diff --git "a/Germany/2.Siemens_$135.42 B_Industries/2022/results.txt" "b/Germany/2.Siemens_$135.42 B_Industries/2022/results.txt"
new file mode 100644--- /dev/null
+++ "b/Germany/2.Siemens_$135.42 B_Industries/2022/results.txt"
@@ -0,0 +1,191356 @@
+SIEMENS
+siemens.com
+Fiscal 2014
+Siemens at a glance
+We make real what matters.
+Vision 2020
+SIEMENS
+Company Report 2014
+siemens.com
+We make real what matters.
+Vision 2020
+Page 41
+Our
+Our strategy defines the direction our Company
+is taking, sets the focus for our business activities
+and determines our entrepreneurial priorities.
+Page 85
+Annual Report 2014
+3 Energy
+application
+We make real what matters by setting
+the benchmark in the way we electrify,
+automate and digitalize the world
+around us.
+2
+At Siemens, we live and nurture an ownership
+culture - because, by giving his or her best,
+each individual makes a vital contribution to
+our Company's overall success.
+Our
+culture
+Page 20
+Flexible and small gas turbines will be an impor-
+tant growth field in the years ahead. Find out
+how our SGT-750 in Lubmin, Germany, is helping
+secure Europe's power supply.
+generation
+1 Power
+To learn more, please read on.
+Page 30
+power distribution and
+smart grid
+2 Power transmission,
+Page 5
+Vision 2020 describes our path to a successful
+future - a strong mission, a lived ownership
+culture shared by all our people and a consis-
+tent strategy.
+Our
+path
+Contents: Company Report
+A capacity of 120 gigawatts and more than
+100,000 kilometers of high-voltage trans-
+mission lines - these are only two features of
+a power grid of true superlatives. Learn how
+we've cooperated with local partners in Brazil
+to create one of the world's most advanced,
+safest and most reliable power grids.
+Our intelligent software solutions are setting
+new standards - for example, in Qatar, where
+a new elevated conveyor system for the Hamad
+International Airport in Doha was planned com-
+pletely digitally and commissioned well before
+the airport itself was opened.
+strategy
+4 Imaging and
+in-vitro diagnostics
+|| | Vision 2020
+Our path
+Dear Readers,
+If you want to gear a company to the future, you've got to
+provide answers to the following questions: What do you
+stand for? What sets you apart? How will you achieve long-
+term success? And that's what we've done. Vision 2020
+is paving the way to a successful future. And to make it
+happen, we're focusing on three topics:
+1. A clear mission
+A mission expresses a company's self-understanding and
+defines its aspirations. “We make real what matters.” That's
+our aspiration. That's what we stand for. That's what sets
+us apart. A reflection of our strong brand, it's the mission
+that inspires us to succeed.
+2. A lived ownership culture
+Page 64
+One engine of sustainable business is our ownership culture,
+in which every employee takes personal responsibility for
+our Company's success. “Always act as if it were your own
+Company" this maxim applies to everyone at Siemens, from
+Managing Board member to trainee.
+With our positioning along the electrification value chain,
+we have knowhow that extends from power generation to
+power transmission, power distribution and smart grid to
+the efficient application of electrical energy. And with our
+outstanding strengths in automation, we're well equipped
+for the future and the age of digitalization. Vision 2020
+| | | ||||||||||
+7
+8
+|||||||||
+Our path
+| | | |||||||||||
+3. A consistent strategy
+President and CEO
+of Siemens AG
+HOW can we achieve
+long-term success?
+3
+4
+Joe Kaeser
+Page 74
+Our path
+For over 165 years, Siemens has stood for
+engineering excellence and innovation, for
+quality and reliability, for human creativity
+and drive, for stability and financial solidity
+and, last but not least, for good corporate
+citizenship. Our Vision 2020 fully embraces
+this legacy while moving us forward into
+a successful future.
+6
+| | | |||||||||| Our path
+||||||| | || |
+WHAT do we stand for?
+WHAT sets us apart?
+Making real what matters |
+Rush University Medical Center in Chicago
+demonstrates how we're helping hospital
+operators and clinicians worldwide offer the
+best possible healthcare at affordable prices.
+Profit margin ranges of businesses
+payout ratio
+productivity
+Capital
+structure
+efficiency
+Capital
+Growth
+Total cost
+One Siemens
+|
+|
+97
+98
+| | | |||||||||| Our strategy |||||||||| ││
+|| |
+2. Operating system and Corporate Memory
+1. Financial framework
+Doing the right things right – that's what a strategy's implementation
+depends on. To manage a company effectively, efficiently and thus
+successfully, you've got to set clear priorities, have the right tools and
+base your work on clear goals and rules. Our One Siemens operating
+system delivers these prerequisites and sets the priorities for:
+|
+Customer proximity
+Financial framework
+Our strategy
+Growth
+Management model
+2. Operating system and Corporate Memory
+Our strategy
+1. Financial framework
+Management model
+One Siemens
+These factors are making a decisive contribution to our Company's success
+managed jointly and holistically, not individually or in isolation. That's how
+One Siemens is helping us to reach our Vision 2020 goals.
+→ SEE PAGE 102
+We contribute to sustainable development by maintaining a responsible
+balance at the Company level between profit, planet and people.
+| Sustainability and citizenship
+We manage our Company in accordance with specific, clearly defined prior-
+ities. And we do it rigorously. In addition, the Corporate Memory - our
+knowledge management - ensures that we learn from mistakes and keep
+our work focused on success. → SEE PAGE 98
+3. Sustainability and citizenship
+Operating system and Corporate Memory
+To measure and compare our development vis-à-vis the market and in our
+competitive environment, we use a system of defined key indicators. We've
+now refined and expanded this financial target system.
+Financial framework
+A strategy sets the course. In the end, however, it's implementation and
+results that count. To enable us to manage our Company more effectively,
+we've expanded One Siemens into an integrated management model
+that combines under one roof the overarching targets and priorities with
+which we're implementing our strategy throughout the Company.
+|
+|
+|| | Management model
+| | | |||||||||| Our strategy |||||||||| ││
+94
+93
+Our strategy
+→ SEE PAGE 96
+| Management model
+IIII
+95
+One Siemens
+At the level of our businesses, we've defined individual margin ranges
+based on the profitability of the most relevant competitors of each
+business.
+Profit margin ranges of businesses
+|
+We want to achieve an attractive payout ratio of 40% to 60% of net
+income.
+Dividend payout ratio
+to maintain our very solid and efficient financial basis.
+|
+We've set ourselves a goal for our capital structure that will enable us
+Capital structure
+|
+We want to continuously optimize our costs and achieve total cost
+productivity gains of 3% to 5% a year.
+Total cost productivity
+|
+We've set ourselves an ambitious target corridor of 15% to 20% for
+sustainable return on capital employed.
+Capital efficiency
+|
+Our aim is to outpace the average growth rate of our most relevant
+competitors.
+|
+We've set out to increase our Company's value on a sustainable basis.
+To measure our progress, we use a balanced system of defined financial
+performance indicators. We've further refined the range of the One
+Siemens indicators we've reported to date:
+|| | 1. Financial framework
+| | | |||||||||| Our strategy |||||||||| ││
+96
+|||||||
+Innovation
+Dividend
+|
+and Renewables
+-Power Generation
+-Mobility
+- Digital Factory
+Services
+- Process Industries
+and Drives
+Customer and business focus
+|
+~2-3%
+-Financial
+Services
+90
+| | | |||||||||| Our strategy |||||||||| ││
+Customer and business focus also includes setting clear priorities for
+resource allocation in the future. We'll utilize the power of our employees,
+our technological expertise and our capital in a more targeted manner
+in the areas where they'll create maximum value for Siemens. Positioning
+our Company rigorously along the value chain of electrification and allocat-
+ing resources in a targeted manner will enable us to access the fields
+that promise to provide us with long-term profitable growth. On this double
+page, we present selected growth fields.
+Flexible and small gas turbines |||||||||||||
+In the area of power generation, the trend is increasingly toward decen-
+tralized energy supply. Customers worldwide are relying more and more
+on individualized energy supplies and demanding tailor-made solutions.
+As a result, we see major growth potential in the field of flexible and small
+gas turbines - potential that we intend to rigorously exploit.
+Technologies
+||||||||| Offshore wind power
+Management
+- Healthcare
+| Business excellence
+Our strategy
+89
+Expected
+market growth
+~7-9%
+Digitalization
+Automation
+~4-6%
+Electrification
+Power
+generation
+Power transmission,
+power distribution
+and smart grid
+Imaging
+and in-vitro
+diagnostics
+- Power and Gas - Energy
+-Building
+- Wind Power
+Among renewable sources of energy, wind power will play a key role over
+the long term. Offshore wind turbines deliver high yields and are subject
+to less fluctuation than other renewables. We want to continue building
+on the leading position in offshore wind power that we've captured in
+recent years. We consider double-digit market growth realistic in this field
+in the medium term.
+Energy
+application
+Energy management is becoming increasingly vital – for distribution grids as well
+as industrial and private energy producers and consumers. Energy management
+systems make it possible to integrate increasingly decentralized power supplies
+into the energy cycle, while mitigating the negative impact of the fluctuations
+that occur when power is generated from renewable sources - thus improving
+the utilization of existing power grids. Our intelligent, integrated automation
+solutions offer customers decisive added value.
+|
+We want to lead Siemens in such a way that we focus on our customers at
+all times and further expand our market penetration while maintaining lean
+and flexible structures. That's why we've selected a market-integrative
+setup that combines a common regional organization with a coordinated
+vertical approach. Against this backdrop, we've retailored the structures
+and responsibilities of our businesses, our Regions and our corporate
+governance functions. Concretely, this means:
+We've removed layers from our Company, thus bringing our businesses closer to
+customers and key markets. We replaced our 14 Regional Clusters with 30 Lead
+Countries. These Countries, which generate more than 85% of our business,
+now report directly to our Managing Board.
+We've also eliminated the Sector level and consolidated our business activities
+into nine Divisions and one separately managed unit, Healthcare. This change,
+too, is increasing our customer proximity and accelerating our decision-making.
+In addition, we've made governance even more stringent across all levels of
+our organization. Our Managing Board leads the Company and maintains the
+balance between our businesses and Regions. It's supported by strong, efficient
+corporate governance functions, our Corporate Core. This Corporate Core
+ensures fast, unbureaucratic decision-making across key Company functions.
+Stringent governance also means making sure that our proven method-
+ologies for continuously improving performance are rigorously applied
+Company-wide in our businesses and projects in the future. In this con-
+nection, we're relying on our well-established top+ program. We're also
+managing our compliance system and Company-wide compliance organi-
+zation directly from Company headquarters to ensure that our activities
+always fully comply with applicable laws and with our own internal principles
+and regulations.
+Customers and markets
+Businesses
+Managing Board
+| Governance
+IIII
+-
+We're bundling all the insights that help us improve our business
+operations into a new type of knowledge management. This Corporate
+Memory isn't limited to databases and methodologies. It's also an-
+chored in our organization. Why? Because it's the only way we can draw
+the right conclusions – from highly successful projects as well as from
+earlier failures.
+Distribution grid automation and software
+People excellence and care
+|
+|
+Regions
+| | | |||||||||| Our strategy |||||||||| ││
+In greater demand than ever before, intelligent mobility solutions are
+providing major impulses for growth - particularly in the areas of urban
+transportation and automated traffic-control solutions. We see stronger
+growth potential in this area as well.
+Urban and interurban mobility
+|| | Governance
+|||||||||
+Our strategy
+||||||||||
+Digital-twin software
+The virtual and real worlds are merging more and more. Already today,
+our software solutions are helping customers develop products much
+faster, more flexibly and more efficiently. For example, they can now
+perform endurance tests even before a single bolt is tightened in the real
+world. Not only products but also the plants in which they're produced
+have digital twins that can be used to coordinate and integrate product
+design and production planning. The digital models are always up-to-
+date - as planned, as built, as maintained – while allowing improvements
+throughout entire lifecycles.
+91
+Some industry sectors – oil & gas and food & beverage, for example –
+are growing at above-average rates. We want to participate in this
+growth. That's why we're bundling our expertise in process industries
+and drive technologies and continuing to expand our related portfolio
+of products and software solutions.
+Image-guided therapy and molecular diagnostics ……………………………………
+The increasing use of molecular biological methods and progress in
+the life sciences are accelerating technological change in healthcare.
+To improve quality and efficiency, societies worldwide are also demand-
+ing new solutions for next-generation healthcare. Against this backdrop,
+fundamental changes are emerging – changes to which we're optimally
+gearing our Healthcare business.
+22
+Business analytics and data-driven services,
+software and IT solutions
+We have a comprehensive understanding of our customers' business
+processes. In the future, we want to leverage this knowledge even better
+by analyzing the data generated in these processes, providing recommen-
+dations for improvement and action, and thus creating value. The result-
+ing competitive advantages for our customers are increasingly derived
+from cloud-based solutions and services powered by data analytics
+software. A clear example is our cross-unit remote service, which we're
+continuously expanding.
+Key sectors in process industries
+92
+78,350
+71,920
+Further
+information
+(2)%
+Continuing operations
+in millions of €
+in millions of €
+79,755
+% Change
+Actual Comparable²
+Orders
+Revenue
+FY 2013
+2014
+|| | Volume
+Key figures fiscal 2014¹
+106
+2014
+Financial Report
+Company Report
+Sustainability and citizenship
+One Siemens
+73,445
+Profit
+People
+FY 2014
+(2)%
+in millions of €
+→ Page 193
+7.9
+103
+10.0
+in %
+in % of revenue (Total Sectors)
+→ Page 202
+26%
+5,842
+7,335
+Total Sectors profit
+→ Page 202
+12%
+8,131
+9,103
+in millions of €
+Adjusted EBITDA
+Total Sectors
+Further
+information
+% Change
+FY 2013
+FY 2014
+|| | Profitability and Capital efficiency
+→ Page 193
+1%
+1%
+IIIII
+Operating system and Corporate Memory
+|
+|||||||||||||| Innovation
+h
+Profitable growth is based on proximity to our customers and on an
+understanding of their individual requirements. To meet and exceed
+our customers' expectations, we invest in local sales presence and
+support for specific groups of market partners. Our key account
+management approach is just one successful example of this. We're
+represented in virtually every country in the world by Regional
+Companies that operate as local partners to our customers. We also
+exploit our in-depth knowledge of customer processes and continually
+develop our offerings for key verticals in a targeted manner - across
+organizational boundaries. To regularly gauge the satisfaction
+of our customers around the world, we use a uniform measure, the
+Net Promoter Score (NPS).
+Customer proximity ⠀⠀⠀⠀⠀⠀
+To implement its strategy and ensure its continued development, a company
+needs an operating system that defines principles for the excellent manage-
+ment of its businesses and determines appropriate action areas. Our operating
+system, One Siemens, sets the following four priorities:
+| | | |||||||||| Our strategy |||||||||| ││
+100
+|
+| One Siemens
+and care
+Innovation is essential for ensuring long-term competitiveness. This
+applies to our entire portfolio of products, solutions and services.
+Added value for our customers is based increasingly on software and
+IT solutions. As a result, we've made this field a particular focus of our
+attention – for example, through research and development activities
+in software architecture and platforms. Tools such as partner networks
+are enabling us to manage highly effective innovation processes and
+an open innovation culture. We're concentrating on new technology-
+driven growth areas as well as innovative business models.
+People
+excellence
+Innovation
+Customer
+proximity
+2. Operating system and Corporate Memory
+Management model
+One Siemens
+99
+IIIII
+Our strategy
+||||
+Continuing operations
+Business
+excellence
+|||||||||
+Business excellence
+We want to do an excellent job of managing our businesses while
+pursuing our aim of continuous improvement. For this, we've developed
+outstanding tools as part of our Company-wide top+ movement – tools
+that we will apply with even greater rigor in the future. These tools
+enable us, for instance, to benchmark our performance against the best
+and to increase our productivity. Tightening our risk management
+approach is helping us identify project risks while still in the bidding
+phase and thus avoid costly project delays. Last but not least, we're
+fostering our service business across organizational boundaries, for
+example, by developing service platforms.
+Planet
+and citizenship
+3. Sustainability
+One Siemens
+Management model
+What we create is yours. For the benefit of our customers and for the
+societies in which we live and work. Yesterday, today and in the future.
+That's what ensures our long-term entrepreneurial success. That's what
+we understand by sustainability. And that's what we mean when we
+say, "We make real what matters."
+People by living a culture that strengthens our employees' sense of
+responsibility worldwide, fosters their development and places integrity at the
+center of our Company's activities. As good corporate citizens, we're also
+contributing to the sustainable development of society through our portfolio,
+our local presence worldwide and our role as a thought leader.
+-
+Planet by utilizing our planet's limited resources responsibly and by
+enabling our customers to improve their own environmental performance.
+-
+a difference worldwide, because it provides our customers with decisive
+competitive advantages and strengthens our profitability over the long term.
+Profit by offering a range of products, solutions and services that makes
+-
+Together with our customers and partners, we want to shape the future by
+making real what matters and addressing the global issues and trends
+that are truly crucial. Driven by our passion for engineering excellence,
+we're committed to the values of our Company's founder. Guiding us
+for over 165 years, his maxim - "I won't sell the future of my Company
+for a short-term profit" - demands that we maintain a healthy balance
+between profit, planet and people.
+|
+|
+|
+|| | 3. Sustainability and citizenship
+| | | |||||||||| Our strategy |||||||||| ││
+102
+Excellent employees are the heart and soul of Siemens. That's how
+it's always been. And we want it to be even more so in the future.
+Therefore, we're anchoring an ownership culture at our Company. For
+us, this is not an abstract idea but a concrete goal that we're pursuing
+with measures we can track. After all, the behavior, motivation and
+values of the people who work for Siemens mold our culture. In an
+attractive working environment, we promote lifelong learning and
+personal development. Integrity - supported by a well-established
+compliance system – remains the principle that guides our conduct.
+Our share programs are enabling us to increase employee participation
+in our Company's success while bringing us closer every day to a lived
+ownership culture.
+⠀⠀⠀⠀⠀⠀⠀ People excellence and care
+101
+Our strategy
+Our strategy
+Adjusted EBITDA
+Basic earnings per share³
+9,139
+20
+14
+→ Page 222
+||| Employees
+Total employees - continuing operations
+Europe, C.I.S., 5 Africa, Middle East
+therein Germany
+Asia, Australia
+Americas
+Total employees - continuing and discontinued operations
+Employee turnover rate 6,7
+Female employees in management positions (percentage of all management positions) 6,8
+Expenses for continuing education 6,9
+Expenses per employee for continuing education 6,9
+Sep. 30,
+2014
+in millions of €
+2013
+Further
+information
+in thousands
+343
+348
+→ Page 216
+in thousands
+211
+in %
+215
+→ Page 222
+8
+8.3
+→ Page 219
+in thousands
+4.3
+4.0
+→ Page 219
+FY 2014
+FY 2013
+Further
+information
+Accumulated annual customer reductions of carbon dioxide emissions
+generated by elements from the Environmental Portfolio¹
+Energy efficiency improvement compared to baseline in fiscal 20101
+Waste efficiency improvement compared to baseline in fiscal 20101
+Waste for disposal reduction compared to baseline in fiscal 20101
+Carbon dioxide emission efficiency improvement compared to baseline in fiscal 20101
+in millions of
+metric tons
+428
+369
+→ Page 221
+in %
+11
+5
+→ Page 222
+in %
+12
+8
+→ Page 222
+in %
+10
+8.6
+→ Page 173
+115
+in €
+769
+670
+→ Page 216
+1 Continuing operations.
+2 Average number of employees in fiscal year.
+3 Number of inventions reported by the Business
+Units in an internal report.
+4 First filings as part of inventions submitted
+to patent offices.
+5 Commonwealth of Independent States.
+6 Continuing and discontinued operations.
+7 Employee turnover rate is defined as the ratio of
+voluntary and involuntary exits from Siemens during
+the fiscal year to the average number of employees.
+8 Employees in management positions include
+all managers with disciplinary responsibility,
+plus project managers.
+9 Without travel expenses.
+107
+108
+|||A.1 Letter to our Shareholders
+Berlin and Munich, December 3, 2014
+Dear Shareholders,
+In fiscal 2014, we worked hard, we were highly focused, and we achieved a great
+deal. Despite a complex geopolitical situation, our overall results for the year were
+very good. We increased profit by 25%, tackled a great many issues and improved
+our operations, even though in some areas we could have been even more success-
+ful. Above all, we gave our Company a new setup based on our Vision 2020 and
+defined the direction we'll be taking in the years ahead.
+We're proud of what we've achieved so far, particularly because the circumstances
+have been anything but favorable: global economic development was very uneven
+in fiscal 2014, and with more than 40 critical hotspots around the world, political
+uncertainties were greater than they'd been in decades. That's why we were right
+when we decided not to pin our hopes on a global economic recovery but to exploit
+our own strengths.
+For fiscal 2014, we reported net income of €5.5 billion, with revenue totaling
+€71.9 billion and orders €78.4 billion. We thus reached the targets we'd originally
+set for the year and exceeded our goal for profit development while making sub-
+stantial progress in strengthening our portfolio. These achievements will enable us
+to propose a dividend of €3.30 to the Annual Shareholders' Meeting. Siemens is
+and will remain a good investment. We stand for a long-term, reliable and attractive
+dividend policy and will remain a company with a rock-solid financial basis.
+Nevertheless, our performance could have been even better. The high charges
+on which we again focused considerable attention in fiscal 2014 are not what
+Siemens stands for. We're working hard to improve our risk management, and
+we expect to see successes already in fiscal 2015.
+Fiscal 2014 was a year of upheaval for our Company. Our Company-wide Vision 2020
+concept is paving the way to the future. Vision 2020 defines a clear strategic direc-
+tion for the "new Siemens." We're positioning our Company in strategically attractive
+growth fields and demonstrating a clear focus as we gear our setup to these fields.
+→ Page 216
+in thousands
+265
+in millions of €
+117
+in thousands
+62
+61
+→ Page 173
+in thousands
+70
+72
+→ Page 173
+in thousands
+357
+367
+FY 2014
+FY 2013
+Further
+information
+in %
+9.1
+10.8
+→ Page 216
+in %
+15.6
+15.6
+→ Page 216
+276
+in thousands
+Sep. 30,
+28.1
+in €
+6.37
+5.08
+25%
+→ Page 202
+Return on capital employed (ROCE)
+in %
+17.3
+13.5
+→ Page 188
+|| | Capital structure and Liquidity
+September 30, 2014
+Cash and cash equivalents
+Industrial net debt
+in millions of €
+8,013
+Total equity (Shareholders of Siemens AG)
+in millions of €
+30,954
+September 30, 2013
+9,190
+28,111
+Further
+information
+→ Page 210
+→ Page 212
+Basic earnings per share³
+in millions of €
+→ Page 201
+4,409
+8,097
+13%
+→ Page 202
+Income from continuing operations
+in millions of €
+5,400
+4,179
+29%
+→ Page 219
+in €
+6.24
+4.81
+30%
+→ Page 309
+Return on capital employed (ROCE)
+in %
+17.2
+13.7
+→ Page 188
+Continuing and discontinued operations
+Net income
+in millions of €
+5,507
+25%
+1,390
+→ Page 201
+→ Page 189
+in % of revenue from continuing operations
+Research and development employees 1,2
+Inventions 1,3
+Patent first filings¹4
+|| | Environment
+FY 2014
+FY 2013
+Further
+information
+in billions of €
+33.0
+31.9
+→ Page 221
+in %
+46
+43
+in billions of €
+4.1
+4.0
+→ Page 219
+5.7
+5.5
+in thousands
+28.8
+2,805
+in % of revenue from continuing operations
+Research and development expenses¹
+Revenue generated by the Environmental Portfolio¹
+in %
+|| | Customers and Innovation
+adjusted EBITDA (continuing operations)
+0.15
+Industrial net debt/
+FY 2014
+FY 2013
+→ Page 189
+Further
+information
+Continuing operations
+Free cash flow
+in millions of €
+5,399
+0.35
+→ Page 207
+5,378
+amounted to 843,449 and 843,819 shares,
+respectively.
+3 Basic earnings per share - attributable to shareholders
+of Siemens AG. For fiscal 2014 and 2013 weighted
+average shares outstanding (basic) (in thousands)
+1 October 1, 2013 - September 30, 2014.
+→ Page 207
+2 Excluding currency translation and portfolio effects.
+5,201
+in millions of €
+Continuing and discontinued operations
+Free cash flow
+5,328
+Energy Management,
+Building Technologies,
+Mobility
+President and Chief Executive Officer
+Joe Kaeser
+President and
+Roland Busch
+Asia, Australia
+Ralf P. Thomas
+Controlling and Finance,
+Financial Services,
+Global Services
+|| | A.2 Managing Board of Siemens AG
+114
+113
+Joe Kaeser
+> assumes responsibility and makes a difference.
+For the Managing Board
+After a year at the helm of this great Company, I assure you that I still feel person-
+ally responsible for passing on to the next generation an enterprise that's even
+better and stronger than today's. “We make real what matters." That's my mission
+for Siemens. That's my responsibility. That's my promise.
+Vision 2020 sets the strategic course for Siemens. The direction is clear, team spirit
+is flourishing, and we have every reason to look to the future with confidence.
+Ever since Werner von Siemens founded his company in a rear building in Berlin in
+1847, Siemens has stood for pioneering spirit. We continuously foster long-term
+success - day by day, quarter by quarter, year by year. Rigorously and responsibly.
+In 2014, we defined our strategic direction and aligned our organization accordingly.
+In 2015, we'll consolidate our operations. We're increasing expenditures for research
+and development and for our go-to-market activities in selected areas and regions.
+Operational improvements will already be visible in 2016. Starting in early 2017, all
+our efforts will bear fruit in the form of faster growth and enhanced cost efficiency.
+> more than any other, stands for innovation in the electrification of the world
+> is a strong, global brand renowned for hard work, financial solidity, top quality,
+engineering excellence and a talent for innovation
+With greater employee participation, we'll also ensure that Siemens remains an
+excellent company in the future. A company that
+Already today, 140,000 Siemens employees hold shares in our Company. I want to
+increase this figure substantially. Our aim is to have more than 200,000 employee
+shareholders by 2020. And I'm convinced we can do it.
+Our foremost maxim must be: always act as if it were your own Company! I'm
+convinced that an ownership culture is not only a formula for success at strong,
+family-run enterprises but that it will also be the foundation for our success. It's
+this culture that will shape Siemens.
+However, strategy isn't the only thing that counts here - since a strategy can
+be implemented only if it's based on a strong company culture. At Siemens, this
+means an ownership culture. I asked our employees and managers how they'd
+describe ownership culture in one word. “Responsibility" was far and away the
+most common answer. And that's precisely the point: we must always bear in mind
+that we have a responsibility to pass on a better company to the next generation.
+Sincerely yours,
+Chief Executive Officer
+Corporate Development,
+Governance & Markets,
+Communications
+Hermann Requardt
+Klaus Helmrich
+|| | Contents: Financial Report
+Culture makes the difference
+116
+115
+Power Generation Services
+Wind Power and Renewables,
+Power and Gas,
+Americas
+Lisa Davis
+Healthcare
+A.
+Corporate Technology
+Human Resources,
+Middle East
+Commonwealth of Independent States,
+Labor Director
+Siegfried Russwurm
+From left
+to right
+Europe, Africa
+Digital Factory,
+Process Industries
+and Drives
+and Government Affairs,
+Legal and Compliance
+and legal disclosures
+Our stages on the path to 2020
+This step is fully in line with our strategy of strengthening our core business and
+of divesting activities that yield few or no synergies for the Company.
+> For the short term, we're improving our performance and efficiency.
+> For the medium term, we're strengthening our core business.
+> For the long term, we're driving sustainable growth.
+Let me start with the most important thing: our Company's long-term, sustainable
+development. Already today, Siemens is a leader in electrification and automation -
+just think of our urban mobility systems, our solutions for the process industry and
+our power plants as well as our outstanding position in power plant instrumentation
+and control technology, power grids, and factory and rail automation. We aim
+to achieve an equally strong position in the field of digitalization, in which we're
+already a key player: our worldwide installed customer base gives us not only
+access to an enormous volume of data but also an in-depth understanding of the
+related processes. And our customers appreciate these advantages.
+A company like Siemens never stands still. This was the case in the past, and it will
+remain so in the future. That's why we intend to continue developing our port-
+folio with determination and the utmost prudence in order to strengthen our core
+business in the medium term. We've taken the first steps with our acquisition
+of Rolls-Royce's aero-derivative gas turbine business and our decision to acquire
+U.S. compressor and turbine manufacturer Dresser-Rand. These two acquisitions
+will close important gaps in our electrification portfolio for the oil and gas industry
+as well as for decentralized power generation.
+The announcement that we're divesting our stake in BSH Bosch und Siemens
+Hausgeräte (BSH) was a further signal that we're intent on implementing our
+Vision 2020. The Siemens brand will continue to be used for household appliances,
+so Siemens will still be found “in the kitchen and in the laundry room." However,
+BSH will now be managed exclusively by Bosch.
+We can accept the fact that we didn't win the bid for the French company Alstom,
+although, objectively speaking, our offer was the better one. In this connection,
+one thing is particularly important to me: we proved that Siemens is capable of
+taking action in any situation. What's more, we had an impact on the transaction
+that was not negligible for our competitors.
+New setup at all levels and in all business fields
+Our focus on what is essential is also reflected in our Company's organization.
+We've eliminated the Clusters and Sectors and reduced the number of Divisions
+from 16 to ten. In addition, we've substantially strengthened our international
+organization.
+We're blazing new trails with our new setup. For instance, thanks to our Digital
+Factory Division, we're the world's first company to bundle all the requirements for
+the factory of the future under one roof. The Division will be our driving force
+for Industry 4.0, the much-discussed Fourth Industrial Revolution in which every
+aspect of production - from idea, development and manufacturing to services
+and recycling - will be totally integrated. At Siemens, we're not just talking about
+Industry 4.0; we're implementing it.
+In view of the growing strategic importance of the U.S. energy markets, we've
+relocated the management of our energy business as well as the responsibility for
+supporting our marketing activities throughout the Americas to Houston, Texas.
+To head our energy business, we've brought in Lisa Davis, who joined the Managing
+Board of Siemens AG on August 1, 2014, and has since been making valuable
+contributions to its work. For our customers and for our Company, the energy
+landscape has changed dramatically, not least because of political factors such as
+Germany's "energy transition." We're responding to these shifts.
+111
+112
+Our healthcare business achieved very good results overall in the past quarters, an
+accomplishment we're proud of. However, over the long term, we anticipate fun-
+damental changes and new business models in healthcare markets and technologies.
+With the aim of continuing the success story of Siemens' medical engineering
+activities and of giving them greater freedom and better prospects for the future,
+we'll manage our healthcare business independently within Siemens - as a
+company within the Company. Healthcare is not "still" at Siemens or “staying” at
+Siemens. Healthcare is part of Siemens.
+To our Shareholders
+We've paved the way for the sale of our audiology business to the investment
+company EQT and Germany's Strüngmann family of entrepreneurs. Siemens will
+remain invested in the hearing aid business with preferred equity and will thus
+benefit from the business's future successes. Not only is the transaction an excellent
+move from a financial perspective; we're also convinced that the new investors
+have a clear growth strategy for further developing the hearing aid business over
+the long term.
+Our Company-wide reorganization will be implemented in three phases. While the
+measures included in these phases will be reflected in our key financial figures at
+various times, we're continually addressing all of them with the same intensity and
+the same rigor:
+Looking at my description of our Vision 2020 targets, you'll have noticed that we've
+set very ambitious goals. In pursuing these goals, we won't be able to please
+everyone, because the pace in international competition is far too fast. That's why
+we have to set priorities. But our actions will be well-focused, level-headed and
+responsible as can be expected of Siemens.
+For years now, we've been focusing on the megatrends of urbanization, demo-
+graphic change, globalization and climate change. And now a further megatrend
+has emerged: digitalization, which consists in capturing and analyzing data and
+then using it to create customer value. We want to play a key role in shaping this
+digital transformation. Businesses related to software and data analytics are
+achieving dynamic annual growth of 7% to 9% and, in some fields of digitalization,
+even more. Highly attractive markets await us here, and we're positioning our
+Company accordingly.
+Vision 2020 is our concept for the future and, above all, for achieving sustainable
+growth. We proceeded calmly and carefully in drafting Vision 2020, taking all the
+time we needed, and then implemented the concept in record time.
+In fiscal 2014, the Managing Board cooperated with the Supervisory Board closely
+and regularly in the development of Vision 2020, which defines Siemens' long-term
+perspective along the electrification value chain, with our strengths in automation
+and digitalization. The goal is to enhance Siemens' performance in the short term,
+strengthen its core business in the medium term and return to profitable growth.
+In fiscal 2014, the Supervisory Board performed with great diligence the duties
+assigned to it by law, the Siemens Articles of Association and the Bylaws for the
+Supervisory Board. We regularly advised the Managing Board on the management
+of the Company and monitored the Managing Board's activities. We were directly
+involved at an early stage in all major decisions regarding the Company. In written
+and oral reports, the Managing Board regularly provided us with timely and com-
+prehensive information on Company planning and business operations as well as
+on the strategic development and current state of the Company. On the basis of
+reports submitted by the Managing Board, we considered in detail business devel-
+opment and all decisions and transactions of major significance to the Company.
+Deviations from business plans were explained to us in detail and intensively
+discussed. The Managing Board coordinated the Company's strategic orientation
+with us. The proposals made by the Managing Board were approved by the Super-
+visory Board and/or the relevant Supervisory Board committees after in-depth
+examination and consultation. In my capacity as Chairman of the Supervisory
+Board, I was also in regular contact with the Managing Board and, in particular,
+with the President and CEO and was kept up-to-date on current developments
+in the Company's business situation and on key business transactions. In addition,
+I engaged in separate discussions with members of the Managing Board regard-
+ing the prospects for and the future orientation of individual Siemens businesses.
+Topics at the plenary meetings of the Supervisory Board
+We held a total of six regular meetings and three extraordinary meetings in fiscal
+2014. In addition, we made one decision outside meetings. Attendance at Supervisory
+Board meetings by members was around 91%.
+Regular topics of discussion at our plenary meetings were revenue, profit and
+employment development at Siemens AG, at the Company's operating units
+and at the Siemens Group as well as the Company's financial situation, profitability
+and major investment and divestment projects.
+| A.3 Report of the Supervisory Board
+118
+Contents: Financial Report
+117
+17
+REFERENCE TO THE
+INTERNET
+7 REFERENCE TO AN
+EXTERNAL PUBLICATION
+THE PUBLICATION
+Joe Kaeser
+President and
+CEO of Siemens AG
+110
+-
+I'd like to extend my thanks to all 343,000 Siemens employees – and particularly
+to our many people in the world's crisis regions - for their continuing dedication.
+Throughout fiscal 2014, the Managing Board team received tremendous employee
+support for the changes now necessary at our Company. Cooperation with the
+employee representatives was also characterized by a spirit of mutual trust. In addi-
+tion, Dr. Gerhard Cromme and the members of the Supervisory Board diligently
+assisted the work of the Managing Board, providing outstanding support for all our
+activities and projects. I'm very grateful for the commitment of all these individu-
+als. I'd also like to extend a special thanks to our customers, who gave us their trust
+and confidence in fiscal 2014. We'll remain an expert and reliable partner for them
+in the future.
+Vision 2020 - Our Company-wide concept
+In keeping with Vision 2020, we're positioning Siemens along the electrification
+value chain. Electrification, automation and digitalization, and the impact of these
+fields on all parts of our Company: that's what the new Siemens is all about. Our
+new setup will help us close the gap to our competitors. We have some catching up
+to do in terms of growth as well as margin development. Our goal must be to
+close that gap. And we'll succeed, although not overnight. One thing, however, is
+clear: Vision 2020 has already made us stronger and brought us closer to our mar-
+kets. We'll also be investing more in innovation and market access than in the past -
+with the aim of creating sustainable value for our employees, our customers and
+for you, our shareholders.
+B.
+C.11
+C.
+344
+E.5 | Five-year summary
+252
+D.5 | Consolidated Statements
+of Changes in Equity
+345
+254
+D.6 | Notes to Consolidated
+Financial Statements
+346
+E.6 | Notes and forward-
+looking statements
+D.4 | Consolidated Statements
+of Cash Flows
+E.7 | Further information and
+330
+D.7 Supervisory Board and
+Managing Board
+347
+E.8 | Financial calendar
+Key to references
+→ REFERENCE WITHIN
+Dear Shareholders,
+242
+C.10 | Compensation Report
+information resources
+Corporate
+Governance
+251
+342
+Siemens AG
+(Discussion on basis of
+German Commercial Code)
+D.
+E.
+Consolidated
+Financial Statements
+Additional
+Information
+248
+E.4 Company structure
+D.1 Consolidated Statements
+of Income
+E.1 Responsibility Statement
+339
+249
+D.2 | Consolidated Statements
+of Comprehensive Income
+E.2 | Independent
+Auditor's Report
+341
+250
+D.3 | Consolidated Statements
+of Financial Position
+E.3 | Statement of the
+Managing Board
+338
+associated material
+opportunities and risks
+Berlin and Munich, December 3, 2014
+C.8 |Sustainability
+and citizenship
+C.4 | Financial position
+Share/Investor Relations
+138
+B.3 Compliance Report
+210
+C.5 | Net assets position
+213
+C.6 | Overall assessment
+of the economic position
+144
+B.4 Compensation Report
+(part of the Combined
+Management Report)
+214
+C.7 | Subsequent events
+215
+165
+B.5 |Takeover-relevant
+information (pursuant to
+Sections 289 para. 4 and
+315 para. 4 of the German
+Commercial Code) and
+explanatory report
+(part of the Combined
+Management Report)
+225
+242
+C.9 |Report on expected
+developments and
+A.4 | The Siemens
+126
+(part of the Combined
+Management Report)
+C.3 | Results of operations
+Combined
+Management Report
+108
+A.1
+205
+132
+B.1 |Corporate
+Governance Report
+172
+C.1 Business and
+economic environment
+114
+A.2 | Managing Board of
+Letter to our Shareholders
+136
+118
+A.3 Report of the
+Supervisory Board
+B.2 Corporate Governance
+statement pursuant
+to Section 289a of the
+German Commercial Code
+(part of the Combined
+Management Report)
+187
+C.2 | Financial performance
+system
+193
+Siemens AG
+127
+A.4.5 Shareholder structure
+With around 660,000 shareholders, Siemens AG is one of the
+world's largest publicly owned companies. Siemens has a sta-
+ble shareholder structure that has changed only slightly over
+time. This applies, in particular, to our more than 650,000 pri-
+vate Siemens shareholders, who have often maintained their
+investments for many years. In July 2014, we mandated an ex-
+ternal institute to conduct an analysis of our shareholder struc-
+ture. Based on an evaluation of publications from institutional
+investors and on statistical estimates, this analysis showed that
+shareholders in Germany hold the largest percentage of our
+outstanding shares, about 27% of the total. Shareholders in the
+U.S. hold roughly 21% and shareholders in the U.K. around 11%,
+while investors in France hold 8% and those in Switzerland 8%.
+Around 64% of Siemens' outstanding shares are currently held
+by institutional investors, about 19% by private shareholders
+and around 6% by members of the Siemens family. For fur-
+ther information on our shareholder structure, please see
+WWW.SIEMENS.COM/SHAREHOLDERSTRUCTURE.
+A.4.6 Credit ratings
+Siemens AG has good, investment-grade credit ratings.
+"Aa3/negative/P-1" from Moody's Investors Service and "A+/stable/
+A-1+" from Standard & Poor's are very positive ratings - particu-
+larly when compared to those of our competitors in the indus-
+try sector. Our solid financial position gives us unrestricted
+access to the international financial and capital markets.
+September 30, 2014
+Moody's Standard &
+Investors Poor's Ratings
+Service
+Services
+| Credit ratings
+September 30, 2013
+Moody's
+Standard &
+Investors Poor's Ratings
+Service
+Services
+Additional Information
+At the end of fiscal 2014, the net debt of Siemens AG was
+€12,008 million, with cash and cash equivalents of €8,013 mil-
+lion. For further information on our credit ratings and financial
+obligations, please see → NOTE 26 ADDITIONAL CAPITAL DISCLOSURES
+in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages
+290-292 of this Annual Report.
+|
+At our meeting on November 6, 2013, we discussed the Company's key financial
+figures for fiscal 2013 and approved the budget for 2014. In addition, we adjusted
+the composition of the Supervisory Board committees and the assignment of
+responsibilities in the Managing Board. On the basis of reported target achievement,
+we also defined the compensation of the Managing Board members for fiscal 2013.
+The appropriateness of this compensation was confirmed by an internal review. On
+the recommendation of the Compensation Committee, we amended the Managing
+Board contracts in order to bring them into line with the new recommendations
+of the German Corporate Governance Code - in particular, with the Code's recom-
+mendation that compensation amounts be capped. At this meeting, the amount
+of Managing Board compensation was also reviewed and adjusted. On January 28,
+2014, the Annual Shareholders' Meeting approved by a majority of over 93%
+the remuneration system for the Managing Board members for fiscal 2014. At our
+meeting on November 6, 2013, we also approved the sale of major businesses at
+the Water Technologies Business Unit and our share buyback program. The Manag-
+ing Board reported to us on the current status of acquisitions and divestments
+and on sustainability at Siemens.
+Consolidated Financial Statements
+Long-term debt
+1 To be proposed to the Annual Shareholders' Meeting.
+2 Dividend payout/Siemens share price on day of
+Annual Shareholders' Meeting; for fiscal 2014:
+dividend payout/Siemens share price at fiscal year-end.
+3 Based on estimated number of shares entitled to
+a dividend payment on day of Annual Shareholders'
+Meeting for fiscal 2014.
+4 To calculate the payout ratio, net income was adjusted
+for non-cash items in 2010 (DX impairment charges)
+and 2012 (impairment charges for Solar and NSN
+restructuring).
+A.4.2 Dividend proposal
+At the Annual Shareholders' Meeting, the Managing Board and
+the Supervisory Board will propose a dividend payment of
+€3.30, which represents a dividend yield of 3.5% and a payout
+ratio of 49%. This proposal continues our tradition of paying
+attractive dividends to our investors.
+337 | E.
+A.4.3 Share buyback program
+A.4.4 Delisting from stock exchanges
+in New York, London and Zürich
+On May 15, 2014, the listing of Siemens' American Depository
+Receipts (ADRs) on the New York Stock Exchange (NYSE) was
+terminated. On the same date, the Company applied for dereg-
+istration at the U.S. stock exchange regulatory authority, the
+United States Securities and Exchange Commission (SEC). The
+deregistration became effective on August 15, 2014.
+The goal of the delisting and deregistration was to address
+the change in the behavior of investors. The trading of Siemens
+shares is now conducted predominantly in Germany and
+via electronic trading platforms (over-the-counter, OTC). The
+trading volume of Siemens shares in the U.S. was low, amount-
+ing to significantly less than 5% of their global trading volume
+over the last 12 months. The deregistration has enabled us to
+simplify our financial reporting processes and increase their
+efficiency.
+On October 8, 2014, the listing of the Siemens share on the
+London Stock Exchange (LSE) was terminated. On the same
+date, SIX Swiss Exchange AG in Zürich (SIX) approved the
+request of Siemens AG to terminate the Siemens share's listing
+on the SIX stock exchange as of January 8, 2015.
+Like the delisting in New York, these two delistings were the
+result of a change in investor behavior. In 2013, trading volume
+on both exchanges accounted for considerably less than 3% of
+our global trading volume.
+Independently of the delistings, high standards of transparency
+in financial reporting and first-class corporate governance will
+continue to be a top priority at Siemens. The Company will, of
+course, continue to foster open and direct dialogue with its
+German and international investors. The termination of the
+stock exchange listings will have no impact on Siemens' stra-
+tegic orientation or its presence.
+247
+In May 2014, Siemens began to improve its capital structure
+and repurchase its shares. The share buyback program has a
+total value of up to €4 billion for the repurchase of shares by
+the end of October 2015. By September 30, 2014, the Company
+had acquired about 11.3 million shares at an average price of
+€95.25 per share, for a total value of around €1.1 billion.
+Aa3
+126 A.4
+Aa3
+46
+The Siemens Share/Investor Relations
+U.K.: 11%
+U.S.: 21%
+Institutional investors:
+64%
+Unidentified: 11%
+Germany: 27%
+Switzerland: 8%
+France: 8%
+Rest of world: 9%
+Rest of Europe: 5%
+131 | B.
+Corporate Governance
+171 | C
+Combined Management Report
+Report of the Supervisory Board
+118 A.3
+Managing Board of Siemens AG
+114 A.2
+Short-term debt
+P-1
+A-1+
+P-1
+A+
+A-1+
+| Investor type and regional distribution
+Private investors: 19%
+A+
+Unidentified
+Siemens family
+members: 6%
+108 A.
+To our Shareholders
+128
+108 A.1
+Letter to our Shareholders
+investors: 11%
+2,356
+2,629
+42
+2,528
+48
+123
+124
+Detailed discussion of the financial statements
+Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft audited the Annual Financial
+Statements of Siemens AG, the Consolidated Financial Statements of the Siemens
+Group and the Combined Management Report for Siemens AG and the Siemens
+Group for fiscal 2014 and issued an unqualified opinion. The Annual Financial
+Statements of Siemens AG and the Combined Management Report for Siemens AG
+and the Siemens Group were prepared in accordance with the requirements of
+German law. The Consolidated Financial Statements of the Siemens Group were
+prepared in accordance with the International Financial Reporting Standards (IFRS)
+as adopted by the European Union (EU) and with the additional requirements of
+German law set out in Section 315a (1) of the German Commercial Code (Handels-
+gesetzbuch). The financial statements also comply with the IFRS as issued by the
+International Accounting Standards Board (IASB). The independent auditors con-
+ducted their audit in accordance with Section 317 of the German Commercial Code
+and in compliance with the generally accepted German standards for the audit of
+financial statements promulgated by the Institut der Wirtschaftsprüfer (IDW) and
+with the International Standards on Auditing (ISA). The above-mentioned docu-
+ments as well as the Managing Board's proposal for the appropriation of net income
+were submitted to us by the Managing Board in a timely manner. The Audit Com-
+mittee discussed the dividend proposal in detail at its meeting on November 4,
+2014. It discussed the Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Combined Management Report
+in detail at its meeting on December 2, 2014.
+The audit reports prepared by Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
+were distributed to all members of the Supervisory Board and comprehensively
+reviewed at the Supervisory Board's meeting on December 3, 2014, in the presence
+of the independent auditors, who reported on the scope, focal points and main
+findings of their audit. No major weaknesses in the Company's internal control or
+risk management systems were reported. At this meeting, the Managing Board
+explained the financial statements of Siemens AG and the Siemens Group as well as
+the Company's risk management system.
+The Supervisory Board concurs with the results of the audit. Following the
+definitive findings of the Audit Committee's examination and our own examination,
+we have no objections. The Managing Board prepared the Annual Financial State-
+ments of Siemens AG and the Consolidated Financial Statements of the Siemens
+Group. We approved the Annual Financial Statements and the Consolidated Finan-
+cial Statements. In view of our approval, the financial statements are accepted as
+submitted. At our meeting on December 3, 2014, we endorsed the Managing Board's
+proposal that the net income available for distribution be used to pay out a divi-
+dend of €3.30 per share entitled to a dividend and that the amount of net income
+attributable to shares of stock not entitled to receive a dividend for fiscal 2014 be
+carried forward.
+Changes in the composition of
+the Supervisory and Managing Boards
+Prof. Dr. Rainer Sieg left the Supervisory Board on February 28, 2014, upon reaching
+retirement age. Lothar Adler left the Supervisory Board on May 31, 2014, upon reach-
+ing retirement age. They were succeeded by Michael Sigmund and Olaf Bolduan,
+who were appointed to the Supervisory Board by court order. Berthold Huber,
+Gerd von Brandenstein and Prof. Dr. Peter Gruss have announced that they will
+resign from the Supervisory Board, effective the end of the Annual Shareholders'
+Meeting on January 27, 2015. Prof. Dr. Gruss will serve as the chairman of the
+Siemens Technology & Innovation Council that reports to the Managing Board,
+a move that - in line with the suggestions of the efficiency review - will further
+strengthen technology and innovation at Siemens. The Supervisory Board would
+like to express its appreciation to the members who have left or are leaving the Board
+for their many years of loyal support. On the recommendation of the Nominating
+Committee, the Supervisory Board decided at its meeting on December 3, 2014, to
+propose to the 2015 Annual Shareholders' Meeting that Dr. Nathalie von Siemens
+and Dr. Norbert Reithofer be elected to succeed the two departing shareholder
+representatives, effective the end of the Annual Shareholders' Meeting. A successor
+to Mr. Huber will be appointed by court order.
+Peter Y. Solmssen left the Managing Board, effective December 31, 2013. Dr. Michael
+Süẞ left the Managing Board, effective May 6, 2014. The Supervisory Board appointed
+Lisa Davis a full member of the Managing Board, effective August 1, 2014.
+On behalf of the Supervisory Board, I would like to thank the members of the Manag-
+ing Board as well as the employees and employee representatives of Siemens AG
+and all Group companies for their outstanding commitment and constructive coop-
+eration in fiscal 2014.
+For the Supervisory Board
+The Audit Committee met six times in fiscal 2014. In the presence of the indepen-
+dent auditors as well as the President and Chief Executive Officer and the Chief
+Financial Officer, the Committee discussed the financial statements and the Com-
+bined Management Report for Siemens AG and the Siemens Group. In addition,
+the Audit Committee addressed the half-year and quarterly financial reports and,
+in the presence of the independent auditors, discussed their audit reviews. The
+Committee recommended that the Supervisory Board propose to the Annual Share-
+holders' Meeting the election of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft
+as the independent auditors. The Committee appointed the independent auditors
+for fiscal 2014, defined the audit focal points and determined the auditors' fee.
+The Committee monitored the independence and qualifications of the independent
+auditors. Furthermore, the Audit Committee dealt with the Company's financial
+reporting and risk management systems and with the effectiveness, resources
+and findings of the internal audit as well as with reports concerning potential
+and pending legal disputes.
+дамал Сложие
+Chairman
+me
+125
+|||A.4 The Siemens Share/Investor Relations
+Change in the value of an investment in Siemens shares in fiscal 2014 (with dividends reinvested; indexed)
+in % September 30, 2013
+125
+120
+115
+110
+105
+100
+95
+90
+Dr. Gerhard Cromme
+The Innovation and Finance Committee (formerly the Finance and Investment
+Committee) met four times and made one decision by written circulation. The
+focuses of its meetings included the Committee's recommendation regarding the
+budget for fiscal 2014 as well as the preparation and/or approval of investment and
+divestment projects. In addition, the Committee intensively addressed the Company's
+innovation focuses.
+The Compensation Committee met six times in fiscal 2014. The Committee prepared
+proposals for the Supervisory Board regarding the implementation of the new
+recommendations of the German Corporate Governance Code as well as the simpli-
+fication of the Managing Board remuneration system as of fiscal 2015. In addition,
+the Compensation Committee prepared, in particular, proposals for the full Super-
+visory Board regarding the determination of targets for variable compensation, the
+determination and review of the appropriateness of Managing Board compensation
+and the approval of the Compensation Report.
+The Mediation Committee was not required to meet in fiscal 2014.
+At our meeting on November 27, 2013, we discussed the financial statements and
+the Combined Management Report for Siemens AG and the Siemens Group as of
+September 30, 2013, as well as the agenda for the Annual Shareholders' Meeting on
+January 28, 2014, and the Annual Report for 2013, including the Report of the Super-
+visory Board and the Corporate Governance Report. At this meeting, we approved
+the termination by mutual consent of Peter Y. Solmssen's appointment as a full
+member of the Managing Board, effective December 31, 2013, as well as the termina-
+tion agreement regarding his Managing Board employment contract. Responsibility
+for Legal & Compliance was transferred to Joe Kaeser. On the recommendation of
+the Compensation Committee, we approved the targets for Managing Board com-
+pensation for fiscal 2014. The Infrastructure & Cities Sector provided us with a
+status report on its current business situation. The Managing Board also reported
+to us on Operational Excellence at Siemens.
+At our meeting on January 27, 2014, the Managing Board reported to us on the Com-
+pany's business and financial position following the conclusion of the first quarter.
+We also discussed the Annual Shareholders' Meeting to be held on January 28, 2014.
+At extraordinary meetings on April 29, 2014, and June 15, 2014, we dealt with the
+submission of a bid to Alstom. Even though our offer was not accepted, it demon-
+strated the Managing Board's and Supervisory Board's capacity to act and showed
+that our Company can respond quickly and decisively to changes in its competitive
+environment.
+At our meeting on May 6, 2014, we discussed Vision 2020 and the related reorien-
+tation of the Company's organization structure. In this connection, we approved
+a reassignment of responsibilities in the Managing Board. We approved the
+termination by mutual consent of Dr. Michael Süß's appointment as a member of
+the Managing Board as well as the termination agreement regarding his Managing
+Board employment contract. Lisa Davis was appointed a full member of the Managing
+Board, effective August 1, 2014. We also approved the exchange of Managing Board
+responsibilities between Klaus Helmrich and Prof. Dr. Siegfried Russwurm, effective
+October 1, 2014 - in particular, the transfer of the function of Labor Director. In
+addition, we discussed the Company's business and financial position following
+the conclusion of the second quarter. At this meeting, we approved the acquisition
+of Rolls-Royce's aero-derivative gas turbine and compressor business and the
+contribution of key parts of our Metals Technologies Business Unit to a joint venture
+with the Japanese company Mitsubishi-Hitachi Metals Machinery, Inc.
+At our meeting on July 30, 2014, the Managing Board reported on the Company's
+business and financial position following the conclusion of the third quarter as well
+as on the status of the implementation of Vision 2020. On the recommendation of
+the Supervisory Board's Compliance Committee, we approved the settlement agree-
+ment with former Managing Board member Heinz-Joachim Neubürger and decided
+to submit the agreement to the Annual Shareholders' Meeting for approval. We also
+dealt with the planned sale of our Health Services Business Unit to Cerner Corpora-
+tion of the U.S. Following the conclusion of negotiations with Cerner, we approved
+the transaction on August 6, 2014. Jim Hagemann Snabe did not take part in these
+discussions and, as a precaution, abstained from voting on the proposal in order to
+preclude any appearance of a conflict of interest.
+The Supervisory Board has reviewed the efficiency of its activities with the help of
+an external consultant. The results of this review were presented and discussed at
+our meeting on July 30, 2014. The review confirmed that the members of the Super-
+visory Board were independent and highly competent. The wish was expressed that
+this situation continue to be ensured in the future. Cooperation within the Super-
+visory Board was assessed as open and constructive. The Innovation and Finance
+Committee had been previously repositioned to better meet the Company's future
+technological challenges. This committee will, among other things, consider
+strategically important technological issues in order to further strengthen technol-
+ogy and innovation. As suggested by the efficiency review, reporting to the full
+Supervisory Board on technology, innovation and risk management will also be
+intensified.
+At our extraordinary meeting on September 21, 2014, we approved the Managing
+Board's decisions to acquire the Dresser-Rand Group, which is listed on the
+New York Stock Exchange, and to sell our 50% stake in BSH Bosch und Siemens
+Hausgeräte GmbH (BSH) to co-owner Robert Bosch GmbH.
+At our meeting on September 24, 2014, the Managing Board reported to us on the
+state of the Company shortly before the end of fiscal 2014. On the recommendation
+of the Compensation Committee, we adjusted and simplified the Managing Board
+remuneration system, effective the beginning of fiscal 2015. We also reviewed and
+adjusted the amount of Managing Board compensation. A detailed explanation
+of the new remuneration system is available in chapter → B.4 COMPENSATION REPORT
+on pages 161-162 of this Annual Report.
+→ B.4
+SEE PAGES
+161-162
+121
+→ B.1
+SEE PAGES
+132-136
+→ B.2
+SEE PAGE
+136
+→ D.7
+SEE PAGES
+330-333
+Corporate Governance Code
+-
+We've discussed the implementation of the German Corporate Governance Code.
+At our meeting on May 6, 2014, we approved an interim update to our Declaration
+of Conformity with the Code, in which a temporary deviation from one of the
+Code's recommendations was explained. This deviation resulted from the fact
+that contrary to Section 5.4.5, para. 1, sentence 2 of the German Corporate Gover-
+nance Code - Jim Hagemann Snabe, in his capacity as a member of SAP's Executive
+Board, briefly held supervisory board positions in four external, publicly listed
+companies. Jim Hagemann Snabe resigned his position on SAP's Executive Board,
+effective May 21, 2014. At our meeting on September 24, 2014, we decided to issue
+an unqualified Declaration of Conformity in accordance with Section 161 of the
+German Stock Corporation Act (Aktiengesetz), whereby the Company complies -
+and will continue to comply – with the recommendations of the German Corporate
+Governance Code. Information on corporate governance at Siemens is available in
+chapter → B.1 CORPORATE GOVERNANCE REPORT on pages 132-136 of this Annual Report.
+Our Declarations of Conformity have been made permanently available to our
+shareholders on our website. The current Declaration of Conformity is available in
+chapter → B.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
+COMMERCIAL CODE on page 136 of this Annual Report.
+Work in the Supervisory Board committees
+To ensure the efficiency of its work, the Supervisory Board has established seven
+standing committees, which prepare proposals and issues to be dealt with at the
+Board's plenary meetings. The Supervisory Board's decision-making powers have
+also been delegated to these committees within the permissible legal framework.
+The committee chairpersons report to the Supervisory Board on their committees'
+work at the subsequent Board meetings. The members of the individual Super-
+visory Board committees, the number of committee meetings and the number of
+committee decisions are set out in chapter → D.7 SUPERVISORY BOARD AND MANAGING
+BOARD on pages 330-333 of this Annual Report.
+The Chairman's Committee met seven times in fiscal 2014. It also made one deci-
+sion by written circulation. Between meetings, I discussed topics of major impor-
+tance with the members of the Chairman's Committee. The Committee concerned
+itself, in particular, with personnel topics and corporate governance issues – for
+example, the preparation of the efficiency review - as well as with the assumption by
+Managing Board members of positions at other companies and institutions.
+The Nominating Committee met once in fiscal 2014 and made one decision by
+written circulation. The members of the Committee concerned themselves with
+longer-term succession planning for the Supervisory Board also outside Committee
+meetings. In addition, the Nominating Committee prepared recommendations
+regarding the candidates to be proposed to the Supervisory Board for a by-election
+of shareholder representatives at the Annual Shareholders' Meeting on January 27,
+2015, and was supported in this process by an external personnel consultant.
+In searching for and evaluating succession candidates, the Nominating Committee
+took into account the requirements of the German Stock Corporation Act,
+the German Corporate Governance Code and the Bylaws for the Supervisory Board
+122
+as well as the goals that the Supervisory Board had set for its own composition,
+giving particular consideration to the goal of increasing the number of women on
+the Supervisory Board if possible and ensuring broad industry and technology
+expertise as emphasized by the Supervisory Board in its efficiency review.
+The Compliance Committee met five times in fiscal 2014. It discussed the quarterly
+reports and the annual report submitted by the Chief Compliance Officer.
+The Committee also concerned itself with a review of the circumstances relating to
+a pay increase that had been granted to the former Chairman of the Central Works
+Council, Lothar Adler, at the beginning of 2009. As a precaution, Mr. Adler did
+not participate in the discussions of this matter in order to preclude any appearance
+of a conflict of interest. The Compliance Committee recommended that the
+Supervisory Board approve the settlement agreement with former Managing Board
+member Heinz-Joachim Neubürger and present the agreement to the Annual
+Shareholders' Meeting for its approval.
+Siemens
+120
+DAX®
+September 30, 2014
+Dividend per share
+Dividend yield²
+FY 2014
+FY 2013
+Dr. Gerhard Cromme
+FY 2011
+FY 2010
+in €
+in %
+3.301
+3.5
+Ex-dividend date
+Net income (as reported)
+in millions of €
+Fiscal year
+Jan. 28, 2015
+5,507
+3.00
+3.6
+Jan. 24, 2013
+4,590
+3.00
+3.9
+2.70
+2.9
+Jan. 25, 2012
+6,321
+Jan. 26, 2011
+4,068
+Total dividend payout
+Payout ratio4
+in millions of €
+in %
+2,7063
+49
+2,533
+57
+3.00
+3.0
+Jan. 29, 2014
+4,409
+| Dividend
+Combined Management Report
+171 | C
+The Siemens share price developed positively during fiscal 2014
+in a market environment strongly impacted by economic and
+political factors. In the first four months, European stock mar-
+kets and the Siemens share price rose substantially due to un-
+expectedly positive economic data. After the Siemens share
+achieved its high for the year of €101.35 in January 2014, stock
+markets initially began to decline in February and then moved
+sideways in the following months in a volatile stock market
+environment. On September 30, 2014, the Siemens share
+closed at €94.37, a gain of 6% compared to September 30, 2013.
+-
+The Managing Board and the Supervisory Board will propose
+a dividend payment of €3.30 per share for fiscal 2014. Represent-
+ing a planned payout ratio of 49%, this proposal ensures - in
+accordance with our One Siemens dividend policy – that our
+shareholders participate adequately in the Company's profit
+development. In May 2014, we launched a share buyback pro-
+gram of up to €4 billion. By the end of fiscal 2014, we'd acquired
+shares with a total value corresponding to about €1.1 billion.
+Siemens AG continues to have a very sound financial basis. In
+an environment in which the ratings of many countries have
+come under pressure, the Company continues to enjoy good
+investment-grade credit ratings.
+A.4.1 Development of the Siemens share
+Over the entire fiscal year, Siemens stock performed well in
+the market environment, closing at €94.37 per share on
+September 30, 2014. For shareholders who reinvested their
+dividends, this amounted to a gain of 9.3% (fiscal 2013: a gain
+of 22.8%, including the proceeds from the OSRAM spinoff)
+compared to the price on September 30, 2013. The develop-
+ment of the Siemens share price was slightly below the perfor-
+mance of the leading German stock exchange index, the
+DAX (which rose 10.2%), and the leading international index,
+MSCI World (which advanced 12.2%).
+Long-term performance of Siemens shares compared
+with leading indices (average annual performance with dividends
+and the corresponding value of the OSRAM spinoff reinvested)
+Ten-year period
+Siemens
+DAX®
+MSCI World
+7.9%
+9.3%
+7.1%
+FY 2005 - FY 2014
+The strength of the Siemens share is also illustrated by a long-
+term comparison: the assets of an investor who acquired
+Siemens stock worth €1,000 at the beginning of fiscal 2005
+and reinvested the dividends and the corresponding value of
+the OSRAM spinoff in additional Siemens shares would have
+increased to €2,147 by the end of fiscal 2014. This annual
+return of 7.9% is above the results for MSCI World (7.1%) but
+below those for the DAX 30 (9.3%).
+108 A.
+To our Shareholders
+126
+108 A.1
+Chairman of the
+Supervisory Board
+Letter to our Shareholders
+114 A.2
+Managing Board of Siemens AG
+118 A.3
+Report of the Supervisory Board
+126 A.4
+The Siemens Share/Investor Relations
+131 | B.
+Corporate Governance
+MSCI World
+FY 2012
+Compensation Report
+We take our responsibility to maintain an intensive dialogue
+with the capital market very seriously. Cultivating close con-
+tacts with our shareholders, we keep them informed of all
+major developments throughout Siemens. As part of our inves-
+tor relations work, we provide information on our Company's
+development in quarterly, semiannual and annual reports. Our
+CEO and CFO also maintain close contact with investors
+through roadshows and conferences. In addition, Siemens
+holds Capital Market Days, at which Company management
+informs investors and analysts about our business strategy
+and market environment.
+Consolidated Financial Statements
+337 | E.
+Additional Information
+135
+-
+meeting through electronic communications – in particular, via
+the Internet and enables shareholders who are unable to
+attend the meeting to vote by proxy. Furthermore, shareholders
+may exercise their right to vote in writing or by means of elec-
+tronic communications (absentee voting). The Managing Board
+may enable shareholders to participate in the Annual Share-
+holders' Meeting without the need to be present at the venue
+and without a proxy and to exercise some or all of their rights
+fully or partially by means of electronic communications.
+Shareholders may submit proposals regarding the proposals of
+the Managing and Supervisory Boards and may contest deci-
+sions of the Annual Shareholders' Meeting. Shareholders
+owning Siemens stock with an aggregate notional value of
+€100,000 or more may also demand the judicial appointment
+of special auditors to examine specific issues. The reports, doc-
+uments and information required by law, including the Annual
+Report, may be downloaded from our website. The same
+applies to the agenda for the Annual Shareholders' Meeting
+and to any counterproposals or shareholders' nominations that
+require disclosure.
+As part of our investor relations activities, we inform our inves-
+tors comprehensively about developments within the Company.
+For communication purposes, Siemens makes extensive use of
+the Internet. We publish quarterly, half-yearly and annual
+reports, earnings releases, ad hoc announcements, analyst pre-
+sentations, shareholder letters and press releases as well as the
+financial calendar for the current year, which contains the pub-
+lication dates of significant financial communications and the
+date of the Annual Shareholders' Meeting, at WWW.SIEMENS.
+COM/INVESTORS. Details of our investor relations activities are
+provided in chapter → A.4 THE SIEMENS SHARE/INVESTOR RELATIONS
+on pages 126-129 of this Annual Report.
+Our Articles of Association, the Bylaws for the Supervisory
+Board, the Bylaws for the most important Supervisory Board
+committees, the Bylaws for the Managing Board, all our Decla-
+rations of Conformity with the Code and a variety of other
+corporate-governance-related documents are posted on our
+website at: WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
+|| | B.2 Corporate Governance statement pursuant to Section 289a
+of the German Commercial Code
+The Corporate Governance statement pursuant to Section 289a
+of the German Commercial Code (Handelsgesetzbuch) is an
+integral part of the Combined Management Report. In accord-
+ance with Section 317 para. 2 sentence 3 of the German
+Commercial Code, the disclosures made within the scope of
+Section 289a of the German Commercial Code are not subject
+to the audit by the auditors.
+DECLARATION OF CONFORMITY WITH THE GERMAN
+CORPORATE GOVERNANCE CODE
+The Managing Board and the Supervisory Board of Siemens AG
+approved the following Declaration of Conformity pursuant to
+Section 161 of the German Stock Corporation Act as of Octo-
+ber 1, 2014:
+"Declaration of Conformity by the Managing Board and the
+Supervisory Board of Siemens Aktiengesellschaft with the
+German Corporate Governance Code
+Siemens AG complies and will continue to comply with
+the currently applicable recommendations of the German
+Corporate Governance Code ("Code"), published by the
+Federal Ministry of Justice in the official section of the
+Federal Gazette (Bundesanzeiger).
+Since making its last Declaration of Conformity dated May 7,
+2014, Siemens AG has complied with the recommendations
+of the Code with the one exception noted therein (contrary
+to Section 5.4.5, paragraph 1, sentence 2 of the Code, Jim
+Hagemann Snabe, who is a member of the Supervisory
+Board of Siemens AG and a former member of the Executive
+Board of SAP AG, held four supervisory board positions at
+other publicly listed companies). This exception has been
+eliminated since Mr. Snabe resigned his position on the
+Executive Board of SAP AG, effective May 21, 2014.
+Berlin and Munich, October 1, 2014
+Siemens Aktiengesellschaft
+Compensation Report
+(part of the Combined Management Report)
+165 B.5
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+138 B.3
+144 B.4
+247 | D.
+Corporate Governance Report
+136
+Corporate Governance
+131 B.
+108 | A. To our Shareholders
+The Supervisory Board"
+The Managing Board
+132 B.1
+136 B.2
+171 | C. Combined Management Report
+Shareholders exercise their rights in the Annual Shareholders'
+Meeting. An ordinary Annual Shareholders' Meeting normally
+takes place within the first four months of each fiscal year. The
+Annual Shareholders' Meeting decides, among other things, on
+the appropriation of unappropriated net income, the ratifica-
+tion of the acts of the Managing and Supervisory Boards, and
+the appointment of the independent auditors. Amendments to
+the Articles of Association and measures that change the Com-
+pany's capital stock are approved at the Annual Shareholders'
+Meeting and are implemented by the Managing Board. The
+Managing Board facilitates shareholder participation in this
+B.1.4 Annual Shareholders' Meeting
+and investor relations
+Corporate Governance Report
+132 B.1
+136 B.2
+134
+131 B.
+108 | A. To our Shareholders
+The composition of the Supervisory Board and its committees
+is presented in chapter → D.7 SUPERVISORY BOARD AND MANAGING
+BOARD on pages 330-333 of this Annual Report. Information on
+the work of the Supervisory Board is provided in the → A.3
+REPORT OF THE SUPERVISORY BOARD on pages 118-125. The com-
+pensation paid to the members of the Supervisory Board
+is explained in chapter → B.4 COMPENSATION REPORT on pages
+163-164.
+144 B.4
+-
+The Mediation Committee, which comprises the Chairman of
+the Supervisory Board, the First Deputy Chairman (who is
+elected in accordance with the German Codetermination Act),
+one of the Supervisory Board's shareholder representatives and
+one of the Supervisory Board's employee representatives, sub-
+mits proposals to the Supervisory Board in the event that the
+Supervisory Board cannot reach the two-thirds majority
+required for the appointment or dismissal of a Managing Board
+member.
+The Nominating Committee, which comprises the Chairman
+and the Second Deputy Chairman of the Supervisory Board as
+well as two further members to be elected by the shareholder
+representatives of the Supervisory Board from among their own
+number, is responsible for making recommendations to the
+Supervisory Board on suitable candidates for election as share-
+holder representatives on the Supervisory Board by the Annual
+Shareholders' Meeting. In preparing these recommendations,
+the objectives specified by the Supervisory Board regarding its
+composition are to be taken into account as well as the required
+knowledge, abilities and experience of the proposed candi-
+dates; attention shall also be paid to independence, diversity
+and, in particular, the appropriate participation of women.
+representatives. The Compliance Committee concerns itself, in
+particular, with the Company's adherence to statutory provi-
+sions, official regulations and internal Company policies.
+The Compliance Committee comprises the Chairman of the
+Supervisory Board, three of the Supervisory Board's shareholder
+representatives and four of the Supervisory Board's employee
+-
+The Audit Committee comprises the Chairman of the Super-
+visory Board, three of the Supervisory Board's shareholder
+representatives and four of the Supervisory Board's employee
+representatives. According to the German Stock Corporation
+Act, the Audit Committee must include at least one indepen-
+dent Supervisory Board member with knowledge and experi-
+ence in the application of accounting principles or the audit-
+ing of financial statements. The Chairman of the Audit
+Committee, Dr. Hans Michael Gaul, fulfills these statutory re-
+quirements. The Audit Committee oversees, in particular, the
+accounting process and conducts a preliminary review of the
+Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Combined
+Management Report. On the basis of the independent audi-
+tors' report on their audit of the annual financial statements,
+the Audit Committee makes, after its preliminary review, rec-
+ommendations regarding Supervisory Board approval of the
+Annual Financial Statements of Siemens AG and the Consoli-
+dated Financial Statements of the Siemens Group. In addition
+to the work performed by the independent auditors, the Audit
+Committee discusses the Company's quarterly financial state-
+ments and half-year financial reports, which are prepared by
+the Managing Board, as well as the report on the auditors' re-
+view of the quarterly financial statements and the half-year fi-
+nancial report (condensed financial statements and interim
+management report). It concerns itself with the Company's
+risk monitoring system and oversees the effectiveness of the
+internal control system as this relates, in particular, to finan-
+cial reporting, the risk management system and the internal
+audit system. The Audit Committee receives regular reports
+from the Internal Audit Department. It prepares the Supervi-
+sory Board's recommendation to the Annual Shareholders'
+Meeting concerning the election of the independent auditors
+and submits the corresponding proposal to the Supervisory
+Board. It awards the audit contract to the independent auditors
+elected by the Annual Shareholders' Meeting and monitors the
+independent audit of the financial statements – including, in
+particular, the auditors' independence, professional expertise
+and services.
+The Innovation and Finance Committee comprises the Chair-
+man of the Supervisory Board, three of the Supervisory Board's
+shareholder representatives and four of the Supervisory Board's
+employee representatives. Based on the Company's overall
+strategy, the Committee discusses, in particular, the Company's
+focuses of innovation and prepares the Supervisory Board's
+discussions and resolutions regarding questions relating to the
+Company's financial situation and structure - including annual
+planning (budget) as well as the Company's fixed asset
+investments and its financial measures. In addition, the Inno-
+vation and Finance Committee has been authorized by the
+Supervisory Board to decide on the approval of transactions
+and measures that require Supervisory Board approval and
+have a value of less than €600 million.
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+138 B.3
+165 B.5
+WWW.SIEMENS.COM/DIRECTORS-DEALINGS.
+Pursuant to Section 15a of the German Securities Trading Act
+(Wertpapierhandelsgesetz), members of the Managing Board
+and the Supervisory Board are legally required to disclose the
+purchase or sale of shares of Siemens AG or of financial instru-
+ments based thereon if the total value of such transactions en-
+tered into by a board member or any closely associated person
+reaches or exceeds €5,000 in any calendar year. All transac-
+tions reported to Siemens AG in accordance with this require-
+ment have been duly published and are available on the
+Company's website
+-
+As of the same day, the Supervisory Board's current members
+held Siemens shares representing less than 0.01% (2013: less
+than 0.01%) of the capital stock of Siemens AG, which totaled
+881,000,000 shares. These figures do not include the 9,386,535
+(2013: 9,313,438) shares or 1.07% (2013: 1.06%) of the capital
+stock of Siemens AG, which totaled 881,000,000 shares, over
+which the von Siemens-Vermögensverwaltung GmbH (vSV),
+a German limited liability company, has voting control under
+powers of attorney based on an agreement between - among
+others members of the Siemens family, including Gerd von
+Brandenstein, and vSV. These shares are voted together by VSV
+based on proposals made by a family partnership established
+by the Siemens family or by one of its committees. Gerd von
+Brandenstein is the chairman of the executive committee and
+has a deciding vote in cases of deadlock.
+As of September 30, 2014, the Managing Board's current mem-
+bers held a total of 181,009 (2013: 216,560) Siemens shares
+representing 0.02% (2013: 0.02%) of the capital stock of
+Siemens AG, which totaled 881,000,000 shares.
+B.1.3 Share ownership and share
+transactions by members of the
+Managing and Supervisory Boards
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+The composition of the Managing Board and its committee is
+presented in chapter → D.7 SUPERVISORY BOARD AND MANAGING
+BOARD on pages 334-335 of this Annual Report. Information on
+the compensation paid to the members of the Managing Board
+is provided in the → B.4 COMPENSATION REPORT on pages 144-162.
+The Managing Board prepares the Company's quarterly finan-
+cial statements and the half-year financial reports, the Annual
+Financial Statements of Siemens AG, the Consolidated Finan-
+cial Statements of the Siemens Group and the Combined Man-
+agement Report of Siemens AG and the Siemens Group. In
+addition, the Managing Board must ensure that the Company
+adheres to statutory provisions, official regulations and internal
+Company policies (compliance) and works to achieve compli-
+ance with these provisions and policies within the Siemens
+Group. Further comprehensive information on the compliance
+program and related activities in fiscal 2014 is presented
+in chapter B.3 COMPLIANCE REPORT on pages 138-143 of this
+Annual Report. The Managing Board and the Supervisory Board
+cooperate closely for the benefit of the Company. The Manag-
+ing Board informs the Supervisory Board regularly, comprehen-
+sively and without delay on all issues of importance to the
+Company with regard to strategy, planning, business develop-
+ment, financial position, earnings, compliance and risks. When
+filling managerial positions at the Company, the Managing
+Board takes diversity into consideration and, in particular, aims
+for an appropriate consideration of women and internationality.
+As the Company's top management body, the Managing Board
+is committed to serving the interests of the Company and
+achieving sustainable growth in Company value. The members
+of the Managing Board are jointly responsible for the entire
+management of the Company and decide on the basic issues
+of business policy and corporate strategy as well as on the
+Company's annual and multi-year plans.
+B.1.2.2 MANAGING BOARD
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Compensation Report
+(part of the Combined Management Report)
+Currently, there is one Managing Board committee, the Equity
+and Employee Stock Committee. This committee comprises
+three members of the Managing Board and oversees, in particu-
+lar, the utilization of authorized capital in connection with the
+issuance of employee stock and the implementation of certain
+capital measures. It also determines the scope and conditions
+of the share-based compensation components and/or pro-
+grams for employees and managers (with the exception of the
+Managing Board).
+Supervisory Board's plenary meetings regarding the system of
+Managing Board compensation, including the implementation
+of this system in the Managing Board contracts, the definition
+of the targets for variable Managing Board compensation, the
+determination and review of the appropriateness of the total
+compensation of individual Managing Board members and the
+approval of the annual Compensation Report.
+INFORMATION ON
+Siemens voluntarily complies with the Code's non-binding
+suggestions, with the following exceptions:
+Management responsibility
+Prevent
+> Compliance risk management
+> Policies and procedures
+> Training and communication
+> Advice and support
+> Integration in personnel processes
+> Collective action
+Detect
+> Whistleblowing channels "Tell us"
+and ombudsman
+> Compliance controls
+> Monitoring and compliance reviews
+> Compliance audits
+> Compliance investigations
+Respond
+> Consequences for misconduct
+> Remediation
+A.4.7 Siemens on the capital market
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+(part of the Combined Management Report)
+165 B.5
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+138 B.3
+These priorities, which guided our activities in fiscal 2014, in-
+clude the conclusion of project- and market-specific Collective
+Action agreements and the launch of the second funding
+round of the Siemens Integrity Initiative. We have also carried
+out a project to reinforce our business-partner compliance due
+144 B.4
+132 B.1
+136 B.2
+138
+Corporate Governance
+131 B.
+108 | A. To our Shareholders
+> Global case tracking
+Corporate Governance Report
+> Responsibility for data privacy: we will assume new
+responsibilities in the area of data privacy.
+> Manage risk & assurance: we want to continue to provide our
+businesses with the appropriate level of assurance within
+our Compliance System.
+> Stand for integrity: Our aim is to support business leadership
+in its responsibility for compliance and to execute our Collec-
+tive Action strategy focused on tangible business benefits.
+> Committed to business: we want to foster trustful collabora-
+tion between the Compliance Organization and our busi-
+nesses as well as strengthen the market and customer focus
+of compliance.
+In the 167 years of its existence, our Company has built an
+excellent reputation around the world. Technical performance,
+innovation, quality reliability, and international engagement
+have made Siemens one of the leading companies in electron-
+ics and electrical engineering. It is top performance with the
+highest ethics that has made Siemens strong. This is what the
+Company should continue to stand for in the future.
+and Business Conduct Guidelines
+Our Company's values
+Further Corporate Governance Practices applied beyond legal
+requirements are contained in our Business Conduct Guidelines.
+WWW.SIEMENS.COM/289A.
+A general description of the functions and operation of the
+Managing Board and the Supervisory Board can be found under
+the heading → B.1.2 MANAGEMENT AND CONTROL STRUCTURE under
+chapter B.1 CORPORATE GOVERNANCE REPORT on pages 132-135
+and via the Internet on: WWW.SIEMENS.COM/289A. Further
+details regarding the operation of the Managing Board and
+Supervisory Board can be derived from the description of the
+committees as well as from the bylaws for the corporate bodies
+concerned. These documents can be found at:
+The Business Conduct Guidelines provide the ethical and legal
+framework within which we want to maintain successful activi-
+ties. They contain the basic principles and rules for our conduct
+within our Company and in relation to our external partners and
+the general public. They set out how we meet our ethical and
+legal responsibility as a company and give expression to our cor-
+porate values of being "Responsible - Excellent - Innovative."
+WWW.SIEMENS.COM/289A.
+OPERATION OF THE MANAGING BOARD, THE
+SUPERVISORY BOARD, AND COMPOSITION AND
+OPERATION OF THEIR COMMITTEES
+WWW.SIEMENS.COM/289A.
+The Code can be downloaded from the Internet at:
+Since the Managing Board appointments of 2011, the sugges-
+tion in Section 5.1.2 para. 2 sentence 1 of the Code that the
+maximum possible appointment period of five years should not
+be the rule for first-time appointments to a management board
+has not been followed.
+-
+Pursuant to Section 3.7 para. 3 of the Code, in the case of a
+takeover offer, a management board should convene an ex-
+traordinary general meeting at which shareholders discuss the
+takeover offer and may decide on corporate actions. The con-
+vening of a shareholders' meeting - even taking into account
+the shortened time limits stipulated in the German Securities
+Acquisition and Takeover Act (Wertpapiererwerbs- und Über-
+nahmegesetz) – is an organizational challenge for large pub-
+licly listed companies. It appears doubtful whether the associ-
+ated effort is justified in cases where no relevant decisions by
+the shareholders' meeting are intended. Therefore, extraordi-
+nary shareholders' meetings shall be convened only in appro-
+priate cases.
+The composition of the committees of the Managing and Super-
+visory Boards is given under chapter →D.7 SUPERVISORY BOARD
+AND MANAGING BOARD on pages 330-335, respectively of the
+Annual Report, as is a description of the composition of the
+Managing Board and the Supervisory Board. The compositions
+can be accessed via the Internet on:
+CORPORATE GOVERNANCE PRACTICES
+Suggestions of the Code
+The Business Conduct Guidelines can be downloaded from the
+Internet on: www.SIEMENS.COM/289A.
+247 | D.
+For fiscal 2014, we defined the following compliance priorities:
+Our compliance priorities provide the basis for the ongoing
+development and further improvement of our Compliance
+System. In this connection, we take into account and aim to
+fulfill continuously evolving requirements in the compliance
+field, which reflect both our own work and the changing mar-
+ket conditions and compliance risks of our business activities.
+B.3.1 Compliance priorities for fiscal 2014
+Our activities in the World Economic Forum include the Com-
+pany's participation in the Pact Against Corruption Initiative
+and the Siemens General Counsel's membership in the Global
+Agenda Council on Transparency & Anti-Corruption.
+We actively support the enactment of the United Nations Con-
+vention against Corruption and the Anti-Bribery Convention of
+the Organization for Economic Co-operation and Development
+(OECD), which like the ten principles of the United Nations
+Global Compact - provide important guidance for our entire
+organization. We are also actively involved in the Global Com-
+pact. At the end of 2013, our Chief Compliance Officer was
+elected Chairman of the Task Force on Anti-Bribery/Corruption
+of the Business and Industry Advisory Committee to the OECD.
+| Siemens Compliance System
+Our Compliance System aims to ensure that all our worldwide
+business practices are in line with these guidelines and in com-
+pliance with all applicable laws. To serve this purpose and pro-
+vide the Company with reliable protection against compliance
+risks, our Compliance System has three pillars: Prevent, Detect
+and Respond. We are continuously working to further strengthen
+compliance in our Company and to combat corruption together
+with other organizations (Collective Action).
+171 | C. Combined Management Report
+Our Business Conduct Guidelines describe how we fulfill our
+compliance-related responsibilities. They are also an expression
+of our values and lay the foundation for our own internal regu-
+lations. Our Business Conduct Guidelines are binding for all
+employees worldwide.
+For us at Siemens, integrity means acting in accordance with
+our values - responsible, excellent and innovative - wherever
+we do business. A key element of integrity is compliance:
+adherence to the law and to our own internal regulations. We
+have zero tolerance for corruption and violations of the princi-
+ples of fair competition - and where these do occur, we rigor-
+ously respond.
+|| | B.3 Compliance Report
+137
+Additional Information
+337 | E.
+Consolidated Financial Statements
+The Compliance Report is an integral part of the Combined
+Management Report.
+133
+Corporate Governance
+Consolidated Financial Statements
+Fostering an ownership culture is a key pillar of Vision 2020,
+which is sustainably supported, among other things, by em-
+ployee share ownership. Siemens intends to increase the num-
+ber of employee shareholders from today's figure of about
+140,000 to over 200,000. To strengthen participation by em-
+ployees around the world in our Company's success, we're
+launching a new profit-sharing scheme for fiscal 2015. Called
+Siemens Profit Sharing, the scheme offers employees below
+senior management level worldwide an opportunity to benefit
+from the Company's outstanding success by receiving shares
+from Siemens free of charge.¹
+We already enable our workforce to participate in a variety of
+share-based programs: the Siemens Stock Awards, the Share
+Matching Program (with its underlying Share Matching Plan,
+Monthly Investment Plan and Base Share Program) and the
+Jubilee Share Program. In fiscal 2014, 3,584,370 shares were
+issued to service these programs. Non-vested grants under the
+various programs will result in additional share issuances
+to employees in the future. For more detailed information
+on share-based payment, please see → NOTE 32 SHARE-BASED
+PAYMENT in D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+on pages 306-309 of this Annual Report.
+In addition to our share programs, we've established Share
+Ownership Guidelines. Applicable Company-wide, these guide-
+lines require members of the Managing Board of Siemens AG
+and other senior executives of the Siemens Group to hold an
+interest in Siemens equal in value to between 50% and 300%
+of their base compensation for the period in which they hold
+office.
+1 Like Siemens' existing share programs, Siemens Profit Sharing is a voluntary and
+discretionary benefit for eligible employees. The issuance of a new tranche or the
+distribution of the profit-sharing pool to employees in one or several fiscal years
+does not create a legal claim or right to issue a new tranche or to receive a distribu-
+tion in subsequent years. If a distribution in shares is not feasible or economically
+appropriate, an equivalent cash payment will be made.
+247
+Consolidated Financial Statements
+337 | E.
+| Additional Information
+129
+130
+Good corporate governance comprises
+responsible, value-based management
+and monitoring focused on long-term
+success. In this chapter, we present
+Siemens' Corporate Governance Report,
+discuss the Company's management
+and control structure, explain the
+remuneration of the Managing Board
+and the Supervisory Board and provide
+detailed insights into the takeover-
+relevant information of the Company.
+WWW.SIEMENS.COM/AR/CORPORATE-GOVERNANCE
+B.
+Corporate
+Governance
+132 | B.1
+132 B.1.1
+132 B.1.2
+135 B.1.3
+139 B.3.3
+Compliance Report (part of the
+Combined Management Report)
+Compliance priorities for fiscal 2014
+139 B.3.2 Compliance risk management
+Business partners and suppliers
+Compliance training
+| Management Report)
+Corporate Governance statement
+pursuant to Section 289a of
+the German Commercial Code
+(part of the Combined
+138 B.3.1
+138 | B.3
+A.4.8 Ownership culture/
+Stock-based programs
+136 | B.2
+144 B.4.1 Remuneration of members
+of the Managing Board
+163 B.4.2 Remuneration of members
+of the Supervisory Board
+Compensation Report
+(part of the Combined
+Management Report)
+144 | B.4
+Management and control structure
+Share ownership and share
+transactions by members of the
+Managing and Supervisory Boards
+Annual Shareholders' Meeting
+and investor relations
+Corporate Governance Report
+Declaration of Conformity pursuant
+to Section 161 of the German Stock
+Corporation Act
+135 B.1.4
+164 B.4.3 | Other
+We also provide extensive information online. Quarterly, semi-
+annual and annual financial reports, analyst presentations and
+press releases as well as our financial calendar for the current
+year which includes all major publication dates and the date
+of the Annual Shareholders' Meeting (please see → E.7 FINANCIAL
+CALENDAR on page 347 of this Annual Report) - are available at
+WWW.SIEMENS.COM/INVESTORS. For each quarter and each fiscal
+year, we also publish the Siemens Shareholder Letter, which is
+addressed primarily to our private investors and provides a
+brief summary of key developments during the previous quar-
+ter or fiscal year.
+4 To be proposed to the Annual Shareholders' Meeting.
+2 On the basis of outstanding shares.
+Number of shares issued
+Fiscal year-end
+90.33
+76.00
+89.06
+101.35
+88.71
+94.37
+in €
+in €
+in €
+(September 30)
+FY 20131
+Low
+High
+(Xetra closing price)
+Siemens stock price
+| Stock market information
+337 | E. Additional Information
+FY 2014¹
+140 B.3.4
+in millions
+Market capitalization²
+1 Fiscal year from October 1 to September 30.
+3.00
+3.304
+in €
+Dividend per share
+881
+75,078
+5.08
+5.03
+881
+6.31
+Diluted earnings per share³
+6.37
+in €
+Basic earnings per share³
+78,823
+in millions of €
+in €
+140 B.3.5
+3 Continuing and discontinued operations.
+141 B.3.7
+144 B.4
+Corporate Governance Report
+132 B.1
+136 B.2
+132
+Corporate Governance
+131 B.
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+108 | A. To our Shareholders
+> Taking the Company's international orientation into account,
+care shall also be taken to ensure that the Supervisory Board
+has an adequate number of members with extensive interna-
+tional experience. Our goal is to make sure that the present
+considerable share of Supervisory Board members with
+extensive international experience is maintained.
+> The composition of the Supervisory Board of Siemens AG
+shall be such that qualified control and advising for the
+Managing Board is ensured. The candidates proposed for
+election to the Supervisory Board shall have the expertise,
+skills and professional experience necessary to carry out the
+functions of a Supervisory Board member in a multinational
+company and safeguard the reputation of Siemens in public.
+In particular, care shall be taken in regard to the personality,
+integrity, commitment, professionalism and independence
+of the individuals proposed for election. The goal is to ensure
+that, in the Supervisory Board, as a group, all know-how and
+experience is available that is considered essential in view of
+Siemens' activities.
+The composition of the Supervisory Board is to be such that its
+members as a group have the knowledge, skills and profes-
+sional experience necessary to carry out its proper functions.
+For this reason, the Supervisory Board approved - taking into
+account the Code's recommendations - concrete objectives for
+its composition in fiscal 2013:
+The regular term of office of the members of the Supervisory
+Board will expire at the close of the Annual Shareholders'
+Meeting in 2018. Jim Hagemann Snabe – who was appointed
+by court order until the end of the Annual Shareholders'
+Meeting 2014 as successor to Dr. Josef Ackermann, who re-
+signed from the Supervisory Board effective September 30,
+2013 was elected a shareholder representative on the
+Supervisory Board at the Annual Shareholders' Meeting on
+January 28, 2014. Michael Sigmund and Olaf Bolduan were
+appointed to the Supervisory Board by court order to succeed
+the employee representatives Prof. Dr. Rainer Sieg and Lothar
+Adler, who resigned from the Supervisory Board effective
+February 28, 2014 and May 31, 2014, respectively.
+As required by the German Codetermination Act (Mitbestim-
+mungsgesetz), the Company's shareholders and its employees
+each select one-half of the Supervisory Board's twenty members.
+B.1.2.1 SUPERVISORY BOARD
+> In its election proposals, the Supervisory Board shall also
+pay particular attention to the appropriate participation of
+women. Qualified women shall already be included in the
+initial process of selecting potential candidates for new elec-
+tions or for the filling of Supervisory Board positions that
+have become vacant and shall be considered, as appropriate,
+in nominations. We have meanwhile been able to increase
+the number of women on our Supervisory Board to five.
+Our goal is to maintain and, if possible, to increase this
+number. It is also intended that - as is currently the case - at
+the minimum one woman should be a member of the Nomi-
+nating Committee.
+B.1.2 Management and control structure
+Siemens AG is subject to German corporate law. Therefore, it
+has a two-tier board structure, consisting of a Managing Board
+and a Supervisory Board.
+165 B.5
+Compensation Report
+Combined Management Report
+247 | D.
+141 B.3.6
+171 | C.
+The Compensation Committee, which comprises the mem-
+bers of the Chairman's Committee of the Supervisory Board as
+well as one of the Supervisory Board's shareholder representa-
+tives and one of the Supervisory Board's employee representa-
+tives, prepares, in particular, the proposals for decisions by the
+The Chairman's Committee, which comprises the Chairman
+and Deputy Chairmen of the Supervisory Board as well as one
+further employee representative elected by the Supervisory
+Board, makes proposals, in particular, regarding the appoint-
+ment and dismissal of Managing Board members and handles
+contracts with members of the Managing Board. In preparing
+recommendations on the appointment of Managing Board
+members, the Chairman's Committee takes into account the
+candidates' professional qualifications, international experience
+and leadership qualities, the age limit specified for Managing
+Board members, the Managing Board's long-range plans for suc-
+cession as well as its diversity and, in particular, the appropriate
+consideration of women. The Chairman's Committee concerns
+itself with questions regarding the Company's corporate gover-
+nance and prepares the resolutions to be approved by the Super-
+visory Board regarding the Declaration of Conformity with the
+Code - including the explanation of deviations from the Code -
+and regarding the approval of the Corporate Governance Report
+as well as the Report of the Supervisory Board to the Annual
+Shareholders' Meeting. Furthermore, the Chairman's Committee
+submits recommendations to the Supervisory Board regarding
+the composition of the Supervisory Board committees and de-
+cides whether to approve contracts and business transactions
+with Managing Board members and parties related to them.
+(part of the Combined Management Report)
+The Supervisory Board has seven committees, whose duties,
+responsibilities and procedures fulfill the requirements of the
+German Stock Corporation Act and the Code. The chairmen of
+these committees provide the Supervisory Board with regular
+reports on their committees' activities.
+The Supervisory Board oversees and advises the Managing
+Board in its management of the Company's business. At regular
+intervals, the Supervisory Board discusses business develop-
+ment, planning, strategy and the strategy's implementation.
+It reviews the Annual Financial Statements of Siemens AG and
+the Consolidated Financial Statements of the Siemens Group,
+the Combined Management Report of Siemens AG and the
+Siemens Group, and the proposal for the appropriation of net
+income. It approves the Annual Financial Statements of
+Siemens AG as well as the Consolidated Financial Statements
+of the Siemens Group, based on the results of the preliminary
+review conducted by the Audit Committee and taking into
+account the reports of the independent auditors. The
+Supervisory Board decides on the Managing Board's proposal
+-
+These objectives for the Supervisory Board's composition have
+been fully achieved: a considerable number of Supervisory
+Board members are currently engaged in international activi-
+ties and/or have many years of international experience. Since
+the Supervisory Board election in 2013, the Supervisory Board
+has had five female members. Dr. Nicola Leibinger-Kammüller
+is a member of the Nominating Committee. The Supervisory
+Board has an adequate number of independent members. In
+the opinion of the Supervisory Board, a minimum of 16 Super-
+visory Board members are independent in the meaning of Sec-
+tion 5.4.2 of the Code. Some Supervisory Board members
+hold or have held in the past fiscal year - high-ranking posi-
+tions at other companies with which Siemens does business.
+Transactions between Siemens and such companies are carried
+out on an arm's length basis. We believe that these trans-
+actions do not compromise the independence of the Super-
+visory Board members in question.
+> The age limitation established in the Bylaws for the Super-
+visory Board will be taken into consideration. In addition, no
+more than two former members of the Managing Board of
+Siemens AG shall belong to the Supervisory Board.
+> An adequate number of independent members shall belong
+to the Supervisory Board. Material and not only temporary
+conflicts of interest, such as organizational functions or advi-
+sory capacities with major competitors of the company, shall
+be avoided. Under the presumption that the mere exercise of
+Supervisory Board duties as an employee representative
+gives no cause to doubt the compliance with the indepen-
+dence criteria pursuant to Section 5.4.2 of the Code, the
+Supervisory Board shall have a minimum of 16 members who
+are independent in the meaning of the Code. In any case, the
+Supervisory Board shall be composed in such a way that a
+number of at least six independent shareholder representa-
+tives in the meaning of Section 5.4.2 of the Code is achieved.
+In addition, the Supervisory Board members shall have suffi-
+cient time to be able to devote the necessary regularity and
+diligence to their mandate.
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+for the appropriation of net income and the Report of the
+Supervisory Board to the Annual Shareholders' Meeting. In
+addition, the Supervisory Board or the Compliance Committee,
+which is described in more detail below, concern themselves
+with the Company's adherence to statutory provisions, official
+regulations and internal Company policies (compliance). The
+Supervisory Board also appoints the members of the Managing
+Board and determines each member's portfolios. Important
+Managing Board decisions - such as those regarding major
+acquisitions, divestments, fixed asset investments and finan-
+cial measures - require Supervisory Board approval, unless the
+Bylaws for the Supervisory Board specify that such authority be
+delegated to the Innovation and Finance Committee of the
+Supervisory Board. In the Bylaws for the Managing Board, the
+Supervisory Board has established the rules that govern the
+Managing Board's work.
+> Since the Managing Board appointments of 2011, the sugges-
+tion in Section 5.1.2 para. 2 sentence 1 of the Code that the
+maximum possible appointment period of five years should
+not be the rule for first-time appointments to a management
+board has not been followed.
+138 B.3
+165 B.5.1
+165 B.5.3 Equity interests exceeding 10%
+of voting rights
+Restrictions on voting rights
+or transfer of shares
+Takeover-relevant information
+(pursuant to Sections 289 para. 4
+and 315 para. 4 of the German
+Commercial Code) and explanatory
+report (part of the Combined
+Management Report)
+Composition of common stock
+165 B.5.2
+141 B.3.8
+165 | B.5
+165 B.5.5 System of control of any employee
+share scheme where the control rights
+are not exercised directly by the
+employees
+143 B.3.10 Further information and
+legal proceedings
+Siemens Integrity Initiative
+Collective Action and
+Company-wide award for integrity
+and compliance
+-
+Compliance indicators
+Data privacy
+142 B.3.9
+Our revised compliance priorities -
+Guidance until 2020
+166 B.5.6 Legislation and provisions of the
+Articles of Association applicable to
+the appointment and removal of
+members of the Managing Board
+and governing amendment to the
+Articles of Association
+165 B.5.4 Shares with special rights conferring
+powers of control
+Siemens AG complies with all the currently applicable recom-
+mendations of the German Corporate Governance Code (Code)
+without exception.
+MENT PURSUANT TO SECTION 289A OF THE GERMAN COMMERCIAL CODE
+The Managing Board and the Supervisory Board of Siemens AG
+have discussed compliance with the Code's recommendations
+in detail. Based on their deliberations, the boards have
+approved the annual Declaration of Conformity as of October 1,
+2014. The Declaration of Conformity is posted on our website
+and presented in chapter → B.2 CORPORATE GOVERNANCE STATE-
+166 B.5.7 Powers of the Managing Board to
+issue and repurchase shares
+B.1.1 Declaration of Conformity
+pursuant to Section 161 of the German
+Stock Corporation Act
+|| | B.1 Corporate Governance Report
+Siemens voluntarily complies with the Code's non-binding
+suggestions, with the following exceptions:
+B. Corporate Governance
+or employees in the event of a
+takeover bid
+members of the Managing Board
+169 B.5.9 Compensation agreements with
+change of control of the Company
+following a takeover bid
+> Pursuant to Section 3.7 para. 3 of the Code, in the case of a
+takeover offer, a management board should convene an ex-
+traordinary general meeting at which shareholders discuss
+the takeover offer and may decide on corporate actions. The
+convening of a shareholders' meeting - even taking into
+account the shortened time limits stipulated in the German
+Securities Acquisition and Takeover Act (Wertpapiererwerbs-
+und Übernahmegesetz) – is an organizational challenge for
+large publicly listed companies. It appears doubtful whether
+the associated effort is justified in cases where no relevant
+decisions by the shareholders' meeting are intended. There-
+fore, extraordinary shareholders' meetings shall be convened
+only in appropriate cases.
+168 B.5.8 Significant agreements which take
+effect, alter or terminate upon a
+131
+on page 136 of this Annual Report.
+165 B.5
+132 B.1 Corporate Governance Report
+136 B.2
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+(part of the Combined Management Report)
+138 B.3
+Compensation Report
+144 B.4
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Additional Information
+Members of the Managing Board are entitled to benefits under
+the BSAV on reaching age 60, at the earliest, or age 62 for ben-
+efit commitments made on or after January 1, 2012. As a rule,
+the accrued pension benefit balance is paid out to the
+Managing Board member in twelve annual installments. At the
+request of the Managing Board member or of his or her surviv-
+ing dependents, the pension benefit balance may also be paid
+out in fewer installments or as a lump sum, subject to the
+Company's consent. The accrued pension benefit balance may
+also be paid out as a pension. As a further alternative, the
+Managing Board member may choose a combination of
+pay-
+ment in one to twelve installments and payment of a pension.
+If the pension option is chosen, a decision must be made as to
+whether it should include pensions for surviving dependents.
+If a member of the Managing Board dies while receiving a pen-
+sion, benefits will be paid to the member's surviving depen-
+dents if the member chose such benefits. The Company will
+then provide a limited-term pension to surviving children until
+they reach age 27, or age 25 in the case of benefit commitments
+made on or after January 1, 2007.
+Benefits from the retirement benefit system that was in place
+before the BSAV are normally granted as pension benefits with
+a surviving dependent's pension. In this case as well, a payout
+in installments or a lump sum may be chosen instead of pen-
+sion payments.
+Members of the Managing Board who were employed by the
+Company on or before September 30, 1983, are entitled to tran-
+sition payments for the first six months after retirement, equal
+to the difference between their final base compensation and the
+retirement benefits payable under the corporate pension plan.
+Commitments in connection with termination
+of Managing Board membership
+Managing Board contracts provide for a compensatory payment
+if membership on the Managing Board is terminated pre-
+maturely by mutual agreement, without serious cause. The
+amount of this payment must not exceed the value of two
+years' compensation and compensate no more than the re-
+maining term of the contract (cap). The amount of the compen-
+satory payment is calculated on the basis of base compensa-
+tion, together with the variable compensation (bonus) and the
+long-term stock-based compensation (Stock Awards) actually
+received during the last fiscal year before termination. The
+compensatory payment is payable in the month when the
+member leaves the Managing Board. In addition, a one-time
+special contribution is made to the BSAV. The amount of this
+contribution is based on the BSAV contribution that the Board
+member received in the previous year, and on the remaining
+term of the appointment, but is limited to not more than two
+years' contributions (cap). The above benefits are not paid if an
+amicable termination of the member's activity on the Managing
+Board is agreed upon at the member's request, or if there is
+serious cause for the Company to terminate the employment
+relationship.
+146
+-
+which the individual has been a Managing Board member, as
+well as the annual and long-term expense to the Company as a
+result of that provision. The non-forfeitability of pension bene-
+fit commitments is in compliance with the provisions of the
+German Company Pensions Act (Betriebsrentengesetz). Special
+contributions may be granted to Managing Board members on
+the basis of individual decisions of the Supervisory Board. In
+the case of new appointments of members of the Managing
+Board from outside the Company, these contributions may
+be defined as non-forfeitable from their inception. If a member
+of the Managing Board earned a pension benefit entitlement
+from the Company before the BSAV was introduced, a portion
+of his or her contributions went toward financing this prior
+commitment.
+Corporate Governance
+> On the one hand, half of the annual target amount for the
+annual Stock Awards is linked to the average basic earnings
+per share (EPS) from continuing and discontinued operations
+for the last three completed fiscal years. In principle, the tar-
+get value is the average basic EPS from the past three fiscal
+years completed prior to the year of compensation. At the
+end of each fiscal year, the Supervisory Board decides on a
+figure that represents that year's target attainment, which
+may lie between 0% and 200% (cap). This target attainment
+will then determine the actual monetary value of the award
+and the resulting number of Stock Awards.
+108 | A. To our Shareholders
+for
+145
+The performance-based component of long-term stock-based
+compensation is likewise founded on One Siemens. The allo-
+cation rules for long-term stock-based compensation take this
+focus into account as follows:
+> On the other hand, the development of the performance of
+Siemens' stock relative to competitors is to have a direct ef-
+fect on compensation. For this purpose, with respect to the
+other half of the annual target amount for the Stock Awards,
+the Supervisory Board will first grant a number of Stock
+Awards equivalent to the monetary value of half the target
+amount on the date of the award. The Supervisory Board will
+also decide on a target system (target value for 100% and tar-
+get curve) for the performance of Siemens stock relative to
+the stock of competitors (for fiscal 2014, these are ABB,
+Alstom, General Electric, Rockwell and Schneider). The refer-
+ence period for measuring the target will be the same as the
+four-year restriction period for the Stock Awards. After this
+restriction period expires, the Supervisory Board will deter-
+mine how much better or worse Siemens stock has per-
+formed relative to the stock of its competitors. This determi-
+nation will yield a target attainment of between 0% and
+200% (cap). If target attainment is above 100%, an additional
+cash payment corresponding to the outperformance is
+effected. If target attainment is less than 100%, a number of
+Stock Awards equivalent to the shortfall from the target will
+expire without replacement.
+The value of Siemens stock to be transferred for Stock Awards
+after the end of the restriction period is subject to a ceiling of
+300% of the respective target amount. If this maximum amount
+of compensation is exceeded, the corresponding entitlement to
+stock commitments will be forfeited without replacement.
+With regard to the further terms of the Stock Awards, the same
+principles apply in general for the Managing Board and for
+senior managers; these principles are discussed in more detail
+in NOTE 32 SHARE-BASED PAYMENT in → D.6 NOTES TO CONSOLI-
+DATED FINANCIAL STATEMENTS. That note also includes further
+information about the stock-based employee investment plans.
+Maximum amount for compensation overall
+In addition to the forfeiture rules to maintain the maximum
+amounts of compensation for variable compensation (bonus)
+and long-term stock-based compensation, a maximum amount
+for the compensation overall has also been agreed upon.
+Beginning with fiscal 2014, this amount cannot be more than
+1.7 times greater than target compensation. Target compensa-
+tion comprises base compensation, the target amount for vari-
+able compensation (bonus), and the target amount for long-
+term stock-based compensation, excluding fringe benefits and
+pension benefit commitments. Including fringe benefits and
+pension benefit commitments of the relevant fiscal year, the
+maximum amount of compensation for the overall compensa-
+tion increases by corresponding amounts.
+Share Ownership Guidelines
+-
+-
+The Siemens Share Ownership Guidelines are an integral part
+of the remuneration system for the Managing Board and senior
+executives. These guidelines require the members of the
+Managing Board after a certain buildup phase to hold
+Siemens stock worth a multiple of their base compensation
+300% for the President and CEO, 200% for the other members
+of the Managing Board - during their term of office on the
+Managing Board. The determining figure in this context is the
+average base compensation that each member of the Managing
+Board has drawn over the four years before the applicable date
+of proof of compliance. Accordingly, changes that have been
+made to base compensation in the meantime are included.
+Non-forfeitable stock commitments (Bonus Awards) are taken
+into account in determining compliance with the Share Owner-
+ship Guidelines.
+Evidence that this obligation has been met must first be pro-
+vided after a four-year buildup phase, and updated annually
+thereafter. If the value of the accrued holdings declines below
+the minimum to be evidenced from time to time because the
+market price of Siemens stock has fluctuated, the member of
+the Managing Board must acquire additional shares.
+Pension benefit commitments
+The members of the Managing Board, like all Siemens AG
+employees, are included in the Siemens Defined Contribution
+Benefit Plan (BSAV). Under the BSAV, members of the Managing
+Board receive contributions that are credited to their personal
+pension account. The amount of the annual contributions is
+based on a predetermined percentage which refers to the base
+compensation and the target amount for the bonus. This per-
+centage is decided upon annually by the Supervisory Board;
+most recently it was set at 28%. In making its decision, the
+Supervisory Board takes account of the intended level of provi-
+sion for each individual, also considering the length of time for
+131 B.
+-
+171 | C. Combined Management Report
+171 | C. Combined Management Report
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+165 B.5
+(part of the Combined Management Report)
+Compensation Report
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+143
+Additional Information
+337 | E.
+Consolidated Financial Statements
+247 | D.
+Continue to further optimize and streamline
+our compliance processes.
+Effective Processes
+Continue providing our businesses with
+the appropriate level of assurance within
+our Compliance System.
+Manage Risk & Assurance
+337 | E.
+138 B.3
+144 B.4
+132 B.1 Corporate Governance Report
+136 B.2
+148
+247 | D.
+Consolidated Financial Statements
+337 | E.
+Additional Information
+147
+Additionally, compensatory or severance payments cover non-
+monetary benefits by including an amount of 5% of the total
+compensation or severance amount. Compensatory or sever-
+ance payments will be reduced by 15% as a lump-sum allow-
+ance for discounted values and for income earned elsewhere.
+However, this reduction will apply only to the portion of the
+compensatory or severance payment that was calculated with-
+out taking account of the first six months of the remaining
+term of the Managing Board member's contract.
+If a member leaves the Managing Board, the variable compen-
+sation (bonus) is determined pro rata temporis after the end of
+the fiscal year in which the appointment was terminated and is
+settled in cash at the usual payout or transfer date, as the case
+may be. If the employment contract is terminated in the course
+of an appointment period, the non-forfeitable stock commit-
+ments (Bonus Awards) for which the waiting period is still in
+progress remain in effect without restriction. If the employ-
+ment agreement is terminated because of retirement, disability
+or death, a Managing Board member's Bonus Awards will be
+settled in cash as of the date of departure from the Board.
+In the event of a change of control that results in a substantial
+change in the position of the Managing Board member
+example, due to a change in corporate strategy or a change in
+the Managing Board member's duties and responsibilities
+the member of the Managing Board has the right to terminate
+his or her contract with the Company for good cause. A change
+of control exists if one or more shareholders acting jointly or in
+concert acquire a majority of the voting rights in Siemens AG
+and exercise a controlling influence, or if Siemens AG becomes
+a dependent enterprise as a result of entering into an inter-
+company agreement within the meaning of Section 291 of the
+German Stock Corporation Act (Aktiengesetz), or if Siemens AG
+is to be merged into an existing corporation or other entity. If
+this right of termination is exercised, the Managing Board
+member is entitled to a severance payment in the amount of
+not more than two years' compensation. The calculation of the
+annual compensation includes not only the base compensation
+and the target amount for the bonus, but also the target
+amount for the Stock Awards, in each case based on the most
+recent completed fiscal year prior to termination of the con-
+tract. The stock-based components for which a firm commit-
+ment already exists will remain unaffected. There is no entitle-
+ment to a severance payment if the Managing Board member
+receives benefits from third parties in connection with a
+change of control. Moreover, there is no right to terminate if
+the change of control occurs within a period of twelve months
+prior to a Managing Board member's retirement.
+Stock commitments that were made as long-term stock-based
+compensation (Stock Awards) and for which the restriction
+period is still in progress will be forfeited without replacement
+if the employment agreement is not extended after the end of
+an appointment period, either at the Board member's request
+or because there is serious cause that would have entitled the
+Company to revoke the appointment or terminate the contract.
+However, once granted, Stock Awards are not forfeited if the
+employment agreement is terminated by mutual agreement at
+the Company's request, or because of retirement, disability or
+death, or in connection with a spinoff, the transfer of an oper-
+ation, or a change of activity within the corporate group. In this
+case, the Stock Awards will remain in effect upon termination
+of the employment agreement and will be honored on expira-
+tion of the restriction period.
+OF THE MANAGING BOARD FOR FISCAL 2014
+On the basis of the financial framework in the context of One
+Siemens, at the beginning of the fiscal year the Supervisory
+Board set the targets and weighting for the parameters of return
+on capital employed (ROCE) and Free cash flow, together with
+earnings per share (EPS), in each case on the basis of continu-
+ing and discontinued operations. The definition of these param-
+eters and their weighting acknowledges a sustainable enhance-
+ment of corporate value. Additionally, in setting the target for
+the variable compensation (bonus) for those Managing Board
+members with responsibilities for Sector portfolios, the Super-
+visory Board set economic value added (EVA) as a Sector-specific
+target, as well as additional individual targets for all members of
+the Managing Board so as to take fuller account of the individ-
+ual Board members' performance. For this purpose, up to five
+individual targets were generally defined; these take account of
+such aspects as business performance in the Regions, imple-
+mentation of portfolio measures, and customer satisfaction. An
+external review of the appropriateness of the Managing Board's
+compensation for fiscal 2014 confirmed that the remuneration
+of the Managing Board resulting from target attainment for fis-
+cal 2014 is to be considered appropriate. In light of this expert
+review, and following a review of the achievement of the targets
+set at the beginning of the fiscal year, the Supervisory Board
+decided at its meeting on November 5, 2014, to set the variable
+compensation (bonus), the Bonus Awards and Stock Awards to
+be granted, and the pension benefit contributions as follows:
+Variable compensation (bonus)
+In setting the targets for the variable compensation (bonus) at
+the beginning of fiscal 2014, the Supervisory Board took into
+account that the Company continues to focus on a sustainable
+appreciation of value. This focus is intended to enable the Com-
+pany to maintain its financial flexibility and hold its own
+against competitors even in periods of high market volatility:
+The emphasis in terms of the sustainable enhancement of
+value was on capital efficiency and capital structure. Target
+values slightly higher than the prior-year figures were set in the
+case of return on capital employed and substantially higher
+than the prior-year figures in the case of Free cash flow. These
+were agreed upon uniformly with all members of the Managing
+Board. Moreover, the target values for the target parameters
+were set on the basis of continuing and discontinued opera-
+tions, so as to take full account of the Managing Board's overall
+responsibility for the Company's economic situation, perfor-
+mance and outlook. Additionally, targets were set taking
+account of business expectations for fiscal 2014. Here capital
+efficiency improved because of the absence of the expenses for
+the Siemens 2014 program in comparison to the prior year, as
+well as because of effects outside the Sectors.
+108 | A. To our Shareholders
+131 B.
+Corporate Governance
+B.4.1.2 REMUNERATION OF THE MEMBERS
+Consolidated Financial Statements
+Maximum amounts of compensation
+171 | C. Combined Management Report
+> target parameter: Return on
+capital employed, Free cash flow,
+individual targets
+> variability: 0-200%
+add. ±20% adjustment
+> 75% granted in cash and
+25% in Bonus Awards
+Base
+compen-
+sation
+Bonus (cash):
+0-200%
+add. +20%
+adjustment
+Base
+compen-
+sation
+Compensation
+overall
+max. 1.7-times
+of target
+compensation
+Base
+compen-
+sation
+Variable compensation (bonus)
+> variability: 0-200% respectively
+> target parameter: Ø earnings per share
+compared to 5 competitors
+This section is based on the recommendations of the German
+Corporate Governance Code (Code) and the requirements of
+the German Commercial Code (Handelsgesetzbuch), German
+Accounting Standards (Deutsche Rechnungslegungs Standards),
+and International Financial Reporting Standards (IFRS). The
+Compensation Report is an integral part of the Combined
+Management Report.
+B.4.1 Remuneration of members
+of the Managing Board
+B.4.1.1 REMUNERATION SYSTEM
+The remuneration system for the Managing Board at Siemens is
+intended to provide an incentive for successful corporate man-
+agement with an emphasis on sustainability. Members of the
+Managing Board are expected to make a long-term commitment
+to and on behalf of the Company, and may benefit from any sus-
+tained increase in the Company's value. In the interest of that
+aim, a substantial portion of their total remuneration is linked to
+the long-term performance of Siemens stock. A further aim is
+| Remuneration system for Managing Board members for fiscal 2014
+Target compensation
+for their remuneration to be commensurate with the Company's
+size and economic position. Exceptional achievements are to be
+rewarded adequately, while falling short of goals is intended to
+result in an appreciable reduction in remuneration. The
+Managing Board's compensation is also structured so as to be
+attractive in comparison to that of competitors, with a view to
+attracting outstanding managers to our Company and keeping
+them with us for the long term.
+President
+and CEO:
+3-times
+The system and levels for the remuneration of the Managing
+Board are determined and reviewed regularly by the full Super-
+visory Board, based on proposals from the Compensation Com-
+mittee. The Supervisory Board reviews remuneration levels
+annually to ensure that they are appropriate. In that process,
+the Company's economic situation, performance and outlook,
+as well as the tasks and performance of the individual Manag-
+ing Board members, are taken into account. In addition, the
+Supervisory Board considers the common level of remunera-
+tion in comparison with peer companies and with the compen-
+sation structure in place in other areas of the Company. Here it
+also takes due account of the relationship between the Manag-
+ing Board's remuneration and that of senior management and
+staff, both overall and with regard to its development over
+time, and for this purpose the Supervisory Board has also
+determined how senior management and the relevant staff
+are to be differentiated. The remuneration system that was in
+place for the Managing Board members for fiscal 2014 was
+approved by 93.98% at the Annual Shareholders' Meeting on
+Share Ownership Guidelines
+Stock-based
+components
+(Bonus Awards
+and Stock
+Awards):
+max. 300% of
+the respective
+target amount
+Stock-
+based
+compen-
+sation
+Cash
+compen-
+sation
+Long-term stock-based compensation
+> target parameter: stock price
+Vision 2020
+of Base
+compen-
+sation
+Managing
+Board
+The new remuneration system will be submitted to the Annual
+Shareholders' Meeting for its approval on January 27, 2015.
+In fiscal 2014, the remuneration system for the Managing Board
+had the following components:
+Non-performance-based components
+Base compensation
+Base compensation is paid as a monthly salary. It is reviewed
+annually, and revised if appropriate. The base compensation of
+the President and CEO Joe Kaeser has been €1,845,000 per year
+since the time of his appointment on August 1, 2013. The base
+compensation of the CFO, of those members of the Managing
+Board who have responsibilities for Sector portfolios and of Klaus
+Helmrich because of his additional services as Labor Director
+("Arbeitsdirektor") has been €998,400 per year since October 1,
+2013. The base compensation of the other members of the Man-
+aging Board has been €928,800 per year since October 1, 2013.
+Fringe benefits
+Fringe benefits include costs, or the cash equivalent, of
+non-monetary benefits and other perquisites, such as the pro-
+vision of a Company car, contributions toward the cost of insur-
+ance, reimbursement of fees for legal advice, tax advice and
+accommodation and moving expenses, including a gross-up for
+any taxes that have to be borne in this regard, as well as costs
+relating to preventive medical examinations.
+Performance-based components
+Variable compensation (bonus)
+ATION SYSTEM FOR THE MANAGING BOARD FROM FISCAL 2015 ONWARD.
+Variable compensation (bonus) is based on the Company's
+business performance in the past fiscal year. The targets for
+variable compensation are derived from the financial frame-
+work of our integrative management model One Siemens. On
+this basis, the Supervisory Board at the beginning of each
+fiscal year defines specific targets. Corresponding targets - in
+addition to other factors - also apply to senior managers, with
+a view to establishing a consistent target system throughout
+the Company.
+The Supervisory Board is entitled to revise the amount resulting
+from attaining targets by as much as 20% downward or up-
+ward, at its duty-bound discretion (pflichtgemäßes Ermessen);
+the adjusted amount of the bonus paid can be as much as 240%
+of the target amount. In choosing the factors to be considered
+in deciding on possible revisions of the bonus payouts (±20%),
+the Supervisory Board takes account of incentives for sustain-
+able corporate management. The revision option may also
+be exercised in recognition of Managing Board members' indi-
+vidual achievements.
+The bonus is paid 75% in cash and 25% in the form of gener-
+ally non-forfeitable Siemens stock commitments (Bonus
+Awards). After a four-year waiting period, the beneficiary will
+receive one share of Siemens stock for each Bonus Award. The
+value of Siemens stock to be transferred for Bonus Awards
+after the waiting period is subject to a ceiling of 300% of the
+target amount of the Bonus Awards. If this maximum amount
+is exceeded, the corresponding entitlement to share commit-
+ments will be forfeited without replacement. Instead of the
+transfer of Siemens stock, an equivalent cash settlement may
+be effected.
+Long-term stock-based compensation
+Long-term stock-based compensation consists of a grant of for-
+feitable stock commitments (Stock Awards). The beneficiaries
+will receive one free share of Siemens stock for each Stock
+Award after a restriction period. Beginning with the award for
+fiscal 2011, the restriction period for Stock Awards ends at the
+close of the second day after publication of the preliminary
+operating results for the fourth calendar year after the date of
+the award.
+In the event of extraordinary unforeseen developments that
+have an impact on the stock price, the Supervisory Board may
+decide to reduce the number of promised Stock Awards retro-
+actively, or it may decide that in lieu of a transfer of Siemens
+Stock only a cash settlement in a defined and limited amount
+will be paid, or it may decide to postpone transfers of Siemens
+stock for payable Stock Awards until the developments have
+ceased to have an impact on the stock price.
+In the event of a 100% target attainment, the annual target
+amount for the monetary value of the Stock Awards com-
+mitment is €1.9 million for the President and CEO (effective
+August 1, 2013) and €1 million for each of the other members of
+the Managing Board. Beginning with fiscal 2011, the Super-
+visory Board has the option of increasing, on an individual
+basis, the target amount for a member of the Managing Board
+who has been reappointed by as much as 75% above the
+amount of €1 million, for one fiscal year at a time. This option
+enables the Supervisory Board to take account of the Managing
+Board member's individual accomplishments and experience as
+well as the scope and demands of his or her function.
+For a 100% target attainment (target amount), the amount of
+the bonus equals the amount of base compensation. The bonus
+is subject to a ceiling (cap) of 200%. If targets are substantially
+missed, variable compensation may not be paid at all.
+247 | D.
+January 28, 2014. The new remuneration system that takes
+effect in fiscal 2015 is explained in section → B.4.1.4 REMUNER-
+Compensation Report
+member:
+2-times
+of Base
+compen-
+sation
+Performance-based components with deferred payout
+Non-performance-based component
+Performance-based component
+Obligation to hold shares during term of office on the Managing Board
+108 | A. To our Shareholders
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+144
+Corporate Governance
+132 B.1 Corporate Governance Report
+136 B.2
+144 B.4
+138 B.3
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+165 B.5
+(part of the Combined Management Report)
+131 B.
+Processes
+Data protection laws in the European Economic Area (EEA)
+require a recipient of personal data located outside the EEA to
+provide a level of data protection equivalent to the level of data
+protection in the EEA. As a result, the instrument of Binding
+Corporate Rules (BCR) was developed at European Union level
+to allow multinational groups of companies, such as Siemens,
+to make transfers of personal data across borders and between
+group companies that implement the BCR in compliance with
+the aforementioned requirement. In this context, Siemens
+has issued, effective fiscal 2015, its BCR for the Protection of
+Personal Data within the Company.
+Manage Ri
+131 B.
+108 | A. To our Shareholders
+The "Ask us" help desk encourages our employees to ask com-
+pliance-related questions. Incoming questions are automati-
+cally forwarded without prior registration to the Compliance
+Officers responsible for the employees' entities. Furthermore,
+all employees can pose questions directly to the Compliance
+Officers responsible for their respective units. Most employee
+questions are now being handled and answered in this way.
+These questions are not registered either. In light of these
+developments, we have decided to discontinue the reporting
+of inquiries submitted to the "Ask us" help desk.
+In our view, the detected compliance violations in our Company
+in the past fiscal year demonstrate once again that our
+Compliance System was properly designed and is being imple-
+mented effectively.
+Furthermore, a single reported compliance case may, for
+instance, result in several disciplinary sanctions or in no disci-
+plinary sanctions at all - for instance, because the employee
+concerned meanwhile has left the company for some other
+reason. Therefore, too, it is not possible to establish a direct
+correlation between the numbers of reported compliance cases
+and the numbers and types of disciplinary sanctions
+implemented in a given reporting period.
+The total number of disciplinary sanctions for compliance vio-
+lations in fiscal 2014 was 195 (fiscal 2013: 305). The disciplinary
+sanctions reported in a specific fiscal year do not all relate to
+the compliance cases reported in the same period: disciplinary
+sanctions are frequently not implemented in the year in which
+a case was reported. This is due to the fact that a reported com-
+pliance case has to undergo the Company's entire internal case
+handling process (see top right), from the mandating and per-
+forming of an internal investigation to the documentation of its
+results in an investigation report that will form the basis for
+related disciplinary sanctions and remediation measures.
+The "Tell us" help desk and the Company's ombudsman are two
+secure reporting channels that can be used by our employees
+and external stakeholders to report violations of external and
+internal rules. Reports to these channels are passed on to our
+Compliance Organization. Possible misconduct may also be
+reported directly via the Managing Board or via supervisors
+to the Compliance Organization and, in particular, to the
+Compliance Officers in our individual company units. Our
+employees regularly make use of this reporting channel. In fis-
+cal 2014, the total number of compliance cases requiring
+further inquiries or investigations reported via all the above-
+mentioned reporting channels was 653. We believe that the
+decrease from fiscal 2013 (908) is within the normal range of
+variation.
+2 Includes loss of variable and voluntary compensation elements, transfer and
+suspension.
+42
+31
+75
+50
+188
+114
+305
+Corporate Governance
+140
+132 B.1
+136 B.2
+Corporate Governance Report
+Disciplinary
+Preparation
+Investigation
+Research and
+planning
+Mandating
+Assessment
+carried out
+Allegation
+received
+195
+Compliance case
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Compensation Report
+(part of the Combined Management Report)
+165 B.5
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+138 B.3
+144 B.4
+| Compliance investigation process
+by examining
+908
+2013
+Our mandatory process and tool for business-partner com-
+pliance due diligence is designed to help all Siemens entities
+conduct risk-based integrity checks of business partners.
+Transparent and risk-oriented decisions about a business part-
+ner relationship are based on high-quality compliance due
+diligence.
+Cooperation with third parties such as sales agents, customs
+clearing agents, consultants, distributors and resellers is part
+of Company operations and often essential in order to reach
+certain areas of the market. At the same time, however, the
+Company may be liable for the actions of these third parties.
+B.3.3 Business partners and suppliers
+The identification of compliance risks in individual Siemens
+entities worldwide (CRA) and the Group-level compliance risk
+analysis are complemented by an interdisciplinary exchange
+during the quarterly Compliance Risk Radar meeting.
+The Corporate compliance risks are derived from these consol-
+idated results, which are then shared with the Company's busi-
+nesses. As in the CRA process, relevant risks are reported to
+Siemens' Enterprise Risk Management (ERM), and measures to
+reduce the risks are drawn up and implemented.
+In fiscal 2014, the CRA was performed for a total of 14 top-risk
+countries. The CRA results have been incorporated into the
+Group-level compliance risk analysis, which aims to determine
+systematic and globally recurring compliance risks to the
+Company as quickly as possible. As well as the CRA results, this
+analysis of the overall Group-level compliance risks takes into
+account, for example, the insights from compliance controls -
+the ongoing assessment of the operation of our compliance
+processes to ensure their effectiveness and the results of
+case-related investigations.
+> In odd-numbered years (starting in fiscal 2015), the CRA
+process will be performed at Lead Country/Division level.
+> In even-numbered years, the CRA process is performed for
+so-called top-risk countries in order to complement the anal-
+yses at Lead Country/Division level with in-depth risk assess-
+ments for selected countries. We will identify these countries
+in advance based on an analysis of external and internal
+compliance risks.
+A CRA was performed for all the Company's operating units in
+fiscal 2013. Based on our experience to date and the analysis
+of these results, the CRA process has been further developed.
+Starting fiscal 2014, the CRA is performed in two different ways:
+-
+Our Compliance Risk Assessment (CRA) process requires that
+CEOs and managers in the Company together with the
+relevant Compliance Officers systematically determine and
+assess the compliance risks to their units on a regular basis.
+-
+B.3.2 Compliance risk management
+diligence process. The company's compliance risk assessment
+process has been further developed: Besides other improve-
+ments Data Privacy has been included therein as part of our
+activities to integrate Data Privacy into the Compliance System.
+The Compensation Report outlines the principles underlying
+the determination of the total compensation of the members of
+the Managing Board of Siemens AG, and sets out the structure
+and level of the remuneration of the Managing Board mem-
+bers. It also describes the policies governing, and levels of, the
+compensation paid to Supervisory Board members.
+In fiscal 2014, we carried out a project to reinforce the effective-
+ness of our business-partner compliance due diligence process
+and of management's assessment of the related compliance
+risks. Key outcomes of the project include the regular review of
+business partner portfolios at the Lead Countries and Divisions
+and on-site compliance checks for selected types of business
+partners as part of due diligence. Both measures are scheduled
+for implementation in fiscal 2015. Furthermore we have
+introduced a web-based compliance training program, which is
+mandatory for certain business partners before they can enter
+into a business relationship with our Company. Other business
+partners may also take part in the training program on a volun-
+tary basis.
+We require our suppliers to comply with our Code of Conduct
+for Siemens Suppliers, which includes compliance with all
+applicable laws and, in particular, the prohibition of corrupt
+activities. We also require our suppliers to support the Code's
+implementation in their own supply chains. The Code of
+Conduct is based on the ten principles of the United Nations
+Global Compact. Instruments such as sustainability self-assess-
+ments by suppliers and sustainability audits by external audi-
+tors enable us to systematically identify potential risks in our
+supply chain and to monitor whether our suppliers are in com-
+pliance with the Code's requirements.
+171 | C. Combined Management Report
+247 | D.
+2014
+Year ended September, 30
+1 Continuing and discontinued operations.
+Therein other²
+therein dismissals
+Compliance cases reported
+Disciplinary sanctions
+therein warnings
+Compliance indicators¹
+653
+B.3.5 Compliance indicators
+Our Company-wide compliance training portfolio consists of
+in-person and web-based training programs. The in-person
+training programs also provide our employees with an opportu-
+nity to discuss correct behavior based on day-to-day work
+examples. In fiscal 2013, we introduced an annual Integrity
+Dialog to maintain a high awareness of integrity and compli-
+ance topics at Siemens. The Dialog, which is conducted across
+the entire Company, serves as a forum for managers to discuss
+recent compliance matters with their employees.
+One focus of our preventive measures under the Compliance
+System is to provide compliance training to all managers and
+employees who hold positions with a particular risk profile. In
+fiscal 2014, the definition of these "sensitive functions" was ex-
+panded and specified more precisely. In accordance with this
+definition, the Compliance Officers of the relevant Company
+units identify the managers and employees whose participa-
+tion is required and ensure that they attend the training
+sessions. They monitor and confirm the fulfillment of these
+requirements at regular intervals.
+B.3.4 Compliance training
+139
+Additional Information
+337 | E.
+Consolidated Financial Statements
+The assessment and analysis of compliance risks for the oper-
+ating units and at Group level offers important indicators that
+help us develop and define the focus of our training activities,
+including the selection of themed modules for the annual
+events held in conjunction with the Integrity Dialog. Our oper-
+ating units address specific challenges by enhancing their
+training activities with additional topics from their own busi-
+nesses or by extending the mandatory target groups for spe-
+cific compliance training programs in their units. In this way,
+our training activities reflect both Siemens-wide topics and the
+key topics specific to the operating units.
+of the investi-
+gation report
+measures and
+remediation
+or evaluating
+For further information, please see:
+B.3.10 Further information
+and legal proceedings
+We will continue to further develop our compliance system in
+order to adapt it to evolving requirements in the field of
+compliance. Our overall aim remains unchanged: we want to
+anchor integrity permanently throughout our company in
+order to ensure sound business decisions based on clear princi-
+ples of integrity.
+Compliance Officers around the world and our Company units.
+The other pillar of our Compliance System with its three
+action levels Prevent, Detect and Respond – is the requirement
+that all Siemens managers assume personal responsibility for
+compliance at their respective units.
+-
+| Compliance priorities for fiscal 2015
+The effectiveness of compliance at Siemens is based on
+the global governance of our Compliance Organization and
+clear-cut reporting lines and close cooperation between our
+Our compliance priorities as of fiscal 2015 are illustrated and
+briefly described in the figures below. These priorities, which
+will also guide our activities for fiscal 2015, will be supple-
+mented by focus areas and activities for each fiscal year.
+> Effective processes: utilizing our compliance portfolio man-
+agement system, we will continue to improve our compliance
+processes in order to optimize efficiency and keep opera-
+tional burdens as low as possible while further strengthen-
+ing the assurance against compliance risks that those pro-
+cesses provide.
+> Excellent compliance team: we expect our Compliance
+Officers to combine compliance expertise with business
+understanding, and we offer them attractive career paths.
+That's why we will continue working to develop a first-class
+learning and development landscape for our Compliance
+Organization. We will also reinforce close collaboration
+across the Company's global Compliance Organization to
+ensure that we provide the best possible support for our
+businesses.
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Compensation Report
+(part of the Combined Management Report)
+165 B.5
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+→ C.9 REPORT ON EXPECTED DEVELOPMENTS AND ASSOCIATED MATERIAL
+OPPORTUNITIES AND RISKS on pages 225-241 and → NOTE 28 LEGAL
+PROCEEDINGS in D.6 NOTES TO CONSOLIDATED FINANCIAL STATE-
+MENTS on pages 293-295 of this Annual Report.
+WWW.SIEMENS.COM/COMPLIANCE
+Committed to Business
+Further intensify cooperation between the
+Compliance Organization and our businesses
+and reinforce our Compliance System's
+market and customer focus.
+Assurance
+e Risk &
+Team
+Compliance
+Excellent
+Culture
+Ownership
+138 B.3
+Business
+Integrity
+Foster
+Compliance Priorities
+Support business management to meet its
+responsibilities for compliance and further
+strengthen the culture of integrity in our
+Company and beyond.
+Foster Integrity
+Provide an excellent compliance team through
+a first-class learning and development land-
+scape and close collaboration.
+Excellent Compliance Team
+Committed to
+144 B.4
+Corporate Governance Report
+132 B.1
+136 B.2
+247 | D.
+171 | C. Combined Management Report
+If substantial progress is to be made in combating corruption
+and fostering fair competition, as many stakeholders as pos-
+sible must act collectively. That's why we have joined forces
+with other organizations to fight corruption and promote
+ethical markets through collective action and the Siemens
+Integrity Initiative.
+and Siemens Integrity Initiative
+B.3.8 Collective Action
+Effective fiscal 2015, the consideration of weak compliance per-
+formance on the part of managers has been made a mandatory
+element of the Company's bonus regulations. In addition, re-
+lated performance issues will also be addressed through the
+Compliance Organization. In light of the above and to reinforce
+the recognition of exemplary commitment to integrity and
+compliance within the Company, an annual award for integrity
+and compliance will be presented starting in fiscal 2015. The
+award will honor outstanding examples of management
+responsibility for compliance and employee commitment to
+compliance. In addition to recognition by Company manage-
+ment, the competition will promote best practices within
+Siemens and encourage others to follow these examples.
+integrity. This approach proved useful in the following period.
+It was subsequently replaced by a specific process for dealing
+with weak compliance performance on the part of managers.
+As part of this process, a corrective factor is applied to bonus
+payments if remedial action is not taken following the issuance
+of a "yellow card."
+Consolidated Financial Statements
+In 2008, we made compliance excellence a component of the
+incentive system for our senior management. This system was
+not designed to honor basic compliance with the law and inter-
+nal regulations, which is always expected. Instead, it focused
+on rewarding managers for "going the extra mile" in imple-
+menting our Compliance Program and driving a culture of
+In line with our compliance priorities for fiscal 2014, we've con-
+tinued to integrate data privacy into our Company's Compliance
+System. Selected measures include the integration of data
+privacy into the Compliance Risk Assessments, data privacy
+reporting via our quarterly Compliance Performance Review
+and the inclusion of data privacy incidents in our global compli-
+ance case tracking tool.
+B.3.6 Data privacy
+Compliance investigation
+investigation
+mandating an
+before
+the allegation
+B.3.7 Company-wide award
+for integrity and compliance
+Effective
+337 | E.
+141
+142
+Corporate Governance
+131 B.
+108 | A. To our Shareholders
+> Manage risk & assurance: we want to continue providing our
+businesses with the appropriate level of assurance within
+our Compliance System. We constantly monitor external and
+internal developments and, where necessary, update the
+compliance safeguards for our Company.
+> Committed to business: our Compliance Organization and
+our businesses must work hand-in-hand to effectively miti-
+gate compliance risks. Without compromising our integrity
+standards, we'll also intensify support for our businesses in
+order to allow them to seize business opportunities even in
+challenging environments.
+> Foster integrity: a clear tone from the top, coupled with tan-
+gible ownership of compliance at all management levels, is
+essential. We will continue to help our managers meet this
+responsibility. Our new Company-wide award for integrity
+and compliance will play an important role in this respect.
+Beyond the boundaries of our organization, we will continue
+to cooperate with our stakeholders in order to combat cor-
+ruption and promote fair markets.
+Additional Information
+Compliance will also make further contributions to Vision
+2020. The following five compliance priorities define the levers
+for the future development of compliance at Siemens:
+Since their introduction in fiscal 2011, our compliance priorities
+have provided the focus of our compliance-related activities
+and the basis for the ongoing development of our Compliance
+System. In light of our experience to date and above all - in
+line with our entrepreneurial concept Vision 2020, we have
+decided to develop this approach further in order to create a
+reliable long-term perspective for the ongoing development of
+compliance at Siemens.
+B.3.9 Our revised compliance priorities -
+Guidance until 2020
+The second funding round was announced on June 27, 2013,
+and the deadline for applications was August 29, 2013. We
+received more than 180 applications from about 60 countries.
+In a two-stage review and due diligence process, we selected
+projects which are to receive approximately US$30.0 million of
+total funding over a period of three to five years. We began con-
+cluding the funding contracts in October 2014.
+The status of the 31 projects funded within the first funding
+round-based upon the settlement with the World Bank -, with
+a total contractual funding volume of US$37.7 million, was
+presented to the World Bank in April 2014, together with the
+Siemens Integrity Initiative Annual Report 2013.
+The global Siemens Integrity Initiative was launched by Siemens
+on December 9, 2009. It earmarks more than US$100 million for
+supporting organizations and projects fighting corruption and
+fraud through Collective Action, education and training. The
+initiative focuses on supporting projects that have a clear im-
+pact on the business environment, can demonstrate objective
+and measurable results and have the potential to be scaled up
+and replicated. The Siemens Integrity Initiative constitutes one
+element of the July 2009 settlement between Siemens and the
+World Bank and the March 2013 settlement between Siemens
+and the European Investment Bank (EIB).
+To support the enforcement of the code of conduct, a compli-
+ance pact has also been signed, involving a whistleblower
+channel - supported by the Secretary of Transparency in the
+President's Office - and sanctions in cases of wrongdoing.
+Achievements during fiscal 2014 include a collective action in
+Colombia: in August 2014, a code of conduct was signed for the
+first time by around 190 companies associated with the Colom-
+bian Chamber of Goods and Oil Services (CAMPETROL) as well
+as several oil and gas operators. All of the signatories, of whom
+Siemens is one, are committed to initiating corporate ethics
+programs that abolish and prohibit activities such as bribery
+and the demand for and offering of undue favors. The signato-
+ries have also agreed to disclose serious cases to CAMPETROL
+and the Regional Center of the United Nations Global Compact,
+which will act as a neutral facilitator.
+Ownership culture is a cornerstone of Vision 2020, and the in-
+tegrity of our employees' decisions and actions is an essential
+part of it. Every employee is expected to act responsibly and
+to live up to this principle. Our Compliance System aims to
+support Siemens employees in making risk-based decisions
+with integrity - this is how compliance can ultimately provide
+reliable assurance to our Company and its employees and at
+the same time help strengthen an ownership culture at
+Siemens. Therefore, ownership culture lies at the heart of our
+compliance priorities.
+The management of each Siemens unit is responsible for the
+unit's utilization of business partners. This means that busi-
+ness partners must be carefully selected and appropriately
+monitored and managed throughout the course of a business
+relationship.
+||| B.4 Compensation Report
+Lisa Davis
+FY 2013
+FY 2014
+900,000
+0
+900,000
+Barbara Kux6
+Member of the Managing Board
+until November 16, 2013
+FY 2013
+FY 2014
+118,680
+FY 2013
+Peter Y. Solmssen?
+Member of the Managing Board
+until December 31, 2013
+FY 2014
+Dr. Michael Süß8
+Member of the Managing Board
+until May 6, 2014
+900,000
+42,571
+0
+68,048
+942,571
+0
+968,048
+4,909
+123,589
+32,977
+932,977
+232,200
+8,130
+240,330
+FY 2013
+967,500
+FY 2014
+598,503
+36,158
+1,003,658
+23,060
+621,563
+855,148
+0
+427,574
+227,441
+Member of the Managing Board
+until September 30, 2013
+Brigitte Ederer5
+4,120,380
+3,560,233
+560,147
+126,867
+0
+5,237
+0
+0
+0
+0
+81,747
+0
+0
+10,807
+1,098,246
+0
+14,749
+509,312
+0
+2,538,746
+1,403,988
+520,736
+2,154,028
+561,000
+3,099,746
+2,818,722
+4,222,710
+1,688,282
+520,698
+2,208,980
+2,488,302
+520,994
+3,009,296
+2,951,530
+499,761
+3,451,291
+62,071
+3,684,352
+539,849
+4,224,201
+42,393
+0
+0
+56,005
+2,811,298
+519,915
+3,331,213
+1,633,292
+0
+1,192,671
+427,574
+1,299,629
+55,545
+0
+0
+0
+0
+0
+0
+2,025,160
+509,312
+525,886
+2,551,046
+0
+509,312
+2,588,293
+525,734
+3,114,027
+56,005
+1,746,282
+526,669
+2,272,951
+0
+56,005
+0
+21,048
+2,660,180
+526,160
+3,186,340
+1,893,389
+526,771
+2,420,160
+1,940,539
+1,637,484
+530,392
+2,470,931
+570,428
+2,207,912
+6 Barbara Kux resigned from the Managing Board effective at the end of
+the day on November 16, 2013.
+7 Peter Y. Solmssen resigned from the Managing Board effective at the end
+of the day on December 31, 2013; his contract with the Company ends
+effective as of March 31, 2015. In addition to the compensation for his
+activity as a member of the Managing Board in fiscal 2014, as shown above,
+Mr. Solmssen received the following compensation for the months of
+January through September 2014: fixed compensation of €696,600, fringe
+benefits of €160,717, variable compensation (bonus) of €719,465 and
+Siemens Stock Awards in the amount of €611,240. He was also reimbursed
+for relocation expenses of €270,211 plus the associated tax of €241,373, in
+accordance with the commitment he received when he took office.
+8 Dr. Michael Süß resigned from the Managing Board effective at the end
+of the day on May 6, 2014; his contract ended effective as of Septem-
+ber 30, 2014. According to his provisions of the contract, his variable
+compensation (bonus) for fiscal 2014 will be granted entirely in cash.
+In addition to the compensation for fiscal 2014 for his activity as member
+of the Managing Board presented above, Dr. Süß received the following
+compensation for the remaining term of his employment agreement
+from May 7 to September 30, 2014: fixed compensation of €399,897,
+fringe benefits of €12,470 and variable compensation (bonus) of €315,171.
+155
+0
+0
+0
+0
+204,992
+459,642
+471,698
+1,392,062
+477,239
+523,175
+0
+509,312
+0
+1,392,062
+0
+1,392,062
+0
+523,175
+174,626
+1,392,062
+227,441
+1,137,126
+0
+1,299,629
+0
+477,239
+0
+0
+0
+0
+0
+0
+0
+0
+0
+0
+Pension benefit commitments
+231
+0
+37,403
+1,059,622
+16,598
+1,046,148
+Multi-year variable compensation
+0
+534,592
+Siemens Stock Awards (restriction period: 2010-2013)
+Siemens Stock Awards (restriction period: 2009-2012)
+Share Matching Plan (vesting period: 2011 - 2013)
+0
+519,851
+0
+0
+0
+14,741
+Share Matching Plan (vesting period: 2010 - 2012)
+Other³
+0
+0
+0
+21,619
+Total
+Service cost
+Total (GCGC)
+54,001
+208,034
+262,035
+2,661,981
+230,055
+2,892,036
+1 Fringe benefits include costs, or the cash equivalent, of
+non-monetary benefits and other perquisites, such as
+provision of Company cars in the amount of €181,638
+(2013: €239,301), contributions toward the cost of
+insurance in the amount of €71,776 (2013: €88,827),
+reimbursement of fees for legal advice, tax advice and
+accommodation and moving expenses, including any
+taxes that have been assumed in this regard as well as
+costs connected with preventive medical examinations,
+in the amount of €194,498 (2013: €176,221).
+2 The Supervisory Board adjusted the bonus payout
+amount resulting from target attainment individually
+downward by 10% for Dr. Süß. The cash component
+of one-year variable compensation (bonus) presented
+above therefore represents the amount awarded for
+fiscal 2014; which will be paid out in January 2015.
+One-year variable compensation (bonus) -
+Cash component²
+Total
+61,222
+FY 2014
+998,400
+Siemens Stock Awards (restriction period: 2010-2013)
+Siemens Stock Awards (restriction period: 2009-2012)
+Share Matching Plan (vesting period: 2011-2013)
+Share Matching Plan (vesting period: 2010-2012)
+Other³
+0
+1,392,062
+1,299,629
+0
+0
+202,848
+126,564
+0
+0
+Total
+3,170,635
+65,704
+5,617,060
+Service cost
+3 The "Other" item includes the adjustment of the 2010
+Siemens Stock Awards in accordance with Section 23
+and Section 125 of the German Transformation Act
+(Umwandlungsgesetz) because of the spin-off of
+OSRAM. For Ms. Davis, "Other" represents the cash
+component of the compensatory payment that will
+be paid in December 2014.
+504,323
+Total (GCGC)
+3,674,958
+6,675,626
+| Managing Board members serving as of September 30, 2014
+(Amounts in €)
+Non-performance-
+based components
+Performance-based
+components
+without long-term incentive
+effect, non-stock-based
+with long-term incentive
+effect, stock-based
+Dr. Ralf P. Thomas
+CFO
+FY 2013
+Fixed compensation (base compensation)
+Fringe benefits¹
+34,938
+2,465
+1,058,566
+0
+4 In compensation for the forfeiture of stock, pension
+benefits, health benefits and transitional remuneration
+from her former employer, the Supervisory Board
+granted Ms. Davis a one-time amount of €5,491,229.
+This amount will be provided 20% in cash, 30% in the
+form of Siemens Stock Awards and the remaining 50%
+as a special contribution to the pension plan. The cash
+component will be paid in December 2014.
+for Sector portfolio
+183,382
+268,614
+0
+292,379
+1,046,148
+366,548
+537,110
+1,381,376
+0
+268,614
+0
+0
+366,317
+0
+1,021,363
+1,518,929
+1,392,062
+459,642
+1,342,022
+1,070,035
+1,392,062
+0
+1,392,062
+178,145
+0
+0
+292,379
+0
+1,299,629
+0
+1,299,629
+0
+0
+0
+427,574
+124,800
+1,209,836
+433,819
+Dr. Roland Busch
+Member with responsibilities
+Lisa Davis 4
+Member with responsibilities
+for Sector portfolio
+since August 1, 2014
+Klaus Helmrich
+Member of the Managing Board
+Prof. Dr. Hermann Requardt | Prof. Dr. Siegfried Russwurm
+Member with responsibilities
+for Sector portfolio
+Member with responsibilities
+for Sector portfolio
+FY 2013
+967,500
+FY 2014
+998,400
+FY 2013
+48,591
+5 Brigitte Ederer resigned from the Managing Board effec-
+tive at the end of the day on September 30, 2013. Accord-
+ing to the provisions of her contract, her variable compen-
+sation (bonus) for fiscal 2013 was granted entirely in cash.
+51,089
+1,016,091
+1,049,489
+180,942
+FY 2013
+900,000
+68,329
+968,329
+FY 2014
+998,400
+62,457
+1,060,857
+FY 2013
+967,500
+65,544
+1,033,044
+FY 2014
+998,400
+83,589
+1,081,989
+FY 2013
+967,500
+42,134
+1,009,634
+FY 2014
+998,400
+43,731
+1,042,131
+FY 2014
+166,400
+14,542
+For fiscal 2014, the members of the Managing Board were
+granted contributions under the BSAV totaling €5.1 million
+(2013: €6.4 million), based on a resolution of the Supervisory
+Board dated November 5, 2014. Of this amount, €5.0 million
+(2013: €6.3 million), related to contributions to their personal
+pension accounts and the remaining €0.1 million (2013:
+€0.1 million) to funding of pension commitments earned prior
+to transfer to the BSAV.
+The contributions under the BSAV are added to the personal
+pension accounts each January following the close of the fiscal
+year, with value date on January 1. Until the beneficiary's time
+of retirement, the pension account is credited with an annual
+interest payment (guaranteed interest), currently 1.75%, on Jan-
+uary 1 of each year.
+The following table shows individualized details of the contri-
+butions (additions) under the BSAV for fiscal 2014 as well as the
+defined benefit obligations for the pension commitments.
+24,819
+Barbara Kux6
+38,105
+24,819
+5,364
+43,469
+24,819
+Brigitte Ederer5
+of the Managing Board
+Former members
+23,184
+206
+5,475
+2,944
+3,474
+206
+22,241
+Dr. Ralf P. Thomas
+54,952
+30,503
+14,661
+7,728
+9,119
+5,684
+52,766
+24,819
+Prof. Dr. Siegfried Russwurm
+54,952
+32,403
+52,766
+5,287
+7,295
+6,182
+2 Amounts do not include stock commitments (Bonus
+Awards and Stock Awards) granted in November 2014
+for fiscal 2014; for details, see the next page. However,
+these amounts may include Stock Awards received as
+compensation by the Managing Board member before
+joining the Managing Board.
+1 The weighted average fair value as of the grant date for
+fiscal 2014 was €82.49 per granted share.
+246,631 487,212
+96,341
+60,284
+71,136
+46,350
+452,133
+46,399
+22,806
+5,510
+6,182
+7,295
+5,684
+14,661
+38,432
+Total
+Dr. Michael Süß8
+51,582
+30,106
+14,661
+6,182
+7,295
+5,287
+52,766
+24,819
+Peter Y. Solmssen?
+51,582
+30,106
+14,661
+17,122
+200,281
+3 The number of forfeitable commitments of Stock Awards
+shown here for Brigitte Ederer as of the end of fiscal
+7,728
+6,641
+Forfeitable
+Stock
+Awards³
+commit-
+ments of
+Non-
+forfeitable
+commit-
+ments of
+Bonus
+Awards
+Stock
+Awards
+Awards
+Stock
+Commit-
+ments of
+Awards and
+Commit-
+ments of
+Bonus
+on future
+stock per-
+formance)
+attainment
+depending
+(Target
+on EPS for
+past three
+fiscal years)
+forfeitable
+commit-
+ments of
+Bonus
+Awards
+Non-
+depending
+(Target
+attainment
+Forfeitable commitments
+of Stock Awards
+Stock
+Awards
+Awards
+(Amounts in number of units)
+Bonus
+Forfeitable
+commit-
+ments of
+ments of
+commit-
+Non-
+forfeitable
+fiscal year
+Managing Board
+members serving as of
+September 30, 2014
+Joe Kaeser
+52,766
+25,762
+Prof. Dr. Hermann Requardt
+45,314
+22,409
+3,858
+6,182
+7,295
+5,287
+35,695
+17,122
+Klaus Helmrich
+Lisa Davis 4
+44,443
+9,119
+21,544
+6,182
+7,295
+5,364
+33,795
+16,180
+Dr. Roland Busch
+76,699
+31,729
+14,661
+10,974
+12,949
+6,910
+67,437
+24,819
+2,829
+2014 remains in effect in full on the basis of the agree-
+ment in connection with her departure from the Manag-
+ing Board; the number of Stock Awards linked to future
+stock performance will be revised on the basis of actual
+target attainment after the end of the restriction period.
+4 Lisa Davis was elected a full member of the Managing
+Board effective August 1, 2014.
+5 Brigitte Ederer resigned from the Managing Board
+effective at the end of the day on September 30, 2013.
+3,490,629
+Dr. Ralf P. Thomas
+559,104
+19,565
+2,742,051
+1,970,651
+Former members of the Managing Board
+Brigitte Ederer 5
+Barbara Kux6
+Peter Y. Solmssen?
+Dr. Michael Süß³
+Total
+504,000
+2,446,9512
+66,461
+504,000
+1,499,0342
+2,740,4792
+520,128
+504,000
+18,343,788²
+15,750,8832
+559,104
+5,067,597
+541,800
+5,235,965
+3,903,372
+52,962,753
+2,353,756
+43,685,384
+Klaus Helmrich
+1
+The expenses (service cost) recognized in accordance
+with IFRS in fiscal 2014 for Managing Board members'
+entitlements under the BSAV in fiscal 2014 amounted to
+€7,913,201 (2013: €6,053,355).
+2 The defined benefit obligations reflect one-time special
+contributions to the BSAV of €3,558,315 (2013:
+€22,480,000) for new appointments from outside the
+Company, as well as special contributions in connection
+with departures from the Managing Board: in the
+amount of €0 (2013: €10,740,000) for Peter Löscher, of
+€0 (2013: €882,000) for Brigitte Ederer, of €0 (2013:
+€340,000) for Barbara Kux, of €0 (2013: €10,518,000)
+4,390,368
+541,800
+559,104
+Prof. Dr. Siegfried Russwurm
+Total contributions¹ for
+FY 2013
+FY 2014
+Defined benefit obligation² for all pension
+commitments excluding deferred compensation³
+FY 2013
+(Amounts in €)
+Managing Board members
+serving as of September 30, 2014
+Joe Kaeser
+Dr. Roland Busch
+Lisa Davis 4
+Klaus Helmrich
+FY 2014
+1,033,200
+1,033,200
+for Peter Y. Solmssen, of €812,700 (2013: €0) for Dr. Mi-
+chael Süẞ, and of €2,745,615 (2013: €0) for Lisa Davis.
+7,174,641
+541,800
+2,769,337
+5,580,345
+2,008,718
+93,184
+2,818,7222
+559,104
+504,000
+3,047,911
+2,248,901
+Prof. Dr. Hermann Requardt
+559,104
+541,800
+6,273,529
+5,094,071
+559,104
+3 Deferred compensation totals €10,057,923 (2013:
+€8,595,135), including €3,171,486 for Joe Kaeser (2013:
+€2,914,462), €302,595 for Klaus Helmrich (2013:
+€276,893), €1,381,365 for Prof. Dr. Hermann Requardt
+(2013: €1,275,259), and €49,732 for Dr. Ralf P. Thomas
+(2013: €46,155) as well as for former Managing Board
+members: €4,697,955 for Barbara Kux (2013: €4,082,366),
+and €454,790 for Peter Y. Solmssen (2013: €0).
+4 Lisa Davis was elected a full member of the Managing
+Board effective August 1, 2014.
+5 Brigitte Ederer resigned from the Managing Board
+effective at the end of the day on September 30, 2013.
+576
+6,916
+6,639
+5,578
+13,140
+12,615
+9,296
+(Target attainment depending
+on future stock performance)
+Forfeitable commitments of Stock Awards
+(Target attainment depending
+on EPS for past three fiscal years)
+Klaus Helmrich
+Lisa Davis 2
+Dr. Roland Busch
+Joe Kaeser
+12,044
+serving as of September 30, 2014
+(Amounts in number of units)
+of Bonus Awards
+Non-forfeitable commitments
+Awarded for fiscal¹
+The following table shows the stock (Bonus Awards and Stock
+Awards) awarded in November 2014 for fiscal 2014:
+157
+Additional Information
+337 | E.
+Consolidated Financial Statements
+247 | D.
+171 | C. Combined Management Report
+8 Dr. Michael Süß resigned from the Managing Board
+effective at the end of the day on May 6, 2014; his
+employment agreement ended effective September 30,
+2014.
+7 Peter Y. Solmssen resigned from the Managing Board
+effective at the end of the day on December 31, 2013;
+his employment contract ends effective March 31, 2015.
+6 Barbara Kux resigned from the Managing Board effective
+at the end of the day on November 16, 2013.
+Managing Board members
+1,594,910
+12,546
+during
+6 Barbara Kux resigned from the Managing Board effective
+at the end of the day on November 16, 2013.
+7 Peter Y. Solmssen resigned from the Managing Board
+at the end of the day on December 31, 2013; his employ-
+ment agreement ends effective March 31, 2015.
+8 Dr. Michael Süß resigned from the Managing Board
+at the end of the day on May 6, 2014; his employment
+agreement ended effective September 30, 2014.
+Former members of the Managing Board and their surviving
+dependents received emoluments within the meaning of Sec-
+tion 314 para. 1 No. 6 b of the German Commercial Code totaling
+€24.2 million (2013: €33.1 million) in fiscal 2014. This figure in-
+cludes the compensation for former Managing Board member
+Peter Y. Solmssen for the period from January through Septem-
+ber 2014, together with reimbursement of relocation costs and
+the associated tax. Furthermore, it includes the compensatory
+payment connected with the mutually agreed-upon termina-
+tion of the Managing Board membership of Dr. Michael Süßẞ as
+of May 6, 2014, the compensation for the remaining term of his
+employment contract - that is, from May 7 to September 30,
+2014 - as well as a special contribution to the BSAV. Dr. Süß
+received 5,429 Stock Awards for the period from May 7 through
+September 30, 2014, which will be settled in cash in Septem-
+ber 2015 according to the provisions of his contract and in
+connection with the mutually agreed-upon termination of his
+Managing Board membership. Mr. Solmssen received 10,166
+Stock Awards and 3,317 Bonus Awards for the period from Jan-
+uary through September 2014. Other than this, former Manag-
+ing Board members and their surviving dependents received no
+(2013: 5,615) Stock Awards.
+108 | A. To our Shareholders
+131 B.
+Corporate Governance
+156
+132 B.1 Corporate Governance Report
+136 B.2
+138 B.3
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+165 B.5
+(part of the Combined Management Report)
+Forfeited
+during
+fiscal year
+144 B.4
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their
+surviving dependents as of September 30, 2014, amounted
+to €234.4 (2013: €192.5) million. This figure is included in
+→ NOTE 22 POST-EMPLOYMENT BENEFITS in → D.6 NOTES TO CONSOLI-
+DATED FINANCIAL STATEMENTS.
+Other
+No loans or advances from the Company are provided to mem-
+bers of the Managing Board.
+B.4.1.3 ADDITIONAL INFORMATION
+ON STOCK-BASED COMPENSATION INSTRUMENTS
+IN FISCAL 2014
+This section provides information concerning the stock commit-
+ments held by members of the Managing Board that were com-
+ponents of stock-based compensation in fiscal 2014 and prior
+years, and about the Managing Board members' entitlements to
+matching shares under the Siemens Share Matching Plan.
+Stock commitments
+The following table shows the changes in the stock commit-
+ments (Bonus Awards and Stock Awards) held by Managing
+Board members in fiscal 2014:
+Balance at beginning of
+Granted during fiscal year¹
+fiscal 2014
+Vested and
+transferred
+Compensation Report
+fiscal 2014²
+1,426,193
+2,016,262
+1,996,800
+21,234
+March 2019
+200%
+1,828,114
+19,440
+March 2016
+200%
+1,996,800
+21,234
+March 2018
+7,696,114
+81,840
+based on average base compensation since the mem-
+ber's initial appointment.
+108 | A. To our Shareholders
+131 B.
+Corporate Governance
+160
+2 Based on the average Xetra opening price of €94.04 for
+the fourth quarter of 2013 (October-December).
+132 B.1 Corporate Governance Report
+136 B.2
+144 B.4
+138 B.3
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+165 B.5
+(part of the Combined Management Report)
+Compensation Report
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+0 748,800
+200%
+March 2016
+19,932
+1,874,400
+Peter Y. Solmssen 5
+Barbara Kux4
+Brigitte Ederer³
+Former members of the Managing Board
+6,916
+6,639
+4,824
+Dr. Ralf P. Thomas
+6,916
+6,639
+4,934
+Prof. Dr. Siegfried Russwurm
+8,645
+8,299
+-
+4,709
+6,916
+6,639
+4,824
+Dr. Ralf P. Thomas
+Total
+1
+The amount of the obligation is based on a member's
+average base compensation for the four years prior to
+the respective date of proof. The amount shown here is
+3 As per March 14, 2014 (date of proof), including Bonus
+Awards.
+Obligations under Share Ownership Guidelines
+Percentage of base
+compensation¹
+Value¹
+Number of shares²
+Required
+Due date for initial
+measurement
+of adherence
+200%
+Prof. Dr. Hermann Requardt
+Dr. Michael Süß6
+0 3,748,800
+0 1,797,120
+Lisa Davis 10
+Member with responsibilities for Sector portfolio
+Dr. Roland Busch
+Member with responsibilities for Sector portfolio
+Joe Kaeser
+President and CEO
+Total compensation
+One-year variable compensation (bonus) -
+Cash component²
+without long-term incentive
+effect, non-stock-based
+Performance-based
+components
+Total compensation of all Managing Board members for fiscal 2014, according to the applicable reporting standards, amounted to €28.57
+(2013: €34.589) million. The granted payout amount presented below is to be used instead of the target value according to the GCGC for
+the one-year variable compensation (bonus), and service costs for pension benefits are not included. In addition, the cash component of
+the compensatory payment of Lisa Davis in the amount of €1,098,246 is included.
+Total (GCGC)³
+Service cost
+Total'
+Target attainment depending on EPS for past three fiscal years 5
+Target attainment depending on future stock performance 6
+Siemens Stock Awards (restriction period: 4 years)
+Variable compensation (bonus) - Bonus Awards 2.5
+Multi-year variable compensation 3.4
+One-year variable compensation (bonus) -
+Cash component (GCGC)²
+Total
+Fixed compensation (base compensation)
+Fringe benefits'
+effect, stock-based
+with long-term incentive
+effect, non-stock-based
+Performance-based without long-term incentive
+components
+based components
+Non-performance-
+(Amounts in €)
+Managing Board members serving as of September 30, 2014
+One-year variable compensation (bonus) -
+Cash component²
+effect, non-stock-based
+without long-term incentive
+since August 1, 2014
+556,875 1,383,750
+2,542,970 2,220,668
+558,881
+672,101
+14,542
+180,942
+180,942
+180,942
+-
+166,400
+166,400
+14,542
+166,400
+14,542
+51,089
+1,049,489
+998,400
+998,400
+51,089
+1,049,489
+998,400
+51,089
+967,500
+48,591
+0 3,321,000 483,750 748,800
+0 7,083,750 1,551,574 1,218,300
+0 1,383,750 433,840 403,289
+1,845,000
+95,184
+1,940,184 1,016,091 1,049,489
+-
+(max)
+(max)
+FY 2014
+FY 2014
+FY 2014
+FY 2013
+FY 2014
+FY 2014
+(min)
+FY 2014
+FY 2013
+FY 2014
+(max)
+FY 2014
+(min)
+1,845,000
+95,184
+1,940,184
+1,113,750 1,845,000
+71,843 95,184
+1,185,593 1,940,184
+FY 2014
+FY 2013
+(min)
+Total compensation
+Total
+0
+Proven
+Required
+Obligations under Share Ownership Guidelines
+Prof. Dr. Siegfried Russwurm
+Total
+Prof. Dr. Hermann Requardt
+Managing Board members serving as
+of September 30, 2014, and required
+to show proof as of March 14, 2014
+Joe Kaeser
+(Amounts in number of units or €)
+of Siemens shares that were held by Managing Board mem-
+bers in office at September 30, 2014, as of the deadline in
+March 2014 for showing compliance with the Share Owner-
+ship Guidelines, and that are to be held permanently with a
+view to future deadlines.
+The deadlines by which the individual members of the Man-
+aging Board must provide first-time proof of compliance with
+the Siemens Share Ownership Guidelines vary from member
+to member, depending on when the member was appointed
+to the Managing Board. The following table shows the number
+Share Ownership Guidelines
+159
+Additional Information
+337 | E.
+Consolidated Financial Statements
+247 | D.
+171 | C. Combined Management Report
+7 Dr. Michael Süß resigned from the Managing Board
+effective at the end of the day on May 6, 2014; his
+employment agreement ended effective September 30,
+2014.
+6 Peter Y. Solmssen resigned from the Managing Board
+effective at the end of the day on December 31, 2013;
+his employment contract ends effective March 31, 2015.
+5 Barbara Kux resigned from the Managing Board effective
+at the end of the day on November 16, 2013.
+4 Brigitte Ederer resigned from the Managing Board
+effective at the end of the day on September 30, 2013.
+3 Lisa Davis was elected a full member of the Managing
+Board effective August 1, 2014.
+€0), and Dr. Michael Süß €0 (2013: €0). The above fair
+values also take into account that the shares acquired
+under the Base Share Program as part of the Share
+Matching Plan were provided with a Company subsidy
+(for additional information on the Base Share Program
+see → NOTE 32 SHARE-BASED PAYMENT in → D.6 NOTES
+TO CONSOLIDATED FINANCIAL STATEMENTS).
+2 The entitlements of the Managing Board members
+serving as of September 30, 2014, had the following fair
+values: Joe Kaeser €0 (2013: €146,901), Dr. Roland Busch
+€0 (2013: €0), Lisa Davis €0 (2013: €0), Klaus Helmrich
+€0 (2013: €527), Prof. Dr. Hermann Requardt €0 (2013:
+€92,011), Prof. Dr. Siegfried Russwurm €0 (2013: €0) and
+Dr. Ralf P. Thomas €133,392 (2013: €152,696). The enti-
+tlements of former Managing Board members have the
+following fair values: Brigitte Ederer €0 (2013: €0),
+Barbara Kux €0 (2013: €0), Peter Y. Solmssen €0 (2013:
+Amounts may include entitlements acquired before the
+member joined the Managing Board.
+1
+2,685
+2,685
+0
+-
+Percentage of base
+compensation¹
+Value¹
+Number of shares²
+Percentage of base
+compensation¹
+Dr. Roland Busch
+Managing Board members required to show proof in subsequent years
+(Amounts in number of units or €)
+The following table shows the proof-of-compliance obligations
+of the other Managing Board members in view of the Share
+Ownership Guidelines:
+2 Based on the average Xetra opening price of €94.04
+for the fourth quarter of 2013 (October-December).
+239,771
+22,548,065
+71,688
+6,741,625
+79,803
+7,504,674
+825%
+19,345
+1,819,250
+3,766
+200%
+6,184,635
+680%
+19,345
+1,819,250
+200%
+94,202
+8,858,756
+856%
+32,998
+3,103,125
+300%
+The amount of the obligation is based on a member's
+average base compensation for the four years prior to
+the respective date of proof.
+1
+Value² Number of shares³
+65,766
+0
+6,451
+Peter Y. Solmssen 6
+Compensation Report
+(part of the Combined Management Report)
+165 B.5
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+138 B.3
+144 B.4
+132 B.1 Corporate Governance Report
+136 B.2
+158
+Corporate Governance
+131 B.
+108 | A. To our Shareholders
+6 Dr. Michael Süß resigned from the Managing Board
+effective at the end of the day on May 6, 2014; his em-
+ployment agreement ended effective September 30,
+2014. See the information on → PAGE 153 for the Stock
+Awards granted for the remaining term of his contract
+for the period from May 7 through September 30, 2014.
+5 Peter Y. Solmssen resigned from the Managing Board
+effective at the end of the day on December 31, 2013;
+his employment contract ends effective March 31, 2015.
+See the information on → PAGE 153 for the Stock
+Awards committed for the months of January through
+September 2014.
+4 Barbara Kux resigned from the Managing Board effective
+at the end of the day on November 16, 2013.
+3 Brigitte Ederer resigned from the Managing Board
+effective at the end of the day on September 30, 2013.
+2 Lisa Davis was elected a full member of the Managing
+Board effective August 1, 2014.
+1 See the information on → PAGES 151-153 for the
+corresponding fair values.
+68,754
+4,146
+1,729
+884
+0
+3,980
+66,003
+35,687
+0
+1,660
+946
+849
+0
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Shares from the Share Matching Plan
+In fiscal 2011, the members of the Managing Board were
+entitled for the last time to participate in the Siemens Share
+Matching Plan, and under the plan were entitled to invest up to
+50% of the annual gross amount of their variable cash compen-
+sation (bonus) determined for fiscal 2010 in Siemens shares.
+After expiration of a vesting period of approximately three
+years, the plan participants will receive one free matching
+share of Siemens stock for every three Siemens shares acquired
+and continuously held under the plan, provided the partici-
+pants were employed without interruption at Siemens AG or a
+Siemens company until the end of the vesting period. The fol-
+lowing table shows the development of the matching share
+entitlements of the individual members of the Managing Board
+in fiscal 2014.
+Barbara Kux 5
+Brigitte Ederer4
+of the Managing Board
+Former members
+161
+2,846
+Dr. Ralf P. Thomas
+Prof. Dr. Siegfried Russwurm
+1,386
+3
+3
+1,386
+Prof. Dr. Hermann Requardt
+Klaus Helmrich
+Dr. Michael Süß7
+Total
+-
+Dr. Roland Busch
+Entitlement to
+matching shares
+Balance at end
+of fiscal 201412
+Entitlement to
+matching shares
+Forfeited during
+fiscal year
+2,216
+Due during
+fiscal year
+Entitlement to
+matching shares
+2,216
+of fiscal 20141
+Entitlement to
+matching shares
+Balance at beginning
+Joe Kaeser
+serving as of September 30, 2014
+Managing Board members
+(Amounts in number of units)
+Lisa Davis 3
+Performance-based
+components
+Total compensation of all Managing Board members for fiscal 2014, according to the applicable reporting standards, amounted to €28.57
+(2013: €34.58⁹) million. The granted payout amount presented below is to be used instead of the target value according to the GCGC for
+the one-year variable compensation (bonus), and service costs for pension benefits are not included. In addition, the cash component of
+the compensatory payment of Lisa Davis in the amount of €1,098,246 is included.
+Total (GCGC)³
+335,011
+2,973,443 1,060,857
+0
+1,500,000 737,545 600,018
+1,500,000 659,685 418,764
+5,094,560 3,451,148 3,190,032 1,081,989
+520,994 520,994 520,994 499,761 539,849 539,849
+3,494,437 1,581,851 5,615,554 3,950,909 3,729,881 1,621,838 6,059,409
+0
+1,875,000
+0 1,875,000
+5,519,560
+539,849
+427,574
+2,941,250
+1,046,148
+3,270,791
+537,110 1,021,363
+3,504,508 3,462,595
+Brigitte Ederer 12
+Member of the
+Managing Board until
+September 30, 2013
+FY 2013
+Barbara Kux 13
+Member of the
+Managing Board until
+November 16, 2013
+FY 2014
+FY 2014
+FY 2013
+Peter Y. Solmssen 14
+Member of the
+Managing Board until
+December 31, 2013
+FY 2014
+FY 2013
+Dr. Michael Süß 15
+Member of the
+Managing Board until
+May 6, 2014
+FY 2013
+FY 2014
+900,000
+0
+527,714
+2,963,676
+520,698
+3,484,374
+0
+590,020 480,000
+748,800
+900,000
+68,329
+968,329
+998,400
+62,457
+1,060,857
+FY 2014
+(min)
+998,400
+FY 2014
+(max)
+FY 2013
+FY 2014
+FY 2014
+(min)
+998,400
+62,457
+1,060,857
+62,457
+1,060,857
+967,500
+65,544
+1,033,044
+998,400
+998,400
+FY 2014
+(max)
+998,400
+900,000
+83,589
+83,589
+1,081,989
+1,081,989
+1,081,989
+450,000 748,800
+1,545,347 1,163,786
+0
+427,613 348,775
+0
+0 1,797,120 483,750 748,800
+3,748,800 1,934,354 1,359,243
+748,800 537,124 340,461
+0
+1,797,120
+0 4,498,800
+0
+83,589
+FY 2014
+42,571
+942,571
+0
+427,574
+2,940,969
+174,626 427,574 204,992 459,642 471,698
+402,419 2,905,898 717,489 3,040,756 1,581,847
+13 Barbara Kux resigned from the Managing Board effective at
+the end of the day on November 16, 2013.
+14 Peter Y. Solmssen resigned from the Managing Board effective
+at the end of the day on December 31, 2013; his contract with
+the Company ends effective as of March 31, 2015. In addition
+to his total compensation as a member of the Managing
+Board, as shown above, Mr. Solmssen received the following
+compensation in the months of January through Septem-
+ber 2014: fixed compensation of €696,600, fringe benefits of
+€160,717, variable compensation (bonus) of €719,465, and
+Siemens Stock Awards in the amount of €611,240. He was
+also reimbursed for relocation expenses of €270,211 plus the
+associated tax of €241,373, in accordance with the commit-
+ment he received when he took office.
+15 Dr. Michael Süß resigned from the Managing Board effective
+at the end of the day on May 6, 2014; his contract ended
+effective as of September 30, 2014. In addition to his total
+compensation shown above as a member of the Managing
+Board, Dr. Süß received the following compensation for the
+remaining term of his contract from May 7 to September 30,
+2014: fixed compensation of €399,897, fringe benefits of
+€12,470, variable compensation (bonus) of €315,171, and
+Siemens Stock Awards in the amount of €326,425. According
+to the provisions of the contract, the variable compensation
+(bonus) for fiscal 2014 will be granted entirely in cash and the
+Siemens Stock Awards will be settled in cash in Septem-
+ber 2015 at the closing price of Siemens stock in Xetra trading
+on May 6, 2014.
+153
+154
+Allocations
+The following table shows allocations during or for fiscal 2014,
+as the case may be, for fixed compensation, fringe benefits,
+one-year variable compensation, and multi-year variable com-
+pensation - broken down by the relevant years for which they
+were subscribed, as well as the expense of pension benefits.
+| Managing Board members serving as of September 30, 2014
+In deviation from the multi-year variable compensation granted
+for fiscal 2014 and shown above, this table includes the actual
+figure for multi-year variable compensation granted in previous
+years and allocated in fiscal 2014.
+(Amounts in €)
+Non-performance-
+based components
+Performance-based
+components
+without long-term incentive
+effect, non-stock-based
+with long-term incentive
+effect, stock-based
+Joe Kaeser
+President and CEO
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total
+One-year variable compensation (bonus) -
+Cash component²
+FY 2013
+1,113,750
+FY 2014
+1,845,000
+71,843
+95,184
+1,185,593
+1,940,184
+558,849
+0
+855,148
+2,915,453
+526,669 526,160 526,771 530,392 570,428
+873,142 3,454,484 1,213,418 3,595,256 2,279,080
+0 3,489,129
+0
+68,048
+968,048
+118,680 900,000
+4,909 32,977
+123,589 932,977
+232,200
+8,130
+240,330
+967,500
+598,503
+36,158
+1,003,658
+23,060
+621,563
+900,000
+0
+1,117,734
+0
+450,000
+0 1,545,347
+0 427,613
+0
+118,680 450,000
+104,204 1,545,347
+174,150 483,750
+272,167 1,577,456
+68,396 459,722
+598,503
+488,586
+0
+590,020
+527,714
+0 590,020
+0 527,714
+2,960,305
+525,886
+3,486,191
+0 2,963,395
+61,383 590,020
+42,821 527,714
+346,473 2,928,324
+120,018
+83,753
+686,647 3,064,864
+590,020
+527,714
+287,754
+200,832
+1,708,652
+0 525,734
+0 427,613
+FY 2013
+Member with responsibilities for Sector portfolio
+Prof. Dr. Hermann Requardt"
+The number of stock commitments (Bonus Awards and Stock
+Awards) granted was based on the closing price of Siemens
+stock in Xetra trading on the date of award less the present
+value of dividends expected during the holding period, because
+For the other half of the annual target amount for the Stock
+Awards, the Supervisory Board approved a number of Stock
+Awards equivalent to the monetary value of half the target
+amount on the award date. The amount by which these stock
+commitments must be adjusted - or an additional cash pay-
+ment must be made - after the end of the restriction period
+will depend on the performance of Siemens stock compared to
+the stock of five competitors - ABB, Alstom, General Electric,
+Rockwell and Schneider - over the coming four years, and will
+therefore not be determined until after the end of fiscal 2018. If
+significant changes occur among the relevant competitors
+during the period under consideration, the Supervisory Board
+may appropriately take these changes into account in deter-
+mining the values for comparison and/or calculating the rele-
+vant stock prices of those competitors.
+For half of the annual target amount for the Stock Awards, an
+average basic EPS of €5.40 was determined for fiscal years 2012
+through 2014, yielding a target attainment of 96%.
+Long-term stock-based compensation
+In an overall assessment of all aspects, taking individual
+achievements into account and exercising its duty-bound
+discretion (pflichtgemäßes Ermessen), the Supervisory Board
+decided to adjust the bonus payout amounts resulting from
+target attainment downward for one Managing Board member.
+Taking this adjustment by the Supervisory Board into account,
+target attainment grades of the bonus for members of the
+Managing Board came to between 78.81% and 161.57%.
+In addition, in determining target attainment, the attainment
+of Sector-specific targets for economic value added (EVA) and
+of the respective individual targets was taken into account. In
+measuring attainment of the individual targets, the Super-
+visory Board took account of the Compensation Committee's
+recommendation.
+1 Continuing and discontinued operations. The values measured for target attainment were not adjusted.
+100% of target
+15.4%
+€5,250 million
+Free cash flow¹
+Return on capital employed (ROCE)1
+Target parameter
+|
+these two target parameters for variable compensation (bonus):
+The following targets were set and attained with respect to
+124,800
+1,520,154
+41,645
+0
+299,520
+0 5,566,905
+0
+124,800
+1,047,315
+936,774
+912,065
+636,502
+0
+0
+4,789,761
+2,850,000 590,020 480,000
+1,500,000
+2,850,000 527,714 335,011
+1,500,000
+4,285,438 5,544,602 1,940,184 9,503,000 3,051,415 3,016,589 1,049,489 5,094,560
+504,323 1,058,566 1,058,566 1,058,566 520,736 561,000 561,000 561,000
+6,603,168 2,998,750 10,561,566 3,572,151 3,577,589 1,610,489 5,655,560
+0
+0
+-
+Actual FY 2014 figure
+Target attainment
+17.3%
+€5,201million
+Service cost
+Target attainment depending on future stock performance
+Total'
+Target attainment depending on EPS for past three fiscal years5
+Siemens Stock Awards (restriction period: 4 years)
+Variable compensation (bonus) - Bonus Awards 2.5
+Multi-year variable compensation 3.4
+One-year variable compensation (bonus) -
+Cash component (GCGC)²
+Total
+Fixed compensation (base compensation)
+Fringe benefits'
+without long-term incentive
+effect, non-stock-based
+with long-term incentive
+effect, stock-based
+Performance-based
+components
+Non-performance-
+based components
+(Amounts in €)
+Managing Board members serving as of September 30, 2014
+870,781
+607,728
+1,825,896 180,942
+149
+337 | E
+247 | D. Consolidated Financial Statements
+171 | C. Combined Management Report
+The compensation presented on the following pages was
+granted to the members of the Managing Board for fiscal 2014
+(individualized disclosure).
+The following disclosure of the compensation granted for fis-
+cal 2014 takes account not only of the applicable reporting
+standards, but also of the recommendations of the Code. Con-
+sequently, the model table recommended by the Code for dis-
+closing the value of benefits granted for the year under review
+was used. The figures presented also include the attainable
+minimums or maximums, as applicable. The fair values shown
+for granted stock-based compensation were calculated on the
+basis of the applicable reporting standards. The transfer of
+one share per award will not take place until the expiration of
+the four-year waiting or restriction period - that is, not until
+November 2018. The number of Stock Awards linked to the
+performance of the price of Siemens stock will be adjusted
+after the end of the restriction period, on the basis of the
+actual target attainment. Accordingly, the value of the ac-
+tual shares transferred may be higher or lower than shown
+here, also depending on the stock price in effect at the time
+of transfer.
+On the basis of the decisions by the Supervisory Board de-
+scribed above, Managing Board compensation for fiscal 2014
+totaled €28.57 million, a decrease of 17.4% (2013: €34.58 mil-
+lion). Of this total amount, €17.89 million (2013: €16.98 million)
+was attributable to cash compensation and €10.68 million
+(2013: €17.60 million) to stock-based compensation.
+Total compensation
+compensation (Stock Awards) for fiscal 2014 will be calculated
+once the actual target attainment is available, and will be
+granted at the usual date. The Stock Awards already granted
+in the past and those for fiscal 2014, for which the restriction
+period is still running, will be absolutely maintained, in accor-
+dance with the terms of his contract with the Company, and
+will be settled in cash in September 2015 at the closing price
+of Siemens stock in Xetra trading on May 6, 2014 (€93.91).
+Dr. Süẞ agreed not to take up activities for any significant
+competitor of Siemens for a period of one year after the end
+of his employment contract - that is, until September 30,
+2015. For this post-contractual non-compete commitment, he
+will be paid a monthly total of gross €65,000. In determining
+the amount of the compensatory payment for Dr. Süß, in ac-
+cordance with the terms of his contract with the Company,
+the base compensation for fiscal 2014 and the variable com-
+pensation and long-term stock-based compensation actually
+received for fiscal 2013 were applied and limited, as applica-
+ble, to either two annual payments in total or the compensa-
+tion for the remaining term of his appointment. The portion
+of the compensatory payment that was calculated excluding
+the first six months of the remaining contract term was re-
+duced by 15% as a lump-sum allowance for discounted values
+and for income earned elsewhere. In addition, non-monetary
+benefits were covered by a payment in the amount of 5% of
+the compensatory payment.
+In connection with the mutually agreed termination of
+Dr. Michael Süẞ's activity on the Managing Board as of May 6,
+2014, it was agreed that his current contract with the Company
+would terminate as of September 30, 2014. The entitlements
+agreed upon under the contract remained in effect until that
+date. Dr. Süẞ receives a compensatory payment in the gross
+amount of €4,286,092 in connection with the mutually agreed
+premature termination of his activity as a member of the Man-
+aging Board, together with a one-time special contribution of
+€812,700 to the BSAV, to be credited in January 2015. It was
+also agreed with Dr. Süß that the long-term stock-based
+In connection with the mutually agreed termination of Peter Y.
+Solmssen's activity on the Managing Board as of December 31,
+2013, it was agreed that his contract with the Company would
+remain in effect until March 31, 2015. The entitlements agreed
+upon under the contract will remain in effect until that date.
+These will not include the fringe benefits under the contract,
+particularly the Company car and contributions toward the cost
+of insurance, which will be covered until the contract ends by
+a monthly lump-sum payment of €11,500. The Stock Awards
+already granted in the past for fiscal 2011, 2012 and 2013, for
+which the restriction period is still in progress, will be abso-
+lutely maintained. Mr. Solmssen was also reimbursed for relo-
+cation costs, in accordance with the commitment he received
+when he took office. The Company furthermore reimbursed
+Mr. Solmssen for out-of-pocket expenses of €100,000 plus
+value added-tax.
+As Barbara Kux's appointment to the Managing Board expired
+regularly on November 16, 2013, no compensatory payments
+were agreed upon in that connection. The Stock Awards already
+granted in the past for fiscal 2011, 2012 and 2013, for which the
+restriction period is still running, will be absolutely maintained,
+in accordance with the terms of her contract with the Company.
+Benefits associated with termination
+of Managing Board membership
+beneficiaries are not entitled to receive dividends. This figure
+for determining the number of commitments amounted to
+€72.30 (2013: €80.88).
+163.67%
+97.55%
+Additional Information
+0
+2,721,053
+0 2,721,052
+849,093
+2,818,722 2,818,722 2,818,722
+4,644,618 2,999,664 3,667,815
+0 1,500,000
+3,350,336 2,962,670 1,042,131 5,094,560
+519,915 560,147 560,147 560,147
+3,870,251 3,522,817 1,602,278 5,654,707
+21,352 480,000
+19,121 335,011
+112,006 2,972,208
+0
+1,500,000
+0
+1,500,000
+1,059,622 5,094,560
+208,034 230,055 230,055 230,055
+320,040 3,202,263 1,289,677 5,324,615
+459,642 1,070,035
+3,326,228 3,283,905
+16,598 1,046,148
+111,135 3,269,556
+124,800
+1,825,896
+1 Fringe benefits include costs, or the cash equiva-
+lent, of non-monetary benefits and other perqui-
+sites, such as provision of Company cars in the
+amount of €181,638 (2013: €239,301), contributions
+toward the cost of insurance in the amount of
+€71,776 (2013: €88,827), reimbursement of fees
+for legal advice, tax advice and accommodation
+and moving expenses, including any taxes that
+have been assumed in this regard as well as costs
+connected with preventive medical examinations,
+in the amount of €194,498 (2013: €176,221).
+2 The Supervisory Board adjusted the bonus payout
+amount resulting from target attainment individu-
+ally downward by 10% for Dr. Süß.
+3 The figures for individual maximums for multi-
+year variable compensation reflect the possible
+maximum value in accordance with the maximum
+amount agreed for fiscal 2014, that is 300% of
+the applicable target amount.
+659,685 335,011
+4 The expenses recognized for stock-based compen-
+sation (Bonus Awards and Stock Awards) and for
+the Share Matching Plan for members of the Man-
+aging Board in accordance with IFRS in fiscal 2014
+and 2013 amounted to €16,141,235 and €23,160,536,
+respectively. The following amounts pertained to
+the members of the Managing Board in fiscal 2014:
+Joe Kaeser €1,822,932 (2013: €2,099,925), Dr. Ro-
+land Busch €922,535 (2013: €1,091,572), Lisa Davis
+€1,337,996 (2013: €0), Klaus Helmrich €949,521
+way, for former Managing Board members was
+follows: Brigitte Ederer €35,373 (2013: €3,062,678),
+Barbara Kux €1,971,611 (2013: €1,566,960), Peter
+Löscher €107,733 (2013: €8,261,949), Peter Y.
+Solmssen €3,430,484 (2013: €1,566,874), and
+Dr. Michael Süẞ €2,742,885 (2013: €1,091,934).
+5 For Stock Awards for which the target attainment
+depends on the EPS for the past three fiscal years,
+and for Bonus Awards, the fair value at the date of
+award is equivalent to the respective monetary value.
+6 The monetary values referred to a 100% target attainment
+amounted to €4,970,916 (2013: €6,197,430). The following
+amounts pertained to the members of the Managing Board:
+Joe Kaeser €950,022 (2013: €887,577), Dr. Roland Busch
+€500,027 (2013: €500,000), Lisa Davis €907,076 (2013: €0),
+Klaus Helmrich €500,027 (2013: €500,000), Prof. Dr.
+Hermann Requardt €625,034 (2013: €625,041), Prof. Dr.
+Siegfried Russwurm €500,027 (2013: €625,041), and Dr.
+Ralf P. Thomas €500,027 (2013: €18,117). The corresponding
+monetary values for former Managing Board members were
+as follows: Brigitte Ederer €0 (2013: €500,000), Barbara Kux
+€63,913 (2013: €500,000), Peter Y. Solmssen €125,007 (2013:
+€500,000), and Dr. Michael Süß €299,756 (2013: €500,000).
+7 The total maximum compensation for fiscal 2014 represents
+the contractual maximum amount for overall compensation,
+excluding fringe benefits and pension benefit commitments.
+The maximum amount, at 1.7 times target compensation
+(base compensation, target amount for bonus and target
+amount for stock-based compensation) is less than the total
+individual contractual caps for performance-based
+components.
+8 The total compensation reflects the current fair value of
+stock-based compensation components on the award date.
+On the basis of the current monetary values of stock-based
+compensation components, total compensation amounted
+to €29,109,709 (2013: €34,236,151).
+9
+The total compensation of €34.58 million for the prior year
+also includes the fiscal 2013 compensation of €5,604,567 for
+former Managing Board member Peter Löscher.
+10 In compensation for the forfeiture of stock, pension bene-
+fits, health benefits and transitional remuneration from her
+former employer, the Supervisory Board granted Ms. Davis
+a one-time amount of €5,491,229. This amount will be
+provided 20% cash, 30% in the form of Siemens Stock
+Awards, and the remaining 50% as a special contribution
+to the pension plan.
+11
+The Supervisory Board increased the annual target amount for
+the monetary value of the Stock Awards commitment for fiscal
+2014 by 25% to €1,250,000 for Prof. Dr. Hermann Requardt.
+12 Brigitte Ederer resigned from the Managing Board effective
+at the end of the day on September 30, 2013. According
+to the provisions of her contract, the variable compensation
+(bonus) for fiscal 2013 was granted entirely in cash, and the
+Siemens Stock Awards for fiscal 2013 were settled in cash.
+Klaus Helmrich
+Member of the Managing Board
+(2013: €1,058,299), Prof. Dr. Hermann Requardt
+€1,254,756 (2013: €1,686,929), Prof. Dr. Siegfried
+Russwurm €1,118,839 (2013: €1,653,844), and
+Dr. Ralf P. Thomas €446,570 (2013: €19,572). The
+corresponding expense, determined the same
+Multi-year variable compensation
+0 1,500,000
+0 748,800
+558,849 2,016,262
+4,287,412 6,177,114
+Prof. Dr. Siegfried Russwurm
+Member with responsibilities for Sector portfolio
+433,819 1,209,836
+3,001,484 3,477,625
+Dr. Ralf P. Thomas
+CFO
+FY 2013
+FY 2014
+FY 2014
+(min)
+FY 2014
+FY 2013
+FY 2014
+(max)
+967,500 998,400
+42,134 43,731
+1,009,634 1,042,131
+998,400
+43,731
+1,042,131
+737,545 480,000
+998,400
+43,731
+1,042,131
+FY 2014
+(min)
+998,400
+61,222
+1,059,622
+FY 2014
+(max)
+998,400
+61,222
+1,059,622
+483,750 748,800
+1,856,952 1,171,739
+0 1,797,120
+459,722
+356,728
+0 3,748,800
+0 748,800
+17,469 748,800
+57,134 1,163,786
+16,661 348,775
+0 1,797,120
+0 3,748,800
+34,938 998,400
+2,465
+61,222
+37,403 1,059,622
+Balance at end of
+Additional Information
+Additional Sustainability indicators are available at:
+40,000
+140,000
+201,000
+21,000
+40,000
+140,000
+Sibylle Wankel¹
+288,500
+28,500
+120,000
+140,000
+370,167
+43,500
+186,667
+140,000
+Birgit Steinborn¹
+241,722
+19,500
+97,778
+22,500
+124,444
+202,500
+Dr. Josef Ackermann4
+140,000
+2,896,779 1,291,926
+62,833
+5,133,191
+4,500
+493,500
+1,640,247
+340,500
+40,500
+160,000
+140,000
+227,000
+27,000
+106,667
+93,333
+58,333
+2,999,444
+381,167
+34,500
+134,815
+211,852
+Total
+Prof. Dr. Rainer Sieg³
+Lothar Adler 1,2
+Former Supervisory Board members
+Jim Hagemann Snabe
+90,667
+9,000
+Dr. Nicola Leibinger-Kammüller
+287,000
+27,000
+120,000
+140,000
+288,500
+28,500
+120,000
+140,000
+Jürgen Kerner¹
+186,500
+16,500
+30,000
+140,000
+242,167
+25,500
+76,667
+140,000
+Harald Kern¹
+124,444
+10,500
+134,944
+134,815
+81,667
+Michael Sigmund³
+104,000
+6,000
+98,000
+140,130
+10,500
+129,630
+Güler Sabancı
+15,000
+433,500 4,622,2055
+133,500
+28,000
+98,000
+132,438
+7,500
+5,679
+119,259
+Gérard Mestrallet
+149,815
+15,000
+7,500
+112,500
+155,000
+2 Olaf Bolduan was appointed to the Supervisory Board by
+court order as of July 11, 2014, succeeding Lothar Adler,
+who resigned from the Supervisory Board as of the end
+of the day on May 31, 2014.
+166
+108 | A. To our Shareholders
+The new shares under the Authorized Capital 2014 and the
+bonds under these authorizations are to be issued against
+cash or non-cash contributions. The bonds are, as a matter of
+principle, to be offered to shareholders for subscription. The
+Managing Board is authorized to exclude, with the approval of
+the Supervisory Board, subscription rights of shareholders in
+the event of capital increases against contributions in kind.
+By resolution of the Annual Shareholders' Meeting of Janu-
+ary 26, 2010, the Managing Board is authorized until Janu-
+ary 25, 2015 to issue bonds in an aggregate principal amount of
+up to €15 billion with conversion rights or with warrants at-
+tached, or a combination of these instruments, entitling the
+holders to subscribe to up to 200 million registered shares of
+Siemens AG of no par value, representing a pro rata amount of
+up to €600 million of the capital stock. Additionally, by resolu-
+tion of the Annual Shareholders' Meeting of January 28, 2014,
+the Managing Board is authorized until January 27, 2019 to
+issue bearer or registered bonds in an aggregate principal
+amount of up to €15 billion with conversion rights or with
+bearer or registered warrants attached or a combination of
+these instruments, entitling the holders to subscribe to up to
+80 million registered shares of Siemens AG of no par value, rep-
+resenting a pro rata amount of up to €240 million of the capital
+stock. In order to grant shares of stock to holders/creditors of
+convertible bonds or warrant bonds issued by the Company
+or by consolidated subsidiaries of the Company under these
+authorizations the capital stock was conditionally increased by
+up to €600 million through the issuance of up to 200 million
+shares of no par value registered in the names of the holders
+(Conditional Capital 2010) and by up to €240 million, respec-
+tively, through the issuance of up to 80 million shares of no par
+value registered in the names of the of the holders (Conditional
+Capital 2014).
+As of September 30, 2014, the total unissued authorized capital
+of Siemens AG therefore consisted of €618.6 million nominal
+that may be issued in installments with varying terms by issu-
+ance of up to 206.2 million registered shares of no par value.
+Furthermore, the Managing Board is authorized to increase,
+with the approval of the Supervisory Board, the capital stock
+until January 27, 2019 by up to €528.6 million through the issu-
+ance of up to 176.2 million registered shares of no par value
+against cash contributions and/or contributions in kind (Author-
+ized Capital 2014).
+issued in such a manner that the contribution to be paid on
+such shares is covered by that part of the annual net income
+which the Managing Board and the Supervisory Board may
+allocate to other retained earnings under Section 58 para. 2 of
+the German Stock Corporation Act.
+The Managing Board is authorized to increase, with the ap-
+proval of the Supervisory Board, the capital stock until Janu-
+ary 24, 2016 by up to €90 million through the issuance of up to
+30 million registered shares of no par value against contribu-
+tions in cash (Authorized Capital 2011). Preemptive rights of
+existing shareholders are excluded. The new shares shall be
+issued under the condition that they are offered exclusively
+to employees of Siemens AG and its consolidated subsidiaries.
+To the extent permitted by law, employee shares may also be
+B.5.7 Powers of the Managing Board
+to issue and repurchase shares
+Resolutions of the Annual Shareholders' Meeting require a sim-
+ple majority vote, unless a greater majority is required by law.
+Pursuant to Section 179 para. 2 of the German Stock Corpora-
+tion Act, amendments to the Articles of Association require
+a majority of at least three-quarters of the capital stock repre-
+sented at the time of the casting of the votes, unless another
+capital majority is prescribed by the Articles of Association.
+According to Section 179 of the German Stock Corporation Act,
+any amendment to the Articles of Association requires a resolu-
+tion of the Annual Shareholders' Meeting. The authority to
+adopt purely formal amendments to the Articles of Association
+was transferred to the Supervisory Board under Section 13
+para. 2 of the Articles of Association. In addition, by resolution
+of the Annual Shareholders' Meetings on January 25, 2011 and
+January 28, 2014, the Supervisory Board has been authorized to
+amend Section 4 of the Articles of Association in accordance
+with the utilization of the Authorized Capital 2011 and the
+Authorized Capital 2014, and after expiration of the then-appli-
+cable authorization period.
+The appointment and removal of members of the Managing
+Board is subject to the provisions of Sections 84 and 85 of the
+German Stock Corporation Act and Section 31 of the German
+Codetermination Act (Mitbestimmungsgesetz). According to
+Section 8 para. 1 of the Articles of Association, the Managing
+Board is comprised of several members, the number of which
+is determined by the Supervisory Board. Pursuant to Section 84
+of the German Stock Corporation Act and Section 9 of the
+Articles of Association, the Supervisory Board may appoint a
+President of the Managing Board as well as a Vice President.
+B.5.6 Legislation and provisions of the
+Articles of Association applicable to the
+appointment and removal of members.
+of the Managing Board and governing
+amendment to the Articles of Association
+165
+Additional Information
+337 | E.
+Consolidated Financial Statements
+247 | D.
+171 | C. Combined Management Report
+131 B. Corporate Governance
+Shares of stock issued by Siemens AG to employees under its
+employee share program and/or as stock-based compensation
+are transferred directly to the employees. The beneficiary
+employees who hold shares of employee stock may exercise
+their control rights in the same way as any other shareholder
+directly in accordance with applicable laws and the Articles of
+Association.
+132 B.1 Corporate Governance Report
+136 B.2
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+> used to meet obligations or rights to acquire Siemens shares
+arising from, or in connection with, convertible bonds or war-
+rant bonds issued by the Company or any of its consolidated
+> sold, with the approval of the Supervisory Board, to third par-
+ties against payment in cash if the price at which such
+Siemens shares are sold is not significantly lower than
+the market price of Siemens stock at the time of selling (ex-
+clusion of subscription rights, limited to 10% of the capital
+stock, by mutatis mutandis application of Section 186 para. 3
+sentence 4 German Stock Corporation Act) or
+> offered and transferred, with the approval of the Supervisory
+Board, to third parties against non-cash contributions
+> offered for purchase to individuals currently or formerly em-
+ployed by the Company or any of its affiliated companies as
+well as to board members of any of the Company's affiliated
+companies, or awarded and/or transferred to such individu-
+als with a vesting period of at least two years
+Such Siemens shares may be
+> retired
+Besides selling them over the stock exchange or through a pub-
+lic sales offer to all shareholders, the Managing Board is author-
+ized by resolution of the Annual Shareholders' Meeting on
+January 25, 2011 to also use Siemens shares repurchased on the
+basis of this or any previously given authorization as follows:
+Company to acquire until January 24, 2016 up to 10% of its
+capital stock existing at the date of adopting the resolution
+or - if this value is lower - as of the date on which the autho-
+rization is exercised. The aggregate of shares of stock of
+Siemens AG repurchased under this authorization and any
+other Siemens shares previously acquired and still held in
+treasury by the Company or attributable to the Company pur-
+suant to Sections 71d and 71e of the German Stock Corpora-
+tion Act may at no time exceed 10% of the then existing capi-
+tal stock. Any repurchase of Siemens shares shall be
+accomplished at the discretion of the Managing Board either
+(1) by acquisition over the stock exchange or (2) through a
+public share repurchase offer. The Managing Board is addi-
+tionally authorized, with the approval of the Supervisory
+Board, to complete the repurchase of Siemens shares in
+accordance with the authorization described above by using
+certain equity derivatives (such as put and call options, for-
+ward purchases and any combination of these derivatives). In
+exercising this authorization, all stock repurchases based on
+the equity derivatives are limited to a maximum volume of
+5% of Siemens' capital stock existing at the date of adopting
+the resolution at the Annual Shareholders' Meeting. An equity
+derivative's term of maturity may not, in any case, exceed
+18 months and must be chosen in such a way that the repur-
+chase of Siemens shares upon exercise of the equity deriva-
+tive will take place no later than January 24, 2016.
+The Company may not repurchase its own shares unless so
+authorized by a resolution duly adopted by the shareholders
+at a general meeting or in other very limited circumstances
+set forth in the German Stock Corporation Act. On January 25,
+2011, the Annual Shareholders' Meeting authorized the
+In February 2012, Siemens issued bonds with warrant units
+with a volume of US$3 billion. The bonds with warrant units
+with a minimum per-unit denomination of US$250,000 were
+offered exclusively to institutional investors outside the U.S.
+Subscription rights of Siemens shareholders were excluded.
+The bonds issued by Siemens Financieringsmaatschappij N.V.
+are guaranteed by Siemens AG and complemented with war-
+rants issued by Siemens AG. The warrants entitle their holders
+to receive Siemens shares against payment of the exercise
+price in euros. At issuance, the warrants resulted in option
+rights relating to a total of about 21.7 million Siemens shares.
+The terms and conditions of the warrants enable Siemens to
+service exercised option rights also by delivering treasury stock
+as well as to buy back the warrants. The bonds with warrant
+units were issued in two tranches with maturities of 5.5 years
+and 7.5 years, respectively. The maturities refer to both the
+bonds and the related warrants.
+The total amount of new shares issued or to be issued under
+the Authorized Capital 2014 or in accordance with the bonds
+mentioned above, in exchange for contributions in cash and in
+kind and with shareholders' subscription rights excluded, may
+in certain cases be subject to further restrictions, such as the
+restriction that they may not exceed 20% of the capital stock.
+The details of those restrictions are described in the relevant
+authorization.
+> where the exclusion is necessary in order to grant holders of
+conversion or option rights or conversion or option obliga-
+tions on Siemens shares a compensation for the effects of
+dilution.
+> where the exclusion is necessary with regard to fractional
+amounts resulting from the subscription ratio
+> where the issue price of the new shares/bonds is not signif-
+icantly lower than the stock market price of the Siemens
+shares already listed or the theoretical market price of the
+bonds computed in accordance with generally accepted actu-
+arial methods (exclusion of preemptive rights, limited to 10%
+of the capital stock, in accordance with or by mutatis mutan-
+dis application of Section 186 para. 3 sentence 4 German
+Stock Corporation Act)
+In the event of capital increases against contributions in cash,
+the Managing Board is authorized to exclude shareholders'
+subscription rights with the approval of the Supervisory Board
+in the following cases:
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Compensation Report
+165 B.5
+144 B.4
+(part of the Combined Management Report)
+138 B.3
+B.5.5 System of control of any
+employee share scheme where
+the control rights are not exercised
+directly by the employees
+There are no shares with special rights conferring powers of
+control.
+B.5.4 Shares with special rights
+conferring powers of control
+The Company provides a group insurance policy for Board and
+Committee members and certain employees of the Siemens
+organization that is taken out for one year and renewed annu-
+ally. The insurance covers the personal liability of the insured
+in the case of a financial loss associated with employment func-
+tions. The insurance policy for fiscal 2014 includes a deductible
+for the members of the Managing Board and the Supervisory
+Board in compliance with the requirements of the German
+Stock Corporation Act and the Code.
+B.4.3 Other
+No loans or advances from the Company are provided to mem-
+bers of the Supervisory Board.
+The members of the Supervisory Board are reimbursed for out-
+of-pocket expenses incurred in connection with their duties
+and for any value-added taxes to be paid on their remuneration.
+For the performance of his duties, the Chairman of the Super-
+visory Board is also entitled to an office with secretarial support
+and the use of a carpool service.
+In addition, the members of the Supervisory Board are entitled
+to receive a meeting attendance fee of €1,500 for each meeting
+of the Supervisory Board and its committees that they attend.
+If a Supervisory Board member does not attend a meeting of
+the Supervisory Board, one-third of the aggregate compensa-
+tion due to that member is reduced by the percentage of Super-
+visory Board meetings not attended by the member in relation
+to the total number of Supervisory Board meetings held during
+the fiscal year. In the event of changes in the composition of
+the Supervisory Board and/or its committees, compensation is
+paid pro rata temporis, rounding up to the next full month.
+The members of the Supervisory Board committees receive the
+following additional fixed compensation for their work on these
+committees: the Chairman of the Audit Committee receives
+€160,000, and each of the other members of that Committee
+receives €80,000; the Chairman of the Chairman's Committee
+receives €120,000, and each of the other members of that Com-
+mittee receives €80,000; the Chairman of the Compensation
+Committee receives €100,000, and each of the other members
+of that Committee receives €60,000 (compensation for any
+work on the Chairman's Committee counts toward compensa-
+tion for work on the Compensation Committee); the Chairman
+of the Innovation and Finance Committee receives €80,000,
+and each of the other members of that Committee receives
+€40,000; the Chairman of the Compliance Committee receives
+€80,000, and each of the other members of that Committee
+receives €40,000. However, no additional compensation is paid
+for work on the Compliance Committee if a member of that
+Committee is already entitled to compensation for work on the
+Audit Committee.
+According to current rules, members of the Supervisory Board
+receive an annual base compensation of €140,000; the Chair-
+man of the Supervisory Board receives a base compensation of
+€280,000, and each of the Deputy Chairmen receives €220,000.
+The current remuneration policies for the Supervisory Board
+were authorized at the Annual Shareholders' Meeting held on
+January 28, 2014, and are effective as of fiscal 2014. Details
+are set out in Section 17 of the Articles of Association of
+Siemens AG. The remuneration of the Supervisory Board con-
+sists entirely of fixed compensation; it reflects the responsibili-
+ties and scope of the work of the Supervisory Board members.
+The Chairman and Deputy Chairmen of the Supervisory Board
+as well as the Chairmen and members of the Audit Committee,
+the Chairman's Committee, the Compensation Committee, the
+Compliance Committee and the Innovation and Finance Com-
+mittee receive additional compensation.
+The compensation shown on the previous page was deter-
+mined for each of the members of the Supervisory Board for
+fiscal 2014 (individualized disclosure).
+163
+Additional Information
+337 | E.
+Consolidated Financial Statements
+247 | D.
+171 | C. Combined Management Report
+5 The total figure, compared to the amount of €4,420,926
+presented in the 2013 Compensation Report, includes
+additional meeting attendance fees of €433,500, but not
+the total compensation of €232,222 for former Supervisory
+Board members Jean-Louis Beffa, Werner Mönius,
+Håkan Samuelsson and Lord lain Vallance of Tummel.
+4 Dr. Josef Ackermann resigned from the Supervisory
+Board as of the end of the day on September 30, 2013.
+3 Michael Sigmund was appointed to the Supervisory
+Board by court order as of March 1, 2014, succeeding
+Prof. Dr. Rainer Sieg, who resigned from the Supervisory
+Board as of the end of the day on February 28, 2014.
+108 | A. To our Shareholders
+131 B.
+Corporate Governance
+164
+We are not aware of, nor have we during the fiscal year 2014
+been notified of, any shareholder directly or indirectly holding
+10% or more of the voting rights.
+B.5.3 Equity interests exceeding 10%
+of voting rights
+The von Siemens-Vermögensverwaltung GmbH (vSV) has, on a
+sustained basis, powers of attorney allowing it to exercise the
+voting rights for 9,386,535 shares (as of September 30, 2014) on
+behalf of members of the Siemens family, whereby aforemen-
+tioned shares constitute a part of the overall number of shares
+held by members of the Siemens family. The VSV is a German
+limited liability company and party to an agreement with,
+among others, members of the Siemens family (family agree-
+ment). In order to bundle and represent their interests, the
+members of the Siemens family established a family partner-
+ship. This family partnership makes proposals to the VSV with
+respect to the exercise of the voting rights at Shareholders'
+Meetings of the Company, which are taken into account by
+the VSV when acting within the bounds of its professional dis-
+cretion. Pursuant to the family agreement, the shares under
+powers of attorney are voted by the VSV collectively.
+Shares issued to employees worldwide under the employee
+share program implemented since the beginning of fiscal 2009,
+in particular the Share Matching Plan, are freely transferable un-
+less applicable local laws provide otherwise. However, in order
+to receive one matching share free of charge for each three
+shares purchased, participants are required to hold the shares
+purchased by them under the rules of the program for a vesting
+period of about three years, during which the participants have
+to be continuously employed by Siemens AG or another Siemens
+company. The right to receive matching shares is forfeited if the
+purchased shares are sold, transferred, hedged on, pledged or
+hypothecated in any way during the vesting period.
+At the Annual Shareholders' Meeting, each share of stock has
+one vote and accounts for the shareholders' proportionate
+share in the Company's net income. Excepted from this rule are
+treasury shares held by the Company, which do not entitle the
+Company to any rights. Under Section 136 of the German Stock
+Corporation Act the voting right of the affected shares is ex-
+cluded by law.
+B.5.2 Restrictions on voting rights or
+transfer of shares
+All shares confer the same rights and obligations. The share-
+holders' rights and obligations are governed by the provisions
+of the German Stock Corporation Act, in particular by Sections
+12, 53a et seq., 118 et seq. and 186 of the German Stock Corpo-
+ration Act.
+As of September 30, 2014, the Company's common stock
+totaled €2.643 billion (2013: €2.643 billion) divided into 881 mil-
+lion (2013: 881 million) registered shares with no par value and
+a notional value of €3.00 per share. The shares are fully paid in.
+In accordance with Section 4 para. 3 of the Company's Articles
+of Association, the right of shareholders to have their owner-
+ship interests evidenced by document is excluded, unless such
+evidence is required under the regulations of a stock exchange
+on which the shares are listed. Collective share certificates may
+be issued. Pursuant to Section 67 para. 2 of the German Stock
+Corporation Act (Aktiengesetz), only those persons recorded
+in the Company's stock register will be recognized as share-
+holders of the Company.
+B.5.1 Composition of common stock
+1 Both the employee representatives on the Supervisory
+Board who represent the employees pursuant to Section
+3 para. 1 No. 1 of the German Codetermination Act
+(Mitbestimmungsgesetz) and the representatives of the
+trade unions on the Supervisory Board declared their
+readiness to transfer their compensation to the Hans
+Boeckler Foundation, in accordance with the guidelines
+of the Confederation of German Trade Unions (DGB).
+The takeover-relevant information pursuant to Sections 289
+para. 4 and 315 para. 4 of the German Commercial Code (Han-
+delsgesetzbuch) and the explanatory report are an integral part
+of the Combined Management Report.
+|||B.5 Takeover-relevant information (pursuant to Sections 289
+para. 4 and 315 para. 4 of the German Commercial Code) and
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Compensation Report
+(part of the Combined Management Report)
+165 B.5
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+138 B.3
+144 B.4
+132 B.1 Corporate Governance Report
+136 B.2
+explanatory report
+171 | C. Combined Management Report
+7,500
+273,667
+2-times
+Managing
+Board
+member:
+of Base
+compen-
+sation
+President
+and CEO:
+3-times
+Base
+compen-
+sation
+Base
+compen-
+sation
+compensation
+of target
+max. 1.7-times
+overall
+Compensation
+Bonus (cash):
+0-200%
+add. +20%
+adjustment
+compen-
+sation
+Base
+add. ±20% adjustment
+> variability: 0-200%
+capital efficiency, profit, individual
+> 3 targets one third each:
+Variable compensation (bonus)
+WWW.SIEMENS.COM/AR/SUSTAINABILITY-FIGURES
+> variability: 0-200%
+Performance-based component with deferred payout
+108 | A. To our Shareholders
+Additional
+compensation
+for committee
+work
+Base com-
+pensation
+FY 2014
+Supervisory Board members
+(Amounts in €)
+B.4.2 Remuneration of members
+of the Supervisory Board
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Compensation Report
+(part of the Combined Management Report)
+165 B.5
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+138 B.3
+136 B.2
+144 B.4
+132 B.1 Corporate Governance Report
+131 B. Corporate Governance
+Obligation to hold shares during term of office on the Managing Board
+Performance-based component
+162
+Non-performance-based component
+compared to 5 competitors
+> target parameter: stock price
+Long-term stock-based compensation
+Annual remuneration reviews - together with
+contractually defined maximum amounts for
+variable compensation and for stock-based
+components of compensation and compensation
+overall - ensure that compensation is appropriate.
+Appropriateness
+Granting a substantial portion of compensation
+as stock, together with the share ownership
+obligation, puts an emphasis on the ownership
+culture within the Company.
+Ownership culture
+Individual performance is rewarded by agreeing
+on individual targets and by the possibility for
+the Supervisory Board to adjust the bonus as well
+as by individualizable target amounts for stock-
+based compensation.
+Individual performance
+Variable compensation is linked
+to the Company's success and
+to comparisons with competitors.
+Performance orientation
+Dividing compensation into three equally
+weighted components, and the equal weighting
+of three bases of measurement for the bonus,
+permit transparent, understandable communica-
+tion of Managing Board remuneration.
+Transparency
+The multi-year bases of measurement and long-
+term goals for variable components ensure and
+encourage sustainable Company development.
+Sustainability
+| Principal features of the new remuneration system for the Managing Board
+The complexity of the former system also resulted from the
+way in which variable compensation (bonus) was granted
+partly in Stock commitments, Bonus Awards, and from the di-
+vided measurement of performance for long-term stock-based
+compensation (Stock Awards). Beginning with fiscal 2015, the
+bonus will be paid in cash only. The Stock Awards will now be
+measured only on the basis of one performance component.
+-
+offered in the market. The Supervisory Board has maintained
+the time-tested division of compensation into non-perfor-
+mance-based and performance-based components, but in the
+future the individual components of compensation - base com-
+pensation, variable compensation (bonus) and long-term,
+stock-based compensation will be weighted equally. This
+equal weighting will also be applied in setting the target cate-
+gories for variable compensation (bonus).
+At its meeting on September 24, 2014, the Supervisory Board
+decided to introduce a new, simplified remuneration system for
+the Managing Board as of October 1, 2014. In past years, the
+remuneration system for the Managing Board was modified a
+number of times on the basis of new regulatory and statutory
+requirements. The system grew more complex as a result.
+Establishing transparency about the remuneration of the Man-
+aging Board is an important element of good corporate gover-
+nance. For that reason, in its revision of the remuneration
+system, the Supervisory Board has reduced the system's com-
+plexity to the necessary minimum. At the same time, the Super-
+visory Board retained incentives for successful corporate man-
+agement with an emphasis on sustainability and ensured that
+the system would remain consistent with other remuneration
+MANAGING BOARD FROM FISCAL 2015 ONWARD
+B.4.1.4 REMUNERATION SYSTEM FOR THE
+Specifically, the following changes were adopted effective
+October 1, 2014:
+Compensation structure. Base compensation, variable com-
+pensation (bonus) and long-term stock-based compensation
+will each constitute approximately one-third of the target com-
+pensation for all Managing Board members. The maximum
+amounts for stock commitments (Stock Awards), for bonus and
+for compensation overall that were introduced in fiscal 2014
+will remain fully in effect.
+Variable compensation (bonus). In the future, the bonus
+will depend on an equal one-third weighting of target attain-
+ment in the target categories of capital efficiency, earnings and
+individual targets. This weighting will give greater importance
+to the Managing Board members' individual performance.
+In deciding the individual targets, account will be taken of both
+business-related targets like market coverage and business
+performance as well as targets like customer and employee
+satisfaction, innovation and sustainability. For fiscal 2015, the
+target values for the earnings component will be set on a multi-
+year basis. Target attainment for the bonus can still vary
+between 0% and a ceiling (cap) of 200%.
+Cash
+compen-
+sation
+compen-
+sation
+Stock-
+based
+target amount
+(Stock Awards):
+max. 300% of
+Stock-based
+components
+Share Ownership Guidelines
+Maximum amounts of compensation
+Even after the adjustment of the remuneration system for the
+Managing Board, regulatory requirements will be met in full.
+More than half of the variable compensation has a multi-year
+basis. The new system continues to reward long-term commit-
+ment to and on behalf of the Company as well as Managing
+Board members' participation in a sustained increase in the
+Company's value.
+Meeting
+attendance
+Compensatory payments in connection with termination
+of Managing Board membership. The terms for compensa-
+tory payments will remain essentially unchanged. In particular,
+the compensatory payment still cannot exceed the value of two
+years' compensation. In the future, the compensatory and sev-
+erance payments will be reduced by 10% as a lump-sum allow-
+ance for discounted values and for income earned elsewhere;
+this reduction will apply only to the portion of the compensa-
+tory or severance payment that was calculated without taking
+account of the first six months of the remaining term of the
+Managing Board member's contract.
+| Remuneration system for Managing Board members as of fiscal 2015
+Target compensation
+Long-term stock-based compensation. Long-term stock-
+based compensation will continue to be granted in the form of
+forfeitable Stock Awards for Siemens stock. To reflect a Manag-
+ing Board member's individual experience as well as the scope
+and demands of his or her function, the annual target amount
+for all Managing Board members, including the President and
+CEO, can now be increased, on an individual basis, by as much
+as 75% of the contractually agreed-upon target amount for one
+fiscal year at a time. Starting with fiscal 2015, this long-term
+stock-based compensation will be linked solely to the perfor-
+mance of Siemens stock in comparison to competitors. The
+Supervisory Board will also decide on a target system (target
+value for 100% and target curve) for the performance of
+Siemens stock relative to the stock of - at present - five compet-
+itors: ABB, General Electric, Rockwell, Schneider and Toshiba.
+The change in stock price will be measured on the basis of a
+twelve-month reference period (compensation year) over three
+years (performance period), while the four-year restriction pe-
+riod for Stock Awards will still apply unchanged. After this re-
+striction period expires, the Supervisory Board will determine
+how much better or worse Siemens stock has performed rela-
+tive to the stock of its competitors. This determination will yield
+a target attainment of between 0% and 200% (cap). If target at-
+tainment is above 100%, the members of the Managing Board
+will receive an additional cash payment, the amount of which
+will be based on the outperformance. If target attainment is
+less than 100%, a number of Stock Awards equivalent to the
+shortfall from the target will expire without replacement. All in
+all, the allocation by way of the Stock Awards will be limited to
+300% of the target amount (maximum amount).
+161
+Additional Information
+337 | E.
+Consolidated Financial Statements
+247 | D.
+171 | C. Combined Management Report
+After the end of the fiscal year, the Supervisory Board can still
+decide, exercising its duty-bound discretion (pflichtgemäßes
+Ermessen), to adjust bonus payout amounts by ±20% for all or
+some of the members of the Managing Board. Thus the maxi-
+mum amount of 240% of the target amount applies for the
+bonus. In deciding on a discretionary adjustment, the Super-
+visory Board will take account not only of the Company's eco-
+nomic situation and the individual performance of the various
+Managing Board members, but also of such factors as the
+results of an employee survey (Global Engagement Survey) and
+a customer satisfaction survey (Net Promoter Score). Variable
+compensation (bonus) will be granted entirely in cash.
+Share Ownership Guidelines. The share ownership obli-
+gation for members of the Managing Board will remain un-
+changed: 300% of base compensation for the President and
+CEO, 200% of base compensation for the other members of the
+Managing Board during the four years prior to the relevant date
+of proof.
+105,000
+fee
+Base com-
+pensation
+185,123
+15,000
+35,309
+134,815
+Prof. Dr. Peter Gruss
+339,000
+39,000
+160,000
+140,000
+330,000
+30,000
+160,000
+140,000
+Dr. Hans Michael Gaul
+153,500
+13,500
+140,000
+205,778
+18,000
+140,000
+52,963
+15,000
+Bettina Haller¹
+27,000
+106,667
+140,000
+Robert Kensbock1
+140,130
+10,500
+129,630
+153,500
+13,500
+140,000
+Hans-Jürgen Hartung¹
+229,204
+25,500
+74,074
+129,630
+248,500
+28,500
+80,000
+140,000
+155,000
+134,815
+Michael Diekmann
+198,000
+211,852
+314,389
+25,500
+77,037
+211,852
+Berthold Huber¹
+57,000
+280,000
+280,000
+615,500
+55,500
+280,000
+280,000
+Dr. Gerhard Cromme
+serving as of September 30, 2014
+Total
+Meeting
+attendance
+fee
+FY 2013
+Additional
+compensation
+for committee
+work
+77,037
+27,000
+617,000
+315,889
+Werner Wenning
+18,000
+40,000
+140,000
+250,000
+30,000
+80,000
+140,000
+Gerd von Brandenstein
+39,500
+Total
+4,500
+Olaf Bolduan 1,2
+133,500
+7,500
+28,000
+98,000
+385,667
+39,000
+134,815
+211,852
+35,000
+247 | D.
+of Base
+compen-
+sation
+138 B.3
+B.5.9 Compensation agreements with
+members of the Managing Board or
+employees in the event of a takeover bid
+In the event of a change of control that results in a substantial
+change in the position of a Managing Board member (for exam-
+ple, due to a change in corporate strategy or a change in the
+Managing Board member's duties and responsibilities), the
+member of the Managing Board has the right to terminate his
+or her contract with the Company for good cause. A change of
+control exists if one or several shareholders acting jointly or in
+concert acquire a majority of the voting rights in Siemens AG
+and exercise a controlling influence, or if Siemens AG becomes
+a dependent enterprise as a result of entering into an intercom-
+pany agreement within the meaning of Section 291 of the Ger-
+man Stock Corporation Act, or if Siemens AG is to be merged
+into an existing corporation or other entity. If this right of ter-
+mination is exercised, the Managing Board member is entitled
+to a severance payment in the amount of no more than two
+years' compensation. The calculation of the annual compensa-
+tion includes not only the base compensation and the target
+amount for the bonus, but also the target amount for the stock
+awards, in each case based on the most recent completed fiscal
+year prior to termination of the contract. The stock-based com-
+pensation components for which a firm commitment already
+exists will remain unaffected. There is no entitlement to a sev-
+erance payment if the Managing Board member receives bene-
+fits from third parties in connection with a change of control.
+Moreover, there is no right to terminate if the change of control
+occurs within a period of twelve months prior to a Managing
+Board member's retirement. Additionally, the severance pay-
+ments cover non-monetary benefits by including an amount of
+5% of the total severance amount. Severance payments will be
+reduced by 15% as a lump-sum allowance for discounted values
+and for income earned elsewhere. However, this reduction will
+apply only to the portion of the severance payment that was
+calculated without taking account of the first six months of the
+remaining term of the Managing Board member's contract.
+171 | C. Combined Management Report
+247 | D.
+Consolidated Financial Statements
+337 | E.
+(part of the Combined Management Report)
+Takeover-relevant information (pursuant to
+Sections 289 para. 4 and 315 para. 4 of the
+German Commercial Code) and explanatory report
+(part of the Combined Management Report)
+Additional Information
+170
+In our Combined Management Report,
+we analyze our business activities
+in the reporting year as well as the
+current state of Siemens worldwide
+and Siemens AG. Starting from a
+description of our business, economic
+environment and strategy, we present
+our financial target system and a
+detailed explanation of our results of
+operations as well as our financial
+and net assets position. We also report
+on various aspects of sustainability
+at Siemens and on expected develop-
+ments and their material opportunities
+and risks.
+WWW.SIEMENS.COM/AR/COMBINED-MANAGEMENT-REPORT
+subsidiaries (exclusion of subscription rights, limited to 10%
+of the capital stock, by mutatis mutandis application of Sec-
+tion 186 para. 3 sentence 4 German Stock Corporation Act).
+168
+167
+169
+337 | E.
+Compensation Report
+165 B.5
+For details on the authorizations, especially with respect to the
+restrictions to exclude subscription rights and the terms to in-
+clude shares when calculating such restrictions, please refer to
+the relevant resolution and to Section 4 of the Articles of Associ-
+ation. For further information on the authorized and conditional
+capitals and on the treasury stock of the Company as of Sep-
+tember 30, 2014, see → NOTE 25 EQUITY in → D.6 NOTES TO
+CONSOLIDATED FINANCIAL STATEMENTS on pages 289-290 of this
+Annual Report.
+B.5.8 Significant agreements which take
+effect, alter or terminate upon a change
+of control of the Company following a
+takeover bid
+Siemens AG maintains two lines of credit in an amount of
+€4 billion and an amount of US$3 billion, respectively, which
+provide its lenders with a right of termination in the event that
+(1) Siemens AG becomes a subsidiary of another company or
+(2) a person or a group of persons acting in concert acquires
+effective control over Siemens AG by being able to exercise
+decisive influence over its activities (Art. 3(2) of Council Regu-
+lation (EC) 139/2004). In addition, Siemens AG has a bilateral
+credit line at its disposal in the amount of €450 million which
+may be terminated by the lender if major changes in
+Siemens AG's corporate legal situation occur that jeopardize
+the orderly repayment of the credit.
+In March 2013, a consolidated subsidiary as borrower and
+Siemens AG as guarantor entered into two bilateral loan agree-
+ments, each of which has been drawn in the full amount of
+US$500 million. Both agreements provide their respective
+lenders with a right of termination in the event that (1)
+Siemens AG becomes a subsidiary of another company or (2)
+a person or a group of persons acting in concert acquires effec-
+tive control over Siemens AG by being able to exercise decisive
+influence over its activities (Art. 3(2) of Council Regulation
+(EC) 139/2004).
+Framework agreements concluded by Siemens AG under Inter-
+national Swaps and Derivatives Association Inc. documenta-
+tion (ISDA Agreements) grant the counterparty a right of termi-
+nation when Siemens AG consolidates with, merges into, or
+transfers substantially all its assets to a third party. However,
+this right of termination only exists, if (1) the resulting entity's
+creditworthiness is materially weaker than Siemens AG's im-
+mediately prior to such event or (2) the resulting entity fails to
+simultaneously assume Siemens AG's obligations under the
+ISDA Agreement. Additionally, some ISDA Agreements grant
+the counterparty a right of termination if a third party acquires
+the beneficial ownership of equity securities that enable it to
+elect a majority of Siemens AG's Supervisory Board or other-
+wise acquire the power to control Siemens AG's material policy-
+making decisions and if the creditworthiness of Siemens AG is
+materially weaker than it was immediately prior to such an
+event. In either situation, ISDA Agreements are designed such
+that upon termination all outstanding payment claims docu-
+mented under them are to be netted.
+(part of the Combined Management Report)
+In February 2012, Siemens issued bonds with warrant units
+with a volume of US$3 billion. In case of a change of control,
+the terms and conditions of these warrants enable their hold-
+ers to receive a higher number of Siemens shares in accordance
+with an adjusted strike price if they exercise their option rights
+within a certain period of time after the change of control. This
+period of time shall end either (1) not less than 30 days and no
+more than 60 days after publication of the notice of the issuer
+regarding the change of control, as determined by the issuer or
+(2) 30 days after the change of control first becomes publicly
+known. The strike price adjustment decreases depending on
+the remaining term of the warrants and is determined in detail
+in the terms and conditions of the warrants. In this context, a
+change of control occurs if control of Siemens AG is acquired
+by a person or by persons acting in concert.
+131 B. Corporate Governance
+132 B.1
+136 B.2
+Corporate Governance Report
+144 B.4
+Furthermore, the Supervisory Board is authorized to use shares
+acquired on the basis of this or any previously given authoriza-
+tion to meet obligations or rights to acquire Siemens shares
+that were or will be agreed with members of the Managing
+Board within the framework of rules governing Managing
+Board compensation.
+Corporate Governance statement pursuant to
+Section 289a of the German Commercial Code
+(part of the Combined Management Report)
+Compliance Report
+108 | A. To our Shareholders
+As of September 30, 2014, the Company held 45,745,147 (2013:
+37,997,595) shares of stock in treasury.
+In November 2013, the Company announced that it would carry
+out a share buyback of up to €4 billion in volume within the
+next up to 24 months using the authorization given by the An-
+nual Shareholders' Meeting on January 25, 2011. The buyback
+commenced on May 12, 2014. Under this share buyback
+Siemens repurchased 11,331,922 shares by September 30, 2014.
+The total consideration paid for these shares amounted to
+about €1.079 billion (excluding incidental transaction charges).
+The buyback may serve only to cancel and reduce the capital
+stock, issue shares to employees, board members of affiliated
+companies and members of the Managing Board of Siemens AG,
+or service convertible bonds and warrant bonds.
+Consolidated Financial Statements
+Beginning with fiscal 2015, substantially all of the former Divi-
+sion's businesses will be included in the new Power and Gas
+In May 2014, we announced the acquisition of the Rolls-Royce
+Energy aero-derivative gas turbine and compressor business
+of Rolls-Royce plc, U.K. With the acquisition, we intend to
+strengthen our position in the growing oil and gas industry as
+well as in the field of decentralized power generation. In Sep-
+tember 2014, we have entered into an agreement with Dresser-
+Rand to acquire all of its issued and outstanding common
+shares by way of a friendly takeover bid. With its comprehen-
+sive portfolio of compressors, steam turbines, gas turbines and
+engines, Dresser-Rand is a leading supplier for the oil & gas,
+process, power and other industries in the related energy infra-
+structure markets worldwide. The acquisition complements our
+existing offerings, notably for the global oil & gas industry and
+for distributed power generation.
+The businesses of our former Power Generation Division offer
+an extensive portfolio of products and solutions for generating
+electricity from fossil fuels and for producing and transporting
+oil and gas. The Division's customers include both energy pro-
+viders and industrial companies. Due to the broad range of the
+offerings, the Division's revenue mix may vary from reporting
+period to reporting period depending on the share of revenue
+attributable to products, solutions and services. Because typical
+profitability levels differ among these three revenue sources,
+the revenue mix in a reporting period accordingly affects
+Division profit for that period.
+In fiscal 2014, the Energy Sector comprised four Divisions:
+Power Generation; Wind Power; Power Transmission; and
+Energy Service. In addition, the Sector included two Sector-
+led businesses: solar and hydro. Results for these businesses
+were included in results for the Sector. Siemens has decided
+to exit solar business activities after completing projects in
+progress.
+41,542
+The businesses of the former Energy Sector offer a wide spec-
+trum of products, solutions and services for generating and
+transmitting power, and for extracting, converting and trans-
+porting oil and gas.
+38,732
+Americas
+Africa, Middle East
+| Global presence¹
+Net assets position
+Until September 30, 2014, our business activities focused on
+the four Sectors Energy, Healthcare, Industry and Infrastruc-
+ture & Cities. In addition to these four Sectors, we had two addi-
+tional reportable segments: Equity Investments and SFS. For
+more information on the portfolio transactions described
+below, see → NOTE 4 in → D.6 NOTES TO CONSOLIDATED FINANCIAL
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+172
+Combined Management Report
+171 C.
+Division. Our solution business for the oil and gas industry will
+be included in the new Process Industries and Drives Division.
+210 C.5
+The businesses of our former Wind Power Division manufac-
+ture wind turbines for onshore and offshore applications, in-
+cluding both geared turbines and direct drive machines. The
+product portfolio is based on four product platforms, two for
+each of the onshore and offshore applications. The revenue mix
+of these businesses may vary from reporting period to report-
+ing period depending on the project mix between onshore and
+offshore projects in the respective period. Beginning with fiscal
+2015, these businesses were combined with our solar and hydro
+activities in the new Wind Power and Renewables Division.
+The businesses of our former Power Transmission Division
+provide energy utilities and large industrial power users
+with turnkey power transmission solutions as well as discrete
+products, systems and related engineering and services. These
+offerings are used to process and transmit electrical power
+from the source, such as power plants and onshore and off-
+shore wind farms, to various points along the power trans-
+mission network. Beginning with fiscal 2015, these businesses
+are part of the new Energy Management Division.
+Beginning with fiscal 2015, Siemens Healthcare will be man-
+aged separately under the Siemens umbrella. This will enable
+Healthcare to adjust to markets flexibly and in a more focused
+way. It means in essence, a sales organization optimized to
+meet the needs of Healthcare and a Healthcare specific set up
+of support and central functions. In addition, Siemens an-
+nounced in November 2014 the sale of its hearing aid business
+Audiology Solutions to the investment company EQT and the
+German entrepreneurial family Strüngmann as co-investors.
+In fiscal 2014, the Healthcare Sector included four Divisions:
+Imaging & Therapy Systems, Clinical Products, Diagnostics
+and Customer Solutions. The Sector also included Audiology
+Solutions, a Sector-led business. In addition to our Sector-level
+financial results, we also reported financial results for our
+Diagnostics Division.
+Because a large part of our revenue stems from recurring busi-
+ness, our business activities are to a certain extent resilient to
+short-term economic trends but are dependent on regulatory
+and policy developments around the world. We are currently
+operating in a low growth environment, impacted by healthcare
+reforms, budgetary constraints and consolidation of healthcare
+service providers, predominantly in the U.S. and Europe.
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+187 C.2
+Corporate Governance
+Business and economic environment
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+176
+108 | A. To our Shareholders
+In August 2014, we announced our plan to sell our hospital
+information system business to the U.S.-based company Cerner
+Corp. Since the fourth quarter of fiscal 2014, these activities
+formerly included in the Healthcare Sector fulfilled the require-
+ments to be reported as discontinued operations. Results for
+prior periods are reported on a comparable basis.
+Healthcare offers customers a comprehensive portfolio of
+medical solutions across the treatment chain
+from preven-
+tion and early detection to diagnosis, treatment and follow-up
+care. We are a major supplier of technology to the healthcare
+industry worldwide and a trendsetter in medical imaging, labo-
+ratory diagnostics, healthcare IT and hearing instruments. In
+addition, we provide technical maintenance, professional and
+consulting services, and, together with SFS, financing to assist
+customers in purchasing our products.
+-
+Healthcare
+The businesses of the former Energy Service Division offer
+comprehensive services for products, solutions and technol-
+ogies, covering performance enhancements, maintenance ser-
+vices, customer trainings and consulting services for the for-
+mer Divisions Power Generation and Wind Power. Financial
+results relating to the Energy Service Division were included in
+these Divisions. Beginning with fiscal 2015, the Division was
+renamed Power Generation Services. Results for that Division
+will be included in the new Power and Gas and Wind Power and
+Renewables Divisions.
+172 C.1
+STATEMENTS.
+131 | B.
+which consist of the following Divisions: Power and Gas;
+Wind Power and Renewables; Energy Management; Build-
+ing Technologies; Mobility; Digital Factory; and Process
+Industries and Drives.
+C.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION
+We are a globally operating technology company with core ac-
+tivities in the fields of electrification, automation and digital-
+ization, and we occupy leading market positions worldwide in
+the majority of our businesses. We can look back on a success-
+ful history spanning 167 years, with groundbreaking and revo-
+lutionary innovations such as the invention of the dynamo,
+the first electric streetcar, the construction of the first public
+power plant, and the first images of the inside of the human
+body. On a continuing basis, we have around 343,000 employees
+as of September 30, 2014 and business activities in nearly all
+countries of the world and reported consolidated revenue of
+€71.920 billion in fiscal 2014. We operate 289 major produc-
+tion and manufacturing plants worldwide. In addition, we have
+office buildings, warehouses, research and development facili-
+ties or sales offices in almost every country in the world.
+C.1.1 The Siemens Group
+II | C.1 Business and economic environment
+C. Combined Management Report
+171
+171
+245 C.11.6 Risks and opportunities
+245 C.11.7 | Outlook
+245 C.11.5 Subsequent events
+244 C.11.3 Net assets and financial position
+245 C.11.4 Employees
+Overall assessment of the
+economic position
+213 C.6
+210 C.5 | Net assets position
+214 C.7
+215 C.8
+225 C.9
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+175
+C.1.1.2 BUSINESS DESCRIPTION
+Siemens comprises Siemens AG, a stock corporation under the
+Federal laws of Germany, as the parent company and a total
+of about 800 legal entities, including minority investments.
+Our Company is incorporated in Germany, with our corporate
+headquarters situated in Munich. Siemens operates under the
+leadership of its Managing Board. The Siemens Managing
+Board is the sole management body and has overall business
+responsibility in accordance with the German Stock Corporation
+Act (Aktiengesetz, AktG). At all other organizational levels
+within our Company, management responsibility is assigned to
+individuals who make decisions and assume personal responsi-
+bility (CEO principle). This principle establishes clear and direct
+responsibilities and fosters efficient decision-making.
+Below the Managing Board, Siemens was structured organiza-
+tionally into four Sectors (Energy, Healthcare, Industry and
+Infrastructure & Cities), Financial Services (SFS), Cross-Sector
+Services, Corporate Units and Countries in fiscal 2014. The
+Sectors were principally broken down into Divisions and these
+in turn into Business Units.
+In fiscal 2014, the Sectors formed four of our reportable seg-
+ments. In addition to our four Sectors, we had two additional
+reportable segments: Equity Investments and SFS. The following
+figure shows our reportable segments as of September 30, 2014.
+During fiscal 2014, we initiated a change in the organizational
+structure of Siemens, which became effective as of October 1,
+2014. Beginning with fiscal 2015, we eliminated the Sectors and
+bundled the businesses of the former Energy, Industry and
+Infrastructure & Cities Sectors into seven reportable segments,
+> Building
+Technologies
+Solutions & Products
+> Power Grid
+> Transportation &
+Logistics
+Sector
+therein:
+Financial
+Services
+Equity
+Investments
+Infrastructure & Cities
+> Power Transmission
+108 | A. To our Shareholders
+> Drive Technologies
+> Industry Automation
+> Diagnostics
+Energy
+therein:
+Industry
+Sector
+therein:
+Healthcare
+Sector
+Energy
+Sector
+therein:
+Total Sectors
+| Reportable segments as of September 30, 2014
+> Wind Power
+> Power Generation
+Europe, C.I.S.,²
+213 C.6
+All figures refer to continuing operations.
+2 Commonwealth of Independent States.
+3 By customer location.
+4 As of September 30, 2014.
+213 C.6
+214 C.7
+Overall assessment of the economic position
+Subsequent events
+242 C.11
+215 C.8
+Sustainability and citizenship
+242 C.10 Compensation Report and legal disclosures
+Siemens AG (Discussion on basis
+of German Commercial Code)
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+247 D.
+337
+5 15 employees or more.
+Consolidated Financial Statements
+Additional Information
+173
+The following figure shows the main transfers of the businesses
+from the three Sectors Energy, Industry and Infrastructure &
+Cities as of September 30, 2014 to these Divisions as of
+October 1, 2014.
+| Transfer of businesses as of October 1, 2014
+Energy Sector
+Industry Sector
+Infrastructure & Cities Sector
+Power
+Generation¹
+Wind Power
+Power
+Trans-
+mission
+1
+Industry
+Automation
+26% of total worldwide
+major
+orders (in millions of €)³
+53% of total worldwide
+employees
+62% of total worldwide
+major
+production plants5
+48% of total worldwide
+Asia,
+Australia
+да
+18,756
+20,880
+70,000 **
+76
+revenue (in millions of €)³
+26% of total worldwide
+orders (in millions of €)³
+27% of total worldwide
+employees
+20% of total worldwide
+major
+production plants
+26% of total worldwide
+14,433
+15,929
+62,000 **
+revenue (in millions of €)³
+20% of total worldwide
+orders (in millions of €)³
+20% of total worldwide
+employees4
+18% of total worldwide
+74 production plants
+Industry
+Drive
+Tech-
+nologies
+Power Grid
+Mobility
+Digital
+Factory
+Process
+Industries
+and Drives
+Healthcare
+Financial
+Services
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+Our Divisions are responsible for developing and implementing
+their strategy; for developing and producing their portfolio of
+products and services; and for managing their sales channels.
+As "global entrepreneurs" they have end-to-end business re-
+sponsibility worldwide, including with regard to their operating
+results. They therefore have "right of way" over the regional
+units in business matters.
+As of October 1, 2014, Healthcare became a separately managed
+unit, which includes among others, the set-up of customized
+structures (e.g. sales structures, R&D), systems (especially IT)
+and functions (e.g. human resources, procurement).
+Beginning with fiscal 2015, our businesses are supported by our
+Corporate Core, which comprises the units Corporate Develop-
+ment; Governance & Markets; Communications and Govern-
+ment Affairs; Legal and Compliance, Human Resources; Corpo-
+rate Technology; and Controlling and Finance and by our
+Corporate Services, which consist of the units Information
+Technology; Supply Chain Management; Export Control and
+Customs; Business Process Services; and Siemens Real Estate.
+The Corporate Core issues binding company-wide guidelines in
+coordination with the Managing Board and oversee their imple-
+mentation. In addition, the Heads of selected corporate func-
+tions (Governance & Markets, Communications and Govern-
+ment Affairs, Legal and Compliance, Human Resources,
+Controlling and Finance) have an unrestricted right to issue
+instructions in relation to their function across all parts of the
+company in accordance with the Bylaws for the Managing
+Board of Siemens AG and to the extent legally permissible.
+During the first quarter of fiscal 2014, we disbanded our
+Regional Cluster organization. Following this organizational
+change, we have designated 30 Lead Countries which are indi-
+vidually responsible for managing a number of other Coun-
+tries regarding market penetration. The Lead Countries and
+their assigned Countries are responsible for the local customer
+relationship management and for implementing the business
+strategies of the Divisions. Each Lead Country reports directly
+to the Managing Board.
+Except otherwise stated, financial measures presented in this
+Combined Management Report are based on our organizational
+structure as of September 30, 2014. Based on this organiza-
+tional structure, we provide financial measures for our four
+Sectors and for two Businesses, each combining two Divisions
+within a Sector as well as for eight Divisions of our Sectors.
+These financial measures include: orders, revenue, profit and
+profit margin. Divisions within a Sector may do business with
+each other, leading to corresponding orders and revenue. Such
+orders and revenues are eliminated on a Sector level. Further-
+more, our reportable segments may do business with each
+other, leading to corresponding orders and revenue. Such
+orders and revenue are eliminated on the Siemens level within
+Eliminations, Corporate Treasury and other reconciling items
+and are not included in orders and revenue with external cus-
+tomers (external orders and external revenue, respectively)
+reported in this document. For Equity Investments we report
+profit, and for SFS we report profit and total assets. Free cash
+flow and further financial measures are reported for each
+reportable segment in the Notes to Consolidated Financial
+Statements. For information related to the definition of these
+financial measures and to the reconciliation of segment finan-
+cial measures to the Consolidated Financial Statements, see
+→ NOTE 35 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Building
+Tech-
+nologies
+Trans-
+portation &
+Logistics²
+Energy
+Manage-
+ment
+Power
+and Gas
+Solutions &
+Products³
+Power
+and Gas
+1
+Wind Power
+and
+Renewables
+Energy
+Manage-
+ment
+Digital
+Factory
+Process
+Industries
+and Drives
+Mobility
+Building
+Tech-
+nologies
+Building
+Tech-
+nologies
+All businesses except for solutions for oil and gas
+industries go to Power and Gas, oil and gas solutions
+go to Process Industries and Drives.
+2 Beginning with fiscal 2015, the airport logistics and
+postal automation business is reported within Centrally
+managed portfolio activities.
+3 All businesses except for rail electrification go to Energy
+Management; Rail electrification goes to Mobility.
+4 Also includes solar and hydro business.
+For more details on these organizational changes see →C.1.1.2
+BUSINESS DESCRIPTION.
+In addition, the former Healthcare Sector became a separately
+managed business within Siemens effective October 1, 2014.
+The above mentioned seven Divisions together with Health-
+care form our Industrial Business.
+SFS, which acts as business partner for Siemens's other Divi-
+sions and Healthcare and also conducts its own business with
+external customers, is a reportable segment which is reported
+outside our Industrial Business. Beginning with fiscal 2015,
+Equity Investments ceased to be a reportable segment and
+became part of Centrally managed portfolio activities, which
+are reported within the Reconciliation to Consolidated Finan-
+cial Statements.
+Beginning of fiscal 2015, Siemens' reportable segments are as
+follows:
+| Reportable segments as of October 1, 2014
+14
+174
+Industrial Business
+Wind Power
+and
+Renewables
+With the businesses included in the former Industry Sector, we
+are one of the world's leading suppliers of innovative and envi-
+ronmentally friendly products and solutions for industrial com-
+panies, particularly those in the process and manufacturing
+industries. Our end-to-end automation solutions, drive technol-
+ogies, industrial IT and industry software, in-depth industry
+expertise and technology-based services help our customers
+use resources and energy more efficiently, improve productiv-
+ity, and increase flexibility.
+In fiscal year 2014, the Sector consisted of three Divisions:
+Industry Automation, Drive Technologies and Customer Ser-
+vices. Financial results relating to the Customer Services Divi-
+sion were included in the results for Industry Automation and
+Drive Technologies. During the third quarter of fiscal 2014,
+nearly all activities of the Metals Technologies business for-
+merly included in the Industry Sector fulfilled the requirements
+to be reported as discontinued operations. These activities
+are to become part of a joint venture with Mitsubishi-Hitachi
+Metals Machinery Inc., in which Siemens will hold a 49% stake.
+Results for prior periods are reported on a comparable basis.
+The businesses of the former Industry Automation Division
+offer a unique combination of automation technologies, indus-
+trial controls and industry software that supports customers in
+optimizing the complete product development and production
+213 C.6
+214 C.7
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+179
+3.6% in 2014 and not by 5.2% as expected in October 2013,
+global value added in manufacturing grew by only 3.5% and
+not by the expected 4.0%, hurting Siemens' industrial and
+energy-related businesses in particular.
+From a geographical perspective, the region Europe, C.I.S.,
+Africa, Middle East was the only of our three reporting regions
+delivering faster GDP growth in 2014 than in 2013. However,
+with 1.6% the level of growth is still lower than in the other re-
+porting regions. In addition, last year's expectation was 0.5 per-
+centage points higher. The main reasons for the disappointing
+performance are the still very sluggish development in Europe,
+in particular the Euro zone, and recessions in both Russia and
+Ukraine. In Germany, the fiscal year started promisingly with
+sentiment indicators continuously improving, followed by a
+strong first quarter of calendar 2014 (which was partly due to
+mild winter weather). However, in the course of year 2014 the
+uncertainties caused by the geopolitical conflicts increasingly
+weighed on economic activity and slowed down GDP growth
+for the full year.
+In the Americas region, growth slowed down slightly to 2.0%.
+A year earlier, the expectation was for growth of 2.7%. The
+harsh winter mentioned above, which reduced consumption
+and factory output in some areas of the U.S. and Canada, was
+one reason for the slowdown. In addition, the economies of
+most Latin American countries grew substantially slower than
+estimated last year. For example GDP growth for Brazil was
+marked down from 3.1% to a negative 0.1% from October 2013
+to October 2014. The pattern was similar for Argentina, Chile,
+Venezuela and Peru. One important driver for this weak perfor-
+mance was globally weaker commodity markets.
+C.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
+Fiscal year 2014 started with a divergent global economic
+development. While emerging countries showed a mixed pic-
+ture with growth slowing down in the BRIC countries (Brasil,
+Russia, India, China), early economic indicators in many indus-
+trial economies (U.S., U.K., Japan, countries of the Euro zone)
+signaled improvements. In the Euro zone, years of economic
+stagnation and recession seemed set to come to an end. Given
+the importance of these "heavy weights" for the world econ-
+omy, expectations for fiscal 2014 were quite positive. Indeed,
+with growth of 2.8% year-over-year, global gross domestic
+product (GDP) growth had accelerated in the second half of cal-
+endar 2013 compared to the first half, when GDP grew by 2.1%
+year-over-year. However, these promising prospects did not
+materialize in 2014 for several unforeseeable reasons. The un-
+usually strong winter of 2013/2014 disrupted large parts of the
+U.S. economy and led to negative GDP growth in the U.S. in the
+first quarter of calendar 2014. With the start of calendar 2014,
+the first of a series of geopolitical conflicts escalated: the con-
+flict in Ukraine brought about substantial uncertainty for the
+whole year. In the Middle East, several military conflicts got
+worse: Israel and Palestinians again went to war; Libya fell back
+into political chaos; the militant group "Islamic State" made sig-
+nificant military advances in Syria and Iraq and triggered an
+American-led intervention. All these shocks to the global econ-
+omy led to increased uncertainty and weighed on global econ-
+omic activity. Accordingly, global GDP grew only by 2.7% and
+not by 3.2% as expected in October 2013. The slowdown of fixed
+investment growth and value added manufacturing growth -
+both important indicators for Siemens as a producer of capital
+goods - was even stronger: Fixed investments grew by only
+In Asia, Australia, GDP growth for calendar 2014 is estimated
+at 4.8%, virtually the same level as in previous years. Compared
+to last year's expectation this is 0.3 percentage points lower,
+reflecting slower growth in China (7.3% against 8% expected
+last year), which is largely explained by continued downturns
+in real estate and manufacturing investment. India suffered
+from investment shifts before the general election that took
+place from April to May 2014.
+| Real GDP growth per region (change in % compared to prior year)1
+World
+Europe, C.I.S.,³
+Africa,
+Middle East
+Americas
+5
+4
+3
+.2.7-2.6
+2.3
+2.0
+2
+1.6
+| World real GDP growth (in % compared to previous period)1
+C.1.2 Economic environment
+FINANCIAL MANAGEMENT.
+SFS operates the Corporate Treasury of the Siemens Group,
+which includes managing liquidity, cash and interest risks as
+well as certain foreign exchange, credit and commodities risks.
+Business activities and tasks of Corporate Treasury are reported
+in the segment information within Reconciliation to Consoli-
+dated Financial Statements. For further information on Corpo-
+rate Treasury activities see → c.4.1 PRINCIPLES AND OBJECTIVES OF
+business can operate better and more flexible in its medium-
+sized competitive environment. Beginning with fiscal 2015, the
+airport logistics and postal automation business is reported
+within Centrally managed portfolio activities, which are part of
+the Reconciliation to Consolidated Financial Statements.
+The principal customers of the businesses included in our for-
+mer Rail Systems and Mobility and Logistics Divisions are pub-
+lic and state-owned companies in the transportation and logis-
+tics sectors. Markets served by these businesses are driven
+primarily by public spending. Customers of these businesses
+usually have multi-year planning and implementation hori-
+zons, and their contract tenders therefore tend to be indepen-
+dent of short-term economic trends.
+Beginning with fiscal 2015, the business activities of the former
+Rail Systems and Mobility and Logistics Divisions are combined
+to form the Mobility Division. The Mobility Division also includes
+the rail electrification business of the former Smart Grid Division.
+The business activities of the former Low and Medium Volt-
+age Division supply public energy providers, industrial compa-
+nies and municipal utilities with a complete range of products,
+systems and solutions for power distribution infrastructures.
+Our portfolio includes highly reliable power supply solutions
+for conventional power plants and renewable energy systems
+as well as intelligent, compact substations for urban and rural
+distribution networks. We also offer energy-efficient solutions
+for heavy industry, the oil & gas industry and the process
+industry. Energy-efficient solutions and energy storage systems
+for the integration of renewable energies into power grids
+round off our portfolio. Business activities included in our Low
+and Medium Voltage Division generally tend to react quickly to
+changes in the overall economic environment.
+Beginning with fiscal 2015, the business activities of the former
+Low and Medium Voltage Division are included in the new
+Energy Management Division.
+The business activities of the former Smart Grid Division offer
+power providers, network operators, industrial enterprises and
+cities an end-to-end portfolio of products and solutions for
+developing intelligent grid infrastructures. Smart grids enable
+a bidirectional flow of energy and information. They are re-
+quired for the integration of more renewable energy sources
+into conventional power transmission and distribution net-
+works. In addition, power providers can run their plants more
+efficiently with data gained from smart grids. Software solu-
+tions that analyze data from smart grids will continuously gain
+importance. Our offerings include both in-house technology
+development and systems from software partners. The principal
+customers are power producers, grid operators, multi utilities,
+108 | A. To our Shareholders
+178
+171 C.
+131 | B. Corporate Governance
+Combined Management Report
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+cities and rail operators. Changes in the overall economic envi-
+ronment generally have a delayed effect on our business activ-
+ities. Furthermore, parts of our businesses are driven by public
+spending. Customers in the public sector usually have multi-
+year planning and implementation horizons, and their contract
+tenders therefore tend to be independent of short-term eco-
+nomic trends.
+Beginning with fiscal 2015, all businesses of the former Smart
+Grid Division except for the rail electrification business are in-
+cluded in the new Energy Management Division. As described
+above, the rail electrification business is included in the new
+Mobility Division as of fiscal 2015.
+The Building Technologies Division is a leading provider of
+automation technologies and services for safe, secure and effi-
+cient buildings and infrastructures throughout the lifecycle of
+buildings. The Division offers products, solutions and services
+for fire safety, security, building automation, heating, venti-
+lation, air conditioning and energy management. The large
+customer base is widely-dispersed. It includes public and com-
+mercial building owners, operators and tenants, building con-
+struction general contractors and system houses. Changes in
+the overall economic environment generally have a delayed
+effect on our business activities.
+At the beginning of fiscal 2015, the Building Technologies Divi-
+sion includes the same business activities as it did at the end of
+fiscal 2014.
+Equity Investments
+In fiscal 2014, Equity Investments in general comprised equity
+stakes held by Siemens that are accounted for by the equity
+method or as available-for-sale financial assets and that for
+strategic reasons are not allocated to a Sector or a Division, re-
+spectively, SFS, Centrally managed portfolio activities, Siemens
+Real Estate (SRE), Corporate items or Corporate Treasury. Our
+main investments within Equity Investments were our 50%
+stake in BSH Bosch und Siemens Hausgeräte GmbH (BSH), our
+17% stake in OSRAM Licht AG (OSRAM), our 12% stake in Atos SE
+(AtoS) and our 49% stake in Enterprise Networks Holdings
+B.V. (EN), which in the fourth quarter of fiscal 2014, was re-
+named Unify Holdings B.V. (Unify). In the fourth quarter of fiscal
+2014, Siemens signed an agreement to sell its stake in BSH to
+Robert Bosch GmbH. The transaction is expected to be com-
+pleted in the first half of calendar 2015. Equity Investments
+ceased to be a reportable segment beginning with fiscal 2015.
+As of October 1, 2014, equity stakes formerly included in Equity
+Investments are reported within Centrally managed portfolio
+activities, which are part of the Reconciliation to Consolidated
+Financial Statements.
+Financial Services
+Financial Services (SFS) provides business-to-business finan-
+cial solutions. With its specialist financing and technology
+expertise in the areas of Siemens businesses, SFS supports cus-
+tomer investments with leasing solutions and equipment,
+project and structured financing. SFS provides capital for
+Siemens customers as well as other companies and manages
+financial risks of Siemens.
+1.1
+1
+20142
+2013
+2.41
+-2.6.
+2.5-
+2.6-
+2.7.
+_ 2.7
+1.8
+===== _--_--_AAD¯¯¯¯|1.4
+Quarterly GDP growth (seasonally adjusted annual rate)
+Quarterly GDP growth forecast (seasonally adjusted annual rate)
+1 Siemens AG, based on an IHS Global Insight report as of October 15, 2014.
+Annual GDP growth
+Annual GDP growth forecast
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+180
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+2.4-2.5 2.4
+The business activities of the former Mobility and Logistics
+Division hold leading positions as global providers of the inte-
+grated technologies that enable people and goods to be trans-
+ported safely, efficiently and in an environmentally friendly
+manner. Our offerings encompass rail automation and intelli-
+gent traffic and transportation systems. The products, services
+and IT-based solutions in our portfolio combine innovation
+with comprehensive industry know-how. In fiscal 2014, our of-
+ferings also comprised our airport logistics business for cargo
+tracking and baggage handling and our postal automation
+business for letter and parcel sorting. In the third quarter of
+fiscal 2014, Siemens announced that it no longer intends to sell
+this business. The activities are to be carved out and operated
+as a separate business under the Siemens umbrella so that this
+3.1 3.2
+3.2
+Asia,
+Australia
+4.8
+4.9
+1 Source: Siemens AG, based on an IHS Global Insight as of October 15, 2014.
+Growth rates provided by calendar year.
+2 Estimate for calendar year 2014.
+3 Commonwealth of Independent States.
+The partly estimated figures presented here for GDP, fixed
+investments and manufacturing value added are calculated by
+Siemens based on an IHS Global Insight report dated Octo-
+ber 15, 2014.
+Our businesses are dependent on the development of raw
+material prices. Key materials to which we have significant cost
+exposure include copper, various grades and formats of steel,
+and aluminum. In addition, within stainless steel we have
+exposure related to nickel and ferro-alloy materials.
+The average monthly price of copper (denominated in € per
+metric ton) for September 2014 was 1% lower than the average
+monthly price in September 2013. Prices on a fiscal-year average
+2010
+7
+6
+5.1
+5
+4.8
+4.4
+4
+3.7-3.5-
+3
+2
+1
+2011
+2012
+2013
+2014
+3.6
+3.7
+3.2
+3.3
+2.9
+The offerings of the former Rail Systems Division comprise
+Siemens' rail vehicle business - including high-speed trains,
+commuter trains, passenger coaches, metros, people movers,
+light rail vehicles, locomotives, bogies, traction systems and
+rail-related services. We combine our expertise in the fields of
+mass transit, regional and long-distance transportation, driver-
+less systems, traction systems, bogies and onboard power
+supplies in order to offer comprehensive know-how for reliable
+and efficient rail vehicles.
+In fiscal 2014, the Sector consisted of five Divisions: Rail Sys-
+tems; Mobility and Logistics; Low and Medium Voltage; Smart
+Grid; and Building Technologies. Financial results of the Rail
+Systems and the Mobility and Logistics Divisions were com-
+bined and reported together as the results of the Sector's Trans-
+portation & Logistics Business. Financial results of the Divisions
+Low and Medium Voltage and Smart Grid were combined and
+reported together as the Sector's Power Grid Solutions & Prod-
+ucts Business.
+The businesses of the former Infrastructure & Cities Sector of-
+fer a wide range of technologies that increase the functionality
+and sustainability of metropolitan centers and urban infra-
+structures worldwide, such as integrated mobility solutions,
+building and security systems, power distribution equipment,
+grid automation and control products and solutions, smart grid
+applications and low and medium-voltage products. We apply
+our IT and automation expertise to optimize infrastructures -
+making better use of existing systems and reducing operating
+costs while increasing energy efficiency and improving safety
+and security.
+2 C.10 Compensation Report
+242 |
+240 C.9.5 Significant characteristics of the
+accounting-related internal control
+and risk management system
+Opportunities
+Risk management
+Risks
+Report on expected developments
+opportunities and risks
+Report on expected developments
+and associated material
+238 C.9.4
+of financial management
+205 C.4.1 Principles and objectives
+Financial position
+205|C.4
+202 C.3.4 Reconciliation to adjusted EBITDA
+204 C.3.5 Selected information based on
+new organizational structure
+Results of operations
+193 C.3.1 Orders and revenue by region
+194 C.3.2 Segment information analysis
+201 C.3.3 | Income
+193 | C.3
+financial performance measures
+189 C.2.5 Dividend and share buybacks
+190 C.2.6 Additional information for
+Corporate citizenship
+224 C.8.8
+189 C.2.4 Capital structure
+Environmental protection
+Environmental Portfolio
+Distribution and customer relations
+222 C.8.7
+187 C.2.3 Profitability and capital efficiency
+221 C.8.6
+187 C.2.2 Revenue growth
+221 C.8.5
+and legal disclosures
+187 C.2.1 Overview
+225 C.9
+229 C.9.2
+-
+processes from product design to production to sales and ser-
+vice. In line with "Industrie 4.0" - a German high-tech indus-
+trial strategy
+- we are working on the convergence between
+the real and the virtual worlds of production, sometimes called
+"Digital Enterprise." Our portfolio is geared largely to the man-
+ufacturing industry and its major markets such as automotive,
+aerospace and production equipment as well as food and bev-
+erage, pharmaceutical and chemical. Therefore our business
+activities can be strongly affected by economic cycles because
+these markets tend to react quickly to changes in the overall
+economic environment.
+With the businesses of the former Drive Technologies Divi-
+sion we are one of the world's leading suppliers of integrated
+drive systems. With our products and systems for innovative
+applications and industry-specific solutions as well as end-to-
+end services, we are increasing the productivity, energy effi-
+ciency and reliability of machinery and installations in indus-
+tries such as shipbuilding, cement, mining, and pulp and
+paper. Advanced industry software facilitates our offerings'
+optimal integration. Our reliable gears, couplings, and drive
+solutions are partly also in high demand in other Divisions of
+the Siemens Group, mainly for rail transport and wind turbines.
+With our e-Car business, we develop motors and inverters for
+electric cars and thereby address an additional future growth
+market. The industries served by our businesses, particularly
+the process industries, the energy industry and the infrastruc-
+ture sector, generally show a delayed response to changes in
+the overall economic environment. In contrast, our business
+activities that serve customers in the manufacturing industries
+can be strongly affected by economic cycles.
+With a comprehensive portfolio of services and a global net-
+work of experts, our businesses of the former Customer
+Services Division support our industrial customers with tech-
+nology-based industry services across entire lifecycles of their
+plants and machinery from planning and engineering to
+operation and modernization.
+-
+Beginning with fiscal 2015, we serve the industrial market
+with two new Divisions that tailor their strategies to specific
+customer industries. The Digital Factory Division primarily
+addresses the manufacturing industry and its major markets:
+automotive, aerospace, and machine tool and production equip-
+ment over the complete product lifecycle of our customers.
+The Process Industries and Drives Division focuses largely on
+the process industries like pharmaceutical, food & beverage,
+chemical and related industries as well as drive solutions for
+infrastructure topics. The related business activities within the
+former Industry Automation and Drive Technologies Divisions
+were accordingly realigned into the two new Divisions. In order
+to streamline the process automation activities in the oil & gas
+213 C.6
+214 C.7
+215 C.8
+225 C.9
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+177
+industries, the former Energy Power Generation Division's
+oil & gas solutions business is part of the new Process Indus-
+tries and Drives Division. The former Customer Services
+Division is managed within the new Digital Factory Division.
+Business and economic environment
+Results of operations
+242 C.11.2
+208 C.4.5 Capital resources and requirements
+242 C.11.1
+207 C.4.4 Cash flows
+(Discussion on basis of German
+Commercial Code)
+206 C.4.3 Investing activities
+Siemens AG
+242 | C.11
+205 C.4.2 Capital structure
+230 C.9.3
+225 C.9.1
+revenue (in millions of €)³
+54% of total worldwide
+Supply chain management
+Financial performance system
+Infrastructure & Cities
+220 C.8.4
+C.
+Combined
+Management Report
+172 | C.1
+Business and
+economic environment
+214 | C.7
+| Subsequent events
+172 C.1.1
+The Siemens Group
+211,000 **
+139
+179 C.1.2
+215 | C.8
+218 C.8.3
+Employees
+| Sustainability and citizenship
+Sustainability at Siemens
+187 C.2
+Strategy
+183 C.1.3
+215 C.8.1
+Economic environment
+216 C.8.2
+Research and development
+| Development of raw material prices (Index: Beginning of fiscal 2010 = 100)
+120
+130
+140
+150
+160
+170
+Siemens employs various strategies to reduce the price risk in
+its project and product businesses, such as long-term contract-
+ing with suppliers, physical and financial hedging and price
+escalation clauses with customers.
+Markets of the Power Generation Division declined in fiscal
+2014 compared to fiscal 2013. In particular the advanced gas
+turbine market remained difficult with a market size in fiscal
+2014 clearly below fiscal 2013. In addition, production over-
+capacities have been resulting in increased price pressure.
+During the fiscal year, the overall market environment for fossil
+power generation faced project shifts in various regions lead-
+ing to tough competition. While key countries such as the
+U.S. or China have been facing market delays, countries of the
+Middle East, especially Saudi-Arabia showed higher invest-
+ments in gas-fired power plants year-over-year. Demand for
+industrial gas and steam turbines developed roughly flat.
+In fiscal 2014, the addressed market of our Energy Sector devel-
+oped stable year-over-year. Wind power markets showed the
+strongest growth (both onshore and offshore). Markets for
+power transmission grew slightly while market volume for
+large gas turbines declined year-over-year.
+C.1.2.2 MARKET DEVELOPMENT
+110
+Our main exposure to the prices of copper, aluminum and
+related products is in the new Divisions Energy Management
+and Process Industries and Drives. Our main price exposure
+related to carbon steel and stainless steel is in our new Divi-
+sions Power and Gas and Wind Power and Renewables. In addi-
+tion, Siemens is generally exposed to energy and fuel prices,
+both directly (electricity, gas, oil) and indirectly (energy used
+in the manufacturing processes of suppliers, fuels included in
+logistics costs).
+The average monthly steel prices for September 2014 declined
+by 8% compared to the average monthly prices in Septem-
+ber 2013. Prices on a fiscal-year average were 7% lower in fiscal
+2014 than the average for fiscal 2013.
+Average monthly prices of aluminum traded on the London
+Metal Exchange recently rebounded and were 17% higher
+in September 2014 compared to September 2013. Prices on a
+fiscal-year average were nevertheless 8% lower in fiscal 2014
+than the average of fiscal 2013. Significantly rising premiums
+for physically delivered aluminum have added to the prices of
+the London Metal Exchange contracts. The aluminum industry
+is in a situation of a global oversupply due to rapid expansion
+of capacities, while regional markets in the western world face
+a tighter supply.
+were still 10% lower in fiscal 2014 than the average for fiscal
+2013, reflecting modest demand during fiscal 2014.
+Markets served by our Wind Power Division grew clearly in fis-
+cal 2014 fueled by strong demand in Europe, which is the most
+mature geographic market in the world for onshore and off-
+shore wind power. In particular, Europe is home to almost all
+offshore installations currently active worldwide. Within the
+Americas, growth in the U.S. was driven by onshore wind proj-
+ects, following the extension of an existing production tax
+credit (PTC) for renewable energy into the first quarter of fiscal
+2014. Market development in the Asia, Australia region was
+characterized by intense local competition, particularly in
+China. While China has the largest wind market in the world,
+market access for foreign companies remains to be very diffi-
+cult and limited. The competitive situation in the wind power
+100
+FY 2011
+80
+Consolidated Financial Statements
+Additional Information
+247 D.
+337
+FY 2014
+FY 2013
+Report on expected developments and
+associated material opportunities and risks
+225 C.9
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+213 C.6
+Source: London Metal Exchange (LME) for copper and aluminium, CRU HRC Germany for steel; cash prices in € per ton.
+Steel HRC
+Aluminium (HG)
+Copper
+FY 2012
+225 C.9
+FY 2010
+90
+214 C.7
+215 C.8
+214 C.7
+215 C.8
+Net assets position
+Sustainability and citizenship
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+185
+Operating system and Corporate Memory
+We manage our Company in accordance with specific, clearly
+defined priorities. Our One Siemens operating system sets the
+following four priorities: Customer proximity, innovation, busi-
+ness excellence, as well as people excellence and care. In addi-
+tion, the Corporate Memory - our knowledge management -
+ensures that we learn from mistakes and keep our work focused
+on success.
+Customer proximity: Profitable growth is based on proximity
+to our customers and on an understanding of their individual
+requirements. To meet and exceed our customers' expecta-
+tions, we invest in local sales presence and support for spe-
+cific groups of market partners. Our key account management
+approach is just one successful example of this. We are repre-
+sented in virtually every country in the world by Regional Com-
+panies that operate as local partners to our customers. We also
+exploit our in-depth knowledge of customer processes and
+continually develop our offerings for key verticals in a targeted
+manner - across organizational boundaries. To regularly gauge
+the satisfaction of our customers around the world, we use a
+uniform measure, the Net Promoter Score.
+-
+Innovation: Innovation is essential for ensuring long-term
+competitiveness. This applies to our entire portfolio of prod-
+ucts, solutions and services. Added value for our customers is
+based increasingly on software and IT solutions. As a result, we
+have made this field a particular focus of our attention for
+example, through research and development activities in soft-
+ware architecture and platforms. Tools such as partner net-
+works are enabling us to manage highly effective innovation
+processes and an open innovation culture. We are concentrat-
+ing on new technology-driven growth areas as well as innova-
+tive business models.
+Business excellence: We want to do an excellent job of man-
+aging our businesses while pursuing our aim of continuous
+improvement. For this, we have developed outstanding tools
+that we intend to apply with even greater rigor in the future.
+These tools enable us, for instance, to benchmark our per-
+formance against the best and to increase our productivity.
+Tightening our risk management approach is helping us iden-
+tify project risks while still in the bidding phase and thus
+avoid costly project delays. Last but not least, we are fostering
+our service business across organizational boundaries - for
+example, by developing service platforms.
+People excellence and care: Excellent employees are the
+heart and soul of Siemens. That is how it has always been. And
+we want it to be even more so in the future. Therefore we are
+anchoring an ownership culture at our Company. For us, this is
+not an abstract idea but a concrete goal that we are pursuing
+with measures we can track. After all, the behavior, motivation
+and values of the people who work for Siemens mold our cul-
+ture. In an attractive working environment, we promote lifelong
+learning and personal development. Integrity – supported by a
+well-established compliance system
+remains the principle
+that guides our conduct. Our share programs are enabling us
+to increase employee participation in our Company's success,
+while bringing us closer every day to a lived ownership culture.
+Sustainability and citizenship
+-
+We contribute to sustainable development by maintaining a
+responsible balance at company level between profit, planet
+and people.
+Overall assessment of the economic position
+Subsequent events
+> Profit: by having a range of products, solutions and services
+that makes a difference worldwide, because it provides cus-
+tomers with decisive competitive advantages.
+214 C.7
+215 C.8
+To measure and compare our development against the market
+and in our competitive environment, we used a system of
+defined key indicators. We have now refined and expanded
+this financial target system, which is explained in more detail
+in c.2 FINANCIAL PERFORMANCE SYSTEM.
+Net assets position
+Offshore wind power: Among renewable sources of energy,
+wind power will play a key role over the long term. Offshore
+wind turbines deliver high yields and are subject to less fluctu-
+ation than other renewables. We want to continue building on
+the leading position in offshore wind power that we have cap-
+tured in recent years. We consider double-digit market growth
+realistic in this field in the medium term.
+Distribution grid automation and software: Energy manage-
+ment is becoming increasingly vital - for distribution grids as
+well as industrial and private energy producers and consumers.
+Energy management systems make it possible to integrate in-
+creasingly decentralized power supplies into the energy cycle,
+while mitigating the negative impact of the fluctuations that
+occur when power is generated from renewable sources - thus
+improving the utilization of existing power grids. Our intelli-
+gent, integrated automation solutions offer customers decisive
+added value.
+Urban and interurban mobility: In strong demand, intelligent
+mobility solutions are providing major impulses for growth -
+particularly in the areas of urban transportation and automated
+traffic-control solutions. We see stronger growth potential in
+this area as well.
+Digital-twin software: The virtual and real worlds are merging
+more and more. Already today, our software solutions are help-
+ing customers develop products much faster, more flexibly and
+more efficiently. Not only products but also the plants in which
+they are produced have digital twins that can be used to co-
+ordinate and integrate product design and production plan-
+ning. The digital models are always up-to-date – as planned, as
+built, as maintained - while allowing improvements through-
+out entire lifecycles.
+-
+Key sectors in process industries: Some industry sectors
+oil & gas and food & beverage, for example are growing at
+above-average rates. We want to participate in this growth.
+That is why we are bundling our expertise in process industries
+and drive technologies and continuing to expand our related
+portfolio of products and software solutions.
+Image-guided therapy and molecular diagnostics: The in-
+creasing use of molecular biological methods and progress in
+the life sciences are accelerating technological change in health-
+care. To improve quality and efficiency, societies worldwide are
+also demanding new solutions for next-generation healthcare.
+Business analytics and data-driven services, software and
+IT solutions: We have a comprehensive understanding of our
+customers' business processes. In the future, we want to lever-
+age this knowledge even better by analyzing the data gener-
+ated in these processes, providing recommendations for im-
+provement and action, and thus creating value. The resulting
+competitive advantages for our customers are increasingly
+derived from cloud-based solutions and services powered
+by data-analytics software.
+c) Governance
+We want to lead Siemens in such a way that we focus on our
+customers at all times and further expand our market penetra-
+tion while maintaining lean and flexible structures. That is why
+we have selected a market-integrative setup that combines a
+common regional organization with a coordinated vertical
+approach. Against this backdrop, we have retailored the struc-
+tures and responsibilities of our businesses, our Regions and
+our corporate governance functions:
+> We have removed layers from our Company, thus bringing
+our businesses closer to customers and key markets. We re-
+placed our 14 Regional Clusters with 30 Lead Countries. The
+CEOs of these countries now report directly to our Managing
+Board.
+> We have also eliminated the Sector level and consolidated
+our business activities into nine Divisions and one separately
+managed unit, Healthcare. This change is increasing our
+customer proximity and accelerating our decision-making.
+> In addition, we have made governance even more stringent
+across all levels of our organization. Our Managing Board
+leads the Company and maintains the balance between our
+businesses and regions. It is supported by strong, efficient
+governance functions, our Corporate Core. This Corporate
+Core ensures fast, unbureaucratic decision-making across
+key company functions.
+d) Management model "One Siemens"
+To enable us to manage our Company more effectively, we have
+expanded "One Siemens" into an integrated management
+model that combines under one roof the overarching targets
+and priorities with which we are implementing our strategy
+throughout the Company. It encompasses a financial frame-
+work, an operating system and Corporate Memory as well as
+sustainability and citizenship.
+Financial framework
+213 C.6
+> Planet: by utilizing our planet's limited resources responsibly
+and by enabling our customers to improve their own environ-
+mental performance.
+> People: by living a culture that strengthens our employees'
+sense of responsibility worldwide, fosters their development
+and places integrity at the center of our Company's activities.
+As good corporate citizens, we are also contributing to the
+sustainable development of society through our portfolio, our
+local presence worldwide and our role as a thought leader.
+108 | A. To our Shareholders
+FY 2013
+9.9%
+C.2.2 Revenue growth
+Within the framework of One Siemens, we aim to grow our rev-
+enue faster than the average weighted revenue growth of our
+most relevant competitors. In fiscal 2014, we calculated our rev-
+enue growth for this comparison using actual revenue as pre-
+sented in the Consolidated Financial Statements. Our primary
+measure for managing and controlling our revenue growth is
+comparable growth, which excludes currency translation and
+portfolio effects. We provide figures for both comparable and
+actual revenue growth in this Annual Report, within c.3.1
+ORDERS AND REVENUE BY REGION.
+| Revenue growth
+Revenue current period
+Revenue prior-year period
+Actual
+FY 2014
+(2)%
+FY 2013
+(2)%
+小
+× 100%
+Healthcare
+FY 2014
+20.5%
+15-20%
+10-15%
+8.1%
+FY 2014
+Energy
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+186
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+210 C.5
+193 C.3
+205 C.4
+Financial position
+210 C.5
+Net assets position
+| Adjusted EBITDA margins
+Margin
+Target range
+C.2.1 Overview
+Within One Siemens, we have established a financial frame-
+work - for revenue growth, for profitability and capital effi-
+ciency, for our capital structure, and for our dividend policy.
+Results of operations
+FY 2013
+Financial position
+Results of operations
+187 C.2
+Business and economic environment
+172 C.1
+182
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+In fiscal 2014, markets served by our Industry Sector, consist-
+ing of our Industry Automation and Drive Technologies Divi-
+sions, grew slightly year-over-year. At the beginning of the
+fiscal year, growth came mainly from stronger demand in
+long-cycle industries and restocking by customers in China.
+Towards the end of the fiscal year, demand also began to pick
+up in short-cycle industries. Within the main industries served
+by our Divisions, demand in the automotive industry was par-
+ticularly strong, with many countries reporting significant in-
+creases in production, especially in Europe. The machine build-
+ing industry developed less favorable in the beginning of the
+fiscal year due to weaker growth in many emerging economies,
+which are important markets for export-oriented industrialized
+countries. In the last months of fiscal 2014, demand in the
+machine building industries picked up somewhat. On a regional
+basis, our markets in Europe experienced a slight recovery in
+fiscal 2014, due to a more positive overall economic environ-
+ment year-over-year, particularly including Spain, Poland and
+the Netherlands. While markets in Germany grew year-over-
+year, growth was held back by stagnation in original equip-
+ment manufacturing (OEM) industries, which were impacted
+by lower demand from emerging markets. Overall, demand in
+Europe for industrial investment goods was held back as pro-
+duction capacities of our customers still did not reach full utili-
+zation. In the Americas, except the U.S., growth in end-cus-
+tomer markets slowed down in fiscal 2014 compared to fiscal
+2013. This was particularly evident in Brazil. Within the U.S.,
+demand in the oil and gas industries grew strongly. In contrast
+markets for electrical investment goods expanded modestly.
+Within the Asia, Australia region, growth slowed down year-
+over-year in several countries, particularly including Australia,
+India, Indonesia and Thailand. Growth in China was solid year-
+over-year. While growth in China benefited from restocking ef-
+fects, it was supported also by strong demand from the coun-
+try's automotive and infrastructure industries, and, to a lesser
+extent, by demand in parts of the construction machinery mar-
+kets and food machinery, elevators and rubber machines mar-
+kets. Competition of Industry's business activities can be
+grouped into two categories: multinational companies that of-
+fer a relatively broad portfolio and companies that are active
+only in certain geographic or product markets. Consolidation is
+taking place mostly in particular market segments and not
+China are experiencing a shift in demand, from an emphasis on
+large clinics to increased investment in small and midsize
+regional clinics. Along with this change, competitive and price
+pressure rose, due mainly to increasing numbers of local ven-
+dors. Overall, the trend toward consolidation in the healthcare
+industry continues. Competition among the leading companies
+is strong, including with respect to price.
+In fiscal 2014, markets served by our Healthcare Sector grew
+slightly year-over-year. Growth was again driven by emerging
+markets, which continued to build up their healthcare infra-
+structures and expand access to modern medical technology
+for a broader population. Market development in industrialized
+countries remained weak, impacted by healthcare reforms and
+budgetary constraints. On a regional basis, markets in the
+Americas grew moderately. Market conditions in our large U.S.
+market remained challenging as service providers faced ongo-
+ing pressure on utilization and reimbursement rates associated
+with medical devices. The U.S. market for Healthcare IT contin-
+ues to grow, but at a slower pace than in previous years.
+Healthcare markets in the Europe, C.I.S., Africa, Middle East
+region declined slightly. During fiscal 2014, European health-
+care markets saw some stabilization. The market situation in
+Germany was challenging. Demand stagnated and price pres-
+sure was strong. Decreasing public grants to the country's
+health insurance system is burdening the financial situation of
+hospitals and thus their willingness to invest. Growth in China
+slowed down compared to the previous fiscal year. Markets in
+Markets addressed by our Power Transmission Division grew
+slightly in fiscal 2014 compared to fiscal 2013, due mainly
+to strong demand from parts of Europe and the Middle East,
+including Germany, the U.K. and Saudi Arabia, where large
+transmission projects were awarded. In contrast, investments
+in Russian electrical infrastructure went down significantly in
+fiscal 2014. Markets in Asia remained stable year-over-year.
+While growth in China slowed down somewhat, India awarded
+a new contract for a large high-voltage direct current (HVDC)
+project. On a currency-adjusted basis, market volume in the
+Americas increased slightly year-over-year. Including currency
+translation effects, markets in the Americas declined slightly
+year-over-year.
+markets differs between the market segments. In the market
+for onshore wind farms, competition is widely dispersed with-
+out any one company holding a dominant share of the market.
+In contrast, there are only a few major players in the market for
+offshore wind farms, which are technologically more complex.
+Several competitors have managed to return to profitability
+through cost reduction measures and restructuring. Previously
+existing overcapacities have been adjusted to better match
+demand. Consolidation is moving forward in both on- and off-
+shore wind power through the market exit of smaller players,
+and especially in offshore through joint ventures between
+established players and new market entrants. The key drivers
+for consolidation are technology and market access challenges,
+which increase development costs and the importance of risk
+sharing in offshore wind power.
+181
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+Financial performance system
+of German Commercial Code)
+193 C.3
+205 C.4
+213 C.6
+> In the long term, we want to "scale up." We will intensify our
+efforts to seize further growth opportunities and tap new
+fields.
+> "Strengthen core" is our aim in the medium term. We in-
+tend to strengthen our successful businesses along the value
+chain of electrification by, among other things, allocating
+resources in a more rigorous way in order to expand in
+strategic growth fields.
+> In the short term, we want to "drive performance." To
+achieve this aim, we are retailoring our structures and re-
+sponsibilities. We are also focusing on business excellence.
+In addition, we want to get those businesses back on track
+that have not reached their full potential and make them
+competitive again.
+There are three stages in which we will lead our Company into
+the future:
+Shaped by our history, culture and values, our mission defines
+how we understand ourselves. As an expression of a strong
+brand, it formulates our aspiration: We make real what matters,
+by setting the benchmark in the way we electrify, automate
+and digitalize the world around us. Ingenuity drives us and
+what we create is yours. Together we deliver.
+In May 2014, we presented our entrepreneurial concept
+"Vision 2020."
+C.1.3.1 VISION 2020
+C.1.3 Strategy
+Infrastructure & Cities principal competitors are multinational
+companies. The Sector also faces competition from niche com-
+petitors and from new entrants, such as utility companies and
+consulting firms, exploiting the fragmented energy efficiency
+market. The Sector's solution businesses also compete with en-
+gineering, procurement and construction providers, and com-
+petitors in the service field often include small local players.
+to fiscal 2013. Within Europe, non-residential construction
+markets saw some stabilization in fiscal 2014, but remained
+weak due to the economic situation and austerity programs in
+some southern and western European countries. In contrast,
+markets in the Middle East, in Asia and Australia grew consid-
+erably year-over-year. In the Americas, growth in non-residen-
+tial construction markets began to accelerate during the fiscal
+year. There is usually a time lag of three to four quarters be-
+fore Building Technologies businesses begin to participate in
+such growth.
+In fiscal 2014, markets addressed by our Building Technol-
+ogies Division grew slightly in aggregate year-over-year. Within
+our non-residential construction markets, some segments
+developed more favorably than the market overall. Among
+them were data centers and the pharmaceutical industry,
+which showed clear growth in construction activities compared
+In fiscal 2014, markets for our Power Grid Solutions & Prod-
+ucts Business declined slightly year-over-year including weaker
+demand from some emerging markets countries. Overall, the
+decline is caused by weak demand in the Europe, C.I.S., Africa,
+Middle East region. The market situation in southern Europe
+remained particularly challenging. In Germany, which is under-
+taking a massive shift to renewable energy ("Energiewende"),
+utilities continued to delay major grid investments due to un-
+certainty in the regulatory environment. The Americas re-
+ported modest growth in real terms, particularly in the U.S.,
+where the economy is gaining momentum in construction and
+oil and gas markets. The overall market development was more
+positive in the Asia, Australia region, particularly including
+demand in the utility business within emerging economies.
+Furthermore, markets in the oil and gas business and in the
+non-residential construction business grew year-over-year, par-
+ticularly in China.
+Markets served by the Transportation & Logistics Business
+grew moderately in fiscal 2014, fueled e.g. by large contract
+awards in the U.K. and in Saudi Arabia within the Europe, C.I.S.,
+Africa, Middle East region. Europe remained the largest market
+for the Business. Growth in the Americas region benefited from
+demand for passenger locomotives and urban transport prod-
+ucts in the U.S. The Asia, Australia region showed the highest
+growth rates of all regions. This growth was fueled, amongst
+others, by a recovery in China, which began to increase its
+investments in high-speed trains.
+In fiscal 2014, the broad overall market for the offerings of the
+Infrastructure & Cities Sector grew slightly. The market for rail
+systems showed growth, non-residential construction markets
+were recovering, and the market for power grid solutions and
+products remained challenging.
+across the broad base of our portfolio, with the exception of
+the acquisition of Invensys by Schneider Electric. Consolidation
+in solution-driven markets is going in the direction of in-depth
+niche market expertise, whereas consolidation of the product-
+driven market follows the line of convergence. Most major
+competitors have established global bases for their businesses.
+In addition, competition has become increasingly focused on
+technological improvements and cost position.
+Net assets position
+210 C.5
+Financial position
+Results of operations
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+183
+> Offshore wind power;
+> Distribution grid automation and software;
+> Urban and interurban mobility;
+> Digital-twin software;
+> Key sectors in process industries;
+> Image-guided therapy and molecular diagnostics; and
+> Business analytics and data-driven services, software and
+IT solutions.
+Flexible and small gas turbines: In the area of power genera-
+tion, the trend is increasingly toward decentralized energy
+supply. Customers worldwide are relying more and more on
+individualized energy supplies and demanding tailor-made
+solutions. As a result, we see major growth potential in the
+field of flexible and small gas turbines.
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+184
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+> Flexible and small gas turbines;
+We want to set clear priorities for resource allocation and
+address promising growth fields, for example:
+In all areas related to project financing, Financial Services is a
+reliable partner to our customers.
+> Energy application: Our Divisions Building Technologies,
+Mobility, Digital Factory and Process Industries and Drives
+are delivering technologies for the efficient application of
+energy in building technology, transportation and industry.
+> Imaging and in-vitro diagnostics: Healthcare is responsible
+for our medical imaging and in-vitro diagnostics businesses.
+We have linked the success of Vision 2020 to the attainment of
+seven overarching goals:
+> Implement stringent corporate governance: We want to
+simplify and accelerate our processes, while reducing com-
+plexity in our Company and strengthening our corporate
+governance functions. We expect that these measures en-
+able us to reduce our costs by roughly €1 billion. The savings
+are expected to be mainly effective in fiscal 2016.
+> Create value sustainably: We are tapping attractive growth
+fields and getting those businesses that have not yet reached
+their full potential back on track.
+> Execute financial target system: We are rigorously imple-
+menting our financial target system.
+> Expand global management: To reflect our global orienta-
+tion more strongly in the future, we want more than 30% of
+our Division and Business Unit managers to be based outside
+Germany.
+> Be partner of choice for our customers: We want to be our
+customers' partner of choice. To measure customer satisfac-
+tion, we use the Net Promoter Score (NPS) – a comprehensive
+customer satisfaction survey that we conduct every year. Our
+goal is to improve our score by at least 20%.
+> Be an employer of choice: Highly committed and satisfied
+employees are the basis of our success. We are - and want to
+remain - an attractive employer. That is why we conduct a
+global engagement survey to measure employee satisfaction.
+In the categories Leadership and Diversity, we aim to achieve
+an approval rating of over 75% on a sustainable basis.
+> Foster an ownership culture: In the future, our employees
+will have an even greater stake in their company's success.
+We want to increase the current number of employee share-
+holders by at least 50%.
+C.1.3.2 STRATEGIC FRAMEWORK
+We have defined a comprehensive strategic framework that
+integrates the key fields of company management. These key
+fields are:
+205 C.4
+> Ownership culture;
+> Governance; and
+> our management model "One Siemens."
+a) Ownership culture
+One engine of sustainable business is our ownership culture,
+in which every employee takes personal responsibility for our
+Company's success. "Always act as if it were your own Company" -
+this maxim applies to everyone at Siemens, from Managing
+Board member to trainee.
+b) Customer and business focus
+We expect that the megatrends digital transformation, global-
+ization, urbanization, demographic change and climate change
+will provide growth opportunities. We are focusing on our posi-
+tioning along the value chain of electrification. This is where
+our core business lies. From power generation to power trans-
+mission, power distribution and smart grid to the efficient
+application of electrical energy in every one of these inter-
+related fields, electrification, automation and digitalization are
+the key business drivers.
+-
+> Power generation: The field of efficient power generation
+encompassing conventional and renewable energy sources
+as well as comprehensive services - is addressed by our
+Divisions Power and Gas, Wind Power and Renewables, and
+Power Generation Services.
+> Power transmission, power distribution and smart grid:
+Solutions for power transmission and distribution as well as
+technologies for smart grids are all bundled at our Energy
+Management Division.
+> Customer and business focus;
+20.7%
+II | C.2 Financial performance system
+16.4%
+Beginning with fiscal 2015, we intend to achieve a ratio of up to
+1.0, and thereby maintain our healthy capital structure.
+C.2.5 Dividend and share buybacks
+We intend to continue providing an attractive return to share-
+holders. In fiscal 2014, we intended to propose a dividend pay-
+out which, combined with outlays during the fiscal year for
+publicly announced share buybacks, results in a sum represent-
+ing 40% to 60% of net income, which for this purpose we may
+adjust to exclude selected exceptional non-cash effects.
+|
+In November 2013, we announced a share buyback of up to
+€4 billion ending latest on October 31, 2015. In May 2014, we
+started to repurchase shares. Through the end of fiscal 2014,
+outlays for our publicly announced share buybacks (excluding
+incidental transaction charges) totaled €1.079 billion and repre-
+sent 20% of net income.
+The percentage for fiscal 2013 was 26% with outlays for share
+buybacks in the amount of €1.152 billion.
+Beginning with fiscal 2015, we intend to realize a dividend pay-
+out range, without the effect of share buybacks, of 40% to 60%
+of net income, which for this purpose we may adjust to exclude
+selected exceptional non-cash effects. As in the past, we intend
+to fund the dividend payout from Free cash flow.
+213 C.6
+214 C.7
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11
+Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+189
+C.2.6 Additional information
+for financial performance measures
+C.2.6.1 RETURN ON EQUITY (ROE) (AFTER TAX)
+Industry
+FY 2014
+(in millions of €)
+Calculation of income taxes of SFS
+49%
+57%
+FY 2013
+FY 2014
+× 100%
+Combined Management Report
+188
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+Profit of SFS (Income before income taxes, IBIT)
+C.2.4 Capital structure
+| Capital structure (continuing operations)
+At the Annual Shareholders' Meeting, the Managing Board, in
+agreement with the Supervisory Board, will submit the follow-
+ing proposal to allocate the unappropriated net income of
+Siemens AG for the fiscal year ended September 30, 2014: to
+distribute a dividend of €3.30 on each share of no-par value
+entitled to the dividend for fiscal year 2014 existing at the date
+of the Annual Shareholders' Meeting, with the remaining
+amount to be carried forward. Payment of the proposed divi-
+dend is contingent upon approval by Siemens shareholders
+at the Annual Shareholders' Meeting on January 27, 2015. The
+prior-year dividend was €3.00 per share.
+The proposed dividend of €3.30 per share for fiscal 2014 rep-
+resents a total payout of €2.706 billion based on the estimated
+number of shares entitled to dividend at the date of the Annual
+Shareholders' Meeting. Based on net income of €5.507 billion
+for fiscal 2014, the dividend payout percentage is 49%. The per-
+centage for fiscal 2013 was 57%, based on a total dividend pay-
+out of €2.533 billion and a net income of €4.409 billion.
+Dividend payout percentage
+Industrial net debt
+Adjusted EBITDA
+FY 2014
+FY 2013
+0.15
+0.35
+Target range: 0.5 - 1.0
+Total dividend payout
+Net income
+Sustainable revenue and profit development is supported by a
+healthy capital structure. A key consideration within the frame-
+work of One Siemens is to maintain ready access to the capital
+markets through various debt products and preserve our ability
+to repay and service our debt obligations over time. Our pri-
+mary measure for managing and controlling our capital struc-
+ture is the ratio of industrial net debt to adjusted EBITDA.
+This financial measure indicates the approximate amount of
+time in years that would be needed to cover industrial net debt
+through income from continuing operations, without taking
+into account interest, taxes, depreciation and amortization. In
+fiscal 2014, we aimed to achieve a ratio in the range of 0.5 to
+1.0. For more information regarding adjusted EBITDA and for an
+analysis of our capital structure ratio, see → C.3.4 RECONCILIA-
+TION TO ADJUSTED EBITDA and C.4.2 CAPITAL STRUCTURE.
+171 C.
+Less: Income of SFS from investments accounted for using the equity method, net¹
+Less: Tax-free income components and others²
+Tax rate (flat)
+357
+320
+1,976
+1,874
+18.1%
+17.1%
+1 For information on Income (loss) of SFS from invest-
+ments accounted for using the equity method net,
+see → C.3.4 RECONCILIATION TO ADJUSTED EBITDA.
+2 Tax-free income components include forms of financing
+which are generally exempted from income taxes.
+Others comprise result components related to the
+(partial) sale/divestment of equity investments, which
+are classified from at equity to available-for-sale financial
+assets and are therefore not included in the (Income) loss
+of SFS from investments accounted for using the equity
+method, net. Such results are already taxed or generally
+tax free. Others may also comprise an adjustment for
+material taxable Income (loss) of SFS from investments
+accounted for using the equity method, net.
+3 Average allocated equity of SFS for a fiscal year is deter-
+mined as a five-point average in allocated equity of SFS
+of the respective quarters starting with the allocated
+equity of SFS as of September 30 of the previous fiscal
+year.
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+190
+Business and economic environment
+172 C.1
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+320
+357
+(89)
+(107)
+Calculated income taxes of SFS
+Profit after tax of SFS
+Profit of SFS (IBIT)
+Less: Calculated income taxes of SFS
+Profit after tax of SFS
+ROE (after tax) of SFS
+(I) Profit after tax of SFS
+(II) Average allocated equity of SFS³
+(I)/(II) ROE (after tax) of SFS
+Year ended September 30,
+2014
+2013
+Tax basis
+465
+(66)
+(85)
+(41)
+(26)
+358
+298
+30%
+30%
+107
+89
+465
+409
+409
+Corporate Governance
+The following table reports the calculation of ROE (after tax) of
+SFS as defined under One Siemens.
+108 | A. To our Shareholders
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+215 C.8
+213 C.6
+→ C.3.3 INCOME.
+For purposes of managing and controlling profitability at the
+Group level, we use net income as our primary measure. This
+measure is the main driver of basic earnings per share (EPS)
+from net income, which we use for communicating with
+the capital markets. For an analysis of this measure, refer to
+Target range: 15-20%
+RECONCILIATION TO ADJUSTED EBITDA.
+Within the framework of One Siemens, we aim to achieve mar-
+gins through the entire business cycle that are comparable to
+those of our relevant competitors. For purposes of this compar-
+ison in fiscal 2014, we used defined adjusted EBITDA margin
+ranges, which are based on the results of the respective rele-
+vant competitors of our four Sectors. Information regarding
+the calculation of adjusted EBITDA is presented in → c.3.4
+C.2.3 Profitability and capital efficiency
+× 100%
+18.1%
+17.1%
+FY 2014
+FY 2013
+SFS' average allocated equity
+SFS' profit after tax
+242 C.11
+1 Excluding currency translation and portfolio effects.
+FY 2013
+FY 2014
+Comparable1
+| Return on equity (ROE) (after tax)
+In line with common practice in the financial services busi-
+ness, our financial indicator for measuring capital efficiency at
+Financial Services (SFS) is return on equity after tax, or ROE
+(after tax). For information on the calculation of ROE (after
+tax) and its components, see → C.2.6.1 RETURN ON EQUITY (ROE)
+(AFTER TAX).
+8-12%
+1 Adjusted EBITDA margins of respective markets through business cycle.
+Target range
+FY 2013
+9.4%
+3.7%
+Infrastructure & Cities
+FY 2014
+131 | B.
+13.1%
+11-17%
+1%
+(1)%
+Sustainability and citizenship
+FY 2013
+225 C.9
+Margin range
+11-15%
+5-8%
+7-10%
+8-11%
+6-9%
+Beginning with fiscal 2015 and within the scope of further
+development of One Siemens, we intend to use ROCE for con-
+tinuing and discontinued operations as the primary measure for
+managing and controlling our capital efficiency. Going forward
+all activities of the Group are included in this financial measure.
+We continue to aim for a ROCE in the range of 15% to 20%. ROCE
+for continuing and discontinued operations amounted to 17.3%
+in fiscal 2014, compared to 13.5% a year earlier.
+Building Technologies
+Mobility
+Digital Factory
+Energy Management
+14-20%
+8-12%
+Healthcare
+SFS (ROE (after taxes))
+15-19%
+15-20%
+Beginning with fiscal 2015, we incorporated a measure called
+total cost productivity into our One Siemens framework, to em-
+phasize and evaluate our continuous efforts to improve produc-
+tivity. We define this measure as the ratio of cost savings from
+defined productivity improvement measures to the aggregate
+of functional costs for the Siemens Group. We aim to achieve
+an annual value of 3% to 5% for Total cost productivity.
+242 C.10 Compensation Report and legal disclosures
+Siemens AG (Discussion on basis
+of German Commercial Code)
+Process Industries and Drives
+Wind Power and Renewables
+FY 2014
+× 100%
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+Report on expected developments and
+associated material opportunities and risks
+187
+Beginning with fiscal 2015, we defined profit margin ranges for
+our Industrial Business (for the new organizational set up of
+Siemens, see → C.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION),
+which are based on the profit margins of the respective rele-
+vant competitors. Their determination is based on our en-
+hanced profit definition for our Industrial Business, which is
+also effective beginning with fiscal 2015. In contrast to the
+profit definition we used for fiscal 2014, the enhanced defini-
+tion eliminates income statement effects resulting from amor-
+tization of intangible assets acquired in business combinations.
+This type of amortization is basically a technical consequence
+of the purchase price allocation resulting from an acquisition,
+and therefore has nearly no operational business relevance.
+Moreover, by eliminating these income statement effects, we
+improve the comparability of our Industrial Businesses's profits
+with that of their relevant competitors. Beginning with fiscal
+2015, profit for SFS is also presented excluding amortization
+of intangible assets acquired in business combinations. Except
+for this adjustment, the profit definition remains unchanged.
+Within the framework of One Siemens we seek to work profit-
+ably and as efficiently as possible with the capital provided by
+our shareholders and lenders. For purposes of managing and
+controlling our capital efficiency in fiscal 2014, we used return
+on capital employed, or ROCE, for continuing operations as
+our primary measure. We aimed to achieve a range of 15% to
+20%. An analysis of this financial measure is provided in
+→ C.3.3 INCOME. For information on the calculation of ROCE and
+its components, see → C.2.6.2 RETURN ON CAPITAL EMPLOYED (ROCE).
+Return on capital employed (ROCE)
+| Profit margin ranges
+Income from continuing operations before interest after tax
+Average capital employed
+FY 2013
+Power and Gas
+17.2%
+13.7%
+Target range: 15-20%
+| (continuing operations)
+Electrification
+Energy
+application
+D
+Power transmission,
+power distribution and
+smart grid
+Our path
+|||||||||
+Power
+generation
+Automation
+→ SEE PAGE 88
+Imaging and
+in-vitro diagnostics
+-
+We empower our customers to set benchmarks – with our power of innovation,
+our leading technologies, our global presence and, last but not least, our financial
+solidity. We generate value by transforming the value chain of electrification,
+reaching across both the digital and physical worlds. Our highly qualified and
+committed employees are the foundation for achieving this.
+| Together we deliver
+Our knowledge is the basis of our performance. We partner with our customers,
+leveraging sustainable business practices. With determination and ingenuity, we
+deliver engineering excellence, taking personal ownership until we jointly succeed.
+This is the foundation on which we've been tackling the challenges
+of our time ever since Werner von Siemens and Johann Georg Halske
+founded our Company in Berlin more than 165 years ago.
+12
+| | | |||||||||| Our path
+||||||| | || |
+|| | Positioning
+How can we achieve long-term success? And how are we positioning
+ourselves to make it happen? Our setup is aligned with framework
+conditions worldwide, with the long-term trends that define our markets,
+with our competitive environment and with the requirements of
+customers, partners and societies. Focused on the long term, it stands
+for what all our business activities have in common.
+|
+|
+Electrification
+We're positioned along the value chain of electrification. Our products are
+designed to generate, transmit, distribute and utilize electrical energy with
+particularly high efficiency. Our roots are in electrification. We've been lead-
+ers in this field until now, and it's here that our future lies.
+Automation
+We've been successfully automating customer processes for years. In auto-
+mation, too, we've already captured leading market positions worldwide.
+We intend to maintain and expand these positions.
+Digitalization
+We want to exploit the opportunities offered by digitalization even better.
+Because added value for our customers lies more and more in software
+solutions and intelligent data analysis.
+Across the areas of electrification, automation and digitalization, there
+are concrete growth fields - fields in which we see major potential. We're
+rigorously aligning ourselves to exploit this potential in order to achieve
+long-term success. Our setup reflects this aspiration.
+Digitalization
+| | | | | | |
+13
+14
+Stages
+16
+| | | |||||||||| Our path
+||||||| | || |
+|| | Goals
+Only those who set demanding goals can be successful over the long term.
+That's why we've linked the success of Vision 2020 to the attainment of
+seven overarching goals - goals that will provide us with a yardstick and a
+compass on the path to 2020. In particular, we aim to:
+Implement stringent corporate governance
+We're simplifying and accelerating our processes while
+reducing complexity in our Company and strengthening
+our corporate governance functions. In this way, we plan
+to reduce our costs by roughly €1 billion. The savings are
+expected to be mainly effective in 2016.
+Goal:
+|
+Tap growth fields and
+businesses back on track
+=
+⠀⠀⠀⠀⠀⠀⠀⠀ Create value sustainably
+We're tapping attractive growth fields and getting
+those businesses that haven't yet reached their full
+potential back on track.
+Goal:
+Growth
+Goal:
+ROCE of
+Execute financial target system
+We're rigorously implementing our financial target
+system in order to consistently achieve our capital
+efficiency target – an ROCE of 15% to 20%. Our aim is
+to grow faster than our most relevant competitors.
+most relevant
+competitors
+get underperforming
+By setting the benchmark
+| Vision 2020
++
+| | | |||||||||| Our path
+||||||| | || |
+||| Stages
+Our positioning and our strategic direction are closely linked to defined
+milestones - the stages in which we'll lead our Company into a successful
+future. We're not only focusing on the next one or two quarters or the
+next reporting season but on the years and, perhaps, even decades to come.
+With this future in view, we now have to take all the right steps to create
+value - for the short, medium and long term.
+|
+Short term: Drive performance
+|
+Our first task is to boost our performance. To achieve this aim, we're retai-
+loring our structures and responsibilities. We're also focusing on business
+excellence, in other words, the reliable management of our businesses.
+We want to get even those businesses that aren't reaching their full potential
+back on a successful track and make them competitive again.
+Medium term: Strengthen core
+2015 2016 2017 2018 2019 2020
+To achieve long-term success, you have to focus on the things that make you
+strong and put other things aside. In line with this philosophy, we intend to
+strengthen our successful businesses along the value chain of electrification.
+Among other things, we want to allocate resources in a more rigorous way
+in order to expand in strategic growth fields. → SEE PAGE 90
+But we won't stop there. With the same resolve, we'll intensify our efforts to
+seize further growth opportunities and tap new fields.
+Value
+||||
+Our path
+15
+Scale up
+Strengthen core
+Drive performance
+#
+| Long term: Scale up
+Grounded in reality, we're inspired by the desire to shape the future – in cooperation
+with our partners. Leveraging our passion for engineering, we make real what
+matters, working with our customers to help improve the lives of people today and
+in the generations to come. Customers all around the world trust us and count on
+our knowhow and our reliability to make them more competitive.
+Together we deliver.
+Shaped by our history, culture and values, our mission defines
+how we understand ourselves. As an expression of a strong brand,
+it formulates our aspiration.
+number of employee
+shareholders
+increase in the
+≥50%
+Goal:
+approval rating in the
+categories Leadership
+and Diversity in our global
+engagement survey
+>75% 1
+Goal:
+Foster an ownership culture
+Highly committed and satisfied employees are the basis
+of our success. We are - and want to remain - an
+attractive employer. That's why we conduct a global
+engagement survey to measure employee satisfaction.
+In the categories Leadership and Diversity, we
+aim to achieve an approval rating of over 75% on
+a sustainable basis.
+We want to be our customers' partner of choice - both
+now and in the future. To measure customer satisfac-
+tion, we use the Net Promoter Score – a comprehensive
+customer satisfaction survey that we conduct every
+year. Our goal is to improve our score in the survey by
+at least 20%.
+-
+Be a partner of choice for our customers
+1-
+Net Promoter Score
+improvement in
+≥ 20%
+Be an employer of choice
+In the future, our employees will have an even greater
+stake in their Company's success. We want to increase
+the current number of employee shareholders by at
+least 50%.
+18
+| | | |||||||||| Our path
+Last but not least, we're further expanding the original One Siemens
+financial concept to make it a comprehensive management model
+encompassing our financial targets, our operating system and our
+underlying approach to sustainability. → SEE PAGE 94
+Management model
+We're also strengthening our internal setup by streamlining our Company
+structure and making our management even more effective – in a word,
+we're ensuring strong governance. → SEE PAGE 92
+Governance
+|
+|
+→ SEE PAGE 88
+We're sharpening our customer and business focus through rigorous
+positioning and clear priorities for stringent resource allocation. For
+this reason, we're concentrating our efforts on selected growth fields.
+Customer and business focus
+→ SEE PAGE 42
+is a strong culture. It's the origin and foundation for all our consider-
+ations. We want to reflect the basic values of responsible action within
+a strong ownership culture - throughout the entire Company.
+The most important guarantee for the long-term success of our strategy
+Ownership culture
+|
+To be successful, a company needs more than concrete financial targets.
+It also requires a comprehensive strategic framework that closely aligns
+the central fields of company management. Vision 2020 defines this frame-
+work for Siemens.
+|| | Strategic framework
+||||||| | || |
+Goal:
+We make real what matters
+of Division and
+Business Unit management
+outside Germany
+Goal:
+9
+10
+|| | |||||||||| Our path
+|| | Mission
+We make real what matters
+by setting the benchmark
+||||in the way we |||
+| | | ||||||||||
+electrify, automate and digitalize
+|||||| Ingenuity drives us
+||| and what we create is
+yours.
+Our path
+|||||||| ||
+11
+|
+the world around us. |||
+We make real what matters
+|
+Vision 2020
+We want more than 30% of our Division and Business
+Unit managers to be based outside Germany by 2020.
+We now have business activities in virtually every
+country of the world, generating some 85% of our
+revenue outside Germany. We want our management
+to reflect this global orientation more strongly in
+the future.
+Expand global management ||||||
+17
+|||||||| ||
+Our path
+15%
+20%
+to
+billion
+Goal:
+Our path
+defines an entrepreneurial concept that will enable our
+Company to consistently occupy attractive growth fields,
+sustainably strengthen our core business and outpace
+our competitors in efficiency and performance. It's our
+path to long-term success. And we're measuring our
+progress: seven overarching goals support this aim.
+→ SEE PAGE 16
+We'll be working on the three areas outlined above. They
+describe the key factors that are enabling us to lead
+Siemens into a successful future. Throughout this process,
+we will gear all our actions to the requirements of our
+customers, our owners and our employees as well as to the
+values of society. I personally intend to ensure that the
+next generation will inherit a better Company. That's my
+vision. That's my responsibility. That's my promise.
+Sincerely yours,
+Kem
+Joe Kaeser
+President and CEO of Siemens AG
+>30%
+|||||||||| |
+Cut costs by
+~€1
+20,621
+Q4 2014
+20,733
+Q4 2014
+Book-to-bill ratio
+Revenue
+Orders
+Orders and revenue by quarter (in millions of €)
+193
+Consolidated Financial Statements
+Additional Information
+247 D.
+337
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+Report on expected developments and
+associated material opportunities and risks
+225 C.9
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+215 C.8
+213 C.6
+year-over-year.
+While revenue in Asia, Australia came in near the prior-year
+level, it included double-digit revenue growth in China that
+resulted from a sharp increase in Infrastructure & Cities and a
+solid contribution from Industry. In the Americas, revenue was
+lower year-over-year in all Sectors, due in part to currency trans-
+lation headwinds as mentioned above. A double-digit decrease
+in Energy revenue in Europe, C.I.S., Africa, Middle East more
+than offset clear growth in Infrastructure & Cities. Emerging
+markets reported a 2% decline compared to fiscal 2013 and
+accounted for €24.312 billion, or 34%, of total revenue in fiscal
+2014. Comparable revenue growth in emerging markets was 3%
+Revenue related to external customers declined 2% com-
+pared to fiscal 2013. Clear revenue growth year-over-year in
+Infrastructure & Cities resulting from the continuing execution
+of large rolling-stock projects, was more than offset by a clear
+decline in Energy, which saw revenue fall in many of its
+businesses and in all three reporting regions. Industry revenue
+came in near the prior-year level and Healthcare reported
+a slight decline, both including unfavorable currency trans-
+lation effects.
+In the region Europe, C.I.S., Africa, Middle East, the decline
+in orders was due mainly to a double-digit decrease in Infra-
+structure & Cities caused by a lower volume from large orders
+compared to a year earlier. Orders came in slightly lower in
+the Americas, despite 9% order growth in the U.S. Key growth
+drivers here included Siemens' largest-ever order for light rail
+vehicles in the U.S. and a rebound in the U.S. wind business
+after a sharp drop in the previous year. Clear order growth in
+Asia, Australia was due in part to a higher volume from large
+orders in Energy. In addition, China contributed to the regional
+development with a sharp increase in Infrastructure & Cities
+and double-digit order growth in Industry.
+Orders related to external customers in fiscal 2014 decreased
+2%, largely due to a moderate decline in Infrastructure & Cities
+where prior-year orders included a €3.0 billion contract for
+trains and maintenance in the U.K. Slight decreases in Health-
+care and Energy were only partially offset by order growth in
+Industry.
+2 Commonwealth of Independent States.
+1 Excluding currency translation and portfolio effects.
+1.01
+Q3 2014
+19,284
+Q3 2014
+Q1 2013
+1.21
+Q2 2013 17,226
+20,761
+Q2 2013
+1.09
+18,363
+Q3 2013
+19,928
+Q3 2013
+0.99
+20,559
+0%
+Q4 2013
+Q4 2013
+1.21
+16,742
+Q1 2014
+20,306
+Q1 2014
+1.07
+Q2 2014 16,865
+18,027
+Q2 2014
+1.09
+17,692
+20,298
+(3)%
+0%
+(2)%
+Americas
+38,732 39,390 (2)% (1)% (1)% 0%
+10,857 10,652
+2% 2% 0% 0%
+therein Germany
+Port-
+folio
+Cur-
+rency
+Compa-
+Actual rable¹
+2013
+2014
+(in millions of €)
+Europe, C.I.S.,²
+Africa, Middle East
+% Change
+Year ended
+September 30,
+therein
+Year ended
+September 30,
+| Revenue (location of customer)
+| Orders (location of customer)
+The order backlog (defined as the sum of order backlogs of the
+Sectors) was €100 billion as of September 30, 2014, up from
+€94 billion a year earlier.
+Orders for fiscal 2014 totaled €78.350 billion, and revenue came
+in at €71.920 billion. Both represented a 2% decrease year-over-
+year, due in part to unfavorable currency translation effects.
+The resulting book-to-bill ratio was 1.09 for Siemens in fiscal
+2014. On a comparable basis, excluding currency translation
+and portfolio effects, orders and revenue both grew 1% year-
+over-year.
+C.3.1 Orders and revenue by region
+|| | C.3 Results of operations
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+On a global basis, orders from emerging markets, as these mar-
+kets are defined by the International Monetary Fund, remained
+level year-over-year, and accounted for €27.471 billion, or 35%,
+of total orders for fiscal 2014. Comparable order growth in
+emerging markets was 6% year-over-year.
+18,767
+% Change
+(in millions of €)
+(4)% 0%
+1 Excluding currency translation and portfolio effects.
+Commonwealth of Independent States.
+2
+1%
+(3)%
+1%
+(5)%
+0%
+0%
+10,986 11,616 (5)% (5)%
+20,880 21,070 (1)% 4%
+14,842 13,592 9% 11%
+15,929 14,796 8% 12%
+6,641 6,053 10% 12%
+78,350 79,755 (2)% 1%
+therein China
+Siemens
+therein U.S.
+Asia, Australia
+therein
+Americas
+1%
+18,756 19,644 (5)% 0% (5)% 0%
+12,876 13,110 (2)%
+(3)% 1%
+14,433 14,411 0% 4% (4)% 0%
+6,442 5,866 10% 12% (2)% 0%
+71,920 73,445 (2)% 1% (3)% 0%
+therein U.S.
+Asia, Australia
+therein China
+Siemens
+0%
+41,542 43,889 (5)% (4)% (1)%
+Africa, Middle East
+Europe, C.I.S.,²
+Port-
+Cur-
+Compa-
+rable¹ rency folio
+2013 Actual
+2014
+therein Germany
+187 C.2
+Q1 2013
+1.09
+(in millions of €)
+| Profit and Profit margin by Business
+1 Excluding currency translation and portfolio effects.
+Power Transmission
+Wind Power
+Power Generation
+(in millions of €)
+Revenue by Business
+| 1 Excluding currency translation and portfolio effects.
+Power Transmission
+Wind Power
+Power Generation
+(in millions of €)
+Orders by Business
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+Combined Management Report
+Power Generation
+Wind Power
+Power Transmission
+Year ended September 30,
+0%
+(4)%
+2%
+(2)%
+5,700
+5,586
+0%
+(2)%
+19%
+18%
+6,593
+7,748
+171 C.
+(2)%
+0%
+(5)%
+16,366
+15,478
+Portfolio
+Currency
+Comparable¹
+Actual
+2013
+2014
+therein
+% Change
+(4)%
+Corporate Governance
+131 | B.
+194
+26,638
+24,631
+Total revenue
+4%
+(1)%
+28,797
+28,646
+Orders
+7.3%
+6.4%
+Profit margin
+(20)%
+(8)%
+1,955
+therein
+Portfolio
+Currency
+% Change
+Comparable¹
+Actual
+2013
+Year ended September 30,
+2014
+Profit
+(in millions of €)
+| Sector
+C.3.2.1 ENERGY
+C.3.2 Segment information analysis
+|
+1,569
+17,297
+(3)%
+(1)%
+(1)%
+108 | A. To our Shareholders
+Revenue for the Sector came in 8% lower than a year ago on
+decreases in all three reporting regions, reflecting weak order
+development at Power Generation and selective order intake at
+Power Transmission in the past. Power Generation and Power
+Transmission posted revenue declines compared to the prior
+year, while Wind Power clearly increased its revenue. Orders
+for the Sector came in 1% lower than in the prior year. On a
+regional basis, an increase in the Asia, Australia reporting
+region was more than offset by a decline in the Americas.
+Negative currency translation effects took three percentage
+points from both revenue and order development during the
+year. The book-to-bill ratio for Energy was 1.16, and its order
+backlog was €58 billion at the end of the fiscal year. Out of the
+order backlog as of September 30, 2014, orders of €19 billion
+are expected to be converted into revenue in fiscal 2015 and the
+remainder in the periods thereafter.
+Energy Sector profit of €1.569 billion in fiscal 2014 was down
+significantly compared to a year earlier, due mainly to continu-
+ing profitability challenges including a revenue decline and a
+less favorable business mix. Both periods included substantial
+burdens on profit. In the current period, the impacts included
+€538 million in charges at Power Transmission and €272 mil-
+lion in charges at Wind Power. Burdens on Sector profit a year
+ago included €301 million in charges for the "Siemens 2014"
+program, a loss of €255 million at Siemens' solar activities,
+€171 million in charges at Power Transmission, among others,
+€94 million in charges related to onshore wind turbine blades
+and €46 million in charges related to compliance with sanc-
+tions on Iran at Power Generation. The Power Generation Divi-
+sion increased its profit year-over-year, benefiting from a gain
+on the sale of the Division's turbo fan business and a positive
+effect from a successful project completion. Power Trans-
+mission posted a sharply higher loss year-over-year, and Wind
+Power reported a loss compared to a profit in fiscal 2013.
+2 Commonwealth of Independent States.
+| 1 Excluding currency translation and portfolio effects.
+(6)%
+4,888
+4,601
+Asia, Australia
+(2)%
+7,155
+7,013
+(3)%
+(3)%
+Americas
+2,246
+2,507
+therein Germany
+(11)%
+14,382
+12,766
+Europe, C.I.S., Africa, Middle East
+therein:
+(8)%
+26,425
+24,380
+External revenue
+12%
+Year ended September 30,
+Business and economic environment
+192
+28,625
+Total equity
+Capital employed Fiscal 2013
+09/30/2012
+12/31/2012
+03/31/2013
+06/30/2013
+09/30/2013
+(in millions of €)
+258
+31,195
+232
+33,138
+20
+33,354
+33,898
+1,275
+1,559
+32,297
+Capital employed (continuing operations)
+presented as discontinued operations
+Plus: Liabilities associated with assets classified as held for disposal
+(768)
+(758)
+(14)
+(1,689)
+(2,325)
+Less: Assets classified as held for disposal presented as discontinued operations
+31,706
+27,909
+26,620
+30,551
+31,424
+9,265
+Plus: Post-employment benefits
+(524)
+(517)
+(533)
+(506)
+(601)
+Less: Current available-for-sale financial assets
+(10,891)
+(7,823)
+(7,892)
+(6,071)
+33,665
+(9,190)
+3,826
+3,709
+2,752
+3,656
+1,944
+Plus: Short-term debt and current maturities of long-term debt
+16,880
+16,651
+20,182
+19,140
+18,509
+Plus: Long-term debt
+Less: Cash and cash equivalents
+33,348
+34,313
+33,063
+Less: Cash and cash equivalents
+1,944
+2,883
+3,757
+4,092
+Plus: Short-term debt and current maturities of long-term debt
+18,509
+18,377
+18,587
+18,364
+19,326
+Plus: Long-term debt
+(8,013)
+28,625
+28,336
+28,633
+31,514
+Total equity
+Capital employed Fiscal 2014
+09/30/2013
+12/31/2013
+03/31/2014
+06/30/2014
+09/30/2014
+(in millions of €)
+|
+30,372
+9,325
+(8,210)
+(8,885)
+Capital employed (continuing and discontinued operations)
+(1,247)
+(1,166)
+(1,134)
+(1,114)
+(1,121)
+Less: Fair value hedge accounting adjustment¹
+(15,600)
+(16,022)
+(16,428)
+(17,017)
+(18,663)
+(8,585)
+Less: SFS Debt
+8,771
+9,614
+10,473
+9,324
+Plus: Post-employment benefits
+(601)
+(666)
+(799)
+(907)
+(925)
+Less: Current available-for-sale financial assets
+(9,190)
+9,265
+172 C.1
+9,890
+9,801
+(I) Income before interest after tax
+Return on capital employed (ROCE) (continuing and discontinued operations)
+4,465
+5,632
+Income from continuing operations before interest after tax
+(231)
+(108)
+Less: Income from discontinued operations, net of income taxes
+4,695
+5,739
+(111)
+(87)
+297
+295
+556
+630
+(455)
+(606)
+Less:
+Net interest expenses from post-employment benefits
+Plus:
+SFS Other interest expenses/income¹
+Plus:
+Less:
+Income before interest after tax
+5,739
+4,695
+(II) Average capital employed (continuing and discontinued operations)³
+33,219
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+There is no standard system for compiling and calculating or-
+ders and order backlog information that applies across compa-
+nies. Accordingly, our orders and order backlog may not be
+comparable with orders and order backlog measures reported
+by other companies. We subject our orders and our order back-
+log to internal documentation and review requirements. We
+may change our policies for recognizing orders and order back-
+log in the future without previous notice.
+Order backlog represents an indicator for the future revenues
+of our Company resulting from already recognized orders. Order
+backlog is calculated by adding the orders of the current fiscal
+year to the balance of the order backlog as of the end of the
+prior fiscal year and then subtracting the revenue recognized in
+the current fiscal year. If the amount of an order already recog-
+nized in the current or the previous fiscal years is modified or
+if an order from the current fiscal year is cancelled, we adjust
+orders for the current quarter and also our order backlog
+accordingly, but do not retroactively adjust previously pub-
+lished orders. However, if an order from a previous fiscal year is
+cancelled, orders of the current quarter and, accordingly, the
+current fiscal year are generally not adjusted; instead, the exist-
+ing order backlog is revised directly. Aside from cancellations,
+the order backlog is also subject to currency translation and
+portfolio effects.
+Under our policy for the recognition of orders, we generally
+recognize the total contract amount for an order when we enter
+into a contract that we consider legally effective and compul-
+sory based on a number of different criteria. The contract
+amount is the agreed price or fee for that portion of the contract
+for which the delivery of goods and/or the provision of services
+has been irrevocably agreed. Future revenue from long-term
+service, maintenance and outsourcing contracts is recognized
+as orders in the amount of the total contract value only if there
+is adequate assurance that the contract will remain in effect for
+its entire duration (e.g., due to high exit barriers for the cus-
+tomer). Orders are generally recognized immediately when the
+relevant contract is considered legally effective and compul-
+sory. The only exceptions are orders with short overall contract
+terms. In this case, a separate reporting of orders would provide
+no significant additional information regarding our perfor-
+mance. For orders of this type, the recognition of orders thus
+occurs when the corresponding revenue is recognized.
+We also use other financial measures in addition to the mea-
+sures described above, such as orders and order backlog for the
+assessment of our future revenue potential. We define and cal-
+culate orders and order backlog as follows:
+C.2.6.3 DEFINITIONS OF OTHER
+FINANCIAL MEASURES
+3 Average capital employed for a fiscal year is determined
+as a five-point average in capital employed of the
+respective quarters starting with the capital employed
+as of September 30 of the previous fiscal year.
+SOLIDATED STATEMENTS OF INCOME.
+Taxes on interest adjustments²
+2 Effective tax rate for the determination of taxes on
+interest adjustments is calculated by dividing Income
+tax expenses by Income from continuing operations
+before income taxes, both as reported in → D.1 CON-
+13.7%
+17.2%
+32,583
+32,777
+4,465
+5,632
+(I) Income from continuing operations before interest after tax
+(II) Average capital employed (continuing operations)³
+(I)/(II) ROCE (continuing operations)
+Return on capital employed (ROCE) (continuing operations)
+(1)/(II) ROCE (continuing and discontinued operations)
+13.5%
+17.3%
+34,831
+1 SFS Other interest expenses/income is included in Other
+interest expenses/income, net. Adding back SFS Other
+interest expenses/income in the numerator corresponds
+to the adjustment for SFS Debt in the denominator.
+4,409
+5,507
+2013
+presented as discontinued operations
+Plus: Liabilities associated with assets classified as held for disposal
+(4,693)
+(4,589)
+(4,616)
+(4,783)
+(768)
+Less: Assets classified as held for disposal presented as discontinued operations
+34,289
+36,367
+34,667
+37,127
+258
+31,706
+(1,670)
+(1,570)
+(1,473)
+(1,323)
+(1,247)
+Less: Fair value hedge accounting adjustment¹
+(14,558)
+(14,490)
+(14,879)
+(15,004)
+(15,600)
+Less: SFS Debt
+Capital employed (continuing and discontinued operations)
+9,856
+Capital employed (continuing operations)
+1,948
+34,291
+2014
+Other interest expenses/income, net
+Net income
+Income from continuing operations before interest after tax
+(in millions of €)
+Year ended September 30,
+191
+Additional Information
+Consolidated Financial Statements
+D.
+247
+337
+Report on expected developments and
+associated material opportunities and risks
+31,195
+225 C.9
+Sustainability and citizenship
+242 C.11
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+215 C.8
+213 C.6
+figure for the calculation presented above. For further
+information on fair value hedges see NOTE 30 in
+→ D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+value mainly due to changes in interest rates. Accord-
+ingly, we deduct these changes in market value in order
+to end up with an amount of debt that approximately
+will be repaid, which we believe is a more meaningful
+1 Debt is generally reported with a value representing
+approximately the amount to be repaid. However, for
+debt designated in a hedging relationship (fair value
+hedges), this amount is adjusted by changes in market
+31,606
+2,010
+2,045
+33,823
+1,948
+31,999
+242 C.10 Compensation Report and legal disclosures
+Siemens AG (Discussion on basis
+of German Commercial Code)
+As part of One Siemens, we managed and controlled our capital
+efficiency in fiscal 2014 using the financial measure ROCE for
+continuing operations. The following tables report this financial
+measure as defined under One Siemens and also provide a rec-
+onciliation to ROCE for continuing and discontinued operations.
+% Change
+2014
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+2 Commonwealth of Independent States.
+1 Excluding currency translation and portfolio effects.
+12%
+2,367
+2,656
+(5)%
+4,288
+4,075
+Asia, Australia
+Americas
+5%
+2,635
+2,763
+therein Germany
+10%
+10,494
+11,560
+Europe, C.I.S., Africa, Middle East
+therein:
+External revenue
+198
+172 C.1
+Business and economic environment
+187 C.2
+Building Technologies
+Power Grid Solutions & Products
+Transportation & Logistics
+(in millions of €)
+Profit and Profit margin by Business
+1 Excluding currency translation and portfolio effects.
+Building Technologies
+Power Grid Solutions & Products
+Transportation & Logistics
+(in millions of €)
+Revenue by Business
+| 1 Excluding currency translation and portfolio effects.
+Total revenue
+Building Technologies
+Transportation & Logistics
+(in millions of €)
+Orders by Business
+Sector revenue in fiscal 2014 rose 6% compared to the prior
+fiscal year, due to a double-digit increase at Transportation &
+Logistics. This business continued to execute large rolling stock
+projects won in prior periods, and also recorded four quarters of
+revenue from the acquisition of Invensys Rail which closed
+during the third quarter of the prior year. Large orders in the
+current period included a contract worth €1.6 billion for two
+driverless subway lines in Saudi Arabia. A year earlier, large
+orders included among others a contract worth €3.0 billion for
+trains and maintenance in the U.K., and as a result fiscal 2014
+orders for the Sector came in 4% lower year-over-year. On a geo-
+graphic basis, the Sector reported double-digit revenue in-
+creases in Asia, Australia and Europe, C.I.S, Africa, Middle East,
+only partly offset by a decline in the Americas. For orders,
+double-digit increases in the Americas and Asia, Australia
+were more than offset by a double-digit decline in Europe,
+C.I.S., Africa, Middle East. On a book-to-bill ratio of 1.11, Infra-
+structure & Cities' order backlog rose to €31 billion at the end of
+fiscal 2014. Out of the order backlog as of September 30, 2014,
+orders of €10 billion are expected to be converted into revenue
+in fiscal 2015 and the remainder in the periods thereafter.
+In fiscal 2014, Infrastructure & Cities executed its projects
+solidly, improved its productivity, and again won a number of
+very large infrastructure orders. Profit for the Sector rose to
+€1.487 billion and all its Businesses contributed to the increase
+year-over-year. For comparison, profit of €291 million in the
+prior year was impacted by €468 million in "Siemens 2014"
+charges as well as project charges including charges of
+€270 million related to high-speed trains. Transportation &
+Logistics, which posted a loss in the prior fiscal year due to the
+project charges just mentioned and a majority share of the Sec-
+tor's "Siemens 2014" charges, delivered a profit of €440 million
+in fiscal 2014 and made the strongest contribution to the
+Sector's profit improvement year-over-year. Power Grid Solu-
+tions & Products and Building Technologies improved their prof-
+its sharply year-over-year, to €566 million and €501 million, re-
+spectively. While both Businesses posted lower revenue, they
+improved productivity and generated a more favorable revenue
+mix year-over-year.
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+Power Grid Solutions & Products
+7%
+17,149
+18,291
+On a geographic basis, double-digit order growth in China drove
+a moderate increase in Asia, Australia while orders in Europe,
+C.I.S., Africa, Middle East came in slightly above their prior-year
+level. Revenue was flat in these two reporting regions. Both
+orders and revenue came in lower in the Americas, held back
+by unfavorable currency translation effects.
+Profit at Drive Technologies in fiscal 2014 increased to
+€843 million on contributions from most of its businesses.
+Profit development included a higher share of revenue from
+the Division's higher-margin motion control business and an
+improved cost position. For comparison, profit of €527 million a
+year earlier was burdened by €243 million in "Siemens 2014"
+charges. Due to unfavorable currency translation effects,
+reported revenue was level year-over-year while orders grew
+2% on a higher volume of large internal orders from Siemens'
+rail business.
+Africa, Middle East. Reported revenue in the Americas showed
+a slight decline due to unfavorable currency translation effects.
+Order and revenue development for the Division was driven
+mainly by double-digit growth in Asia, Australia, led by China.
+In addition, order growth of 3% year-over-year included a mod-
+erate increase in the Americas. Revenue came in 2% above
+the prior year and included a slight increase in Europe, C.I.S.,
+Profit at Industry Automation increased substantially year-
+over year to €1.401 billion on an improved business mix and
+higher results in all businesses, up from €1.038 billion in the
+prior-year period which included €114 million in "Siemens 2014"
+charges. Profit development further included higher revenue
+and lower acquisition-related effects. In particular, PPA effects
+related to the acquisition of UGS Corp. in fiscal 2007 were
+€93 million in the current period compared to €147 million a
+year earlier. In addition, the Division recorded PPA effects of
+€44 million related to LMS International NV (LMS), acquired in
+the second quarter of fiscal 2013. For comparison, PPA effects
+related to LMS in the prior year were €33 million, while de-
+ferred revenue adjustments and inventory step-ups totaled
+€43 million.
+5.7%
+9.1%
+12.7%
+16.8%
+35%
+60%
+1,038
+527
+1,401
+843
+C.3.2.4 INFRASTRUCTURE & CITIES
+2013
+% Change
+2013
+2014
+Year ended September 30,
+Year ended September 30,
+Profit margin
+Profit
+Drive Technologies
+Industry Automation
+(in millions of €)
+| Profit and Profit margin by Business
+197
+2014
+213 C.6
+| Sector
+Profit
+3%
+(3)%
+6%
+6%
+17,879
+18,934
+2%
+(2)%
+(4)%
+(4)%
+21,894
+21,001
+(in millions of €)
+1.6%
+>200%
+291
+1,487
+therein
+Portfolio
+Currency
+% Change
+Comparable¹
+Actual
+2013
+2014
+Year ended September 30,
+Orders
+Profit margin
+7.9%
+Consolidated Financial Statements
+Additional Information
+214 C.7
+Overall assessment of the economic position
+Subsequent events
+Building Technologies increased its profit to €501 million
+compared to €351 million in the prior fiscal year. Profit growth
+year-over-year was supported by higher productivity and a
+more favorable business mix related to the Division's high-
+er-margin product and service businesses. For comparison,
+profit in fiscal 2013 was held back by €100 million in "Siemens
+2014" charges. Both revenue and orders declined 3% year-over-
+year. On a regional basis, lower volume was due mainly to the
+Americas.
+Profit at Power Grid Solutions & Products rose to €566 million
+from €403 million in the prior fiscal year. Profit grew on im-
+proved productivity as well as a more favorable revenue mix.
+For comparison, profit in fiscal 2013 was burdened by €97 mil-
+lion in "Siemens 2014" charges. Slightly lower revenue year-
+over-year included declines in the Americas and the Asia,
+Australia regions. A slight increase in orders included the Busi-
+ness's share of the above-mentioned order from Saudi Arabia.
+Revenue and order development in fiscal 2014 was strongly
+affected by negative currency translation effects. On an organic
+basis, revenue was up 3% and orders rose 6% year-over-year.
+Transportation & Logistics contributed a profit of €440 mil-
+lion in the current fiscal year, compared to a loss of €448 mil-
+lion a year earlier. Profit development in the current fiscal was
+driven primarily by significantly higher revenue and solid proj-
+ect execution. Profit also benefited from a €55 million net effect
+from the release of accruals related to the "Siemens 2014" pro-
+gram and a €27 million positive effect stemming from a change
+in risk assessment for a rail project. For comparison, the loss in
+the prior fiscal year was due to substantial profit impacts, in-
+cluding the above-mentioned €270 million in project charges,
+which stemmed from delays for receiving certification for new
+high-speed trains, and €267 million in "Siemens 2014" charges.
+Prior-year profit was also burdened by €76 million in trans-
+action and integration costs and PPA effects of €23 million
+related to the acquisition of Invensys Rail, which closed during
+the third quarter of fiscal 2013. In fiscal 2014, full-year PPA ef-
+fects related to the acquisition of Invensys Rail were €53 mil-
+lion and integration costs amounted to €34 million. Revenue at
+Transportation & Logistics rose substantially year-over-year, as
+the Business has been executing a number of its large roll-
+ing-stock orders. Orders declined 9% compared to fiscal 2013,
+due primarily to lower volume from large orders. For example,
+fiscal 2014 included the Business's share of the above-men-
+tioned €1.6 billion order from Saudi Arabia, while the prior fis-
+cal year included the entire €3.0 billion order from the U.K.
+mentioned above. Both revenue and order development in
+fiscal 2014 benefited from the acquisition of Invensys rail.
+199
+Consolidated Financial Statements
+Additional Information
+247 D.
+337
+242 C.10 Compensation Report and legal disclosures
+Siemens AG (Discussion on basis
+of German Commercial Code)
+242 C.11
+6.1%
+9.0%
+43%
+351
+501
+6.6%
+9.4%
+41%
+403
+566
+(7.1)%
+5.8%
+n/a
+(448)
+440
+2013
+2014
+C.3.2.5 EQUITY INVESTMENTS
+In fiscal 2014, Equity Investments generated €328 million in
+profit, down from €411 million a year earlier. Profit at Equity
+Investments in both fiscal years included equity investment
+income related to our stake in BSH. Beginning with the second
+quarter of fiscal 2014, we started to report results related to our
+stake in BSH in phase with results of Siemens, rather than with
+the lag of one quarter. This one-time catch-up effect contrib-
+uted €59 million to profit at Equity Investments in fiscal 2014.
+Late in the fourth quarter of fiscal 2014, we announced an
+agreement to sell our stake in BSH to Robert Bosch GmbH.
+Profit at Equity Investments in the prior year benefited from a
+positive effect of €301 million stemming from a partial reversal
+of a fiscal 2009 impairment of our stake in NSN, which was sold
+at the end of fiscal 2013. This positive effect was only partly
+offset by an equity investment loss related to our share in Unify
+Holdings B.V. (formerly named Enterprise Networks) of €96 mil-
+lion. This loss was due largely to additions to our net invest-
+ment in Unify, which required us to recognize previously un-
+recognized losses.
+C.3.2.6 FINANCIAL SERVICES (SFS)
+(in millions of €)
+Income before income taxes
+Total assets
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+200
+Combined Management Report
+% Change
+171 C.
+131 | B.
+108 | A. To our Shareholders
+Reconciliation to Consolidated Financial Statements includes
+Centrally managed portfolio activities, Siemens Real Estate
+(SRE) and various categories of items which are not allocated to
+the Sectors and to SFS because the Company's management
+has determined that such items are not indicative of the Sec-
+tors' and SFS' respective performance.
+C.3.2.7 RECONCILIATION TO CONSOLIDATED
+FINANCIAL STATEMENTS
+SFS delivered €465 million in profit (defined as income before
+income taxes) in fiscal 2014. For comparison, profit of €409 mil-
+lion in the prior-year period was burdened primarily by a
+€52 million impairment of an equity stake in a power plant
+project in the U.S. SFS continued to successfully support
+Siemens business and grow in its focus areas leading to higher
+interest income and associated expenses. Total assets rose to
+€21.970 billion at the end of fiscal 2014, compared to €18.661 bil-
+lion at the end of fiscal 2013, including positive currency trans-
+lation effects and substantial early terminations of financings.
+14%
+18%
+409
+18,661
+21,970
+465
+2013
+% Change
+Year ended September 30,
+2014
+Corporate Governance
+2013
+2014
+Year ended September 30,
+(2)%
+(1)%
+(3)%
+5,769
+5,587
+0%
+(5)%
+6%
+1%
+6,392
+6,481
+5%
+0%
+(1)%
+Currency
+therein
+% Change
+Comparable¹
+(13)%
+(9)%
+10,040
+9,184
+Actual
+2013
+Year ended September 30,
+2014
+Report on expected developments and
+associated material opportunities and risks
+225 C.9
+Sustainability and citizenship
+Portfolio
+215 C.8
+Year ended September 30,
+2013
+Year ended September 30,
+Profit margin
+Profit
+0%
+(2)%
+(1)%
+(3)%
+5,754
+5,569
+0%
+(4)%
+3%
+2014
+(2)%
+6,005
+8%
+(2)%
+14%
+21%
+6,318
+7,615
+Portfolio
+Currency
+therein
+% Change
+Comparable¹
+Actual
+6,102
+therein
+247 D.
+337
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+(4)%
+(4)%
+2%
+(2)%
+12,649
+12,429
+3%
+(1)%
+13,004
+12,819
+16.1%
+16.3%
+0%
+Portfolio
+Currency
+therein
+% Change
+Comparable¹
+Actual
+2,033
+2,027
+2013
+2014
+Year ended September 30,
+Profit
+(in millions of €)
+| Sector
+0%
+0%
+12,401
+12,626
+(2)%
+The Diagnostics business reported revenue of €3.834 billion in
+fiscal 2014, a 3% decrease from €3.942 billion a year earlier.
+A clear decline in the Americas was due primarily to headwinds
+from currency translation as mentioned above. On a compara-
+ble basis, Diagnostics revenue was up 1% year-over-year.
+Revenue and orders for Healthcare in fiscal 2014 declined
+slightly year-over-year. Negative currency translation effects
+affected reported results for most of the Sector's businesses,
+and also reduced reported revenue and orders in Asia, Australia
+and the Americas compared to fiscal 2013. On a comparable
+basis, both revenue and orders were up. The book-to-bill ratio
+was 1.03, and Healthcare's order backlog was €4 billion at the
+end of fiscal 2014. Out of the order backlog as of September 30,
+2014, orders of €3 billion are expected to be converted into rev-
+enue in fiscal 2015 and the remainder in the periods thereafter.
+Despite negative currency effects, profit at Diagnostics rose
+significantly to €417 million. For comparison, profit of €350 mil-
+lion a year earlier was held back by €35 million in charges for
+the Sector's "Agenda 2013" initiative. Purchase price allocation
+(PPA) effects related to past acquisitions at Diagnostics were
+€163 million in fiscal 2014. A year earlier, Diagnostics recorded
+€169 million in PPA effects.
+The Healthcare Sector delivered €2.027 billion in profit in fiscal
+2014, close to the level of the prior year. Results in the current
+period include burdens on profit from currency effects due to
+the greater strength of the euro compared to fiscal 2013. These
+unfavorable effects were strongest at the Sector's imaging and
+therapy systems businesses and at Diagnostics, and they more
+than offset a €66 million positive effect related to the sale of a
+particle therapy installation in Marburg, Germany. For compar-
+ison, Sector profit in fiscal 2013 was burdened by €80 million in
+charges associated with the Sector's "Agenda 2013" initiative.
+2 Commonwealth of Independent States.
+1 Excluding currency translation and portfolio effects.
+(4)%
+(2)%
+4,815
+3,419
+3,281
+Asia, Australia
+4,729
+C.3.2.2 HEALTHCARE
+Americas
+903
+880
+therein Germany
+0%
+4,392
+4,391
+Europe, C.I.S., Africa, Middle East
+therein:
+External revenue
+Total revenue
+Orders
+Profit margin
+(2)%
+year, the Division recorded €129 million in charges for the
+"Siemens 2014" program. Revenue was down 14% on decreases
+in all reporting regions, due mainly to selective order intake in
+prior periods primarily in the solutions business. Order intake
+was down 2% year-over-year on decreases in the Americas
+and Asia, Australia, held back by negative currency translation
+effects. On an organic basis, orders grew 2%. Legacy projects
+are expected to hold back results going forward.
+charges of €240 million primarily related to grid connections to
+offshore wind-farms resulting from transport, installation and
+commissioning costs, compared to charges of €171 million in
+the prior year. The Division reached several material milestones
+with respect to its North Sea grid connection projects in fiscal
+2014. Finally, profit development in fiscal 2014 was also held
+back by a less favorable revenue mix due to a high proportion
+of projects with low or negligible profit margins. In the prior
+195
+2014
+Year ended September 30,
+Year ended September 30,
+Profit margin
+Profit
+0%
+(3)%
+(10)%
+0%
+(3)%
+9%
+6%
+(14)%
+2013
+6,167
+5,174
+5,500
+(2)%
+(3)%
+Portfolio
+Currency
+Comparable¹
+(4)%
+(9)%
+15,242
+13,909
+Actual
+2013
+5,310
+108 | A. To our Shareholders
+% Change
+2013
+Consolidated Financial Statements
+Additional Information
+247 D.
+337
+of German Commercial Code)
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+Report on expected developments and
+associated material opportunities and risks
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+225 C.9
+214 C.7
+215 C.8
+213 C.6
+Power Transmission reported a loss of €636 million, substan-
+tially wider than the loss a year earlier mainly due to project
+execution challenges. In the current year, the Division took
+charges totaling €298 million related to two high voltage direct
+current (HVDC) transmission line projects in Canada, resulting
+from revised estimates for civil engineering and infrastructure
+provided by suppliers as well as penalties for associated project
+delays, among other factors. In addition, the Division took
+contribution from the higher-margin offshore business. In addi-
+tion, the Division's production costs were higher compared to
+the prior year. For comparison, fiscal 2013 profit was burdened
+by €94 million in charges related to inspecting and retrofitting
+onshore turbine blades, but benefited from positive effects re-
+lated to project completions and the settlement of a claim
+related to an offshore wind-farm project. Revenue was up 6% as
+an increase in the onshore business, particularly in the Ameri-
+cas, more than offset the above-mentioned decline in the off-
+shore business. Order intake was up significantly year-over-
+year as order intake in the Americas region grew sharply, driven
+mainly by a recovery in the U.S., the Division's largest national
+market for onshore wind power, from a low basis of comparison
+in the prior year that resulted from uncertainty about continu-
+ation of production tax incentives.
+2014
+Wind Power reported a loss of €15 million in fiscal 2014, com-
+pared to a profit of €306 million in fiscal 2013. The Division
+recorded charges of €272 million for inspecting and replacing
+main bearings in onshore wind turbines and for repairing
+offshore and onshore wind blades. The revenue mix was
+clearly less favorable year-over-year, due to a significantly lower
+(2.5)%
+5.9%
+(0.3)%
+(12.0)%
+>(200)%
+n/a
+306
+(156)
+(15)
+(636)
+13.9%
+15.7%
+3%
+2,126
+2,186
+Profit at Power Generation in fiscal 2014 increased moderately
+year-over-year to €2.186 billion, despite a 9% revenue decline.
+The current period benefited from a €73 million gain on the sale
+of the Division's turbo fan business and a positive €72 million
+effect from a successful project completion in the turnkey busi-
+ness. The Division continues to face challenges in an increas-
+ingly competitive market for large gas turbines. For comparison,
+profit development a year earlier was held back by €163 million
+in "Siemens 2014" charges and €46 million in charges related to
+compliance with sanctions on Iran. Revenue for the Division
+decreased 9% year-over-year on declines in all three reporting
+regions, due in part to negative currency translation. Order in-
+take was below the level of the prior year, including strong neg-
+ative currency translation effects, as declines in the Americas
+and Europe, C.I.S., Africa, Middle East were only partially offset
+by an increase in Asia, Australia. On an organic basis, order
+intake was on the same level as in the prior year.
+of German Commercial Code)
+131 | B.
+171 C.
+Actual
+2013
+8,143
+8,412
+2014
+% Change
+Year ended September 30,
+214 C.7
+215 C.8
+225 C.9
+213 C.6
+1 Excluding currency translation and portfolio effects.
+Drive Technologies
+Industry Automation
+(in millions of €)
+| Revenue by Business
+| 1 Excluding currency translation and portfolio effects.
+Drive Technologies
+Industry Automation
+(in millions of €)
+Orders by Business
+On a geographic basis, order and revenue development was
+supported largely by growth in Asia, Australia, driven by China,
+and by a slight increase in Europe, C.I.S., Africa, Middle East.
+Reported orders and revenue in the Americas region were
+lower compared to the prior-year period, held back by negative
+currency translation effects. The book-to-bill ratio was 1.00, and
+Industry's order backlog was €7 billion at the end of fiscal 2014.
+Out of the order backlog as of September 30, 2014, orders of
+€5 billion are expected to be converted into revenue in fiscal
+2015 and the remainder in the periods thereafter.
+In fiscal 2014, profit at Industry rose sharply to €2.252 billion,
+supported by a more favorable revenue mix and improved pro-
+ductivity compared to the prior year. For comparison, profit in
+the prior-year period was burdened by €375 million in “Siemens
+2014" charges. Through most of fiscal 2014, the market environ-
+ment for the Sector's businesses was clearly more favorable
+than a year earlier. While reported orders and revenue for the
+year were up 2% and 1%, respectively, both were held back by
+negative currency translation effects that took away three per-
+centage points from reported growth.
+2 Commonwealth of Independent States.
+1 Excluding currency translation and portfolio effects.
+4%
+3,699
+3,848
+Comparable¹
+Currency
+3%
+5%
+Report on expected developments and
+associated material opportunities and risks
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+0%
+(2)%
+1%
+(3)%
+4%
+3%
+0%
+9,208
+9,211
+2%
+Asia, Australia
+therein
+Portfolio
+% Change
+Comparable¹
+Actual
+2013
+8,194
+Year ended September 30,
+2014
+8,353
+0%
+(3)%
+5%
+2%
+9,024
+9,210
+therein
+Portfolio
+1%
+(3)%
+Currency
+(5)%
+2,718
+2,592
+2,252
+Portfolio
+Currency
+Comparable¹
+Actual
+2013
+therein
+% Change
+Year ended September 30,
+2014
+Profit margin
+Profit
+(in millions of €)
+1,563
+Sector
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+196
+Combined Management Report
+C.3.2.3 INDUSTRY
+Corporate Governance
+44%
+9.2%
+Americas
+0%
+4,145
+4,141
+therein Germany
+1%
+8,839
+8,906
+Europe, C.I.S., Africa, Middle East
+therein:
+1%
+15,256
+13.2%
+15,346
+0%
+0%
+(3)%
+(3)%
+4%
+1%
+16,896
+17,064
+Total revenue
+5%
+2%
+16,688
+17,103
+Orders
+External revenue
+C.2.6.2 RETURN ON CAPITAL EMPLOYED (ROCE)
+1,620
+(in millions of €)
+214 C.7
+215 C.8
+225 C.9
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+209
+|
+C.5 Net assets position
+Structure of Consolidated Statements
+of Financial Position (in millions of €)
+September 30,
+(in millions of €)
+2014
+2013
+Total assets
+3%
+Total liabilities
+and equity
+3%
+Cash and cash equivalents
+8,013
+9,190
+Available-for-sale financial assets
+925
+213 C.6
+With our ability to generate positive operating cash flows,
+our total liquidity of €8.9 billion and our €6.8 billion in unused
+lines of credit and given our credit ratings at year-end, we
+believe that we have sufficient flexibility to fund our capital
+requirements. Also in our opinion, our working capital is
+sufficient for our present requirements.
+→ D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+For information related to expected cash inflows and outflows
+in connection with portfolio transactions, see → NOTE 4 in
+Cash and cash equivalents
+The changes in Net debt from fiscal 2013 to 2014 may also be
+presented as follows:
+| Changes in Net debt (in millions of €)
+1 We typically need a considerable portion of our cash and cash equivalents and
+our current available-for-sale financial assets for purposes other than debt reduc-
+tion. The deduction of these items from total debt in the calculation of Net debt
+therefore should not be understood to mean that these items are available exclu-
+sively for debt reduction at any given time.
+10,663
+(83)
+(7,147)
+4,364
+4,211
+12,008
+Net debt as of
+September 30, 2013
+Cash inflows for the
+decrease in operating
+net working capital¹
+601
+Income and other changes
+in cash flows from
+operating activities
+Cash flows from
+investing activities²
+Changes in certain
+financing activities³
+Net debt as of
+September 30, 2014
+1 In fiscal 2014, cash inflows for the decrease in operating
+net working capital included cash inflows for inventories
+less advance payments received of €336 million, for
+trade and other receivables of €200 million, for trade
+payables of €205 million and cash outflows for billings
+in excess of costs and in estimated earnings on uncom-
+pleted contracts and related advances of €657 million.
+2 Continuing operations.
+3 Included cash flows relating to certain financing activities
+such as dividends paid and purchase of treasury shares
+as well as effects without cash flow impact such as from
+currency translations.
+OFF-BALANCE-SHEET COMMITMENTS
+As of September 30, 2014 and 2013 we recorded €6.687 billion
+and €5.970 billion, respectively, of the undiscounted amount of
+maximum potential future payments related to guarantees. The
+increase in these commitments included guarantees related to
+the disposition of businesses and agreements related to our
+project businesses. As of September 30, 2014 and 2013 we
+recorded also €3.217 billion and €3.120 billion, respectively, of
+future payment obligations under non-cancellable operating
+leases and €132 million and €223 million, respectively, for com-
+mitments to make capital contributions to the equity of various
+companies.
+Further information about these off-balance-sheet commit-
+ments is provided in → NOTE 27 in → D.6 NOTES TO CONSOLIDATED
+FINANCIAL STATEMENTS.
+As of September 30, 2014 and 2013 we recorded also irrevoca-
+ble loan commitments of €3.604 billion and €2.950 billion.
+A considerable portion of these commitments resulted from
+asset-based lending transactions, meaning that the respective
+loans can be drawn only after the borrower has provided suffi-
+cient collateral. The increase in these commitments year-over-
+year was due mainly to new business volume at SFS, including
+positive currency translation effects.
+OTHER CAPITAL RESOURCES AND REQUIREMENTS
+For information related to the expected payments for dividend
+and share buybacks, see → C.2.5 DIVIDEND AND SHARE BUYBACKS.
+Total cash flows from operating activities²
+Trade and other receivables
+14,526
+14,853
+Total liquidity
+9,790
+Total
+8,938
+(10%)
+non-current
+Total current assets
+48,076 46,937
+(9%)
+liabilities
+36,767
+35,443
+(35%)
+Total
+1,393
+non-current
+(35%)
+54,999
+(54%)
+(54%)
+Total equity
+31,514
+(30%)
+28,625
+(28%)
+Sep. 30,
+2014
+Sep. 30,
+2013
+Sep. 30,
+2014
+Sep. 30,
+2013
+Cash and cash equivalents decreased by €1.177 billion from the
+prior-year level. For detailed information regarding the change,
+see c.4.4 CASH FLOWS.
+Our total assets in fiscal 2014 were influenced by positive cur-
+rency translation effects of €2.8 billion, led by the US$. Within
+total assets of €104.879 billion, total assets related to SFS
+increased to €21.970 billion as of September 30, 2014 from
+€18.661 billion a year earlier. Within total liabilities, SFS debt
+increased to €18.663 billion from €15.600 billion a year earlier.
+Both changes were driven by planned asset growth at SFS
+during fiscal 2014. SFS assets represented 21% of Siemens' total
+assets as of September 30, 2014, compared to 18% a year earlier.
+SFS debt represented 18% of Siemens total liabilities and equity,
+compared to 15% at the end of fiscal 2013.
+assets
+56,803
+10,663
+3,935
+therein:
+104,879
+104,879
+Other current financial assets
+3,710
+3,250
+101,936
+101,936
+Inventories
+15,100
+15,560
+Total current
+Total current
+assets
+Assets classified as held for disposal
+liabilities
+Current income tax assets
+577
+794
+48,076
+46,937
+36,598
+(37%)
+(46%)
+(46%)
+(35%)
+Other current assets
+1,290
+1,297
+37,868
+12,008
+193 C.3
+Results of operations
+2,248
+(16)
+2
+784
+776
+211
+200
+196
+184
+377
+392
+(27)
+25
+1,583
+20.7%
+2,622
+2,551
+311
+308
+266
+245
+2,045
+1,999
+(19)
+23
+(39)
+(552)
+114
+20.5%
+89
+242
+302
+1,476
+(14)
+(17)
+817
+1,070
+219
+182
+56
+45
+542
+843
+(11)
+(2)
+296
+1,404
+123
+119
+240
+196
+1,041
+1,396
+(4)
+4
+13.1%
+16.4%
+2,220
+2,792
+342
+1,711
+During fiscal 2014 we classified a number of businesses as held
+for disposal. These classifications affected a number of line
+items in our Consolidated Statements of Financial Position,
+which are noted in the discussion below. The relevant busi-
+nesses include the following: the Metals Technologies busi-
+ness formerly within Industry, the Hospital Information System
+business and Microbiology business formerly within Health-
+care, and our equity investment stake in BSH.
+13
+(167)
+(27)
+(41)
+2013
+2014
+2013
+2014
+2013
+2014
+2013
+2014
+2013
+2014
+2013
+1,481
+2014
+impairments of
+property, plant and
+impairment of other
+intangible assets
+Adjusted EBITDA margin
+Adjusted EBITDA
+Depreciation and
+Amortization and
+Adjusted EBIT
+(expenses), net
+Financial income
+Net assets position
+210 C.5
+Financial position
+205 C.4
+equipment and goodwill
+14
+2,022
+132
+(655)
+(10)
+(10)
+454
+85
+103
+109
+32
+31
+320
+(55)
+(6)
+(12)
+101
+9.9%
+2,631
+2,399
+2,438
+222
+204
+68
+57
+2,110
+2,177
+(16)
+(22)
+1,988
+478
+406
+8.1%
+The line items Trade and other receivables and Inventories
+decreased by €328 million and €461 million, respectively, year-
+over-year. The main factor in the decreases was assets related
+to the Metals Technologies business, which were classified as
+held for disposal. These decreases were partly offset by positive
+currency translation effects.
+Assets classified as held for disposal increased by €2.542 billion
+due mainly to the classification of assets related to the Metals
+Technologies business, our stake in BSH and the Hospital Infor-
+mation System business. This increase was partly offset by a
+reduction in assets due to the sale of the Water Technologies
+business.
+(in millions of €)
+C.3.3 Income
+Income before income taxes from Eliminations, Corporate
+Treasury and other reconciling items was a negative €48 mil-
+lion in fiscal 2014, compared to a negative €70 million in
+the same period a year earlier. The change year-over-year in-
+cluded higher interest income from liquidity at Corporate
+Treasury.
+Eliminations, Corporate Treasury
+and other reconciling items
+current period included expenses resulting from changes in
+the fair value of warrants issued together with US$3 billion in
+bonds in fiscal 2012, as well as negative effects related to legal
+and regulatory matters. The fair value of the warrants depends
+on the underlying Siemens and OSRAM share prices as well as
+their respective volatilities. Because this effect is accounted
+for in Corporate items, results for Corporate items are expected
+to remain variable in coming periods. Centrally carried pen-
+sion expense totaled €393 million in fiscal 2014, compared to
+€416 million in fiscal 2013.
+Corporate items and pensions reported a loss of €938 million in
+fiscal 2014, compared to a loss of €836 million in fiscal 2013.
+Within these figures, the loss at Corporate items was €545 mil-
+lion, compared to a loss of €419 million in fiscal 2013. The
+Corporate items and pensions
+Income before income taxes at SRE was €241 million in fiscal
+2014, compared to €168 million in fiscal 2013. As in the past,
+income from SRE continues to be highly dependent on dis-
+posals of real estate.
+Siemens Real Estate (SRE)
+Centrally managed portfolio activities reported a profit of
+€44 million in fiscal 2014, compared to a loss of €113 million
+in fiscal 2013. Results for the prior year included €100 million in
+charges related to two large projects remaining from the Metals
+Technologies business, formerly reported within Industry, that
+were not classified as discontinued operations.
+Centrally managed portfolio activities
+(601)
+Sectors
+Financial performance system
+Equity Investments
+187 C.2
+172 C.1
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+510
+582
+5,813
+7,427
+(6)
+1
+(70)
+(48)
+Business and economic environment
+(2)
+(in millions of €)
+Healthcare
+Reconciliation to Consolidated Financial Statements
+14%
+409
+465
+(20)%
+411
+328
+26%
+5,842
+7,335
+>200%
+291
+1,487
+Energy
+44%
+2,252
+0%
+2,033
+2,027
+% Change
+(20)%
+1,955
+1,569
+2013
+Year ended September 30,
+2014
+Financial Services (SFS)
+Total Sectors profit
+Infrastructure & Cities
+Industry
+1,563
+(700)
+(836)
+168
+(5)
+2
+527
+843
+1,038
+1,401
+(4)
+2
+1,563
+2,252
+350
+417
+8
+1,487
+6
+2,027
+20
+29
+(156)
+(636)
+(8)
+52
+306
+(15)
+32
+32
+2,126
+2,186
+2,033
+(938)
+291
+26
+241
+69
+55
+(113)
+44
+85
+66
+409
+465
+372
+297
+411
+328
+28
+(10)
+5,842
+7,335
+2
+351
+501
+8
+10
+403
+566
+18
+16
+(448)
+440
+165
+279
+(850)
+Income from continuing operations before income taxes
+Combined Management Report
+210
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+Energy Sector
+171 C.
+therein: Power Generation
+Power Transmission
+Healthcare Sector
+therein: Diagnostics
+Industry Sector
+therein: Industry Automation
+Drive Technologies
+Infrastructure & Cities Sector
+therein: Transportation & Logistics
+Total Sectors
+Power Grid Solutions & Products
+Building Technologies
+Equity Investments
+Financial Services (SFS)
+Wind Power
+Reconciliation to Consolidated Financial Statements
+Corporate Governance
+108 | A. To our Shareholders
+Goodwill
+September 30,
+2014
+2013
+17,783
+17,883
+Other intangible assets
+4,560
+5,057
+Property, plant and equipment
+9,638
+9,815
+Investments accounted for using
+131 | B.
+the equity method
+3,022
+Other financial assets
+18,416
+15,117
+Deferred tax assets
+3,334
+3,234
+Other assets
+945
+872
+Total non-current assets
+56,803
+54,999
+2,127
+17%
+Centrally managed portfolio activities
+Corporate items and pensions
+214 C.7
+215 C.8
+225 C.9
+213 C.6
+Overall assessment of the economic position
+Subsequent events
+In fiscal 2014, the hospital information system business, for-
+merly included in the Healthcare Sector, and nearly all of the
+Metals Technology business, formerly included in the Industry
+Sector, were classified as discontinued operations. Income
+from discontinued operations, net of income taxes in fiscal
+2014 was €108 million compared to €231 million a year earlier.
+As a result of the developments described in → C.3.2 SEGMENT
+INFORMATION ANALYSIS, Income from continuing operations
+before income taxes increased 28% year-over-year. With a
+lower effective tax rate compared to fiscal 2013 (27% in fiscal
+2014 vs. 28% in fiscal 2013), Income from continuing opera-
+tions increased 29% year-over-year.
+25%
+126
+4,284
+134
+5,373
+Net income attributable to non-controlling interests
+Net income attributable to shareholders of Siemens AG
+25%
+4,409
+5,507
+Net income
+Report on expected developments and
+associated material opportunities and risks
+(53)%
+108
+Income from discontinued operations, net of income taxes
+29%
+4,179
+5,400
+Income from continuing operations
+(24)%
+(1,634)
+(2,028)
+Income tax expenses
+28%
+5,813
+7,427
+231
+Siemens Real Estate (SRE)
+Sustainability and citizenship
+of German Commercial Code)
+Eliminations, Corporate Treasury and other reconciling items
+Siemens
+Beginning with fiscal 2015, we calculate EBITDA without the
+elimination of income (loss) from investments accounted for
+using the equity method, net.
+108 | A. To our Shareholders
+Profit
+Income (loss) from
+investments accounted
+for using the
+equity method, net
+2014
+2013
+2014
+2013
+1,569
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+1,955
+(39)
+For the fiscal years ended September 30, 2014 and 2013
+The following table gives additional information on topics
+included in Profit and Income before income taxes and pro-
+vides a reconciliation to adjusted EBITDA based on continuing
+operations.
+C.3.4 Reconciliation to adjusted EBITDA
+→ C.2.6.2 RETURN ON CAPITAL EMPLOYED (ROCE).
+In fiscal 2014, ROCE from continuing operations was 17.2%,
+thus clearly returning to our target range of 15 to 20%. In fiscal
+2013, ROCE from continuing operations was 13.7%. The increase
+was due primarily to the substantial increase in Income from
+continuing operations and a slightly lower average capital
+employed. For more detail on the calculation of ROCE, see
+Corresponding basic EPS rose 25% to €6.37 compared to €5.08
+in the prior year, primarily reflecting higher Net income attri-
+butable to shareholders of Siemens AG.
+As a result of the changes in Income from continuing opera-
+tions and Income from discontinued operations, Net income
+and Net income attributable to shareholders were 25% higher
+than a year earlier.
+While Income from discontinued operations in the current
+period benefited from a positive €64 million tax effect related
+to former Communications activities, the prior year included
+Income from discontinued operations of €277 million related to
+OSRAM, which was spun off in the fourth quarter of fiscal 2013.
+202
+201
+Consolidated Financial Statements
+Additional Information
+247 D.
+337
+129
+127
+The line item Other current financial assets increased by
+€461 million year-over-year, which included higher loans receiv-
+ables of SFS.
+170
+C.4.1 Principles and objectives
+of financial management
+Siemens is committed to a strong financial profile, which pro-
+vides the financial flexibility to achieve growth and portfolio
+optimization goals largely independent of capital market con-
+ditions.
+Financial management at Siemens is executed according
+to applicable laws and internal guidelines and regulations. It
+includes the following activities:
+LIQUIDITY MANAGEMENT
+Siemens' principal source of financing is cash inflows from
+operating activities. Corporate Treasury generally manages
+cash and cash equivalents for Siemens and has primary respon-
+sibility for raising funds in the capital markets for Siemens
+through various debt products, with the exception of countries
+with conflicting capital market controls. The relevant consoli-
+dated subsidiaries in these countries obtain financing primarily
+from local banks. Siemens follows a prudent borrowing policy
+that is aimed towards a balanced financing portfolio, a diversi-
+fied maturity profile and a comfortable liquidity cushion. Espe-
+cially since the beginning of the global financial markets crisis,
+Siemens monitors very closely the funding options available in
+the capital markets, trends in the availability of funds and the
+cost of such funding in order to evaluate possible strategies
+regarding its financial and risk profile.
+CASH MANAGEMENT
+Cash management comprises the management of bank partner
+relationships and bank accounts as well as the execution of
+payments, including the administration of cash pools, on a
+global level. Siemens strives to raise efficiency and transpar-
+ency through a high level of standardization and continuous
+advancement of payment processes. Where permissible, the
+execution of intercompany and third party payments is effected
+centrally through group-wide tools with central controls to en-
+sure compliance with internal and external guidelines and
+requirements. To ensure efficient management of Siemens'
+funds, Corporate Treasury has established a central cash man-
+agement approach: to the extent legally and economically fea-
+sible, funds are pooled and managed centrally by Corporate
+Treasury. Conversely, funding needs within Siemens are cov-
+ered centrally by Corporate Treasury via intercompany current
+accounts and/or loans where legally and economically feasible.
+FINANCIAL RISK MANAGEMENT
+II | C.4 Financial position
+Investments of cash and cash equivalents are subject to credit
+requirements and counterparty limits. Corporate Treasury
+pools and centrally manages Siemens' interest rate exposure as
+well as certain commodity, currency and credit risk exposures
+MANAGEMENT OF POST-EMPLOYMENT BENEFITS
+Siemens' funding policy for post-employment-benefits is part
+of its overall commitment to sound financial management,
+which includes a continuous analysis of the structure of its pen-
+sion liabilities. For more detailed information about Siemens'
+pension plan funding, see → NOTE 22 in → D.6 NOTES TO CON-
+SOLIDATED FINANCIAL STATEMENTS.
+CAPITAL STRUCTURE MANAGEMENT
+To effectively manage Siemens' capital structure, Siemens
+seeks to maintain ready access to the capital markets through
+various debt products and to preserve its ability to repay and
+service its debt obligations over time.
+C.4.2 Capital structure
+As of September 30, 2014 and 2013 our capital structure was
+as follows:
+(in millions of €)
+Total equity attributable to
+shareholders of Siemens AG
+As percentage of total capital
+Short-term debt and current
+maturities of long-term debt
+Long-term debt
+Total debt
+and uses financial derivative instruments in transactions with
+external financial institutions to offset such concentrated expo-
+sures. Especially since the beginning of the global financial
+market crisis, Siemens monitors very closely the counterparty
+risk in its financial assets and financial derivative instruments.
+For more detailed information about financial risk manage-
+ment at Siemens, see → NOTE 31 in → D.6 NOTES TO CONSOLIDATED
+FINANCIAL STATEMENTS.
+September 30,
+Net assets position
+Financial position
+Income from discontinued operations, net of income taxes
+215
+340
+Net income
+5,507
+4,409
+108 | A. To our Shareholders
+131 | B.
+210 C.5
+Corporate Governance
+Combined Management Report
+204
+172 C.1
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+171 C.
+% Change
+2014
+2013
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+205
+214 C.7
+215 C.8
+over time. In fiscal 2014, the target range for our capital struc-
+ture was 0.5 - 1.0. The ratio is defined as the item Industrial net
+debt divided by the item Adjusted EBITDA. This financial perfor-
+mance measure indicates the approximate amount of time in
+years that would be needed to cover industrial net debt through
+continuing income, without taking into account interest, taxes,
+depreciation and amortization.
+For further information on the calculation of adjusted EBITDA
+and its changes, see c.3.4 RECONCILIATION TO ADJUSTED EBITDA.
+For further information with respect to our capital structure,
+the calculation of industrial net debt and its changes, and our
+credit rating, see → NOTE 26 in → D.6 NOTES TO CONSOLIDATED
+FINANCIAL STATEMENTS.
+C.4.3 Investing activities
+Additions to intangible assets and property, plant and equip-
+ment from continuing operations was €1.831 billion in fiscal
+2014, nearly unchanged from the level in the same period a
+year earlier. In fiscal 2014, we directed €1.356 billion of these.
+additions to intangible assets and property, plant and equip-
+ment within the Sectors to investments for technological inno-
+vations, extending our capacities for designing, manufacturing
+and marketing new solutions and for the necessary replace-
+ments of fixed assets. The majority of the additions in fiscal
+2014 took place in the focus areas of investing activities of the
+former Sectors described below, which will basically continue
+to be the focus areas regarding the investing activities of the
+Industrial Business in fiscal 2015. The remaining portion in fis-
+cal 2014, €475 million, related mainly to SRE and its responsibil-
+ity for uniform and comprehensive management of Company
+real estate worldwide.
+The businesses of the former Energy Sector includes invest-
+ments mainly in improving its global footprint to secure com-
+petitiveness by improving its cost position and strengthening
+technological innovations. These investments include mainly
+spending in capacities and facilities related to the business of
+the former Power Generation Division, such as new test facili-
+ties for highly efficient gas turbines, and for the technology-
+driven wind power market, particularly in northern Europe.
+Healthcare's investments are mainly driven by the medical
+imaging and therapy systems and laboratory diagnostics busi-
+nesses. Large parts of the additions are related to intangible
+assets, such as licenses as well as developing and implement-
+ing software and IT solutions.
+The businesses of the former Industry Sector spend a large por-
+tion of its additions to intangible assets, particularly software,
+and property, plant and equipment for additional capacities for
+innovative products, for optimization of its global footprint;
+and for the replacement of fixed assets.
+The businesses of the former Infrastructure & Cities Sector
+spend large amounts of their additions to intangible assets and
+property, plant and equipment for investments in innovations
+at the former Power Grid Solutions & Products Business, partic-
+ularly including the business activities of the former Low and
+Medium Voltage Division, and at the Building Technologies
+Division. The businesses also invest significant amounts in the
+replacement and expansion of technical equipment in order to
+improve productivity and their respective positions in grow-
+ing market segments, particularly at the former Transporta-
+tion & Logistics Business.
+Our capital structure ratio as of September 30, 2014 decreased
+to 0.15 from 0.35 a year earlier. The change was due to a de-
+crease in industrial net debt and an increase in adjusted EBITDA
+compared to the prior year. We actively manage this ratio
+through our ongoing share buybacks. Our announced acquisi-
+tions and divestments of businesses will also have a noticeable
+impact on it in fiscal 2015.
+213 C.6
+We believe that sustainable revenue and profit development is
+supported by a healthy capital structure. A key consideration of
+our capital structure management is to maintain ready access
+to the capital markets through various debt products and to
+preserve our ability to repay and service our debt obligations
+ASSETS POSITION.
+30,954
+60%
+28,111
+58%
+10%
+1,620
+1,944
+19,326
+18,509
+20,947
+20,453
+2%
+As percentage of total capital
+Total capital
+40%
+42%
+(total equity and total debt)
+51,900
+48,564
+7%
+For information on changes in equity and debt, see → c.5 NET
+4,070
+5,292
+Income from continuing operations
+(1,652)
+Profit
+Profit margin
+(in millions of €)
+Year ended September 30,
+2014
+2013
+Year ended September 30,
+2014
+2013
+Power and Gas
+73,414
+2,215
+17.4%
+15.2%
+Wind Power and Renewables
+6
+7
+0.1%
+0,1%
+Energy Management
+2,129
+72,396
+79,781
+79,158
+9,707
+7,249
+5,823
+Digital Factory
+9,233
+8,897
+9,201
+8,950
+Process Industries and Drives
+9,968
+9,695
+9,645
+9,834
+Healthcare
+12,126
+12,338
+11,736
+11,983
+Industrial business
+(86)
+The changes of additions to intangible assets and property,
+plant and equipment from fiscal 2013 to 2014 were as follows:
+254
+2.2%
+17.7%
+17.7%
+Industrial business
+7,703
+6,488
+10.6%
+8.8%
+Financial Services
+2,123
+466
+Reconciliation to Consolidated Financial Statements
+(862)
+(1,177)
+Income from continuing operations before income taxes
+7,306
+5,722
+Income tax expenses
+(2,014)
+410
+2,072
+Healthcare
+5.2%
+Building Technologies
+Mobility
+511
+377
+9.2%
+6.6%
+532
+(232)
+7.3%
+(4.0)%
+Digital Factory
+Process Industries and Drives
+1,681
+1,320
+18.3%
+14.8%
+773
+510
+8.0%
+(0.8)%
+Additions to intangible assets and property,
+| plant and equipment (in millions of €)
+Siemens (continuing operations)
+FY 2014
+FY 2013
+1,831
+1,808
+193 C.3
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+208
+154
+Combined Management Report
+Results of operations
+171 C.
+131 | B.
+108 | A. To our Shareholders
+→ D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Further information about our debt and credit facilities, interest
+rate risk management and the use of financial instruments
+for hedging purposes is provided in → NOTES 21, 30 AND 31 in
+We have three credit facilities at our disposal for general corpo-
+rate purposes. The credit facilities as of September 30, 2014
+consisted of €6.8 billion in committed, unused lines of credit.
+In order to optimize the Company's position with regard to in-
+terest income and interest expense, and to manage the associ-
+ated interest rate risk, Corporate Treasury uses derivative finan-
+cial instruments to comprehensively and actively manage our
+interest rate risk relative to a benchmark. The interest rate risk
+relating to SFS is managed separately, considering the term
+structure of SFS's financial assets and liabilities.
+2 We may redeem, at any time, all or some of US$-notes, issued in August
+2006, at the early redemption amount (call) according to the conditions of
+the notes.
+1 The maturity of the hybrid bond depends on the exercise of a call option:
+the bond is callable by us in September 2016 and thereafter, with a final legal
+maturity ending in September 2066.
+Corporate Governance
+205 C.4
+Financial position
+210 C.5
+Q4 2014
+3,450
+Q3 2014
+(925)
+(8,938) (9,790)
+Available-for-sale financial assets (current)
+Total liquidity
+Net debt¹
+(8,013) (9,190)
+20,947 20,453
+18,509
+19,326
+1,944
+1,620
+2013
+September 30,
+2014
+Short-term debt and current maturities
+of long-term debt
+Long-term debt
+Total debt
+(in millions of €)
+Net debt results from total debt less total liquidity. Total liquid-
+ity refers to the liquid financial assets we have available at the
+end of a reporting period to fund our business operations and
+pay for near-term obligations. Total liquidity comprises Cash
+and cash equivalents as well as current Available-for-sale finan-
+cial assets, as stated in the Consolidated Statements of Finan-
+cial Position. Management uses the Net debt measure for inter-
+nal finance management, as well as for external communication
+with investors, analysts and rating agencies.
+NET DEBT
+Net assets position
+2015 2016 2017 2018 2019 2020 2021 2025 2026 2028 2042 2066
+Free cash flow (in millions of €)1
+0.8
+1.4²
+Report on expected developments and
+associated material opportunities and risks
+225 C.9
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+215 C.8
+213 C.6
+(1,395)
+1,335
+1 Continuing and discontinued operations.
+Q2 2013
+Q1 2013
+1,048
+Q3 2013
+4,336
+Q4 2013
+(699)
+Q1 2014
+1,402
+Q2 2014
+1,053
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 | D.
+337
+Consolidated Financial Statements
+Additional Information
+0.4
+As of September 30, 2014 we recorded in total €18.2 billion in
+bonds, €1.7 billion in loans from banks, €0.9 billion in other
+financial indebtedness, primarily consisted of US$-commercial
+paper, and €0.1 billion in obligations under finance leases.
+DEBT AND CREDIT FACILITIES
+Our capital requirements include, among others, scheduled
+debt service, regular capital spending, ongoing cash require-
+ments from operating and SFS financing activities, dividend
+payments, pension plan funding, portfolio activities and share
+buybacks.
+Our capital resources consist of a variety of short- and long-
+term instruments including debt instruments and credit facili-
+ties. In addition to cash and cash equivalents and available-for-
+sale financial assets, liquid resources consist of future cash
+flows from operating activities.
+-0.3 0.5
+2.0161.91
+1.3
+2.5
+4.62
+1.91
+2.3
+| (nominal amounts outstanding in billions of €)
+Bonds and loans maturity profile
+Below we present the maturity profile of our assignable and
+term loans and our bonds, issued mainly in Euro and US$ and
+to a lower extent in £, as of September 30, 2014:
+C.4.5 Capital resources
+and requirements
+Cash flows from financing activities – Financing activities for
+continuing operations used cash of €4.485 billion in fiscal 2014,
+compared to cash used of €3.715 billion a year earlier. In the
+current period, the major cash outflows were dividends of
+€2.533 billion paid (for fiscal 2013) to shareholders of
+Siemens AG and the repayment of €1.452 billion in long-term
+debt. In addition we recorded cash outflows of €1.066 billion for
+the purchase of treasury shares under Siemens' share buyback
+program and paid interest totaling €617 million. These cash
+outflows were partly offset by cash inflows of €801 million from
+the change in short-term debt and other financing activities
+related to the issuance of commercial paper and by proceeds of
+€527 million from the issuance of long-term debt, related to a
+total of US$700 million in privately placed floating-rate instru-
+ments. For comparison, in the prior year we paid dividends of
+€2.528 billion (for fiscal 2012) to shareholders of Siemens AG
+and €2.927 billion for the repayment of long-term debt. We re-
+corded €1.394 billion in cash outflows for the purchase of treas-
+ury shares and €479 million for the payment of interest. In the
+prior year these cash outflows were partly offset by cash inflows
+from the issuance of long-term debt totaling €3.772 billion.
+-
+207
+1.1
+9,280
+Free cash flow from continuing and discontinued operations
+of €5.201 billion in fiscal 2014 was near the high level of the
+prior year. On a sequential basis, Free cash flow during fiscal
+2014 and fiscal 2013 developed as follows:
+For comparison, the prior year included cash outflows from the
+financing activities at SFS of €2.175 billion and additions to in-
+tangible assets and property, plant and equipment of €1.808 bil-
+lion. In the prior year, cash outflows for acquisitions of
+businesses, net of cash acquired, totaled €2.786 billion. This
+total included the preliminary purchase price (excluding cash
+acquired) of €1.987 billion related to Infrastructure & Cities' ac-
+quisition of Invensys Rail, and €670 million related to Indus-
+try's acquisitions of LMS International NV. Also in the prior year
+cash inflows from the disposal of investments, intangibles and
+property, plant and equipment were €2.462 billion. This total
+included proceeds of €1.7 billion relating to the sale of our 50%
+stake in NSN and €0.3 billion relating to the sale of our AtoS
+convertible bonds.
+206
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Combined Management Report
+Financial position
+Net assets position
+C.4.4 Cash flows
+Cash flows
+(in millions of €)
+Cash flows from:
+Continuing operations
+Discontinued operations
+Year ended September 30,
+210 C.5
+171 C.
+Corporate Governance
+131 | B.
+Energy Sector
+FY 2014
+FY 2013
+449
+425
+1%
+6%
+Healthcare Sector
+FY 2014
+FY 2013
+303
+26%
+241
+Industry Sector
+FY 2014
+FY 2013
+358
+384
+Infrastructure & Cities Sector
+FY 2014
+247
+FY 2013
+239
+(7)%
+3%
+For information with respect to acquisitions of businesses, see
+→ C.1.1.2 BUSINESS DESCRIPTION.
+108 | A. To our Shareholders
+2014
+Discontinued operations provided cash of €339 million in fiscal
+2014, compared to cash used of €317 million in the prior year.
+The current period included proceeds (excluding cash sold)
+of €0.5 billion related to the sale of the Water Technologies
+Business Unit.
+2013
+2013
+(1,898)
+(2,012)
+Free cash flow
+5,399
+Financing activities
+(4,485)
+5,378
+(3,715)
+(198)
+(204)
+(50)
+5,328
+(2)
+319
+(4,487)
+(3,396)
+Cash flows from operating activities - Continuing operations
+provided cash from operating activities of €7.230 billion in fis-
+cal 2014, nearly unchanged from the level a year earlier. In both
+periods, the major component of cash inflows was income
+from continuing operations, which increased to €5.400 billion
+in fiscal 2014 from €4.179 billion in the prior year. Included
+therein were amortization, depreciation and impairments of
+€2.411 billion in the current period and €2.804 billion in the
+prior year. A decrease in operating net working capital led to
+cash inflows of €0.1 billion in the current period compared to
+outflows of €1.7 billion due to a build-up in operating net work-
+ing capital a year earlier. The positive change year-over-year in
+operating net working capital related mainly to Energy, in par-
+ticular to the Wind Power Division, and to Infrastructure &
+Cities' Transportation & Logistics Business. In fiscal 2014 we
+recorded negative effects related to changes in other assets and
+liabilities, particularly personnel-related liabilities, compared to
+positive effects in the prior year. The current period included
+cash outflows of approximately €0.5 billion corresponding to
+charges to income taken for the "Siemens 2014" program, com-
+pared to €0.4 billion in such outflows in the prior year.
+Discontinued operations used cash of €131 million in fiscal
+2014, compared to cash provided of €154 million in the prior
+year, which included significant cash inflows at OSRAM.
+Cash flows from investing activities - Cash used in investing
+activities for continuing operations amounted to €4.364 billion
+in fiscal 2014, compared to cash used of €4.759 billion in the
+prior year. In the current period, cash outflows from investing
+activities were due mainly to two factors. Firstly, SFS executed
+its planned asset growth during fiscal 2014 and we recorded
+cash outflows totaling €2.501 billion for a net increase in new
+business volume at SFS. Secondly, we had additions to intan-
+gible assets and property, plant and equipment of €1.831 bil-
+lion, which related mainly to investments within the Sectors.
+5,201
+(67)
+(1,808)
+(1,831)
+Continuing and
+discontinued operations
+Year ended September 30,
+2014
+2013
+Operating activities
+7,230
+7,186
+(131)
+154
+7,100
+7,340
+Investing activities
+(4,364)
+(4,759)
+339
+(317)
+(4,026)
+(5,076)
+therein: Additions to intangible assets and property,
+plant and equipment
+Year ended September 30,
+2014
+Mobility
+Business and economic environment
+5,569
+CIAL PERFORMANCE SYSTEM.
+Orders
+Revenue
+(153)
+389
+552
+-
+if the new organizational structure as of beginning of fiscal
+year 2015 had already been in place. As described in more detail
+in → C.7 SUBSEQUENT EVENTS, Audiology Solutions, formerly
+reported within Healthcare, was classified as discontinued op-
+erations in the first quarter of fiscal 2015. This classification is
+already reflected in the numbers presented. Profit amounts are
+reported in accordance with our enhanced definition of seg-
+ment profit, which is described in more detail in → C.2 FINAN-
+16
+16
+1
+23
+29
+8,131
+9,103
+1,356
+1
+In May 2014, we announced a new organizational structure
+that became effective with the beginning of fiscal 2015. In gen-
+eral, financial measures presented in this Combined Manage-
+ment Report are based on our organizational structure during
+fiscal 2014. In this subchapter, we present selected financial
+results for fiscal 2014 and fiscal 2013 as they would have looked
+on new organizational structure
+C.3.5 Selected information based
+(128)
+873
+1,670
+1,931
+9,139
+8,097
+213 C.6
+214 C.7
+215 C.8
+225 C.9
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+203
+1,185
+(112)
+848
+5,928
+(3)
+(321)
+556
+99
+57
+39
+65
+(6)
+(459)
+226
+(7)
+(12)
+3.7%
+9.4%
+658
+1,772
+435
+560
+401
+22
+7,203
+(75)
+(33)
+456
+581
+46
+40
+58
+40
+352
+501
+(2)
+536
+652
+78
+70
+57
+715
+(34)
+741
+-
+Energy Management
+Wind Power and Renewables
+Power and Gas
+(in millions of €)
+(246)
+(360)
+Year ended September 30,
+2014
+586
+307
+263
+1
+1
+278
+344
+(29)
+(109)
+2013
+13,996
+5,769
+5,587
+Building Technologies
+11,672
+10,708
+11,405
+Year ended September 30,
+2014
+11,210
+5,567
+6,870
+7,759
+2013
+14,016
+12,720
+15,100
+5,382
+(103)
+608
+(5)
+190
+(177)
+5
+(64)
+(576)
+(590)
+19
+9
+17
+59
+74
+(498)
+(498)
+35
+30
+118
+9
+(83)
+6,728
+(94)
+5,293
+225
+41
+5
+5,754
+2
+(9)
+(2)
+(2)
+166
+3
+(180)
+1
+2
+Siemens has defined sustainability to mean achieving profit-
+able and long-term growth, acting responsibly on behalf of
+future generations and to keep the three dimensions of sus-
+tainability - people, planet, profit - in balance. We are aware of
+the associated high standards and the possibility of conflicting
+goals. Nevertheless, we are convinced that sustainability,
+especially in the sense of resource efficiency is a business
+opportunity, and worth seizing.
+C.8.1.1 OVERVIEW
+C.8.1 Sustainability at Siemens
+|||C.8 Sustainability and citizenship
+Net assets position
+210 C.5
+Financial position
+Financial performance system
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+216
+172 C.1
+Business and economic environment
+187 C.2
+193 C.3
+205 C.4
+108 | A. To our Shareholders
+193 C.3
+Other current liabilities
+2,151
+1,762
+Current income tax liabilities
+35,443
+36,767
+17,954
+Total non-current liabilities
+4,354
+Current provisions
+2,074
+1,874
+Other liabilities
+1,515
+4,485
+19,701
+Liabilities associated with assets
+classified as held for disposal
+of German Commercial Code)
+Sustainability and citizenship
+215 C.8
+Siemens AG (Discussion on basis
+C.11
+242
+242 C.10 Compensation Report and legal disclosures
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+213 C.6
+Long-term debt increased by €817 million as of September 30,
+2014, compared to the prior year, due mainly to positive cur-
+rency translation effects and the issuance of US$700 million in
+privately placed floating-rate instruments.
+473
+37,868
+36,598
+Total current liabilities
+1,597
+1,717
+225 C.9
+Other current financial liabilities
+1,620
+(in millions of €)
+18,509
+19,326
+Long-term debt
+September 30,
+September 30,
+2013
+2014
+2014
+|
+Liabilities associated with assets classified as held for disposal
+increased to €1.597 billion as of September 30, 2014 from
+€473 million a year earlier. The main factor in the increase was
+the above-mentioned classification of liabilities associated
+within Metals Technologies business.
+Other current liabilities decreased to €17.954 billion as of Sep-
+tember 30, 2014 from €19.701 billion a year earlier. The main
+factors were a decrease in billings in excess of costs and esti-
+mated earnings on uncompleted contracts and related ad-
+vances, mainly in Energy and Industry, and, to a lesser extent,
+lower personnel-related liabilities. The decrease in Industry re-
+lated primarily to the Metals Technologies business, where lia-
+bilities were classified as liabilities associated with assets clas-
+sified as held for disposal.
+Short-term debt and current maturities of long-term debt de-
+creased by €324 million year-over-year. The main factors in the
+decrease were the redemption of €1.0 billion in 5.375% p.a.
+instruments and €400 million in 0.375% p.a. instruments,
+partly offset by the issuance of commercial paper.
+The line item Other financial assets increased to €18.416 billion
+as of September 30, 2014 compared to €15.117 billion a year ear-
+lier. The change was due primarily to higher loans receivable
+driven by planned asset growth at SFS in fiscal 2014 and also to
+a minor extent positive currency effects.
+Investments accounted for using the equity method decreased
+by €894 million year-over-year. The main factor was the classi-
+fication of our stake in BSH as assets classified as held for dis-
+posal, partly offset by an investment in the joint venture re-
+lated to the TurboCare Business Unit within Energy.
+(in millions of €)
+2013
+Post-employment benefits
+9,324
+Other financial liabilities
+7,599
+7,594
+Trade payables
+3,907
+4,071
+Provisions
+1,944
+1,620
+maturities of long-term debt
+504
+552
+Deferred tax liabilities
+Short-term debt and current
+9,265
+1,184
+Report on expected developments and
+associated material opportunities and risks
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+Report on expected developments and
+associated material opportunities and risks
+225 C.9
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+215 C.8
+213 C.6
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+Our primary measure for evaluating our capital structure is
+defined as the ratio of industrial net debt to adjusted EBITDA.
+Our target for this ratio in fiscal 2014 was 0.5 to 1.0. As the net
+result of the portfolio measures that we initiated in fiscal 2014
+is expected to result in a significant net cash outflow in fiscal
+2015, we kept our capital structure in fiscal 2014 more conser-
+vative. As a result of a combination of sharply lower industrial
+net debt and clearly higher EBITDA from continuing operations
+year-over-year the ratio declined to 0.15, down from 0.35 a
+year earlier. Thus we did not fulfill our forecast for the capital
+structure ratio, which was to approach the lower end of the
+target range.
+ROCE is a primary measure of our capital efficiency. As we fore-
+cast in our Annual Report for fiscal 2013, ROCE for continuing
+operations for fiscal 2014 returned to the target range of 15% to
+20%. We increased our income compared to a year earlier and
+decreased our average capital employed slightly year-over-year.
+As a result, ROCE for continuing operations rose to 17.2% from
+13.7% in fiscal 2013.
+The Sectors' results regarding adjusted EBITDA margin followed
+the same pattern. Infrastructure & Cities and Industry increased
+their EBITDA margins significantly year-over-year, with the for-
+mer re-entering its target range and the latter approaching the
+top of its target range. Healthcare again achieved an EBITDA
+margin above its target corridor. Energy fell even further below
+its EBITDA margin range than it was in fiscal 2013.
+Total Sectors profit margin in fiscal 2014 was 10.0%, in the mid-
+dle of our forecast of 9.5% to 10.5% given in our Annual Report
+for fiscal 2013. Infrastructure & Cities and Industry were key
+drivers in meeting this expectation, as both Sectors showed im-
+pressive performance improvements in fiscal 2014. Healthcare
+maintained its profit and profit margin near the high level
+achieved in the prior fiscal year. In contrast, the performance of
+the Energy Sector was disappointing. Profit fell significantly and,
+contrary to our expectation, profit margin also declined year-
+over-year due mainly to sharply higher project-related charges.
+indicators of our economic performance rose 25% year-over-year
+to €5.507 billion and €6.37, respectively, which clearly fulfilled
+our forecast for an increase of basic EPS from net income of at
+least 15%.
+Higher Total Sectors profit was the main driver for growth in
+net income and basic EPS from net income. These primary
+Total Sectors profit for fiscal 2014 was €7.335 billion. As ex-
+pected, this was a substantial increase from €5.842 billion a
+year earlier, when the Sectors took €1.2 billion in charges for
+the "Siemens 2014" productivity improvement program.
+Free cash flow from continuing and discontinued operations
+for fiscal 2014 came in at €5.201 billion, 2% lower than the high
+level we achieved a year earlier. While cash inflows from oper-
+ating activities declined moderately year-over-year, we partly
+offset this change by reducing cash outflows for investments in
+intangible assets and property, plant and equipment.
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+213
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+214
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+Results of operations
+In November 2014, we announced the sale of our hearing aid
+business to the investment company EQT and the German
+entrepreneurial family Strüngmann as co-investors. The trans-
+action volume is €2.15 billion plus an earn-out component and
+includes that the new owners will also be allowed to continue
+using the Siemens product brand for the hearing aid business
+over the medium term. The hearing aid business so far rep-
+resents a Business Unit within Healthcare. The transaction is
+subject to approval by the regulatory authorities. Closing is
+expected in the first quarter of calendar year 2015. The hearing
+aid business is presented as held for disposal and discontinued
+operations since the first quarter of fiscal 2015.
+||| C.7 Subsequent events
+We intend to continue providing an attractive return to share-
+holders. As in the past, we intend to fund the dividend payout
+from Free cash flow. The Siemens Managing Board, in agree-
+ment with the Supervisory Board, proposes a dividend of €3.30
+per share, up from €3.00 a year earlier.
+attractive geographic markets and get closer to our customers.
+With regard to innovation, we expect to intensify R&D activi-
+ties e.g. to shorten product development cycles and increase
+our application of new technologies, such as data analytics. To
+better balance risks and rewards when we take on innovative
+projects, we intend to explicitly rely on our so-called corporate
+memory as an early-warning system that takes advantage of
+the experience and expertise we already possess.
+Our "Vision 2020″ concept mentioned above, which was initi-
+ated in fiscal 2014, focuses Siemens on profitable growth
+along the value chain of electrification. During the year we
+announced a number of portfolio changes for this purpose,
+including acquisition of two major energy businesses: the
+Rolls-Royce aero-derivative gas turbine and compressor busi-
+ness and the Dresser-Rand oil and gas equipment business. We
+have also announced planned divestments of our hearing aid
+business and our stake in the home appliance business BSH. To
+streamline our processes, we reduced layers of management by
+eliminating the Sector structure and reducing the number of
+our Divisions, effective with the beginning of fiscal 2015. We
+also streamlined our regional go-to-market structure, with a
+smaller number of entities that have greater ability to penetrate
+Orders for fiscal 2014 were €78.350 billion, fulfilling our expec-
+tation for a book-to-bill ratio above 1, which came in at 1.09.
+Order development followed the pattern for revenue: while
+reported orders were 2% lower year-over-year, organic orders
+were up 1% on increases in three of the four Sectors. Energy
+and Infrastructure & Cities again won large order volumes from
+major contract wins, demonstrating the trust that customers
+place in our ability to execute large projects despite setbacks in
+certain project businesses in recent years. While Energy's Wind
+Power Division achieved a strong order increase year-over-year,
+the volume from large orders at Infrastructure & Cities came in
+lower than a year earlier, when the Sector won an extraordi-
+narily large contract worth €3.0 billion in the U.K.
+Revenue for fiscal 2014 was €71.920 billion, a 2% decline com-
+pared to the prior fiscal year. Within the change, Infrastruc-
+ture & Cities and Industry reported higher revenue while Energy
+and Healthcare reported declines. Overall, the decline was due
+to negative currency translation effects. On an organic basis,
+excluding currency translation and portfolio effects, revenue
+was up 1% year-over-year, with three Sectors contributing to
+the increase and only Energy reporting a decline year-over-year.
+This fulfilled our expectation that organic revenue would
+remain near the prior-year level in fiscal 2014.
+During the fiscal year, we finished the remaining measures
+from the "Siemens 2014" program, which helped to increase our
+cost productivity. Furthermore, we initiated "Vision 2020," a
+long-term and comprehensive concept for sustainable value
+creation. With this concept we aim to achieve profitable growth
+through greater customer proximity and accelerated innova-
+tion, while further optimizing our portfolio, streamlining our
+management structures and processes, and fostering an "owner-
+ship culture" throughout the Company.
+We reached most of the goals for fiscal 2014 that we set in our
+Annual Report for fiscal 2013, particularly including 1% organic
+revenue growth and net income and basic EPS (net income)
+growth of well over 15% compared to the prior year. We also
+achieved a return on capital employed (ROCE) in our target
+range. Among the primary measures of our economic position,
+only our capital structure ratio was outside the target range, as
+we kept our capital structure conservative in fiscal 2014.
+514
+28,111
+28%
+30%
+560
+30,954
+Total liabilities and equity
+Non-controlling interests
+to shareholders of Siemens AG
+Equity ratio
+Total equity attributable
+(in millions of €)
+For additional information on our net assets position, see the
+corresponding notes in → D.6 NOTES TO CONSOLIDATED FINANCIAL
+STATEMENTS.
+Total equity attributable to shareholders of Siemens AG in-
+creased from €28.111 billion at the end of fiscal 2013 to
+€30.954 billion at the end of fiscal 2014. In fiscal 2014, the main
+factors relating to the increase in total equity attributable to
+shareholders of Siemens AG were €5.373 billion in net income
+attributable to shareholders of Siemens AG and €825 million in
+other comprehensive income, net of income taxes. These in-
+creases were partly offset by dividend payments of €2.533 bil-
+lion (paid for fiscal 2013) and the repurchase of 11,331,922
+treasury shares at average costs per share of €95.27 totaling
+€1.080 billion (including incidental transaction charges).
+September 30,
+2013
+2014
+As of September 30, 2014, the funded status of our defined ben-
+efit plans showed an underfunding of €9.1 billion, unchanged
+from the prior year. Within these figures, underfunding for
+pension plans amounted to €8.5 billion, as of September 30,
+2014 and 2013, respectively. An increase in our defined benefit
+obligation (DBO) by €2.418 billion mainly resulted from the im-
+pact of decreasing market interest rates which was offset partly
+by the effect of a refined determination of the discount rate. At
+the same time, plan assets increased by €2.427 billion due
+mainly to a positive return, primarily driven by fixed-income
+and equity investments.
+211
+104,879
+Results of operations
+101,936
+131 | B.
+|| | C.6 Overall assessment of the economic position
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+212
+Combined Management Report
+171 C.
+Corporate Governance
+108 | A. To our Shareholders
+205 C.4
+Female employees in management
+210 C.5
+> making medical imaging, in-vitro diagnostics, and health-
+care IT an integral part of outcome oriented treatment plans.
+> using smart analytical systems and our domain expertise to
+develop new services from previously unstructured data
+(Examples of such services include anticipatory maintenance
+work and cost-efficient warehousing offers.), and
+> further development of industrial software to accelerate pro-
+cesses at every point along the value chain,
+> developing new solutions for smart grids and technologies
+for storing energy from fluctuating renewable sources,
+> increasing the efficiency of renewable and conventional en-
+ergy sources for power generation and improving low-loss
+electricity transmission systems,
+Our R&D activities are geared toward ensuring economically
+sustainable energy supplies and developing software solutions,
+which are essential to maintaining the long-term competitive-
+ness of our businesses. Accordingly, major focus areas include:
+> enhancing technological competitiveness, and
+> optimizing the allocation of R&D resources.
+Other intangible assets decreased to €4.560 billion as of Sep-
+tember 30, 2014, compared to €5.057 billion a year earlier. The
+major factor in the decrease was amortization.
+> ensuring long-term future viability,
+In fiscal 2014, we continued to focus on the following areas in
+research and development (R&D):
+276
+-
+C.8.3.1 RESEARCH AND DEVELOPMENT
+ORGANIZATION AND STRATEGY
+C.8.3 Research and development
+Promoting health - Siemens has established a high standard
+of occupational health and safety to avoid work-related health
+risks and promote employees' health. We help our employees
+assume responsibility for their own personal behavior in
+health-related matters, and support health-promoting general
+conditions within the Company. We promote the physical,
+mental and social well-being of our employees through a range
+of activities governing the five topics of healthy work environ-
+ment, psychosocial well-being, physical activity, healthy nutri-
+tion and medical care.
+In fiscal 2014 the overall number of fatalities was lower than in
+fiscal 2013. We attribute this to the numerous and rigorous
+actions and specific initiated projects. An implemented process
+for the assessment of suppliers is supporting these activities.
+Furthermore, Supply Chain Management and Business have
+developed collaborative plans to improve the EHS profile of
+suppliers. Regrettably, we report seven fatalities. Of that three
+fatalities are with contractors (all are work-related fatalities)
+and four with Siemens employees (one business trip fatality
+and three commuting accidents). In the previous year, there
+were five fatalities involving Siemens employees and ten in-
+volving contractors.
+Therefore, the responsible CEO of the affected unit shows com-
+mitment by personally reporting every work related fatality, its
+cause and the measures taken to the Siemens Managing Board.
+218
+217
+Consolidated Financial Statements
+Additional Information
+247 D.
+337
+of German Commercial Code)
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+Report on expected developments and
+associated material opportunities and risks
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+225 C.9
+Another major focus is promoting more efficient energy use in
+buildings, industrial facilities, and the transport sector. Exam-
+ples include the development of electric drives and mass trans-
+portation systems such as local and long-distance trains and
+subways.
+Across all focus areas, we recognize the vital importance of
+sophisticated software solutions. This is true not just for the
+areas mentioned above but also in nearly all of the other fields
+in which Siemens is active.
+R&D activities are carried out by the businesses of our former
+Sectors and our Corporate Technology (CT) department. CT is a
+worldwide network with primary locations in Germany, the
+U.S., China, Russia, India, and Austria. The more than 7,400 CT
+employees contribute their in-depth understanding of funda-
+mental technologies, models, and trends, as well as their
+wealth of software and process expertise. The businesses focus
+their R&D efforts on the next generations of their products and
+solutions. In contrast, the aim of CT is to work with our operat-
+ing units to develop the Group's technology and innovation
+strategies, especially for the next generation of their products
+and solutions. In addition, CT strives to secure the technologi-
+cal and innovative future through commonly developed core
+technology initiatives such as future of automation, data to
+business or system integration. With its global network of ex-
+perts, our corporate research unit serves as a strategic partner
+for Siemens' operating units. CT makes important contributions
+along the entire value chain, from research and development
+to production technology, manufacturing processes, and the
+testing of products and solutions. All of CT's activities are cho-
+sen to optimize the allocation of R&D resources, with a balance
+between support the current offerings of our businesses and
+development of longer-term opportunities.
+CT is also networked with leading universities and research
+institutes worldwide. Close collaborative approaches with such
+partners are also a substantial part of our Open Innovation (OI)
+concept, in which we receive input from internal as well as
+external experts that significantly contributes to the innovative
+power of the Company. With OI we aim to overcome the bar-
+riers of silo thinking, to prove and truly leverage the potential
+of an open network enterprise.
+(in thousands)
+Employees²
+| R&D indicators¹
+CT incurred additional R&D expenses.
+Research and
+development
+intensity1
+5.7%
+(in billions of €)
+Research and development expenses
+4.065
+4.048
+FY 2014
+FY 2013
+| R&D intensity
+In fiscal 2014, we reported research and development expenses
+of €4.065 billion, compared to €4.048 billion in fiscal 2013. The
+resulting R&D intensity, defined as the ratio of R&D expenses
+and revenue, was 5.7%, above the R&D intensity in fiscal 2013.
+C.8.3.2 RESEARCH AND DEVELOPMENT FIGURES
+CT offers extensive process and production consulting services
+for development and manufacturing units at Siemens. CT em-
+ploys more than 4,200 software developers at locations in Asia,
+Europe, and the Americas. These specialists help our Business
+Units develop concepts from the initial idea to the finished
+product. In addition, CT strategically handles the intellectual
+property of Siemens. Around 440 experts help the Company
+register patents and trademarks, establish them, and put them
+to profitable use.
+In addition, Siemens takes part in publicly funded research pro-
+grams. The most important research areas include the develop-
+ment of sustainable technologies including recycling, the com-
+munication of machines, the creation of new materials and
+bio-technology.
+214 C.7
+215 C.8
+Net assets position
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+210 C.5
+213 C.6
+In addition to this global approach of "Zero Harm Culture @
+Siemens," our businesses and countries themselves improve
+safety locally through various activities depending on the cur-
+rent safety performance and the business needs. Management
+attention is of utmost importance to foster and improve safety.
+> Health and safety - no compromises!
+> We take care of each other!
+> we want to provide opportunities for diversity
+of experience and interaction, and
+> we want to have the best person for every position,
+All our activities, measures and programs fostering Diversity
+follow these principles:
+As a global player, the vast and diverse range of our employees'
+capabilities, experience and qualifications forms a substantial
+competitive advantage and supports our value proposition as
+an employer.
+C.8.2.1 DIVERSITY
+Demographic change, lifelong employability and cross-gener-
+ation collaboration are Siemens' key employee-related chal-
+lenges to be mastered, and we see differences between regions
+and labor markets. To remain an employer of choice, we are
+taking appropriate action based on local needs.
+measures and to follow-up on improvements. Due to the
+launch of our "Vision 2020" concept and the related organiza-
+tional changes the survey originally scheduled for 2014 was
+postponed to 2015.
+Siemens believes that employee engagement is a key driver for
+sustainable company performance. An engaged workforce
+drives innovation, growth and profitability. Since 2010, the
+Siemens Global Engagement Survey has been seen as an im-
+portant management tool. In general the Engagement Survey
+will be conducted on a biennial basis to allow more time to set
+Infrastructure & Cities:
+88 (26%)
+3 (1%)
+│1 Continuing operations.
+Industry: 90 (26%)
+343
+> we want to achieve diversity of thinking across our Company.
+Healthcare: 48 (14%)
+Other: 33 (10%)
+Energy: 81 (24%)
+Employees by segments as of September 30, 2014
+(in thousands)'
+Excellent employees are one of Siemens' vital strengths. They
+have made Siemens what it is today and their expertise, capa-
+bilities and high level of engagement are laying the foundation
+for our future success. To stay competitive, we need to contin-
+uously win and retain the best and brightest employees world-
+wide. As an employer of choice, we empower our diverse and
+engaged people worldwide with a high-performance culture,
+encourage life-long learning and development, offer an attrac-
+tive working environment and ensure occupational health
+and safety.
+4 Without travel expenses.
+3 Employees in management positions include all managers with disciplinary
+responsibility, plus project managers.
+2 Employee turnover rate is defined as the ratio of voluntary and involuntary
+exits from Siemens during the fiscal year to the average number of employees.
+1 Continuing and discontinued operations.
+670
+769
+education (in €) 4
+Expenses per employee for continuing
+265
+Financial Services:
+Inventions³
+We've developed our management recruitment processes to
+ensure that the preliminary selection of candidates reflects the
+diversity of our customers and employees at all levels and in all
+regions. For example the percentage of women in management
+at Siemens globally has nearly doubled since fiscal 2002 to
+15.6%.
+DEVELOPMENT
+> Zero incidents - it is achievable.
+Our customers, suppliers and regulatory authorities expect
+high safety standards from us. Safe behavior is governed not
+only by complying with laws, regulations and procedures,
+but also by the personal values of managers and employees.
+Our "Zero Harm Culture @ Siemens" program, which has been
+launched in fiscal 2012 is having an increasingly positive
+impact. It contains three principles:
+Promote a culture of safety - In the past, occupational safety
+was often characterized by a focus on technical protective
+measures, an approach which achieved considerable success.
+We are convinced, however, that further improvement can be
+achieved only through an actively practiced occupational
+safety culture and optimal working conditions – in every coun-
+try and for all Siemens employees as well as those of our con-
+tractors. Both, as a company and as individuals, we are respon-
+sible for ensuring that the working environment at Siemens is
+safe at all times and for every employee. At present, local man-
+agement systems and best practices exist which we can build
+on. We will achieve sustainability, however, only through a
+global and consistent approach.
+Occupational safety and health management are key elements
+of our Company's sustainable strategy and an integral part of
+our business processes. We therefore develop central programs
+and processes that are applied locally and adapted to the respec-
+tive business needs. Occupational safety and health manage-
+ment are an integral part of our Business Conduct Guidelines,
+our internal monitoring systems, and our risk management and
+internal controls. In addition, occupational safety is part of an
+international framework agreement between Siemens AG, the
+Central Works Council of Siemens AG, IG Metall and the global
+union IndustriAll.
+C.8.2.6 OCCUPATIONAL SAFETY AND
+HEALTH MANAGEMENT
+employees which already apply worldwide and are firmly
+anchored in our Business Conduct Guidelines. Underscoring
+this commitment, Siemens, the Siemens Central Works Coun-
+cil, the German trade union IG Metall and the global industrial
+union IndustriAll have signed an international framework
+agreement on the principles of corporate responsibility.
+-
+C.8.2.5 EMPLOYEE RIGHTS AND RELATIONS
+TO EMPLOYEE REPRESENTATIVES
+Fair-minded collaboration among Company management, em-
+ployees and employee representatives plays a central role at
+Siemens. As one of the largest corporate employers in Germany
+and worldwide, we are committed to our social responsibil-
+ity and respect and uphold the fundamental rights of our
+We also continue to strengthen Siemens' innovation power by
+benefiting from the innovative strength in our supplier net-
+work. In May 2014, we held our "1st Siemens Supplier Innova-
+tion Day," the first event of its kind on Siemens corporate level.
+With this event, we established a platform for regular dialogue
+with our top innovative suppliers at the CEO level. With this
+dialogue, we aim to increase our innovation capabilities, realize
+shared growth potential and ensure long-term cost leadership.
+Sustainability requirements - as a guiding principle for our
+supply chain management - are an integral part of all relevant
+supplier management processes - such as supplier selection,
+supplier qualification and evaluation, and supplier develop-
+ment. We require all of our suppliers to comply with the princi-
+ples of our Code of Conduct for Siemens Suppliers, which in-
+clude, besides others, respect for the basic rights of employees,
+strong safety & health and environmental protection standards
+as well as zero-tolerance on corruption & bribery. We also re-
+quire them to support its implementation in their own supply
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+C.8.2.2 TALENT ACQUISITION AND EMPLOYEE
+171 C.
+Combined Management Report
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+In order to meet our requirements for qualified staff, we attract
+new talent to Siemens and also work on retaining our existing
+workforce for the long term. To attract new talents, Siemens has
+a wide array of programs in place. The Performance Manage-
+ment Process (PMP) helps leaders and employees determine
+clear personal goals and share the feedback necessary to
+achieve them. The process also supports us in setting compen-
+sation, providing professional development opportunities and
+identifying talents throughout the Company. To reflect the focus
+on high-performance within Siemens, our compensation sys-
+tem for our top executives and senior management worldwide
+includes a variable component.
+Attracting, contacting, hiring, promoting and systematically
+developing the best employees worldwide for Siemens – that is
+our goal in Talent Acquisition and Employee Development.
+220
+Financial position
+Patent first filings4
+2 Average number of employees in fiscal year.
+Year ended September 30,
+2014
+9.1%
+2013
+10.8%
+15.6%
+15.6%
+Expenses for continuing education
+(in millions of €) 4
+> Siemens-wide managed volume,
+The principal goal of supply chain management (SCM) at
+Siemens is to ensure the availability and quality of the materi-
+als we require to serve our customers also considering innova-
+tion strength and sustainability of our suppliers. We aim to
+strengthen our competitiveness by achieving substantial sav-
+ings in our purchasing volume. In fiscal 2014, Siemens' pur-
+chasing volume amounted to approximately €37 billion, which
+equaled roughly half of our total revenue. Our primary strate-
+gies for achieving savings in purchasing include:
+C.8.4 Supply chain management
+increase cost-effectiveness, and improve the quality of life in
+cities. To this end, the businesses develop building technologies
+that conserve energy, solutions for ensuring an efficient and
+secure supply of electricity in cities, and intelligent traffic and
+transport systems. In addition, researchers are looking for ways
+to integrate buildings into smart grids. Through such integration,
+the buildings can feed the electricity they produce into the grids
+and provide additional power during times of peak demand.
+R&D activities of the businesses in our former Infrastruc-
+ture & Cities Sector focus on urban growth issues. Main research
+fields therefore cover sustainable technologies for major metro-
+politan areas and their infrastructures. The main aims are to in-
+crease energy efficiency, reduce burdens on the environment,
+One of the R&D priorities of the businesses in our former
+Industry Sector is the software-based integration of product
+development, production planning, production processes and
+services within the framework of product lifecycle manage-
+ment. The objective is to accelerate processes at every point
+along the value chain. Innovative technologies can cut the time
+from design to market in the manufacturing industry by up to
+50%. The further development of automation and drive tech-
+nology, and industrial software in particular, plays a major role
+here. This applies to the product development and production
+process as well as to the integration of the drive system. More-
+over, the businesses of the former Industry Sector are striving
+to achieve greater energy efficiency, reduce raw material con-
+sumption, and lower emissions. These objectives also guide
+the development of technology-based service concepts such as
+energy management and remote maintenance systems.
+Another focus area is automating clinical work processes and
+optimizing laboratory diagnostics, with a goal of enabling physi-
+cians to identify diseases more precisely and at an earlier stage.
+Physicians are then able to monitor the effect of medications
+more accurately and benefit from the evaluation and analytical
+capabilities of modern computer technology. As a result, thera-
+pies can be tailored more closely to a patient's needs. Healthcare
+also develops products that meet the specific, targeted require-
+ments of the healthcare systems of emerging countries.
+One of the R&D fields involves the development of systems that
+help physicians make precise diagnoses of large numbers of
+patients and are also robust, easy to use, and inexpensive to
+purchase and maintain. Examples include interventional radiol-
+ogy or catheter labs. Ultrasound with wireless transducers is
+also ideally suited for minimally-invasive procedures such as
+nerve blockades, access to blood vessels, and positioning for
+therapeutic interventions and biopsies.
+The R&D activities in the businesses of our former Healthcare
+Sector are focused on meeting customer requirements, which
+are the result of two major trends: the world's population con-
+tinues to grow steadily and to get older. These trends increase
+the pressure on healthcare providers to treat more and more
+people at increasingly lower costs in order to stabilize rising
+healthcare expenditures. To overcome the challenges of mak-
+ing healthcare more efficient and more effective, the health-
+care measures have to focus on the individual patient and the
+success of the treatment.
+219
+Consolidated Financial Statements
+Additional Information
+247 D.
+337
+of German Commercial Code)
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+Report on expected developments and
+associated material opportunities and risks
+Sustainability and citizenship
+Overall assessment of the economic position
+Subsequent events
+225 C.9
+positions (percentage of all management
+positions)³
+Employee turnover rate²
+Indicators
+C.8.2 Employees
+Net assets position
+C.8.2.3 LEARNING AND CONTINUING EDUCATION
+We encourage our employees at all locations to develop their
+qualifications and expertise. In fiscal 2014, we invested around
+€276 million for continuing education (without travel ex-
+penses), which equals about €769 per employee. The expenses
+include courses and training programs both for individual em-
+ployees and for entire company units.
+Siemens Learning Campus and Siemens Leadership Excellence,
+two corporate-level organizations, are responsible for imple-
+menting the global learning portfolio: Siemens Learning
+Campus offers regional learning opportunities to employees in
+all countries, ranging from courses for employees and manag-
+ers, through tailored training programs and services for groups,
+to solutions for entire organizations. Additionally Siemens
+Leadership Excellence (SLE) is addressing our current and
+future senior and top leaders. Siemens continues to be one of
+Germany's largest providers of professional education for sec-
+ondary school graduates (7,100 places for Siemens trainees and
+2,800 places for trainees from other companies). As in previous
+years, we again made 10% of our trainee positions available to
+disadvantaged youths.
+C.8.2.4 SIEMENS EQUITY CULTURE
+Siemens established its first employee share program in
+Germany as early as 1969. Building on this successful program
+in Germany, Siemens decided in 2008 to extend employee and
+management participation. Today, Siemens offers approxi-
+mately 97% of its employees in 60 countries the opportunity to
+acquire Siemens shares with the Company's financial support.
+The Share Matching Plan is based on a simple principle: Em-
+ployees participating in the plan will receive one Siemens share
+without payment of consideration (matching share) for every
+three Siemens shares bought and continuously held over a
+period of three years. Only condition: The employee still needs
+to be employed by Siemens. The main idea of the plan has
+always been to make stock ownership available to employees at
+all income levels.
+We are convinced that empowering employees with shares
+motivates them to assume greater responsibilities and helps
+them identify more closely with the company they work for - a
+fundamental prerequisite for the sustainable development of
+Siemens.
+Sustainability is a guiding principle within our Company, incor-
+porated in our philosophy, central theme of our corporate strat-
+egy, and integral part of the Siemens Management model. In
+our Sustainability activities we focus on three areas: "Sustain-
+able business practices," "Contribution to our customers' com-
+petiveness," and "Contribution to sustainable development of
+societies" in order to achieve sustainable progress for Siemens,
+its customers and societies.
+> "Sustainable business practices" comprises our commitment
+to embedding sustainability throughout our organization
+and operations. We want to be a role model ourselves and
+walk the talk across all areas of the Company covering oper-
+ational businesses, countries, and corporate functions.
+> The second area means that we contribute to our customers'
+competitiveness with our products, solutions and services
+and enable them to increase energy efficiency, save re-
+sources and reduce carbon emissions at a significant cost
+advantage.
+> Siemens contributes to the sustainable development of soci-
+eties with its innovative products and solutions, local opera-
+tions, thought leadership and the fostering of long-term
+relationships with local communities through Corporate
+Citizenship projects with partners.
+C.8.1.2 SUSTAINABILITY MANAGEMENT
+AND ORGANIZATION
+The importance we attach to the topic of sustainability is evi-
+dent in its central position within the Company's organization
+and in our programs and the measures we execute. Efficient
+sustainability management is a company-wide task that requires
+a clear organizational structure and a thorough anchoring of
+sustainability in our corporate culture. All our sustainability ac-
+tivities are steered by the Chief Sustainability Officer, who is a
+member of our Managing Board. In order to coordinate and
+manage our sustainability activities efficiently, we established
+the Siemens Sustainability Board, the Sustainability Office and
+the Siemens Sustainability Advisory Board.
+214 C.7
+215 C.8
+The Siemens Sustainability Board, which is chaired by the
+Chief Sustainability Officer, is the central steering committee
+for sustainability at Siemens. In its regular meetings it directs
+our sustainability activities as part of our sustainable strategy
+and adopts appropriate measures and initiatives. Our Chief Sus-
+tainability Officer also manages the Sustainability Office,
+which is responsible for driving sustainability further within
+Siemens and for coordinating the sustainability activities and
+other company-wide programs and measures.
+C.8.1.3 COLLABORATING FOR SUSTAINABILITY
+Our sustainability efforts are based on our Business Conduct
+Guidelines, which provide the ethical and legal framework
+within which we conduct our business activities. They contain
+the basic principles and rules for our conduct internally and
+externally. Specific issues, such as those relating to the environ-
+ment, are covered in more detailed regulations and guidelines.
+The Business Conduct Guidelines are binding for all companies
+controlled by Siemens.
+Furthermore, we believe that close collaboration with stake-
+holders supports us in addressing complex, interlocking sus-
+tainability challenges and topics. Maintaining an intensive dia-
+logue with partners along the supply chain and with external
+stakeholder groups and organizations is important for us:
+Siemens is actively engaged with leading global sustainability
+organizations, such as the World Business Council for Sustain-
+able Development (WBCSD) and the World Resources Institute
+(WRI). We also liaise regularly with a broad group of stakehold-
+ers on key sustainability issues, track their most material topics
+and use them as guide for our activities.
+In addition, we are committed to international standards and
+guidelines for sustainability. For example, we signed on to the
+United Nations Global Compact in 2003 and became a signatory
+to the Global Compact's CEO Water Mandate in 2008; since fiscal
+2011, we are a member of the steering committee of the Global
+Compact's "Caring for Climate" initiative. We regularly report on
+our sustainability performance using the guidelines (G3.0) of
+the Global Reporting Initiative (GRI), which aim at high transpar-
+ency and comparability for corporate sustainability reporting.
+213 C.6
+214 C.7
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+215
+To help us maintain an objective perspective on our sustain-
+ability challenges and performance, we have also created the
+Siemens Sustainability Advisory Board, composed of eight
+eminent figures in science and industry from a range of disci-
+plines and regions of the world. None are employees of
+Siemens. Furthermore, a network of assigned Sustainability
+Managers in the businesses and regional units ensure that sus-
+tainability measures are implemented and multiplied through-
+out the Company.
+213 C.6
+The R&D activities of the businesses in our former Energy
+Sector are focused on developing methods for the efficient
+generation and transmission of electrical energy, including
+advanced gas turbines that increase the efficiency and reduce
+emissions of power plants, combined cycle power plants, to
+increase the availability of electricity through higher flexibility
+and efficient and reliable power supply for decentralized struc-
+tures such as those in the oil and gas industries, innovations
+for reducing the cost of wind turbines, innovations for increas-
+ing the efficiency of wind turbines (offshore and onshore), the
+development of an HVDC super grid and the development of a
+subsea power grid to make deep-sea oil and gas extraction
+more profitable.
+C.8.3.3 RESEARCH AND DEVELOPMENT
+IN OUR BUSINESSES
+1
+11
+13
+U.S.- United States Patent
+and Trademark Office (US PTO)
+5.5%
+2
+2
+Europe European Patent Office (EPO)
+3
+4
+and Trade Mark Office (DPMA)
+Germany German Patent
+2012
+R&D intensity is defined as the ratio of R&D expenses and revenue.
+2013
+As of September 30, 2014, Siemens held approximately 56,100
+granted patents worldwide in its continuing operations. As of
+September 30, 2013, it held approximately 56,000 granted pat-
+ents. In terms of the number of published patent applications
+in calendar year 2013, Siemens ranked fourth in Germany and
+second in Europe. Siemens was also ranked thirteenth in the
+statistics for patents issued in the U.S. in calendar year 2013.
+First filings as part of inventions submitted to patent offices.
+4
+3 Number of inventions reported by the Business Units in an internal report.
+4.0
+4.3
+8.3
+8.6
+28.1
+28.8
+2013
+2014
+Year ended September 30,
+| Rank in patent office statistics
+1 Continuing operations.
+R&D expenses and intensity for the Sectors in fiscal 2014 and
+2013:
+(in millions of €)
+In our continuing operations, we had an average of approxi-
+mately 13,200 R&D employees in Germany and approximately
+15,600 employees in approximately 30 other countries during
+fiscal 2014.
+4.1%
+3.8%
+Infrastructure & Cities
+7.1%
+7.2%
+Industry
+8.3%
+8.1%
+2013
+3.3%
+3.5%
+Year ended September 30,
+2014
+Healthcare
+| R&D expenses
+Energy
+Healthcare
+1,048
+1,204
+731
+719
+Infrastructure & Cities
+1,229
+Industry
+1,010
+872
+873
+2013
+2014
+Year ended September 30,
+Energy
+| R&D intensity
+Goodwill decreased slightly to €17.783 billion as of Septem-
+ber 30, 2014 compared to €17.883 billion a year earlier. The
+decrease was mainly related to goodwill in the Metals Techno-
+logies, Hospital Information System and Microbiology busi-
+nesses, which were classified as assets classified as held for
+disposal. This decrease was nearly offset by positive currency
+translation effects.
+The successful restructuring of our SCM function since the end
+of fiscal 2013 led to a substantial decrease of the cost for the
+SCM organization, driven by optimizing towards a less complex
+setup and process improvements. Going forward, we will con-
+tinue with reshaping the SCM function in alignment with Vision
+2020 to support the new Siemens organization structure overall.
+> Sourcing from emerging markets, and
+> E-sourcing.
+210 C.5
+C.8.8 Corporate citizenship
+Siemens is committed to providing long-term benefits to the
+societies in which we operate, through corporate citizenship
+activities. These activities can take a variety of forms ranging
+from philanthropic disaster relief to more strategic shared
+value or inclusive business approaches like our mobile clinics
+in India.
+The responsibility for choosing and carrying out charitable
+activities lies with the local units in each country. This ensures
+that we provide support where it is needed most. In doing so,
+we apply high management standards and strategically focus
+our corporate citizenship activities in areas where our company
+competencies, resources and employee volunteering can make
+a meaningful difference:
+> Education and Science: Our goal is to maintain a continu-
+ous dialogue with young people and to identify and foster
+talent from an early age on. We support educational and re-
+search activities particularly in natural sciences, engineering
+and healthcare.
+> Social: Projects in this area aim to bring about a systematic
+and lasting improvement in people's living conditions. In
+addition, we provide urgent humanitarian relief, including
+financial and technical assistance after natural disasters.
+> Environment: We want to make an effective contribution
+towards protecting the environment, particularly through
+our core competencies, and raise environmental awareness
+among younger generations.
+> Arts and Culture: We support Arts and Culture because a
+society's cultural heritage is a key aspect of its identity.
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+224
+172 C.1
+223
+Additional Information
+Consolidated Financial Statements
+247 D.
+337
+> to improve the waste efficiency each year by 1%; and
+> to reduce waste for disposal each year by 1%.
+Furthermore, Siemens continued with the water risk manage-
+ment approach: In locations where there are particular water
+risks or negative impacts on the environment (for example as a
+result of aridity, high waste-water loads or poorly developed
+technical infrastructure), the local sites need to define targets
+matched to local conditions. Finally, our "Serve the Environ-
+ment" program also addressed air pollution by seeking alterna-
+tive solutions for any ozone-depleting substances still in legally
+permissible use and control VOC (Volatile organic compounds)
+emissions. For continuation of the Serve the Environment pro-
+gram energy and waste efficiency aspects will be integrated
+into our supply chain. Air pollution control will be considered
+holistically, taking account not only of own emissions but also
+of the local air immission situation at our production plants
+and offices. Climate change induced impacts of water use in
+our businesses will also be integrated.
+We achieved the targets we set ourselves for fiscal 2014. The
+energy efficiency could be improved due to implementation of
+energy efficiency measures and implementation of energy
+management systems. Due to this and to reasonable energy
+procurement and increased share of renewable energy in elec-
+tricity mix the CO2 efficiency was increased considerably.
+C.8.7.2 PRODUCT-RELATED
+ENVIRONMENTAL PROTECTION
+The major focus of product-related environmental protection is
+to improve the overall environmental performance of our prod-
+ucts and systems. Therefore the existing "Product Eco Excel-
+lence" program will continue its approach regarding elements
+related to the product life cycle by integrating aspects of the
+circular economy and resource efficiency. The program has a
+modular design and offers innovative solutions to accomplish
+a higher transparency in terms of declarable substances, to de-
+velop and integrate a set of measures to improve resource effi-
+ciency of materials (e.g. scarcity, criticality) and to increase our
+claim on product environmental footprint information. On the
+basis of mandatory requirements as defined in our internal
+environmental standard, we support the reduction of the envi-
+ronmental impacts of our products and systems during product
+development, production, use and end of life. Additionally, the
+program aims to better prepare the operating units for future
+regulatory and customer requirements, to strengthen environ-
+mental communication, and to broaden environmental aware-
+ness among our employees. In the time period fiscal 2012 to
+fiscal 2014 for the main elements of the program following
+objectives have been reached:
+> Transparency was enhanced with our list of declarable sub-
+stances (LoDS), comprising substances that are restricted in
+use due to regional or application-specific regulations.
+> Development and application of a methodological approach
+for better assessing risks such as environmental, toxicologi-
+cal and future availability risks associated with used materi-
+als and substances. The application has been verified within
+our business.
+> Establishment of a harmonized procedure on the basis of ISO
+14040/44 (Life-cycle-assessment) for determining the “eco-
+logical footprint" of our products and thereof derived envi-
+ronmental product declarations based on the requirements
+of ISO 14025.
+214 C.7
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+213 C.6
+214 C.7
+215 C.8
+225 C.9
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+For the markets served by our Wind Power and Renewables
+Division, we expect growth in fiscal 2015 to come in slightly
+lower than in fiscal 2014, which saw particularly strong growth
+rates. For onshore wind power markets, investments in the U.S.
+are expected to decline in fiscal 2015, following the strong prior
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+225
+fiscal year. In Europe, we expect the onshore market to see con-
+tinuous moderate growth. In both cases, market development
+strongly depends on the energy policy framework, including
+tax incentives in the U.S. and regulatory frameworks in Ger-
+many and the U.K. We expect these latter factors to have a sim-
+ilar effect on growth in the offshore wind power market, which
+is dominated by Europe. We expect the offshore wind power
+markets in Asia, Australia and the Americas to remain largely
+undeveloped in the short term.
+For the markets served by our Energy Management Division,
+we expect overall moderate growth in fiscal 2015. Within the
+Division's utility markets, we expect a slight increase in fiscal
+2015. On a regional basis, the strongest growth in the utility
+markets is expected to come from the Europe, C.I.S., Africa,
+Middle East region. Here we expect strong demand from the
+Middle East and growth in transmission investments due to the
+integration of renewable sources into existing power distribu-
+tion networks. This growth may be partly offset by lower
+demand from major European utility companies which have an-
+nounced plans to reduce their capital expenditures. We expect
+utility markets in the Americas to grow slightly in fiscal 2015.
+Markets in the Asia, Australia region are expected to grow
+slightly, benefiting from demand from utility companies in the
+emerging countries of the region. We expect the Division's oil
+and gas market to grow moderately, with the strongest growth
+rates in the Americas. Production of unconventional oil and gas
+is expected to be the main growth driver in the Americas, while
+growth in the Asia, Australia region is driven by investments in
+liquefied natural gas (LNG) infrastructure. The Division's miner-
+als markets are expected to grow slightly in fiscal 2015 driven by
+demand in the Asia, Australia region. Overcapacities burden the
+Division's metals markets, which are expected to grow even
+more slowly than the minerals markets. We expect a more posi-
+tive outlook in the Division's chemicals and non-residential con-
+struction markets. Both markets are forecast to grow moderately
+in fiscal 2015 year-over-year. In all regions the chemical industry
+is contributing to growth. For the non-residential construction
+markets, we expect growth to be driven by the recovery of U.S.
+markets and by ongoing construction investments in Asia,
+Australia, particularly in China.
+For the markets served by our Building Technologies Division,
+we expect moderate growth in fiscal 2015. On a regional basis,
+we expect growth in Europe, C.I.S., Africa, Middle East to pick
+up in fiscal 2015. Within the region, we expect growth rates in
+Europe including Germany to increase slightly year-over-year.
+For the Middle East we expect moderate growth rates year-
+over-year. Within the Americas, we expect the Division to ben-
+efit from a slow but continued recovery in U.S. construction
+markets. We expect markets in the Asia, Australia region to
+grow moderately as in fiscal 2014.
+of German Commercial Code)
+In fiscal 2015, we expect growth in the markets served by the
+Power and Gas Division to remain on a low level. While we
+anticipate slightly increasing market volume year-over-year in
+advanced gas turbine markets - especially in the large-scale
+range (H class) - we also expect continued price declines due
+to manufacturing overcapacities and increased competitive
+pressure. We expect growth in the Division's oil and gas mar-
+kets to accelerate in South America and Eastern Europe (e.g.
+Turkey, Azerbaijan). Investments in markets in the Americas
+are likely to pick up, despite delays, due mainly to demand for
+gas-fired power plants. We anticipate flat development for the
+coal-fired steam power plant market, due to an anticipated
+slow-down in China. We expect that clear growth in distributed
+power generation will continue to support growth for the
+Divisions' markets as a whole.
+C.9.1.2 MARKET DEVELOPMENT
+The forecasts presented here for GDP, gross fixed investments
+and manufacturing value added are based on a report from IHS
+Global Insight dated October 15, 2014.
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+|||C.9 Report on expected developments and associated
+material opportunities and risks
+C.9.1 Report on expected developments
+C.9.1.1 WORLDWIDE ECONOMY
+For the year 2015 we expect world GDP to expand by 3.2% with
+fixed investment and manufacturing value added growing
+even more strongly at 4.5% and 3.9%, respectively. The slight
+acceleration compared to 2.7% GDP growth anticipated in 2014
+is expected to be driven mainly by the U.S. economy which
+seems to be on a stable recovery path. The monetary environ-
+ment is still expansive which should further support growth
+especially in the housing market. Nevertheless the outlook for
+the world economy remains uncertain, as indicated by the
+deterioration of many early indicators (especially for the Euro
+zone and China), the increased volatility in equity markets in
+October, and the severe decline in oil prices since summer
+2014. On the one hand, the oil price decline is a symptom of
+slack global demand relative to supply. On the other hand it is
+a stabilizing factor for oil importing countries, because it in-
+creases purchasing power for consumers and reduces costs for
+many businesses. The biggest downside risks stem from geo-
+political tensions. An escalation of the Ukraine conflict would
+lead to a steep decline in investment activity. Similarly, further
+expansion of the "Islamic State" (including control over import-
+ant oil fields) could disrupt global oil markets and hit the global
+economy. Further downside risks would also emerge from an
+uncontrolled spread of the Ebola epidemic outside West-Africa.
+In the region Europe, C.I.S., Africa, Middle East the condition
+of many Euro zone economies is a cause for concern. Given the
+latest indicators, there is some danger of a possible premature
+lapse of the recovery in the Euro zone. In the near term, defla-
+tion is the most important threat to these economies. While
+the German economy is expected to still suffer from Euro zone
+weakness and geopolitical tensions, it should also benefit from
+stabilizing factors, such as a relatively strong service sector,
+solid consumer demand, strong employment data, a weaker
+Euro and cheaper energy. For Russia, the outlook for 2015
+depends on the future course of the Ukraine conflict and the
+reaction of western countries, which is not foreseeable now.
+While many African countries have achieved a steeper growth
+path in recent years, they might be negatively affected by lower
+raw material prices and by the Ebola epidemic in West-Africa.
+For the Americas, we expect the U.S. economy to be the deci-
+sive force. The U.S. recovery seems to be broad-based and sup-
+ported by improving labor markets. The possible start of tight-
+ening monetary measures should not disrupt the underlying
+recovery. The outlook for Brazil, the second-largest economy in
+the Americas region, is less optimistic. The expected GDP
+growth rate of 1.0% for 2015 (a little more than the population
+growth rate) has to be regarded as very low, given the poor
+growth rate of 2014. The newly re-elected government has to
+enact substantial structural reforms to increase the growth
+potential of the country.
+As in past years, Asia, Australia is expected to exhibit the high-
+est GDP growth. We expect China to contribute the main part of
+the region's growth. However, the Chinese economy still suf-
+fers from overcapacities in several industries and fragile real
+estate and banking sectors. However, the government should
+be able to contain these problems if they become more severe.
+China's gradual shift from an investment-driven to a consump-
+tion-driven economy is expected to slow down its economy in
+the near term. For India, the outlook for next year is better than
+in 2014. Growth should pick up slightly. However, similar to
+Brazil, the country needs structural reforms and substantial
+improvements in infrastructure.
+All in all, for 2015 we expect growth of the global economy to
+accelerate slightly compared to 2014. However, there is an un-
+usually high number of downside risks, which - even if only
+some of them materialize - could substantially weigh on global
+economic activity. On the upside, a quick solution of political
+conflicts together with strong economic growth in the U.S.
+could boost global demand.
+> to continue our systematic effort to improve
+energy efficiency, and thereby achieve corresponding
+improvement in our carbon dioxide efficiency;
+C.8.7.1 INDUSTRIAL ENVIRONMENTAL PROTECTION
+Our industrial environmental protection efforts focus on opti-
+mizing energy and resource efficiency at our sites. With the
+current "Serve the Environment” program we have been com-
+mitted to the following Siemens-wide main targets in the time
+period fiscal 2011 to 2014:
+Our commitment to continual improvement led to two environ-
+mental protection programs in fiscal 2012: "Serve the Environ-
+ment" for industrial environmental protection and "Product Eco
+Excellence" for product-related environmental protection. Both
+programs were reconfirmed and extended in fiscal 2014. The
+general objectives to improve energy and resource efficiency, to
+fulfill growing international requirements with regard to envi-
+ronmental protection, to increase customer benefits, and to
+proactively strengthen our position as a sustainable company
+will be kept. The two reconfirmed programs will run from 2015
+to 2020.
+standard defines requirements to reduce the environmental
+impact of our products and systems during the production, use
+and disposal phase and is an integral part of our business pro-
+cesses. We conduct regular internal reviews of our environmen-
+tal performance and progress, in order to create a cycle of con-
+tinual improvement.
+With our Environmental Portfolio, we intend, among other
+things, to help our customers reduce their carbon dioxide foot-
+print, cut their energy costs and improve their profitability
+213 C.6
+214 C.7
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+225 C.9
+In fiscal 2010, we set ourselves a revenue target for the Environ-
+mental Portfolio within the One Siemens framework: to exceed
+€40 billion in revenue from the Environmental Portfolio by the
+end of fiscal 2014. Due to recent and ongoing portfolio changes
+we have not been able to achieve this target. Siemens' strategic
+focus on technologies for energy efficiency and climate and en-
+vironmental protection will nevertheless remain in place. For
+fiscal year 2014, almost three-quarter of the revenue from our
+Environmental Portfolio were already generated with products
+and solutions for energy efficiency.
+Report on expected developments and
+associated material opportunities and risks
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+221
+through an increase in productivity. Taking together all ele-
+ments of the Environmental Portfolio that were installed at cus-
+tomer locations since the beginning of fiscal 2002 and remain
+in use today, we have reduced customer carbon dioxide emis-
+sions by 428 million metric tons in fiscal 2014, which is the
+equivalent of the following thirteen cities' combined yearly
+emissions: Berlin, Bogotá, Cape Town, Hong Kong, London, Los
+Angeles, Melbourne, Mexico City, Moscow, New York City, São
+Paulo, Seoul and Tokyo.
+C.8.6.1 SELECTION CRITERIA
+An Environmental Portfolio element can be a product, a system,
+a solution or a service. Furthermore, a core component of a
+system or solution may qualify as an Environmental Portfolio
+element if the component provided by Siemens is key to en-
+abling environmental benefits resulting from the system's or
+solution's overall application. To qualify for inclusion in the
+Environmental Portfolio, an element must meet one of the se-
+lection criteria described below, which are energy efficiency,
+renewable energy or environmental technologies. Products,
+systems, solutions and services with planned application in
+military use or nuclear power are not included in the Environ-
+mental Portfolio.
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+In addition to its environmental benefits, our Environmental
+Portfolio enables us to compete successfully in attractive mar-
+kets and generate profitable growth. In fiscal 2014, revenue
+from continuing operations from the Environmental Portfolio
+amounted to €33.0 billion, which accounted for 46% of our rev-
+enue from continuing operations in this fiscal year. This rev-
+enue includes revenue from newly developed and additionally
+qualified elements, and excludes revenue from elements that
+no longer fulfill our qualifications.
+Our Environmental Portfolio serves as an example of how we
+strive to align our business activities with the aforementioned
+megatrends, in this case climate change. The Environmental
+Portfolio consists of products, systems, solutions and services
+(Environmental Portfolio elements) that reduce negative im-
+pacts on the environment and emissions of carbon dioxide and
+other greenhouse gases (defined together in the following as
+carbon dioxide emissions) responsible for climate change.
+369
+chains. We have established and continually further develop
+a risk-based system of appropriate processes to enable us to
+systematically identify potential risks in our supply chain. It
+consists of sustainability self-assessments by suppliers, risk
+evaluation conducted by our purchasing department, sustain-
+ability questions within supplier quality audits and sustainabil-
+ity audits by external auditors. To further encourage sustain-
+able business conduct throughout our entire global supply
+chain, we are committed to building our suppliers' competence
+and intensifying knowledge transfers related to sustainability.
+An elementary component of all our global marketing and sell-
+ing activities is compliance with applicable laws and internal
+rules and regulations. Therefore, Siemens values and compli-
+ance are an integral part of our training program.
+C.8.6 Environmental Portfolio
+Indicators¹
+Year ended September 30,
+2014
+2013
+C.8.5 Distribution and customer relations
+Our Divisions have global responsibility for their business,
+sales and results. They are able to support customers around
+the world directly from their respective headquarters, espe-
+cially for large contracts and projects. However, most of our
+customers are small and medium-sized companies and organi-
+zations that require local support. To address local business
+opportunities with them, we are able to draw upon a large
+global sales force steered by our regional companies. They are
+responsible for serving our customers in the respective coun-
+tries, leveraging our global network of market partners like
+consultants, distributors, integrators, EPCs and machine build-
+ers. We are currently selling products and services in almost
+every country in the world.
+Sustainable customer relationships are the basis for our long-
+term success. We employ a structured key account manage-
+ment (KAM) approach throughout the Company to take care of
+our key customers. This means that we tailor our products and
+solutions to their size and regional site structures. We also
+ensure that our key account managers continually develop and
+maintain relationships with them over the long term. This
+approach is supplemented by our Executive Relationship Pro-
+gram. In this program, members of the Company's Executive
+Management stay in direct contact with selected customers
+and maintain an ongoing dialogue with them to familiarize
+Siemens with their needs.
+Our business success is strongly dependent on the satisfaction
+of our customers. For this reason, we measure customer satis-
+faction in every unit of the Company using the Net Promoter
+Score (NPS). This internationally recognized and commonly ap-
+plied managerial performance indicator, which we determine
+annually on a worldwide basis by means of customer surveys,
+measures the referral rate of our customers. The NPS for fiscal
+2014 was based on the results of more than 25,500 interviews,
+compared to more than 25,200 interviews in fiscal 2013. In
+fiscal 2014, our company-wide NPS once again increased com-
+pared to previous fiscal year.
+Revenue generated by the Siemens
+Environmental Portfolio (in billions of €)
+Accumulated annual customer reductions
+of carbon dioxide emissions generated by
+elements from the Siemens Environmental
+Portfolio (in millions of metric tons)
+1 Continuing operations.
+33.0
+31.9
+428
+> Energy efficiency: The criteria for energy efficiency are an
+improvement in energy efficiency of 20% or more during the
+customer use phase compared to the applicable baseline, or
+a reduction of at least 100,000 metric tons of carbon dioxide
+equivalents per reporting period in the customer use phase.
+Examples of elements that meet the energy efficiency crite-
+rion are combined cycle power plants and intelligent build-
+ing technology systems.
+We expect markets served by our Mobility Division to grow
+slightly in fiscal 2015. Within Europe and the Middle East we
+expect decisions on large contract tenders in fiscal 2015, stem-
+ming from major public rail investments in the U.K. and the
+Middle East. Liberalization of the Turkish rail industry is on-
+going and large contract tenders are expected in the upcoming
+years. Within the Americas, we expect a continued high level of
+investments in mainline passenger and urban transport infra-
+structures in the U.S. Within the Asia, Australia region, we ex-
+pect growth in fiscal 2015 to benefit from a recovery of China's
+high-speed rail infrastructure market. In Australia, we expect
+demand to be held back by lower investments in infrastructure
+industries.
+> Renewable energy: This criterion covers technologies in the
+field of renewable energy sources such as wind turbines or
+smart grid applications and their respective core compo-
+nents.
+C.8.6.2 GOVERNANCE AND REPORTING APPROACH
+The qualification of Environmental Portfolio elements as well
+as their respective reporting is based on defined processes and
+criteria. The business portfolio of Siemens' continuing opera-
+tions is reviewed annually regarding the qualification of Envi-
+ronmental Portfolio elements based on the criteria described
+before. This covers the inclusion of newly developed elements
+131 | B. Corporate Governance
+171 C.
+222
+Combined Management Report
+172 C.1
+Business and economic environment
+108 | A. To our Shareholders
+187 C.2
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+Financial performance system
+To meet today's global ecological challenges responsibly,
+Siemens has a comprehensive EHS (Environmental Protection,
+Health Management and Safety) management system. The pro-
+cess requirements of this management system help our operat-
+ing units comply with applicable laws, regulations and customer
+requirements, satisfy our corporate requirements properly and
+achieve our Siemens-wide environmental targets. The environ-
+mental protection management system requires that our rele-
+vant production and office sites must implement an environ-
+mental management system which fulfills the requirements of
+the internationally recognized ISO 14001 standard and also our
+own internal standard, known as "Specifications on environ-
+mentally compatible product and system design." This internal
+2 Indicator incorporates weighted calculations related to the primary fuels
+consumed in generating the energy used at our sites and the amount of energy
+used to extract, convert and distribute the fuels consumed.
+14%
+as well as the integration of additionally qualified elements
+where evidence of fulfillment of the qualification criteria was
+not available in prior reporting periods. For additionally quali-
+fied Environmental Portfolio elements, we report their pri-
+or-year revenue and prior-year contribution to reducing cus-
+tomer carbon dioxide emissions on a comparable basis.
+Elements that no longer fulfill our qualification criteria are ex-
+cluded from our Environmental Portfolio.
+We report the revenue from our Environmental Portfolio and
+annual customer reductions of carbon dioxide emissions gener-
+ated by it in accordance with internal regulations defined in our
+Environmental Portfolio Guideline. This Guideline is based on
+the Reporting Principles of the Greenhouse Gas Protocol Corpo-
+rate Accounting and Reporting Standard, revised edition, and
+the Greenhouse Gas Protocol for Project Accounting. The rev-
+enue generated by the Environmental Portfolio is recognized in
+accordance with revenue recognition policies as described in
+→ NOTE 2 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+C.8.7 Environmental protection
+Indicators¹
+Year ended September 30,
+2014
+Net assets position
+Energy efficiency improvement
+compared to baseline in fiscal 2010²
+Waste efficiency improvement
+compared to baseline in fiscal 2010
+Waste for disposal reduction
+compared to baseline in fiscal 2010
+Carbon dioxide emission efficiency
+improvement compared to baseline
+in fiscal 2010
+11%
+5%
+12%
+8%
+8%
+10%
+1 Continuing operations.
+20%
+> Environmental technologies: This criterion is related to wa-
+ter and wastewater treatment, air pollution control, waste
+reduction, recycling, e-car infrastructure and its core compo-
+nents. It also includes the Siemens Consulting Service which
+analyzes customers' environmental impact. Additionally, a
+criterion for the Healthcare Sector is an environmental
+impact reduction in terms of noise, radiation or total weight
+of at least 25% compared to the baseline.
+In fiscal 2015, we do not expect growth momentum to acceler-
+ate in markets served by our Digital Factory and Process
+Industries and Drives Divisions compared to fiscal 2014. With
+the exception of the oil and gas industry, we expect conserva-
+tive investments in industries served by both Divisions over-
+all, particularly in Europe. Furthermore, we expect demand
+from emerging markets, which were growth drivers in the
+past, to be weak in fiscal 2015, with the exception of China.
+Within the region Europe, C.I.S., Africa, Middle East, we expect
+markets in Europe to continue to grow, albeit at a slow pace.
+While we expect moderate growth rates in some central Euro-
+pean countries, we expect growth to remain weak in the
+industrial markets of some large economies, such as France
+and Italy. While we expect currency-related headwinds for
+export-oriented industries in the Euro-zone to recede in fiscal
+2015 compared to fiscal 2014, we expect weak demand from
+emerging markets to limit growth opportunities for those
+industries in fiscal 2015. The latter development is expected to
+be particularly evident in Germany's export-oriented OEM
+businesses, such as the machine building industry. Also, we
+expect growth in Germany's large automotive industry to slow
+in fiscal 2015 compared to fiscal 2014, resulting in less expan-
+sive investments year-over-year. Within the Americas, we
+expect that growth will be driven mainly by the U.S., which
+will also benefit manufacturing industries in Canada and Mex-
+ico. We expect a less favorable development in Brazil and
+other Latin American countries, where industrial growth is
+largely dependent on mining industries. Within the Asia, Aus-
+tralia region, we expect industrial markets in China to grow
+moderately in fiscal 2015, but below the growth rates in previ-
+ous years, as development in the country's export-oriented
+industries is held back by a stronger currency, higher labor
+costs and weakness in many other emerging economies which
+are important for Chinese exports. Growth in Asia, Australia is
+expected to benefit from a pick-up of industrial markets in
+South Korea. Industrial markets in India are expected to im-
+prove slightly. Overall, rising regional political uncertainties
+may further limit investment behavior.
+2013
+131 | B.
+system. It considers a company's strategy, the efficiency and
+effectiveness of its business operations, the reliability of its
+financial reporting as well as compliance with relevant laws
+and regulations to be equally important.
+The ERM process aims for early identification and evaluation of,
+and response regarding, risks and opportunities that could ma-
+terially affect the achievement of our strategic, operational,
+financial and compliance objectives. Our ERM is based on a net
+risk approach, covering risks and opportunities remaining after
+the execution of existing control measures. In order to provide
+a comprehensive view on our business activities, risks and op-
+portunities are identified in a structured way combining ele-
+ments of both top-down and bottom-up approaches. Risks and
+opportunities are generally reported on a quarterly basis. This
+regular reporting process is complemented by an ad-hoc
+reporting process that aims to escalate critical issues in a timely
+manner. Relevant risks and opportunities are prioritized in
+terms of impact and likelihood, considering different perspec-
+tives, including business objectives, reputation and regulatory
+matters. The bottom-up identification and prioritization pro-
+cess is supported by workshops with the respective manage-
+ment of the Sector, SFS, SRE, regional and Corporate Unit orga-
+nizations. This top-down element ensures that potential new
+risks and opportunities are discussed at the management level
+and are included in the subsequent reporting process, if found
+to be relevant. Reported risks and opportunities are analyzed
+regarding potential cumulative effects and are aggregated at
+Sector, SFS, SRE, regional and corporate level.
+Responsibilities are assigned for all relevant risks and opportu-
+nities with the hierarchical level of responsibility depending on
+the significance of the respective risk or opportunity. In a first
+step, assuming responsibility for a specific risk or opportunity
+involves deciding upon one of our general response strategies,
+or a combination of them. Our general response strategies with
+respect to risks are avoidance, transfer, reduction or acceptance
+of the relevant risk. Our general response strategies with
+respect to opportunities are partial or complete realization of
+the relevant opportunity. In a second step, responsibility for a
+risk or opportunity also involves the development, initiation
+and monitoring of appropriate response measures correspond-
+ing to the chosen response strategy. These response measures
+have to be specifically tailored to allow for effective risk man-
+agement. Accordingly, we have developed a variety of response
+measures with different characteristics: For example, we miti-
+gate the risk of fluctuations in currency and interest rates by
+engaging in hedging activities. Regarding our long-term proj-
+ects, systematic and comprehensive project management with
+standardized project milestones, including provisional accep-
+tances during project execution, and complemented by clearly
+Overall assessment of the economic position
+Subsequent events
+213 C.6
+214 C.7
+215 C.8
+Risk management at Siemens is based on a comprehensive, in-
+teractive and management-oriented Enterprise Risk Manage-
+ment (ERM) approach that is integrated into the organization
+and that addresses both risks and opportunities. Our ERM
+approach is based on the worldwide accepted Enterprise Risk
+Management - Integrated Framework (2004) developed by the
+Committee of Sponsoring Organizations of the Treadway Com-
+mission (COSO). The framework connects the ERM process
+with our financial reporting process and our internal control
+225 C.9
+Sustainability and citizenship
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+229
+defined approval processes assists us in identifying and re-
+sponding to project risks at an early stage, even before entering
+the bidding phase. Furthermore, we maintain appropriate
+insurance levels for potential cases of damage and liability risks
+in order to reduce our exposure to such risks and to avoid or
+minimize potential losses. Among others, we address the risk
+Report on expected developments and
+associated material opportunities and risks
+C.9.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
+We have implemented and coordinated a set of risk manage-
+ment and control systems which support us in the early recog-
+nition of developments jeopardizing the continuity of our busi-
+ness. The most important of these systems include our
+enterprise-wide processes for strategic planning and manage-
+ment reporting. Strategic planning is intended to support us in
+considering potential risks well in advance of major business
+decisions, while management reporting is intended to enable
+us to monitor such risks more closely as our business pro-
+gresses. Our internal auditors regularly review the adequacy
+and effectiveness of our risk management system. Accordingly,
+if deficits are detected, it is possible to adopt appropriate mea-
+sures for their elimination. This coordination of processes and
+procedures is intended to help ensure that the Managing Board
+and the Supervisory Board are fully informed about significant
+risks in a timely manner.
+Our risk management policy stems from a philosophy of pursu-
+ing sustainable growth and creating economic value while
+avoiding and managing inappropriate risks. As risk manage-
+ment is an integral part of how we plan and execute our busi-
+ness strategies, our risk management policy is set by the Man-
+aging Board. Our organizational and accountability structure as
+of September 30, 2014 requires each of the respective manage-
+ments of our Sectors, SFS, SRE, regions and Corporate Units to
+implement risk management programs that are tailored to their
+specific industries and responsibilities, while being consistent
+with the overall policy established by the Managing Board.
+MANAGEMENT
+Combined Management Report
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+Overall, the actual development for Siemens and its Segments
+may vary, positively or negatively, from our expectations due to
+the risks and opportunities described below. See → C.9.3 RISKS
+as well as c.9.4 OPPORTUNITIES. This report on expected devel-
+opments should be read in conjunction with → E.6 NOTES AND
+FORWARD-LOOKING STATEMENTS.
+C.9.2 Risk management
+C.9.2.1 BASIC PRINCIPLES OF THE RISK
+of fluctuations in economic activity and customer demand by
+closely monitoring the macroeconomic conditions and devel-
+opments in relevant industries, and by adjusting capacity and
+implementing cost-reduction measures in a timely and consis-
+tent manner, if deemed necessary.
+C.9.2.3 RISK MANAGEMENT ORGANIZATION
+AND RESPONSIBILITIES
+| Operational and organizational structure of the Enterprise Risk Management (ERM) process as of September 30, 2014
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+230
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+108 | A. To our Shareholders
+Below we describe the risks that could have a material adverse
+effect on our business, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and
+reputation. The order in which the risks are presented in each
+of the four categories reflects the currently estimated relative
+exposure for Siemens associated with these risks and thus
+provides an indication of the risks' current importance to us.
+Nevertheless, risks currently considered to entail a lower risk
+exposure could potentially result in a higher negative impact
+on Siemens than risks currently considered to entail a higher
+risk exposure. Additional risks not known to us or that we cur-
+rently consider immaterial may also negatively impact our busi-
+ness operations. Unless otherwise stated, the risks described
+below relate to all of our segments.
+171 C.
+C.9.3 Risks
+The term "Sector" in this chart comprises Sectors, SFS and SRE.
+Managing Board
+Overall responsibility for the Risk and Internal Control System.
+Defines risk policy and ERM strategy.
+Corporate Risk & Internal Control Committee (CRIC)
+Reports to and supports the Managing Board in matters relating
+to the implementation, operation and oversight of an effective
+Risk and Internal Control System.
+Audit Committee
+Oversees the effectiveness of the risk management and
+internal control system.
+Chief Risk & Internal Control Officer
+Chairman of the CRIC. Defines and monitors application of ERM strategy,
+policy and methodology. Consolidates Siemens wide risk and opportunity
+profile for CRIC.
+Sector Risk & Internal
+Control Committees
+Lead Country Risk & Internal
+Control Committees
+Oversee the risk and internal control activities for their area of responsibility and provide
+the Management with information necessary to report to the CRIC.
+Sector Management¹
+Lead Country Management
+Heads of Corporate Units
+Implement ERM system and ensure management and monitoring of risks and opportunities in their respective organization.
+To oversee the ERM process and to further drive the integration
+and harmonization of existing control activities to align with
+legal and operational requirements, the Managing Board estab-
+lished a Corporate Risk and Internal Control Department,
+headed by the Chief Risk & Internal Control Officer, and a Cor-
+porate Risk and Internal Control Committee (CRIC). The CRIC
+obtains risk and opportunity information from the Risk Com-
+mittees established at the Sector, SFS, SRE and regional level as
+well as from the Heads of Corporate Units, which then forms
+the basis for the evaluation of the company-wide risk and op-
+portunity situation. The CRIC reports to and supports the Man-
+aging Board on matters relating to the implementation, opera-
+tion and oversight of the risk and internal control system and
+assists the Managing Board in reporting to the Audit Commit-
+tee of the Supervisory Board. The CRIC is composed of the Chief
+Risk & Internal Control Officer, as the chairperson, and mem-
+bers of senior management such as the Sector and SFS CEOs,
+the CFO of Siemens, and selected Heads of Corporate Units.
+Corporate Governance
+213 C.6
+228
+We are basing our outlook for fiscal 2015 for the Siemens Group
+and its segments on the above-mentioned expectations regard-
+ing the overall economic situation and specific market condi-
+tions for the next fiscal year.
+This outlook excludes impacts related to legal and regulatory
+matters.
+We are exposed to currency translation effects, particularly in-
+volving the US$, British £ and currencies of emerging markets,
+such as China, India and Brazil. During fiscal 2014, the average
+exchange rate conversion for our large volume of US$-denomi-
+nated revenue was US$1.357 per Euro. While we expect vola-
+tility in global currency markets to continue in fiscal 2015,
+we have improved our natural hedge on a global basis through
+geographic distribution of our production facilities during the
+past. Nevertheless, Siemens is still a net exporter from the Euro
+zone to the rest of the world, so a weak Euro is principally
+favorable for our business and a strong Euro is principally un-
+favorable. In addition to the natural hedging strategy just men-
+tioned, we also hedge currency risk in our export business
+using derivative financial instruments, see → NOTE 30 in → D.6
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. We expect these
+steps to help us limit effects on income related to currency in
+fiscal 2015.
+Revenue growth
+C.9.1.3 SIEMENS GROUP
+Given our complex economic and market developments, as
+described in the previous section, we expect that fiscal 2015
+revenue for Siemens on an organic basis, excluding currency
+translation and portfolio effects, will be flat year-over-year. We
+expect that a moderate organic revenue decline particularly in
+our Power and Gas Division will be offset by organic revenue
+growth in other Divisions. Also, we expect a stabilizing effect
+on revenue from conversion of our order backlog (defined as
+the sum of order backlogs of our Industrial Business) which
+totaled €100 billion as of September 30, 2014. From this back-
+log we expect to convert approximately €37 billion of past
+orders into current revenue in fiscal 2015. We expect that orders
+for fiscal 2015 will exceed revenue, leading to a book-to-bill
+ratio above 1.
+In fiscal 2015, we expect substantial gains from divestments
+mentioned in this Annual Report, particularly including the sale
+of our stake in BSH and the sale of our hearing aid business. We
+expect that these gains will more than offset charges associated
+with our "Vision 2020" concept, which includes efforts to increase
+customer proximity, accelerate innovation, and streamline our
+management and internal service processes. We anticipate that
+such charges during fiscal 2015 will be in the mid-to-high triple-
+digit-million euro range. We expect a significant rise in net
+income in fiscal 2015, which will enable us to increase basic
+earnings per share (EPS) from net income by at least 15% from
+€6.37 in fiscal 2014. In this forecast we also expect EPS growth
+to benefit modestly from our current program to repurchase
+Siemens shares in a volume of up to €4 billion; repurchases
+under this program in fiscal 2014 totaled €1.1 billion.
+Our assumptions regarding net income for fiscal 2015 in-
+clude targeted increases in selling and R&D expenses, aimed at
+organic volume growth and strengthening our capacities for
+innovation. As part of our One Siemens framework, we target a
+total cost productivity increase of 3% to 4%. Furthermore, we
+expect a significant reduction in project charges compared to
+fiscal 2014.
+213 C.6
+214 C.7
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Profitability
+Our SFS Division is geared to Siemens' Industrial Business and
+its markets. As such SFS is, among other factors, influenced by
+the overall business development of the markets served by our
+Industrial Business.
+For fiscal 2015, we expect slight growth in the markets served
+by Healthcare. We expect markets in emerging countries to
+grow faster than markets in the industrialized countries. In
+emerging markets, we expect continued strong demand, in
+particular for entry-level products and solutions, as these coun-
+tries build up their healthcare infrastructure to provide their
+populations with affordable access to modern medical technol-
+ogy, including in rural areas. In contrast, demand in industrial-
+ized countries is expected to be held back by healthcare
+reforms and budgetary constraints. We expect industrialized
+countries especially those more reliant on government
+healthcare expenditures – to continue to focus on improving
+the efficiency of healthcare and on slowing the growth of
+healthcare spending, thus driving demand for cost-efficient
+and high-throughput products and solutions. For the healthcare
+market overall, we anticipate that the trends towards entry-level
+solutions, higher efficiency and focus on patient outcomes will
+continue. On a regional basis, we expect that growth in the
+Americas in fiscal 2015 will be supported by moderate growth
+in the U.S., where we expect the trends towards higher effi-
+ciency and increased accountability of healthcare providers to
+continue. Our customers continue to face legislative and regu-
+latory reimbursement risks as governments and regulators
+seek to curb healthcare costs. Within the Europe, C.I.S., Africa,
+Middle East region, we expect the gradual stabilizing of Euro-
+pean markets to continue in fiscal 2015. While we expect the
+markets in the region Asia, Australia to grow faster than other
+regions in fiscal 2015, we expect growth to slow down year-
+over-year. This is expected to be particularly evident in China,
+where we expect increasing price and competitive pressure due
+mainly to increasing numbers of local vendors.
+-
+131 | B.
+Corporate Governance
+171 C.
+226
+Combined Management Report
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+210 C.5
+Net assets position
+-
+225 C.9
+Report on expected developments and
+associated material opportunities and risks
+Financial position
+247 D.
+337
+SFS (ROE (after taxes))
+15-19%
+15-20%
+We expect that nearly all of our Divisions and Healthcare will
+reach their margin ranges in fiscal 2015. Our Energy Manage-
+ment Division and our Wind Power and Renewables Division,
+whose profit margins were below their respective ranges in fis-
+cal 2014, are expected to significantly improve their profitability
+in fiscal 2015. While we expect the profit margin for our Power
+and Gas Division to be in the target range in fiscal 2015, we ex-
+pect it will come in significantly below the margin of 17.4%
+achieved in fiscal 2014. Besides the above-mentioned market
+conditions, the reasons for this development are targeted
+expense increases for growth and innovation as well as consol-
+idation early in fiscal 2015 of our acquisition of the aero-deriva-
+tive turbine and compressor business of Rolls-Royce, among
+other factors. Overall, we expect an aggregate profit margin for
+our Industrial Business of 10% to 11%, compared to 10.6% in
+fiscal 2014. We expect profit for SFS, which is outside our Indus-
+trial Business, to be near the prior-year level.
+Within our Reconciliation to Consolidated Financial State-
+ments, profit from Centrally managed portfolio activities is
+expected to rise sharply year-over-year, benefiting from a gain
+on the sale of our stake in BSH. This positive effect is expected
+to be partly offset by burdens that may arise from remaining
+Centrally managed portfolio activities. While we anticipate
+that SRE will continue with real estate disposals depending on
+market conditions, we expect gains from disposals to be lower
+in fiscal 2015 than in fiscal 2014. Corporate items are expected
+to cost approximately €0.6 billion in fiscal 2015, with costs in
+the second half-year higher than in the first half. Among other
+factors, results from Corporate items are dependent on
+changes in the fair value of warrants we issued together with
+US$3 billion in bonds in fiscal 2012. Centrally carried pen-
+sion expenses are expected to total approximately €0.5 billion
+in fiscal 2015. Because our enhanced profit definition now
+excludes expenses from amortization of intangible assets
+acquired in business combinations, we report these expenses
+separately within our Reconciliation to Consolidated Financial
+Statements. In fiscal 2014, these expenses were a negative
+€0.5 billion and we expect them to be on a similar level in
+fiscal 2015.
+Income from discontinued operations in fiscal 2015 is expected
+to rise sharply year-over-year, benefiting particularly from a
+substantial gain on the sale of our hearing aid business.
+Capital efficiency
+Capital structure
+To measure our capital structure we use the ratio of industrial
+net debt to EBITDA, and seek to achieve a ratio of up to 1.0. We
+expect to achieve a ratio below 1.0 in fiscal 2015, but clearly
+above the fiscal 2014 level of 0.15, due to portfolio measures
+that we initiated in fiscal 2014 and our share buyback program,
+which are expected to result in significant net cash outflows
+in fiscal 2015.
+Dividend
+We intend to continue providing an attractive return to share-
+holders. Therefore in the years ahead we intend to propose a
+dividend payout of 40% to 60% of net income, which for this
+purpose we may adjust to exclude selected exceptional non-
+cash effects. As in the past, we intend to fund the dividend pay-
+out from Free cash flow.
+C.9.1.4 OVERALL ASSESSMENT
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+108 | A. To our Shareholders
+We believe that our business environment will be complex in
+fiscal 2015, among other things due to geopolitical tensions. We
+expect revenue on an organic basis to remain flat year-over-year,
+and orders to exceed revenue for a book-to-bill ratio above 1. Fur-
+thermore, we expect that gains from divestments will enable us
+to increase basic EPS from net income by at least 15% from €6.37
+in fiscal 2014. For our Industrial Business, we expect a profit
+margin of 10% to 11%. This outlook excludes impacts from legal
+and regulatory matters.
+Healthcare
+8-12%
+Our primary measure for managing and controlling our capital
+efficiency is return on capital employed from continuing and dis-
+continued operations (ROCE). Due mainly to our expectations
+regarding the development of net income, we expect to achieve
+ROCE clearly in our target range of 15% to 20% in fiscal 2015.
+14-20%
+Additionally, we assume pricing pressure on our offerings of
+around 2.5% in fiscal 2015, with the Wind Power and Renew-
+ables Division, the Power and Gas Division and Healthcare
+being affected the most. Furthermore, we expect upward pres-
+sure on costs from wage inflation of around 3% to 4%.
+227
+Process Industries and Drives
+Consolidated Financial Statements
+Additional Information
+Beginning with fiscal 2015, we defined profit margin ranges for
+our Industrial Business and SFS, which are based on the profit
+margins of the respective relevant competitors. The profit mar-
+gin ranges for our Industrial Business and for SFS are as follows:
+| Profit margin ranges
+Wind Power and Renewables
+Energy Management
+Power and Gas
+Margin range
+11-15%
+Building Technologies
+5-8%
+7-10%
+8-11%
+Mobility
+6-9%
+Digital Factory
+Our business, financial condition and results of operations
+could suffer as a result of current or future litigation: We are
+subject to numerous risks relating to legal, governmental and
+regulatory proceedings to which we are currently a party or to
+which we may become a party in the future. We routinely be-
+come subject to legal, governmental and regulatory investiga-
+tions and proceedings involving, among other things, requests
+for arbitration, allegations of improper delivery of goods or
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+237
+In addition, future developments in ongoing and potential
+future investigations, such as responding to the requests of
+governmental authorities and cooperating with them, could
+divert management's attention and resources from other issues
+facing our business. The materialization of any of these risks
+could have an adverse effect on our business, financial condi-
+tion and results of operations and on our reputation.
+We are subject to environmental and other governmental
+regulations: Some of the industries in which we operate are
+highly regulated. Current and future environmental and other
+governmental regulations or changes thereto may require us
+to change the way we run our operations and could result in
+significant increases in our operating or production costs. In
+addition, while we have procedures in place to ensure compli-
+ance with applicable governmental regulations in the conduct
+of our business operations, it cannot be excluded that viola-
+tions of applicable governmental regulations may be caused
+either by us or by third parties that we contract with, including
+suppliers or service providers, whose activities may be at-
+tributed to us. Any such violations expose us to the risk of lia-
+bility, reputational damage or loss of licenses or permits that
+are important to our business operations. In particular, we
+could also face liability for damage or remediation for environ-
+mental contamination at the facilities we design or operate. For
+example, we are required to bear environmental clean-up costs
+mainly related to remediation and environmental protection
+liabilities, which have been accrued based on the estimated
+costs of decommissioning facilities for the production of ura-
+nium and mixed-oxide fuel elements in Hanau, Germany, as well
+as a nuclear research and service center in Karlstein, Germany.
+For further information, see NOTE 23 in D.6 NOTES TO
+CONSOLIDATED FINANCIAL STATEMENTS. Under certain circum-
+stances, we establish provisions for environmental risks. With
+regard to certain environmental risks, we maintain liability in-
+surance at levels that our management believes are appropri-
+ate and consistent with industry practice. We may incur envi-
+ronmental losses beyond the limits, or outside the coverage, of
+such insurance, and such losses may have an adverse effect on
+our business, financial condition and results of our operations.
+In addition, our provisions for environmental liabilities may
+not be sufficient to cover our ultimate losses or expenditures
+resulting therefrom.
+of German Commercial Code)
+services, product liability, product defects, quality problems,
+intellectual property infringement, non-compliance with tax reg-
+ulations and/or alleged or suspected violations of applicable
+laws. In addition, we may face further claims in connection with
+the circumstances that led to the corruption charges. For addi-
+tional information with respect to specific proceedings, see
+→ NOTE 28 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+There can be no assurance that the results of these or any other
+proceedings will not materially harm our business, financial con-
+dition and results of operations. Moreover, even if we ultimately
+prevail on the merits in any such proceedings, we may have to
+incur substantial legal fees and other costs defending ourselves
+against the underlying allegations. Under certain circumstances
+we record a provision for risks arising from legal disputes and
+proceedings. In addition, we maintain liability insurance for cer-
+tain legal risks at levels our management believes are appropriate
+and consistent with industry practice. Our insurance policy, how-
+ever, does not protect us against reputational damage. Moreover,
+we may incur losses relating to legal proceedings beyond the lim-
+its, or outside the coverage, of such insurance or exceeding any
+provisions made for legal proceedings related losses. Finally,
+there can be no assurance that we will be able to maintain ade-
+quate insurance coverage on commercially reasonable terms in
+the future. Each of these risks may have an adverse effect on
+our business, financial condition and results of operations.
+238
+The most significant challenges have been mentioned first in
+each of the four categories Strategic, Operations, Financial and
+Compliance with the risks caused by highly competitive mar-
+kets currently being our most significant. Even though the as-
+sessments of individual risk exposures have changed during
+fiscal 2014 due to developments in the external environment as
+well as the effects of our own mitigation measures, the overall
+risk situation for Siemens did not change significantly as com-
+pared to the prior year. At present, no risks have been identified
+that either individually or in combination could endanger our
+ability to continue as a going concern. We are confident that we
+can continue to successfully counter the challenges arising
+from the risks mentioned above.
+C.9.4 Opportunities
+Within our comprehensive, interactive and management-ori-
+ented Enterprise Risk Management (ERM) approach that is inte-
+grated into the organization and that addresses both risks and
+opportunities, we regularly identify, evaluate and respond to
+opportunities that present themselves in our various fields of
+activity. Below we describe our most significant opportunities.
+Unless otherwise stated, the opportunities described below
+108 | A. To our Shareholders
+171 C.
+131 | B. Corporate Governance
+Combined Management Report
+172 C.1
+Report on expected developments and
+associated material opportunities and risks
+Business and economic environment
+C.9.3.5 ASSESSMENT OF THE OVERALL
+RISK SITUATION
+Sustainability and citizenship
+187 C.2
+225 C.9
+187 C.2
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+236
+Combined Management Report
+172 C.1
+Business and economic environment
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+countries in which we do business may result in a curtailment
+of our existing business in such countries or indirectly in other
+countries and in amendments to our policies. We are also aware
+of initiatives by institutional investors, such as pension funds or
+other companies, to adopt or consider adopting policies prohib-
+iting investment in and transactions with, or requiring divest-
+ment of interests in entities doing business with, Iran and other
+countries identified as state sponsors of terrorism by the U.S.
+Secretary of State. It is possible that such initiatives may result
+in us being unable to gain or retain investors, customers or sup-
+pliers. In addition, the termination of our activities in sanctioned
+countries may expose us to customer claims and other actions.
+Our reputation could also suffer due to our activities with coun-
+terparties in or affiliated with these countries. As previously
+disclosed, Siemens has decided that, subject to certain limited
+exceptions, it will not enter into new contracts with customers
+in Iran and has issued group-wide policies establishing the
+details of its general decision.
+We expect that sales to emerging markets will account for an
+increasing portion of our total revenue, as our business natu-
+rally evolves and as developing nations and regions around the
+world increase their demand for our offering. Emerging market
+operations involve various risks, including civil unrest, health
+concerns, cultural differences such as employment and busi-
+ness practices, volatility in gross domestic product, economic
+and governmental instability, the potential for nationalization
+of private assets and the imposition of exchange controls. The
+Asian markets, in particular, are important for our long-term
+growth strategy, and our sizeable operations in China are influ-
+enced by a legal system that is still developing and is subject
+to change. Our growth strategy could be limited by govern-
+ments supporting local industries. Our former Sectors, partic-
+ularly those that derive their revenue from large projects,
+could be adversely affected if future demand, prices and gross
+domestic product in the markets in which those former Sectors
+operate do not develop as favorably as expected due to such
+regulatory measures. If any of these risks or similar risks asso-
+ciated with our international operations were to materialize,
+our business, financial condition and results of operations
+could be adversely affected.
+Current and future investigations regarding allegations of
+public corruption, antitrust violations and other illegal acts
+could have an adverse effect on our business, financial
+condition and results of operations and on our reputation:
+We engage in a substantial amount of business with govern-
+ments and government-owned enterprises around the world.
+We also participate in a number of projects funded by govern-
+ment agencies and intergovernmental and supranational orga-
+nizations such as multilateral development banks. If we are
+found to have been engaged in public corruption, antitrust
+violations and other illegal acts, such activities may impair our
+ability to do business with these or other organizations. Cor-
+ruption, antitrust and related proceedings may lead to criminal
+and civil fines as well as penalties, sanctions, injunctions
+against future conduct, profit disgorgements, disqualifications
+from directly and indirectly engaging in certain types of busi-
+ness, the loss of business licenses or permits or other restric-
+tions. Accordingly, we may be required to record material pro-
+visions to cover potential liabilities arising in connection with
+such investigations and proceedings, including potential tax
+penalties. Moreover, any findings related to public corruption
+that are not covered by the 2008 and 2009 corruption charge
+settlements, which were concluded with American and German
+authorities, may endanger our business with government
+agencies and intergovernmental and supranational organiza-
+tions, further monitors could be appointed to review future
+business practices and we may otherwise be required to further
+modify our business practices and our compliance program.
+Our involvement in ongoing and potential future corruption or
+antitrust proceedings could damage our reputation and have
+an adverse impact on our ability to compete for business from
+public and private sector customers around the world. If we or
+our subsidiaries are found to have engaged in certain illegal
+acts or not to have taken effective steps to address allegations
+or findings of corruption or antitrust violations in our business,
+this may impair our ability to participate in business with gov-
+ernments or intergovernmental organizations and may result
+in our formal exclusion from such business. Even if we are not
+formally excluded from participating in government business,
+government agencies or intergovernmental or supranational
+organizations may informally exclude us from tendering for or
+participating in certain contracts. For example, legislation of
+member states of the European Union could in certain cases
+result in our mandatory or discretionary exclusion from public
+contracts in case of a conviction for bribery and certain other
+offences or for other reasons. As described in more detail in
+→ NOTE 28 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,
+we and certain of our subsidiaries have in the past been ex-
+cluded or currently are excluded from some contracting, in-
+cluding with governments, development banks and multilat-
+eral financial institutions, as a result of findings of corruption
+or other misconduct. Ongoing or potential future investiga-
+tions into allegations of corruption or antitrust violations could
+also impair existing relationships with, and our ability to ac-
+quire new private sector business partners. For instance, such
+investigations may adversely affect our ability to pursue poten-
+tially important strategic projects and transactions, such as
+strategic alliances, joint ventures or other business combina-
+tions, or could result in the cancellation of certain of our exist-
+ing contracts and third parties, including our competitors,
+could initiate significant third-party litigation.
+213 C.6
+214 C.7
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+Financial performance system
+Our Consolidated Financial Statements are prepared on the ba-
+sis of a conceptual framework which primarily consists of com-
+pany-wide uniform Financial Reporting Guidelines and a chart
+of accounts, both issued centrally and to be applied consistently
+throughout Siemens. New laws, accounting standards, and
+other official announcements are analyzed on an ongoing basis
+with regard to their relevance and impact on the Consolidated
+Financial Statements and the Combined Management Report
+and where necessary, our Financial Reporting Guidelines and
+the chart of accounts are adjusted accordingly. In quarterly clos-
+ing letters, accounting departments of Siemens AG and its sub-
+sidiaries are informed about current topics from an accounting
+and closing process perspective and any deadlines that must be
+met for the respective closing processes.
+Results of operations
+The following discussion describes information required pursu-
+ant to Section 289 (5) and Section 315 (2) no. 5 of the German
+Commercial Code (Handelsgesetzbuch) and explanatory report.
+The overarching objective of our accounting-related internal
+control and risk management system is to ensure that finan-
+cial reporting is conducted in a proper manner such that the
+Consolidated Financial Statements and the Combined Man-
+agement Report are prepared in accordance with all relevant
+regulations.
+As described in → C.9.2 RISK MANAGEMENT, Our ERM approach is
+based on the worldwide accepted "Enterprise Risk Manage-
+ment - Integrated Framework" developed by the COSO. As one of
+the objectives of this framework is reliability of a company's
+financial reporting, it also includes an accounting-related per-
+spective. The accounting-related internal control system (control
+system) implemented by us is based on Internal Control
+Integrated Framework (2013), an internationally recognized
+framework also developed by the COSO. The two systems are
+complementary.
+-
+Our management is responsible for establishing and maintain-
+ing adequate internal control over financial reporting. At the
+end of each fiscal year, our management performs an evalua-
+tion of the effectiveness of its control system, both in design
+and operating effectiveness. We have a standardized procedure
+under which necessary controls are defined, documented in
+accordance with uniform standards, and tested regularly on
+their effectiveness. Nevertheless, there are inherent limitations
+in the effectiveness of any control system, and no system, in-
+cluding one determined to be effective, may prevent or detect
+all misstatements.
+As a globally operating organization, we conduct business with
+customers in countries, such as Iran, Syria, Cuba and countries
+in Eastern Europe, that are subject to export control regulations,
+embargoes, economic sanctions or other forms of trade restric-
+tions imposed by the U.S., the European Union or other coun-
+tries or organizations. New or expanded export control regu-
+lations, economic sanctions, embargoes or other forms of
+trade restrictions imposed on Iran, Syria or on other sanctioned
+The base data used in preparing the Consolidated Financial
+Statements consists of the closing data reported by the opera-
+tions of Siemens AG and its subsidiaries, which are derived
+from the various accounting records. The preparation of the
+closing data of most of our subsidiaries is supported by an
+internal shared services organization. Furthermore, other ac-
+counting activities, such as governance and monitoring related
+activities, are bundled on regional level. In addition, for some
+areas requiring specialized know-how such as valuations relat-
+ing to post-employment benefits support from external service
+providers is obtained and used. The reported closing data is
+used to prepare the Consolidated Financial Statements in the
+consolidation system. The steps necessary to prepare the Con-
+solidated Financial Statements are subject to both manual and
+automated controls at all levels.
+108 | A. To our Shareholders
+131 | B. Corporate Governance
+171 C.
+C.9.5 Significant characteristics
+of the accounting-related internal
+control and risk management system
+Combined Management Report
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+Financial position
+210 C.5
+Net assets position
+240
+As of October 1, 2014, we have also eliminated the Sector level
+and consolidated our business activities into nine Divisions and
+one separately managed unit, Healthcare (for details see
+→ C.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION). This change is
+expected to increase our customer proximity and accelerate our
+decision-making. In addition, we have made governance even
+more stringent across all levels of our organization. Our Man-
+aging Board leads the Company and maintains the balance be-
+tween our businesses and Regions. It is supported by strong,
+efficient corporate governance functions, our Corporate Core,
+which is expected to ensure fast, nonbureaucratic deci-
+sion-making across key company functions (for details, see
+→ C.1.3 STRATEGY).
+239
+Consolidated Financial Statements
+Additional Information
+205 C.4
+Financial position
+210 C.5
+Net assets position
+relate to all of our segments. The order in which the opportuni-
+ties are presented reflects the currently estimated relative ex-
+posure for Siemens associated with these opportunities and
+thus provides an indication of the opportunities' current impor-
+tance to us. Nevertheless, opportunities currently considered
+to entail a lower opportunity exposure could potentially result
+in a higher positive impact on Siemens than opportunities cur-
+rently considered to entail a higher opportunity exposure. The
+described opportunities are necessarily not the only ones we
+encounter. In addition, our assessment of opportunities is sub-
+ject to change as our Company, our markets and technologies
+are constantly developing. As a consequence, new opportuni-
+ties may arise, existing opportunities may cease to be relevant,
+or the significance of an opportunity may change. Generally,
+opportunities are assessed to the best of our knowledge, con-
+sidering certain assumptions, including market development,
+market potential of technologies or solutions, and anticipated
+developments in customer demand or prices, among other
+things. When opportunities materialize, they may have a lower
+effect than previously estimated on the basis of the underlying
+assumptions. It is also possible that opportunities we see today
+will never materialize.
+In our view, the overall opportunity situation did not change
+significantly as compared to the prior year.
+We constantly strive to develop new technologies, offer new
+products, solutions and services, and improve existing ones:
+We invest in new technologies that we expect will meet future
+demands in accordance with the megatrends demographic
+change, urbanization, climate change, globalization and digital
+transformation (for further information see c.1.3 STRATEGY).
+Furthermore, a growing awareness for cyber security could lead
+to additional business for high quality solutions offered by the
+former Industry Sector's Industry Automation Division.
+We see further opportunities in the growth potential of
+emerging markets as well as established markets: We ex-
+pect that in coming years growth in our markets will be driven
+by countries in Asia and the Middle East, in particular by coun-
+tries such as Indonesia and Turkey. Within One Siemens, we
+take measures aimed at continuously increasing our share of
+revenue from emerging markets. Our "Vision 2020" concept,
+which puts a stronger focus on getting close to customers is
+expected to result in higher market penetration (for further
+information, see → C.1.3 STRATEGY).
+We believe that developing the capability to design, manufac-
+ture and sell so-called SMART products (simple, maintenance-
+friendly, affordable, reliable, and timely-to-market) will pro-
+vide us with opportunities to gain market share and enhance
+our local presence in these strategic growth markets. Adding
+further SMART products to our portfolio and developing stron-
+ger sales channels would enable us to increase our revenues by
+serving large and fast-growing geographic markets, where cus-
+tomers making a purchase decision may consider price more
+strongly than product features without compromising on prod-
+uct quality and reliability.
+Through selective acquisitions, equity investments and
+partnerships we constantly strive to strengthen our lead-
+ing technology position, open up additional potential mar-
+kets and further develop our product portfolio: We con-
+stantly monitor our current and future markets for opportunities
+for strategic acquisitions, equity investments or partnerships to
+complement organic growth. Such activities could help us to
+strengthen our market position in our existing markets, provide
+access to new markets or complement our technological port-
+folio in selected areas.
+Localizing value chain activities in low-cost countries could
+further improve our cost position: Localizing certain value
+chain activities, such as procurement, manufacturing, mainte-
+nance and service in markets such as the BRIC countries, other
+emerging markets, and the Middle East could enable us to re-
+duce costs and strengthen our global competitive position, in
+particular compared to competitors based in countries with a
+more favorable cost structure.
+We are in the process of continuously developing and im-
+plementing initiatives to reduce costs, adjust capacities,
+improve our processes and streamline our portfolio: In an
+increasingly competitive market environment, a competitive
+cost structure complements the competitive advantage of
+being innovative. We believe that further improvements in our
+cost position can strengthen our global competitive position
+and secure our market presence against emerging and incum-
+bent competitors. For example, we expect to create sustainable
+value from productivity measures in connection with our
+"Vision 2020" (for further information, see → C.1.3 STRATEGY).
+Moreover, fostering a stringent claim management process can
+help materialize opportunities by enforcing our claims towards
+our contract partners even stronger.
+We are realigning our organization: As of November, 2013,
+we disbanded our Regional Cluster organization. Following this
+organizational change, we have designated 30 Lead Countries
+which are individually responsible for managing a number
+of other countries regarding market penetration. Each Lead
+Country reports directly to the Managing Board. By implement-
+ing this move, Siemens intends to intensify its customer access
+and expand its regional business. We expect this new setup to
+further enhance our local market penetration and our customer
+proximity going forward.
+213 C.6
+214 C.7
+215 C.8
+225 C.9
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+193 C.3
+We are subject to regulatory risks associated with our inter-
+national operations: Protectionist trade policies and changes
+in the political and regulatory environment in the markets in
+which we operate, such as import and export controls, tariffs
+and other trade barriers including debarment from certain mar-
+kets and price or exchange controls, could affect our business
+in several national markets, impact our sales and profitability
+and make the repatriation of profits difficult, and may expose
+us to penalties, sanctions and reputational damage. In addi-
+tion, the uncertainty of the legal environment in some regions
+could limit our ability to enforce our rights and subject us to
+continually increasing costs related to designing and imple-
+menting appropriate compliance programs and protocols.
+234
+For further information on derivative financial instruments,
+hedging activities and financial risk management, see → NOTE
+30 AND 31 in → D.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+232
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Mergers and acquisitions are inherently risky because of diffi-
+culties that may arise when integrating people, operations,
+technologies and products. There can be no assurance that any
+of the businesses we acquire can be integrated successfully and
+as timely as originally planned, or that they will perform as
+anticipated once integrated. In addition, we may incur signifi-
+cant acquisition, administrative and other costs in connection
+with these transactions, including costs related to integration
+of acquired businesses. For example, in September 2014, we
+entered into an agreement with Dresser-Rand to acquire all of
+its issued and outstanding common shares by way of a friendly
+takeover bid. At the beginning of May 2014, we announced the
+acquisition of the Rolls-Royce Energy aero-derivative gas
+turbine and compressor business of Rolls-Royce plc, U.K. (Rolls-
+Royce). Furthermore, portfolio measures may result in addi-
+tional financing needs and adversely affect our financial
+leverage and our debt-to-equity ratio. Acquisitions may also
+lead to substantial increases in intangible assets, including
+goodwill. Our Statements of Financial Position reflect a signifi-
+cant amount of intangible assets, including goodwill. Among
+our businesses, the largest amount of goodwill is allocated to
+Results of operations
+Financial position
+210 C.5
+Net assets position
+the former Diagnostics Division and the former Imaging &
+Therapy Systems Division of Healthcare, and the former Indus-
+try Automation Division of the former Industry Sector. If we
+were to encounter continuing adverse business developments
+including negative effects on our revenues, profits or cash, or
+adverse effects from an increase in the weighted average cost of
+capital (WACC) or from foreign exchange rate developments, or
+if we were otherwise to perform worse than expected at acqui-
+sition activities, then these intangible assets, including good-
+will, might have to be written off, which could adversely affect
+our business, financial condition and results of operations. The
+likelihood of such adverse business developments increases in
+times of difficult or uncertain macroeconomic conditions.
+Our business, financial condition and results of operations
+may be adversely affected by our equity interests, other
+investments and strategic alliances: Our strategy includes
+strengthening our business interests through joint ventures,
+associated companies and strategic alliances. Certain of our
+investments, particularly in our former segment Equity Invest-
+ments, are accounted for using the equity method, including,
+among others, Unify (formerly EN) and, after contractual clos-
+ing of the transaction, our Metals Technologies joint venture
+with Mitsubishi Heavy Industries. Furthermore, we hold other
+investments, for example Atos SE and OSRAM Licht AG. Any
+factors negatively influencing the profitability of our equity and
+other investments, including negative effects on revenues,
+profits or cash, could have an adverse effect on our equity
+pick-up related to these equity interests or may result in a write-
+off of these investments. In addition, our business, financial
+condition and results of operations could also be adversely
+affected in connection with loans, guarantees or non-compli-
+ance with financial covenants related to these equity and other
+investments. Furthermore, such investments are inherently
+risky as we may not be able to sufficiently influence corporate
+governance processes or business decisions taken by our
+equity investments, other investments and strategic alliances
+that may have a negative effect on our business. In addition,
+joint ventures bear the risk of difficulties that may arise when
+integrating people, operations, technologies and products.
+Strategic alliances may also pose risks for us because we com-
+pete in some business areas with companies with which we
+have strategic alliances.
+We are subject to changes of regulations, laws and policies
+concerning our products: As a diversified company with global
+businesses we are exposed to various product-related regula-
+tions, laws and policies influencing our processes. Recently,
+some jurisdictions around the world have adopted certain reg-
+ulations, laws and policies requiring us to extend our recycling
+efforts, limit the sourcing and usage of certain raw materials,
+and request that suppliers provide additional due diligence and
+disclosures on sourcing and usage of the regulated raw materi-
+als. In particular, there is U.S. legislation concerning the sourc-
+ing of "conflict minerals" from mines located in the conflict
+zones of the Democratic Republic of Congo (DRC) and its
+adjoining countries. This U.S. legislation requires manufactur-
+ers listed on U.S. stock exchanges to investigate and disclose
+their use of any conflict minerals originating in the DRC or ad-
+joining countries. Many of our customers fall into this category.
+If their (sub-)suppliers do not provide them with requested in-
+formation and do not take other steps to ensure that no such
+conflict minerals are included in minerals or components sup-
+plied to them, they may be forced to disclose information about
+the use of conflict minerals in their supply chain in filings with
+the SEC. Thus, our customers pass on these transparency obli-
+gations within their supply chain in which we are also involved.
+We exercise our duty within the supply chain, as our customers
+request transparency in the supply chain and as the obligation
+to do so already forms an element of customer contracts. If we
+are unable to achieve sufficient confidence throughout our
+supply chain, or if any of these risks or similar risks associated
+with these kinds of regulations, laws and policies were to
+materialize, our business, financial condition, results of opera-
+tions and reputation could be adversely affected.
+C.9.3.2 OPERATIONAL RISKS
+Our business, financial condition and results of operations
+may be adversely affected by cost overruns or additional
+payment obligations related to the management of our
+long-term, fixed-price or turnkey projects: We perform a por-
+tion of our business, especially large projects, under long-term
+contracts that are awarded on a competitive bidding basis.
+Some of these contracts are inherently risky because we may
+assume substantially all of the risks associated with complet-
+ing a project and the post-completion warranty obligations. For
+example, we face the risk that we must satisfy technical re-
+quirements of a project even though we may not have gained
+experience with those requirements before we win the project.
+The profit margins realized on fixed-priced contracts may vary
+from original estimates as a result of changes in costs and pro-
+ductivity over their term. We sometimes bear the risk of unan-
+ticipated project modifications, shortage of key personnel,
+quality problems, financial difficulties of our customers, cost
+overruns or contractual penalties caused by unexpected tech-
+nological problems, unforeseen developments at the project
+sites, unforeseen changes or difficulties in the regulatory or
+political environment, performance problems with our suppli-
+ers, subcontractors and consortium partners or other logistical
+difficulties. Certain of our multi-year contracts also contain
+demanding installation and maintenance requirements in
+addition to other performance criteria relating to timing, unit
+cost and compliance with government regulations require-
+ments, which, if not satisfied, could subject us to substantial
+213 C.6
+205 C.4
+214 C.7
+215 C.8
+With respect to divestments, we may not be able to divest some
+of our activities as planned, and the divestitures we do carry
+out could have a negative impact on our business, financial
+condition, results of operations and our reputation. As a major
+divestment, we agreed that Bosch will acquire Siemens' stake
+in BSH Bosch und Siemens Hausgeräte GmbH.
+adequately deter misappropriation or improper use of our
+technology. Furthermore, in some of our markets, the need to
+develop and introduce new products rapidly in order to cap-
+ture available opportunities may lead to quality problems. Our
+operating results depend to a significant extent on our ability
+to anticipate and adapt to changes in our markets and to
+reduce the costs of producing high-quality products. Among
+recent technology trends, we are carefully evaluating the
+potential and relevance of digitalization. We believe that the
+potential and usage scenarios of this technology vary among
+our products, solutions and services depending on the degree
+of information technology utilized. However, we also believe
+that this trend needs to be monitored closely, because it might
+bear the potential to change the competitive landscape. Any
+inability to adapt to the aforementioned factors could have an
+adverse effect on our business, financial condition and results
+of operations.
+C.9.3.1 STRATEGIC RISKS
+We operate in highly competitive markets, which are sub-
+ject to price pressures and rapid changes: The worldwide
+markets for our products and solutions are highly competitive
+in terms of pricing, product and service quality, product devel-
+opment and introduction time, customer service and financ-
+ing terms. In many of our businesses, we face downward price
+pressure and we are or could be exposed to market downturns
+or slower growth, which may increase in times of declining
+investment activities and consumer demand. We face strong
+competitors, some of which are larger and may have greater
+resources in a given business area, and also competitors from
+emerging markets, which may have a better cost structure.
+Some industries in which we operate are undergoing con-
+solidation, which may result in stronger competition and a
+change in our relative market position. Certain competitors
+may be more effective and faster in capturing available market
+opportunities, such as through heavy investments or new
+entrance of IT companies into emerging service fields (e.g.
+data-driven services). These factors alone or in combination
+may negatively impact our business, financial condition, and
+results of operations.
+Furthermore, we see a risk that suppliers (and to some extent
+even smaller customers), especially from emerging countries
+(e.g. China), could develop into serious competitors for
+Siemens resulting in even more competition and thus in re-
+duced volume, loss of market share, and/or lower profit margin.
+Our business, financial condition and results of operations
+may be affected by the uncertainties of economic and polit-
+ical conditions, particularly in the current macroeconomic
+environment, which is characterized by a high degree of un-
+certainty and modest recovery as well as the continuing risk
+of resurgence of crisis in financial markets and/or renewed
+global economic downturn: Our business environment is in-
+fluenced by both domestic and global demand, which in turn is
+influenced by economic conditions. These conditions and, in
+consequence, the speed of economic growth and the sustain-
+ability of our market environment are dependent upon the evo-
+lution of a number of global and local factors. We still see a
+high level of uncertainty regarding the global economic out-
+look, primarily as a result of the anemic economic recovery in
+the Euro zone, sluggish growth in various emerging countries,
+and ongoing geopolitical tensions. The main downside risks
+stem from these political tensions. A severe escalation of the
+conflict in Eastern Europe would strongly affect the European
+and world economy and lead to a steep decline in investment
+activity. Similarly, an escalation of the conflicts in the Middle
+East could disrupt global oil markets and hit the global econ-
+omy. Additional risks for our market environment include such
+possibilities as a prolonged decline in investment sentiment,
+a renewed crisis in financial and credit markets, a renewed
+banking crisis in Europe, a hard landing of the Chinese econ-
+omy, a supra-regional spread of the Ebola epidemic, fluctuating
+commodity prices, bankruptcies, natural disasters, political
+crises including further independence debates, social unrest
+and other challenges.
+In general, due to the significant proportion of long-cycle busi-
+nesses in our former Sectors and the importance of long-term
+contracts for Siemens, there is usually a time lag between the
+development of macroeconomic conditions and their impact on
+our financial results. Important exceptions include our short-
+cycle businesses in the former Industry Sector, particularly
+those in the former Industry Automation Division and parts of
+the former Drive Technologies Division as well as parts of the
+former Power Grid Solutions & Products Business within the for-
+mer Infrastructure & Cities Sector, which are highly sensitive to
+volatility in market demand. If the moderate recovery of macro-
+economic growth stalls again and if we are not successful in
+adapting our production and cost structure to subsequent
+changes to conditions in the markets in which we operate,
+there can be no assurance that we will not experience adverse
+effects (e.g. underutilization of manufacturing and engineer-
+ing capacities) that may be material to our business, financial
+condition and results of operations. For example, it may be-
+come more difficult for our customers to obtain financing and
+as a result they may modify, delay or cancel plans to purchase
+our products and services or to follow through on purchases or
+contracts already executed. Furthermore, prices may decline as
+a result of adverse market conditions to a greater extent than
+currently anticipated. In addition, contracted payment terms,
+especially regarding the level of advance payments by our cus-
+tomers relating to long-term projects, may become less favor-
+able, which could negatively impact our cash flows. Addition-
+ally, if customers are not successful in generating sufficient
+revenue or securing access to the capital markets, they may not
+be able to pay, or may delay payment of, the amounts they owe
+us, which may adversely affect our business, financial condi-
+tion and results of operations.
+Numerous other headwinds continue to constrain the world
+economy, such as the increasing popular support for anti-EU and
+anti-business parties, ongoing high public debt, and significant
+fluctuations in exchange rates, energy prices and raw material
+prices. These and other factors could impact macroeconomic
+parameters and the international capital and credit markets, and
+the resulting uncertainty could have an adverse impact on our
+business, financial condition and results of operations.
+Our business is affected by a variety of market conditions and
+regulations. For example, our former Energy Sector is exposed
+to the development of global demand for energy and strongly
+213 C.6
+214 C.7
+215 C.8
+Our business, financial condition and results of operations
+may be adversely affected by portfolio measures: Our strat-
+egy includes divesting activities in some business areas and
+strengthening others through portfolio measures, including
+mergers and acquisitions.
+225 C.9
+Sustainability and citizenship
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+231
+affected by regulations and policies related to energy and the
+environment. Healthcare is dependent on policy development
+and regulations affecting healthcare systems around the world,
+particularly in the important U.S. healthcare market. Our for-
+mer Industry Sector is vulnerable to unfavorable market condi-
+tions in certain segments of the automotive and manufac-
+turing industries. Our former Infrastructure & Cities Sector
+focuses, among other things, on business with public authori-
+ties around the world and is thus vulnerable to restrictions in
+public budgets.
+Our business, financial condition and results of operations
+may be adversely affected by continued strategic alignments
+and cost-cutting initiatives: We are in a continuous process of
+strategic alignments and constantly engage in cost-cutting
+initiatives, including ongoing capacity adjustment measures
+and structural initiatives. Capacity adjustments through
+consolidation of business activities and manufacturing facili-
+ties, and the streamlining of product portfolios are also part of
+these cost reduction efforts. These measures may not be imple-
+mented as planned, may turn out to be less effective than an-
+ticipated, may become effective later than estimated or may
+not become effective at all. Each of these factors alone or in
+combination may negatively impact our business, financial
+condition, and results of operations. Any future contribution of
+these measures to our profitability will be influenced by the
+actual savings achieved and by our ability to sustain them.
+Our businesses must keep pace with technological
+changes and develop new products and services to remain
+competitive: The markets in which our businesses operate ex-
+perience rapid and significant changes due to the introduction
+of innovative technologies. To meet our customers' needs, we
+must continuously design new products and services and up-
+date existing ones, while investing in and developing new
+technologies. Introducing new products and technologies
+requires a significant commitment to research and develop-
+ment, which in return requires expenditure of considerable
+financial resources that may not always result in success. Our
+sales and profitability may suffer if we invest in technologies
+that do not operate or may not be integrated as expected, or
+that are not accepted in the market place as anticipated, or if
+our products or systems are not introduced to the market in a
+timely manner, particularly compared to our competitors, or
+become obsolete. We constantly apply for new patents and
+actively manage our intellectual property portfolio to secure
+our technological position. However, our patents and other
+intellectual property may not prevent competitors from inde-
+pendently developing or selling products and services that are
+similar to or duplicates of ours. There can be no assurance that
+the resources we invest to protect our intellectual property
+will be sufficient or that our intellectual property portfolio will
+Overall assessment of the economic position
+Subsequent events
+Overall assessment of the economic position
+Subsequent events
+Sustainability and citizenship
+225 C.9
+Our former Sectors purchase raw materials including so-called
+rare-earth metals, copper, steel, aluminum and oil, which ex-
+pose them to fluctuations in energy and raw material prices. In
+recent times, commodities prices have been subject to volatile
+markets, and such volatility is expected to continue. If we are
+not able to compensate for our increased costs or pass them on
+to customers, price increases could have an adverse impact on
+our business, financial condition and results of operations. In
+contrast, in times of falling commodity prices, we may not fully
+profit from such price decreases as we attempt to reduce the
+risk of rising commodity prices by several means, such as long-
+term contracting or physical and financial hedging. In addition
+to price pressure that we may face from our customers expect-
+ing to benefit from falling commodity prices or adverse market
+conditions, this could also adversely affect our business, finan-
+cial condition and results of operations.
+C.9.3.3 FINANCIAL RISKS
+We are exposed to market price risks: We are exposed to fluc-
+tuations in exchange rates, especially between the U.S. dollar
+and the euro, because a high percentage of our business
+volume is conducted in the U.S. and as exports from Europe. In
+addition, we are exposed to currency effects involving the
+currencies of emerging markets, in particular the Chinese
+Yuan. A strengthening of the euro (particularly against the U.S.
+dollar) may change our competitive position, as many of our
+competitors may benefit from having a substantial portion of
+their costs based in weaker currencies, enabling them to offer
+their products at lower prices. As a result, a strong euro in rela-
+tion to the U.S. dollar and other currencies could have an
+adverse impact on our revenues and results of operations.
+Certain currency risks as well as interest rate risks are hedged
+using derivative financial instruments. Depending on the
+development of foreign currency exchange and interest rates,
+our hedging activities could have significant effects on our
+business, financial condition and results of operations.
+Changes in the fair value of warrants issued together with
+US$3 billion bonds in fiscal 2012 depends mainly on the under-
+lying Siemens and OSRAM share prices as well as their respec-
+tive volatilities, irrespective of the fact that our potential
+obligation related to the warrant writer position to physically
+deliver Siemens and OSRAM shares could be covered out of
+existing stock. Accordingly, exchange rate, interest rate and
+share price fluctuations may lead to higher volatility and
+adverse effects on our business, financial condition and results
+of operations.
+We are exposed to volatile credit spreads: Regarding our
+Corporate Treasury activities, widening credit spreads due to
+uncertainty and risk aversion in the financial markets might
+lead to adverse changes of fair market values of our financial
+assets, in particular concerning our derivative financial instru-
+ments. In addition, widening credit spreads could lead to
+increasing refinancing costs if the Euro zone sovereign debt
+crisis with its ongoing significant impact on global financial
+markets and the European financial sector in particular, contin-
+ues or even worsens. Any such development could also further
+increase the costs for buying protection against credit risks due
+to a potential increase of counterparty risks.
+Our future financing via Corporate Treasury may particu-
+larly be affected by the uncertainty of economic condi-
+tions and the developments of capital and financial mar-
+kets: Our Corporate Treasury is responsible for the financing
+of the Company. Negative developments in foreign exchange,
+money or capital markets, such as limited availability of funds
+(particularly U.S. dollar funds), may increase our overall cost
+of funding. The ongoing Euro zone sovereign debt crisis con-
+tinues to have an impact on global capital markets. The result-
+ing higher risk awareness of governments led to more regula-
+tions on the use of financial instruments through (1) the
+Regulation on OTC derivatives, central counterparties and
+trade repositories (European Market Infrastructure Regula-
+tion) and (2) other similar regulations in other jurisdictions,
+which may have an impact on the future availability or the
+costs of adequate hedging instruments for the Company.
+It may even lead to further regulations of the financial sector
+as well as to the use of financial instruments that could
+adversely influence our future possibilities of obtaining debt
+financing, and/or may increase our refinancing costs. Deterio-
+rating credit quality or even default of business partners may
+adversely affect our business, financial condition and results
+of operations.
+Downgrades of our rating could increase our cost of capital
+and therefore could negatively affect our business: Our
+business, financial condition and results of operations are influ-
+enced significantly by the actual and expected performance of
+the former Sectors and SFS, as well as our portfolio measures.
+An actual or expected negative development of our business,
+financial condition or results of operations could result in the
+deterioration of our credit rating. Downgrades by rating agen-
+cies could increase our cost of capital, may reduce our potential
+investor base and may negatively affect our business, financial
+condition and results of operations.
+Overall assessment of the economic position
+Subsequent events
+213 C.6
+214 C.7
+215 C.8
+risk of delays and interruptions of the supply chain as a conse-
+quence of natural disasters in case we are unable to identify
+alternative sources of supply or ways of transportation in
+a timely manner or at all. A general shortage of materials, com-
+ponents or sub-components as a result of natural disasters also
+bears the risk of unforeseeable fluctuations in prices and
+demand, which might adversely affect our business, financial
+condition and results of operations.
+225 C.9
+Sustainability and citizenship
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+235
+Our financing activities subject us to various risks, includ-
+ing credit, interest rate and foreign exchange risk: We pro-
+vide our customers with various forms of direct and indirect
+financing in connection with large projects. We also finance a
+large number of customer orders, for example, the leasing of
+medical equipment, mainly through SFS. SFS also bears credit
+risk by financing third-party equipment or by taking direct or
+indirect participation in financings, such as syndicated loans.
+In part, we take a security interest in the assets we finance or
+we receive additional collateral. Our business, financial condi-
+tion and results of operations may be adversely affected if the
+credit quality of our customers deteriorates or if they default on
+their payment obligation to us, if the value of the assets in
+which we have taken a security interest or additional collateral
+declines, if interest rates or foreign exchange rates fluctuate, or
+if the projects in which we invest are unsuccessful. Potential
+adverse changes in economic conditions could cause a decline
+in the fair market values of assets, derivative instruments as
+well as collateral, resulting in losses which could have an
+adverse effect on our business, financial condition and results
+of operations.
+Our business, financial condition and results of operations
+may be adversely affected by several parameters influenc-
+ing the funded status of our pension benefit plans: The
+funded status of our pension plans may be affected by an
+increase or decrease in the defined benefit obligation (DBO), as
+well as by an increase or decrease in the value of plan assets.
+A significant increase in the underfunding may have a negative
+effect on our rating. Pensions are accounted for in accordance
+with actuarial valuations, which rely on statistical and other
+factors in order to anticipate future events. These factors
+include key pension plan valuation assumptions such as the
+discount rate, rate of future compensation increases and
+pension progression. Actual developments may differ from
+assumptions due to changing market and economic conditions,
+thereby resulting in an increase or decrease in the DBO. Signif-
+icant movements in financial markets or a change in the port-
+folio mix of invested assets could result in corresponding
+increases or decreases in the value of plan assets, particularly
+equity securities. Also, changes in pension plan assumptions
+could affect defined benefit costs. For example, a change in dis-
+count rates may result in changes in the defined benefit costs
+in the following fiscal year. In order to comply with local pen-
+sion regulations in selected foreign countries, we may face a
+risk of increasing cash outflows to reduce an underfunding of
+our pension plans in these countries, if any.
+With respect to sales-related bank guarantees to be issued
+in the course of orders or supplies, we are exposed to cer-
+tain risks arising from our banks' rating and its develop-
+ment: Frequently customers request from the supplier that
+guarantees customary for the business are procured from banks,
+such as down-payment or warranty bonds, as part of the order.
+Sometimes customers may also set minimum requirements as
+to the creditworthiness of acceptable guarantors. Accordingly,
+situations may arise with respect to existing orders that, during
+the order's execution phase, customers request the provision of
+alternative security upon the deterioration of a guaranteeing
+bank's creditworthiness.
+Examinations by tax authorities and changes in tax regula-
+tions could adversely affect our business, financial condi-
+tion and results of operations: We operate in nearly all coun-
+tries of the world and therefore are subject to many different tax
+regulations. Changes in tax law in any of these jurisdictions
+could result in higher tax expense and payments. Furthermore,
+legislative changes could impact our tax receivables and liabil-
+ities as well as deferred tax assets and deferred tax liabilities. In
+addition, the uncertain tax environment in some regions could
+limit our ability to enforce our rights. As a globally operating
+organization, we conduct business in countries subject to com-
+plex tax rules, which may be interpreted in different ways. Future
+interpretations or developments of tax regimes may affect our
+business, financial condition and results of operations. We are
+regularly examined by tax authorities in various jurisdictions.
+Report on expected developments and
+associated material opportunities and risks
+Net assets position
+210 C.5
+Financial position
+Report on expected developments and
+associated material opportunities and risks
+242 C.10 Compensation Report and legal disclosures
+242 C.11 Siemens AG (Discussion on basis
+of German Commercial Code)
+247 D.
+337
+Consolidated Financial Statements
+Additional Information
+233
+contractual penalties, damages, non-payment and contract ter-
+mination. There can be no assurance that contracts and proj-
+ects, in particular those with long-term duration and fixed-
+price calculation, can be completed profitably.
+Increased IT security threats and higher levels of profes-
+sionalism in computer crime could pose a risk to our
+systems, networks, products, solutions and services as well
+as to those of our service providers: Our business portfolio
+includes a broad array of systems, networks, products, solu-
+tions and services across our businesses that rely on digital
+technologies. We observe a global increase in IT security
+threats and higher levels of professionalism in computer crime,
+which pose a risk to the security of systems and networks and
+the confidentiality, availability and integrity of data. We attempt
+to mitigate these risks by employing a number of measures,
+including employee training, comprehensive monitoring of
+our networks and systems, and maintenance of backup and
+protective systems such as firewalls and virus scanners. To the
+extent we employ service providers, such as in the area of IT
+infrastructure, we have contractual arrangements in place in
+order to ensure that these risks are reduced in a similar man-
+ner. Nonetheless, our systems, networks, products, solutions
+and services, as well as those of our service providers remain
+potentially vulnerable to attacks. Depending on their nature
+and scope, such attacks could potentially lead to the leakage of
+confidential information, improper use of our systems and net-
+works, manipulation and destruction of data, defective prod-
+ucts, production downtimes and supply shortages, which in
+turn could adversely affect our business, financial condition,
+results of operations and reputation.
+We may face operational failures and quality problems in
+our value chain processes: Our value chain comprises all
+steps, from research and development to supply chain manage-
+ment, production, marketing, sales and services. Operational
+failures in our value chain processes could result in quality
+problems or potential product, labor safety, regulatory or envi-
+ronmental risks. Such risks are particularly present in our
+former Sectors in relation to our production and construction
+facilities, which are located all over the world and have a high
+degree of organizational and technological complexity. From
+time to time, some of the products we sell might have quality
+issues resulting from the design or manufacture of such prod-
+ucts or from the software integrated into them. Our Healthcare
+business, for example, is subject to regulatory authorities
+including the U.S. Food and Drug Administration and the Euro-
+pean Commission's Health and Consumer Policy Department,
+which require us to make certain efforts to safeguard our prod-
+uct quality. If we are not able to comply with these require-
+ments, our business, financial condition, results of operations
+and reputation may be adversely affected.
+Furthermore, failures on the part of service providers we
+employ, such as in the area of IT, may have an adverse effect on
+our processes and operations and our ability to meet our com-
+mitments to customers or increase our operating costs. Any
+operational failures or quality issues could have an adverse
+effect on our business, financial condition, results of opera-
+tions and reputation.
+We are dependent upon hiring, developing and retaining
+highly qualified management and technical personnel:
+Competition for highly qualified personnel remains intense
+in the industries and regions in which our businesses operate.
+In many of our business areas, we intend to expand our busi-
+ness activities, for which we will need highly skilled employ-
+ees. Our future success depends in part on our continued abil-
+ity to hire, integrate, develop and retain engineers and other
+qualified personnel. We address this risk with various measures,
+for example succession planning, employer branding, retention
+and career management. However, there can be no assurance
+that we will continue to be successful in attracting and retain-
+ing all the highly qualified employees and key personnel needed
+in the future, including in appropriate geographic locations, and
+any inability to do so could have an adverse effect on our busi-
+ness, financial condition, results of operations and reputation.
+We may face interruption of our supply chain, including the
+inability of third parties to deliver parts, components and
+services on time and in the contractually agreed quality,
+and we may be subject to rising raw material prices: Our
+financial performance depends in part on reliable and effective
+supply chain management for components, sub-assemblies
+and other materials. Capacity constraints and supply shortages
+resulting from ineffective supply chain management may lead
+to delays and additional cost. We rely on third parties to supply
+us with parts, components and services. Using third parties to
+manufacture, assemble and test our products reduces our con-
+trol over manufacturing yields, quality assurance, product
+delivery schedules and costs. The third parties that supply us
+with parts and components also have other customers and may
+not have sufficient capacity to meet all of their customers'
+needs, including ours, during periods of excess demand. Com-
+ponent supply delays can affect the performance of our former
+Sectors. Although we work closely with our suppliers to avoid
+supply-related problems, there can be no assurance that we
+will not encounter supply problems in the future or that we will
+be able to replace a supplier that is not able to meet our
+demand. This risk is particularly evident in businesses with a
+very limited number of suppliers. Shortages and delays could
+materially harm our business. Unanticipated increases in the
+price of components or raw materials due to market shortages
+or other reasons could also adversely affect the performance of
+our former Sectors. Furthermore, we may be exposed to the
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+172 C.1
+Business and economic environment
+187 C.2
+Financial performance system
+193 C.3
+Results of operations
+205 C.4
+C.9.3.4 COMPLIANCE RISKS
+Combined Management Report
+225 C.9
+108 | A. To our Shareholders
+Financial performance system
+187 C.2
+Business and economic environment
+172 C.1
+244
+Combined Management Report
+171 C.
+193 C.3
+Corporate Governance
+108 | A. To our Shareholders
+The increase in Trade payables, liabilities to affiliated com-
+panies and other liabilities was due primarily to higher liabil-
+ities to affiliated companies as a result of intra-group financing
+activities.
+The decrease in Other provisions was due primarily to a de-
+crease of €176 million in provisions for personnel expenses and
+a decline of €98 million in provisions for operating expenses.
+The increase in Pension and similar commitments included
+interest and service costs amounting to €1.007 billion and the
+effect from the adjustment of the discount rate amounting to
+€277 million. These factors were partly offset by pension pay-
+ments amounting to €514 million.
+The increase in Equity was attributable to net income for
+the year of €3.786 billion and issuance of treasury stock of
+€330 million in conjunction with our share-based compensa-
+tion program. These factors were partly offset by dividends paid
+in fiscal 2014 (for fiscal 2013) of €2.533 billion (for additional
+information see → C.2.5 DIVIDEND AND SHARE BUYBACKS). In addi-
+tion, the equity reduction was due to share buybacks during
+the year amounting to €1.079 billion. The equity ratios at Sep-
+tember 30, 2014 and 2013 were 29% and 28%, respectively.
+Cash and cash equivalents and marketable securities
+are significantly affected by the liquidity management of
+Siemens AG. The liquidity management is based on the finance
+strategy of the Siemens Group. Therefore, the change in liquid-
+ity of Siemens AG resulted not only from business activities of
+Siemens AG.
+The decline in Receivables and other assets was due primar-
+ily to lower receivables from affiliated companies as a result of
+intra-group financing activities.
+131 | B.
+Results of operations
+205 C.4
+Financial position
+(in millions of €)³
+Expenses for continuing education
+→ C.9.4 OPPORTUNITIES.
+The business development of Siemens AG is fundamentally
+subject to the same risks and opportunities as the Siemens
+Group. Siemens AG generally participates in the risks of its sub-
+sidiaries and equity investments in line with its percentage of
+each holding. For additional information see → C.9.3 RISKS and
+C.11.6 Risks and opportunities
+11.3%
+11.8%
+2013
+3.0%
+4.1%
+2014
+Year ended September 30,
+Female employees in management positions
+(percentage of all management positions)²
+Employee turnover rate¹
+Indicators
+C.11.4 Employees
+Net assets position
+210 C.5
+The increase in Financial assets was due primarily to the pur-
+chase of a 14.26% stake in Atos SE from Siemens Beteiligungen
+Inland GmbH amounting to €779 million and a capital increase
+of €500 million relating to Siemens Bank GmbH. In addition,
+loans increased €297 million and securities in non-current
+assets came in €350 million higher. These increases were partly
+offset by the sale of our 17% stake in OSRAM Licht AG to
+Siemens Beteiligungen Inland GmbH. The sale price amounted
+to €715 million and the book value amounted to €395 million.
+2%
+1%
+2%
+(1)%
+25,771
+27,257
+290
+64,868
+(1)%
+767
+759
+an equity portion
+Special reserve with
+3%
+18,295
+18,798
+Equity
+Liabilities and equity
+48%
+(10)%
+17%
+(4)%
+(13)%
+1%
+46
+64,868
+65,400
+Total assets
+40
+Provisions
+Expenses per employee for continuing
+Pensions and similar
+Other provisions
+27,075
+296
+65,400
+Total liabilities and equity
+Deferred income
+26,189
+other liabilities
+to affiliated companies and
+Trade payables, liabilities
+51%
+(50)%
+138
+1,349
+677
+Advanced payments received
+208
+Liabilities to banks
+Liabilities
+6%
+(6)%
+1%
+10,432
+7,827
+18,260
+11,103
+7,369
+18,472
+commitments
+education (in €)³
+98
+94
+Consolidated Statements
+of Changes in Equity
+Consolidated Statements
+of Cash Flows
+Consolidated Statements
+of Financial Position
+Consolidated Statements
+of Comprehensive Income
+Consolidated Statements
+of Income
+254 | D.6
+252 | D.5
+251 | D.4
+250 | D.3
+249 | D.2
+248 | D.1
+Financial Statements
+Consolidated
+D.
+WWW.SIEMENS.COM/AR/CONSOLIDATED-FINANCIAL-STATEMENTS
+The Consolidated Financial Statements
+are prepared in accordance with Inter-
+national Financial Reporting Standards
+(IFRS) as adopted by the European Union
+(EU), the supplementary requirements
+of German law pursuant to Section
+315a (1) of the German Commercial Code
+(Handelsgesetzbuch) and full IFRS as
+issued by the International Accounting
+Standards Board (IASB). They give a true
+and fair view of the net assets, financial
+position and results of operations
+of the group in accordance with these
+requirements.
+246
+Notes to Consolidated
+Financial Statements
+245
+254 NOTE 1 - Basis of presentation
+262 NOTE 3 - Critical accounting estimates
+264 NOTE 4 - Acquisitions, dispositions and
+discontinued operations
+301 NOTE 31 - Financial risk management
+306 NOTE 32- Share-based payment
+309 NOTE 33 - Personnel costs
+300 NOTE 30 - Derivative financial instruments
+and hedging activities
+financial instruments
+296 NOTE 29 - Additional disclosures on
+290 NOTE 26 - Additional capital disclosures
+292 NOTE 27 - Commitments and contingencies
+293 NOTE 28 - Legal proceedings
+289 NOTE 25 - Equity
+288 NOTE 24 - Other liabilities
+281 NOTE 22 - Post-employment benefits
+287 NOTE 23 - Provisions
+278 NOTE 19 - Other current financial liabilities
+278 NOTE 20 - Other current liabilities
+278 NOTE 21 - Debt
+275 NOTE 16 - Other intangible assets
+276 NOTE 17 - Property, plant and equipment
+278 NOTE 18 - Other financial assets
+274 NOTE 15 - Goodwill
+273 NOTE 14 - Other current assets
+273 | NOTE 13 - Inventories
+271 NOTE 10 - Available-for-sale financial assets
+271 NOTE 11 - Trade and other receivables
+273 NOTE 12 - Other current financial assets
+269 NOTE 9 - Income taxes
+expenses and other financial income
+(expenses), net
+267 NOTE 5 - Interests in other entities
+268 NOTE 6- Other operating income
+268 NOTE 7-Other operating expenses
+268 NOTE 8 Interest income, interest
+254 NOTE 2 - Summary of significant
+accounting policies
+from offsetting
+Consolidated Financial Statements
+Additional Information
+247 D.
+Healthcare: 10 (10%)
+Siemens Real Estate:
+Other: 8 (8%)
+Energy: 25 (24%)
+SIEMENS AG.
+For additional information regarding the use of financial
+instruments see 7 NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF
+ING RELATED INTERNAL CONTROL AND RISK MANAGEMENT SYSTEM.
+The description of the internal control system for Siemens AG
+required by Section 289 para. 5 of the German Commercial Code
+is included in c.9.5 SIGNIFICANT CHARACTERISTICS OF THE ACCOUNT-
+As the parent company of the Siemens Group, Siemens AG is
+integrated into the group-wide risk management system. For
+additional information see C.9.2 RISK MANAGEMENT.
+as of September 30, 2014 (in thousands)
+Employees of Siemens AG
+As of September 30, 2014 and 2013, the numbers of employees
+were 106,860 and 108,234 respectively.
+3 Without travel expenses.
+2 Employees in management positions include all managers with disciplinary
+responsibility, plus project managers.
+1 Employee turnover rate is defined as the ratio of voluntary and involuntary exits
+from Siemens AG during the fiscal year to the average number of employees.
+864
+919
+107
+337
+Industry: 36 (33%)
+Infrastructure & Cities:
+26 (24%)
+Report on expected developments and
+associated material opportunities and risks
+of German Commercial Code)
+Sustainability and citizenship
+215 C.8
+Siemens AG (Discussion on basis
+242 C.11
+Compensation Report and legal disclosures
+242 C.10
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+213 C.6
+We intend to continue providing an attractive return to share-
+holders. Therefore in the years ahead we intend to propose a
+dividend payout of 40% to 60% of net income of Siemens
+Group, which for this purpose we may adjust to exclude
+selected exceptional non-cash effects.
+Due to the interrelations between Siemens AG and its subsid-
+iaries and the relative size of Siemens AG within the Group, the
+outlook of the Group also largely reflects our expectations for
+Siemens AG. We expect that the anticipated market and rev-
+enue developments for fiscal 2015 described in statements made
+by the Siemens Group will be mainly reflected in the revenue of
+Siemens AG. In fiscal 2015, we continue to execute the Group's
+"Vision 2020" concept. In particular, we expect that gains
+from divestments will significantly influence the profit of
+Siemens AG. For additional information see c.9.1 REPORT ON
+EXPECTED DEVELOPMENTS.
+C.11.7 Outlook
+There have been no events of particular significance since the
+end of fiscal 2014.
+C.11.5 Subsequent events
+For additional information see c.8.2 EMPLOYEES.
+2 (2%)
+Active difference resulting
+2,467
+2,222
+Selling and general
+3%
+(2,878)
+(2,781)
+expenses
+27%
+29%
+as percentage of revenue
+Research and development
+6%
+8,289
+8,824
+Gross profit
+0%
+(22,016)
+2%
+30,305
+30,934
+(22,109)
+administrative expenses
+Cost of sales
+(4,036)
+3%
+3,786
+Net income
+47%
+(840)
+(444)
+Income taxes
+(10)%
+4,692
+4,230
+ordinary activities
+(38)%
+3,631
+2,243
+89%
+(178)
+(20)
+Other operating income
+(expenses), net
+Financial income, net
+thereof income from
+investments 2,870
+(prior year 3,893)
+Result from
+(4,173)
+3,852
+2013
+% Change
+242 C.10 Compensation Report and legal disclosures
+Siemens AG (Discussion on basis
+of German Commercial Code)
+Report on expected developments and
+associated material opportunities and risks
+225 C.9
+Sustainability and citizenship
+215 C.8
+Overall assessment of the economic position
+Subsequent events
+214 C.7
+213 C.6
+The Consolidated Financial Statements are prepared in accor-
+dance with IFRS. Where required, i.e. for purposes of preparing
+statements for local regulatory or tax purposes, data is adopted
+in accordance with relevant regulations by means of reconcili-
+ation at account level. Accordingly, accurately determined IFRS
+closing data also forms an important basis for the Annual
+Financial Statements of Siemens AG. In the case of Siemens AG
+and other group companies required to prepare financial state-
+ments in accordance with German Commercial Code, the
+conceptual framework described above is complemented by
+mandatory regulations specific to German Commercial Code
+within our Financial Reporting Guidelines and a German Com-
+mercial Code chart of accounts. The manual and system-based
+control mechanisms referred to above generally also apply
+when reconciling the IFRS closing data to the Annual Financial
+Statements of Siemens AG.
+Siemens AG as the parent company of the Siemens Group is
+integrated into the company-wide accounting-related internal
+control system described above. Generally, the information set
+out above also applies for Annual Financial Statements of
+Siemens AG prepared in accordance with the German Com-
+mercial Code.
+ADDITIONAL INFORMATION RELATED TO THE
+ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG
+(GERMAN COMMERCIAL CODE)
+In addition we have rules for accounting-related complaints
+and a Code of Ethics for Financial Matters.
+Through audits on a continuous and Siemens wide basis our
+internal corporate audit function monitors compliance with
+our guidelines and the reliability and functional operation of
+our control system as well as the adequacy and effectiveness
+of our risk management system.
+The Supervisory Board, through the Audit Committee, is also
+integrated into our control system. In particular, the Audit
+Committee oversees the accounting process, the effectiveness
+of the control system, the risk management system and the
+internal audit system, and the independent audit of financial
+statements. In addition, it conducts an audit of the documents
+related to the Annual Financial Statements of Siemens AG and
+the Consolidated Financial Statements and discusses the
+Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements and Combined Management Report of
+these statements with the Managing Board and the indepen-
+dent auditors.
+In addition, we have set up a Disclosure Committee - compris-
+ing selected heads of Corporate Units – which is responsible for
+reviewing certain financial and non-financial information prior
+to publication.
+On a quarterly basis, an internal certification process is ex-
+ecuted. Management of different levels of our organization,
+supported by confirmations of management of entities under
+their responsibility, confirms the accuracy of the financial data
+that has been reported to Siemens' corporate headquarters and
+reports on the effectiveness of the related control systems.
+The specialist skills required of employees involved in the ac-
+counting process are assessed when the employees are initially
+selected; thereafter, the employees receive regular training. As
+a fundamental principle, at the different levels and based on
+materiality considerations, items must be verified by at least
+one other person (four eyes principle) and specific procedures
+must be adhered to for the authorization of the data. Additional
+control mechanisms include target-performance comparisons
+and analyses of the composition of, and changes in, individual
+line items, both in the closing data reported by units and in the
+Consolidated Financial Statements. Accounting-related IT sys-
+tems provide for defined access rules in order to ensure that
+accounting related data is protected from unauthorized access,
+use or modification. Every unit included in our Consolidated
+Financial Statements is subject to the rules and regulations of
+the Corporate Information Security Guide.
+242 C.11
+2014
+247 D.
+337
+Additional Information
+September 30,
+(in millions of €)
+Revenue
+Statement of Income of Siemens AG in accordance
+with German Commercial Code (condensed)
+C.11.2 Results of operations
+ECONOMIC ENVIRONMENT.
+The economic environment for Siemens AG is largely the same
+as for the Siemens Group and is described in detail in → c.1.2
+Siemens AG is the parent company of the Siemens Group.
+Siemens AG is a technology company with core activities in the
+fields of electrification, automation and digitalization. Siemens AG
+includes one additional operating business, Siemens Real Estate.
+Furthermore Siemens AG is significantly influenced by directly
+or indirectly owned subsidiaries and investments. Siemens AG
+holds directly and indirectly 640 legal entities including
+non-controlling interests. Siemens AG also includes the Group's
+corporate headquarters functions.
+C.11.1 Business and economic environment
+Unlike our Consolidated Financial Statements, which are
+prepared in accordance with the International Financial Report-
+ing Standards (IFRS), the Annual Financial Statements of
+Siemens AG have been prepared in accordance with the rules
+set out in the German Commercial Code (Handelsgesetzbuch).
+||| C.11 Siemens AG (Discussion on basis of German Commercial Code)
+The Compliance Report outlines the principles of our Compli-
+ance System which aims to ensure that all our worldwide busi-
+ness practices are in line with our Business Conduct Guidelines
+and in compliance with all applicable laws. In addition, it de-
+scribes our approach on compliance risk management, busi-
+ness partner compliance due diligence, cooperation with third
+parties and the Siemens Integrity Initiative. The Compliance
+Report is an integral part of the Combined Management Report
+and is presented in → B.3 COMPLIANCE REPORT.
+The Takeover-relevant information (pursuant to Sections 289
+para. 4 and 315 para. 4 of the German Commercial Code) and
+explanatory report are an integral part of the Combined Man-
+agement Report and are presented in → B.5 TAKEOVER-RELEVANT
+INFORMATION (PURSUANT TO SECTIONS 289 PARA. 4 AND 315 PARA. 4 OF
+THE GERMAN COMMERCIAL CODE) AND EXPLANATORY REPORT.
+GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
+COMMERCIAL CODE.
+The Corporate Governance statement pursuant to Section 289a
+of the German Commercial Code is an integral part of the Com-
+bined Management Report and is presented in → B.2 CORPORATE
+The Compensation Report outlines the principles underlying
+the determination of the total compensation of the members of
+the Managing Board of Siemens AG, and sets out the structure
+and level of the remuneration of the Managing Board mem-
+bers. It also describes the policies governing and levels of com-
+pensation paid to Supervisory Board members. The Compensa-
+tion Report is an integral part of the Combined Management
+Report and is presented in → B.4 COMPENSATION REPORT.
+||| C.10 Compensation Report and legal disclosures
+241
+Consolidated Financial Statements
+309 NOTE 34 - Earnings per share
+(2)%
+110
+2,419
+Intangible and tangible assets
+Non-current assets
+Assets
+(in millions of €)
+% Change
+September 30,
+2013
+2014
+Statement of Financial Position of Siemens AG in
+accordance with German Commercial Code (condensed)
+C.11.3 Net assets and financial position
+243
+Additional Information
+Consolidated Financial Statements
+247 D.
+337
+Report on expected developments and
+associated material opportunities and risks
+225 C.9
+of German Commercial Code)
+Financial assets
+Sustainability and citizenship
+42,121
+44,540
+Deferred tax assets
+75
+111
+Prepaid expenses
+19,313
+18,488
+2,282
+2,672
+securities
+Cash and cash equivalents,
+(7)%
+17,032
+15,816
+Receivables and other assets
+Current assets
+(1)%
+4%
+4%
+42,967
+2,437
+40,530
+Profit carried forward
+242 C.10 Compensation Report and legal disclosures
+242
+Siemens AG (Discussion on basis
+Overall assessment of the economic position
+Subsequent events
+Combined Management Report
+171 C.
+131 | B. Corporate Governance
+108 | A. To our Shareholders
+10%
+n/a
+476
+2,643
+(988)
+2,907
+Unappropriated net income
+retained earnings
+Allocation to other
+100%
+(1,800)
+to spin-off
+Assets reduction due
+(4)%
+115
+242
+C.11
+172 C.1
+187 C.2
+214 C.7
+215 C.8
+213 C.6
+The decline in Income tax expenses was due mainly to prior-
+year one-time special effects.
+The decrease in other financial income resulted mainly from a
+realized loss related to interest and foreign currency derivatives
+amounting to €309 million, compared to income amounting to
+€548 million in the prior year. In addition, expenses from com-
+pounding of pension provisions increased by €161 million.
+These factors were partly offset by reversals of impairments of
+shares in investments of €214 million.
+The primary factor for the decrease in income from invest-
+ments was lower dividend payments. In fiscal 2013, we received
+a dividend payment of €3.000 billion from Siemens Beteiligungs-
+verwaltung GmbH & Co. OHG. We received no such dividend
+payment in fiscal 2014. In contrast, income from profit transfers
+from Siemens Beteiligungen Inland GmbH increased by
+€909 million. In addition, gains (losses) from the disposal of
+investments came in €755 million higher year-over-year, in-
+cluding a gain of €321 million from the sale of our 17% stake in
+OSRAM Licht AG to Siemens Beteiligungen Inland GmbH.
+The decline in Financial income, net was primarily attribut-
+able to lower income from investments, which decreased by
+€1.023 billion. Other financial income was €395 million lower
+compared to the prior year, while net interest income came in
+€29 million higher.
+The improvement in Other operating income (expenses), net
+resulted from an increase in other operating income of
+€161 million, only slightly offset by an increase of €4 million in
+other operating expenses. Within other operating income, pos-
+itive effects included €137 million from higher allocation of
+central infrastructure and support services to Sectors and
+Divisions outside Siemens AG, and gains totaling €110 million
+related to the sale of concessions and industrial property rights
+to Siemens Schweiz AG.
+Research and development (R&D) expenses decreased due
+primarily to a reduction of €196 million in the Infrastructure &
+Cities Sector. This decrease was partly offset by increases of
+€46 million in the Energy Sector and €16 million in the Health-
+care Sector. R&D expenses as a percentage of revenue (R&D
+intensity) decreased by one percentage point, to 9% year-over
+year. On an average basis, we employed 12,600 people in R&D
+in fiscal 2014, compared to 12,500 in fiscal 2013. For additional
+information see c.8.3 RESEARCH AND DEVELOPMENT.
+The increase in Gross profit included increases of €421 million
+in the Energy Sector, €279 million in the Industry Sector
+and €269 million in the Infrastructure & Cities Sector. These
+increases were partly offset by a decrease of €335 million in the
+Healthcare Sector. A year earlier, gross profit was burdened by
+charges for the company-wide "Siemens 2014" productivity im-
+provement program. While both years included project charges,
+these were higher in fiscal 2014. In particular, the Energy
+Sector's Power Transmission Division took charges including
+€361 million related primarily to grid-connections to offshore
+wind-farms and €197 million related to onshore HVDC trans-
+mission line projects.
+The increase in Revenue is due primarily to revenue increases
+of €1.002 billion in the Energy Sector, €251 million in the Indus-
+try Sector and €73 million in the Infrastructure & Cities Sector.
+These increases were partly offset by revenue declines of
+€419 million in the Healthcare Sector and €16 million in
+Siemens Real Estate. As a consequence of the mutual agree-
+ment procedure with tax authorities related to transfer pricing,
+Siemens AG received compensatory payments from Siemens
+Healthcare U.S. The payments amounted to €259 million, com-
+pared to €670 million in the prior year, and were booked as rev-
+enue by the Healthcare Sector. On a geographic basis, revenue
+grew 31% year-over-year in the Asia, Australia region and de-
+clined 12% in the Americas region and 3% in the Europe, C.I.S.,
+Africa, Middle East region. Exports from Germany accounted
+for 73% and 70% of revenue in fiscal 2014 and 2013, respec-
+tively. In fiscal 2014, orders for Siemens AG amounted to
+€32.3 billion, nearly level compared to the prior year.
+Net assets position
+210 C.5
+Financial position
+205 C.4
+Results of operations
+193 C.3
+Financial performance system
+Business and economic environment
+250
+310 NOTE 35 - Segment information
+317
+Other financial assets
+3,022
+2,127
+5
+Investments accounted for using the equity method
+9,815
+9,638
+18
+17
+5,057
+4,560
+16
+17,883
+17,783
+15
+46,937
+Property, plant and equipment
+18,416
+15,117
+Deferred tax assets
+1,944
+1,620
+21
+Short-term debt and current maturities of long-term debt
+Liabilities and equity
+101,936
+104,879
+54,999
+56,803
+872
+945
+3,234
+3,334
+9
+Total assets
+Total non-current assets
+Other assets
+48,076
+Other intangible assets
+Goodwill
+Total current assets
+8,013
+2013
+2014
+Note
+September, 30
+Other current assets
+Current income tax assets
+Inventories
+Other current financial assets
+Trade and other receivables
+Available-for-sale financial assets
+Cash and cash equivalents
+Assets
+(in millions of €)
+As of September 30, 2014 and 2013
+1 D.3 Consolidated Statements of Financial Position
+249
+9,190
+Trade payables
+10
+11
+1,393
+3,935
+4
+Assets classified as held for disposal
+1,297
+1,290
+14
+794
+577
+15,560
+15,100
+13
+3,250
+3,710
+12
+601
+14,853
+14,526
+925
+7,594
+7,599
+Other current financial liabilities
+Retained earnings
+5,484
+5,525
+Capital reserve
+2,643
+2,643
+25
+73,312
+73,365
+35,443
+36,767
+2,074
+1,874
+24
+1,184
+1,620
+Issued capital, no par value
+25,729
+Equity
+22,663
+Treasury shares, at cost
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+28,625
+101,936
+514
+560
+31,514
+104,879
+Total liabilities and equity
+Total equity
+Non-controlling interests
+28,111
+30,954
+Total equity attributable to shareholders of Siemens AG
+(2,946)
+(3,747)
+268
+803
+Other components of equity
+Additional Information
+Total liabilities
+Other liabilities
+1,597
+4
+Liabilities associated with assets classified as held for disposal
+19,701
+17,954
+20
+Other current liabilities
+2,151
+1,762
+Current income tax liabilities
+4,485
+4,354
+23
+Current provisions
+1,515
+1,717
+19
+473
+Total non-current liabilities
+Total current liabilities
+37,868
+Other financial liabilities
+3,907
+4,071
+23
+Provisions
+504
+552
+9
+Deferred tax liabilities
+9,265
+9,324
+22
+Post-employment benefits
+18,509
+19,326
+21
+Long-term debt
+36,598
+337 | E.
+3,888
+6,199
+(1,634)
+(2,028)
+9
+Income tax expenses
+5,813
+7,427
+Income from continuing operations before income taxes
+(154)
+(177)
+8
+Other financial income (expenses), net
+(784)
+(764)
+8
+Interest expenses
+947
+1,058
+Income from continuing operations
+8
+5,400
+Income from discontinued operations, net of income taxes
+|
+Income from discontinued operations
+Net income
+Income from continuing operations
+Diluted earnings per share
+Net income
+Income from discontinued operations
+Income from continuing operations
+Basic earnings per share
+Shareholders of Siemens AG
+Non-controlling interests
+Attributable to:
+4,409
+5,507
+Net income
+231
+108
+4
+4,179
+131 | B.
+Interest income
+582
+2013
+2014
+Note
+Gross profit
+Cost of sales
+Revenue
+(in millions of €, per share amounts in €)
+For the fiscal years ended September 30, 2014 and 2013
+||| D.1 Consolidated Statements of Income
+D. Consolidated Financial Statements
+247
+334 D.7.2 Managing Board
+Supervisory Board and
+Managing Board
+Supervisory Board
+330 D.7.1
+330 | D.7
+associated companies pursuant
+to Section 313 para. 2 of the
+German Commercial Code
+NOTE 39 - Corporate Governance
+317 NOTE 40 - Subsequent events
+318 NOTE 41 - List of subsidiaries and
+71,920
+(51,165)
+510
+73,445
+20,755
+5
+Income from investments accounted for using the equity method, net
+(424)
+(194)
+7
+Other operating expenses
+500
+656
+6
+Other operating income
+(10,869)
+(10,424)
+Selling and general administrative expenses
+(4,048)
+(4,065)
+Research and development expenses
+20,135
+(53,309)
+314 NOTE 36 - Information about geographies
+315 NOTE 37 - Related party transactions
+317 NOTE 38 - Principal accountant fees
+and services
+Corporate Governance
+108 | A. To our Shareholders
+288
+394
+288
+22
+4,409
+5,507
+2013
+2014
+Note
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+330 D.7
+254 D.6
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+394
+Consolidated Statements of Income
+(37)
+940
+81
+165
+3,969
+6,364
+(440)
+857
+(136)
+(85)
+(834)
+569
+45
+(316)
+29, 30
+183
+(56)
+10
+(1,062)
+(121)
+171 | C
+248 D.1
+247
+0.26
+0.13
+4.76
+6.18
+34
+5.08
+6.37
+0.27
+0.13
+4.81
+6.24
+34
+4,284
+5,373
+126
+134
+248
+6.31
+D. Consolidated Financial Statements
+5.03
+|| | D.2 Consolidated Statements of Comprehensive Income
+|
+Shareholders of Siemens AG
+Non-controlling interests
+Attributable to:
+Total comprehensive income
+Other comprehensive income, net of income taxes
+therein: Expenses from investments accounted for using the equity method
+Items that may be reclassified subsequently to profit or loss
+Derivative financial instruments
+Available-for-sale financial assets
+Currency translation differences
+therein: Expenses from investments accounted for using the equity method
+Items that will not be reclassified to profit or loss
+Remeasurements of defined benefit plans
+Net income
+(in millions of €)
+For the fiscal years ended September 30, 2014 and 2013
+Combined Management Report
+253
+Purchase of treasury shares
+|||D.6 Notes to Consolidated Financial Statements
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+31,514
+560
+30,954
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+(3,747)
+373
+745
+5
+(6)
+(37)
+(3)
+(34)
+310
+310
+(1,080)
+(1,080)
+(1,080)
+279
+(314)
+337 | E.
+Additional Information
+NOTE 1 Basis of presentation
+currencies
+specified below
+Year-end exchange
+rate €1 quoted into
+Currency
+U.S. dollar
+The exchange rate of the U.S. dollar, Siemens' significant cur-
+rency outside the euro zone used in the preparation of the
+Consolidated Financial Statements is as follows:
+Foreign currency translation - The assets, including good-
+will, and liabilities of foreign subsidiaries, where the functional
+currency is other than the euro, are translated using the spot
+exchange rate at the end of the reporting period, while the
+Consolidated Statements of Income are translated using aver-
+age exchange rates during the period. Differences arising from
+such translations are recognized within equity and reclassified
+to net income when the gain or loss on disposal of the foreign
+subsidiary is recognized. The Consolidated Statements of Cash
+Flow are translated at average exchange rates during the
+period, whereas cash and cash equivalents are translated at the
+spot exchange rate at the end of the reporting period.
+Joint operations - A joint operation is a jointly controlled
+arrangement whereby the parties have rights to the assets and
+obligations for the liabilities relating to the arrangement.
+Siemens as joint operator recognizes in relation to its interest
+in the joint operation the assets and liabilities controlled by
+Siemens, its share of any jointly held assets or jointly incurred
+liabilities and revenues from the sale of its output and any
+related expenses including its share in revenues and expenses
+incurred jointly, in relation to the joint operation.
+measures and recognizes any retaining investment at its fair
+value. Any difference between the carrying amount of the as-
+sociate or joint venture upon loss of significant influence or
+joint control and the fair value of the retaining investment and
+proceeds from disposal is recognized in profit or loss.
+The following policies equally apply to associates and joint ven-
+tures. Where necessary, adjustments are made to bring the
+accounting policies in line with those of Siemens. The excess
+of Siemens' initial investment in associates over Siemens' own-
+ership percentage in the underlying net assets of those compa-
+nies is attributed to certain fair value adjustments with the
+remaining portion recognized as goodwill. Goodwill relating to
+the acquisition of associates is included in the carrying amount
+of the investment and is not amortized but is tested for impair-
+ment as part of the overall investment in the associate.
+Siemens' share of its associate's post-acquisition profits or
+losses is recognized in the Consolidated Statements of Income,
+and its share of post-acquisition movements in equity that
+have not been recognized in the associate's profit or loss is rec-
+ognized directly in equity. The cumulative post-acquisition
+movements are adjusted against the carrying amount of the
+investment in the associate. When Siemens' share of losses in
+an associate equals or exceeds its interest in the associate,
+Siemens does not recognize further losses, unless it incurs
+obligations or makes payments on behalf of the associate. The
+interest in an associate is the carrying amount of the invest-
+ment in the associate together with any long-term interests
+that, in substance, form part of Siemens' net investment in the
+associate. Intercompany results arising from transactions be-
+tween Siemens and its associates are eliminated to the extent
+of Siemens' interest in the associate. Siemens determines at
+each reporting date whether there is any objective evidence
+that the investment in the associate is impaired. If this is the
+case, Siemens calculates the amount of impairment as the
+difference between the recoverable amount of the associate
+and its carrying value. Upon loss of significant influence over
+the associate or joint control over the joint venture, Siemens
+through direct or indirect ownership of 20% to 50% of the vot-
+ing rights). These are recorded in the Consolidated Financial
+Statements using the equity method and are initially recog-
+nized at cost. When Siemens holds less than 20% of the voting
+power of the investee, other facts and circumstances may
+result in the Company exercising significant influence. Joint
+arrangements are arrangements over which Siemens and one
+or more parties have joint control. Joint control is the contrac-
+tually agreed sharing of control that exists only when decisions
+about the relevant activities require the unanimous consent of
+the parties sharing control. Joint arrangements that are struc-
+tured through a separate vehicle are classified as joint ventures
+if the parties to the arrangement have rights to its net assets.
+Joint ventures are accounted for using the equity method
+and are initially recognized at cost. The equity method is
+applied from the date when Siemens obtains significant influ-
+ence or joint control, and is discontinued from the date when
+Siemens ceases to have significant influence or joint control
+over an investee.
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+254
+108 | A. To our Shareholders
+Associates and joint ventures - Associates are companies
+over which Siemens has the ability to exercise significant
+influence over operating and financial policies (generally
+Business combinations Business combinations are ac-
+counted for under the acquisition method. Siemens as the
+acquirer and the acquiree may have a relationship that existed
+before they contemplated the business combination, referred to
+as a pre-existing relationship. If the business combination in
+effect settles a pre-existing relationship, Siemens as the ac-
+quirer recognizes a gain or loss for the pre-existing relationship.
+The cost of an acquisition is measured at the fair value of the
+assets given and liabilities incurred or assumed at the date of
+exchange. Any contingent consideration to be transferred by
+Siemens as the acquirer will be recognized at fair value at the
+acquisition date. Subsequent changes to the fair value of the
+contingent consideration that is deemed to be an asset or liabil-
+ity will be recognized either in profit or loss or as a change to
+other comprehensive income. If the contingent consideration
+is classified as equity, it will not be remeasured; subsequent
+settlement is accounted for within equity. Acquisition-related
+costs are expensed in the period incurred. Identifiable assets
+acquired and liabilities assumed in a business combination
+(including contingent liabilities) are measured initially at their
+fair values at the acquisition date, irrespective of the extent of
+any non-controlling interest. Uniform accounting policies are
+applied. Non-controlling interests may be measured at their fair
+value (full goodwill method) or at the proportional fair value
+of assets acquired and liabilities assumed (partial goodwill
+method). After initial recognition non-controlling interests may
+show a deficit balance since both profits and losses are allocated
+to the shareholders based on their equity interests. In business
+combinations achieved in stages, any previously held equity
+interest in the acquiree is remeasured to its acquisition date fair
+value. If there is no loss of control, transactions with non-con-
+trolling interests are accounted for as equity transactions not
+affecting profit and loss. At the date control is lost, any retained
+equity interests are remeasured to fair value. In case of a written
+put on non-controlling interests the Company distinguishes
+whether the prerequisites for the transfer of present ownership
+interest are fulfilled at the balance sheet date. Provided that the
+Company is not the beneficial owner of the shares underlying
+the put option, the exercise of the put option will be assumed at
+each balance sheet date and treated as equity transaction be-
+tween shareholders with the recognition of a purchase liability
+at the respective exercise price. The non-controlling interests
+participate in profits and losses during the reporting period.
+loses control of the subsidiary. For Consolidated Financial
+Statements, all assets, liabilities, income, expenses and cash
+flows of Siemens AG with those of its subsidiaries are com-
+bined. Intra-group transactions are eliminated in full.
+Basis of consolidation The Consolidated Financial State-
+ments include the accounts of Siemens AG and its subsidiaries
+over which the Company has control. Siemens controls an in-
+vestee if it has power over the investee that is, Siemens has
+existing rights that give Siemens the current ability to direct
+the relevant activities, which are the activities that significantly
+affect Siemens' return. In addition, Siemens is exposed to, or
+has rights to, variable returns from the involvement with
+the investee and Siemens has the ability to use its power over
+the investee to affect the amount of Siemens' return. When
+Siemens holds less than the majority of voting rights, other
+facts and circumstances including contractual arrangements
+that give Siemens power over the investee may result in the
+Company controlling the investee. Siemens reassesses whether
+it controls an investee if, and when, facts and circumstances
+indicate that there are changes to the elements evidencing
+control. Consolidation begins when the Company obtains
+control of the subsidiary and ceases from the date that Siemens
+-
+The accounting policies set out below have been applied con-
+sistently to all periods presented in these Consolidated Finan-
+cial Statements.
+NOTE 2 Summary of significant
+accounting policies
+SIGNIFICANT ACCOUNTING POLICIES.
+The Consolidated Financial Statements were authorized for
+issue by the Managing Board on November 26, 2014. The Con-
+solidated Financial Statements are generally prepared on the
+historical cost basis, except as stated in → NOTE 2 SUMMARY OF
+Siemens is a German based multinational technology company
+with core activities in the fields of electrification, automation
+and digitalization.
+Siemens prepares and reports its Consolidated Financial State-
+ments in euros (€). Due to rounding, numbers presented may
+not add up precisely to totals provided.
+The accompanying Consolidated Financial Statements present
+the operations of Siemens AG with registered offices in Berlin
+and Munich, Germany, and its subsidiaries (the Company or
+Siemens). They have been prepared in accordance with Inter-
+national Financial Reporting Standards (IFRS), as adopted by the
+European Union as well as with the additional requirements set
+forth in Section 315a (1) of the German Commercial Code (HGB).
+The financial statements are also in accordance with IFRS as
+issued by the International Accounting Standards Board (IASB).
+(13)
+Annual average
+rate €1 quoted into
+(13)
+(121)
+(52)
+304
+304
+(1,349)
+(1,349)
+(1,349)
+300
+(18)
+(18)
+(2,647)
+(119)
+(2,528)
+(440)
+(10)
+(44)
+43
+183
+(1,017)
+4,409
+126
+4,284
+31,424
+569
+30,855
+Total equity
+of Siemens AG
+able to shareholders
+(396)
+(62)
+(2,433)
+(2,433)
+(2,533)
+857
+31
+825
+(314)
+(56)
+905
+5,507
+134
+5,373
+28,625
+514
+28,111
+(2,946)
+(1)
+428
+(160)
+28,625
+514
+28,111
+(2,946)
+(1)
+428
+(160)
+(564)
+(8)
+(556)
+(2,654)
+Total equity attribut-
+currencies
+specified below
+September 30,
+Inventories - Inventories are valued at the lower of acquisi-
+tion or production costs and net realizable value, costs being
+generally determined on the basis of an average or first-in,
+Income taxes - The Company applies IAS 12, Income taxes.
+Current taxes are calculated based on the profit (loss) of the
+fiscal year and in accordance with local tax rules of the tax
+jurisdiction respectively. Expected and executed additional tax
+payments respectively tax refunds for prior years are also taken
+into account. Under the liability method, deferred tax assets
+and liabilities are recognized for future tax consequences
+attributable to differences between the financial statement
+carrying amounts of existing assets and liabilities and their
+respective tax bases. The effect on deferred tax assets and
+liabilities of a change in tax rates is recognized in the income
+statement, unless related to items directly recognized in equity,
+in the period the new laws are enacted or substantively
+enacted. Deferred tax assets are recognized to the extent that it
+is probable that future taxable income will be available against
+which the deductible temporary differences, unused tax losses
+and unused tax credits can be utilized.
+Siemens classifies a non-current asset or a disposal group as
+held for disposal if its carrying amount will be recovered princi-
+pally through a sale transaction or through distribution to
+shareholders rather than through continuing use. For this to be
+the case, the asset or disposal group must be available for im-
+mediate sale or distribution in its present condition subject
+only to terms that are usual and customary for sales or distribu-
+tions of such assets or disposal groups and its sale or distribu-
+tion must be highly probable. The disclosures in the Notes to
+Consolidated Financial Statements outside → NOTE 4 ACQUISI-
+TIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS that refer to the
+Consolidated Statements of Financial Position generally relate
+to assets that are not held for disposal. Siemens reports
+non-current assets or disposal groups held for disposal sepa-
+rately in NOTE 4 ACQUISITIONS, DISPOSITIONS AND DISCONTINUED
+OPERATIONS. Non-current assets classified as held for disposal
+and disposal groups are measured at the lower of their carrying
+amount and fair value less costs to sell, unless these items pre-
+sented in the disposal group are not part of the measurement
+scope as defined in IFRS 5, Non-current Assets held for Sale and
+Discontinued Operations.
+Siemens reports discontinued operations separately in → NOTE 4
+ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS. In order
+to present the financial effects of a discontinued operation, rev-
+enue and expenses arising from intragroup transactions are
+eliminated except for those revenue and expenses that are con-
+sidered to continue after the disposal of the discontinued oper-
+ation. In any case, no profit or loss is recognized for intragroup
+transactions.
+258
+108 | A. To our Shareholders
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+Discontinued operations and non-current assets held for
+disposal - Discontinued operations are reported when a com-
+ponent of an entity comprising operations and cash flows that
+can be clearly distinguished, operationally and for financial
+reporting purposes, from the rest of the entity is classified as
+held for disposal or has been disposed of, if the component
+either (1) represents a separate major line of business or geo-
+graphical area of operations and (2) is part of a single co-
+ordinated plan to dispose of a separate major line of business or
+geographical area of operations or (3) is a subsidiary acquired
+exclusively with a view to resale. In the Consolidated State-
+ments of Income, income (loss) from discontinued operations
+is reported separately from income and expenses from continu-
+ing operations; prior periods are presented on a comparable
+basis. In the Consolidated Statements of Cash Flow, the cash
+flows from discontinued operations are presented separately
+from cash flows of continuing operations; prior periods are pre-
+sented on a comparable basis. The disclosures in the Notes
+to the Consolidated Financial Statements outside → NOTE 4
+ACQUISITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS that refer
+to the Consolidated Statements of Income and the Consoli-
+dated Statements of Cash Flow relate to continuing operations.
+The Company's property, plant and equipment and other intan-
+gible assets to be disposed of are recorded at the lower of
+carrying amount or fair value less costs to sell and depreciation
+is ceased.
+first-out method. Production costs comprise direct material
+and labor and applicable manufacturing overheads, including
+depreciation charges. Net realizable value is the estimated sell-
+ing price in the ordinary course of business, less the estimated
+costs of completion and selling expenses.
+Impairment of property, plant and equipment and other
+intangible assets - The Company reviews property, plant and
+equipment and other intangible assets for impairment when-
+ever events or changes in circumstances indicate that the car-
+rying amount of an asset may not be recoverable. In addition,
+intangible assets with indefinite useful lives as well as intangi-
+ble assets not yet available for use are subject to an annual im-
+pairment test. Recoverability of assets is measured by the com-
+parison of the carrying amount of the asset to the recoverable
+amount, which is the higher of the asset's value in use and its
+fair value less costs to sell. If assets do not generate cash in-
+flows that are largely independent of those from other assets or
+groups of assets, the impairment test is not performed at an
+individual asset level, instead, it is performed at the level of the
+cash-generating unit the asset belongs to. If such assets are
+considered to be impaired, the impairment to be recognized is
+measured by the amount by which the carrying amount of the
+assets or cash-generating unit exceeds their recoverable
+amount. If the fair value cannot be determined, the assets'
+value in use is applied as their recoverable amount. The assets'
+value in use is measured by discounting their estimated future
+cash flows. If there is an indication that the reasons which
+caused the impairment no longer exist, Siemens assesses the
+need to reverse all or a portion of the impairment.
+Furniture & office equipment
+Equipment leased to others
+Technical machinery & equipment
+Factory and office buildings
+Other buildings
+If the costs of certain components of an item of property, plant
+and equipment are significant in relation to the total cost of the
+item, they are accounted for and depreciated separately. Depre-
+ciation expense is recognized using the straight-line method.
+Residual values and useful lives are reviewed annually and, if
+expectations differ from previous estimates, adjusted accord-
+ingly. Costs of construction of qualifying assets, i.e. assets that
+require a substantial period of time to be ready for its intended
+use, include capitalized interest, which is amortized over the
+estimated useful life of the related asset. The following useful
+lives are assumed:
+Property, plant and equipment - Property, plant and equip-
+ment, including investment property, is valued at cost less
+accumulated depreciation and impairment losses.
+Other intangible assets - The Company amortizes intangible
+assets with finite useful lives on a straight-line basis over their
+respective estimated useful lives. Estimated useful lives for
+patents, licenses and other similar rights generally range from
+three to five years, except for intangible assets with finite use-
+ful lives acquired in business combinations. Intangible assets
+acquired in business combinations primarily consist of cus-
+tomer relationships and technology. Useful lives in specific
+acquisitions ranged from eleven to twenty years for customer
+relationships and from three to 18 years for technology. Intan-
+gible assets which are determined to have indefinite useful
+lives as well as intangible assets not yet available for use are
+not amortized, but instead tested for impairment at least
+annually.
+allocated to this cash-generating unit or this group of cash-
+generating units is recognized. The recoverable amount is the
+higher of the cash-generating unit's or the group of cash-
+generating units' fair value less costs to sell and its value in
+use. If either of these amounts exceeds the carrying amount,
+it is not always necessary to determine both amounts. These
+values are generally determined based on discounted cash flow
+calculations. Impairment losses on goodwill are not reversed
+in future periods if the recoverable amount exceeds the carry-
+ing amount of the cash-generating unit or the group of cash-
+generating units to which the goodwill is allocated.
+257
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+20 to 50 years
+5 to 10 years
+5 to 10 years
+generally 5 years
+generally 3 to 5 years
+Defined benefit plans - Siemens measures the entitlements
+of the defined benefit plans by applying the projected unit
+credit method. The approach reflects an actuarially calculated
+net present value of the future benefit entitlement for services
+already rendered. In determining the net present value of the
+future benefit entitlement for service already rendered (Defined
+Benefit Obligation (DBO)), Siemens considers future compensa-
+tion and benefit increases, because the employee's final benefit
+entitlement at regular retirement age depends on future com-
+pensation or benefit increases. The assumptions used for the
+calculation of the DBO as of the period-end of the preceding
+fiscal year are used to determine the calculation of service cost
+and interest income and expense of the following year. The net
+interest income or expense for the fiscal year will be based on
+the discount rate for the respective year multiplied by the net
+liability at the preceding fiscal year's period-end date. The fair
+value of plan assets and DBO and thus the interest income on
+plan assets and the interest expenses on DBO are adjusted for
+significant events after the preceding fiscal year end, such as a
+supplemental funding, plan changes or business combinations
+and disposals. The DBO includes the present value from the
+effects of taxes payable by the plan on contributions or bene-
+fits relating to services already rendered.
+Service cost and past service cost for post-employment benefits
+as well as other administration costs which are unrelated to the
+management of plan assets are allocated among functional
+costs (line items Cost of sales, Research and development
+expenses, Selling and general administrative expenses) follow-
+ing the functional area of the corresponding profit and cost
+centers. Past service cost and settlement gains (losses) are rec-
+ognized immediately in profit or loss when the plan amend-
+ment, curtailment or settlement occurs. Administration Costs
+which are related to the management of plan assets and taxes
+directly linked to the return on plan assets and payable by the
+plan itself are included in the return on plan assets and are rec-
+ognized in Other comprehensive income, net of income taxes.
+For unfunded plans, Siemens recognizes a post-employment
+benefit liability equal to the DBO. For funded plans, Siemens
+offsets the fair value of the plan assets with the benefit obliga-
+tions. Siemens recognizes the net amount, after adjustments
+for effects relating to any asset ceiling, in line item Post-employ-
+ment benefits or in line item Other current assets.
+Remeasurements comprise actuarial gains and losses, resulting
+for example from an adjustment of the discount rate, as well as
+131 | B. Corporate Governance
+Combined Management Report
+171 C.
+108 | A. To our Shareholders
+When available-for-sale financial assets incur a decline in fair
+value below acquisition cost and there is objective evidence
+Available-for-sale financial assets - Investments in equity
+instruments, debt instruments and fund shares are all classi-
+fied as available-for-sale financial assets and are measured at
+fair value, if reliably measurable. Unrealized gains and losses,
+net of applicable deferred income tax expenses, are recognized
+in line item Other comprehensive income, net of income taxes.
+Provided that fair value cannot be reliably determined, Siemens
+measures available-for-sale financial instruments at cost. This
+applies to equity instruments that do not have a quoted market
+price in an active market, and decisive parameters cannot be
+reliably estimated to be used in valuation models for the deter-
+mination of fair value.
+Cash and cash equivalents - The Company considers all
+highly liquid investments with less than three months matu-
+rity from the date of acquisition to be cash equivalents. Cash
+and cash equivalents are measured at cost.
+-
+Initially, financial instruments are recognized at their fair value.
+Transaction costs directly attributable to the acquisition or
+issue of financial instruments are only included in determining
+the carrying amount, if the financial instruments are not
+measured at fair value through profit or loss. Receivables from
+finance leases are recognized at an amount equal to the net
+investment in the lease. Subsequently, financial assets and
+liabilities are measured according to the category cash and
+cash equivalents, available-for-sale financial assets, loans and
+receivables, financial liabilities measured at amortized cost or
+financial assets and liabilities classified as held for trading - to
+which they are assigned.
+Financial instruments are recognized on the Consolidated State-
+ments of Financial Position when Siemens becomes a party to
+the contractual obligations of the instrument. Regular way
+purchases or sales of financial assets, i.e. purchases or sales
+under a contract whose terms require delivery of the asset
+within the time frame established generally by regulation or
+convention in the market place concerned, are accounted for at
+the trade date.
+mainly comprise notes and bonds, loans from banks, trade pay-
+ables, obligations under finance leases and derivative financial
+instruments with a negative fair value. Siemens does not make
+use of the option to designate financial assets or financial liabil-
+ities at fair value through profit or loss at inception (Fair Value
+Option). Based on their nature, financial instruments are classi-
+fied as financial assets and financial liabilities measured at cost
+or amortized cost and financial assets and financial liabilities
+measured at fair value and as receivables from finance leases.
+Financial instruments - A financial instrument is any con-
+tract that gives rise to a financial asset of one entity and a
+financial liability or equity instrument of another entity. Finan-
+cial assets of the Company mainly include cash and cash equiv-
+alents, available-for-sale financial assets, trade receivables,
+loans receivables, receivables from finance leases and derivative
+financial instruments with a positive fair value. Cash and cash
+equivalents are not included within the category available-for-
+sale financial assets as these financial instruments are not sub-
+ject to fluctuations in value. Siemens does not make use of the
+category held to maturity. Financial liabilities of the Company
+Provisions - A provision is recognized in the Statement of
+Financial Position when the Company has a present legal or
+constructive obligation as a result of a past event, it is probable
+that an outflow of economic benefits will be required to settle
+the obligation and a reliable estimate can be made of the
+amount of the obligation. If the effect is material, provisions are
+recognized at present value by discounting the expected future
+cash flows at a pretax rate that reflects current market assess-
+ments of the time value of money. When a contract becomes
+onerous, the present obligation under the contract is recog-
+nized as a provision and measured at the lower of the expected
+cost of fulfilling the contract and the expected cost of terminat-
+ing the contract as far as they exceed the expected economic
+benefits of the contract. Additions to provisions and reversals
+are generally recognized in the Consolidated Statements of
+Income. The present value of the recognized obligations associ-
+ated with the retirement of property, plant and equipment
+(asset retirement obligations) that result from the acquisition,
+construction, development or normal use of an asset is added to
+the carrying amount of the related asset. The additional carry-
+ing amount is depreciated over the useful life of the related
+asset. Additions to and reductions from the present value of
+asset retirement obligations that result from changes in esti-
+mates are generally recognized by adjusting the carrying
+amount of the related asset and provision. If the asset retirement
+obligation is settled for other than the carrying amount of the
+liability, the Company recognizes a gain or loss on settlement.
+Termination benefits - Termination benefits are provided as
+a result of an entity's offer made in order to encourage volun-
+tary redundancy before the normal retirement date or from an
+entity's decision to terminate the employment. Termination
+benefits in accordance with IAS 19, Employee Benefits, are rec-
+ognized as a liability and an expense when the entity can no
+longer withdraw the offer of those benefits.
+the difference between the return on plan assets and the
+amounts included in net interest on the net defined benefits
+liability (asset) and are recognized in Other comprehensive
+income, net of income taxes.
+260
+259
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+248 D.1
+D. Consolidated Financial Statements
+247
+252 D.5
+Year ended
+September 30,
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+250 D.3
+Sales from construction contracts: A construction contract is a
+contract specifically negotiated for the construction of an asset
+or a combination of assets that are closely interrelated or inter-
+dependent in terms of their design, technology and function or
+their ultimate purpose or use. When the outcome of a construc-
+tion contract can be estimated reliably, revenues from con-
+struction-type projects are recognized under the percent-
+age-of-completion method, based on the percentage of costs
+incurred to date compared to the total estimated contract costs.
+An expected loss on the construction contract is recognized as
+an expense immediately. When the outcome of a construction
+contract cannot be estimated reliably (1) revenue is recognized
+only to the extent contract costs incurred are probable of being
+recoverable, and (2) contract costs are recognized as an
+expense in the period in which they are incurred.
+Sale of goods: Revenue from the sale of goods is recognized
+when the significant risks and rewards of ownership of the
+goods have passed to the buyer, usually on delivery of the goods.
+Revenue recognition - Under the condition that persuasive
+evidence of an arrangement exists revenue is recognized to the
+extent that it is probable that the economic benefits will flow to
+the Company and the revenue can be reliably measured, regard-
+less of when the payment is being made. In cases where the
+inflow of economic benefits is not probable due to customer
+related credit risks the revenue recognized is subject to the
+amount of payments irrevocably received. Revenue is mea-
+sured at the fair value of the consideration received or receiv-
+able net of discounts and rebates and excluding taxes or duty.
+The Company assesses its revenue arrangements against spe-
+cific criteria in order to determine if it is acting as principal or
+agent. The following specific recognition criteria must also be
+met before revenue is recognized:
+from these foreign currency revaluations are recognized in net
+income. Those foreign currency-denominated transactions
+which are classified as non-monetary are remeasured using the
+historical spot exchange rate.
+256
+255
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+252 D.5
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+During project execution, variation orders by the customer for a
+change in the scope of the work to be performed under the con-
+tract may be received leading to an increase or a decrease in
+contract revenue. Examples of such variations are changes
+in the specifications or design of the asset and changes in the
+duration of the contract. As the scope of work to be performed
+changes also in case of contract terminations, such termina-
+tions are considered to be a subset of variations. Therefore
+the requirements of IAS 11 relating to variations are applied to
+contract terminations, irrespective of whether the contract is
+terminated by the customer, Siemens or both. In accordance
+with the requirements of IAS 11 relating to changes in estimates,
+251 D.4
+249 D.2
+248 D.1
+D. Consolidated Financial Statements
+247
+Foreign currency transaction Transactions that are
+denominated in a currency other than the functional currency
+of an entity, are recorded at that functional currency applying
+the spot exchange rate at the date when the underlying trans-
+actions are initially recognized. At the end of the reporting
+period, foreign currency-denominated monetary assets and lia-
+bilities are revalued to functional currency applying the spot
+exchange rate prevailing at that date. Gains and losses arising
+-
+1.313
+2013
+2014
+1.357
+2013
+1.351
+2014
+1.258
+ISO Code
+USD
+250 D.3
+the estimates of the total contract revenue and the total con-
+tract costs are adjusted reflecting the reduced scope of work to
+be performed, typically leading to a reversal of revenue recog-
+nized. This methodology is also applied to contracts for which it
+is management's best estimate that a termination is the most
+likely scenario, but which have not yet been terminated.
+Rendering of services: Revenues from service transactions are
+recognized as services are performed. For long-term service
+contracts, revenues are recognized on a straight-line basis over
+the term of the contract or, if the performance pattern is other
+than straight-line, as the services are provided, i.e. under the
+percentage-of-completion method as described above.
+Sales from multiple element arrangements: Sales of goods
+and services as well as software arrangements sometimes
+involve the provision of multiple elements. In these cases, the
+Company determines whether the contract or arrangement
+contains more than one unit of accounting. If certain criteria
+are met, foremost if the delivered element(s) has (have) value
+to the customer on a stand-alone basis, the arrangement is sep-
+arated and the appropriate revenue recognition convention is
+then applied to each separate unit of accounting. Generally, the
+total arrangement consideration is allocated to the separate
+units of accounting based on their relative fair values. How-
+ever, if in rare cases fair value evidence is available for the un-
+delivered but not for one or more of the delivered elements, the
+amount allocated to the delivered element(s) equals the total
+arrangement consideration less the aggregate fair value of
+the undelivered element(s) (residual method). If the criteria for
+the separation of units of accounting are not met, revenue is
+deferred until such criteria are met or until the period in which
+the last undelivered element is delivered.
+249 D.2
+248 D.1
+D. Consolidated Financial Statements
+247
+For the purpose of impairment testing, goodwill acquired in
+a business combination is allocated to the cash-generating
+unit or the group of cash-generating units that is expected to
+benefit from the synergies of the business combination. If the
+carrying amount of the cash-generating unit or the group of
+cash-generating units, to which the goodwill is allocated, ex-
+ceeds its recoverable amount, an impairment loss on goodwill
+purposes.
+The goodwill impairment test is performed at the level of a
+cash-generating unit or a group of cash-generating units repre-
+sented by a Division or equivalent, which is the lowest level
+at which goodwill is monitored for internal management
+Goodwill - Goodwill is not amortized, but instead tested for
+impairment annually, as well as whenever there are events or
+changes in circumstances (triggering events) which suggest
+that the carrying amount may not be recoverable. Goodwill is
+carried at cost less accumulated impairment losses.
+Earnings per share - Basic earnings per share are computed
+by dividing income from continuing operations, income from
+discontinued operations and net income, all attributable to
+ordinary shareholders of Siemens AG by the weighted average
+number of shares outstanding during the year. Diluted earn-
+ings per share are calculated by assuming conversion or exer-
+cise of all potentially dilutive securities and share-based pay-
+ment plans.
+Government grants for research and development activities are
+offset against research and development costs. They are recog-
+nized as income over the periods in which the research and
+development costs incur that are to be compensated. Govern-
+ment grants for future research and development costs are
+recorded as deferred income.
+Costs for development activities, whereby research findings are
+applied to a plan or design for the production of new or sub-
+stantially improved products and processes, are capitalized if
+(1) development costs can be measured reliably, the product
+or process is (2) technically and (3) commercially feasible,
+(4) future economic benefits are probable and (5) Siemens
+intends, and (6) has sufficient resources, to complete develop-
+ment and to use or sell the asset. The costs capitalized include
+the cost of materials, direct labour and other directly attribut-
+able expenditure that serves to prepare the asset for use. Such
+capitalized costs are included in line item Other intangible
+assets as software and other internally generated intangible
+assets. Other development costs are expensed as incurred.
+Capitalized development costs are stated at cost less accumu-
+lated amortization and impairment losses with an amortization
+period of generally three to ten years.
+Research and development costs - Costs of research activi-
+ties undertaken with the prospect of gaining new scientific or
+technical knowledge and understanding are expensed as
+incurred.
+Product-related expenses and losses from onerous con-
+tracts - Provisions for estimated costs related to product war-
+ranties are recorded in line item Cost of sales at the time the
+related sale is recognized, and are established on an individual
+basis, except for the standard product business. The estimates
+reflect historic experience of warranty costs, as well as infor-
+mation regarding product failure experienced during construc-
+tion, installation or testing of products. In the case of new
+products, expert opinions and industry data are also taken
+into consideration in estimating product warranty provisions.
+Expected losses from onerous contracts are recognized in the
+period when the current estimate of total contract costs
+exceeds contract revenue.
+Government grants
+Government grants are recognized
+when there is reasonable assurance that the conditions at-
+tached to the grants are complied with and the grants will be
+received. Grants awarded for the purchase or the production
+of fixed assets (grants related to assets) are generally offset
+against the acquisition or production costs of the respective
+assets and reduce future depreciations accordingly. Grants
+awarded for other than non-current assets (grants related to
+income) are reported in the Consolidated Statements of Income
+under the same functional area as the corresponding expenses.
+They are recognized as income over the periods necessary
+to match them on a systematic basis to the costs that are
+intended to be compensated. Government grants for future
+expenses are recorded as deferred income.
+-
+→ NOTE 33 PERSONNEL COSTS.
+Functional costs - In general, operating expenses by types
+are assigned to the functions following the functional area
+of the corresponding profit and cost centers. Expenses relating
+to cross-functional initiatives or projects are assigned to the
+respective functional costs based on an appropriate allocation
+principle. Regarding amortization see → NOTE 16 OTHER INTANGIBLE
+ASSETS, regarding depreciation see → NOTE 17 PROPERTY, PLANT
+AND EQUIPMENT and regarding employee benefit expenses see
+Dividends: Dividends are recognized when the right to receive
+payment is established.
+manufacturing leases is recognized based on the policies for
+outright sales. Profit from sale and leaseback transactions is rec-
+ognized immediately if significant risks and rewards of owner-
+ship have passed to the buyer, the leaseback results in an
+operating lease and the transaction is established at fair value.
+Combined Management Report
+171 C.
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+Income from lease arrangements: Operating lease income for
+equipment rentals is recognized on a straight-line basis over the
+lease term. An arrangement that is not in the legal form of a
+lease is accounted for as a lease if it is dependent on the use of
+a specific asset or assets and the arrangement conveys a right
+to use the asset. Receivables from finance leases, in which
+Siemens as lessor transfers substantially all the risks and re-
+wards incidental to ownership to the customer are recognized
+at an amount equal to the net investment in the lease. Finance
+income is subsequently recognized based on a pattern reflecting
+a constant periodic rate of return on the net investment using
+the effective interest method. A selling profit component on
+Royalties: Royalties are recognized on an accrual basis in accor-
+dance with the substance of the relevant agreement.
+Interest income: Interest is recognized using the effective inter-
+est method.
+251 D.4
+D.
+Non-controlling
+interests
+(1,897)
+Disposal of current available-for-sale financial assets
+(26)
+112
+Disposal of businesses, net of cash disposed
+2,462
+518
+Disposal of investments, intangibles and property, plant and equipment
+(2,175)
+(2,501)
+(157)
+(613)
+Purchase of current available-for-sale financial assets
+317
+(346)
+Change in receivables from financing activities
+Purchase of investments
+(2,786)
+(31)
+Acquisitions of businesses, net of cash acquired
+(1,808)
+(1,831)
+Additions to intangible assets and property, plant and equipment
+Cash flows from investing activities
+7,340
+7,100
+Cash flows from operating activities – continuing and discontinued operations
+(335)
+76
+Cash flows from investing activities – continuing operations
+(4,364)
+25
+247
+(479)
+(617)
+Interest paid
+8
+801
+Change in short-term debt and other financing activities
+(2,927)
+(1,452)
+Repayment of long-term debt (including current maturities of long-term debt)
+(15)
+3,772
+(20)
+527
+21
+Issuance of long-term debt
+Other transactions with owners
+(1,394)
+(1,066)
+25
+Purchase of treasury shares
+Cash flows from financing activities
+(5,076)
+(317)
+339
+(4,026)
+Cash flows from investing activities - continuing and discontinued operations
+Cash flows from investing activities – discontinued operations
+(4,759)
+154
+(131)
+Cash flows from operating activities - discontinued operations
+7,186
+2,411
+(231)
+(108)
+4,409
+5,507
+2013
+2014
+Note
+Income taxes paid
+Additions to assets leased to others in operating leases
+Other assets and liabilities
+Trade payables
+Trade and other receivables
+Inventories
+Change in assets and liabilities
+Other non-cash (income) expenses
+Other (income) losses from investments
+(Gains) losses on disposals of assets related to investing activities, net
+Interest (income) expenses, net
+Income tax expenses
+Amortization, depreciation and impairments
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+(Income) from discontinued operations, net of income taxes
+Net income
+Cash flows from operating activities
+(in millions of €)
+For the fiscal years ended September 30, 2014 and 2013
+| D.4 Consolidated Statements of Cash Flows
+2,804
+(2,533)
+2,028
+(295)
+7,230
+Cash flows from operating activities - continuing operations
+837
+977
+Interest received
+356
+333
+Dividends received
+(2,164)
+(1,828)
+(377)
+(371)
+818
+(1,203)
+(208)
+205
+(326)
+200
+(256)
+336
+671
+92
+(326)
+(526)
+(292)
+(527)
+(164)
+1,634
+(2,528)
+Dividends paid to shareholders of Siemens AG
+Cash flows from financing activities - continuing operations
+5,484
+2,643
+(3)
+(553)
+(2,270)
+(52)
+(163)
+-
+5
+-
+(40)
+395
+(2,528)
+22,663
+4,284
+21
+6,173
+2,643
+Retained earnings
+Capital reserve
+Issued capital
+Balance as of September 30, 2014
+Other changes in equity
+Transactions with non-controlling interests
+Dividends attributable to non-controlling interests
+Purchase of treasury shares
+Share-based payment
+22,877
+2,643
+5,484
+22,663
+(44)
+245
+857
+Treasury
+shares at cost
+instruments
+financial assets
+differences
+Derivative financial
+Available-for-sale
+Currency translation
+Combined Management Report
+252
+108 | A. To our Shareholders
+171 | C
+Corporate Governance
+131 | B.
+25,729
+5,525
+2,643
+(6)
+(34)
+31
+(24)
+11
+(2,533)
+290
+5,373
+Dividends
+Other comprehensive income, net of income taxes
+Re-issuance of treasury shares
+Balance as of October 1, 2013
+21
+Net income
+8,034
+10,950
+9,234
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+and discontinued operations at end of period
+Less: Cash and cash equivalents of assets classified as held for disposal
+Cash and cash equivalents at end of period
+Cash and cash equivalents at beginning of period
+(1,717)
+(1,199)
+8,013
+Change in cash and cash equivalents
+214
+Effect of changes in exchange rates on cash and cash equivalents
+(476)
+Effect of deconsolidation of OSRAM on cash and cash equivalents
+(3,396)
+319
+(2)
+(4,487)
+Cash flows from financing activities – continuing and discontinued operations
+Cash flows from financing activities – discontinued operations
+(3,715)
+(152)
+(125)
+(4,485)
+(108)
+44
+9,190
+9,234
+Balance as of October 1, 2012
+Balance as of September 30, 2013
+Other changes in equity
+Spin-off related changes in equity
+Transactions with non-controlling interests
+Re-issuance of treasury shares
+Share-based payment
+Dividends
+Other comprehensive income, net of income taxes
+Net income
+247
+(in millions of €)
+For the fiscal years ended September 30, 2014 and 2013
+251
+D.5 Consolidated Statements of Changes in Equity
+252 D.5
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+Additional Information
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+D.
+Fair value hedges - The carrying amount of the hedged item
+is adjusted by the gain or loss attributable to the hedged risk.
+Where an unrecognized firm commitment is designated as
+hedged item, the subsequent cumulative change in its fair
+value is recognized as a separate financial asset or liability with
+corresponding gain or loss recognized in net income.
+Derivative financial instruments Derivative financial
+instruments, such as foreign currency exchange contracts and
+interest rate swap contracts, are measured at fair value. Deriv-
+ative financial instruments are classified as held for trading un-
+less they are designated as hedging instruments, for which
+hedge accounting is applied. Changes in the fair value of deriv-
+ative financial instruments are recognized periodically either in
+net income or, in the case of a cash flow hedge, in line item
+Other comprehensive income, net of income taxes (applicable
+deferred income tax). Certain derivative instruments embed-
+ded in host contracts are also accounted for separately as
+derivatives.
+For hedged items carried at amortized cost, the adjustment is
+amortized until maturity of the hedged item. For hedged
+firm commitments the initial carrying amount of the assets or
+-
+NOTE 6 Other operating income
+Loans and receivables - Financial assets classified as loans
+and receivables are measured at amortized cost using the ef-
+fective interest method less any impairment losses. Impair-
+ment losses on trade and other receivables are recognized
+using separate allowance accounts. Loans and receivables
+bearing no or lower interest rates compared to market rates
+with a maturity of more than one year are discounted.
+that the asset is impaired, the cumulative loss that has been
+recognized in equity is removed from equity and recognized in
+the Consolidated Statements of Income. The Company consid-
+ers all available evidence such as market conditions and prices,
+investee-specific factors and the duration as well as the extent
+to which fair value is less than acquisition cost in evaluating
+potential impairment of its available-for-sale financial assets.
+The Company considers a decline in fair value as objective
+evidence of impairment, if the decline exceeds 20% of costs or
+continues for more than six months. An impairment loss is
+reversed in subsequent periods, if the reasons for the impair-
+ment no longer exist. The reversal of impairment losses on
+debt instruments is recognized in the Consolidated Statement
+of Income, while any reversal of impairment losses on equity
+instruments is recognized in line item Other comprehensive
+income, net of income taxes.
+liabilities that result from meeting the firm commitments are
+adjusted to include the cumulative changes in the fair value
+that were previously recognized as separate financial assets or
+liabilities.
+Financial liabilities - Siemens measures financial liabilities,
+except for derivative financial instruments, at amortized cost
+using the effective interest method.
+Cash flow hedges - The effective portion of changes in the fair
+value of derivative instruments designated as cash flow hedges
+are recognized in line item Other comprehensive income, net
+of income taxes (applicable deferred income tax), and any inef-
+fective portion is recognized immediately in net income.
+Amounts accumulated in equity are reclassified into net in-
+come in the same periods in which the hedged item affects net
+income.
+Total amounts of item Interest income and (expense), other
+than from post-employment benefits, were as follows:
+Prior-year information - The presentation of certain prior-
+year information has been reclassified to conform to the cur-
+rent year presentation. To enhance transparency, the Company
+changed retrospectively the presentation of financing of dis-
+continued operations in the Consolidated Statements of Cash
+Flows in fiscal 2014.
+45
+(80)
+Miscellaneous financial income (expenses), net
+Other financial income (expenses), net
+(221)
+(74)
+(177)
+(154)
+Year ended September 30,
+2014
+2013
+30
+(33)
+(72)
+4
+(42)
+(30)
+Share-based payment – IFRS 2, Share-based payment, distin-
+guishes between cash-settled and equity-settled share-based
+payment transactions. For both types, the fair value is mea-
+sured at grant date and compensation expense is recognized
+over the vesting period during which the employees become
+unconditionally entitled to the awards granted. Cash-settled
+awards are re-measured at fair value at the end of each report-
+ing period and upon settlement. The fair value of share-based
+awards, such as stock awards, matching shares, and shares
+granted under the Jubilee Share Program, is determined as the
+market price of Siemens shares, considering dividends during
+the vesting period the grantees are not entitled to and market
+conditions and non-vesting conditions, if applicable.
+Deferred tax:
+45
+(80)
+Germany
+Foreign
+207
+256
+99
+(376)
+306
+(120)
+Income (expenses) from available-for-sale
+financial assets, net
+2,028
+(784)
+Interest expenses
+Other comprehensive income,
+net of income taxes
+Total comprehensive income
+|
+NOTE 8 Interest income, interest expenses
+and other financial income (expenses),
+net
+(in millions of €)
+Interest income from post-employment
+benefits
+Interest income
+Year ended September 30,
+2014
+2013
+1
+3
+Interest income other than from
+post-employment benefits
+1,058
+944
+1,058
+947
+Interest expenses from
+post-employment benefits
+(295)
+(294)
+Interest expenses other than from
+post-employment benefits
+(469)
+(490)
+(764)
+Income (loss) from continuing operations
+1,634
+Changes in the fair value of warrants issued together with
+US$3 billion bonds in fiscal 2012 resulted in a pretax loss of
+€42 million and a pretax gain of €11 million, respectively, in fis-
+cal 2014 and 2013. In fiscal 2014, the fair value increased mainly
+due to an increase in the underlying Siemens and OSRAM share
+prices as well as increased implied volatilities. The gain (loss)
+is disclosed in Other financial income (expenses), net and in
+Corporate items for segment reporting purposes.
+1,445
+1,240
+Post-employment benefits
+3,112
+2,954
+Liabilities
+3,991
+3,699
+Other
+229
+282
+Tax loss and credit carryforward
+Deferred tax assets
+706
+918
+9,915
+9,640
+Liabilities:
+Non-current assets
+2,185
+2,452
+Inventories and receivables
+3,882
+3,476
+Liabilities
+787
+670
+Other
+Inventories and receivables
+Item Miscellaneous financial income (expense), net, in fiscal
+2014 and 2013, includes gains (losses) of €(293) million and
+€95 million, respectively, from the accretion of provisions
+and the increase (decrease) in the discount rate, as well as
+expenses as a result of allowances and write offs of finance
+receivables, net of reversals of €40 million and €80 million,
+respectively. Furthermore, gains (losses) related to derivative
+financial instruments are included.
+547
+2013
+Income tax expenses
+The current income tax expenses in fiscal 2014 and 2013
+include adjustments recognized for current tax of prior years
+in the amount of €106 million and €87 million, respectively.
+The current tax expense in 2013 is positively impacted by the
+closing of a mutual agreement procedure regarding transfer
+prices between Germany and the U.S. leading to an increase
+of German current taxes and an overcompensating decrease of
+foreign income taxes.
+The deferred tax expense (benefit) in fiscal 2014 and 2013
+includes tax effects of the origination and reversal of tempo-
+rary differences of €119 million and €(302) million, respectively.
+The German deferred tax expense in fiscal 2014 and 2013 is
+mainly related to the utilization of tax loss carryforwards,
+partly compensated by tax effects in connection with positive
+appeal proceedings in 2014.
+247
+D.
+Consolidated Financial Statements
+454
+Consolidated Statements of Income
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+269
+In Germany, the calculation of current tax is based on a corpo-
+rate tax rate of 15% and a solidarity surcharge thereon of 5.5%,
+for all distributed and retained earnings. In addition to corpo-
+rate taxation, trade tax is levied on profits earned in Germany.
+As the German trade tax is a non deductible expense, the aver-
+age trade tax rate amounts to 15% and the combined total tax
+rate results in 31%. Deferred tax assets and liabilities are mea-
+sured at tax rates that are expected to apply to the period when
+the asset is realized or the liability is settled.
+For foreign subsidiaries, current taxes are calculated based on
+the local tax laws and applicable tax rates in the individual for-
+eign countries. Deferred tax assets and liabilities are measured
+at the tax rates that are expected to apply to the period when
+the asset is realized or the liability is settled.
+Income tax expense (current and deferred) differs from the
+amounts computed by applying a combined statutory German
+income tax rate of 31% as follows:
+Deferred income tax assets and liabilities on a gross basis are
+summarized as follows:
+(in millions of €)
+Assets:
+Non-current assets
+September 30,
+2014
+433
+(in millions of €)
+As of September 30, 2014 and 2013, the carrying amount of all
+individually not material joint ventures amounts to €710 mil-
+lion and €393 million, respectively. Summarized financial infor-
+mation for all individually not material joint ventures adjusted
+for the percentage of ownership held by Siemens, is presented
+below. Items in the Statements of Comprehensive Income
+are presented for the twelve month period applied under the
+equity method of accounting.
+c) Joint ventures
+Gains on sales, net
+Impairment
+Other
+Income (expenses) from available-for-sale
+financial assets, net
+Year ended September 30,
+2014
+2013
+2,295
+1,304
+5,132
+4,509
+7,427
+5,813
+Income tax expense (benefit) consists of the following:
+Year ended September 30,
+2014
+2013
+(in millions of €)
+Year ended September 30,
+2014
+2013
+16
+18
+Current tax:
+40
+17
+German corporation and trade taxes
+Dividends received
+469
+(in millions of €)
+Foreign
+Thereof: Interest income (expenses)
+of operations, net
+(17)
+(2)
+Thereof: Other interest income (expenses),
+net
+606
+455
+Item Interest income (expense) of operations, net includes
+interest income and expense primarily related to receivables
+from customers and payables to suppliers, interest on advances
+from customers and advanced financing of customer contracts.
+Item Other interest income (expense), net includes all other
+interest amounts primarily consisting of interest relating to
+corporate debt, and related hedging activities, as well as inter-
+est income on corporate assets.
+131 | B.
+Corporate Governance
+171 | C
+Combined Management Report
+108 | A. To our Shareholders
+268
+Item Interest income (expense) other than from post-employ-
+ment benefits includes the following with respect to financial
+assets (financial liabilities) not at fair value through profit or
+loss:
+NOTE 9 Income taxes
+Income from continuing operations before income tax is attrib-
+utable to the following geographic regions:
+Year ended September 30,
+(in millions of €)
+2014
+2013
+Total interest income on financial assets
+Total interest expenses on financial liabilites
+1,050
+931
+(in millions of €)
+Germany
+(643)
+(766)
+The components of item Income (expense) from available-for-
+sale financial assets, net were as follows:
+542
+(11)
+(117)
+575
+247
+Gains (losses) on sales, net
+6
+78
+1
+185
+Impairment and reversals of impairment
+Income (loss) from investments accounted
+for using the equity method, net
+582
+510
+As of September 30, 2014 and 2013, Siemens has one principal
+joint venture, BSH Bosch und Siemens Hausgeräte GmbH
+(BSH), Munich, Germany which is a worldwide home appliances
+The carrying amount of all individually not material associates
+includes the carrying amount of BWI IT, amounting to €131 mil-
+lion and €154 million as of September 30, 2014 and 2013.
+Siemens holds a 50.05% stake in BWI IT. BWI IT is not controlled
+by Siemens due to significant participating rights of the two
+other shareholders. Together with the HERKULES obliga-
+tions disclosed in → NOTE 27, COMMITMENTS AND CONTINGENCIES,
+the Company's maximum exposure to loss from BWI IT as of
+247
+D. Consolidated Financial Statements
+248 D.1
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+267
+September 30, 2014 and 2013 amounts to €1,621 million and
+€2,044 million. BWI IT finances its operations on its own.
+The accumulated unrecognized share of losses in associates
+amounts to €84 million and €11 million, respectively, as of
+September 30, 2014 and 2013. Within fiscal 2014 and 2013 the
+unrecognized share of losses amounts to €74 million and
+€11 million.
+2013
+2014
+Share of profit (loss), net
+(in millions of €)
+Foreign income taxes
+1,253
+1,212
+2
+1,722
+1,754
+Interest income (expenses), net, other than
+from post-employment benefits
+(490)
+(469)
+post-employment benefits
+Interest expenses other than from
+944
+1,058
+280
+post-employment benefits
+2013
+2014
+(in millions of €)
+Year ended September 30,
+Other operating expenses in fiscal 2014 and 2013 include losses
+on sales of property, plant and equipment and intangible assets,
+impairment losses on goodwill and effects from insurance, legal
+and regulatory matters.
+NOTE 7 Other operating expenses
+In fiscal 2014 and 2013, Other operating income includes gains
+on sales of property, plant and equipment and intangible assets
+of €355 million and €227 million, respectively, including gains
+from real estate sold and leased back; gains from the sale of
+businesses of €143 million and €10 million, respectively; as well
+as income in connection with legal and regulatory matters.
+net of income taxes
+(52)
+Year ended September 30,
+Total comprehensive income
+71
+(33)
+130
+Interest income other than from
+312
+248 D.1
+7,133
+251 D.4
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+381
+153
+126
+60
+856
+183
+110
+18
+123
+59
+1,597
+473
+250 D.3
+249 D.2
+248 D.1
+D. Consolidated Financial Statements
+Investments previously accounted for using the equity method
+1,156
+Other financial assets
+132
+72
+Other assets
+158
+56
+337 | E.
+Assets classified as held for disposal
+1,393
+Trade payables
+Current provisions
+Other current liabilities
+Post employment benefits
+Other non-current liabilities
+Liabilities associated with assets classified as held for disposal
+247
+3,935
+Additional Information
+265
+266
+Combined Management Report
+INCOME (LOSS) FROM DISCONTINUED OPERATIONS
+In fiscal 2014 and 2013, the major line items of income from
+discontinued operations were as follows:
+(in millions of €)
+Revenue
+Year ended September 30,
+2014
+2,951
+2013
+7,757
+171 C.
+Expenses
+(7,501)
+Income on the measurement to fair value less
+costs to sell or on the disposal of the disposal
+groups constituting the discontinued operations
+Pretax income from discontinued operations
+Income taxes on ordinary activities
+23
+129
+57
+41
+385
+(174)
+Income taxes on the income on the measure-
+ment to fair value less costs to sell or on the
+(2,916)
+317
+Corporate Governance
+108 | A. To our Shareholders
+ba) Dispositions not qualifying for
+discontinued operations
+BSH Bosch und Siemens Hausgeräte GmbH (BSH)
+In September 2014, Robert Bosch GmbH and Siemens agreed
+that Robert Bosch GmbH will acquire Siemens' 50% stake in
+the joint venture BSH. The transaction volume amounts to
+€3.25 billion. The agreement includes the permission to pro-
+duce and market household appliances under the Siemens
+brand over the long term as well as a distribution of €250 mil-
+lion from BSH prior to the completion of the transaction. The
+transaction is subject to approval by the regulatory authorities.
+Closing is expected in the first half of calendar year 2015.
+Siemens' stake in BSH is presented as held for disposal since
+the fourth quarter of fiscal 2014. No impairment was identified
+either upon reclassification or at year end.
+Microbiology business
+In July 2014, Siemens signed an agreement to sell its Micro-
+biology business of the Healthcare Sector to Beckman Coulter
+Inc., a subsidiary of Danaher Corporation. The activities of the
+Microbiology business include systems for the identification
+and antibiotic susceptibility testing of microorganisms. The
+regulatory authorities approved the transaction. Closing is ex-
+pected in the first half of fiscal 2015. The microbiology business
+(the disposal group) is presented as held for disposal since the
+third quarter of fiscal 2014. No impairment was identified
+either upon reclassification or at year end.
+bb) Dispositions not qualifying for discontinued
+operations: closed transactions
+TurboCare business
+131 | B.
+In May 2014, the TurboCare Business Unit of the Energy Sec-
+tor - which was previously presented as held for disposal - was
+contributed into a joint venture with John Wood Group plc.
+The joint venture is a service provider of rotating equipment
+services to the industry, with a focus on power and oil & gas
+markets. Siemens' interest in the new company is accounted
+for using the equity method.
+In August 2014, Siemens announced its plans to sell its hospital
+information system business (Customer Solutions Health Ser-
+vices Business Unit), formerly included in the Healthcare Sec-
+tor, to the US-based company Cerner Corp. for a consideration
+of US$1.3 billion (€1 billion as of September 30, 2014) in cash.
+The regulatory authorities approved the transaction. Closing
+is expected in the second quarter of fiscal 2015. The hospital
+information system business (the disposal group) is presented
+as held for disposal and discontinued operations since the
+fourth quarter of fiscal 2014. No impairment was identified
+either upon reclassification or at year end.
+Metals Technologies
+In May 2014, Siemens signed an agreement to contribute
+nearly all of its metallurgical solutions business (Business
+Unit Metals Technologies), formerly included in the Industry
+Sector, into a joint venture with Mitsubishi-Hitachi Metals
+Machinery Inc., a company majority owned by Mitsubishi
+Heavy Industries, Ltd. As a result of this transaction, Siemens
+will lose control over its metallurgical solutions business
+upon closing. Siemens will hold an equity interest of 49%
+in the new company which will be accounted for using the
+equity method. The transaction is subject to approval by
+the regulatory authorities. Closing is expected in the second
+quarter of fiscal 2015. The respective metallurgical solutions
+business (the disposal group) is presented as held for disposal
+and discontinued operations since the third quarter of fiscal
+2014. No impairment was identified either upon reclassifica-
+tion or at year end.
+bd) Discontinued operations: closed transactions
+The results presented in Income (loss) from discontinued oper-
+ations in the Company's Consolidated Statements of Income
+also include the results of businesses that have been disposed
+of prior to the end of fiscal 2014.
+Water Technologies
+The Water Technologies Business Unit, formerly included in the
+Industry Sector, is presented as held for disposal and discontin-
+ued operations since the fourth quarter of fiscal 2013. In Octo-
+ber 2013, Siemens signed an agreement to sell the disposal
+group to funds managed by American European Associates
+Investors LP, U.S. On January 15, 2014, Siemens closed the
+transaction for a preliminary cash consideration of €612 mil-
+lion. Assets and liabilities held for disposal of €794 million and
+of €214 million, respectively, were derecognized upon closing.
+The major classes of assets held for disposal were Property,
+plant and equipment of €164 million, Goodwill of €154 million,
+Inventories of €136 million, Trade and other receivables of
+€125 million, and Cash and cash equivalents of €75 million.
+OSRAM, Siemens IT Solutions and Services,
+Siemens VDO Automotive and Communications
+Net results from discontinued operations of OSRAM, Siemens
+IT Solutions and Services, Siemens VDO Automotive and the
+former operating segment Communications presented in the
+Consolidated Statements of Income in fiscal 2014 and 2013
+amounted to €89 million (thereof €66 million income tax) and
+€222 million (thereof €(165) million income tax), respectively.
+Net results from discontinued operations in fiscal 2013 include
+€277 million relating to OSRAM, thereof the pretax spin-off gain
+of €54 million. Income tax in fiscal 2014 and 2013 includes
+€64 million and €(80) million, respectively, related to former
+Communications activities.
+bc) Discontinued operations
+Customer Solutions Health Services
+disposal of the disposal groups constituting
+311
+111
+-
+The
+Revenue recognition on construction contracts
+Company's Sectors, particularly Energy, Industry and Infra-
+structure & Cities, conduct a significant portion of their
+business under construction contracts with customers.
+The Company accounts for construction projects using the
+percentage-of-completion method, recognizing revenue as
+performance on contract progresses. Certain long-term ser-
+vice contracts are accounted for under the percentage-of-
+completion method as well. This method places considerable
+importance on accurate estimates of the extent of progress
+towards completion and may involve estimates on the scope
+of deliveries and services required for fulfilling the contractu-
+ally defined obligations. These significant estimates include
+total contract costs, total contract revenues, contract risks,
+including technical, political and regulatory risks, and other
+judgments. Under the percentage-of-completion method,
+changes in estimates may lead to an increase or decrease of
+revenue. The creditworthiness of our customers is taken into
+account in estimating the probability that economic benefits
+associated with a contract will flow to the Company. In addi-
+tion, we need to assess whether the contract is expected to
+continue or to be terminated. In determining whether the con-
+tinuation or termination of a contract is expected to be the
+most likely scenario, all relevant facts and circumstances relat-
+ing to the contract are considered on an individual basis. For
+contracts expected to be continued, amounts already included
+in revenue for which collectability ceases to be probable are
+recognized as an expense. For contracts expected to be termi-
+nated, including terminations due to expected payment de-
+faults of our customers or terminations due to force majeure
+events, the estimates on the scope of deliveries and services
+provided under the contracts are revised accordingly, typically
+108 | A. To our Shareholders
+262
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+resulting in a decrease of revenue in the respective reporting
+period. Management of the operating Divisions continually
+reviews all estimates involved in such construction contracts
+and adjusts them as necessary.
+Trade and other receivables - The allowance for doubtful
+accounts involves significant management judgment and
+review of individual receivables based on individual customer
+creditworthiness, current economic trends and analysis of
+historical bad debts on a portfolio basis. For the determination
+of the country-specific component of the individual allowance,
+Siemens also consider country credit ratings, which are cen-
+trally determined based on information from external rating
+agencies. Regarding the determination of the valuation allow-
+ance derived from a portfolio-based analysis of historical bad
+debts, a decline of receivables in volume results in a corre-
+sponding reduction of such provisions and vice versa. As of
+September 30, 2014 and 2013, Siemens recorded a total valua-
+tion allowance for trade and other receivables of €1,073 million
+and €1,147 million, respectively.
+Impairment - Siemens tests at least annually whether good-
+will has incurred any impairment, in accordance with its
+accounting policy. The determination of the recoverable
+amount of a cash-generating unit or a group of cash-generat-
+ing units to which goodwill is allocated involves the use of
+estimates by management. The outcome predicted by these
+estimates is influenced e.g. by the successful integration of
+acquired entities, volatility of capital markets, interest rate
+developments, foreign exchange rate fluctuations and the
+outlook on economic trends. The recoverable amount is the
+higher of the cash-generating unit's or the group of cash-
+generating units' fair value less costs to sell and its value in
+use. The Company generally uses discounted cash flow based
+methods to determine these values. These discounted cash
+flow calculations use five-year projections that are based on
+financial forecasts. Cash flow projections take into account
+past experience and represent management's best estimate
+about future developments. Cash flows after the planning
+period are extrapolated using individual growth rates. Key
+assumptions on which management has based its determina-
+tion of fair value less costs to sell and value in use include
+estimated growth rates, weighted average cost of capital and
+tax rates. These estimates, including the methodology used,
+can have a material impact on the respective values and ulti-
+mately the amount of any goodwill impairment. Likewise,
+whenever property, plant and equipment, other intangible
+assets and investments accounted for using the equity method
+are tested for impairment, the determination of the assets'
+recoverable amount involves the use of estimates by manage-
+ment that can have a material impact on the respective values
+and ultimately the amount of any impairment.
+-
+Non-current assets and disposal groups classified as
+held for disposal Assets held for disposal and disposal
+groups are measured at the lower of their carrying amount
+and their fair value less costs to sell. The determination of the
+fair value less costs to sell includes the use of management
+estimates and assumptions that tend to be uncertain.
+Employee benefit accounting - Post-employment benefits -
+Obligations for pension and other post-employment benefits
+and related net periodic benefit costs are determined in accor-
+dance with actuarial valuations. These valuations rely on key
+assumptions including discount rates, expected compensation
+increases, rate of pension progression and mortality rates. The
+discount rate assumptions are determined by reference to
+yields on high-quality corporate bonds of appropriate duration
+and currency at the end of the reporting period. In case such
+yields are not available discount rates are based on govern-
+ment bonds yields. Due to changing market, economic and
+social conditions the underlying key assumptions may differ
+from actual developments and may lead to significant changes
+in pension and other post-employment benefit obligations.
+Such differences are recognized in full through line item Other
+comprehensive income, net of income taxes in the period in
+which they occur without affecting profit or loss.
+Provisions - Significant estimates are involved in the determi-
+nation of provisions related to onerous contracts, warranty
+costs, asset retirement obligations and legal proceedings.
+A significant portion of the business of certain operating divi-
+sions is performed pursuant to long-term contracts, often for
+large projects, in Germany and abroad, awarded on a competi-
+tive bidding basis. Siemens records a provision for onerous
+sales contracts when current estimates of total contract costs
+exceed expected contract revenue. Such estimates are subject
+to change based on new information as projects progress to-
+wards completion. Onerous sales contracts are identified by
+monitoring the progress of the project and updating the esti-
+mate of total contract costs which also requires significant
+judgment relating to achieving certain performance standards
+as well as estimates involving warranty costs and estimates
+regarding project delays including the assessment of respon-
+sibility splits between the contract partners for these delays.
+Significant estimates and assumptions are also involved in the
+determination of provisions related to major asset retirement
+obligations. Uncertainties surrounding the amount to be rec-
+ognized include, for example, the estimated costs of decom-
+missioning because of the long time frame over which future
+cash outflows are expected to occur including the respective
+interest accretion. Amongst others, the estimated cash out-
+flows could alter significantly if, and when, political develop-
+ments affect the government's plans to develop the final
+storage.
+247
+Siemens' Consolidated Financial Statements are prepared in
+accordance with IFRS as issued by the IASB and as adopted by
+the EU. Siemens' significant accounting policies, as described
+in NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES are
+essential to understanding the Company's results of operations,
+financial positions and cash flows. Certain of these accounting
+policies require critical accounting estimates that involve com-
+plex and subjective judgments and the use of assumptions,
+some of which may be for matters that are inherently uncertain
+and susceptible to change. Such critical accounting estimates
+could change from period to period and have a material impact
+on the Company's results of operations, financial positions and
+cash flows. Critical accounting estimates could also involve
+estimates where management reasonably could have used a
+different estimate in the current accounting period. Manage-
+ment cautions that future events often vary from forecasts and
+that estimates routinely require adjustment.
+NOTE 3 Critical accounting estimates
+In May 2014, the IASB issued IFRS 15, Revenue from Contracts
+with Customers. According to the new standard, revenue is rec-
+ognized to depict the transfer of promised goods or services to
+a customer in an amount that reflects the consideration to
+which the Company expects to be entitled in exchange for
+those goods or services. Revenue is recognized when, or as,
+the customer obtains control of the goods or services. IFRS 15
+also includes guidance on the presentation of contract bal-
+ances, that is, assets and liabilities arising from contracts with
+customers, depending on the relationship between the entity's
+performance and the customer's payment. In addition, the new
+standard requires a set of quantitative and qualitative disclo-
+sures to enable users of the Company's Consolidated Financial
+Statements to understand the nature, amount, timing, and un-
+certainty of revenue and cash flows arising from contracts with
+customers. IFRS 15 supersedes IAS 11, Construction Contracts
+and IAS 18, Revenue as well as related interpretations. The
+standard is effective for annual periods beginning on or after
+January 1, 2017; early application is permitted. The Company
+is currently assessing the impact of adopting IFRS 15 on the
+Company's Consolidated Financial Statements and will deter-
+mine the adoption date as well as the transition method.
+In July 2014, the IASB completed its project to replace IAS 39,
+Financial Instruments: Recognition and Measurement by pub-
+lishing the final version of IFRS 9: Financial Instruments. IFRS 9
+introduces a single approach for the classification and measure-
+ment of financial assets according to their cash flow character-
+istics and the business model they are managed in, and pro-
+vides a new impairment model based on expected credit losses.
+IFRS 9 also includes new regulations regarding the application
+of hedge accounting to better reflect an entity's risk manage-
+ment activities especially with regard to managing non-finan-
+cial risks. The new standard is effective for annual reporting
+periods beginning on or after January 1, 2018, while early
+application is permitted. The European Financial Reporting
+Advisory Group postponed its endorsement advice on IFRS 9.
+The Company is currently assessing the impacts of adopting
+IFRS 9 on the Company's Consolidated Financial Statements.
+RECENTLY ADOPTED ACCOUNTING
+PRONOUNCEMENTS
+As of October 1, 2013, Siemens adopted IFRS 10, Consolidated
+Financial Statements, IFRS 11, Joint Arrangements, IFRS 12, Dis-
+closure of Interests in Other Entities and consequential amend-
+ments to IAS 27, Separate Financial Statements (amended
+2011) and IAS 28, Investments in Associates and Joint Ventures
+(amended 2011). IFRS 10 provides a comprehensive concept of
+control in determining whether an entity is to be consolidated,
+IFRS 11 provides guidance on accounting for joint arrangements
+by focusing on rights and obligations of the arrangement and
+IFRS 12 provides comprehensive disclosure requirements for all
+forms of interests in other entities. The standards are applied
+on a retrospective basis. The adoption of the new standards did
+not have a material impact on the Company's Consolidated
+Financial Statements. The application of IFRS 12 resulted in
+additional disclosures.
+247
+D. Consolidated Financial Statements
+248 D.1
+249 D.2
+250 D.3
+D. Consolidated Financial Statements
+251 D.4
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E. Additional Information
+261
+As of October 1, 2013, Siemens adopted IFRS 13, Fair Value
+Measurement. The new standard defines fair value and
+standardizes disclosures on fair value measurements of both
+financial and non-financial instrument items. The standard
+is applied on a prospective basis. The adoption of IFRS 13 did
+not have a material impact on the Company's Consolidated
+Financial Statements.
+RECENT ACCOUNTING PRONOUNCEMENTS,
+NOT YET ADOPTED
+The following pronouncements, issued by the IASB, are not yet
+effective and have not yet been adopted by the Company:
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+248 D.1
+249 D.2
+250 D.3
+At the beginning of January 2013, Siemens acquired all of the
+shares in LMS International NV, Belgium, a leading provider of
+mechatronic simulation solutions, which was integrated in the
+Industry Sector's Industry Automation Division. The purchase
+price allocation was finalized in the second quarter of fiscal
+2014. No significant adjustments were made to the preliminary
+purchase price allocation as of September 30, 2013. The final
+consideration amounts to €702 million (including €32 million
+cash acquired); €352 million were allocated to Goodwill which
+comprises intangible assets that are not separable such as
+employee know-how and expected synergy effects.
+B) DISPOSITIONS AND DISCONTINUED OPERATIONS
+Assets and liabilities held for disposal
+As of September 30, 2014 and 2013, the carrying amounts of
+the major classes of assets and liabilities held for disposal were
+as follows:
+September 30,
+(in millions of €)
+Trade and other receivables
+Inventories
+2014
+that are not separable such as employee know-how and expected
+synergy effects. Including earnings effects from purchase price
+allocation and integration costs, the acquired business contrib-
+uted revenues of €335 million and a net loss of €44 million to
+Siemens for the period from acquisition to September 30, 2013. If
+the acquired business had been included as of October 1, 2012,
+the impact on consolidated revenues and consolidated net in-
+come for the twelve months ended September 30, 2013 would
+have been €915 million and €(9) million, respectively.
+2013
+310
+479
+340
+Goodwill
+846
+187
+Other intangible assets
+246
+606
+Property, plant and equipment
+At the beginning of May 2013, Siemens acquired all of the
+shares of several entities constituting the rail automation busi-
+ness of Invensys plc, U.K. (Invensys), which were integrated
+in the Infrastructure & Cities Sector's Mobility and Logistics
+Division. With the acquisition, Siemens expanded and comple-
+mented the Infrastructure & Cities Sector's rail automation busi-
+ness. The purchase price allocation was finalized in the third
+quarter of fiscal 2014 following the final agreement on the pur-
+chase price and the completion of post-closing project reviews.
+Adjustments mainly relate to Intangible assets, Inventories,
+Liabilities and Deferred income tax liabilities. The final consid-
+eration amounts to €2,024 million (including €53 million cash
+acquired) of which €472 million were paid to the Invensys
+Pension Trust. The following figures reflect the amounts rec-
+ognized as of the acquisition date for each major class of assets
+acquired and liabilities assumed: Intangible assets €883 million,
+Inventories €159 million, Receivables €127 million, Deferred in-
+come tax assets €65 million, Liabilities €537 million and Deferred
+income tax liabilities €116 million. Intangible assets mainly relate
+to customer relationships of €616 million with a useful life of
+18 years and technology of €245 million with a useful life of
+18 years. Goodwill of €1,315 million comprises intangible assets
+Combined Management Report
+251 D.4
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+263
+264
+Siemens is subject to legal and regulatory proceedings in vari-
+ous jurisdictions. Such proceedings may result in criminal or
+civil sanctions, penalties, damage claims and other claims, or
+disgorgements against the Company. If it is more likely than
+not that an obligation of the Company exists and will result in
+an outflow of resources, a provision is recorded if the amount
+of the obligation can be reliably estimated. Regulatory and
+legal proceedings as well as government investigations often
+involve complex legal issues and are subject to substantial un-
+certainties. Accordingly, management exercises considerable
+judgment in determining whether there is a present obligation
+as a result of a past event at the end of the reporting period,
+whether it is more likely than not that such a proceeding
+will result in an outflow of resources and whether the amount
+of the obligation can be reliably estimated. The Company
+periodically reviews the status of these proceedings with both
+inside and outside counsel. These judgments are subject to
+change as new information becomes available. The required
+amount of a provision may change in the future due to new
+developments in the particular matter. Revisions to estimates
+may significantly impact future net income. Upon resolution,
+Siemens may incur charges in excess of the recorded provi-
+sions for such matters. It cannot be excluded that the financial
+position or results of operations of Siemens will be materially
+affected by an unfavorable outcome of legal or regulatory pro-
+ceedings or government investigations.
+NOTE 4 Acquisitions, dispositions
+and discontinued operations
+A) ACQUISITIONS
+In September 2014, Siemens has entered into an agreement
+with Dresser-Rand to acquire all of its issued and outstanding
+common shares by way of a friendly takeover bid. With its com-
+prehensive portfolio of compressors, steam turbines, gas tur-
+bines and engines, Dresser-Rand is a leading supplier for the
+oil & gas, process, power and other industries in the related
+energy infrastructure markets worldwide. The acquisition com-
+plements Siemens' existing offerings, notably for the global
+oil & gas industry and for distributed power generation.
+Siemens offers US$83 per share in cash or US$6.5 billion in
+total if the transaction is closed prior to March 1, 2015 (€5.2 bil-
+lion as of September 30, 2014). Thereafter, the price increases
+by US$0.55 per share or US$43 million (€34 million as of Sep-
+tember 30, 2014) on the first day of each month starting
+March 1, 2015 (ticking fee). As part of the transaction, Siemens
+will assume Dresser-Rand's net debt, currently estimated at
+US$1.1 billion (€0.9 billion as of September 30, 2014), resulting
+in a transaction volume without ticking fee of approximately
+US$7.6 billion (approximately €6 billion as of September 30,
+2014). The transaction is subject to approval by regulatory
+authorities. Closing is expected in summer 2015.
+At the beginning of May 2014, Siemens announced the acquisi-
+tion of the Rolls-Royce Energy aero-derivative gas turbine
+and compressor business of Rolls-Royce plc, U.K. (Rolls-Royce).
+With the acquisition Siemens intends to strengthen its position
+in the growing oil and gas industry as well as in the field of
+decentralized power generation. The preliminary purchase
+price amounts to £785 million (€1 billion as of September 30,
+2014). In addition, as part of the transaction, Siemens will I pay
+Rolls-Royce £200 million (€257 million as of September 30,
+2014) for a 25 year technology licensing agreement granting
+exclusive access to future Rolls-Royce aero-turbine technology
+developments in the four to 85 megawatt power output range
+as well as preferred access to supply and engineering services
+of Rolls-Royce. The regulatory authorities approved the trans-
+action after fiscal year end. Closing is expected in the first quar-
+ter of fiscal 2015.
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+171 | C
+Income taxes - Siemens operates in various tax jurisdictions
+and therefore has to determine tax positions under respective
+local tax laws and tax authorities' views which can be complex
+and subject to different interpretations of tax payers and local
+tax authorities. As an effect of tax audits, different interpreta-
+tions of tax laws may result in additional tax payments for prior
+years and are taken into account based on management's
+considerations. Deferred tax assets are recognized if sufficient
+future taxable profit is available, including income from
+forecasted operating earnings, the reversal of existing taxable
+temporary differences and established tax planning opportuni-
+ties. As of each period-end, management evaluates the
+recoverability of deferred tax assets, based on projected future
+taxable profits. As future developments are uncertain and
+partly beyond management's control, assumptions are neces-
+sary to estimate future taxable profits as well as the period in
+which deferred tax assets will recover. Estimates are revised in
+the period in which there is sufficient evidence to revise the
+assumption. If management considers it probable that all or a
+portion of a deferred tax asset cannot be realized, that portion
+would not be recognized.
+Deferred tax liabilities
+Total deferred tax assets, net
+589
+Combined Management Report
+(in millions of €)
+Year ended September 30,
+2014
+2013
+Income (loss) from continuing operations
+Income (loss) from discontinued operations
+102
+a) Income (loss) from investments accounted
+for using the equity method, net
+163
+Other comprehensive income,
+270
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+22
+INVESTMENTS ACCOUNTED FOR
+USING THE EQUITY METHOD
+As of September 30, 2014 and 2013, the carrying amount of all
+individually not material associates amounts to €1,417 million
+and €1,483 million, respectively. Summarized financial infor-
+mation for all individually not material associates adjusted
+for the percentage of ownership held by Siemens, is presented
+below. Items included in the Statements of Comprehensive
+Income are presented for the twelve month period applied
+under the equity method.
+b) Associates
+9
+20
+Income from discontinued operations,
+net of income taxes
+108
+231
+Thereof attributable to the shareholders of
+Siemens AG
+107
+225
+NOTE 5 Interests in other entities
+For information on the composition of the Siemens Group refer
+to the list of our subsidiaries, joint ventures and associates in
+fiscal 2014 in NOTE 41 LIST OF SUBSIDIARIES AND ASSOCIATED
+COMPANIES PURSUANT TO SECTION 313 PARA. 2 OF THE GERMAN COM-
+MERCIAL CODE and → NOTE 4 ACQUISITIONS, DISPOSITIONS AND DIS-
+CONTINUED OPERATIONS.
+manufacturer. In the second quarter of fiscal 2014, Siemens
+started to report results related to its stake in BSH using the
+equity method in phase with results of Siemens, rather than
+with the lag of one quarter. Due to the one-time catch-up effect
+associated with this change, item Share of profit (loss), net for
+fiscal 2014 therefore includes results related to BSH for approx-
+imately five quarters rather than the usual four. This one-time
+catch-up effect increased the income from Siemens' invest-
+ment in BSH by €59 million. At the end of the fourth quarter of
+fiscal 2014, BSH was classified as held for disposal and the use
+of the equity method was ceased.
+Item Share of profit (loss), net, also includes Siemens' share in
+BWI Informationstechnik GmbH's (BWI IT) earnings of €55 mil-
+lion and €69 million in fiscal 2014 and 2013.
+Items Share of profit (loss), net, Gains (losses) on sales, net and
+Impairment and reversals of impairment include the effects
+of disposing of Siemens' share in NSN in the fourth quarter of
+fiscal 2013. In fiscal 2013, item Impairment and reversals of
+impairment includes €(97) million related to an investment of
+Siemens' solar business.
+In assessing the realizability of deferred tax assets, manage-
+ment considers the extent to which it is probable that the
+deferred tax asset will be realized. The ultimate realization of
+deferred tax assets is dependent upon the generation of future
+taxable profits during the periods in which those temporary
+differences and tax loss carryforwards become deductible.
+Management considers the expected reversal of deferred tax
+liabilities and projected future taxable income in making this
+assessment. Based upon the level of historical taxable income
+and projections for future taxable income over the periods in
+which the deferred tax assets are deductible, management
+believes it is probable the Company will realize the benefits
+of these deductible differences. As of September 30, 2014,
+the Company has certain tax losses subject to significant lim-
+itations. For those losses deferred tax assets are not recog-
+nized, as it is not probable that gains will be generated to offset
+those losses.
+The tax free income in fiscal 2014 is impacted by several Port-
+folio activities, whereas 2013 is amongst others attributable to
+the NSN disposal.
+As of September 30, 2014 and 2013, the Company had
+€2,425 million and €3,341 million, respectively of gross tax loss
+carryforwards. The Company assumes that future operations
+will generate sufficient taxable income to realize the deferred
+tax assets.
+(31)
+(175)
+1
+78
+Taxes for prior years
+282
+(236)
+Tax-free income
+Non-deductible losses and expenses
+Increase (decrease) in income taxes resulting
+from:
+Change in realizability of deferred tax assets
+2013
+1,802
+Expected income tax expenses
+2014
+(in millions of €)
+Year ended September 30,
+2,730
+2,782
+6,910
+2,302
+and tax credits
+377
+(343)
+56
+the discontinued operations
+1,634
+2,028
+Actual income tax expenses
+(1)
+11
+(74)
+(163)
+Other, net
+Tax effect of investments accounted
+(244)
+Foreign tax rate differential
+(1)
+Change in tax rates
+21
+for using the equity method
+Short-term
+Obligations under finance leases
+Notes and bonds
+Loans from banks
+Other financial indebtedness
+Item Loans receivable primarily relate to long-term loan trans-
+actions of SFS.
+1,431
+(78)
+412
+826
+82
+21
+20
+Short-term debt and current maturities
+of long-term debt
+2013
+773
+2014
+September 30,
+15,117
+those entities.
+2 Includes impairment expenses of €141 million in fiscal
+2013, thereof €55 million at SRE, €34 million at Industry,
+€31 million at Energy, €10 million at Infrastructure &
+Cities, €8 million at SFS and €2 million at Healthcare.
+3 Includes €594 million expenditures for property,
+plant and equipment under construction.
+Depreciation and impairment is included in line items Cost of
+sales, Research and development expenses or Selling and gen-
+eral administrative expenses, depending on the use of the asset.
+As of September 30, 2014 and 2013, contractual commitments
+for purchases of property, plant and equipment amount to
+€351 million and €434 million, respectively.
+In fiscal 2014 and 2013, government grants awarded for the
+purchase or the production of property, plant and equipment
+amounted to €6 million and €9 million, respectively. The award
+of further government grants of €65 million and €60 million in
+fiscal 2014 and 2013, respectively, related to costs incurred and
+future costs.
+As of September 30, 2014 and 2013, minimum future lease pay-
+ments receivable from lessees under operating leases are as
+follows:
+Payments from lessees under operating leases primarily relate
+to buildings, medical equipment and transportation systems.
+Total contingent rent recognized in income in fiscal 2014 and
+2013 amounts to €223 million and €214 million, respectively.
+INVESTMENT PROPERTY
+1 Includes Property, plant and equipment reclassified to
+Assets classified as held for disposal and dispositions of
+The carrying amount of investment property amounts to
+€113 million and €116 million compared to a fair value of
+€214 million and €258 million as of September 30, 2014 and
+2013, respectively. Fair value is generally a level 2 measurement
+and is determined based on sales of similar property, bid prices
+for similar property, external independent appraisals or internal
+fair value measurements which rely on the income approach or
+on adjusted official standard land values depending on the
+nature of the property.
+(in millions of €)
+2014
+2013
+Within one year
+338
+321
+After one year but not more than five years
+590
+September 30,
+(1,862)
+(14,268) 9,815
+Additions Retirements Gross carrying
+2
+generated intangible assets
+(114)
+3,346
+(2,104)
+Software and other internally
+20132
+impairment
+combinations
+ment in fiscal
+09/30/2013
+and
+and impair-
+Carrying Amortization
+amount as of
+amortization
+amount as of
+09/30/2013
+1,620
+Accumulated
+578
+3,270
+More than five years
+137
+Loans receivable
+10,919
+8,012
+Receivables from finance leases, see
+NOTE 21 Debt
+→ NOTE 11 TRADE AND OTHER RECEIVABLES
+3,357
+3,340
+2013
+Derivative financial instruments
+1,894
+Available-for-sale financial assets
+1,803
+1,560
+Other
+226
+18,416
+311
+(in millions of €)
+2,111
+2014
+(in millions of €)
+September 30,
+1,045
+1,035
+247
+D.
+Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+277
+NOTE 18 Other financial assets
+Item Other employee related costs primarily includes vacation
+payments, accrued overtime and service anniversary awards,
+severance payments, as well as liabilities related to termination
+benefits.
+117
+265
+(485)
+24,083
+2,936
+Equipment leased to others
+106
+5,740
+equipment
+Furniture and office
+(456)
+2,453
+(4,687)
+7,140
+104
+(521)
+277
+4
+122
+7,020
+equipment
+Technical machinery and
+(242)
+3,868
+(3,489)
+7,356
+239
+21
+608
+81
+equipment
+Property, plant and
+750
+(10)
+7603
+(25)
+(449)
+516
+7
+710
+construction in progress
+Advances to suppliers and
+(316)
+1,222
+(1,705)
+2,927
+1
+371
+(653)
+1,347
+(4,440)
+5,786
+(751)
+(733)
+24,083
+128
+(7)
+(873)
+5,057
+(6,358)
+11,415
+(372)
+(648)
+3,816
+(4,254)
+8,070
+(259)
+1 Includes Other intangible assets reclassified to Assets
+classified as held for disposal and dispositions of those
+entities.
+65
+330
+(332)
+10,424
+Other intangible assets
+1,363
+(253)
+7,154
+and similar rights
+Patents, licenses
+(224)
+1,241
+1,365
+2 Includes impairment expenses of €53 million in fis-
+cal 2013, thereof €25 million at Infrastructure & Cities,
+€19 million at Energy, €8 million at Industry and
+€2 million at Healthcare.
+Amortization and impairment on intangible assets is contained
+in line items Cost of sales, Research and development expenses
+or Selling and general administrative expenses, depending on
+the use of the asset.
+As of September 30, 2014 and 2013, contractual commitments
+for purchases of other intangible assets amount to €18 million
+and €14 million.
+136
+7,677
+Land and buildings
+2014²
+in fiscal
+09/30/2014
+Deprecia-
+tion and
+impairment
+of
+Carrying
+amount as
+Accumu-
+lated depre-
+ciation and
+impairment
+carrying
+amount
+as of
+09/30/2014
+nations
+10/01/2013
+(in millions of €)
+combi-
+business
+Gross
+Retire-
+ments¹
+Reclassi-
+fications
+Additions Additions
+through
+Gross Translation
+carrying differences
+amount
+as of
+Property, plant and equipment
+NOTE 17
+155
+475
+1,927
+-
+(117)
+3,372
+Equipment leased to others
+(614)
+131
+681
+27
+(149)
+5,664
+equipment
+377
+Furniture and office
+2,426
+(4,594)
+7,020
+(463)
+284
+269
+30
+(177)
+7,076
+equipment
+(510)
+(7)
+(689)
+5,740 (4,352)
+2,936 (1,662)
+(2,623)
+1,979
+129
+(658)
+25,255
+equipment
+Property, plant and
+(6)
+701
+(9)
+7103
+(33)
+(559)
+465
+5
+(26)
+859
+construction in progress
+Advances to suppliers and
+(362)
+1,274
+(698)
+1,387
+Technical machinery and
+(286)
+4,027
+7,677 (3,651)
+Gross carry-
+Retire-
+ments¹
+Reclassi-
+fications
+through
+differences
+ing amount
+Additions Additions
+Translation
+Gross carry-
+276
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+3 Includes €670 million expenditures for property,
+plant and equipment under construction.
+2 Includes impairment expenses of €29 million in fiscal
+2014, therein €19 million at SRE.
+1 Includes Property, plant and equipment reclassified to
+Assets classified as held for disposal and dispositions of
+those entities.
+(1,666)
+9,638
+(14,330)
+23,968
+(2,515)
+ing amount
+1,944
+Accumu-
+lated depre-
+Deprecia-
+(824)
+150
+187
+68
+(189)
+8,285
+Land and buildings
+2013²
+tions
+(in millions of €)
+in fiscal
+09/30/2013
+impairment
+09/30/2013
+combina-
+10/01/2012
+impairment
+of
+ciation and
+as of
+business
+as of
+tion and
+Carrying
+amount as
+NOTE 19 Other current financial liabilities
+2,483
+Notes and bonds (maturing until 2066)
+1,158
+1,500
+US$
+1.05%/2012/August 2017/US$ fixed-rate instruments
+1.65%/2012/August 2019/US$ fixed-rate instruments
+Total Bond with Warrant Units
+1,962
+1,984
+986
+US$
+750
+1,025
+750
+£
+976
+900
+€
+959
+£
+900
+1,500
+US$
+In September 2006, the Company issued a subordinated hybrid
+bond in a EUR tranche of €900 million and a GBP tranche of
+£750 million (€965 million as of September 30, 2014), both
+with a legal final maturity on September 14, 2066 and with a
+call option for Siemens in 2016 or thereafter. The instruments
+bear fixed-rate interests until September 14, 2016; thereafter,
+floating-rate interest is applied according to the conditions of
+the bond.
+Hybrid Capital Bond
+floating-rate instruments due September 10, 2021 and redeemed
+at face value €400 million in 0,375% fixed-rate instruments on
+September 10, 2014.
+In March 2014, Siemens issued US$300 million (€238 million as
+of September 30, 2014) privately placed floating-rate instru-
+ments due March 6, 2019. Furthermore, Siemens redeemed at
+face value €1.0 billion in 5.375% fixed-rate instruments on
+June 11, 2014. In September 2014 Siemens issued US$400 mil-
+lion (€318 million as of September 30, 2014) privately placed
+The Company has a program for the issuance of debt instru-
+ments under which it may issue instruments up to €15.0 billion
+as of September 30, 2014 and 2013, respectively. As of Septem-
+ber 30, 2014 and 2013 €10.2 billion and €10.9 billion in notional
+amounts were issued and are outstanding.
+Debt Issuance Program
+2 Redeemed at face value at maturity in fiscal 2014.
+1,068
+| 1 Includes adjustments for fair value hedge accounting.
+2,120
+2,298
+18,165
+1,052
+1,500
+US$
+1,140
+1,500
+18,491
+247
+€
+3,147
+238
+300
+US$
+295
+400
+US$
+317
+US$
+400
+72
+100
+US$
+77
+100
+US$
+368
+US$
+5.25%/2006/September 2066/EUR fixed-rate instruments
+6.125%/2006/September 2066/GBP fixed-rate instruments
+Total Hybrid Capital Bond
+400
+10,582
+3,301
+1,759
+1,750
+US$
+1,843
+1,750
+US$
+317
+6.125%/2006/August 2026/US$ fixed-rate instruments
+Total US$ Bonds
+1,750
+US$
+1,457
+1,750
+US$
+5.75%/2006/October 2016/US$ fixed-rate instruments
+11,262
+1,389
+D.
+Consolidated Financial Statements
+248 D.1
+20
+12
+Additions
+through
+business
+obligation
+obligation interest expense
+lease payment
+Unamortized
+Within one year
+After one year but not
+more than five years
+More than five years
+Total
+Less: Current portion
+minimum future
+Present value of
+September 30, 2013
+108
+(in millions of €)
+Due
+Less: Current portion
+(21)
+130
+Minimum future
+lease payment
+87
+32
+9
+280
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+|
+94
+110
+130
+74
+204
+25
+53
+78
+86
+(20)
+217
+24
+52
+In March 2014, the two bilateral US$500 million term loan facil-
+ities (in aggregate €795 million in notional and carrying
+amount as of September 30, 2014) that the company signed
+and fully drew in fiscal 2013 bearing floating-rate interest of
+0.79% above three months LIBOR with an original term of five
+years were extended by one year and are now due on March 26,
+2019 with a remaining one year extension option.
+The Company has a 5.435% fixed rate assignable loan for gen-
+eral corporate purposes due on June 12, 2015 with a notional
+amount of €333 million as of September 30, 2014 and 2013 and
+a carrying amount of €343 million and €356 million, respec-
+tively, as of September 30, 2014 and 2013.
+3. ASSIGNABLE AND TERM LOANS
+In February 2012, Siemens issued US$ fixed-rate bonds with
+warrant units in an aggregate principal amount of US$3 billion
+in two tranches, comprising: (1) US$1.5 billion (€1.2 billion as
+of September 30, 2014) in 1.05% instruments maturing on
+August 16, 2017 and (2) US$1.5 billion (€1.2 billion as of Sep-
+tember 30, 2014) in 1.65% instruments maturing on August 16,
+2019. Each of the US$1.5 billion instruments were issued with
+6,000 detachable warrants. The warrants' exercise price was
+fixed in Euro. The warrants entitle the holders, at their option,
+to receive 1,806.1496 Siemens AG shares per warrant at an
+exercise price per share of €104.0018 during the exercise period
+which matures on August 1, 2017 and August 1, 2019 for instru-
+ments (1) and instruments (2), respectively. After the spin-off
+of OSRAM in fiscal 2013, the warrants entitle the holders to
+obtain 169.4234 OSRAM shares in addition to Siemens shares.
+The number of additional shares remains subject to the adjust-
+ment provisions under the terms and conditions of warrants.
+Since the approval of the OSRAM spin-off in January 2013 the
+warrants are accounted for as other financial liability. The war-
+rants result in option rights relating to a total of 21.7 million
+Siemens AG shares.
+Bond with Warrant Units
+279
+Additional Information
+4. CREDIT FACILITIES
+337 | E.
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+The credit facilities at September 30, 2014 and 2013 consisted of
+€6.8 billion and €6.7 billion, respectively, in committed lines of
+credit. As of September 30, 2014, those include: (1) a €4.0 bil-
+lion undrawn syndicated multi-currency revolving credit facil-
+ity; in June 2014, the facility has been amended and extended
+to June 27, 2019 with two one-year extension options remain-
+ing; (2) a US$ 3.0 billion (€2.4 billion as of September 30, 2014)
+undrawn syndicated multi-currency revolving credit facility; in
+2014 its maturity has been extended by one year to Septem-
+ber 27, 2019 with one one-year extension option remaining; (3)
+a €450 million revolving credit facility provided by a domestic
+bank expiring September 30, 2015.
+As of September 30, 2014 and 2013, €6.8 billion and €6.7 billion
+of these lines of credit remained unused. Commitment fees for
+the years ended September 30, 2014 and 2013 amount to
+€6 million and €6 million, respectively. The facilities are for
+general business purposes.
+5. OTHER FINANCIAL INDEBTEDNESS
+76
+85
+7
+92
+After one year but not
+more than five years
+More than five years
+Total
+49
+Within one year
+obligation
+Present value of
+minimum future
+lease payment
+Unamortized
+obligation interest expense
+(in millions of €)
+Due
+Minimum future
+lease payment
+21
+28
+September 30, 2014
+OBLIGATIONS UNDER FINANCE LEASES
+Item Other financial indebtedness includes €27 million and
+€111 million as of September 30, 2014 and 2013, respectively, for
+the Company's real estate assets that were sold or transferred
+and in which Siemens has retained significant risks and re-
+wards of ownership, including circumstances in which Siemens
+participates directly or indirectly in the change in market
+value of the property. Therefore, these transactions have been
+accounted for as financing obligations. These real estate prop-
+erties are carried on the Company's Consolidated Statements of
+Financial Position and no sale and profit has been recognized.
+500
+US$
+396
+500
+Miscellaneous tax liabilities
+1,683
+1,785
+Bonus obligations
+1,067
+1,059
+Accruals for pending invoices
+663
+1,035
+Deferred income
+2,103
+1,644
+Other employee related costs
+1,561
+1,438
+Payroll obligations and social security taxes
+1,068
+10,559
+669
+56
+Carrying
+Currency
+September 30, 2014
+2. BONDS
+278
+Combined Management Report
+171 | C
+Deferred reservation fees received
+Corporate Governance
+108 | A. To our Shareholders
+19,701
+17,954
+923
+682
+Other
+101
+131 | B.
+9,559
+Billings in excess of costs and estimated earn-
+ings on uncompleted contracts and related
+advances
+2014
+110
+108
+Obligations under finance leases
+Long-term debt
+Derivative financial instruments,
+2013
+2014
+(in millions of €)
+19,326
+106
+(maturing until 2027)
+September 30,
+Other financial indebtedness
+17,060
+1,233
+968
+Loans from banks (maturing until 2023)
+18,165
+85
+18,509
+see NOTES 29 AND 30
+680
+(in millions of €)
+Siemens has a US$ 9.0 billion (€7.2 billion as of September 30,
+2014) multi-currency commercial paper program in place includ-
+ing US$ extendible notes capabilities. As of September 30, 2014
+US$ 1.0 billion (€795 million as of September 30, 2014) were out-
+standing. As of September 30, 2013 no commercial papers were
+outstanding. Siemens' commercial papers have a maturity of
+generally less than 90 days. Interest rates ranged from 0.1% to
+0.2% in fiscal 2014 and from 0.01% to 0.37% in fiscal 2013.
+1. COMMERCIAL PAPER PROGRAM
+Interest rates in this Note are per annum. In fiscal 2014 and
+2013, weighted-average interest rates for loans from banks,
+other financial indebtedness and obligations under finance
+leases were 3.0% (2013: 2.7%), 0.3% (2013: 3.1%) and 4.0%
+(2013: 4.1%), respectively.
+September 30,
+2013
+I
+NOTE 20 Other current liabilities
+1,515
+1,717
+944
+826
+221
+210
+Accrued interest expense
+Other
+20,453
+20,947
+350
+notional amount
+Long-term
+amount in
+September 30, 2013
+416
+350
+£
+448
+350
+£
+994
+3.75%/2012/September 2042/GBP fixed-rate instruments
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+1.5%/2013/March 2018/US$ fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+2013/June 2020/US$ floating-rate instruments
+2014/March 2019/US$ floating-rate instruments
+2014/September 2021/US$ floating-rate instruments
+Total Debt Issuance Program
+1,000
+995
+1,000
+€
+1.5%/2012/March 2020/EUR fixed-rate instruments
+2.75%/2012/September 2025/GBP fixed-rate instruments
+400
+400
+€
+€
+-
+£
+819
+US$
+995
+1,000
+€
+996
+1,000
+€
+650
+1,242
+€
+1,276
+1,250
+€
+760
+650
+£
+1,250
+0.375%/2012/September 2014/EUR fixed-rate instruments²
+296
+400
+€
+412
+500
+US$
+425
+500
+US$
+1,000
+millions of €1
+millions of €1
+(in millions)
+5.375%/2008/June 2014/EUR fixed-rate instruments²
+5.625%/2006/March 2016/US$ fixed-rate instruments
+(interest/issued/maturity)
+amount in
+Carrying
+(in millions)
+1,031
+5.625%/2008/June 2018/EUR fixed-rate instruments
+€
+US$
+318
+400
+US$
+US$ 3m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
+2.2%
+2,000
+€
+2,122
+2,000
+€
+5.125%/2009/February 2017/EUR fixed-rate instruments
+1,844
+1,600
+€
+1,839
+1,600
+Currency
+notional amount
+10/01/2012
+2,136
+amount as of
+Other
+227
+229
+Prepaid expenses
+707
+17,601
+(1,895) (2,040)
+15,100 15,560
+Advance payments received
+16,994
+528
+Advances to suppliers
+735
+707
+Miscellaneous tax receivables
+2,311
+2,312
+Finished goods and products held for resale
+2013
+2014
+(in millions of €)
+8,604
+8,329
+on uncompleted contracts
+354
+September 30,
+335
+1,297
+2014
+Year ended September 30,
+Cost
+(in millions of €)
+NOTE 15 Goodwill
+273
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+D.
+247
+Cost of sales include inventories recognized as expense
+amounting to €49,453 million and €52,039 million, respec-
+tively, in fiscal 2014 and 2013. Raw materials and supplies, work
+in process as well as finished goods and products held for re-
+sale are valued at the lower of acquisition or production cost
+and net realizable value. The respective write-downs, as com-
+pared to prior year, increased by €1 million and €39 million as
+of September 30, 2014 and 2013.
+1,290
+2013
+Costs and earnings in excess of billings
+|
+September 30,
+2013
+435
+1,861
+NOTE 12 Other current financial assets
+Investments in finance leases primarily relate to industrial
+machinery, medical equipment, transportation systems, equip-
+ment for information technology and office machines. Actual
+cash flows will vary from contractual maturities due to future
+sales of finance receivables, prepayments and write-offs.
+272
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+195
+215
+Thereafter
+3,035
+3,037
+One to five years
+1,946
+2,013
+Within one year
+5,176
+5,266
+payments receivable
+(in millions of €)
+3,502
+2014
+458
+3,436
+Work in process
+2,476
+2,389
+Raw materials and supplies
+2013
+2014
+September 30,
+NOTE 14 Other current assets
+Advance payments received on construction contracts in prog-
+ress were €7,704 million and €8,239 million as of Septem-
+ber 30, 2014 and 2013. Retentions in connection with construc-
+tion contracts were €245 million and €452 million in fiscal 2014
+and 2013, respectively.
+The aggregate amount of costs incurred and recognized profits
+less recognized losses for construction contracts in progress,
+as of September 30, 2014 and 2013 amounted to €86,140 mil-
+lion and €79,296 million, respectively. Revenue from construc-
+tion contracts amounted to €29,735 million and €30,441 mil-
+lion, respectively, for fiscal 2014 and 2013.
+Item Costs and earnings in excess of billings on uncompleted
+contracts relates to construction contracts, with net asset bal-
+ances where contract costs plus recognized profits less recog-
+nized losses exceed progress billings. Construction contracts,
+here and as follows, include service contracts accounted for
+under the percentage of completion method. Liabilities from
+contracts for which progress billings exceed costs and recog-
+nized profits less recognized losses are recognized in line item
+Other current liabilities.
+954
+(in millions of €)
+NOTE 13 Inventories
+3,250
+3,710
+1,141
+Other
+2,111
+Loans receivable
+Derivative financial instruments
+Balance at beginning of year
+19,564
+18,517
+3,061
+(1)
+(3)
+36
+99
+2,930
+Infrastructure & Cities
+4,003
+(419)
+(1)
+147
+4,276
+Industry
+7,900
+(4)
+(426)
+7
+373
+7,950
+Healthcare
+2,688
+Total Sectors
+(2)
+17,761
+55
+Translation
+differences
+and other
+of 10/01/2012
+Carrying amount as
+Energy
+Sectors
+(in millions of €)
+17,783
+(5)
+(851)
+60
+696
+17,883
+Siemens
+132
+4
+5
+122
+Financial Services (SFS)
+17,651
+(5)
+(851)
+691
+14
+71
+2,606
+(66)
+82
+1,448
+1,681
+Dispositions and reclassifications to assets classified as held for disposal
+Impairment losses recognized during the period
+Translation differences and other
+Balance at beginning of year
+Accumulated impairment losses and other changes
+19,564
+19,546
+Balance at year-end
+25
+(856)
+Dispositions and reclassifications to assets classified as held for disposal
+1,719
+60
+Acquisitions and purchase accounting adjustments
+(697)
+777
+Translation differences and other
+5
+70
+(5)
+229
+of 09/30/2014
+Carrying amount as
+reclassifications
+to assets classified as
+held for disposal
+adjustments
+Impairments
+Dispositions,
+reclassifications incl.
+Acquisitions and
+purchase accounting
+Translation
+differences
+and other
+of 10/01/2013
+Carrying amount as
+Present value of minimum future lease
+17,883
+17,883
+17,783
+Energy
+Sectors
+(in millions of €)
+Balance at year-end
+Balance at beginning of year
+Carrying amount
+Balance at year-end
+1,681
+1,763
+17,069
+218
+242
+Thereafter
+Income and expenses recognized directly
+in equity
+154
+(50)
+Discontinued operations
+1,634
+2,028
+Continuing operations
+2013
+2014
+Year ended September 30,
+NOTE 11 Trade and other receivables
+Non-current available-for-sale financial assets, which are in-
+cluded in line item Other financial assets are measured at fair
+value, if reliably measurable. They primarily consist of equity
+instruments, including shares in AtoS and in OSRAM. As of
+September 30, 2014 and 2013 non-current available-for-sale
+financial assets measured at cost amount to €192 million and
+€167 million, respectively; non-current available-for-sale finan-
+cial assets measured at fair value amount to €1,611 million and
+€1,394 million, respectively. Unrealized gains (losses) in fiscal
+2014 and 2013 resulting from non-current available-for-sale
+financial assets at fair value were €317 million and €401 mil-
+lion, respectively.
+(1)
+21
+601
+580
+16
+211
+195
+3
+382
+(346)
+378
+738
+2,526
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+D. Consolidated Financial Statements
+247
+14,853
+1,921
+1,988
+14,526
+Receivables from finance leases
+12,932
+12,537
+Trade receivables from the sale of goods
+and services
+September 30,
+2013
+2014
+(in millions of €)
+1,632
+2
+8
+6
+1,091
+915
+gain
+Unrealized
+Fair value
+Cost
+941
+760
+Tax loss carryforward
+150
+155
+Deductible temporary differences
+2013
+2014
+(in millions of €)
+September 30, 2014
+Unrealized
+loss
+September 30,
+The following tables summarize the current portion of the
+Company's investment in available-for-sale financial assets:
+NOTE 10 Available-for-sale financial assets
+Deferred tax assets have not been recognized with respect of
+the following items (gross amounts):
+differences
+(in millions of €)
+Equity instruments
+1
+1
+Debt instruments
+(in millions of €)
+Equity instruments
+Debt instruments
+Fund shares
+loss
+gain
+Unrealized Unrealized
+Fair value
+Cost
+September 30, 2013
+(in millions of €)
+Including the items charged or credited directly to equity
+and the expense (benefit) from continuing and discontinued
+operations, the income tax expense (benefit) consists of the
+following:
+The Company recorded deferred tax liabilities for income taxes
+and foreign withholding taxes on future dividend distributions
+from subsidiaries which are actually intended to be repatriated.
+Apart from this liability, the Company has not recognized de-
+ferred tax liabilities for income taxes or foreign withholding
+taxes on the cumulative earnings of subsidiaries of €21,115 mil-
+lion and €19,214 million, respectively in fiscal 2014 and 2013
+because the earnings are intended to be permanently rein-
+vested in the subsidiaries.
+337 | E.
+The Company has ongoing regular tax audits concerning open
+income tax years in a number of jurisdictions. Adequate provi-
+sions for all open tax years have been foreseen. The Company
+has applied for several mutual agreement procedures to avoid
+double taxation.
+37
+925
+888
+28
+222
+195
+Fund shares
+9
+702
+693
+As of September 30, 2014 and 2013, €152 million and €221 mil-
+lion, respectively the major part of the unrecognized tax loss
+carryforwards expire over the periods to 2018.
+Acquisitions and
+purchase accounting
+Additional Information
+Changes to the valuation allowance of current and long-term
+receivables presented in → NOTE 11, 12 AND 18, which belong to
+the class of financial assets measured at (amortized) cost are as
+follows (excluding receivables from finance leases):
+(46)
+Write-offs charged against the allowance
+The gross investment in leases and the present value of mini-
+mum future lease payments receivable are due as follows:
+35
+47
+Increase in valuation allowances recorded in
+the Consolidated Statements of Income in the
+current period
+134
+124
+Valuation allowance as of beginning
+of fiscal year
+2013
+2014
+(in millions of €)
+5,176
+5,266
+Present value of minimum future lease
+payments receivable
+Year ended September 30,
+(85)
+(80)
+(124)
+(135)
+Less: Allowance for doubtful accounts
+Less: Present value of unguaranteed residual
+value
+(47)
+5,385
+Recoveries of amounts previously written-off
+5
+3,472
+3,449
+One to five years
+124
+135
+Valuation allowance as of fiscal year-end
+2,345
+2,433
+Within one year
+6,034
+6,124
+Gross investment in leases
+Assets held for disposal and dispositions
+of those entities
+2013
+2014
+(in millions of €)
+Reclassifications to and from line item
+September 30,
+(4)
+5
+Foreign exchange translation differences
+5
+5,481
+(649)
+(643)
+5,938
+6,033
+214
+233
+3,406
+3,393
+After one year but not more than five years
+More than five years
+2013
+Year ended September 30,
+2014
+2,318
+2,406
+Within one year
+2013
+2014
+(in millions of €)
+September 30,
+Increase in valuation allowances recorded in
+the Consolidated Statements of Income in the
+current period
+of fiscal year
+Valuation allowance as of beginning
+(in millions of €)
+Minimum future lease payments to be received are as follows:
+1,023
+1,056
+62
+205
+6,034
+6,124
+97
+91
+5,938
+6,033
+Minimum future lease payments
+Plus: Unguaranteed residual values
+Gross investment in leases
+Less: Unearned finance income
+Net investment in leases
+In fiscal 2014 and 2013, receivables from finance leases, current
+amount to €1,988 million and €1,921 million, respectively; the
+long-term portion amounts to €3,357 million and €3,340 mil-
+lion, respectively. The valuation allowance on current and long-
+term receivables from finance leases changed as follows:
+2013
+2014
+271
+(in millions of €)
+The following table shows a reconciliation of minimum future
+lease payments to the gross and net investment in leases and
+to the present value of the minimum future lease payments
+receivable:
+1,023
+938
+(33)
+(38)
+5
+9
+6
+(208)
+(126)
+September 30,
+adjustments
+Write-offs charged against the allowance
+Recoveries of amounts previously written-off
+Foreign exchange translation differences
+Reclassifications to line item Assets held for
+disposal and dispositions of those entities
+Valuation allowance as of fiscal year-end
+Impairments
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+D.
+247
+1 Includes Other intangible assets reclassified to Assets
+classified as held for disposal and dispositions of those
+entities.
+(741)
+4,560
+2,986
+1.7%
+8.5%
+2,603
+2.2%
+Dispositions,
+reclassifications incl.
+275
+388
+78
+390
+(370)
+(1,389)
+8,077
+10,826
+(4,741)
+(6,266)
+3,336
+(558)
+21
+8.5%
+(in millions of €)
+11,415
+7.5%
+In fiscal 2013, an impairment loss of €46 million resulted from
+the logistics and airport solutions business of the Mobility &
+Logistics Division of the Infrastructure & Cities Sector.
+NOTE 16 Other intangible assets
+(in millions of €)
+Gross carrying
+amount as of
+10/01/2013
+Translation
+differences
+Additions
+through
+business
+combinations
+Additions
+amount as of
+Retirements Gross carrying | Accumulated
+amortization
+09/30/2014
+and
+impairment
+Carrying
+amount as of
+09/30/2014
+Amortization
+and impair-
+ment in fiscal
+2014
+Software and other internally
+generated intangible assets
+3,346
+Other intangible assets
+21
+277
+8,070
+and similar rights
+Patents, licenses
+Gross carrying
+(183)
+1,224
+(1,526)
+2,750
+(1,019)
+312
+111
+7.5%
+1.7%
+Translation
+Industry Automation of the Industry Sector
+Imaging & Therapy Systems of the Healthcare Sector
+17,883
+131 B.
+Corporate Governance
+171 | C
+Combined Management Report
+108 | A. To our Shareholders
+274
+Siemens performs the mandatory annual impairment test
+in the three months ended September 30. The recoverable
+amounts for the annual impairment test 2014 for Divisions or
+equivalents were generally estimated to be higher than the
+carrying amounts. Key assumptions on which management
+has based its determinations of the fair value less costs to sell
+for the Divisions' or equivalents' carrying amount include ter-
+minal value growth rates up to 2.9% in fiscal 2014 and 2.3% in
+fiscal 2013, respectively and after-tax discount rates of 6.5% to
+9.0% in fiscal 2014 and 6.0% to 10.8% in fiscal 2013. Where pos-
+sible, reference to market prices is made.
+For the purpose of estimating the fair value less costs to sell of
+the Divisions or equivalents, cash flows were projected for
+the next five years based on past experience, actual operating
+results and management's best estimate about future develop-
+ments as well as market assumptions. The determined fair
+value of the Divisions or equivalents is assigned to level 3 of
+the fair value hierarchy.
+The fair value less costs to sell is mainly driven by the terminal
+value which is particularly sensitive to changes in the assump-
+tions on the terminal value growth rate and discount rate. Both
+assumptions are determined individually for each Division or
+equivalent. Discount rates reflect the current market assess-
+ment of the risks specific to each Division or equivalent and are
+based on the weighted average cost of capital for the Divisions
+or equivalents (for SFS the discount rate represents cost of
+equity). Terminal value growth rates take into consideration
+external macroeconomic sources of data and industry
+specific trends.
+The following table presents the key assumptions used to
+determine fair value less costs to sell for impairment test
+purposes for the Divisions to which a significant amount of
+goodwill is allocated:
+Goodwill
+(70)
+(in millions of €)
+(3)
+Year ended September 30, 2014
+Terminal value |After-tax discount
+growth rate
+rate
+Goodwill
+Year ended September 30, 2013
+Terminal value |After-tax discount
+growth rate
+(362)
+8,314
+Healthcare
+2,606
+(23)
+(34)
+5
+2,718
+Diagnostics of the Healthcare Sector
+to assets classified as
+held for disposal
+(204)
+(632)
+(204)
+1,719
+(633)
+16,949
+Total Sectors
+2,930
+(47)
+1,299
+(65)
+3,105
+1,742
+Infrastructure & Cities
+1,719
+4,276
+418
+(146)
+4,173
+Industry
+7,950
+(70)
+17,761
+Financial Services (SFS)
+Siemens
+121
+2
+122
+17,069
+(169)
+reclassifications
+(61)
+Carrying amount as
+4,765
+2.4%
+6.5%
+4,758
+2.3%
+6.0%
+rate
+of 09/30/2013
+(9)
+1
+290
+108 | A. To our Shareholders
+Combined Management Report
+171 | C
+131 | B. Corporate Governance
+Siemens believes that sustainable revenue and profit develop-
+ment is supported by a healthy capital structure. A key consid-
+eration of our capital structure management is to maintain
+ready access to the capital markets through various debt prod-
+ucts and to preserve our ability to repay and service our debt
+obligations over time. In fiscal 2014, Siemens set a capital struc-
+ture target range of 0.5 - 1.0. The ratio is defined as the item
+Industrial net debt divided by the item Adjusted EBITDA
+(continuing operations). This financial performance measure
+NOTE 26 Additional capital disclosures
+payments. Payment of the proposed dividend is contingent
+upon approval by the shareholders at the Annual Shareholders'
+Meeting on January 27, 2015.
+(202)
+24,078
+MISCELLANEOUS
+(440)
+3
+(178)
+(262)
+857
+Total
+35,591
+33,173
+26,505
+Under the German Stock Corporation Act (Aktiengesetz), the
+amount of dividends available for distribution to shareholders
+is based upon the earnings of Siemens AG as reported in its
+statutory financial statements determined in accordance with
+the German Commercial Code (Handelsgesetzbuch). In fiscal
+2014, Siemens AG management distributed to its shareholders
+an ordinary dividend of €2,533 million (€3.00 per share) of
+the fiscal 2013 earnings to its shareholders. In fiscal 2013,
+Siemens AG management distributed an ordinary dividend of
+€2,528 million (€3.00 per share) of the fiscal 2012 earnings to
+its shareholders.
+The Managing Board and the Supervisory Board proposed a div-
+idend of €3.30 per share of the fiscal 2014 Siemens AG earnings,
+in total representing approximately €2.7 billion in expected
+> Sensitivity analysis,
+477
+(146)
+(9,288)
+(810)
+(9,241)
+The net defined benefit balance of €9,288 million and
+€9,241 million as of September 30, 2014 and 2013 comprises
+€9,324 million and €9,265 million net defined benefit liability
+and €36 million and €24 million net defined benefit asset,
+respectively.
+131 | B.
+Corporate Governance
+171 | C
+Combined Management Report
+108 | A. To our Shareholders
+282
+Defined benefit costs are as follows:
+Year ended September 30,
+2014
+The Company's defined benefit plans are explicitly explained in
+the subsequent sections with regard to:
+505
+> Reconciliation of defined benefit obligations and plan assets,
+> Actuarial assumptions,
+Current service cost
+Past service (benefit) cost
+Settlement (gains) losses
+Net interest expenses
+Net interest income
+Liability administration expenses
+Components of defined benefit
+costs recognized in the Consolidated
+Statements of Income
+784
+795
+Return on plan assets
+> Asset-liability matching strategies,
+2013
+(in millions of €)
+(843)
+(125)
+(46)
+Warranties
+Order related
+losses and risks
+Asset
+retirement
+obligations
+Other
+Total
+3,350
+1,929
+1,138
+1,976
+8,392
+1,200
+686
+1,113
+908
+3,907
+1,776
+881
+3
+Balance as of September 30, 2014
+Thereof non-current
+469
+Other changes
+Translation differences
+The weighted average duration of the DBO for Siemens defined
+benefit plans was 13 years as of September 30, 2014 and 2013.
+MULTI-EMPLOYER DEFINED BENEFIT PLANS
+Multi-employer plans mainly exist in the Netherlands and in
+the U.S. These plans are industry specific plans based on local
+laws, which are accounted for as defined contribution plans as
+Siemens has no right to obtain the necessary data for defined
+benefit plan accounting. These plans may expose the Company
+to investment and actuarial risk in case of a deficit.
+In the Netherlands the Company is not liable for other enti-
+ties' obligations under the terms and conditions of the multi-
+employer plan.
+In the U.S. the Company may be liable for other entities' obliga-
+tions in case of failure of other participating employers to make
+required contributions. In case of withdrawal from a plan the
+Company may be subject to a liability for the potential future
+statutory underfunding for its share in the plan. The Company
+has only a minor share in these plans compared to other partic-
+ipating entities and has no intention to withdraw from one of
+these plans.
+Siemens is not aware of any probable significant risk due to
+multi-employer defined benefit plans accounted for as defined
+contribution plans.
+Siemens expects contributions to multi-employer defined ben-
+efit plans accounted for as defined contribution plans for the
+next fiscal year of €27 million.
+131 | B. Corporate Governance
+171 | C
+Combined Management Report
+108 | A. To our Shareholders
+286
+DEFINED CONTRIBUTION PLANS AND STATE PLANS
+The amount recognized as expense for defined contribution
+plans amounts to €535 million and €594 million in fiscal 2014
+and 2013, respectively. Contributions to state plans amount
+to €1,317 million and €1,354 million in fiscal 2014 and 2013,
+respectively.
+NOTE 23 Provisions
+(in millions of €)
+Balance as of October 1, 2013
+Thereof non-current
+Additions
+Usage
+Reversals
+Accretion expense and effect of changes in discount rates
+(32)
+3,128
+(725)
+4,818
+4,022
+(97)
+(65)
+(498)
+CH
+2,784
+2,828
+2,673
+2,489
+(59)
+(49)
+(170)
+(388)
+Other
+1,818
+1,753
+1,021
+975
+4,455
+(771)
+4,845
+(1,194)
+(8)
+(337)
+(1,842)
+(657)
+(320)
+(8)
+(528)
+(1,513)
+59
+14,017
+(7,309)
+(6,350)
+U.S.
+3,730
+3,769
+2,888
+2,575
+338
+(842)
+U.K.
+519
+(12)
+(29)
+317
+210
+76
+39
+39
+34
+German pension insurance association -
+Pensionssicherungsverein (PSV)
+Insurance liabilities
+133
+118
+96
+1,874
+76
+275
+228
+534
+618
+in the U.S. not qualifying for presentation
+as Post-employment benefits
+Deferred income
+Liabilities due to employees and retirees
+604
+550
+Employee related liabilities
+2013
+Accruals for pending invoices
+Severance payments
+2,074
+Other
+131 | B.
+Authorized capital
+881,000
+in thousand
+shares
+Issued capital
+2,643,000
+in thousands
+of €
+|
+As of September 30, 2014
+Newly approved capital
+Expired or cancelled
+As of September 30, 2013
+Approved, expired or cancelled capital
+As of September 30, 2012
+|
+Siemens' issued capital is composed of no par value shares
+with a notional value of €3.00 per share. Each share of issued
+capital is entitled to one vote.
+CAPITAL STOCK
+Equity
+NOTE 25
+288
+108 | A. To our Shareholders
+Combined Management Report
+171 | C
+Corporate Governance
+2014
+in thousands
+of €
+September 30,
+NOTE 24 Other liabilities
+Item Other changes contains reclassifications to line item
+Liabilities associated with assets classified as held for disposal
+including the disposal of those entities of ��131 million.
+Except for asset retirement obligations, the majority of the
+Company's provisions are generally expected to result in cash
+outflows during the next one to 15 years.
+Warranties - mainly relate to products sold. Order related
+losses and risks - are provided for anticipated losses and
+risks on uncompleted construction, sales and leasing contracts.
+In fiscal 2014, the Power Transmission Division of the Energy
+Sector incurred charges totaling €298 million related to two
+high voltage direct current (HVDC) transmission line projects in
+Canada, resulting from revised estimates for civil engineering
+and infrastructure provided by suppliers as well as penalties for
+associated project delays, among other factors. In addition,
+Power Transmission incurred charges of €240 million primarily
+related to grid connections to offshore wind-farms resulting
+from transport, installation and commissioning costs, com-
+pared to charges of €171 million in fiscal 2013. The Wind Power
+Division of the Energy Sector recorded charges of €272 million
+in fiscal 2014 for inspecting and replacing main bearings in
+onshore wind turbines and for repairing offshore and onshore
+wind blades; in fiscal 2013 charges related to inspecting and
+retrofitting onshore turbine blades amounted to €94 million.
+Asset retirement obligations - The Company is subject to
+asset retirement obligations related to certain items of prop-
+erty, plant and equipment. Such asset retirement obligations
+are primarily attributable to environmental clean-up costs
+which amounted to €1,347 million and €1,096 million, respec-
+tively, as of September 30, 2014 and 2013 (the non-current por-
+tion thereof being €1,339 million and €1,086 million, respec-
+tively) and to costs primarily associated with the removal of
+leasehold improvements at the end of the lease term.
+Environmental clean-up costs relate to remediation and envi-
+ronmental protection liabilities which have been accrued based
+on the estimated costs of decommissioning facilities for
+the production of uranium and mixed-oxide fuel elements
+in Hanau, Germany (Hanau facilities), as well as a nuclear
+research and service center in Karlstein, Germany (Karlstein
+facilities). According to the German Atomic Energy Act, when
+such a facility is closed, the resulting radioactive waste must be
+collected and delivered to a government-developed final stor-
+age facility. In this regard, the Company has developed a plan
+to decommission the Hanau and Karlstein facilities in the fol-
+lowing steps: clean-out, decontamination and disassembly of
+247
+D.
+Consolidated Financial Statements
+4,071
+248 D.1
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E. Additional Information
+287
+equipment and installations, decontamination of the facilities
+and buildings, sorting of radioactive materials, and inter-
+mediate and final storage of the radioactive waste. This process
+will be supported by continuing engineering studies and radio-
+active sampling under the supervision of German federal and
+state authorities. The decontamination, disassembly and final
+waste conditioning are planned to continue until 2018; there-
+after, the Company is responsible for intermediate storage of
+the radioactive materials until a final storage facility is avail-
+able. With respect to the Hanau facility, the process of setting
+up intermediate storage for radioactive waste has nearly
+reached completion; on September 21, 2006, the Company
+received official notification from the authorities that the
+Hanau facility has been released from the scope of application
+of the German Atomic Energy Act and that its further use is
+unrestricted. The ultimate costs of the remediation are contin-
+gent on the decision of the federal government on the location
+of the final storage facilities and the date of their availability.
+Consequently, the provision is based on a number of significant
+estimates and assumptions. Several parameters relating to the
+development of a final storage facility for radioactive waste are
+based on the assumptions for the so called Schacht Konrad
+final storage. Parameters related to the life-span of the German
+nuclear reactors reflect a planned phase-out until 2022. The val-
+uation uses assumptions to reflect the current and detailed cost
+estimates, price inflation and discount rates as well as a contin-
+uous outflow until the 2070's related to the costs for disman-
+tling as well as intermediate and final storage.
+Consolidated Statements of Income
+691
+1,377
+580
+Other Other includes transaction-related and post-closing
+provisions in connection with portfolio activities as well as pro-
+visions for legal and regulatory matters.
+-
+The Company recognizes the accretion of the provision for en-
+vironmental clean-up costs using the effective interest method
+applying current interest rates prevailing at the period-end
+date. In fiscal 2014 and 2013, the Company recognized €22 mil-
+lion and €22 million, respectively, in accretion expense for
+environmental clean-up costs in line item Other Financial
+income (expenses), net. Changes in discount rates increased
+the carrying amount of provisions by €242 million as of Sep-
+tember 30, 2014 and decreased it by €128 million as of Septem-
+ber 30, 2013.
+31
+2
+10
+102
+1
+8
+264
+10
+284
+(37)
+(59)
+7
+(38)
+(127)
+3,721
+1,745
+1,398
+1,561
+8,425
+1,423
+(in millions of €)
+610,800
+(not issued)
+in thousand
+shares
+(2)
+185
+(56)
+(13)
+(43)
+4
+1
+4
+(12)
+Employer contributions expected to be paid to the post-em-
+ployment defined benefit plans in fiscal 2015 are €655 million.
+At the end of fiscal 2013 the Company expected to pay €631 mil-
+lion employer contributions for fiscal 2014.
+183
+179
+182
+(44)
+(13)
+(31)
+394
+(149)
+543
+288
+249
+39
+(3)
+(394)
+92
+(301)
+(805)
+569
+89
+480
+(1,062)
+(1,062)
+940
+940
+45
+(27)
+72
+(316)
+102
+(418)
+(50)
+21
+(70)
+(14)
+10
+(24)
+94
+(48)
+142
+Net
+Year ended September 30, 2013
+Tax effect
+Pretax
+Net
+Conditional Capital 2010 permits the issuance of bonds with
+conversion rights and/or with warrants in aggregate of up to
+€15 billion, entitling the holders to subscribe to up to 200 mil-
+lion no par value shares (representing up to €600 million
+capital stock increase) against contribution in cash until
+January 2015.
+Conditional Capital 2014 approved on January 28, 2014 and
+expiring on January 27, 2019, permits the issuance of convert-
+ible and/or warrant bonds in aggregate of up to €15 billion,
+entitling the holders to subscribe to up to 80 million no par
+value shares (representing up to €240 million capital stock
+increase), issuable for contributions in cash and, in certain
+circumstances, contributions in kind.
+CONDITIONAL CAPITAL (NOT ISSUED)
+Conditional Capital is primarily provided for the purpose of
+serving the issuance of bonds with conversion rights and (or)
+with warrants; subscription rights are or may be excluded:
+Authorized Capital 2014 resolved on January 28, 2014, permits
+the increase of capital stock by up to €528.6 million or 176.2 mil-
+lion shares for contributions in cash or in kind until January 27,
+2019. Authorized Capital 2011 permits the increase of capital
+stock by up to €90 million or 30 million shares for contributions
+in cash until January 24, 2016; new shares are solely issuable to
+employees of Siemens. Authorized Capital 2009 expired on Jan-
+uary 26, 2014; it permitted the issuance of up to 173.6 million
+shares, equaling €520.8 million.
+The Company's shareholders authorized the Managing Board,
+with the approval of the Supervisory Board, to increase capital
+stock through the issuance of no par value shares registered in
+the names of the holders and to determine the further content
+of the rights embodied in the shares, whereas subscription
+rights are or may be excluded:
+AUTHORIZED CAPITAL (NOT ISSUED)
+As of September 30, 2014 and 2013, the Company has a total of
+1,087,200 thousand and 1,084,600 thousand authorized shares.
+881,000
+2,643,000
+610,800
+203,600 1,027,517 342,506
+(520,800) (173,600) (426,951) (142,317)
+528,600 176,200 240,000 80,000
+618,600 206,200 840,566 280,189
+-
+-
+881,000
+2,643,000
+342,506
+shares
+in thousand
+(not issued)
+1,027,517
+of €
+in thousands
+Conditional capital
+203,600
+Conditional Capital 2011 was cancelled on January 28, 2014,
+which permitted the issuance of convertible bonds and/or
+warrant bonds in aggregate of up to €15 billion, entitling the
+holders to subscribe to up to 90 million no par value shares
+(representing up to €270 million capital stock increase). Condi-
+tional Capital to service the 2001 and 1999 Siemens Stock
+Option Plans was cancelled on January 28, 2014, since the last
+tranche of stock options expired in November 2010 and from
+that date on, no further shares were to be issued. It amounted
+to €157 million, representing 52.32 million shares.
+(834)
+247
+248 D.1
+Tax effect
+Pretax
+Year ended September 30, 2014
+Other comprehensive income
+Items that may be reclassified subsequently to profit or loss:
+Unrealized holding gains (losses) on available-for-sale financial assets
+Reclassification adjustments for gains (losses) included in net income
+Net unrealized gains (losses) on available-for-sale financial assets
+Unrealized gains (losses) on derivative financial instruments
+Reclassification adjustments for gains (losses) included in net income
+Net unrealized gains (losses) on derivative financial instruments
+Foreign-currency translation differences
+Items that will not be reclassified to profit or loss:
+Remeasurements of defined benefit plans
+(in millions of €)
+The changes in line item Other comprehensive income, net of
+income taxes including non-controlling interest holders are as
+follows:
+OTHER COMPREHENSIVE INCOME,
+NET OF INCOME TAXES
+In fiscal 2014 and 2013, Siemens repurchased 11,331,922 trea-
+sury shares and 17,150,820 treasury shares at average costs per
+share of €95.27 and €78.66, respectively. In fiscal 2014 and
+2013, Siemens transferred 3,584,370 shares and 3,878,899
+shares, respectively, in connection with share-based payment
+plans. As of September 30, 2014 and 2013, the Company has
+treasury shares of 45,745,147 and 37,997,595, respectively.
+In November 2013, Siemens announced a share buyback of up
+to €4 billion ending latest on October 31, 2015. Buybacks are
+made under the current authorization, which allows for further
+share repurchases of a maximum of 47.8 million shares as
+of the date of the buyback announcement. Siemens started to
+repurchase shares in May 2014.
+Until January 24, 2016, the Company is authorized by its share-
+holders to acquire treasury shares of up to 10% of its capital
+stock as of the date of the shareholders' resolution or, if this
+value is less, 10% of capital stock as of the date on which the
+authorization is exercised. Repurchased shares may only be
+used for purposes stipulated in the Articles of Association of
+Siemens AG.
+TREASURY SHARES
+289
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+252 D.5
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+D. Consolidated Financial Statements
+Future cash flows
+26,505
+As of September 30, 2013, the major part of cash and cash
+equivalents is marked as cash in transition into corporate bond
+mandates.
+A detailed reconciliation of the changes in the fair value of plan
+assets for fiscal 2014 and 2013 is provided in the following table:
+The net interest income/expense for fiscal year 2015 improves by
+€19 million due to the refined determination of discount rate.
+283
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+(in millions of €)
+250 D.3
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+D.
+247
+Actuarial (gains) losses from changes in financial assumptions
+include losses from decreasing market interest rates which
+were compensated by gains of total €2,214 million from the
+refined extrapolation and data selection used to derive the dis-
+count rate in the major currency zones (EUR, GBP, USD, CHF).
+Actuarial (gains) losses from changes in demographic assump-
+tions include losses from modified assumptions of German and
+US mortality tables of total €441 million and gains of €102 mil-
+lion from adjusted turnover rates in Switzerland.
+|
+249 D.2
+Year ended September 30,
+2014
+2013
+The data selection criteria used to derive the discount rate in
+the major currency zones (EUR, GBP, USD, CHF) and the extra-
+polation were refined as of September 30, 2014. The discount
+rate was derived from high-quality corporate bonds with an
+issuing volume of more than 100 million units in the respective
+currency zones, which have been awarded an AA rating (or
+equivalent) by at least one of the two rating agencies Moody's
+Investor Service or Standard & Poor's Rating Services.
+Benefits paid
+105
+122
+Plan participants' contributions
+528
+533
+Employer contributions
+U.S.
+Germany
+507
+2,098
+and net interest expenses
+amounts included in net interest income
+Return on plan assets excluding
+Remeasurements:
+24,057
+745
+802
+24,078
+Fair value of plan assets at beginning of year
+Interest income
+Change in plan assets:
+The mortality tables used for the actuarial valuation of the DBO
+were as follows (most significant countries):
+(9,095)
+(1,514)
+The plan assets include own transferable financial instruments
+of the Company with a fair value of €110 million and €89 mil-
+lion as of September 30, 2014 and 2013.
+(575)
+35,591
+Defined benefit obligation at end of year
+Thereof:
+(507)
+635
+Foreign currency translation effects
+579
+33,173
+35,591
+Total defined benefit obligation
+554
+33,173
+post-employment benefit plans
+135
+(224)
+Business combinations, disposals and other
+32,594
+35,037
+(67)
+(7)
+Settlement payments
+Defined benefit obligation of pension
+benefit plans
+Defined benefit obligation of other
+Fair value of plan assets of pension
+benefit plans
+26,500
+(548)
+benefit plans
+Funded status of other post-employment
+24,078
+(8,520)
+(8,537)
+Funded status of pension benefit plans
+26,505
+Total fair value of plan assets
+17,761
+19,273
+4,645
+4,958
+Former employees with vested rights
+Retirees and surviving dependants
+5
+5
+post-employment benefit plans
+Fair value of plan assets of other
+10,767
+11,360
+Active employees
+24,073
+Total funded status (excluding effects
+in connection with asset ceiling)
+(1,476)
+U.K.
+Settlement payments
+Consolidated Financial Statements
+D.
+247
+Derivatives are used for risk reducing purposes to either reduce
+the fluctuations in the value of plan assets or reduce funded
+status volatility as part of an integrated risk management
+approach for assets and liabilities. Main risks mitigated are
+interest rate, credit, equity, currency and inflation risk. All over-
+the-counter derivatives are collateralized on a daily basis to
+eliminate counterparty risk. In addition, derivatives are permit-
+ted for investment managers to use as substitutes for tradi-
+tional securities where appropriate, to manage exposure to
+foreign exchange and interest rate risks.
+Siemens' funding policy for its funded defined benefit plans is
+part of the overall commitment to sound financial manage-
+ment, which also includes an ongoing analysis of the structure
+of Siemens' defined benefit liabilities. To balance return and
+risk, Siemens has developed a benefit risk management con-
+cept. The Company has identified as a major risk a decline in
+the plans' funded status as a result of the adverse development
+of plan assets and/or defined benefit obligations. Siemens
+monitors its investments and its defined benefit obligations in
+order to measure such risk. The risk quantifies the expected
+maximum decline in the principle plans' funded status for a
+given confidence level over a given time horizon. A risk limit on
+the Group level forms the basis for the determination of the
+Company's investment strategy, i.e. the strategic asset class
+allocation of principle plan assets and the degree of interest
+rate risk hedging. Both the risk limit and investment strategy
+are regularly reviewed with the participation of senior external
+experts of the international asset management and insurance
+industry to allow for an integral view on plan assets and benefit
+liabilities. The Company selects asset managers based on quan-
+titative and qualitative analysis and subsequently constantly
+monitors their performance and risk, both on a stand-alone
+basis, and in the broader portfolio context. Siemens reviews
+the asset allocation of each plan in light of the duration of the
+related benefit liabilities and analyzes trends and events that
+may affect asset values in order to inform about appropriate
+measures at a very early stage.
+Asset Liability Matching Strategies
+When calculating the sensitivity of the defined benefit obliga-
+tion to significant actuarial assumptions the same method
+(present value of the defined benefit obligation calculated with
+the projected unit credit method) has been applied as when cal-
+culating the post-employment benefit obligation recognized in
+the Consolidated Statement of Financial Position. Increases and
+decreases in the discount rate, rate of compensation increase,
+rate of pension progression and mortality rates which are used
+in determining the DBO do not have a symmetrical effect on the
+DBO primarily due to the compound interest effect created
+when determining the net present value of the future benefit. If
+more than one of the assumptions are changed simultaneously,
+the combined impact due to the changes would not necessarily
+be the same as the sum of the individual effects due to the
+changes. Furthermore, the sensitivities reflect a change in the
+DBO only for a change in the assumptions in this specific mag-
+nitude, i.e. 0.5%. If the assumptions change at a different level,
+the effect on the DBO is not necessarily in a linear relation.
+The reduction of the mortality rates by 10% results in an
+increase of life expectancy depending on the individual age of
+each beneficiary. That means for example, that the life expec-
+tancy of a 55 years old male Siemens employee as of Sep-
+tember 30, 2014 increases by approximately 1 year. In order to
+determine the longevity sensitivity the mortality rates were
+reduced by 10% for all beneficiaries. The effect on DBO due to
+a 10% reduction in mortality rates would result in an increase
+of €1,027 million and €985 million as of September 30, 2014
+and 2013.
+2,159
+(105)
+(1,339)
+248 D.1
+(1,919)
+136
+1,492
+Rate of compensation increase
+Rate of pension progression
+Discount rate
+(in millions of €)
+284
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+Effect on DBO due to a
+one-half percentage-point
+as of September 2013
+increase decrease
+Consolidated Statements of Income
+252 D.5
+249 D.2
+2018
+September 30,
+1,668
+2017
+1,659
+2016
+1,687
+2015
+September 30, 2014
+(in millions of €)
+Expected benefit payments
+The asset allocation of the plan assets of the defined benefit
+plans is as follows:
+Disaggregation of plan assets
+285
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+2,361
+(90)
+(1,441)
+1,590
+95
+(2,100)
+The rates of compensation increase for countries with signifi-
+cant effects with regard to this assumption were as follows in
+fiscal 2014 and 2013: U.K.: 4.80% and 4.80%, Switzerland: 1.50%
+and 1.50%. The rates of pension progression for countries with
+significant effects with regard to this assumption were as fol-
+lows in fiscal 2014 and 2013: Germany: 1.69% and 1.69%, U.K.:
+3.2% and 3.2%.
+The weighted-average discount rate used for the actuarial valu-
+ation of the DBO at period-end was as follows:
+Assumed discount rates, compensation increase rates, pension
+progression rates and mortality rates used in calculating the
+DBO vary according to the economic and other conditions of
+the country in which the retirement plans are situated.
+Actuarial assumptions
+Line item Business combinations, disposals and other in the
+tables above contains reclassifications to assets and to liabili-
+ties held for disposal.
+for Self Administered Pension Schemes
+(SAPS) with allowance for future
+mortality improvements)
+BVG 2010 G
+Heubeck Richttafeln 2005 G (modified)
+RP2000 Combined Healthy
+Fully Generational Mortality Table and
+longevity improvement scale BB2D
+S1PxA (Standard mortality tables
+(397)
+24,078
+26,505
+Fair value of plan assets at end of year
+525
+Foreign currency translation effects
+(16)
+(8)
+Liability administration costs
+CH
+93
+(122)
+Business combinations, disposals and other
+(67)
+(7)
+The DBO is also affected by assumed future inflation rates. The
+effect of inflation is recognized within the assumptions above
+where applicable.
+(1,612)
+Sensitivity analysis
+Discount rate
+Effect on DBO due to a
+one-half percentage-point
+as of September 2014
+increase
+decrease
+Rate of pension progression
+Rate of compensation increase
+Discount rate
+2.1%
+1.8%
+(in millions of €)
+4.5%
+4.5%
+3.7%
+4.6%
+3.1%
+2.4%
+3.4%
+3.0%
+2013
+2014
+September 30,
+U.K.
+CH
+U.S.
+Germany
+A one-half-percentage-point change of the established assump-
+tions mentioned before, used for the calculation of the DBO as
+of September 30, 2014 and 2013, would result in the following
+increase (decrease) of the DBO:
+(1,649)
+(9,086)
+105
+6,604
+U.S. equities
+Benefits paid
+1,463
+(in millions of €)
+September 30, 2013
+1,416
+2014
+1,647
+7,050
+European equities
+2,214
+Emerging markets
+2015
+1,611
+1,457
+1,613
+Global equities
+2016
+1,947
+2,030
+Equity securities
+9,069
+2020-2024
+(in millions of €)
+2014
+2013
+2014
+2013
+2014
+Effects in connection
+with asset ceiling
+September 30,
+2013
+Net defined
+benefit balance
+September 30,
+2014
+2013
+Germany
+22,414
+20,367
+15,105
+1,706
+(in millions of €)
+2014
+2013
+2019
+1,725
+Asset class
+1,517
+1,624
+2017
+Fixed income securities
+1,337
+1,487
+646
+175
+Interest risk
+1,149
+263
+Foreign currency risk
+(45)
+53
+Credit/Inflation/Price risks
+(458)
+(141)
+Cash and cash equivalents
+456
+1,148
+Other assets
+Total
+485
+24,078
+422
+Virtually all equity securities have quoted prices in active mar-
+kets. The fair value of fixed income securities is based on prices
+provided by price service agencies. The fixed income securities
+are traded in highly liquid markets and almost all fixed income
+securities are investment grade. In addition, the asset class
+Other assets includes assets with quoted prices in active mar-
+kets in the amount of €67 million and €78 million as of Septem-
+ber 30, 2014 and 2013.
+Derivatives
+Fair value
+of plan assets
+September 30,
+Real estate
+626
+14,694
+1,668
+12,768
+Government bonds
+4,216
+3,003
+2018
+1,713
+Corporate bonds
+2019-2023
+10,479
+8,958
+9,765
+Alternative investments
+3,174
+2,961
+Hedge Funds
+1,211
+978
+|
+Private Equity
+497
+September 30,
+develop the so called Schacht Konrad. As of September 30,
+2014 and 2013, the provision totals €1,347 million and
+€1,096 million, respectively, and is recorded net of a present
+value discount of €977 million and €1,259 million, respectively
+reflecting the assumed continuous outflow of the total
+expected payments until the 2070's.
+The amounts included in the Company's Consolidated Financial
+Statements arising from its post-employment defined benefit
+plans are as follows:
+2013
+Remeasurements of defined benefit plans
+Change in defined benefit obligations:
+recognized in the Consolidated Statements
+of Comprehensive Income
+(83)
+(577)
+Defined benefit obligation at beginning of year
+33,173
+2014
+33,650
+701
+218
+Current service cost
+477
+505
+3
+(9)
+Settlement (gains) losses
+1
+Defined benefit costs
+Year ended September 30,
+(in millions of €)
+(23)
+Defined benefit
+obligation (DBO)
+(7)
+295
+294
+(1)
+(3)
+8
+16
+> Disaggregation of plan assets, and
+> Future cash flows.
+Reconciliation for defined benefit obligations
+and plan assets
+A detailed reconciliation for the changes in the DBO for fiscal
+2014 and 2013 is provided in the following table:
+(excluding amounts included in net interest
+expenses and net interest income)
+(2,098)
+(507)
+Actuarial (gains) and losses
+1,972
+(47)
+Effect from asset ceiling
+43
+Using the input of an independent advisor, management up-
+dated its valuation of the liability due to changes in estimates
+which resulted in minor adjustments in fiscal 2014 and 2013.
+The determination of the provisions related to major asset
+retirement obligations will continue to involve significant esti-
+mates and assumptions. Uncertainties surrounding the amount
+to be recognized include, for example, the estimated costs of
+decommissioning and final storage because of the long time
+frame over which future cash outflows are expected to occur.
+Amongst others, the estimated cash outflows related to the
+asset retirement obligation could alter significantly if, and
+when, political developments affect the government's plans to
+(7)
+Past service (benefit) cost
+NOTE 22 Post-employment benefits
+U.S.:
+Siemens Corporation in the U.S. sponsors one major defined
+benefit plan, the Siemens Pension Plan, which is frozen to new
+entrants and accretion of new benefits (with the exception of
+one small group of union employees). Employees of Siemens
+U.S. companies hired prior to April 1st, 2006 participate in the
+Siemens Pension Plan. Most of the defined benefit plan par-
+ticipants' benefits are calculated using a cash balance formula;
+although a small group of participants are eligible for a benefit
+based on a final average pay formula. This frozen defined ben-
+efit plan exposes the Company to actuarial risks such as invest-
+ment risk, interest rate risk and longevity risk.
+The defined benefit plan assets are held in a Master Trust.
+Siemens Corporation, as the sponsoring employer, has dele-
+gated investment oversight of the plans' assets to the Invest-
+ment Committee. The Investment Committee members have
+a fiduciary duty to act solely in the best interests of the bene-
+ficiaries according to the trust agreement and U.S. law. The
+Committee has established an Investment Policy Statement
+which articulates the goals and objectives of the plans' invest-
+ment management, including diversifying the assets of the
+Master Trust with the intention of appropriately addressing
+concentration risks. The trustee of the Master Trust acts only
+by direction of the Investment Committee. It is responsible for
+the safekeeping of the trust, but generally has no decision
+making authority over the plan assets. The legal and regulatory
+framework for the plans is based on the applicable U.S. legisla-
+tion Employee Retirement Income Security Act (ERISA). Based
+on this legislation a funding valuation is prepared annually.
+Annual contributions are determined by the plans' indepen-
+dent actuaries as prescribed under the rules and regulations of
+ERISA and the Internal Revenue Code. There is a regulatory
+requirement to maintain a minimum funding level of 80% in
+the defined benefit plans in order to avoid benefit restrictions.
+Interest expenses
+Siemens plc in the U.K. sponsors a frozen defined benefit plan
+and a defined contribution plan for all new employees and for
+the active service of those members who have participated
+in the frozen defined benefit plan. There are several smaller
+defined benefit plans which result from previous acquisitions,
+those plans are in the process of being de-risked. For most of
+247
+D. Consolidated Financial Statements
+248 D.1
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+281
+the defined benefit plan members an inflation increase of the
+accrued benefits until the start of retirement is mandatory.
+Furthermore, the plans expose the Company to actuarial risks
+such as investment risk, interest rate risk, longevity risk and
+salary increase risk. The funding environment is determined by
+the Pension Regulator and the applicable social and labor laws.
+The defined benefit plans are each governed by a benefit trust
+whose decision making body is a Board of Trustees who have a
+fiduciary duty to act in the best interests of the beneficiaries
+according to the trust agreement and law. The required fund-
+ing is determined by a funding valuation carried out every third
+year based on legal requirements, which measures the liabili-
+ties on a government bond basis rather than under a high qual-
+ity corporate bond basis as under IAS 19, thus the technical
+funding deficit is usually larger. The funding valuation assump-
+tions are negotiated between the Company and the Trustees.
+The latest funding valuation, for the largest plan, in UK in cal-
+endar year 2011 resulted in a technical underfunding of GBP 939
+(€1,208) million, based on the assumptions at that date. As a
+result, in fiscal 2013, Siemens entered into an agreement with
+the trustees to provide an annual payment of GBP 31 (€40) mil-
+lion for the next 20 years, beginning in fiscal 2014. The agree-
+ment also provides for a cumulative advance payment by
+Siemens AG compensating the remaining annual payments at
+the date of early termination of the agreement due to cancella-
+tion or insolvency. In addition to these payments the Company
+is obliged to pay GBP 5 (€6) million until the next funding valu-
+ation, when the funding requirements will be updated based
+on new assumptions. This valuation process will start in calen-
+dar year 2014.
+Switzerland:
+Siemens Switzerland sponsors several funded defined benefit
+(cash-balance) plans following the Swiss law of occupational
+benefits (BVG) according to which each employer has to grant
+post-employment benefits for qualifying employees. These
+plans are administered by foundations that are legally sepa-
+rated from the entity. For the main pension fund, which rep-
+resents almost all of the defined benefit obligation in Switzer-
+land, the board of the pension fund is composed of equally
+many employer and employee representatives. The board of
+each pension fund is required by law and by the regulations to
+act in the fund's and all stakeholders' best interest, i.e. in the
+interest of all active employees and retirees. The board of the
+pension fund is responsible for the investment policy and the
+asset management, as well as for any changes in the plan rules,
+in which it determines the necessary contributions to finance
+the benefits. The Company is required to make total contribu-
+tions at least as high as the sum of the employee contributions
+set out in the plan rules. Employer's and employees' contribu-
+tions are determined by the respective foundation boards.
+About 40% of the necessary contributions are financed by
+the employees. In the case of an underfunding in a plan the
+Company together with the employees may be asked to pay
+extra contributions in a well defined framework of recovery
+measures. The plans expose the Company to various actuarial
+and financial risks such as longevity, interest rate risks and
+salary increases.
+these plans. However, these frozen plans still expose the
+Company to actuarial risks such as investment risk, interest
+rate risk and longevity risk. Furthermore, deferred compen-
+sation plans are offered which are also funded via a CTA. In
+Germany no legal or regulatory minimum funding require-
+ments apply. The Trusts, which are legally separate from the
+Company, manage their plan assets as trustees, in accordance
+with the respective trust agreements with the Company.
+In Germany, Siemens AG provides pension benefits through the
+cash-balance plan BSAV (Beitragsorientierte Siemens Alters-
+versorgung), frozen legacy plans and deferred compensation
+plans. The majority of Siemens' active employees in Germany
+participate in the BSAV introduced in fiscal 2004, which is a
+funded defined benefit pension plan whose benefits are pre-
+dominantly based on contributions made by the Company and
+returns earned on such contributions, subject to a minimum
+return guaranteed by the Company. The BSAV is funded via a
+contractual trust arrangement (CTA), the BSAV Trust. Individual
+benefits under the frozen legacy plans are based on eligible
+compensation levels or ranking within the Company hierarchy
+and years of service. In connection with the implementation of
+the BSAV, benefits provided under the frozen legacy plans
+funded via a CTA, the Siemens Pension Trust, were modified to
+substantially eliminate the effects of compensation increases
+by freezing the accretion of benefits under the majority of
+U.K.:
+In order to reduce the Company's exposure to certain risks
+associated with defined benefit plans, such as longevity, infla-
+tion, effects of compensation increases, Siemens regularly
+reviews and continuously improves the design of its post-
+employment defined benefit plans. The benefits of defined
+benefit plans open to new entrants are based predominantly on
+contributions made by the Company and are still affected by
+longevity, inflation adjustments and compensation increases,
+but only to a significant lesser extent. The Company's major
+defined benefit plans are funded with assets in segregated en-
+tities. The defined benefit plans cover 494,000 participants,
+including 210,000 active employees, 85,000 former employees
+with vested benefits and 199,000 retirees and surviving depen-
+dents. Individual benefits are generally based on eligible com-
+pensation levels and/or ranking within the Company hierarchy
+and years of service. The characteristics of the defined benefit
+plans and the risks associated with them vary depending on
+legal, fiscal and economic requirements in each country. For
+the major defined benefit plans of Siemens the characteristics
+and risks are as follows:
+1,089
+1,029
+A reconciliation of the funded status to the amounts recog-
+nized in the Consolidated Statements of Financial Position is as
+follows:
+Remeasurements:
+Germany:
+in demographic assumptions
+370
+43
+Actuarial (gains) losses from changes
+in financial assumptions
+Actuarial (gains) losses from changes
+(245)
+1,602
+DEFINED BENEFIT PLANS
+Post-employment benefits provided by Siemens are organized
+through defined benefit plans as well as defined contribution
+plans which cover almost all of the Company's domestic em-
+ployees and the majority of the Company's foreign employees.
+Post-employment defined benefit plans include pension bene-
+fits and other post-employment benefits, which primarily
+consist of transition payments to German employees after
+retirement as well as post-employment health care and life
+insurance benefits to employees in the U.S. and Canada.
+Plan participants' contributions
+September 30,
+2013
+122
+2014
+(in millions of €)
+156
+Experience (gains) losses
+Experts are predicting that the demand for electricity
+will grow twice as fast as the global population, surging
+around 60% by the year 2030. Since resources are scarce,
+power generation will increasingly require highly effi-
+cient, customized solutions - just like the ones offered
+by our flexible and small gas turbines. These gas tur-
+bines help secure a stable energy supply since they're
+well suited for decentralized applications. Thanks to
+decades of experience in the manufacture of gas tur-
+bines, we're ideally positioned in this dynamic growth
+market, drawing upon extensive expertise to support
+customers worldwide.
+27
+28
+Power generation |||||||
+27
+Striking features of the new SGT-750
+include its efficiency and ecofriendliness,
+combined with high availability and
+reliability. The turbine has an electrical
+efficiency of 39.5% and achieves an
+efficiency of 40.7% when used as a
+mechanical drive. When exhaust heat
+is used in a combined heat and power
+system, fuel efficiency can be as high
+as 95%.
+Our portfolio of gas turbines is already ideally tailored to meet the needs of this
+market environment. Models with a capacity of 5 to 400 megawatts cover a broad
+spectrum of applications and ensure efficiency, reliability, flexibility and environ-
+mental compatibility. Low lifecycle costs and high profitability round off this
+positive picture.
+Decentralized energy supply made reliable
+Gas-fired I power plants are considered an ideal supplement to renewable energy
+sources because they're available at short notice when the wind isn't blowing or
+the sun isn't shining.
+Decentralized energy supplies play a key role in an intelligent power mix. An
+increasing number of companies maintain their own power plants that, using a
+combined heat and power system, supply valuable process heat that can be used
+in manufacturing or for building services - all at competitive electricity prices.
+Our acquisition of Rolls-Royce's aero-derivative gas turbines business will close
+an important gap in our portfolio. Originally developed for use in aviation, the
+gas turbines from Rolls-Royce feature an efficient, compact and weight-optimized
+design. This makes them particularly attractive for energy supplies in the oil and
+gas industry. They're also used in decentralized power supplies because they can
+start up very quickly when needed and rapidly generate power. These advantages
+are particularly useful for managing energy peaks or power reserves for industry
+or for stabilizing power grids. As a result, we're expanding our access to the
+attractive market of flexible and small gas turbines. We expect high growth poten-
+tial in this market in the years to come.
+more efficient and more ecofriendly: exhaust heat produced
+during power generation is ideal for heating the natural gas.
+Reaching temperatures as high as 459°C, the exhaust airflow
+supplies enough energy to heat the gas at the pipeline's
+landfall facility in Lubmin, even during the cold winter
+months - thus enabling the gas to be further transported.
+WWW.SIEMENS.COM/SGT-750
+Combating ice with 459°C | The Joule-Thomson effect
+describes the phenomenon whereby natural gas in pipelines
+cools when the pressure is reduced. At temperatures near the
+freezing point, a great deal of energy is needed to heat the
+gas in order to prevent icing. In the past, gas-fired boiler
+plants with a heat output of 40 megawatts each were used
+for this purpose. The SGT-750 offers technology that is both
+20
+1* SUBD
+Siemens sales manager,
+product manager and
+development engineer
+22
+22
+|| | || | ||
+Less is more | To boost efficiency, you have to eliminate
+unnecessary losses. Intelligent solutions can cut these to a
+minimum, enabling the Siemens SGT-750 gas turbine to
+achieve a mechanical efficiency of more than 40%. This
+requires farsighted planning early on. That's why our engi-
+neers leveraged the advantages of digitalization already
+during the design phase. Using multi-layered 3D models,
+they simulated and planned future maintenance work while
+still working on first drafts of the new turbines.
+24 bar
+High compressor pressure enhances
+efficiency and cuts emissions.
+95%
+Fuel efficiency of up to 95% can
+be achieved with combined heat
+and power (CHP) systems.
+True greatness lies in the details | Efficiency, cost effec-
+tiveness and reliability are the three main requirements for
+gas turbines. Improvements to details make it possible to
+constantly push the limits of what is feasible. A prime
+example is our Dry Low Emissions combustion system, which
+optimizes fuel use and minimizes harmful NOx emissions.
+With its advanced materials and precision processing, our
+SGT-750 is deployable worldwide under all possible climatic
+conditions - in the desert as well as in the Arctic, on the high
+seas as well as on land.
+23
+| |
+Power generation |||||||
+6332
+Anders Hellberg,
+1845
+"Already during the
+design phase, we placed
+great importance on
+the turbine's future ease
+of service as well as its
+efficiency."
+21
+IIIII
+19
+Ownership
+culture
+Siemens <
+Governance
+Management
+model
+Strategic framework
+|
+Power generation | Power transmission, power distribution and smart grid |||||||||||||| Energy application ||||||||||||| Imaging and in-vitro diagnostics
+More IQ per megawatt -
+Generating power more
+efficiently
+||| Efficient power generation requires intelligent solutions like those
+offered by our SGT-750 gas turbine. With a capacity of 37 megawatts,
+the SGT-750 is one of our smaller gas turbines - but its capabilities are
+enormous. On the Baltic Sea in Lubmin, Germany, exhaust heat from
+the turbine is used to heat natural gas arriving on site through the
+Nord Stream pipeline, thus keeping the gas transportable. In addition,
+the electricity generated by the turbine is fed into the public grid. This
+two-fold benefit is further enhanced by the turbine's high efficiency and
+low emissions, which make the SGT-750 one of the most ecofriendly
+turbines in its class.
++60%
+Experts expect global demand
+for electricity to increase signi-
+ficantly by 2030.
+20
+2x
+The demand for electricity
+is growing twice as fast
+as the global population.
+21
+| | | | |
+1105919858
+THE
+01-Unit Operation GT3
+for further transport, for which 100 bar is required. On the
+other hand, the gas has already cooled down to such an extent
+that a further reduction in pressure could cause the pipelines
+to become iced. That's where our SGT-750 gas turbine comes
+in, helping ensure the smooth provision of gas to Europe with
+its exhaust heat. The fact that the power generated by the
+turbine is fed into the grid and can supply up to 50,000 house-
+holds with electricity rounds off this success story.
+-0
+10
+30
+30
+20
+-10
+-20
+40 50
+60
+10
+70
+80
+°C
+9G
+90
+100
+How the SGT-750 is helping safeguard Europe's gas
+supplies Along its route from Siberia's large natural gas
+reserves, the Nord Stream pipeline transports natural gas
+through the cold Baltic Sea. Not only does the temperature of
+the gas drop during transport, but the pressure also falls - from
+about 215 bar at the Russian city of Portovaya to a maximum
+of 120 bar in Lubmin, Germany - resulting in a challenging
+situation. On the one hand, the pressure is still not low enough
+G703
+26
+25
+ration
+Start indication
+Stop Indicat
+Sequences Power
+Venb
+G
+T7L NOG
+24
+Energy supply security according to plan | Ensuring
+the continued successful provision of energy in the future
+will require sophisticated energy management. To get a grip
+on rising energy costs, power generation must become more
+efficient. Our online monitoring system performs tasks such
+as controlling the capacity utilization of systems and continu-
+ously monitoring sensitive components - enabling potential
+errors to be detected and resolved at an early stage. The
+advantage: the turbine can operate at full load for nearly eight
+years, or 68,000 hours, before it has to be comprehensively
+overhauled. With rigorous monitoring, this service interval
+can be extended even further. That's what we call energy
+supply security according to plan.
+ENS
+17/17
+Only 17 maintenance
+days are scheduled over
+a period of 17 years -
+a clear promise.
+68,000
+The gas turbine can operate
+at full load for 68,000 hours
+before it's due for its first
+comprehensive overhaul.
+Maintenance with minimum downtimes | Downtime
+is costly and impairs processes. To minimize it, we designed
+the SGT-750. Our aim was to ensure that the new turbine
+would have the least downtime in its class. And our engi-
+neers have kept their word: the SGT-750 has just 17 scheduled
+maintenance days over a period of 17 years. That's the stand-
+ard we've set - a benchmark made possible by a design that
+offers ease of service and ready access to all important parts.
+In addition, high-quality materials and components minimize
+the likelihood of failures.
+Power generation |||||||
+Power generation |||||||
+Our path
+Customer and
+business focus
+171 | C
+(in millions of €)
+4
+Credit Default Swaps
+281
+123
+316
+192
+Options
+122
+118
+212
+Embedded derivatives
+49
+35
+46
+43
+Commodity swaps
+261
+30
+Year ended September 30,
+2015
+2016
+In connection with fair value hedges
+(mainly interest rate derivatives)
+In connection with cash flow hedges (main-
+ly foreign currency exchange derivatives)
+Embedded derivatives
+1,533
+Not designated in a hedge accounting
+relationship
+In connection with fair value hedges
+476
+472
+98
+153
+212
+118
+5,105
+Combined Management Report
+Expected gain (loss)
+1,047
+2,330
+1,749
+2,569
+2017 to 2020 and
+2019 thereafter
+1,637
+456
+1,769
+swaps
+774
+22
+796
+1,625
+687
+2,312
+22
+2,334
+100
+100
+100
+1,625
+587
+2,212
+22
+2,234
+Position
+Net amounts
+September 30, 2013
+566
+1,587
+208
+337 | E.
+combined interest/currency
+Interest rate swaps and
+331
+416
+901
+352
+Foreign currency exchange
+contracts
+September 30, 2014
+Asset Liability
+Periods in which the hedged forecast transactions or the firm
+commitments denominated in foreign currency are expected to
+impact profit or loss:
+Cash flow hedges - As of September 30, 2014 and 2013, the
+ineffective portion of cash flow hedges is not significant indi-
+vidually or in aggregate.
+The Company's operating units apply hedge accounting for cer-
+tain significant forecast transactions and firm commitments
+denominated in foreign currencies. Particularly, the Company
+has entered into foreign currency exchange contracts to reduce
+the risk of variability of future cash flows resulting from fore-
+cast sales and purchases as well as firm commitments. This risk
+results mainly from contracts denominated in US$ both from
+Siemens' operating units entering into long-term contracts,
+e.g. project business, and from the standard product business.
+Hedging activities
+September 30, 2013
+Asset Liability
+(in millions of €)
+The fair values of each type of derivative financial instruments
+recorded as financial assets or financial liabilities are as follows:
+As part of the Company's risk management program, a variety
+of derivative financial instruments is used to reduce risks
+resulting primarily from fluctuations in foreign currency ex-
+change rates, interest rates and commodity prices.
+NOTE 30 Derivative financial instruments
+and hedging activities
+299
+Additional Information
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+1,783
+2,330
+2,569
+Carrying
+amount
+Carrying
+Fair value
+amount
+12,558
+12,558
+12,944
+12,944
+5,345
+5,345
+5,261
+5,261
+8,013
+8,013
+9,190
+9,190
+14,378
+14,378
+11,126
+September 30, 2013
+11,126
+Fair value
+30,751
+Financial assets measured at cost or amortized cost
+Trade and other receivables¹
+Receivables from finance leases
+Cash and cash equivalents
+Other non-derivative financial assets
+Available-for-sale financial assets²
+Financial liabilities measured at cost or amortized cost
+Notes and bonds
+Trade payables³
+Loans from banks and other financial indebtedness
+Obligations under finance leases
+Other non-derivative financial liabilities
+30,128
+29,704
+1,338
+887
+411
+160
+31,877
+September 30, 2014
+Related
+amounts not
+set off in the
+Statement
+of Financial
+192
+18,787
+131 | B.
+Corporate Governance
+171 | C
+Combined Management Report
+108 | A. To our Shareholders
+296
+Cash and cash equivalents includes €429 million and €320 mil-
+lion as of September 30, 2014 and 2013, respectively, which are
+not available for use by Siemens mainly due to minimum
+reserve requirements with banks.
+As of September 30, 2014 and 2013, the carrying amount of
+financial assets Siemens has pledged as collateral amounted to
+€271 million and €344 million, respectively.
+The carrying amounts of cash and cash equivalents, trade and
+other receivables and trade payables with a remaining term of
+up to twelve months, other current financial assets and liabili-
+ties represent a reasonable approximation of their fair values,
+mainly due to the short-term maturities of these instruments.
+Fixed-rate and variable-rate receivables with a remaining term
+of more than twelve months, including receivables from
+finance leases, are evaluated by the Company based on para-
+meters such as interest rates, specific country risk factors, indi-
+vidual creditworthiness of the customer, and the risk character-
+istics of the financed project. Based on this evaluation,
+allowances for these receivables are recognized. As of Septem-
+ber 30, 2014 and 2013, the carrying amounts of such receiv-
+ables, net of allowances, approximate their fair values.
+The fair value of notes and bonds is based on prices provided
+by price service agencies at the period-end date (Level 2). The
+fair value of loans from banks and other financial indebted-
+ness, obligations under finance leases as well as other non-
+current financial liabilities is estimated by discounting future
+cash flows using rates currently available for debt of similar
+terms and remaining maturities (Level 2).
+Financial instruments categorized as financial assets and
+financial liabilities measured at fair value are presented in the
+following table:
+(in millions of €)
+September 30,
+2014
+2013
+Financial assets measured at fair value
+Available-for-sale financial assets
+Derivative financial instruments
+Not designated in a hedge accounting
+relationship
+2,536
+1,994
+3 As of September 30, 2014 and 2013, trade payables of
+€40 million and €32 million have a remaining term of
+more than twelve months.
+167
+2 Consists of equity instruments classified as available-for-
+sale, for which a fair value could not be reliably measured
+and which are therefore recognized at cost.
+the sale of goods and services of €788 million and
+18,165
+18,742
+18,491
+7,594
+7,594
+7,599
+7,599
+2,635
+2,652
+1,821
+1,832
+186
+1,588
+130
+167
+130
+1,588
+1,651
+1,651
+1 Consists of (1) €12,537 million and €12,932 million trade
+receivables from the sale of goods and services in fiscal
+2014 and 2013, respectively, as well as (2) €20 million
+and €11 million receivables included in line item Other
+financial assets in fiscal 2014 and 2013, respectively. As
+of September 30, 2014 and 2013, trade receivables from
+€686 million have a remaining term of more than twelve
+months.
+of Financial
+Position
+Net amounts
+in the
+Statement
+Amounts
+set off in the
+Statement
+of Financial
+Position
+Level 1: quoted prices in active markets for identical assets
+or liabilities;
+Level 2: inputs other than quoted prices that are observ-
+able for the asset or liability, either directly (i.e. as prices)
+or indirectly (i.e. derived from prices); and
+Level 3: inputs for assets or liabilities, not based on observ-
+able market data.
+The unquoted equity instrument allocated to level 3 of the fair
+value hierarchy relates to an investment in an offshore wind
+farm. The fair value is determined based on discounted cash
+flow calculations. The most significant unobservable input
+used to determine the fair value is the cash flow forecast which
+is mainly based on the future power generation income. This
+income is generally subject to future market developments and
+thus price volatility. Since a long-term power purchase agree-
+ment is in place that mitigates price volatility, significant
+changes to the cash flow forecast are unlikely and thus, no
+significant effects on Other comprehensive income, net of
+income taxes, are expected.
+At the end of the reporting period the Company assesses
+whether transfers from one level of the fair value hierarchy to
+another level have to be made. In fiscal 2014, there were no
+such transfers.
+|
+131 | B.
+Corporate Governance
+171 | C
+Combined Management Report
+108 | A. To our Shareholders
+298
+Net gains (losses) of financial instruments are as follows:
+(in millions of €)
+Cash and cash equivalents
+Loans and receivables
+Available-for-sale financial assets
+2013
+(1)
+The levels of the fair value hierarchy and its application to our
+financial assets and financial liabilities are described below:
+Year ended September 30,
+1,047
+Derivative financial instruments
+1,994
+-
+-
+1,612
+Debt instruments
+-
+382
+382
+Derivative financial instruments
+-
+2,330
+-
+2,330
+1,612
+2,712
+-
+4,324
+Total
+Financial liabilities measured
+at fair value
+1,047
+-
+2014
+29
+September 30, 2014
+Net amounts
+Derivative financial assets
+2,364
+7
+2,357
+955
+1,402
+Reverse repurchase agreements
+400
+400
+400
+Total
+2,764
+7
+2,757
+1,355
+1,402
+Financial liabilities
+Derivative financial liabilities
+Related
+amounts not
+set off in the
+Statement
+of Financial
+Position
+19
+of Financial
+Position
+Amounts
+set off in the
+Statement
+of Financial
+Position
+(99)
+58
+(172)
+Financial liabilities measured at amortized cost
+(844)
+408
+(283)
+370
+Financial assets and financial liabilities
+held for trading
+Net gains (losses) in fiscal 2014 and 2013 on available-for-sale
+financial assets include net gains on derecognition as well as
+impairment losses.
+Net losses on loans and receivables contain changes in valua-
+tion allowances, gains or losses on derecognition as well as
+recoveries of amounts previously written-off. Net gains (losses)
+in fiscal 2014 and 2013 on financial liabilities measured at amor-
+tized cost are comprised of gains (losses) from derecogni-
+tion and the ineffective portion of fair value hedges. Net gains
+(losses) in fiscal 2014 and 2013 on financial assets and financial
+liabilities held for trading consist of changes in the fair value of
+derivative financial instruments, including interest income and
+expense, for which hedge accounting is not applied.
+The amounts presented include foreign currency gains and
+losses from the realization and valuation of the financial assets
+and liabilities mentioned above.
+Offsetting
+Siemens enters into master netting agreements and similar
+agreements for derivative financial instruments and reverse
+repurchase agreements. The requirements to offset recognized
+financial instruments are usually not met. The following table
+reflects financial assets and financial liabilities that are subject
+to netting agreements and similar agreements:
+|
+(in millions of €)
+Financial assets
+Gross amounts
+Net amounts
+in the
+Statement
+(in millions of €)
+382
+Equity instruments
+1,047
+1,308
+765
+5
+8
+In connection with cash flow hedges (main-
+ly foreign currency exchange derivatives)
+Embedded derivatives
+406
+152
+30
+122
+1,749
+1,047
+The fair value of available-for-sale financial assets quoted in an
+active market is based on price quotations at the period-end
+date. The fair value of debt instruments is either based on
+prices provided by price service agencies or estimated by dis-
+counting future cash flows using current market interest rates.
+The Company limits default risks resulting from derivative
+financial instruments by a careful counterparty selection.
+Derivative financial instruments are generally transacted with
+financial institutions with investment grade credit ratings. The
+fair valuation of derivative financial instruments at Siemens
+incorporates all factors that market participants would con-
+sider. This includes credit risks for which a credit valuation
+adjustment is determined based on Siemens' net exposure
+towards each counterparty. The exact calculation of fair values
+of derivative financial instruments depends on the specific
+type of instrument:
+247
+D. Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+252 D.5
+1,749
+249 D.2
+4,324
+905
+Gross amounts
+330 D.7
+254 D.6
+252 D.5
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+248 D.1
+D. Consolidated Financial Statements
+247
+Derivative financial liabilities
+Financial liabilities
+Total
+Reverse repurchase agreements
+Derivative financial assets
+Financial assets
+(in millions of €)
+621
+1,526
+1,612
+1,612
+250 D.3
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+Derivative financial instruments
+703
+1
+702
+2,569
+-
+Total
+1,527 3,272
+Financial liabilities measured
+at fair value
+Derivative financial instruments
+-
+1,749
+-
+1,749
+Level 1
+Level 2
+September 30, 2013
+Level 3
+Total
+(in millions of €)
+Financial assets measured
+at fair value
+Available-for-sale financial assets
+Debt instruments
+251 D.4
+1,527
+1,527
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+297
+Derivative interest rate contracts - The fair values of derivative
+interest rate contracts (e.g. interest rate swap agreements) are
+estimated by discounting expected future cash flows using cur-
+rent market interest rates and yield curves over the remaining
+term of the instrument. Interest rate futures and interest rate
+options are valued on the basis of quoted market prices when
+available. If quoted market prices are not available, interest rate
+options are valued based on option pricing models.
+Derivative currency contracts - The fair value of foreign cur-
+rency exchange contracts is based on forward exchange rates.
+Currency options are valued on the basis of quoted market
+prices or on estimates based on option pricing models.
+Derivative commodity contracts - The fair value of commodity
+swaps is based on forward commodity prices. Commodity
+options are valued on the basis of quoted market prices or on
+estimates based on option pricing models.
+The warrants issued together with US$3 billion bonds in fiscal
+2012 are valued based on an option pricing model. The most
+significant inputs used are the underlying Siemens and OSRAM
+share price and the implied volatility.
+In determining the fair values of the derivative financial instru-
+ments, no compensating effects from underlying transactions
+(e.g. firm commitments and forecast transactions) are taken
+into consideration.
+The following table allocates financial assets and financial
+liabilities measured at fair value to the three levels of the fair
+value hierarchy.
+(in millions of €)
+Financial assets measured
+September 30, 2014
+Total
+Level 1 Level 2 Level 3
+307
+2,536
+307 1,834
+702
+2,569
+307 5,105
+at fair value
+Available-for-sale financial assets
+Equity instruments
+The following table presents the fair values and carrying
+amounts of financial assets and financial liabilities measured at
+cost or amortized cost:
+Financial liabilities measured at fair value
+Derivative financial instruments
+7
+Completion of the power plant has been delayed for reasons
+which are in dispute. In December 2008, the supplier consor-
+tium filed a request for arbitration against TVO demanding an
+extension of the construction time, additional compensation,
+milestone payments, damages and interest. In 2013, the sup-
+plier consortium increased its monetary claims to €2.71 billion.
+TVO rejected the claims and made counterclaims against the
+supplier consortium consisting primarily of damages due to
+the delay. As of September 2012, TVO's counterclaims amounted
+to €1.59 billion based on a delay of up to 56 months. In Octo-
+ber 2014, TVO estimated that its counterclaims, based on a de-
+lay of 116 months, may be increased to €2.3 billion in calendar
+year 2015. The supplier consortium increased its monetary
+claims in October 2014 to €3.39 billion. The arbitration proceed-
+ings may continue for several years. The amounts claimed by
+the parties may be updated further.
+As previously reported, Essent Wind Nordsee Ost Planungs-
+und Betriebsgesellschaft mbH filed a request for arbitration
+against Siemens AG in October 2013 alleging breaches of a con-
+tract for the delivery of a High Voltage Substation entered into
+by the parties in 2010. The claimant claims damages in an
+amount of €256 million plus interest and a determination that
+Siemens AG shall be liable for any further damages claimed to
+amount to €152 million. Siemens AG filed a motion to dismiss
+the request for arbitration. In addition, Siemens filed counter-
+claims of €48 million plus interest and requested a determina-
+tion concerning compensation for all future damages.
+During fiscal year 2014 Siemens Industrial Turbomachinery Ltd.,
+UK was sued before an Iranian Court. The alleged damage claims
+are not quantified. Siemens will defend itself against the action.
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED COMPLIANCE VIOLATIONS
+As previously reported, Siemens AG agreed on a settlement
+with nine out of eleven former members of the Managing and
+Supervisory Board in January 2010. The settlement relates to
+claims of breaches of organizational and supervisory duties
+in view of the accusations of illegal business practices that oc-
+curred in the course of international business transactions
+in calendar 2003 to 2006 and the resulting financial burdens
+for the Company. In January 2013, Siemens AG agreed on a
+settlement with Dr. Thomas Ganswindt. In August 2014,
+Siemens AG reached a settlement with Mr. Joachim Neubürger.
+The settlement is subject to the approval of the annual share-
+holders' meeting of Siemens AG and will terminate the litiga-
+tion proceeding.
+As previously reported in July 2008, Hellenic Telecommunica-
+tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
+with the district court of Munich, Germany, seeking to compel
+247
+D. Consolidated Financial Statements
+248 D.1
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+Derivatives designated in a hedge accounting relationship
+Financial liabilities held for trading
+Financial liabilities measured at amortized cost
+Financial liabilities:
+43,010
+45,591
+2,161
+2,728
+Available-for-sale financial assets
+1,705
+1,995
+Financial assets held for trading
+625
+As previously reported, Siemens AG is a member of a supplier
+consortium that has been contracted to construct the nuclear
+power plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj
+(TVO) on a turnkey basis. The agreed completion date for the
+nuclear power plant was April 30, 2009. Siemens AG's share of
+the contract value is approximately 27%. The other member of
+the supplier consortium is a further consortium consisting of
+Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
+574
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED BREACHES OF CONTRACT
+NOTE 28
+1,890
+1,864
+5,970
+Item Credit guarantees cover the financial obligations of third
+parties in cases where Siemens is the vendor and (or) contrac-
+tual partner. These guarantees generally provide that in the
+event of default or non-payment by the primary debtor,
+Siemens will be required to settle such financial obligations.
+In addition, Siemens provides credit guarantees generally as
+guarantees for credit-lines with variable utilization for obliga-
+tions of joint ventures and associates accounted for using the
+equity method. The maximum amount of these guarantees is
+equal to the outstanding balance of the credit or, in case where
+a credit line is subject to variable utilization, the nominal
+amount of the credit line. These guarantees have terms up to
+19 years and twelve years, respectively, in fiscal 2014 and 2013.
+Except for statutory recourse provisions against the primary
+debtor, credit guarantees are generally not subject to additional
+contractual recourse provisions. The Company accrued €49 mil-
+lion and €38 million relating to credit guarantees as of Septem-
+ber 30, 2014 and 2013, respectively.
+Furthermore, Siemens issues guarantees of third-party perfor-
+mance, which include performance bonds and guarantees of
+advanced payments in cases where Siemens is the general or
+subsidiary partner in a consortium. In the event of non-fulfill-
+ment of contractual obligations by the consortium partner(s),
+Siemens will be required to pay up to an agreed-upon maxi-
+mum amount. These agreements span the term of the con-
+tract, typically ranging from three months to ten years in fiscal
+2014 and 2013. Generally, consortium agreements provide for
+fallback guarantees as a recourse provision among the consor-
+tium partners. As of September 30, 2014 and 2013, the Company
+accrued €3 million and €66 million, respectively, relating to
+performance guarantees.
+In fiscal 2007, The Federal Republic of Germany commissioned a
+consortium consisting of Siemens and IBM Deutschland GmbH
+(IBM) to modernize and operate the non-military information
+and communications technology of the German Federal Armed
+Forces (Bundeswehr). This project is called HERKULES. A project
+company, BWI Informationstechnik GmbH (BWI), provides the
+services required by the terms of the contract. Siemens is a
+shareholder in the project company. The total contract value
+amounts to a maximum of approximately €6 billion. In connec-
+tion with this project, Siemens issued several guarantees con-
+nected to each other legally and economically in favor of the
+Federal Republic of Germany and of the consortium member
+IBM in December 2006. The guarantees ensure that BWI has
+sufficient resources to provide the required services and to fulfill
+its contractual obligations. These guarantees are listed as a sepa-
+rate item HERKULES obligations in the table above due to their
+compound and multilayer nature. Total future payments poten-
+tially required by Siemens amount to €1.49 billion and €1.89 bil-
+lion as of September 30, 2014 and 2013, respectively and will be
+reduced by approximately €400 million per year over the re-
+maining three-year contract period as of September 30, 2014.
+Yearly payments under these guarantees are limited to €400 mil-
+lion plus, if applicable, a maximum of €90 million in unused
+guarantees carried forward from the prior year.
+108 | A. To our Shareholders
+292
+131 | B.
+Corporate Governance
+171 C.
+Combined Management Report
+Item Other includes indemnifications issued in connection
+with dispositions of business entities. Such indemnifications, if
+customary to the relevant transactions, may protect the buyer
+from potential tax, legal and other risks in conjunction with the
+purchased business entity. Indemnifications include those for
+Unify (EN), disposed of in fiscal 2008 and Siemens IT Solutions
+and Services disposed of in fiscal 2011. As of September 30,
+2014 and 2013, the total amount accrued for guarantees in item
+Other is €168 million and €242 million, respectively.
+As of September 30, 2014 and 2013, future payment obligations
+under non-cancellable operating leases are as follows:
+(in millions of €)
+2014
+Within one year
+815
+After one year but not more than five years
+More than five years
+1,574
+828
+3,217
+757
+3,120
+Total operating rental expense for the years ended Septem-
+ber 30, 2014 and 2013 were €1,122 million and €1,049 million,
+respectively. Total sublease income amounts to €51 million and
+€62 million, respectively in fiscal 2014 and 2013. Total future
+minimum sublease payments expected to be received under
+non-cancellable subleases as of September 30, 2014 and 2013
+amount to €94 million and €139 million, respectively.
+As of September 30, 2014 and 2013, the Company has commit-
+ments to make capital contributions to the equity of various
+companies of €132 million and €223 million, respectively.
+The Company is jointly and severally liable and has capital con-
+tribution obligations as a partner in commercial partnerships
+and as a participant in various consortiums.
+Legal proceedings
+6,687
+Derivatives designated in a hedge accounting relationship
+8,013
+As previously reported, CADE is conducting – unrelated to the
+above mentioned proceedings - two further investigations into
+possible antitrust behavior in the field of gas-insulated and
+air-insulated switchgear in the 1990's calendar years to 2006.
+Siemens is cooperating with the authorities.
+-
+It cannot be excluded that further significant damages claims
+will be brought by customers or the state against Siemens based
+on the outcome of the above mentioned investigations.
+294
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+252 D.5
+108 | A. To our Shareholders
+In May 2014 the Public Prosecutor's Office São Paulo initiated a
+law suit against Siemens Ltda. Brazil as well as other companies
+and several individuals in the amount of BRL 2.5 billion
+(approximately €800 million) in relation to a train refurbish-
+ment project that is not part of the above cooperation agree-
+ment. A technical note issued by the Brazilian cartel authority
+CADE earlier in calendar 2014 had not identified any anticompet-
+itive wrongdoing by Siemens Ltda. Brazil in relation to this proj-
+ect. Siemens Ltda. Brazil is defending itself against the action.
+In March 2014, Siemens was informed that in connection with
+the above mentioned metro transport projects the Public Pros-
+ecutor's Office São Paulo has requested criminal proceedings at
+court into alleged violations of Brazilian antitrust law against a
+number of individuals including current and former Siemens
+employees.
+As previously reported, in May 2013, Siemens Ltda. in Brazil
+(Siemens Ltda. Brazil) entered into a leniency agreement with
+the Administrative Council for Economic Defense (CADE) and
+other relevant Brazilian authorities relating to possible anti-
+trust violations in connection with several Brazilian metro
+transport projects. In March 2014, CADE commenced adminis-
+trative proceedings, confirming Siemens Ltda. Brazil's immu-
+nity from administrative fines for the reported potential mis-
+conduct. In connection with the above mentioned metro
+transport projects, several Brazilian authorities initiated inves-
+tigations relating to alleged criminal acts (corruptive payments,
+anti-competitive conduct, undue influence on public tenders).
+In March 2014, Siemens Ltda. Brazil signed an agreement with
+the Public Prosecutor's Office of the State of São Paulo ("Public
+Prosecutor's Office São Paulo") that formalizes and structures
+the cooperation in the investigations.
+As previously reported, claims are being asserted against
+Siemens in connection with a decision of the European Com-
+mission rendered in January 2007 regarding antitrust violations
+in the high-voltage gas-insulated switchgear market, which has
+become binding and final. Among such claims is a claim as-
+serted by National Grid Electricity Transmission Plc. (National
+Grid) with the High Court of England and Wales in Novem-
+ber 2008. The Parties are no longer in dispute with each other
+and settled the High Court action in fiscal year 2014.
+in the Israeli gas insulated switchgear market in the amount of
+ILS 3.8 billion (approximately €800 million). Siemens AG is
+defending itself against the actions.
+Siemens AG and other companies that allegedly formed a cartel
+Based on the above mentioned conclusion of the Israeli Anti-
+trust Authority, two electricity consumer groups filed each a
+motion to certify a class action for cartel damages against a
+number of companies including Siemens AG with an Israeli
+District Court in September 2013. Both class actions seek com-
+pensation for alleged damages, which are claimed to be in a
+range of ILS 2 billion (approximately €400 million) to ILS
+2.8 billion (approximately €600 million). In addition, the Israel
+Electric Corporation (IEC) filed at the end of December 2013 a
+separate claim for damages with the Israeli state court against
+As previously reported, in September 2011, the Israeli Antitrust
+Authority requested that Siemens present its legal position
+regarding an alleged anti-competitive arrangement between
+April 1988 and April 2004 in the field of gas-insulated switch-
+gear. In September 2013, the Israeli Antitrust Authority con-
+cluded that Siemens AG was a party to an illegal restrictive
+arrangement regarding the Israeli gas-insulated switchgear
+market between 1988 and 2004, with an interruption from
+October 1999 to February 2002. The Company appealed against
+this decision in May 2014.
+As previously reported, in June 2008, the Republic of Iraq filed
+an action requesting unspecified damages against 93 named
+defendants with the United States District Court for the South-
+ern District of New York on the basis of findings made in the
+"Report of the Independent Inquiry Committee into the United
+Nations Oil-for-Food Programme." Siemens S.A.S. France,
+Siemens Sanayi ve Ticaret A.S., Turkey, and the former Siemens
+subsidiary OSRAM Middle East FZE, Dubai, are among the 93
+named defendants. In February 2013, the trial court dismissed
+the Republic of Iraq's action. The Republic of Iraq appealed the
+decision, which was then affirmed by the court of appeals. The
+Republic of Iraq thereafter petitioned for an "en banc" review of
+the appellate decision. The court of appeals has not yet granted
+the request for review.
+Siemens AG to disclose the outcome of its internal investiga-
+tions with respect to OTE. OTE seeks to obtain information with
+respect to allegations of undue influence and/or acts of bribery
+in connection with contracts concluded between Siemens AG
+and OTE from calendar 1992 to 2006. At the end of July 2010,
+OTE expanded its claim and requested payment of damages by
+Siemens AG of at least €57 million to OTE for alleged bribery
+payments to OTE employees. At the end of October 2014 OTE
+increased its damage claim to the amount of at least €68 mil-
+lion. Siemens AG continues to defend itself against the ex-
+panded claim.
+293
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+As previously reported, in August 2013, a Brazilian Appellate
+Court upheld a decision to suspend Siemens Ltda. Brazil from
+participating in public tenders and signing contracts with
+public administrations in Brazil for a five year term, based on
+alleged irregularities in calendar 1999 and 2004 public tenders
+with the Brazilian Postal Authorities. Siemens Ltda. Brazil has
+further appealed the decision. In March 2014, upon request of
+Siemens Ltda. Brazil, said exclusion from public tenders and
+contracts was temporarily suspended until a final court deci-
+sion is reached.
+9,190
+As previously reported, the Vienna public prosecutor in Austria
+is conducting an investigation into payments between calendar
+1999 and calendar 2006 relating to Siemens AG Österreich for
+which adequate services rendered could not be identified. In
+September 2011, the Vienna public prosecutor extended the
+investigations to include a tax evasion matter for which
+Siemens AG Österreich is potentially liable. Siemens is cooper-
+ating with the authorities.
+For legal proceedings information required under IAS 37, Provi-
+sions, Contingent Liabilities and Contingent Assets is not dis-
+closed, if the Company concludes that the disclosure can be
+expected to seriously prejudice the outcome of the litigation.
+Cash and cash equivalents
+29,331
+32,281
+Loans and receivables
+2013
+2014
+September 30,
+Financial assets:
+(in millions of €)
+The following table presents the carrying amounts of each
+category of financial assets and financial liabilities:
+NOTE 29 Additional disclosures on financial
+instruments
+295
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+252 D.5
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+248 D.1
+D. Consolidated Financial Statements
+247
+In addition to the investigations and legal proceedings described
+above, Siemens AG and its subsidiaries have been named as de-
+fendants in various other legal actions and proceedings arising
+in connection with their activities as a global diversified group.
+Some of these pending proceedings have been previously dis-
+closed. Some of the legal actions include claims or potential
+claims for compensatory and in some cases punitive damages
+for indeterminate amounts. Siemens is from time to time also
+involved in regulatory or other investigations in several jurisdic-
+tions beyond those described above. Siemens cooperates with
+the relevant authorities and, where appropriate, conducts inter-
+nal investigations with the assistance of in-house and external
+counsel. In some instances, criminal or civil sanctions could be
+brought against the Company itself or against certain of its em-
+ployees in connection with possible violations of law. In addi-
+tion, the scope of pending investigations may be expanded and
+new investigations commenced in connection with allegations
+of bribery or other illegal acts. The Company's operating activi-
+ties, financial results and reputation may also be negatively
+affected, particularly as a result of penalties, fines, disgorge-
+ments, compensatory damages, third-party litigation, including
+with competitors, the formal or informal exclusion from public
+invitations to tender, or the loss of business licenses or permits.
+Additional expenses and provisions, which could be material,
+may need to be recorded in the future for penalties, fines, dam-
+ages or other charges in connection with the investigations.
+Given the number of legal actions and other proceedings to
+which Siemens is subject, some may result in adverse decisions.
+Siemens contests actions and proceedings when it considers it
+appropriate. In view of the inherent difficulty of predicting the
+outcome of such matters, particularly in cases in which claim-
+ants seek indeterminate damages, Siemens may not be able to
+predict what the eventual loss or range of loss related to such
+matters will be. The final resolution of the matters discussed in
+this paragraph could have a material effect on Siemens' busi-
+ness, results of operations and financial condition for any report-
+ing period in which an adverse decision is rendered. There can
+be no assurance that the results of any additional legal matter
+not separately discussed in this paragraph will not have a mate-
+rial negative impact on the Company's net worth, financial con-
+dition and operational results. However, Siemens currently does
+not expect its net worth, financial condition or operational
+results to be materially affected by such additional legal matters
+not separately discussed in this paragraph.
+As previously reported, the Inter-American Development Bank
+(IADB) conducted administrative proceedings in two Latin-
+American countries against, among others, Siemens alleging
+misconduct in connection with public invitations to tender in
+calendar 2003. In April 2014, a settlement was reached with the
+IADB which involves a payment of a single digit million €
+amount and a voluntary restraint from IADB-financed projects
+for three years by two Latin-American businesses, one of which
+is no longer owned by Siemens.
+2,362
+September 30,
+2013
+807
+1,556
+1,490
+1,944
+19,326 18,509
+(8,013) (9,190)
+(601)
+10,663
+(in millions of €)
+2014
+September 30,
+2013
+Short-term debt and current maturities of
+long-term debt¹
+1,620
+Plus: Long-term debt¹
+Less: Cash and cash equivalents
+Less: Current available-for-sale financial assets
+(925)
+Net debt
+12,008
+Less: SFS Debt²
+(18,663)
+(15,600)
+Plus: Post-employment benefits³
+Other
+9,265
+Plus: Credit guarantees
+Less: 50% nominal amount hybrid bond4
+Less: Fair value hedge accounting adjustment
+Industrial net debt
+Adjusted EBITDA (continuing operations)
+Industrial net debt/Adjusted EBITDA
+(continuing operations)
+774
+622
+(932) (899)
+(1,121) (1,247)
+1,390 2,805
+9,139 8,097
+0.15
+0.35
+1 The item Short-term debt and current maturities of long-term debt as well as the
+item Long-term debt included, in total, fair value hedge accounting adjustments
+of €1,121 million and €1,247 million in fiscal 2014 and 2013, respectively.
+2 The adjustment considers that both Moody's and S&P view SFS as a captive finance
+company. These rating agencies generally recognize and accept higher levels
+of debt attributable to captive finance subsidiaries in determining credit ratings.
+Following this concept, Siemens excludes SFS Debt in order to derive an industrial
+net debt which is not affected by SFS's financing activities.
+8.05
+3 To reflect Siemens' total post-employment benefit liability, industrial net debt
+includes line item Post-employment benefits as presented in the Consolidated
+Statements of Financial Position.
+15,600
+1,938
+Corporate Governance
+131 | B.
+300
+108 | A. To our Shareholders
+not designated in a hedging relationship
+For the interest rate risk management relating to the Group
+excluding SFS' business, derivative financial instruments are
+used under a portfolio-based approach to manage interest risk
+actively relative to a benchmark. The interest rate management
+relating to the SFS business remains to be managed separately,
+considering the term structure of SFS' financial assets and lia-
+bilities on a portfolio basis. Neither approach qualifies for
+hedge accounting treatment. Accordingly, all interest rate de-
+rivatives held in this relation are recorded at fair value, either in
+line items Other current financial assets (liabilities) or in line
+items Other financial assets (liabilities), and changes in the fair
+values are charged to line item Other financial income (ex-
+penses), net. Net cash receipts and payments relating to inter-
+est rate swaps used in offsetting relationships are also recorded
+in line item Other financial income (expenses), net.
+Derivative financial instruments
+Interest rate risk arises from the sensitivity of financial assets
+and liabilities to changes in market interest rates. The Company
+seeks to mitigate that risk by entering into interest rate deriva-
+tives such as interest rate swaps, options, interest rate futures
+and forward rate agreements.
+INTEREST RATE RISK MANAGEMENT
+The Company also has foreign currency derivatives, which are
+embedded in sale and purchase contracts denominated in a
+currency that is neither the functional currency of the substan-
+tial parties to the contract nor a currency which is commonly
+used in the economic environment in which the contract
+takes place. Gains (losses) relating to such embedded foreign
+currency derivatives are reported in line item Cost of sales in
+the Consolidated Statements of Income.
+not designated in a hedging relationship
+The Company manages its risks associated with fluctuations in
+foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through
+a Company-wide portfolio approach. Under this approach the
+Company-wide risks are aggregated centrally, and various
+derivative financial instruments, primarily foreign currency
+exchange contracts, foreign currency swaps and options, are
+utilized to minimize such risks. Such a strategy does not qualify
+for hedge accounting treatment. Accordingly, all such deriva-
+tive financial instruments are recorded at fair value on the Con-
+solidated Statements of Financial Position, either in line items
+Other current financial assets (liabilities) or line items Other
+financial assets (liabilities); changes in fair values are charged
+to net income (loss).
+Derivative financial instruments
+RISK MANAGEMENT
+FOREIGN CURRENCY EXCHANGE RATE
+6
+(94)
+(62)
+(166)
+net of income taxes into revenue
+or cost of sales
+to be reclassified from line item
+Other comprehensive income,
+indicates the approximate amount of time in years that would
+be needed to cover Industrial net debt through continuing
+income, without taking into account interest, taxes, deprecia-
+tion and amortization.
+Siemens calculates the item Industrial net debt as set forth in
+the table below:
+(in millions of €)
+Allocated equity
+SFS debt
+Debt to equity ratio
+September 30,
+2014
+2013
+2,148
+18,663
+8.69
+4 The adjustment for our hybrid bond considers the calculation of this financial ratio
+applied by rating agencies to classify 50% of our hybrid bond as equity and 50% as
+debt. This assignment reflects the characteristics of our hybrid bond such as a long
+maturity date and subordination to all senior and debt obligations.
+9,324
+To measure capital efficiency at SFS, equity capital is allocated
+to SFS. Allocated equity capital differs from book capital as it is
+mainly determined and influenced by the size and quality of its
+portfolio of commercial finance as well as project and struc-
+tured finance assets (primarily loans and leases) and equity
+investments. This allocation is designed to cover the risks of
+the underlying business. The actual risk of the SFS portfolio is
+evaluated and controlled on a regular basis.
+A+
+Aa3
+A+
+P-1
+A-1+
+P-1
+A-1+
+337 | E.
+Additional Information
+291
+5 Debt is generally reported with a value representing approximately the amount to
+be repaid. However, for debt designated in a hedging relationship (fair value
+hedges), this amount is adjusted for changes in market value mainly due to changes
+in interest rates. Accordingly, Siemens deducts these changes in market value in
+order to end up with an amount of debt that approximately will be repaid. Siemens
+believes this is a more meaningful figure for the calculation presented above.
+Moody's short-term credit rating is "P-1." The classification "P-1"
+is the highest available rating in the prime rating system of
+Moody's, which assesses issuers' ability to honor senior finan-
+cial obligations and contracts. It applies to senior unsecured
+obligations with an original maturity of less than one year.
+Aa3
+S&P made also no rating changes in fiscal 2014. S&P's long-
+term credit rating for Siemens is "A+" and the rating outlook is
+"stable." Within S&P's long-term credit rating scale, "A" is the
+third highest long-term rating category. The modifier "+" indi-
+cates that our long-term debt ranks in the upper end of the "A"
+category. Rating outlooks of S&P fall into the following four
+categories: "positive," "negative," "stable" or "developing." S&P's
+short-term rating is "A-1+," which is the highest rating within
+S&P's short-term rating scale.
+GUARANTEES AND OTHER COMMITMENTS
+The following table presents the undiscounted amount of
+maximum potential future payments for each major group of
+guarantees:
+(in millions of €)
+Guarantees
+2014
+September 30,
+2013
+Credit guarantees
+774
+Guarantees of third-party performance
+2,061
+622
+1,593
+HERKULES obligations
+NOTE 27 Commitments and contingencies
+S&P
+Moody's made no rating changes in fiscal 2014. Moody's long-
+term credit rating for Siemens is "Aa3" and the rating outlook is
+"negative." Within Moody's long-term credit rating scale, the
+classification "Aa" is the second highest category. The numeri-
+cal modifier "3" indicates a ranking in the lower end of that
+category. The rating outlook is an opinion regarding the likely
+direction of an issuer's long-term credit rating over the
+medium-term. Rating outlooks of Moody's fall into the follow-
+ing six categories: "positive," "negative," "stable," "developing,"
+"ratings under review" or "no outlook."
+Service
+In November 2013, Siemens announced that Siemens intends
+to further optimize the Company's capital structure through a
+share buyback of up to €4 billion in volume in the time period
+until October 31, 2015. In May 2014, we started to repurchase
+shares. The share buyback serves exclusively the purpose of
+retiring shares and reducing capital, for issuing shares to
+employees, board members of associated companies and mem-
+bers of the Managing Board, and for meeting obligations under
+convertible and/or warrant bonds. For additional information,
+see NOTE 25 EQUITY.
+Moody's
+Investors
+Service
+A key factor in maintaining a strong financial profile is our
+credit rating which is affected by, among other factors,
+Siemens' capital structure, profitability, ability to generate cash
+flows, geographic and product diversification and Siemens'
+competitive market position. Siemens' current corporate credit
+ratings from Moody's Investors Service (Moody's) and Stan-
+dard & Poor's Ratings Services (S&P) are noted as follows:
+SFS' capital structure differs from the capital structure of
+Siemens' industrial business, as SFS' business is capital inten-
+sive and requires a larger amount of debt to finance its opera-
+tions, in particular to finance SFS's expanding asset base. The
+following table provides information on the capital structure of
+SFS as of September 30, 2014 and 2013:
+Long-term debt
+Short-term debt
+247
+D.
+Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+In fiscal 2015, Siemens may again fulfill commitments for
+share-based compensation through treasury shares.
+249 D.2
+252 D.5
+S&P
+Moody's
+Investors
+September 30, 2013
+September 30, 2014
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+250 D.3
+Financial Statements subject to the audit opinion.
+on a voluntary basis. It is not part of the Consolidated
+26,638
+This supplementary information on Orders is provided
+1
+73,445
+(5,048)
+131 | B.
+Corporate Governance
+171 | C
+108 | A. To our Shareholders
+(5,098)
+71,920
+310
+Combined Management Report
+12,819
+12,429
+12,401
+21,001
+73,445
+16,896
+17,064
+1,640
+1,718
+13,004
+15,256
+16,688
+17,103
+12,649
+22
+29
+12,626
+15,346
+71,920
+305
+78,350
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+252 D.5
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+248 D.1
+D. Consolidated Financial Statements
+Additional Information
+247
+To increase transparency with regard to credit risk Corporate
+Treasury has established the Siemens Credit Warehouse to
+which numerous operating units from the Siemens Group reg-
+ularly transfer business partner data as a basis for a centralized
+rating process. In addition, numerous operating units transfer
+their trade receivables with a remaining term up to one year
+along with the inherent credit risk to the Siemens Credit
+Warehouse, but remain responsible for servicing activities
+such as collections and receivables management. The Siemens
+Credit Warehouse actively identifies, quantifies and manages
+the credit risk in its portfolio, such as by hedging exposure
+to specific customers, countries and industries. In addition to
+an increased transparency with regard to credit risk, the
+Siemens Credit Warehouse may provide Siemens with an addi-
+tional source of liquidity and strengthens Siemens' funding
+flexibility.
+systems for its financing activities. There are also a number of
+decentralized tools used for management of individual credit
+risks within the operating units. A central IT application pro-
+cesses data from the operating units together with rating and
+default information and calculates an estimate which may be
+used as a basis for individual bad debt provisions. In addition to
+this automated process, qualitative information is considered,
+in particular to incorporate the latest developments.
+Credit risk is recorded, analyzed and monitored on an ongoing
+basis applying different systems and processes dependent on
+the financial instrument. Central systems are used for ongoing
+monitoring of counterparty risk. In addition, SFS uses own
+Customer ratings, analyzed and defined by SFS, and individual
+customer limits are based on generally accepted rating meth-
+odologies, with the input consisting of information obtained
+from the customer, external rating agencies, data service pro-
+viders and Siemens' customer default experiences. Ratings and
+credit limits are carefully considered in determining the condi-
+tions under which direct or indirect financing will be offered to
+customers. As part of the process, internal risk assessment spe-
+cialists determine and continuously update ratings and credit
+limits for Siemens' public and private customers. For public
+customers our policy provides that the rating applied to individ-
+ual customers cannot be better than the weakest of the sover-
+eign ratings provided by Moody's, S&P's and Fitch for the
+respective country.
+The effective monitoring and controlling of credit risk is a core
+competency of our risk management system. Siemens has im-
+plemented a binding credit policy for all entities. Hence, credit
+evaluations and ratings are performed for all customers with an
+exposure or requiring credit beyond centrally defined limits.
+Siemens provides its customers with various forms of direct
+and indirect financing particularly in connection with large
+projects. Siemens finances a large number of smaller customer
+orders, for example the leasing of medical equipment, in part
+through SFS. SFS is also exposed to credit risk by financing
+third-party equipment or by taking direct or indirect participa-
+tions in financings, such as syndicated loans. In part, Siemens
+takes a security interest in the assets Siemens finances or
+Siemens receives additional collateral. Siemens may incur
+losses if the credit quality of its customers deteriorates or if
+they default on their payment obligations to Siemens, such as
+a consequence of a financial or political crisis and a global
+downturn.
+Credit risk is defined as an unexpected loss in cash and earn-
+ings if the customer is unable to pay its obligations in full and
+on time or if the value of collateral declines.
+CREDIT RISK
+are the maximum amounts Siemens could be required to settle
+in the event of default or non-payment by the primary debtor.
+For additional information regarding credit guarantees see
+→ NOTE 27 COMMITMENTS AND CONTINGENCIES. To monitor existing
+financial assets and liabilities as well as to enable an effective
+controlling of future risks, Siemens has established a compre-
+hensive risk reporting covering its worldwide business units.
+304
+The maximum exposure to credit risk of financial assets, with-
+out taking account of any collateral, is represented by their car-
+rying amount. As of September 30, 2014 and 2013 the collateral
+for financial instruments classified as financial assets measured
+at fair value in the form of netting agreements for derivatives
+in the event of insolvency of the respective counterparty
+amounted to €955 million and €587 million, respectively. As of
+September 30, 2014 and 2013 the collateral held for financial
+instruments classified as receivables from finance leases
+amounted to €2,072 million and €1,902 million, respectively,
+mainly in the form of the leased equipment. As of Septem-
+ber 30, 2014 and 2013 the collateral held for financial instru-
+ments classified as financial assets measured at cost or amor-
+tized cost amounted to €2,425 million and €2,141 million,
+respectively. The collateral mainly consisted of property, plant
+and equipment. In addition, for this class Siemens holds collat-
+eral in the form of securities related to reverse repurchase
+agreements that can be sold or re-pledged in absence of default
+by the owner of the collateral. As of September 30, 2014 and
+2013 the fair value of the collateral held amounted to €408 mil-
+lion and €103 million, respectively. In fiscal 2014 and 2013
+Siemens has not exercised the right to sell or re-pledge the col-
+lateral. Credit risks arising from irrevocable loan commitments
+are equal to the expected future pay-offs resulting from these
+commitments. As of September 30, 2014 and 2013 the collateral
+held for these commitments amounted to €1,646 million and
+Combined Management Report
+21,894
+Concerning trade receivables and other receivables, as well as
+loans or receivables included in line item Other financial assets
+that are neither impaired nor past due, there were no indica-
+tions as of September 30, 2014, that defaults in payment obliga-
+tions will occur, which lead to a decrease in the net assets of
+Siemens. Overdue financial instruments are generally impaired
+on a portfolio basis in order to reflect losses incurred within
+the respective portfolios. When substantial expected payment
+delays become evident, overdue financial instruments are
+assessed individually for additional impairment and are further
+allowed for as appropriate.
+In fiscal 2014 and 2013, 769,049 and 1,308,171 stock awards, re-
+spectively, were granted to members of the senior manage-
+ment and other eligible employees contingent upon attaining
+an EPS-based target. The fair value of these stock awards
+amounts to €62 million and €85 million, respectively, in fiscal
+2014 and 2013 and corresponds to the target amount represent-
+ing the EPS target attainment.
+Commitments to members of the senior
+management and other eligible employees
+In fiscal 2014 and 2013, agreements were entered into which
+entitle members of the Managing Board to Bonus Awards con-
+tingent upon the target attainment. The fair value of these en-
+titlements amounting to €2 million and €5 million, respec-
+tively, in fiscal 2014 and 2013, was determined by calculating
+the present value of the target amount. Compensation expense
+related to Bonus Awards is generally recognized over the vest-
+ing period of one year. Beneficiaries will receive one Siemens
+share without payment of consideration for each Bonus Award,
+following an additional waiting period of four years.
+Compensation expense related to stock awards is generally rec-
+ognized over five years until they vest, including a restriction
+period of four years.
+In fiscal 2014 and 2013, agreements were entered into which
+entitle members of the Managing Board to stock awards contin-
+gent upon attaining a prospective performance-based target of
+Siemens stock relative to five competitors (for fiscal 2014 Philips
+was replaced by Alstom). The fair value of these entitlements
+amounting to €5 million and €7 million, respectively, in fiscal
+2014 and 2013, was calculated by applying a valuation model.
+Inputs to that model include an expected weighted volatility of
+Siemens shares of 22% in fiscal 2014 and 24% in fiscal 2013 and
+a market price of €98.36 in fiscal 2014 and €78.94 in fiscal 2013
+per Siemens share. Expected volatility was determined by refer-
+ence to historic volatilities. The model applies a risk-free inter-
+est rate of up to 1.0% in fiscal 2014 and up to 0.8% in fiscal 2013
+and an expected dividend yield of 3.1% in fiscal 2014 and 3.8%
+in fiscal 2013. Assumptions concerning share price correlations
+were determined by reference to historic correlations.
+306
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+€1,320 million, respectively, mainly in the form of inventories
+and receivables. Credit risks arising from credit guarantees are
+described in → NOTE 27 COMMITMENTS AND CONTINGENCIES. There
+were no significant concentrations of credit risk as of Septem-
+ber 30, 2014 and 2013.
+108 | A. To our Shareholders
+Commitments to members of the Managing Board
+The remuneration system for the Managing Board was revised
+by the Supervisory Board, effective as of fiscal 2014, which
+is explained in detail in the Compensation Report within the
+Corporate Governance Report.
+Additionally one portion of the variable compensation com-
+ponent (bonus) for members of the Managing Board is granted
+in the form of non-forfeitable awards of Siemens stock (Bonus
+Awards).
+The other half of the annual target amount for stock awards
+is based on the share price performance of Siemens shares
+relative to the share price performance of five important
+Siemens competitors (ABB, General Electric, Philips, Rockwell,
+Schneider) during the four-year restriction period. The target
+attainment is determined during the four-year restriction
+period for the stock awards and accordingly, determines the
+number of Siemens shares ultimately transferred following
+the restriction period. If the target attainment is up to 100%,
+settlement is in shares. If the target attainment exceeds 100%
+(up to 200%) an additional cash payment corresponding to the
+outperformance results.
+Half of the annual target amount for stock awards is based on
+the average of earnings per share (EPS, basic) of the past three
+fiscal years. The target attainment determines the number of
+stock awards upon allocation. Settlement of these stock awards
+is in shares following the four-year restriction period.
+Since fiscal 2012, the allocation of stock awards as a share-
+based payment has been increasingly tied to corporate perfor-
+mance criteria. The target attainment for the performance
+criteria ranges between 0% and 200%.
+awards may occur in newly issued shares of capital stock of
+Siemens AG, treasury shares or in cash. The settlement method
+will be determined by the Managing Board and the Supervisory
+Board. Each fiscal year, the Company decides whether or not
+to grant stock awards. The Supervisory Board decides about
+the number of stock awards to the Managing Board and the
+Managing Board decides about the number of stock awards
+to members of the senior management and other eligible
+employees.
+The Company grants stock awards as a means for providing
+share-based compensation to members of the Managing
+Board, members of the senior management of Siemens AG
+and its domestic and foreign subsidiaries and other eligible
+employees. Stock awards are subject to a restriction period of
+about four years and entitle the beneficiary to Siemens shares
+without payment of consideration following the restriction
+period. Stock awards granted in fiscal 2008 to 2011 were gener-
+ally subject to a restriction period of three years. In principle,
+stock awards forfeit if the beneficiary's employment with the
+Company terminates prior to the expiration of the restriction
+period. During the restriction period, beneficiaries are not
+entitled to dividends. Stock awards may not be transferred,
+sold, pledged or otherwise encumbered. Settlement of stock
+STOCK AWARDS
+Share-based payment awards at Siemens, including Bonus
+Awards, Stock Awards, the Share Matching Program and its
+underlying plans as well as the Jubilee Share Program are pre-
+dominately designed as equity-settled plans and to a limited
+extent as cash-settled plans. If participating Siemens compa-
+nies cease to be part of the Siemens Group, they are no longer
+eligible to participate in future share-based payment awards at
+Siemens. In such cases the participating Siemens companies
+have the right to settle the share-based payment awards pre-
+maturely. Total pretax expense for share-based payment recog-
+nized in line item Income from continuing operations
+amounted to €184 million and €181 million for the years ended
+September 30, 2014 and 2013, respectively, and refers primar-
+ily to equity-settled awards, including the Company's Base
+Share Program.
+NOTE 32 Share-based payment
+In fiscal 2014 and 2013, agreements were entered into which
+entitle members of the Managing Board to stock awards contin-
+gent upon attaining an EPS-based target. The fair value of these
+entitlements amounting to €5 million and €6 million, respec-
+tively, in fiscal 2014 and 2013, was determined by calculating
+the present value of the target amount.
+171 C.
+71,456
+2,641
+270
+332
+2,136
+2,159
+2,405
+2,491
+Corporate items and pensions
+305
+471
+190
+2,490
+309
+163
+310
+472
+Eliminations, Corporate Treasury
+and other reconciling items
+(5,169)
+(4,956)
+(5,098)
+(5,048)
+Siemens
+120
+2,405
+Siemens Real Estate (SRE)
+396
+2,605
+73,059
+74,061
+Equity Investments
+Financial Services (SFS)
+937
+1,072
+746
+961
+191
+111
+937
+1,072
+Reconciliation to Consolidated Financial
+Statements
+Centrally managed portfolio activities
+302
+296
+297
+386
+9
+10
+306
+79,755
+18,291
+843
+643
+Foreign currency exchange rate fluctuations may create un-
+wanted and unpredictable earnings and cash flow volatility.
+Each Siemens unit conducting businesses with international
+counterparties leading to future cash flows denominated in a
+currency other than its functional currency is exposed to risks
+from changes in foreign currency exchange rates. Foreign cur-
+rency exchange rate exposure is partly balanced by purchasing
+of goods, commodities and services in the respective curren-
+cies as well as production activities and other contributions
+along the value chain in the local markets.
+Operating units (total Sectors and SFS) are prohibited from
+borrowing or investing in foreign currencies on a speculative
+basis. Intercompany financing or investments of operating
+units are preferably carried out in their functional currency or
+on a hedged basis.
+Siemens has established a foreign currency exchange rate risk
+management system that has an established track record for
+years. Each Siemens unit is responsible for recording, assess-
+ing, monitoring, reporting and hedging its foreign currency
+transaction exposure. The binding guideline for Siemens'
+oper-
+ating units provides the concept for the identification and
+determination of a single net foreign currency position for each
+affected unit and commits these units to hedge this aggregated
+position within a narrow band of at least 75% but no more than
+100% of their net foreign currency position. In addition, the
+guideline provides a framework of the organizational structure
+necessary for foreign currency exchange rate risk management,
+proposes hedging strategies and defines the hedging instru-
+ments available to the entities: foreign currency exchange
+contracts, foreign currency put and call options and stop-loss
+orders. If there are no conflicting country specific regulations,
+hedging activities of the operating units are transacted inter-
+nally with Corporate Treasury. Hedging transactions with exter-
+nal counterparties in the global financial markets are carried
+out under these limitations by Corporate Treasury. This includes
+hedging instruments which qualify for hedge accounting.
+131 | B. Corporate Governance
+171 | C
+Combined Management Report
+108 | A. To our Shareholders
+302
+Siemens has a Company-wide portfolio approach which gener-
+ates a benefit from any potential off-set of divergent cash flows
+in the same currency, as well as optimized transaction costs.
+The VaR relating to foreign currency exchange rates is calcu-
+lated by aggregating the net foreign currency positions after
+hedging by the operating units. As of September 30, 2014 the
+foreign currency exchange rate risk based on historical volatili-
+ties and correlations, a ten day holding period and a confidence
+level of 99.5% resulted in a VaR of €47 million compared to a
+VaR of €72 million in the year before. The prior-year amount has
+been adjusted in order to take into consideration modified
+principles with regard to foreign currency exchange rate risk
+management. Changes in euro values of future cash flows
+denominated in foreign currency due to volatile foreign cur-
+rency exchange rates might influence the unhedged portion of
+revenues, but would also affect the unhedged portion of cost of
+materials. Future changes in the foreign currency exchange
+rates can impact sales prices and may lead to margin changes,
+the extent of which is determined by the matching of foreign
+currency revenues and
+expenses.
+Siemens defines foreign currency exchange rate exposure
+generally as items of the Consolidated Statement of Financial
+Position in addition to firm commitments which are denomi-
+nated in foreign currencies, as well as foreign currency denomi-
+nated cash inflows and cash outflows from forecast trans-
+actions for the following twelve months. This foreign currency
+exchange rate exposure is determined based on the respective
+functional currencies of the exposed Siemens' entities.
+Effects of foreign currency translation
+Many Siemens units are located outside the euro zone. Since
+the financial reporting currency of Siemens is the euro, the
+financial statements of these subsidiaries are translated into
+euro for the preparation of the Consolidated Financial State-
+ments. To consider the effects of foreign currency translation in
+the risk management, the general assumption is that invest-
+ments in foreign-based operations are permanent and that re-
+investment is continuous. Effects from foreign currency
+exchange rate fluctuations on the translation of net asset
+amounts into euro are reflected in the Company's consolidated
+equity position.
+INTEREST RATE RISK
+Interest rate risk is the risk that the fair value or future cash
+flows of a financial instrument will fluctuate because of
+changes in market interest rates. This risk arises whenever
+interest terms of financial assets and liabilities are different. In
+order to optimize the Company's position with regard to inter-
+est income and interest expenses and to manage the interest
+rate risk, Corporate Treasury performs a comprehensive corpo-
+rate interest rate risk management by using derivative financial
+instruments. The interest rate risk relating to the Group, ex-
+cluding SFS' business, is mitigated by managing interest rate
+risk actively relatively to a benchmark. The interest rate risk
+relating to the SFS' business is managed separately, consider-
+ing the term structure of SFS's financial assets and liabilities.
+The Company's interest rate risk results primarily from the
+funding in U.S. dollar, GBP and euro.
+If there are no conflicting country-specific regulations, all
+Siemens operating units generally obtain any required financ-
+ing through Corporate Treasury in the form of loans or inter-
+company clearing accounts. The same concept is adopted for
+deposits of cash generated by the units.
+Assuming historical volatilities and correlations, a ten day
+holding period and a confidence level of 99.5% the interest rate
+VaR was €220 million as of September 30, 2014, compared to
+a VaR of €236 million in the year before.
+330 D.7
+254 D.6
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+Siemens' international operations expose the Company to
+foreign currency exchange rate risks, particularly regarding
+fluctuations between the U.S. dollar and the euro, in the ordi-
+nary course of business. The Company employs various strate-
+gies discussed below involving the use of derivative financial
+instruments to mitigate or eliminate certain of those exposures.
+252 D.5
+248 D.1
+D. Consolidated Financial Statements
+247
+Siemens has established a commodity price risk management
+system to reduce earnings and cash flow volatility. Each
+Siemens unit is responsible for recording, assessing, monitor-
+ing, reporting and hedging its risks from forecast and pending
+commodity purchase transactions (commodity price risk expo-
+sure). The binding guideline for Siemens operating units pro-
+vides the concept for the identification and determination of
+the commodity price risk exposure and commits the units to
+hedge it within a narrow band of 75% to 100% of the commod-
+ity price risk exposure in the product business for the next three
+months and 95% to 100% of the commodity price risk exposure
+in the project business after receipt of order. Siemens operating
+units are prohibited from speculative transactions.
+Siemens' production operations expose the Company to vari-
+ous commodity price risks in the ordinary course of business.
+Especially in the Sectors Industry and Energy a continuous
+supply of copper was necessary for the operating activities.
+Commodity price risk fluctuations may create unwanted and
+unpredictable earnings and cash flow volatility. The Company
+employs various strategies discussed below involving the use
+of derivative financial instruments to mitigate or eliminate
+certain of those exposures.
+COMMODITY PRICE RISK
+Consolidated Statements of Income
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+FOREIGN CURRENCY EXCHANGE RATE RISK
+Transaction risk and foreign currency
+exchange rate risk management
+Actual results that are included in the Consolidated Statements
+of Income or Consolidated Statements of Comprehensive
+Income may differ substantially from VaR figures due to funda-
+mental conceptual differences. The Consolidated Statements
+of Income and Consolidated Statements of Comprehensive
+Income are prepared in accordance with IFRS. The VaR figures
+are the output of a model with a purely financial perspective
+and represent the potential financial loss which will not be
+exceeded within ten days with a probability of 99.5%. The
+concept of VaR is also used for internal management of the
+Corporate Treasury activities.
+Fair value hedges of fixed-rate debt obligations
+Under the interest rate swap agreements outstanding during
+the years ended September 30, 2014 and 2013, the Company has
+agreed to pay a variable rate of interest multiplied by a notional
+principle amount, and receives in return an amount equal to a
+specified fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements offset
+an impact of future changes in interest rates designated as the
+hedged risk on the fair value of the underlying fixed-rate debt
+obligations. The interest rate swap contracts are recorded at
+fair value in the Company's Consolidated Statements of Finan-
+cial Position and the related portion of fixed-rate debt being
+hedged is recorded at an amount equal to the sum of its carrying
+amount plus an adjustment representing the change in fair
+value of the debt obligations attributable to the respective inter-
+est rate risk being hedged. Changes in the fair value of interest
+rate swap contracts and the offsetting changes in the adjusted
+carrying amount of the related portion of fixed-rate debt being
+hedged are recognized in line item Other financial income
+(expenses), net in the Consolidated Statements of Income.
+Adjustments in the carrying amount of the debt obligations
+resulted in a gain (loss) of €(8) million and €293 million, respec-
+tively, in fiscal 2014 and 2013. During the same period, the re-
+lated swap agreements resulted in a gain (loss) of €3 million and
+€(305) million, respectively. Accordingly, the net effect recog-
+nized in line item Other financial income (expenses), net, repre-
+senting the ineffective portion of the hedging relationship,
+amounts to €(5) million and €(12) million, in fiscal 2014 and 2013,
+respectively. Net cash receipts and payments relating to such
+interest rate swap agreements are recorded as interest expenses.
+The Company had interest rate swap contracts to pay variable
+rates of interest of an average of 0.3% and 0.3% as of Septem-
+ber 30, 2014 and 2013, respectively and received fixed rates of
+interest (average rate of 4.0% and 3.5%, as of September 30,
+2014 and 2013, respectively). The notional amount of indebted-
+ness hedged as of September 30, 2014 and 2013 was €6,645 mil-
+lion and €7,100 million, respectively. This changed 41% and
+41% of the Company's underlying notes and bonds from fixed
+interest rates into variable interest rates as of September 30,
+2014 and 2013, respectively. The notional amounts of these
+contracts mature at varying dates based on the maturity of the
+underlying hedged items. The net fair value of interest rate
+swap contracts (excluding accrued interest) used to hedge in-
+debtedness as of September 30, 2014 and 2013 was €386 mil-
+lion and €385 million, respectively.
+COMMODITY PRICE RISK MANAGEMENT
+Derivative financial instruments not designated
+in a hedging relationship
+The Company applies a portfolio approach to manage the
+Company-wide risks associated with fluctuations in commodity
+prices from firm commitments and forecast transactions by
+entering into commodity swaps and commodity options. Such
+a strategy does not qualify for hedge accounting treatment.
+Cash flow hedging activities
+The Company's corporate procurement applies cash flow hedge
+accounting for certain firm commitments to purchase copper.
+The ineffective portion as well as resulting gains and (losses)
+were not significant individually or in aggregate.
+It is expected that €73 million of net deferred losses in line item
+Other comprehensive income, net of income taxes will be
+reclassified into line item Cost of sales in fiscal 2015, when the
+consumption of the hedged commodity purchases is recog-
+nized in line item Cost of sales. As of September 30, 2014 and
+2013, the maximum length of time over which the Company is
+hedging its future commodity purchases is 75 months and
+87 months, respectively.
+NOTE 31 Financial risk management
+Siemens' financial risk management is an integral part of how
+to plan and execute its business strategies. Siemens' financial
+risk management policy is set by the Managing Board. Siemens'
+organizational and accountability structure as of September 30,
+2014 requires each of the respective managements of Siemens
+Sectors, Financial Services, SRE, regions and Corporate Units
+to implement financial risk management programs that are
+tailored to their specific industries and responsibilities, while
+being consistent with the overall policy established by the
+Managing Board.
+Increasing market fluctuations may result in significant earn-
+ings and cash flow volatility risk for Siemens. The Company's
+operating business as well as its investment and financing
+activities are affected by changes in foreign exchange rates,
+interest rates, commodity prices and equity prices. In order to
+optimize the allocation of the financial resources across the
+Siemens segments and entities, as well as to secure an optimal
+return for its shareholders, Siemens identifies, analyzes and
+proactively manages the associated market risks. The Company
+seeks to manage and control these risks primarily through its
+regular operating and financing activities, and uses derivative
+financial instruments when deemed appropriate.
+247
+D.
+Consolidated Financial Statements
+337 | E.
+Additional Information
+301
+for foreign currency exchange rate risk, interest rate risk,
+commodity price risk and equity price risk as discussed below.
+> a 99.5% confidence level
+> a ten day holding period, and
+> historical volatilities and correlations,
+Within the various methodologies to analyze and manage risk,
+Siemens has implemented a system based on parametric vari-
+ance-covariance Value at Risk (VaR). The VaR methodology pro-
+vides a quantification of market risks based on historical vola-
+tilities and correlations of the different risk factors under the
+assumptions of the parametric variance-covariance Value at
+Risk model. The VaR figures are calculated based on
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+Although VaR is an important tool for measuring market risk,
+the assumptions on which the model is based give rise to
+some limitations including the following. A ten day holding
+period assumes that it is possible to dispose of the underlying
+positions within this period. While this is considered to be a
+realistic assumption in almost all cases, it may not be valid
+during prolonged periods of severe market illiquidity. A 99.5%
+confidence level does not reflect losses that may occur beyond
+this level. There is a 0.5% statistical probability that losses
+could exceed the calculated VaR. The use of historical data as
+a basis for estimating the statistic behavior of the relevant
+markets and finally determining the possible range of the
+future outcomes on the basis of this statistic behavior may
+not always cover all possible scenarios, especially those of an
+exceptional nature. Any market sensitive instruments, including
+equity and interest bearing investments, that our Company's
+pension plans hold are not included in the following quantita-
+tive and qualitative disclosures.
+254 D.6
+330 D.7
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+17,149
+337 | E.
+303
+7,697
+16
+18
+1
+Other financial liabilities
+1,014
+65
+432
+8
+Derivative financial liabilities
+Credit guarantees
+933
+278
+487
+56
+774
+Irrevocable loan
+commitments
+|
+730
+18,934
+17,879
+79,569
+80,382
+70,418
+97
+Corporate Governance
+108 | A. To our Shareholders
+The risk implied from the values shown in the table above
+reflects the one-sided scenario of cash outflows only. Obliga-
+tions under finance leases, trade payables and other financial
+liabilities mainly originate from the financing of assets used in
+Siemens' ongoing operations such as property, plant, equip-
+ment and investments in working capital e.g. inventories
+and trade receivables. These assets are considered in the
+Company's overall liquidity risk management. A considerable
+portion of the irrevocable loan commitments result from asset-
+based lending transactions meaning that the respective loans
+can only be drawn after sufficient collateral has been provided
+by the borrower. The amounts included for credit guarantees
+1
+174
+215
+3,214
+131 | B.
+Additional Information
+34
+27
+The aggregated commodity price risk exposure is hedged
+with external counterparties through derivative financial hedg-
+ing instruments by Corporate Treasury. Derivative financial
+hedging instruments designated for hedge accounting are
+directly entered into with external counterparties. Additionally,
+Siemens applies a Company-wide portfolio approach which
+optimizes the Company's position of the overall financial com-
+modity price risk.
+Using historical volatilities and correlations, a ten day holding
+period and a confidence level of 99.5%, the VaR, which com-
+prises the net position of commodity derivatives and the com-
+modity purchase transactions with price risk, was €13 million
+as of September 30, 2014 compared to €19 million as of Septem-
+ber 30, 2013. The prior-year amount has been adjusted in order
+to take into consideration modified principles with regard to
+commodity price risk management.
+EQUITY PRICE RISK
+Siemens' investment portfolio consists of direct and indirect
+investments in publicly traded companies held for purposes
+other than trading. The direct participations result mainly from
+strategic partnerships, strengthening Siemens' focus on its core
+business activities or compensation from M&A transactions;
+indirect investments in fund shares are mainly transacted for
+financial reasons.
+These investments are monitored based on their current
+market value, affected primarily by fluctuations in the volatile
+technology-related markets worldwide. The market value of
+Siemens' portfolio in publicly traded companies decreased from
+€1,444 million as of September 30, 2013 to €1,351 million as of
+September 30, 2014.
+Based on historical volatilities and correlations, a ten day hold-
+ing period and a confidence level of 99.5%, the VaR as of Sep-
+tember 30, 2014 of Siemens' equity investments was €122 mil-
+lion compared to €81 million the year before.
+LIQUIDITY RISK
+Liquidity risk results from the Company's potential inability to
+meet its financial liabilities, e.g. for the settlement of its finan-
+cial debt or for ongoing cash requirements from operating and
+SFS financing activities, dividend payments, pension plan fund-
+ing and portfolio activities. In addition to having implemented
+effective working capital and cash management, Siemens miti-
+gates liquidity risk by arranged credit facilities with highly
+rated financial institutions, via a debt issuance program and via
+a global multi-currency commercial paper program. Liquidity
+risk may also be mitigated by the Siemens Bank GmbH, which
+increases the flexibility of depositing cash or refinancing by
+using European Central Bank accounts.
+In addition to the above-mentioned sources of liquidity,
+Siemens constantly monitors funding options available in the
+capital markets, as well as trends in the availability and costs of
+such funding, with a view to maintaining financial flexibility
+and limiting repayment risks.
+The following table reflects all contractually fixed pay-offs for
+settlement, repayments and interest resulting from recognized
+financial liabilities as well as from credit guarantees and irrevo-
+cable loan commitments. It includes expected net cash out-
+flows from derivative financial liabilities that are in place as per
+September 30, 2014. Such expected net cash outflows are de-
+termined based on each particular settlement date of an instru-
+ment. The amounts disclosed are undiscounted net cash out-
+flows for the respective upcoming fiscal years, based on the
+earliest date on which Siemens could be required to pay. Cash
+outflows for financial liabilities (including interest) without
+fixed amount or timing are based on the conditions existing at
+September 30, 2014.
+(in millions of €)
+Year ended September 30,
+2020 and
+thereafter
+2015
+2016
+2017 to
+2019
+Non-derivative financial
+liabilities
+Notes and bonds
+Loans from banks
+Other financial
+indebtedness
+Obligations under
+finance leases
+22
+Trade payables
+33
+45
+9
+828
+49
+9
+133
+834
+8,383
+9,361
+2,911
+649
+In fiscal 2014 and 2013, 652,162 and 849,908 stock awards, re-
+spectively, were granted to members of the senior manage-
+ment and other eligible employees contingent upon attaining a
+prospective performance-based target of the Siemens stock
+relative to five competitors. The fair value of these stock awards
+amounting to €56 million and €53 million, respectively, in fis-
+cal 2014 and 2013, of which €40 million and €41 million relate
+to equity instruments, was calculated by applying a valuation
+model. In fiscal 2014 and 2013, inputs to that model include an
+expected weighted volatility of Siemens shares of 23% and
+24%, respectively, and a market price of €95.62 and €79.70 per
+Siemens share. Expected volatility was determined by reference
+to historic volatilities. The model applies a risk-free interest rate
+of up to 0.9% in fiscal 2014 and up to 0.6% in fiscal 2013 and an
+expected dividend yield of 3.1% in fiscal 2014 and 3.8% in fiscal
+2013. Assumptions concerning share price correlations were
+determined by reference to historic correlations. Compensation
+expense related to these stock awards is recognized over four
+years until they vest.
+308
+Year ended September 30,
+2014
+Awards
+2013
+Manufacturing and services
+213.6
+215.0
+Sales and marketing
+68.6
+71.1
+Research and development
+28.8
+28.1
+Administration and general services
+33.5
+34.4
+344.4
+348.7
+2014
+(in thousands)
+Year ended September 30,
+The dilutive earnings per share computation in fiscal 2014 and
+2013 does not contain 21,674 thousand shares relating to war-
+rants issued with bonds. The inclusion of those shares would
+have been antidilutive in the years presented. In the future, the
+warrants could potentially dilute basic earnings per share.
+843,819
+8,485
+Weighted average shares outstanding - diluted
+Basic earnings per share
+851,934
+8,433
+852,252
+(from continuing operations)
+In fiscal 2014 and 2013, 0.22 million and 0.29 million jubilee
+shares were granted; 0.20 million and 0.18 million were trans-
+ferred, 0.14 million and 0.12 million forfeited, resulting in an
+outstanding balance of 4.56 million and 4.68 million jubilee
+shares as of September 30, 2014 and 2013. Considering bio-
+metrical factors as of September 30, 2014 and 2013, 3.60 million
+and 3.28 million jubilee shares were expected to vest.
+247
+6.24
+|
+Item Expenses relating to post-employment benefits includes
+service costs for the period. Interest from post-employment
+benefits is included in line items interest income (expenses).
+Wages and salaries, statutory social welfare contributions
+and expenses for optional support payments as well as ex-
+penses relating to post-employment benefits for continuing
+and discontinued operations amounts to €25,533 million and
+€28,163 million in fiscal 2014 and 2013, respectively.
+The average number of employees in fiscal years 2014 and 2013
+was 344.4 thousand and 348.7 thousand, respectively (based
+on continuing operations). Part-time employees are included
+on a proportionate basis. The employees were engaged in the
+following activities:
+Diluted earnings per share
+(from continuing operations)
+6.18
+4.76
+4.81
+D. Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+Orders¹
+External revenue
+Intersegment revenue
+Total revenue
+2014
+2013
+2014
+Total Sectors
+2013
+2013
+2014
+2013
+28,646
+28,797
+24,380
+26,425
+2014
+843,449
+Infrastructure & Cities
+Healthcare
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+Industry
+337 | E.
+309
+NOTE 35 Segment information
+Segment information is presented for continuing operations.
+As of and for the fiscal years ended September 30, 2014 and 2013
+(in millions of €)
+Sectors
+Energy
+Additional Information
+251
+4,059
+Income from continuing operations
+attributable to shareholders of Siemens AG
+Weighted average shares outstanding - basic
+Effect of dilutive share-based payment
+2013
+1,733,497
+Entitlements
+to Matching
+Shares
+2014
+Year ended September 30,
+Outstanding, end of period
+Vested and transferred
+Forfeited
+Settled
+Granted
+Outstanding, beginning of period
+4. Resulting Matching Shares
+In fiscal 2014 and 2013, the Company issued a new tranche
+under the Base Share Program. Employees of Siemens AG and
+participating domestic Siemens companies can invest a fixed
+amount of their compensation into Siemens shares, sponsored
+by Siemens with a tax beneficial allowance. The shares are
+bought at market price at a predetermined date in the second
+quarter and grant the right to receive matching shares under
+the same conditions applying to the Share Matching Plan
+described above. Each fiscal year, the Managing Board decides
+whether or not to issue a new tranche under the Base Share
+Program. The fair value of the base share program equals the
+amount of the tax beneficial allowance sponsored by Siemens.
+In fiscal 2014 and 2013, the Company incurred pretax expense
+from continuing operations of €32 million and €30 million,
+respectively.
+3. Base Share Program
+The Managing Board decided that shares acquired under the
+tranches issued in fiscal 2013 and 2012 are transferred to the
+Share Matching Plan as of February 2014 and February 2013,
+respectively.
+In fiscal 2014 and 2013, the Company issued a new tranche
+under the Monthly Investment Plan that is a further compo-
+nent of the Share Matching Plan and which is available for
+employees - other than senior managers - of Siemens AG and
+participating Siemens companies. Plan participants may invest
+a specified percentage of their compensation in Siemens shares
+on a monthly basis over a period of twelve months. The shares
+are purchased at market price at a predetermined date once a
+month. The Managing Board of the Company will decide annu-
+ally, whether shares acquired under the Monthly Investment
+Plan (investment shares) may be transferred to the Share
+Matching Plan the following year. If the Managing Board
+decides that shares acquired under the Monthly Investment
+Plan are transferred to the Share Matching Plan, plan partici-
+pants will receive the right to matching shares under the same
+conditions applying to the Share Matching Plan described
+above. Each fiscal year the Managing Board decides, whether
+or not to issue a new tranche under the Monthly Invest-
+ment Plan.
+2. Monthly Investment Plan
+Entitlements
+to Matching
+Shares
+1,545,582
+609,758
+713,245
+108 | A. To our Shareholders
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+Under the Jubilee Share Program, eligible employees of
+Siemens AG and participating domestic Siemens companies
+receive jubilee shares after having been continuously em-
+ployed by the Company for 25 and 40 years (vesting period),
+respectively. Generally, settlement of jubilee grants is in shares.
+Jubilee shares are measured at fair value considering bio-
+metrical factors. The fair value is determined as the market
+price of Siemens shares at grant date less the present value of
+dividends expected to be paid during the vesting period for
+which the employees are not entitled to. The weighted average
+fair value of each jubilee share granted in fiscal 2014 for the 25th
+and the 40th anniversary is €49.36 and €32.86, respectively,
+based on the number of shares granted. The weighted average
+fair value of each jubilee share granted adjusted by biometrical
+factors (considering fluctuation) is €31.58 and €18.97, respec-
+tively, in fiscal 2014. The weighted average fair value of each
+jubilee share granted in fiscal 2013 for the 25th and the 40th
+anniversary is €36.92 and €24.55 respectively, based on the
+number of shares granted. The weighted average fair value
+of each jubilee share granted adjusted by biometrical factors
+(considering fluctuation) is €18.24 and €9.99 respectively, in
+fiscal 2013.
+JUBILEE SHARE PROGRAM
+307
+Fair value was determined as the market price of Siemens
+shares less the present value of expected dividends during the
+vesting period as matching shares do not carry dividend rights
+during the vesting period. Non-vesting conditions, i.e. the con-
+dition neither to transfer, sell, pledge nor otherwise encumber
+the underlying shares, were considered in determining the fair
+value. In fiscal 2014 and 2013, the weighted average grant-
+date fair value of the resulting matching shares is €73.00 and
+€57.77 per share respectively, based on the number of instru-
+ments granted.
+1,750,176
+(33,475)
+(63,055)
+(140,307)
+(92,035)
+(351,548)
+(437,989)
+1,733,497
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+Year ended September 30,
+Statutory social welfare contributions and
+expenses for optional support payments
+Expenses relating to post-employment benefits
+3,220
+3,228
+1,044
+1,114
+20,988
+24,406
+(shares in thousands; earnings per share in €)
+Income from continuing operations
+Less: Portion attributable to non-controlling
+interest
+2014
+2013
+5,400
+4,179
+(133)
+(120)
+25,330
+5,267
+20,142
+2013
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+Wages and salaries
+248 D.1
+247
+NOTE 33 Personnel costs
+The average number of employees in fiscal years 2014 and 2013
+is 359.2 thousand and 394.9 thousand, respectively (based on
+continuing and discontinued operations). Thereof, in fiscal
+2014 and 2013, 223.7 and 248.3 thousand employees were
+engaged in manufacturing and services, 71.2 thousand and
+78.2 thousand were engaged in sales and marketing, 30.4 thou-
+sand and 31.8 thousand employees were in research and devel-
+opment and 34.0 thousand and 36.6 thousand employees were
+in administration and general services, respectively.
+NOTE 34
+Earnings per share
+(in millions of €)
+Year ended September 30,
+2014
+D. Consolidated Financial Statements
+212
+The following table shows the changes in the stock awards
+held by members of the senior management and other eligible
+employees:
+In fiscal 2014 and 2013, the Company issued a new tranche un-
+der the Share Matching Plan. Senior managers of Siemens AG
+and participating Siemens companies may invest a specified
+percentage of their compensation in Siemens shares. Within a
+predetermined period in the first quarter of each fiscal year,
+plan participants decide on their investment amount for which
+investment shares are purchased. The shares are purchased at
+the market price at a predetermined date in the second quarter.
+Plan participants receive the right to one Siemens share with-
+out payment of consideration (matching share) for every three
+investment shares continuously held over a period of three
+years (vesting period) provided the plan participant has been
+continuously employed by Siemens AG or another Siemens
+company until the end of the vesting period. During the vesting
+period, matching shares are not entitled to dividends. The right
+to receive matching shares forfeits if the underlying investment
+shares are transferred, sold, pledged or otherwise encumbered.
+Matching shares may be settled in newly issued shares of capi-
+tal stock of Siemens AG, treasury shares or in cash. The settle-
+ment method will be determined by the Managing Board. Each
+fiscal year, the Managing Board decides whether or not to issue
+a new tranche under the Share Matching Plan.
+24,631
+SHARE MATCHING PROGRAM
+AND ITS UNDERLYING PLANS
+1. Share Matching Plan
+Settled
+4,876,455
+4,985,998
+(324,665)
+(149,942)
+(101,192)
+Non-vested, end of period
+(1,073,355)
+(1,041,376)
+Vested and transferred
+Forfeited
+2013
+Awards
+4,217,588
+2,158,079
+1,421,211
+4,876,455
+Non-vested, beginning of period
+Granted
+(120,350)
+Siemens TOO, Almaty/Kazakhstan
+100
+Siemens Kenya Ltd., Nairobi/Kenya
+100
+Siemens France Holding, Saint-Denis/France
+100
+100
+10 Exemption pursuant to Section 264 b German Commercial Code.
+100
+Trench Italia S.r.l., Savona/Italy
+100
+Siemens Audiologie S.A.S., Saint-Denis/France
+1008
+Siemens VAI Metals Technologies S.r.I., Marnate/Italy
+100
+Siemens Healthcare Diagnostics S.A.S., Saint-Denis/France
+Siemens Financial Services SAS, Saint-Denis/France
+100
+1008
+100
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+100
+Siemens Industry Software SAS, Vélizy-Villacoublay/France
+TFM International S.A. i.L., Luxembourg/Luxembourg
+Siemens d.o.o. Podgorica, Podgorica/Montenegro
+Samtech France, Massy/France
+100
+Tecnomatix Technologies SARL, Luxembourg/Luxembourg
+100
+Siemens Lease Services SAS, Saint-Denis/France
+SIEMENS Postal Parcel Airport Logistics S.A.S., Paris/France
+Siemens S.A.S., Saint-Denis/France
+492
+Siemens Electrical & Electronic Services K.S.C.C.,
+Kuwait City/Kuwait
+100
+100
+Siemens Renting S.p.A. in Liquidazione, Milan/Italy
+100
+Siemens Healthcare Diagnostics OY, Espoo/Finland
+100
+Siemens Healthcare Diagnostics S.r.I., Milan/Italy
+90
+Siemens Technologies S.A.E., Cairo/Egypt
+100
+Samtech Italia S.r.l., Milan/Italy
+100
+100
+100
+HV-Turbo Italia S.r.I., Mornago/Italy
+100
+Siemens Healthcare Diagnostics S.A.E, Cairo/Egypt
+100
+UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
+100
+Siemens Ltd. for Trading, Cairo/Egypt
+Siemens Transformers S.p.A., Trento/Italy
+Siemens Hearing Instruments S.r.l., Milan/Italy
+Siemens Osakeyhtiö, Espoo/Finland
+PETNET Solutions SAS, Saint-Denis/France
+100
+Siemens S.p.A., Milan/Italy
+100
+LMS Imagine, Roanne/France
+100
+6 No significant influence due to contractual arrangements or legal circumstances.
+100
+100
+100
+Siemens Postal, Parcel & Airport Logistics S.r.L., Milan/Italy
+100
+Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
+100
+Siemens Industry Software S.r.I., Milan/Italy
+100
+LMS France S.A.R.L, Vélizy-Villacoublay/France
+7 Significant influence due to contractual arrangements or legal circumstances.
+Combined Management Report
+9 Not accounted for using the equity method due to immateriality.
+100
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
+Munich
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+Siemens Novel Businesses GmbH, Munich
+100
+Weiss Spindeltechnologie GmbH, Schweinfurt
+10011
+100
+10011
+1008
+Siemens Postal, Parcel & Airport Logistics GmbH, Constance
+Siemens Power Control GmbH, Langen
+10011
+Siemens Private Finance Versicherungs- und
+Kapitalanlagenvermittlungs-GmbH, Munich
+Siemens Project Ventures GmbH, Erlangen
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (260 companies)
+ESTEL Rail Automation SPA, Algiers/Algeria
+51
+10011
+Siemens Spa, Algiers/Algeria
+1008
+100
+943
+10010
+171 | C
+Combined Management Report
+Equity interest
+Equity interest
+September 30, 2014
+Siemens Industry Automation Holding AG, Munich
+Siemens Industry Software GmbH & Co. KG, Cologne
+Siemens Industry Software Management GmbH, Cologne
+Siemens Insulation Center GmbH & Co. KG, Zwönitz
+Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
+Siemens Medical Solutions Health Services GmbH, Erlangen
+in %
+10011
+VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
+September 30, 2014
+Verwaltung SeaRenergy Offshore Projects GmbH i.L., Hamburg
+100
+10010
+1008
+VIB Verkehrsinformationsagentur Bayern GmbH, Munich
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+51
+100
+in %
+8 Not consolidated due to immateriality.
+10011
+51
+100
+100
+Omnetric GmbH, Vienna/Austria
+100
+10011
+Saudi VOEST-ALPINE GmbH, Linz/Austria
+100
+100
+Siemens Turbomachinery Equipment GmbH, Frankenthal
+Siemens VAI Metals Technologies GmbH, Willstätt-Legelshurst
+Siemens Venture Capital GmbH, Munich
+171 | C
+Corporate Governance
+131 | B.
+320
+108 | A. To our Shareholders
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264 b German Commercial Code.
+NEM Energy Egypt LLC, Alexandria/Egypt
+Siemens S.A., Luanda/Angola
+Landis & Staefa (Österreich) GmbH, Vienna/Austria
+Landis & Staefa GmbH, Vienna/Austria
+100
+Siemens Real Estate GmbH & Co. OHG, Grünwald
+10010
+ETM professional control GmbH, Eisenstadt/Austria
+100
+Siemens Real Estate Management GmbH, Grünwald
+1008
+Hochquellstrom-Vertriebs GmbH, Vienna/Austria
+10010
+100
+100
+10011
+ITH icoserve technology for healthcare GmbH,
+Innsbruck/Austria
+69
+Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
+Siemens Technopark Mülheim Verwaltungs GmbH, Grünwald
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Technopark Nürnberg Verwaltungs GmbH, Grünwald
+Siemens Treasury GmbH, Munich
+10010
+KDAG Beteiligungen GmbH, Vienna/Austria
+100
+Siemens Spezial-Investmentaktiengesellschaft mit TGV, Munich
+Siemens Technology Accelerator GmbH, Munich
+100
+Siemens Product Lifecycle Management Software 2 (IL) Ltd.,
+Airport City/Israel
+100
+SIMAR West Grundstücks-GmbH, Grünwald
+10011
+SIMOS Real Estate GmbH, Munich
+10011
+Siemens Personaldienstleistungen GmbH, Vienna/Austria
+Siemens Urban Rail Technologies Holding GmbH,
+Vienna/Austria
+100
+75
+SKAG Fonds C1, Munich
+10011
+100
+100
+SKAG Fonds S7, Munich
+100
+SKAG Fonds S8, Munich
+100
+Steiermärkische Medizinarchiv GesmbH, Graz/Austria
+Trench Austria GmbH, Leonding/Austria
+52
+100
+Siemens VAI Metals Technologies GmbH, Linz/Austria
+SKAG Principals, Munich
+100
+100
+Siemens Aktiengesellschaft Österreich, Vienna/Austria
+100
+100
+10011
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+SIM 16. Grundstücksverwaltungs- und -beteiligungs-
+GmbH & Co. KG, Munich
+100
+10010
+Siemens Convergence Creators GmbH, Eisenstadt/Austria
+Siemens Convergence Creators GmbH, Vienna/Austria
+Siemens Convergence Creators Holding GmbH, Vienna/Austria
+Siemens Gebäudemanagement & -Services G.m.b.H.,
+Vienna/Austria
+100
+10011 Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
+100
+100
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+SIMAR Nordost Grundstücks-GmbH, Grünwald
+SIMAR Nordwest Grundstücks-GmbH, Grünwald
+SIMAR Ost Grundstücks-GmbH, Grünwald
+SIMAR Süd Grundstücks-GmbH, Grünwald
+10010
+10011
+Siemens Healthcare Diagnostics GmbH, Vienna/Austria
+Siemens Industry Software GmbH, Linz/Austria
+100
+100
+Siemens Konzernbeteiligungen GmbH, Vienna/Austria
+100
+Equity interest
+100
+Sky Eye Transportation Systems GmbH i.L., Braunschweig
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances.
+8 Not consolidated due to immateriality.
+319
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+5 No control due to contractual arrangements or legal circumstances.
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+247 | D.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+251 D.4
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH,
+4 No control due to substantive removal or participation rights held by other parties.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1008
+Vienna/Austria
+100
+SYKATEC Systeme, Komponenten, Anwendungstechnologie
+GmbH, Erlangen
+Siemens W.L.L., Manama/Bahrain
+51
+10011
+Samtech SA, Angleur/Belgium
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+79
+10011
+Siemens Healthcare Diagnostics SA, Brussels/Belgium
+100
+Turbine Airfoil Coating and Repair GmbH, Berlin
+100
+Siemens Industry Software NV, Leuven/Belgium
+100
+1 Control due to a majority of voting rights.
+Trench Germany GmbH, Bamberg
+9 Not accounted for using the equity method due to immateriality.
+Equity interest
+in %
+Ostrava/Czech Republic
+100
+Siemens Limited, Dublin/Ireland
+Siemens VAI Metals Technologies, s.r.o.,
+100
+iMetrex Technologies Limited, Dublin/Ireland
+100
+Siemens Industry Software, s.r.o., Prague/Czech Republic
+1008
+100
+100
+97
+Islamic Republic of
+100
+Siemens Sherkate Sahami (Khass), Teheran/Iran,
+100
+Siemens Audiologická Technika s.r.o., Prague/Czech Republic
+Siemens Convergence Creators, s.r.o., Prague/Czech Republic
+Siemens Electric Machines s.r.o., Drasov/Czech Republic
+100
+Europlex Technologies (Ireland) Limited, Dublin/Ireland
+100
+Robcad Limited, Airport City/Israel
+Siemens, s.r.o., Prague/Czech Republic
+Siemens Wind Power A/S, Brande/Denmark
+100
+Siemens Industry Software A/S, Ballerup/Denmark
+1008
+Siemens Israel Projects Ltd., Rosh HaAyin/Israel
+100
+Siemens Höreapparater A/S, Ballerup/Denmark
+100
+100
+Siemens Israel Ltd., Tel Aviv/Israel
+Siemens Healthcare Diagnostics ApS, Ballerup/Denmark
+100
+Siemens Industry Software Ltd., Airport City/Israel
+100
+Siemens A/S, Ballerup/Denmark
+100
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
+100
+100
+September 30, 2014
+Siemens Zrt., Budapest/Hungary
+Siemens PSE Program- és Rendszerfejlesztő Kft.,
+Budapest/Hungary
+Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
+100
+Siemens d.o.o., Banja Luka/Bosnia and Herzegovina
+100
+Gibraltar/Gibraltar
+1008
+Siemens VAI Metal Technologies S.A/N.V, Beersel/Belgium
+Tecnomatix Technologies (Gibraltar) Limited,
+Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
+100
+100
+10011
+100
+100
+Siemens VAI Metals Technologies SAS, Savigneux/France
+Siemens Product Lifecycle Management Software II (BE) BVBA,
+Anderlecht/Belgium
+in %
+September 30, 2014
+Siemens S.A./N.V., Beersel/Belgium
+100
+100
+100
+100
+J. N. Kelly Security Holding Limited, Larnaka/Cyprus
+OEZ s.r.o., Letohrad/Czech Republic
+100
+Siemens d.d., Zagreb/Croatia
+100
+Siemens Audiológiai Technika Kereskedelmi és Szolgáltató
+Korlátolt Felelősségü Társaság, Budapest/Hungary
+100
+Siemens Convergence Creators d.o.o., Zagreb/Croatia
+Athens/Greece
+51
+100
+evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
+100
+Siemens EOOD, Sofia/Bulgaria
+100
+Siemens Healthcare Diagnostics ABEE, Athens/Greece
+100
+Siemens Pty. Ltd., Gaborone/Botswana
+Koncar Power Transformers d.o.o., Zagreb/Croatia
+Trench France S.A.S., Saint-Louis/France
+10011
+7,335
+296
+379
+5,842
+24,646
+23,736
+7,108
+6,473
+1,356
+1,289
+1,900
+239
+2,204
+411
+2,571
+2,488
+81
+126
+465
+409
+21,970
+18,661
+522
+328
+857
+247
+1,280
+For information regarding the funding of our pension plans
+refer to NOTE 22 POST-EMPLOYMENT BENEFITS.
+PENSION ENTITIES
+As of September 30, 2014 and 2013, guarantees to joint ventures
+and associates amounted to €2,904 million and €2,789 million,
+respectively, including the HERKULES obligations of €1,490 mil-
+lion and €1,890 million, respectively. For additional information
+regarding the HERKULES obligations as well as for information
+regarding guarantees in connection with the contribution of
+the SEN operations into Unify (EN) see → NOTE 27 COMMITMENTS
+AND CONTINGENCIES. As of September 30, 2014 and 2013, guaran-
+tees to joint ventures amounted to €593 million and €431 mil-
+lion, respectively. As of September 30, 2014 and 2013, the
+Company had commitments to make capital contributions of
+€107 million and €187 million to its joint ventures and asso-
+ciates, therein €56 million and €107 million related to joint ven-
+tures, respectively. For a loan raised by a joint venture, which is
+secured by a Siemens guarantee, Siemens granted an addi-
+tional collateral. As of September 30, 2014 and 2013 the out-
+standing amount totaled to €129 million and €134 million, re-
+spectively. As of September 30, 2014 and 2013 there were loan
+commitments to joint ventures and associates amounting to
+€81 million and €90 million, respectively, therein €81 million
+and €90 million, respectively related to joint ventures.
+As of September 30, 2014 and 2013, loans given to joint ven-
+tures and associates amounted to €21 million and €17 million,
+respectively. In the normal course of business the Company
+regularly reviews loans and receivables associated with joint
+ventures and associates. In fiscal 2014 and 2013, the review
+resulted in net gains related to valuation allowances totaling
+€13 million and net losses related to valuation allowances
+totaling €27 million, respectively. As of September 30, 2014 and
+2013, valuation allowances amounted to €26 million and
+€42 million, respectively.
+12
+121
+133
+327
+276
+280
+255
+222
+372
+82
+72
+54
+198
+Joint ventures
+Liabilities
+September 30,
+2013
+2014
+2013
+2014
+5,180
+4,973
+Associates
+31
+69
+194
+70
+83
+78
+91
+(48)
+(70)
+53,009
+54,525
+(1,430)
+(1,403)
+(422)
+(3)
+(29)
+(34)
+7,427
+5,813
+104,879
+101,936
+5,399
+5,378
+1,831
+1,808
+(4)
+(675)
+(1,987)
+(1,859)
+230
+44
+(113)
+(154)
+(234)
+(37)
+(142)
+6
+7
+4
+4
+241
+168
+4,697
+4,747
+(170)
+(112)
+370
+364
+264
+309
+(938)
+(836)
+RELATED INDIVIDUALS
+2,411
+Related individuals include the members of the Managing
+Board and Supervisory Board.
+247
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+D.
+247
+56.3
+13,793 14,887
+0.4
+250 D.3
+0.1
+10.2
+5.9
+45.6
+43.5
+Other services
+Total
+Tax Services
+Other Attestation Services
+Audit Services
+Type of fees
+(in millions of €)
+0.2
+In November 2014, Siemens announced the sale of its hearing
+aid business to the investment company EQT and the German
+entrepreneurial family Strüngmann as co-investors. The trans-
+action volume is €2.15 billion plus an earn-out component and
+includes that the new owners will also be allowed to continue
+using the Siemens product brand for the hearing aid business
+over the medium term. The hearing aid business so far rep-
+resents a Business Unit within Healthcare. The transaction is
+subject to approval by the regulatory authorities. Closing is
+expected in the first quarter of calendar year 2015. The hearing
+aid business is presented as held for disposal and discontinued
+operations since the first quarter of fiscal 2015.
+251 D.4
+254 D.6
+Subsidiaries
+10011
+in %
+10010
+Equity interest
+51
+100
+in %
+Equity interest
+Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt
+Tübingen KG, Grünwald
+messMa GmbH, Irxleben
+September 30, 2014
+September 30, 2014
+para. 2 of the German Commercial Code
+NOTE 41 List of subsidiaries and associated
+companies pursuant to Section 313
+317
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+330 D.7
+Omnetric GmbH, Munich
+Subsequent events
+NOTE 40
+The Managing Board and the Supervisory Board of Siemens
+Aktiengesellschaft provided the declaration required by
+Section 161 of the German stock corporation law (AktG) as of
+October 1, 2014, which is available on the Company's website
+at: www.SIEMENS.COM/GCG-CODE.
+long-term stock-based compensation (8,126 Stock Awards) for
+fiscal 2014 will be calculated once the actual target attainment is
+available, and will be granted at the usual date. The 46,399 Stock
+Awards already granted in the past and those for fiscal 2014, for
+which the restriction period is still running, will be absolutely
+maintained (54,525 Stock Awards), in accordance with the terms
+of his contract with the Company, and will be settled in cash in
+September 2015 at the closing price of Siemens stock in Xetra
+trading on May 6, 2014 (€93.91). The respective fair value of the
+Stock Awards already granted in the past at grant date amounted
+to €3.16 million. The Stock Awards for fiscal 2014 are included in
+the above mentioned stock-based compensation amount. Dr. Süß
+agreed not to take up activities for any of significant competitor
+of Siemens for a period of one year after the end of his employ-
+ment contract that is, until September 30, 2015. For this
+post-contractual non-compete commitment, he will be paid a
+monthly total of gross €65,000.
+In connection with the mutually agreed termination of Dr. Michael
+Süẞ's activity on the Managing Board as of May 6, 2014, it was
+agreed that his current contract with the Company would termi-
+nate as of September 30, 2014. The entitlements agreed under
+the contract remained in effect until that date. Dr. Süß received a
+compensatory payment in the gross amount of €4.3 million in
+connection with the mutually agreed premature termination of
+his activity as a member of the Managing Board, together with a
+one-time special contribution of €0.8 million to the BSAV, to be
+credited in January 2015. It was also agreed with Dr. Süß that the
+In connection with the mutually agreed termination of Peter Y.
+Solmssen's activity on the Managing Board as of December 31,
+2013, it was agreed that his contract with the Company would
+remain in effect until March 31, 2015. The entitlements agreed
+under the contract will remain in effect until that date. These
+will not include the fringe benefits under the contract, partic-
+ularly the Company car and contributions toward the cost of
+insurance, which will be covered until the contract ends by
+a monthly lump-sum payment of €11,500. The 51,582 Stock
+Awards already granted in the past for fiscal 2011, 2012 and
+2013, for which the restriction period is still in progress, will be
+absolutely maintained. The respective fair value of these Stock
+Awards at grant date amounted to €3.47 million. Mr. Solmssen
+was also reimbursed for relocation costs, in accordance
+with the commitment he received when he took office. The
+Company furthermore reimbursed Mr. Solmssen for out-of-
+pocket expenses of €100,000 plus value-added tax.
+As Barbara Kux's appointment to the Managing Board expired
+regularly on November 16, 2013, no compensatory payments
+were agreed upon. The 51,582 Stock Awards already granted in
+the past for fiscal 2011, 2012 and 2013, for which the restriction
+period is still running, will be absolutely maintained, in accor-
+dance with the terms of her contract with the Company. The
+respective fair value of these Stock Awards at grant date
+amounted to €3.47 million.
+In fiscal 2014, the following settlements have been agreed in
+connection with termination of Managing Board memberships:
+In compensation for the forfeiture of stock, pension benefits,
+health benefits and transitional remuneration from her former
+employer, the Supervisory Board granted Ms. Davis a one-time
+amount of € 5.5 million. This amount will be provided 20% in
+cash, 30% in the form of Siemens Stock Awards and the re-
+maining 50% as a special contribution to the pension plan.
+Therefore in fiscal 2014 and 2013, compensation and benefits,
+attributable to members of the Managing Board amounted to
+€33.7 million and €41.0 million in total, respectively.
+315
+Additional Information
+337 | E.
+-
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+D.
+330 D.7
+In fiscal 2013, in connection with termination of Managing
+Board membership, compensatory payments amounting to
+€20.4 million (gross) and one-time special contributions amount-
+ing to €3.1 million to the BSAV were agreed. It was also agreed
+that these members of the Managing Board receive their long-
+term stock-based compensation for fiscal 2013 (41,554 Stock
+Awards), which will be settled in cash, and is included in the
+above mentioned stock-based compensation amount. The
+Company has furthermore agreed to reimburse out-of-pocket
+expenses up to a maximum of €130,000 plus value-added tax.
+The 175,382 Stock Awards that were granted in the past and for
+which the restriction period is still in effect, will be absolutely
+maintained. The respective fair value of these Stock Awards at
+grant date amounted to €11.5 million.
+In fiscal 2014 and 2013, expense related to share-based pay-
+ment and to the Share Matching Program amounted to €16.1
+million (including the above mentioned Stock Awards in con-
+nection with the departure from members of the Managing
+Board) and €23.2 million (including the above mentioned
+Stock Awards in connection with the departure from members
+of the Managing Board), respectively. For additional informa-
+tion regarding the Share Matching Program see → NOTE 32
+SHARE-BASED PAYMENT.
+NOTE 39 Corporate Governance
+Audit Services relate primarily to services provided by EY for
+auditing Siemens' Consolidated Financial Statements and for
+auditing the statutory financial statements of Siemens AG and
+its subsidiaries. Other Attestation Services include primarily
+audits of financial statements in connection with M&A activi-
+ties, comfort letters and other attestation services required
+under regulatory requirements, agreements or requested on a
+voluntary basis. Tax Services are primarily for transitional sup-
+port, where EY was the historical tax service provider, with tax
+audits and other follow-up tax compliance services. Other ser-
+vices in fiscal 2013 consist of advisory services provided by EY
+for a transitional period after they acquired one of Siemens'
+IT-suppliers in the area of supply chain management in
+June 2013.
+In fiscal 2014 and 2013, 44% and 50%, respectively, of the total
+fees related to Ernst & Young GmbH Wirtschaftsprüfungs-
+gesellschaft, Germany.
+2013
+Year ended September 30,
+2014
+Fees related to professional services rendered by the Com-
+pany's principal accountant, EY, for fiscal 2014 and 2013 were as
+follows:
+and services
+Principal accountant fees
+NOTE 38
+Some of our board members hold, or in the last year have held,
+positions of significant responsibility with other entities.
+We have relationships with almost all of these entities in the
+ordinary course of our business whereby we buy and sell a wide
+variety of products and services on arm's length terms.
+In fiscal 2014 and 2013, no other major transactions took place
+between the Company and the other members of the Manag-
+ing Board and the Supervisory Board.
+GOVERNANCE.
+Information regarding the remuneration of the members of the
+Managing Board and Supervisory Board is disclosed on an indi-
+vidual basis in the Compensation Report, which is part of the
+Combined Management Report. The chapter → B.4 COMPEN-
+SATION REPORT is presented within the chapter → B. CORPORATE
+No loans and advances from the Company are provided to mem-
+bers of the Managing Board and Supervisory Board.
+Compensation attributable to members of the Supervisory Board
+comprises in fiscal 2014 and 2013 of a base compensation and
+additional compensation for committee work and amounted
+to €5.1 million and €4.9 million (including meeting fees),
+respectively.
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their
+survivors as of September 30, 2014 and 2013 amounted to
+€234.4 million and €192.5 million. For additional information
+see → NOTE 22 POST-EMPLOYMENT BENEFITS.
+316
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+Former members of the Managing Board and their surviving
+dependents received emoluments within the meaning of Sec-
+tion 314 para. 1 No. 6 b of the German Commercial Code totaling
+€24.2 million (including €7.9 million in connection with the
+above mentioned departure from members of the Managing
+Board) and €33.1 million (including €18.2 million in connection
+with the above mentioned departure from a member of the
+Managing Board) in fiscal 2014 and 2013.
+In fiscal 2014 and 2013 members of the Managing Board
+received cash compensation of €17.9 million and €17.0 million.
+The fair value of stock-based compensation amounted to €10.7
+million and €17.6 million for 170,444 and 213,394 Stock Awards,
+respectively, in fiscal 2014 and 2013. In fiscal 2014 and 2013 the
+Company granted contributions under the BSAV to members of
+the Managing Board totaling €5.1 million and €6.4 million.
+Project Ventures Butendiek Holding GmbH, Erlangen
+2,804
+D. Consolidated Financial Statements
+(in millions of €)
+Year ended
+September 30,
+Purchases of goods and
+services and other expenses
+Year ended
+September 30,
+2013
+and other income
+Sales of goods and services.
+Sales of goods and services and other income from trans-
+actions with joint ventures and associates as well as purchase
+of goods and services and other expenses from transactions
+with joint ventures and associates are as follows:
+GERMAN COMMERCIAL CODE. Information regarding our subsidiar-
+ies, joint ventures and associates for fiscal 2013 are presented
+in the List of subsidiaries and associated companies published
+separately in the German Electronic Federal Gazette (elektro-
+nischer Bundesanzeiger).
+Siemens has relationships with many joint ventures and asso-
+ciates in the ordinary course of business whereby Siemens
+buys and sells a wide variety of products and services generally
+on arm's length terms. For information regarding our subsidiar-
+ies, joint ventures and associated in fiscal 2014 see → NOTE 5
+INTERESTS IN OTHER ENTITIES and → NOTE 41 LIST OF SUBSIDIARIES
+AND ASSOCIATED COMPANIES PURSUANT TO SECTION 313 PARA. 2 OF THE
+JOINT VENTURES AND ASSOCIATES
+NOTE 37 Related party transactions
+2014
+314
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+goodwill and other intangible assets.
+Non-current assets consist of property, plant and equipment,
+1 Includes assets and liabilities reclassified in connection with discontinued
+operations.
+Commonwealth of Independent States.
+1
+104,879 101,936
+Combined Management Report
+11,205
+2013
+Joint ventures
+49,187
+44,884
+thereof foreign countries
+thereof U.S.
+12,876
+38,732 39,390 42,383 43,426
+18,756 19,644 18,425 19,555
+14,433 14,411 11,112 10,463
+71,920 73,445 71,920 73,445
+10,857 10,652 18,602 18,944
+61,063 62,792
+13,110
+(in millions of €)
+Receivables
+September 30,
+Receivables from joint ventures and associates and liabilities
+to joint ventures and associates are as follows:
+12
+|
+2014
+226
+1,345
+977
+214
+165
+1,008
+747
+Associates
+23
+336
+230
+188
+10,861
+thereof U.S.
+26,245
+(in millions of €)
+40,850
+3,924
+42,037
+3,782
+Tax-related assets
+and investments
+Intragroup financing receivables
+September 30,
+Non-current assets
+Asset-based adjustments:
+reconciling items of Segment information:
+2014
+(1,987)
+Assets of Corporate items and pensions¹
+Eliminations, Corporate Treasury and other
+Commonwealth of Independent States.
+1
+4,747
+4,697
+Assets SRE
+(234)
+(154)
+Assets Centrally managed portfolio activities
+Reconciliation:
+(1,859)
+2013
+Europe, C.I.S., Africa, Middle East
+Americas
+17,053
+25,484
+thereof foreign countries
+54,525
+53,009
+6,510
+6,497
+thereof Germany
+Total Eliminations, Corporate Treasury and
+other reconciling items of Segment information
+Total assets in Siemens' Consolidated
+Statements of Financial Position
+32,755
+31,981
+Siemens
+2,752
+2,753
+Asia, Australia
+39,244
+(29,492)
+(32,043)
+Eliminations, Corporate Treasury, other items¹
+39,232
+Liabilities
+12,598
+12,175
+Liability-based adjustments:
+17,404
+Total Segment Assets
+247
+thereof Germany
+21,970
+TO CONSOLIDATED FINANCIAL STATEMENTS
+Reconciliation to Consolidated Financial Statements contains
+businesses and items not directly related to Siemens' report-
+able segments:
+Centrally managed portfolio activities - generally includes
+activities intended for divestment or closure as well as activities
+remaining from divestments and discontinued operations.
+Siemens Real Estate (SRE) - is the real estate service pro-
+vider at Siemens, who manages the Group's entire real estate
+business portfolio, operates the properties, and is responsible
+for building projects and the purchase and sale of real estate.
+Corporate items and pensions - includes corporate charges
+such as personnel costs for corporate headquarters, corporate
+projects and non-operating investments or results of corpo-
+rate-related derivative activities and costs for carve out activi-
+ties managed by corporate, which are charged to the respective
+segment when the disposal gain or loss is realized or when the
+activities are classified as discontinued operations. Pensions
+includes the Company's pension related income (expense) not
+allocated to the segments, SRE or Centrally managed portfolio
+activities.
+Eliminations, Corporate Treasury and other reconciling
+items - comprise consolidation of transactions within the seg-
+ments, certain reconciliation and reclassification items and the
+activities of the Company's Corporate Treasury. It also includes
+interest income and expense, such as, for example, interest not
+allocated to segments or Centrally managed portfolio activities
+(referred to as financing interest), interest related to Corporate
+Treasury activities or resulting consolidation and reconciliation
+effects on interest.
+MEASUREMENT - SEGMENTS
+Accounting policies for Segment information are generally
+the same as those used for Siemens, described in → NOTE 2
+SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. Lease transactions,
+however, are classified as operating leases for internal and seg-
+ment reporting purposes. Intersegment transactions are based
+on market prices.
+Profit of the Sectors and of Equity Investments:
+Siemens' Managing Board is responsible for assessing the per-
+formance of the segments. The Company's profitability mea-
+sure of the Sectors and Equity Investments is earnings before
+financing interest, certain pension costs, and income taxes as
+determined by the chief operating decision maker (Profit).
+Profit excludes various categories of items, not allocated to the
+131 | B. Corporate Governance
+171 | C
+RECONCILIATION
+Combined Management Report
+312
+Sectors and Equity Investments, which management does not
+regard as indicative of their performance. Profit represents a
+performance measure focused on operational success exclud-
+ing the effects of capital market financing issues; for financing
+issues regarding Equity Investments see paragraph below.
+The major categories of items excluded from Profit are pre-
+sented below.
+Financing interest, excluded from Profit, is any interest income
+or expense other than interest income related to receivables
+from customers, from cash allocated to the Sectors and Equity
+Investments and interest expenses on payables to suppliers.
+Borrowing costs capitalized as part of qualifying long-term
+projects are not part of financing interest. Financing interest is
+excluded from Profit because decision-making regarding finan-
+cing is typically made at the corporate level. Equity Invest-
+ments include interest and impairments as well as reversals
+of impairments on long-term loans granted to investments
+reported in Equity Investments.
+-
+Similarly, decision-making regarding essential pension items is
+done centrally. Accordingly, Profit primarily includes amounts
+related to service cost of pension plans only, while all other reg-
+ularly recurring pension related costs – including charges for
+the German pension insurance association and plan adminis-
+tration costs are included in line item Corporate items and
+pensions. Curtailments are a partial payback with regard to past
+service cost that affect Segment Profit.
+Furthermore, income taxes are excluded from Profit since
+income tax is subject to legal structures, which typically do not
+correspond to the structure of the segments.
+The effect of certain litigation and compliance issues is
+excluded from Profit, if such items are not indicative of the
+Sectors' and Equity Investments' performance, since their
+related results of operations may be distorted by the amount
+and the irregular nature of such events. This may also be the
+case for items that refer to more than one reportable segment,
+SRE and (or) Centrally managed portfolio activities or have a
+corporate or central character.
+Central infrastructure costs are primarily allocated to the
+Sectors. The total amount to be allocated is determined at the
+beginning of the fiscal year and is charged in installments in all
+four quarters.
+Profit of Equity Investments mainly comprises income (loss)
+from investments presented in Equity Investments, such as the
+share in the earnings of associates or dividends from invest-
+ments not accounted for under the equity method, income
+(loss) from the sale of interests in investments, impairment of
+investments and reversals of impairments. It also includes
+interest and impairments as well as reversals of impairments
+on long-term loans granted to investments reported in Equity
+Investments.
+108 | A. To our Shareholders
+Profit of the segment SFS:
+Financial Services (SFS) - provides business-to-business
+financial solutions. With its specialist financing and technology
+expertise in the areas of Siemens businesses, SFS supports cus-
+tomer investments with leasing solutions and equipment, proj-
+ect and structured financing. SFS provides capital for Siemens
+customers as well as other companies and manages financial
+risks of Siemens.
+-
+248 D.1
+Consolidated Statements of Income
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+Equity Investments in general, comprises equity stakes
+held by Siemens that are accounted for by the equity method or
+as available-for-sale financial assets and that for strategic rea-
+sons are not allocated to a Sector or a Division, respectively,
+SFS, Centrally managed portfolio activities, Siemens Real Estate
+(SRE), Corporate items or Corporate Treasury.
+337 | E.
+311
+DESCRIPTION OF REPORTABLE SEGMENTS
+The four Sectors comprise manufacturing, industrial and com-
+mercial goods, solutions and services in areas more or less
+related to Siemens' origins in the electrical business field.
+Energy - offers a wide spectrum of products, solutions and
+services for generating and transmitting power, and for extract-
+ing, converting and transporting oil and gas.
+-
+Healthcare offers customers a comprehensive portfolio of
+medical solutions across the treatment chain - from preven-
+tion and early detection to diagnosis, treatment and follow-up
+care. Healthcare also provides technical maintenance, profes-
+sional and consulting services, and, together with Financial
+Services (SFS), financing to assist customers in purchasing our
+products.
+Industry
+-
+a supplier of innovative and environmentally
+friendly products and solutions for industrial companies, par-
+ticularly those in the process and manufacturing industries.
+Industry's end-to-end automation solutions, drive technolo-
+gies, industrial IT and industry software, in-depth industry
+expertise and technology-based services help Industry's cus-
+tomers use resources and energy more efficiently, improve
+productivity, and increase flexibility.
+Infrastructure & Cities - offers a wide range of technologies
+that increase the functionality and sustainability of metropoli-
+tan centers and urban infrastructures worldwide, such as inte-
+grated mobility solutions, building and security systems, power
+distribution equipment, grid automation and control products
+and solutions, smart grid applications and low and medium-
+voltage products.
+Additional Information
+Profit of the segment SFS is Income before income taxes. In
+contrast to performance measurement principles applied to the
+Sectors and Equity Investments interest income and expenses
+is an important source of revenue and expense of SFS.
+Asset measurement principles:
+Management determined Assets as a measure to assess capital
+intensity of the Sectors and Equity Investments (Net capital
+employed). Its definition corresponds to the Profit measure. It
+is based on Total assets of the Consolidated Statements of
+Financial Position, primarily excluding intragroup financing
+receivables, tax related assets and assets of discontinued
+operations, since the corresponding positions are excluded
+from Profit. A Division of Infrastructure & Cities includes the
+project-specific intercompany financing of a long-term project.
+The remaining assets are reduced by non-interest-bearing
+liabilities other than tax related liabilities, e.g. trade payables,
+to derive Assets. In contrast, Assets of SFS is Total assets.
+Revenue by location
+of customer
+Year ended
+September 30,
+2013
+2014
+Revenue by location
+of companies
+Year ended
+September 30,
+2014
+2013
+(in millions of €)
+Europe, C.I.S., Africa,
+Middle East
+September 30,
+Americas
+NOTE 36 Information about geographies
+(in millions of €)
+2014
+2013
+Asia, Australia
+24,646
+23,736
+Siemens
+Assets of Equity Investments
+2,571
+2,488
+Assets of SFS
+Assets of Sectors
+In fiscal 2014 and 2013, Profit of SFS includes interest income
+of €966 million and €873 million, respectively and interest
+expenses of €336 million and €317 million, respectively.
+ADDITIONAL SEGMENT INFORMATION
+In fiscal 2014 and 2013, Corporate items and pensions in column
+Profit includes €(545) million and €(419) million related to Cor-
+porate items, as well as €(393) million and €(416) million related
+to Pensions, respectively. Corporate items include effects from
+legal and regulatory matters. In fiscal 2014, column Profit in-
+cludes a one-time effect of €186 million regarding insurance
+matters, which were mainly included in Eliminations.
+Orders:
+Orders are determined principally as estimated revenue of
+accepted purchase orders and order value changes and adjust-
+ments, excluding letters of intent. New orders are supplemen-
+tary information, provided on a voluntary basis. It is not part of
+the audited Consolidated Financial Statements.
+Free cash flow definition:
+Segment information discloses Free cash flow and Additions
+to property, plant and equipment and intangible assets. Free
+cash flow of the Sectors and Equity Investments constitutes
+cash flows from operating activities less additions to intangi-
+ble assets and property, plant and equipment. It excludes
+Financing interest, except for cases where interest on qualify-
+ing assets is capitalized or classified as contract costs and it
+also excludes non-cash income tax as well as certain other
+payments and proceeds. Free cash flow of Equity Investments
+includes interest from shareholder loans granted to invest-
+ments reported in Equity Investments. Pension curtailments
+are a partial payback with regard to past service cost that
+affect segment Free cash flow. Free cash flow of SFS, a finan-
+cial services business, includes related financing interest pay-
+ments and proceeds; income tax payments and proceeds of
+SFS are excluded.
+247
+D. Consolidated Financial Statements
+248 D.1
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+313
+Amortization, depreciation and impairments:
+Amortization, depreciation and impairments presented in Seg-
+ment information includes depreciation and impairments of
+property, plant and equipment, net of reversals of impairments
+as well as amortization and impairments of intangible assets,
+net of reversals of impairment.
+MEASUREMENT - CENTRALLY MANAGED
+PORTFOLIO ACTIVITIES AND SRE:
+Centrally managed portfolio activities follow the measure-
+ment principles of the Sectors. SRE applies the measurement
+principles of SFS; Total assets of SRE nets certain intercom-
+pany finance receivables with certain intercompany finance
+liabilities.
+RECONCILIATION TO SIEMENS'
+CONSOLIDATED FINANCIAL STATEMENTS
+The following table reconciles total Assets of the Sectors,
+Equity Investments and SFS to Total assets of Siemens' Con-
+solidated Statements of Financial Position:
+18,661
+10011
+49.6
+Projektbau-Arena-Berlin GmbH, Grünwald
+2,227
+2,067
+10,732
+11,126
+2,033
+2,027
+610
+507
+303
+425
+1,595
+1,591
+1,621
+1,680
+1,955
+1,569
+2013
+2014
+449
+241
+553
+577
+10010
+Jawa Power Holding GmbH, Erlangen
+10011
+Siemens Healthcare Diagnostics GmbH, Eschborn
+100
+KompTime GmbH, Munich
+10011
+291
+1,487
+638
+544
+384
+358
+2,280
+2,170
+6,410
+6,661
+1,563
+2,252
+2013
+Siemens Grundstücksmanagement GmbH & Co. OHG,
+Grünwald
+2014
+2014
+10011
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+10010
+6 No significant influence due to contractual arrangements or legal circumstances.
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+Mechanik Center Erlangen GmbH, Erlangen
+5 No control due to contractual arrangements or legal circumstances.
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+108 | A. To our Shareholders
+318
+131 | B.
+Corporate Governance
+7 Significant influence due to contractual arrangements or legal circumstances.
+10011
+100
+100
+09/30/2013
+09/30/2014
+2013
+2014
+and impairments
+Amortization, depreciation
+Additions to intangible
+assets and property, plant
+and equipment
+Free cash flow
+Assets
+Profit
+Germany (115 companies)
+Kyros 46 Verwaltungs GmbH, Constance
+1008
+Lincas Electro Vertriebsgesellschaft mbH, Hamburg
+100
+Mannesmann Demag Krauss-Maffei GmbH, Munich
+100
+Siemens Healthcare Diagnostics Holding GmbH, Eschborn
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+Siemens Immobilien Chemnitz-Voerde GmbH, Grünwald
+Siemens Industriegetriebe GmbH, Penig
+100
+2013
+100
+53,318 54,501
+ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
+IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
+1008
+Siemens Beteiligungen Inland GmbH, Munich
+10011
+Blitz 14-660 GmbH, Munich
+1008
+Siemens Beteiligungen Management GmbH, Grünwald
+1008
+Blitz 14-661 GmbH, Munich
+1008
+Siemens Beteiligungen USA GmbH, Berlin
+10011
+BWI Services GmbH, Meckenheim
+10011
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Grünwald
+10010
+CAPTA Grundstücksgesellschaft mbH & Co. KG i.L., Grünwald
+10010
+100
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
+Grünwald
+Blitz 14-658 GmbH, Munich
+10010
+100
+Siemens Audiologische Technik GmbH, Erlangen
+Siemens Bank GmbH, Munich
+85
+10011
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+Alpha Verteilertechnik GmbH, Cham
+100
+10011
+Anlagen- und Rohrleitungsbau Ratingen GmbH, Ratingen
+1008
+AS AUDIO-SERVICE Gesellschaft mit beschränkter Haftung,
+Herford
+100
+R&S Restaurant Services GmbH, Munich
+REMECH Systemtechnik GmbH, Kamsdorf
+RHG Vermögensverwaltung GmbH, Berlin
+RISICOM Rückversicherung AG, Grünwald
+Samtech Deutschland GmbH, Hamburg
+100
+10011
+10011
+100
+100
+Atecs Mannesmann GmbH, Erlangen
+100
+Berliner Vermögensverwaltung GmbH, Berlin
+10011
+100
+DA Creative GmbH, Munich
+Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
+1008
+Siemens Campus Erlangen Objekt 1 GmbH & Co. KG, Grünwald
+100
+1008
+100
+FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
+Munich
+Siemens Finance & Leasing GmbH, Munich
+10011
+10010
+Siemens Financial Services GmbH, Munich
+10011
+HanseCom Gesellschaft für Informations- und
+10010
+Siemens Fonds Invest GmbH, Munich
+1008
+10011
+74
+HSP Hochspannungsgeräte GmbH, Troisdorf
+10011
+Siemens Fuel Gasification Technology GmbH & Co. KG,
+Freiberg
+Siemens Global Innovation Partners Management GmbH,
+Munich
+10010
+ILLIT Grundstücks-Verwaltungsgesellschaft mbH & Co. KG i.L.,
+Grünwald
+10010
+Siemens Fuel Gasification Technology Verwaltungs GmbH,
+Freiberg
+Kommunikationsdienstleistungen mbH, Hamburg
+10011
+10010
+100
+1008
+Dade Behring Beteiligungs GmbH, Eschborn
+10010
+EDI - USS Verwaltungsgesellschaft mbH, Munich
+evosoft GmbH, Nuremberg
+1008
+10011
+IBS Aktiengesellschaft excellence, collaboration,
+manufacturing, Höhr-Grenzhausen
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+EDI - USS Umsatzsteuersammelrechnungen und Signaturen
+GmbH & Co. KG, Munich
+1008
+Siemens Campus Erlangen Objektmanagement GmbH,
+Grünwald
+100
+Dade Behring Grundstücks GmbH, Marburg
+Siemens Convergence Creators GmbH & Co. KG, Hamburg
+Siemens Convergence Creators Management GmbH, Hamburg
+Siemens Energy Automation GmbH, Erlangen
+100
+Siemens, S.A. de C.V., México, D.F./Mexico
+100
+1 Control due to a majority of voting rights.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances.
+9 Not accounted for using the equity method due to immateriality.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+8 Not consolidated due to immateriality.
+Siemens Postal, Parcel & Airport Logistics Ltd., Oakville/Canada
+10 Exemption pursuant to Section 264 b German Commercial Code.
+100
+Panama City/Panama
+100
+Siemens Molecular Imaging, Inc., Wilmington,
+Siemens S.A., Panama City/Panama
+100
+DE/United States
+100
+Siemens S.A.C., Lima/Peru
+Siemens Medical Solutions USA, Inc., Wilmington,
+DE/United States
+100
+Audiology Distribution, LLC, Wilmington, DE/United States
+100
+DE/United States
+100
+eMeter Corporation, Wilmington, DE/United States
+100
+Siemens Power Generation Service Company, Ltd.,
+FCE International, LLC, Huntingdon Valley, PA/United States
+100
+Siemens Postal, Parcel & Airport Logistics LLC, Wilmington,
+Siemens Healthcare Diagnostics Panama, S.A.,
+100
+Siemens S.A., Managua/Nicaragua
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+247 | D.
+Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+323
+Equity interest
+Equity interest
+September 30, 2014
+in %
+September 30, 2014
+in %
+Siemens Aparelhos Auditivos Ltda., São Paulo/Brazil
+1008
+100
+100
+100
+Siemens Manufacturing S.A., Bogotá/Colombia
+100
+Siemens VAI Metals Technologies Limited, Frimley,
+Siemens S.A., Costado Sur - Tenjo/Colombia
+100
+Surrey/United Kingdom
+100
+Siemens Healthcare Diagnostics S.A., San José/Costa Rica
+100
+The Preactor Group Limited, Frimley, Surrey/United Kingdom
+100
+Siemens S.A., San José/Costa Rica
+100
+Tronic Ltd., Frimley, Surrey/United Kingdom
+100
+Siemens, S.R.L., Santo Domingo/Dominican Republic
+100
+VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
+Surrey/United Kingdom
+100
+Siemens S.A., Santiago de Chile/Chile
+Siemens Transmission & Distribution Limited, Frimley,
+100
+Siemens Rail Automation Limited, Frimley,
+Siemens Transformers Canada Inc., Trois-Rivières/Canada
+100
+Surrey/United Kingdom
+100
+Trench Ltd., Saint John/Canada
+100
+Siemens Rail Systems Project Holdings Limited, Frimley,
+100
+Wheelabrator Air Pollution Control (Canada) Inc.,
+100
+Ontario/Canada
+100
+Siemens Rail Systems Project Limited, Frimley,
+Siemens Healthcare Diagnostics Manufacturing Limited,
+Surrey/United Kingdom
+100
+George Town/Cayman Islands
+100
+Surrey/United Kingdom
+100
+Siemens S.A., Quito/Ecuador
+VA Tech Reyrolle Distribution Ltd., Frimley,
+Wilmington, DE/United States
+100
+VA TECH International Argentina SA, Buenos Aires/Argentina
+100
+Indústria de Trabajos Eléctricos S.A. de C.V., Ciudad
+Juárez/Mexico
+100
+Siemens Soluciones Tecnologicas S.A., Santa Cruz de la
+Sierra/Bolivia, Plurinational State of
+100
+Siemens Healthcare Diagnostics, S. de R.L. de C.V., México,
+D.F./Mexico
+100
+Chemtech Servicos de Engenharia e Software Ltda.,
+Rio de Janeiro/Brazil
+100
+Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
+Canoas/Brazil
+100
+LMS da América do Sul Servicos de Engenharia Ltda,
+São Caetano do Sul/Brazil
+100
+Siemens Industry Software, SA de CV, México, D.F./Mexico
+Siemens Inmobiliaria S.A. de C.V., México, D.F./Mexico
+Siemens Innovaciones S.A. de C.V., México, D.F./Mexico
+Siemens Servicios S.A. de C.V., México, D.F./Mexico
+Siemens VAI Metals Technologies, S. de R.L. de C.V.,
+Apodaca/Mexico
+100
+100
+Surrey/United Kingdom
+Siemens S.A., Buenos Aires/Argentina
+100
+Grupo Siemens S.A. de C.V., México, D.F./Mexico
+Siemens S.A., San Salvador/El Salvador
+100
+Surrey/United Kingdom
+100
+SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
+VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
+100
+Guatemala/Guatemala
+100
+100
+VTW Anlagen UK Ltd., Banbury, Oxfordshire/United Kingdom
+Siemens S.A., Guatemala/Guatemala
+100
+Siemens S.A., Tegucigalpa/Honduras
+100
+Americas (96 companies)
+Dade Behring, S.A. de C.V., México, D.F./Mexico
+100
+Siemens IT Services S.A., Buenos Aires/Argentina
+100
+100
+100
+100
+100
+in %
+September 30, 2014
+Equity interest
+Equity interest
+325
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+September 30, 2014
+in %
+Siemens X-Ray Vacuum Technology Ltd.,Wuxi, Wuxi/China
+Smart Metering Solutions (Changsha) Co. Ltd., Changsha/China
+Trench High Voltage Products Ltd., Shenyang, Shenyang/China
+Winergy Drive Systems (Tianjin) Co. Ltd., Tianjin/China
+100
+Siemens VAI Manufacturing (Taicang) Co., Ltd., Taicang/China
+Siemens VAI Metals Technologies Co., Ltd., Shanghai,
+100
+Asia Care Holding Limited, Hong Kong/Hong Kong
+51
+Mannesmann Corporation, New York, NY/United States
+Hangzhou/China
+Yangtze Delta Manufacturing Co. Ltd., Hangzhou,
+248 D.1
+1008
+100
+65
+100
+Siemens PETNET Korea Co. Ltd., Seoul/Korea, Republic of
+60
+100
+Siemens Ltd. Seoul, Seoul/Korea, Republic of
+Siemens VAI Metals Technologies Limited, Seoul/Korea,
+Republic of
+Consolidated Financial Statements
+247 | D.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+100
+Shanghai/China
+100
+Siemens Wind Power Blades (Shanghai) Co., Ltd.,
+Siemens Industry Software (Shanghai) Co., Ltd.,
+Shanghai/China
+100
+Siemens Water Technologies Ltd., Beijing/China
+Siemens International Trading Ltd., Shanghai, Shanghai/China
+Siemens Investment Consulting Co., Ltd., Beijing/China
+100
+100
+Siemens Venture Capital Co., Ltd., Beijing/China
+84
+Huludao/China
+100
+Shanghai/China
+Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
+Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
+100
+100
+Siemens Wind Power Turbines (Shanghai) Co. Ltd.,
+Shanghai/China
+Exemption pursuant to Section 264 b German Commercial Code.
+10
+9 Not accounted for using the equity method due to immateriality.
+8 Not consolidated due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+100
+4 No control due to substantive removal or participation rights held by other parties.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+Siemens Wiring Accessories Shandong Ltd., Zibo/China
+100
+Siemens Ltd., China, Beijing/China
+492
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+HearUSA IPA, Inc., New York, NY/United States
+Siemens Industrial Automation Ltd., Shanghai, Shanghai/China
+Guangzhou/China
+100
+75
+Siemens Eco-City Innovation Technologies (Tianjin) Co., Ltd.,
+Tianjin/China
+Siemens Sensors & Communication Ltd., Dalian/China
+Siemens Shanghai Medical Equipment Ltd., Shanghai/China
+100
+100
+60
+Siemens Shenzhen Magnetic Resonance Ltd.,
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
+100
+Shenzhen/China
+100
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
+100
+Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
+Siemens Real Estate Management (Beijing) Ltd., Co.,
+Beijing/China
+100
+100
+Siemens Rail Automation Technical Consulting Services
+(Beijing) Co. Ltd., Beijing/China
+Siemens Product Lifecycle Management Software Inc.,
+HearX West LLC, Wilmington, DE/United States
+502
+Wilmington, DE/United States
+100
+HearX West, Inc., Los Angeles, CA/United States
+100
+70
+Siemens Public, Inc., Wilmington, DE/United States
+IBS America, Inc., Wilmington, DE/United States
+100
+100
+MWB (Shanghai) Co Ltd., Shanghai/China
+65
+Siemens Building Technologies (Tianjin) Ltd., Tianjin/China
+Siemens Business Information Consulting Co., Ltd, Beijing/China
+Siemens Circuit Protection Systems Ltd., Shanghai,
+Shanghai/China
+70
+100
+Siemens Electrical Drives Ltd., Tianjin/China
+85
+Siemens Factory Automation Engineering Ltd., Beijing/China
+Guangzhou/China
+63
+Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
+Siemens Transformer (Jinan) Co., Ltd, Jinan/China
+90
+Hangzhou/China
+51
+100
+Siemens High Voltage Switchgear Co., Ltd. Shanghai,
+100
+Shanghai/China
+51
+Siemens VAI International Trading Co., Ltd., Shanghai,
+Siemens High Voltage Switchgear Guangzhou Ltd.,
+Shanghai/China
+1008
+Siemens Transformer (Wuhan) Company Ltd.,
+Wuhan City/China
+94
+Siemens Hearing Instruments (Suzhou) Co. Ltd., Suzhou/China
+Shanghai/China
+100
+Siemens Special Electrical Machines Co. Ltd., Changzhi/China
+Siemens Standard Motors Ltd., Yizheng/China
+77
+Siemens Finance and Leasing Ltd., Beijing/China
+100
+Siemens Surge Arresters Ltd., Wuxi/China
+100
+Siemens Transformer (Guangzhou) Co., Ltd.,
+Siemens Financial Services Ltd., Beijing/China
+Siemens Switchgear Ltd., Shanghai, Shanghai/China
+55
+Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
+51
+Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
+Siemens Technology Development Co., Ltd. of Beijing,
+Beijing/China
+90
+100
+100
+Caterva GmbH, Pullach i. Isartal
+1008
+100
+10 Exemption pursuant to Section 264 b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+8 Not consolidated due to immateriality.
+Significant influence due to contractual arrangements or legal circumstances.
+7
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+409
+49
+Power Automation Pte. Ltd., Singapore/Singapore
+Modern Engineering and Consultants Co. Ltd.,
+Bangkok/Thailand
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+25
+309
+50
+Yaskawa Siemens Automation & Drives Corp.,
+Kitakyushu/Japan
+ChinaInvent (Shanghai) Instrument Co., Ltd,
+Shanghai/China
+219
+Magellan Technology Pty. Ltd., Annandale/Australia
+439
+Koden Co., Ltd., Hiroshima/Japan
+50
+Exemplar Health (SCUH) Partnership, Sydney/Australia
+509
+Kikoeno Soudanshitsu Co., Ltd., Tochigi/Japan
+50
+Exemplar Health (NBH) Partnership, Melbourne/Australia
+DBEST (Beijing) Facility Technology Management Co., Ltd.,
+Beijing/China
+108 | A. To our Shareholders
+131 | B.
+Corporate Governance
+(42)
+2
+1005,6
+1
+0
+1005,6
+€
+€
+in %
+in millions of
+in millions of
+interest
+Equity
+Net income
+Equity
+Atos SE, Bezons/France
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (5 companies)
+Dils Energie NV, Hasselt/Belgium
+171 | C
+Combined Management Report
+328
+September 30, 2014
+Other investments 13
+Germany (9 companies)
+259
+Ausbildungszentrum für Technik, Informationsverarbeitung und Wirtschaft gemeinnützige GmbH (ATIW), Paderborn
+BOMA Verwaltungsgesellschaft mbH & Co. KG, Grünwald
+Kyros Beteiligungsverwaltung GmbH, Grünwald
+MAENA Grundstücks-Verwaltungsgesellschaft mbH & Co. KG, Grünwald
+OSRAM Licht AG, Munich
+Siemens Global Innovation Partners | GmbH & Co. KG, Munich
+Siemens Pensionsfonds AG, Grünwald
+SIM 9. Grundstücksverwaltungs- und -beteiligungs-GmbH, Munich
+BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
+Kanto Hochouki Co., Ltd., Ibaragi/Japan
+Asia, Australia (24 companies)
+40
+ROSE Power Transmission Technology Co., Ltd,
+50
+309
+GSP China Technology Co., Ltd., Beijing/China
+509
+FCE (Beijing) Heat Treatment Technology Co., Ltd.,
+Beijing/China
+509
+509
+Brockton Power Company LLC, Boston, MA/United States
+Brockton Power Holdings Inc., Boston, MA/United States
+Brockton Power Properties, Inc., Boston, MA/United States
+Cyclos Semiconductor, Inc., Wilmington, DE/United States
+PhSiTh LLC, New Castle, DE/United States
+Cia Técnica de Engenheria Eletrica Sucursal Argentina
+VA TECH ARGENTINA S.A. Union transitoria de Empresas,
+Buenos Aires/Argentina
+Americas (10 companies)
+SMart Wind SPC 6 Limited, London/United Kingdom
+SMart Wind SPC 7 Limited, London/United Kingdom
+SMart Wind SPC 8 Limited, London/United Kingdom
+in %
+September 30, 2014
+in %
+September 30, 2014
+Equity interest
+Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+252 D.5
+249 D.2
+250 D.3
+Anshan/China
+251 D.4
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+327
+Equity interest
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+1005,6
+50
+509
+PT Asia Care Indonesia, Jakarta/Indonesia
+50
+P.T. Jawa Power, Jakarta/Indonesia
+207,9
+259
+Transparent Energy Systems Private Limited,
+Pune/India
+Innovex Capital En Tecnologia, C.A., Caracas/Venezuela,
+Bolivarian Republic of
+515
+26
+Bangalore International Airport Ltd., Bangalore/India
+Siemens First Capital Commercial Finance, LLC, Oklahoma City,
+OK/United States
+50
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
+Yangzhong/China
+30
+Rether networks, Inc., Berkeley, CA/United States
+259
+Power Properties Inc., Boston, MA/United States
+309
+23
+Shanghai Electric Power Generation Equipment Co., Ltd.,
+Shanghai/China
+40
+259
+Shanghai Electric Wind Energy Co., Ltd., Shanghai/China
+Saitong Railway Electrification (Nanjing) Co., Ltd.,
+Nanjing/China
+49
+32
+Siemens Traction Equipment Ltd., Zhuzhou,
+Zhuzhou/China
+50
+33
+Xi'An X-Ray Target Ltd., Xi'an/China
+43
+259
+1
+66
+1005,6
+of Siemens Dynamowerk,
+Berlin, Germany
+Chairman of the Works Council
+(since July 11, 2014)
+Olaf Bolduan*
+Date of birth: February 22, 1949
+Member since: January 23, 2003
+Supervisory Board Member
+Lothar Adler*
+(until May 31, 2014)
+> Henkel Management AG,
+Düsseldorf
+> Henkel AG & Co. KGaA,
+Düsseldorf¹
+> E.ON SE, Düsseldorf (Chairman)
+> Bayer AG, Leverkusen
+(Chairman)
+German supervisory board
+positions:
+Werner Wenning
+Second Deputy Chairman
+Chairman of the Supervisory
+Boards of Bayer AG and E.ON SE
+Date of birth: October 21, 1946
+Member since: January 23, 2013
+External positions
+(Deputy Chairman)
+> Volkswagen AG, Wolfsburg
+Stuttgart
+> Porsche Automobil Holding SE,
+329
+| D.7 Supervisory Board and Managing Board
+D.7.1 Supervisory Board
+Gerhard Cromme, Dr. iur.
+Chairman
+Chairman of the Supervisory
+Board of Siemens AG
+Date of birth: February 25, 1943
+Member since: January 23, 2003
+Gerd von Brandenstein
+Supervisory Board Member
+Date of birth: April 6, 1942
+Member since: January 24, 2008
+Berthold Huber*
+Date of birth: February 15, 1950
+Member since: July 1, 2004
+External positions
+German supervisory board
+positions:
+> Audi AG, Ingolstadt
+(Deputy Chairman)
+First Deputy Chairman
+President of IndustriALL
+Global Union
+Additional Information
+Michael Diekmann
+Date of birth: December 23, 1954
+Member since: January 24, 2008
+External positions
+330
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+Date of birth: March 10, 1952
+Member since: January 27, 2009
+Germany
+Chairman of the Works Council
+of Siemens Erlangen Süd,
+Hans-Jürgen Hartung*
+Chairwoman of the Combine
+Works Council of Siemens AG
+Date of birth: March 14, 1959
+Member since: April 1, 2007
+Bettina Haller*
+Date of birth: July 24, 1952
+Member since: July 11, 2014
+in München, Munich
+Positions outside Germany:
+> Actelion Ltd., Switzerland
+> Münchener Rückversicherungs-
+Gesellschaft Aktiengesellschaft
+German supervisory board
+positions:
+Date of birth: June 28, 1949
+Member since: January 24, 2008
+External positions
+German supervisory board
+positions:
+> Allianz Asset Management AG,
+Munich (Chairman)
+> Allianz Deutschland AG, Munich
+> BASF SE, Ludwigshafen am
+Rhein (Deputy Chairman)
+> Linde AG, Munich (Deputy
+Chairman)
+Positions outside Germany:
+> Allianz France S.A., France
+(Deputy Chairman)
+Chairman of the Board of
+Management of Allianz SE
+> Allianz S.p.A., Italy
+Supervisory Board Member
+Date of birth: March 2, 1942
+Member since: January 24, 2008
+External positions
+German supervisory board
+positions:
+> BDO AG Wirtschaftsprüfungs-
+gesellschaft, Hamburg
+(Deputy Chairman)
+> HSBC Trinkaus & Burkhardt AG,
+Düsseldorf
+Peter Gruss, Prof. Dr. rer. nat.
+Scientific Member of the
+Max Planck Society
+Hans Michael Gaul, Dr. iur.
+247 | D.
+337 | E.
+254 D.6
+330 D.7
+12
+(1)
+506
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+Longview Intermediate Holdings B, LLC, Wilmington, DE/United States
+¡BAHN Corporation, South Jordan, UT/United States
+Americas (2 companies)
+Siemens Benefits Scheme Limited, Frimley, Surrey/United Kingdom
+Corporate XII S.A. (SICAV-FIS), Luxembourg/Luxembourg
+Medical Systems S.p.A., Genoa/Italy
+8
+0
+1
+66
+975,6
+3
+(98)
+206,12
+260
+24
+506
+1
+61
+1005,6
+0
+1005,6
+2,268
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+(1)
+2,939
+5
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+D.
+247
+13 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Interests in the capital of 2.5% are held by Siemens Pension Trust e.V.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264 b German Commercial Code.
+10
+9 Not accounted for using the equity method due to immateriality.
+8
+84
+1005,6
+88
+6,800
+744,6
+0
+456
+0
+(3)
+34
+7
+(36)
+810
+7 Significant influence due to contractual arrangements or legal circumstances.
+Not consolidated due to immateriality.
+9
+SAMTECH HK Ltd, Hong Kong/Hong Kong
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Siemens Japan Holding K.K., Tokyo/Japan
+50
+IFTEC GmbH & Co. KG, Leipzig
+100
+Kanagawa/Japan
+509
+499
+FEAG Fertigungscenter für Elektrische Anlagen GmbH, Erlangen
+HANSATON Akustik GmbH, Hamburg
+Siemens Industry Software Simulation and Test K.K.,
+100
+Siemens Industry Software K.K., Tokyo/Japan
+49
+EMIS Electrics GmbH, Lübbenau/Spreewald
+100
+100
+Siemens Hearing Instruments K.K., Tokyo/Japan
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
+des Stadt- und Regionalverkehrs mbH, Cologne
+100
+Siemens Healthcare Diagnostics K.K., Tokyo/Japan
+100
+Best Sound K.K., Sagamihara/Japan
+50
+100
+57
+Acrorad Co., Ltd., Okinawa/Japan
+505
+BWI Informationstechnik GmbH, Meckenheim
+100
+Siemens Hearing Instruments Batam, PT, Batam/Indonesia
+50
+499
+Infineon Technologies Bipolar GmbH & Co. KG, Warstein
+40
+Siemens Japan K.K., Tokyo/Japan
+in %
+MeVis BreastCare GmbH & Co. KG, Bremen
+Maschinenfabrik Reinhausen GmbH, Regensburg
+September 30, 2014
+Equity interest
+Equity interest
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+326
+108 | A. To our Shareholders
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264 b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+8 Not consolidated due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances.
+100
+Siemens Energy Solutions Limited, Seoul/Korea, Republic of
+Siemens Industry Software Ltd., Seoul/Korea, Republic of
+100
+Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
+Innovative Wind Concepts GmbH, Husum
+409
+100
+BSH Bosch und Siemens Hausgeräte GmbH, Munich
+LIB Verwaltungs-GmbH, Leipzig
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+50
+509
+60
+PT. Siemens Industrial Power, Kota Bandung/Indonesia
+499
+Siemens Pte. Ltd., Singapore/Singapore
+100
+100
+100
+100
+Siemens Industry Software Pte. Ltd., Singapore/Singapore
+Siemens Medical Instruments Pte. Ltd., Singapore/Singapore
+Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
+Singapore/Singapore
+100
+501
+Powerplant Performance Improvement Ltd., New Delhi/India
+Preactor Software India Private Limited, Bangalore/India
+Siemens Convergence Creators Private Limited, Mumbai/India
+Siemens Financial Services Private Limited, Mumbai/India
+Siemens Hearing Instruments Pvt. Ltd., Bangalore/India
+100
+PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
+New Delhi/India
+100
+PETNET Solutions Private Limited, Singapore/Singapore
+100
+LMS India Engineering Solutions Pvt Ltd, Chennai/India
+100
+100
+Siemens Industry Software Limited, Hong Kong/Hong Kong
+100
+Siemens Ltd., Hong Kong/Hong Kong
+100
+Siemens Postal, Parcel & Airport Logistics Limited,
+Hong Kong/Hong Kong
+100
+100
+100
+100
+100
+100
+100
+100
+HRSG Systems (Malaysia) SDN. BHD., Kuala Lumpur/Malaysia
+Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
+Siemens Subsea Systems SDN. BHD, Kuala Lumpur/Malaysia
+VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens (N.Z.) Limited, Auckland/New Zealand
+Siemens Power Operations, Inc., Manila/Philippines
+Siemens, Inc., Manila/Philippines
+September 30, 2014
+100
+100
+BELLIS GmbH, Braunschweig
+100
+P.T. Siemens Indonesia, Jakarta/Indonesia
+259
+ATS Projekt Grevenbroich GmbH, Schüttorf, Schüttorf
+100
+50
+Advanced Power AG und Siemens Project Ventures GmbH
+in GbR, Hamburg
+Siemens Technology and Services Private Limited,
+Mumbai/India
+100
+Siemens Rail Automation Pvt. Ltd., Bangalore/India
+Germany (30 companies)
+100
+Associated companies and joint ventures
+Siemens Postal Parcel & Airport Logistics Private Limited,
+Mumbai/India
+1008
+Limited, Mumbai/India
+100
+Siemens Industry Software (India) Private Limited,
+New Delhi/India
+Siemens Industry Software (TW) Co., Ltd., Taipei/Taiwan,
+Province of China
+100
+100
+Siemens Ltd., Taipei/Taiwan, Province of China
+Siemens Rail Automation Pte. Ltd., Singapore/Singapore
+100
+75
+Siemens Limited, Bangkok/Thailand
+99
+Siemens Postal and Parcel Logistics Technologies Private
+Siemens Ltd., Ho Chi Minh City/Viet Nam
+100
+Siemens Ltd., Mumbai/India
+in %
+26
+49
+Rosh HaAyin/Israel
+50
+Lincs Renewable Energy Holdings Limited,
+London/United Kingdom
+Metropolitan Transportation Solutions Ltd.,
+48
+33
+Heron Wind Limited, London/United Kingdom
+Eviop-Tempo A.E. Electrical Equipment Manufacturers,
+Vassiliko/Greece
+49
+Ethos Energy Group Limited, Aberdeen/United Kingdom
+25
+TRIXELL S.A.S., Moirans/France
+33
+Cross London Trains Holdco 2 Limited,
+London/United Kingdom
+40
+Compagnie Electrique de Bretagne, S.A.S., Paris/France
+249
+239
+T-Power NV, Brussels/Belgium
+20
+Certas AG, Zurich/Switzerland
+50
+Meomed s.r.o., Prerov/Czech Republic
+209
+479
+50
+A2SEA A/S, Fredericia/Denmark
+49
+Breesea Limited, London/United Kingdom
+50
+Noliac A/S, Kvistgaard/Denmark
+Interessengemeinschaft TUS, Männedorf/Switzerland
+Termica AFAP S.A., Villacanas/Spain
+Njord Limited, London/United Kingdom
+Transfima GEIE, Milan/Italy
+8 Not consolidated due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+509
+SMart Wind SPC 5 Limited, London/United Kingdom
+50
+50
+509
+Sesmos Limited, Edinburgh/United Kingdom
+SMart Wind Limited, London/United Kingdom
+Solutions & Infrastructure Services Limited,
+Gzira/Malta
+209
+Electrogas Malta Limited, St. Julian's/Malta
+429
+Odos Imaging Ltd., Edinburgh/United Kingdom
+509
+Transfima S.p.A., Milan/Italy
+499
+Optimus Wind Limited, London/United Kingdom
+33
+50
+865,9
+Temir Zhol Electrification LLP, Astana/Kazakhstan
+49
+Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
+Pyreos Limited, Edinburgh/United Kingdom
+509
+349
+VAL 208 Torino GEIE, Milan/Italy
+10 Exemption pursuant to Section 264 b German Commercial Code.
+259
+Solucia Renovables 1, S.L., Lebrija/Spain
+26
+Rousch (Pakistan) Power Ltd., Lahore/Pakistan
+97
+Siemens Qualität & Dividende Europa, Munich
+339
+Wirescan AS, Torp/Norway
+87
+Siemens EuroCash, Munich
+409
+209
+ZeeEnergie Management B.V., Eemshaven/Netherlands
+VOEST-ALPINE Technical Services Ltd., Abuja/Nigeria
+1005,9
+1005,9
+Siemens-Electrogeräte GmbH, Munich
+Siemens Venture Capital Fund 1 GmbH, Munich
+207
+ZeeEnergie C.V., Amsterdam/Netherlands
+509
+Energie Electrique de Tahaddart S.A., Tanger/Morocco
+Buitengaats C.V., Amsterdam/Netherlands
+20
+207
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+OWP Butendiek GmbH & Co. KG, Bremen
+499
+23
+Symeo GmbH, Neubiberg
+Power Vermögensbeteiligungsgesellschaft mbH Die Erste,
+Hamburg
+PTZ Partikeltherapiezentrum Kiel Management GmbH,
+Wiesbaden
+Buitengaats Management B.V., Eemshaven/Netherlands
+Infraspeed Maintainance B.V., Zoetermeer/Netherlands
+Unify Holdings B.V., Amsterdam/Netherlands
+Ural Locomotives Holding Besloten Vennootschap,
+The Hague/Netherlands
+209
+46
+49
+50
+509
+50
+655,9
+509
+50
+E-Mobility Provider Austria GmbH & Co KG, Vienna/Austria
+Oil and Gas ProServ LLC, Baku/Azerbaijan
+50
+Soleval Renovables S.L., Sevilla/Spain
+509
+515
+Nertus Mantenimiento Ferroviario y Servicios S.A.,
+Barcelona/Spain
+44
+Aspern Smart City Research GmbH & Co KG, Vienna/Austria
+E-Mobility Provider Austria GmbH, Vienna/Austria
+449
+Aspern Smart City Research GmbH, Vienna/Austria
+31
+26
+ZAO Systema-Service, St. Petersburg/Russian Federation
+Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
+259
+409
+46
+Transrapid International Verwaltungsgesellschaft
+mbH i.L., Berlin
+000 Transconverter, Moscow/Russian Federation
+359
+509
+ubimake GmbH, Berlin
+50
+Windfarm Polska II Sp. z o.o., Koszalin/Poland
+000 UniPower Transmission Solutions, Region Moskau
+Krasnogorsky District/Russian Federation
+Voith Hydro Holding GmbH & Co. KG, Heidenheim
+Voith Hydro Holding Verwaltungs GmbH, Heidenheim
+35
+359
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (61 companies)
+Arelion GmbH, Pasching b. Linz/Austria
+000 VIS Automation mit Zusatz "Ein Gemeinschaftsunter-
+nehmen von VIS und Siemens", Moscow/Russian Federation
+ZAO Interautomatika, Moscow/Russian Federation
+ZAO Nuclearcontrol, Moscow/Russian Federation
+49
+50
+Siemens Industry Software Ltd., Ontario/Canada
+100
+100
+66
+000 Siemens Elektroprivod, St. Petersburg/Russian Federation
+100
+NEM Energy Holding B.V., The Hague/Netherlands
+100
+000 Siemens, Moscow/Russian Federation
+100
+100
+000 Russian Turbo Machinery, Perm/Russian Federation
+100
+NEM Energy B.V., Leiden/Netherlands
+LMS Instruments BV, Breda/Netherlands
+100
+Omnetric B.V., The Hague/Netherlands
+000 Legion II, Moscow/Russian Federation
+Equity interest
+Equity interest
+September 30, 2014
+in %
+September 30, 2014
+in %
+SCIENTIFIC MEDICAL SOLUTION DIAGNOSTICS S.A.R.L.,
+SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
+Casablanca/Morocco
+100
+Bucharest/Romania
+100
+Siemens Plant Operations Tahaddart SARL, Tanger/Morocco
+100
+100
+000 Siemens Gas Turbine Technologies, Novoe
+Pollux III B.V., Amsterdam/Netherlands
+Siemens International Holding B.V., The Hague/Netherlands
+100
+100
+Siemens Finance LLC, Vladivostok/Russian Federation
+1008
+000 Siemens VAI Metals Technologies, Moscow/
+Russian Federation
+100
+Siemens Healthcare Diagnostics B.V., Breda/Netherlands
+Siemens Industry Software B.V., 's-Hertogenbosch/
+Netherlands
+65
+The Hague/Netherlands
+100
+100
+100
+000 Siemens Industry Software, Moscow/Russian Federation
+000 Siemens Transformers, Voronezh/Russian Federation
+000 Siemens Urban Rail Technologies, Moscow/Russian
+Federation
+Siemens Gas Turbine Technologies Holding B.V.,
+100
+The Hague/Netherlands
+Siemens Financieringsmaatschappij N.V.,
+100
+Siemens Finance B.V., The Hague/Netherlands
+100
+000 Siemens High Voltage Products, Ufimsky
+District/Russian Federation
+100
+Siemens Diagnostics Holding II B.V., The Hague/Netherlands
+100
+Siemens Audiologie Techniek B.V., The Hague/Netherlands
+100
+Devyatkino/Russian Federation
+100
+100
+100
+Siemens Convergence Creators S.R.L., Brasov/Romania
+Siemens S.A., Casablanca/Morocco
+PETNET Solutions, Inc., Knoxville, TN/United States
+100
+Siemens Telecomunicaciones S.A., Montevideo/Uruguay
+100
+Siemens Capital Company LLC, Wilmington, DE/United States
+100
+Siemens Convergence Creators Corp., Wilmington,
+Siemens Rail Automation, C.A., Caracas/Venezuela,
+Bolivarian Republic of
+100
+DE/United States
+100
+Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
+100
+100
+Siemens Corporation, Wilmington, DE/United States
+Dade Behring Hong Kong Holdings Corporation,
+Siemens Credit Warehouse, Inc., Wilmington,
+DE/United States
+Tortola/Virgin Islands, British
+100
+100
+Siemens Demag Delaval Turbomachinery, Inc., Wilmington,
+DE/United States
+Asia, Australia (133 companies)
+100
+Australia Hospital Holding Pty Limited, Bayswater/Australia
+100
+Siemens Electrical, LLC, Wilmington, DE/United States
+100
+Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
+100
+Siemens S.A., Montevideo/Uruguay
+63
+100
+100
+Siemens Industry Software S.R.L., Brasov/Romania
+100
+Siemens Lda., Maputo/Mozambique
+100
+Siemens S.R.L., Bucharest/Romania
+100
+Siemens Pty. Ltd., Windhoek/Namibia
+100
+SIMEA SIBIU S.R.L., Sibiu/Romania
+100
+NEM USA Corp., Wilmington, DE/United States
+100
+Siemens USA Holdings, Inc., Wilmington, DE/United States
+Siemens VAI Metals Technologies LLC, Wilmington,
+DE/United States
+100
+1008
+Nimbus Technologies, LLC, Bingham Farms, MI/United States
+100
+SMI Holding LLC, Wilmington, DE/United States
+100
+Omnetric Corp., Wilmington, DE/United States
+100
+P.E.T.NET Houston, LLC, Austin, TX/United States
+51
+Wheelabrator Air Pollution Control Inc., Baltimore,
+MD/United States
+100
+PETNET Indiana LLC, Indianapolis, IN/United States
+501
+Winergy Drive Systems Corporation, Wilmington,
+DE/United States
+100
+Siemens Research Center Limited Liability Company,
+Moscow/Russian Federation
+100
+Siemens Medical Solutions Diagnostics Holding | B.V.,
+The Hague/Netherlands
+254 D.6
+330 D.7
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+251 D.4
+250 D.3
+249 D.2
+252 D.5
+Consolidated Statements of Income
+248 D.1
+Consolidated Financial Statements
+247 | D.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264 b German Commercial Code.
+10
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+9 Not accounted for using the equity method due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+03
+Siemens Employee Share Ownership Trust,
+Johannesburg/South Africa
+402
+Siemens W.L.L., Doha/Qatar
+100
+Siemens S.A., Amadora/Portugal
+8 Not consolidated due to immateriality.
+337 | E.
+Additional Information
+321
+Samtech Iberica Engineering & Software Services S.L.,
+492
+100
+Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
+SD (Middle East) LLC, Dubai/United Arab Emirates
+100
+Madrid/Spain
+Petnet Soluciones, S.L., Sociedad Unipersonal,
+1008
+LIMITED LIABILITY COMPANY "SIEMENS VAI METALS
+TECHNOLOGIES", Kiev/Ukraine
+100
+Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
+100
+Johannesburg/South Africa
+Siemens IT Solutions and Services (Pty) Ltd.,
+100
+100% foreign owned subsidiary "Siemens Ukraine",
+Kiev/Ukraine
+100
+Siemens Hearing Solution (Pty.) Ltd., Randburg/South Africa
+1008
+Siemens VAI Metal Teknolojileri Sanayi ve Ticaret A.S.,
+Istanbul/Turkey
+100
+Isando/South Africa
+Siemens Healthcare Diagnostics (Pty.) Limited,
+in %
+September 30, 2014
+in %
+September 30, 2014
+Equity interest
+Equity interest
+100
+Siemens Building Technologies (Pty) Ltd., Midrand/South Africa
+100
+Lisbon/Portugal
+SAT Systémy automatizacnej techniky spol. s.r.o.,
+Bratislava/Slovakia
+75
+Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
+51
+Siemens L.L.C., Muscat/Oman
+100
+OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
+100
+Siemens Höreapparater AS, Oslo/Norway
+100
+Siemens d.o.o. Beograd, Belgrade/Serbia
+100
+Siemens Healthcare Diagnostics AS, Oslo/Norway
+1008
+Westinghouse Saudi Arabia Ltd., Riyadh/Saudi Arabia
+100
+Siemens AS, Oslo/Norway
+51
+VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
+100
+Siemens Ltd., Lagos/Nigeria
+51
+51
+ISCOSA Industries and Maintenance Ltd., Riyadh/Saudi Arabia
+Siemens Ltd., Riyadh/Saudi Arabia
+100
+Siemens Nederland N.V., The Hague/Netherlands
+100
+51
+Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
+60
+1008
+60
+100
+70
+Siemens (Proprietary) Limited, Midrand/South Africa
+Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
+100
+Marqott Holdings (Pty.) Ltd., Pretoria/South Africa
+100
+Amadora/Portugal
+100
+Marqott (Proprietory) Limited, Pretoria/South Africa
+Siemens Healthcare Diagnostics, Unipessoal Lda.,
+03
+Linacre Investments (Pty) Ltd., Kenilworth/South Africa
+1008
+100
+Siemens d.o.o., Ljubljana/Slovenia
+Siemens VAI Metals Technologies Spólka z ograniczona
+odpowiedzialnoscia, Cracow/Poland
+100
+SIPRIN s.r.o., Bratislava/Slovakia
+100
+Siemens Rail Automation Holdings Limited, Frimley,
+Siemens Sp. z o.o., Warsaw/Poland
+100
+Siemens s.r.o., Bratislava/Slovakia
+100
+Siemens Industry Software Sp. z o.o., Warsaw/Poland
+100
+Siemens Program and System Engineering s.r.o.,
+Bratislava/Slovakia
+100
+Siemens Finance Sp. z o.o., Warsaw/Poland
+Audio SAT Sp. z o.o., Poznan/Poland
+Siemens Energy, Inc., Wilmington, DE/United States
+PETNET Solutions Cleveland, LLC, Wilmington,
+DE/United States
+Exemplar Health (NBH) Holdings 2 Pty Limited,
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances.
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264 b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+108 | A. To our Shareholders
+100
+324
+Corporate Governance
+171 | C
+Combined Management Report
+Equity interest
+Equity interest
+September 30, 2014
+in %
+September 30, 2014
+in %
+Siemens Rail Automation Holding Pty. Ltd., Clayton/Australia
+100
+Siemens Manufacturing and Engineering Centre Ltd.,
+SIEMENS RAIL AUTOMATION INVESTMENT PTY. LTD.,
+Clayton/Australia
+131 | B.
+Siemens Hearing Instruments Pty. Ltd., Bayswater/Australia
+Siemens Ltd., Bayswater/Australia
+100
+Siemens Industry, Inc., Wilmington, DE/United States
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances.
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264 b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+108 | A. To our Shareholders
+322
+131 | B.
+Corporate Governance
+171 | C
+Combined Management Report
+Equity interest
+Equity interest
+Siemens Government Technologies, Inc., Wilmington,
+DE/United States
+100
+Exemplar Health (SCUH) Holdings 4 Pty Limited,
+Bayswater/Australia
+100
+Siemens Healthcare Diagnostics Inc., Los Angeles,
+CA/United States
+100
+Siemens Hearing Instruments, Inc., Wilmington,
+DE/United States
+Exemplar Health (SCUH) Trust 3, Bayswater/Australia
+Exemplar Health (SCUH) Trust 4, Bayswater/Australia
+Memcor Australia Pty. Ltd., South Windsor/Australia
+100
+100
+100
+100
+Shanghai/China
+51
+100
+SIEMENS RAIL AUTOMATION PTY. LTD., Clayton/Australia
+Surrey/United Kingdom
+100
+Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
+Siemens Industry Software Ltda., São Caetano do Sul/Brazil
+Siemens Ltda., São Paulo/Brazil
+100
+100
+100
+Siemens Pension Funding Limited, Frimley,
+Siemens Rail Automation Ltda., São Paulo/Brazil
+100
+Surrey/United Kingdom
+100
+Siemens VAI Metals Services Ltda., Volta Redonda/Brazil
+100
+Siemens plc, Frimley, Surrey/United Kingdom
+100
+Siemens Postal, Parcel & Airport Logistics Limited, Frimley,
+VAI - INGDESI Automation Ltda., Belo Horizonte/Brazil
+Hearcanada Inc., Oakville/Canada
+100
+100
+Surrey/United Kingdom
+100
+Siemens Canada Ltd., Ontario/Canada
+100
+Siemens Protection Devices Limited, Frimley,
+Siemens Financial Ltd., Oakville/Canada
+100
+Surrey/United Kingdom
+100
+Siemens Hearing Instruments Inc., Ontario/Canada
+Siemens Pension Funding (General) Limited, Frimley,
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+100
+100
+100
+Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
+Tianjin/China
+100
+Westinghouse McKenzie-Holland Pty Ltd, Clayton/Australia
+Siemens Bangladesh Ltd., Dhaka/Bangladesh
+100
+100
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd.,
+Wuxi/China
+85
+Beijing Siemens Cerberus Electronics Ltd., Beijing/China
+DPC (Tianjin) Co., Ltd., Tianjin/China
+100
+Siemens Numerical Control Ltd., Nanjing, Nanjing/China
+80
+100
+GIS Steel & Aluminum Products Co., Ltd. Hangzhou,
+Hangzhou/China
+Siemens PLM Software (Shenzhen) Limited, Shenzhen/China
+Siemens Power Automation Ltd., Nanjing/China
+100
+100
+51
+IBS Industrial Business Software (Shanghai), Ltd.,
+Shanghai/China
+Siemens Power Equipment Packages Co. Ltd., Shanghai,
+Shanghai/China
+65
+100
+Siemens Power Plant Automation Ltd., Nanjing/China
+September 30, 2014
+in %
+September 30, 2014
+in %
+Siemens Industry Software Limited, Frimley,
+Siemens Eletroeletronica Limitada, Manaus/Brazil
+Surrey/United Kingdom
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+100
+100
+SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS, S.L. Sociedad
+Unipersonal, Madrid/Spain
+100
+GYM Renewables ONE Limited, Frimley, Surrey/United Kingdom
+Leuven Measurement & Systems UK Limited, Frimley,
+100
+Siemens Rail Automation Holding S.A., Madrid/Spain
+100
+Surrey/United Kingdom
+100
+Siemens Rail Automation S.A.U., Madrid/Spain
+100
+Marine Current Turbines Limited, Frimley, Surrey/United Kingdom
+100
+100
+Siemens Renting S.A., Madrid/Spain
+Siemens S.A., Madrid/Spain
+100
+Telecomunicación, Electrónica y Conmutación S.A.,
+Preactor International Limited, Frimley, Surrey/United Kingdom
+Project Ventures Rail Investments | Limited, Frimley,
+Surrey/United Kingdom
+100
+100
+Madrid/Spain
+100
+Samtech UK Limited, Frimley, Surrey/United Kingdom
+100
+Siemens AB, Upplands Väsby/Sweden
+100
+Siemens Financial Services AB, Stockholm/Sweden
+100
+100
+Electrium Sales Limited, Frimley, Surrey/United Kingdom
+GYM Renewables Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Financial Services, Inc., Wilmington,
+DE/United States
+Bayswater/Australia
+100
+100
+Exemplar Health (NBH) Trust 2, Bayswater/Australia
+100
+Siemens Financial, Inc., Wilmington, DE/United States
+Siemens Fossil Services, Inc., Wilmington, DE/United States
+Siemens Generation Services Company, Wilmington,
+DE/United States
+100
+Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
+1008
+100
+Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
+Exemplar Health (SCUH) Holdings 3 Pty Limited,
+1008
+100
+Bayswater/Australia
+100
+Castor III B.V., Amsterdam/Netherlands
+Siemens LLC, Abu Dhabi/United Arab Emirates
+492
+Barcelona/Spain
+100
+Siemens Healthcare Diagnostics S.L., Barcelona/Spain
+100
+Siemens Middle East Limited, Masdar City/
+United Arab Emirates
+100
+Siemens Holding S.L., Madrid/Spain
+100
+1 Control due to a majority of voting rights.
+100
+SBS Pension Funding (Scotland) Limited Partnership,
+Edinburgh/United Kingdom
+Siemens Industry Software S.L., Barcelona/Spain
+Siemens Healthcare Diagnostics AB, Södertälje/Sweden
+Siemens Industrial Turbomachinery AB, Finspång/Sweden
+100
+Surrey/United Kingdom
+100
+Siemens Schweiz AG, Zurich/Switzerland
+100
+Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley,
+Stadt/Land Immobilien AG, Zurich/Switzerland
+100
+Surrey/United Kingdom
+100
+Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
+United Republic of
+Siemens Healthcare Diagnostics Products Ltd, Frimley,
+100
+Surrey/United Kingdom
+Siemens S.A., Tunis/Tunisia
+100
+Siemens Hearing Instruments Ltd., Crawley,
+Siemens Finansal Kiralama A.S., Istanbul/Turkey
+100
+West Sussex/United Kingdom
+100
+Siemens Isitme Cihazlari Sanayi Ve Ticaret Anonim Sirketi,
+Istanbul/Turkey
+Siemens Holdings plc, Frimley, Surrey/United Kingdom
+100
+100
+Siemens Sanayi ve Ticaret A.S., Istanbul/Turkey
+100
+Siemens Industrial Turbomachinery Ltd., Frimley,
+Surrey/United Kingdom
+573
+Siemens Power Holding AG, Zug/Switzerland
+Siemens Healthcare Diagnostics Ltd., Frimley,
+100
+100
+100
+100
+Sea Generation (Brough Ness) Limited, Frimley,
+100
+Surrey/United Kingdom
+100
+Siemens Industry Software AB, Kista/Sweden
+100
+Sea Generation (Kyle Rhea) Limited, Frimley,
+100
+Surrey/United Kingdom
+100
+Siemens Audiologie AG, Adliswil/Switzerland
+100
+Siemens Fuel Gasification Technology Holding AG,
+Zug/Switzerland
+Huba Control AG, Würenlos/Switzerland
+Sea Generation (Wales) Ltd., Frimley, Surrey/United Kingdom
+Sea Generation Limited, Frimley, Surrey/United Kingdom
+Buckinghamshire/United Kingdom
+Siemens Postal, Parcel & Airport Logistics AG,
+Zurich/Switzerland
+Siemens Financial Services Ltd., Stoke Poges,
+100
+100
+Siemens Financial Services Holdings Ltd., Stoke Poges,
+Buckinghamshire/United Kingdom
+Siemens Industry Software AG, Zurich/Switzerland
+Siemens Healthcare Diagnostics AG, Zurich/Switzerland
+100
+100
+100
+100
+Güler Sabancı
+Chairman of the Committee of
+Spokespersons of the Siemens
+Group; Chairman of the Central
+Committee of Spokespersons
+of Siemens AG
+Chairwoman and Managing
+Director of Hacı Ömer Sabancı
+Holding A.Ş.
+Date of birth: August 14, 1955
+Member since: January 23, 2013
+Rainer Sieg, Prof. Dr. iur.*
+(until February 28, 2014)
+Supervisory Board Member
+Date of birth: December 20, 1948
+Member since: January 24, 2008
+Michael Sigmund*
+(since March 1, 2014)
+Date of birth: September 13, 1957
+Member since: March 1, 2014
+> SAP SE, Walldorf
+Positions outside Germany:
+German supervisory board
+positions:
+Birgit Steinborn*
+> Allianz SE, Munich
+> Danske Bank A/S, Denmark
+> Bang & Olufsen A/S, Denmark
+(Deputy Chairman)
+> Suez Environnement Company
+S.A., France (Chairman)
+Jim Hagemann Snabe
+Supervisory Board Member
+Date of birth: October 27, 1965
+Member since: October 1, 2013
+External positions
+Barcelona S.A., Spain
+(Deputy Chairman)
+Date of birth: December 15, 1959
+Member since: January 24, 2008
+External positions
+> International Power Ltd., U.K.
+Augsburg (Deputy Chairman)
+Chairwoman of the Central
+Works Council of Siemens AG
+Date of birth: March 26, 1960
+Member since: January 24, 2008
+Nicola Leibinger-
+Kammüller, Dr. phil.
+President and Chairwoman of
+the Managing Board of TRUMPF
+GmbH + Co. KG
+German supervisory board
+positions:
+> Axel Springer SE, Berlin
+> Deutsche Lufthansa AG,
+Cologne
+> Voith GmbH, Heidenheim
+Gérard Mestrallet
+Chairman of the Board and
+Chief Executive Officer of
+GDF SUEZ S.A.
+Date of birth: April 1, 1949
+Member since: January 23, 2013
+External positions
+Positions outside Germany:
+> Compagnie de Saint-Gobain
+S.A., France
+> Electrabel S.A., Belgium
+(Chairman)
+> GDF Suez Energy Management
+Trading CVBA, Belgium
+(Chairman)
+> GDF Suez Energie Services S.A.,
+France (Chairman)
+> GDF Suez Rassembleurs
+d'Energies SAS, France
+(Chairman)
+> Sociedad General de Aguas de
+Sibylle Wankel*
+Gerhard Cromme, Dr. iur.
+(Chairman)
+Date of birth: March 3, 1964
+Member since: April 1, 2009
+External positions
+German supervisory board
+positions:
+D.7.1.1 SUPERVISORY BOARD COMMITTEES
+Committees
+Meetings in
+fiscal 2014
+Chairman's
+Committee
+7
+Duties and responsibilities
+331
+Members as of
+September 30, 2014
+The Chairman's Committee makes proposals, in particular, regarding the
+appointment and dismissal of Managing Board members and handles
+contracts with members of the Managing Board. In preparing recommen-
+dations on the appointment of Managing Board members, the Chairman's
+Committee takes into account the candidates' professional qualifications,
+international experience and leadership qualities, the age limit specified for
+Managing Board members, the Managing Board's long-range plans for suc-
+cession as well as its diversity and, in particular, the appropriate consider-
+ation of women. The Chairman's Committee concerns itself with questions
+regarding the Company's corporate governance and prepares the resolu-
+tions to be approved by the Supervisory Board regarding the Declaration of
+Conformity with the Code - including the explanation of deviations from
+the Code - and regarding the approval of the Corporate Governance Report
+as well as the Report of the Supervisory Board to the Annual Shareholders'
+Meeting. Furthermore, the Chairman's Committee submits recommenda-
+tions to the Supervisory Board regarding the composition of the Supervisory
+Board committees and decides whether to approve contracts and business
+transactions with Managing Board members and parties related to them.
+Berthold Huber
+Birgit Steinborn
+Werner Wenning
+Compensation
+Committee
+6
+Audit
+Committee
+> Premium Aerotec GmbH,
+1 decision
+by notational
+voting using
+written
+circulations
+Additional Information
+337 | E.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+> Audi AG, Ingolstadt
+> Vaillant GmbH, Remscheid
+The Supervisory Board of Siemens AG has 20 members. As stipulated by the German Codetermination Act
+(Mitbestimmungsgesetz), half of the members represent Company shareholders, and half represent Company
+employees. The shareholder representatives were elected at the Annual Shareholders' Meeting on January 23,
+2013 (or in a by-election at the Annual Shareholders' Meeting on January 28, 2014). The employee representatives,
+whose names are marked with an asterisk (*), either were elected in accordance with the provisions of the German
+Codetermination Act on September 25, 2012, effective as of the end of the Annual Shareholders' Meeting on
+January 23, 2013, or replaced an employee representative, who had resigned/retired. The present Supervisory Board's
+term of office will expire at the conclusion of the Annual Shareholders' Meeting in 2018.
+1 Shareholders' Committee.
+As of September 30, 2014.
+247 | D.
+Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Attorney, Bavarian Regional
+Headquarters of IG Metall
+(Deputy Chairman)
+As of September 30, 2014.
+> Airbus Operations GmbH,
+Hamburg
+D. Consolidated Financial Statements
+248 D.1
+Consolidated Statements of Income
+252 D.5
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+335
+336
+How have the Company's key business
+figures developed over the past five
+years? What are the key financial dates
+for the next twelve months? How
+is the Company structured? All this
+information is available here.
+WWW.SIEMENS.COM/AR/ADDITIONAL-INFORMATION
+11E.1 Responsibility Statement
+E. Additional Information
+337
+347 | E.8 | Financial calendar
+346 | E.7 | Further information and
+information resources
+statements
+247
+345 | E.6 | Notes and forward-looking
+342 | E.4 | Company structure
+341 | E.3 | Statement of the Managing Board
+339 | E.2 | Independent Auditor's Report
+338 | E.1 | Responsibility Statement
+Additional
+Information
+E.
+344 | E.5 | Five-year summary
+To the best of our knowledge, and in accordance with the appli-
+cable reporting principles, the Consolidated Financial State-
+ments give a true and fair view of the assets, liabilities, financial
+position and profit or loss of the Group, and the Group Manage-
+ment Report, which has been combined with the Management
+2 Since October 1, 2014.
+1
+Technologies GmbH, Austria
+> Siemens W.L.L., Qatar
+Peter Y. Solmssen
+(until December 31, 2013)
+Date of birth: January 24, 1955
+First appointed: October 1, 2007
+Term originally to have expired:
+March 31, 2017
+Michael Süß, Dr. rer. pol.
+(until May 6, 2014)
+Date of birth: December 25, 1963
+First appointed: April 1, 2011
+Term originally to have expired:
+March 31, 2016
+External positions²
+German supervisory board
+positions:
+> Herrenknecht AG, Schwanau
+Ralf P. Thomas, Dr. rer. pol.
+Date of birth: March 7, 1961
+First appointed: September 18, 2013
+Term expires: September 17, 2018
+Group Company positions
+German supervisory board
+positions:
+> BSH Bosch und Siemens
+Hausgeräte GmbH, Munich
+(Deputy Chairman)
+Positions outside Germany:
+> Siemens Aktiengesellschaft
+Österreich, Austria
+> Siemens Corp., USA
+(Deputy Chairman)
+1 As of November 16, 2013.
+2 As of May 6, 2014.
+108 | A. To our Shareholders
+131 | B.
+Klaus Helmrich 1
+Siegfried Russwurm,
+Prof. Dr.-Ing.²
+Ralf P. Thomas, Dr. rer. pol.
+Joe Kaeser
+(Chairman)
+The Equity and Employee Stock Committee oversees, in particular, the
+utilization of authorized capital in connection with the issuance of employee
+stock as well as the implementation of certain capital measures. It also
+determines the scope and conditions of the share-based compensation
+components and/or compensation programs for employees and managers
+(with the exception of the Managing Board).
+6 decisions
+by notational
+voting using
+written
+circulations
+Equity and
+Employee Stock
+Committee
+Members as of
+September 30, 2014
+Until September 30, 2014.
+Duties and responsibilities
+Committee
+D.7.2.1 MANAGING BOARD COMMITTEES
+334
+Combined Management Report
+171 | C
+Corporate Governance
+Meetings in
+fiscal 2014
+> Siemens VAI Metals
+Munich, November 26, 2014
+Лиш
+Consolidated Financial Statements
+337 |E. Additional Information
+338 E.1 Responsibility Statement
+339 E.2
+344 E.5
+341 E.3
+342 E.4
+Independent Auditor's Report
+Statement of the Managing Board
+Company structure
+345 E.6
+346 E.7
+347 E.8
+Five-year summary
+Notes and forward-looking statements
+Further information and information resources
+Financial calendar
+339
+340
+REPORT ON THE GROUP MANAGEMENT REPORT
+We have audited the accompanying group management report,
+which is combined with the management report of Siemens
+Aktiengesellschaft, for the business year from October 1, 2013
+to September 30, 2014. The management of the company is
+responsible for the preparation of the group management
+report in compliance with the applicable requirements of
+German commercial law pursuant to Sec. 315a (1) HGB. We are
+required to conduct our audit in accordance with Sec. 317 (2)
+HGB and German generally accepted standards for the audit of
+the group management report promulgated by the IDW.
+Accordingly, we are required to plan and perform the audit of
+the group management report to obtain reasonable assurance
+about whether the group management report is consistent
+with the consolidated financial statements and the audit
+findings, and as a whole provides a suitable view of the Group's
+position and suitably presents the opportunities and risks of
+future development.
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
+of the group management report has not led to any reservations.
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+To our Shareholders
+108
+247
+[German Public Auditor]
+[German Public Auditor]
+Spannagl
+Wirtschaftsprüfer
+дашия
+Ernst & Young GmbH
+Wiftschaftsprüfungsgesellschaft
+Munich, November 26, 2014
+In our opinion, based on the findings of our audit of the consoli-
+dated financial statements and group management report, the
+group management report is consistent with the consolidated
+financial statements, and as a whole provides a suitable view of
+the Group's position and suitably presents the opportunities
+and risks of future development.
+Prof. Dr. Hayn
+Wirtschaftsprüfer
+Siemens Aktiengesellschaft
+The Managing Board
+In our opinion, based on the findings of our audit, the consol-
+idated financial statements comply in all material respects
+with IFRS as adopted by the EU, the supplementary require-
+ments of German commercial law pursuant to Sec. 315a (1)
+HGB and full IFRS as issued by the IASB and give a true and
+fair view of the net assets and financial position of the Group
+as at September 30, 2014 as well as the results of operations
+for the business year then ended, in accordance with these
+requirements.
+Audit Opinion
+Joe Kaeser
+P.R
+Dr. Roland Busch
+Њ Линя
+Report for Siemens Aktiengesellschaft, includes a fair review
+of the development and performance of the business and the
+position of the Group, together with a description of the ma-
+terial opportunities and risks associated with the expected
+development of the Group.
+Love
+Lisa Davis
+5. Pla
+Maus ih
+Klaus Helmrich
+Prof. Dr. Hermann Requardt
+Prof. Dr. Siegfried Russwurm
+Dr. Ralf P. Thomas
+338
+108 |A.
+131 | B.
+Corporate Governance
+We believe that the audit evidence we have obtained is suffi-
+cient and appropriate to provide a basis for our audit opinion.
+An audit involves performing audit procedures to obtain audit
+evidence about the amounts and disclosures in the consoli-
+dated financial statements. The selection of audit procedures
+depends on the auditor's professional judgment. This includes
+the assessment of the risks of material misstatement of the
+consolidated financial statements, whether due to fraud or
+error. In assessing those risks, the auditor considers the inter-
+nal control system relevant to the entity's preparation of the
+consolidated financial statements that give a true and fair view.
+The aim of this is to plan and perform audit procedures that are
+appropriate in the given circumstances, but not for the purpose
+of expressing an opinion on the effectiveness of the group's
+internal control system. An audit also includes evaluating the
+appropriateness of accounting policies used and the reason-
+ableness of accounting estimates made by management, as
+well as evaluating the overall presentation of the consolidated
+financial statements.
+and plan and perform the audit to obtain reasonable assurance
+about whether the consolidated financial statements are free
+from material misstatement.
+Our responsibility is to express an opinion on these consoli-
+dated financial statements based on our audit. We conducted
+our audit in accordance with Sec. 317 HGB and German gener-
+ally accepted standards for the audit of financial statements
+promulgated by the Institut der Wirtschaftsprüfer [Institute of
+Public Auditors in Germany] (IDW) as well as in supplementary
+compliance with International Standards on Auditing (ISA).
+Accordingly, we are required to comply with ethical requirements
+Auditor's Responsibility
+The management of Siemens Aktiengesellschaft is responsible
+for the preparation of these consolidated financial statements.
+This responsibility includes preparing these consolidated finan-
+cial statements in accordance with International Financial
+Reporting Standards (IFRS) as adopted by the European Union
+(EU), the supplementary requirements of German law pursuant
+to Sec. 315a (1) HGB ["Handelsgesetzbuch“: German Commer-
+cial Code] and full IFRS as issued by the International Account-
+ing Standards Board (IASB), to give a true and fair view of the
+net assets, financial position and results of operations of the
+group in accordance with these requirements. The company's
+management is also responsible for the internal controls that
+management determines are necessary to enable the prepa-
+ration of consolidated financial statements that are free from
+material misstatement, whether due to fraud or error.
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
+of the consolidated financial statements has not led to any
+reservations.
+Management's Responsibility for the
+Consolidated Financial Statements
+REPORT ON THE CONSOLIDATED
+FINANCIAL STATEMENTS
+To Siemens Aktiengesellschaft, Berlin and Munich
+|||E.2 Independent Auditor's Report
+To our Shareholders
+Combined Management Report
+171 | C
+We have audited the accompanying consolidated financial
+statements of Siemens Aktiengesellschaft, Berlin and Munich,
+and its subsidiaries, which comprise the consolidated state-
+ments of income, comprehensive income, financial position,
+cash flow and changes in equity, and notes to the consolidated
+financial statements for the business year from October 1, 2013
+to September 30, 2014.
+> MAN SE, Munich
+> Siemens Sanayi ve Ticaret A.Ş.,
+Turkey
+(Chairman)
+by notational
+voting using
+written
+circulations
+The Compliance Committee concerns itself, in particular, with the Com-
+pany's adherence to statutory provisions, official regulations and internal
+Company policies.
+Based on the Company's overall strategy, the Innovation and Finance
+Committee discusses, in particular, the Company's focuses of innovation
+and prepares the Supervisory Board's discussions and resolutions regard-
+ing questions relating to the Company's financial situation and structure -
+including annual planning (budget) - as well as the Company's fixed asset
+investments and its financial measures. In addition, the Innovation and
+Finance Committee has been authorized by the Supervisory Board to
+decide on the approval of transactions and measures that require Super-
+visory Board approval and have a value of less than €600 million.
+Gerhard Cromme, Dr. iur.
+(Chairman)
+Gerd von Brandenstein
+Hans Michael Gaul, Dr. iur.
+Bettina Haller
+Harald Kern
+Jim Hagemann Snabe
+Birgit Steinborn
+Sibylle Wankel
+Gerhard Cromme, Dr. iur.
+(Chairman)
+Peter Gruss, Prof. Dr. rer. nat.
+Robert Kensbock
+Harald Kern
+Jürgen Kerner
+Jim Hagemann Snabe
+Birgit Steinborn
+Werner Wenning
+Nominating
+Committee
+1
+1 decision
+by notational
+voting using
+written
+circulations
+Berthold Huber
+Birgit Steinborn
+Werner Wenning
+Gerhard Cromme, Dr. iur.
+(Chairman)
+The Mediation Committee submits proposals to the Supervisory Board in
+the event that the Supervisory Board cannot reach the two-thirds majority
+required for the appointment or dismissal of a Managing Board member.
+tion Act
+Codetermina-
+of the German
+Committee
+Section 31
+para. 3 and 5
+under Section
+0
+Mediation
+Committee,
+Hans Michael Gaul, Dr. iur.
+Nicola Leibinger-
+Kammüller, Dr. phil.
+Werner Wenning
+Gerhard Cromme, Dr. iur.
+(Chairman)
+The Nominating Committee is responsible for making recommendations
+to the Supervisory Board on suitable candidates for election as shareholder
+representatives on the Supervisory Board by the Annual Shareholders'
+Meeting.
+27 para.3 and
+Further information on corporate governance at Siemens is available at
+WWW.SIEMENS.DE/CORPORATE-GOVERNANCE
+1 decision
+4
+German supervisory board
+positions:
+Date of birth: January 22, 1969
+Member since: January 25, 2012
+External positions
+Executive Managing Board
+Member of IG Metall
+Jürgen Kerner*
+Date of birth: March 16, 1960
+Member since: January 24, 2008
+Chairman of the Siemens Europe
+Committee
+Harald Kern*
+Deputy Chairman of the Central
+Works Council of Siemens AG
+Date of birth: March 13, 1971
+Member since: January 23, 2013
+Robert Kensbock*
+6
+The Compensation Committee prepares, in particular, the proposals for
+decisions by the Supervisory Board's plenary meetings regarding the system
+of Managing Board compensation, including the implementation of this
+system in the Managing Board contracts, the definition of the targets for
+variable Managing Board compensation, the determination and review
+of the appropriateness of the total compensation of individual Managing
+Board members and the approval of the annual Compensation Report.
+Werner Wenning
+(Chairman)
+Gerhard Cromme, Dr. iur.
+Michael Diekmann
+Berthold Huber
+Robert Kensbock
+Birgit Steinborn
+The Audit Committee oversees, in particular, the accounting process and
+conducts a preliminary review of the Annual Financial Statements of
+Siemens AG, the Consolidated Financial Statements of the Siemens Group
+and the Combined Management Report. On the basis of the independent
+auditors' report on their audit of the annual financial statements, the Audit
+Committee makes, after its preliminary review, recommendations regard-
+ing Supervisory Board approval of the Annual Financial Statements of
+Siemens AG and the Consolidated Financial Statements of the Siemens
+Group. In addition to the work performed by the independent auditors, the
+Audit Committee discusses the Company's quarterly financial statements
+and half-year financial reports, which are prepared by the Managing Board,
+as well as the report on the auditors' review of the quarterly financial state-
+ments and the half-year financial report (condensed financial statements
+and interim management report). It concerns itself with the Company's risk
+monitoring system and oversees the effectiveness of the internal control
+system as this relates, in particular, to financial reporting, the risk manage-
+ment system and the internal audit system. The Audit Committee receives
+regular reports from the Internal Audit Department. It prepares the Super-
+visory Board's recommendation to the Annual Shareholders' Meeting con-
+cerning the election of the independent auditors and submits the corre-
+sponding proposal to the Supervisory Board. It awards the audit contract to
+the independent auditors elected by the Annual Shareholders' Meeting and
+monitors the independent audit of the financial statements - including, in
+particular, the auditors' independence, professional expertise and services.
+Hans Michael Gaul,
+Dr. iur. (Chairman)1
+Gerd von Brandenstein
+Gerhard Cromme, Dr. iur.
+Bettina Haller
+Robert Kensbock
+Jürgen Kerner
+Jim Hagemann Snabe
+Birgit Steinborn
+Innovation
+5
+Compliance
+Committee
+Members as of
+September 30, 2014
+Duties and responsibilities
+Meetings in
+fiscal 2014
+and Finance
+Committees
+171 C.
+Corporate Governance
+131 |B.
+332
+108 | A. To our Shareholders
+1 Fulfills the requirements of Section 100 para. 5 and Section 107 para. 4 of the German Stock Corporation Act (Aktiengesetz).
+Combined Management Report
+> Siemens Ltd., South Africa
+(Chairman)
+247
+248 D.1
+Positions outside Germany:
+> Siemens Corp., USA
+(Chairwoman)
+Klaus Helmrich
+Date of birth: May 24, 1958
+First appointed: April 1, 2011
+Term expires: March 31, 2016
+External positions
+German supervisory board
+positions:
+> EOS Holding AG, Krailling
+> inpro Innovationsgesellschaft
+für fortgeschrittene Produk-
+tionssysteme in der Fahrzeug-
+industrie mbH, Berlin
+Group Company positions
+German supervisory board
+positions:
+> BSH Bosch und Siemens
+Hausgeräte GmbH, Munich
+Barbara Kux
+(until November 16, 2013)
+Date of birth: February 26, 1954
+First appointed: November 17, 2008
+Term expired: November 16, 2013
+External positions¹
+German supervisory board
+positions:
+> Henkel AG & Co. KGaA,
+Düsseldorf
+Positions outside Germany:
+> Firmenich International SA,
+Switzerland
+> Total S.A., France
+Hermann Requardt,
+Prof. Dr. phil. nat.
+> Siemens Holdings plc, U.K.
+> Siemens Aktiengesellschaft
+Österreich, Austria (Chairman)
+> BSH Bosch und Siemens
+Hausgeräte GmbH, Munich
+Positions outside Germany:
+> Siemens AB, Sweden
+(Chairman)
+Group Company positions
+German supervisory board
+positions:
+> Deutsche Messe AG, Hanover
+German supervisory board
+positions:
+Group Company positions
+Date of birth: June 27, 1963
+First appointed: January 1, 2008
+Term expires: March 31, 2017
+External positions
+> Siemens S.A., Colombia
+(Chairman)
+> Siemens Japan K.K., Japan
+(Chairman)
+> Siemens Japan Holding K.K.,
+Japan (Chairman)
+> Software AG, Darmstadt
+Group Company positions
+Positions outside Germany:
+German supervisory board
+positions:
+Date of birth: February 11, 1955
+First appointed: May 1, 2006
+Term expires: March 31, 2016
+External positions
+Siegfried Russwurm,
+Prof. Dr.-Ing.
+D. Consolidated Financial Statements
+Term expires: July 31, 2019
+External positions
+Positions outside Germany:
+> Spectris plc, U.K.
+Date of birth: October 15, 1963
+249 D.2
+250 D.3
+251 D.4
+Consolidated Statements of Income
+Consolidated Statements of Comprehensive Income
+Consolidated Statements of Financial Position
+Consolidated Statements of Cash Flows
+252 D.5
+254 D.6
+330 D.7
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+Supervisory Board and Managing Board
+337 | E.
+Additional Information
+333
+D.7.2 Managing Board
+Joe Kaeser
+President and Chief Executive
+Officer of Siemens AG
+Date of birth: June 23, 1957
+First appointed: May 1, 2006
+Term expires: July 31, 2018
+External positions
+German supervisory board
+positions:
+> Allianz Deutschland AG, Munich
+> Daimler AG, Stuttgart
+Positions outside Germany:
+> NXP Semiconductors B.V.,
+Lisa Davis
+Switzerland (Chairman)
+> Siemens Schweiz AG,
+> Siemens Ltd., India
+> Siemens Ltd., China (Chairman)
+Positions outside Germany:
+First appointed: August 1, 2014
+Group Company positions
+> Osram GmbH, Munich
+(Deputy Chairman)
+Positions outside Germany:
+> OSRAM Licht AG, Munich
+(Deputy Chairman)
+German supervisory board
+positions:
+Roland Busch, Dr. rer. nat.
+Date of birth: November 22, 1964
+First appointed: April 1, 2011
+Term expires: March 31, 2016
+External positions
+Group Company positions
+Positions outside Germany:
+> Siemens Ltd., India
+Netherlands
+> Atos SE, France
+The Supervisory Board of Siemens AG has established seven
+standing committees. Information on their activities in fiscal
+2014 is provided in → A.3 REPORT OF THE SUPERVISORY BOARD On
+pages 118-125 of this Annual Report.
+Asia, Australia
+108 | A. To our Shareholders
+7,188
+9,801
+9,265
+9,324
+in millions of €
+5,560
+8,342
+4,995
+10,663
+12,008
+in millions of €
+17,497
+14,280
+16,880
+9,292
+18,509
+in millions of €
+in %
+30
+FY 2014
+102,791
+104,210
+108,251
+101,936
+104,879
+31,514
+in millions of €
+31
+29
+29,222
+32,271
+31,424
+28,625
+28
+28
+19,326
+in millions of €
+19,913
+Current liabilities
+50,179
+52,540
+52,128
+46,937
+48,076
+in millions of €
+in millions of €
+FY 2010
+FY 2011
+FY 2012
+FY 2013
+FY 2014
+Assets, liabilities and equity
+Current assets
+36,598
+37,868
+42,627
+17,940
+20,707
+20,453
+20,947
+in millions of €
+Cash flows¹
+Total assets
+as a percentage of total assets
+Equity (including non-controlling interests)
+Post-employment benefits
+Net debt²
+Long-term debt
+Debt
+40,602
+43,549
+FY 2013
+FY 2012
+FY 2011
+FY 2010
+5,399
+in millions of €
+Free cash flow - continuing operations
+7,109
+5,282
+4,700
+5,378
+5,328
+in millions of €
+Free cash flow - continuing and discontinued operations
+4,023
+(1,715)
+(1,561)
+(1,717)
+5,201
+4,871
+5,889
+6,781
+FY 2012
+FY 2013
+FY 2014
+316
+FY 2010
+FY 2011
+341
+FY 2012
+352
+348
+343
+in thousands
+Stock market information
+Employees (September 30)
+FY 2013
+FY 2014
+Employees¹ - continuing operations
+(1,199)
+3,881
+in millions of €
+(2,735)
+Cash flows from investing activities – continuing operations
+Additions to intangible assets and property,
+2,454
+2,379
+2,625
+2,735
+2,406
+in millions of €
+in millions of €
+7,979
+6,992
+7,186
+7,230
+in millions of €
+Cash flows from operating activities - continuing operations
+Amortization, depreciation and impairments³
+8,640
+(4,364)
+(4,759)
+(4,906)
+(5,591)
+(3,017)
+(3,715)
+(4,485)
+in millions of €
+Cash flows from financing activities - continuing operations
+(1,859)
+(2,091)
+(2,121)
+(1,808)
+(1,831)
+in millions of €
+plant and equipment
+(2,230)
+(2,835)
+Change in cash and cash equivalents
+FY 2011
+5,899
+4,409
+Digital Factory
+Anton Sebastian Huber
+Process Industries
+and Drives
+Peter Herweck
+Global Services
+Hannes Apitzsch
+Dietmar Siersdorfer
+Healthcare
+Hermann Requardt
+Roland Chalons-Browne
+247
+Consolidated Financial Statements
+337 | E. Additional Information
+338 E.1 Responsibility Statement
+344 E.5
+Financial Services
+Five-year summary
+Saudi Arabia | Arja Talakar
+United Arab Emirates |
+Commonwealth of
+Independent States,
+Middle East
+| Hermann Requardt |
+| Siegfried Russwurm |
+Ralf P. Thomas
+Labor Director
+Human Resources
+Siegfried Russwurm
+Corporate Technology
+Siegfried Russwurm
+Russian Federation | Dietrich Möller
+Controlling and Finance
+Ralf P. Thomas
+Austria | Wolfgang Hesoun
+Belgium | André Bouffioux
+Czech Republic | Eduard Palisek
+France | Christophe de Maistre
+Germany | Rudolf Martin Siegers
+Italy | Federico Vilfredo Golla
+Netherlands | Ab van der Touw
+Poland | Peter Baudrexl
+Portugal | Carlos Melo Ribeiro
+South Africa | Sabine Dall'Omo
+Spain | Rosa María García
+Sweden | Ulf Troedsson
+Switzerland | Siegfried Gerlach
+Turkey | Hüseyin Gelis
+United Kingdom | Jürgen Maier
+Europe, Africa
+342 E.4
+339 E.2 Independent Auditor's Report
+341 E.3 Statement of the Managing Board
+Company structure
+345 E.6
+Gross profit
+in millions of €
+20,755
+20,135
+21,128
+21,160
+65,067
+19,045
+in millions of €
+5,400
+4,179
+4,565
+6,469
+3,991
+Income from continuing operations
+69,607
+74,734
+73,445
+Notes and forward-looking statements
+346 E.7
+347 E.8
+Further information and information resources
+Financial calendar
+343
+||| E.5 Five-year summary
+Revenue and profit¹
+Revenue
+FY 2014
+FY 2013
+FY 2012
+FY 2011
+FY 2010
+in millions of €
+71,920
+Klaus Helmrich
+Combined Management Report
+171 | C
+Corporate Governance
+Consolidated Financial Statements
+337 |E. Additional Information
+338 E.1 Responsibility Statement
+339 E.2
+341 E.3
+344 E.5
+342 E.4
+Independent Auditor's Report
+Statement of the Managing Board
+Company structure
+247
+345 E.6
+347 E.8
+Klaus Helmrich
+Dr. Ralf P. Thomas
+Five-year summary
+Notes and forward-looking statements
+Further information and information resources
+Financial calendar
+341
+346 E.7
+Prof. Dr. Siegfried Russwurm
+S.
+She
+Pla
+5,507
+||| E.3 Statement of the Managing Board
+The Managing Board of Siemens Aktiengesellschaft is respon-
+sible for preparing the Consolidated Financial Statements and
+the Group Management Report. The Consolidated Financial
+Statements have been prepared in accordance with Interna-
+tional Financial Reporting Standards (IFRS), as adopted by the
+European Union as well as with the additional requirements set
+forth in Section 315a (1) of the German Commercial Code (Han-
+delsgesetzbuch). The financial statements are also in accor-
+dance with IFRS as issued by the International Accounting Stan-
+dards Board (IASB). The Group Management Report is consistent
+with the Consolidated Financial Statements and is combined
+with the Management Report of Siemens Aktiengesellschaft.
+Siemens employs extensive internal controls, company-wide
+uniform reporting guidelines and additional measures, includ-
+ing employee training and continuing education, with the
+intention that the Consolidated Financial Statements and the
+Group Management Report are conducted correctly and in
+accordance with the applicable legal requirements. Members
+of the management of the Company Units have confirmed to us
+the correctness of the financial data they have reported to
+Siemens' corporate headquarters and the effectiveness of the
+related control systems. Compliance with the guidelines as well
+as the reliability and effectiveness of the control systems are
+continuously examined by Internal Corporate Audit throughout
+the Siemens Group. Our risk management system complies
+with the requirements of the German Stock Corporation Act
+(Aktiengesetz). Our risk management system is designed to
+enable the Managing Board to recognize potential risks early
+on and initiate timely countermeasures.
+In accordance with the resolution adopted at the Annual Share-
+holders' Meeting, Ernst & Young GmbH Wirtschaftsprüfungs-
+gesellschaft has audited the Consolidated Financial Statements
+and Group Management Report, which is combined with the
+Management Report of Siemens Aktiengesellschaft, and issued
+an unqualified opinion. Together with the independent audi-
+tors, the Supervisory Board has thoroughly examined the
+Consolidated Financial Statements, the Group Management
+Report, and the Independent Auditors' Report. The result of this
+examination is included in the Report of the Supervisory Board
+(→ A.3 OF THIS ANNUAL REPORT).
+Munich, December 3, 2014
+The Managing Board
+Кии
+Joe Kaeser
+P.R
+Dr. Roland Busch
+Њ Линя
+Prof. Dr. Hermann Requardt
+Lisa Davis
+|||E.4 Company structure
+4,282
+| | | Managing Board
+of Siemens AG
+Chief Executive Officer
+Energy Management
+Ralf Christian | Jan Mrosik
+Building Technologies
+Matthias Rebellius
+Mobility
+Jochen Eickholt
+Power and Gas
+Roland Fischer
+Wind Power
+and Renewables
+Markus Tacke
+Separately managed
+business
+Power Generation
+Services
+As of January 1, 2015.
+The members of the Supervisory Board are listed in
+→ D.7 SUPERVISORY BOARD AND MANAGING BOARD, pages 330-331.
+108 | A. To our Shareholders
+342
+131 | B.
+Randy Zwirn
+| | | Divisions,
+Brazil | Paulo Ricardo Stark
+Canada | Robert Hardt
+Colombia | Daniel Fernández
+Mexico | Louise Koopman Goeser
+United States | Eric Spiegel
+Americas
+| | | Corporate Core
+Corporate Development
+Joe Kaeser
+Governance & Markets
+Mariel von Schumann
+Communications and
+Government Affairs
+Stephan Heimbach
+Legal and Compliance
+Andreas Christian Hoffmann
+| | | Corporate Services
+|| | Regions
+|
+Roland Busch
+Lisa Davis
+Australia | Jeffery Connolly
+China | Lothar Herrmann
+India | Sunil Mathur
+Indonesia | Josef Winter
+Japan | Junichi Obata
+Republic of Korea | Jongkap Kim
+Singapore | Armin Bruck
+Joe Kaeser
+President and
+Net income
+FY 2010
+in €
+Wittelsbacherplatz 2
+Siemens AG
+of this Annual Report is available from:
+Address
+Further information on the contents
+E.7 Further information and information resources
+345
+80333 Munich
+Five-year summary
+Notes and forward-looking statements
+Further information and information resources
+Financial calendar
+346 E.7
+345 E.6
+339 E.2 Independent Auditor's Report
+341 E.3 Statement of the Managing Board
+Company structure
+342 E.4
+344 E.5
+338 E.1 Responsibility Statement
+347 E.8
+337 | E. Additional Information
+Germany
+E-mail
+Order no. AR2014-E
+ORDER-ANNUALREPORT
+HTTPS://INTRANET.SIEMENS.COM/
+English
+German
+Intranet
+Siemens employees may obtain copies at:
+Copies of the Annual Report can be ordered at:
+siemens@bek-gmbh.de
+investorrelations@siemens.com
+E-mail
+Fax
+Phone
+WWW.SIEMENS.COM/ORDER-ANNUALREPORT
++49 7237-1736
+Fax
+Internet
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
++49 89 636-32830 (Investor Relations)
+press@siemens.com
+Consolidated Financial Statements
+247
+For technical reasons, there may be differences between the
+accounting records appearing in this document and those
+published pursuant to legal requirements.
+A+
+A+
+A+
+A+
+Aa3
+A+
+Aa3
+Moody's Investors Service
+Aa3
+Standard & Poor's Ratings Services
+67,351
+914
+914
+59,554
+881
+66,455
+75,078
+78,823
+Credit rating of long-term debt
+A1
+A1
+1 Regarding activities classified as discontinued operations,
+prior years are presented on a comparable basis.
+This document is an English language translation of the
+German document. In case of discrepancies, the German
+language document is the sole authoritative and universally
+valid version.
+Due to rounding, numbers presented throughout this and other
+documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This document includes - in IFRS not clearly defined - supple-
+mental financial measures that are or may be non-GAAP finan-
+cial measures. These supplemental financial measures should
+not be viewed in isolation or as alternatives to measures of
+Siemens' net assets and financial positions or results of opera-
+tions as presented in accordance with IFRS in its Consolidated
+Financial Statements. Other companies that report or describe
+similarly titled financial measures may calculate them differ-
+ently.
+This document contains statements related to our future busi-
+ness and financial performance and future events or develop-
+ments involving Siemens that may constitute forward-looking
+statements. These statements may be identified by words such
+as "expect," "look forward to," "anticipate" "intend,” “plan,”
+"believe," "seek," "estimate," "will," "project" or words of similar
+meaning. We may also make forward-looking statements in
+other reports, in presentations, in material delivered to share-
+holders and in press releases. In addition, our representatives
+may from time to time make oral forward-looking statements.
+Such statements are based on the current expectations and
+certain assumptions of Siemens' management, of which many
+are beyond Siemens' control. These are subject to a number of
+risks, uncertainties and factors, including, but not limited to
+those described in disclosures, in particular in the chapter Risks
+in this Annual Report. Should one or more of these risks or
+uncertainties materialize, or should underlying expectations
+not occur or assumptions prove incorrect, actual results, per-
+formance or achievements of Siemens may (negatively or
+positively) vary materially from those described explicitly or
+implicitly in the relevant forward-looking statement. Siemens
+neither intends, nor assumes any obligation, to update or
+revise these forward-looking statements in light of develop-
+ments which differ from those anticipated.
+|| | E.6 Notes and forward-looking statements
+344
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+4 To be proposed to the Annual Shareholders' Meeting.
+5 On the basis of outstanding shares.
+amortization and impairments of intangible assets, net
+of reversals of impairment.
+3 Amortization, depreciation and impairments includes
+depreciation and impairments of property, plant and
+equipment, net of reversals of impairments as well as
+comprises cash and cash equivalents as well as available-
+for-sale financial assets (current).
+2 Net debt results from total debt less total liquidity. Total
+debt comprises short-term debt and current maturities of
+long-term debt as well as long-term debt. Total liquidity
+Order no. JB2014-D
+in millions of €
+Employees should include their postal address and complete
+order data (Org-ID and cost center information) when ordering.
+The Siemens Annual Report for 2014 is available online at:
+January
+2016
+26
+2015
+Third-quarter
+financial report
+July
+2015
+30
+Annual Shareholders'
+Meeting for fiscal 2015
+November
+12 Preliminary figures
+2015
+May
+Second-quarter
+financial report
+7
+WWW.SIEMENS.COM/FINANCIAL-CALENDAR
+for fiscal 2015
+1 Provisional. Updates will be published at:
+247
+337 |E. Additional Information
+Order no. AR2014-E
+siemens.com/annual-report
+347
+Notes and forward-looking statements
+Further information and information resources
+Financial calendar
+Five-year summary
+347 E.8
+Consolidated Financial Statements
+346 E.7
+Independent Auditor's Report
+Statement of the Managing Board
+Company structure
+342 E.4
+341 E.3
+339 E.2
+344 E.5
+338 E.1 Responsibility Statement
+345 E.6
+Ex-dividend date
+January
+2015
+28
+The Magazine for Research and Innovation is available at:
+The Siemens publication Pictures of the Future:
+Further information on research, development
+and innovation at Siemens is available at:
+WWW.SIEMENS.COM/INNOVATION
+WWW.SIEMENS.COM/FINANCIAL-REPORTS
+In addition to our Annual Report at the end of each fiscal year,
+we publish quarterly consolidated financial statements in the
+form of press releases. Conference calls and press conferences
+supplement these publications, giving journalists and analysts
+further opportunities to review developments in our businesses.
+Financial reporting for the first three quarters is complemented
+by interim reports and shareholder letters for private investors,
+in particular. All these financial reports are available at:
+Layout/Production
+hw.design GmbH
+WWW.SIEMENS.COM/POF
+Controlling and Finance
+Dr. Marcus Mayer
+Concept and coordination
+WWW.SIEMENS.COM/SUSTAINABILITY-FIGURES
+WWW.SIEMENS.COM/SUSTAINABILITY
+The Annual Report combines our annual and sustainability
+reporting to provide an integrated overview of our Company's
+key topics. Further information on our commitment to
+sustainability and additional sustainability-related indicators
+are available at:
+Combined reporting
+WWW.SIEMENS.COM/ANNUAL-REPORT
+Communications and Government Affairs
+Dr. Johannes von Karczewski
+Annette Häfelinger
+Copyright notice
+Designations used in this document may be trademarks,
+the use of which by third parties for their own purposes
+could violate the rights of the trademark owners.
+Ecofriendly production
+Meeting for fiscal 2014
+Annual Shareholders'
+2015
+financial report
+January
+27 First-quarter
+|||E.8 Financial calendar¹
+346
+Combined Management Report
+171 | C
+Corporate Governance
+131 | B.
+108 | A. To our Shareholders
+© 2014 by Siemens AG, Berlin and Munich
+This Annual Report has been produced using chlorine-free
+bleached materials and climate-neutral production processes.
+In accordance with the guidelines of the Forest Stewardship
+Council (FSC), all the paper used in this Annual Report comes
+from controlled sources such as sustainable forests. The mill
+in which the paper was produced is certified in accordance
+with ISO 9001, 14001 and 18001 guidelines. It uses only
+chlorine-free bleached pulps (ECF), which are subsequently
+processed without the use of elemental chlorine.
+Additional information
+Basic earnings per share - continuing and discontinued operations
+Market capitalization5
+881
+7.12
+4.37
+Dividend per share
+in €
+3.304
+3.00
+3.00
+3.00
+2.70
+5.01
+Siemens stock price (Xetra closing price)
+Low
+Fiscal year-end
+in €
+101.35
+90.33
+79.71
+99.38
+79.37
+in €
+High
+88.71
+4.76
+in €
+6.37
+5.08
+4.74
+6.55
+4.28
+Basic earnings per share - continuing operations¹
+in €
+6.24
+4.81
+6.18
+5.06
+4.41
+Diluted earnings per share - continuing and discontinued operations
+in €
+6.31
+5.03
+4.69
+6.48
+4.23
+Diluted earnings per share - continuing operations¹
+7.19
+881
+in millions of €
+in €
+76.00
+63.06
+64.45
+60.20
+94.37
+89.06
+77.61
+68.12
+77.43
+Compared to DAX®
+in %-points
+(0.92)
+Siemens stock price performance year-over-year
+(12.57)
+in millions
+Number of shares issued (September 30)
+18.53
+3.67
+(3.01)
+2.55
+(5.16)
+in %-points
+Compared to MSCI World
+15.53
+2.17
+(2.89)
+Power transmission, power distribution and smart grid |||||||
+30
+ASTER
+Two-thirds of Brazil is
+covered by the power grid.
+5 million km²
+|| | Brazil's social and economic structure has been transformed in the past
+few years, strengthening the country's domestic market and increasing the
+supply of and demand for goods and services. To prevent power blackouts,
+which can take a heavy toll on a nation's infrastructure and hamper its
+economic development, Brazil's booming market requires a robust power
+grid. By implementing a centrally managed smart grid solution, Siemens
+and its partners are helping make the country's power grid more reliable,
+flexible and efficient. The solution, which is enabling Brazil to close the
+gap to the leaders in infrastructure technology, has placed the nation in the
+vanguard of a development that is set to spread to many other countries
+around the world in the years ahead.
+Everything under
+control - Thanks to
+reliable power grids
+Power generation | Power transmission, power distribution and smart grid Energy application | Imaging and in-vitro diagnostics
+29
+the country's electricity.
+Textile production using on-site power generation: in Mexico, our SGT-750 is supplying power
+to the factories of a textile manufacturer - one example of a decentralized power supply.
+SGT-750 | Altamira, Mexico
+SIEMENS
+Doubly efficient: in Lubmin, our SGT-750 feeds electricity into the local power
+grid and safeguards Europe's gas supply with its exhaust heat.
+SGT-750 | Lubmin, Germany
+The SGT-750 sees the light of day: in November 2010, the benefits of our SGT-750 gas turbines
+were presented to the general public for the very first time in Finspång, Sweden.
+SGT-750 | Finspång, Sweden
+4:33 PM
+38
+100 %
+The grid supplies nearly all
+37
+Generating value with innovative solutions | Brazil's
+smart grid has already convincingly demonstrated its value:
+the resources available to the grid are now being used more
+flexibly and efficiently. REGER situational awareness tools
+are reducing the risk of blackouts - an important advantage
+not only for car manufacturers. However, if outages do occur,
+And if one regional control center becomes very busy, another
+can always back it up. The new energy management system
+utilizes available resources better than the heterogeneous
+grid monitoring system that preceded it - thereby reducing
+operating costs and making Brazil's energy system more
+reliable, more flexible and more efficient.
+Monitoring the Brazilian grid | One of Brazil's four
+regional control centers is located in Rio de Janeiro. Respon-
+sible for the southeast region, the center monitors data points
+from the country's most developed area - which accounts
+for around 80% of Brazil's energy consumption. Monitoring
+and control systems support all the grid's operating functions.
+Power transmission, power distribution and smart grid |||||||
+34
+33
+in real time, the grid adapts more effectively to variations
+in demand and makes more intelligent use of available
+resources. REGER has been a major success, as represen-
+tatives of ONS, CEPEL and Siemens can confirm: Carlos
+Adolfo de Souza Pereira of Siemens, Albert Melo of CEPEL,
+Guilherme Vieira de Mendonça of Siemens and Hermes Chipp
+of ONS (from left to right).
+"smart grid." Monitoring and controlling power transmission
+A grid built on experience | In 2009, a consortium com-
+prising Siemens and CEPEL, the research branch of the
+Eletrobras Group, was selected by ONS to develop a state-of-
+the-art energy management system. Known as REGER, the
+system is now monitoring and controlling Brazil's power
+grid. Leveraging its wide-ranging experience in installing
+similar systems worldwide, Siemens cooperated with CEPEL
+to develop an intelligent power transmission solution or
+General Director of ONS
+Hermes Chipp,
+"Our new system places the
+country in the global van-
+guard of energy management
+technology - thanks to
+the close cooperation and
+outstanding competence
+of Siemens, CEPEL and ONS."
+Albert Melo,
+General Director of CEPEL
+"The combined expertise of
+CEPEL and Siemens, plus the
+mutual trust and respect
+among all partners, were key
+to the project's major success.”
+from hydropower plants. Monitoring this huge and complex
+system is the role of ONS, Brazil's national grid operator. As
+part of a strategic plan, ONS invested in a unique solution to
+increase the reliability and flexibility of the power grid and
+avoid the risk of blackouts and faults.
+Reliable power is a prerequisite for growth | Brazil's
+power grid is a system of superlatives. Its more than 100,000
+kilometers of high-voltage lines can transport over 120 giga-
+watts of electricity - compared to around 65 gigawatts at the
+turn of the century. In addition, around 80% of the country's
+electricity comes from renewable energy sources, mainly
+Power transmission, power distribution and smart grid |||||||
+32
+31
+wwwwwwww
+Total grid capacity
+> 120 gigawatts
+Adaptability is a matter of intelligence | Brazil's grid
+operators face a huge challenge: ensuring the reliable and
+economical transport of energy over great distances from
+many different parts of the country. Roughly 80% of Brazil's
+electricity is currently generated by hydropower plants, of
+which there are now more than 1,100 in the country. To meet
+the nation's growing energy requirements, the government
+is planning to build up to 50 additional hydropower plants
+by 2020. Since rainfall volumes are not always constant,
+however, the amount of electricity supplied by hydropower
+is subject to natural fluctuations. Declines must be compen-
+sated for in real time. Grid operators also have to plan for
+foreseeable demand peaks - at midday, for example, when
+large numbers of air conditioners are switched on - and
+make additional power plant capacity available as quickly
+as possible.
+35
+Supply regions
+PO
+maintenance. To safeguard the grid's long-term performance,
+Siemens and CEPEL have pledged to keep the hardware and
+software up-to-date, which is made easier thanks to the use
+of evergreen technology. Their ongoing partnership ensures
+that Brazil's smart grid will always operate reliably through-
+out its entire lifecycle.
+Always up-to-date | Brazil's power grid covers around five
+million square kilometers or about two-thirds of the country
+and supplies 97% of the nation's electricity requirements.
+Developed by Siemens and CEPEL, the proven hardware and
+software that control and monitor the grid combine high
+performance with outstanding reliability while minimizing
+36
+South Regional
+Operations Center
+Florianópolis
+Thermal power plant
+Hydro power plans
+Wind power plant
+Nuclear power plant
+the causes can be identified, impacts minimized and power
+restored much faster than ever before. And smart grids hold
+even more potential for the future. They're a prerequisite for
+making power grids more intelligent and thus simplifying
+the management and control of tomorrow's energy flows.
+Power transmission, power distribution and smart grid |||||||
+Rio de Janeiro
+Southeast Regional
+Operations Center a
+Northeast Regional
+Operations Center
+Recife
+8.5 million km²
+Area
+202 million
+Population
+National Control Center and
+Northwest Regional Operations Center
+Brasilia
+97%
+Puwer Grid
+Apprentice
+Europeans@Siemens
+Georgia Davari
+48
+The development of intelligent grids is one of the key challenges of the future
+for the global energy industry. For the first time, the unilateral flow of energy is
+being transformed into a multidimensional exchange of energy and information.
+Intelligent and networked energy systems are complex - not only in design, but
+also in operation. But there's also a payoff: the systems offer far more than just
+a failsafe power supply. Advanced Smart Metering solutions make it possible,
+for example, to balance generation and consumption more closely while manag-
+ing - and not merely reacting to - the demand for power. They also enable grid
+operators to provide pricing incentives to customers who save electricity during
+periods of high demand or shift their consumption to off-peak periods. The advan-
+tages - flattened demand peaks and improved customer behavior - enhance
+energy efficiency, particularly for decentralized power plants and large-scale
+consumers, while ultimately making a further active contribution to environmen-
+tal protection by increasing the share of renewables.
+The amount of power being consumed and
+generated worldwide is continually increas-
+ing. The share of electricity in the energy mix
+is on the rise, as is the percentage of power
+being produced from renewable, decentral-
+ized sources. The greatly fluctuating feed-in
+from renewables is a further burden for grids
+that are already overloaded. Leveraging
+its worldwide experience in designing and
+operating grids, Siemens develops intelligent
+solutions that better integrate power grids
+under such conditions and make them smarter.
+An IT revolution has begun in the area of
+power grids: information and communica-
+tion technologies are boosting security of
+supply and enhancing the efficiency of grid
+infrastructure operations. At the same time,
+grid control software and company software
+are becoming increasingly integrated,
+opening up new business models for utili-
+ties. Siemens offers the energy industry a
+complete range of products, solutions and
+services from a single source - from grid
+protection, automation, planning, control,
+monitoring and diagnostics systems to
+products and turnkey solutions.
+39
+A culture can't be dictated or imposed:
+a culture must be lived. All around the world,
+we want to foster a culture that appeals
+to the commitment, creative drive and
+entrepreneurial spirit of every individual -
+in short, an ownership culture.
+Intelligent grids: the key to saving electricity
+40
+Our culture
+42
+| | | | | | | |
+Our culture
+| | | | | | | | |
+|| | Culture makes the difference
+Even the best strategy can't succeed unless it's supported by
+a strong culture. That's why we at Siemens live and foster an
+ownership culture - a culture that encourages every indi-
+vidual in our Company to give his or her best in his or her
+position in order to help build Siemens' long-term success.
+40
+REGER is one of the safest, most advanced and most reliable systems implemented
+to date. Brazil has thus closed the gap to the world's leading industrialized nations
+and paved the way for the ongoing growth of its economy and infrastructure.
+Initial planning for the new system in Brazil began in 2009. In 2013, the country's
+national grid operator, ONS, commissioned the project. Known as REGER, the
+system integrates five energy management systems as well as four regional oper-
+ating centers into a nationwide power grid.
+The transformation of Brazil's power system into a smart grid has been driven
+primarily by a consortium comprising Brazil's Electrical Energy Research Center
+(CEPEL) and Siemens. Our Company was selected as a partner for the project on
+the basis of its virtually unparalleled experience in designing and implementing
+smart grid applications worldwide.
+47
+Ownership culture is an asset as well as
+a prerequisite for our global success.
+Enituxia Las.
+Пазковна
+προϋπόθεση
+Cal
+στοιχείο, καθώς
+Eva
+eiva
+Las notiekos
+Siuos
+Перошенало
+Ja Tuv
+Our culture
+|||||
+||
+|| |
+Smart grids are being implemented or planned world-
+wide as an energy-efficient, ecofriendly solution for the
+reliable supply of power. This complex undertaking
+requires new strategies and partnerships, innovative
+technologies and tailor-made solutions. As one of the
+world's largest providers in the industry, Siemens offers
+a comprehensive portfolio of products, solutions and
+services that support energy producers, grid operators
+and power utilities.
+A smart grid for Brazil
+We've asked employees to explain what they understand by
+an ownership culture. You'll meet some of them on the pages
+that follow.
+| | ||||||||||
+Acting entrepreneurially
+|||||||||| │││ 43
+| | | | | ||||||||
+Our culture
+Jag, tillsammans med min grupp, arbetar hårt och
+målinriktat med att underlätta arbetsbördan
+för kollegor som tar över där vi slutar.
+Together with my team, I work hard and with dedication to ease the
+workload for the colleagues who take over where we've left off.
+Rickard Olsson
+Workshop Test Manager
+Our culture
+Our culture
+||||||||||
+For me, Ownership Culture means that everyone in
+the company feels they have the ability and the
+opportunity to rea make a difference and contribut
+zally
+to the success of fiemens
+is elicowaged to do so.
+And that
+союдоис
+Janina Kugel
+Chief Diversity Officer
+Head of HR People & Leadership
+46
+45
+| | | | | | || |
+Mariel von Schumann
+Always act as
+act as 
+if it were
+your own Company.
+Head of Governance & Markets
+Joe Kaeser
+President and CEO
+of Siemens AG
+44
+「企業にとってのベストは何かを
+に念頭に、自分のベストを尽くすこ
+とへの責任とコミットメントを、誠
+実に表したい」
+It is genuinely demonstrating commitment and responsibility
+to do my best and what is best for the Company.
+Our culture
+Human Resources Manager
+| | | | | | | |
+Our culture
+|||||| | | | |
+Ownership culture for me means to apply the level
+withere
+of performance and zigor to every ochon you to he
+si) you would take them for your own company.
+as
+Lena Ikejiri de Medeiros
+| || | || | || | || |
+Oil & Gas
+Our culture
+| | | | | | |||||||
+50
+49
+||||||||||
+General Manager
+Rickard Olsson is a workshop test manager at our Siemens
+Industrial Turbomachinery AB site in Finspång, a town in the
+Swedish province of Östergötland. Once famous for its cannon
+production, the locality now pursues peaceful activities, build-
+ing the most modern and efficient gas turbine in its class.
+Rickard looks back on many years of experience in this field.
+He started his career as a trainee, followed by on-site assembly
+and commissioning work. Before assuming his current duties,
+he held various positions in a transfer project in the Middle
+East and worked as a warranty engineer in Europe.
+a culture for the people around me that will motivate them
+to do their best.
+For me, ownership culture is having both feet on the ground,
+knowing the local context like the back of my hand and creating
+سيمينز جي حويني
+حد الشعور بالانتماء الكلي لعملك ؟
+والمشايرة الجادة والعطاء المستمر من الجميع للوصول للكمان
+Our culture
+| | | ||||||||||
+||| Ownership culture
+Hamad Al Khayyat
+It's not just strategy that makes the difference; it's also
+a company's culture, its values and what it stands for.
+Rickard Olsson
+Finspång, Sweden
+Values
+E
+ser automotivado pela melhoria
+continua para
+o sucesso sustentavel
+Ownership culture is being self-motivated by continuous
+improvement for sustainable success, whatever your position is.
+você ocupa.
+Juliana Furlanetto Odoni
+Sales Support Manager
+54 | | | |||||||||| Our culture |||||||||||│
+For me, Ownership Culture is my personal responsibility to make
+intelligent business decisions and act in a manner that generates
+positive impact for our company and our customers, partriers and
+shareholders.
+Devina Pasta
+Corporate Strategies
+PERSONAL OWNERSHIP SCREAMS, "I CARE!"
+FROM WITHIN; AND WHEN ALL TEAM MEMBERS
+TRULY CARE, SUCCESS USUALLY FOLLOWS.
+A
+Michael Cheng
+Senior Manager
+Engineering for Angiography
+Our culture
+55
+56
+| | | |||||||||| Our culture ||||
+53
+Crear
+Our culture |||||||||||
+Electrician
+Equity
+Owners care for each individual
+We strive for a people-oriented approach that values and clearly fosters diversity
+of experience and expertise. If this is reflected in all that we do, we'll improve the
+performance of our Company.
+Ownership culture is based on our Company values
+If everyone in the Company acts responsibly, achieves excellent results and is
+innovative, they will personally contribute to the sustainable success of Siemens.
+Responsible, excellent, innovative – these values are the foundation of our
+ownership culture.
+Owners identify themselves fully with Siemens
+We strongly believe that employee shareholders act responsibly and are oriented to
+the long term when they directly participate in their Company's success. That's why
+the equity culture is an integral part of our ownership culture. → see PAGE 63
+51
+62
+52
+Our culture
+Var en förebild och följ Säkra
+rutiner för
+en
+Säkrare
+Be a role model and follow safe routines for a safer future.
+framtid.
+|
+Entrepreneurial behavior should be the standard and foundation for how we act
+at Siemens. This applies to each individual in the Company - since only then can
+behaviors constantly evolve and improve.
+SIEMENS
+Jesper Rönnbäck
+I
+у
+independentemente do cargo que
+segnifica para mi ca propia avetura del trabajo.
+After graduating with a degree in business administration and
+specializing in HR, Lena Ikejiri de Medeiros joined Siemens in 1996
+as an intern and has worked in human resources with passion ever
+since. Lena's core competencies are employee and leadership develop-
+ment, succession planning and learning – the areas for which she's
+currently responsible at Siemens Brazil. Drawing on two cultural her-
+itages, Brazilian and Japanese, Lena lives both cultures' values with
+great enthusiasm. She's further enhanced her intercultural capabilities
+by working in a variety of Latin American countries.
+Mariel von Schumann
+Munich, Germany
+|
+Mariel von Schumann joined Siemens in 1999. After serving
+the Company in various capacities, she was appointed head of
+Governance & Markets in November 2013. In her current func-
+tion, she combines internal management of governance topics
+with the external view from the capital market. This includes,
+for instance, communicating with the shareholder community,
+coordinating remuneration of Siemens' Managing Board and
+top executives, and managing the Company's organizational
+structure and internal equity programs. In addition, she orches-
+trates our initiative for fostering an ownership culture at
+Siemens, one of the main building blocks of our Vision 2020.
+She's eager to be a role model in that respect - living this
+ownership culture drives her actions.
+Our behaviors bring the ownership culture to life
+Our managers should serve as role models for the Company's strategic direction
+and ensure the sustainable and efficient use of available resources – thus inspiring
+and empowering their teams to give their best for the Company.
+Owners ensure our business success
+Siemens is a company that was led for generations by owners who
+had a passionate interest in the firm's long-term successful develop-
+ment. They all knew that every individual makes a contribution
+every day to the Company's enduring success. We're following this
+conviction and want to foster an ownership culture worldwide that
+includes all of our people. We believe the following principles are
+especially important here:
+|
+|
+|
+|
+|
+| | | | | | |||||||
+| | | | | || ||||||| Our culture
+un buen ambiente de trabajo, confiando
+respetando el uno al otro, eso es lo que
+Leadership
+Our culture
+People
+orientation
+Ownership
+culture
+Lena Ikejiri de Medeiros
+São Paulo, Brazil
+| | | |||||||||| Our culture
+Behaviors
+57
+58
+Creating a good working environment,
+trusting and respecting one another -
+SIEMENS
+SIEME
+Elena Rubio López
+Apprentice
+Europeans@Siemens
+| | | |||||||||| Our culture
+È EXERCITAR
+O SENSO DE Pertencimento
+A RESPONSIBilidios OS
+that's what ownership culture means to me.
+Fazere
+HOMANDO PARA sí
+Program Manager
+Transformation Program
+Siemens Brazil
+| Sergio Souza
+|||||||||||
+Ownership culture is exercising a sense of belonging, taking the
+responsibility for doing your best, unconditionally, every day.
+A CADA Did.
+IN CONDICIONALMENts, o
+Mos Libr
+Michael Cheng
+Chicago, USA
+Michael Cheng works at Siemens in the Chicago area. He
+holds a degree in actuarial mathematics from the University
+of Michigan. After working for 16 years as a pension con-
+sultant, applications specialist, tester and quality assurance
+manager in the defined benefits industry, he joined Siemens
+in 2007. Michael successfully led a test center for six years
+before moving on to manage a team in systems engineering.
+||||||||||
+Our culture
+|||||||||| │
+Juliana Furlanetto Odoni holds a bachelor's degree in environmental
+engineering and a master's degree in business management. The
+28-year-old Brazilian first came to Siemens in 2008 as an intern in cor-
+porate quality management before joining a trainee program in 2010.
+Since 2011, she's been working as a sales support manager. Always
+motivated to improve processes, Juliana has participated in several
+projects and programs focused on making Siemens Brazil a benchmark
+in leadership, productivity and customer satisfaction. Very committed
+to sustainability issues, she's also been serving as an environmental
+education volunteer and panelist.
+|
+Munich, Germany
+|
+Devina Pasta
+An electrical engineer, Devina Pasta joined Siemens
+India in 2006, where she held positions in the area of
+motion control - first in product management, later in
+business development. There, she launched a product
+for the Asian market and created new business models.
+After driving business in Asia, she now works at
+Corporate Strategies in Munich, managing aspects of
+digital transformation - such as a Siemens CEO commu-
+nity - in order to address the key opportunities arising
+from digitalization. Devina has studied, worked and
+lived in Asia, America and Europe and thrives in interna-
+tional environments.
+|||||||||| Sergio Souza
+São Paulo, Brazil
+|
+São Paulo, Brazil
+Sergio Souza joined Siemens in 1990 as a field service technician
+in the area of telecommunications. Since then, he's held a wide
+range of positions in Brazil and other countries. Since August
+2013, Sergio has headed the Transformation Program, a Regional
+initiative aimed at making Siemens Brazil an agile organization
+with an excellent working environment and at enabling the com-
+pany to better serve its customers, better fulfill its responsibilities
+to society and consistently outpace its competitors.
+61
+Juliana Furlanetto Odoni
+Berlin, Germany
+Jesper Rönnbäck plays a key role in keeping production
+running smoothly at our gas turbine plant in the Swedish
+town of Finspång. Starting out as a technical assistant
+and moving up to the position of foreman in 2010, Jesper is
+responsible for all the plant's electrical installation work,
+including the connecting up of the SGT-750, one of our
+latest gas turbines. A smaller gas turbine in the Siemens
+portfolio, the SGT-750 is capable of generating 37 mega-
+watts of power. Its outstanding features include versatility,
+high efficiency and low emissions - all of which make it one
+of the most environmentally friendly turbines in its class.
+62
+Janina Kugel
+Munich, Germany
+|
+Janina Kugel is responsible for strategic personnel topics and executive
+development at Siemens. After studying at universities in Mainz and
+Verona, she began work as a management consultant in 1997. Since
+joining Siemens in 2001, she's been involved in the Company's develop-
+ment in various capacities. From 2012 to 2013, Janina headed the global
+HR organization at OSRAM and prepared the business for the IPO that
+was completed in July 2013. Since 2014, she's been Chief Diversity Officer
+at Siemens AG.
+||||||||||
+Our culture
+|||||||||| │ 59
+|
+|
+In many EU countries, one out of every two young people
+has neither a job nor a vocational trainee position. Through
+the Europeans@Siemens initiative, we're helping improve
+this situation by giving young people the chance to com-
+plete a dual education-and-training program in Germany.
+Since 2012, 90 young Europeans from 18 EU member
+countries have been selected by their respective Siemens
+Regional Companies and sent to Berlin. Among them are
+Georgia Davari and Elena López, who entered the program
+on August 1, 2014. Whereas 24-year-old Georgia had
+already earned a college degree in automation engineer-
+ing in her home country of Greece, 18-year-old Elena left
+Spain after attaining the "Bachillerato," which is a college
+entrance qualification. In the coming years, in alternating
+phases of theoretical instruction and hands-on practice,
+these two women will learn the occupation of electronics
+technician. After that, they intend to take the knowledge
+and skills acquired in the program back to their home coun-
+tries. But first, they need to become proficient in German,
+the language in which the final examination is conducted.
+60
+| | | ||||||||||
+Our culture
+Hamad Al Khayyat
+General Manager Oil & Gas, Qatar
+Hamad Al Khayyat joined Siemens WLL Qatar in December 2010
+as General Manager of the company's oil and gas business
+in the Gulf state. As a highly respected expert in Qatar's oil, gas
+and petrochemicals industry, Hamad boasts vast experience
+in strategic planning and in fostering business relationships with
+other organizations and the representatives of governmental
+and non-governmental institutions. As a large number of projects
+impressively attest, he's helped strengthen Siemens' successful,
+trust-based partnership with the nation of Qatar.
+Jesper Rönnbäck
+Finspång, Sweden
+Georgia Davari | Elena Rubio López
+62
+A company owes its existence to the fact that its employees
+identify with it, trust it and commit themselves to its
+positive development. We're proud that around 140,000
+of our employees are today expressing these feelings
+by owning Siemens shares. We intend to increase this
+figure by at least 50%. Therefore, we want employees
+below the management level to participate in their
+Company's success on an annual basis. Because the more
+our people trust their own Company, the more personal
+commitment they will feel and the greater each individual's
+sense of belonging and sense of responsibility will be.
+This is the culture we're striving to create at Siemens –
+a culture that will be decisive for our Company's long-
+term success.
+Owners identify themselves
+with their Company
+and thus give their best.
+القطرية
+AR
+65
+Energy application |||||||
+66
+Intelligent planning is the key | Machine and system
+suppliers such as Eisenmann SE are now faced with enor-
+mous complexities as well as growing time and cost pres-
+sures. The key to mastering these challenges is intelligent
+planning and meticulous preparation from the very begin-
+ning - with the help of innovative software. "Just a few
+years ago, we would've had to send a team of engineers to
+now
+Ab
+It's best to spot errors before they're made | Eisenmann
+opted for Siemens' Tecnomatix software solution, which
+enables engineers to fully visualize, simulate and analyze a
+system using a "digital twin" model. Potential faults or weak-
+nesses can be detected early on and corrected before the
+system is actually installed. For the Hamad International
+Airport project, the engineers conducted a detailed analysis
+67
+||
+68
+Energy application |||||||
+Entering uncharted territory | For the Hamad Inter-
+national Airport project, engineers working at computers
+in Böblingen, Germany, pushed fully loaded flight-service
+carts onto waiting trolleys, transported them to the supply
+station, unloaded them, cleaned them in the designated area
+and then conveyed them to the appropriate terminals
+all in a virtual environment and up to 20,000 times a day.
+"The programmers had to foresee every scenario with the
+potential to cause problems," says Monika Schneider - for
+example, when a trolley fails to reach its station or the stor-
+age area for empty trolleys is too small. "When we used the
+real electrified monorail system for the first time, everything
+worked just as we'd planned in the virtual world."
+| | | |||||||||| Our culture
+of all the parameters for the electrified monorail system on
+the computer before virtually simulating all its processes.
+And the processes are numerous: 130 carts move indepen-
+dently along the 1.6-kilometer electrified monorail system,
+making around 20,000 deliveries every day. There's no room
+here for error.
+Total length of electrified
+monorail system
+Qatar for on-site testing of the system in order to spot and
+eliminate weaknesses in the software," says Dr. Monika
+Schneider, simulation expert at Eisenmann. Today, every-
+thing is simpler: "Thanks to Siemens' Tecnomatix Plant
+Simulation software, we were able to test the entire system
+right here in Böblingen - even though the airport itself was
+still under construction."
+a day
+1.6 km
+President and CEO
+of Siemens AG
+| | | | | | | |
+Our culture
+||| Strengthening our equity culture
+63
+Power generation | Power transmission, power distribution and smart grid | Energy application |||||||||||||| Imaging and in-vitro diagnostics
+| | | | | | ||||||||
+Joe Kaeser
+-
+|| | In May 2014, the word was "ready for take-off" at Hamad International
+Airport in Doha. Each year, some 30 million passengers arrive in or depart from
+Qatar by air a logistical challenge that also encompasses catering services.
+Every day, around 82,000 meals are loaded onto specially prepared trolleys that
+convey them to the aircraft and have to be cleaned on return. The whole sys-
+tem runs smoothly, thanks to sophisticated technology and logistics based on
+German engineering. Eisenmann SE – a global supplier of industrial systems
+headquartered in Böblingen, Germany - was commissioned to provide a fully
+automated electrified monorail system that enables the trolleys to be trans-
+ported within the airport's huge logistics center. The engineers from southern
+Germany relied on industry software from Siemens that allowed them to plan,
+test and optimize the entire system in a virtual environment before it was
+actually installed.
+64
+130 carts
+simultaneously coordinated
+and controlled
+20,000 deliveries
+Ready for take-off –
+Thanks to virtual
+planning
+SIEMENS
+咖啡
+Artis
+川
+SIEMENS
+| |
+|| | Hospital operators around the world are faced with the challenge of
+delivering the best possible healthcare, based on state-of-the-art technol-
+ogy, at affordable prices. And Rush University Medical Center in Chicago,
+Illinois, is no exception. That's why the facility's management team
+decided ten years ago to embark on a major project that would make the
+medical center one of the leading hospitals in the U.S. The ambitious plan
+called for existing buildings to undergo extensive modernization, a new
+building to be constructed and the entire campus to be equipped with
+leading-edge healthcare technology - while the complex remained in oper-
+ation. The hospital's project team was looking for a partner with worldwide
+experience, outstanding technological competence and a proven track
+record of implementing complex projects – and chose Siemens.
+Whether revolution or evolution, one thing is certain: the growing demands being
+placed on industrial production and the introduction of new technologies have
+ushered in irreversible change. And we'll play a key role in shaping this change -
+because we're better equipped for the job than virtually any of our competitors.
+As a world-leading provider of automation technology and industry software,
+we not only boast decades of experience in industrial production; we're also one
+of Europe's biggest software companies, with some 17,500 software engineers.
+We offer a complete portfolio of industry software, encompassing everything
+from the automotive, shipping and aviation industries to the production of chem-
+icals, pharmaceuticals and food. We're shaping the future of industry - today.
+Power generation Power transmission, power distribution and smart grid | Energy application |||||||||||||| Imaging and in-vitro diagnostics
+74
+73
+WWW.SIEMENS.COM/
+FUTURE-OF-MANUFACTURING
+As the first company in the world to bundle
+all offerings for the digital factory under
+one roof, we're ideally positioned to reinforce
+and expand our leading role in turning the
+digitalized company into reality.
+WWW.EISENMANN.COM
+Eisenmann is a leading international supplier
+of systems and services for surface finishing
+and paint technologies, material flow auto-
+mation, thermal process engineering and
+environmental technology. Located in south-
+ern Germany, the company's been building
+highly flexible, energy- and resource-efficient
+manufacturing, assembly and logistics
+facilities for over 60 years.
+CARE CLEAR
+Moving into the lead -
+In partnership with
+Siemens
+יויייו.
+analysis of the processes used at some of the world's leading
+hospitals as well as the latest scientific insights into treating
+stroke victims. Based on this model, numerous suggestions
+for improvements were developed and implemented that
+save time- and can thus save lives. As a result, clinicians at
+many other hospitals in the U.S. now consider Rush Univer-
+sity Medical Center a benchmark in stroke treatment.
+Imaging and in-vitro diagnostics |||||||
+On the way to the Fourth Industrial Revolution
+Scenarios that sounded like science fiction just a few years ago are increasingly
+becoming a reality. Machines are largely organizing themselves, supply chains
+are automatically coordinating themselves, and products are supplying all their
+production data to the machines on which they'll be manufactured. A new kind
+of industrial production - sometimes referred to as the Fourth Industrial Revolu-
+tion or Industry 4.0 – is now blazing its own trail.
+Saving time can save lives | When discussing ideas
+for enhancing clinical workflow, the project team always
+returned to the key priority: optimizing patient treatment and
+outcomes. In the case of a medical emergency like a stroke,
+patients need to obtain medical treatment as quickly as pos-
+sible. Here, too, Siemens is a competent partner for Rush:
+we've designed a consulting model that builds upon an
+78
+Imaging and in-vitro diagnostics |||||||
+77
+walked by staff and patients? How can the highest standards
+of hygiene be maintained? How can IT be embedded to
+accelerate workflow? In the post-9/11 era, the list of ques-
+tions also included how to ensure the provision of basic
+medical services for millions of city residents in the wake of
+an event like a terrorist attack or an epidemic. These are only
+some of the topics the project team considered and dis-
+cussed with Siemens.
+A made-to-measure hospital | The extensive modern-
+ization and expansion of a hospital complex is an opportu-
+nity that comes along at best once in a career - and the
+opportunity was tackled with great determination at Rush
+University Medical Center. Once the decision to implement
+the project had been made, a team was formed to address
+fundamental questions relating to the planned changes.
+How can a building be designed to minimize the distances
+ENERGY CONSERVATE CODE COMPLIANCE
+926000 ON 29
+ALUMNOS 60201
+ET, SUITE 300
+MAN/BUTKUS ASSOCIATES
+N
+65009 RON
+concurs with Peter Butler, President and Chief Operating
+Officer of Rush, who says, "I was very involved in the selec-
+tion of Siemens. We knew a lot about their culture and their
+impact on healthcare worldwide, and the depth and breadth
+of what they could bring to our partnership. We felt there was
+really a lot more intellectual capital than other vendors could
+bring to the table."
+Partnering as equals | To provide the best possible con-
+sulting services in the area of healthcare, you must have a
+fundamental understanding of clinical workflow processes.
+That's why Bernard F. Peculis, Administrative Director at Rush
+(pictured on the left), places his trust in Siemens. By consult-
+ing with Jim Gurney, project head for Siemens (pictured on
+the right), Peculis was able not only to clarify product-specific
+questions but also to discuss the project as a whole. He
+76
+75
+New competitors, global value chains and highly transparent markets are all
+increasing competitive pressures. Industrial companies have to boost their pro-
+ductivity - using innovative technologies that make production more cost-effective
+and flexible while cutting time-to-market.
+Services - Customer service
+and support throughout
+all steps of the value chain
+The future of industry -
+2.
+Product design - Digital
+planning, designing and
+validating of products
+1.
+QATAR AJEWAYS
+QATAR AIRWAYS
+the case of large and complex systems. Scenarios and prob-
+lems can be tested interactively: Does the system still run
+smoothly when operating at full capacity? Where do bottle-
+necks arise, and how can they be prevented? What's more,
+every euro invested in the Tecnomatix simulation solution
+results in savings of up to 12 euros by the time the system is
+completed.
+In a world full of questions, software provides the
+answers In a globalized world, the question is always the
+same: How can companies boost their productivity and flex-
+ibility while cutting costs? Tecnomatix software adds a new
+dimension to planning. Thanks to 3D simulations, users can
+obtain a networked overview of a nearly limitless abundance
+of variables that are nevertheless clearly visualized – even in
+Production planning -
+Digital planning, simulat-
+ing and optimizing of
+production and factory
+automation
+Magnus Edholm,
+Siemens software developer
+Energy application |||||||
+70
+69
+69
+no need for tedious, labor-intensive on-site work, and we
+were able to quantify our business risks, because the possibil-
+ity of project delays could be completely eliminated," explains
+Monika Schneider. This approach will enable Eisenmann to
+continue shortening its delivery times in the future - a key
+competitive edge.
+Errors cost hard cash | "How does an increase in flight
+operations affect catering? How can items of different sizes
+be transported? What can be done to ensure that system
+processes don't interfere with one other?" By answering
+questions like these before a system goes into actual opera-
+tion, Tecnomatix offers decisive advantages for mid-sized
+Eisenmann. "Development times were shortened. There was
+AND
+"Our software solutions
+enable us to connect
+productivity and
+efficiency across the
+entire product and
+production lifecycle –
+from product design
+to services."
+Production engineering -
+Integrated plant manage-
+ment throughout the entire
+lifecycle
+4.
+Production execution -
+Scalable data process
+information in real time
+company-wide
+4 - At the end of 2015, 19 Siemens trams
+will begin operation in Qatar's Education
+City, linking 25 stations along 11.5 kilometers
+of track without any overhead contact
+lines - thanks to an innovative energy
+storage system.
+2,3 The design of the passenger terminal
+complex is inspired by the waves of the
+Arabian Gulf. Planned to handle some
+30 million passengers a year, the building
+includes over 40,000 square meters of
+shops, cafés and restaurants.
+1- Hamad International Airport is one of
+the world's newest aviation hubs.
++2
+As the development and commissioning of the electri-
+fied monorail system for Hamad International Airport
+in Doha impressively demonstrates, industrial produc-
+tion is now inconceivable without integrated software
+solutions. Thanks to industry software, product devel-
+opment is now digitalized and production systems and
+processes are networked - making efficient, flexibly
+reacting production environments possible. With our
+comprehensive offerings in the areas of automation
+technology, industrial switchgear, industrial drive sys-
+tems, industry software and services, we supply and
+support customers along the entire value chain - from
+product design, production planning and engineering
+to actual production and service.
+|| |
+47
+Al Maha Loung
+Ovens Baggage O
+72
+22
+QACC
+Energy application |||||||
+71
+platform and NX software (MCad), from which data can
+be effortlessly transferred to Tecnomatix. Gerd Schneider,
+Corporate Vice President at Eisenmann, sums it all up: "This
+integration is bringing our worldwide project teams even
+closer together. So its advantages extend far beyond the
+benefits of the individual software solutions."
+Integration as a success factor | In the future, Eisen-
+mann will standardize its various processes - everything
+from sales to service - worldwide. For example, the cross-
+border exchange of data within the company's international
+project teams will be significantly simplified. Product devel-
+opers and system designers are now using Siemens software
+solutions: Teamcenter (PLM) as a shared engineering data
+5.
+Linking the virtual and real worlds
+3.
+|| | Customer and business focus
+Financial Services
+81
+82
+2
+Imaging and in-vitro diagnostics |||||||
+|| |
+With the demand for healthcare continually increasing
+worldwide, solutions that offer better treatment at
+lower cost are needed. At Siemens, we've been working
+for years to improve medical care around the globe with
+our imaging and laboratory diagnostics systems and
+related IT solutions. We partner with hospital oper-
+ators throughout the world - providing everything from
+consulting for the construction of new facilities to inno-
+vative healthcare technologies, intelligent software
+solutions and staff training.
+A hospital at its best
+-
+"Our goal was for Rush University Medical Center to rank among the top ten percent
+of the nation's hospitals." Formulated by CEO Larry Goodman, MD, this ambitious
+aim was the basis for all planning. Together with the project team, Goodman set
+out to make his university hospital in the heart of Chicago one of the country's
+most advanced facilities – a hospital that sets standards for medical care as well
+as for university research and education. The project called for modernizing older
+sections of the complex, building a new hospital tower shaped around patients'
+needs and fully integrating the entire healthcare infrastructure, including an
+intelligent IT system. The acquisition of new medical technologies - particularly
+in the field of imaging - was also part of the plan, and Rush formed a special
+team for that task.
+-
+Rush is a not-for-profit healthcare, educa-
+tion and research enterprise headquartered
+in Chicago, Illinois. Over 2,000 students are
+enrolled at Rush University in preparation
+for careers in the medical field. With around
+700 beds, Rush University Medical Center
+is one of the biggest hospitals in Chicago.
+With areas of specialization including neuro-
+science, orthopedics, oncology and cardiol-
+ogy, the hospital has received many awards
+in recent years. In particular, its outstanding
+nursing care and exceptional patient satis-
+faction have made Rush one of the top-rated
+hospitals in the United States.
+A trustworthy partner
+To achieve all this, the hospital team was looking for a partner who could not
+only deliver the technological solutions but also accompany the project with its
+expertise and competence. And they chose Siemens. Company employees advised
+the hospital management and the project team throughout all key phases of the
+facility's modernization. Siemens was also involved in the construction phase,
+supplying building technology systems, for instance. In addition, the Company
+equipped the hospital with numerous imaging systems, provided staff training
+and developed a solution for ongoing services. For example, the facility's com-
+puted tomography (CT) systems, which are vitally important for emergency care,
+are constantly monitored. Networked with the Siemens Guardian Program, the
+systems are watched online by Siemens technicians around the clock. What's the
+advantage? Potential system errors can be corrected proactively and maintenance
+can be planned at an early stage. And an analysis of the captured data can also
+lead to suggestions for enhancing system-related processes - thus creating value
+for the hospital.
+Dr. Goodman and Peter Butler still have lots of plans for Rush. They intend to
+continue developing the hospital on an ongoing basis: "Our foremost concern is
+the patients and their optimal care. That's why we want to become even better
+and make Rush a leading healthcare center." And in pursuing this vision, they'll
+continue to rely on Siemens.
+The statements described herein are based on results that were achieved in the customer's unique setting. Since there is no "typical"
+hospital and many variables exist (e.g., hospital size, case mix, level of IT adoption), there can be no guarantee that other customers
+will achieve the same results.
+Together with customers and partners, we're
+working on improving healthcare throughout
+the world. We measure our progress in
+three key areas. During fiscal 2014, we sus-
+tained the positive trend of the previous
+years, achieving or even exceeding the tar-
+gets we'd set for ourselves.
+WWW.SIEMENS.COM/
+HEALTHCARE-INDICATORS
+✓ ✓
+3
+4
+WWW.RUSH.EDU
+1 - Peter Butler, President and Chief Operating
+Officer, Rush University Medical Center
+Creating knowledge by sharing | Comprehensive health-
+care requires knowledge - or, in Dr. Goodman's words, "Train-
+ing is incredibly important." That's why it was essential to
+familiarize hospital personnel with the systems' capabilities
+as quickly as possible. To accomplish this, a training plan was
+developed for every work group and every function from
+doctors and nursing staff to technicians. In addition, the train-
+ing time for participants was significantly reduced by offering
+online training to supplement classroom-based courses held
+Information is the key to success | In healthcare, as in
+many other areas, information technology now plays a vital
+role. That's why IT experts from Siemens helped Rush Uni-
+versity Medical Center intelligently integrate its medical
+systems and optimize the flow of information. Peter Butler
+recalls, "In 1982, the last time we renovated the facility, I still
+saw patients being rolled down the hall with X-rays on their
+knees." Those days are long gone. Working closely with the
+building planners, Siemens defined all requirements early
+In all areas related to project financing, Financial Services is a reliable
+partner to our customers.
+Eatert Acclications Transfer Edt Yew Image Tools Scroll Evaluation System Options b
+E
+Tools
+Revealing what's hidden | Rush University Medical
+Center is aiming to set standards in healthcare imaging as
+well. The intelligent networking of newly acquired imaging
+systems was an important part of the hospital's moderni-
+zation. From computed tomography systems that generate
+images faster and minimize radiation doses to magnetic
+resonance imaging systems for neurological applications and
+fluoroscopy systems that are used in connection with contrast
+media, for example, to examine internal organs: Siemens
+supplied the systems and adapted them to the facility's
+requirements. That's one of the reasons why the medical
+center chose Siemens, as the facility's CEO Larry Goodman,
+MD, confirms: "When we pick a technology, we also pick the
+company and the people. They're the ones who are critical
+to the smooth implementation of the new technology. Our
+partnership with Siemens has been very successful."
+|||
+79
+Imaging and in-vitro diagnostics |||||||
+on. The challenge was not only to install new systems and
+get them up and running but also to integrate systems from
+other manufacturers that were already in operation. And all
+the systems had to be incorporated into the Medical Center's
+IT system without a hitch. When the new hospital tower
+opened its doors in January 2012, everything worked per-
+fectly. And Siemens employees at the facility are ensuring
+that this will continue to be the case.
+AXOM
+VOIGE H21-2
+PAY manly dubled
+WC 1400
+ww.400
+000
+00:00
+9000
+SIEMENS
+Artis
+80
+e test test
+2- Exterior view of the new hospital tower
+at the Siemens training center and on-site at Rush. Around
+150 Rush employees have taken part in training sessions so
+far, thus ensuring that all equipment is optimally utilized.
+Dr. Goodman is thrilled with his employees' learning curve
+and commitment. "The key was that the entire team was
+enthusiastic about the project and also willing to take the
+extra time for training. I'm really proud of how the entire
+organization got on board. We had the spirit and everyone
+said, 'We can do it!""
+4 - Larry Goodman, MD, Chief Executive
+Officer, Rush University Medical Center
+way
+forward and set clear priorities.
+Joe Kaeser
+President and CEO
+of Siemens AG
+88
+| | | |||||||||| Our strategy |||||||||| ││
+We're focusing on our positioning along the value chain of electrification.
+This is where our core business lies. From power generation to power
+transmission, power distribution and smart grid to the efficient application
+of electrical energy - in every one of these interrelated fields, electrification,
+automation and digitalization are the key business drivers. Our integrated
+setup not only enables us to leverage opportunities in individual markets;
+it also allows us to exploit the potential at their interfaces. A worldwide
+go-to-market setup and an organization geared toward shared customer
+markets are making this possible.
+| Power generation
+the
+|
+Power transmission, power distribution
+and smart grid
+Solutions and products for power transmission and distribution as
+well as technologies for smart grids are all bundled at our Energy
+Management Division.
+|
+Energy application
+Our Building Technologies Division, Mobility Division, Digital Factory
+Division and Process Industries and Drives Division are delivering
+technologies for the efficient application of energy in building technol-
+ogy, transportation and industry.
+|
+Imaging and in-vitro diagnostics
+3 - Interior view of the entry pavilion
+with circular skylights
+Siemens Healthcare is responsible for our medical imaging and in-vitro
+diagnostics businesses.
+The field of efficient power generation - encompassing conventional
+and renewable energy sources as well as comprehensive services – is
+addressed by our Power and Gas Division, Wind Power and Renewables
+Division and Power Generation Services Division.
+needs a strategy to point
+|
+Successful company management demands
+more than financial targets - it requires
+a comprehensive strategic framework that
+integrates the key fields of corporate govern-
+ance: a strategy that sets the course.
+complex world, a company
+83
+84
+=4
+Our strategy
+| Setting the course
+86
+| | | | | | | |
+Our strategy
+| | | | | | | | |
+|
+To leverage the diverse opportunities of our complex world,
+a company needs a clear direction, a strong internal setup,
+and people who follow the set course and turn plans and
+ideas into reality. And that's exactly what our strategy does:
+it includes a sharper customer and business focus, streamlined
+governance and an integrated management model that
+defines the concrete targets and measures required to closely
+follow the course we've set.
+our
+|||||||||
+Our strategy
+||||||||||
+87
+To leverage the diverse opportunities
+||| Strategy sets the course
+ов
+A.6
+P 20
+Notes and forward-looking
+Overall assessment
+B.5
+p 62
+of Cash Flows
+of the economic position
+statements
+Consolidated Statements
+p 128
+Financial position
+C.5
+p 61
+B.4
+p 16
+A.5
+Corporate Governance
+Consolidated Statements
+of Financial Position
+Net assets position
+p 136
+A.7
+P 38
+Subsequent events
+Combined Management Report
+A.
+о
+Financial Statements
+Notes to Consolidated
+p 64
+B.6
+of Changes in Equity
+Takeover-relevant information
+p21
+p 53
+Compensation Report
+A.10
+Siemens AG
+p 35
+A.9
+and associated material opportunities
+and risks
+Report on expected developments
+p22
+A.8
+A.11
+C.4
+0 1 0 1 1 0 0 0 1
+P 15
+p2
+A.1
+Additional Information
+Consolidated Financial Statements
+C.
+B.
+Combined Management Report
+A.
+Table of contents
+siemens.com
+Annual Report
+2015
+001
+00100111
+1 1 1 1
+1
+1 0 0 1 1 0 1 0 1 1 0 0
+0001 00
+11010011
+0 0 1 1 1 0
+1010
+Ingenuity for life
+SIEMENS
+A.1 Business and economic environment
+B.1
+p 58
+C.1
+Business and economic environment
+A.4
+Report of the Supervisory Board
+p 60
+B.3
+Results of operations
+P 125
+C.3
+of Comprehensive Income
+p 10
+A.3
+Consolidated Statements
+Consolidated Statements
+p 59
+B.2
+Financial performance system
+p 123
+C.2
+p 8
+A.2
+Responsibility Statement
+P 122
+Consolidated Statements
+of Income
+Independent Auditor's Report
+A.1.1 The Siemens Group
+For more information on the portfolio transactions described
+below, see NOTE 3 in → B.6 NOTES TO CONSOLIDATED FINANCIAL
+Following the organizational changes described in the Annual
+Report for fiscal 2014, we have the following reportable seg-
+ments beginning with fiscal 2015: the Divisions Power and
+Gas; Wind Power and Renewables; Energy Management;
+Building Technologies; Mobility; Digital Factory; and Pro-
+cess Industries and Drives as well as the separately managed
+business Healthcare, which together form our Industrial Busi-
+ness. The Division Financial Services (SFS) supports the activ-
+ities of our Industrial Business and also conducts its own busi-
+ness with external customers. As "global entrepreneurs" our
+Divisions and Healthcare carry business responsibility world-
+wide, including with regard to their operating results.
+For purposes of managing and controlling profitability at the
+Group level, we use net income as our primary measure. This
+measure is the main driver of basic earnings per share (EPS)
+from net income, which we use in communication to the capital
+markets.
+In line with common practice in the financial services business,
+our financial indicator for measuring capital efficiency at Finan-
+cial Services (SFS) is return on equity after tax, or ROE (after
+tax). ROE is defined as SFS' profit after tax, divided by the Divi-
+sions' average allocated equity.
+FOR FISCAL 2014.
+Within One Siemens, we have established a financial frame-
+work - for revenue growth, for profitability and capital effi-
+ciency, for our capital structure, and for our dividend policy.
+Beginning with fiscal 2015 we modified our financial frame-
+work in the course of organizational changes and due to our
+new strategy "Vision 2020", as described in the 7 ANNUAL REPORT
+A.2.1 Overview
+A.2 Financial performance system
+7
+Combined Management Report
+In fiscal 2015, markets served by Healthcare continued to
+grow. Growth was again driven by emerging markets, which
+continued to build up their healthcare infrastructures and ex-
+pand access to modern medical technology for their growing
+populations. Market development in industrialized countries
+remained weak, impacted by healthcare reforms and budgetary
+constraints. Healthcare's imaging customers saw growing de-
+mand for diagnostic imaging procedures but also experienced
+increasing public pressure to slow the growth of healthcare
+costs. Growth in the large Chinese imaging market was weak
+compared to prior years. Together with market entries of local
+vendors this led to increased price pressure. Within the mar-
+kets for clinical products, demand in the low-end product seg-
+ment in emerging markets was the main growth driver, while
+demand in industrialized countries remained stable year-over-
+year. Within emerging economies, the market for clinical prod-
+ucts increasingly includes incentives for local production,
+particularly in China, Brazil and Russia. Growth in in-vitro diag-
+nostics markets is benefiting from increasing test volumes as
+populations are aging. Overall, demand for in-vitro diagnostics
+solutions from emerging markets, particularly China, grew
+faster than markets in industrialized countries. For the health-
+care market as a whole, the trend towards consolidation con-
+tinues. Competition among the leading companies is strong,
+including with respect to price.
+broad portfolio and companies that are active only in certain
+geographic or product markets. Consolidation is taking place
+mostly in particular market segments and not across the broad
+base of the Division's portfolio. Consolidation in solution-driven
+markets is going in the direction of in-depth niche market ex-
+pertise, whereas consolidation of the product-driven market
+follows the line of convergence. Most major competitors have
+established global bases for their businesses. In addition, the
+competition has become increasingly focused on technological
+improvements and cost position.
+Markets served by the Process Industries and Drives Division
+grew slightly in fiscal 2015. While all regions contributed to
+growth and growth rates in Europe, C.I.S., Africa, Middle East
+were lower than in the Americas and Asia, Australia, growth
+rates in the latter two regions came in below the levels in prior
+years. Within the Division's main industries, demand from the
+chemicals, food and beverage, and pharmaceuticals industries
+grew year-over-year. This growth was largely offset by lower
+demand from the oil and gas and the mining industries. Com-
+petitors of the Division's business activities can be grouped into
+two categories: multinational companies that offer a relatively
+In fiscal 2015, markets for the Digital Factory Division grew in
+all regions. Markets in Asia, Australia grew more strongly than
+in other regions but growth dynamics lost momentum signifi-
+cantly compared to fiscal 2014, particularly in China. While
+growth in Europe accelerated somewhat year-over-year, markets
+in the Americas showed a mixed picture: In the U.S. demand
+from consumer-oriented manufacturing industries was strong,
+whereas factory automation investment slowed down in coun-
+tries affected by reduced global demand for export commodi-
+ties including oil and gas. Within the Division's customer seg-
+ments, markets for the manufacturing and machine building
+industries grew slightly overall in fiscal 2015, with decelerating
+growth during the course of the fiscal year. A slow-down in
+growth was particularly evident in the global automotive in-
+dustry, which showed strong growth at the beginning of the
+fiscal year but started to cut investments due to lower demand
+for cars in emerging countries. The competition for Digital
+Factory's business activities can be grouped into two catego-
+ries: multinational companies that offer a relatively broad port-
+folio and companies that are active only in certain geographic
+or product markets.
+Markets for the Mobility Division grew moderately in fiscal
+2015, with all regions contributing to growth. Market develop-
+ment in the Europe, C.I.S., Africa, Middle East region was char-
+acterized by continuous investment and awards of large orders.
+This was particularly evident in Germany, the U.K. and Russia.
+Demand in the Middle East and in Africa was mainly driven by
+turnkey and rail infrastructure projects. In the Americas region,
+growth continued to benefit from demand for passenger loco-
+motives and urban transport products in the U.S. Chinese mar-
+kets saw ongoing investments in high-speed trains, urban
+transport and rail infrastructure. The Division's principal com-
+petitors are multinational companies. Consolidation among
+Mobility's competitors is continuing.
+business also competes with system integrators and small local
+companies. The Division faces continuing price pressure, par-
+ticularly in its solutions business, due to strong competition
+from system houses and some larger competitors.
+Combined Management Report
+6
+Markets for the Building Technologies Division grew moder-
+ately in fiscal 2015. Growth was driven by rising demand from
+the U.S. and Asia, despite weaker growth in China. Within the
+Europe, C.I.S., Africa, Middle East region, markets in the Middle
+East grew stronger than the region overall. The European mar-
+ket grew modestly with growth in Germany, the U.K., and Scan-
+dinavian countries above average. The Division's principal com-
+petitors are multinational companies. Its solutions and services
+In fiscal 2015, markets for the Energy Management Division
+saw demand growth overall. The utilities market, the Division's
+most important customer segment, showed moderate growth.
+There was also stronger demand from the chemicals, metals
+and construction industries year-over-year. Within the chemi-
+cals industry, drivers of growth were sustainability and energy
+efficiency. In the Americas, growth in the chemicals industry
+benefited from process industries, which showed a trend to-
+wards re-industrialization in the U.S. and a build-up of capac-
+ities within the region overall. Within the metals markets,
+demand was held back by continued overcapacities and re-
+duced investment activity, particularly in the region Europe,
+C.I.S., Africa, Middle East. Construction markets grew in all
+regions. In contrast, demand in the Division's oil and gas and
+minerals and mining markets declined year-over-year. The oil
+and gas industry has significantly reduced capital expenditures
+due to the global oil price decline. The minerals and mining
+industry suffers from lower demand for raw materials, mainly
+driven by the economic slowdown in China, and also by over-
+capacities and higher extraction costs. Competitors of the
+Energy Management Division consist mainly of a small number
+of large multinational companies. International competition is
+increasing from manufacturers in emerging countries such as
+China, India and Korea.
+remains difficult. Policy and regulatory frameworks continue to
+influence regional wind power markets. For example, the pro-
+duction tax credit remained pertinent for the U.S. market. In
+Germany, the scheduled expiration of feed-in-tariffs beginning
+with calendar 2017 for newly build onshore wind power plants
+fueled demand in fiscal 2015. Market growth also benefited
+from stronger demand from some emerging countries in the
+Middle East, in Africa and Latin America. The competitive situ-
+ation in wind power differs in the two major market :
+segments.
+In the markets for onshore wind farms, competition is widely
+dispersed without any one company holding a dominant share
+of the market. In contrast, markets for offshore wind farms con-
+tinue to be dominated by a few experienced market players.
+Consolidation is moving forward in both on- and offshore seg-
+ments, including exits of smaller players. The key drivers of
+consolidation are technology challenges and market access
+challenges, which increase development costs and the impor-
+tance of risk sharing in offshore wind power.
+Markets served by the Wind Power and Renewables Division
+grew moderately in fiscal 2015. Overall growth was driven by
+the onshore wind power market segment, while the relatively
+smaller offshore wind power market segment saw a slight de-
+cline year-over-year. On a geographic basis, growth was strong
+in China, which has the largest national wind market in the
+world, but where market access for foreign manufacturers
+The markets of the Power and Gas Division remained challeng-
+ing in fiscal 2015. This was particularly evident in the market for
+steam turbines where volume shrank substantially year-over-
+year due including to an ongoing shift from coal-fired to gas-
+fired power generation in the U.S. and emission regulation e.g.
+in China. Demand in compression markets declined year-over-
+year. This was due mainly to a fall in capital expenditure for oil
+and gas upstream applications following the global oil price
+decline in 2014. In contrast, demand in the gas turbine market
+grew in fiscal 2015, driven by demand for replacement of aged
+existing inefficient and inflexible power plants, particularly
+in the U.S.; energy market reform in Mexico; and rising de-
+mand for energy in emerging countries, particularly China and
+countries in Latin America and the Middle East. The Division's
+competition consists mainly of two groups: a relatively small
+number of equipment manufacturers, some with very strong
+positions in their domestic markets, and on the other hand a
+large number of engineering, procurement and construction
+contractors. The gas turbine market is experiencing overcapac-
+ity among original equipment manufacturers and engineering,
+procurement and construction contractors, which is leading to
+market consolidation.
+A.2.2 Revenue growth
+A.1.2.2 MARKET DEVELOPMENT
+Within the framework of One Siemens, we aim to grow our rev-
+enue faster than the average weighted revenue growth of our
+most relevant competitors. Our primary measure for managing
+and controlling our revenue growth is comparable growth,
+which excludes currency translation and portfolio effects.
+| Profit margin ranges
+A.1.1.1 ORGANIZATION AND BASIS OF PRESENTATION
+We are a technology company with core activities in the fields
+of electrification, automation and digitalization, and activi-
+ties in nearly all countries of the world. Siemens comprises
+Siemens AG, a stock corporation under the Federal laws of
+Germany, as the parent company and its subsidiaries. Our
+Company is incorporated in Germany, with our corporate head-
+quarters situated in Munich. As of September 30, 2015, Siemens
+had around 348,000 employees.
+8 Combined Management Report
+Sustainable revenue and profit development is supported by a
+healthy capital structure. Accordingly, a key consideration within
+the framework of One Siemens is to maintain ready access to the
+capital markets through various debt products and preserve
+our ability to repay and service our debt obligations over time.
+Our primary measure for managing and controlling our capital
+structure is the ratio of industrial net debt to EBITDA. This
+financial measure indicates the approximate amount of time in
+years that would be needed to cover industrial net debt through
+income from continuing operations, without taking into account
+interest, taxes, depreciation and amortization. We aim to achieve
+a ratio of up to 1.0.
+A.2.4 Capital structure
+15 - 19%
+15-20%
+8-12%
+14 -20%
+5-8%
+7-10%
+8-11%
+6-9%
+Margin range
+11-15%
+|
+SFS ((ROE) (after taxes))
+Healthcare
+Process Industries and Drives
+Digital Factory
+Mobility
+Building Technologies
+Energy Management
+Wind Power and Renewables
+Power and Gas
+Within the framework of One Siemens, we seek to work profit-
+ably and as efficiently as possible with the capital provided
+by our shareholders and lenders. For purposes of managing
+and controlling our capital efficiency, we use return on capital
+employed, or ROCE, as our primary measure. We aim to achieve
+a range of 15% to 20%.
+To emphasize and evaluate our continuous efforts to improve
+productivity, we incorporated a measure called total cost pro-
+ductivity into our One Siemens framework. We define this
+measure as the ratio of cost savings from defined productivity
+improvement measures to the aggregate of functional costs for
+the Siemens Group. We aim to achieve an annual value of 3% to
+5% for Total cost productivity.
+A.2.3 Profitability and capital efficiency
+The partly estimated figures presented here for GDP and fixed
+investments are calculated by Siemens based on an IHS Global
+Insight report dated October 15, 2015.
+Within the framework of One Siemens, we aim to achieve mar-
+gins through the entire business cycle that are comparable to
+those of our relevant competitors. Therefore, we have defined
+profit margin ranges for our Industrial Business, which are based
+on the profit margins of the respective relevant competitors.
+The U.S. economy experienced a slowdown during the start of
+the year as a result of a harsh winter and disruptions caused by
+port strikes. The acceleration in the succeeding quarters
+showed that the underlying recovery trend was intact, mainly
+because of strong domestic demand. In particular, fixed invest-
+ments performed better than the overall economy, although
+capital expenditures related to oil and gas production declined
+significantly due to lower oil prices. Strong consumption ex-
+penditures were fueled by a steadily improving labor market.
+A.1.1.3 RESEARCH AND DEVELOPMENT
+equipment, project and structured financing. SFS provides cap-
+ital for Siemens customers as well as other companies and also
+manages financial risks of Siemens. SFS operates the Corporate
+Treasury of the Siemens Group, which includes managing
+liquidity, cash and interest risks as well as certain foreign
+exchange, credit and commodities risks. Business activities
+and tasks of Corporate Treasury are reported in the segment
+information within Reconciliation to Consolidated Financial
+Statements.
+Combined Management Report 3
+The Financial Services (SFS) Division provides business-to-
+business financial solutions. With specialist financing and
+technology expertise in the areas of Siemens businesses, SFS
+supports customer investments with leasing solutions and
+Healthcare is one of the world's largest suppliers of technol-
+ogy to the healthcare industry and a leader in medical imaging
+and laboratory diagnostics. We provide medical technology and
+software solutions as well as clinical consulting services, sup-
+ported by a comprehensive training and service portfolio. There-
+fore, we offer our customers a comprehensive portfolio of med-
+ical solutions along the healthcare continuum of care – from
+prevention and early detection to diagnosis, treatment and fol-
+low-up care. Because large portions of our revenue stem from
+recurring business, our business activities are to a certain ex-
+tent resilient to short-term economic trends but dependent on
+regulatory and policy developments around the world. During
+fiscal 2015, we completed the sale of several businesses, in par-
+ticular the hearing aid business and the hospital information
+business. With the beginning of fiscal 2016, Healthcare is stra-
+tegically reorganized into six newly defined business areas
+and six regions. The Business Areas are Diagnostic Imaging,
+Laboratory Diagnostics, Advanced Therapies, Ultrasound, Point
+of Care Diagnostics and Services.
+The Process Industries and Drives Division offers its custom-
+ers standard products including converters, gears, motors,
+drives and couplings on the one hand and also customized, ap-
+plication-specific systems and solutions on the other hand. In
+addition, the Division supplies machine-to-machine communi-
+cation products and sensors that measure pressure, tempera-
+ture or flow rate for example. The Division's products, systems
+and industry-specific solutions as well as end-to-end services
+are designed to increase productivity, energy efficiency and re-
+liability of machinery and installations, mainly in industries
+such as oil & gas, shipbuilding, mining, cement, pulp and paper,
+chemicals, food and beverage, and pharmaceuticals. In addi-
+tion, the Division sells gears, couplings and drive solutions to
+other Divisions of the Siemens Group, which use them in rail
+transport and wind turbines. Demand within the industries
+served by the Division generally shows a delayed response to
+changes in the overall economic environment. Even so, the
+Division is strongly dependent on investment cycles in its key
+industries. In basic process industries such as oil & gas or min-
+ing, these cycles are driven mainly by commodity price fluctu-
+ations rather than changes in produced volumes.
+Because demand depends directly on the investment decisions
+of end customers as well as indirectly on orders from OEMs, a
+downturn or upswing in the overall economic environment
+impacts the Division's business results more timely than those
+of other Siemens businesses.
+The Digital Factory Division offers a range of products and
+system solutions for automation technologies and industrial
+controls used in manufacturing industries. The Division is a
+leading provider of industry software together with a compre-
+hensive product and service portfolio that covers all aspects of
+"Industrie 4.0" - a German high-tech industrial strategy. The
+Division supports customers in transforming their traditional
+companies into digital enterprises, in increasing the flexibility
+and efficiency of their production processes and in reducing
+the time to market for new products. The Division's lifecycle
+services and data-driven services complement its products and
+system solutions. The Divisions' offerings are geared largely
+to the manufacturing industry and its major markets such as
+automotive, aerospace, machine tools and plant installations.
+The Mobility Division combines all Siemens businesses in
+the area of passenger and freight transportation, including rail
+vehicles, rail automation systems, rail electrification systems,
+road traffic technology, IT solutions and related services. The
+Division also provides its customers with consulting, plan-
+ning, financing, construction, service and operation of turnkey
+mobility systems. Integrated mobility solutions for networking
+of different traffic systems round off Mobility's offerings. The
+principal customers of the Mobility Division are public and
+state-owned companies in the transportation and logistics sec-
+tors. Markets served by Mobility are driven primarily by public
+spending. Customers usually have multi-year planning and
+implementation horizons, and their contract tenders therefore
+tend to be independent of short-term economic trends.
+and renewable energy systems as well as substations for urban
+and rural distribution networks. We also offer energy-efficient
+solutions for heavy industry, the oil and gas industry and the
+process industries. The portfolio is rounded off by solutions
+and energy storage systems for integrating renewable energy
+into power grids, together with vertical IT software applica-
+tions that link energy consumers and producers.
+Combined Management Report
+2
+The Energy Management Division offers a wide spectrum of
+products, systems, solutions, software and services for trans-
+mitting and distributing power and for developing intelligent
+grid infrastructure. The Division's customers include power
+providers, network operators, industrial companies, infrastruc-
+ture developers and construction companies. The offerings are
+used to process and transmit electrical power from the source
+down to various load points along the power transmission and
+distribution networks to the power consumers. Our solutions
+for smart grids enable a bidirectional flow of energy and infor-
+mation, which is required for the integration of more renew-
+able energy sources into conventional power transmission and
+distribution networks. In addition, the Division's portfolio in-
+cludes power supply solutions for conventional power plants
+The Power Generation Services Division offers comprehen-
+sive services for products, solutions and technologies, covering
+performance enhancements, maintenance services, customer
+trainings and consulting services for the Divisions Power
+and Gas and Wind Power and Renewables. Financial results of
+these two Divisions include the respective financial results of
+the Power Generation Services Division, which itself is not a
+reportable segment. Based on the business model, all discus-
+sions of the services business for Power and Gas as well as
+Wind Power and Renewables concern the Power Generation
+Services Division.
+The Wind Power and Renewables Division designs, manufac-
+tures and installs wind turbines for onshore and offshore appli-
+cations. This includes both geared turbines and direct drive tur-
+bines. The product portfolio is based on four product platforms,
+two for each of the onshore and offshore applications. The Divi-
+sion serves a variety of customers, in particular large utilities
+and independent power producers. Due to the significant off-
+shore business of the Division and its activities in the Northern
+hemisphere, production and installations are typically higher
+during spring and summer months because of the more favor-
+able weather and marine conditions during those seasons. The
+revenue mix of these businesses may vary from reporting pe-
+riod to reporting period depending on the project mix between
+onshore and offshore projects in the respective period. The Divi-
+sion also includes a minority stake in a hydro power business.
+With Dresser-Rand on board, we have a comprehensive port-
+folio of equipment and capability for the oil and gas industry
+and a much expanded installed base, allowing us to address
+the needs of the market with products, solutions and services.
+In December 2014, Siemens acquired the Rolls-Royce Energy
+aero-derivative gas turbine and compressor business of Rolls-
+Royce plc, U.K. (Rolls-Royce). By acquiring Rolls-Royce's small
+and medium aero-derivative gas turbines business, we closed a
+technology gap in our extensive gas turbine portfolio.
+The Power and Gas Division offers a broad spectrum of prod-
+ucts and solutions for generating electricity from fossil fuels
+and for producing and transporting oil and gas. The portfolio
+includes gas turbines, steam turbines, generators to be applied
+to gas or steam power plants, compressors, integrated power
+plant solutions, and instrumentation and control systems for
+power generation. Customers are public utilities and indepen-
+dent power producers, companies in engineering, procurement
+and construction that serve these companies, and companies
+that generate power for their own consumption. Due to the
+broad range of its offerings, the Division's revenue mix may
+vary from reporting period to reporting period depending on
+the share of revenue attributable to products, solutions and
+services. Because typical profitability levels differ among these
+three revenue sources, the revenue mix in a reporting period
+accordingly affects Division profit for that period. In June 2015,
+Siemens acquired all shares of Dresser-Rand Group Inc. (Dresser-
+Rand), a world-leading supplier for the oil and gas industry.
+STATEMENTS.
+A.1.1.2 BUSINESS DESCRIPTION
+All in all the negative effects outweighed the positive ones,
+leading to declining worldwide gross domestic product (GDP)
+forecasts for 2015 in the course of the year, down to 2.5%
+growth from 3.2% expected in October 2014. Fixed investments
+are forecast to expand by 2.4% in calendar 2015, down from
+4.5% expected in October 2014.
+Our reportable segments may do business with each other,
+leading to corresponding orders and revenue. Such orders and
+revenue are eliminated on the Group level.
+Our research and development (R&D) activities are ultimately
+geared to developing innovative, sustainable solutions for our
+customers and the Siemens businesses - and simultaneously
+safeguarding our competitiveness. For these reasons, we focus
+in particular
+> on enabling energy supplies that are also economically sus-
+tainable;
+The Building Technologies Division is a leading provider of
+automation technologies and services for safe, secure and effi-
+cient buildings and infrastructures throughout their lifecycles.
+The Division offers products, solutions and services for fire
+safety, security, building automation, heating, ventilation, air
+conditioning and energy management. The large customer
+base is widely dispersed. It includes public and commercial
+building owners, operators and tenants, building construction
+general contractors and system houses. Changes in the over-
+all economic environment generally have a delayed effect on
+the Division's business activities. Particularly in the solutions
+and service businesses, Building Technologies is affected by
+changes in the non-residential construction markets with a
+time lag of two to four quarters.
+and simulations are prerequisites for end-to-end digitalization
+and automation and require, for example, consistent engineer-
+ing, optimized and more efficient processes, and intelligent
+and predictive service concepts. The Division is also developing
+technologies for the digital oil field and the electric propeller
+pod drive. Our gears portfolio will be expanded and gears will
+be integrated into a digitalized condition monitoring and con-
+trolling system while increasing energy efficiency, reducing
+material costs and further cutting emissions.
+Combined Management Report
+> further enhancing efficiency in the generation of renewable
+and conventional power and minimizing losses during power
+transmission;
+In the European economies, growth improved slightly in the
+first half of calendar 2015. Uncertainties stemming from the
+Greek bailout renegotiations and Greece's snap referendum
+on the bailout proposal had only minor impact on economic
+activity outside Greece itself, which is again in a deep recession
+after the economy started to stabilize last year. The German
+economy grew a solid 1.7%, with fixed investments expanding
+even faster at 2.4%.
+A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
+The global economic outlook deteriorated during fiscal year
+2015, particularly for many emerging economies. The main rea-
+son for the deceleration in commodity exporting countries is
+globally weaker demand for raw materials and a further soften-
+ing of the Chinese economy that suffered from weaker foreign
+demand, slower investment activity, a correction in real estate
+markets, and overcapacities in several industries. Additional
+stress for emerging countries resulted from capital outflows and
+exchange rates depreciation. Severe recessions have followed
+in Russia and Brazil, both countries having to deal with addi-
+tional adverse shocks. A rare exception amongst the emerging
+economies is India, where the recovery has gained traction.
+A.1.2 Economic environment
+The R&D activities of our Healthcare business are directed to-
+wards our growth fields in therapy, molecular diagnostics, and
+services. We want to tap the full potential of imaging solutions
+in therapy and to establish a closer connection between diag-
+nostics and therapy in cardiology, interventional clinical disci-
+plines, surgery, and radiation oncology. Strategic partnerships
+are an essential part of our strategy to reach this goal. Expand-
+ing our innovation map beyond our established portfolio, and
+investing in new ideas will help us tap new business fields. As
+an example, we will drive our activities in the highly dynamic
+growth field of molecular diagnostics. We will expand our ser-
+vices business beyond product-related services by adding a dig-
+ital services portfolio and increasing enterprise transformation
+services to help customers in their transition to value-based
+care within more and more provider organizations across geo-
+graphical borders.
+The R&D strategy of the Process Industries and Drives Divi-
+sion is focusing on the digitalization of crucial portfolio ele-
+ments across the complete lifecycle of processing plants. Inno-
+vative technologies for sensors, actuators, communications
+One of the R&D priorities at the Digital Factory Division is the
+Digital Enterprise Software Suite. Using Teamcenter software
+for central data management, the Digital Enterprise Software
+Suite creates a seamless data connection across the entire
+value chain - from product design to production planning and
+set-up all the way to real production and subsequent service.
+Innovative data services are another field of research: Siemens
+has already developed an open cloud solution for analyzing
+large datasets in industry. Data-based services such as pre-
+dictive maintenance, asset and energy data management can
+be hosted on this platform. Control of Hybrid Manufacturing
+is another example. Additive manufacturing (e.g. 3D printing)
+is combined with subtractive procedures (e.g. milling) in
+one machine to ensure that components or products with a
+high degree of individualization can be manufactured quickly
+and efficiently.
+The Mobility Division's R&D strategy addresses customers' de-
+mand for maximum availability, high throughput and enhanced
+passenger experience. Although there is a growing need for
+mobility worldwide, possibilities for building new roads and
+railways are limited. Meeting the demand for mobility requires
+intelligent solutions that make transport more efficient, safe
+and environmentally friendly. Reflecting this, Mobility's R&D
+activities strongly emphasize digitalization in developing state-
+of-the art rail vehicles, automation solutions for rail and road
+traffic, and rail electrification systems. Most of these goals can
+be achieved only with intelligent IT solutions such as WLAN-
+based control systems for driverless and conductorless metro
+train operation, decentralized wayside architecture for rail au-
+tomation, cloud-based product solutions, or Integrated Mobility
+Platforms that intelligently network passengers, mobility ser-
+vice providers and traffic management centers.
+Combined Management Report
+R&D work at the Building Technologies Division focuses on
+optimizing comfort, operational and energy efficiency in build-
+ings and infrastructures, protecting against fire and security
+hazards, and minimizing related risks. We aim to create a port-
+folio of products and services ranging from the field level to
+the cloud, based on open standards wherever possible. This
+includes data-based services for new ways of optimizing energy
+consumption, easily scalable and reasonably priced services, a
+new and harmonized system landscape with particularly effec-
+tive integration of electrical consumption, fire detection and
+HVAC (heating, ventilation, air conditioning) systems, and a
+complete range of field-level products tailored specifically to
+growing markets.
+4
+The R&D activities of our Energy Management Division focus
+on preparing our portfolio for changes on all voltage levels in
+the world of electricity. The increasing infeed of renewable
+energy to power grids requires that those grids become more
+flexible and efficient, particularly with distributed generation
+on the rise. The digitalization of future grids will enable intel-
+ligent grid operation and data-driven services. Cost-out pro-
+grams and optimization of our footprint are improving the
+competitiveness of our product portfolio on global markets.
+Our innovations are centered on power electronics, digitaliza-
+tion or grid stabilization. The full integration of energy supply
+systems with process automation is a core portfolio element for
+industrial applications and infrastructures.
+At Siemens' Wind Power and Renewables Division, our R&D
+efforts are focused on innovative products and solutions that
+allow us to take the lead in performance, improve our compet-
+itiveness, and build a stronger business case to present to our
+customers. This includes finding ways to more intelligently
+monitor and analyze turbine conditions, and smart diagnostic
+services. Our R&D efforts also focus on digitalization. At our
+remote diagnostics center in Brande, Denmark, we collect digi-
+tal data from nearly 10,000 turbines in more than 30 countries:
+a total of more than 24 million data sets annually. We use this
+data to provide value for our customers: in 85% of cases, prob-
+lems can be corrected and turbines restarted without the need
+to send out a service team.
+Research and Development in our businesses
+R&D at the Power and Gas Division concentrates on develop-
+ing products and solutions for enhancing efficiency, flexibility
+and economy in power generation and in the oil and gas indus-
+try. These products and solutions include turbomachinery -
+primarily high-performance, low-emission gas turbines for
+single operation or for combined cycle power plants - and com-
+pressor solutions for various process industries. The Division's
+technology initiative started in fiscal 2015 is aimed at intensify-
+ing R&D in innovative materials, advanced manufacturing
+methods and plant optimization. Along with promoting digita-
+lization in overall product lifecycles, Power and Gas is on track
+preparing for changing energy markets and their increasingly
+diversified centralized and decentralized structures.
+In fiscal 2015, we reported research and development expenses
+of €4.5 billion, compared to €4.0 billion in fiscal 2014. The re-
+sulting R&D intensity, defined as the ratio of R&D expenses
+and revenue, was 5.9%, thus above the R&D intensity of 5.6%
+in fiscal 2014. As of September 30, 2015, Siemens held approx-
+imately 56,200 granted patents worldwide in its continuing
+operations. As of September 30, 2014, it held approximately
+56,100 granted patents. On average, we had 32,100 R&D
+employees in fiscal 2015.
+Corporate Technology is both a creative driver of disruptive
+innovations and a partner to the Siemens businesses. The R&D
+activities are focused on the company's core activities in the
+fields of electrification, automation, and digitization. In many
+research projects, CT works closely with scholars from leading
+universities and research institutions. These partnerships, along
+with a close collaboration with start-ups, are an important part
+of Siemens' open innovation concept, which is designed to
+make the company even more innovative.
+Beyond these points of focus, we recognize how important
+highly sophisticated software solutions are for all the fields of
+business in which Siemens is active. R&D activities are carried
+out by our businesses as well as our Corporate Technology (CT)
+department.
+> creating the highly flexible, connected factories of tomorrow
+using advanced automation and digitalization technologies;
+> turn unstructured data into value-adding information, e.g.
+when providing services such as preventive maintenance;
+> advancing the integration of medical imaging technology, in
+vitro diagnostics and IT for medical engineering to support
+achievement of improved patient outcomes.
+> promoting the efficient utilization of energy, especially in
+buildings, industry and transportation, e.g. through highly
+efficient drives for production facilities or for local and
+long-distance trains;
+> finding novel solutions for smart grids and for the storage of
+energy from renewable sources with irregular availability;
+5
+476
+98
+98
+476
+1,749
+Fiscal year
+2014
+1,995
+2,569
+1,749
+2,569
+1,995
+1,338
+(in millions of €)
+1,338
+406
+The fair value of available-for-sale financial equity instruments
+quoted in an active market is based on price quotations at the
+period-end date. The fair value of debt instruments is either
+based on prices provided by price service agencies or esti-
+mated by discounting future cash flows using current market
+interest rates.
+Non-current available-for-sale financial assets measured at
+fair value include interests in Atos SE (AtoS) and OSRAM of
+€1,703 million and €1,241 million as of September 30, 2015 and
+2014. Unrealized gains (losses) in fiscal 2015 and 2014 resulting
+from non-current available-for-sale financial assets measured
+at fair value are €367 million and €(48) million, respectively.
+Siemens determines the fair values of derivative financial instru-
+ments depending on the specific type of instrument. Fair values
+of derivative interest rate contracts are estimated by discount-
+ing expected future cash flows using current market interest
+rates and yield curves over the remaining term of the instru-
+ment. Interest rate futures are valued on the basis of quoted
+market prices, if available. Fair values of foreign currency deriv-
+atives are based on forward exchange rates. Options are gener-
+ally valued based on quoted market prices or based on option
+pricing models. In determining the fair values of the derivative
+financial instruments, no compensating effects from underly-
+ing transactions (e.g. firm commitments and forecast transac-
+tions) are taken into consideration.
+The Company limits default risks resulting from derivative
+financial instruments by generally transacting with financial
+institutions with a minimum credit rating of investment grade.
+Based on Siemens' net risk exposure towards the counterparty,
+the resulting credit risk is taken into account via a credit valua-
+tion adjustment.
+The unquoted equity instrument allocated to level 3 of the fair
+value hierarchy relates to an investment in an offshore wind
+farm. The fair value is determined based on discounted cash
+flow calculations. The most significant unobservable input
+used to determine the fair value is the cash flow forecast which
+is mainly based on the future power generation income. This
+income is generally subject to future market developments and
+thus price volatility. Since a long-term power purchase agree-
+ment is in place that mitigates price volatility, significant
+changes to the cash flow forecast are unlikely and thus, no sig-
+nificant effects on Other comprehensive income, net of income
+taxes, are expected.
+Net gains (losses) of financial instruments are:
+2015
+702
+406
+702
+(in millions of €)
+307
+Cash and cash equivalents
+Available-for-sale financial assets
+Loans and receivables
+534
+|
+Consolidated Financial Statements 91
+Financial assets measured at fair value
+Available-for-sale financial assets: Equity instruments
+Available-for-sale financial assets: Debt instruments
+Derivative financial instruments
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+In connection with fair value hedges
+In connection with cash flow hedges
+1,834
+Financial liabilities measured at fair value - Derivative financial instruments
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+Sep 30, 2014
+Level 1
+Level 2
+Level 3
+Total
+1,527
+3,272
+307
+5,105
+1,527
+1
+In connection with cash flow hedges
+(24)
+10
+39
+Reverse repurchase agreements
+Gross
+amounts
+Amounts set
+Net amounts
+off in the
+Statement of
+Financial
+Position
+in the
+Statement of
+Financial
+Position
+Related
+amounts not
+set off in the
+Statement of
+Financial
+Position
+Sep 30, 2015
+Net
+amounts
+2,678
+10
+2,668
+1,065
+1,604
+2,678
+534
+2,668
+1,065
+1,604
+Financial liabilities - Derivative financial liabilities
+1,885
+Derivative financial assets
+Financial assets
+(in millions of €)
+Siemens enters into master netting agreements and similar
+agreements for derivative financial instruments and reverse
+repurchase agreements. The requirements to offset recognized
+financial instruments are usually not met. The following table
+reflects financial assets and financial liabilities that are subject
+to netting agreements and similar agreements:
+29
+(42)
+60
+Financial liabilities measured
+at amortized cost
+(1,049)
+(844)
+(945)
+(283)
+Financial assets and financial
+liabilities held for trading
+92 Consolidated Financial Statements
+19
+Net gains (losses) in fiscal 2015 and 2014 on financial liabilities
+measured at amortized cost are comprised of gains (losses)
+from derecognition and the ineffective portion of fair value
+hedges. Net gains (losses) in fiscal 2015 and 2014 on financial
+assets and financial liabilities held for trading consist of
+changes in the fair value of derivative financial instruments,
+including interest income and expense, for which hedge ac-
+counting is not applied. The amounts presented include foreign
+currency gains and losses from the realization and valuation of
+the financial assets and liabilities mentioned above.
+(in millions of €)
+Total interest income on financial assets
+Total interest expenses on financial liabilities
+Fiscal year
+2015
+2014
+1,248
+1,048
+(739)
+(643)
+In fiscal 2015 and 2014, gains (losses) reclassified from Other
+comprehensive income to the Consolidated Statements of
+Income relating to cash flow hedges were €(268) million and
+€14 million, respectively; unrealized gains (losses) recognized
+in Other comprehensive income amounted €(311) million and
+€(301) million, respectively.
+OFFSETTING
+Interest income (expense) other than from post-employment
+benefits includes interest from financial assets and financial
+liabilities not at fair value through profit or loss:
+In connection with cash flow hedges
+18,165
+1,383
+2,728
+53,092
+45,591
+Financial liabilities measured
+at amortized cost³
+39,067
+30,128
+Financial liabilities held for trading4
+Derivatives designated in a hedge
+accounting relationship4
+Financial liabilities
+1,383
+1,338
+536
+40,986
+3,639
+411
+1 Reported in the following line items of the Statements of Financial Position: Trade
+and other receivables, Other current financial assets and Other financial assets,
+except for separately disclosed €2,464 million and €1,803 million available-for-sale
+financial assets and €3,228 million and €2,569 million derivative financial instru-
+ments as of September 30, 2015 and 2014, respectively. Includes €13,909 million
+and €12,537 million trade receivables from the sale of goods and services in fiscal
+2015 and 2014, thereof €726 million and €788 million with a term of more than
+twelve months.
+2 Includes equity instruments classified as available-for-sale, for which a fair value
+could not be reliably measured and which are therefore recognized at cost.
+3 Reported in the following line items of the Statements of Financial Position:
+Short-term debt and current maturities of long-term debt, Trade payables, Other
+current financial liabilities, Long-term debt and Other financial liabilities, except
+for separately disclosed derivative financial instruments of €1,919 million and
+€1,749 million, respectively, as of September 30, 2015 and 2014.
+4 Reported in line items Other current financial liabilities and Other financial liabilities.
+Cash and cash equivalents includes €378 million and €429 mil-
+lion as of September 30, 2015 and 2014, respectively, which are
+not available for use by Siemens mainly due to minimum re-
+serve requirements with banks. As of September 30, 2015 and
+2014, the carrying amount of financial assets Siemens has
+pledged as collateral amounted to €345 million and €271 mil-
+lion, respectively.
+Consolidated Financial Statements
+The following table presents the fair values and carrying
+amounts of financial assets and financial liabilities measured at
+cost or amortized cost for which the carrying amounts do not
+approximate fair value:
+(in millions of €)
+Notes and bonds
+Loans from banks and other financial indebtedness
+Obligations under finance leases
+Fair value
+31,877
+Sep 30, 2015
+1,995
+574
+In October 2015, Siemens AG and Siemens Israel Ltd., Israel,
+were asked to present their position before the Israeli District
+Attorney (DA) regarding potentially illegal payments that were
+allegedly paid to Israeli Electric Company-representatives in the
+early 2000's. In August 2015, the Israeli Exchange Supervisory
+Authority (ISA) concluded its investigation and transferred
+the investigation files to the DA, who will make the decision
+whether or not to take any legal steps against any of the sus-
+pects named in the ISA investigation. Siemens has not been
+served with any charges so far. Siemens is cooperating with
+the Israeli authorities.
+As previously reported, in May 2013, Siemens Ltda., Brazil,
+(Siemens Ltda.) entered into a leniency agreement with the
+Administrative Council for Economic Defense (CADE) and other
+relevant Brazilian authorities relating to possible antitrust vio-
+lations in connection with alleged anticompetitive irregulari-
+ties in metro and urban train projects, in which Siemens Ltda.
+and partially Siemens AG, as well as a number of other compa-
+nies participated as contractor. In March 2014, CADE com-
+menced administrative proceedings, confirming Siemens
+Ltda.'s immunity from administrative fines for the reported po-
+tential misconduct. In connection with the above mentioned
+metro and urban train projects, several Brazilian authorities
+initiated investigations relating to alleged criminal acts (cor-
+ruptive payments, anti-competitive conduct, undue influence
+on public tenders).
+As previously reported, in March 2014, Siemens was informed
+that in connection with the above mentioned metro and urban
+train projects the Public Prosecutor's Office São Paulo has re-
+quested criminal proceedings at court into alleged violations of
+Brazilian antitrust law against a number of individuals includ-
+ing current and former Siemens employees. The proceedings
+continue; the Public Prosecutor's Office São Paulo has, in the
+meantime, appealed all decisions where the courts denied
+opening criminal trials.
+As previously reported, in May 2014, the Public Affairs Office
+(Ministério Público) São Paulo initiated a lawsuit against
+Siemens Ltda. as well as other companies and several indivi-
+duals claiming, inter alia, damages in an amount of BRL2.5 bil-
+lion (approximately €558 million as of September 2015) plus
+adjustments for inflation and related interest in relation to train
+refurbishment contracts entered into between 2008 and 2011.
+A technical note issued by the Brazilian cartel authority CADE
+earlier in 2014 had not identified evidence suggesting Siemens
+Ltda.'s involvement in anticompetitive conduct in relation to
+these refurbishment contracts. In January 2015 the district
+court of São Paulo admitted a lawsuit of the State of São Paulo
+and two customers against Siemens Ltda., Siemens AG and
+other companies and individuals claiming damages in an un-
+specified amount. In March 2015, the district court of São Paulo
+admitted a lawsuit of the Public Affairs Office (Ministério
+Público) São Paulo against Siemens Ltda. and other companies
+claiming, inter alia, damages in an amount of BRL487 million
+(approximately €109 million as of September 2015) plus adjust-
+ments for inflation and related interest in relation to train main-
+tenance contracts entered into in 2000 and 2002. In Septem-
+ber 2015, the district court of São Paulo admitted another
+lawsuit of the Public Affairs Office (Ministério Público) São Paulo
+against Siemens Ltda. and other companies claiming, inter
+alia, damages in an amount of BRL918 million (approximately
+€205 million as of September 2015) plus adjustments for infla-
+tion and related interest in relation to train maintenance con-
+tracts entered into in 2006 and 2007. Siemens will defend itself
+against these actions. It cannot be excluded that further signif-
+icant damage claims will be brought by customers or the state
+against Siemens.
+As previously reported, CADE is conducting - unrelated to the
+above mentioned proceedings - two further investigations into
+possible antitrust behavior in the field of gas-insulated and
+air-insulated switchgear from the 1990's to 2006. Siemens is
+cooperating with the authorities.
+Consolidated Financial Statements 89
+00
+90
+As previously reported, in June 2015, Siemens Ltda. once again
+appealed to the Supreme Court against a decision confirming
+the decision of the previous court to suspend Siemens Ltda.
+from participating in public tenders and signing contracts
+with public administrations in Brazil for a five year term based
+on alleged irregularities in calendar 1999 and 2004 public ten-
+ders with the Brazilian Postal authorities. In July 2015, the
+court suspended enforcement of the debarment decision pend-
+ing the appeal.
+As previously reported, the Vienna public prosecutor in Austria
+is conducting an investigation into payments between calendar
+1999 and calendar 2006 relating to Siemens Aktiengesellschaft
+Österreich, Austria, for which adequate services rendered
+could not be identified. In September 2011, the Vienna public
+prosecutor extended the investigations to include a tax evasion
+matter for which Siemens AG Österreich is potentially liable.
+Siemens is cooperating with the authorities.
+2,620
+Siemens is in the course of its normal business operations in-
+volved in numerous Legal Proceedings in various jurisdictions.
+These Legal Proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages,
+equitable remedies or criminal or civil sanctions, fines or dis-
+gorgement of profit. In individual cases this may also lead to
+formal or informal exclusion from tenders or the revocation or
+loss of business licenses or permits. In addition, further Legal
+Proceedings may be commenced or the scope of pending Legal
+Proceedings may be expanded. Asserted claims are generally
+subject to interest rates.
+For Legal Proceedings information required under IAS 37, Provi-
+sions, Contingent Liabilities and Contingent Assets is not dis-
+closed if the Company concludes that disclosure can be expected
+to seriously prejudice the outcome of the matter.
+NOTE 22 Additional disclosures on financial
+instruments
+The following table discloses the carrying amounts of each cat-
+egory of financial assets and financial liabilities:
+(in millions of €)
+Loans and receivables1
+Cash and cash equivalents
+Derivatives designated in a hedge
+accounting relationship
+Financial assets held for trading
+Available-for-sale financial assets²
+Financial assets
+2015
+36,268
+Sep 30,
+2014
+32,281
+9,957
+8,013
+608
+Some of these Legal Proceedings could result in adverse deci-
+sions for Siemens that may have material effects on its finan-
+cial position, the results of its operations and/or its cash flows
+in the respective reporting period. At present, Siemens does
+not expect any matters not described in this Note to have mate-
+rial effects on its financial position, the results of its operations
+and/or its cash flows.
+1,383
+Carrying
+amount
+Sep 30, 2014
+Available-for-sale financial assets: Debt instruments
+1,131
+10
+1,141
+Derivative financial instruments
+3,181
+46
+3,228
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+2,574
+2,299
+46
+In connection with fair value hedges
+329
+329
+In connection with cash flow hedges
+279
+279
+Financial liabilities measured at fair value - Derivative financial instruments
+1,919
+1,919
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+2,620
+Fair value
+318
+Available-for-sale financial assets: Equity instruments
+Carrying
+amount
+26,516
+25,955
+18,787
+11
+3,544
+207
+3,559
+147
+2,605
+216
+2,626
+156
+1,980
+Fixed-rate and variable-rate receivables with a remaining
+term of more than twelve months, including receivables from
+finance leases, are evaluated by the Company based on pa-
+rameters such as interest rates, specific country risk factors,
+individual creditworthiness of the customer, and the risk
+characteristics of the financed project. Based on this evalua-
+tion, allowances for these receivables are recognized.
+The following table allocates financial assets and financial lia-
+bilities measured at fair value to the three levels of the fair
+value hierarchy:
+(in millions of €)
+Level 1
+Level 2
+Level 3
+Sep 30, 2015
+Total
+Financial assets measured at fair value
+1,980
+4,313
+374
+6,668
+The fair value of notes and bonds is based on prices provided
+by price service agencies at the period-end date (Level 2). The
+fair value of loans from banks and other financial indebted-
+ness, obligations under finance leases as well as other non-cur-
+rent financial liabilities is estimated by discounting future cash
+flows using rates currently available for debt of similar terms
+and remaining maturities (Level 2).
+1,874
+Asset
+843
+957
+Other financial
+indebtedness
+1,737
+3
+16
+50
+Obligations under
+finance leases
+37
+19
+71
+Trade payables
+7,740
+23
+12
+Other financial liabilities
+1,189
+145
+98
+16
+Derivative financial
+liabilities
+80
+783
+Loans from banks
+13,746
+If there are no conflicting country-specific regulations, all
+Siemens operating units generally obtain any required financ-
+ing through Corporate Treasury in the form of loans or inter-
+company clearing accounts. The same concept is adopted for
+deposits of cash generated by the units.
+As of September 30, 2015 and 2014 the VaR relating to the inter-
+est rate was €500 million and €220 million. In fiscal 2015 the
+interest VaR mainly increased due to the issuance of fixed-rate
+US$ bonds and higher interest rate volatilities for EUR and US$.
+The issuance of fixed-rate U.S. dollar bonds locked in a fixed
+rate and thus avoided additional cash flow risk.
+EQUITY PRICE RISK
+Siemens' investment portfolio consists of direct and indirect
+investments in publicly traded companies held for purposes
+other than trading. The direct participations result mainly from
+strategic partnerships, strengthening Siemens' focus on its
+core business activities or compensation from merger and ac-
+quisitions transactions; indirect investments in fund shares are
+mainly transacted for financial reasons.
+These investments are monitored based on their current mar-
+ket value, affected primarily by fluctuations in the volatile tech-
+nology-related markets worldwide. As of September 30, 2015
+and 2014 the market value of Siemens' portfolio in publicly
+traded companies was €1,814 million compared to €1,351 mil-
+lion in the prior year. The increase is due mainly to higher mar-
+ket values of our stakes in OSRAM and Atos.
+As of September 30, 2015 and 2014, the VaR relating to the eq-
+uity price was €189 and €122 million. The increase is due
+mainly to higher market values related to the above-mentioned
+stakes and an increased volatility.
+LIQUIDITY RISK
+Liquidity risk results from the Company's inability to meet its
+financial liabilities. Siemens follows a deliberated financing
+policy that is aimed towards a balanced financing portfolio, a
+diversified maturity profile and a comfortable liquidity cushion.
+Siemens mitigates liquidity risk by the implementation of an
+effective working capital and cash management, arranged
+credit facilities with highly rated financial institutions, via a
+debt issuance program and via a global multi-currency com-
+mercial paper program. Liquidity risk may also be mitigated by
+the Siemens Bank GmbH, which increases the flexibility of de-
+positing cash or refinancing.
+In addition, Siemens constantly monitors funding options
+available in the capital markets, as well as trends in the avail-
+ability and costs of such funding, with a view to maintaining
+financial flexibility and limiting repayment risks.
+The following table reflects the contractually fixed pay-offs for
+settlement, repayments and interest. The disclosed expected
+undiscounted net cash outflows from derivative financial liabil-
+ities are determined based on each particular settlement date
+of an instrument and based on the earliest date on which
+Siemens could be required to pay. Cash outflows for financial
+liabilities (including interest) without fixed amount or timing
+are based on the conditions existing at September 30, 2015.
+943
+96 Consolidated Financial Statements
+2016
+2017
+2018 to
+2020
+Fiscal year
+2021 and
+thereafter
+7
+(in millions of €)
+liabilities
+Notes and bonds
+3,243
+5,667
+9,175
+Non-derivative financial
+508
+537
+23
+by reference to historic volatilities. The model applies a risk-free
+interest rate of up to 0.3% in fiscal 2015 and up to 1.0% in fiscal
+2014 and an expected dividend yield of 3.8% in fiscal 2015 and
+3.1% in fiscal 2014. Assumptions concerning share price cor-
+relations were determined by reference to historic correlations.
+In addition, in fiscal 2014, agreements were entered into which
+entitle members of the Managing Board to EPS-based stock
+awards and Bonus Awards contingent upon the target attain-
+ment. The fair value of these entitlements amounting to
+€5 million and €2 million was determined by calculating the
+present value of the target amount.
+Commitments to members of the senior
+management and other eligible employees
+In fiscal 2015 and 2014, 366,929 and 769,049 stock awards, re-
+spectively, were granted based on the EPS target. The fair value
+of these stock awards amounts to €27 million and €62 million,
+respectively, in fiscal 2015 and 2014, and corresponds to the
+amount representing the EPS target attainment.
+In fiscal 2015 and 2014, 1,162,028 and 652,162 stock awards,
+respectively, were granted contingent upon attaining the pro-
+spective performance-based target of Siemens stock relative to
+five competitors. The fair value of equity-settled stock awards
+amounting to €57 million and €40 million, respectively, in fis-
+cal 2015 and 2014, was calculated by applying a valuation
+model. In fiscal 2015 and 2014, inputs to that model include an
+expected weighted volatility of Siemens shares of 22% and 23%,
+respectively, and a market price of €88.03 and €95.62 per
+Siemens share. Expected volatility was determined by reference
+to historic volatilities. The model applies a risk-free interest rate
+of up to 0.3% in fiscal 2015 and up to 0.9% in fiscal 2014 and an
+expected dividend yield of 3.8% in fiscal 2015 and 3.1% in fiscal
+2014. Assumptions concerning share price correlations were
+determined by reference to historic correlations.
+Changes in the stock awards held by members of the senior
+management and other eligible employees are:
+Vested and fulfilled
+Forfeited
+2015
+Fiscal year
+2014
+Non-vested, beginning of period
+Granted
+4,985,998
+Commitments to members of the Managing Board
+In fiscal 2015 and 2014, agreements were entered into which
+entitle members of the Managing Board to stock awards contin-
+gent upon attaining the prospective performance-based target
+of Siemens stock relative to five competitors. The fair value of
+these entitlements amounting to €9 million and €5 million, re-
+spectively, in fiscal 2015 and 2014, was calculated by applying a
+valuation model. In fiscal 2015 and 2014, inputs to that model
+include an expected weighted volatility of Siemens shares of
+22% and 22%, respectively, and a market price of €88.03 and
+€98.36 per Siemens share. Expected volatility was determined
+1,528,957
+(1,041,376)
+(159,754)
+(120,350)
+(305,951)
+(149,942)
+Non-vested, end of period
+6,049,250
+4,985,998
+|
+Settled
+98 Consolidated Financial Statements
+4,876,455
+1,421,211
+Interest rate risk is the risk that the fair value or future cash
+flows of a financial instrument will fluctuate because of changes
+in market interest rates. This risk arises whenever interest terms
+of financial assets and liabilities are different. In order to man-
+age the Company's position with regard to interest rate risk, in-
+terest income and interest expenses, Corporate Treasury per-
+forms a comprehensive corporate interest rate risk management
+by using fixed or variable interest rates from bond issuances
+and derivative financial instruments when appropriate. The in-
+terest rate risk relating to the Group, excluding SFS' business, is
+mitigated by managing interest rate risk actively relatively to a
+benchmark. The interest rate risk relating to the SFS' business is
+managed separately, considering the term structure of SFS's fi-
+nancial assets and liabilities. The Company's interest rate risk
+results primarily from the funding in U.S. dollar, GBP and euro.
+Until fiscal 2014, additionally one portion of the variable com-
+pensation component (bonus) for members of the Managing
+Board was granted in the form of non-forfeitable awards of
+Siemens stock (Bonus Awards) subject to a vesting period of
+one year. Beneficiaries will receive one Siemens share without
+payment of consideration for each Bonus Award, following an
+additional waiting period of four years.
+The Company grants stock awards to members of the Manag-
+ing Board, members of the senior management and other eligi-
+ble employees. Stock awards are subject to a restriction period
+of about four years and entitle the beneficiary to Siemens
+shares without payment of consideration following the restric-
+tion period.
+Credit guarantees¹
+859
+Irrevocable loan
+commitments²
+3,300
+158
+125
+101
+7
+1 Based on the maximum amounts Siemens could be required to settle in the event
+of default by the primary debtor.
+2 A considerable portion result from asset-based lending transactions meaning
+that the respective loans can only be drawn after sufficient collateral has been
+provided by the borrower.
+Stock awards are tied to performance criteria. The annual target
+amount for stock awards can be bound to the average of earn-
+ings per share (EPS, basic) of the past three fiscal years and/or
+to the share price performance of Siemens relative to the share
+price performance of five important competitors during the
+four-year restriction period. The target attainment for the per-
+formance criteria ranges between 0% and 200%. If the target
+attainment of the prospective performance-based target of
+Siemens stock relative to five competitors exceeds 100%, an ad-
+ditional cash payment results corresponding to the outperfor-
+mance. The vesting period is four years and five years for stock
+awards granted to members of the Managing Board in fiscal
+2014, respectively.
+CREDIT RISK
+Siemens provides its customers with various forms of direct
+and indirect financing particularly in connection with large
+projects. Hence, credit risks arise are determined by the sol-
+vency of the debtors, the recoverability of the collaterals and
+the global economic development.
+The effective monitoring and controlling of credit risk through
+credit evaluations and ratings is a core competency of our risk
+management system. In this context, Siemens has imple-
+mented a binding credit policy for all entities.
+Ratings, defined and analyzed by SFS, and individually defined
+credit limits are based on generally accepted rating methodolo-
+gies, with the input consisting of information obtained from
+the customer, external rating agencies, data service providers
+and Siemens' credit default experiences. Ratings and credit lim-
+its for financial institutions as well as Siemens' public and pri-
+vate customers, which are determined by internal risk assess-
+ment specialists, are continuously updated and considered by
+investments in cash and cash equivalents, and in determining
+the conditions under which direct or indirect financing will be
+offered to customers.
+For analysis and monitoring of the credit risk the Company ap-
+plies different systems and processes. A central IT application
+processes data from the operating units together with rating
+and default information and calculates an estimate which may
+be used as a basis for individual bad debt provisions. In addi-
+tion to this automated process, qualitative information is con-
+sidered, in particular to incorporate the latest developments.
+Furthermore Corporate Treasury has established the Siemens
+Credit Warehouse to which numerous operating units from the
+Siemens Group regularly transfer business partner data as a ba-
+sis for a centralized rating process. Furthermore, the Siemens
+Credit Warehouse purchases trade receivables from numerous
+operating units with a remaining term up to one year. Due to
+the identification, quantification and active management of
+the credit risk the Siemens Credit Warehouse increases the
+transparency with regard to credit risk. In addition, the Siemens
+Credit Warehouse may provide Siemens with an additional
+source of liquidity and strengthens Siemens' funding flexibility.
+The maximum exposure to credit risk of financial assets, with-
+out taking account of any collateral, is represented by their car-
+rying amount. As of September 30, 2015 and 2014 the collateral
+for financial instruments classified as financial assets measured
+at fair value in the form of netting agreements for derivatives
+in the event of insolvency of the respective counterparty
+amounted to €1,065 million and €955 million, respectively. As
+of September 30, 2015 and 2014 the collateral held for financial
+instruments classified as receivables from finance leases
+amounted to €2,003 million and €2,057 million, respectively,
+mainly in the form of the leased equipment. As of Septem-
+ber 30, 2015 and 2014 the collateral held for financial instru-
+ments classified as financial assets measured at cost or amor-
+tized cost amounted to €3,165 million and €2,841 million,
+respectively. The collateral mainly consisted of property, plant
+and equipment. Credit risks arising from irrevocable loan com-
+mitments are equal to the expected future pay-offs resulting
+from these commitments. As of September 30, 2015 and 2014
+the collateral held for these commitments amounted to
+€1,445 million and €1,466 million, respectively, mainly in the
+form of inventories and receivables.
+Concerning trade receivables and other receivables, as well as
+loans or receivables included in line item Other financial assets
+that are neither impaired nor past due, there were no indica-
+tions that defaults in payment obligations will occur, which
+lead to a decrease in the net assets of Siemens. Overdue finan-
+cial instruments are generally impaired on a portfolio basis in
+order to reflect losses incurred within the respective portfolios.
+When substantial expected payment delays become evident,
+overdue financial instruments are assessed individually for ad-
+ditional impairment and are further allowed for as appropriate.
+Consolidated Financial Statements 97
+NOTE 25 Share-based payment
+Share-based payment awards may be settled in newly issued
+shares of capital stock of Siemens AG, in treasury shares or in
+cash. Share-based payment awards may forfeit if the employ-
+ment of the beneficiary terminates prior to the expiration of
+the vesting period. Total pretax expense for share-based pay-
+ment amounted to €203 million and €183 million for the years
+ended September 30, 2015 and 2014, respectively, and refers
+primarily to equity-settled awards.
+STOCK AWARDS
+Credit risk is defined as an unexpected loss in financial instru-
+ments if the contractual partner is failing to discharge its obli-
+gations in full and on time or if the value of collateral declines.
+1,032
+INTEREST RATE RISK
+Translation risk
+Financial liabilities - Derivative financial liabilities
+1,533
+7
+1,526
+905
+621
+|
+Consolidated Financial Statements 93
+NOTE 23 Derivative financial instruments
+and hedging activities
+Fair values of each type of derivative financial instruments
+recorded as financial assets or financial liabilities are:
+Periods in which the hedged forecast transactions or the firm
+commitments denominated in foreign currency are expected to
+impact profit or loss:
+Fiscal year
+(in millions of €)
+2016
+2017
+2018 to
+2020
+2021 and
+thereafter
+(in millions of €)
+Sep 30, 2015
+Liability
+Asset
+Sep 30, 2014
+Liability
+Foreign currency
+Expected gain (loss) to be
+reclassified from line item
+Other comprehensive in-
+400
+400
+400
+Reverse repurchase agreements
+Gross
+amounts
+Amounts set
+Net amounts
+off in the
+Statement of
+in the
+Statement of
+Financial
+Position
+Financial
+Position
+Related
+amounts not
+set off in the
+Statement of
+Financial
+Position
+Sep 30, 2014
+Net
+amounts
+exchange contracts
+(in millions of €)
+2,764
+7
+2,757
+1,355
+1,402
+Derivative financial assets
+2,364
+7
+2,357
+955
+1,402
+Financial assets
+713
+1,297
+352
+INTEREST RATE RISK MANAGEMENT
+Derivative financial instruments
+not designated in a hedging relationship
+For the interest rate risk management relating to the Group ex-
+cluding SFS' business, derivative financial instruments are used
+under a portfolio-based approach to manage interest risk ac-
+tively relative to a benchmark. The interest rate management
+relating to the SFS business remains to be managed separately,
+considering the term structure of SFS' financial assets and lia-
+bilities on a portfolio basis. Neither approach qualifies for
+hedge accounting treatment. Net cash receipts and payments
+in connection with interest rate swap agreements are recorded
+as interest expense in Other financial income (expenses), net.
+Cash flow hedges of floating-rate
+commercial papers
+Since fiscal 2015, Siemens applies cash flow hedge accounting
+to a revolving portfolio of floating-rate commercial papers of
+nominal US$700 million. To benefit from low interest rates in
+the USA, Siemens pays a fixed rate of interest and receives a
+variable rate of interest, offsetting future changes in interest
+payments of the underlying floating-rate commercial papers.
+Net cash receipts and payments are recorded as interest ex-
+penses.
+Fair value hedges of fixed-rate debt obligations
+Under the interest rate swap agreements outstanding during
+the years ended September 30, 2015 and 2014, the Company
+has agreed to pay a variable rate of interest multiplied by a no-
+tional principle amount, and to receive in return an amount
+equal to a specified fixed rate of interest multiplied by the same
+notional principal amount. These interest rate swap agree-
+ments offset an impact of future changes in interest rates des-
+ignated as the hedged risk on the fair value of the underlying
+fixed-rate debt obligations. Carrying amount adjustments to
+debt for fair value changes attributable to the respective interest
+rate risk being hedged are included in Other financial income
+94
+94
+Consolidated Financial Statements
+(expenses), net resulted in a gain (loss) of €103 million and
+€(8) million, respectively, in fiscal 2015 and 2014; the related
+swap agreements resulted in a gain (loss) of €(135) million and
+€3 million, respectively. Net cash receipts and payments relat-
+ing to such interest rate swap agreements are recorded as inter-
+est expenses.
+The Company had interest rate swap contracts to pay variable
+rates of interest of an average of 0.1% and 0.3% as of Septem-
+ber 30, 2015 and 2014, respectively and received fixed rates of
+interest (average rate of 4.3% and 4.0%, as of September 30,
+2015 and 2014, respectively). The notional amount of indebted-
+ness hedged as of September 30, 2015 and 2014 was €6,012 mil-
+lion and €6,645 million, respectively. This changed 26% and
+41% of the Company's underlying notes and bonds from fixed
+interest rates into variable interest rates as of September 30,
+2015 and 2014, respectively. The notional amounts of these
+contracts mature at varying dates based on the maturity of the
+underlying hedged items. The net fair value of interest rate
+swap contracts (excluding accrued interest) used to hedge in-
+debtedness as of September 30, 2015 and 2014 was €242 mil-
+lion and €386 million, respectively.
+The Company's operating units apply hedge accounting for cer-
+tain significant forecast transactions and firm commitments
+denominated in foreign currencies. Particularly, the Company
+has entered into foreign currency exchange contracts to reduce
+the risk of variability of future cash flows resulting from fore-
+cast sales and purchases as well as firm commitments. This risk
+results mainly from contracts denominated in US$ both from
+Siemens' operating units entering into long-term contracts e.g.
+project business and from standard product business.
+NOTE 24 Financial risk management
+In order to quantify market risks Siemens has implemented a
+system based on parametric variance-covariance Value at Risk
+(VAR), which is also used for internal management of the Cor-
+porate Treasury activities. The VaR figures are calculated based
+on historical volatilities and correlations of various risk factors,
+a ten day holding period, and a 99.5% confidence level.
+Actual results that are included in the Consolidated Statements
+of Income or Consolidated Statements of Comprehensive In-
+come may differ substantially from VaR figures due to funda-
+mental conceptual differences. While the Consolidated State-
+ments of Income and Consolidated Statements of Comprehensive
+Income are prepared in accordance with IFRS, the VaR figures are
+the output of a model with a purely financial perspective and
+represent the potential financial loss which will not be exceeded
+within ten days with a probability of 99.5%. Although VaR is an
+important tool for measuring market risk, the assumptions on
+which the model is based give rise to some limitations including
+the following. A ten day holding period assumes that it is possi-
+ble to dispose of the underlying positions within this period.
+This may not be valid during continuing periods of illiquidity
+markets. A 99.5% confidence level means, that there is a 0.5%
+statistical probability that losses could exceed the calculated
+VaR. The use of historical data as a basis for estimating the sta-
+tistic behavior of the relevant markets and finally determining
+the possible range of the future outcomes on the basis of this
+statistic behavior may not always cover all possible scenarios,
+especially those of an exceptional nature.
+Any market sensitive instruments, including equity and inter-
+est bearing investments, that our Company's pension plans
+hold are not included in the following quantitative and qualita-
+tive disclosures.
+FOREIGN CURRENCY EXCHANGE RATE RISK
+Transaction risk
+Each Siemens unit conducting businesses with international
+counterparties leading to future cash flows denominated in a
+currency other than its functional currency is exposed to risks
+from changes in foreign currency exchange rates. In the ordi-
+nary course of business Siemens units are exposed to foreign
+currency exchange rate fluctuations, particularly between the
+U.S. dollar and the euro. Foreign currency exchange rate expo-
+sure is partly balanced by purchasing of goods, commodities
+and services in the respective currencies as well as production
+activities and other contributions along the value chain in the
+local markets.
+Operating units (Industrial business and SFS) are prohibited
+from borrowing or investing in foreign currencies on a specula-
+tive basis. Intercompany financing or investments of operating
+units are preferably carried out in their functional currency or
+on a hedged basis.
+According to the company policy each Siemens unit is respon-
+sible for recording, assessing and monitoring its foreign
+currency transaction exposure. The net foreign currency posi-
+tion of each unit serves as a central performance measure and
+has to be hedged within a band of at least 75% but no more
+than 100%.
+Generally, the operating units conclude their hedging activities
+internally with Corporate Treasury. By applying a cost-optimiz-
+ing portfolio approach Corporate Treasury itself hedges foreign
+currency exchange rate risks with external counterparties and
+limits them Company-wide.
+Consolidated Financial Statements 95
+As of September 30, 2015 and 2014 the VaR relating to foreign
+currency exchange rates was €179 million and €47 million. This
+VaR was calculated under consideration of items of the Consol-
+idated Statement of Financial Position in addition to firm com-
+mitments which are denominated in foreign currencies, as well
+as foreign currency denominated cash flows from forecast
+transactions for the following twelve months. A higher volatil-
+ity between the U.S. dollar and the euro in comparison to prior
+year resulted in an increase of the VaR. Furthermore, the VaR
+was influenced by changes to hedging level and hedging hori-
+zon with regard to foreign currency denominated cash flows
+from forecast transactions.
+Increasing market fluctuations may result in significant earn-
+ings and cash flow volatility risk for Siemens. The Company's
+operating business as well as its investment and financing ac-
+tivities are affected particularly by changes in foreign exchange
+rates, interest rates and equity prices. In order to optimize the
+allocation of the financial resources across the Siemens seg-
+ments and entities, as well as to achieve its aims, Siemens iden-
+tifies, analyzes and manages the associated market risks. The
+Company seeks to manage and control these risks primarily
+through its regular operating and financing activities, and uses
+derivative financial instruments when deemed appropriate.
+Many Siemens units are located outside the euro zone. Since
+the financial reporting currency of Siemens is the euro, the fi-
+nancial statements of these subsidiaries are translated into
+euro for the preparation of the Consolidated Financial State-
+ments. To consider the effects of foreign currency translation in
+the risk management, the general assumption is that invest-
+ments in foreign-based operations are permanent and that re-
+investment is continuous. Effects from foreign currency ex-
+change rate fluctuations on the translation of net asset
+amounts into euro are reflected in the Company's consolidated
+equity position.
+Cash flow hedges
+Derivative financial instruments
+901
+Interest rate swaps
+come, net of income taxes
+into revenue or cost of sales
+(163)
+(87)
+(72)
+23
+and combined interest
+and currency swaps
+1,824
+381
+not designated in a hedging relationship
+The Company manages its risks associated with fluctuations in
+foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a
+Company-wide portfolio approach. Under this approach the
+Company-wide risks are aggregated centrally, and various de-
+rivative financial instruments, primarily foreign currency ex-
+change contracts, foreign currency swaps and options, are uti-
+lized to minimize such risks. Such a strategy does not qualify
+for hedge accounting treatment. The Company also accounts
+for foreign currency derivatives, which are embedded in sale
+and purchase contracts.
+1,769
+Other (embedded
+derivatives, options,
+commodity swaps)
+691
+241
+3,228
+1,919
+448
+2,569
+391
+1,749
+FOREIGN CURRENCY EXCHANGE RATE
+RISK MANAGEMENT
+456
+Based on the above mentioned conclusion of the Israeli Anti-
+trust Authority, two electricity consumer groups filed motions to
+certify a class action for cartel damages against a number of
+companies including Siemens AG with an Israeli State Court in
+September 2013. Both class actions seek compensation for al-
+leged damages, which are claimed to be in a range of ILS2 billion
+to ILS2.8 billion (approximately €455 million to €636 million as
+of September 2015). The court dismissed one of the two class
+actions claiming ILS2 billion. This proceeding is therefore final-
+ized. In addition, the Israel Electric Corporation (IEC) filed at the
+end of December 2013 with an Israeli State Court a separate
+ILS3.8 billion (approximately €864 million as of September 2015)
+claim for damages against Siemens AG and other companies
+that allegedly formed a cartel in the Israeli gas insulated switch-
+gear market. Siemens AG is defending itself against the actions.
+As previously reported, in September 2011, the Israeli Antitrust
+Authority requested that Siemens present its legal position
+regarding an alleged anti-competitive arrangement between
+April 1988 and April 2004 in the field of gas-insulated switch-
+gear. In September 2013, the Israeli Antitrust Authority con-
+cluded that Siemens AG was a party to an illegal restrictive ar-
+rangement regarding the Israeli gas-insulated switchgear
+market between 1988 and 2004, with an interruption from Oc-
+tober 1999 to February 2002. The Company appealed against
+this decision in May 2014.
+SHARE MATCHING PROGRAM AND
+Siemens
+75,636
+71,227
+75,636
+71,227
+41,453
+31,981
+thereof Germany
+11,244
+2,753
+10,781
+18,485
+6,748
+6,497
+thereof foreign countries
+64,392
+60,446
+57,194
+52,742
+34,705
+18,443
+25,484
+2,791
+11,765
+2014
+2015
+2014
+Europe, C.I.S., Africa, Middle East
+38,799
+38,449
+42,432
+42,145
+20,085
+10,909
+17,053
+21,702
+18,494
+21,440
+18,173
+18,577
+12,175
+Asia, Australia
+15,135
+14,283
+Americas
+therein U.S.
+15,263
+12,647
+732
+197
+165
+1,052
+1,074
+236
+188
+Liabilities
+Sep 30,
+2014
+687
+Receivables
+(in millions of €)
+2015
+2014
+2015
+Joint ventures
+Associates
+167
+198
+377
+72
+Sep 30,
+Associates
+23
+39
+16,540
+13,565
+17,296
+10,861
+Non-current assets consist of property, plant and equipment,
+goodwill and other intangible assets.
+NOTE 30 Related party transactions
+JOINT VENTURES AND ASSOCIATES
+Siemens has relationships with many joint ventures and asso-
+ciates in the ordinary course of business whereby Siemens
+buys and sells a wide variety of products and services generally
+on arm's length terms.
+and services
+Purchases of goods
+and services
+Sales of goods
+and other income
+Fiscal year
+(in millions of €)
+2015
+2014
+2015
+and other expenses
+Fiscal year
+2014
+Joint ventures
+365
+341
+2015
+2014
+2015
+(in millions of €)
+RECONCILIATION TO
+CONSOLIDATED FINANCIAL STATEMENTS
+| Profit
+(in millions of €)
+Fiscal year
+2015
+2014
+Centrally managed portfolio activities
+Siemens Real Estate
+714
+Centrally managed portfolio activities follow the measurement
+principles of the segments except for SFS. SRE applies the mea-
+surement principles of SFS.
+280
+242
+Corporate items
+(709)
+(446)
+Centrally carried pension expense
+(440)
+(393)
+Amortization of intangible assets
+acquired in business combinations
+205
+MEASUREMENT - CENTRALLY MANAGED
+PORTFOLIO ACTIVITIES AND SRE:
+Amortization, depreciation and impairments:
+Amortization, depreciation and impairments includes depreci-
+ation and impairments of property, plant and equipment as
+well as amortization and impairments of intangible assets each
+net of reversals of impairment.
+Free cash flow of the segments except for SFS constitutes cash
+flows from operating activities less additions to intangible as-
+sets and property, plant and equipment. It excludes Financing
+interest, except for cases where interest on qualifying assets is
+capitalized or classified as contract costs and it also excludes
+income tax as well as certain other payments and proceeds.
+Free cash flow of SFS includes related financing interest pay-
+ments and proceeds; income tax payments and proceeds of SFS
+are excluded.
+Corporate items - includes corporate charges such as person-
+nel costs for corporate headquarters, corporate projects and
+non-operating investments or results of corporate-related de-
+rivative activities.
+Pensions - includes the Company's pension related income
+(expense) not allocated to the segments, SRE or Centrally man-
+aged portfolio activities.
+Eliminations, Corporate Treasury and other reconciling
+items comprise consolidation of transactions within the seg-
+ments, certain reconciliation and reclassification items and the
+activities of the Company's Corporate Treasury. It also includes
+interest income and expense, such as, for example, interest not
+allocated to segments or Centrally managed portfolio activities
+(referred to as financing interest), interest related to Corporate
+Treasury activities or resulting consolidation and reconciliation
+effects on interest.
+MEASUREMENT
+-
+SEGMENTS
+Accounting policies for Segment information are generally the
+same as those used for Siemens. Lease transactions, however,
+are classified as operating leases for internal and segment re-
+porting purposes. Intersegment transactions are based on mar-
+ket prices.
+Profit
+Siemens' Managing Board is responsible for assessing the per-
+formance of the segments (chief operating decision maker).
+The Company's profitability measure of the segments except
+for SFS is earnings before financing interest, certain pension
+costs, income taxes and amortization expenses of intangible
+assets acquired in business combinations as determined by the
+chief operating decision maker (Profit). The major categories of
+items excluded from Profit are presented below.
+Financing interest, excluded from Profit, is any interest income
+or expense other than interest income related to receivables
+from customers, from cash allocated to the segments and inter-
+est expenses on payables to suppliers. Financing interest is ex-
+cluded from Profit because decision-making regarding financ-
+ing is typically made at the corporate level.
+Decisions on essential pension items are made centrally.
+Accordingly, Profit primarily includes amounts related to ser-
+vice cost of pension plans only, while all other regularly recur-
+ring pension related costs are included in reconciliations in line
+item Centrally carried pension expense.
+Amortization expenses of intangible assets acquired in busi-
+ness combinations are not part of Profit. Furthermore, income
+taxes are excluded from Profit since income tax is subject to
+legal structures, which typically do not correspond to the struc-
+ture of the segments.
+The effect of certain litigation and compliance issues is ex-
+cluded from Profit, if such items are not indicative of perfor-
+mance. This may also be the case for items that refer to more
+than one reportable segment, SRE and (or) Centrally managed
+portfolio activities or have a corporate or central character. Costs
+for support functions are primarily allocated to the segments.
+Profit of the segment SFS:
+Profit of the segment SFS differs from the other segments since
+SFS uses Income before income taxes as a measure of profit.
+In contrast to performance measurement principles applied to
+other segments interest income and expenses is an important
+source of revenue and expense of SFS.
+102 Consolidated Financial Statements
+Asset measurement principles:
+Management determined Assets (Net capital employed) as a
+measure to assess capital intensity of the segments except for
+SFS. Its definition corresponds to the Profit measure except for
+amortization expenses of intangible assets acquired in busi-
+ness combinations which are not part of Profit, however, the
+related intangible assets are included in the segments' Assets.
+Segment Assets is based on Total assets of the Consolidated
+Statements of Financial Position, primarily excluding intra-
+group financing receivables, tax related assets and assets of
+discontinued operations, since the corresponding positions are
+excluded from Profit. Mobility includes in Assets the project-
+specific intercompany financing of a long-term project. The re-
+maining assets are reduced by non-interest-bearing liabilities
+other than tax related liabilities, e.g. trade payables, to derive
+Assets. In contrast, Assets of SFS is Total assets.
+Orders:
+Orders are determined principally as estimated revenue of ac-
+cepted purchase orders and order value changes and adjust-
+ments, excluding letters of intent.
+Free cash flow definition:
+(543)
+113
+(498)
+(365)
+Liability-based adjustments
+42,282
+37,779
+Eliminations, Corporate Treasury, other items
+Reconciliation to
+(34,315)
+(30,372)
+Consolidated Financial Statements
+60,855
+58,351
+3,781
+Consolidated Financial Statements
+NOTE 29 Information about geographies
+Revenue by location
+of customer
+Revenue by location
+of companies
+Fiscal year
+Fiscal year
+Non-current
+assets
+Sep 30,
+103
+3,103
+Tax-related assets
+42,129
+(48)
+Consolidated Financial Statements
+(1,138)
+(862)
+In fiscal 2015, Corporate items included €196 million in sever-
+ance charges for corporate reorganization of support functions.
+In fiscal 2014, Profit includes a one-time effect of €186 million
+regarding insurance matters, which were mainly included in
+Eliminations.
+In fiscal 2015 and 2014, Profit of SFS includes interest income
+of €1,086 million and €966 million, respectively and interest
+expenses of €340 million and €336 million, respectively.
+Assets
+(in millions of €)
+2015
+Sep 30,
+2014
+Assets Centrally managed portfolio activities
+Assets Siemens Real Estate
+1,322
+2,116
+4,895
+4,696
+Assets Corporate items and pensions
+(2,007) (1,779)
+Asset-based adjustments:
+Intragroup financing receivables
+and investments
+45,576
+Eliminations, Corporate Treasury,
+and other reconciling items
+Reconciliation to
+Siemens Real Estate (SRE) - manages the Group's entire real
+estate business portfolio, operates the properties, and is re-
+sponsible for building projects and the purchase and sale of
+real estate.
+82
+255
+1008
+evosoft GmbH, Nuremberg
+10011
+FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
+Munich
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+Siemens Convergence Creators GmbH & Co. KG, Hamburg
+1008
+10010
+10010
+HanseCom Gesellschaft für Informations- und
+Kommunikationsdienstleistungen mbH, Hamburg
+10010
+Siemens Convergence Creators Management GmbH, Hamburg
+Siemens Finance & Leasing GmbH, Munich
+10011
+74
+Siemens Financial Services GmbH, Munich
+10011
+HSP Hochspannungsgeräte GmbH, Troisdorf
+10011
+Siemens Fonds Invest GmbH, Munich
+10011
+ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
+IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
+1008
+85
+10010
+10010
+10010
+Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
+DA Creative GmbH, Munich
+100
+100
+Dade Behring Beteiligungs GmbH, Eschborn
+100
+Dade Behring Grundstücks GmbH, Marburg
+100
+D-R Holdings (Germany) GmbH, Oberhausen
+10010
+100
+100
+EDI - USS Umsatzsteuersammelrechnungen und Signaturen
+GmbH & Co. KG, Munich
+10010
+EDI - USS Verwaltungsgesellschaft mbH, Munich
+1008
+Siemens Campus Erlangen Objekt 1 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 2 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objektmanagement GmbH,
+Grünwald
+10010
+10010
+10010
+Dresser-Rand GmbH, Oberhausen
+Jawa Power Holding GmbH, Erlangen
+100
+10011
+Siemens Fuel Gasification Technology GmbH & Co. KG, Freiberg
+Siemens Fuel Gasification Technology Verwaltungs GmbH,
+Freiberg
+100
+10011
+10010
+Siemens Immobilien Chemnitz-Voerde GmbH, Grünwald
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+100
+7 Significant influence due to contractual arrangements or legal circumstances.
+No significant influence due to contractual arrangements or legal circumstances.
+8
+Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+108
+Consolidated Financial Statements
+ITS UNDERLYING PLANS
+6
+Siemens Healthcare Diagnostics Holding GmbH, Eschborn
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+Siemens Healthcare GmbH, Erlangen
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt
+Tübingen KG, Grünwald
+51
+10010
+1008
+KompTime GmbH, Munich
+Kyra 1 GmbH, Erlangen
+Kyros 48 GmbH, Munich
+10011
+10011
+Siemens Global Innovation Partners Management GmbH,
+Munich
+1008
+1008
+Kyros 49 GmbH, Munich
+1008
+Siemens Grundstücksmanagement GmbH & Co. OHG,
+Grünwald
+100
+Lincas Electro Vertriebsgesellschaft mbH, Hamburg
+100
+Siemens Healthcare Diagnostics GmbH, Eschborn
+100
+Mannesmann Demag Krauss-Maffei GmbH, Munich
+100
+Omnetric GmbH, Munich
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
+Grünwald
+10010
+CAPTA Grundstücksgesellschaft mbH & Co. KG i.L., Grünwald
+10011
+Fees related to professional services rendered by the Compa-
+ny's principal accountant, EY, for fiscal 2015 and 2014 are:
+Fiscal year
+(in millions of €)
+2015
+2014
+Audit services
+43.7
+43.5
+Other attestation services
+NOTE 31 Principal accountant fees
+and services
+7.1
+Tax services
+0.1
+0.2
+0.1
+51.0
+49.6
+Other services
+In fiscal 2015 and 2014, 45% and 44%, respectively, of the total
+fees related to Ernst & Young GmbH Wirtschaftsprüfungs-
+gesellschaft, Germany.
+106 Consolidated Financial Statements
+5.9
+Some of our board members hold, or in the last year have held,
+positions of significant responsibility with other entities. We
+have relationships with almost all of these entities in the ordi-
+nary course of our business whereby we buy and sell a wide
+variety of products and services on arm's length terms.
+In fiscal 2015 and 2014, no other major transactions took place
+between the Company and the members of the Managing
+Board and the Supervisory Board.
+Information regarding the remuneration of the members of the
+Managing Board and Supervisory Board is disclosed on an indi-
+vidual basis in the Compensation Report, which is part of the
+combined management report.
+280
+280
+1,015
+327
+As of September 30, 2015 and 2014, guarantees to joint ven-
+tures and associates amounted to €2,145 million and
+€2,263 million, respectively, including the HERKULES obliga-
+tions of €1,090 million and €1,490 million, respectively. As of
+September 30, 2015 and 2014, guarantees to joint ventures
+amounted to €472 million and €593 million, respectively. As of
+September 30, 2015 and 2014, the Company had commitments
+to make capital contributions of €38 million and €107 million to
+its joint ventures and associates, therein €26 million and
+€56 million related to joint ventures, respectively. For a loan
+raised by a joint venture, which is secured by a Siemens guar-
+antee, Siemens granted an additional collateral. As of Septem-
+ber 30, 2015 and 2014 the outstanding amount totaled to
+€124 million and €129 million, respectively. As of September 30,
+2015 and 2014 there were loan commitments to joint ventures
+and associates amounting to €134 million and €52 million, re-
+spectively, therein €58 million and €52 million, respectively
+related to joint ventures.
+RELATED INDIVIDUALS
+In fiscal 2015 and 2014, members of the Managing Board re-
+ceived cash compensation of €19.6 million and €17.9 million.
+The fair value of stock-based compensation amounted to
+€7.9 million and €10.7 million for 113,281 and 170,444 Stock
+Awards, respectively, in fiscal 2015 and 2014. In fiscal 2015 and
+2014, the Company granted contributions under the BSAV to
+members of the Managing Board totaling €4.8 million and
+€5.1 million.
+104 Consolidated Financial Statements
+Therefore in fiscal 2015 and 2014, compensation and benefits,
+attributable to members of the Managing Board amounted to
+€32.2 million and €33.7 million in total, respectively.
+In connection with the mutually agreed-upon termination of
+Prof. Dr. Hermann Requardt's activity on the Managing Board as
+of January 31, 2015, it was agreed that his current employment
+contract with the Company would terminate as of Septem-
+ber 30, 2015. The entitlements agreed upon under the contract
+remained in effect until that date. A gross compensatory pay-
+ment of €1,888,566 and a one-time special contribution of
+€279,552 to the BSAV were agreed upon with Prof. Dr. Hermann
+Requardt in connection with the mutually agreed-upon prema-
+ture termination of his Managing Board membership. The
+86,281 Stock Awards already granted and for which the restric-
+tion period is still in effect, will be maintained, in accordance
+with the terms of his employment contract, and will be settled
+in cash at the closing price of Siemens stock in Xetra trading on
+September 30, 2015 (€79.94). The respective fair value of the
+Stock Awards already granted in the past at grant date
+amounted to €5.77 million. The Stock Awards for fiscal 2015 are
+included in the above mentioned stock-based compensation
+amount. In addition, non-monetary benefits were covered by a
+payment amounting to 5% of the compensatory payment. The
+Company also reimbursed Prof. Dr. Requardt for out-of-pocket
+expenses of €5,000 plus value-added tax.
+In fiscal 2014, in compensation for the forfeiture of stock, pen-
+sion benefits, health benefits and transitional remuneration from
+her former employer, the Supervisory Board granted Ms. Davis a
+one-time amount of €5.5 million. This amount was provided 20%
+in cash, 30% in the form of Siemens Stock Awards and the re-
+maining 50% as a special contribution to the pension plan.
+In fiscal 2014, the following settlements have been agreed in
+connection with termination of Managing Board memberships:
+As Barbara Kux's appointment to the Managing Board expired
+regularly on November 16, 2013, no compensatory payments
+were agreed upon. The 51,582 Stock Awards already granted in
+the past for fiscal 2011, 2012 and 2013, for which the restriction
+period was still running, were maintained, in accordance with
+the terms of her contract with the Company. The respective fair
+value of these Stock Awards at grant date amounted to
+€3.47 million.
+In connection with the mutually agreed termination of Peter Y.
+Solmssen's activity on the Managing Board as of December 31,
+2013, it was agreed that his contract with the Company would
+remain in effect until March 31, 2015. The entitlements agreed
+under the contract remained in effect until that date. These did
+not include the fringe benefits under the contract, particularly
+the Company car and contributions toward the cost of insur-
+ance, which was covered until the contract ends by a monthly
+lump-sum payment of €11,500. The 51,582 Stock Awards al-
+ready granted in the past for fiscal 2011, 2012 and 2013, for
+which the restriction period was still in progress, were main-
+tained. The respective fair value of these Stock Awards at grant
+date amounted to €3.47 million. Mr. Solmssen was also reim-
+bursed for relocation costs, in accordance with the commit-
+ment he received when he took office. The Company further-
+more reimbursed Mr. Solmssen for out-of-pocket expenses of
+€100,000 plus value-added tax.
+In connection with the mutually agreed termination of
+Dr. Michael Süẞ's activity on the Managing Board as of May 6,
+2014, it was agreed that his current contract with the Company
+would terminate as of September 30, 2014. The entitlements
+agreed under the contract remained in effect until that date.
+Dr. Süẞ received a compensatory payment in the gross amount
+of €4.3 million in connection with the mutually agreed prema-
+ture termination of his activity as a member of the Managing
+Board, together with a one-time special contribution of
+€0.8 million to the BSAV, credited in January 2015. It was also
+agreed with Dr. Süß that the long-term stock-based compensa-
+tion (8,126 Stock Awards) for fiscal 2014 were calculated once
+the actual target attainment was available, and were granted at
+the usual date. The 46,399 Stock Awards already granted in the
+past and those for fiscal 2014, for which the restriction period
+was still running, were maintained (54,525 Stock Awards), in
+accordance with the terms of his contract with the Company,
+and were settled in cash in September 2015 at the closing price
+of Siemens stock in Xetra trading on May 6, 2014 (€93.91). The
+respective fair value of the Stock Awards already granted in the
+past at grant date amounted to €3.16 million. The Stock Awards
+for fiscal 2014 were included in the above mentioned stock-
+based compensation amount. Dr. Süß agreed not to take up ac-
+tivities for any significant competitor of Siemens for a period of
+one year after the end of his employment contract - that was,
+until September 30, 2015. For this post-contractual non-compete
+commitment, he has been paid a monthly total of gross €65,000.
+Consolidated Financial Statements
+105
+In fiscal 2015 and 2014, expense related to share-based pay-
+ment and to the Share Matching Program amounted to
+€8.1 million (including the above mentioned Stock Awards in
+connection with the departure from members of the Managing
+Board) and 16.1 million (including the above mentioned Stock
+Awards in connection with the departure from members of the
+Managing Board) respectively.
+Former members of the Managing Board and their surviving
+dependents received emoluments within the meaning of Sec-
+tion 314 para. 1 No. 6 b of the German Commercial Code totaling
+€30.5 million (including €9.6 million in connection with the
+above mentioned departure from members of the Managing
+Board) and €24.2 million (including €7.9 million in connection
+with the above mentioned departure from members of the
+Managing Board) in fiscal 2015 and 2014.
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their
+survivors as of September 30, 2015 and 2014 amounted to
+€228.3 million and €234.4 million.
+Compensation attributable to members of the Supervisory
+Board comprises in fiscal 2015 and 2014 of a base compensation
+and additional compensation for committee work and
+amounted to €5.1 million and €5.1 million (including meeting
+fees), respectively.
+Audit Services relate primarily to services provided by EY for
+auditing Siemens' Consolidated Financial Statements and for
+auditing the statutory financial statements of Siemens AG and
+its subsidiaries. Other Attestation Services include primarily
+audits of financial statements in connection with M&A activi-
+ties, comfort letters and other attestation services required un-
+der regulatory requirements, agreements or requested on a
+voluntary basis.
+638
+NOTE 32 Corporate Governance
+WWW.SIEMENS.COM/GCG-CODE
+Alpha Verteilertechnik GmbH, Cham
+10011
+Siemens Bank GmbH, Munich
+100
+Anlagen- und Rohrleitungsbau Ratingen GmbH, Ratingen
+1008
+Siemens Beteiligungen Inland GmbH, Munich
+10011
+Atecs Mannesmann GmbH, Erlangen
+100
+100
+100
+Siemens Beteiligungen Management GmbH, Grünwald
+Siemens Beteiligungen USA GmbH, Berlin
+1008
+10011
+Berliner Vermögensverwaltung GmbH, Berlin
+10011
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Grünwald
+10010
+BWI Services GmbH, Meckenheim
+AXIT GmbH, Frankenthal
+100
+10011
+100
+NOTE 33 Subsequent events
+In November 2015, Siemens announced the extension of its
+seven-year IT outsourcing contract with AtoS through Decem-
+ber 2021, with minimum committed volumes increasing by
+€3.23 billion to €8.73 billion. Furthermore Siemens announced
+the extension of its current lock-up shareholder commitment in
+Atos through September 2020.
+Also in November 2015, Siemens announced the sale of its 49%
+stake in Unify to Atos. While ownership of the Unify stake has
+adversely affected Siemens' financial results in fiscal 2015 and
+prior fiscal years, the transaction is not expected to result in a
+material effect. Closing of the transaction is subject to the ap-
+provals of the regulatory and antitrust authorities. Closing is
+expected in the second quarter of fiscal 2016.
+Consolidated Financial Statements
+107
+September 30, 2015
+Subsidiaries
+Germany (113 companies)
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+100
+NOTE 34 List of subsidiaries and associated
+companies pursuant to Section 313
+para. 2 of the German Commercial Code
+Equity interest
+in %
+September 30, 2015
+Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
+Project Ventures Butendiek Holding GmbH, Erlangen
+Projektbau-Arena-Berlin GmbH, Grünwald
+R&S Restaurant Services GmbH, Munich
+REMECH Systemtechnik GmbH, Kamsdorf
+RHG Vermögensverwaltung GmbH, Berlin
+RISICOM Rückversicherung AG, Grünwald
+Samtech Deutschland GmbH, Hamburg
+Equity interest
+in %
+10011
+10011
+10011
+The Managing Board and the Supervisory Board of Siemens
+Aktiengesellschaft provided the declaration required by Sec-
+tion 161 of the German stock corporation law (AktG) as of Octo-
+ber 1, 2015, which is available on the Company's website at:
+CONSOLIDATED FINANCIAL STATEMENTS
+Centrally managed portfolio activities (CMPA) - in gen-
+eral, comprises equity stakes held by Siemens that are ac-
+counted for by the equity method or as available-for-sale finan-
+cial assets and that for strategic reasons are not allocated to a
+segment, Siemens Real Estate (SRE), Corporate items or Corpo-
+rate Treasury. CMPA also includes activities generally intended
+for divestment or closure as well as activities remaining from
+divestments and discontinued operations.
+100
+101
+2015
+Fiscal year
+2014
+2015
+Fiscal year
+2014
+Fiscal year
+2015
+2014
+Power and Gas
+15,666
+Fiscal year
+2014
+13,996
+12,668
+88
+52
+13,193
+12,720
+Wind Power and Renewables
+6,136
+7,759
+5,658
+13,105
+5,566
+2015
+Total revenue
+823,408
+843,449
+9,425
+Weighted average shares outstanding - diluted
+832,832
+8,485
+851,934
+Basic earnings per share
+(from continuing operations)
+6.38
+(in millions of €)
+6.12
+(from continuing operations)
+NOTE 28
+Segment information
+6.30
+6.06
+The dilutive earnings per share computation in fiscal 2015 and
+2014 does not contain 22,7 million and 21,7 million shares,
+respectively, relating to warrants issued with bonds. The inclu-
+sion of those shares would have been antidilutive in the years
+presented. In the future, the warrants could potentially dilute
+basic earnings per share.
+Orders¹
+External revenue
+Intersegment Revenue
+Diluted earnings per share
+2
+1
+5,660
+17
+7,508
+7,249
+Digital Factory
+10,014
+9,233
+9,030
+8,430
+926
+31
+771
+9,201
+Process Industries and Drives
+9,337
+9,968
+8,113
+7,896
+1,780
+1,749
+9,894
+9,956
+7,232
+7,477
+9,280
+5,567
+Energy Management
+12,956
+11,210
+11,344
+10,139
+578
+568
+11,922
+10,708
+Building Technologies
+6,099
+5,587
+5,860
+5,446
+139
+123
+5,999
+5,569
+Mobility
+10,262
+Weighted average shares outstanding – basic
+Effect of dilutive share-based payment
+5,159
+5,251
+attributable to shareholders of Siemens AG
+(63,055)
+Outstanding, end of period
+1,655,780
+1,750,176
+Forfeited
+Settled
+JUBILEE SHARE PROGRAM
+For their 25th and 40th service anniversary eligible employees
+receive jubilee shares. There were 4.46 million and 4.56 million
+entitlements to jubilee shares outstanding as of September 30,
+2015 and 2014, respectively.
+NOTE 26 Personnel costs
+(71,164)
+(in millions of €)
+Statutory social welfare contributions
+and expenses for optional support
+Expenses relating to post-employment
+benefits
+|
+Fiscal year
+2015
+2014
+22,611
+19,931
+3,404
+3,190
+Wages and salaries
+(92,035)
+(85,056)
+(437,989)
+RECONCILIATION TO
+In fiscal 2015, Siemens issued a new tranche under each of the
+plans of the Share Matching Program.
+Share Matching Plan
+Under the Share Matching Plan senior managers may invest a
+specified part of their variable compensation in Siemens
+shares (investment shares). The shares are purchased at the
+market price at a predetermined date in the second quarter.
+Plan participants receive the right to one Siemens share with-
+out payment of consideration (matching share) for every three
+investment shares continuously held over a period of about
+three years (vesting period) provided the plan participant has
+been continuously employed by Siemens until the end of the
+vesting period.
+Monthly Investment Plan
+Under the Monthly Investment Plan employees other than se-
+nior managers may invest a specified part of their compensa-
+tion in Siemens shares on a monthly basis over a period of
+twelve months. Shares are purchased at market price at a pre-
+determined date once a month. If the Managing Board decides
+that shares acquired under the Monthly Investment Plan are
+transferred to the Share Matching Plan, plan participants will
+receive the right to matching shares under the same conditions
+applying to the Share Matching Plan described above. The
+Managing Board decided that shares acquired under the
+tranches issued in fiscal 2014 and 2013 are transferred to the
+Share Matching Plan as of February 2015 and February 2014,
+respectively.
+Base Share Program
+Under the Base Share Program employees of Siemens AG and
+participating domestic Siemens companies may invest a fixed
+amount of their compensation in Siemens shares, sponsored
+by Siemens with a tax beneficial allowance. The shares are
+bought at market price at a predetermined date in the second
+quarter and grant the right to receive matching shares under
+the same conditions applying to the Share Matching Plan de-
+scribed above. The fair value of the Base Share Program equals
+the amount of the tax beneficial allowance sponsored by
+Siemens and totaled €33 million and €32 million in fiscal 2015
+and 2014, respectively.
+Resulting Matching Shares
+The fair value of matching shares granted in fiscal 2015 and
+2014 amounting to €69.43 and €73.00 per share was deter-
+mined as the market price of Siemens shares less the present
+value of expected dividends taking into account non-vesting
+conditions.
+Fiscal year
+2015
+2014
+Outstanding, beginning of period
+1,750,176
+1,733,497
+Granted
+610,771
+609,758
+Vested and fulfilled
+(548,947)
+1,163
+9,645
+27,177
+Severance charges amount to €804 million in fiscal 2015.
+Item Expenses relating to post-employment benefits includes
+service costs for the period. Personnel costs for continuing
+and discontinued operations amount to €27,584 million and
+€25,533 million, respectively, in fiscal 2015 and 2014, respec-
+tively. Employees were engaged in (averages; part time em-
+ployees are included proportionally):
+35
+34
+345
+339
+349
+359
+Consolidated Financial Statements 99
+NOTE 27 Earnings per share
+Fiscal year
+33
+(shares in thousands; earnings per share in €)
+2014
+Income from continuing operations
+Less: Portion attributable to
+non-controlling interest
+5,349
+5,292
+(98)
+(134)
+Income from continuing operations
+2015
+34
+and general services
+Administration
+Continuing
+operations
+Fiscal year
+Continuing
+and discontinued
+operations
+Fiscal year
+(in thousands)
+2015
+2014
+2015
+2014
+Manufacturing and services
+Sales and marketing
+212
+208
+214
+67
+67
+68
+71
+Research and development
+32
+31
+33
+34
+1,040
+24,161
+Healthcare
+220
+12,126
+4,840
+4,652
+1,840
+1,454
+184
+197
+277
+320
+536
+1,681
+773
+2,169
+496
+732
+170
+168
+248
+227
+2,184
+2,072
+2,211
+1,738
+119
+126
+184
+230
+212
+553
+511
+1,337
+1,250
+546
+544
+57
+43
+86
+81
+588
+532
+2,526
+2,102
+118
+353
+127
+85
+11,153
+185
+10,822
+1,927
+60,855
+58,351
+(3,359)
+(2,219)
+468
+450
+338
+326
+7,218
+(862)
+7,306
+104,879
+4,984
+5,278
+1,897
+1,813
+2,549
+2,387
+13,349
+Consolidated Financial Statements
+120,348
+(1,138)
+194
+219
+346
+284
+545
+529
+7,755
+7,703
+34,522
+24,559
+7,460
+6,975
+1,413
+1,331
+1,993
+600
+466
+24,970
+21,970
+884
+522
+17
+31
+2,048
+(105)
+1,866
+3,986
+(3,772)
+Consolidated Financial Statements
+(3,502)
+(2,475)
+(2,106)
+Siemens (continuing operations)
+82,340
+77,657
+75,636
+71,227
+-
+75,636
+71,227
+1 This supplemental information on Orders is provided on a voluntary basis.
+It is not part of the Consolidated Financial Statements subject to the audit opinion.
+100
+Consolidated Financial Statements
+DESCRIPTION OF REPORTABLE SEGMENTS
+As of October 1, 2014, Siemens realigned its organizational struc-
+ture. Siemens eliminated the Sector level and arranged its busi-
+ness primarily based on its Divisions managing Healthcare sepa-
+rately. Instead of the previously six reportable segments composed
+of the four Sectors Energy, Healthcare, Industry and Infrastruc-
+ture & Cities, and of SFS and Equity Investments, Siemens has
+nine reportable segments as of October 1, 2014, being:
+> Power and Gas (PG), which offers products and solutions for
+generating electricity from fossil fuels and for producing and
+transporting oil and gas,
+> Wind Power and Renewables (WP), a provider of solutions for
+on- and offshore wind power,
+1,396
+> Energy Management (EM), a supplier of products, systems,
+solutions, software and services for transmission and distri-
+bution of electrical energy and for developing intelligent grid
+infrastructure,
+1,298
+(2,527)
+12,896
+11,707
+691
+35
+Industrial Business
+83,819
+79,158
+73,483
+Financial Services (SFS)
+1,048
+937
+855
+69,085
+746
+3,579
+193
+29
+3,311
+191
+12,930
+11,736
+77,062
+1,048
+937
+Reconciliation to
+(2,438)
+> Building Technologies (BT), a provider of automation tech-
+nologies and services for save, secure and efficient buildings
+and infrastructure systems,
+72,396
+> Digital Factory (DF), which offers products and solutions for
+automation technology and industrial controls sold primarily
+to the manufacturing industry,
+8,873
+(275)
+1,331
+1,517
+225
+225
+350
+238
+160
+(346)
+(146)
+389
+552
+119
+145
+132
+140
+3,929
+> Mobility (MO), a provider of passenger and freight transpor-
+tation systems and solutions,
+570
+(86)
+2,215
+1,426
+6
+2015
+> Process Industries and Drives (PD), which offers standard
+and customized products, systems, solutions and services to
+industry sectors,
+> Healthcare (HC), a technology supplier to the healthcare in-
+dustry with products in medical imaging, laboratory diagnos-
+tics and IT solutions,
+> Financial Services (SFS), a provider of business-to-business
+financial solutions.
+2014
+Profit
+Assets
+Free cash flow
+Fiscal year
+Fiscal year
+Additions to intangible assets
+and property, plant & equipment
+Fiscal year
+Amortization,
+depreciation & impairments
+Fiscal year
+The reportable segments HC and SFS primarily remained
+unchanged; Equity Investments ceased to be a reportable seg-
+ment and became part of the reconciling item Centrally man-
+aged portfolio activities. Prior period information has been
+reclassified to correspond to the new reporting structure.
+2015
+2014
+Sep 30, 2015
+Sep 30, 2014
+2015
+2015
+2014
+2014
+100
+Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
+Casablanca/Morocco
+100
+Lisbon/Portugal
+100
+Siemens Plant Operations Tahaddart SARL, Tanger/Morocco
+SCIENTIFIC MEDICAL SOLUTION DIAGNOSTICS S.A.R.L.,
+100
+Siemens S.A., Amadora/Portugal
+100
+Siemens S.A., Casablanca/Morocco
+100
+100
+Siemens Healthcare Diagnostics, Unipessoal Lda.,
+100
+Guascor Maroc, S.A.R.L, Agadir/Morocco
+100
+100
+Siemens d.o.o. Podgorica, Podgorica/Montenegro
+100
+Siemens Sp. z o.o., Warsaw/Poland
+100
+100
+Siemens Industry Software Sp. z o.o., Warsaw/Poland
+100
+Tecnomatix Technologies SARL, Luxembourg/Luxembourg
+TFM International S.A. i.L., Luxembourg/Luxembourg
+Siemens Healthcare Sp. z o.o., Warsaw/Poland
+Amadora/Portugal
+Siemens W.L.L., Doha/Qatar
+Dresser-Rand Services B.V., Spijkenisse/Netherlands
+Siemens Lda., Maputo/Mozambique
+100
+Omnetric B.V., The Hague/Netherlands
+000 Legion II, Moscow/Russian Federation
+100
+100
+Obschestwo s ogranitschennoj Otwetstwennostju (in parts)
+"Dresser-Rand", Moscow / Russian Federation
+100
+NEM Energy Holding B.V., The Hague/Netherlands
+100
+NEM Energy B.V., The Hague/Netherlands
+100
+SIMEA SIBIU S.R.L., Sibiu/Romania
+100
+100
+Siemens S.R.L., Bucharest/Romania
+100
+Dresser-Rand International B.V., Spijkenisse/Netherlands
+100
+SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
+Siemens Pty. Ltd., Windhoek/Namibia
+100
+Bucharest/Romania
+100
+402
+Castor III B.V., Amsterdam/Netherlands
+Siemens Convergence Creators S.R.L., Brasov/Romania
+100
+Dresser-Rand B.V., Spijkenisse/Netherlands
+100
+Siemens Industry Software S.R.L., Brasov/Romania
+100
+100
+Siemens Finance Sp. z o.o., Warsaw/Poland
+100
+75
+Siemens Electrical & Electronic Services K.S.C.C.,
+100
+Siemens Industry Software SAS, Vélizy-Villacoublay/France
+100
+Siemens Kenya Ltd., Nairobi/Kenya
+100
+Siemens Healthcare S.A.S, Saint-Denis/France
+100
+Siemens TOO, Almaty/Kazakhstan
+Siemens Healthcare Diagnostics S.A.S., Saint-Denis/France
+1008
+Almaty/Kazakhstan
+100
+Siemens France Holding, Saint-Denis/France
+Siemens Lease Services SAS, Saint-Denis/France
+Siemens Healthcare Limited Liability Partnership,
+Siemens Financial Services SAS, Saint-Denis/France
+100
+Trench Italia S.r.l., Savona/Italy
+100
+Samtech France SAS, Massy/France
+100
+Siemens Transformers S.p.A., Trento/Italy
+100
+PETNET Solutions SAS, Lisses/France
+100
+Siemens S.p.A., Milan/Italy
+100
+100
+Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
+100
+100
+100
+SIEMENS Postal Parcel Airport Logistics S.A.S., Paris/France
+Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
+AXIT Sp. z o.o., Wroclaw / Poland
+100
+100
+51
+100
+Siemens Healthcare Diagnostics AS, Oslo/Norway
+Siemens L.L.C., Muscat/Oman
+100
+100
+D-R Luxembourg Holding 2, SARL, Luxembourg/Luxembourg
+D-R Luxembourg Holding 3, SARL, Luxembourg/Luxembourg
+D-R Luxembourg International SARL, Luxembourg/Luxembourg
+D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
+Dresser-Rand Holding (Delaware) LLC, SARL,
+Luxembourg/Luxembourg
+in %
+September 30, 2015
+in %
+September 30, 2015
+Equity interest
+Kuwait City/Kuwait
+Equity interest
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Not consolidated due to immateriality.
+8
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+492
+100
+D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
+100
+110 Consolidated Financial Statements
+Pollux III B.V., Amsterdam/Netherlands
+Guascor Solar S.A., Vitoria-Gasteiz/Spain
+Siemens Diagnostics Holding II B.V., The Hague/Netherlands
+100
+Guascor Wind, S.L., Vitoria-Gasteiz/Spain
+100
+Siemens s.r.o., Bratislava/Slovakia
+100
+100
+Bratislava/Slovakia
+100
+Guascor Solar Operacion and Mantenimiento, S.L.,
+Vitoria-Gasteiz/Spain
+Siemens Program and System Engineering s.r.o.,
+100
+Siemens Healthcare s.r.o., Bratislava/Slovakia
+100
+Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
+SIPRIN s.r.o., Bratislava/Slovakia
+60
+Guascor Servicios, S.A., Madrid/Spain
+SAT Systémy automatizacnej techniky spol. s.r.o.,
+Bratislava/Slovakia
+in %
+September 30, 2015
+in %
+September 30, 2015
+Equity interest
+Equity interest
+111
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Not consolidated due to immateriality.
+100
+8
+100
+100
+Siemens Healthcare Diagnostics (Pty.) Limited,
+100
+100
+SIEMENS HEALTHCARE, S L, Getafe/Spain
+03
+100
+Samtech Iberica Engineering & Software Services S.L.,
+Barcelona/Spain
+Siemens Employee Share Ownership Trust,
+Johannesburg/South Africa
+70
+100
+Petnet Soluciones, S.L., Sociedad Unipersonal, Madrid/Spain
+03
+Linacre Investments (Pty) Ltd., Kenilworth/South Africa
+Siemens (Proprietary) Limited, Midrand/South Africa
+100
+Siemens d.o.o., Ljubljana /Slovenia
+Opción Fotovoltaica 1 S.L., Vitoria-Gasteiz/Spain
+Dresser-Rand Southern Africa (Pty) Ltd., Centurion/South Africa
+100
+Microenergía Vasca, S.A., Vitoria-Gasteiz/Spain
+100
+Dresser-Rand Service Centre (Pty) Ltd., Centurion/South Africa
+1008
+1008
+100
+100
+Inversiones Analcima 6 S.L., Vitoria-Gasteiz/Spain
+Inversiones Analcima 7 S.L., Vitoria-Gasteiz/Spain
+Inversiones Ortosa 13 S.L., Vitoria-Gasteiz/Spain
+Microenergía 21, S.A., Zumaia/Spain
+100
+Dresser-Rand Property (Pty) Ltd., Centurion/South Africa
+100
+Siemens Healthcare d.o.o, Ljubljana/Slovenia
+100
+100
+7 Significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+Siemens Medical Solutions Diagnostics Holding I B.V.,
+The Hague/Netherlands
+100
+Siemens Finance LLC, Vladivostok/Russian Federation
+100
+Siemens International Holding B.V., The Hague/Netherlands
+100
+Moscow/Russian Federation
+100
+Siemens Industry Software B.V., 's-Hertogenbosch/Netherlands
+100
+100
+000 Siemens Industry Software, Moscow/Russian Federation
+000 Siemens Transformers, Voronezh / Russian Federation
+000 Siemens Urban Rail Technologies,
+100
+Siemens Healthcare Diagnostics B.V., Breda / Netherlands
+Siemens Healthcare Limited Liability Company,
+65
+Siemens Gas Turbine Technologies Holding B.V.,
+100
+Leningrad oblast/Russian Federation
+100
+The Hague/Netherlands
+66
+000 Siemens Elektroprivod, St. Petersburg/Russian Federation
+000 Siemens Gas Turbine Technologies,
+Siemens Financieringsmaatschappij N.V.,
+100
+Siemens Finance B.V., The Hague/Netherlands
+100
+100
+000 Russian Turbo Machinery, Perm/Russian Federation
+000 Siemens, Moscow/Russian Federation
+100
+The Hague/Netherlands
+6 No significant influence due to contractual arrangements or legal circumstances.
+100
+1008
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
+100
+Siemens AS, Oslo/Norway
+100
+Siemens d.o.o. Beograd, Belgrade/Serbia
+100
+Dresser-Rand AS, Kongsberg/Norway
+51
+VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
+Moscow/Russian Federation
+100
+51
+51
+ISCOSA Industries and Maintenance Ltd., Riyadh/Saudi Arabia
+Siemens Ltd., Riyadh/Saudi Arabia
+100
+Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
+501
+The Hague/Netherlands
+501
+Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
+Termotron Rail Automation Holding B.V.,
+51
+Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
+100
+Siemens Nederland N.V., The Hague/Netherlands
+Siemens Ltd., Lagos/Nigeria
+Siemens Renting S.p.A. in Liquidazione, Milan/Italy
+100
+Dresser-Rand S.A., Le Havre/France
+100
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+100
+Siemens-Fonds S-8, Munich
+100
+Siemens-Fonds S-7, Munich
+100
+Siemens Konzernbeteiligungen GmbH, Vienna/Austria
+100
+Siemens-Fonds Principals, Munich
+100
+100
+Siemens Healthcare Diagnostics GmbH, Vienna/Austria
+Siemens Industry Software GmbH, Linz/Austria
+100
+Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
+Siemens Metals Technologies Vermögensverwaltungs GmbH,
+Vienna/Austria
+Siemens-Fonds C-1, Munich
+Siemens Venture Capital GmbH, Munich
+100
+Siemens Gebäudemanagement & -Services G.m.b.H.,
+Vienna/Austria
+10011
+Siemens Turbomachinery Equipment GmbH, Frankenthal
+10011
+100
+Siemens Convergence Creators GmbH, Vienna/Austria
+Siemens Convergence Creators Holding GmbH, Vienna/Austria
+100
+10010
+100
+Siemens Convergence Creators GmbH, Eisenstadt/Austria
+100
+100
+10011
+Siemens Aktiengesellschaft Österreich, Vienna/Austria
+100
+SIM 16. Grundstücksverwaltungs- und -beteiligungs-
+GmbH & Co. KG, Munich
+100
+Limited Liability Company Siemens Technologies,
+Minsk/Belarus
+SYKATEC Systeme, Komponenten, Anwendungstechnologie
+GmbH, Erlangen
+10011
+SIMOS Real Estate GmbH, Munich
+51
+Siemens W.L.L., Manama/Bahrain
+10011
+SIMAR West Grundstücks-GmbH, Grünwald
+100
+Vienna/Austria
+10011
+SIMAR Süd Grundstücks-GmbH, Grünwald
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH,
+100
+10011
+100
+Trench Austria GmbH, Leonding/Austria
+10011
+52
+Steiermärkische Medizinarchiv GesmbH, Graz/Austria
+10011
+SIMAR Nordost Grundstücks-GmbH, Grünwald
+SIMAR Nordwest Grundstücks-GmbH, Grünwald
+75
+Siemens Urban Rail Technologies Holding GmbH,
+Vienna/Austria
+10010
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+10010
+100
+Siemens Personaldienstleistungen GmbH, Vienna/Austria
+SIMAR Ost Grundstücks-GmbH, Grünwald
+10011
+10010
+100
+100
+Weiss Spindeltechnologie GmbH, Schweinfurt
+100
+Siemens Medical Solutions Health Services GmbH, Erlangen
+10011
+943
+VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
+Munich
+100
+Siemens Liquidity One, Munich
+1008
+Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
+10010
+Siemens Insulation Center GmbH & Co. KG, Zwönitz
+100
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+51
+10011
+Siemens Industry Software GmbH, Cologne
+10010
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+100
+Verwaltung SeaRenergy Offshore Projects GmbH i.L., Hamburg
+in %
+September 30, 2015
+in %
+10011
+Siemens Industriegetriebe GmbH, Penig
+September 30, 2015
+Equity interest
+Equity interest
+Siemens Holding S.L., Madrid/Spain
+VIB Verkehrsinformationsagentur Bayern GmbH, Munich
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
+Siemens Technopark Mülheim Verwaltungs GmbH, Grünwald
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Technopark Nürnberg Verwaltungs GmbH, Grünwald
+Siemens Treasury GmbH, Munich
+100
+10011
+Omnetric GmbH, Vienna/Austria
+10011
+Siemens Technology Accelerator GmbH, Munich
+100
+69
+ITH icoserve technology for healthcare GmbH, Innsbruck/Austria
+KDAG Beteiligungen GmbH, Vienna/Austria
+100
+Siemens Spezial-Investmentaktiengesellschaft mit TGV, Munich
+1008
+Siemens Real Estate Management GmbH, Grünwald
+100
+100
+ETM professional control GmbH, Eisenstadt/Austria
+Hochquellstrom-Vertriebs GmbH, Vienna/Austria
+10010
+Siemens Novel Businesses GmbH, Munich
+Siemens Real Estate GmbH & Co. OHG, Grünwald
+Siemens Project Ventures GmbH, Erlangen
+51
+Siemens S.A., Luanda/Angola
+10011
+gesellschaft mbH, Munich
+100
+Siemens Spa, Algiers/Algeria
+Siemens Private Finance Versicherungsvermittlungs-
+51
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (298 companies)
+ESTEL Rail Automation SPA, Algiers/Algeria
+10011
+Siemens Power Control GmbH, Langen
+10011
+Siemens Postal, Parcel & Airport Logistics GmbH, Constance
+10011
+100
+Trench Germany GmbH, Bamberg
+Dresser-Rand Machinery Repair Belgie N.V.,
+Antwerp/Belgium
+UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
+Denesa Italia, S.R.L., Mirandola/Italy
+100
+Siemens Industry Software A/S, Ballerup/Denmark
+100
+Siemens Healthcare Diagnostics ApS, Ballerup/Denmark
+100
+Siemens Product Lifecycle Management Software 2 (IL) Ltd.,
+Airport City/Israel
+100
+Siemens A/S, Ballerup/Denmark
+100
+Siemens, s.r.o., Prague/Czech Republic
+1008
+Siemens Israel Projects Ltd., Rosh HaAyin/Israel
+100
+100
+Siemens Industry Software, s.r.o., Prague/Czech Republic
+Siemens Israel Ltd., Tel Aviv/Israel
+1008
+Siemens Healthcare, s.r.o., Prague/Czech Republic
+100
+Siemens Industry Software Ltd., Airport City/Israel
+100
+100
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
+100
+Siemens Convergence Creators, s.r.o., Prague/Czech Republic
+Siemens Electric Machines s.r.o., Drasov/Czech Republic
+100
+Siemens Limited, Dublin/Ireland
+100
+OEZ s.r.o., Letohrad/Czech Republic
+100
+1008
+100
+100
+100
+Siemens Postal, Parcel & Airport Logistics S.r.L., Milan/Italy
+100
+D-R Holdings (France) S.A.S., Le Havre/France
+100
+Siemens Industry Software S.r.I., Milan/Italy
+100
+Siemens Osakeyhtiö, Espoo/Finland
+100
+Siemens Healthcare Diagnostics S.r.I., Milan/Italy
+100
+Siemens Healthcare Oy, Espoo/Finland
+100
+Samtech Italia S.r.I., Milan/Italy
+Siemens Wind Power A/S, Brande/Denmark
+90
+100
+Officine Solari Kaggio S.r.I., Gela/Italy
+100
+Siemens Limited for Trading, Cairo/Egypt
+100
+Officine Solari Aquila S.R.L, Gela/Italy
+100
+Siemens Healthcare Diagnostics S.A.E, Cairo/Egypt
+100
+Guascor Italia, S.R.L., Mirandola/Italy
+100
+NEM Energy Egypt LLC, Alexandria/Egypt
+100
+Dresser-Rand Italia S.r.I., Genoa/Italy
+Siemens Technologies S.A.E., Cairo/Egypt
+10011
+Siemens Healthcare Medical Solutions Limited, Swords,
+County Dublin/Ireland
+J. N. Kelly Security Holding Limited, Larnaka/Cyprus
+100
+Siemens Industry Software NV, Leuven/Belgium
+100
+Trench France S.A.S., Saint-Louis/France
+100
+Siemens Healthcare Diagnostics SA, Beersel/Belgium
+100
+Siemens S.A.S., Saint-Denis/France
+79
+Samtech SA, Angleur/Belgium
+in %
+September 30, 2015
+in %
+September 30, 2015
+Tecnomatix Technologies (Gibraltar) Limited, Gibraltar/Gibraltar
+Equity interest
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Not consolidated due to immateriality.
+8
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+109
+100
+100
+Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
+100
+Siemens d.d., Zagreb/Croatia
+97
+Islamic Republic of
+100
+Siemens Convergence Creators d.o.o., Zagreb/Croatia
+Siemens Sherkate Sahami (Khass), Teheran/Iran,
+51
+Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
+100
+Siemens Zrt., Budapest/Hungary
+100
+Siemens Healthcare EOOD, Sofia/Bulgaria
+100
+Siemens Product Lifecycle Management Software II (BE) BVBA,
+Anderlecht/Belgium
+Siemens Healthcare Kft., Budapest/Hungary
+100
+evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
+100
+Siemens Medicina d.o.o, Sarajevo / Bosnia and Herzegovina
+Siemens EOOD, Sofia/Bulgaria
+100
+Société Anonyme, Athens/Greece
+100
+Siemens d.o.o. Sarajevo, Sarajevo /Bosnia and Herzegovina
+Siemens Healthcare Industrial and Commercial
+100
+Siemens S.A./N.V., Beersel/Belgium
+100
+Athens/Greece
+100
+100
+100
+Equity interest
+100
+44
+449
+Aspern Smart City Research GmbH, Vienna/Austria
+Aspern Smart City Research GmbH & Co KG, Vienna/Austria
+E-Mobility Provider Austria GmbH, Vienna/Austria
+100
+1008
+Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
+Siemens Ltd., Ho Chi Minh City / Viet Nam
+259
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (55 companies)
+Arelion GmbH, Pasching b. Linz/Austria
+99
+Siemens Limited, Bangkok/Thailand
+100
+Siemens Healthcare Limited, Bangkok/Thailand
+239
+100
+100
+Siemens Ltd., Taipei/Taiwan, Province of China
+359
+35
+41
+50
+in %
+Equity interest
+Voith Hydro Holding Verwaltungs GmbH, Heidenheim
+100
+Voith Hydro Holding GmbH & Co. KG, Heidenheim
+Siemens Industry Software (TW) Co., Ltd., Taipei/Taiwan,
+Province of China
+Dresser-Rand (Thailand) Limited, Rayong/Thailand
+Associated companies and joint ventures
+OIL AND GAS PROSERV LLC, Baku/Azerbaijan
+259
+499
+48
+Eviop-Tempo A.E. Electrical Equipment Manufacturers,
+Vassiliko/Greece
+FEAG Fertigungscenter für Elektrische Anlagen GmbH,
+Erlangen
+499
+25
+TRIXELL S.A.S., Moirans/France
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
+des Stadt- und Regionalverkehrs mbH, Cologne
+40
+Compagnie Electrique de Bretagne, S.A.S., Paris/France
+50
+Caterva GmbH, Pullach i. Isartal
+249
+Noliac A/S, Kvistgaard/Denmark
+505
+BWI Informationstechnik GmbH, Meckenheim
+49
+A2SEA A/S, Fredericia/Denmark
+499
+BELLIS GmbH, Braunschweig
+479
+Meomed s.r.o., Prerov/Czech Republic
+259
+ATS Projekt Grevenbroich GmbH, Schüttorf
+20
+T-Power NV, Brussels/Belgium
+Germany (27 companies)
+Veja Mate Offshore Project GmbH, Hamburg
+1008
+Province of China
+ubimake GmbH, Berlin
+Siemens Industry Software Pte. Ltd., Singapore/Singapore
+100
+Siemens Convergence Creators Private Limited, Mumbai/India
+Siemens Financial Services Private Limited, Mumbai/India
+Siemens Healthcare Private Limited, Mumbai/India
+100
+Siemens Healthcare Pte. Ltd., Singapore/Singapore
+100
+100
+CSI Services Pte. Ltd., Singapore/Singapore
+501
+Powerplant Performance Improvement Ltd., New Delhi/India
+Preactor Software India Private Limited, Bangalore/India
+100
+Siemens, Inc., Manila/Philippines
+100
+100
+1008
+100
+Siemens Healthcare Limited, Auckland/New Zealand
+Siemens Healthcare Inc., Manila/Philippines
+Siemens Power Operations, Inc., Manila/Philippines
+PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
+New Delhi/India
+100
+LMS India Engineering Solutions Pvt Ltd, Chennai/India
+100
+Dresser-Rand India Private Limited, Mumbai/India
+100
+100
+100
+100
+100
+100
+Metropolitan Transportation Solutions Ltd., Rosh HaAyin/Israel
+100
+Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
+Singapore/Singapore
+Siemens Healthcare Limited, Taichung/Taiwan,
+September 30, 2015
+in %
+September 30, 2015
+Equity interest
+117
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Not consolidated due to immateriality.
+8
+No significant influence due to contractual arrangements or legal circumstances.
+6
+7 Significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+Siemens Rail Automation Pte. Ltd., Singapore/Singapore
+100
+100
+Siemens Pte. Ltd., Singapore/Singapore
+Siemens Industry Software (India) Private Limited,
+New Delhi/India
+100
+1008
+20
+IFTEC GmbH & Co. KG, Leipzig
+50
+Siemens Demag Delaval Turbomachinery, Inc., Wilmington,
+DE/United States
+Bolivarian Republic of
+1008
+100
+Siemens Rail Automation, C.A., Caracas/Venezuela,
+Siemens Electrical, LLC, Wilmington, DE/United States
+100
+Bolivarian Republic of
+100
+Siemens Energy, Inc., Wilmington, DE/United States
+Siemens Financial Services, Inc., Wilmington, DE/United States
+Siemens Financial, Inc., Wilmington, DE/United States
+100
+Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
+100
+100
+100
+DPC (Tianjin) Co., Ltd., Tianjin/China
+Siemens Transformer (Guangzhou) Co., Ltd.,
+118 Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+8 Not consolidated due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+Siemens Healthcare S.A., Caracas/Venezuela,
+1 Control due to a majority of voting rights.
+100
+100
+501
+Winergy Drive Systems Corporation, Wilmington,
+DE/United States
+100
+PETNET Solutions Cleveland, LLC, Wilmington,
+DE/United States
+Engines Rental, S.A., Montevideo/Uruguay
+100
+63
+Siemens S.A., Montevideo/Uruguay
+100
+PETNET Solutions, Inc., Knoxville, TN/United States
+100
+Siemens Telecomunicaciones S.A., Montevideo/Uruguay
+100
+Siemens Capital Company LLC, Wilmington, DE/United States
+100
+Via Stylos S.A., Montevideo/Uruguay
+1008
+Siemens Convergence Creators Corp.,
+Wilmington, DE/United States
+100
+Dresser-Rand de Venezuela, S.A., Caracas/Venezuela,
+Bolivarian Republic of
+100
+Siemens Corporation, Wilmington, DE/United States
+100
+Guascor Venezuela S.A., Caracas/Venezuela,
+Siemens Credit Warehouse, Inc., Wilmington,
+Bolivarian Republic of
+DE/United States
+100
+50
+509
+49
+MeVis BreastCare GmbH & Co. KG, Bremen
+207
+20
+Energie Electrique de Tahaddart S.A., Tanger/Morocco
+Buitengaats C.V., Amsterdam/Netherlands
+26
+Maschinenfabrik Reinhausen GmbH, Regensburg
+50
+Magazino GmbH, Munich
+33
+Electrogas Malta Limited, St. Julian's/Malta
+259
+Ludwig Bölkow Campus GmbH, Taufkirchen
+49
+Temir Zhol Electrification LLP, Astana/Kazakhstan
+509
+LIB Verwaltungs-GmbH, Leipzig
+865,9
+VAL 208 Torino GEIE, Milan/Italy
+409
+Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
+499
+Transfima S.p.A., Milan/Italy
+40
+Infineon Technologies Bipolar GmbH & Co. KG, Warstein
+429
+Transfima GEIE, Milan/Italy
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+Region Moscow Krasnogorsky District/Russian Federation
+499
+23
+Transrapid International Verwaltungsgesellschaft mbH i.L., Berlin
+000 UniPower Transmission Solutions,
+655,9
+Symeo GmbH, Neubiberg
+26
+359
+000 Transconverter, Moscow/Russian Federation
+207,9
+Sternico GmbH, Wendeburg
+Rousch (Pakistan) Power Ltd., Lahore/Pakistan
+1005,9
+Siemens Venture Capital Fund 1 GmbH, Munich
+339
+209
+ZeeEnergie Management B.V., Eemshaven/Netherlands
+Wirescan AS, Torp/Norway
+87
+Siemens EuroCash, Munich
+509
+207
+ZeeEnergie C.V., Amsterdam/Netherlands
+PTZ Partikeltherapiezentrum Kiel Management GmbH,
+Wiesbaden
+50
+49
+46
+209
+Buitengaats Management B.V., Eemshaven/Netherlands
+Infraspeed Maintainance B.V., Zoetermeer/Netherlands
+Unify Holdings B.V., Amsterdam/Netherlands
+Ural Locomotives Holding Besloten Vennootschap,
+The Hague/Netherlands
+509
+Power Vermögensbeteiligungsgesellschaft mbH Die Erste,
+Hamburg
+OWP Butendiek GmbH & Co. KG, Bremen
+HRSG Systems (Malaysia) SDN. BHD., Kuala Lumpur/Malaysia
+Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
+Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
+VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens (N.Z.) Limited, Auckland/New Zealand
+100
+Hong Kong/Hong Kong
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Consolidated Financial Statements
+115
+Equity interest
+Equity interest
+September 30, 2015
+in %
+September 30, 2015
+in %
+Asia, Australia (138 companies)
+Australia Hospital Holding Pty Limited, Bayswater/Australia
+Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
+100
+1008
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
+Siemens Electrical Drives Ltd., Tianjin/China
+100
+100
+85
+Exemplar Health (NBH) Holdings 2 Pty Limited,
+Bayswater/Australia
+100
+Siemens Factory Automation Engineering Ltd., Beijing/China
+Siemens Finance and Leasing Ltd., Beijing/China
+100
+100
+Exemplar Health (NBH) Trust 2, Bayswater/Australia
+100
+Siemens Financial Services Ltd., Beijing/China
+100
+Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
+Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
+10 Exemption pursuant to Section 264b German Commercial Code.
+1008
+9 Not accounted for using the equity method due to immateriality.
+8
+Siemens PLM Software (Shenzhen) Limited, Shenzhen/China
+Siemens Power Automation Ltd., Nanjing/China
+65
+MWB (Shanghai) Co Ltd., Shanghai/China
+100
+80
+Isando/South Africa
+Siemens Numerical Control Ltd., Nanjing, Nanjing/China
+IBS Industrial Business Software (Shanghai), Ltd.,
+Shanghai China
+85
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd.,
+Wuxi/China
+51
+GIS Steel & Aluminum Products Co., Ltd. Hangzhou,
+Hangzhou/China
+100
+Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
+Tianjin/China
+100
+Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
+Shanghai/China
+51
+Shanghai/China
+Dade Behring Hong Kong Holdings Corporation,
+Tortola/Virgin Islands, British
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances.
+Not consolidated due to immateriality.
+100
+Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
+1008
+Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
+Huludao/China
+84
+100
+SIEMENS RAIL AUTOMATION PTY. LTD., Clayton/Australia
+100
+Westinghouse McKenzie-Holland Pty Ltd, Clayton/Australia
+Siemens Bangladesh Ltd., Dhaka/Bangladesh
+100
+Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
+Siemens Industry Software (Shanghai) Co., Ltd.,
+Shanghai China
+100
+100
+100
+Siemens International Trading Ltd., Shanghai, Shanghai/China
+100
+Beijing Siemens Automotive E-Drive Systems Co., Ltd.,
+Siemens Investment Consulting Co., Ltd., Beijing/China
+100
+Changzhou, Changzhou/China
+60
+Beijing Siemens Cerberus Electronics Ltd., Beijing/China
+100
+Siemens Logistics Automation Systems (Beijing) Co., Ltd,
+Beijing/China
+100
+Camstar Systems Software (Shanghai) Co. Ltd.,
+Shanghai/China
+Siemens Ltd., China, Beijing/China
+100
+100
+Siemens Manufacturing and Engineering Centre Ltd.,
+SIEMENS RAIL AUTOMATION INVESTMENT PTY. LTD.,
+Clayton/Australia
+51
+100
+100
+Exemplar Health (SCUH) Holdings 3 Pty Limited,
+Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
+Shanghai/China
+100
+Bayswater/Australia
+100
+Exemplar Health (SCUH) Holdings 4 Pty Limited,
+Bayswater/Australia
+Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
+Hangzhou/China
+51
+100
+Siemens High Voltage Switchgear Co., Ltd. Shanghai,
+Exemplar Health (SCUH) Trust 3, Bayswater/Australia
+100
+Shanghai/China
+51
+Exemplar Health (SCUH) Trust 4, Bayswater/Australia
+100
+Siemens High Voltage Switchgear Guangzhou Ltd.,
+Memcor Australia Pty. Ltd., South Windsor/Australia
+100
+Guangzhou/China
+94
+Siemens Healthcare Pty. Ltd., Melbourne/Australia
+100
+Siemens Industrial Automation Ltd., Shanghai,
+Siemens Ltd., Bayswater/Australia
+100
+Shanghai/China
+Siemens Rail Automation Holding Pty. Ltd., Clayton/Australia
+PETNET Indiana LLC, Indianapolis, IN/United States
+100
+70
+100
+Dresser-Rand Korea, Ltd., Chungnam-do/Korea, Republic of
+100
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
+100
+Siemens K.K., Tokyo/Japan
+100
+Siemens Wiring Accessories Shandong Ltd., Zibo/China
+100
+Siemens Japan K.K., Tokyo/Japan
+100
+Shanghai/China
+100
+Siemens Japan Holding K.K., Tokyo/Japan
+Siemens Wind Power Blades (Shanghai) Co., Ltd.,
+100
+Siemens Healthcare Diagnostics K.K., Tokyo/Japan
+100
+Siemens Venture Capital Co., Ltd., Beijing/China
+100
+Dresser Rand Japan K.K., Tokyo/Japan
+100
+Siemens Transformer (Wuhan) Company Ltd., Wuhan City/China
+63
+60
+PT. Siemens Industrial Power, Kota Bandung/Indonesia
+Acrorad Co., Ltd., Okinawa/Japan
+90
+Smart Metering Solutions (Changsha) Co. Ltd.,
+Changsha/China
+Siemens Transformer (Jinan) Co., Ltd, Jinan/China
+Siemens Energy Solutions Limited, Seoul/Korea, Republic of
+60
+Siemens Postal, Parcel & Airport Logistics Limited,
+100
+Siemens Ltd., Hong Kong/Hong Kong
+100
+Siemens Industry Software Limited, Hong Kong/Hong Kong
+100
+Siemens Healthcare Limited, Hong Kong/Hong Kong
+100
+SAMTECH HK Ltd, Hong Kong/Hong Kong
+100
+Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
+100
+Camstar Systems (Hong Kong) Limited, Hong Kong/Hong Kong
+492,8
+Dresser-Rand & Enserv Services Sdn. Bhd.,
+Kuala Lumpur/Malaysia
+1008
+Asia Care Holding Limited, Hong Kong/Hong Kong
+51
+100
+Camstar Systems Sdn. Bhd., Penang/Malaysia
+Yangtze Delta Manufacturing Co. Ltd., Hangzhou,
+Hangzhou/China
+100
+Siemens Ltd. Seoul, Seoul/Korea, Republic of
+65
+Trench High Voltage Products Ltd., Shenyang, Shenyang/China
+100
+Siemens Industry Software Ltd., Seoul/Korea, Republic of
+100
+Siemens Building Technologies (Tianjin) Ltd., Tianjin/China
+Siemens Business Information Consulting Co., Ltd, Beijing/China
+Siemens Circuit Protection Systems Ltd., Shanghai,
+Shanghai/China
+63
+100
+September 30, 2015
+Equity interest
+116 Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Not consolidated due to immateriality.
+8
+No significant influence due to contractual arrangements or legal circumstances.
+6
+7 Significant influence due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+Siemens Sensors & Communication Ltd., Dalian/China
+60
+100
+Siemens Real Estate Management (Beijing) Ltd., Co.,
+Beijing/China
+Siemens Eco-City Innovation Technologies (Tianjin) Co., Ltd.,
+Tianjin/China
+75
+100
+Siemens Rail Automation Technical Consulting Services
+(Beijing) Co. Ltd., Beijing/China
+100
+100
+Siemens Power Plant Automation Ltd., Nanjing/China
+in %
+Guangzhou/China
+September 30, 2015
+100
+PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
+100
+P.T. Siemens Indonesia, Jakarta/Indonesia
+90
+100
+Mumbai/India
+Siemens Technology Development Co., Ltd. of Beijing,
+Beijing/China
+Siemens Technology and Services Private Limited,
+55
+Siemens Switchgear Ltd., Shanghai, Shanghai/China
+100
+Siemens Rail Automation Pvt. Ltd., Mumbai/India
+100
+Siemens Surge Arresters Ltd., Wuxi/China
+100
+Siemens Postal Parcel & Airport Logistics Private Limited,
+Mumbai/India
+100
+77
+Siemens Special Electrical Machines Co. Ltd., Changzhi/China
+Siemens Standard Motors Ltd., Yizheng/China
+1008
+Siemens Postal and Parcel Logistics Technologies
+Private Limited, Mumbai/India
+70
+100
+75
+in %
+Equity interest
+Siemens Ltd., Mumbai/India
+Siemens Shanghai Medical Equipment Ltd., Shanghai/China
+Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen/China
+Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
+51
+100
+100
+100
+Siemens Healthcare Diagnostics S.A., San José/Costa Rica
+100
+Siemens S.A., Costado Sur - Tenjo/Colombia
+100
+VA TECH International Argentina SA, Buenos Aires/Argentina
+Siemens Soluciones Tecnologicas S.A.,
+100
+Dresser-Rand Colombia S.A.S., Bogotá/Colombia
+100
+Siemens S.A., Buenos Aires/Argentina
+100
+Siemens S.A., Santiago de Chile/Chile
+100
+Siemens IT Services S.A., Buenos Aires/Argentina
+1008
+Santiago de Chile/Chile
+1008
+Siemens Healthcare S.A., Buenos Aires/Argentina
+Siemens Healthcare Equipos Médicos Limitada,
+69
+Guascor Argentina, S.A., Buenos Aires/Argentina
+Santa Cruz de la Sierra/Bolivia, Plurinational State of
+100
+Siemens S.A., San José/Costa Rica
+100
+Siemens S.A., San Salvador/El Salvador
+85
+Guascor do Brasil Ltda., São Paulo/Brazil
+1008
+Antiguo Cuscatlán/El Salvador
+100
+Siemens Healthcare, Sociedad Anonima,
+100
+Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
+Dresser-Rand Participações Ltda., São Paulo/Brazil
+100
+100
+100
+100
+Dresser-Rand Comercio e Industria Ltda., Campinas/Brazil
+Higüey/Dominican Republic
+100
+Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
+Sociedad Energética Del Caribe, S.R.L.,
+100
+100
+Siemens, S.R.L., Santo Domingo/Dominican Republic
+Chemtech Servicos de Engenharia e Software Ltda.,
+Rio de Janeiro/Brazil
+Siemens S.A., Quito/Ecuador
+Siemens Healthcare Diagnostics Manufacturing Limited,
+Grand Cayman/Cayman Islands
+1008
+Artadi S.A., Buenos Aires/Argentina
+Buckinghamshire/United Kingdom
+Siemens Financial Services Ltd., Stoke Poges,
+100
+Buckinghamshire/United Kingdom
+100
+Surrey/United Kingdom
+Siemens Financial Services Holdings Ltd., Stoke Poges,
+VA Tech Reyrolle Distribution Ltd., Frimley,
+573
+100
+100
+VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
+100
+Tronic Ltd., Frimley, Surrey/United Kingdom
+100
+Samtech UK Limited, Frimley, Surrey/United Kingdom
+100
+The Preactor Group Limited, Frimley, Surrey/United Kingdom
+100
+100
+Surrey/United Kingdom
+Project Ventures Rail Investments I Limited, Frimley,
+Surrey/United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership,
+Edinburgh/United Kingdom
+100
+VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
+VTW Anlagen UK Ltd., Banbury, Oxfordshire/United Kingdom
+Zenco Systems Limited, Frimley, Surrey/United Kingdom
+100
+Americas (126 companies)
+in %
+September 30, 2015
+in %
+September 30, 2015
+Equity interest
+Equity interest
+113
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+100
+10 Exemption pursuant to Section 264b German Commercial Code.
+8
+7 Significant influence due to contractual arrangements or legal circumstances.
+Not consolidated due to immateriality.
+No significant influence due to contractual arrangements or legal circumstances.
+6
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+9 Not accounted for using the equity method due to immateriality.
+Siemens Transmission & Distribution Limited, Frimley,
+Guascor Empreendimentos Energéticos, Ltda.,
+Taboão da Serra/Brazil
+90
+100
+100
+Panama City/Panama
+100
+Siemens Transformers Canada Inc., Trois-Rivières/Canada
+Trench Ltd., Saint John/Canada
+Siemens Healthcare Diagnostics Panama, S.A.,
+100
+100
+Siemens S.A., Managua/Nicaragua
+Siemens Postal, Parcel & Airport Logistics Ltd.,
+Oakville/Canada
+100
+Siemens, S.A. de C.V., México, D.F./Mexico
+100
+Siemens Industry Software Ltd., Ontario/Canada
+100
+Siemens Servicios S.A. de C.V., México, D.F./Mexico
+1008
+Siemens Healthcare Limited, Oakville/Canada
+100
+Siemens Innovaciones S.A. de C.V., México, D.F./Mexico
+100
+Siemens S.A., Panama City/Panama
+100
+Wheelabrator Air Pollution Control (Canada) Inc.,
+Ontario/Canada
+Siemens Healthcare S.A.C., Surquillo/Peru
+in %
+Couva/Trinidad and Tobago
+Dresser-Rand Trinidad & Tobago Limited,
+September 30, 2015
+Equity interest
+Consolidated Financial Statements
+114
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Siemens Financial Ltd., Oakville/Canada
+Not consolidated due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+Siemens S.A.C., Lima/Peru
+100
+1008
+8
+100
+100
+Siemens Industry Software, SA de CV, México, D.F./Mexico
+Siemens Inmobiliaria S.A. de C.V., México, D.F./Mexico
+Tlalnepantla/Mexico
+89
+Jaguarí Energética, S.A., Jaguari/Brazil
+Dresser-Rand Services, S. de R.L. de C.V.,
+100
+100
+Dresser-Rand de Mexico S.A. de C.V., Tlalnepantla/Mexico
+Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
+Canoas/Brazil
+100
+Dade Behring, S.A. de C.V., México, D.F./Mexico
+Minuano Participações Eólicas Ltda., São Paulo/Brazil
+90
+100
+Siemens S.A., Tegucigalpa/Honduras
+90
+Guascor Solar do Brasil, Taboão da Serra/Brazil
+100
+Siemens S.A., Guatemala/Guatemala
+60
+Guascor Serviços Ltda., Taboão da Serra/Brazil
+100
+Guatemala/Guatemala
+Guascor Wind do Brasil, Ltda., São Paulo/Brazil
+SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
+75
+100
+100
+Siemens Canada Limited, Ontario/Canada
+100
+Dresser-Rand Canada, Inc., Calgary/Canada
+1008
+Siemens Healthcare Servicios S de RL de CV, México,
+D.F./Mexico
+100
+Siemens Ltda., São Paulo/Brazil
+100
+Siemens Industry Software Ltda., São Caetano do Sul/Brazil
+Grupo Siemens S.A. de C.V., México, D.F./Mexico
+100
+100
+Siemens Healthcare Diagnósticos S.A., São Paulo/Brazil
+100
+Siemens Eletroeletronica Limitada, Manaus/Brazil
+100
+Ciudad Juárez/Mexico
+1008
+Indústria de Trabajos Eléctricos S.A. de C.V.,
+OMNETRIC Group Tecnologia e Servicos de Consultoria Ltda.,
+Belo Horizonte/Brazil
+100
+Siemens Healthcare Diagnostics, S. de R.L. de C.V., México,
+D.F./Mexico
+September 30, 2015
+100
+100
+100
+Vitoria-Gasteiz/Spain
+100
+Siemens Healthcare AG, Zurich/Switzerland
+Guascor Power Investigacion y Desarollo, S.A.,
+100
+Zug/Switzerland
+898
+Guascor Postensa AIE, Zumaia/Spain
+Siemens Fuel Gasification Technology Holding AG,
+608
+Guascor Isolux AIE, Vitoria-Gasteiz/Spain
+100
+Huba Control AG, Würenlos/Switzerland
+100
+Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
+100
+Dresser-Rand Services, S.a.r.l., Freiburg/Switzerland
+100
+Guascor Explotaciones Energéticas, S.A., Vitoria-Gasteiz/Spain
+99
+Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
+100
+Guascor Power, S.A., Zumaia/Spain
+100
+Equity interest
+112 Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+Not consolidated due to immateriality.
+8
+7 Significant influence due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Dresser-Rand Sales Company S.A., Freiburg/Switzerland
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+100
+Zurich/Switzerland
+1008
+Guascor Proyectos, S.A., Madrid/Spain
+Siemens Postal, Parcel & Airport Logistics AG,
+100
+Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Industry Software AG, Zurich/Switzerland
+6 No significant influence due to contractual arrangements or legal circumstances.
+708
+Guascor Borja AIE, Zumaia/Spain
+100
+Sistemas y Nuevas Energias, S.A, Vitoria-Gasteiz/Spain
+100
+100
+Siemens S.A., Madrid/Spain
+70
+Desimpacte de Purines Altorricón S.A., Altorricón/Spain
+Desimpacto de Purines Turégano, S.A., Turégano/Spain
+Dresser-Rand Holdings Spain S.L.U., Vitoria-Gasteiz/Spain
+Empresa de Reciclajes de Residuos Ambientales, S.A.,
+Vitoria-Gasteiz/Spain
+100
+Siemens Renting S.A., Madrid/Spain
+858
+B2B Energía, S.A., Vitoria-Gasteiz/Spain
+1008
+100
+100
+Axastse Solar, S.L., Vitoria-Gasteiz/Spain
+100
+S.L. Sociedad Unipersonal, Madrid/Spain
+100
+Halfway House/South Africa
+SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS,
+Siemens Healthcare Proprietary Limited,
+100
+Siemens Industry Software S.L., Barcelona/Spain
+Siemens Rail Automation S.A.U., Madrid/Spain
+September 30, 2015
+100
+100
+SKR Lager 20 KB, Finspång/Sweden
+100
+Guascor Bioenergía, S.L., Vitoria-Gasteiz/Spain
+100
+Siemens Industry Software AB, Kista/Sweden
+100
+Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
+100
+Siemens Industrial Turbomachinery AB, Finspång/Sweden
+100
+Telecomunicación, Electrónica y Conmutación S.A.,
+Madrid/Spain
+Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
+Siemens Healthcare AB, Stockholm/Sweden
+100
+Enviroil Vasca, S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Financial Services AB, Stockholm/Sweden
+1008
+Engines Rental, S.L., Zumaia/Spain
+100
+Siemens AB, Upplands Väsby/Sweden
+678
+100
+Preactor International Limited, Frimley, Surrey/United Kingdom
+in %
+Equity interest
+Siemens Protection Devices Limited, Frimley,
+100
+Surrey/United Kingdom
+100
+Siemens Postal, Parcel & Airport Logistics Limited, Frimley,
+100
+Siemens plc, Frimley, Surrey/United Kingdom
+100
+100
+Surrey/United Kingdom
+Siemens Pension Funding Limited, Frimley,
+100
+100
+Surrey/United Kingdom
+Siemens Pension Funding (General) Limited, Frimley,
+492
+100
+Siemens Industry Software Simulation and Test Limited,
+Frimley, Surrey/United Kingdom
+492
+Cambridgeshire/United Kingdom
+Dresser-Rand (U.K.) Limited, Peterborough,
+100
+Surrey/United Kingdom
+100
+Dresser-Rand Company Ltd., Peterborough,
+Surrey/United Kingdom
+100
+Siemens Rail Systems Project Limited, Frimley,
+Industrial Turbine Company (UK) Limited, Frimley,
+Surrey/United Kingdom
+100
+Surrey/United Kingdom
+100
+Surrey/United Kingdom
+Siemens Rail Systems Project Holdings Limited, Frimley,
+GYM Renewables ONE Limited, Frimley,
+Cambridgeshire/United Kingdom
+100
+100
+GYM Renewables Limited, Frimley, Surrey/United Kingdom
+Siemens Rail Automation Limited, Frimley,
+100
+Electrium Sales Limited, Frimley, Surrey/United Kingdom
+100
+Surrey/United Kingdom
+100
+Cambridgeshire/United Kingdom
+Siemens Rail Automation Holdings Limited, Frimley,
+Surrey/United Kingdom
+D-R Holdings (UK) Ltd., Peterborough,
+D-R Dormant Ltd., Peterborough,
+Cambridgeshire/United Kingdom
+Masdar City/United Arab Emirates
+Siemens Finansal Kiralama A.S., Istanbul/Turkey
+100
+Surrey/United Kingdom
+100
+Siemens S.A., Tunis/Tunisia
+Siemens Healthcare Diagnostics Products Ltd, Frimley,
+100
+United Republic of
+100
+Surrey/United Kingdom
+100
+Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
+100
+Stadt/Land Immobilien AG Zürich, Zurich/Switzerland
+100
+Surrey/United Kingdom
+100
+Siemens Schweiz AG, Zurich/Switzerland
+Siemens Healthcare Diagnostics Ltd., Frimley,
+100
+Siemens Power Holding AG, Zug/Switzerland
+in %
+Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley,
+September 30, 2015
+Siemens Healthcare Limited, Frimley,
+1008
+Siemens Middle East Limited,
+Siemens LLC, Abu Dhabi/United Arab Emirates
+SD (Middle East) LLC, Dubai/United Arab Emirates
+100
+Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
+100
+Surrey/United Kingdom
+492
+Abu Dhabi/United Arab Emirates
+Siemens Industry Software Limited, Frimley,
+Siemens Healthcare Saglýk Anonim Sirketi, Istanbul/Turkey
+Siemens Sanayi ve Ticaret A.S., Istanbul/Turkey
+100
+100
+100% foreign owned subsidiary "Siemens Ukraine", Kiev/Ukraine
+Dresser-Rand Field Operations Middle East LLC,
+Siemens Industrial Turbomachinery Ltd., Frimley,
+100
+Dresser-Rand Turkmen Company, Ashgabat/Turkmenistan
+100
+Siemens Holdings plc, Frimley, Surrey/United Kingdom
+100
+1008
+Surrey/United Kingdom
+Surrey/United Kingdom
+Equity interest
+in %
+Siemens Fossil Services, Inc., Wilmington,
+eMeter Corporation, Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Guascor Inc., Baton Rouge, LA/United States
+100
+Siemens Public, Inc., Wilmington, DE/United States
+Siemens Product Lifecycle Management Software Inc.,
+100
+100
+Siemens USA Holdings, Inc., Wilmington, DE/United States
+100
+Mannesmann Corporation, New York, NY/United States
+100
+SMI Holding LLC, Wilmington, DE/United States
+100
+IBS America, Inc., Wilmington, DE/United States
+100
+Dresser-Rand Services, LLC, Wilmington, DE/United States
+100
+Siemens Molecular Imaging, Inc., Wilmington,
+P.E.T.NET Houston, LLC, Austin, TX/United States
+Dresser-Rand International Holdings, LLC, Wilmington,
+DE/United States
+100
+DE/United States
+Siemens Postal, Parcel & Airport Logistics LLC, Wilmington,
+Dresser-Rand International Inc., Wilmington, DE/United States
+100
+DE/United States
+100
+Dresser-Rand LLC, Wilmington, DE/United States
+100
+Siemens Power Generation Service Company, Ltd.,
+Dresser-Rand Power LLC, Wilmington, DE/United States
+100
+Wilmington, DE/United States
+NEM USA Corp., Wilmington, DE/United States
+100
+100
+100
+Dresser-Rand Energy Services LLC, Wilmington, DE/United States
+Dresser-Rand Global Services, Inc., Wilmington,
+DE/United States
+100
+Siemens Government Technologies, Inc., Wilmington,
+DE/United States
+100
+Dresser-Rand Company, Bath, NY/United States
+100
+D-R Steam LLC, Wilmington, DE/United States
+100
+DE/United States
+100
+D-R International Sales Inc., Wilmington, DE/United States
+Siemens Generation Services Company, Wilmington,
+100
+100
+DE/United States
+Synchrony, Inc., Glen Allen, VA/United States
+100
+100
+Siemens Healthcare Diagnostics Inc., Los Angeles,
+D-R Acquisition LLC, Dallas, TX/United States
+100
+Wheelabrator Air Pollution Control Inc., Baltimore,
+CA/United States
+Nimbus Technologies, LLC, Bingham Farms, MI/United States
+100
+100
+MD/United States
+100
+DE/United States
+Omnetric Corp., Wilmington, DE/United States
+DE/United States
+Dresser-Rand Holding (Luxembourg) LLC, Wilmington,
+100
+Siemens Medical Solutions USA, Inc., Wilmington,
+100
+Dresser-Rand Group Inc., Wilmington, DE/United States
+100
+Siemens Industry, Inc., Wilmington, DE/United States
+100
+Joe Kaeser
+Au
+Siemens Aktiengesellschaft
+The Managing Board
+Munich, November 30, 2015
+To the best of our knowledge, and in accordance with the appli-
+cable reporting principles, the Consolidated Financial State-
+ments give a true and fair view of the assets, liabilities, financial
+position and profit or loss of the Group, and the Group Manage-
+ment Report, which has been combined with the Management
+C.
+Additional Information
+120 Consolidated Financial Statements
+N/A = No financial data available.
+12 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+10 Exemption pursuant to Section 264b German Commercial Code.
+C.1 Responsibility Statement
+2.гл
+586
+1. Ye
+To Siemens Aktiengesellschaft, Berlin and Munich
+Not accounted for using the equity method due to immateriality.
+C.2 Independent Auditor's Report
+122 Additional Information
+Dr. Ralf P. Thomas
+wang
+Dr. Roland Busch
+Миг
+Alaus Helms h
+Prof. Dr. Siegfried Russwurm
+Lisa Davis
+Shan
+Report for Siemens Aktiengesellschaft, includes a fair review
+of the development and performance of the business and the
+position of the Group, together with a description of the
+material opportunities and risks associated with the expected
+development of the Group.
+Janina Kugel
+Klaus Helmrich
+9
+0
+8
+REPORT ON THE CONSOLIDATED
+FINANCIAL STATEMENTS
+Longview Intermediate Holdings B, LLC, Wilmington, DE/United States
+506
+(2)
+(1)
+12
+265
+3,402
+456
+8
+92
+1005,6
+49
+7,454
+744,6
+0
+506
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+Not consolidated due to immateriality.
+1 Control due to a majority of voting rights.
+(36)
+34
+(3)
+9
+N/A
+N/A
+810
+We have audited the accompanying consolidated financial
+statements of Siemens Aktiengesellschaft, Berlin and Munich,
+and its subsidiaries, which comprise the consolidated state-
+ments of income, comprehensive income, financial position,
+cash flow and changes in equity, and notes to the consolidated
+financial statements for the business year from October 1, 2014
+to September 30, 2015.
+of women to men on the Managing Board of Siemens AG at at
+least its current level until June 30, 2017. This proportion is 2/7 (or
+28.57%) of the Board's members. The Managing Board informed
+us about the status of the integration of Dresser-Rand Group Inc.,
+which had been acquired, and of the aeroderivative gas turbine
+and compressor business acquired from Rolls-Royce. At an execu-
+tive session, we discussed the efficiency review of our activities.
+The management of Siemens Aktiengesellschaft is responsible
+for the preparation of these consolidated financial statements.
+This responsibility includes preparing these consolidated finan-
+cial statements in accordance with International Financial
+Reporting Standards (IFRS) as adopted by the European Union
+(EU), the supplementary requirements of German law pursuant
+to Sec. 315a (1) HGB ["Handelsgesetzbuch": German Commercial
+Code] and full IFRS as issued by the International Accounting
+Standards Board (IASB), to give a true and fair view of the net
+assets, financial position and results of operations of the group
+in accordance with these requirements. The company's man-
+agement is also responsible for the internal controls that man-
+agement determines are necessary to enable the preparation of
+consolidated financial statements that are free from material
+misstatement, whether due to fraud or error.
+The Audit Committee met six times. In the presence of the
+independent auditors as well as the President and Chief Execu-
+tive Officer and the Chief Financial Officer, the Committee dis-
+cussed the financial statements and the Combined Manage-
+ment Report for Siemens AG and the Siemens Group. In
+addition, the Audit Committee addressed the half-year and
+quarterly financial reports and, in the presence of the indepen-
+dent auditors, discussed their audit reviews. The Committee
+recommended that the Supervisory Board propose to the An-
+nual Shareholders' Meeting the election of Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft as the independent auditors.
+The Committee appointed the independent auditors for fiscal
+2015, defined the audit focal points and determined the audi-
+tors' fee. The Committee monitored the independence and
+qualifications of the independent auditors. Furthermore, the
+Audit Committee dealt with the Company's financial reporting
+and risk management systems and with the effectiveness,
+The Innovation and Finance Committee met four times and
+made one decision by written circulation. The focuses of its
+meetings included the Committee's recommendation regarding
+the budget for fiscal 2015 as well as the preparation and/or
+approval of investment and divestment projects. In addition,
+the Committee intensively addressed the Company's innova-
+tion focuses. At the Committee meeting on July 29, 2015 -
+which all Supervisory Board members were invited to attend -
+Prof. Dr. Peter Gruss reported, as the Chairman of the recently
+established Siemens Technology & Innovation Council, on its
+work for the first time. As a precaution, Jim Hagemann Snabe
+abstained from voting on proposals submitted by the Innova-
+tion and Finance Committee and the Supervisory Board on
+November 4 and 5, 2014, respectively, regarding the sale of the
+audiology business since he held minor private investments in
+the EQT fund involved in the acquisition.
+The Compensation Committee met four times. It also made
+two decisions by written circulation. The Compensation Com-
+mittee prepared, in particular, proposals for the full Supervisory
+Board regarding the determination of targets for variable com-
+pensation, the determination and review of the appropriate-
+ness of Managing Board compensation and the approval of the
+Compensation Report.
+The Mediation Committee was not required to meet.
+The Compliance Committee met four times. It primarily dis-
+cussed the quarterly reports and the annual report submitted
+by the Chief Compliance Officer.
+nating Committee took into account the requirements of the Ger-
+man Stock Corporation Act, the German Corporate Governance
+Code and the Bylaws for the Supervisory Board as well as the tar-
+gets that the Supervisory Board had set for its own composition.
+126 Additional Information
+The Nominating Committee met twice. It prepared recommen-
+dations regarding the candidates to be proposed to the Super-
+visory Board for a by-election of shareholder representatives at
+the Annual Shareholders' Meeting on January 27, 2015, and was
+supported in this process by an external personnel consultant. In
+searching for and evaluating succession candidates, the Nomi-
+AGEMENT AND CONTROL STRUCTURE.
+WORK IN THE SUPERVISORY BOARD COMMITTEES
+The Supervisory Board has established seven standing commit-
+tees, which prepare proposals and issues to be dealt with at the
+Board's plenary meetings. The Supervisory Board's decision-
+making powers have also been delegated to these committees
+within the permissible legal framework. The committee chair-
+persons report to the Supervisory Board on their committees'
+work at the subsequent Board meetings. A list of the members
+and a detailed explanation of the tasks of the individual Super-
+visory Board committees are contained in chapter → C.4.1 MAN-
+GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
+COMMERCIAL CODE.
+At the Supervisory Board meeting of July 29, 2015, we con-
+cerned ourselves with the amendments made to the German
+Corporate Governance Code in the new version of May 5, 2015.
+At the subsequent Supervisory Board meeting, on Septem-
+ber 23, 2015, the Supervisory Board established a limit of three
+complete terms for length of service (15 years) and adjusted
+the concrete targets for its composition, which are specified
+in chapter → c.4.1 MANAGEMENT AND CONTROL STRUCTURE. We ap-
+proved an unqualified Declaration of Conformity in accordance
+with Section 161 of the German Stock Corporation Act (Aktien-
+gesetz). Information on corporate governance at Siemens is
+available in chapter → C.4 CORPORATE GOVERNANCE. Our Decla-
+ration of Conformity has been made permanently available to
+our shareholders on our website. The current Declaration
+of Conformity is also available in chapter → C.4.2 CORPORATE
+CORPORATE GOVERNANCE CODE
+¡BAHN Corporation, South Jordan, UT/United States
+The Chairman's Committee met six times. It also made one
+decision by written circulation. Between meetings, I discussed
+topics of major importance with the members of the Chair-
+man's Committee. The Committee concerned itself, in particu-
+lar, with personnel topics and corporate governance issues as
+well as with the assumption by Managing Board members of
+positions at other companies and institutions.
+125
+resources and findings of the internal audit as well as with
+reports concerning potential and pending legal disputes.
+FINANCIAL STATEMENTS
+Siemens AG is subject to German corporate law. Therefore, it
+has a two-tier board structure, consisting of a Managing Board
+and a Supervisory Board.
+C.4.1 Management and control structure
+C.4 Corporate Governance
+127
+Additional Information
+Dr. Gerhard Cromme
+Chairman
+DETAILED DISCUSSION OF THE
+Gerhard
+For the Supervisory Board
+On behalf of the Supervisory Board, I would like to thank the
+members of the Managing Board as well as the employees and
+employee representatives of Siemens AG and all Group compa-
+nies for their outstanding commitment and constructive coop-
+eration in fiscal 2015.
+Prof. Dr. Hermann Requardt resigned from the Managing Board,
+effective January 31, 2015. The Supervisory Board would like to
+thank him for his many years of successful work as a member
+of the Managing Board. Under Prof. Dr. Requardt's leadership,
+Siemens' Healthcare business succeeded in further consolidat-
+ing its leading position on the world market. The Supervisory
+Board appointed Janina Kugel a full member of the Managing
+Board, effective February 1, 2015.
+CHANGES IN THE COMPOSITION OF THE
+SUPERVISORY AND MANAGING BOARDS
+Effective the end of the Annual Shareholders' Meeting on Janu-
+ary 27, 2015, Deputy Chairman Berthold Huber, Gerd von Bran-
+denstein and Prof. Dr. Peter Gruss resigned from their positions
+on the Supervisory Board of Siemens AG. The Supervisory
+Board would like to express its appreciation to the members
+who have left the Board for their professional commitment and
+contributions to the success of the Company as well as for their
+many years of loyal support. Dr. Nathalie von Siemens and
+Dr. Norbert Reithofer were elected by the 2015 Annual Share-
+holders' Meeting to succeed the two departing shareholder rep-
+resentatives. At the same time, Reinhard Hahn was appointed
+by court order to succeed Mr. Huber on the Supervisory Board.
+The Supervisory Board elected Birgit Steinborn to serve as Dep-
+uty Chairwoman of the Board.
+distribution be used to pay out a dividend of €3.50 per share
+entitled to a dividend and that the amount of net income attrib-
+utable to shares of stock not entitled to receive a dividend for
+fiscal 2015 be carried forward.
+The independent auditors, Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft, audited the Annual Financial Statements
+of Siemens AG, the Consolidated Financial Statements of the
+Siemens Group and the Combined Management Report for
+Siemens AG and the Siemens Group for fiscal 2015 and issued
+an unqualified opinion. The Annual Financial Statements of
+Siemens AG and the Combined Management Report for
+Siemens AG and the Siemens Group were prepared in accord-
+ance with the requirements of German law. The Consolidated
+Financial Statements of the Siemens Group were prepared in
+accordance with the International Financial Reporting Stand-
+ards (IFRS) as adopted by the European Union (EU) and with
+the additional requirements of German law set out in Sec-
+tion 315a (1) of the German Commercial Code (Handelsgesetz-
+buch). These financial statements also comply with the IFRS as
+issued by the International Accounting Standards Board (IASB).
+The independent auditors conducted their audit in accordance
+with Section 317 of the German Commercial Code and in com-
+pliance with the generally accepted German standards for the
+audit of financial statements promulgated by the Institut der
+Wirtschaftsprüfer (IDW) and with the International Standards
+on Auditing (ISA). The abovementioned documents as well as
+the Managing Board's proposal for the appropriation of net in-
+come were submitted to us by the Managing Board in advance.
+The Audit Committee discussed the dividend proposal in detail
+at its meeting on November 10, 2015. It discussed the Annual
+Financial Statements of Siemens AG, the Consolidated Finan-
+cial Statements of the Siemens Group and the Combined Man-
+agement Report in detail at its meeting on December 1, 2015.
+The audit reports prepared by the independent auditors were
+distributed to all members of the Supervisory Board and com-
+prehensively reviewed at the Supervisory Board's meeting on
+December 2, 2015, in the presence of the independent auditors,
+who reported on the scope, focal points and main findings of
+their audit. No major weaknesses in the Company's internal
+control or risk management systems were reported. At this
+meeting, the Managing Board explained the financial state-
+ments of Siemens AG and the Siemens Group as well as the
+Company's risk management system. The Supervisory Board
+concurs with the results of the audit. Following the definitive
+findings of the Audit Committee's examination and our own
+examination, we have no objections. The Managing Board pre-
+pared the Annual Financial Statements of Siemens AG and the
+Consolidated Financial Statements of the Siemens Group. We
+approved the Annual Financial Statements and the Consoli-
+dated Financial Statements. In view of our approval, the finan-
+cial statements are accepted as submitted. We endorsed the
+Managing Board's proposal that the net income available for
+дремал Сложие
+Additional Information
+At the Supervisory Board meeting of September 23, 2015, the
+Managing Board reported to us on the state of the Company. In
+addition, we extended the Managing Board appointments of
+Dr. Roland Busch and Klaus Helmrich, effective April 1, 2016 to
+March 31, 2021. As part of our regular review, we adjusted the
+amount of Managing Board compensation. The Supervisory Board
+also set the gender-quota target of maintaining the proportion
+At our meeting of July 29, 2015, the Managing Board reported
+on the Company's business and financial position following the
+conclusion of the third quarter. We also dealt with the business
+situation and strategic orientation of the Building Technologies
+Division and of the separately managed Healthcare business.
+In our opinion, based on the findings of our audit of the consoli-
+dated financial statements and group management report, the
+group management report is consistent with the consolidated
+financial statements, and as a whole provides a suitable view of
+the Group's position and suitably presents the opportunities
+and risks of future development.
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
+of the group management report has not led to any reservations.
+We have audited the accompanying group management report,
+which is combined with the management report of Siemens
+Aktiengesellschaft, for the business year from October 1, 2014
+to September 30, 2015. The management of the company is
+responsible for the preparation of the group management
+report in compliance with the applicable requirements of
+German commercial law pursuant to Sec. 315a (1) HGB. We are
+required to conduct our audit in accordance with Sec. 317 (2)
+HGB and German generally accepted standards for the audit of
+the group management report promulgated by the IDW.
+Accordingly, we are required to plan and perform the audit of
+the group management report to obtain reasonable assurance
+about whether the group management report is consistent
+with the consolidated financial statements and the audit
+findings, and as a whole provides a suitable view of the Group's
+position and suitably presents the opportunities and risks of
+future development.
+REPORT ON THE GROUP MANAGEMENT REPORT
+123
+Additional Information
+Munich, November 30, 2015
+In our opinion, based on the findings of our audit, the consol-
+idated financial statements comply in all material respects
+with IFRS as adopted by the EU, the supplementary require-
+ments of German commercial law pursuant to Sec. 315a (1)
+HGB and full IFRS as issued by the IASB and give a true and
+fair view of the net assets and financial position of the Group
+as at September 30, 2015 as well as the results of operations
+for the business year then ended, in accordance with these
+requirements.
+Audit Opinion
+We believe that the audit evidence we have obtained is suffi-
+cient and appropriate to provide a basis for our audit opinion.
+An audit involves performing audit procedures to obtain audit
+evidence about the amounts and disclosures in the consoli-
+dated financial statements. The selection of audit procedures
+depends on the auditor's professional judgment. This includes
+the assessment of the risks of material misstatement of the
+consolidated financial statements, whether due to fraud or
+error. In assessing those risks, the auditor considers the inter-
+nal control system relevant to the entity's preparation of the
+consolidated financial statements that give a true and fair view.
+The aim of this is to plan and perform audit procedures that are
+appropriate in the given circumstances, but not for the purpose
+of expressing an opinion on the effectiveness of the group's
+internal control system. An audit also includes evaluating the
+appropriateness of accounting policies used and the reason-
+ableness of accounting estimates made by management, as
+well as evaluating the overall presentation of the consolidated
+financial statements.
+and plan and perform the audit to obtain reasonable assurance
+about whether the consolidated financial statements are free
+from material misstatement.
+Our responsibility is to express an opinion on these consoli-
+dated financial statements based on our audit. We conducted
+our audit in accordance with Sec. 317 HGB and German gener-
+ally accepted standards for the audit of financial statements
+promulgated by the Institut der Wirtschaftsprüfer [Institute of
+Public Auditors in Germany] (IDW) as well as in supplementary
+compliance with International Standards on Auditing (ISA).
+Accordingly, we are required to comply with ethical requirements
+Auditor's Responsibility
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
+of the consolidated financial statements has not led to any
+reservations.
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+Дения
+Spannagl
+Wirtschaftsprüfer
+At our meeting of May 6, 2015, the Managing Board reported on
+the Company's business and financial position following the
+conclusion of the second quarter as well as on the status of the
+implementation of Siemens Vision 2020. We also discussed the
+strategic orientation of the Power and Gas Division. In addition,
+the Managing Board reported in detail on regional business de-
+velopments in China.
+At our meeting of January 26, 2015, the Managing Board
+reported to us on the Company's business and financial posi-
+tion following the conclusion of the first quarter. The Super-
+visory Board approved the termination by mutual consent of
+Prof. Dr. Hermann Requardt's appointment as a member of the
+Managing Board, effective January 31, 2015, as well as the ter-
+mination agreement regarding his Managing Board employ-
+ment contract. Janina Kugel was appointed a full member of
+the Managing Board, effective February 1, 2015. We also ap-
+proved a reassignment of responsibilities in the Managing
+Board. Ms. Kugel was appointed to succeed Prof. Dr. Siegfried
+Russwurm as head of Human Resources and Labor Director.
+We transferred to Prof. Dr. Russwurm Board-level responsibility
+for the separately managed Healthcare business, whereby he
+will retain his regional responsibilities for the Middle East and
+the CIS as well as his position as Chief Technology Officer. The
+Managing Board also reported at this meeting on the further
+development of the Power and Gas Division's regional setup.
+On December 3, 2014, we discussed the financial statements
+and the Combined Management Report for Siemens AG and
+the Siemens Group as of September 30, 2014, and the Annual
+Report for 2014, including the Report of the Supervisory Board
+and the Corporate Governance Report as well as the agenda for
+the Annual Shareholders' Meeting on January 27, 2015. The
+Managing Board reported on the current status of acquisitions
+and divestments. We also discussed Siemens' compliance sys-
+tem and enterprise risk management system.
+ness and the implementation of Siemens Vision 2020. At this
+meeting, we also approved the sale of the hearing aid business.
+At our meeting of November 5, 2014, we discussed the Compa-
+ny's key financial figures for fiscal 2014 and approved the budget
+for 2015. On the basis of reported target achievement, we
+also defined the compensation of the Managing Board mem-
+bers for fiscal 2014. The appropriateness of this compensation
+was confirmed by an external review. On the recommendation
+of the Compensation Committee, we also approved the targets
+for Managing Board compensation for fiscal 2015. On Janu-
+ary 27, 2015, the Annual Shareholders' Meeting approved by a
+majority of over 92% the remuneration system for the Manag-
+ing Board members for fiscal 2015. At our meeting on Novem-
+ber 5, 2014, the Managing Board also informed us about its
+plans regarding the future setup of Siemens' Healthcare busi-
+Topics of discussion at our regular plenary meetings were reve-
+nue, profit and employment development at Siemens AG, at the
+Company's operating units and at the Siemens Group as well as
+the Company's financial situation and profitability. We also con-
+cerned ourselves as required with major investment and divest-
+ment projects and with particular risks to the Company.
+We held a total of six regular plenary meetings in fiscal 2015.
+In addition, we made one decision outside meetings. Attend-
+ance at Supervisory Board meetings by members was 95%.
+TOPICS AT THE PLENARY MEETINGS
+OF THE SUPERVISORY BOARD
+In fiscal 2015, the Supervisory Board performed, in accordance
+with its obligations, the duties assigned to it by law, the
+Siemens Articles of Association and the Bylaws for the Super-
+visory Board. We regularly advised the Managing Board on the
+management of the Company and monitored the Managing
+Board's activities. We were directly involved at an early stage in
+all major decisions regarding the Company. In written and oral
+reports, the Managing Board regularly provided us with timely
+and comprehensive information on Company planning and
+business operations as well as on the strategic development
+and current state of the Company. On the basis of reports sub-
+mitted by the Managing Board, we considered in detail busi-
+ness development and all decisions and transactions of major
+significance to the Company. Deviations from business plans
+were explained to us in detail and intensively discussed. The
+Managing Board coordinated the Company's strategic orienta-
+tion with us. The proposals made by the Managing Board were
+approved by the Supervisory Board and/or the relevant Super-
+visory Board committees after in-depth examination and con-
+sultation. In my capacity as Chairman of the Supervisory Board,
+I was also in regular contact with the Managing Board and, in
+particular, with the President and Chief Executive Officer and
+was kept up-to-date on current developments in the Company's
+business situation and on key business transactions.
+Berlin and Munich, December 2, 2015
+C.3 Report of the Supervisory Board
+124 Additional Information
+[German Public Auditor]
+Prof. Dr. Hayn
+Wirtschaftsprüfer
+[German Public Auditor]
+Management's Responsibility for the
+Consolidated Financial Statements
+Guascor México S.A. de CV, México, D.F./Mexico
+72
+Siemens Benefits Scheme Limited, Frimley, Surrey/United Kingdom
+49
+Ethos Energy Group Limited, Aberdeen/United Kingdom
+309
+219
+50
+50
+Exemplar Health (NBH) Partnership, Melbourne/Australia
+Exemplar Health (SCUH) Partnership, Sydney/Australia
+Magellan Technology Pty. Ltd., Annandale/Australia
+ChinaInvent (Shanghai) Instrument Co., Ltd, Shanghai/China
+33
+Cross London Trains Holdco 2 Limited, London/United Kingdom
+50
+Interessengemeinschaft TUS, Männedorf/Switzerland
+50
+Certas AG, Zurich/Switzerland
+50
+Tusso Energía, S.L., Sevilla/Spain
+Asia, Australia (19 companies)
+50
+Solucia Renovables 1, S.L., Lebrija/Spain
+50
+Lincs Renewable Energy Holdings Limited,
+London/United Kingdom
+DBEST (Beijing) Facility Technology Management Co., Ltd.,
+Beijing/China
+25
+50
+50
+Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
+Xi'An X-Ray Target Ltd., Xi'an/China
+49
+50
+RWG (Repair & Overhauls) Limited, Aberdeen/United Kingdom
+Joint Venture Service Center, Chirchik/Uzbekistan
+40
+Shanghai Electric Power Generation Equipment Co., Ltd.,
+Shanghai/China
+349
+Pyreos Limited, Edinburgh/United Kingdom
+Soleval Renovables S.L., Sevilla/Spain
+49
+509
+Nanjing/China
+509
+Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
+Saitong Railway Electrification (Nanjing) Co., Ltd.,
+509
+Odos Imaging Ltd., Edinburgh/United Kingdom
+50
+GSP China Technology Co., Ltd., Beijing/China
+Primetals Technologies, Limited, London/United Kingdom
+207,9
+Innovex Capital En Tecnologia, C.A., Caracas/Venezuela,
+Bolivarian Republic of
+515
+Powerit Holdings, Inc., Seattle, WA/United States
+26
+ZAO Systema-Service, St. Petersburg/Russian Federation
+259
+Power Properties Inc., Boston, MA/United States
+409
+33
+PhSiTh LLC, New Castle, DE/United States
+46
+219
+37
+49
+in %
+September 30, 2015
+in %
+ZAO Interautomatika, Moscow/Russian Federation
+ZAO Nuclearcontrol, Moscow/Russian Federation
+000 VIS Automation mit Zusatz „Ein Gemeinschaftsunter-
+nehmen von VIS und Siemens", Moscow/Russian Federation
+September 30, 2015
+Equity interest
+Equity interest
+Panda Stonewall Intermediate Holdings I, LLC, Wilmington,
+DE/United States
+43
+Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
+Rether networks, Inc., Berkeley, CA/United States
+Barcelona/Spain
+Nertus Mantenimiento Ferroviario y Servicios S.A.,
+409
+Caracas/Venezuela, Bolivarian Republic of
+50
+Hydrophytic, S.L., Vitoria-Gasteiz/Spain
+Empresa Nacional Maquinas Eléctricas, S.A.,
+50
+Gate Solar, S.L., Vitoria-Gasteiz/Spain
+31
+259
+509
+Explotaciones y Mantenimientos Integrales, S.L., Getxo/Spain
+515
+Siemens First Capital Commercial Finance, LLC, Wilmington,
+DE/United States
+509
+Desgasificación de Vertederos, S.A, Madrid/Spain
+359
+Ardora, S.A., Vigo/Spain
+30
+USARAD Holdings, Inc., Fort Lauderdale, FL/United States
+Americas (3 companies)
+Americas (17 companies)
+50
+5
+975,6
+398
+35
+1005,6
+84
+3
+1005,6
+MAENA Grundstücks-Verwaltungsgesellschaft mbH & Co. KG, Grünwald
+Kyros Beteiligungsverwaltung GmbH, Grünwald
+BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
+(39)
+2
+1005,6
+2
+0
+1005,6
+Ausbildungszentrum für Technik, Informationsverarbeitung und Wirtschaft gemeinnützige GmbH (ATIW), Paderborn
+BOMA Verwaltungsgesellschaft mbH & Co. KG, Grünwald
+€
+(91)
+OSRAM Licht AG, Munich
+Siemens Global Innovation Partners I GmbH & Co. KG, Munich
+Siemens Pensionsfonds AG, Grünwald
+Corporate XII S.A. (SICAV-FIS), Luxembourg/Luxembourg
+Medical Systems S.p.A., Genoa/Italy
+ATOS SE, Bezons / France
+Dils Energie NV, Hasselt/Belgium
+1
+(2)
+506
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (6 companies)
+SMATRICS GmbH & Co KG, Vienna/Austria
+8
+€
+1
+8
+(1)
+1005,6
+6
+506
+2,422
+151
+18
+SIM 9. Grundstücksverwaltungs- und -beteiligungs-GmbH, Munich
+1005,6
+in millions of
+in millions of
+interest
+in %
+49
+43
+Power Automation Pte. Ltd., Singapore/Singapore
+209
+Advance Gas Turbine Solutions SDN. BHD.,
+Kuala Lumpur/Malaysia
+259
+259
+50
+Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
+Cyclos Semiconductor, Inc., Wilmington, DE/United States
+Echogen Power Systems LLC, Wilmington, DE/United States
+23
+PT Asia Care Indonesia, Jakarta/Indonesia
+67
+Bethel Holdco LLC, Houston, TX/United States
+Brockton Power Company LLC, Boston, MA/United States
+Brockton Power Holdings Inc., Boston, MA/United States
+Brockton Power Properties, Inc., Boston, MA/United States
+BuildingIQ, Inc., San Mateo, CA/United States
+50
+259
+26
+Bangalore International Airport Ltd., Bangalore/India
+Transparent Energy Systems Private Limited, Pune/India
+P.T. Jawa Power, Jakarta/Indonesia
+309
+Cia Técnica de Engenheria Eletrica Sucursal Argentina
+VA TECH ARGENTINA S.A. Union transitoria de Empresas,
+Buenos Aires/Argentina
+40
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
+Yangzhong/China
+32
+32
+Equity
+Net income
+Equity
+Germany (9 companies)
+Other investments 12
+September 30, 2015
+119
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Modern Engineering and Consultants Co. Ltd.,
+10 Exemption pursuant to Section 264b German Commercial Code.
+8 Not consolidated due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key
+management personnel.
+1 Control due to a majority of voting rights.
+409
+Bangkok/Thailand
+9 Not accounted for using the equity method due to immateriality.
+7
+The Supervisory Board of Siemens AG has 20 members. As stip-
+ulated by the German Codetermination Act (Mitbestimmungs-
+gesetz), half of the members represent Company shareholders,
+and half represent Company employees. The employee repre-
+sentatives' names are marked below with an asterisk (*). The
+present Supervisory Board's term of office will expire at the
+conclusion of the Annual Shareholders' Meeting in 2018.
+Name
+German positions:
+128 Additional Information
+Shareholders' Committee.
+2
+1 As of January 27, 2015.
+January 27,
+2015
+June 24,
+1956
+> E.ON SE, Düsseldorf (Chairman)
+Trade Union Secretary of the
+Managing Board of IG Metall
+January 24,
+2008
+June 28,
+1949
+Scientific Member of the
+Max Planck Society
+(until January 27, 2015)
+Prof. Dr. rer. nat.
+Peter Gruss,
+January 24,
+2008
+Reinhard Hahn*
+March 2,
+1942
+> Henkel AG & Co. KGaA, Düsseldorf²
+German positions:
+As of September 30, 2015, the Supervisory Board comprised
+the following members:
+C.4.1.1 SUPERVISORY BOARD
+> Siemens Healthcare GmbH, Munich
+(Deputy Chairman)
+> Pfleiderer GmbH, Neumarkt
+German positions:
+> Actelion Ltd., Switzerland
+> Henkel Management AG, Düsseldorf
+> Münchener Rückversicherungs-Gesellschaft
+Aktiengesellschaft in München, Munich
+Positions outside Germany:1
+> BDO AG Wirtschaftsprüfungsgesellschaft,
+Hamburg (Deputy Chairman)
+German positions:
+> Linde AG, Munich (Deputy Chairman)
+(Deputy Chairman)
+> Fresenius SE & Co. KGaA, Bad Homburg
+> Fresenius Management SE, Bad Homburg
+> BASF SE, Ludwigshafen am Rhein
+(Deputy Chairman)
+> HSBC Trinkaus & Burkhardt AG, Düsseldorf
+German positions:1
+Supervisory Board Member
+> Bayer AG, Leverkusen (Chairman)
+January 24,
+2008
+> Porsche Automobil Holding SE, Stuttgart
+> Audi AG, Ingolstadt (Deputy Chairman)
+German positions:1
+(as of September 30, 2015)
+Membership in supervisory boards whose establishment
+is required by law or in comparable domestic or foreign
+controlling bodies of business enterprises
+July 1,
+2004
+President of IndustriALL Global
+Union
+2003
+1943
+February 25, January 23,
+Member since
+Date of birth
+Chairman of the Supervisory Board
+of Siemens AG
+Occupation
+Gerhard Cromme, Dr. iur.
+Chairman
+Hans Michael Gaul,
+Dr. iur.
+Berthold Huber*
+First Deputy Chairman
+(until January 27, 2015)
+> Volkswagen AG, Wolfsburg (Deputy Chairman)
+Birgit Steinborn*
+First Deputy Chairwoman
+Werner Wenning
+Second Deputy Chairman
+February 15,
+1950
+Supervisory Board Member
+Olaf Bolduan*
+January 24,
+2008
+April 6,
+1942
+Supervisory Board Member
+July 11,
+2014
+December
+23, 1954
+of Siemens Dynamowerk, Berlin,
+Germany
+Chairman of the Works Council
+July 24,
+1952
+October 21,
+1946
+Chairman of the Supervisory Boards
+of Bayer AG and E.ON SE
+January 24,
+2008
+March 26,
+1960
+Chairwoman of the Central Works
+Council of Siemens AG
+Michael Diekmann
+Gerd von Brandenstein
+(until January 27, 2015)
+January 23,
+2013
+The Supervisory Board oversees and advises the Managing
+Board in its management of the Company's business. At regular
+intervals, the Supervisory Board discusses business develop-
+ment, planning, strategy and strategy implementation. It re-
+views the Annual Financial Statements of Siemens AG and the
+Consolidated Financial Statements of the Siemens Group, the
+Combined Management Report of Siemens AG and the Siemens
+Group, and the proposal for the appropriation of net income. It
+approves the Annual Financial Statements of Siemens AG as
+well as the Consolidated Financial Statements of the Siemens
+Group, based on the results of the preliminary review con-
+ducted by the Audit Committee and taking into account the re-
+ports of the independent auditors. The Supervisory Board de-
+cides on the Managing Board's proposal for the appropriation
+of net income and the Report of the Supervisory Board to the
+Annual Shareholders' Meeting. In addition, the Supervisory
+Board or the Compliance Committee, which is described in
+more detail below, concern themselves with monitoring the
+Company's adherence to statutory provisions, official regu-
+lations and internal Company policies (compliance). The Super-
+visory Board also appoints the members of the Managing Board
+and determines each member's portfolios. Important Managing
+130 Additional Information
+-
+Board decisions such as those regarding major acquisitions,
+divestments, fixed asset investments and financial measures -
+require Supervisory Board approval, unless the Bylaws for the
+Supervisory Board specify that such authority be delegated to
+the Innovation and Finance Committee of the Supervisory
+Board. In the Bylaws for the Managing Board, the Supervisory
+Board has established the rules that govern the Managing
+Board's work.
+The Supervisory Board has seven committees, whose duties,
+responsibilities and procedures fulfill the requirements of the
+German Stock Corporation Act (Aktiengesetz) and the Code.
+The chairmen of these committees provide the Supervisory
+Board with regular reports on their committees' activities.
+The Chairman's Committee makes proposals, in particular,
+regarding the appointment and dismissal of Managing Board
+members and handles contracts with members of the Manag-
+ing Board. When making recommendations for first-time ap-
+pointments, it takes into account that the terms of these ap-
+pointments shall not, as a rule, exceed three years. In preparing
+recommendations on the appointment of Managing Board
+members, the Chairman's Committee takes into account the
+candidates' professional qualifications, international experi-
+ence and leadership qualities, the age limit specified for Man-
+aging Board members, the Managing Board's long-range plans
+for succession as well as its diversity. It also takes into account
+the targets for the proportion of women on the Managing
+Board specified by the Supervisory Board. The Chairman's Com-
+mittee concerns itself with questions regarding the Company's
+corporate governance and prepares the resolutions to be ap-
+proved by the Supervisory Board regarding the Declaration of
+Conformity with the Code – including the explanation of devia-
+tions from the Code - and regarding the approval of the Corpo-
+rate Governance Report as well as the Report of the Supervisory
+Board to the Annual Shareholders' Meeting. Furthermore, the
+Chairman's Committee submits recommendations to the
+Supervisory Board regarding the composition of the Super-
+visory Board committees and decides whether to approve
+contracts and business transactions with Managing Board
+members and parties related to them.
+As of September 30, 2015, the Chairman's Committee comprised
+Dr. Gerhard Cromme (chairman), Jürgen Kerner, Birgit Stein-
+born and Werner Wenning.
+The Compensation Committee prepares, in particular, the
+proposals for decisions by the Supervisory Board's plenary meet-
+ings regarding the system of Managing Board compensation,
+including the implementation of this system in Managing Board
+contracts, the definition of the targets for variable Managing
+Board compensation, the determination and review of the
+132
+As of September 30, 2015, the Compensation Committee com-
+prised Werner Wenning (chairman), Dr. Gerhard Cromme,
+Michael Diekmann, Robert Kensbock, Jürgen Kerner and Birgit
+Steinborn.
+The Audit Committee oversees, in particular, the accounting
+process and conducts a preliminary review of the Annual Fi-
+nancial Statements of Siemens AG, the Consolidated Financial
+Statements of the Siemens Group and the Combined Manage-
+ment Report. On the basis of the independent auditors' report
+on their audit of the annual financial statements, the Audit
+Committee makes, after its preliminary review, recommenda-
+tions regarding Supervisory Board approval of the Annual Fi-
+nancial Statements of Siemens AG and the Consolidated Finan-
+cial Statements of the Siemens Group. In addition to the work
+performed by the independent auditors, the Audit Committee
+discusses the Company's interim reports, which are prepared
+by the Managing Board, as well as the report on the auditors'
+review of interim reports. It concerns itself with the Company's
+risk monitoring system and oversees the effectiveness of the
+internal control system as this relates, in particular, to financial
+reporting, the risk management system and the internal audit
+system. The Audit Committee receives regular reports from the
+Internal Audit Department. It prepares the Supervisory Board's
+recommendation to the Annual Shareholders' Meeting con-
+cerning the election of the independent auditors and submits
+the corresponding proposal to the Supervisory Board. It awards
+the audit contract to the independent auditors elected by the
+Annual Shareholders' Meeting and monitors the independent
+audit of the financial statements - including, in particular, the
+auditors' independence, professional expertise and services.
+As of September 30, 2015, the Audit Committee comprised
+Dr. Hans Michael Gaul (chairman), Dr. Gerhard Cromme, Bettina
+Haller, Robert Kensbock, Jürgen Kerner, Dr. Nicola Leibin-
+ger-Kammüller, Jim Hagemann Snabe and Birgit Steinborn.
+According to the German Stock Corporation Act, the Audit
+Committee must include at least one independent Supervisory
+Board member with knowledge and experience in the applica-
+tion of accounting principles or the auditing of financial state-
+ments. The Chairman of the Audit Committee, Dr. Hans
+Michael Gaul, fulfills these statutory requirements.
+The Compliance Committee concerns itself, in particular, with
+monitoring the Company's adherence to statutory provisions,
+official regulations and internal Company policies.
+Additional Information
+131
+These objectives for the Supervisory Board's composition have
+been fully achieved: a considerable number of Supervisory
+Board members are currently engaged in international activi-
+ties and/or have many years of international experience. Since
+the Supervisory Board election in 2015, the Supervisory Board
+has had six female members. Dr. Nicola Leibinger-Kammüller is
+a member of the Nominating Committee. The Supervisory
+Board has an adequate number of independent members. In
+the opinion of the Supervisory Board, a minimum of 16 Super-
+visory Board members are independent in the meaning of Sec-
+tion 5.4.2 of the Code. Some Supervisory Board members
+hold or have held in the past fiscal year - high-ranking posi-
+tions at other companies with which Siemens does business.
+Transactions between Siemens and such companies are carried
+out on an arm's-length basis. We believe that these transactions
+do not compromise the independence of the Supervisory Board
+members in question. The regulations establishing limits on
+age and limiting membership in the Supervisory Board to three
+full terms of office (15 years) are complied with.
+appropriateness of the total compensation of individual
+Managing Board members and the approval of the annual
+Compensation Report.
+> The limits on age and length of membership established in
+the Bylaws for the Supervisory Board will be taken into con-
+sideration. In addition, no more than two former members of
+the Managing Board of Siemens AG shall belong to the
+Supervisory Board.
+> Allianz SE, Munich
+> An adequate number of independent members shall belong
+to the Supervisory Board. Material and not only temporary
+conflicts of interest, such as organizational functions or advi-
+sory capacities with major competitors of the Company, shall
+be avoided. Under the presumption that the mere exercise of
+Supervisory Board duties as an employee representative
+gives no cause to doubt the compliance with the independ-
+ence criteria pursuant to Section 5.4.2 of the Code, the
+Supervisory Board shall have a minimum of sixteen members
+who are independent in the meaning of the Code. In any
+case, the Supervisory Board shall be composed in such a
+way that a number of at least six independent shareholder
+As of September 30, 2015, the Compliance Committee com-
+prised Dr. Gerhard Cromme (chairman), Dr. Hans Michael Gaul,
+Bettina Haller, Harald Kern, Dr. Nicola Leibinger-Kammüller,
+Jim Hagemann Snabe, Birgit Steinborn and Sibylle Wankel.
+German positions:
+> SAP SE, Walldorf
+Positions outside Germany:
+> Bang & Olufsen A/S, Denmark
+(Deputy Chairman)
+> Danske Bank A/S, Denmark
+German positions:
+> Audi AG, Ingolstadt
+> Vaillant GmbH, Remscheid
+Additional Information
+129
+The composition of the Supervisory Board is to be such that its
+members as a group have the knowledge, skills and profes-
+sional experience necessary to carry out its proper functions.
+At its meeting on September 23, 2015, the Supervisory Board
+adjusted taking into account the recommendations of the
+German Corporate Governance Code (Code) - the concrete ob-
+jectives for its composition most recently defined in fiscal 2013
+and made the following decisions in this regard:
+-
+> The composition of the Supervisory Board of Siemens AG
+shall be such that qualified control and advising for the Man-
+aging Board is ensured. The candidates proposed for election
+to the Supervisory Board shall have the expertise, skills and
+professional experience necessary to carry out the functions
+of a Supervisory Board member in a multinational company
+and safeguard the reputation of Siemens in public. In partic-
+ular, care shall be taken in regard to the personality, integrity,
+commitment, professionalism and independence of the indi-
+viduals proposed for election. The goal is to ensure that,
+in the Supervisory Board, as a group, all know-how and expe-
+rience is available that is considered essential in view of
+Siemens' activities.
+> Taking the Company's international orientation into account,
+care shall also be taken to ensure that the Supervisory Board
+has an adequate number of members with extensive inter-
+national experience. Our goal is to make sure that the pres-
+ent considerable share of Supervisory Board members with
+extensive international experience is maintained.
+> In its election proposals, the Supervisory Board shall also pay
+particular close attention to ensuring diversity. In accordance
+with the German Law for Equal Participation of Women and
+Men in Management Positions in the Private and Public
+Sectors, the Supervisory Board is composed of at least 30 per-
+cent women and at least 30 percent men. The Nominating
+Committee shall continue to include at least one female
+member. Qualified women shall be included during the
+initial process of selecting potential candidates for new elec-
+tions or for the filling of Supervisory Board positions that
+have become vacant, and they shall be given appropriate
+consideration in nominations.
+representatives in the meaning of Section 5.4.2 of the Code
+is achieved. In addition, the Supervisory Board members
+shall have sufficient time to be able to devote the necessary
+regularity and diligence to their mandate.
+The Nominating Committee is responsible for making recom-
+mendations to the Supervisory Board on suitable candidates for
+election as shareholder representatives on the Supervisory
+Board by the Annual Shareholders' Meeting. In preparing these
+recommendations, the objectives specified by the Supervisory
+Board regarding its composition – including, in particular, inde-
+pendence and diversity - are to be taken into account as well as
+the required knowledge, abilities and professional experience
+of the proposed candidates. Attention shall also be paid to an
+appropriate participation of women and men in accordance
+with the legal requirements relating to the gender quota.
+March 31,
+2021
+The Mediation Committee submits proposals to the Supervi-
+sory Board in the event that the Supervisory Board cannot
+reach the two-thirds majority required for the appointment or
+dismissal of a Managing Board member.
+May 1,
+2006
+July 31,
+2018
+Roland Busch,
+Dr. rer. nat.
+November
+22, 1964
+April 1,
+2011
+March 31,
+2021
+Lisa Davis
+October 15,
+1963
+August 1,
+2014
+July 31,
+2019
+Klaus Helmrich
+May 24,
+1958
+April 1,
+2011
+> Unify Holdings B. V., Netherlands
+Janina Kugel
+January 12,
+1970
+June 23,
+1957
+As of September 30, 2015, the Nominating Committee com-
+prised Dr. Gerhard Cromme (chairman), Dr. Hans Michael Gaul,
+Dr. Leibinger-Kammüller and Werner Wenning.
+President and Chief
+Executive Officer
+Term expires
+As of September 30, 2015, the Mediation Committee comprised
+Dr. Gerhard Cromme (chairman), Jürgen Kerner, Birgit Stein-
+born and Werner Wenning.
+The Innovation and Finance Committee discusses, in partic-
+ular, based on the Company's overall strategy, the Company's
+focuses of innovation and prepares the Supervisory Board's dis-
+cussions and resolutions regarding questions relating to the
+Company's financial situation and structure – including annual
+planning (budget) – as well as the Company's fixed asset in-
+vestments and its financial measures. In addition, the Innova-
+tion and Finance Committee has been authorized by the Super-
+visory Board to decide on the approval of transactions and
+measures that require Supervisory Board approval and have a
+value of less than €600 million.
+-
+As of September 30, 2015, the Innovation and Finance Commit-
+tee comprised Dr. Gerhard Cromme (chairman), Robert Kens-
+bock, Harald Kern, Jürgen Kerner, Dr. Norbert Reithofer, Jim
+Hagemann Snabe, Birgit Steinborn and Werner Wenning.
+Information on the work of the Supervisory Board is provided
+in chapter → c.3 REPORT OF THE SUPERVISORY BOARD. The compen-
+sation paid to the members of the Supervisory Board is explained
+in chapter A.10 COMPENSATION REPORT.
+C.4.1.2 MANAGING BOARD
+As the Company's top management body, the Managing Board
+is committed to serving the interests of the Company and
+achieving sustainable growth in Company value. The members
+of the Managing Board are jointly responsible for the entire
+management of the Company and decide on the basic issues of
+business policy and corporate strategy as well as on the Com-
+pany's annual and multi-year plans.
+The Managing Board prepares the Company's interim reports,
+the Annual Financial Statements of Siemens AG, the Consoli-
+dated Financial Statements of the Siemens Group and the Com-
+bined Management Report of Siemens AG and the Siemens
+Group. In addition, the Managing Board must ensure that the
+Company adheres to statutory requirements, official regula-
+tions and internal Company policies (compliance) and works to
+achieve compliance with these provisions and policies within
+the Siemens Group. The Managing Board and the Supervisory
+Board cooperate closely for the benefit of the Company. The
+Managing Board informs the Supervisory Board regularly, com-
+prehensively and without delay on all issues of importance to
+the Company with regard to strategy, planning, business devel-
+opment, financial position, earnings, compliance and risks.
+When filling managerial positions at the Company, the Manag-
+ing Board takes diversity into consideration and, in particular,
+aims for an appropriate consideration of women and inter-
+nationality. The Managing Board defines targets for the propor-
+tion of women at the two management levels below the
+Managing Board.
+Currently, there is one Managing Board committee, the Equity
+and Employee Stock Committee. This committee oversees, in
+particular, the utilization of authorized capital in connection
+with the issuance of employee stock and the implementation
+of certain capital measures. It also determines the scope and
+conditions of the share-based compensation components and/
+or programs for employees and managers (with the exception
+of the Managing Board). In fiscal 2015, the committee made
+seven decisions by notational voting using written circulations.
+As of September 30, 2015, the committee comprised Joe Kaeser
+(chairman), Janina Kugel and Dr. Ralf P. Thomas.
+Information on the compensation paid to the members of the
+Managing Board is provided in chapter → A.10 COMPENSATION
+REPORT.
+Additional Information
+As of September 30, 2015 the Managing Board comprised the
+following members:
+Name
+Date of birth
+First
+appointed
+Joe Kaeser
+Positions outside Germany:
+> GDF Suez Energie Services S.A., France
+> Messer Group GmbH, Sulzbach
+January 24,
+2008
+January 22,
+1969
+President and Chairwoman
+of the Managing Board of
+TRUMPF GmbH + Co. KG
+December
+15, 1959
+January 24,
+2008
+Gérard Mestrallet
+Chairman of the Board and Chief
+Executive Officer of ENGIE
+April 1,
+1949
+January 23,
+2013
+Membership in supervisory boards whose establishment
+is required by law or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2015)
+January 25,
+2012
+German positions:
+> Airbus Operations GmbH, Hamburg
+> MAN SE, Munich (Deputy Chairman)
+> Premium Aerotec GmbH, Augsburg
+(Deputy Chairman)
+German positions:
+> Axel Springer SE, Berlin
+March 16,
+1960
+> Deutsche Lufthansa AG, Cologne
+January 23,
+2013
+January 27,
+2009
+Name
+Bettina Haller*
+Hans-Jürgen Hartung*
+Robert Kensbock*
+Harald Kern*
+Jürgen Kerner*
+Nicola Leibinger-
+Kammüller, Dr. phil.
+Occupation
+Chairwoman of the Combine Works
+Council of Siemens AG
+Chairman of the Works Council of
+Siemens Erlangen Süd, Germany
+Deputy Chairman of the Central
+Works Council of Siemens AG
+Chairman of the Siemens Europe
+Committee
+Executive Managing Board Member
+of IG Metall
+Date of birth
+Member since
+March 14,
+1959
+April 1,
+2007
+March 10,
+1952
+March 13,
+1971
+> Siemens Healthcare GmbH, Munich
+> Voith GmbH, Heidenheim
+> Electrabel S.A., Belgium (Chairman)
+Michael Sigmund*
+Jim Hagemann Snabe
+Chairman of the Committee of
+Spokespersons of the Siemens
+Group; Chairman of the Central
+Committee of Spokespersons of
+Siemens AG
+Supervisory Board Member
+September
+13, 1957
+March 1,
+2014
+October 27,
+1965
+October 1,
+2013
+Sibylle Wankel*
+Attorney, Bavarian Regional
+Headquarters of IG Metall
+March 3,
+1964
+April 1,
+2009
+1
+As of January 27, 2015.
+2
+Shareholders' Committee.
+German positions:
+January 27,
+2015
+Positions outside Germany:
+July 14,
+1971
+Nathalie von Siemens,
+Dr. phil.
+> GDF Suez Energy Management Trading CVBA,
+Belgium (Chairman)
+February 1,
+2015
+(Chairman)
+> International Power Ltd., United Kingdom
+> Société Générale, France
+> Suez Environnement Company S.A., France
+(Chairman)
+German positions:
+> Bayerische Motoren Werke AG, Munich (Chairman)
+> Henkel AG & Co. KGaA, Düsseldorf²
+Norbert Reithofer, Dr.-Ing.
+Dr.-Ing. E.h.
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke AG
+May 29,
+1956
+January 27,
+2015
+Güler Sabancı
+Chairwoman and Managing
+Director of Hacı Ömer Sabancı
+Holding A.Ş.
+August 14,
+1955
+January 23,
+2013
+Managing Director and
+Spokesperson of Siemens Stiftung
+January 31,
+2020
+> Siemens Ltd., India
+Prof. Dr. phil. nat.
+(until January 31, 2015)
+Our Company's values and
+Business Conduct Guidelines
+In the 168 years of its existence, our Company has built an ex-
+cellent reputation around the world. Technical performance,
+innovation, quality reliability, and international engagement
+have made Siemens one of the leading companies in electron-
+ics and electrical engineering. It is top performance with the
+highest ethics that has made Siemens strong. This is what the
+Company should continue to stand for in the future.
+The Business Conduct Guidelines provide the ethical and legal
+framework within which we want to maintain our successful
+activities. They contain the basic principles and rules for our
+conduct within our Company and in relation to our external
+partners and the general public. They set out how we meet our
+ethical and legal responsibility as a Company and give expres-
+sion to our corporate values of being "Responsible" - "Excel-
+lent" "Innovative".
+-
+C.4.2.3 OPERATION OF THE MANAGING BOARD
+AND THE SUPERVISORY BOARD, AND COMPOSITION
+AND OPERATION OF THEIR COMMITTEES
+A general description of the functions and operation of the
+Managing Board and the Supervisory Board can be found in
+chapter → c.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further
+details can be derived from the bylaws for the corporate bodies
+concerned.
+This information and these documents, including the Code
+and the Business Conduct Guidelines, are available at:
+lines.
+SIEMENS.COM/289A
+Additional Information
+135
+C.5 Notes and forward-looking statements
+This document contains statements related to our future busi-
+ness and financial performance and future events or develop-
+ments involving Siemens that may constitute forward-looking
+statements. These statements may be identified by words such
+as "expect," "look forward to," "anticipate" "intend," "plan,"
+"believe," "seek," "estimate," "will," "project" or words of similar
+meaning. We may also make forward-looking statements in
+other reports, in presentations, in material delivered to share-
+holders and in press releases. In addition, our representatives
+may from time to time make oral forward-looking statements.
+Such statements are based on the current expectations and
+certain assumptions of Siemens' management, of which many
+are beyond Siemens' control. These are subject to a number of
+risks, uncertainties and factors, including, but not limited to
+those described in disclosures, in particular in the chapter Risks
+in this Annual Report. Should one or more of these risks or
+uncertainties materialize, or should underlying expectations
+not occur or assumptions prove incorrect, actual results, per-
+formance or achievements of Siemens may (negatively or
+positively) vary materially from those described explicitly or
+implicitly in the relevant forward-looking statement. Siemens
+neither intends, nor assumes any obligation, to update or
+revise these forward-looking statements in light of develop-
+ments which differ from those anticipated.
+This document includes - in IFRS not clearly defined - supple-
+mental financial measures that are or may be non-GAAP financial
+measures. These supplemental financial measures should not be
+viewed in isolation or as alternatives to measures of Siemens' net
+assets and financial positions or results of operations as pre-
+sented in accordance with IFRS in its Consolidated Financial
+Statements. Other companies that report or describe similarly
+titled financial measures may calculate them differently.
+Due to rounding, numbers presented throughout this and other
+documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This document is an English language translation of the German
+document. In case of discrepancies, the German language doc-
+ument is the sole authoritative and universally valid version.
+WWW.
+Further corporate governance practices applied beyond legal
+requirements are contained in our Business Conduct Guide-
+Securities Acquisition and Takeover Act (Wertpapiererwerbs-
+und Übernahmegesetz) – is an organizational challenge for
+large publicly listed companies. It appears doubtful whether
+the associated effort is justified in cases where no relevant
+decisions by the shareholders' meeting are intended. There-
+fore, extraordinary shareholders' meetings shall be convened
+only in appropriate cases.
+-
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
+Additional Information
+C.4.2 Corporate Governance statement
+pursuant to Section 289a of the German
+Commercial Code
+The Corporate Governance statement pursuant to Section 289a
+of the German Commercial Code (Handelsgesetzbuch) is an in-
+tegral part of the Combined Management Report. In accord-
+ance with Section 317 para. 2 sentence 3 of the German Com-
+mercial Code, the disclosures made within the scope of
+Section 289a of the German Commercial Code are not subject
+to the audit by the auditors.
+C.4.2.1 DECLARATION OF CONFORMITY WITH THE
+GERMAN CORPORATE GOVERNANCE CODE
+The Managing Board and the Supervisory Board of Siemens AG
+approved the following Declaration of Conformity pursuant to
+Section 161 of the German Stock Corporation Act as of Octo-
+ber 1, 2015:
+"Declaration of Conformity by the Managing Board and the
+Supervisory Board of Siemens Aktiengesellschaft with the
+German Corporate Governance Code
+Siemens AG fully complies and will continue to comply
+with the recommendations of the German Corporate
+Governance Code ("Code") in the version of May 5, 2015,
+published by the Federal Ministry of Justice in the official
+section of the Federal Gazette ("Bundesanzeiger").
+Since making its last Declaration of Conformity dated Octo-
+ber 1, 2014, Siemens AG has complied with the recommen-
+dations of the Code in the prior version of June 24, 2014.
+Berlin and Munich, October 1, 2015
+Siemens Aktiengesellschaft
+The Managing Board The Supervisory Board"
+C.4.2.2 INFORMATION ON CORPORATE
+GOVERNANCE PRACTICES
+Suggestions of the Code
+Siemens voluntarily complies with the Code's non-binding
+suggestions, with the following exception:
+Pursuant to Section 3.7 para. 3 of the Code, in the case of a
+takeover offer, a management board should convene an
+extraordinary general meeting at which shareholders dis-
+cuss the takeover offer and may decide on corporate actions.
+The convening of a shareholders' meeting – even taking into
+account the shortened time limits stipulated in the German
+-
+For technical reasons, there may be differences between the
+accounting records appearing in this document and those pub-
+lished pursuant to legal requirements.
+136 Additional Information
+Further information and
+information resources
+COPIES OF THE ANNUAL REPORT
+Intranet
+HTTPS://INTRANET.SIEMENS.COM/
+ORDER-ANNUALREPORT
+English
+German
+Order no. CGXX-C10013-00-7600
+Order no. CGXX-C10013-00
+Employees should include their postal address and complete
+order data (Org-ID and cost center information) when ordering.
+The "Sustainability Information 2015" which reports on
+Sustainability and Citizenship at Siemens is available at:
+WWW.SIEMENS.COM/INVESTORS
+© 2015 by Siemens AG, Berlin and Munich
+0010
+0 1 1 1 0 1 0 0 1
+1 0 0 0 1 0 1 1 0 0 0 1 0
+0 1 0 1 1 1 0 0 10
+10 10 10
+101 010111
+001
+0101011100101
+0100010
+Order no. CGXX-C10013-00-7600
+COPIES AT:
+website at:
+SIEMENS EMPLOYEES MAY OBTAIN
+Internet
+CAN BE ORDERED AT:
+E-mail
+Fax
+siemens@bek-gmbh.de
++49 7237-1736
+FURTHER INFORMATION ON THE
+CONTENTS OF THIS ANNUAL REPORT
+IS AVAILABLE FROM:
+Address
+Phone
+Fax
+E-mail
+Siemens AG
+Wittelsbacherplatz 2
+80333 Munich
+Germany
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
++49 89 636-32830 (Investor Relations)
+press@siemens.com
+investorrelations@siemens.com
+WWW.SIEMENS.COM/ORDER-ANNUALREPORT
+Our Articles of Association, the Bylaws for the Supervisory
+Board, the Bylaws for the most important Supervisory Board
+committees, the Bylaws for the Managing Board, all our
+Declarations of Conformity with the Code and a variety of other
+corporate-governance-related documents are posted on our
+As part of our investor relations activities, we inform our inves-
+tors comprehensively about developments within the Company.
+For communication purposes, Siemens makes extensive use of
+the Internet. We publish interim and annual reports, earnings
+releases, ad hoc announcements, analyst presentations, letters
+to shareholders and press releases as well as the financial calen-
+dar for the current year, which contains the publication dates of
+significant financial communications and the date of the Annual
+Shareholders' Meeting, at: ☐ WWW.SIEMENS.COM/INVESTORS
+at the venue and without a proxy and to exercise some or all of
+their rights fully or partially by means of electronic communi-
+cations. Shareholders may submit proposals regarding the pro-
+posals of the Managing and Supervisory Boards and may con-
+test decisions of the Annual Shareholders' Meeting.
+Shareholders owning Siemens stock with an aggregate no-
+tional value of €100,000 or more may also demand the judicial
+appointment of special auditors to examine specific issues.
+The reports, documents and information required by law, in-
+cluding the Annual Report, may be downloaded from our web-
+site. The same applies to the agenda for the Annual Sharehold-
+ers' Meeting and to any counterproposals or shareholders'
+nominations that require disclosure.
+> NXP Semiconductors B.V.,
+Netherlands
+German positions:
+> OSRAM Licht AG, Munich
+(Deputy Chairman)
+> OSRAM GmbH, Munich
+(Deputy Chairman)
+Positions outside Germany:
+> Atos SE, France
+Positions outside Germany:
+> Spectris plc, United Kingdom
+German positions:
+> EOS Holding AG, Krailling
+> inpro Innovationsgesellschaft
+für fortgeschrittene Produk-
+tionssysteme in der Fahrzeug-
+industrie mbH, Berlin
+German positions:1
+> Software AG, Darmstadt
+German positions:
+> Deutsche Messe AG, Hannover
+Group Company positions
+(as of September 30, 2015)
+Positions outside Germany:
+Positions outside Germany:
+> Siemens Ltd., China (Chairman)
+Positions outside Germany:
+> Siemens Ltd., India
+> Daimler AG, Stuttgart
+German positions:
+February 11,
+1955
+May 1,
+2006
+Term origi-
+nally to have
+expired on
+March 31,
+2016
+Siegfried Russwurm,
+Prof. Dr.-Ing.
+June 27,
+1963
+January 1,
+2008
+March 31,
+2017
+Ralf P. Thomas,
+Dr. rer. pol.
+March 7,
+1961
+September
+18, 2013
+September
+17, 2018
+Membership in supervisory boards whose establishment is required by law or in comparable
+domestic or foreign controlling bodies of business enterprises
+External positions
+(as of September 30, 2015)
+> Allianz Deutschland AG, Munich
+Hermann Requardt,
+Positions outside Germany:
+> Siemens AB, Sweden (Chairman)
+> Siemens Aktiengesellschaft
+Österreich, Austria (Chairman)
+> Siemens Aktiengesellschaft
+Österreich, Austria
+> Siemens Corp., USA
+(Deputy Chairman)
+1
+As of January 31, 2015.
+Additional Information
+133
+134
+C.4.1.3 SHARE OWNERSHIP AND SHARE TRANS-
+ACTIONS BY MEMBERS OF THE MANAGING AND
+SUPERVISORY BOARDS
+As of September 30, 2015, the Managing Board's current mem-
+bers held a total of 161,167 Siemens shares representing 0.02%
+of the capital stock of Siemens AG, which totaled 881,000,000
+shares.
+As of the same date, the Supervisory Board's current members
+held Siemens shares representing less than 0.01% of the capital
+stock of Siemens AG, which totaled 881,000,000 shares. These
+figures do not include the 10,878,836 shares (as of Septem-
+ber 30, 2015) or 1.23% of the capital stock of Siemens AG, which
+totaled 881,000,000 shares, over which the von Siemens-
+Vermögensverwaltung GmbH (vSV) has voting control under
+powers of attorney based on an agreement between among
+others - members of the Siemens family, including Dr. Natalie
+von Siemens, and VSV. These shares are voted together by vSV,
+taking into account the proposals of a family partnership estab-
+lished by the family's members or of one of its governing bodies.
+-
+Pursuant to Section 15a of the German Securities Trading Act
+(Wertpapierhandelsgesetz), members of the Managing Board
+and the Supervisory Board are legally required to disclose the
+purchase or sale of shares of Siemens AG or of financial instru-
+ments based thereon if the total value of such transactions
+entered into by a board member or any closely associated per-
+son reaches or exceeds €5,000 in any calendar year. All trans-
+actions reported to Siemens AG in accordance with this re-
+quirement have been duly published and are available on the
+Company's website at:
+WWW.SIEMENS.COM/DIRECTORS-DEALINGS
+C.4.1.4 ANNUAL SHAREHOLDERS' MEETING AND
+INVESTOR RELATIONS
+Shareholders exercise their rights in the Annual Shareholders'
+Meeting. An ordinary Annual Shareholders' Meeting normally
+takes place within the first four months of each fiscal year. The
+Annual Shareholders' Meeting decides, among other things,
+on the appropriation of unappropriated net income, the ratifi-
+cation of the acts of the Managing and Supervisory Boards,
+and the appointment of the independent auditors. Amend-
+ments to the Articles of Association and measures that change
+the Company's capital stock are approved at the Annual Share-
+holders' Meeting and are implemented by the Managing Board.
+The Managing Board facilitates shareholder participation in
+this meeting through electronic communications – in particu-
+lar, via the Internet – and enables shareholders who are un-
+able to attend the meeting to vote by proxy. Furthermore,
+shareholders may exercise their right to vote in writing or by
+means of electronic communications (absentee voting). The
+Managing Board may enable shareholders to participate in the
+Annual Shareholders' Meeting without the need to be present
+-
+Positions outside Germany:
+> Siemens Corp., USA (Chairman)
+Positions outside Germany:
+> Siemens Healthcare GmbH,
+Munich
+Saudi Arabia
+> Siemens (Proprietary) Ltd.,
+South Africa (Chairman)
+> Siemens Schweiz AG, Switzerland
+(Chairman)
+German positions:
+> Siemens Healthcare GmbH,
+Munich
+Positions outside Germany:1
+> Siemens Japan Holding K. K.,
+Japan (Chairman)
+> Siemens Japan K. K.,
+Japan (Chairman)
+> Siemens S. A., Colombia (Chairman)
+German positions:
+> Siemens Healthcare GmbH,
+Munich
+Positions outside Germany:
+> Arabia Electric Ltd. (Equipment),
+Saudi Arabia
+> Siemens Ltd., Saudi Arabia
+> Siemens W.L.L., Qatar
+> VA TECH T&D Co. Ltd.,
+German positions:
+siemens.com
+Less: Fair value hedge accounting adjustment
+We intend to continue providing an attractive return to our
+shareholders. Therefore, we intend to realize a dividend payout
+range, of 40% to 60% of net income, which we may adjust for
+this purpose to exclude selected exceptional non-cash effects.
+As in the past, we intend to fund the dividend payout from Free
+cash flow.
+15,100
+14%
+644
+577
+12%
+1,151
+1,290
+(11)%
+122
+3,935
+(97)%
+51,442
+48,076
+7%
+23,166
+17,783
+30%
+17,253
+Other intangible assets
+Goodwill
+Assets classified as held for disposal
+8,013
+24%
+Available-for-sale financial assets
+1,175
+925
+27%
+Trade and other receivables
+15,982
+14,526
+10%
+Other current financial assets
+5,157
+3,710
+39%
+Inventories
+Current income tax assets
+Other current assets
+Total current assets
+9,957
+8,077
+77%
+16%
+68,906
+56,803
+21%
+120,348
+104,879
+15%
+Our total assets in fiscal 2015 were influenced by positive cur-
+rency translation effects of €3.6 billion, led by the U.S. dollar.
+In fiscal 2015, the acquisitions of Dresser-Rand and Rolls-Royce
+Energy aero-derivative gas turbine and compressor business
+were the major factors related to the increases in goodwill and
+other intangible assets with a total amount of €4.5 billion and
+€3.7 billion, respectively, and the largest factors related to the
+increase in inventories and trade and other receivables with
+a total amount of €1.0 billion and €0.6 billion, respectively.
+Apart from these acquisitions, the increase in inventories was
+also driven by a substantial build-up in other businesses from
+the Power and Gas and in the Mobility Divisions, while the
+Wind Power and Renewables Division contributed significantly
+to the increase in trade and other receivables.
+Higher loans receivable driven by asset growth at SFS in fiscal
+2015 resulted in the increases in other current financial assets
+and in other financial assets.
+Mainly the following transactions led to the decrease in assets
+classified as held for disposal: Completion of the contribu-
+tion of the metals technologies business into a joint venture
+with Mitsubishi-Hitachi Metals Machinery Inc. (the new invest-
+ment in Primetals Technologies Ltd. is recognized as invest-
+ments accounted for using the equity method); completion of
+the sale of our 50% stake in the joint venture BSH to Robert
+Bosch GmbH and completion of the sale of the hospital infor-
+mation business to Cerner Corp.
+Combined Management Report
+15
+A.5 Financial position
+A.5.1 Capital structure
+Our capital structure developed as follows:
+Sep 30,
+945
+4,560
+1,094
+3,334
+Property, plant and equipment
+10,210
+9,638
+6%
+Investments accounted for using the equity method
+2,947
+2,127
+39%
+Other financial assets
+20,821
+18,416
+13%
+Deferred tax assets
+Other assets
+Total non-current assets
+Total assets
+2,591
+(22)%
+% Change
+Cash and cash equivalents
+2015
+160
+6
+>200%
+570
+(86)
+n/a
+553
+511
+8%
+588
+532
+11%
+1,738
+1,681
+3%
+536
+773
+(36)%
+(31)%
+2,215
+2014
+Building Technologies
+Mobility
+Digital Factory
+Process Industries and Drives
+Healthcare
+Industrial Business
+Profit margin Industrial Business
+Financial Services (SFS)
+Reconciliation to Consolidated Financial Statements
+Income from continuing operations before income taxes
+Income tax expenses
+Income from continuing operations
+Income from discontinued operations, net of income taxes
+Net income
+Basic earnings per share
+ROCE
+Fiscal year
+% Change
+2015
+1,426
+2014
+2,184
+5%
+215
+>200%
+7,380
+5,507
+8.84
+19.6%
+6.37
+34%
+39%
+17.2%
+As a result of the development described for the segments,
+Income from continuing operations before income taxes
+decreased 1%. This amount also included higher expenses - as
+planned for selling and research and development, primarily
+at Power and Gas and to a lesser degree at Digital Factory and
+Healthcare. Severance charges for continuing operations were
+€804 million, of which €566 million were in the Industrial Busi-
+ness. The tax rate of 26% was lower than in the prior year, due
+mainly to the disposition of the stake in BSH, which was mostly
+tax-free. For this reason, Income from continuing operations
+increased 1%.
+Income from discontinued operations, net of income taxes,
+primarily included gains from the disposal of the hearing aid
+and hospital information businesses, totaling €1.7 billion and
+€0.2 billion, respectively.
+The increase in Basic earnings per share benefited substan-
+tially from the disposal gains mentioned above. The percentage
+increase was higher than for Net income due mainly to share buy-
+backs which reduced the number of average shares outstanding.
+Despite a significant increase in average capital employed with
+the acquisitions at Power and Gas, ROCE rose due to the dis-
+posal gains and was at the upper end of our target range.
+Combined Management Report
+A.4 Net assets position
+Sep 30,
+% Change
+(in millions of €)
+2,031
+2,072
+1%
+5,349
+7,755
+7,703
+1%
+10.1%
+10.6%
+600
+466
+29%
+(1,138)
+(862)
+(32)%
+7,218
+7,306
+(1)%
+(1,869)
+(2,014)
+7%
+5,292
+(in millions of €)
+2015
+2014
+A.5.2 Cash flows
+(in millions of €)
+Cash flows from operating activities
+Net income
+Fiscal year
+2015
+7,380
+Change in operating net working capital
+(936)
+Other reconciling items to cash flows from operating activities - continuing operations
+437
+Cash flows from operating activities – continuing operations
+6,881
+Cash flows from operating activities - discontinued operations
+(270)
+Cash flows from operating activities - continuing and discontinued operations
+6,612
+18
+Cash flows from investing activities
+17
+Irrevocable loan commitments amounted to €3.6 billion (Sep-
+tember 30, 2014: €3.4 billion). A considerable portion of these
+commitments resulted from asset-based lending transactions,
+meaning that the respective loans can be drawn only after the
+borrower has provided sufficient collateral.
+The funded status of our defined benefit plans - meaning de-
+fined benefit obligation (DBO) less fair value of plan assets -
+showed an underfunding of €9.5 billion (September 30, 2014:
+16
+Combined Management Report
+€9.1 billion). Within these figures, the underfunding for pension
+benefit plans amounted to €9.0 billion (September 30, 2014:
+€8.5 billion) and the underfunding of other post-employment
+benefit plans amounted to €0.5 billion (September 30, 2014:
+€0.5 billion).
+Capital structure ratio
+Our capital structure ratio as of September 30, 2015 increased
+to 0.6 from 0.1 a year earlier, which is within our target ratio of
+up to 1.0. The change was due to the increase in industrial
+net debt compared to the prior year, reflecting the above-
+mentioned issuance of long-term debt and the impact of our
+share buybacks.
+After the end of fiscal 2015 we repurchased additional 2,370,869
+treasury shares. We thus completed the share buyback program
+in October 2015 with a total volume of €4.0 billion and an aver-
+age costs per share of €92.75 (including incidental transaction
+charges).
+Debt and credit facilities
+As of September 30, 2015 we recorded, in total, €26.0 billion in
+notes and bonds (maturing until 2066), €1.8 billion in loans
+from banks (maturing until 2023), €1.8 billion in other financial
+indebtedness (maturing until 2027), primarily consisting of
+US$-commercial paper, and €0.1 billion in obligations under
+finance leases. Notes, bonds and loans from banks were is-
+sued mainly in Euro and U.S. dollar, and to a lower extent in
+British pound.
+In order to optimize the Company's position with regard to
+interest income and interest expense, and to manage the asso-
+ciated interest rate risk relating to the Group excluding SFS'
+business, we use derivative financial instruments under a port-
+folio-based approach to manage interest risk actively relative to
+a benchmark. The interest rate management relating to the SFS
+business is managed separately, considering the term structure
+of SFS' financial assets and liabilities on a portfolio basis.
+We have three credit facilities at our disposal for general corpo-
+rate purposes. These credit facilities amounted to €7.1 billion
+and were unused as of September 30, 2015.
+For further information about our debt see →NOTE 15 in
+→ B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further
+information about functions and objectives of the financial
+management see NOTE 24 in B.6 NOTES TO CONSOLIDATED
+FINANCIAL STATEMENTS.
+Off-balance-sheet commitments
+As of September 30, 2015 the undiscounted amount of maxi-
+mum potential future payments related to credit guarantees,
+guarantees of third-party performance and HERKULES obliga-
+tions amounted to €4.2 billion (September 30, 2014: €4.3 billion).
+Other commitments, including indemnifications issued in con-
+nection with dispositions of businesses, amounted to €1.9 bil-
+lion (September 30, 2014: €1.3 billion) to the extent future
+claims are not considered remote. The increase in other com-
+mitments related mainly to transactions closed in fiscal 2015.
+Future payment obligations under non-cancellable operating
+leases amounted to €3.4 billion (September 30, 2014: €3.2 bil-
+lion).
+Combined Management Report
+Post-employment benefits
+Additions to intangible assets and property, plant and equipment
+Change in receivables from financing activities of SFS
+(5,827)
+(2,700)
+7,213
+(354)
+351
+(596)
+(2,728)
+(135)
+1,051
+5
+1,056
+The conversion of profit into cash inflows from operating
+activities was mainly driven by Healthcare as well as the
+Digital Factory and Power and Gas Divisions.
+The cash outflows due to the build-up of operating net work-
+ing capital were primarily driven by the Mobility Division, due
+mainly to an increase in the line item inventories. Significant
+cash inflows in the Power and Gas and in Wind Power and
+Renewables Divisions related to increases in the line item bill-
+ings in excess of costs and estimated earnings on uncompleted
+contract and related advances. These cash inflows were offset
+in the Power and Gas Division particularly by an increase in the
+line item inventories and in the Wind Power and Renewables
+Division particularly by an increase in the line item trade and
+other receivables.
+The cash outflows for acquisitions of businesses, net of cash
+acquired, primarily included payments totaling €6.8 billion
+related to the acquisition of Dresser-Rand and €1.3 billion re-
+lated to the acquisition of Rolls-Royce Energy aero-derivative
+gas turbine and compressor business.
+The cash outflows for other purchases of assets primarily
+included additions of assets eligible as central-bank-collateral
+and additional funding to Unify.
+The cash inflows from other disposals of assets included
+€2.8 billion from the sale of Siemens' stake in BSH, disposals
+from above-mentioned eligible collateral, proceeds from the
+sale of businesses and real estate disposals at SRE.
+The cash inflows from investing activities - discontinued
+operations - included €1.9 billion from the sale of the hearing
+aid business and €1.2 billion from the sale of the hospital infor-
+mation business.
+2,889
+Acquisitions of businesses, net of cash acquired
+(8,716)
+(1,467)
+Other purchases of assets
+Other disposals of assets
+Cash flows from investing activities - continuing operations
+Cash flows from investing activities - discontinued operations
+Cash flows from investing activities - continuing and discontinued operations
+Cash flows from financing activities
+Purchase of treasury shares
+Issuance of long-term debt
+Repayment of long-term debt (including current maturities of long-term debt)
+Change in short-term debt and other financing activities
+Interest paid
+Dividends paid to shareholders of Siemens AG
+Other cash flows from financing activities - continuing operations
+Cash flows from financing activities - continuing operations
+Cash flows from financing activities - discontinued operations
+Cash flows from financing activities - continuing and discontinued operations
+(1,897)
+(8,254)
+(1,667)
+4,570
+The main factors relating to the increase in total equity attrib-
+utable to shareholders of Siemens AG were €7.3 billion in net
+income attributable to shareholders of Siemens AG and €1.0 bil-
+lion in other comprehensive income, net of income taxes. This
+increase was partly offset by dividend payments of €2.7 billion
+(paid for fiscal 2014) and the repurchase of 29,419,671 treasury
+shares at an average costs per share of €91.89, totaling €2.7 bil-
+lion (including incidental transaction charges).
+The issuance of instruments totaling US$7.75 billion in six
+tranches with different maturities up to 30 years was the main
+factor for the increase in long-term debt.
+The contribution of the metals technologies business into a
+joint venture with Mitsubishi-Hitachi Metals Machinery Inc.
+led mainly to the decrease in liabilities associated with assets
+classified as held for disposal.
+20,368
+17,954
+13%
+Liabilities associated with assets classified as held for disposal
+39
+1,597
+(98)%
+Total current liabilities
+39,562
+36,598
+8%
+Long-term debt
+Post-employment benefits
+Deferred tax liabilities
+Provisions
+Other financial liabilities
+26,682
+Other current liabilities
+19,326
+4%
+1,828
+Short-term debt and current maturities of long-term debt
+2,979
+1,620
+84%
+Trade payables
+7,774
+7,594
+2%
+Other current financial liabilities
+2,085
+1,717
+21%
+Current provisions
+4,489
+4,354
+3%
+Current income tax liabilities
+1,762
+38%
+9,811
+9,324
+16%
+71%
+70%
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+Non-controlling interests
+Total liabilities and equity
+34,474
+29%
+581
+30,954
+11%
+30%
+560
+4%
+120,348
+104,879
+15%
+The classification of US$ 500 million long-term fixed-rate in-
+struments as current maturity and the issuance of commercial
+paper were the main factors for the increase in short-term
+debt and current maturities of long-term debt.
+The project business of the Divisions Power and Gas, including
+additions related to the acquisitions of Dresser-Rand and Rolls-
+Royce Energy aero-derivative gas turbine and compressor busi-
+ness, and Wind Power and Renewables was the main factor for
+an increase in higher billings in excess of costs and estimated
+earnings on uncompleted contracts and related advances,
+which drove mainly the increase in other current liabilities.
+73,365
+85,292
+24%
+36,767
+5%
+609
+552
+10%
+4,865
+4,071
+20%
+1,466
+Energy Management
+1,620
+Other liabilities
+Total non-current liabilities
+Total liabilities
+Debt ratio
+2,297
+1,874
+23%
+45,730
+(9)%
+A.2.5 Dividend
+Wind Power and Renewables
+(in millions of €, earnings per share in €)
+therein: China
+6,623
+Siemens
+therein: emerging markets
+82,340
+29,769
+24,769 20,619
+17,357 14,613
+15,033 15,779
+6,605
+77,657
+27,345
+10%
+20%
+5%
+19% (1)%
+(5)% (14)%
+0% (12)%
+6% (1)%
+9%
+2%
+Reported orders related to external customers in the region
+Europe, C.I.S., Africa, Middle East increased moderately,
+as substantial growth in Mobility, including among others a
+€1.7 billion order in Germany, and in Power and Gas, more than
+offset a sharp decline in Wind Power and Renewables due to
+a lower volume of large orders. Key growth drivers in the
+Americas included Power and Gas and Energy Management,
+both with a strong increase due to a higher volume of large
+orders in the region, and Healthcare which reported substantial
+growth in the U.S. Orders declined in the region Asia, Australia
+due mainly to a lower volume from large orders in Power and
+Gas and in Mobility that could only be partially offset by growth
+in Wind Power and Renewables, Energy Management, and in
+Digital Factory. The development in China showed a similar
+pattern, with a sharp order decline in Mobility offset by growth
+in the three Divisions just mentioned.
+As expected, given our complex business environment in fiscal
+2015, organic revenue was flat year-over-year, including a
+mixed picture for our industrial businesses. Reported revenue
+related to external customers in Europe, C.I.S., Africa, Middle
+East came in near the prior-year level, as growth in Energy
+Management and in Healthcare offset declines in Mobility
+and in Power and Gas. Moderate revenue growth in Germany
+was driven by a sharp increase in Wind Power and Renewables
+resulting from the continuing execution of large offshore con-
+tracts won in prior periods. In the Americas, revenue came in
+higher year-over-year, driven by double-digit increases in the
+U.S. across our industrial businesses, due mainly to currency
+translation tailwinds. The major contributions to growth in the
+U.S. as well as in the region came from Healthcare and Power
+and Gas. Revenue growth in Asia, Australia resulted mainly
+from solid increases in Digital Factory, Mobility and Healthcare
+that more than offset declines in Power and Gas and Wind
+Power and Renewables. Growth in China included nearly all of
+our industrial businesses, due in part to positive currency
+translation effects, while revenue in Power and Gas decreased
+substantially.
+10
+Combined Management Report
+A.3.2 Segment information analysis
+A.3.2.1 POWER AND GAS
+A.3.2.2 WIND POWER AND RENEWABLES
+Fiscal year
+% Change
+(in millions of €)
+Asia, Australia
+2015
+therein: U.S.
+10%
+(1)%
+5%
+(3)%
+2015
+Fiscal year
+2014
+% Change
+Actual
+Comp.
+(in millions of €)
+Europe, C.I.S., Africa,
+Middle East
+42,539
+41,259
+3%
+1%
+therein: Germany
+11,991 10,910
+Americas
+6%
+2014
+Comp.
+Profit
+160
+6
+>200%
+Profit margin
+2.8%
+0.1%
+|
+Revenue and orders benefited significantly from currency
+translation and portfolio effects. Dresser-Rand and the Rolls-
+Royce Energy aero-derivative gas turbine and compressor busi-
+ness, which were both acquired in fiscal 2015, contributed
+eight and ten percentage points to order and revenue develop-
+ment, respectively. Orders were almost on the level of the prior
+year on a comparable basis, as a decline in the solutions busi-
+ness, due to a lower volume from large orders, was almost off-
+set by order growth in other businesses. The regional picture
+was mixed; order intake increased in Europe, C.I.S., Africa,
+Middle East and the Americas and declined in Asia, Australia.
+Revenue was down significantly on a comparable basis, due
+mainly to declines in the large gas turbine and solutions busi-
+nesses. On a regional basis, revenue increased in the Americas
+and declined in the other two reporting regions. Profit was
+down substantially year-over-year, due mainly to lower mar-
+gins, particularly in the large gas turbine business, severance
+charges of €192 million, charges of €106 million related to a
+project which incurred higher costs for materials and from cus-
+tomer delays, and higher R&D and selling expenses related in
+part to the acquisitions mentioned above. For comparison, the
+prior year benefited from a €73 million gain on the sale of the
+Division's turbo fan business and a positive €72 million effect
+from a successful project completion in the turnkey business.
+The Division continues to face challenges in an increasingly
+competitive market for large gas turbines. Beginning with fiscal
+2016, the Division includes the E-Houses and Modules busi-
+ness segment that was previously included within the Process
+Industries and Drives Division. If this change had already been
+effective in fiscal 2015, profit margin for Power and Gas would
+have been 10.5%.
+Order intake was down year-over-year, due mainly to a sharply
+lower volume of large orders, particularly in the offshore
+business, which for Siemens means primarily in Europe. Asia,
+Australia showed strong growth from a small base. Revenue
+was down on a comparable basis, as increases in the offshore
+and service businesses were more than offset by a decline in
+the onshore business. On a regional basis, an increase in the
+Americas was more than offset by declines in the two other
+reporting regions. Profit was up sharply compared to fiscal
+2014, when the Division recorded charges of €272 million for
+inspecting and replacing main bearings in onshore wind tur-
+bines and for repairing offshore and onshore wind blades. In
+the current year, profit development was held back by reduced
+margins in the offshore business due partly to increased com-
+petition and expenses for ramping up commercial-scale pro-
+duction of turbine offerings.
+A.3.2.3 ENERGY MANAGEMENT
+% Change
+Comp.
+9%
+(in millions of €)
+Orders
+2015
+Fiscal year
+2014
+Revenue
+12,956
+11,922
+(26)%
+(3)%
+Actual
+2%
+5,660
+(in millions of €)
+2015
+Fiscal year
+2014
+% Change
+Orders
+6,136
+7,759
+(21)%
+Orders
+15,666
+Revenue
+13,193
+Profit
+Profit margin
+Actual
+13,996
+12% (1)%
+12,720
+4% (11)%
+1,426 2,215 (36)%
+10.8% 17.4%
+Comp.
+Revenue
+5,567
+11,210
+10,708
+(4)%
+6,405
+(606)
+Plus: SFS Other interest expenses/income
+746
+630
+Plus: Net interest expenses from
+post-employment benefits
+263
+295
+Less: Interest adjustments
+(discontinued operations)
+1
+Less: Taxes on interest adjustments
+(tax rate (flat) 30%)
+(104)
+(96)
+(I) Income before interest after tax
+7,623
+(662)
+5,732
+Less: Other interest expenses/income, net¹
+7,380
+At the Annual Shareholders' Meeting, the Managing Board, in
+agreement with the Supervisory Board, will submit the follow-
+ing proposal to allocate the unappropriated net income of
+Siemens AG for the fiscal year 2015: to distribute a dividend of
+€3.50 on each share of no par value entitled to the dividend for
+fiscal year 2015 existing at the date of the Annual Shareholders'
+Meeting, with the remaining amount to be carried forward. Pay-
+ment of the proposed dividend is contingent upon approval by
+Siemens shareholders at the Annual Shareholders' Meeting on
+January 26, 2016. The prior-year dividend was €3.30 per share.
+The proposed dividend of €3.50 per share for fiscal 2015 rep-
+resents a total payout of €2.8 billion based on the estimated
+number of shares entitled to dividend at the date of the Annual
+Shareholders' Meeting. Based on net income of €7.4 billion for
+fiscal 2015, the dividend payout percentage is 38%.
+A.2.6 Calculation of return
+on capital employed
+| Calculation of ROCE
+Average capital employed for a fiscal year is determined as a
+five-point average in capital employed of the respective quar-
+ters, starting with the capital employed as of September 30 of
+the previous fiscal year.
+| Calculation of capital employed
+Total equity
+Plus: Long-term debt
+Plus: Short-term debt and current maturities of long-term debt
+Less: Cash and cash equivalents
+Less: Current available-for-sale financial assets
+Plus: Post-employment benefits
+Less: SFS Debt
+Plus: Adjustments from assets classified as held for disposal and
+liabilities associated with assets classified as held for disposal
+Capital employed (continuing and discontinued operations)
+Beginning with fiscal 2016, deferred taxes on actuarial gains
+and losses within equity will be eliminated in the calculation of
+capital employed. By making this adjustment, we treat actuarial
+gains and losses consistently in the ROCE calculation.
+Fiscal year
+(in millions of €)
+2015
+2014
+Net income
+5,507
+8%
+(II) Average capital employed
+33,238
+38,799
+11,244 10,781
+21,702 18,494
+15,263 12,647
+38,449
+1%
+(2)%
+4%
+4%
+17%
+1%
+21%
+1%
+15,135
+14,283
+6%
+(4)%
+therein: China
+Siemens
+therein: emerging markets
+therein: U.S.
+38,833
+therein: Germany
+Americas
+Actual
+(1)/(II) ROCE
+19.6%
+17.2%
+1
+Item Other interest expenses/income, net primarily consists of interest relating to
+corporate debt, and related hedging activities, as well as interest income on
+corporate assets.
+Combined Management Report 9
+A.3 Results of operations
+A.3.1 Orders and revenue by region
+The increase in orders and revenue year-over-year was due
+mostly to favorable currency translation effects that added six
+percentage points to volume development. The resulting ratio
+of orders to revenue (book-to-bill) for Siemens in fiscal 2015
+was 1.09, again well above 1. The order backlog (defined as the
+sum of order backlogs of the Industrial Business) was €110 bil-
+lion as of September 30, 2015.
+| Orders (location of customer)
+| Revenue (location of customer)
+(in millions of €)
+Europe, C.I.S., Africa,
+Middle East
+Asia, Australia
+Fiscal year
+% Change
+2015
+2014
+Comp.
+Actual
+16%
+11%
+5%
+18.1%
+Sep 30,
+2015
+24,970
+2014
+21,970
+(in millions of €)
+Total assets
+SFS recorded a higher income contribution from the equity
+business, primarily relating to a net gain in connection with the
+sale of renewable energy projects. Higher interest results asso-
+ciated with growth in total assets were largely offset by a higher
+level of credit hits related mainly to business in China. Despite
+substantial early terminations of financings, total assets have
+increased since the end of fiscal 2014, including positive cur-
+rency translation effects.
+A.3.2.10 RECONCILIATION TO CONSOLIDATED
+FINANCIAL STATEMENTS
+| Profit
+Fiscal year
+(in millions of €)
+2015
+2014
+Centrally managed portfolio activities
+714
+280
+Siemens Real Estate
+20.9%
+205
+466
+Income before income taxes
+ROE (after taxes)
+9,645
+3%
+(3)%
+Profit
+536
+773 (31)%
+Profit margin
+5.4%
+8.0%
+The weak market environment for process industries in fiscal
+2015 was particularly evident in commodity-related markets and
+those influenced by low oil prices. As a result, the Division saw
+a sharp decrease in orders in its oil & gas and marine business
+and a moderate order decline in its large drives business, due
+mainly to a lower volume from large orders. Reported revenue
+increased in nearly all businesses, driven by currency trans-
+lation effects. In the Division's largest business, large drives,
+revenue was flat and comparable revenue decreased moder-
+ately. On a regional basis, the order decline was due largely to a
+double-digit decrease in Europe, C.I.S., Africa, Middle East and
+lower orders in Asia, Australia. Reported revenue increased in all
+three regions, however, in the Americas and in Asia, Australia
+growth was driven by favorable currency translation effects. De-
+spite currency tailwinds, fiscal 2015 profit margin declined, due
+in part to ongoing operational challenges in the large drives and
+the oil & gas and marine businesses. In addition, profitability
+was held back by a warranty charge of €96 million in the large
+drives business and €74 million in severance charges for the
+Division overall. Beginning with fiscal 2016, parts of the Divi-
+sion's business activities are reported within other Divisions,
+as previously described for the Power and Gas and the Digital
+Factory Division. If these changes had already been effective in
+fiscal 2015, profit margin would have been 6.1%.
+A.3.2.8 HEALTHCARE
+benefited from currency translation effects, most notably in the
+Americas. Profit growth was driven mainly by the imaging and
+therapy systems business and benefited from currency tail-
+winds mainly due to the greater strength of the US$ compared
+to fiscal 2014. In fiscal 2015, Healthcare recorded €62 million in
+severance charges and a €64 million gain from the divestment
+of the microbiology business. For comparison, profit in fiscal
+2014 included a €66 million positive effect related to the sale of
+a particle therapy installation in Germany.
+A.3.2.9 FINANCIAL SERVICES (SFS)
+(in millions of €)
+Fiscal year
+2015
+2014
+600
+9,894
+242
+Orders
+Eliminations, Corporate Treasury
+and other reconciling items
+(366)
+(48)
+Reconciliation to Consolidated
+Financial Statements
+(1,138)
+(862)
+All businesses posted order and revenue growth, with the
+largest increase coming from the imaging and therapy sys-
+tems business. All regions contributed to volume growth and
+Combined Management Report
+13
+14
+Centrally managed portfolio activities (CMPA) included a gain
+of €1.4 billion on the disposal of Siemens' stake in BSH Bosch
+und Siemens Hausgeräte GmbH (BSH). This was partly offset
+by an equity investment loss of €275 million related to Unify
+Holdings B.V. (Unify), an impairment of €138 million related to
+Siemens' stake in Primetals Technologies Ltd. and losses from
+other businesses. For comparison, fiscal 2014 included equity
+investment income from BSH.
+As in the past, income from Siemens Real Estate continues to
+be highly dependent on disposals of real estate. In fiscal 2015,
+the disposals of real estate were lower than in the prior-year.
+Corporate items were influenced by a number of items, includ-
+ing €196 million in severance charges for corporate reorganiza-
+tion of support functions.
+The change in Eliminations, Corporate Treasury and other rec-
+onciling items included primarily negative effects related to the
+change in fair value of interest rate derivatives.
+A.3.3 Income
+(498)
+(in millions of €)
+(543)
+Amortization of intangible assets
+Revenue
+Profit
+Profit margin
+2015
+13,349 12,126
+12,930 11,736
+2,184 2,072
+16.9% 17.7%
+Fiscal year
+2014
+% Change
+Actual
+Comp.
+Corporate items
+(709)
+(446)
+10%
+10%
+5%
+3%
+Centrally carried pension expense
+(440)
+(393)
+3%
+acquired in business combinations
+Revenue
+Comp.
+(10)%
+(6)%
+553
+511
+8%
+8%
+Profit margin
+9.2%
+9.2%
+% Change
+Comp.
+2%
+1%
+every quarter. In contrast, the Division's rolling stock busi-
+nesses generated lower revenue in the second half of fiscal
+2015 due to timing of large rail projects following completion of
+older projects while new large projects are beginning to ramp
+up. This held back full-year revenue development for Mobility
+overall. On a geographic basis, revenue growth was stron-
+gest in Asia, Australia. Revenue and order development ben-
+efited strongly from currency translation effects. In fiscal 2015,
+Mobility continued its solid project execution. Profit for the
+Division rose significantly year-over-year, despite €68 million in
+severance charges. The profit improvement was driven by a
+more favorable business mix compared to fiscal 2014, particu-
+larly including a higher share from the rail infrastructure busi-
+ness. For comparison, profit in the prior fiscal year benefited
+from a €55 million net effect from the release of accruals
+related to the "Siemens 2014" program.
+A.3.2.6 DIGITAL FACTORY
+Due largely to positive currency translation effects, orders and
+revenue for Building Technologies grew in all regions, particu-
+larly the Americas and Asia, Australia. The Division further in-
+creased its productivity and continued to improve its business
+mix to include a larger share of higher-margin product and
+service businesses year-over-year. These factors contributed to
+a clear increase in profit and the Division kept its profitability
+stable year-over-year despite impacts from a substantial appre-
+ciation of the Swiss franc early in the second quarter of the
+fiscal year and €24 million in severance charges.
+A.3.2.5 MOBILITY
+|
+Fiscal year
+(in millions of €)
+2015
+2014
+Orders
+Profit
+10,262
+5,569
+Revenue
+Profit
+Profit margin
+570
+4.8%
+(86)
+n/a
+(0.8)%
+Orders and revenue were higher in all businesses, in particular
+in the solutions, transformer and low voltage businesses. Ben-
+efiting from currency translation effects, all reporting regions
+showed order and revenue growth, in particular the Americas
+region. The major factor in the profit improvement year-over-
+year was sharply lower charges related to project execution. In
+addition, margins in the solutions business improved signifi-
+cantly year-over-year, including a lower share of projects with
+Combined Management Report
+11
+low or negligible margins. The Division recorded €88 million in
+severance charges in fiscal 2015. In fiscal 2014, the Division
+took charges totaling €298 million related to two high voltage
+direct current (HVDC) transmission line projects in Canada. It
+also recorded charges of €240 million in fiscal 2014 primarily
+related to grid connections to offshore wind-farms in the North
+Sea, which were handed over to the customer in fiscal 2015.
+A.3.2.4 BUILDING TECHNOLOGIES
+(in millions of €)
+2015
+Fiscal year
+2014
+Orders
+6,099
+5,587
+Actual
+9%
+5,999
+9,280
+Revenue
+7,508
+1,681
+3%
+17.5%
+18.3%
+Revenue
+Profit
+Profit margin
+The softening market environment for production equipment,
+particularly including the industrial deceleration in China during
+fiscal 2015, limited growth opportunities for Digital Factory's
+high-margin factory automation business, which reported flat
+revenue and orders on a comparable basis. Conditions were
+more favorable for the Division's software and motion control
+businesses, which delivered clear comparable growth in both
+revenue and orders. On a regional basis, orders and revenue in-
+creased in all three reporting regions, led by Asia, Australia and
+the Americas, due largely to positive currency translation ef-
+fects. Despite currency tailwinds, profitability was held back by
+the less favorable revenue mix and higher expenses for R&D
+and selling targeted at future growth. In addition, Division profit
+included €54 million in severance charges for the fiscal year.
+Beginning with fiscal 2016, the Division includes the geared
+motors segment that was previously reported in the Process
+Industries and Drives Division. In addition, minor business ac-
+tivities of the Division were bundled centrally and are reported
+within Corporate Items. If these changes had already been
+effective in fiscal 2015, profit margin would have been 16.9%.
+12 Combined Management Report
+A.3.2.7 PROCESS INDUSTRIES AND DRIVES
+Fiscal year
+% Change
+(in millions of €)
+2015
+2014
+Actual
+Orders
+9,337
+9,968
+1,738
+3%
+8%
+9,201
+7,249
+Profit
+Profit margin
+588
+7.8%
+532
+Actual
+11%
+4%
+11%
+7.3%
+% Change
+Comp.
+6%
+(1)%
+Power and Gas
+Mobility again won a number of large orders, driving order
+growth year-over-year. Contract wins in fiscal 2015 included an
+order worth €1.7 billion for regional trains and maintenance in
+Germany and a €1.6 billion long-term order for maintenance in
+Russia. For comparison, large orders in fiscal 2014 included a
+contract worth €1.6 billion for two driverless subway-lines in
+Saudi Arabia. Revenue for Mobility grew moderately compared
+to the prior fiscal year. The Division's rail infrastructure and
+turnkey project businesses increased revenue year-over-year in
+(in millions of €)
+Orders
+2015
+2014
+10,014
+9,233
+Actual
+8%
+% Change
+Comp.
+3%
+9,956
+Fiscal year
+Combined Management Report
+6,938
+75,636 71,227
+25,285 24,146
+Responsibilities are assigned for all relevant risks and opportu-
+nities with the hierarchical level of responsibility depending on
+the significance of the respective risk or opportunity. In a first
+step, assuming responsibility for a specific risk or opportunity
+involves deciding upon one of our general response strategies.
+Our general response strategies with respect to risks are avoid-
+ance, transfer, reduction or acceptance of the relevant risk. Our
+general response strategies with respect to opportunities are
+partial or complete realization of the relevant opportunity. In a
+second step, responsibility for a risk or opportunity also involves
+the development, initiation and monitoring of appropriate re-
+sponse measures corresponding to the chosen response strat-
+egy. These response measures have to be specifically tailored to
+allow for effective risk management. Accordingly, we have de-
+veloped a variety of response measures with different charac-
+teristics. For example, we mitigate the risk of fluctuations in
+currency and interest rates by engaging in hedging activities.
+Regarding our long-term projects, systematic and comprehen-
+sive project management with standardized project milestones,
+including provisional acceptances during project execution, and
+complemented by clearly defined approval processes assists us
+in identifying and responding to project risks at an early stage,
+even before entering the bidding phase. Furthermore, we main-
+tain appropriate insurance levels for potential cases of damage
+and liability risks in order to reduce our exposure to such risks
+and to avoid or minimize potential losses. Among others, we
+address the risk of fluctuation in economic activity and cus-
+tomer demand by closely monitoring the macroeconomic con-
+ditions and developments in relevant industries, and by adjust-
+ing capacity and implementing cost-reduction measures in a
+timely and consistent manner, if deemed necessary.
+We anticipate that orders in fiscal 2016 will materially exceed
+revenue for a book-to-bill ratio clearly above 1. In particular, we
+expect order growth driven by substantial increases in the
+Power and Gas and Wind Power and Renewables Divisions,
+with particularly Power and Gas benefiting from a large con-
+tract win in Egypt, among other factors.
+Profitability
+We expect net income in fiscal 2016 to increase significantly
+compared to €4.4 billion, which we achieved in fiscal 2015 ex-
+cluding €3.0 billion in portfolio gains from the divestment of
+the hearing aid business and our stake in BSH. Including those
+gains in the basis of comparison, we expect net income in fiscal
+2016 to decline significantly year-over-year. We expect basic EPS
+from net income in the range of €5.90 to €6.20 as compared to
+€5.18, which we achieved in fiscal 2015 excluding €3.66 per
+share in portfolio gains from the divestments of the hearing aid
+business and our stake in BSH.
+Our forecast for net income and corresponding basic EPS is
+based on a number of other assumptions: We assume that
+momentum in the market environment for our high-margin
+short-cycle businesses will pick up in the second half of fiscal
+2016. As part of our One Siemens framework, we target a total
+cost productivity improvement of 3% to 4% in fiscal 2016.
+Therein, we expect execution of »Vision 2020«< measures to im-
+prove our cost position by an additional approximately €0.4 bil-
+lion to €0.5 billion in fiscal 2016, following cost savings of ap-
+proximately €0.4 billion already achieved in fiscal 2015. Also,
+we assume continued solid project execution. Furthermore, we
+expect modest positive currency effects on income in the first
+half of fiscal 2016. Offsetting effects include pricing pressure
+on our offerings estimated at around 2% in fiscal 2016, with the
+Power and Gas Division, the Wind Power and Renewables Divi-
+sion and Healthcare being affected the most. Furthermore, we
+expect upward pressure on costs from wage inflation of around
+3% to 4%. Also, we plan for continued targeted investments in
+selling and R&D expenses aimed at organic volume growth
+and strengthening our capacities for innovation.
+For fiscal 2016, we expect all our industrial businesses to be in
+or at least close to their target ranges for profit margin as de-
+fined in our financial performance system (see → A.2 FINANCIAL
+PERFORMANCE SYSTEM) excluding severance charges and integra-
+tion costs.
+We expect revenue growth to benefit from conversion of our
+order backlog (defined as the sum of order backlogs of our
+Industrial Business) which totaled €110 billion as of Septem-
+ber 30, 2015. From this backlog, we expect to convert approxi-
+mately €39 billion of past orders into current revenue in fiscal
+2016. Within this amount, we expect for fiscal 2016 approxi-
+mately €11 billion in revenue conversion from the €42 billion
+backlog of the Power and Gas Division, approximately €8 billion
+in revenue conversion from the €12 billion backlog of the En-
+ergy Management Division, approximately €6 billion in revenue
+conversion from the €27 billion backlog of the Mobility Divi-
+sion, approximately €5 billion in revenue conversion from the
+€14 billion backlog of the Wind Power and Renewables Division,
+approximately €4 billion in revenue conversion from the €6 bil-
+lion backlog of the Process Industries and Drives Division, ap-
+proximately €2 billion in revenue conversion from the €3 billion
+backlog of the Building Technologies Division, approximately
+€2 billion in revenue conversion from the €4 billion backlog of
+Healthcare and approximately €2 billion in revenue conversion
+from the €2 billion backlog of the Digital Factory Division.
+Overall, we expect an aggregate profit margin for our Industrial
+Business of 10% to 11%, compared to 10.1% in fiscal 2015. We
+expect SFS, which is reported outside Industrial Business, to
+continue to be highly profitable and achieve a return on equity
+(ROE) within its target range in fiscal 2016.
+24
+Combined Management Report
+year level despite higher interest expense related primarily to
+issuance of bonds in fiscal 2015.
+We do not expect significant effects from discontinued opera-
+tions in fiscal 2016. For comparison, income from discontinued
+operations of €2.0 billion in fiscal 2015 included the €1.7 billion
+gain from the sale of our hearing aid business. We anticipate
+our tax rate for fiscal 2016 to be in the range of 26% to 30%.
+Within our One Siemens financial framework, we in general
+aim to achieve a ROCE in the range of 15% to 20%. For fiscal
+2016, we expect ROCE to show a double-digit result but to come
+in substantially below the amount reached in fiscal 2015, which
+benefited from the sale of businesses described earlier.
+Capital structure
+Within our Reconciliation to Consolidated Financial Statements
+we expect CMPA to turn negative in fiscal 2016 and results to
+be volatile during the year. Expenses for Corporate items are
+expected to be approximately €0.5 billion, with costs in the
+second half-year higher than in the first half. While we antici-
+pate that SRE will continue with real estate disposals depend-
+ing on market conditions, we expect gains from disposals to be
+lower in fiscal 2016 than in fiscal 2015. Centrally carried pen-
+sion expenses are expected to total approximately €0.5 billion
+in fiscal 2016. Amortization of intangible assets acquired in
+business combinations rose substantially to €168 million in the
+fourth quarter of fiscal 2015 and we expect a similar level in the
+four quarters of fiscal 2016. Eliminations, Corporate Treasury
+and other reconciling items are anticipated to be on the prior-
+Following the financing measures executed during fiscal 2015,
+we expect our capital structure ratio in fiscal 2016 to be below
+but near 1.0. In November 2015, we announced a new share
+buyback of up to €3 billion ending at the latest on Novem-
+ber 15, 2018. The buybacks will be made under the current
+authorization granted at the Annual Shareholders' Meeting on
+January 27, 2015. Shares repurchased may be used for cancel-
+ling and reducing capital stock; for issuing shares to employ-
+ees, to members of the Managing Board and board members of
+affiliated companies; and for meeting obligations from or in
+connection with convertible bonds or warrant bonds.
+We expect all industrial businesses to contribute to organic rev-
+enue growth, except for the Process Industries and Drives Divi-
+sion, which has been impacted by lower order intake in previ-
+ous quarters. We assume that Mobility will be a main growth
+driver, with a clear increase in organic revenue. We also expect
+low to mid single-digit organic growth at the other industrial
+businesses, led by Wind Power and Renewables. Furthermore,
+we expect that Power and Gas will increase its reported revenue
+significantly, benefiting from the acquisition of Dresser-Rand.
+23
+For fiscal 2016, we expect markets served by the Mobility Divi-
+sion to continue to grow moderately. Investments by rail oper-
+ators in Germany are expected to stay on a high level. Market
+growth in Russia depends on improvement of economic condi-
+tions and geopolitical ease. For the Middle East and Africa,
+we expect tenders of further large turnkey and infrastructure
+projects. In China, we expect investments in high-speed trains,
+urban transport and rail infrastructure to continue to drive
+growth. In India, market growth should continue from planned
+projects for commuter and high-speed passenger lines, freight
+rail, and related infrastructure as part of the infrastructure
+build out and reforms by the Government. Overall, local rail
+transport is expected to gain importance as urbanization is pro-
+gressing. In emerging countries, rising incomes are expected
+to result in greater demand for public transport solutions.
+For fiscal 2016, we expect markets for the Digital Factory Divi-
+sion to be slow, with momentum picking up in the second half
+of the fiscal year. Differences in growth rates between Siemens'
+reporting regions are expected to be less pronounced than in
+prior years. Overall, we expect market growth to benefit from
+consumer-oriented manufacturing industries, especially in in-
+dustrialized countries. The trend towards digitalization related
+businesses is expected to continue and drives the industry soft-
+ware market, which is forecast to grow clearly. As for China, we
+expect the decline of growth in industrial output to take a toll
+on our business development, but expect the local market to
+continue to be attractive in the mid and long-term. While we
+expect the current decline in raw material prices to reach a bot-
+tom in fiscal 2016, we do not expect a rebound in the short
+term. We therefore anticipate demand from the mining and the
+oil and gas industries to continue to be weak in fiscal 2016.
+The markets served by the Process Industries and Drives
+Division are expected to be flat in fiscal 2016. In general, we ob-
+serve a trend towards increased demand for technology to im-
+prove competitiveness through increased productivity, flexibility
+and reliability. We expect growth to be driven by the food and
+beverage sector as well as the chemical and pharmaceuticals in-
+dustries. Demand from the oil and mining industries is expected
+to decline further year-over-year, mostly in upstream markets.
+For fiscal 2016, we expect markets for Healthcare to continue its
+growth based on demographic trends. In emerging markets, we
+expect continued demand, in particular for entry-level products
+and solutions, as these countries build up their healthcare infra-
+structure to provide their populations with affordable access to
+modern medical technology, including cost efficient solutions
+in rural areas. On a regional basis we expect healthcare markets
+to grow moderately in the U.S. and in major emerging markets
+such as China, India and Brazil, while demand in Europe, largely
+consisting of replacement business, is anticipated to stay on the
+prior-year level. The market for imaging products and solutions
+is expected to remain on the prior-year level as growing demand
+for imaging procedures is largely absorbed by higher utilization
+of existing systems, while continued price aggressiveness in
+the market affects revenue growth from new systems. The trend
+to expand healthcare access is expected to benefit markets for
+clinical products and suppliers with a broad spectrum of prod-
+ucts and services. For diagnostics solutions, we expect consoli-
+dation to continue leading to an increasing industrialization of
+laboratories, playing into suppliers with experience in automa-
+tion and digitalization.
+Our SFS Division is geared to Siemens' Industrial Business and
+its markets. As such SFS is, among other factors, influenced by
+the overall business development of the markets served by our
+Industrial Business and will continue to focus its business
+scope on those areas of intense domain know-how limiting risk
+and exposure going forward.
+portfolio effects, particularly the acquisition of Dresser-Rand at
+the end of the third quarter of fiscal 2015, to add approximately
+2 percentage points to our revenue growth rate in fiscal 2016.
+Furthermore, we assume that momentum in the market environ-
+ment for our high-margin short-cycle businesses will pick up in
+the second half of fiscal 2016.
+A.8.1.3 SIEMENS GROUP
+This outlook excludes charges related to legal and regulatory
+matters.
+We are exposed to currency translation effects, particularly in-
+volving the US$ and currencies of emerging markets, particu-
+larly the Chinese Yuan. During fiscal 2015, the average exchange
+rate conversion for our large volume of US$-denominated reve-
+nue was US$1.15 per €. While we expect volatility in global cur-
+rency markets to continue in fiscal 2016, we have improved our
+natural hedge on a global basis through geographic distribu-
+tion of our production facilities during the past. Nevertheless,
+Siemens is still a net exporter from the Euro zone to the rest of
+the world, so a weak Euro is principally favorable for our busi-
+ness and a strong Euro is principally unfavorable. In addition to
+the natural hedging strategy just mentioned, we also hedge
+currency risk in our export business using derivative financial
+instruments. We expect these steps to help us limit effects on
+income related to currency in fiscal 2016.
+Revenue growth
+Despite anticipated further softening in the macroeconomic
+environment and continuing complexity in the geopolitical
+environment in fiscal 2016, we expect moderate revenue
+growth, net of effects from currency translation. We expect
+Combined Management Report
+We are basing our outlook for fiscal 2016 for the Siemens Group
+and its segments on the above-mentioned expectations and
+assumptions regarding the overall economic situation and spe-
+cific market conditions for the next fiscal year.
+price pressure, particularly in its solutions business, mainly
+due to aggressive competition.
+A.8.1.4 OVERALL ASSESSMENT
+Overall, the actual development for Siemens and its Segments
+may vary, positively or negatively, from our outlook due to the
+risks and opportunities described below or if our expectations
+and assumptions do not materialize.
+Economic and political conditions (macroeconomic environ-
+ment): We still see a high level of uncertainty regarding the
+global economic outlook. The main downside risks stem from
+the weakening growth in China and potential corrections or
+even a collapse in real estate, the banking sectors or the stock
+markets. The downturn could get worse, if Chinese authorities
+fail to reform the state-owned enterprises in the industry and
+banking sector as well, to liberalize and open the economy fur-
+ther. A rapid tightening of monetary policy by the U.S. Federal
+Reserve could cause a depreciation spiral among emerging
+market currencies. This could lead to a renewed emerging mar-
+ket crisis as debt levels of emerging market enterprises have
+risen, making them dependent on favorable global financial
+conditions to service foreign currency-denominated debts. Fur-
+ther risks stem from increased global danger of terrorism, polit-
+ical tensions (e.g. Syria and Ukraine), raw material prices, con-
+fidence in the automotive sector, and low oil and gas prices.
+With the closing of the acquisition of Dresser-Rand we are
+further exposed to volatility in global oil and gas markets.
+In general, due to the significant proportion of long-cycle busi-
+nesses in our Divisions and the importance of long-term con-
+tracts for Siemens, there is usually a time lag between the de-
+velopment of macroeconomic conditions and their impact on
+our financial results. In contrast, many activities of the Digital
+Factory Division and parts of Process Industries and Drives Divi-
+sion and in the Energy Management Division, react quickly to
+volatility in market demand. If the moderate recovery of macro-
+economic growth stalls again and if we are not successful in
+adapting our production and cost structure to subsequent
+changes to conditions in the markets in which we operate,
+there can be no assurance that we will not experience adverse
+effects. For example, it may become more difficult for our cus-
+tomers to obtain financing and as a result they may modify, de-
+lay or cancel plans to purchase our products and services or to
+follow through on purchases or contracts already executed.
+Furthermore, prices may decline as a result of adverse market
+conditions to a greater extent than currently anticipated. In ad-
+dition, contracted payment terms, especially regarding the
+level of advance payments by our customers relating to long-
+term projects, may become less favorable, which could nega-
+tively impact our financial condition. Siemens' global setup
+with operations in almost all relevant economies, the wide
+variety of our offerings following different business cycles as
+well as different business models (e.g. product, software, solu-
+tion, project and service-business) help us to soften the impact
+of an adverse development in a single market.
+Changes of regulations, laws and policies: As a diversified
+company with global businesses we are exposed to various
+product-related regulations, laws and policies influencing our
+processes. Some jurisdictions around the world have adopted
+certain regulations, laws and policies requiring us to extend
+our recycling efforts, limit the sourcing and usage of certain
+raw materials, and request that suppliers provide additional
+due diligence and disclosures on sourcing and usage of the reg-
+ulated raw materials. We exercise our duty within the supply
+chain, as our customers request transparency in the supply
+chain and as the obligation to do so already forms an element
+of customer contracts. If we are unable to achieve sufficient
+confidence throughout our supply chain, or if any risks associ-
+ated with these kinds of regulations, laws and policies were to
+materialize, our reputation could also be adversely affected.
+Strategic alignments and cost-cutting initiatives: We are in a
+continuous process of strategic alignments and constantly
+engage in cost-cutting initiatives, including ongoing capacity
+adjustment measures and structural initiatives. Consolidation
+of business activities and manufacturing facilities, and the
+streamlining of product portfolios are also part of these cost
+reduction efforts. These measures may not be implemented as
+planned, may turn out to be less effective than anticipated, may
+become effective later than estimated or may not become effec-
+tive at all. Any future contribution of these measures to our
+profitability will be influenced by the actual savings achieved
+Combined Management Report
+in our relative market position. Furthermore, we see a risk that
+suppliers (and to some extent even customers), especially from
+emerging countries (e.g. China), could develop into serious
+competitors for Siemens. We address this risk with various mea-
+sures, for example, benchmarking, strategic initiatives, sales
+push initiatives, executing productivity measures and target
+cost projects, rightsizing of factories, exporting from low-cost
+countries to price sensitive markets, and optimizing our product
+portfolio. The markets in which our businesses operate experi-
+ence rapid and significant changes due to the introduction of
+innovative technologies. Our operating results depend to a sig-
+nificant extent on our ability to anticipate and adapt to changes
+in our markets and to reduce the costs of producing our prod-
+ucts. Introducing new products and technologies requires a sig-
+nificant commitment to research and development, which in
+return requires expenditure of considerable financial resources
+that may not always result in success. Our results of opera-
+tions may suffer if we invest in technologies that do not oper-
+ate or may not be integrated as expected, or that are not ac-
+cepted in the market place as anticipated, or if our products or
+systems are not introduced to the market in a timely manner,
+particularly compared to our competitors, or become obsolete.
+We constantly apply for new patents and actively manage our
+intellectual property portfolio to secure our technological posi-
+tion. However, our patents and other intellectual property may
+not prevent competitors from independently developing or
+selling products and services that are similar to or duplicates
+of ours.
+27
+Portfolio measures, at-equity investments, other invest-
+ments and strategic alliances: Our strategy includes divesting
+activities in some business areas and strengthening others
+through portfolio measures, including mergers and acquisi-
+tions. With respect to divestments, we may not be able to divest
+some of our activities as planned, and the divestitures we
+do carry out could have a negative impact on our business,
+financial condition, results of operations and our reputation.
+Mergers and acquisitions are inherently risky because of diffi-
+culties that may arise when integrating people, operations,
+technologies and products. There can be no assurance that any
+of the businesses we acquired recently can be integrated suc-
+cessfully and in a timely manner as originally planned, or that
+they will perform as anticipated once integrated. In addition,
+we may incur significant acquisition, administrative and other
+costs in connection with these transactions, including costs
+related to integration of acquired businesses. Furthermore,
+portfolio measures may result in additional financing needs
+and adversely affect our capital structure. Acquisitions led to
+substantial addition to intangible assets, including goodwill in
+our Statements of Financial Position. If we were to encounter
+continuing adverse business developments or if we were other-
+wise to perform worse than expected at acquisition activities,
+then these intangible assets, including goodwill, might have to
+be impaired, which could adversely affect our business, finan-
+cial condition and results of operations. Our investment port-
+folio consists of investments held for purposes other than trad-
+ing. Furthermore, we hold other investments, for example,
+Atos SE and OSRAM Licht AG. Any factors negatively influenc-
+ing the financial condition and results of operations of our
+at-equity investments and other investments, could have an
+adverse effect on our equity pick-up related to these invest-
+ments or may result in a related write-off. In addition, our busi-
+ness, financial condition and results of operations could also be
+adversely affected in connection with loans, guarantees or
+non-compliance with financial covenants related to these
+at-equity investments and other investments. Furthermore,
+such investments are inherently risky as we may not be able to
+sufficiently influence corporate governance processes or busi-
+ness decisions taken by our equity investments, other invest-
+ments and strategic alliances that may have a negative effect
+on our business. In addition, joint ventures bear the risk of dif-
+ficulties that may arise when integrating people, operations,
+technologies and products. Strategic alliances may also pose
+risks for us because we compete in some business areas with
+companies with which we have strategic alliances. Besides
+other measures, we handle these risks with standardized pro-
+cesses as well as dedicated roles and responsibilities in the
+areas of mergers, acquisitions, divestments and carve outs.
+This includes post closing actions as well as claim management
+and centrally managed portfolio activities.
+A.8.3.2 OPERATIONAL RISKS
+IT security: Our business portfolio is dependent on digital tech-
+nologies. We observe a global increase of IT security threats and
+higher levels of professionalism in computer crime, which pose
+a risk to the security of products, systems and networks and the
+confidentiality, availability and integrity of data. We are facing
+active cyber threats from sophisticated adversaries that are
+supported by organized crime and nation states engaged in
+economic espionage. We attempt to mitigate these risks by
+employing a number of measures, including employee training,
+comprehensive monitoring of our networks and systems, and
+maintenance of backup and protective systems such as fire-
+walls and virus scanners. Our contractual arrangements with
+service providers aim to ensure that these risks are reduced in
+an adequate manner. Nonetheless, our systems, products, solu-
+tions and services, as well as those of our service providers re-
+main potentially vulnerable to attacks. Such attacks could po-
+tentially lead to the publication, manipulation, espionage or
+leakage of information, improper use of our systems, defective
+products, production downtimes and supply shortages, with
+potential adverse effects on our reputation, our competitive-
+ness and results of our operations.
+Operational failures and quality problems in our value
+chain processes: Our value chain comprises all steps, from
+research and development to supply chain management, pro-
+duction, marketing, sales and services. Operational failures in
+our value chain processes could result in quality problems or
+potential product, labor safety, regulatory or environmental
+risks. Such risks are particularly present in our Industrial Busi-
+ness in relation to our production and construction facilities,
+which are located all over the world and have a high degree of
+organizational and technological complexity. From time to
+time, some of the products we sell might have quality issues
+resulting from the design or manufacture of such products or
+of the commissioning of such products or from the software
+integrated into them. Our Healthcare business, for example, is
+subject to regulatory authorities including the U.S. Food and
+Drug Administration and the European Commission's Health
+and Consumer Policy Department, which require us to make
+specific efforts to safeguard our product quality. If we are not
+able to comply with these requirements, also our reputation
+may be adversely affected. Several measures for quality im-
+provement and claim prevention are established and the in-
+creased use of quality management tools is improving visibil-
+ity and assists us strengthen the root cause and prevention
+process.
+28 Combined Management Report
+and by our ability to sustain them. We constantly control and
+monitor the progress of these projects and initiatives using
+standardized controlling and milestone tracking approaches.
+We anticipate further softening in the macroeconomic environ-
+ment and continuing complexity in the geopolitical environ-
+ment in fiscal 2016. Nevertheless, we expect moderate revenue
+growth, net of effects from currency translation. We anticipate
+that orders will materially exceed revenue for a book-to-bill ratio
+clearly above 1. For our Industrial Business, we expect a profit
+margin of 10% to 11%. Furthermore, we expect basic EPS from
+net income in the range of €5.90 to €6.20 as compared to €5.18,
+which we achieved in fiscal 2015 excluding €3.66 per share in
+portfolio gains from the divestments of the hearing aid business
+and our stake in BSH. This outlook assumes that momentum in
+the market environment for our high-margin short-cycle busi-
+nesses will pick up in the second half of fiscal 2016. Additionally,
+it excludes charges related to legal and regulatory matters.
+Combined Management Report
+A.8.3.1 STRATEGIC RISKS
+A.8.2 Risk management
+A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
+Our risk management policy stems from a philosophy of pursu-
+ing sustainable growth and creating economic value while
+managing appropriate risks or opportunities and avoiding inap-
+propriate risks. As risk management is an integral part of how
+we plan and execute our business strategies, our risk manage-
+ment policy is set by the Managing Board. Our organizational
+and accountability structure as of September 30, 2015 requires
+each of the respective managements of our Industrial Business,
+SFS, regions and Corporate Units to implement risk manage-
+ment programs that are tailored to their specific industries and
+responsibilities, while being consistent with the overall policy.
+A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
+We have implemented and coordinated a set of risk manage-
+ment and control systems which support us in the early recog-
+nition of developments that could jeopardize the continuity of
+our business. The most important of these systems include our
+enterprise-wide processes for strategic planning and manage-
+ment reporting. Strategic planning is intended to support us in
+considering potential risks well in advance of major business
+decisions, while management reporting is intended to enable
+us to monitor such risks more closely as our business pro-
+gresses. Our internal auditors regularly review the adequacy
+and effectiveness of our risk management system. Accordingly,
+if deficits are detected, it is possible to adopt appropriate mea-
+sures for their elimination. This coordination of processes and
+procedures is intended to help ensure that the Managing Board
+and the Supervisory Board are fully informed about significant
+risks in a timely manner.
+Risk management at Siemens builds on a comprehensive, inter-
+active and management-oriented Enterprise Risk Management
+(ERM) approach that is integrated into the organization and
+that addresses both risks and opportunities. Our ERM approach
+is based on the worldwide accepted Enterprise Risk Manage-
+ment - Integrated Framework (2004) developed by the Commit-
+tee of Sponsoring Organizations of the Treadway Commission
+(COSO). The framework connects the ERM process with our
+financial reporting process and our internal control system. It
+considers a company's strategy, the efficiency and effective-
+ness of its business operations, the reliability of its financial
+reporting as well as compliance with relevant laws and regula-
+tions to be equally important.
+The ERM process aims for early identification and evaluation
+of, and response regarding, risks and opportunities that could
+materially affect the achievement of our strategic, operational,
+financial and compliance objectives. The time horizon covered
+by ERM is typically three years. Our ERM is based on a net risk
+Combined Management Report
+Competitive markets and technology changes: The world-
+wide markets for our products and solutions are highly compet-
+itive in terms of pricing, product and service quality, product
+development and introduction time, customer service, financing
+terms, disruptive technologies and shifts in market demands.
+We face strong existing competitors and also competitors from
+emerging markets, which may have a better cost structure.
+Some industries in which we operate are undergoing consoli-
+dation, which may result in stronger competition and a change
+25
+approach, addressing risks and opportunities remaining after
+the execution of existing control measures. In order to provide
+a comprehensive view on our business activities, risks and
+opportunities are identified in a structured way combining ele-
+ments of both top-down and bottom-up approaches. Risks and
+opportunities are generally reported on a quarterly basis. This
+regular reporting process is complemented by an ad-hoc report-
+ing process that aims to escalate critical issues in a timely man-
+ner. Relevant risks and opportunities are prioritized in terms of
+impact and likelihood, considering different perspectives, in-
+cluding business objectives, reputation and regulatory matters.
+The bottom-up identification and prioritization process is sup-
+ported by workshops with the respective managements of the
+Industrial Business, SFS, regions and Corporate Units. This top-
+down element ensures that potential new risks and opportuni-
+ties are discussed at management level and are included in the
+subsequent reporting process, if found to be relevant. Reported
+risks and opportunities are analyzed regarding potential cumu-
+lative effects and are aggregated within and for each of the
+organizations mentioned above.
+A.8.2.3 RISK MANAGEMENT ORGANIZATION
+AND RESPONSIBILITIES
+To oversee the ERM process and to further drive the integration
+and harmonization of existing control activities to align with
+legal and operational requirements, the Managing Board estab-
+lished a Risk Management and Internal Control Organization,
+headed by the Chief Risk & Internal Control Officer, and a Corpo-
+rate Risk and Internal Control Committee (CRIC). The CRIC ob-
+tains risk and opportunity information from the Risk Commit-
+tees established at the Industrial Business, SFS, and regional
+organizations and from the heads of Corporate Units. In order
+to allow for a meaningful discussion on Siemens group level
+individual risk and opportunities of similar cause-and-effect
+nature are aggregated into risk and opportunity themes. This
+aggregation naturally results in a mixture of risks with a pri-
+marily qualitative and primarily quantitative risk assessment.
+Accordingly, a purely quantitative assessment of risk themes is
+not foreseen. This information then forms the basis for the
+evaluation of the company-wide risk and opportunity situation.
+The CRIC reports to and supports the Managing Board on mat-
+ters relating to the implementation, operation and oversight of
+the risk and internal control system and assists the Managing
+Board for example in reporting to the Audit Committee of the
+Supervisory Board. The CRIC is composed of the Chief Risk &
+Internal Control Officer, as the chairperson, members of the
+Managing Board and selected heads of Corporate Units.
+A.8.3 Risks
+Below we describe the risks that could have a material adverse
+effect on our business, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and rep-
+utation. The order in which the risks are presented in each of
+the four categories reflects the currently estimated relative ex-
+posure for Siemens associated with these risks and thus pro-
+vides an indication of the risks' current importance to us. Addi-
+tional risks not known to us or that we currently consider
+immaterial may also negatively impact our business objectives
+and operations. Unless otherwise stated, the risks described
+below relate to all of our segments.
+26
+22 Combined Management Report
+Capital efficiency
+For the markets served by the Energy Management Division,
+we expect slight overall growth in fiscal 2016. The Division's
+markets are experiencing rising power consumption due to on-
+going urbanization and electrification in emerging countries.
+Also the energy mix is changing, with a rising share of renew-
+able energy. Furthermore, there is a trend towards decentral-
+ized power generation, including an increasing number of
+energy consumers who are also energy producers via solar
+technology and other means. Within the Division's key indus-
+tries we expect demand from utilities in fiscal 2016 to remain
+on the prior-year level. Demand from the oil driven industry is
+anticipated to decline further in fiscal 2016, as we expect addi-
+tional cuts in investments, particularly in the Americas. For
+minerals and mining markets we expect slight growth, with all
+regions contributing. However, there is a risk that a further
+slowdown in growth in China may impact investment activities
+in the minerals and mining industry.
+With our ability to generate positive operating cash flows, our
+total liquidity (defined as cash and cash equivalents as well
+as available-for-sale financial assets) of €11.1 billion, and our
+€7.1 billion in unused lines of credit, and given our credit ratings
+at year-end, we believe that we have sufficient flexibility to fund
+our capital requirements. Also in our opinion, our operating net
+working capital is sufficient for our present requirements.
+Investing activities
+Additions to intangible assets and property, plant and equip-
+ment from continuing operations was €1.9 billion in fiscal 2015.
+Within the Industrial Business ongoing investments related
+mainly to technological innovations; extending our capacities
+for designing, manufacturing and marketing new solutions; im-
+proving productivity and our global footprint, such as in Brazil,
+Egypt and India; and replacements of fixed assets. These invest-
+ments amounted to €1.4 billion in fiscal 2015. The remaining
+portion in fiscal 2015, €0.5 billion, related mainly to SRE, includ-
+ing significant amounts related to office projects, such as new
+corporate office buildings in Germany. SRE is responsible for
+uniform and comprehensive management of Company real es-
+tate worldwide, and supports the Industrial Business and cor-
+porate activities with customer-specific real estate solutions.
+With regard to capital expenditures for continuing operations,
+we expect a spending increase year-over-year in fiscal 2016.
+Focus areas of ongoing investing activities of the Industrial
+Business are:
+The investments of Power and Gas are focused on enhancing
+productivity and strategic localization, mainly relating to our
+large gas turbines and generators business, including a burner
+test center for gas turbines in Germany.
+(1,938)
+4,674
+The investments of Wind Power and Renewables are focused
+on the extension, modernization and optimization of existing
+plants to allow for the large-scale manufacturing of innovative
+products, including new production and service facilities for
+blades in the U.K. and an offshore wind power turbines plant in
+Germany.
+The investments of Building Technologies mainly relate to the
+control products and systems business, particularly innovation
+projects.
+Mobility is spending large portions of its capital expenditures
+for improving its respective positions in growing market seg-
+ments, including investments into its infrastructure, capital-
+ized R&D expenses as well as project related investments.
+Major spending of Digital Factory relates to the factory auto-
+mation and control products businesses, including investments
+in production facilities in China.
+The investments of Process Industries and Drives are focused
+on upgrading production machines and replacement of fixed
+assets, particularly relating to the large drives business.
+Healthcare's investments are mainly driven by the diagnostics
+business, including large amounts relating to intangible assets,
+particularly capitalized R&D expenses for new platforms.
+Combined Management Report
+Energy Management is spending the larger portion of its cap-
+ital expenditures for innovation, particularly in the low voltage
+and product business. Further investments are related to re-
+placement of fixed assets and expansion of factories and tech-
+nical equipment.
+19
+(310)
+(1,897)
+4,984
+The change in short-term debt and other financing activi-
+ties included the net proceeds from the issuance of commer-
+cial paper, partly offset by cash outflows related to the settle-
+ment of financial derivatives used to hedge currency exposure
+in our financing activities.
+For the markets served by the Building Technologies Division,
+we expect solid growth in fiscal 2016. On a geographic basis,
+we expect the U.S., China, India and the Middle East to be the
+main growth drivers. Most of the European countries are antic-
+ipated to continue their recovery, led by Germany and some of
+the Northern European countries. In countries with relatively
+strong dependence on the development of commodity mar-
+kets, we anticipate growth in the Division's markets to slow
+down in fiscal 2016. We expect the Division to see continuing
+| Free cash flow
+(in millions of €)
+Cash flows from operating activities
+Additions to intangible assets and property, plant and equipment
+Free cash flow
+(40)
+Continuing
+operations
+Fiscal year 2015
+Continuing and
+6,881
+operations
+(270)
+discontinued operations
+6,612
+Discontinued
+A.6 Overall assessment of the economic position
+We report Free cash flow as a supplemental liquidity measure:
+From a financial perspective, in fiscal 2015, we reached all our
+targets set for our primary measures in the Annual Report for
+fiscal 2014. Revenue on an organic basis remained nearly on the
+prior-year level, and net income and basic earnings per share
+(EPS) (net income) rose by more than a third year-over-year.
+Return on capital employed (ROCE) reached the upper end of
+our target range and our capital structure ratio came in below 1.
+Also in November 2015, Siemens announced the sale of its 49%
+stake in Unify to Atos. While ownership of the Unify stake has
+adversely affected Siemens' financial results in fiscal 2015 and
+prior fiscal years, the transaction is not expected to result in a
+material effect. Closing of the transaction, which is subject to
+the approvals of the regulatory and antitrust authorities, is
+expected in the second quarter of fiscal 2016.
+Combined Management Report
+21
+A.8 Report on expected developments
+and associated material opportunities and risks
+A.8.1 Report on expected developments
+A.8.1.1 WORLDWIDE ECONOMY
+In November 2015, Siemens announced the extension of its ex-
+isting seven-year IT outsourcing contract with Atos SE (AtoS)
+through December 2021, with minimum committed volumes
+increasing by €3.23 billion to €8.73 billion. Furthermore,
+Siemens announced the extension of its current lock-up share-
+holder commitment in Atos through September 2020.
+Deceleration in emerging markets and especially China weigh
+on the outlook for 2016 as well. Global GDP is expected to ex-
+pand by 2.9%, with fixed investments growing by 3.4%. Fixed
+investments in advanced countries (+3.6%) are expected to
+grow more strongly than in emerging countries (+3.3%) be-
+cause of some investment backlog in the former and over-
+capacities in the latter.
+Despite some positive developments expected for the world
+economy in 2016, the risk assessment is clearly biased to the
+downside (see → A.8.3. RISKS) due to a number of factors. First
+and foremost geopolitical risks can dampen the mood for capi-
+tal expenditures. China is on a long-term rebalancing path, and
+some emerging markets are vulnerable to further capital flight
+and exposed to considerable foreign currency debt.
+The forecasts presented here for GDP and fixed investments are
+based on a report from IHS Global Insight dated October 15,
+2015.
+A.8.1.2 MARKET DEVELOPMENT
+Following weak demand in fiscal 2015, we expect markets for
+the Power and Gas Division to pick up in fiscal 2016, particu-
+larly with regard to fossil power generation markets, which are
+anticipated to grow year-over-year due to large projects in
+emerging countries. For the compression market, we expect
+demand in fiscal 2016 to stay on the low level of fiscal 2015 due
+mainly to continuously low capital expenditures for up- and
+downstream applications in the oil and gas industry. Overall,
+we assume a shift to more flexible, decentralized power gener-
+ation and stronger demand for combined heat and power gen-
+eration and off-grid oil and gas applications, particularly in
+Europe, China and the U.S.
+In fiscal 2015, we accomplished numerous objectives included
+in our "Vision 2020" concept. We started the fiscal year with a
+leaner organizational setup more geared towards our growth
+markets. We got closer to customers and enhanced our innova-
+tion capacity with targeted spending increases for selling and
+R&D. This has already improved customer satisfaction. Further-
+more, we made significant progress in adjusting our portfolio.
+With the acquisitions of Dresser-Rand and Roll-Royce's aero-de-
+rivative gas turbine and compressor business, we strengthened
+our position in the area of distributed power generation. Mean-
+while we sold our hearing aid business and our stake in BSH,
+among others. Our market environment in fiscal 2015 was soft-
+ening towards the end of the fiscal year. While we saw growth,
+such as in consumer-oriented markets, and continued strong
+demand for infrastructure solutions, some of our key industries
+like the oil and gas industry and mining were under severe pres-
+sure, and a number of emerging economies that were growth
+drivers in recent years showed signs of weakness. Thus strin-
+gent execution of "Vision 2020" became even more important.
+In fiscal 2015, we began to implement measures to reduce costs
+by €1 billion on a sustainable basis. With cost savings of approx-
+imately €0.4 billion already achieved in fiscal 2015, we are
+ahead of our plans. Also we improved our project execution,
+resulting in sharply lower project charges year-over-year. While
+we have already successfully addressed several businesses that
+were not fulfilling our expectations regarding profitability, we
+have completed a review of our remaining underperforming
+businesses during fiscal 2015 and decided to restructure those
+businesses primarily through our own efforts, with clear goals
+and timetables. At the end of October 2015, shortly after the
+end of fiscal 2015, we completed the share buyback program we
+launched in May 2014. Between these dates we repurchased
+43.1 million Siemens shares in the amount of €4.0 billion.
+Within this total, during fiscal 2015 we repurchased 29.4 million
+Siemens shares in the amount of €2.7 billion.
+The Chinese economy is expected to continue its rebalancing
+path towards a more consumption- and service-driven econ-
+omy, with GDP growth of 6.3%, which is lower than in calendar
+2015. In this view, industries that have been driving the econ-
+omy in the past will keep on consolidating while consump-
+tion-oriented sectors and the service sector gain importance.
+Meanwhile, fixed investments are likely to grow more slowly
+than the overall economy, at around 4.4% in calendar 2016. For
+other emerging markets the outlook is mixed. While Brazil and
+Russia are expected to remain in recession, the Indian economy
+is expected to continue developing strongly, with GDP growth
+rates forecast at 7.5% to 8% in the coming years. Europe is ex-
+pected to remain on a moderate recovery path, with Italy and
+France again the slowest-growing among the larger economies
+and Spain and the U.K. growing the fastest. The German econ-
+omy is expected to benefit from the ongoing European recov-
+ery, and growth should accelerate compared to calendar 2015.
+For the U.S., GDP growth should also pick up slightly. While the
+negative effects of low oil prices on oil and gas-related invest-
+ments should start to ease, the positive effects, especially on
+private consumption, should support economic growth in that
+sector. The U.S. housing recovery is expected to continue.
+A.7 Subsequent events
+For the markets served by the Wind Power and Renewables
+Division, we expect a slight decline in fiscal 2016 with long-
+term outlook still intact. Within this change, we expect lower
+demand in the larger market for onshore wind power, particu-
+larly in the U.S. and Brazil, only partly offset by substantial
+growth in the smaller market for offshore wind power, which is
+driven by Europe. Market development depends strongly on
+energy policy, including tax incentives in the U.S. and regula-
+tory frameworks in Germany and the U.K. While we expect Asia
+and the Americas to offer good growth prospects for offshore
+wind power in the medium term, we expect only limited mar-
+ket volume in these markets in the short term. Overall, we ex-
+pect a continuation of the trend towards an increasing share of
+renewable energy within the energy mix. Within the onshore
+wind power market, we expect a continued rise in demand in
+the low-wind segment.
+Free cash flow from continuing and discontinued operations
+for fiscal 2015 came in at €4.7 billion, 10% lower than in the
+prior fiscal year.
+We intend to continue providing an attractive return to share-
+holders. As in the past, we intend to fund the dividend payout
+from Free cash flow. The Siemens Managing Board, in agree-
+ment with the Supervisory Board, proposes a dividend of €3.50
+per share, up from €3.30 a year earlier.
+Revenue for fiscal 2015 was €75.6 billion, up 6% compared to
+the prior fiscal year. While all industrial businesses posted
+increases, growth was due primarily to strong currency trans-
+lation effects. On an organic basis, excluding currency trans-
+lation and portfolio effects, revenue came in 1% lower year-
+over-year, with half of the industrial businesses increasing
+revenue and the other half reporting a decline year-over-year.
+Overall, revenue thus matched the forecast for fiscal 2015 that
+revenue on an organic basis would be flat year-over-year.
+Orders for fiscal 2015 were €82.3 billion, fulfilling our expecta-
+tion for a book-to-bill ratio above one, which came in at 1.09. As
+with revenue, orders rose 6% year-over-year, due mostly to
+strong currency translation effects while declining 1% on an
+organic basis. Except for Wind Power and Renewables and Pro-
+cess Industries and Drives, all our industrial businesses re-
+ported nominal order growth. The majority increased their
+orders year-over-year on an organic basis.
+Industrial Business profit was €7.8 billion in fiscal 2015, up
+slightly from €7.7 billion a year earlier despite €0.6 billion in
+severance charges. Healthcare, Digital Factory, Mobility and
+Building Technologies continued to operate very successfully
+in their markets and increased their profits compared to fiscal
+2014. The Energy Management Division achieved the largest
+profit improvement year-over-year, following a loss on substan-
+tial project charges in the prior year. The Wind Power and Re-
+newables Division sharply improved profit compared to fiscal
+2014, but profit came in below our expectations as the Division
+faced reduced margins in the offshore business due partly to
+increased competition and expenses for ramping up commer-
+cial-scale production of turbine offerings. The profit improve-
+ments mentioned above were largely offset by declines in the
+Power and Gas and the Process Industries and Drives Divisions.
+Profit outside Industrial Business included a gain of €1.4 billion
+from the sale of our stake in BSH, which was more than offset
+by a number of factors. Burdens from Centrally managed port-
+folio activities included losses from equity investments com-
+pared to income a year earlier, and Corporate Treasury activities
+posted a loss.
+The profit margin of the Industrial Business was 10.1%. We thus
+reached the range of 10% to 11% forecast for fiscal 2015. As ex-
+pected, the Wind Power and Renewables Division and the
+Energy Management Division improved their profit margins
+year-over-year but remained below their target ranges. Process
+Industries and Drives and Power and Gas, which reached their
+targets in the prior year, came in below their respective ranges
+in fiscal 2015. SFS, which is outside our Industrial Business,
+achieved a return on equity after tax of 20.9%, above the upper
+end of its target range.
+20
+20
+Combined Management Report
+from the sale of our hearing aid business and the above-men-
+tioned gain from the sale of our stake in BSH. Basic EPS from
+net income also benefited from execution of our share buyback
+program. Overall, our continuous efforts to increase our pro-
+ductivity contributed positively. Our total cost productivity im-
+provement reached the upper end of our target for fiscal 2015,
+which was to increase total cost productivity by 3% to 4%.
+ROCE for continuing and discontinued operations increased to
+19.6% in fiscal 2015, up from 17.2% in the prior fiscal year. We
+thus reached the upper end of our forecast for fiscal 2015,
+which was to achieve a ROCE for continuing and discontinued
+operations in our target range of 15% to 20%. The main driver of
+the improvement was higher net income, which more than off-
+set an increase in average capital employed.
+We evaluate our capital structure using the ratio of industrial
+net debt to EBITDA. For fiscal 2015, this ratio was 0.6. We thus
+achieved our forecast, which was to achieve a ratio below 1.0
+but clearly above the fiscal 2014 level of 0.1.
+Net income rose by 34% to €7.4 billion and basic EPS from net
+income climbed 39% year-over-year to €8.84. We thus achieved
+our forecast, which was to increase net income significantly
+and to grow EPS from net income by at least 15%. As we fore-
+cast for fiscal 2015, these increases include gains from divest-
+ments. In particular net income included a gain of €1.7 billion
+This report is based on the recommendations of the German
+Corporate Governance Code (Code) and the requirements of the
+German Commercial Code (Handelsgesetzbuch), the German
+Accounting Standards (Deutsche Rechnungslegungs Standards)
+and the International Financial Reporting Standards (IFRS).
+Combined Management Report
+37
+A.10 Compensation Report
+A.10.1 Remuneration of Managing Board
+members
+Long-term stock-based compensation
+The remuneration system for the Siemens Managing Board is
+intended to provide an incentive for successful corporate man-
+agement with an emphasis on sustainability. Managing Board
+members are expected to make a long-term commitment to
+and on behalf of the Company and may benefit from any sus-
+tained increase in the Company's value. For this reason, a sub-
+stantial portion of their total remuneration is linked to the
+long-term performance of Siemens stock. Their remuneration
+is to be commensurate with the Company's size and economic
+position. Exceptional achievements are to be rewarded ade-
+quately, while falling short of targets is to result in an apprecia-
+ble reduction in remuneration. The compensation is also struc-
+tured so as to be attractive in comparison to that of competitors,
+with a view to attracting outstanding managers to the Company
+and retaining them for the long term.
+The system and levels for the Managing Board's remuneration
+are determined and regularly reviewed by the full Supervisory
+Board, based on proposals by the Compensation Committee.
+The Supervisory Board reviews remuneration levels annually to
+ensure that they are appropriate. In this process, the Company's
+economic situation, performance and outlook as well as the
+tasks and performance of the individual Managing Board mem-
+bers are taken into account. In addition, the Supervisory Board
+considers the common level of remuneration in comparison
+with peer companies and with the compensation structure in
+place in other areas of the Company. It also takes due account
+of the relationship between the Managing Board's remunera-
+tion and that of senior management and staff, both overall and
+with regard to its development over time. For this purpose, the
+Supervisory Board has also determined how senior manage-
+ment and the relevant staff are to be differentiated. The remu-
+neration system that was in place for Managing Board members
+in fiscal 2015 was approved by a majority of 92.79% at the Annual
+Shareholders' Meeting on January 27, 2015. The individual com-
+ponents of compensation - base compensation, variable com-
+pensation (Bonus) and long-term stock-based compensation
+are weighted equally, and each comprises about one-third of
+target compensation. This equal weighting is also applied to
+the three target parameters of variable compensation.
+| Remuneration system for Managing Board members as of fiscal 2015
+Target compensation
+Maximum amounts of compensation
+Share Ownership Guidelines
+> Target parameter: stock price
+A.10.1.1 REMUNERATION SYSTEM
+RATE GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE
+GERMAN COMMERCIAL CODE.
+Cash and cash equivalents and marketable securities
+are significantly affected by the liquidity management of
+Siemens AG. The liquidity management is based on the finance
+strategy of the Siemens Group. Therefore, the change in liquid-
+ity of Siemens AG was not driven only from business activities
+of Siemens AG.
+A.9.3 Corporate Governance statement
+27,075
+compared to 5 competitors
+20%
+296
+65,400
+24%
+10%
+The Corporate Governance statement pursuant to Section 289a
+of the German Commercial Code is an integral part of the Com-
+bined Management Report and is presented in → c.4.2 CORPO-
+The increase in Financial assets was due primarily to the addi-
+tion of Siemens' 49% stake in the Primetals Technologies Ltd.
+joint venture amounting to €0.7 billion - less a €0.1 billion
+impairment in fiscal 2015 - and the addition of the newly
+founded Siemens Healthcare GmbH amounting to €0.6 billion.
+The Siemens Medical Solutions Health Services GmbH
+was transferred into this newly founded company with a
+carrying amount of €0.3 billion. In addition, a capital increase
+of €0.3 billion relating to Siemens Beteiligungsverwaltung
+GmbH & Co. OHG was included. Loans and securities within
+non-current assets increased by €0.2 billion and €0.2 billion,
+respectively.
+Combined Management Report
+The increase in Receivables and other assets was due primar-
+ily to higher receivables from affiliated companies as a result of
+intra-group financing activities.
+The increase in Equity was attributable to net income for the
+year of €5.6 billion and issuance of treasury stock of €0.3 bil-
+lion in conjunction with our share-based payments. These fac-
+tors were partly offset by dividends paid in fiscal 2015 (for fiscal
+2014) of €2.7 billion. In addition, the equity was reduced due to
+share buybacks during the year amounting to €2.7 billion. The
+equity ratios at September 30, 2015 and 2014 were 27% and
+29%, respectively.
+The increase in Pension and similar commitments included
+interest and service costs amounting to €0.7 billion and nega-
+tive effects amounting to €0.8 billion from adjustment of the
+discount rate. These factors were partly offset by pension pay-
+ments amounting to €0.6 billion and a transfer of pension
+obligations, net to Siemens Healthcare GmbH amounting to
+€0.4 billion.
+The increase in Other provisions was due primarily to an in-
+crease of €0.5 billion in provisions for probable losses for guar-
+antees. This was partly offset by a decline of €0.2 billion in pro-
+visions for outstanding deliveries and services.
+The increase in Trade payables, liabilities to affiliated com-
+panies and other liabilities was due primarily to higher liabil-
+ities to affiliated companies as a result of intra-group financing
+activities.
+36
+> Variability: 0-200%
+add. +20%
+> 3 targets
+32,494
+367
+71,880
+Interruption of the supply chain: The financial performance
+of our Industrial Business depends on reliable and effective
+supply chain management for components, sub-assemblies
+and other materials. Capacity constraints and supply shortages
+resulting from ineffective supply chain management may lead
+to delays and additional cost. We rely on third parties to supply
+us with parts, components and services. Using third parties to
+manufacture, assemble and test our products reduces our con-
+trol over manufacturing yields, quality assurance, product de-
+livery schedules and costs. Although we work closely with our
+suppliers to avoid supply-related problems, there can be no
+assurance that we will not encounter supply problems in the
+future. Shortages and delays could materially harm our busi-
+ness. Unanticipated increases in the price of components or
+2 times
+base com-
+pensation
+Managing
+Board
+member:
+President
+and CEO:
+3 times
+base com-
+pensation
+Combined Management Report
+38
+Obligation to hold shares during term of office on the Managing Board
+Performance-based component
+Performance-based component with deferred payout
+Non-performance-based component
+target amount
+max. 300% of
+(Stock Awards):
+component
+Variable compensation (Bonus)
+Stock-based
+adjustment
+compensation
+Bonus: 0-200%
+Max. 1.7 times target
+Compensation overall
+compensation
+Base
+compensation
+Base
+compensation
+Base
+add. ±20% adjustment
+> Variability: 0-200%
+one-third each
+ודי"
+20%
+Cost overruns or additional payment obligations related to
+the management of our long-term, fixed-price or turnkey
+projects: Particularly our Divisions Power and Gas, Wind Power
+and Renewables, Mobility as well as parts of Energy Manage-
+ment and Process Industries and Drives perform business, es-
+pecially large projects, under long-term contracts that are
+awarded on a competitive bidding basis. Some of these con-
+tracts are inherently risky because we may assume substan-
+tially all of the risks associated with completing a project and
+meeting post-completion warranty obligations. For example,
+we face the risk that we must satisfy technical requirements of
+a project even though we may not have gained experience with
+those requirements before we win the project. The profit mar-
+gins realized on fixed-priced contracts may vary from original
+estimates as a result of changes in costs and productivity over
+their term. We sometimes bear the risk of unanticipated project
+modifications, shortage of key personnel, quality problems,
+financial difficulties of our customers, cost overruns or contrac-
+tual penalties caused by unexpected technological problems,
+unforeseen developments at the project sites, unforeseen
+changes or difficulties in the regulatory or political environ-
+ment, performance problems with our suppliers, subcontrac-
+tors and consortium partners or other logistical difficulties.
+Some of our multi-year contracts also contain demanding in-
+stallation and maintenance requirements in addition to other
+performance criteria relating to timing, unit cost and compli-
+ance with government regulations requirements, which, if not
+satisfied, could subject us to substantial contractual penalties,
+damages, non-payment and contract termination. There can be
+no assurance that contracts and projects, in particular those
+with long-term duration and fixed-price calculation, can be
+completed profitably. To tackle those risks we implemented a
+global project management organization to systematically im-
+prove the know-how of the project management personnel. For
+very complex technical projects we conduct dedicated techni-
+cal risk assessments in very early stages of the sales phase be-
+fore we decide to hand over a binding offer to our customer.
+31,545
+(20,161)
+30,934
+26,454
+2014
+2015
+% Change
+Fiscal year
+expenses
+Cost of Sales
+Gross profit
+(in millions of €)
+Revenue
+(22,109)
+Statement of Income of Siemens AG in accordance
+| with German Commercial Code (condensed)
+Siemens AG is the parent company of the Siemens Group.
+Results for Siemens AG are significantly influenced by directly
+or indirectly owned subsidiaries and investments. The business
+development of Siemens AG is fundamentally subject to the
+same risks and opportunities as the Siemens Group. Due to the
+interrelations between Siemens AG and its subsidiaries and the
+relative size of Siemens AG within the Group, the outlook of
+the Group also largely reflects our expectations for Siemens AG.
+Therefore, the above mentioned explanations for the Siemens
+Group apply also for the Siemens AG. We expect that income
+from investments will significantly influence the profit of
+Siemens AG.
+The Annual Financial Statements of Siemens AG have been pre-
+pared in accordance with the rules set out in the German Com-
+mercial Code (Handelsgesetzbuch).
+A.9 Siemens AG
+34 Combined Management Report
+Our internal audit function systematically evaluates our finan-
+cial reporting integrity, the effectiveness of the control system
+and the risk management system, and the adherence to our
+compliance policies. In addition, the Audit Committee is inte-
+grated into our control system. In particular, it oversees the
+accounting process and the effectiveness of the control system,
+the risk management system and the internal audit system.
+Furthermore, we have set up a Disclosure Committee which is
+responsible for reviewing certain financial and non-financial
+information prior to publication. Moreover, we have rules for
+accounting-related complaints.
+On a quarterly basis, an internal certification process is exe-
+cuted. Management of different levels of our organization, sup-
+ported by confirmations of management of entities under their
+responsibility, confirms the accuracy of the financial data that
+has been reported to Siemens' corporate headquarters and re-
+ports on the effectiveness of the related control systems.
+Qualification of employees involved in the accounting process
+is ensured through appropriate selection processes and regular
+training. As a fundamental principle, based on materiality con-
+siderations, the four eyes principle applies and specific proce-
+dures must be adhered to for data authorization. Additional
+control mechanisms include target-performance comparisons
+and analyses of the composition of and changes in individual
+line items, both in the closing data submitted by reporting
+units and in the Consolidated Financial Statements. In line with
+our information security requirements, accounting-related IT
+systems contain defined access rules protecting them from un-
+authorized access. The manual and system-based control
+mechanisms referred to above generally also apply when rec-
+onciling the IFRS closing data to the Annual Financial State-
+ments of Siemens AG.
+33
+Combined Management Report
+The base data used in preparing our financial statements
+consists of the closing data reported by the operations of
+Siemens AG and its subsidiaries. The preparation of the closing
+data of most of our entities is supported by an internal shared
+services organization. Furthermore, other accounting activi-
+ties, such as governance and monitoring related activities, are
+usually bundled on regional level. In particular cases, such as
+valuations relating to post-employment benefits, external
+experts are used. The reported closing data is used to prepare
+the financial statements in the consolidation system. The steps
+necessary to prepare the financial statements are subject to
+both manual and automated controls.
+A.9.1 Results of operations
+Our Consolidated Financial Statements are prepared on the ba-
+sis of a centrally issued conceptual framework which primarily
+consists of uniform Financial Reporting Guidelines and a chart
+of accounts. For Siemens AG and other companies within the
+Siemens group required to prepare financial statements in ac-
+cordance with German Commercial Code, this conceptual
+framework is complemented by mandatory regulations specific
+to the German Commercial Code. The need for adjustments in
+the conceptual framework due to regulatory changes is ana-
+lyzed on an ongoing basis. Accounting departments are in-
+formed quarterly about current topics and deadlines from an
+accounting and closing process perspective.
+(14)%
+9%
+8,824
+Result from ordinary activities
+Income taxes
+173%
+2,242
+6,122
+ments 8,142 (prior year 2,870)
+thereof Income from invest-
+Financial income, net
+(20) >(200)%
+(270)
+Other operating income
+(expenses), net
+6,293
+6%
+(3,810)
+administrative expenses
+Selling and general
+13%
+(2,781)
+(2,417)
+29%
+24%
+as percentage of revenue
+Research and development
+(29)%
+(4,036)
+5,918
+At the end of each fiscal year, our management performs an
+evaluation of the effectiveness of the implemented control sys-
+tem, both in design and operating effectiveness. We have a
+standardized procedure under which necessary controls are
+defined, documented in accordance with uniform standards,
+and tested regularly on their effectiveness. Nevertheless, there
+are inherent limitations on the effectiveness of any control sys-
+tem, and no system, including one determined to be effective,
+may prevent or detect all misstatements.
+The overarching objective of our accounting-related internal
+control and risk management system is to ensure that financial
+reporting is conducted in a proper manner, such that the Con-
+solidated Financial Statements and the Combined Management
+Report of Siemens group as well as the Annual Financial State-
+ments of Siemens AG as the parent company are prepared in
+accordance with all relevant regulations.
+by the 2008 and 2009 corruption charge settlements, which
+were concluded with American and German authorities, may
+endanger our business with government agencies and inter-
+governmental and supranational organizations. Further moni-
+tors could be appointed to review future business practices and
+we may otherwise be required to further modify our business
+practices and our compliance program.
+Current and future investigations regarding allegations of
+corruption, antitrust violations and other illegal acts: Cor-
+ruption, antitrust and related proceedings may lead to criminal
+and civil fines as well as penalties, sanctions, injunctions
+against future conduct, profit disgorgements, disqualifications
+from directly and indirectly engaging in certain types of busi-
+ness, the loss of business licenses or permits or other restric-
+tions. Accordingly, we may be required to comply with poten-
+tial liabilities arising in connection with such investigations
+and proceedings, including potential tax penalties. Moreover,
+any findings related to public corruption that are not covered
+Environmental and other governmental regulations: Some
+of the industries in which we operate are highly regulated. Cur-
+rent and future environmental and other governmental regula-
+tions or changes thereto may require us to change the way we
+run our operations and could result in significant increases in
+our operating or production costs. In addition, while we have
+procedures in place to ensure compliance with applicable gov-
+ernmental regulations in the conduct of our business opera-
+tions, it cannot be excluded that violations of applicable gov-
+ernmental regulations may be caused either by us or by third
+parties that we contract with, including suppliers or service
+providers, whose activities may be attributed to us. Any such
+violations expose us to the risk of liability, reputational damage
+or loss of licenses or permits that are important to our business
+operations. In particular, we could also face liability for damage
+or remediation for environmental contamination at the facili-
+ties we design or operate. With regard to certain environmental
+risks, we maintain liability insurance at levels that our manage-
+ment believes are appropriate and consistent with industry
+practice. We may incur environmental losses beyond the limits,
+or outside the coverage, of such insurance, and such losses
+may have an adverse effect on our business, financial condition
+and results of our operations.
+Our business naturally evolves and develops in nations and re-
+gions around the world, increasing their demand for our offer-
+ings. Emerging market operations involve various risks, includ-
+ing civil unrest, health concerns, cultural differences such as
+employment and business practices, volatility in gross domes-
+tic product, economic and governmental instability, the poten-
+tial for nationalization of private assets and the imposition of
+exchange controls. The Asian markets, in particular, are impor-
+tant for our long-term growth strategy, and our sizeable activi-
+ties in China operate under a legal system that is still develop-
+ing and is subject to change. Our long-term growth strategy
+could be limited by governments preferentially supporting local
+competitors. With our dedicated regional organizations we
+tackle these risks by constantly monitoring the latest trends
+and defining our response strategies which include an ongoing
+evaluation of our localization approach.
+Combined Management Report
+30
+As a globally operating organization, we conduct business with
+customers in countries which are subject to export control reg-
+ulations, embargoes, economic sanctions or other forms of
+trade restrictions (hereafter referred to as "sanctions") imposed
+by the U.S., the European Union or other countries or organiza-
+tions. New or expanded sanctions in countries in which we do
+business may result in a curtailment of our existing business in
+such countries or indirectly in other countries. We are also
+aware of initiatives by institutional investors, such as pension
+funds or other companies, to adopt or consider adopting poli-
+cies prohibiting investment in and transactions with, or requir-
+ing divestment of interests in entities doing business with,
+countries identified as state sponsors of terrorism by the U.S.
+Secretary of State. It is possible that such initiatives may result
+in us being unable to gain or retain investors, customers or sup-
+pliers. In addition, the termination of our activities in sanc-
+tioned countries may expose us to customer claims and other
+actions. Our reputation could also suffer due to our activities
+with counterparties in or affiliated with these countries. Due to
+the political agreement based on the Joint Comprehensive Plan
+of Action (JCPOA) regarding the Iranian nuclear program,
+Siemens has revised its internal guidelines in October 2015
+which stated that apart from certain limited exceptions no new
+business activities with customers in Iran are permitted. New
+business activities with customers or end customers in Iran
+that are not designated on the EU or U.S. sanctions lists are
+now allowed, provided that these activities do not breach the
+EU sanctions regulations or the U.S. Secondary Sanctions (if
+applicable). Siemens has issued group-wide policies establish-
+ing the details of its general decision.
+26,190
+A.8.3.4 COMPLIANCE RISKS
+For further information on post-employment benefits, deriva-
+tive financial instruments, hedging activities, financial risk
+management and measurements, see → NOTE 16, 23 AND 24 in
+→ B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+A considerable part of our business activities involve govern-
+ments and companies with a public shareholder. We also partic-
+ipate in a number of projects funded by government agencies
+and intergovernmental and supranational organizations such
+as multilateral development banks. Ongoing or potential future
+investigations into allegations of corruption, antitrust or other
+law violations could also impair relationships with such busi-
+ness partners or could result in the exclusion of public con-
+tracts. Such investigations may also adversely affect existing
+private business relationships and our ability to pursue poten-
+tially important strategic projects and transactions, such as
+strategic alliances, joint ventures or other business coopera-
+tion, or could result in the cancellation of certain of our exist-
+ing contracts and third parties, including our competitors,
+could initiate significant third-party litigation.
+by tax authorities in various jurisdictions and we continuously
+identify and assess resulting risks.
+Risks from pension obligations: The funded status of our
+pension plans may be affected by change in actuarial assump-
+tions, including the discount rate, as well as movements in
+financial markets or a change in the portfolio mix of invested
+assets. A significant increase in the underfunding may have a
+negative effect on our capital structure and rating and thus
+may tighten refinancing options and increase costs. In order to
+comply with local pension regulations in selected foreign coun-
+tries, we may face a risk of increasing cash outflows to reduce
+an underfunding of our pension plans in these countries.
+Credit Risks: We provide our customers with various forms of
+direct and indirect financing of orders and projects. Particularly
+SFS bears credit risks out of its financing activities. In part, we
+take a security interest in the assets we finance or we receive
+additional collateral. Our business, financial condition and re-
+sults of operations may be adversely affected if the credit qual-
+ity of our customers deteriorates or if they default on their pay-
+ment obligation to us, if the value of the assets in which we
+have taken a security interest or additional collateral declines
+or if the projects in which we invest are unsuccessful. Positive
+market values from derivatives and deposits with banks induce
+credit risk against these banks. We monitor these market value
+developments very closely. A default of a major trading partner
+may have negative impact on our financial position and the
+results of financial operations.
+assets, in particular concerning our derivative financial instru-
+ments. Negative developments could also further increase
+the costs for buying protection against credit risks due to a
+potential increase of counterparty risks. Through diversifica-
+tion into different funding instruments, currencies, markets
+and investor groups, Siemens reduces funding risks. Liquidity
+risks are mitigated by depositing cash into different categories
+of instruments and with a range of counterparties of invest-
+ment grade credit quality, at which counterparty risks are cen-
+trally and closely monitored (including risks resulting from
+derivatives).
+29
+Combined Management Report
+Liquidity and financing risks: The ongoing euro zone sover-
+eign debt crisis continues to have an impact on global capital
+markets. Regarding our treasury and financing activities, nega-
+tive developments related to financial markets such as (1) lim-
+ited availability of funds (particularly U.S. dollar funds) and
+hedging instruments, (2) an updated evaluation of our sol-
+vency, particularly from rating agencies and (3) impacts from
+enhanced regulations of the financial sector/central bank pol-
+icy or financial instruments, could result in adverse deposit
+and/or financing conditions. Widening credit spreads due to
+uncertainty and risk aversion in the financial markets might
+lead to adverse changes of fair market values of our financial
+Market price risks: We are exposed to fluctuations in exchange
+rates, especially between the U.S. dollar and the euro, because
+a high percentage of our business volume is conducted in the
+U.S. and as exports from Europe. In addition, we are exposed to
+currency effects involving the currencies of emerging markets,
+in particular the Chinese yuan. A strengthening of the euro
+(particularly against the U.S. dollar) may change our competi-
+tive position, as many of our competitors may benefit from hav-
+ing a substantial portion of their costs based in weaker curren-
+cies, enabling them to offer their products at lower prices. As a
+result, a strong euro in relation to the U.S. dollar and other cur-
+rencies could have an adverse impact on our results of opera-
+tions. We are also exposed to fluctuations in interest rates. Neg-
+ative developments in the financial markets and changes in the
+central bank policies may negatively impact our results. Certain
+currency risks as well as interest rate risks are hedged using
+derivative financial instruments. Depending on the develop-
+ment of foreign currency exchange and interest rates, hedging
+activities could have significant effects on our business, finan-
+cial condition and results of operations.
+A.8.3.3 FINANCIAL RISKS
+Skilled personnel: Competition for highly qualified personnel
+remains intense in the industries and regions in which our
+businesses operate. We have an ongoing demand in highly
+skilled employees. Our future success depends in part on our
+continued ability to hire, integrate, develop and retain engi-
+neers and other qualified personnel. We address this risk for
+example with structured succession planning, employer brand-
+ing, retention and career management.
+raw materials due to market shortages or other reasons could
+also adversely affect the performance. Furthermore, we may be
+exposed to the risk of delays and interruptions of the supply
+chain as a consequence of catastrophic events in case we are
+unable to identify alternative sources of supply or ways of
+transportation in a timely manner or at all. Besides other mea-
+sures, we mitigate fluctuation in the global raw material mar-
+kets with various hedging instruments.
+Examinations by tax authorities and changes in tax regula-
+tions: We operate in nearly all countries of the world and there-
+fore are subject to many different tax regulations. Changes in
+tax law in any of these jurisdictions could result in higher tax
+expense and payments. Furthermore, legislative changes could
+impact our tax receivables and liabilities as well as deferred tax
+assets and deferred tax liabilities. In addition, the uncertain tax
+environment in some regions could limit our ability to enforce
+our rights. As a globally operating organization, we conduct
+business in countries subject to complex tax rules, which may
+be interpreted in different ways. Future interpretations or de-
+velopments of tax regimes may affect our business, financial
+condition and results of operations. We are regularly examined
+Our ERM approach is based on COSO's "Enterprise Risk Manage-
+ment - Integrated Framework". As one of the objectives of this
+framework is reliability of a company's financial reporting, it
+includes an accounting-related perspective. Our accounting-
+related internal control system (control system) is based on
+the internationally recognized "Internal Control - Integrated
+Framework" also developed by COSO. The two systems are com-
+plementary.
+In addition, future developments in ongoing and potential
+future investigations, such as responding to the requests of
+governmental authorities and cooperating with them, could
+divert management's attention and resources from other issues
+facing our business. Furthermore, we might be exposed to
+compliance risks in connection with recently acquired opera-
+tions that are in the ongoing process of integration.
+Current or future litigation: We are subject to numerous risks
+relating to legal, governmental and regulatory proceedings
+to which we are currently a party or to which we may become a
+party in the future. We routinely become subject to legal, gov-
+ernmental and regulatory investigations and proceedings in-
+volving, among other things, requests for arbitration, allega-
+tions of improper delivery of goods or services, product liability,
+product defects, quality problems, intellectual property infringe-
+ment, non-compliance with tax regulations and/or alleged or
+suspected violations of applicable laws. In addition, we may
+face further claims in connection with the circumstances that
+led to the corruption charges. For additional information with
+respect to specific proceedings, see → NOTE 21 in → B.6 NOTES
+TO CONSOLIDATED FINANCIAL STATEMENTS. There can be no assur-
+ance that the results of these or any other proceedings will not
+The following discussion describes information required pursu-
+ant to Section 289 (5) and Section 315 (2) no. 5 of the German
+Commercial Code (Handelsgesetzbuch) and explanatory report.
+A.8.5 Significant characteristics of
+the accounting-related internal control
+and risk management system
+Even though the assessment of individual opportunities have
+changed during fiscal year 2015 due to developments in the
+external environment as well as the effects of our endeavors to
+harvest them, the overall opportunity situation did not change
+significantly as compared to the prior year.
+Localizing value chain activities: Localizing certain value
+chain activities, such as procurement, manufacturing, mainte-
+nance and service in emerging markets, could enable us to re-
+duce costs and strengthen our global competitive position, in
+particular compared to competitors based in countries with a
+more favorable cost structure. Moreover, our local footprint in
+many countries might help us to take advantage of a possible
+recovery of markets and leverage a shift in markets, resulting in
+increased market penetration and market share.
+Excellent project execution: By expanding project manage-
+ment efforts as well as learning from our mistakes in project
+execution through a formalized lessons learned approach, we
+see an opportunity to continuously reduce non-conformance
+costs and ensure on-time delivery of our projects and solutions.
+Furthermore, stringent project risk and opportunity manage-
+ment, time schedule management, performance bonuses and
+highly professional management of consortium partners and
+suppliers help us to avoid liquidated damages and ultimately
+improve our profit position. In addition, improvements of our
+claim management processes enable us to reduce costs in-
+curred as a result of customer claims by finding a consensus
+with customers while also improving customer relationship
+management. At the same time, we reduce quality problems by
+proactively addressing supplier issues up front.
+competitive cost structure complements the competitive ad-
+vantage of being innovative. We believe that further improve-
+ments in our cost position can strengthen our global competi-
+tive position and secure our market presence against emerging
+and incumbent competitors. For example, we expect to create
+sustainable value from productivity measures in connection
+with our "Vision 2020" concept. Moreover, establishing a strin-
+gent claim management process can help materialize opportu-
+nities by enforcing our claims towards our contract partners
+even stronger.
+Combined Management Report
+Continuously developing and implementing initiatives to
+reduce costs, boost sales efforts, adjust capacities, improve
+our processes, realize synergies and streamline our port-
+folio: In an increasingly competitive market environment, a
+Political stabilization of critical countries and recovery of
+worldwide economic environment: We see an opportunity
+that political stabilization of critical countries may lead to
+higher volume because it gives us the opportunity to catch up
+revenue that was unavailable in past years. Furthermore, a
+rapid worldwide recovery of the economic environment could
+also lead to additional volume and profit for Siemens.
+Success from innovation: Innovation is a central part of
+Siemens "Vision 2020", an entrepreneurial concept, leading
+Siemens into the future in the three stages: first we "drive per-
+formance", then we "strengthen core" and finally we "scale up”
+to attain our goals. We do this by investing significantly in R&D
+in order to develop innovative, sustainable solutions for our
+customers and to simultaneously safeguard our competitive-
+ness. We are an innovative company and invent new technolo-
+gies that we expect will meet future demands in accordance
+with the megatrends of demographic change, urbanization,
+climate change and globalization. We are granted thousands of
+new patents every year and continuously develop new con-
+cepts and convincing business models. We open up access to
+new markets and customers through new marketing and sales
+strategies as well as Divisional master plans.
+Besides other measures, Siemens established a global compli-
+ance organization including compliance risk mitigation pro-
+cesses such as Compliance Risk Assessments which has been
+reviewed recently by external compliance experts.
+Electrification, automation and digitalization: Siemens is
+positioned along the value chains of electrification, automa-
+tion and digitalization in order to increase future market
+penetration. Along these value chains, we have identified sev-
+eral growth fields in which we see our greatest long-term
+potential. We are orienting our resource allocation toward these
+growth fields and have announced concrete measures in this
+direction. For example, we see an opportunity to leverage busi-
+ness analytics across verticals and introduce cloud-enabled soft-
+ware and IT services (e.g. predictive maintenance) resulting in
+additional business volume, market share and customer reten-
+tion. We intend to fully exploit the potential of increasing digita-
+lization not just in manufacturing. Utilizing software and simu-
+lations, the Digital Factory Division makes product development
+considerably faster and more efficient. Data-driven services,
+software and IT solutions are of decisive importance as they
+have a substantial influence on all of our future growth fields.
+Acquisitions, equity investments, partnerships and divest-
+ments: We constantly monitor our current and future markets
+for opportunities for strategic acquisitions, equity investments
+or partnerships to complement organic growth. Such activities
+Within our Enterprise Risk Management (ERM) we regularly
+identify, evaluate and respond to opportunities that present
+themselves in our various fields of activity. Below we describe
+our most significant opportunities. Unless otherwise stated,
+the opportunities described below relate to all of our segments.
+The order in which the opportunities are presented reflects the
+currently estimated relative exposure for Siemens associated
+with these opportunities and thus provides an indication of the
+opportunities' current importance to us. The described oppor-
+tunities are not necessarily the only ones we encounter. In ad-
+dition, our assessment of opportunities is subject to change as
+our Company, our markets and technologies are constantly de-
+veloping. It is also possible that opportunities we see today will
+never materialize.
+A.8.4 Opportunities
+concern.
+The most significant challenges have been mentioned first in
+each of the four categories - Strategic, Operations, Financial
+and Compliance – with the risks caused by highly competitive
+markets and technology changes currently being the most sig-
+nificant. Even though the assessments of individual risk expo-
+sures have changed during fiscal 2015 due to developments in
+the external environment as well as the effects of our own mit-
+igation measures, the overall risk situation for Siemens did not
+change significantly as compared to the prior year. At pres-
+ent, no risks have been identified that either individually or in
+combination could endanger our ability to continue as a going
+A.8.3.5 ASSESSMENT OF THE
+OVERALL RISK SITUATION
+materially harm our business, financial condition and results of
+operations. Moreover, even if we ultimately prevail on the mer-
+its in any such proceedings, we may have to incur substantial
+legal fees and other costs defending ourselves against the un-
+derlying allegations. We maintain liability insurance for certain
+legal risks at levels our management believes are appropriate
+and consistent with industry practice. Our insurance policy,
+however, does not protect us against reputational damage.
+Moreover, we may incur losses relating to legal proceedings
+beyond the limits, or outside the coverage, of such insurance
+or exceeding any provisions made for legal proceedings related
+losses. Finally, there can be no assurance that we will be able
+to maintain adequate insurance coverage on commercially rea-
+sonable terms in the future.
+32
+31
+Combined Management Report
+could help us to strengthen our position in our existing mar-
+kets, provide access to new markets or complement our techno-
+logical portfolio in selected areas. Opportunities might also
+arise from well executed divestments further optimizing our
+portfolio and generating divestment gains.
+4,230
+Regulatory risks and potential sanctions: Protectionist trade
+policies and changes in the political and regulatory environ-
+ment in the markets in which we operate, such as import and
+export controls, tariffs and other trade barriers including de-
+barment from certain markets and price or exchange controls,
+could affect our business in several national markets, impact
+our business, financial position and results of operations, and
+may expose us to penalties, other sanctions and reputational
+damage. In addition, the uncertainty of the legal environment
+in some regions could limit our ability to enforce our rights and
+subject us to increasing costs related to appropriate compliance
+programs.
+(300)
+2%
+18,798
+19,247
+Liabilities and equity
+Equity
+Prepaid expenses
+Deferred tax assets
+Active difference resulting
+from offsetting
+Total assets
+10%
+65,400
+71,880
+(28)%
+40
+Special reserve
+with an equity portion
+Provisions
+29
+(25)%
+26%
+18,488
+111
+2,222
+2,333
+23,308
+83
+43%
+2,672
+3,816
+23%
+15,816
+5%
+19,492
+708
+(7)%
+40%
+Deferred income
+Total liabilities and equity
+to affiliated companies
+and other liabilities
+Trade payables, liabilities
+31%
+677
+887
+(70)%
+62
+Liabilities to banks
+Advance payments received
+759
+Liabilities
+18,472
+19,064
+2%
+7,369
+7,511
+Other provisions
+4%
+11,103
+11,553
+Pensions and similar
+commitments
+3%
+Receivables and other assets
+Cash and cash equivalents,
+securities
+208
+4%
+Combined Management Report
+The decrease in Revenue is due primarily to the carve-out of
+Healthcare, which posted €4.8 billion in revenue in fiscal 2014.
+In fiscal 2015, the highest contributions to revenue came from
+Digital Factory amounting to €6.1 billion, Energy Management
+amounting to €5.4 billion, Power and Gas amounting to €5.4 bil-
+lion and Process Industries and Drives amounting to €5.2 bil-
+lion. On a geographical basis, 74% of revenue was generated in
+the Europe, C.I.S., Africa, Middle East region, 19% in the Asia,
+Australia region and 7% in the Americas region. Exports from
+Germany accounted for 62% of overall revenue. In fiscal 2015,
+orders for Siemens AG amounted to €31.8 billion.
+As of September 30, 2015, the number of employees was
+100,900.
+As part of the carve-out of Healthcare, Siemens AG transferred
+its healthcare business to the newly founded Siemens Health-
+care GmbH by way of singular succession. Beginning with fiscal
+2015, the results of the Siemens Healthcare GmbH are trans-
+ferred to Siemens AG based on the profit-and-loss transfer
+agreement between the Siemens AG and the Siemens Health-
+care GmbH.
+We intend to continue providing an attractive return to share-
+holders. Therefore, in the years ahead we intend to propose a
+dividend payout of 40% to 60% of net income of Siemens
+Group, which for this purpose we may adjust to exclude se-
+lected exceptional non-cash effects.
+6%
+2,907
+(175)%
+(988)
+(2,714)
+3,084
+35
+Unappropriated net income
+64%
+110
+179
+Profit carried forward
+3,786
+5,618
+Net income
+32%
+Current assets
+(444)
+Allocation to other retained
+earnings
+The decrease in Gross profit resulted primarily from the above
+mentioned carve-out of Healthcare, which contributed €2.1 bil-
+lion to Gross Profit in fiscal 2014. In fiscal 2015, the strongest
+contributions to Gross Profit came from Digital Factory, Power
+and Gas as well as Process Industries and Drives. Fiscal 2015
+included lower project charges compared to the prior year.
+In fiscal 2014, in particular, the Energy Management Division
+took charges including €0.4 billion related primarily to grid-
+connections to offshore wind-farms and €0.2 billion related to
+onshore HVDC transmission line projects. In fiscal 2015,
+Siemens handed over the four North Sea grid connection plat-
+forms to the customer.
+48%
+Research and development (R&D) expenses decreased due
+primarily to the above mentioned carve-out of Healthcare. R&D
+expenses as a percentage of revenue (R&D intensity) remained
+at 9%. On an average basis, we employed 11,700 people in R&D
+in fiscal 2015. For additional information see A.1.1.3 RESEARCH
+4%
+42,121
+1%
+44,540
+2,419
+2,439
+Intangible and tangible assets
+Financial assets
+Non-current assets
+% Change
+Sep 30,
+2014
+43,688
+(in millions of €)
+Assets
+2015
+AND DEVELOPMENT.
+The decrease in Other operating income (expenses), net re-
+sulted from an increase of €0.5 billion in other operating ex-
+penses, only partly offset by an increase in other operating
+income of €0.2 billion. Within other operating expenses, nega-
+tive effects included additions to post-closing provisions in
+connection with the disposal of businesses.
+The improvement in Financial income, net was primarily at-
+tributable to higher income from investments, which increased
+by ��5.3 billion. Other financial income (expenses), net was
+€1.4 billion lower compared to the prior year.
+The primary factors for the increase in income from investments
+was a gain of €2.8 billion on the disposal of Siemens' stake in
+BSH and higher income from profit transfers of €2.6 billion, in
+particular €1.7 billion from Siemens Beteiligungen Inland GmbH
+and €0.8 billion from Siemens Healthcare GmbH.
+46,127
+The decline in Income tax expenses was due mainly to higher
+deferred tax assets resulting from provisions. This was partly
+offset by prior-year tax effects.
+A.9.2 Net assets and financial position
+Statement of Financial Position of Siemens AG in accordance
+with German Commercial Code (condensed)
+The decrease in other financial income (expenses), net resulted
+mainly from a higher realized loss related to interest and for-
+eign currency derivatives of €0.7 billion and from higher ex-
+penses from compounding of pension provisions of €0.4 bil-
+lion. In addition, impairments of loan receivables of Unify
+Holdings B.V. and Unify Germany Holdings B.V. amounting to
+€0.2 billion were included. For comparison, fiscal 2014 included
+€0.2 billion reversals of impairments of shares in investments.
+Total compensation of all Managing Board members for fiscal 2015, in accordance with the applicable reporting standards, amounted to €27.42 million
+(2014: €28.57 million). The granted payout amount presented below is to be used instead of the target value according to the Code for one-year variable
+compensation. Service costs for pension benefits are not included.
+Performance-based
+components
+Total compensation
+without long-term incentive
+effect, non-stock-based
+One-year variable compensation (Bonus) -
+Cash component
+| Managing Board members serving as of September 30, 2015
+(Amounts in thousands of €)
+Performance-based
+components
+Fixed compensation (base compensation)
+Fringe benefits¹
+Multi-year variable compensation 2,3
+without long-term incentive
+effect, non-stock-based
+with long-term incentive effect,
+stock-based
+Total (Code)7
+One-year variable compensation (Bonus) -
+Cash component (Code)
+Non-performance-
+based components
+Total
+effect, non-stock-based
+Total 6
+43
+| Managing Board members serving as of September 30, 2015
+Variable compensation (Bonus) - Bonus Awards 4
+(Amounts in thousands of €)
+Non-performance-
+based components
+Performance-based
+components
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total
+without long-term incentive
+Combined Management Report
+with long-term incentive effect,
+stock-based
+One-year variable compensation (Bonus) -
+Cash component (Code)
+Multi-year variable compensation 2,3
+Variable compensation (Bonus) - Bonus Awards 4
+Siemens Stock Awards (restriction period: 4 years)
+Target achievement depending on EPS for past three fiscal years 4
+Target achievement depending on future stock performance 5
+Service cost
+Siemens Stock Awards (restriction period: 4 years)
+Lisa Davis 8
+Total 6
+2015
+2015
+2015
+2014
+2015
+2015
+2015
+2014
+2014
+2015
+(min)
+(max)
+(min)
+(max)
+(min)
+The compensation presented on the following pages was
+granted to the members of the Managing Board for fiscal 2015
+(individualized disclosure). Due to rounding, the figures pre-
+sented in the table may not add up precisely to the totals
+provided.
+2014
+2015
+(max)
+2015
+Klaus Helmrich
+Managing Board member
+Managing Board member
+Managing Board member
+Service cost
+Total (Code)7
+Total compensation of all Managing Board members for fiscal 2015, in accordance with the applicable reporting standards, amounted to €27.42 million
+(2014: €28.57 million). The granted payout amount presented below is to be used instead of the target value according to the Code for one-year variable
+compensation. Service costs for pension benefits are not included.
+Performance-based
+components
+Total compensation
+without long-term incentive
+effect, non-stock-based
+One-year variable compensation (Bonus) -
+Cash component
+1 Fringe benefits include the costs, or the cash equiva-
+lent, of non-monetary benefits and other perquisites,
+such as the provision of company cars in the amount
+of €158,131 (2014: €181,638), contributions toward
+the cost of insurance in the amount of €134,170 (2014:
+€71,776), the reimbursement of expenses for legal
+advice and tax advice, accommodation and moving
+expenses, including any taxes due in this regard,
+currency adjustment payments and costs relating to
+preventive medical examinations in the amount of
+€330,620 (2014: €194,498).
+2 The figures for individual maximums for multi-year
+variable compensation reflect the possible maximum
+value in accordance with the maximum amount agreed
+upon for fiscal 2015, that is, 300% of the applicable
+target amount.
+3 The expenses recognized for stock-based compensa-
+tion for members of the Managing Board in accordance
+with the IFRS in fiscal 2015 and fiscal 2014 amounted
+to €8,109,155 and €16,141,235, respectively. The fol-
+lowing amounts pertained to the members of the
+Managing Board in fiscal 2015: Joe Kaeser €2,003,783
+(2014: €1,822,932), Dr. Roland Busch €1,129,224 (2014:
+€922,535), Lisa Davis €284,928 (2014: €1,337,996),
+Klaus Helmrich €1,076,237 (2014: €949,521), Janina
+Kugel €140,185 (2014: €0), Prof. Dr. Siegfried Russ-
+wurm €1,239,596 (2014: €1,118,839), and Dr. Ralf P.
+Thomas €516,915 (2014: €446,570). The corresponding
+expense, determined in the same way, for former
+Managing Board members was as follows: Brigitte
+Ederer €105,227 (2014: €35,373), Barbara Kux €105,227
+(2014: €1,971,611), Peter Löscher €230,387 (2014:
+€107,733), Prof. Dr. Hermann Requardt €1,107,522
+4
+5
+(2014: €1,254,756), Peter Y. Solmssen €141,258 (2014:
+€3,430,484), and Dr. Michael Süẞ €28,666 (2014:
+€2,742,885).
+For Stock Awards granted in fiscal 2014 for which the
+target attainment depends on the EPS for the past
+three fiscal years and for Bonus Awards granted in
+fiscal 2014, the fair value at the date of award is equiva-
+lent to the respective monetary value. As of fiscal 2015,
+the Bonus is granted entirely in cash; Stock Awards are
+linked solely to the performance of Siemens stock in
+comparison to its competitors.
+The monetary values relating to 100% target achieve-
+ment were €8,190,219 (2014: €4,970,916). The amounts
+for individual Managing Board members were as
+follows: Joe Kaeser €1,950,003 (2014: €950,022),
+Dr. Roland Busch €1,040,036 (2014: €500,027),
+Joe Kaeser
+President and CEO
+Dr. Roland Busch
+Target achievement depending on EPS for past three fiscal years 4
+Target achievement depending on future stock performance 5
+On the basis of the Supervisory Board's decisions described
+above, Managing Board compensation for fiscal 2015 totaled
+€27.42 million, a decrease of 4% (2014: €28.57 million). Of this
+total amount, €19.56 million (2014: €17.89 million) was attribut-
+able to cash compensation and €7.86 million (2014: €10.68 mil-
+lion) to stock-based compensation.
+Maximum amount for compensation overall
+In addition to the maximum amounts of compensation for
+variable compensation and long-term stock-based compensa-
+tion, a maximum amount for compensation overall has been
+defined. Since fiscal 2014, this amount cannot be more than
+1.7 times higher than target compensation. Target compensa-
+tion comprises base compensation, the target amount for
+variable compensation and the target amount for long-term
+stock-based compensation, excluding fringe benefits and pen-
+sion benefit commitments. When fringe benefits and pension
+benefit commitments for a given fiscal year are included, the
+maximum amount of compensation overall for that year will
+increase accordingly.
+contract, Prof. Dr. Hermann Requardt's base compensation for
+fiscal 2015 as well as the variable compensation and long-term
+stock-based compensation that he received for fiscal 2014 were
+used to determine the amount of his compensatory payment
+and limited to a total of his compensation for the remaining
+term of his appointment. In addition, non-monetary benefits
+were covered by a payment amounting to 5% of the compensa-
+tory payment. The Company also reimbursed Prof. Dr. Hermann
+Requardt for out-of-pocket expenses of €5,000 plus value-
+added tax.
+Transparency through simplicity:
+Three equally balanced components within the remuneration system and three equally balanced targets within the Bonus
+1/3
+Base compensation
+1/3
+Variable compensation
+(Bonus)
+1/3
+1/3
+With regard to the further terms of the Stock Awards, the same
+principles apply in general to the Managing Board and to sen-
+ior managers. These principles are discussed in more detail in
+→ NOTE 25 in → B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+1/3
+Earnings
+per share
+Individual
+targets
+1/3
+Long-term
+stock-based compensation
+(Siemens Stock Awards)
+Performance of Siemens stock
+compared to 5 competitors
+Share Ownership Guidelines
+-
+ROCE
+The value of the Siemens stock to be transferred for Stock
+Awards after the end of the restriction period is subject to a
+ceiling of 300% of the respective target amount. If this maxi-
+mum amount of compensation is exceeded, the correspond-
+ing entitlement to stock commitments will be forfeited without
+replacement.
+40
+39
+2015
+604
+In fiscal 2015, the Managing Board's remuneration system had
+the following components:
+Non-performance-based components
+Base compensation
+Base compensation is paid as a monthly salary. Since October 1,
+2014, the base compensation of President and CEO Joe Kaeser
+has amounted to €1,878,000 per year. The base compensation
+of the CFO and of those members of the Managing Board who
+are responsible for Divisions (including Healthcare) has been
+€1,010,400 per year. For the other members of the Managing
+Board, it has been €939,000 per year.
+Fringe benefits
+Fringe benefits include the costs, or the cash equivalent, of non-
+monetary benefits and other perquisites, such as the provision
+of a company car, contributions toward the cost of insurance,
+the reimbursement of expenses for legal advice and tax advice,
+accommodation and moving expenses, including a gross-up for
+any taxes due in this regard, currency adjustment payments
+and costs relating to preventive medical examinations.
+Performance-based components
+Variable compensation (Bonus)
+Variable compensation (Bonus) is based on the Company's busi-
+ness performance in the past fiscal year. The Bonus depends on
+an equal one-third weighting of target achievement of the tar-
+get parameters return on capital employed, earnings per share
+and individual targets. To achieve a consistent target system
+Company-wide, corresponding targets - in addition to other fac-
+- also apply to senior managers.
+tors
+For 100% target achievement (target amount), the amount of
+the Bonus equals the amount of base compensation. The Bonus
+is subject to a ceiling (cap) of 200%. If targets are substantially
+missed, variable compensation may not be paid at all (0%).
+At its duty-bound discretion, the Supervisory Board may revise
+the amount resulting from target achievement upward or down-
+ward by as much as 20%; the adjusted amount of the bonus paid
+can thus be as much as 240% of the target amount. In choosing
+the factors to be considered in deciding on possible revisions of
+the bonus payouts (±20%), the Supervisory Board takes account
+of incentives for sustainable corporate management. Decisions
+to make discretionary adjustments may take factors such as the
+results of an employee survey or a customer satisfaction survey
+into account as well as the Company's economic situation. The
+revision option may also be exercised in recognition of Manag-
+ing Board members' individual achievements. The Bonus is paid
+entirely in cash.
+Long-term stock-based compensation
+Long-term stock-based compensation consists of a grant of for-
+feitable stock commitments (Stock Awards) at the beginning of
+the fiscal year. Beneficiaries receive one free share of Siemens
+stock per Stock Award after an approximately four-year restric-
+tion period. In the event of extraordinary unforeseen develop-
+ments that impact the share price, the Supervisory Board may
+decide to reduce the number of promised Stock Awards retro-
+actively, or it may decide that in lieu of a transfer of Siemens
+stock only a cash settlement in a defined and limited amount
+will be paid, or it may decide to postpone transfers of Siemens
+stock for payable Stock Awards until the developments have
+ceased to impact the share price.
+In the event of 100% target achievement, the annual target
+amount for the monetary value of the Stock Awards commit-
+ment is €1,950,000 for the President and CEO (effective Octo-
+ber 1, 2014) and €1,040,000 for each of the other members of
+the Managing Board. Since fiscal 2015, the Supervisory Board
+has had the option of increasing the target amount for each
+member of the Managing Board, on an individual basis, by as
+much as 75% for one fiscal year at a time. This option enables
+the Supervisory Board to take account of each Managing Board
+member's individual accomplishments and experience as well
+as the scope and demands of his or her position.
+-
+Long-term stock-based compensation is linked to the perfor-
+mance of Siemens stock compared to its competitors. The Super-
+visory Board will decide on a target system (target value for
+100% and target line) for the performance of Siemens stock
+relative to the stock of - at present five competitors (ABB,
+General Electric, Rockwell, Schneider Electric and Toshiba). If
+significant changes occur among these competitors during the
+period under consideration, the Supervisory Board may take
+these changes into account, as appropriate, in determining the
+values for comparison and/or calculating the relevant stock
+prices of those competitors.
+Changes in the share price are measured on the basis of a
+twelve-month reference period (compensation year) over three
+years (performance period), while Stock Awards are restricted
+for a period of four years. When this restriction period expires,
+the Supervisory Board determines how much better or worse
+Siemens stock has performed relative to the stock of its com-
+petitors. This determination yields a target achievement of be-
+tween 0% and 200% (cap). If target attainment is above 100%,
+an additional cash payment corresponding to the outperfor-
+mance will be made. If target attainment is less than 100%, a
+number of stock commitments equivalent to the shortfall from
+the target will expire without replacement.
+Combined Management Report
+-
+The Siemens Share Ownership Guidelines are an integral part
+of the remuneration system for the Managing Board and senior
+executives. These guidelines require that – after a specified
+buildup phase - Managing Board members hold Siemens stock
+worth a multiple of their base compensation 300% for the
+President and CEO, 200% for the other members of the Manag-
+ing Board - throughout their terms of office on the Managing
+Board. The determining figure in this context is the average
+base compensation that a member of the Managing Board has
+received over the four years before the applicable dates of proof
+of compliance. Changes that have been made to base compen-
+sation in the meantime are included. Non-forfeitable stock
+commitments (Bonus Awards) which were granted until fiscal
+2014 are taken into account in determining compliance with
+the Share Ownership Guidelines.
+Compliance with these guidelines must be proven for the first
+time after a four-year buildup phase. Thereafter, it must be
+proven annually. If the value of a Managing Board member's
+accrued holdings declines below the required minimum due to
+fluctuations in the market price of Siemens stock, he or she
+must acquire additional shares.
+Return on capital employed, ROCE¹
+Earnings per share, basic EPS1 (02013-2015)
+1 Continuing and discontinued operations.
+100% of target
+15.96%
+€5.40
+Actual FY 2015 figure
+19.63%
+Target achievement²
+€6.76
+128.00%
+190.67%
+2 Calculative target achievement ROCE was 200% (cap). The Supervisory Board adjusted this target achievement due to the sale of the hearing aid business (Audiology).
+The achievement of individual targets was also taken into
+account when determining overall target achievement. In its
+overall assessment, the Supervisory Board decided not to make
+any discretionary adjustments to the Bonus payout amounts. In
+fiscal 2015, Bonus-related target achievement by Managing
+Board members was between 132.89% and 146.22%.
+42
+42
+Combined Management Report
+Long-term stock-based compensation
+Since beneficiaries are not entitled to receive dividends, the
+number of stock commitments granted was based on the clos-
+ing price of Siemens stock in Xetra trading on the date of award
+less the present value of dividends expected during the restric-
+tion period. The share price used to determine the number of
+stock commitments was €72.30 for 2015 as well as for 2014.
+Benefits related to the termination of Managing
+Board membership
+In connection with the mutually agreed-upon termination of
+Prof. Dr. Hermann Requardt's activity on the Managing Board as
+of January 31, 2015, it was agreed that his current employment
+contract with the Company would terminate as of Septem-
+ber 30, 2015. The entitlements agreed upon under the contract
+remained in effect until that date. A gross compensatory pay-
+ment of €1,888,566 and a one-time special contribution of
+€279,552 to the BSAV were agreed upon with Prof. Dr. Hermann
+Requardt in connection with the mutually agreed-upon prema-
+ture termination of his Managing Board membership. The Stock
+Awards already granted and for which the restriction period is
+still in effect will be maintained in accordance with the terms
+of his employment contract and will be settled in cash at the
+closing price of Siemens stock in Xetra trading on Septem-
+ber 30, 2015 (€79.94). Pursuant to the terms of his employment
+Target parameter
+Total compensation
+|
+Variable compensation (Bonus)
+Pension benefit commitments
+Like employees of Siemens AG, the members of the Managing
+Board are included in the Siemens Defined Contribution Benefit
+Plan (BSAV). Under the BSAV, Managing Board members re-
+ceive contributions that are credited to their personal pension
+accounts. The amount of these annual contributions is based
+on a predetermined percentage related to their base compensa-
+tion and the target amount for their Bonuses. This percentage is
+decided upon annually by the Supervisory Board. Most recently
+it was set at 28%. In making its decisions, the Supervisory Board
+takes account of the intended level of provision for each individ-
+ual and the length of time he or she has been a Managing Board
+member as well as the annual and long-term expense to the
+Company resulting from that provision. The non-forfeitability
+Combined Management Report
+of pension benefit commitments is determined in compliance
+with the provisions of the German Company Pensions Act
+(Betriebsrentengesetz). Special contributions may be granted to
+Managing Board members on the basis of individual decisions
+by the Supervisory Board. If a member of the Managing Board
+earned a pension benefit entitlement from the Company before
+the BSAV was introduced, a portion of his or her contributions
+went toward financing that prior commitment.
+Managing Board members are eligible to receive benefits under
+the BSAV at the age of 60 or - in the case of benefit commit-
+ments made on or after January 1, 2012 – the age of 62. As a
+rule, the accrued pension benefit balance is paid out to Manag-
+ing Board members in twelve annual installments. A Managing
+Board member or his or her surviving dependents may also re-
+quest that his or her pension benefit balance be paid out in
+fewer installments or as a lump sum, subject to the Company's
+consent. The accrued pension benefit balance may also be paid
+out as a pension. As a further alternative, Managing Board
+members may choose to combine pension payments with pay-
+ments in one to twelve installments. If the pension option is
+chosen, a decision must be made as to whether the payout
+should include pensions for surviving dependents. If a member
+of the Managing Board dies while receiving a pension, benefits
+will be paid to his or her surviving dependents if the member
+has chosen such benefits. The Company will then provide a
+limited-term pension to surviving children until they reach the
+age of 27 or, in the case of benefit commitments made on or
+after January 1, 2007, until they reach the age of 25.
+Benefits from the retirement benefit system that was in place
+before the BSAV was established are normally granted as pen-
+sion benefits with a surviving dependent's pension. In this case
+also, payout in installments or a lump sum payment may be
+chosen instead of pension payments.
+Managing Board members who were employed by the Company
+on or before September 30, 1983, are entitled to receive transi-
+tion payments for the first six months after retirement, equal to
+the difference between their final base compensation and the
+retirement benefits payable under the corporate pension plan.
+Commitments in connection with the termination
+of Managing Board membership
+Managing Board employment contracts provide for a compen-
+satory payment if membership on the Managing Board is termi-
+nated prematurely by mutual agreement and without serious
+cause. The amount of this payment must not exceed the value
+of two years' compensation and compensate no more than the
+remaining term of the contract (cap). The amount of the com-
+pensatory payment is calculated on the basis of base compen-
+sation, together with the variable compensation and the long-
+term stock-based compensation actually received during the
+last fiscal year before termination. The compensatory payment
+is payable in the month when the member leaves the Managing
+Board. In addition, a one-time special contribution is made to
+the BSAV. The amount of this contribution is based on the BSAV
+contribution that the Managing Board member received in the
+previous year and on the remaining term of his or her appoint-
+ment, but is limited to not more than two years' contributions
+(cap). The above benefits are not paid if an amicable termina-
+tion of the member's activity on the Managing Board is agreed
+upon at the member's request, or if there is serious cause for
+the Company to terminate the employment relationship.
+-
+In the event of a change of control that results in a substantial
+change in a Managing Board member's position – for example,
+due to a change in corporate strategy or a change in the Man-
+aging Board member's duties and responsibilities – the Manag-
+ing Board member has the right to terminate his or her contract
+with the Company. A change of control exists if one or more
+shareholders acting jointly or in concert acquire a majority of
+the voting rights in Siemens AG and exercise a controlling in-
+fluence or if Siemens AG becomes a dependent enterprise as a
+result of entering into an intercompany agreement within the
+meaning of Section 291 of the German Stock Corporation Act
+(Aktiengesetz) or if Siemens AG is to be merged into an existing
+corporation or other entity. If this right of termination is exer-
+cised, the Managing Board member is entitled to a severance
+payment in the amount of not more than two years' compensa-
+tion. The calculation of the annual compensation will include
+not only the base compensation and the target amount for the
+Bonus, but also the target amount for Stock Awards, in each
+case based on the most recent fiscal year completed prior to
+the termination of the member's contract. The stock-based
+components for which a firm commitment already exists will
+remain unaffected. There is no entitlement to a severance pay-
+ment if the Managing Board member receives benefits from
+third parties in connection with a change of control. Moreover,
+there is no right to terminate if the change of control occurs
+within a period of twelve months prior to a Managing Board
+member's retirement.
+Compensatory or severance payments also cover non-mone-
+tary benefits by including an amount of 5% of the total com-
+pensation or severance amount. Compensatory or severance
+payments will be reduced by 10% as a lump-sum allowance for
+discounted values and for income earned elsewhere. However,
+this reduction will apply only to the portion of the compensa-
+tory or severance payment that was calculated without taking
+into account the first six months of the remaining term of the
+Managing Board member's employment contract.
+Combined Management Report
+41
+Stock commitments that were made as long-term stock-based
+compensation and for which the restriction period is still in
+effect will be forfeited without replacement if the employment
+agreement is not extended after the end of an appointment
+period, either at the Managing Board member's request or
+because there is serious cause that would have entitled the
+Company to revoke the appointment or terminate the contract.
+However, once granted, Stock Awards are not forfeited if the
+employment agreement is terminated by mutual agreement at
+the Company's request, or because of retirement, disability or
+death or in connection with a spinoff, the transfer of an opera-
+tion or a change of activity within the corporate group. In these
+cases, the Stock Awards will remain in effect upon termination
+of the employment agreement and will be honored on expira-
+tion of the restriction period.
+A.10.1.2 REMUNERATION OF MANAGING BOARD
+MEMBERS FOR FISCAL 2015
+At the beginning of the fiscal year, the Supervisory Board set
+the target parameters return on capital employed (ROCE) and
+earnings per share (EPS), in each case on the basis of continu-
+ing and discontinued operations. The target values for the EPS
+component were defined on a multi-year basis. In defining the
+target for variable compensation, the Supervisory Board also
+defined individual targets for all members of the Managing
+Board so as to take fuller account of their individual perfor-
+mance. As a rule, up to five individual targets were defined for
+this purpose. These targets take account of business-related
+targets such as market coverage and business performance as
+well as targets such as customer and employee satisfaction, in-
+novation and sustainability. An internal review of the appropri-
+ateness of Managing Board compensation for fiscal 2015 has
+confirmed that the remuneration of the Managing Board result-
+ing from target achievement for fiscal 2015 is to be considered
+appropriate. In light of this review and following a review of the
+achievement of the targets defined at the beginning of the fis-
+cal year, the Supervisory Board has decided to define the
+amounts of variable compensation, stock commitments and
+pension benefit contributions as follows:
+The following targets were set and attained with respect to the
+two target parameters ROCE and EPS for variable compensation:
+2015
+(min)
+521
+(max)
+0
+0
+366
+0
+0
+0
+0
+269
+1,392
+0
+367
+0
+0
+0
+0
+0
+0
+0
+0
+11
+0
+66
+0
+0
+0
+0
+0
+0
+0
+203
+0
+0
+0
+269
+1,098
+0
+0
+227
+51
+53
+95
+102
+998
+15
+1,010
+1,010
+998
+1,010
+1,845
+1,878
+2014
+166
+42
+62
+1,980
+1,046
+1,376
+125
+1,477
+1,210
+1,444
+2,016
+2,683
+1,061
+1,052
+181
+1,238
+1,049
+1,063
+1,940
+1,595
+2015
+0
+4,664
+Janina Kugel 4
+Prof. Dr. Siegfried Russwurm
+Dr. Ralf P. Thomas
+Former members of the Managing Board
+Prof. Dr. Hermann Requardt 5
+Total
+3,047,911
+350,560
+565,824
+559,104
+4,824,749
+4,390,368
+565,824
+559,104
+438,713
+3,522,681
+559,104
+565,824
+1,051,680
+1,033,200
+8,056,153
+7,174,641
+Dr. Roland Busch
+565,824
+559,104
+3,243,101
+2,769,337
+Lisa Davis
+565,824
+93,184
+3,126,396
+2,818,722
+Klaus Helmrich
+3,225,678
+15
+2,742,051
+4,797,184
+561
+3,100
+3,111
+6,676
+5,760
+604
+1,059
+611
+1,096
+2,429
+1,404
+2,715
+2,539
+2,507
+5,617
+2,488
+2,819
+Combined Management Report
+48
+559,104
+3,921,904
+6,977,620
+33,415,101
+6,273,529
+29,216,559
+1
+The expenses (service cost) recognized in accordance
+with the IFRS in fiscal 2015 for Managing Board
+members' entitlements under the BSAV in fiscal 2015
+amounted to €4,804,639 (2014: €7,913,201).
+2 The defined benefit obligations reflect one-time special
+contributions to the BSAV of €279,552 (2014:
+€3,558,315) for new appointments from outside the
+Company and for special contributions in connection
+with departures from the Managing Board. These
+obligations amounted to €0 (2014: €2,745,615) for
+Lisa Davis, €279,552 (2014: €0) for Prof. Dr. Hermann
+Requardt and €0 (2014: €812,700) for Dr. Michael Süß.
+3 Deferred compensation totals €4,947,717 (2014:
+€10,057,923), including €3,207,002 for Joe Kaeser (2014:
+€3,171,486), €305,023 for Klaus Helmrich (2014: €302,595)
+and €49,794 for Dr. Ralf P. Thomas (2014: €49,732). De-
+ferred compensation for former Managing Board members
+is as follows: €0 for Barbara Kux (2014: €4,697,955),
+€1,385,898 for Prof. Dr. Hermann Requardt (2014:
+€1,381,365) and €0 for Peter Y. Solmssen (2014: €454,790).
+4 Janina Kugel was elected a full member of the Managing
+Board effective February 1, 2015.
+5 Prof. Dr. Hermann Requardt resigned from the Managing
+Board effective the end of the day on January 31, 2015.
+His employment contract ended effective September 30,
+2015.
+In fiscal 2015, former members of the Managing Board and
+their surviving dependents received emoluments within the
+meaning of Section 314 para. 1 No. 6 b of the German Commer-
+cial Code totaling €30.5 million (2014: €24.2 million). This fig-
+ure includes the compensation for former Managing Board
+member Peter Y. Solmssen for the remaining period of his em-
+ployment contract from October 2014 through March 2015, the
+cash compensation for Bonus Awards granted in the past as
+well as the pro rata contribution to the BSAV. It also includes
+the compensatory payment connected with the mutually
+agreed-upon termination of the Managing Board membership
+of Prof. Dr. Hermann Requardt as of January 31, 2015, the com-
+pensation for the remaining term of his employment contract -
+that is, from February 1 to September 30, 2015 - and a special
+contribution to the BSAV. For the period from February 1
+through September 30, 2015, Prof. Dr. Hermann Requardt received
+9,590 Stock Awards, which will be settled in cash in accordance
+with the provisions of his employment contract and in connec-
+tion with the mutually agreed-upon termination of his Manag-
+ing Board membership. Mr. Solmssen received 7,193 Stock
+Awards for the period from October 2014 through March 2015.
+Other than this, former Managing Board members and their
+surviving dependents received 0 (2014: 18,912) Stock Awards.
+565,824
+2014
+2015
+2014
+=
+-
+333
+1,359
+0 3,120
+337
+357
+749
+0
+1,010
+998
+749
+1,164
+0 3,120
+2,425
+0
+2,425
+-
+349
+-
+103
+2,045
+651 3,307
+1,942
+-
+998
+335
+0 2,080
+665
+600
+-
+480
+-
+480
+-
+340
+1,010
+998
+103
+103
+754 3,410
+749
+1,172
+665
+1,042
+651
+651
+651
+44
+25
+78
+1,088
+25
+337
+998
+1,010
+1,010
+2015
+1,010
+25
+78
+1,088
+78
+61
+1,502
+0
+626
+_
+365
+1,082
+1,078
+1,078
+28
+84
+67
+67
+67
+1,078
+1,060
+1,088
+0 2,080
+2,963
+560
+3,523
+3,097 1,088
+603
+603
+3,700 1,691
+0 3,120
+5,203
+603
+5,806
+without long-term incentive effect, non-stock-based
+with long-term incentive effect, stock-based
+Total
+Fringe benefits¹
+Fixed compensation (base compensation)
+Performance-based
+components
+based components
+One-year variable compensation (Bonus) - Cash component²
+Multi-year variable compensation³
+Non-performance-
+| Managing Board members serving as of September 30, 2015
+Total (Code)
+Service cost
+Total
+Other4
+Siemens Stock Awards (restriction period: 2010-2013)
+Share Matching Plan (vesting period: 2012 - 2014)
+Share Matching Plan (vesting period: 2011 - 2013)
+(Amounts in thousands of €)
+Siemens Stock Awards (restriction period: 2010-2013)
+Share Matching Plan (vesting period: 2012 - 2014)
+Share Matching Plan (vesting period: 2011-2013)
+Other4
+Total
+2015
+2014
+2015
+Klaus Helmrich
+Managing Board member
+Managing Board member
+Lisa Davis
+Dr. Roland Busch
+Managing Board member
+President and CEO
+Joe Kaeser
+46 Combined Management Report
+2 The cash component of one-year variable compensa-
+tion (Bonus) presented above therefore represents the
+amount awarded for fiscal 2015, which will be paid out
+in January 2016.
+advice and tax advice, accommodation and moving
+expenses, including any taxes due in this regard,
+currency adjustment payments and costs relating to
+preventive medical examinations in the amount of
+€330,620 (2014: €194,498).
+1 Fringe benefits include the costs, or the cash equiva-
+lent, of non-monetary benefits and other perquisites,
+such as the provision of company cars in the amount
+of €158,131 (2014: €181,638), contributions toward the
+cost of insurance in the amount of €134,170 (2014:
+€71,776), the reimbursement of expenses for legal
+Total (Code)
+Service cost
+One-year variable compensation (Bonus) - Cash component²
+Multi-year variable compensation³
+without long-term incentive effect, non-stock-based
+with long-term incentive effect, stock-based
+Total
+Fixed compensation (base compensation)
+Fringe benefits¹
+1,070 1,376
+3,463
+3,284
+832
+2,148
+580
+1,615
+3,730
+540
+604
+1,035
+3,190
+333
+419
+0 3,120
+5,203
+1,078
+604
+998
+2,972 3,086
+230
+604
+3,202 3,690 1,682
+335
+1,046
+3,270
+Joe Kaeser
+1,410
+3,486
+451
+1,149
+components
+Performance-based
+based components
+Non-performance-
+(Amounts in thousands of €)
+| Managing Board members serving as of September 30, 2015
+multi-year variable compensation granted for fiscal 2015 and
+shown above, this table includes the actual figure for multi-
+year variable compensation granted in previous years and allo-
+cated in fiscal 2015. Due to rounding, the figures presented in
+the table may not add up precisely to the totals provided.
+The following table shows allocations for fiscal 2015 for fixed
+compensation, fringe benefits, one-year variable compensation
+and multi-year variable compensation -by reference year - as
+well as the expense of pension benefits. In deviation from the
+Allocations
+9 Prof. Dr. Hermann Requardt resigned from the Managing
+Board effective the end of the day on January 31, 2015. His
+employment contract ended effective September 30, 2015.
+In addition to the total compensation shown above for his
+work as a member of the Managing Board, Prof. Dr. Requardt
+received the following compensation for the remaining term
+of his contract from February 1 to September 30, 2015: fixed
+compensation of €673,600, fringe benefits of €68,203,
+variable compensation (Bonus) of €902,624 and Siemens
+Stock Awards in the amount of €665,258. In accordance
+with the provisions of his contract, his Stock Awards will be
+settled in cash at the closing price of Siemens stock in Xetra
+trading on September 30, 2015.
+reimbursed. For base compensation of calendar year 2014 as
+well as for the cash Bonus of fiscal 2014, a currency-adjust-
+ment payment was granted.
+8 Ms. Davis's compensation is paid out in Germany in euros.
+It has been agreed that any tax liability that arises due to
+tax rates that are higher in Germany than in the U.S. will be
+7 Total compensation reflects the current fair value of stock-
+based compensation components on the award date. On
+the basis of the current monetary values of stock-based
+compensation components, total compensation amounted
+to €27,756,633 (2014: €29,109,709).
+6 Total maximum compensation for fiscal 2015 represents the
+contractual maximum amount for overall compensation,
+excluding fringe benefits and pension benefit commitments.
+At 1.7 times target compensation (base compensation, target
+amount for the Bonus and the target amount for long-term
+stock-based compensation), the maximum amount is less
+than the total of the individual contractual caps for perfor-
+mance-based components.
+Lisa Davis €1,040,036 (2014: €907,076), Klaus Helmrich
+€1,040,036 (2014: €500,027), Janina Kugel €693,357 (2014:
+€0), Prof. Dr. Siegfried Russwurm €1,040,036 (2014:
+€500,027), and Dr. Ralf P. Thomas €1,040,036 (2014:
+€500,027). The corresponding monetary values for former
+Managing Board members were as follows: Barbara Kux €0
+(2014: €63,913), Prof. Dr. Hermann Requardt €346,679 (2014:
+€625,034), Peter Y. Solmssen €0 (2014: €125,007) and
+Dr. Michael Süß €0 (2014: €299,756). Because Janina Kugel
+joined the Managing Board during the fiscal year, the mone-
+tary value relating to 100% target achievement was prorated
+and, instead of Stock Awards, she received an equivalent
+amount of Phantom Stock Awards. At the end of the restric-
+tion period, these awards will be settled in cash rather than
+via a stock transfer. Otherwise, the regulations are the same
+as those for Stock Awards.
+1,021
+3,463
+serving as of September 30, 2015
+5,807
+2014
+0
+3,120
+335
+998
+0
+3,120
+998
+5,545
+1,980
+1,059
+1,096
+1,096
+6,603 6,825
+3,076
+5,729
+608
+3,120
+0
+42
+-
+349
+912
+480
+-
+871
+-
+480
+637
+1,871
+0
+5,850
+335
+998
+9,700 3,017 3,071
+1,096
+561
+604
+10,796 3,578 3,675
+403
+1,063
+1,826
+5,807
+2,016
+2,683
+6,177
+6,535
+1,210
+3,478
+1,656
+1,444
+3,505
+1,826
+1,477
+3,713
+1,046 1,376
+3,271 3,427
+Janina Kugel
+Managing Board member
+since February 1, 2015
+125
+3,664
+604
+604
+604
+1,667
+5,807
+604 2,819
+4,645
+3,246
+611
+3,857
+1,238
+5,203
+2,973
+3,061
+1,052
+5,203
+611
+1,848
+611
+5,814 3,494
+521
+604
+5,203
+Prof. Dr. Siegfried Russwurm
+Managing Board member
+672
+0
+53
+53
+15
+227
+227
+227
+53
+1,940
+1,980
+1,049
+1,063 1,063
+1,063
+181
+1,238
+1,980 1,980
+51
+102
+102
+1,878
+Managing Board members
+1,845
+1,878
+1,878
+998
+1,010
+1,010
+1,010
+166
+1,010
+1,010
+1,010
+95
+102
+1,238
+3,120
+1,238
+1,010
+2,425
+2,221
+1,871
+0
+5,850
+1,218
+0
+998
+3,120
+1,520
+998
+0
+3,120 1,164
+998
+0
+1,010
+749
+2,425
+1,010
+42
+42
+1,052
+1,052
+1,384
+0
+4,507
+749
+1,010
+0
+2,425
+125
+1,010
+0
+998 1,010
+62
+42
+1,061 1,052
+Dr. Ralf P. Thomas
+1,878
+CFO
+0
+0
+0
+177
+0
+0
+1,392
+0
+0
+0
+0
+15
+0
+127
+0
+0
+520
+0
+1,070
+1,410
+1,046
+451
+1,021
+0
+0
+1,392
+177
+535
+0
+1,519
+0
+0
+1,392
+0
+0
+56
+0
+5 Prof. Dr. Hermann Requardt resigned from the Managing
+Board effective the end of the day on January 31, 2015. His
+employment contract ended effective September 30, 2015.
+In addition to the total compensation shown above for his
+work as a member of the Managing Board, Prof. Dr. Requardt
+received the following compensation for the remaining term
+of his contract from February 1 to September 30, 2015: fixed
+compensation of €673,600, fringe benefits of €68,203, and
+variable compensation (Bonus) of €902,624.
+Combined Management Report
+47
+Pension benefit commitments
+For fiscal 2015, the members of the Managing Board were
+granted contributions under the BSAV totaling €4.8 million
+(2014: €5.1 million), based on a resolution of the Supervisory
+Board dated November 11, 2015. Of this amount, €0.1 million
+(2014: €0.1 million) related to the funding of pension commit-
+ments earned prior to transfer to the BSAV.
+The contributions under the BSAV are added to the personal
+pension accounts each January, following the close of the fiscal
+year. Until a beneficiary's date of retirement, his or her pension
+account is credited with an annual interest payment (guaran-
+teed interest) on January 1 of each year. The interest rate is cur-
+rently 1.25%.
+The following table shows individualized details of the contri-
+butions (allocations) under the BSAV for fiscal 2015 as well as
+the defined benefit obligations for pension commitments.
+(Amounts in €)
+2015
+Total contributions' for
+2015
+Prof. Dr. Hermann Requardt⁹
+Defined benefit obligation² for all pension
+commitments excluding deferred compensation³
+2014
+with Section 23 and Section 125 of the German Transforma-
+tion Act (Umwandlungsgesetz) due to the spin-off of
+OSRAM. For Ms. Davis, "Other" represents the cash compo-
+nent of the compensatory payment made in December 2014
+for the forfeiture of benefits from her former employer.
+1,376
+4 "Other" includes the adjustment of the Siemens Stock
+Awards for 2010 (transfer in November 2013) in accordance
+540
+4,224
+22
+0
+62
+1,482
+103
+1,586
+2,465
+3,560
+2,665
+2,662
+817
+603
+3,068
+560
+4,120
+604
+3,269
+230
+2,892
+580
+1,397
+3 Starting with the Siemens Stock Awards tranche of 2011, the
+restriction period was extended from three to four years.
+Shares from the Siemens Stock Awards for 2011 will thus only
+be transferred in November 2015. Therefore, no allocation
+for Siemens Stock Awards was made in fiscal 2015.
+832
+3,684
+365
+(min)
+(max)
+626
+626
+626
+998
+1,010
+1,010
+1,010
+998
+3,326
+4,223
+3,032
+3,009
+Janina Kugel
+(max)
+Prof. Dr. Siegfried Russwurm
+2015
+2015
+until January 31, 2015
+Managing Board member
+2014
+1,082
+2015
+2015
+2015
+2014
+2015
+(min)
+(max)
+2015
+(min)
+2015
+2014
+2015
+2014
+Managing Board member
+2015
+Dr. Ralf P. Thomas
+337
+998
+25
+78
+44
+67
+1,010
+61
+84
+1,088
+1,042
+651
+1,060
+1,078
+28
+998
+998
+626
+CFO
+Prof. Dr. Hermann Requardt5
+Managing Board member
+since February 1, 2015
+until January 31, 2015
+2015
+1,010
+2015
+2014
+2014
+2015
+2014
+2015
+2014
+Managing Board member
+149,000
+9,000
+153,500
+Robert Kensbock1
+140,000
+140,000
+180,000
+13,500
+80,000
+350,000
+140,000
+106,667
+27,000
+273,667
+Harald Kern¹
+140,000
+140,000
+21,000
+241,000
+140,000
+30,000
+Hans-Jürgen Hartung
+Reinhard Hahn 1,2
+28,500
+18,000
+205,778
+76,667
+52,963
+Dr. Hans Michael Gaul
+140,000
+160,000
+27,000
+327,000
+140,000
+160,000
+30,000
+330,000
+105,000
+4,500
+109,500
+Bettina Haller¹
+140,000
+80,000
+24,000
+244,000
+140,000
+80,000
+248,500
+25,500
+9,000
+Jürgen Kerner¹
+4,500
+112,648
+Güler Sabancı
+140,000
+149,000
+129,630
+10,500
+140,130
+Dr. Nathalie von Siemens³
+105,000
+4,500
+109,500
+Michael Sigmund
+140,000
+9,000
+149,000
+81,667
+9,000
+90,667
+Jim Hagemann Snabe
+134,815
+132,222
+113,333
+14,815
+242,167
+93,333
+132,438
+132,222
+170,000
+31,500
+333,722
+140,000
+120,000
+28,500
+288,500
+Dr. Nicola Leibinger-Kammüller
+140,000
+33,333
+15,000
+188,333
+124,444
+10,500
+134,944
+Gérard Mestrallet
+140,000
+9,000
+149,000
+119,259
+5,679
+7,500
+Dr. Norbert Reithofer³
+202,389
+2 Based on the average Xetra opening price of €89.98 for
+the fourth quarter of 2014 (October-December).
+56,667
+Value²
+Number of
+shares³
+300%
+200%
+3,874,688
+1,905,950
+5,780,638
+43,062
+21,182
+64,244
+732%
+801%
+9,451,589
+7,629,314
+17,080,903
+105,041
+84,789
+189,830
+3
+As of March 13, 2015 (date of proof), including
+Bonus Awards.
+Percentage
+of base
+compensation¹
+A.10.2 Remuneration of Supervisory
+Board members
+Under current rules, the members of the Supervisory Board
+receive an annual base compensation of €140,000; the Chair-
+man of the Supervisory Board receives a base compensation of
+€280,000, and each of the Deputy Chairmen receives €220,000.
+The members of the Supervisory Board committees receive the
+following additional fixed compensation for their committee
+work: the Chairman of the Audit Committee receives €160,000,
+and each of the other members of the Committee receives
+€80,000; the Chairman of the Chairman's Committee receives
+€120,000, and each of the other members of the Committee
+receives €80,000; the Chairman of the Compensation Commit-
+tee receives €100,000, and each of the other members of the
+Committee receives €60,000 (compensation for any work on
+the Chairman's Committee counts toward compensation for
+work on the Compensation Committee); the Chairman of the
+Innovation and Finance Committee receives €80,000, and
+each of the other members of the Committee receives €40,000;
+the Chairman of the Compliance Committee receives €80,000,
+and each of the other members of the Committee receives
+€40,000. However, no additional compensation is paid for
+work on the Compliance Committee if a member of that Com-
+mittee is already entitled to compensation for work on the
+Audit Committee.
+If a Supervisory Board member does not attend a meeting of
+the Supervisory Board, one-third of the aggregate compensa-
+tion due to that member is reduced by the percentage of Super-
+visory Board meetings not attended by the member in relation
+to the total number of Supervisory Board meetings held during
+the fiscal year. In the event of changes in the composition of
+the Supervisory Board and/or its committees, compensation is
+paid on a pro rata basis, rounding up to the next full month.
+In addition, the members of the Supervisory Board are entitled
+to receive a fee of €1,500 for each meeting of the Supervisory
+Board and its committees that they attend.
+The members of the Supervisory Board are reimbursed for out-
+of-pocket expenses incurred in connection with their duties
+and for any value-added taxes to be paid on their remuneration.
+For the performance of his duties, the Chairman of the Super-
+visory Board is also entitled to an office with secretarial support
+and the use of a carpool service.
+No loans or advances from the Company are provided to mem-
+bers of the Supervisory Board.
+Combined Management Report
+51
+The compensation shown below was determined for each of
+the members of the Supervisory Board for fiscal 2015 (individu-
+alized disclosure).
+The current remuneration policies for the Supervisory Board
+were authorized at the Annual Shareholders' Meeting held on
+January 28, 2014, and are effective as of fiscal 2014. Details are
+set out in Section 17 of the Articles of Association of Siemens AG.
+The remuneration of the Supervisory Board consists entirely of
+fixed compensation; it reflects the responsibilities and scope of
+the work of the Supervisory Board members. The Chairman and
+Deputy Chairmen of the Supervisory Board as well as the Chair-
+men and members of the Audit Committee, the Chairman's Com-
+mittee, the Compensation Committee, the Compliance Commit-
+tee and the Innovation and Finance Committee receive additional
+compensation.
+Number of
+shares²
+Value¹
+Percentage
+of base
+compensation¹
+3 Janina Kugel was elected a full member of the Managing
+Board effective February 1, 2015. Because she joined the
+Managing Board during the fiscal year, the target
+amount for her stock-based compensation was prorated
+and, instead of Stock Awards, she received an equivalent
+amount of Phantom Stock Awards. At the end of the
+restriction period, these awards will be settled in cash
+rather than via a stock transfer. Otherwise, the regula-
+tions are the same as those for Stock Awards.
+28,500
+4
+Prof. Dr. Hermann Requardt resigned from the Managing
+Board effective the end of the day on January 31, 2015.
+His employment contract ended effective September 30,
+2015. In accordance to the provisions of his contract, the
+Siemens Stock Awards will be settled in cash at the
+closing price of Siemens stock in Xetra trading on Sep-
+tember 30, 2015.
+Combined Management Report
+49
+Shares from the Share Matching Plan
+Fiscal 2011 was the last year in which Managing Board members
+were entitled to participate in the Siemens Share Matching
+Plan. Under the plan, they were entitled to invest up to 50% of
+the annual gross amount of their variable cash compensation,
+as determined for fiscal 2010, in Siemens shares. After the expi-
+ration of a vesting period of approximately three years, plan
+participants are entitled to receive one free matching share of
+Siemens stock for every three Siemens shares acquired and
+continuously held under the plan, provided the participants
+were employed without interruption at Siemens AG or a
+Siemens company until the end of the vesting period. At the
+beginning of fiscal 2015, the following members of the Manag-
+ing Board had entitlements to matching shares, which they ac-
+quired before joining the Managing Board: Dr. Ralf P. Thomas,
+2,685 shares. In fiscal 2015 the following entitlements to match-
+ing shares were acquired: Janina Kugel, 3 shares. In fiscal 2015
+the following entitlements to matching shares were due: 1,905
+shares, Dr. Ralf P. Thomas. During fiscal 2015, no entitlements
+to matching shares were forfeited. Entitlements to matching
+shares at the end of fiscal 2015 show the following balance:
+Janina Kugel, 3 shares and Dr. Ralf P. Thomas, 780 shares. These
+entitlements have the following fair values: Janina Kugel, €174
+(2014: €0) and Dr. Ralf P. Thomas, €42,657 (2014: €133,392).
+Share Ownership Guidelines
+The deadlines by which the individual Managing Board mem-
+bers must provide first-time proof of compliance with the
+Siemens Share Ownership Guidelines vary from member to
+member, depending on when he or she was appointed to the
+Managing Board. The following table shows the number of
+Siemens shares that were held by Managing Board members in
+office at September 30, 2015, as of the March 2015 deadline for
+proving compliance with the Share Ownership Guidelines as
+well as the number that are to be held permanently with a view
+to future deadlines.
+(Amounts in number of units or €)
+Managing Board members serving
+as of September 30, 2015, and required
+to show proof as of March 13, 2015
+Joe Kaeser
+Prof. Dr. Siegfried Russwurm
+Total
+1 The amount of the obligation is based on the average
+base compensation for the four years prior to the respec-
+tive dates of proof.
+50
+Combined Management Report
+Required
+Obligations under Share Ownership Guidelines
+Proven
+(Amounts in €)
+Supervisory Board members
+2015
+Additional
+445,000
+140,000
+186,667
+43,500
+370,167
+Werner Wenning
+220,000
+140,000
+33,000
+393,000
+211,852
+134,815
+39,000
+385,667
+Olaf Bolduan¹
+140,000
+9,000
+149,000
+35,000
+4,500
+39,500
+Michael Diekmann
+132,222
+45,000
+13,500
+200,000
+Birgit Steinborn¹
+Base com-
+pensation
+compen-
+sation for
+committee
+work
+Meeting
+attend-
+ance fee
+Total
+Base com-
+pensation
+2014
+Additional
+compen-
+sation for
+committee
+work
+Meeting
+attend-
+ance fee
+Total
+serving as of September 30, 2015
+Dr. Gerhard Cromme
+280,000
+280,000
+48,000
+608,000
+280,000
+280,000
+55,500
+615,500
+200,000
+274,056
+5
+97,778
+21,847
+20,357
+Research and development expenses
+(4,483)
+(4,020)
+Selling and general administrative expenses
+(11,409)
+(10,190)
+Other operating income
+476
+(50,869)
+654
+6
+(389)
+(194)
+Income from investments accounted for using the equity method, net
+4
+1,235
+582
+Interest income
+1,260
+1,058
+Other operating expenses
+(53,789)
+71,227
+75,636
+We are not aware of, nor have we during the last fiscal year
+been notified of, any shareholder directly or indirectly holding
+10% or more of the voting rights. There are no shares with spe-
+cial rights conferring powers of control. Shares of stock issued
+by Siemens AG to employees under its employee share pro-
+gram and/or as share-based compensation are transferred di-
+rectly to the employees. The beneficiary employees who hold
+shares of employee stock may exercise their control rights in
+the same way as any other shareholder directly in accordance
+with applicable laws and the Articles of Association.
+Combined Management Report
+B.
+Consolidated Financial Statements
+0010010
+0 1 1 1 0 1 0 0 1 1 0
+011000101001110
+0111001010001
+1% 1
+1 0 1 0 1 0 1 1 1 0 10
+011010
+1001
+0101011100101
+0100010
+B.1 Consolidated Statements of Income
+Fiscal year
+(in millions of €, per share amounts in €)
+Revenue
+Cost of sales
+Gross profit
+Note
+2015
+2014
+Interest expenses
+A.11.7 Other takeover-relevant
+information
+(818)
+Other financial income (expenses), net
+7,282
+134
+5,373
+27
+6.38
+6.12
+2.47
+0.25
+8.84
+6.37
+Diluted earnings per share
+98
+Income from continuing operations
+Net income
+58 Consolidated Financial Statements
+27
+6.30
+6.06
+2.44
+0.25
+8.74
+6.31
+2 Amounts also include stock commitments (Stock Awards
+and Phantom Stock Awards) granted in November 2014
+for fiscal 2015. These amounts may further include stock
+commitments received as compensation by the Manag-
+ing Board member before joining the Managing Board.
+Income from discontinued operations
+Net income
+Income from discontinued operations
+Income from continuing operations
+(500)
+(177)
+Income from continuing operations before income taxes
+7,218
+7,306
+Income tax expenses
+7
+(1,869)
+(2,014)
+Income from continuing operations
+5,349
+5,292
+Income from discontinued operations, net of income taxes
+3
+2,031
+215
+Net income
+7,380
+5,507
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+Basic earnings per share
+(764)
+awards, in each case based on the most recent completed fiscal
+year prior to termination of the contract. The stock-based com-
+pensation components for which a firm commitment already
+exists will remain unaffected. Additionally, the severance pay-
+ments cover non-monetary benefits by including an amount of
+5% of the total severance amount. Severance payments will be
+reduced by 10% as a lump-sum allowance for discounted values
+and for income earned elsewhere. However, this reduction will
+apply only to the portion of the severance payment that was
+calculated without taking account of the first six months of the
+remaining term of the Managing Board member's contract.
+There is no entitlement to a severance payment if the Manag-
+ing Board member receives benefits from third parties in con-
+nection with a change of control. A right to terminate the con-
+tract does not exist if the change of control occurs within a
+period of twelve months prior to a Managing Board member's
+retirement.
+In the event of a change of control that results in a substantial
+change in the position of a Managing Board member (for exam-
+ple, due to a change in corporate strategy or a change in the
+Managing Board member's duties and responsibilities), the
+member of the Managing Board has the right to terminate his
+or her contract with the Company for good cause. A change of
+control exists if one or several shareholders acting jointly or in
+concert acquire a majority of the voting rights in Siemens AG
+and exercise a controlling influence, or if Siemens AG becomes
+a dependent enterprise as a result of entering into an intercom-
+pany agreement within the meaning of Section 291 of the Ger-
+man Stock Corporation Act, or if Siemens AG is to be merged
+into an existing corporation or other entity. If this right of ter-
+mination is exercised, the Managing Board member is entitled
+to a severance payment in the amount of no more than two
+years' compensation. The calculation of the annual compensa-
+tion includes not only the base compensation and the target
+amount for the bonus, but also the target amount for the stock
+A.11.6 Compensation agreements with
+members of the Managing Board or
+employees in the event of a takeover bid
+7,500
+10,500
+415,500
+67,500
+110,500 211,852
+5,118,833 2,847,778
+134,815
+35,309
+15,000
+185,123
+77,037
+25,500
+314,389
+1,533,580
+26,667
+1,609,630
+462,000
+1 These employee representatives on the Supervisory
+Board and the representatives of the trade unions on
+the Supervisory Board have declared their willingness
+to transfer their compensation to the Hans Boeckler
+Foundation, in accordance with the guidelines of the
+Confederation of German Trade Unions (DGB).
+2 Reinhard Hahn was appointed to the Supervisory Board
+by court order effective the end of the Annual Shareholders'
+Meeting on January 27, 2015, succeeding Berthold Huber,
+who resigned from the Supervisory Board effective the
+same date.
+3 Dr. Norbert Reithofer and Dr. Nathalie von Siemens were
+elected to the Supervisory Board effective the end of the
+Annual Shareholders' Meeting on January 27, 2015. They
+succeed Gerd von Brandenstein and Prof. Dr. Peter Gruss,
+who resigned from the Supervisory Board effective the
+same date.
+4 The total figure, compared to the amount presented in
+the 2014 Compensation Report, does not include the total
+compensation of €289,833 paid to former Supervisory
+Board members Lothar Adler and Prof. Dr. Rainer Sieg.
+A.10.3 Other
+The Company provides a group insurance policy for Supervisory
+and Managing Board members and certain other employees of
+the Siemens Group. The policy is taken out for one year at a
+time and renewed annually. It covers the personal liability of
+the insured in cases of financial loss associated with their activ-
+ities on behalf of the Company. The insurance policy for fiscal
+2015 includes a deductible for the members of the Managing
+Board and the Supervisory Board that complies with the re-
+quirements of the German Stock Corporation Act and the Code.
+62
+52
+4,843,358
+73,333
+3,093,704
+Total4
+Berthold Huber 1,2
+19,500
+241,722
+Sibylle Wankel¹
+132,222
+37,778
+13,500
+183,500
+140,000
+40,000
+21,000
+201,000
+Former Supervisory Board members
+Gerd von Brandenstein³
+41,481
+9,000
+74,185
+140,000
+80,000
+30,000
+250,000
+Prof. Dr. Peter Gruss³
+46,667
+13,333
+Combined Management Report
+A.11 Takeover-relevant information
+(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
+and explanatory report
+In February 2012, Siemens issued bonds with warrant units
+with a volume of US$3 billion. Siemens exchanged the major
+part of the warrants issued in 2012 against new warrants in
+September 2015; for this purpose, Siemens issued new bonds
+with warrants. At exchange, the new warrants resulted in op-
+tion rights entitling their holders to receive approximately
+20.3 million Siemens shares. The terms and conditions of the
+warrants enable Siemens to service exercised option rights
+using either conditional capital or treasury stock, and also
+enable Siemens to buy back the warrants.
+The Company may not repurchase its own shares unless so
+authorized by a resolution duly adopted by the shareholders at
+a general meeting or in other very limited circumstances set
+forth in the German Stock Corporation Act. On January 27,
+2015, the Shareholders' Meeting authorized the Company to
+acquire until January 26, 2020 up to 10% of its capital stock ex-
+isting at the date of adopting the resolution or – if this value is
+lower - as of the date on which the authorization is exercised.
+The aggregate of shares of stock of Siemens AG repurchased
+under this authorization and any other Siemens shares previ-
+ously acquired and still held in treasury by the Company or at-
+tributable to the Company pursuant to Sections 71d and 71e of
+the German Stock Corporation Act may at no time exceed 10%
+of the then existing capital stock. Any repurchase of Siemens
+shares shall be accomplished at the discretion of the Managing
+Board either (1) by acquisition over the stock exchange or
+(2) through a public share repurchase offer. The Managing
+Board is additionally authorized to complete, with the approval
+of the Supervisory Board, the repurchase of Siemens shares in
+accordance with the authorization described above by using
+certain derivatives (put and call options, forward purchases
+and any combination of these derivatives). In exercising this
+authorization, all stock repurchases based on the derivatives
+are limited to a maximum volume of 5% of Siemens' capital
+Combined Management Report
+stock existing at the date of adopting the resolution at the
+Shareholders' Meeting. A derivative's term of maturity may not,
+in any case, exceed 18 months and must be chosen in such a
+way that the repurchase of Siemens shares upon exercise of
+the derivative will take place no later than January 26, 2020.
+In addition to selling them over the stock exchange or through
+a public sales offer to all shareholders, the Managing Board
+is authorized by resolution of the Shareholders' Meeting on
+January 27, 2015 to also use Siemens shares repurchased on the
+basis of this or any previously given authorization for every
+permissible purpose, in particular as follows: Such Siemens
+shares may be
+> retired
+> used in connection with share-based compensation pro-
+grams and/or employee share programs of the Company or
+any of its affiliated companies and issued to individuals cur-
+rently or formerly employed by the Company or any of its
+affiliated companies as well as to board members of any of
+the Company's affiliated companies
+> offered and transferred, with the approval of the Supervisory
+Board, to third parties against non-cash contributions
+> sold, with the approval of the Supervisory Board, to third par-
+ties against payment in cash if the price at which such
+Siemens shares are sold is not significantly lower than the
+market price of Siemens stock (exclusion of subscription
+rights, limited to 10% of the capital stock, by mutatis mutan-
+dis application of Section 186 para. 3 sentence 4 German
+Stock Corporation Act) or
+> used to service or secure obligations or rights to acquire
+Siemens shares arising particularly from or in connection
+with convertible bonds or warrant bonds issued by the Com-
+pany or any of its consolidated subsidiaries (exclusion of
+subscription rights, limited to 10% of the capital stock, by
+mutatis mutandis application of Section 186 para. 3 sen-
+tence 4 German Stock Corporation Act).
+Furthermore, the Supervisory Board is authorized to use shares
+acquired on the basis of this or any previously given authoriza-
+tion to meet obligations or rights to acquire Siemens shares
+that were or will be agreed with members of the Managing
+Board within the framework of rules governing Managing
+Board compensation.
+In November 2013, the Company announced that it would carry
+out a share buyback of up to €4 billion in volume within the
+following up to 24 months. The buyback commenced on
+May 12, 2014 using the authorizations given by the Annual
+Shareholders' Meeting on January 25, 2011 and continued on
+January 29, 2015 based on the authorizations resolved by the
+Annual Shareholders' Meeting on January 27, 2015. Under this
+share buyback Siemens repurchased 40,751,593 shares by
+September 30, 2015. The total consideration paid for these
+shares amounted to about €3.782 billion (excluding incidental
+transaction charges). The buyback may serve only to cancel
+and reduce the capital stock, issue shares to employees, board
+members of affiliated companies and members of the Manag-
+ing Board of Siemens AG, or service convertible bonds and
+warrant bonds. As of September 30, 2015, the Company held
+72,376,759 shares of stock in treasury.
+For details on the authorizations referred to above, especially
+with the restrictions to exclude subscription rights and the
+terms to include shares when calculating such restrictions,
+please refer to the relevant resolution and to Section 4 of the
+Articles of Association.
+A.11.5 Significant agreements which
+take effect, alter or terminate upon
+a change of control of the Company
+following a takeover bid
+Siemens AG maintains two lines of credit in an amount of
+€4 billion and an amount of US$3 billion, respectively, which
+provide its lenders with a right of termination in the event that
+(1) Siemens AG becomes a subsidiary of another company or
+(2) a person or a group of persons acting in concert acquires
+effective control over Siemens AG by being able to exercise de-
+cisive influence over its activities (Art. 3(2) of Council Regula-
+tion (EC) 139/2004).
+In March 2013, a consolidated subsidiary as borrower and
+Siemens AG as guarantor entered into two bilateral loan agree-
+ments, each of which has been drawn in the full amount of
+US$500 million. Both agreements provide their respective lend-
+ers with a right of termination in the event that (1) Siemens AG
+becomes a subsidiary of another company or (2) a person or a
+group of persons acting in concert acquires effective control
+over Siemens AG by being able to exercise decisive influence
+over its activities (Art. 3(2) of Council Regulation (EC) 139/2004).
+Framework agreements concluded by Siemens AG under Inter-
+national Swaps and Derivatives Association Inc. documenta-
+tion (ISDA Agreements) grant the counterparty a right of termi-
+nation when Siemens AG consolidates with, merges into, or
+transfers substantially all its assets to a third party. However,
+this right of termination exists only, if (1) the resulting entity's
+creditworthiness is materially weaker than Siemens AG's im-
+mediately prior to such event or (2) the resulting entity fails to
+simultaneously assume Siemens AG's obligations under the
+ISDA Agreement. Additionally, some ISDA Agreements grant
+Combined Management Report
+55
+56
+the counterparty a right of termination if a third party acquires
+beneficial ownership of equity securities that enable it to elect a
+majority of Siemens AG's Supervisory Board or otherwise acquire
+the power to control Siemens AG's material policy-making deci-
+sions and if the creditworthiness of Siemens AG is materially
+weaker than it was immediately prior to such an event. In ei-
+ther situation, ISDA Agreements are designed such that upon
+termination all outstanding payment claims documented un-
+der them are to be netted.
+In February 2012, Siemens issued bonds with warrant units
+with a volume of US$3 billion. Siemens exchanged the major
+part of the warrants issued in 2012 against new warrants in
+September 2015. In case of a change of control, the terms and
+conditions of each warrant enable their holders to receive a
+higher number of Siemens shares in accordance with an ad-
+justed strike price if they exercise their option rights within a
+certain period of time after the change of control. This period
+of time shall end either (1) not less than 30 days and no more
+than 60 days after publication of the notice of the issuer re-
+garding the change of control, as determined by the issuer or
+(2) 30 days after the change of control first becomes publicly
+known. The strike price adjustment decreases depending on
+the remaining term of the warrants and is determined in detail
+in the terms and conditions of the warrants. In this context, a
+change of control occurs if control of Siemens AG is acquired
+by a person or by persons acting in concert.
+The total amount of new shares issued or to be issued under
+Authorized Capital 2014 or in accordance with the bonds men-
+tioned above, in exchange for contributions in cash and in kind
+and with shareholders' subscription rights excluded, may in
+certain cases be subject to further restrictions, such as the
+restriction that they may not exceed 20% of the capital stock.
+The details of those restrictions are described in the relevant
+authorization.
+124,444
+> The exclusion is necessary in order to grant holders of con-
+version or option rights or conversion or option obligations
+on Siemens shares a compensation for the effects of dilution.
+application of Section 186 para. 3 sentence 4 German Stock
+Corporation Act).
+A.11.1 Composition of common stock
+As of September 30, 2015, the Company's common stock to-
+taled €2.643 billion. The capital stock is divided into 881 million
+registered shares with no par value and a notional value of
+€3.00 per share. The shares are fully paid in. All shares confer
+the same rights and obligations. The shareholders' rights and
+obligations are governed in detail by the provisions of the Ger-
+man Stock Corporation Act, in particular by Sections 12, 53a et
+seq., 118 et seq. and 186 of the German Stock Corporation Act.
+A.11.2 Restrictions on voting rights
+or transfer of shares
+At the Shareholders' Meeting, each share of stock has one vote
+and accounts for the shareholders' proportionate share in the
+Company's net income. An exception from this rule applies
+with regard to treasury shares held by the Company, which do
+not entitle the Company to any rights. Under Section 136 of the
+German Stock Corporation Act the voting right of the affected
+shares is excluded by law.
+Shares issued to employees worldwide under the employee
+share program implemented since the beginning of fiscal 2009,
+in particular the Share Matching Plan, are freely transferable
+unless applicable local laws provide otherwise. Under the rules
+of the program, however, in order to receive one matching
+share free of charge for each three shares purchased, partici-
+pants are required to hold the shares purchased by them for a
+vesting period of several years, during which the participants
+have to be continuously employed by Siemens AG or another
+Siemens company. The right to receive matching shares is for-
+feited if the purchased shares are sold, transferred, hedged on,
+pledged or hypothecated in any way during the vesting period.
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
+sustained basis, powers of attorney allowing it to exercise the
+voting rights for 10,878,836 shares (as of September 30, 2015)
+on behalf of members of the Siemens family. These shares
+are part of the total number of shares held by the family's
+members. The powers of attorney are based on an agreement
+between the VSV and, among others, members of the Siemens
+family. The shares are voted together by VSV, taking into account
+the proposals of a family partnership established by the family's
+members or of one of this partnership's governing bodies.
+A.11.3 Legislation and provisions
+of the Articles of Association applicable
+to the appointment and removal
+of members of the Managing Board and
+governing amendment to the Articles
+of Association
+The appointment and removal of members of the Managing
+Board is subject to the provisions of Sections 84 and 85 of the
+German Stock Corporation Act and Section 31 of the German
+Codetermination Act (Mitbestimmungsgesetz). According to
+Section 8 para. 1 of the Articles of Association, the Managing
+Board is comprised of several members, the number of which
+is determined by the Supervisory Board.
+According to Section 179 of the German Stock Corporation
+Act, any amendment to the Articles of Association requires a
+resolution of the Shareholders' Meeting. The authority to adopt
+purely formal amendments to the Articles of Association was
+transferred to the Supervisory Board under Section 13 para. 2 of
+the Articles of Association. In addition, by resolutions of the
+Shareholders' Meetings on January 25, 2011, January 28, 2014
+and January 27, 2015, the Supervisory Board has been autho-
+rized to amend Section 4 of the Articles of Association in accord-
+ance with the utilization of the Authorized Capitals 2011 and
+2014, Conditional Capitals 2014 and 2015, and after expiration
+of the then-applicable authorization period.
+Resolutions of the Shareholders' Meeting require a simple ma-
+jority vote, unless a greater majority is required by law. Pursu-
+ant to Section 179 para. 2 of the German Stock Corporation Act,
+amendments to the Articles of Association require a majority of
+at least three-quarters of the capital stock represented at the
+time of the casting of the votes, unless another capital majority
+is prescribed by the Articles of Association.
+A.11.4 Powers of the Managing Board
+to issue and repurchase shares
+The Managing Board is authorized to increase, with the ap-
+proval of the Supervisory Board, the capital stock until Janu-
+ary 24, 2016 by up to €90 million through the issuance of up to
+30 million registered shares of no par value against contribu-
+tions in cash (Authorized Capital 2011). Subscription rights of
+existing shareholders are excluded. The new shares shall be
+issued under the condition that they are offered exclusively to
+employees of Siemens AG and its consolidated subsidiaries. To
+the extent permitted by law, employee shares may also be is-
+sued in such a manner that the contribution to be paid on such
+Combined Management Report
+53
+54
+shares is covered by that part of the annual net income which
+the Managing Board and the Supervisory Board may allocate to
+other retained earnings under Section 58 para. 2 of the German
+Stock Corporation Act.
+Furthermore, the Managing Board is authorized to increase,
+with the approval of the Supervisory Board, the capital stock
+until January 27, 2019 by up to €528.6 million through the
+issuance of up to 176.2 million registered shares of no par value
+against cash contributions and/or contributions in kind
+(Authorized Capital 2014).
+As of September 30, 2015, the total unissued authorized capital
+of Siemens AG therefore consisted of €618.6 million nominal
+that may be issued, with varying terms by issuance, in install-
+ments of up to 206.2 million registered shares of no par value.
+By resolutions of the Shareholders' Meetings of January 28,
+2014 and January 27, 2015, the Managing Board is authorized to
+issue bonds with conversion rights or with warrants attached,
+or a combination of these instruments, each entitling the
+holders to subscribe to up to 80 million registered shares of
+Siemens AG of no par value. Based on these two authorizations
+the Company or consolidated subsidiaries of the Company
+may issue bonds until January 27, 2019 and January 26, 2020,
+respectively, each in an aggregate principal amount of up to
+€15 billion. In order to grant shares of stock to holders/creditors
+of such convertible bonds or warrant bonds, the capital stock
+was conditionally increased by resolutions of the Shareholders'
+Meetings 2014 and 2015, each by up to 80 million registered
+shares of no par value (Conditional Capitals 2014 and 2015), i.e.
+in total by up to €480 million through the issuance of up to
+160 million shares of no par value.
+The new shares under Authorized Capital 2014 and the bonds
+under these authorizations are to be issued against cash or
+non-cash contributions. They are, as a matter of principle, to be
+offered to shareholders for subscription. The Managing Board is
+authorized to exclude, with the approval of the Supervisory
+Board, subscription rights of shareholders in the event of capi-
+tal increases against contributions in kind. In the event of cap-
+ital increases against contributions in cash, the Managing
+Board is authorized to exclude shareholders' subscription
+rights with the approval of the Supervisory Board in the follow-
+ing cases:
+> The issue price of the new shares/bonds is not significantly
+lower than the stock market price of the Siemens shares
+already listed or the theoretical market price of the bonds
+computed in accordance with generally accepted actuarial
+methods (exclusion of subscription rights, limited to 10% of
+the capital stock, in accordance with or by mutatis mutandis
+> The exclusion is necessary with regard to fractional amounts
+resulting from the subscription ratio.
+1 The weighted average fair value as of the grant date for
+fiscal 2015 was €66.20 per granted share.
+23,704
+-
+fiscal year
+(Target
+attainment
+depending
+Commit-
+ments
+of Bonus
+Awards
+and Stock
+Awards
+Non-
+forfeitable
+commit-
+ments of
+of Stock
+Awards
+Bonus
+Awards
+on future
+Non-
+forfeitable
+commit-
+ments of
+Bonus
+Awards
+past three
+perfor-
+fiscal years)
+on EPS for
+stock
+Commit-
+ments
+Balance at end
+of fiscal 2015²
+Forfeitable
+commit-
+ments of
+Stock
+Awards
+31,729
+76,699
+Forfeited
+during
+fulfilled
+during
+fiscal year
+Vested and
+depending
+37,112 86,281
+173,535 549,989
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their
+surviving dependents as of September 30, 2015, amounted to
+€228.3 million (2014: €234.4 million). This figure is included in
+→ NOTE 16 in → B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Other
+No loans or advances from the Company are provided to mem-
+bers of the Managing Board.
+A.10.1.3 ADDITIONAL INFORMATION ON
+STOCK-BASED COMPENSATION INSTRUMENTS
+IN FISCAL 2015
+Stock commitments
+The following table shows the changes in the balance of the
+stock commitments held by Managing Board members in fiscal
+2015:
+Balance at beginning
+of fiscal 2015
+9,296
+Non-
+forfeitable
+commit-
+ments of
+(Amounts in number of units)
+Awards
+Managing Board members
+serving as of
+September 30, 2015
+Joe Kaeser
+Dr. Roland Busch
+Forfeitable
+commit-
+ments
+of Stock
+Awards
+Granted during
+fiscal year¹
+Forfeitable commitments
+of Stock Awards
+(Target
+attainment
+Bonus
+12,615
+mance)
+21,544
+4,824
+6,639
+21,301
+Former members
+of the Managing Board
+Prof. Dr. Hermann Requardt4
+Total
+32,403
+138,794
+54,952
+303,543
+4,709
+34,741
+8,299
+60,178
+41,025
+27,122
+129,425
+72,383
+576
+38,975
+-
+27,233
+73,254
+-
+15,655
+35,437
+5,030
+82,892
+40,111
+51,124
+23,184
+206
+23,030
+186,268
+21,301
+Dr. Ralf P. Thomas
+6,639
+21,301
+Lisa Davis
+576
+12,044
+44,443
+Klaus Helmrich
+22,409
+45,314
+4,824
+6,639
+26,931
+6,639
+21,301
+4,934
+54,952
+30,503
+Prof. Dr. Siegfried Russwurm
+5,578
+10,992
+664
+3,999
+Janina Kugel³
+-
+6,612
+7,100
+Cash flows from investing activities
+Additions to intangible assets and property, plant and equipment
+(1,897)
+(1,813)
+Acquisitions of businesses, net of cash acquired
+(8,254)
+(23)
+Purchase of investments
+Cash flows from operating activities - continuing and discontinued operations
+Disposal of investments, intangibles and property, plant and equipment
+Change in receivables from financing activities
+Disposal of businesses, net of cash disposed
+Disposal of current available-for-sale financial assets
+(568)
+(335)
+(899)
+(613)
+(1,667)
+(2,501)
+3,474
+9
+Purchase of current available-for-sale financial assets
+(270)
+201
+7,090
+(811)
+517
+Trade payables
+(247)
+204
+Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
+Additions to assets leased to others in operating leases
+914
+(657)
+(451)
+(371)
+Change in other assets and liabilities
+Cash flows from operating activities - discontinued operations
+Income taxes paid
+Interest received
+Cash flows from operating activities - continuing operations
+852
+(558)
+(2,306)
+(1,809)
+495
+333
+1,138
+977
+6,881
+Dividends received
+445
+Change in short-term debt and other financing activities
+651
+Dividends paid to shareholders of Siemens AG
+(2,728)
+(2,533)
+Dividends attributable to non-controlling interests
+(145)
+(125)
+Cash flows from financing activities - continuing operations
+1,051
+(4,485)
+Cash flows from financing activities - discontinued operations
+5
+1,056
+(2)
+(4,487)
+83
+Change in cash and cash equivalents
+1,923
+214
+(1,199)
+Cash and cash equivalents at beginning of period
+8,034
+9,234
+Cash and cash equivalents at end of period
+9,958
+8,034
+(617)
+(596)
+Interest paid
+801
+317
+Cash flows from investing activities - continuing operations
+(8,716)
+(4,340)
+Cash flows from investing activities - discontinued operations
+2,889
+314
+Cash flows from investing activities - continuing and discontinued operations
+(5,827)
+(4,026)
+Cash flows from financing activities
+112
+Purchase of treasury shares
+Other transactions with owners
+10
+(20)
+Issuance of long-term debt
+7,213
+527
+Repayment of long-term debt (including current maturities of long-term debt)
+(354)
+(1,452)
+Trade and other receivables
+351
+(1,066)
+335
+Cash flows from operating activities
+Inventories
+5677
+15
+26,682
+19,326
+16
+9,811
+9,324
+609
+552
+17
+4,865
+Provisions
+4,071
+Other liabilities
+Total non-current liabilities
+Total liabilities
+Equity
+Issued capital
+1,466
+1,620
+2,297
+1,874
+45,730
+36,767
+Other financial liabilities
+85,292
+Deferred tax liabilities
+Long-term debt
+Trade payables
+7,774
+7,594
+Other current financial liabilities
+2,085
+1,717
+Current provisions
+17
+4,489
+4,354
+Current income tax liabilities
+Post-employment benefits
+1,828
+Other current liabilities
+14
+20,368
+17,954
+Liabilities associated with assets classified as held for disposal
+3
+39
+1,597
+Total current liabilities
+39,562
+36,598
+1,762
+(793)
+73,365
+2,643
+2014
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
+operations at end of period
+Net income
+7,380
+5,507
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+Income from discontinued operations, net of income taxes
+(2,031)
+(215)
+Amortization, depreciation and impairments
+2,549
+2,387
+2015
+Income tax expenses
+(Income) loss related to investing activities
+Other non-cash (income) expenses
+Change in operating net working capital
+1,869
+2,014
+(442)
+(294)
+(1,603)
+(1,054)
+366
+90
+Interest (income) expenses, net
+18
+Fiscal year
+B.4 Consolidated Statements of Cash Flows
+2,643
+Capital reserve
+Retained earnings
+Other components of equity
+Treasury shares, at cost
+Non-controlling interests
+Total equity
+Total liabilities and equity
+5,733
+5,525
+30,152
+(in millions of €)
+25,729
+803
+(6,218)
+(3,747)
+Total equity attributable to shareholders of Siemens AG
+34,474
+30,954
+581
+35,056
+120,348
+560
+31,514
+104,879
+|
+60 Consolidated Financial Statements
+2,163
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+62
+21
+8,013
+726
+(357)
+(6,218)
+34,474
+581
+35,056
+Consolidated Financial Statements 63
+B.6 Notes to Consolidated Financial Statements
+NOTE 1 Basis of presentation
+The accompanying Consolidated Financial Statements present
+the operations of Siemens AG with registered offices in Berlin
+and Munich, Germany, and its subsidiaries (the Company or
+Siemens). They have been prepared in accordance with Interna-
+tional Financial Reporting Standards (IFRS), as adopted by the
+European Union as well as with the additional requirements set
+forth in Section 315a (1) of the German Commercial Code (HGB).
+The financial statements are also in accordance with IFRS as
+issued by the International Accounting Standards Board (IASB).
+The Consolidated Financial Statements were authorized for is-
+sue by the Managing Board on November 30, 2015.
+Siemens prepares and reports its Consolidated Financial State-
+ments in euros (€). Due to rounding, numbers presented may
+not add up precisely to totals provided.
+1,794
+Siemens is a German based multinational technology company
+with core activities in the fields of electrification, automation
+and digitalization.
+Associates - Associates are companies over which Siemens
+has the ability to exercise significant influence over operating
+and financial policies (generally through direct or indirect own-
+ership of 20% to 50% of the voting rights). These are recorded
+in the Consolidated Financial Statements using the equity
+method and are initially recognized at cost. Siemens' share of
+NOTE 2 Summary of significant accounting its associate's post-acquisition profits or losses is recognized in
+policies and critical accounting estimates
+Certain of these accounting policies require critical accounting
+estimates that involve complex and subjective judgments and
+the use of assumptions, some of which may be for matters that
+are inherently uncertain and susceptible to change. Such criti-
+cal accounting estimates could change from period to period
+and have a material impact on the Company's results of opera-
+tions, financial positions and cash flows. Critical accounting
+estimates could also involve estimates where Siemens reason-
+ably could have used a different estimate in the current account-
+ing period. Siemens cautions that future events often vary from
+forecasts and that estimates routinely require adjustment.
+Basis of consolidation - The Consolidated Financial State-
+ments include the accounts of Siemens AG and its subsidiaries
+over which the Company has control. Siemens controls an in-
+vestee if it has power over the investee. In addition, Siemens is
+exposed to, or has rights to, variable returns from the involve-
+ment with the investee and Siemens has the ability to use its
+power over the investee to affect the amount of Siemens' return.
+Business combinations - Cost of an acquisition is measured
+at the fair value of the assets given and liabilities incurred or
+assumed at the date of exchange. Identifiable assets acquired
+and liabilities assumed in a business combination (including
+contingent liabilities) are measured initially at their fair
+values at the acquisition date, irrespective of the extent of
+the Consolidated Statements of Income, and its share of
+post-acquisition changes in equity that have not been recog-
+nized in the associate's profit or loss is recognized directly in
+equity. The cumulative post-acquisition changes are adjusted
+against the carrying amount of the investment in the associ-
+ate. When Siemens' share of losses in an associate equals or
+exceeds its interest in the associate, Siemens does not recog-
+nize further losses, unless it incurs obligations or makes pay-
+ments on behalf of the associate. The interest in an associate is
+the carrying amount of the investment in the associate to-
+gether with any long-term interests that, in substance, form
+part of Siemens' net investment in the associate.
+Joint ventures - Joint ventures are entities over which
+Siemens and one or more parties have joint control. Joint con-
+trol requires unanimous consent of the parties sharing control
+in decision making on relevant activities.
+Foreign currency translation - assets and liabilities of for-
+eign subsidiaries, where the functional currency is other than
+the euro, are translated using the spot exchange rate at the end
+of the reporting period, while the Consolidated Statements of
+Income are translated using average exchange rates during the
+period. Differences arising from such translations are recog-
+nized within equity and reclassified to net income when the
+gain or loss on disposal of the foreign subsidiary is recognized.
+The Consolidated Statements of Cash Flow are translated at
+average exchange rates during the period, whereas cash and
+64 Consolidated Financial Statements
+cash equivalents are translated at the spot exchange rate at the
+end of the reporting period.
+any non-controlling interest. Non-controlling interests are
+measured at the proportional fair value of assets acquired and
+liabilities assumed (partial goodwill method). If there is no loss
+of control, transactions with non-controlling interests are ac-
+counted for as equity transactions not affecting profit and loss.
+At the date control is lost, any retained equity interests are
+remeasured to fair value. In case of a written put option on
+non-controlling interests the Company assesses whether the
+prerequisites for the transfer of present ownership interest are
+fulfilled at the balance sheet date. If the Company is not the
+beneficial owner of the shares underlying the put option, the
+exercise of the put option will be assumed at each balance
+sheet date and treated as equity transaction between share-
+holders with the recognition of a purchase liability at the re-
+spective exercise price. The non-controlling interests partici-
+pate in profits and losses during the reporting period.
+-
+129
+96
+560
+31,514
+-
+7,282
+98
+7,380
+1,049
+354
+(42)
+993
+35
+33
+1,029
+(145)
+(2,873)
+36
+36
+(2,703)
+233
+(2,703)
+(2,703)
+256
+256
+289
+289
+(2,728)
+30,954
+Foreign currency transaction Transactions that are de-
+nominated in a currency other than the functional currency of
+an entity, are recorded at that functional currency applying the
+spot exchange rate at the date when the underlying transac-
+tions are initially recognized. At the end of the reporting
+period, foreign currency-denominated monetary assets and lia-
+bilities are revalued to functional currency applying the spot
+exchange rate prevailing at that date. Gains and losses arising
+from these foreign currency revaluations are recognized in net
+income. Those foreign currency-denominated transactions
+which are classified as non-monetary are remeasured using the
+historical spot exchange rate.
+Sale of goods: Revenue is recognized when the significant risks
+and rewards of ownership of the goods have passed to the
+buyer, usually on delivery of the goods.
+Impairment of property, plant and equipment and other
+intangible assets - The Company reviews property, plant and
+equipment and other intangible assets for impairment when-
+ever events or changes in circumstances indicate that the car-
+rying amount of an asset may not be recoverable. In addition,
+intangible assets not yet available for use are subject to an an-
+nual impairment test. Impairment testing of property, plant
+and equipment and other intangible assets involves the use of
+66 Consolidated Financial Statements
+estimates in determining the assets' recoverable amount which
+can have a material impact on the respective values and ulti-
+mately the amount of any impairment.
+Discontinued operations and non-current assets held for
+disposal - Discontinued operations are reported when a com-
+ponent of an entity is classified as held for disposal or has been
+disposed of, if the component represents a separate major line
+of business or geographical area of operations and is part of
+a single co-ordinated plan to dispose of a separate major line of
+business or geographical area of operations. In the Consoli-
+dated Statements of Income, income (loss) from discontinued
+operations is reported separately from income and expenses
+from continuing operations; prior periods are presented on
+a comparable basis. In the Consolidated Statements of Cash
+Flow, the cash flows from discontinued operations are pre-
+sented separately from cash flows of continuing operations;
+prior periods are presented on a comparable basis. The disclo-
+sures in the Notes to the Consolidated Financial Statements
+outside → NOTE 3 ACQUISITIONS, DISPOSITIONS AND DISCONTINUED
+OPERATIONS that refer to the Consolidated Statements of Income
+and the Consolidated Statements of Cash Flow relate to con-
+tinuing operations.
+Siemens classifies a non-current asset or a disposal group as
+held for disposal if its carrying amount will be recovered princi-
+pally through a sale transaction rather than through continu-
+ing use. The disclosures in the Notes to Consolidated Financial
+Statements outside NOTE 3 ACQUISITIONS, DISPOSITIONS AND
+DISCONTINUED OPERATIONS that refer to the Consolidated State-
+ments of Financial Position generally relate to assets that are
+not held for disposal. Siemens reports non-current assets or
+disposal groups held for disposal separately in → NOTE 3 ACQUI-
+SITIONS, DISPOSITIONS AND DISCONTINUED OPERATIONS. Non-current
+assets classified as held for disposal and disposal groups are
+measured at the lower of their carrying amount and fair value
+less costs to sell. Depreciation and amortization ceases. The
+determination of the fair value less costs to sell includes the
+use of estimates and assumptions that tend to be uncertain.
+Income taxes - Tax positions under respective local tax laws
+and tax authorities' views can be complex and subject to differ-
+ent interpretations of tax payers and local tax authorities.
+Different interpretations of tax laws may result in additional tax
+payments for prior years and are taken into account based on
+management's considerations. Under the liability method, de-
+ferred tax assets and liabilities are recognized for future tax
+consequences attributable to differences between the financial
+statement carrying amounts of existing assets and liabilities
+and their respective tax bases. Deferred tax assets are recog-
+nized if sufficient future taxable profit is available, including
+income from forecasted operating earnings, the reversal of
+existing taxable temporary differences and established tax
+planning opportunities. As of each period-end, Siemens evalu-
+ates the recoverability of deferred tax assets, based on pro-
+jected future taxable profits. Based upon the level of historical
+taxable income and projections for future taxable income over
+the periods in which the deferred tax assets are deductible,
+Siemens believes it is probable the Company will realize the
+benefits of these deductible differences. As future develop-
+ments are uncertain and partly beyond Siemens's control,
+assumptions are necessary to estimate future taxable profits as
+well as the period in which deferred tax assets will recover.
+Estimates are revised in the period in which there is sufficient
+evidence to revise the assumption.
+Inventories - Inventories are valued at the lower of acquisi-
+tion or production costs and net realizable value, costs being
+generally determined on the basis of an average or first-in, first-
+out method.
+Defined benefit plans - Siemens measures the entitlements
+by applying the projected unit credit method. The approach re-
+flects an actuarially calculated net present value of the future
+benefit entitlement for services already rendered. In determin-
+ing the net present value of the future benefit entitlement for
+service already rendered (Defined Benefit Obligation (DBO)),
+the expected rates of future salary increase and expected rates
+of future pension progression are considered. The assumptions
+used for the calculation of the DBO as of the period-end of the
+preceding fiscal year are used to determine the calculation of
+service cost and interest income and expense of the following
+year. The net interest income or expense for the fiscal year will
+be based on the discount rate for the respective year multiplied
+by the net liability (asset) at the preceding fiscal year's peri-
+od-end date.
+Service cost and past service cost for post-employment benefits
+and administration costs unrelated to the management of plan
+assets are allocated among functional costs. Past service cost
+and settlement gains (losses) are recognized immediately in
+profit or loss. For unfunded plans, the amount of line item
+Post-employment benefits equals the DBO. For funded plans,
+Siemens offsets the fair value of the plan assets with the DBO.
+Siemens recognizes the net amount, after adjustments for
+effects relating to any asset ceiling.
+generally 5 years
+generally 3 to 5 years
+Remeasurements comprise actuarial gains and losses as well as
+the difference between the return on plan assets and the
+amounts included in net interest on the net defined benefits
+liability (asset) and are recognized in Other comprehensive
+income, net of income taxes.
+Actuarial valuations rely on key assumptions including dis-
+count rates, expected compensation increases, rate of pension
+progression and mortality rates. Discount rates used are deter-
+mined by reference to yields on high-quality corporate bonds of
+appropriate duration and currency at the end of the reporting
+period. In case such yields are not available discount rates are
+based on government bonds yields. Due to changing market,
+economic and social conditions the underlying key assump-
+tions may differ from actual developments.
+-
+Provisions
+A provision is recognized in the Statement of
+Financial Position when it is probable that the Company has a
+present legal or constructive obligation as a result of a past
+event, it is probable that an outflow of economic benefits will
+be required to settle the obligation and a reliable estimate can
+be made of the amount of the obligation. If the effect is mate-
+rial, provisions are recognized at present value by discounting
+the expected future cash flows at a pretax rate that reflects cur-
+rent market assessments of the time value of money. When a
+contract becomes onerous, the present obligation under the
+contract is recognized as a provision.
+Significant estimates are involved in the determination of pro-
+visions related to onerous contracts, warranty costs, asset re-
+tirement obligations, legal and regulatory proceedings as well
+as governmental investigations (Legal Proceedings). Siemens
+records a provision for onerous sales contracts when current
+estimates of total contract costs exceed expected contract rev-
+enue. Onerous sales contracts are identified by monitoring the
+progress of the project and updating the estimate of total con-
+tract costs which also requires significant judgment relating to
+achieving certain performance standards as well as estimates
+involving warranty costs and estimates regarding project de-
+lays including the assessment of responsibility splits between
+the contract partners for these delays. Uncertainties regarding
+asset retirement obligations include the estimated costs of de-
+commissioning and final storage because of the long time
+frame over which future cash outflows are expected to occur
+including the respective interest accretion. Amongst others,
+the estimated cash outflows could alter significantly if, and
+when, political developments affect the government's plans to
+develop the final storage.
+Legal Proceedings often involve complex legal issues and are
+subject to substantial uncertainties. Accordingly, considerable
+judgment is part of determining whether it is probable that
+there is a present obligation as a result of a past event at the
+end of the reporting period, whether it is probable that such a
+Legal Proceeding will result in an outflow of resources and
+whether the amount of the obligation can be reliably esti-
+mated. Internal and external counsels are generally part of the
+determination process. Due to new developments, it may be
+necessary, to record a provision for an ongoing Legal Proceed-
+ing or to adjust the amount of a previously recognized provi-
+sion. Upon resolution of a Legal Proceeding, Siemens may incur
+charges in excess of the recorded provisions for such matters.
+The outcome of Legal Proceedings may have a material effect
+on Siemens' financial position, its results of operations and/or
+its cash flows.
+Termination benefits - Termination benefits are provided as
+a result of an entity's offer made in order to encourage volun-
+tary redundancy before the normal retirement date or from an
+entity's decision to terminate the employment. Termination
+benefits in accordance with IAS 19, Employee Benefits, are rec-
+ognized as a liability and an expense when the entity can no
+longer withdraw the offer of those benefits.
+Financial instruments - A financial instrument is any con-
+tract that gives rise to a financial asset of one entity and a fi-
+nancial liability or equity instrument of another entity. Siemens
+does not use the category held to maturity and does not use
+the option to designate financial assets or financial liabilities at
+fair value through profit or loss at inception (Fair Value Option).
+Based on their nature, financial instruments are classified as
+financial assets and financial liabilities measured at cost or
+amortized cost and financial assets and financial liabilities
+measured at fair value and as receivables from finance leases.
+Regular way purchases or sales of financial assets are ac-
+counted for at the trade date. Initially, financial instruments are
+recognized at their fair value. Transaction costs are only in-
+cluded in determining the carrying amount, if the financial in-
+struments are not measured at fair value through profit or loss.
+Receivables from finance leases are recognized at an amount
+equal to the net investment in the lease. Subsequently, finan-
+cial assets and liabilities are measured according to the cate-
+gory to which they are assigned-cash and cash equivalents,
+available-for-sale financial assets, loans and receivables, finan-
+cial liabilities measured at amortized cost or financial assets
+and liabilities classified as held for trading.
+Cash and cash equivalents - The Company considers all
+highly liquid investments with less than three months matu-
+rity from the date of acquisition to be cash equivalents. Cash
+and cash equivalents are measured at cost.
+Available-for-sale financial assets - Investments in equity
+instruments, debt instruments and fund shares are measured
+at fair value, if reliably measurable. Unrealized gains and
+losses, net of applicable deferred income tax expenses, are rec-
+ognized in line item Other comprehensive income, net of in-
+come taxes. Provided that fair value cannot be reliably deter-
+mined, Siemens measures available-for-sale financial assets at
+cost. This applies to equity instruments that do not have a
+68 Consolidated Financial Statements
+Consolidated Financial Statements 67
+Revenue recognition - Under the condition that persuasive
+evidence of an arrangement exists revenue is recognized to the
+extent that it is probable that the economic benefits will flow to
+the Company and the revenue can be reliably measured, re-
+gardless of when the payment is being made. In cases where
+the inflow of economic benefits is not probable due to cus-
+tomer related credit risks the revenue recognized is subject to
+the amount of payments irrevocably received.
+5 to 10 years
+20 to 50 years
+Sales from construction contracts: When the outcome of a con-
+struction contract can be estimated reliably, revenues from
+construction-type projects are recognized under the percent-
+age-of-completion method, based on the percentage of costs
+incurred to date compared to the total estimated contract costs.
+An expected loss on the construction contract is recognized as
+an expense immediately. Siemens applies the requirements of
+IAS 11 regarding contract variations to contract terminations,
+since contract terminations are also changes to the agreed de-
+livery and service scope.
+The percentage-of-completion method places considerable im-
+portance on accurate estimates of the extent of progress to-
+wards completion and may involve estimates on the scope of
+deliveries and services required for fulfilling the contractually
+defined obligations. These significant estimates include total
+contract costs, total contract revenues, contract risks, including
+technical, political and regulatory risks, and other judgments.
+Under the percentage-of-completion method, changes in esti-
+mates may lead to an increase or decrease of revenue. The cred-
+itworthiness of our customers is taken into account in estimat-
+ing the probability that economic benefits associated with a
+contract will flow to the Company. In addition, we need to
+assess whether the contract is expected to continue or to be
+terminated. In determining whether the continuation or termi-
+nation of a contract is expected to be the most likely scenario,
+all relevant facts and circumstances relating to the contract are
+considered on an individual basis. For contracts expected to be
+continued, amounts already included in revenue for which col-
+lectability ceases to be probable are recognized as an expense.
+For contracts expected to be terminated, including termina-
+tions due to expected payment defaults of our customers or
+terminations due to force majeure events, the estimates on the
+scope of deliveries and services provided under the contracts
+are revised accordingly, typically resulting in a decrease of rev-
+enue in the respective reporting period.
+Rendering of services: for long-term service contracts, reve-
+nues are recognized on a straight-line basis over the term of
+the contract or, if the performance pattern is other than
+straight-line, as the services are provided, i.e. under the per-
+centage-of-completion method as described above.
+Sales from multiple element arrangements: Sales of goods and
+services as well as software arrangements sometimes involve
+the provision of multiple elements. In these cases, the Com-
+pany determines whether the contract or arrangement con-
+tains more than one unit of accounting. If certain criteria are
+met, foremost if the delivered element(s) has (have) value to
+the customer on a stand-alone basis, the arrangement is sepa-
+rated and the appropriate revenue recognition convention is
+then applied to each separate unit of accounting. Generally, the
+total arrangement consideration is allocated to the separate
+units of accounting based on their relative fair values. If the
+criteria for the separation of units of accounting are not met,
+revenue is deferred until such criteria are met or until the pe-
+riod in which the last undelivered element is delivered.
+Income from interest: interest is recognized using the effective
+interest method.
+Income from royalties: royalties are recognized on an accrual
+basis in accordance with the substance of the relevant agree-
+ment.
+Income from operating leases: operating lease income for
+equipment rentals is recognized on a straight-line basis over
+the lease term.
+Functional costs - In general, operating expenses by types
+are assigned to the functions following the functional area of
+the corresponding profit and cost centers. Amortization, depre-
+ciation and impairment of intangible assets and property, plant
+and equipment are included in functional costs depending on
+the use of the assets.
+Consolidated Financial Statements 65
+5 to 10 years
+-
+Research and development costs - Costs of research activi-
+ties are expensed as incurred. Costs of development activities
+are capitalized when the recognition criteria in IAS 38 are met.
+Capitalized development costs are stated at cost less accumu-
+lated amortization and impairment losses with an amortization
+period of generally three to ten years.
+Earnings per share - Basic earnings per share are computed
+by dividing income from continuing operations, income from
+discontinued operations and net income, all attributable to or-
+dinary shareholders of Siemens AG by the weighted average
+number of shares outstanding during the year. Diluted earn-
+ings per share are calculated by assuming conversion or exer-
+cise of all potentially dilutive securities and share-based pay-
+ment plans.
+Goodwill - Goodwill is not amortized, but instead tested for
+impairment annually, as well as whenever there are events or
+changes in circumstances (triggering events) which suggest
+that the carrying amount may not be recoverable. Goodwill is
+carried at cost less accumulated impairment losses.
+The goodwill impairment test is performed at the level of a
+cash-generating unit or a group of cash-generating units gen-
+erally represented by a segment and for Healthcare one level
+below the segment. This is the lowest level at which goodwill
+is monitored for internal management purposes.
+For the purpose of impairment testing, goodwill acquired in a
+business combination is allocated to the cash-generating unit
+or the group of cash-generating units that is expected to bene-
+fit from the synergies of the business combination. If the carry-
+ing amount of the cash-generating unit or the group of
+cash-generating units, to which the goodwill is allocated, ex-
+ceeds its recoverable amount, an impairment loss on goodwill
+allocated to this cash-generating unit or this group of cash-gen-
+erating units is recognized. The recoverable amount is the
+higher of the cash-generating unit's or the group of cash-gen-
+erating units' fair value less costs to sell and its value in use. If
+either of these amounts exceeds the carrying amount, it is not
+always necessary to determine both amounts. These values are
+generally determined based on discounted cash flow calcula-
+tions. Impairment losses on goodwill are not reversed in future
+periods.
+The determination of the recoverable amount of a cash-gener-
+ating unit or a group of cash-generating units to which good-
+will is allocated involves the use of estimates by management.
+The outcome predicted by these estimates is influenced e.g. by
+the successful integration of acquired entities, volatility of cap-
+ital markets, interest rate developments, foreign exchange rate
+fluctuations and the outlook on economic trends. In determin-
+ing recoverable amounts, discounted cash flow calculations
+use five-year projections that are based on financial forecasts.
+Cash flow projections take into account past experience and
+represent management's best estimate about future develop-
+ments. Cash flows after the planning period are extrapolated
+using individual growth rates. Key assumptions on which man-
+agement has based its determination of fair value less costs
+to sell and value in use include estimated growth rates and
+weighted average cost of capital. These estimates, including
+the methodology used, can have a material impact on the
+respective values and ultimately the amount of any goodwill
+impairment.
+Other intangible assets - The Company amortizes intangible
+assets with finite useful lives on a straight-line basis over their
+respective estimated useful lives. Estimated useful lives for pat-
+ents, licenses and other similar rights generally range from
+three to five years, except for intangible assets with finite use-
+ful lives acquired in business combinations. Intangible assets
+acquired in business combinations primarily consist of cus-
+tomer relationships and trademarks as well as technology. Use-
+ful lives in specific acquisitions ranged from four to 20 years
+for customer relationships and trademarks and from seven to
+25 years for technology.
+Property, plant and equipment - Property, plant and equip-
+ment, is valued at cost less accumulated depreciation and im-
+pairment losses. Depreciation expense is recognized using the
+straight-line method. The following useful lives are assumed:
+Factory and office buildings
+Other buildings
+Technical machinery & equipment
+Furniture & office equipment
+Equipment leased to others
+Product-related expenses
+Provisions for estimated costs
+related to product warranties are recorded in line item Cost of
+sales at the time the related sale is recognized.
+(3,747)
+(314)
+373
+Retained earnings
+2,643
+5,484
+22,663
+5,373
+290
+(2,533)
+11
+(24)
+31
+-
+(34)
+Capital reserve
+(6)
+5,525
+25,729
+2,643
+5,525
+25,729
+-
+7,282
+(367)
+(2,728)
+79
+(43)
+2,643
+23
+Issued capital
+62
+Consolidated Financial Statements 61
+B.5 Consolidated Statements of Changes in Equity
+(in millions of €)
+Balance as of October 1, 2013
+Net income
+Other comprehensive income, net of income taxes
+Dividends
+Share-based payment
+Purchase of treasury shares
+Re-issuance of treasury shares
+Transactions with non-controlling interests
+Consolidated Financial Statements
+Other changes in equity
+Balance as of October 1, 2014
+Net income
+Other comprehensive income, net of income taxes
+Dividends
+Share-based payment
+Purchase of treasury shares
+Re-issuance of treasury shares
+Transactions with non-controlling interests
+Other changes in equity
+Balance as of September 30, 2015
+1,620
+Balance as of September 30, 2014
+289
+106
+(10)
+31
+857
+(2,533)
+(121)
+(2,654)
+(13)
+(1,080)
+279
+(1,080)
+(13)
+(1,080)
+310
+310
+825
+(34)
+(37)
+(6)
+5
+745
+373
+(314)
+(3,747)
+30,954
+560
+31,514
+745
+(3)
+(314)
+(56)
+905
+2,643
+5,733
+30,152
+Currency translation
+Available-for-sale
+Derivative financial
+differences
+financial assets
+instruments
+(160)
+428
+(1)
+Treasury
+shares at cost
+Total equity attribut-
+able to shareholders
+of Siemens AG
+Non controlling
+interests
+Total equity
+(2,946)
+28,111
+514
+28,625
+5,373
+134
+5,507
+9,957
+2,979
+Cash flows from financing activities - continuing and discontinued operations
+Effect of changes in exchange rates on cash and cash equivalents
+Short-term debt and current maturities of long-term debt
+(37)
+1,089
+940
+354
+(56)
+(7)
+(13)
+22, 23
+(43)
+(316)
+(7)
+102
+1,399
+569
+149
+(85)
+1,029
+857
+8,408
+6,364
+133
+8,275
+165
+6,199
+Consolidated Financial Statements 59
+B.3 Consolidated Statements of Financial Position
+(in millions of €)
+Assets
+Cash and cash equivalents
+Available-for-sale financial assets
+(42)
+288
+(370)
+249
+15
+B.2 Consolidated Statements of Comprehensive Income
+(in millions of €)
+Net income
+Remeasurements of defined benefit plans
+therein: Income tax effects
+Items that will not be reclassified to profit or loss
+therein: Income (loss) from investments accounted for using the equity method, net
+Currency translation differences
+Available-for-sale financial assets
+therein: Income tax effects
+Derivative financial instruments
+therein: Income tax effects
+Items that may be reclassified subsequently to profit or loss
+Trade and other receivables
+therein: Income (loss) from investments accounted for using the equity method, net
+Total comprehensive income
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+Fiscal year
+Note
+2015
+2014
+7,380
+5,507
+16
+(370)
+288
+(107)
+Other comprehensive income, net of income taxes
+Other current financial assets
+(2,700)
+Current income tax assets
+12
+8,077
+4,560
+Property, plant and equipment
+12
+10,210
+9,638
+Investments accounted for using the equity method
+4
+2,947
+2,127
+Other financial assets
+13
+20,821
+18,416
+Deferred tax assets
+Other assets
+Total non-current assets
+7
+2,591
+1,094
+945
+68,906
+56,803
+Total assets
+120,348
+104,879
+Inventories
+Liabilities and equity
+17,783
+23,166
+3,334
+48,076
+September, 30
+Other current assets
+11
+Note
+2015
+2014
+8,013
+1,175
+925
+8
+15,982
+14,526
+9
+5,157
+3,710
+9,957
+17,253
+Other intangible assets
+10
+51,442
+Total current assets
+Goodwill
+122
+3
+3,935
+1,290
+1,151
+577
+644
+15,100
+Assets classified as held for disposal
+Consolidated Financial Statements
+Minimum future lease payments to be received are as follows:
+74
+938
+933
+(33)
+(26)
+5
+Write-offs charged against the allowance
+Recoveries of amounts previously written-off
+Foreign exchange translation differences
+Reclassifications to line item Assets held for
+disposal and dispositions of those entities
+Valuation allowance as of fiscal year-end
+6
+7
+(126)
+(145)
+1,632
+2,218
+(346)
+139
+Sep 30,
+directly in equity
+(9)
+(in millions of €)
+RECENT ACCOUNTING PRONOUNCEMENTS,
+NOT YET ADOPTED
+2014
+Income and expenses recognized
+ACQUISITIONS
+NOTE 3 Acquisitions, dispositions
+and discontinued operations
+a customer in an amount that reflects the consideration to
+which the Company expects to be entitled in exchange for
+those goods or services. Revenue is recognized when, or as,
+the customer obtains control of the goods or services. IFRS 15
+also includes guidance on the presentation of contract bal-
+ances, that is, assets and liabilities arising from contracts with
+customers, depending on the relationship between the entity's
+performance and the customer's payment. In addition, the new
+standard requires a set of quantitative and qualitative disclo-
+sures to enable users of the Company's Consolidated Financial
+Statements to understand the nature, amount, timing, and un-
+certainty of revenue and cash flows arising from contracts with
+customers. IFRS 15 supersedes IAS 11, Construction Contracts
+and IAS 18, Revenue as well as related interpretations. In
+July 2015 the IASB deferred the standard's effective date to an-
+nual periods beginning on or after January 1, 2018; early appli-
+cation is permitted. The Company is currently assessing the
+impact of adopting IFRS 15 on the Company's Consolidated
+Financial Statements and will determine the adoption date as
+well as the transition method.
+69
+Consolidated Financial Statements
+In May 2014, the IASB issued IFRS 15, Revenue from Contracts
+with Customers. According to the new standard, revenue is rec-
+ognized to depict the transfer of promised goods or services to
+In July 2014, the IASB issued IFRS 9, Financial Instruments.
+IFRS 9 introduces a single approach for the classification and
+measurement of financial assets according to their cash flow
+characteristics and the business model they are managed in,
+and provides a new impairment model based on expected
+credit losses. IFRS 9 also includes new regulations regarding
+the application of hedge accounting to better reflect an entity's
+risk management activities especially with regard to managing
+non-financial risks. The new standard is effective for annual re-
+porting periods beginning on or after January 1, 2018, while
+early application is permitted. The Company is currently assess-
+ing the impacts of adopting IFRS 9 on the Company's Consoli-
+dated Financial Statements.
+The following pronouncements, issued by the IASB, are not yet
+effective and have not yet been adopted by the Company:
+The presentation of certain pri-
+or-year information has been reclassified to conform to the cur-
+rent year presentation.
+-
+Prior-year information
+Share-based payment Share-based payment awards at
+Siemens are predominately designed as equity-settled. Fair
+value is measured at grant date and is expensed over the vest-
+ing period. Fair value is determined as the market price of
+Siemens shares, considering dividends during the vesting
+period the grantees are not entitled to and market conditions
+and non-vesting conditions, if applicable.
+-
+Cash flow hedges: The effective portion of changes in the fair
+value of derivative instruments designated as cash flow hedges
+are recognized in line item Other comprehensive income, net
+of income taxes (applicable deferred income tax), and any inef-
+fective portion is recognized immediately in net income.
+Amounts accumulated in equity are reclassified into net in-
+come in the same periods in which the hedged item affects net
+income.
+corresponding gain or loss recognized in net income. For
+hedged items carried at amortized cost, the adjustment is
+amortized until maturity of the hedged item. For hedged firm
+commitments the initial carrying amount of the assets or liabil-
+ities that result from meeting the firm commitments are ad-
+justed to include the cumulative changes in the fair value that
+were previously recognized as separate financial assets or lia-
+bilities.
+Fair value hedges: The carrying amount of the hedged item is
+adjusted by the gain or loss attributable to the hedged risk.
+Where an unrecognized firm commitment is designated as
+hedged item, the subsequent cumulative change in its fair
+value is recognized as a separate financial asset or liability with
+Derivative financial instruments - Derivative financial in-
+struments, such as foreign currency exchange contracts and
+interest rate swap contracts are measured at fair value and clas-
+sified as held for trading unless they are designated as hedging
+instruments, for which hedge accounting is applied. Changes
+in the fair value of derivative financial instruments are recog-
+nized either in net income or, in the case of a cash flow hedge,
+in line item Other comprehensive income, net of income taxes
+(applicable deferred income tax). Certain derivative instru-
+ments embedded in host contracts are also accounted for sep-
+arately as derivatives.
+Financial liabilities - Siemens measures financial liabilities,
+except for derivative financial instruments, at amortized cost
+using the effective interest method.
+Loans and receivables - Financial assets classified as loans
+and receivables are measured at amortized cost using the ef-
+fective interest method less any impairment losses. Impair-
+ment losses on trade and other receivables are recognized us-
+ing separate allowance accounts. The allowance for doubtful
+accounts involves significant management judgment and re-
+view of individual receivables based on individual customer
+creditworthiness, current economic trends and analysis of his-
+torical bad debts on a portfolio basis. For the determination of
+the country-specific component of the individual allowance,
+Siemens also considers country credit ratings, which are cen-
+trally determined based on information from external rating
+agencies. Regarding the determination of the valuation allow-
+ance derived from a portfolio-based analysis of historical bad
+debts, a decline of receivables in volume results in a corre-
+sponding reduction of such provisions and vice versa. As of
+September 30, 2015 and 2014, Siemens recorded a valuation
+allowance for trade and other receivables (including leases) of
+€1,123 million and €1,073 million, respectively.
+quoted market price in an active market, and decisive parame-
+ters cannot be reliably estimated to be used in valuation mod-
+els for the determination of fair value. Siemens considers all
+available evidence such as market conditions and prices, in-
+vestee-specific factors and the duration as well as the extent to
+which fair value is less than acquisition cost in evaluating po-
+tential impairment of its available-for-sale financial assets. The
+Company considers a decline in fair value as objective evidence
+of impairment, if the decline exceeds 20% of costs or continues
+for more than six months.
+2015
+2,014
+(37)
+2,073
+Discontinued operations
+915
+1,334
+1,988
+In June 2015, Siemens acquired all shares of Dresser-Rand
+Group Inc., Houston, Texas (U.S.) and Paris (France), a
+world-leading supplier for the oil and gas industry and for dis-
+tributed power generation. With Dresser-Rand on board,
+Siemens has a comprehensive portfolio of equipment and ca-
+pability for the oil and gas industry and a much expanded in-
+stalled base, allowing Siemens to address the needs of the mar-
+ket with products, solutions and services. The acquired business
+will be integrated in the Division Power and Gas. The purchase
+price amounts to US$6,692 million (€5,981 million as of the ac-
+quisition date) paid in cash. It comprises US$6,555 million
+(€5,858 million as of the acquisition date) for all outstanding
+shares and US$138 million (€123 million as of the acquisition
+date) to settle the outstanding equity-based compensation pro-
+grams. Siemens assumed cash amounting to US$197 million
+(€176 million as of the acquisition date). Further, Siemens set-
+tled outstanding financial debt of US$1,142 million (€1,021 mil-
+lion as of the acquisition date). The following figures result
+from the preliminary purchase price allocation as of the acqui-
+sition date: Other intangible assets €2,957 million, Property,
+plant and equipment €352 million, Trade and other receivables
+€352 million, Inventories €538 million, Other current financial
+assets €131 million, Cash and cash equivalents €176 million,
+Deferred tax assets €201 million, Debt including outstanding
+financial debt settled €1,033 million, Trade payables €229 mil-
+lion, Other current liabilities €382 million and Deferred tax
+760
+Receivables from finance leases
+1,142
+12,537
+13,909
+Trade receivables from the sale
+of goods and services
+155
+192
+Deductible temporary differences
+Tax loss carryforward
+2014
+2015
+(in millions of €)
+2014
+2015
+Sep 30,
+(in millions of €)
+Sep 30,
+15,982
+210
+14,526
+Siemens has not recognized deferred tax liabilities for income
+taxes or foreign withholding taxes on the cumulative earnings
+of subsidiaries of €27,507 million and €21,115 million, respec-
+tively in fiscal 2015 and 2014 because the earnings are intended
+to be permanently reinvested in the subsidiaries.
+1,869
+Continuing operations
+62
+168
+of Income in the current period
+Fiscal year
+2014
+2015
+(in millions of €)
+recorded in the Consolidated Statements
+Increase in valuation allowances
+1,023
+938
+beginning of fiscal year
+Valuation allowance as of
+2014
+2015
+Fiscal year
+(in millions of €)
+Changes to the valuation allowance of current and long-term
+receivables which belong to the class of financial assets mea-
+sured at (amortized) cost are as follows (excluding receivables
+from finance leases):
+In fiscal 2015 and 2014, the long-term portion of receivables
+from finance leases is reported in Other financial assets and
+amounts to €3,264 million and €3,357 million, respectively.
+Including items charged or credited directly to equity and the
+expense (benefit) from continuing and discontinued operations,
+the income tax expense (benefit) consists of the following:
+As of September 30, 2015 and 2014, €458 and €152 million of
+the unrecognized tax loss carryforwards expire over the peri-
+ods to 2028.
+liabilities €989 million. Intangible assets mainly relate to tech-
+nology of €426 million, customer relationships of €2,275 mil-
+lion and trademarks of €256 million. The gross contractual
+amount of the trade and other receivables acquired is €455 mil-
+lion. Preliminary goodwill amounts to €4,058 million and is
+largely based on synergies, such as sales synergies mainly
+resulting from the extended portfolio and enhanced service
+opportunities, and cost synergies, especially in research and
+development, purchasing, general administration functions, as
+well as manufacturing. Including pre-tax earnings effects from
+amortization of intangible assets acquired in the business com-
+bination (€44 million) and integration costs (€19 million), the
+acquired business contributed revenues of €533 million and a
+net income of €(33) million to Siemens for the period from
+acquisition to September 30, 2015.
+246
+70
+2014
+2015
+(in millions of €)
+5,481
+5,527
+Net investment in leases
+Sep 30,
+(643)
+(601)
+Less: Allowance for doubtful accounts
+Less: Unearned finance income
+6,129
+Gross investment in leases
+91
+87
+Plus: Unguaranteed residual values
+NOTE 10 Inventories
+As of September 30, 2015 and 2014, Other current financial as-
+sets include loans receivables of €3,128 million and €2,111 mil-
+lion, respectively and derivative financial instruments of
+€830 million and €458 million, respectively.
+NOTE 9 Other current financial assets
+(in millions of €)
+6,124
+(190)
+(135)
+Raw materials and supplies
+551
+Advances to suppliers
+2,312
+3,046
+Finished goods and products held for resale
+5,266
+5,265
+8,329
+9,162
+of billings on uncompleted contracts
+Present value of minimum future
+lease payments receivable
+Costs and earnings in excess
+(80)
+(72)
+residual value
+3,436
+4,417
+Work in progress
+Less: Present value of unguaranteed
+2,389
+2,631
+The following table shows a reconciliation of minimum future
+lease payments to the gross and net investment in leases and
+to the present value of the minimum future lease payments
+receivable:
+In December 2014, Siemens acquired the Rolls-Royce Energy
+aero-derivative gas turbine and compressor business of Rolls-
+Royce plc, U.K. (Rolls-Royce). By acquiring Rolls-Royce's small
+and medium derivative gas turbines business, Siemens closed
+a technology gap in its gas turbine portfolio. The acquired
+business will be integrated in the Division Power and Gas. The
+contractually agreed purchase price amounts to £785 million
+(€990 million as of the acquisition date). That amount was
+subject to post-closing adjustments amounting to £29 million
+(€37 million as of the acquisition date). The purchase price
+was paid in cash. In addition, as part of the transaction,
+Siemens paid Rolls-Royce £200 million (€252 million as of the
+acquisition date) for a 25 year technology licensing agreement
+granting exclusive access to future Rolls-Royce aero-turbine
+technology developments in the four to 85 megawatt power
+output range as well as preferred access to supply and engi-
+neering services of Rolls-Royce. The following figures result
+from the preliminary purchase price allocation as of the acqui-
+sition date: Other intangible assets €764 million, Property,
+plant and equipment €134 million, Trade and other receivables
+€238 million, Inventories €463 million, Deferred tax assets
+€103 million, Provisions €316 million, Trade payables €156 mil-
+lion and Other current liabilities €322 million. Other intangible
+assets mainly relate to technology including licences and sim-
+ilar rights of €459 million and customer relationships of
+€292 million. Preliminary goodwill amounts to €437 million
+and is largely based on synergies, such as cost synergies, espe-
+cially in manufacturing, purchasing, research and develop-
+ment, as well as general administration functions, and sales
+synergies mainly resulting from the extension of the gas tur-
+bine portfolio. Including pre-tax earnings effects from amor-
+tization of intangible assets acquired in the business combina-
+tion (€42 million) and integration costs (€33 million), the
+acquired business contributed revenues of €786 million and
+a net income of €(29) million to Siemens for the period from
+acquisition to September 30, 2015.
+2014
+6,033
+Minimum future lease payments
+Liabilities associated with assets classified as held for disposal
+Other non-current liabilities
+Post-employment benefits
+Other current liabilities
+Current provisions
+Trade payables
+Assets classified as held for disposal
+Other assets
+Other financial assets
+Sep 30,
+Investments previously accounted for using the equity method
+Other intangible assets
+Goodwill
+Inventories
+Trade and other receivables
+(in millions of €)
+| Carrying amounts of major classes of assets and liabilities held-for-disposal
+DISPOSITIONS AND DISCONTINUED OPERATIONS
+Revenue and net income of the combined entity in fiscal 2015
+would have been €77,474 million and €7,227 million, respec-
+tively, had both acquired businesses been included as of Octo-
+ber 1, 2014.
+Consolidated Financial Statements
+Property, plant and equipment
+2015
+2014
+10
+2015
+Sep 30,
+6,033
+6,042
+233
+246
+More than five years
+3,393
+3,322
+After one year but not more than five years
+2,406
+2,474
+Within one year
+311
+76
+NOTE 8 Trade and other receivables
+846
+12
+479
+17
+606
+6,042
+the following items (gross amounts):
+1,936
+Consolidated Financial Statements 73
+1,477
+Gains (losses) on sales, net
+(87)
+Share of profit (loss), net
+2015
+Fiscal year
+2014
+575
+(in millions of €)
+Investments accounted for using the equity method
+NOTE 4 Interests in other entities
+6
+The total consideration received for all above-described dispo-
+sitions and discontinued operations amounts to €6.8 billion
+(thereof €6 billion in cash). The carrying amounts of the major
+classes of assets and liabilities derecognized were as follows:
+Trade and other receivables €732 million, Inventories €508 mil-
+lion, Goodwill €867 million, Other intangible assets €293 mil-
+lion, Property, Plant & Equipment €294 million, Investments
+accounted for using the equity method €1.2 billion, Deferred
+tax assets €114 million, Miscellaneous assets €339 million,
+Trade payables €437 million, Current provisions €143 million,
+Other current liabilities €790 million, Miscellaneous liabilities
+€313 million.
+2,031
+shareholders of Siemens AG
+Thereof attributable to the
+215
+2,031
+net of income taxes
+Income from discontinued operations,
+9
+(196)
+215
+Impairment and reversals of impairment
+(155)
+1
+20
+22
+1
+102
+38
+2014
+2015
+Fiscal year
+Total comprehensive income
+net of income taxes
+Other comprehensive income,
+Income (loss) from continuing operations
+Income (loss) from discontinued operations
+(in millions of €)
+As of September 30, 2015 and 2014, the carrying amount of all
+individually not material associates amounts to €2,046 million
+and €1,417 million, respectively. Summarized financial informa-
+tion for all individually not material associates adjusted for the
+percentage of ownership held by Siemens, is presented below.
+Items included in the Statements of Comprehensive Income
+are presented for the twelve month period applied under the
+equity method.
+Item Impairment and Reversals of impairments includes an
+impairment loss of € 138 million relating to Siemens' invest-
+ment in Primetals presented within Centrally Managed Port-
+folio Activities. The adverse development of the market envi-
+ronment triggered an impairment test of the investment. The
+recoverable amount of €524 million was determined based on
+a discounted cash flow calculation (level 3 of the fair value
+hierarchy). To determine the recoverable amount, cash flow
+projections were used that take into account past experience
+and represent management's best estimate about future devel-
+opments. The calculation is based on a terminal value growth
+rate of 1.5% and an after-tax discount rate of 8.3%.
+In January 2015, Siemens committed itself to provide additional
+funding of €293 million to Unify Holdings B.V. disclosed in Cen-
+trally managed portfolio activities. Part of the funding was paid
+out to Unify in fiscal 2015. As a consequence of the commit-
+ment, Siemens recognized proportionate losses of €275 million
+in fiscal 2015.
+|
+582
+1,235
+for using the equity method, net
+Income (loss) from investments accounted
+the discontinued operations
+ment to fair value less costs to sell or on the
+disposal of the disposal groups constituting
+Income taxes on the income on the measure-
+27
+-
+In January 2015, Siemens completed the contribution of its
+metals technologies business - formerly included in the former
+Industry Sector into a joint venture with Mitsubishi-Hitachi
+Metals Machinery Inc. (majority-owned by Mitsubishi Heavy
+In January 2015, Siemens completed the sale of its hearing aid
+business formerly included in Healthcare - to the investment
+company EQT and the German entrepreneurial family Strüng-
+mann as co-investors. The sold entities are allowed to continue
+using the Siemens product brand for the hearing aid business
+over the medium term. The consideration includes contingent
+components. Siemens recognized a pretax gain on disposal of
+€1.7 billion in fiscal 2015.
+DISCONTINUED OPERATIONS
+DISPOSITIONS NOT QUALIFYING FOR DISCON-
+TINUED OPERATIONS CLOSED TRANSACTIONS
+In January 2015, Siemens completed the sale of its 50% stake in
+the joint venture BSH Bosch und Siemens Hausgeräte GmbH
+(BSH) - formerly included in Centrally managed portfolio activi-
+ties to Robert Bosch GmbH. Siemens recognized a pretax gain
+on disposal of €1.4 billion in Income (expenses) from invest-
+ments accounted for using the equity method, net in fiscal 2015.
+-
+1,597
+39
+123
+110
+856
+18
+126
+5
+381
+15
+3,935
+122
+158
+6
+132
+Industries Ltd.). Siemens initially recognized the new invest-
+ment in Primetals Technologies Ltd. at fair value.
+58
+In February 2015, Siemens completed the sale of its hospital
+information business – formerly included in Healthcare – to
+Cerner Corp. Siemens recognized a pretax gain on disposal of
+€516 million in fiscal 2015.
+Consolidated Financial Statements 71
+(14)
+Income taxes on ordinary activities
+178
+2,241
+operations
+Pretax income from discontinued
+25
+2,243
+the discontinued operations
+of the disposal groups constituting
+value less costs to sell or on the disposal
+Income on the measurement to fair
+(924)
+Expenses
+922
+Revenue
+2015
+(in millions of €)
+2014
+3,643
+(3,491)
+Fiscal year
+| Income (loss) from discontinued operations
+The results presented in Income (loss) from discontinued oper-
+ations in the Company's Consolidated Statements of Income
+also include the results of businesses that have been disposed
+of prior to fiscal 2015.
+Deferred tax assets have not been recognized with respect of
+(52)
+71
+72
+7,539
+Liabilities and Post-employment benefits
+Other
+1,878
+528
+Non-current and current assets
+2014
+2015
+Sep 30,
+(in millions of €)
+Assets
+7,103
+In Germany, the calculation of current tax is based on a com-
+bined tax rate of 31%, consisting of a corporate tax rate of 15%,
+a solidarity surcharge thereon of 5.5% and an average trade tax
+rate of 15%. For foreign subsidiaries, current taxes are calcu-
+lated based on the local tax laws and applicable tax rates in the
+individual foreign countries. Deferred tax assets and liabilities
+in Germany and abroad are measured at the tax rates that are
+expected to apply to the period when the asset is realized or
+the liability is settled.
+Deferred income tax assets and liabilities on a gross basis are
+summarized as follows:
+2,014
+305
+(145)
+1,869
+1,710
+2,014
+2014
+2015
+Fiscal year
+The current income tax expenses in fiscal 2015 and 2014 in-
+clude adjustments recognized for current tax of prior years in
+the amount of €79 million and €107 million, respectively. The
+deferred tax expense (benefit) in fiscal 2015 and 2014 includes
+tax effects of the origination and reversal of temporary differ-
+ences of €(30) million and €120 million, respectively.
+237
+229
+610
+As of September 30, 2015, the Company has certain tax losses
+subject to significant limitations. For those losses deferred tax
+assets are not recognized, as it is not probable that gains will be
+generated to offset those losses.
+|
+2,782
+1,983
+Total deferred tax assets, net
+7,133
+8,339
+Deferred tax liabilities
+280
+336
+Other
+787
+732
+6,067
+7,272
+Non-current and current assets
+Liabilities
+Liabilities
+Tax loss and credit carryforward
+Deferred tax assets
+9,915
+10,322
+706
+Income tax expenses
+Deferred tax
+Current tax
+(in millions of €)
+Tax-free income
+280
+474
+Non-deductible losses and expenses
+Increase (decrease) in income
+taxes resulting from:
+Expected income tax expenses
+2,265
+2,238
+2014
+2015
+Fiscal year
+(in millions of €)
+Income tax expense (current and deferred) differs from the
+amounts computed by applying a combined statutory German
+income tax rate of 31% as follows:
+Income tax expense (benefit) consists of the following:
+NOTE 7 Income taxes
+Other operating expenses in fiscal 2015 and 2014 include losses
+on sales of property, plant and equipment and intangible as-
+sets, and effects from insurance, legal and regulatory matters.
+NOTE 6 Other operating expenses
+In fiscal 2015 and 2014, Other operating income includes
+gains on sales of property, plant and equipment and intangi-
+ble assets of €232 million and €355 million, respectively, and
+gains from the sale of businesses of €80 million and €143 mil-
+lion, respectively.
+NOTE 5 Other operating income
+Consolidated Financial Statements
+22
+(709)
+Item Share of profit (loss), net, includes Siemens' share in BWI
+Informationstechnik GmbH's (BWI IT) earnings of €27 million
+and €55 million, respectively, in fiscal 2015 and 2014. The car-
+rying amount of all individually not material associates in-
+cludes the carrying amount of BWI IT, amounting to €114 mil-
+lion and €131 million, respectively, as of September 30, 2015
+and 2014. Siemens holds a 50.05% stake in BWI IT. BWI IT is not
+controlled by Siemens due to significant participating rights of
+the two other shareholders. Together with the HERKULES obli-
+gations the Company's maximum exposure to loss from BWI IT
+as of September 30, 2015 and 2014 amounts to €1,204 million
+and €1,621 million, respectively. BWI IT finances its operations
+on its own.
+(235)
+(20)
+2,014
+1,869
+Actual income tax expenses
+1
+2
+Other, net
+(163)
+26
+for using the equity method
+Tax effect of investments accounted
+(222)
+(107)
+Foreign tax rate differential
+(1)
+(43)
+Change in tax rates
+11
+8
+tax assets and tax credits
+Change in realizability of deferred
+79
+Taxes for prior years
+19,807
+Construction contracts, here and as follows, include service
+contracts accounted for under the percentage of completion
+method. The aggregate amount of costs incurred and recog-
+nized profits less recognized losses for construction contracts
+in progress, as of September 30, 2015 and 2014 amounted to
+€81,341 million and €86,542 million, respectively. Revenue
+from construction contracts amounted to €30,288 million and
+€29,765 million, respectively, for fiscal 2015 and 2014. Advance
+payments received on construction contracts in progress were
+€8,644 million and €7,707 million as of September 30, 2015 and
+2014. Retentions in connection with construction contracts
+were €225 million and €245 million in fiscal 2015 and 2014,
+respectively.
+Advance payments received
+135
+(257)
+7,745
+(3,656)
+4,089
+(256)
+Technical machinery and
+equipment
+7,140
+199
+167
+282
+263
+(252)
+7,770
+(5,111)
+2,660
+(513)
+Furniture and office
+equipment
+172
+143
+169
+7,356
+Customer relationships
+and trademarks
+4,552
+293
+2,873
+(176)
+7,542
+(2,715)
+4,827
+(370)
+Other intangible assets
+10,826
+693
+3,796
+390
+(444)
+15,262
+(7,185)
+8,077
+(778)
+Land and bulidings
+5,786
+(231)
+109
+580
+(7)
+856
+(1)
+855
+6
+Property, plant
+and equipment
+23,968
+566
+(467)
+487
+(1,805)
+25,234
+(15,024)
+10,210
+(1,769)
+│1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+(in millions of €)
+Gross Translation
+Additions
+2,018
+500
+66
+66
+73
+(768)
+5,829
+(4,510)
+1,319
+(662)
+Equipment leased to others
+2,927
+117
+57
+457
+(4)
+(521)
+3,033
+(1,746)
+1,287
+(345)
+Advances to suppliers and
+construction in progress
+760
+5
+49
+1,874
+(2,851)
+4,725
+6.5%
+3,587
+1.7%
+8.0%
+3,328
+1.7%
+8.5%
+2,790
+2.0%
+2.5%
+6.5%
+1.7%
+8.0%
+Sep 30, 2014
+Goodwill
+Terminal value
+growth rate
+After-tax
+discount rate
+4,765
+2.4%
+6.5%
+2,613
+5,108
+discount rate
+After-tax
+For the purpose of estimating the fair value less costs to sell of
+the groups of cash-generating units, cash flows were projected
+for the next five years based on past experience, actual operat-
+ing results and management's best estimate about future de-
+velopments as well as market assumptions. The determined
+fair value of the groups of cash-generating units is assigned to
+level 3 of the fair value hierarchy.
+The fair value less costs to sell is mainly driven by the terminal
+value which is particularly sensitive to changes in the assump-
+tions on the terminal value growth rate and discount rate. Both
+assumptions are determined individually for each group of
+cash-generating units. Discount rates are based on the weighted
+average cost of capital (WACC) for the groups of cash-generat-
+ing units (for SFS the discount rate represents cost of equity).
+The discount rates are calculated based on a risk-free rate of in-
+terest and a market risk premium. In addition, the discount rates
+reflect the current market assessment of the risks specific to
+each group of cash-generating units by taking into account spe-
+cific peer group information on beta factors, leverage and cost
+of debt. The parameters for calculating the discount rates are
+based on external sources of information. The peer group is
+subject to an annual review and adjusted, if necessary. Terminal
+value growth rates take into consideration external macroeco-
+nomic sources of data and industry specific trends.
+76
+Consolidated Financial Statements
+The following table presents key assumptions used to deter-
+mine fair value less costs to sell for impairment test purposes
+for the groups of cash-generating units to which a significant
+amount of goodwill is allocated:
+(in millions of €)
+Diagnostics of Healthcare
+Power and Gas (without part of Power Generation Services)
+Digital Factory
+Imaging & Therapy Systems of Healthcare
+Power Generation Services (part of Power and Gas)
+Revenue figures in the 5-year planning period of the groups of
+cash-generating units to which a significant amount of good-
+will is allocated include average revenue organic growth rates
+of between 2.6% and 5.9%.
+(in millions of €)
+Diagnostics of the Healthcare Sector
+Industry Automation of the Industry Sector
+Imaging & Therapy Systems of the Healthcare Sector
+The sensitivity analysis for the groups of cash-generating units
+to which a significant amount of goodwill is allocated was
+based on an increase in after-tax discount rates of one percent-
+age point or a reduction in the terminal value growth rate of
+one percentage point. Siemens concluded that no impairment
+loss would need to be recognized on goodwill in any of the
+groups of cash-generating units.
+Sep 30, 2015
+Goodwill
+Terminal value
+growth rate
+3,105
+1.7%
+8.5%
+2,603
+tion/amorti-
+zation and
+impairment
+Deprecia-
+tion/amorti-
+zation and
+impairment
+in fiscal
+2015
+337
+(302)
+2,995
+(1,619)
+1,376
+(176)
+Internally generated
+technology
+2,750
+211
+Acquired technology
+including patents, licenses
+and similar rights
+3,525
+190
+923
+53
+34
+nations
+Additions
+amount
+09/30/2015
+carrying
+amount
+09/30/2015
+2.2%
+7.5%
+Consolidated Financial Statements
+77
+NOTE 12 Other intangible assets and
+property, plant and equipment
+(in millions of €)
+Gross Translation
+carrying
+Additions
+Additions
+Reclassi-
+differences
+through
+fications
+Retire-
+ments¹
+Gross
+Accumu-
+Carrying
+amount
+business
+10/01/2014
+combi-
+lated
+deprecia-
+16,994
+carrying
+through
+17,783
+23,166
+Balance at beginning of year
+Balance at year-end
+Carrying amount
+1,763
+1,905
+(5)
+(1)
+3
+82
+17,883
+140
+1,763
+Balance at year-end
+Dispositions and reclassifications to assets classified as held for disposal
+Impairment losses recognized during the period
+Translation differences and other
+Balance at beginning of year
+Accumulated impairment losses and other changes
+19,546
+25,071
+1,681
+17,783
+As of October 1, 2014, Siemens realigned its organizational and
+reporting structure. Goodwill has been reallocated to the reor-
+ganized reporting structure generally based on relative values.
+The reallocation did not result in goodwill impairments.
+The Siemens' groups of cash-generating units to which good-
+will is allocated are generally represented by a segment and for
+Healthcare one level below the segment. Prior year disclosures
+are based on the reporting structure before reorganization.
+Siemens performs the mandatory annual impairment test
+in the three months ended September 30. The recoverable
+amounts for the annual impairment test 2015 for Siemens'
+groups of cash-generating units were generally estimated to be
+higher than the carrying amounts. Key assumptions on which
+Siemens based its determinations of the fair value less costs to
+sell for the groups of cash-generating units include terminal
+value growth rates up to 2.5% in fiscal 2015 and 2.9% in fiscal
+2014, respectively and after-tax discount rates of 6.0% to 9.5%
+in fiscal 2015 and 6.5% to 9.0% in fiscal 2014. Where possible,
+reference to market prices is made.
+construction in progress
+710
+7
+516
+(449)
+(25)
+760
+(10)
+750
+Property, plant
+and equipment
+24,083
+475
+1,927
+(2,515)
+23,968
+(14,330)
+9,638 (1,652)
+│1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+78
+Consolidated Financial Statements
+Balance at year-end
+Advances to suppliers and
+(856)
+Dispositions and reclassifications to assets classified as held for disposal
+3,449
+3,374
+One to five years
+Thereafter
+2,072
+2,433
+2,492
+Within one year
+2015
+2014
+2,965
+2015
+Sep 30,
+in leases
+Gross investment
+Present value of minimum
+future lease payments
+receivable
+Sep 30,
+15,100
+17,253
+The gross investment in leases and the present value of mini-
+mum future lease payments receivable are due as follows:
+(1,895)
+(2,554)
+(in millions of €)
+263
+242
+6,129
+60
+4,599
+Acquisitions and purchase accounting adjustments
+777
+1,187
+Translation differences and other
+19,564
+19,546
+Balance at beginning of year
+2014
+2015
+Fiscal Year
+Cost
+(in millions of €)
+NOTE 11 Goodwill
+Consolidated Financial Statements 75
+Cost of sales include inventories recognized as expense
+amounting to €51,735 million and €49,177 million, respectively,
+in fiscal 2015 and 2014. Compared to prior year write-downs in-
+creased by €97 million and €1 million as of September 30, 2015
+and 2014.
+Investments in finance leases primarily relate to industrial ma-
+chinery, medical equipment, transportation systems, equip-
+ment for information technology and office machines. Actual
+cash flows will vary from contractual maturities due to future
+sales of finance receivables, prepayments and write-offs.
+2014
+2,013
+3,037
+215
+5,266
+228
+5,265
+6,124
+(261)
+(316)
+1,222
+(645)
+technology
+3,346
+111
+Acquired technology
+including patents, licenses
+and similar rights
+3,505
+130
+16
+Internally generated
+78
+3,525
+(2,461)
+1,064
+(246)
+Customer relationships
+and trademarks
+4,565
+148
+5
+(204)
+(174)
+1,224
+(1,526)
+Reclassi-
+fications
+Retire-
+ments¹
+amount
+business
+Gross
+carrying
+amount
+Accumu-
+lated
+Carrying
+10/01/2013
+combi-
+09/30/2014
+nations
+deprecia-
+tion/amorti-
+zation and
+impairment
+09/30/2014
+amount
+Deprecia-
+tion/amorti-
+zation and
+impairment
+in fiscal
+2014
+312
+(1,019)
+2,750
+Other intangible assets
+11,415
+388
+21
+(4,687)
+2,453
+(453)
+Furniture and office
+equipment
+5,740
+106
+2
+608
+81
+(751)
+Equipment leased to others
+2,936
+104
+-
+371
+1
+(485)
+5,786
+2,927
+(4,440)
+(1,705)
+1,347
+(521) 7,140
+differences
+239
+4
+390
+(166) 4,552
+(1,389) 10,826
+(2,280)
+2,273
+(309)
+(6,266) 4,560
+(730)
+Land and bulidings
+7,677
+136
+(7)
+155
+128
+(733)
+7,356
+(3,489) 3,868
+(238)
+Technical machinery and
+equipment
+7,020
+122
+277
+5
+1,156
+1
+(83)
+1 Includes adjustments for fair value hedge accounting.
+2,298
+18,165
+2,670
+25,955
+31
+31
+€
+33
+33
+€
+3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
+3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
+Total Bonds with Warrant Units
+1,140
+1,500
+US$
+1,292
+1,500
+US$
+1,158
+1,500
+US$
+1,314
+1,500
+US$
+Debt Issuance Program - The Company has a program for
+the issuance of debt instruments in place under which instru-
+ments up to €15.0 billion can be issued as of September 30,
+2015 and 2014, respectively. As of September 30, 2015 and 2014
+€10.5 billion and €10.2 billion in notional amounts were issued
+and are outstanding.
+US$ Bonds - In May 2015, Siemens issued instruments total-
+ing US$7.75 billion (€6.92 billion as of September 30, 2015) in
+six tranches.
+Hybrid Capital Bond - Siemens may call the option on the
+hybrid bond in 2016 or thereafter. The instruments bear fixed-
+rate interests until September 14, 2016; thereafter, floating-rate
+interest is applied according to the conditions of the bond.
+80 Consolidated Financial Statements
+(11)
+(1)
+Fair value of
+plan assets
+Defined benefit
+obligation (DBO)
+Development of the defined benefit plans
+in fiscal 2015 and 2014
+Following the Swiss law of occupational benefits (BVG) each em-
+ployer has to grant post-employment benefits for qualifying em-
+ployees. Accordingly Siemens in Switzerland sponsors several
+cash balance plans. These plans are administered by founda-
+tions. The board of the main foundation is composed of equally
+many employer and employee representatives. The board of the
+foundation is responsible for investment policy and the asset
+management, as well as for any changes in the plan rules and the
+determination of contributions to finance the benefits. The Com-
+pany is required to make total contributions at least as high as
+the sum of the employee contributions set out in the plan rules.
+In case of an underfunded plan the Company together with the
+employees may be asked to pay supplementary contributions ac-
+cording to a well defined framework of recovery measures.
+Switzerland:
+Siemens plc offers benefits through the Siemens Benefit Scheme
+for which, until the start of retirement, an inflation increase of
+the accrued benefits is mandatory. The required funding is de-
+termined by a funding valuation carried out every third year
+based on legal requirements. Due to deviating guidelines for the
+determination of the discount rates, the technical funding defi-
+cit is usually larger than the IFRS funding deficit. To reduce the
+deficit Siemens entered into an agreement with the trustees to
+provide annual payments of GBP 31 (€42) million until fiscal
+2033. The agreement also provides for a cumulative advance
+payment by Siemens AG compensating the remaining annual
+payments at the date of early termination of the agreement due
+to cancellation or insolvency.
+U.K.:
+Consolidated Financial Statements 81
+Siemens Corporation sponsors the Siemens Pension Plan,
+which is vastly frozen to new entrants and accretion of new
+benefits. Most of the plan participants' benefits are calculated
+using a cash balance formula. The plan assets are held in a
+Master Trust. Siemens Corporation has delegated investment
+oversight of the assets to the Investment Committee. The
+trustee of the Master Trust, who is responsible for the safe-
+keeping of the trust, acts only by direction of the Investment
+Committee. Annual contributions are determined by indepen-
+dent actuaries. There is a regulatory requirement to maintain a
+minimum funding level of 80% in the defined benefit plans in
+order to avoid benefit restrictions.
+U.S.:
+In Germany, Siemens AG provides pension benefits through
+the plan BSAV (Beitragsorientierte Siemens Altersversorgung),
+frozen legacy plans and deferred compensation plans. The ma-
+jority of Siemens' active employees participate in the BSAV.
+Those benefits are predominantly based on contributions made
+by the Company and returns earned on such contributions,
+subject to a minimum return guaranteed by the Company. In
+connection with the implementation of the BSAV, benefits pro-
+vided under the frozen legacy plans were modified to substan-
+tially eliminate the effects of compensation increases. How-
+ever, these frozen plans still expose the Company to investment
+risk, interest rate risk and longevity risk. The pension plans are
+funded via contractual trust arrangements (CTA). In Germany
+no legal or regulatory minimum funding requirements apply.
+Germany:
+The defined benefit plans open to new entrants are based pre-
+dominantly on contributions made by the Company. Only to a
+certain extent, those plans are affected by longevity, inflation
+and compensation increases and take into account country
+specific differences. The Company's major plans are funded
+with assets in segregated entities. In accordance with local
+laws and bilateral agreements with benefit trusts (trust agree-
+ment) those plans are managed in the interest of the beneficia-
+ries. The defined benefit plans cover 500,000 participants, in-
+cluding 218,000 active employees, 80,000 former employees
+with vested benefits and 202,000 retirees and surviving depen-
+dents.
+DEFINED BENEFIT PLANS
+Siemens provides post-employment defined benefit plans or
+defined contribution plans to almost all of the Company's do-
+mestic employees and the majority of the Company's foreign
+employees.
+NOTE 16 Post-employment benefits
+Siemens has a US$ 9.0 billion (€8.0 billion as of September 30,
+2015) commercial paper program in place including US$ ex-
+tendible notes capabilities. As of September 30, 2015 and 2014,
+US$ 1.7 billion (€1.5 billion) and US$ 1.0 billion (€0.8 billion),
+respectively, were outstanding. Siemens' commercial papers
+have a maturity of generally less than 90 days. Interest rates
+ranged from 0.11% to 0.32% in fiscal 2015 and from 0.1% to 0.2%
+in fiscal 2014.
+COMMERCIAL PAPER PROGRAM
+In fiscal 2015, the two bilateral US$500 million term loan facili-
+ties (in aggregate €893 million) were extended by one year un-
+til March 26, 2020 with no extension option remaining. In
+June 2015, Siemens redeemed a €333 million assignable loan.
+ASSIGNABLE AND TERM LOANS
+Bond with Warrant Units - Each of the US$1.5 billion instru-
+ments were issued with 6,000 detachable warrants. In the
+three months ended September 30, 2015, Siemens made an ex-
+change offer to institutional investors to replace the existing
+warrants relating to Siemens and OSRAM Licht AG (OSRAM)
+shares with new warrants relating only to Siemens shares;
+10,661 warrants were offered for exchange by warrant holders
+and accepted by Siemens; the previous warrants submitted
+for exchange were cancelled. Since September 11, 2015, holders
+of the new warrants are entitled, at their option, to receive
+1,902.0024 Siemens AG shares per warrant at an exercise price
+per share of €98.7606. To facilitate the exchange, in total, float-
+ing-rate instruments of €64 million were issued. 1,339 warrants
+were not exchanged and retain the original rights to receive
+1,811.9349 Siemens AG shares per warrant and 160.4987 OSRAM
+shares at an exercise price of €187,842.81 (since February 26,
+2015). The number of shares remains subject to the adjustment
+provisions under the terms and conditions of the warrants. As
+of September 30, 2015 and 2014, respectively, the warrants of-
+fer option rights to 22.7 million and 21.7 million Siemens AG
+shares. The new warrants are classified as equity instruments
+with a fair value of €108 million at issuance; they are presented
+in Capital reserve in line item Other changes in equity. The pre-
+vious warrants not exchanged continue to be recognized as
+other financial liability.
+1.05%/2012/August 2017 US$ fixed-rate instruments
+1.65%/2012/August 2019 US$ fixed-rate instruments
+1,984
+1,989
+Total Hybrid Capital Bonds
+889
+1,000
+US$
+2.15%/2015/May 2020/US$-fixed-rate-instruments
+1,114
+1,250
+US$
+1.45%/2015/May 2018/US$-fixed-rate-instruments
+446
+500
+US$
+US$ 3m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
+1,843
+1,750
+US$
+2,023
+1,750
+US$
+6.125%/2006/August 2026/US$ fixed-rate instruments
+1,457
+1,750
+US$
+1,600
+2.90%/2015/May 2022/US$-fixed-rate-instruments
+Effects of asset
+ceiling
+(III)
+US$
+1,557
+1,025
+750
+£
+1,055
+750
+£
+959
+900
+€
+934
+900
+€
+5.25%/2006/September 2066/EUR fixed-rate instruments
+6.125%/2006/September 2066/GBP fixed-rate instruments
+3,301
+10,497
+1,539
+1,750
+US$
+4.40%/2015/May 2045/US$-fixed-rate-instruments
+Total US$ Bonds
+1,331
+1,500
+US$
+3.25%/2015/May 2025/US$-fixed-rate-instruments
+1,750
+Net defined
+benefit balance
+(1 - 11 + 111)
+Fiscal year
+Debt to equity ratio
+Sep 30,
+2014
+2,148
+2015
+2,417
+21,198
+8.77
+18,663
+8.69
+Equity allocated to SFS differs from the carrying amount of
+equity as it is mainly allocated based on the risks of the under-
+lying business.
+Siemens' current corporate credit ratings are:
+Standard &
+Poor's Ratings
+Services
+Sep 30, 2015
+Sep 30, 2014
+Moody's
+Investors
+Standard &
+Poor's Ratings
+Service
+Services
+Moody's
+Investors
+Service
+Long-term debt
+Short-term debt
+A1
+P-1
+A+
+Aa3
+SFS debt
+A-1+
+Allocated equity
+The SFS business is capital intensive and requires a larger
+amount of debt to finance its operations compared to the in-
+dustrial business.
+Less: 50% nominal amount hybrid bond
+Less: Fair value hedge accounting adjustment²
+Industrial net debt
+(958)
+(932)
+(936)
+(1,121)
+6,107
+1,390
+Income from continuing operations
+before income taxes
+7,218
+7,306
+Plus/Less: Interest income, interest expenses
+and other financial income (expenses), net
+Plus: Amortization,
+depreciation and impairments
+EBITDA
+58
+(117)
+2,549
+2,387
+9,825
+9,576
+0.62
+0.15
+Industrial net debt/EBITDA
+1 The adjustment considers that both Moody's and S&P view SFS as a captive
+finance company. These rating agencies generally recognize and accept higher
+levels of debt attributable to captive finance subsidiaries in determining credit
+ratings. Following this concept, Siemens excludes SFS Debt in order to derive an
+industrial net debt which is not affected by SFS's financing activities.
+2 Debt is generally reported with a value representing approximately the amount
+to be repaid. However, for debt designated in a hedging relationship (fair value
+hedges), this amount is adjusted for changes in market value mainly due to changes
+in interest rates. Accordingly, Siemens deducts these changes in market value in
+order to end up with an amount of debt that approximately will be repaid.
+86 Consolidated Financial Statements
+(in millions of €)
+1,750
+P-1
+NOTE 20 Commitments and contingencies
+993
+3,428
+828
+3,217
+Total operating rental expenses for the years ended Septem-
+ber 30, 2015 and 2014 were €1,118 million and €1,105 million,
+respectively.
+The Company is jointly and severally liable and has capital con-
+tribution obligations as a partner in commercial partnerships
+and as a participant in various consortiums.
+NOTE 21 Legal proceedings
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED BREACHES OF CONTRACT
+As previously reported, Siemens AG is a member of a supplier
+consortium that has been contracted to construct the nuclear
+power plant "Olkiluoto 3″ in Finland for Teollisuuden Voima Oyj
+(TVO) on a turnkey basis. The agreed completion date for the
+nuclear power plant was April 30, 2009. Siemens AG's share of
+the contract value is approximately 27%. The other member of
+the supplier consortium is a further consortium consisting of
+Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
+Completion of the power plant has been delayed for reasons
+which are in dispute. In December 2008, the supplier consor-
+tium filed a request for arbitration against TVO demanding an
+extension of the construction time, additional compensation,
+milestone payments, damages and interest. In August 2015, the
+supplier consortium updated its monetary claims in the
+amount of approximately €3.4 billion. TVO rejected the claims
+and asserted counterclaims against the supplier consortium
+consisting primarily of damages due to the delay. Also in Au-
+gust 2015, TVO increased its counterclaims to approximately
+€2.3 billion. The arbitration proceedings may continue for sev-
+eral years. Partial Awards on certain aspects could be rendered
+during fiscal year 2016. The amounts claimed by the parties do
+not cover the total period of delay and may be updated further.
+As previously reported, Essent Wind Nordsee Ost Planungs- und
+Betriebsgesellschaft mbH filed a request for arbitration against
+Siemens AG in October 2013 alleging breaches of a contract for
+the delivery of a high-voltage substation entered into by the par-
+ties in 2010. The parties settled the dispute in December 2014.
+35,591
+Balance at begin of fiscal year
+2014
+2015
+2014
+2015
+2014
+2015
+2014
+2015
+(in millions of €)
+Fiscal year
+Fiscal year
+Fiscal year
+Sep 30,
+2014
+815
+1,574
+A+
+A-1+
+1,662
+773
+The following table presents the undiscounted amount of maxi-
+mum potential future payments for major groups of guarantees:
+Sep 30,
+(in millions of €)
+2015
+Credit guarantees
+859
+2014
+774
+Guarantees of third-party performance
+HERKULES obligations
+2,292
+2,061
+1,090
+4,241
+1,490
+4,325
+Item Credit guarantees cover the financial obligations of third
+parties generally in cases where Siemens is the vendor and (or)
+contractual partner or Siemens is liable for obligations of asso-
+ciated companies accounted for using the equity method. Addi-
+tionally, credit guarantees are issued in the course of the SFS
+business. Credit guarantees generally provide that in the event
+of default or non-payment by the primary debtor, Siemens will
+be required to settle such financial obligations. The maximum
+amount of these guarantees is equal to the outstanding bal-
+ance of the credit or, in case where a credit line is subject to
+variable utilization, the nominal amount of the credit line.
+These guarantees have terms up to 18 years and 19 years, re-
+spectively, in fiscal 2015 and 2014. For credit guarantees
+amounting to €271 million and €260 million as of Septem-
+ber 30, 2015 and 2014, respectively, the Company held collateral
+mainly in the form of inventories and trade receivables. The
+Company accrued €93 million and €49 million relating to credit
+guarantees as of September 30, 2015 and 2014, respectively.
+Furthermore, Siemens issues guarantees of third-party perfor-
+mance, which mainly include performance bonds and guaran-
+tees of advanced payments in a consortium. In the event of
+non-fulfillment of contractual obligations by the consortium
+partner(s), Siemens will be required to pay up to an agreed-
+upon maximum amount. These agreements typically have
+terms of up to ten years. Generally, consortium agreements
+provide for fallback guarantees as a recourse provision among
+the consortium partners. As of September 30, 2015 and 2014,
+the Company accrued €3 million relating to performance guar-
+antees at each year-end date.
+In fiscal 2007, The Federal Republic of Germany commissioned
+a consortium consisting of Siemens and IBM Deutschland
+GmbH (IBM) to modernize and operate the non-military infor-
+mation and communications technology of the German Federal
+Armed Forces (Bundeswehr). This project is called HERKULES.
+A project company, BWI Informationstechnik GmbH (BWI), pro-
+vides the services required by the terms of the contract.
+Siemens is a shareholder in the project company. Siemens is-
+sued several guarantees connected to each other legally and
+economically in favor of the Federal Republic of Germany and
+of the consortium member IBM. The guarantees ensure that
+BWI has sufficient resources to provide the required services
+and to fulfill its contractual obligations. Future payments po-
+tentially required by Siemens will be reduced successively over
+the remaining two-year contract period.
+In addition to guarantees described above, the Company issued
+other commitments. To the extent future claims are not consid-
+ered remote, maximum future payments from these obliga-
+tions amount to €1,912 million and €1,305 million as of Sep-
+tember 30, 2015 and 2014, respectively. These commitments
+include indemnifications issued in connection with disposi-
+tions of businesses. Such indemnifications may protect the
+buyer from potential tax, legal and other risks in conjunction
+with the purchased business. As of September 30, 2015 and
+2014, the accrued amount for such other commitments is
+€559 million and €168 million, respectively.
+Consolidated Financial Statements 87
+88
+Future payment obligations under non-cancellable operating
+leases are:
+(in millions of €)
+2015
+Within one year
+After one year but not more than five years
+More than five years
+US$
+5.75%/2006/October 2016/US$ fixed-rate instruments
+10,582
+226
+217
+Other
+1,803
+2,464
+Available-for-sale financial assets
+2,111
+2,398
+Derivative financial instruments
+3,264
+Receivables from finance leases
+10,919
+12,477
+Loans receivable
+Sep 30,
+2014
+2015
+3,357
+(in millions of €)
+|
+NOTE 13 Other financial assets
+1,045
+1,063
+117
+20,821
+92
+18,416
+Interest rates in this Note are per annum. In fiscal 2015 and
+2014, weighted-average interest rates for loans from banks,
+other financial indebtedness and obligations under finance
+leases were 2.8% (2014: 3.5%), 0.2% (2014: 0.1%) and 4.7%
+(2014: 4.3%), respectively.
+17,954
+(611)
+2,455
+2,708
+Other
+1,059
+1,242
+Accruals for pending invoices
+4,880
+5,437
+Liabilities to personnel
+9,559
+10,982
+contracts and related advances
+estimated earnings on uncompleted
+Billings in excess of costs and
+2014
+2015
+Sep 30,
+(in millions of €)
+NOTE 14 Other current liabilities
+As of September 30, 2015 and 2014, €7.1 billion and €6.8 billion
+of lines of credit are unused. The facilities are for general corpo-
+rate purposes. The €4.0 billion syndicated credit facility was
+extended by one year until June 26, 2020 with one extension
+option remaining. The US$ 3.0 billion syndicated credit facility
+was extended by one year until September 27, 2020 with no
+more extension option remaining. The €450 million revolving
+bilateral credit facility is unused and has been extended to Sep-
+tember 30, 2016.
+CREDIT FACILITIES
+Item Loans receivable primarily relate to long-term loan trans-
+actions of SFS.
+Consolidated Financial Statements 79
+19,326
+115
+755
+(maturing until 2023)
+Loans from banks
+18,165
+25,498
+-
+456
+2014
+2015
+Sep 30,
+Sep 30,
+2014
+2015
+Non-current debt
+Current debt
+(in millions of €)
+Notes and bonds
+(maturing until 2066)
+NOTE 15 Debt
+Minimum future lease payments under operating leases are:
+The gross carrying amount of Advances to suppliers and con-
+struction in progress includes €787 million and €670 million,
+respectively of property, plant and equipment under construc-
+tion in fiscal 2015 and 2014. As of September 30, 2015 and 2014,
+contractual commitments for purchases of property, plant and
+equipment are €474 million and €351 million, respectively.
+As previously reported, during fiscal year 2014, Siemens Indus-
+trial Turbomachinery Ltd., United Kingdom, was sued before an
+Iranian Court. The alleged damage claims are not quantified.
+Siemens is defending itself against the action.
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED COMPLIANCE VIOLATIONS
+As previously reported, Siemens AG agreed on a settlement
+with nine out of eleven former members of the Managing and
+Supervisory Board in January 2010 relating to claims of
+breaches of organizational and supervisory duties. In Janu-
+ary 2013, Siemens AG agreed on a settlement with Dr. Thomas
+Ganswindt. In August 2014, Siemens AG reached a settlement
+with Mr. Joachim Neubürger. The Annual Shareholders' Meet-
+ing of Siemens AG approved the proposed settlement between
+the Company and Mr. Neubürger on January 27, 2015.
+As previously reported, in July 2008, Hellenic Telecommunica-
+tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
+with the district court of Munich, Germany, seeking to compel
+Siemens AG to disclose the outcome of its internal investiga-
+tions with respect to OTE. OTE seeks to obtain information with
+respect to allegations of undue influence and/or acts of bribery
+in connection with contracts concluded between Siemens AG
+and OTE from calendar 1992 to 2006. At the end of July 2010,
+OTE expanded its claim and requested payment of damages by
+Siemens AG of at least €57 million to OTE for alleged bribery
+payments to OTE employees. In October 2014 OTE increased its
+damage claim to the amount of at least €68 million. Siemens AG
+continues to defend itself against the expanded claim.
+As previously reported, in June 2008, the Republic of Iraq filed
+an action requesting unspecified damages against 93 named
+defendants with the United States District Court for the South-
+ern District of New York on the basis of findings made in the
+"Report of the Independent Inquiry Committee into the United
+Nations Oil-for-Food Program". Siemens S.A.S., France, Siemens
+Sanayi ve Ticaret A.S., Turkey, and the former Siemens subsidi-
+ary OSRAM Middle East FZE, Dubai, are among the 93 named
+defendants. In February 2013, the trial court dismissed the Re-
+public of Iraq's action. The Republic of Iraq appealed the deci-
+sion, which was then affirmed by the court of appeals. The Re-
+public of Iraq thereafter petitioned for an "en banc" review of
+the appellate decision. The court of appeals rejected the Repub-
+lic of Iraq's request in December 2014. In March 2015, the Re-
+public of Iraq filed a petition for U.S. Supreme Court review,
+which was denied in June 2015.
+Consolidated Financial Statements
+773
+134
+1,000
+Other financial
+23
+1,620 26,682
+2,979
+31
+More than five years
+Total debt
+590
+652
+After one year but not more than five years
+finance leases
+Obligations under
+338
+319
+Within one year
+2014
+2015
+(in millions of €)
+60
+68
+825
+1,737
+(maturing until 2027)
+indebtedness
+Sep 30,
+968
+774
+NOTES AND BONDS
+Currency
+US$
+445
+500
+US$
+996
+1,000
+€
+996
+1,000
+€
+1,276
+1,250
+€
+1,278
+1,250
+€
+2013/June 2020/US$ floating-rate instruments
+2014/March 2019/US$ floating-rate instruments
+2014/September 2021/US$ floating-rate instruments
+Total Debt Issuance Program
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+1.5%/2013/March 2018/US$ fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+819
+650
+£
+863
+650
+500
+£
+396
+100
+10,799
+317
+400
+US$
+357
+400
+US$
+238
+300
+US$
+267
+300
+US$
+317
+400
+US$
+356
+400
+US$
+77
+100
+US$
+87
+US$
+Sep 30, 2015
+3.75%/2012/September 2042/GBP fixed-rate instruments
+350
+1,600
+€
+1,779
+1,600
+€
+5.625%/2008/June 2018/EUR fixed-rate instruments
+425
+500
+US$
+456
+500
+US$
+millions of €1
+(in millions)
+Carrying
+amount in
+Sep 30, 2014
+notional amount
+Currency
+Carrying
+amount in
+millions of €1
+(in millions)
+5.625%/2006/March 2016/US$ fixed-rate instruments
+(interest/issued/maturity)
+notional amount
+1,839
+448
+5.125%/2009/February 2017/EUR fixed-rate instruments
+2,000
+£
+472
+350
+£
+2.75%/2012/September 2025/GBP fixed-rate instruments
+995
+1,000
+€
+996
+1,000
+€
+1.5%/2012/March 2020/EUR fixed-rate instruments
+318
+400
+US$
+357
+400
+US$
+US$ 3m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
+2,122
+2,000
+€
+2,090
+€
+859
+20,368
+9,811
+Sensitivity analysis
+Consolidated Financial Statements 83
+|
+1.8%
+1.0%
+3.2%
+2.9%
+1.7%
+1.7%
+U.K.
+4.5%
+3.9%
+Germany
+4.6%
+4.3%
+Pension progression
+2.4%
+A one-half-percentage-point change of the above assumptions
+would result in the following increase (decrease) of the DBO:
+2.7%
+Disaggregation of plan assets
+(in millions of €)
+2,380
+(2,121)
+increase
+decrease
+increase
+(in millions of €)
+Discount rate
+1,463
+1,366
+U.S. equities
+Sep 30, 2014
+Sep 30, 2015
+7,050
+6,285
+Equity securities
+Effect on DBO due to a one-half percentage-point
+2014
+2015
+Sep 30,
+1.5%
+1.5%
+CH
+Heubeck Richttafeln 2005G (modified)
+RP-2014 mortality table with MP-2014
+generational projection
+1,972
+(41)
+Total
+(59)
+Experience (gains) losses
+1,602
+(8)
+Changes in financial assumptions
+CH
+370
+26
+Changes in demographic assumptions
+2014
+2015
+(in millions of €)
+Fiscal year
+SAPS S2 (Standard mortality tables
+for Self Administered Pension Schemes
+with allowance for future mortality
+improvements)
+BVG 2010 G
+Actuarial assumptions
+The weighted-average discount rate used for the actuarial valu-
+ation of the DBO at period-end was as follows:
+3.0%
+3.0%
+4.8%
+3.6%
+U.K.
+2014
+2015
+Compensation increase
+(2,100)
+Sep 30,
+2015
+|
+CH
+U.K.
+U.S.
+Germany
+Discount rate
+The rates of compensation increase and pension progression
+for countries with significant effects are shown in the following
+table. Inflation effects, if applicable, are included in the assump-
+tions below.
+Sep 30,
+2014
+U.K.
+decrease
+2,361
+1,783
+Foreign currency risk
+Credit/Inflation/Price risks
+Real estate
+As a significant risk, the Company considers a decline in the
+plans' funded status due to adverse developments of plan as-
+sets and/or defined benefit obligations resulting from chang-
+ing parameters. Accordingly, Siemens implemented a risk man-
+agement concept aligned with the defined benefit obligations
+(Asset Liability Matching). Risk management is based on a
+worldwide defined risk threshold (value-at-risk). The concept,
+the value at risk and the asset development including the in-
+vestment strategy are monitored and adjusted on an ongoing
+basis under consultation of senior external experts. Indepen-
+dent asset managers are selected based on quantitative and
+qualitative analysis, which includes their performance and risk
+evaluation. Derivatives are used to reduce risks as part of risk
+management.
+Asset Liability Matching Strategies
+As in prior year, sensitivity determinations apply the same
+methodology as applied for the determination of the post-em-
+ployment benefit obligation. Sensitivities reflect changes in the
+DBO solely for the assumption changed.
+The DBO effect of a 10% reduction in mortality rates for all
+beneficiaries would be an increase of €1,021 million and
+€1,027 million, respectively, as of September 30, 2015 and 2014.
+26,505
+27,296
+485
+572
+456
+483
+Cash and cash equivalents
+Other assets
+(458)
+(614)
+(45)
+26
+Total
+1,149
+1 Multi strategy funds comprise absolute return funds and diversified growth funds
+that invest in various asset classes within a single fund and aim to stabilize return
+and reduce volatility.
+Future cash flows
+Warranties
+Thereof non-current
+Balance as of September 30, 2015
+Other changes
+Accretion expense and effect of changes in discount rates
+Translation differences
+Reversals
+Usage
+Additions
+Thereof non-current
+Balance as of October 1, 2014
+(in millions of €)
+NOTE 17 Provisions
+DEFINED CONTRIBUTION PLANS AND STATE PLANS
+The amount recognized as expense for defined contribution
+plans amounts to €594 million and €535 million in fiscal 2015
+and 2014, respectively. Contributions to state plans amount to
+€1,372 million and €1,317 million in fiscal 2015 and 2014, respec-
+tively.
+84 Consolidated Financial Statements
+2015 and 2014.
+Employer contributions expected to be paid to defined benefit
+plans in fiscal 2016 are €667 million. Over the next ten fiscal
+years, average annual benefit payments of €1,912 million and
+€1,751 million, respectively, are expected as of September 30,
+2015 and 2014. The weighted average duration of the DBO for
+Siemens defined benefit plans was 13 years as of September 30,
+Virtually all equity securities have quoted prices in active mar-
+kets. The fair value of fixed income securities is based on prices
+provided by price service agencies. The fixed income securities
+are traded in highly liquid markets and almost all fixed income
+securities are investment grade.
+1,079
+Interest risk
+646
+1,717
+4,718
+Government bonds
+14,694
+15,206
+Fixed income securities
+(90)
+95
+(93)
+101
+1,947
+1,993
+Global equities
+Rate of compen-
+sation increase
+Rate of pension
+progression
+1,611
+1,143
+2,030
+(1,379)
+1,590
+(1,441)
+4,216
+491
+Derivatives
+733
+Multi strategy funds'
+1,337
+1,351
+626
+772
+European equities
+Private Equity
+1,403
+Hedge Funds
+3,174
+3,526
+Alternative investments
+10,479
+10,488
+Corporate bonds
+1,211
+U.S.
+Germany
+Applied mortality tables are:
+7
+1,087
+1,096
+Interest income
+Other¹
+(177)
+4
+825
+(179)
+802
+-
+(825)
+(802)
+(8)
+2
+12
+Components of defined benefit
+costs recognized in the
+11
+Consolidated Statements of income
+1,089
+Interest expenses
+122
+133
+Plan participants' contributions
+(533)
+33,173
+26,505
+24,078
+202
+146
+9,288
+9,241
+Current service cost
+536
+477
+-
+536
+477
+1,076
+1,436
+1,570
+646
+1
+43
+Remeasurements recognized
+in the Consolidated Statements
+of Comprehensive Income
+(41)
+1,972
+(245)
+2,098
+1
+9,324
+43
+33
+Employer contributions
+611
+533
+205
+43
+1
+1,972
+(41)
+793
+11
+7
+801
+784
+Return on plan assets excluding
+amounts included in net interest
+income and net interest expenses
+133
+Actuarial (gains) losses
+2,098
+(41)
+1,972
+Effects of asset ceiling
+-
+245
+(2,098)
+-
+(245)
+122
+Benefits paid
+(1,753)
+1,435
+2,888
+3,162
+3,730
+4,597
+7,309
+6,930
+15,105
+14,539
+22,414
+21,469
+CH
+U.K.
+U.S.
+Germany
+thereof:
+9,288
+842
+5,612
+4,845
+5,696
+The discount rate was derived from high-quality corporate
+bonds with an issuing volume of more than 100 million units in
+the respective currency zones, which have been awarded an AA
+rating (or equivalent) by at least one of the three rating agen-
+cies Moody's Investor Service, Standard & Poor's Rating Services
+or Fitch Ratings.
+The remeasurements comprise actuarial (gains) and losses
+resulting from:
+The net defined benefit balance of €9,737 million and €9,288 mil-
+lion as of September 30, 2015 and 2014 comprised €9,811 million
+and €9,324 million net defined benefit liability and €75 million
+and €36 million net defined benefit asset, respectively. Net in-
+terest expenses amounted to €263 million and €295 million,
+respectively, in fiscal 2015 and 2014. Consistent with prior year,
+the DBO is attributable to active employees 32%, to former em-
+ployees with vested rights 14% and to retirees and surviving
+dependants 54%.
+82 Consolidated Financial Statements
+1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
+170
+551
+59
+9,737
+66
+2,947
+2,784
+3,432
+125
+22
+97
+107
+4,818
+2,673
+Order related
+202
+26,505
+88
+1
+(122)
+515
+(224)
+602
+Business combinations, disposals and other
+(7)
+(47)
+(7)
+(47)
+Settlement payments
+(134)
+(137)
+(1,514)
+(1,616)
+(1,649)
+(102)
+Foreign currency translation effects
+897
+635
+27,296
+35,591
+36,818
+Balance at fiscal year-end
+(654)
+(557)
+6
+(463)
+214
+390
+(167)
+Other reconciling items
+115
+103
+6
+(1)
+525
+793
+(1,123)
+losses and risks
+Emerging markets
+Equity
+Other includes transaction-related and post-closing provisions
+in connection with portfolio activities as well as provisions for
+Legal Proceedings, as far as the risks that are subject to such
+Legal Proceedings are not already covered by project account-
+ing. Provisions for Legal Proceedings amounted to €398 mil-
+lion and €433 million as of September 30, 2015 and 2014,
+respectively.
+decreased by €282 million as of September 30, 2015, mainly
+due to reduced assumed inflation rates.
+Consolidated Financial Statements 85
+As of September 30, 2015 and 2014, the provision totals
+€1,359 million and €1,347 million, respectively, and is recorded
+net of a present value discount of €594 million and €977 mil-
+lion, respectively, reflecting the assumed continuous outflow
+of the total expected payments until the 2070's. Declined dis-
+count rates increased the carrying amount of provisions by
+€283 million as of September 30, 2015 and by €242 million as
+of September 30, 2014. At the same time, the provisions were
+the Company is responsible for intermediate storage of the ra-
+dioactive materials until they are handed over to a final storage
+facility. With respect to the Hanau facility, the asset retirement
+has been completed and intermediate storage has been set up.
+On September 21, 2006, the Company received official notifica-
+tion from the authorities that the Hanau facility has been re-
+leased from the scope of application of the German Atomic
+Energy Act and that its further use is unrestricted. The ulti-
+mate costs of the remediation are contingent on the decision
+of the federal government on the location of the final storage
+facilities and the date of their availability. Several parameters
+relating to the development of a final storage facility for radio-
+active waste are based on the assumptions for the so called
+Schacht Konrad final storage. Parameters related to the life-
+span of the German nuclear reactors assume a phase-out until
+2022. The valuation uses assumptions to reflect the current
+and detailed cost estimates, price inflation and discount rates
+as well as a continuous outflow until the 2070's related to the
+costs for dismantling as well as intermediate and final storage.
+Amongst others, the estimated cash outflows related to the
+asset retirement obligation could alter significantly if, and
+when, political developments affect the government's plans to
+develop the so called Schacht Konrad. For discounting the
+cash outflows, the Company uses current interest rates as of
+the balance sheet date.
+Environmental clean-up costs relate to remediation and envi-
+ronmental protection liabilities which have been accrued based
+on the estimated costs of decommissioning facilities for the
+production of uranium and mixed-oxide fuel elements in
+Hanau, Germany (Hanau facilities), as well as a nuclear re-
+search and service center in Karlstein, Germany (Karlstein facil-
+ities). According to the German Atomic Energy Act, when such
+a facility is closed, the resulting radioactive waste must be col-
+lected and delivered to a government-developed final storage
+facility. In this regard, the Company has developed a plan to
+decommission the Hanau and Karlstein facilities in the follow-
+ing steps: clean-out, decontamination and disassembly of
+equipment and installations, decontamination of the facilities
+and buildings, sorting of radioactive materials, and intermedi-
+ate and final storage of the radioactive waste. This process will
+be supported by continuing engineering studies and radioac-
+tive sampling under the supervision of German federal and state
+authorities. The decontamination, disassembly and final waste
+conditioning are planned to continue until 2018; thereafter,
+The Company is subject to asset retirement obligations related
+to certain items of property, plant and equipment. Such asset
+retirement obligations are primarily attributable to environ-
+mental clean-up costs and to costs primarily associated with
+the removal of leasehold improvements at the end of the
+lease term.
+Warranties mainly relate to products sold. Order related losses
+and risks are provided for anticipated losses and risks on un-
+completed construction, sales and leasing contracts.
+Except for asset retirement obligations, the majority of the
+Company's provisions are generally expected to result in cash
+outflows during the next one to 15 years.
+|
+9,353
+1,888
+801
+1,415
+1,393
+689
+1,981
+1,829
+4,220
+500
+102
+NOTE 19 Additional capital disclosures
+3
+A key consideration of our capital structure management is to
+maintain ready access to capital markets through various debt
+instruments and to sustain our ability to repay and service our
+debt obligations over time. In order to achieve this, Siemens
+intends to maintain an Industrial net debt divided by EBITDA
+(continuing operations) ratio of up to 1.0, commencing with
+fiscal 2015. The ratio indicates the approximate number of
+years that would be needed to cover the Industrial net debt
+through continuing income, without taking into account inter-
+est, taxes, depreciation and amortization.
+Siemens' issued capital is divided into 881 million registered
+shares with no par value and a notional value of €3.00 per
+share. The shares are fully paid in. At the Shareholders' Meet-
+ing, each share has one vote and accounts for the shareholders'
+proportionate share in the Company's net income. All shares
+confer the same rights and obligations.
+(925)
+(1,175)
+Less: Current available-for-sale financial assets
+Net debt
+(8,013)
+(9,957)
+Less: Cash and cash equivalents
+19,326
+26,682
+Plus: Long-term debt
+1,620
+2,979
+Short-term debt and current maturities of
+long-term debt
+Sep 30,
+2014
+2015
+(in millions of €)
+The carrying amount of a liability resulting from a non-con-
+trolling interest holder's option to put its interest to Siemens
+decreased by €287 million in fiscal 2015 and increased Retained
+earnings, accordingly.
+Dividends paid per share were €3.30 and €3.00, respectively, in
+fiscal 2015 and 2014. The Managing Board and the Supervisory
+Board I propose to distribute a dividend of €3.50 per share enti-
+tled to the dividend, in total representing approximately €2.8
+billion in expected payments. Payment of the proposed divi-
+dend is contingent upon approval at the Shareholders' Meeting
+on January 26, 2016.
+As of September 30, 2015, total authorized capital of Siemens AG
+is €618.6 million nominal, issuable in installments based on var-
+ious time-limited authorizations, by issuance of up to 206.2 mil-
+lion registered shares of no par value. In addition, as of Septem-
+ber 30, 2015, Siemens AG's conditional capital is €1,080.6 million
+nominal or 360.2 million shares. It can primarily be used for
+serving convertible bonds or warrants under warrant bonds
+that could or can be issued based on various time-limited autho-
+rizations approved by the Shareholders' Meetings.
+In fiscal 2015 and 2014, Siemens repurchased 29,419,671 and
+11,331,922 shares, respectively. In fiscal 2015 and 2014, Siemens
+transferred 2,788,059 and 3,584,370 treasury shares, respec-
+tively, in connection with share-based payments. As of Septem-
+ber 30, 2015 and 2014, the Company has treasury shares of
+72,376,759 and 45,745,147, respectively.
+NOTE 18
+342
+4,865
+291
+2,101
+4,071
+691
+1,377
+580
+1,423
+8,425
+1,561
+53
+911
+1,745
+Total
+Other
+18,528
+Asset
+retirement
+obligations
+12,008
+Less: SFS Debt¹
+(21,198)
+(18,663)
+Plus: Post-employment benefits
+Plus: Credit guarantees
+3,721
+2
+1,398
+3,845
+3
+830
+300
+(13)
+1
+71
+(17)
+6
+80
+(1,629)
+3
+(278)
+(283)
+(355)
+(713)
+(2,150)
+(313)
+(8)
+(807)
+(1,023)
+Consolidated Statements
+P 15
+A.4
+p 58
+C.3
+P 121
+Results of operations
+of Comprehensive Income
+C.4
+B.3
+Net assets position
+A.6
+A.5
+p 16
+B.4
+p 59
+C.5
+Financial position
+Consolidated Statements
+of Cash Flows
+P 20
+p 57
+Overall assessment
+of Financial Position
+B.2
+Consolidated Statements
+C.2
+B.5
+SIEMENS
+Ingenuity for life
+Annual Report
+2016
+siemens.com
+Table of contents
+A.
+Combined Management Report
+B.
+C.
+Additional Information
+Responsibility Statement
+p 119
+Independent Auditor's Report
+p2
+B.1
+p 56
+C.1
+p 118
+Business and economic environment
+Consolidated Statements
+of Income
+A.2
+p 8
+A.3
+Financial performance system
+P 10
+A.1
+p 60
+Consolidated Financial Statements
+Consolidated Statements
+7
+Combined Management Report
+Markets served by Healthineers grew moderately in fiscal 2016
+as growth in the U.S. and in Europe more than offset weakness
+in Latin America. Growth in China was stabilizing, though growth
+rates came in lower than at the beginning of the decade. The
+diagnostic imaging market segment grew slightly. While demand
+for imaging procedures continued to grow, this trend was partly
+offset by price pressure and increased utilization rates. The mar-
+kets for ultrasound and in-vitro diagnostics grew moderately.
+Development in the ultrasound market segment benefits from
+increasing access to healthcare services. The market for in-vitro
+diagnostics is expanding due to population and income growth
+in emerging markets and the rising importance of diagnostics
+in improving healthcare quality. For the healthcare industry as
+a whole, the trend towards consolidation continues. Competi-
+tion among the leading companies is strong, including with re-
+spect to price.
+Market volume for the markets addressed by the Process Indus-
+tries and Drives Division declined moderately in fiscal 2016. This
+was due mainly to reductions in capital expenditures by custom-
+ers in commodity-related industries such as oil and gas, mining,
+cement and metals. Towards the end of the fiscal year, demand
+from those industries began to stabilize. As described for Digital
+Factory above, global manufacturing production grew only mod-
+estly while the consumer-oriented industries served by Process
+Industries and Drives, such as food and beverage and pharma-
+ceuticals continued their growth path. Competitors of the Divi-
+sion's business activities can be grouped into two categories:
+multinational companies that offer a relatively broad portfolio
+and companies that are active only in certain geographic or prod-
+uct markets. Consolidation is taking place mostly in particular
+market segments and not across the broad base of the Division's
+portfolio. In particular, consolidation in solution-driven markets
+is going in the direction of in-depth niche market expertise. Most
+major competitors have established global bases for their busi-
+nesses. In addition, the competition has become increasingly
+focused on technological improvements and cost position.
+2015. Global manufacturing production grew only modestly
+but showed some signs of growth stabilization towards the end
+of the fiscal year. Consumer-oriented industries and the global
+automotive industry, which is one of the most important end-
+customer industries of the Division, remained on a stable growth
+path. In contrast, mining- and oil-related industries continued to
+suffer from low raw material prices. Demand from the machine-
+building industry declined modestly year-over-year as invest-
+ments were held back due mainly to uncertainties in the global
+political and economic environment. The competition for Digital
+Factory's business activities can be grouped into two categories:
+multinational companies that offer a relatively broad portfolio
+and companies that are active only in certain geographic or prod-
+uct markets.
+In fiscal 2016, market volume for the markets addressed by the
+Digital Factory Division came in slightly below the level in fiscal
+Markets for the Mobility Division grew moderately in fiscal 2016,
+with all regions contributing to growth. Market development in
+the Europe, C.I.S., Africa, Middle East region was characterized by
+continuous investment and awards of large orders. This was par-
+ticularly evident in Germany and the U.K. Demand in the Middle
+East and in Africa was mainly driven by turnkey and rail infrastruc-
+ture projects. In the Americas region, growth continued to bene-
+fit from demand for passenger locomotives and urban transport
+products in the U.S. Within the Asia, Australia region, Chinese
+markets saw ongoing investments in high-speed trains, urban
+transport and rail infrastructure, while India awarded large orders
+as part of the country's transportation infrastructure build-out.
+The Division's principal competitors are multinational companies.
+Consolidation among Mobility's competitors is continuing.
+Markets for the Building Technologies Division grew moderately
+in fiscal 2016. Growth was driven by solid demand from the U.S.
+and Asia, despite softening growth rates in China. Within the
+Europe, C.I.S., Africa, Middle East region, markets in the Middle
+East grew stronger than the region overall. The recovery of the
+European market was weaker than expected but included sta-
+ble growth in Germany. The Division's principal competitors are
+multinational companies. Its solutions and services business also
+competes with system integrators and small local companies.
+The Division faces continuing price pressure, particularly in its
+solutions business, due to strong competition from system houses
+and some larger competitors.
+Markets addressed by the Energy Management Division grew
+moderately in fiscal 2016. The utilities market, the Division's single
+largest customer segment, showed clear growth, benefiting from
+major energy transmission investments in Egypt and Qatar and
+from large interconnection projects, particularly in China and
+India. The chemicals and the construction industries grew slightly.
+Growth in the chemicals industry was driven by the Americas,
+where some process industries showed a trend towards re-indus-
+trialization in the U.S. and a build-up of capacities within the
+region overall. Within the construction industry, increased invest-
+ments in North America were largely offset by a slow-down in
+investing activities in Asia, particularly in China. Demand from
+the metals industry remained on the prior-year level, while the
+oil and gas industry continued to reduce capital expenditures due
+to low oil prices. Competitors of the Energy Management Division
+consist mainly of a small number of large multinational compa-
+nies. International competition is increasing from manufacturers
+in emerging countries such as China, India and Korea.
+and cost reduction, dependency on subsidy schemes is expected
+to decrease in the long term.
+Combined Management Report
+6
+Following strong demand in fiscal 2015, market volume for the
+markets served by the Wind Power and Renewables Division
+declined moderately in fiscal 2016. The decline was due to the
+onshore wind power market segment, only partly offset by
+growth in the relatively smaller offshore wind power market seg-
+ment. On a regional basis, the decline was most evident in the
+Americas, particularly including Brazil and the U.S., and in Asia,
+Australia, particularly including China, where the largest national
+wind market in the world remains largely closed to foreign man-
+ufacturers. In Europe, in contrast, demand for wind power grew
+in both the onshore and the offshore market segments. The com-
+petitive situation in wind power differs in the two major market
+segments. In the markets for onshore wind farms, competition is
+widely dispersed without any one company holding a dominant
+share of the market, while markets for offshore wind farms con-
+tinue to consist of a few experienced players. Consolidation is
+moving forward in both on- and offshore segments, including
+exits of smaller players. The key drivers of consolidation are in-
+creasing price pressure as well as technology challenges and
+market access challenges, which increase development costs and
+the importance of risk-sharing in offshore wind power. Market
+development continues to depend strongly on energy policy, in-
+cluding tax incentives in the U.S. and regulatory frameworks in
+Germany and the U.K. With continued technological progress
+The markets of the Power and Gas Division remained challeng-
+ing in fiscal 2016. This was again particularly evident in the mar-
+ket for steam turbines, where volume shrank substantially year-
+over-year due to an ongoing shift from coal-fired to gas-fired
+power generation in the U.S. and emission regulation such as in
+China. Demand in compression markets also fell year-over-year
+due to continued reduction in capital expenditure for oil and gas
+upstream applications. In contrast, demand in the gas turbine
+market continued to grow in fiscal 2016, driven by rising demand
+for energy in emerging countries, demand for replacement of
+aged, inefficient and inflexible power plants; the above-men-
+tioned shift from coal to gas, particularly in the U.S.; an energy
+market reform in Mexico; large projects in Egypt; diversification
+towards gas power plants in China and countries in Latin America
+and the Middle East. The Division's competition consists mainly
+of two groups: a relatively small number of equipment manufac-
+turers, some with very strong positions in their domestic markets,
+and on the other hand a large number of engineering, procure-
+ment and construction contractors. The gas turbine market is
+experiencing overcapacity among original equipment manufac-
+turers and engineering, procurement and construction contrac-
+tors, which is leading to market consolidation.
+A.1.2.2 MARKET DEVELOPMENT
+A.2 Financial performance system
+The partly estimated figures presented here for GDP and fixed
+investments are calculated by Siemens based on an IHS Markit
+report dated October 15, 2016.
+A.2.1 Overview
+A.2.2 Revenue growth
+Process Industries and Drives
+Healthineers
+14-20%
+6-9%
+8-11%
+7-10%
+5-8%
+11-15%
+Margin range
+Wind Power and Renewables
+Energy Management
+Building Technologies
+Mobility
+Power and Gas
+Profit margin ranges
+Within the framework of One Siemens, we aim to achieve margins
+through the entire business cycle that are comparable to those of
+our relevant competitors. Therefore, we have defined profit mar-
+gin ranges for our industrial businesses, which are based on the
+profit margins of the respective relevant competitors.
+A.2.3 Profitability and capital
+efficiency
+Currency translation effects are the difference between revenue
+for the current period calculated using the exchange rates of
+the current period and revenue for the current period calculated
+using the exchange rates of the comparison period. For calculat-
+ing the percentage change year-over-year, this absolute differ-
+ence is divided by revenue for the comparison period. A portfolio
+effect arises in the case of an acquisition or a disposition and is
+calculated as the change year-over-year in revenue of the relevant
+business resulting specifically from the acquisition or disposition.
+For calculating the percentage change, this absolute change is
+divided by revenue for the comparison period. For orders, we
+apply the same calculations for currency translation and portfolio
+effects as described above.
+Within the framework of One Siemens, we aim to grow our reve-
+nue faster than the average weighted revenue growth of our most
+relevant competitors. Our primary measure for managing and
+controlling our revenue growth is comparable growth, because it
+shows the development in our business net of currency transla-
+tion effects, which arise from the external environment outside
+of our control, and portfolio effects, which involve business activ-
+ities which are either new to or no longer a part of our business.
+Within One Siemens, we have established a financial framework –
+for revenue growth, for profitability and capital efficiency, for our
+capital structure, and for our dividend policy.
+8-12%
+All in all, the negative effects outweighed the positive ones.
+During the course of the fiscal year, growth forecasts for global
+gross domestic product (GDP) for calendar 2016 declined from
+2.9% in October 2015 to 2.4% in October 2016. Fixed investments
+are expected to expand by 1.7% in calendar 2016, down from
+3.4% previously forecast in October 2015.
+In Europe, economic activity also decelerated considerably in the
+second and third quarters of fiscal 2016. Risks in the European
+banking system resurfaced. The largely unexpected Brexit vote in
+June 2016 added uncertainty - though the consequences in the
+following months did not match the initial concerns.
+The Financial Services (SFS) Division supports its customers'
+investments with leasing solutions and equipment, project and
+Combined Management Report 3
+structured financing in the form of debt and equity investments.
+Based on its comprehensive financing know-how and specialist
+technology expertise in the areas of Siemens businesses, SFS pro-
+vides financial solutions for Siemens customers as well as other
+companies, and also manages financial risks of Siemens. SFS op-
+erates the Corporate Treasury of the Siemens Group, which in-
+cludes managing liquidity, cash and interest risks as well as cer-
+tain foreign exchange, credit and commodities risks. Business
+activities and tasks of Corporate Treasury are reported in the seg-
+ment information within Reconciliation to Consolidated Financial
+Statements.
+A.1.1.3 RESEARCH AND DEVELOPMENT
+Our research and development (R&D) activities are ultimately
+geared to developing innovative, sustainable solutions for our
+customers and the Siemens businesses - and simultaneously
+safeguarding our competitiveness. For these reasons, we focus
+in particular on
+enabling energy supplies that are economically sustainable;
+> further enhancing efficiency in the generation of renewable
+and conventional power and minimizing losses during power
+transmission;
+➤ finding novel solutions for smart grids and for the storage of
+energy from renewable sources with irregular availability;
+> promoting the efficient utilization of energy, especially in
+buildings, industry and transportation, e.g. through highly
+efficient drives for production facilities or for local and long-
+distance trains;
+> creating the highly flexible, connected factories of tomorrow
+using advanced automation and digitalization technologies;
+> turning unstructured data into value-adding information, e.g.
+when providing services such as preventive maintenance;
+> advancing the integration of medical imaging technology, in
+vitro diagnostics and IT for medical engineering to support
+improved patient outcomes.
+Beyond these points of focus, we recognize how important
+highly sophisticated software solutions are for all the fields of
+business in which Siemens is active. R&D activities are carried
+out by our businesses as well as our Corporate Technology (CT)
+department.
+Corporate Technology is both a creative driver of disruptive inno-
+vations and a partner to the Siemens businesses. Its R & D activi-
+ties are focused on the Company's core activities in the fields of
+electrification, automation and digitalization. In many research
+projects, CT works closely with scholars from leading universities
+and research institutions. These partnerships, along with close
+collaborations with start-ups, are an important part of Siemens'
+open innovation concept, which is designed to make the Com-
+pany even more innovative.
+In fiscal 2016, Siemens announced the creation of an autono-
+mous unit that will place the Company's partnership with start-
+ups on a much higher level: next47. The unit went into operation
+in October 2016. It has been given a budget of €1 billion for its
+first five years. With the creation of next47, Siemens plans to
+further enhance its innovativeness and speed up the introduction
+of innovations to the marketplace. next47 is focusing on five in-
+novation fields: artificial intelligence, distributed electrification,
+autonomous machines, blockchain applications and connected
+electric mobility. Electrically powered flight is an example of a
+disruptive development being pursued by next47. In cooperation
+with Airbus, Siemens intends to demonstrate by 2020 that elec-
+tricity can be used to power large planes.
+In fiscal 2016, we reported research and development expenses
+of €4.7 billion, compared to €4.5 billion in fiscal 2015. The result-
+ing R&D intensity, defined as the ratio of R&D expenses and
+revenue, was 5.9% - the same level as in fiscal 2015. Additions to
+capitalized development expenses amounted to €0.3 billion in
+both fiscal 2016 and 2015, mainly at Healthineers. As of Septem-
+ber 30, 2016, Siemens held approximately 59,800 granted patents
+worldwide in its continuing operations. As of September 30,
+2015, it held approximately 56,200 granted patents. On average,
+we had 33,000 R&D employees in fiscal 2016.
+Research and Development in our Businesses
+R&D at the Power and Gas Division concentrates on developing
+products and solutions for enhancing efficiency, flexibility and
+economy in power generation and in the oil and gas industry.
+These products and solutions include turbomachinery - primarily
+high-performance, low-emission gas turbines for single operation
+or for combined cycle power plants - and compressor solutions
+for various process industries. The Division's current technology
+initiative, which started in fiscal 2015, is aimed at intensifying
+R&D in innovative materials, advanced manufacturing methods
+and plant optimization. Along with promoting digitalization in
+overall product lifecycles, Power and Gas is on track preparing for
+changing energy markets and their increasingly diversified cen-
+tralized and decentralized structures.
+-
+While raw material prices increased following a slump in the sec-
+ond quarter of fiscal 2016, commodity exporting countries still
+were burdened with overcapacities due to former investment
+overhangs in extractive sectors. Associated reductions in govern-
+ment spending further weighed on economic activity.
+Combined Management Report
+R&D work at the Building Technologies Division focuses on op-
+timizing comfort, operational and energy efficiency in buildings
+and infrastructures, protecting against fire and security hazards,
+and minimizing related risks. We aim to create a portfolio of prod-
+ucts and services ranging from the field to the cloud, based on
+open standards wherever possible. This includes data-based ser-
+vices for new ways of optimizing energy consumption, easily
+scalable and reasonably priced services, a new and harmonized
+system landscape with effective integration of electrical con-
+sumption, fire detection and HVAC (heating, ventilation, air con-
+ditioning) systems, and a complete range of products tailored
+specifically to growing markets.
+The Chinese economy continued its path of rebalancing toward
+a more consumption- and domestic-demand-driven economy,
+which has so far been accompanied by a steady decline in eco-
+nomic growth rates. However, the stability of China's economy
+was partly caused by stimulus measures which have slowed the
+country's progress on this path.
+of the economic position
+The growth slowdown was especially evident in the U.S. econ-
+omy in the second and third quarters of fiscal 2016, followed by
+modest acceleration of economic activity in the fourth quarter.
+The main reason for this development was an inventory reduc-
+tion which was substantially resolved by the end of the fiscal
+year. In addition, the strong US$ weighed on U.S. exports and
+improved conditions for imports.
+As in recent years, sluggish aggregate demand, particularly for
+investment goods, held back growth. This was influenced signifi-
+cantly by high levels of political and economic uncertainty arising
+from conflicts in Syria and Iraq, the failed coup in Turkey and
+U.K.'s vote to leave the European Union, among other factors.
+A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
+The development of the world economy in fiscal 2016 again
+resulted in diminished expectations through the course of the
+year. After a slight improvement in sentiment indicators in the
+first quarter, economic activity unexpectedly slowed down in
+the second and third quarters of fiscal 2016. The growth slow-
+down was also evident in the development of international
+trade volume.
+A.1.2 Economic environment
+5
+Combined Management Report
+The R&D activities of Healthineers are directed toward our
+growth fields in therapy, molecular diagnostics, and services. We
+want to tap the full potential of imaging solutions in therapy and
+to establish a closer connection between diagnostics and therapy
+in cardiology, interventional clinical disciplines, surgery, and ra-
+diation oncology. Strategic partnerships are an essential part of
+our strategy to reach this goal. Expanding our innovation map
+beyond our established portfolio, and investing in new ideas will
+help us tap new business fields. For example, we will extend our
+activities in the highly dynamic growth field of molecular diag-
+nostics. We will expand our services business beyond product-
+related services by adding a digital services portfolio and increas-
+ing enterprise transformation services to help customers in their
+transition to value-based care within more and more provider
+organizations across geographical borders.
+The focus of R & D activities in the Process Industries and Drives
+Division is on the digital transformation of products, solutions
+and services for all sectors in the process industry, such as oil and
+gas, chemicals and pharmaceuticals. Information and communi-
+cation technologies (ICT) play a crucial role in areas such as im-
+provements in instrumentation, analytics, industrial communi-
+cation and process control systems. The end-to-end use of ICT is
+as essential a prerequisite for the expansion of drive and trans-
+mission platforms by means of integrated condition monitoring
+and service cloud connections as it is for the commissioning and
+operation of processing plants or the use of computer-assisted
+simulations to support their operators. The same applies for new
+service offerings that complement operational engineering data
+with additional condition-related data (condition monitoring)
+and use it for purposes such as asset management. The digitali-
+zation of our comprehensive process automation and industrial
+communication portfolio includes a holistic industrial security
+concept. Another central objective of our R&D activities is to fur-
+ther increase energy efficiency while reducing the consump-
+tion of raw materials and cutting emissions. This applies to our
+own product creation processes as well as to our customers' pro-
+cesses that are facilitated by our products (systems, solutions
+and services).
+less link to simulation tools enhances the benefits of virtual com-
+missioning, which is used to identify flaws at an early stage and
+in a cost-effective manner. Data-based services are another field
+of research. Siemens offers MindSphere, an industry cloud that
+industrial companies can use to develop and provide their own
+digital services. As a result, new types of services such as predic-
+tive maintenance and resource optimization can be provided.
+Machinery and plant builders can use it to monitor production
+operations around the world. MindSphere helps them reduce
+downtimes and offer new business models.
+through planning and engineering to production and service. In
+addition, the TIA (Totally Integrated Automation) Portal engi-
+neering platform is being intensively improved. Thanks to its
+open interfaces, it exchanges data with other systems. The seam-
+-
+One of the R&D priorities at the Digital Factory Division is the
+Digital Enterprise Software Suite. It includes Teamcenter software.
+Serving as a data backbone, Teamcenter digitizes the entire prod-
+uct lifecycle management (PLM) process from product design
+The Mobility Division's R&D strategy addresses customers'
+demand for maximum availability, high throughput and en-
+hanced passenger experience. Although there is a growing need
+for mobility worldwide, possibilities for building new roads and
+railways are limited. Meeting the demand for mobility requires
+intelligent solutions that make transport more efficient, safe and
+environmentally friendly. Reflecting this, Mobility's R&D activi-
+ties emphasize digitalization in developing state-of-the art rail
+vehicles, automation solutions for rail and road traffic, and rail
+electrification systems. Most of these goals can be achieved only
+with intelligent IT solutions such as WLAN-based control systems
+for driverless and conductorless metro train operation, decentral-
+ized wayside architecture for rail automation, cloud-based prod-
+uct solutions, and Integrated Mobility Platforms that intelli-
+gently network passengers, mobility service providers and traffic
+management centers.
+The R&D activities of our Energy Management Division focus
+on preparing our portfolio for changes on all voltage levels in the
+world of electricity. The increasing infeed of renewable energy
+to power grids requires that those grids become more flexible
+and efficient, particularly with distributed generation on the rise.
+The digitalization of future grids will enable intelligent grid oper-
+ation and data-driven services. Cost-out programs and optimiza-
+tion of our footprint are improving the competitiveness of our
+product portfolio on global markets. Our innovations are cen-
+tered on power electronics, digitalization or grid stabilization.
+The full integration of energy supply systems with process auto-
+mation is a core portfolio element for industrial applications and
+infrastructures.
+15-19%
+Digital Factory
+SFS (ROE after tax)
+p 51
+Takeover-relevant information
+Report of the Supervisory Board
+p 124
+Corporate Governance
+p 133
+Notes and forward-looking
+statements
+COMBINED
+MANAGEMENT REPORT
+A.1 Business and economic environment
+A.1.1 The Siemens Group
+A.1.1.1 ORGANIZATION AND BASIS
+OF PRESENTATION
+We are a technology company with core activities in the fields of
+electrification, automation and digitalization, and activities in
+nearly all countries of the world. Siemens comprises Siemens AG,
+a stock corporation under the Federal laws of Germany, as the
+parent company and its subsidiaries. Our Company is incorpo-
+rated in Germany, with our corporate headquarters situated in
+Munich. As of September 30, 2016, Siemens had around 351,000
+employees.
+Siemens has the following reportable segments: the Divisions
+Power and Gas; Wind Power and Renewables; Energy Man-
+agement; Building Technologies; Mobility; Digital Factory;
+and Process Industries and Drives as well as the separately
+managed business Healthineers (formerly called Healthcare),
+which together form our Industrial Business. The Division Finan-
+cial Services (SFS) supports the activities of our Industrial Busi-
+ness and also conducts its own business with external customers.
+As "global entrepreneurs" our Divisions and Healthineers carry
+business responsibility worldwide, including with regard to their
+operating results.
+Our reportable segments may do business with each other, lead-
+ing to corresponding orders and revenue. Such orders and reve-
+nue are eliminated on the Group level.
+A.11
+A.1.1.2 BUSINESS DESCRIPTION
+Compensation Report
+A.10
+of Changes in Equity
+A.7
+P 21
+Subsequent events
+B.6
+p 62
+A.8
+P 22
+Notes to Consolidated
+Financial Statements
+Report on expected developments
+and associated material opportunities
+and risks
+A.9
+p 35
+Siemens AG
+p 37
+The Power and Gas Division offers a broad spectrum of products
+and solutions for generating electricity from fossil fuels and for
+producing and transporting oil and gas. The portfolio includes
+gas turbines, steam turbines, generators to be applied to gas or
+steam power plants, compressor trains, integrated power plant
+solutions, and instrumentation and control systems for power
+generation. Customers are public utilities and independent power
+producers; companies in engineering, procurement and construc-
+tion that serve these companies; international and national oil
+companies; and industrial customers that generate power for
+their own consumption. Due to the broad range of its offerings,
+the Division's revenue mix may vary from reporting period to re-
+porting period depending on the share of revenue attributable to
+products, solutions and services. Because typical profitability levels
+differ among these three revenue sources, the revenue mix in a
+reporting period accordingly affects Division profit for that period.
+The Wind Power and Renewables Division designs, manufac-
+tures and installs wind turbines for onshore and offshore appli-
+cations. This includes both geared turbines and direct drive tur-
+bines. The product portfolio is based on four product platforms,
+two each for onshore and offshore applications. The Division
+primarily serves large utilities and independent power producers.
+Due to the significant offshore business of the Division and its
+activities in the Northern hemisphere, production and installa-
+tions are typically higher during spring and summer months be-
+cause of the more favorable weather and marine conditions
+during those seasons. The Division's revenue mix may vary from
+reporting period to reporting period depending on the project
+mix between onshore and offshore projects in the respective
+period. The Division also includes a minority stake in a hydro
+power business.
+15-20%
+In line with common practice in the financial services business,
+our financial indicator for measuring capital efficiency at the
+Financial Services Division (SFS) is return on equity after tax, or
+ROE after tax. ROE is defined as SFS' profit after tax, divided by
+the Division's average allocated equity.
+For purposes of managing and controlling profitability at the
+Group level, we use net income as our primary measure. This
+measure is the main driver of basic earnings per share (EPS)
+from net income, which we use in communication to the capital
+markets.
+To emphasize and evaluate our continuous efforts to improve
+productivity, we incorporated a measure called total cost produc-
+tivity into our One Siemens framework. We define this measure
+as the ratio of cost savings from defined productivity improve-
+ment measures to the aggregate of functional costs for the
+Siemens Group. We aim to achieve an annual value of 3% to 5%
+for total cost productivity.
+Within the framework of One Siemens, we seek to work as prof-
+itably and efficiently as possible with the capital provided by our
+shareholders and lenders. For purposes of managing and con-
+trolling our capital efficiency, we use return on capital employed,
+or ROCE, as our primary measure. We aim to achieve a range of
+15% to 20%.
+8 Combined Management Report
+At the Wind Power and Renewables Division, our R&D efforts
+are focused on innovative products and solutions that allow us to
+take the lead in performance, improve our competitiveness, and
+build a stronger business case for customers. This includes find-
+ing ways to more intelligently monitor and analyze turbine con-
+ditions, and smart diagnostic services. Our R&D efforts also fo-
+cus on digitalization. At our remote diagnostics center in Brande,
+Denmark, we collect digital data from more than 10,000 turbines
+in more than 30 countries, which total more than 24 million data
+sets annually. We use this data to provide value for our custom-
+ers: in 85% of cases, issues can be corrected and turbines re-
+started without sending out a service team.
+Healthineers ("Healthcare" before renaming in May 2016) is one
+of the world's largest suppliers of technology to the healthcare
+industry and a leader in medical imaging and laboratory diagnos-
+tics. We provide medical technology and software solutions as
+well as clinical consulting services, supported by a complete set of
+training and service offerings. Therefore, we offer our customers
+a comprehensive portfolio of medical solutions along the contin-
+uum of care from prevention and early detection to diagnosis,
+treatment and follow-up care. Because large portions of our rev-
+enue stem from recurring business, our business activities are to
+a certain extent resilient to short-term economic trends. They are,
+however, dependent on regulatory and public policy develop-
+ments around the world. Healthineers is organized into six busi-
+ness areas: Diagnostic Imaging, Laboratory Diagnostics, Advanced
+Therapies, Ultrasound, Point of Care Diagnostics and Services.
+The Process Industries and Drives Division offers a comprehen-
+sive product, software, solution and service portfolio for moving,
+measuring, controlling and optimizing all kinds of mass flows.
+With its know-how in vertical industries including oil and gas,
+shipbuilding, mining, cement, fiber, chemicals, food and bever-
+age, and pharmaceuticals, the Division increases productivity,
+reliability and flexibility of machinery and installations along
+their entire life cycle jointly with its customers. Based on data
+models and analysis methods, Process Industries and Drives
+paves the way together with its customers to create a "Digital
+Enterprise," from process simulation via plant design and docu-
+mentation through to asset and performance management. The
+Division's offerings include an integrated portfolio with prod-
+ucts, components and systems such as couplings, gears, motors
+and converters, process instrumentation systems, process ana-
+lytics devices, wired and wireless communication, industrial
+identification and power supplies up to systems level with de-
+centralized control systems, industrial software as well as cus-
+tomized, application-specific systems and solutions. It also sells
+gears, couplings and drive solutions to other Siemens Divisions,
+which use them in rail transport and wind turbines. Demand
+within the industries served by the Division generally shows a
+delayed response to changes in the overall economic environ-
+ment. Even so, the Division is strongly dependent on invest-
+ment cycles in its key industries. In commodity-based process
+industries such as oil and gas or mining, these cycles are driven
+mainly by commodity price fluctuations rather than changes in
+produced volumes.
+CONSOLIDATED FINANCIAL STATEMENTS.
+4
+The Digital Factory Division offers a comprehensive product
+portfolio and system solutions used in manufacturing industries,
+complemented by lifecycle and data-driven services. These offer-
+ings enable customers to optimize entire value chains from prod-
+uct design and development to production and services. With its
+comprehensive offering, the Division supports manufacturing
+companies with the transformation towards the "Digital Enter-
+prise," resulting in increased flexibility and efficiency of produc-
+tion processes and reduced time to market for new products.
+The Division supplies customers in discrete, process and hybrid
+manufacturing industries. Changes in the level of demand are
+strongly driven by macroeconomic cycles, and can lead to signif-
+icant short-term variation in market performance. In the third
+quarter of fiscal 2016, Digital Factory further strengthened and
+The Mobility Division combines all Siemens businesses in the
+area of passenger and freight transportation, including rail vehi-
+cles, rail automation systems, rail electrification systems, road
+traffic technology, IT solutions and related services. The Division
+provides its customers with consulting, planning, financing, con-
+struction, service and operation of turnkey mobility systems.
+Mobility also provides integrated mobility solutions for network-
+ing of different types of traffic systems. The principal customers
+of the Mobility Division are public and state-owned companies
+in the transportation and logistics sectors. Markets served by
+Mobility are driven primarily by public spending. Customers usu-
+ally have multi-year planning and implementation horizons, and
+their contract tenders therefore tend to be independent of short-
+term economic trends.
+The Building Technologies Division is a leading provider of au-
+tomation technologies and digital services for safe, secure and
+efficient buildings and infrastructures throughout their lifecycles.
+The Division offers products, solutions, services and software for
+fire safety, security, building automation, heating, ventilation,
+air conditioning and energy management. The large customer
+base is widely dispersed. It includes owners, operators and ten-
+ants for both public and commercial buildings; building construc-
+tion general contractors; and system houses. Changes in the
+overall economic environment generally have a delayed effect on
+the Division's business activities. Particularly in the solutions and
+service businesses, Building Technologies is affected by changes
+in the non-residential construction markets with a time lag of two
+to four quarters.
+In June 2016, Siemens and Gamesa Corporación Tecnológica, S.A.
+(Gamesa) signed binding agreements to merge the Siemens wind
+power business, including service, with Gamesa. The two busi-
+nesses are highly complementary regarding global footprint, ex-
+isting product portfolios and technologies. The combined busi-
+ness is expected to have a global reach across all relevant regions
+and manufacturing footprints on all continents. Accordingly, the
+transaction will result in a product offering covering all wind
+classes and addressing all key market segments. Siemens will own
+59% of the shares of the combined entity. As part of the merger,
+Siemens will fund a cash payment of €1 billion which will be dis-
+tributed to Gamesa's shareholders (excluding Siemens) immedi-
+ately following the completion of the merger. Closing of the trans-
+action is subject to the approvals of the antitrust and regulatory
+authorities.
+The Power Generation Services Division offers a comprehensive
+set of services for products, solutions and technologies of the
+Power and Gas and Wind Power and Renewables Divisions, cov-
+ering performance enhancements, maintenance services, cus-
+tomer training and professional consulting. Financial results of
+these two Divisions include the corresponding financial results of
+the Power Generation Services Division, which itself is not a re-
+portable segment. Based on this business model, all discussions
+of the services business for Power and Gas as well as Wind Power
+and Renewables concern the Power Generation Services Division.
+The Energy Management Division offers a wide spectrum of
+products, systems, solutions, software and services for transmit-
+ting and distributing power and for developing intelligent grid
+infrastructure. The Division's customers include power providers,
+network operators, industrial companies, infrastructure develop-
+ers and construction companies. The offerings are used to pro-
+cess and transmit electrical power from the source down to var-
+ious load points along the power transmission and distribution
+networks to the power consumers. Our solutions for smart grids
+enable a bidirectional flow of energy and information, which is
+required for the integration of more renewable energy sources
+into conventional power transmission and distribution networks.
+The Division also offers solutions and energy storage systems for
+integrating renewable energy into power grids, together with
+vertical IT software applications that link energy consumers and
+producers. In addition, the Division's portfolio includes power
+supply solutions for conventional power plants and renewable
+energy systems as well as substations for urban and rural distri-
+bution networks. The Division also offers energy-efficient solu-
+tions for heavy industry, the oil and gas industry and the process
+industries.
+2
+Combined Management Report
+expanded its software business by acquiring CD-adapco, a U.S.-
+based provider of simulation software. For more information on
+the acquisition of CD-adapco, see NOTE 3 in → B.6 NOTES TO
+6
+Consolidated Financial Statements 91
+in the
+Statement of
+Financial
+Position
+off in the
+Statement of
+Position
+Amounts set
+amounts
+Financial assets
+(in millions of €)
+Financial
+Gross
+amounts
+1,640
+595
+838
+1,433
+Net amounts
+Sep 30, 2015
+Fair values of each type of derivative financial instruments recorded
+as financial assets or financial liabilities are:
+amounts not
+set off in the
+Statement of
+Financial
+Position
+Cash flow hedges of floating-rate commercial
+papers
+Interest rate risk management relating to the Group, excluding
+SFS' business, uses derivative financial instruments under a port-
+folio-based approach to manage interest risk actively relative to
+a benchmark. The interest rate management relating to the SFS
+business remains to be managed separately, considering the
+term structure of SFS' financial assets and liabilities on a portfolio
+basis. Neither approach qualifies for hedge accounting treat-
+ment. Net cash receipts and payments in connection with inter-
+est rate swap agreements are recorded as interest expense in
+Other financial income (expenses), net.
+INTEREST RATE RISK MANAGEMENT
+Derivative financial instruments not designated
+in a hedging relationship
+30
+67
+6
+(22)
+Since fiscal 2015, Siemens applies cash flow hedge accounting to
+a revolving portfolio of floating-rate commercial papers of nom-
+inal US$700 million. To benefit from low interest rates in the USA,
+Siemens pays a fixed rate of interest and receives a variable rate
+of interest, offsetting future changes in interest payments of the
+underlying floating-rate commercial papers. Net cash receipts
+and payments are recorded as interest expenses.
+2022
+and
+there-
+after
+Other comprehensive income,
+net of income taxes into
+revenue or cost of sales
+Expected gain (loss) to be
+reclassified from line item
+2019
+to
+2021
+2018
+2017
+(in millions of €)
+Periods in which the hedged forecast transactions or the firm
+commitments denominated in foreign currency are expected to
+impact profit or loss:
+Fiscal year
+Fair value hedges of fixed-rate debt obligations
+Under the interest rate swap agreements outstanding during the
+years ended September 30, 2016 and 2015, the Company has
+agreed to pay a variable rate of interest multiplied by a notional
+principle amount, and to receive in return an amount equal to a
+specified fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements offset an
+impact of future changes in interest rates designated as the
+hedged risk on the fair value of the underlying fixed-rate debt
+obligations. Carrying amount adjustments to debt for fair value
+changes attributable to the respective interest rate risk being
+hedged are included in Other financial income (expenses),
+net resulted in a gain (loss) of €149 million and €103 million,
+respectively, in fiscal 2016 and 2015; the related swap agreements
+resulted in a gain (loss) of €(152) million and €(135) million,
+respectively. Net cash receipts and payments relating to such
+interest rate swap agreements are recorded as interest expenses.
+The Company had interest rate swap contracts to pay variable
+rates of interest of an average of (0.2)% and 0.1% as of Septem-
+ber 30, 2016 and 2015, respectively and received fixed rates of
+interest (average rate of 3.3% and 4.3%, as of September 30,
+2016 and 2015, respectively). The notional amount of indebted-
+ness hedged as of September 30, 2016 and 2015 was €3,650 mil-
+lion and €6,012 million, respectively. This changed 14% and 26%
+of the Company's underlying notes and bonds from fixed interest
+rates into variable interest rates as of September 30, 2016 and
+2015, respectively. The notional amounts of these contracts ma-
+ture at varying dates based on the maturity of the underlying
+hedged items. The net fair value of interest rate swap contracts
+(excluding accrued interest) used to hedge indebtedness as of
+September 30, 2016 and 2015 was €93 million and €242 million,
+respectively.
+NOTE 24 Financial risk management
+994
+Interest rate risk is the risk that the fair value or future cash flows
+of a financial instrument will fluctuate because of changes in
+market interest rates. This risk arises whenever interest terms of
+financial assets and liabilities are different. In order to manage
+the Company's position with regard to interest rate risk, interest
+income and interest expenses, Corporate Treasury performs a
+comprehensive corporate interest rate risk management by using
+fixed or variable interest rates from bond issuances and deriva-
+tive financial instruments when appropriate. The interest rate risk
+relating to the Group, excluding SFS' business, is mitigated by
+managing interest rate risk actively relatively to a benchmark.
+The interest rate risk relating to the SFS' business is managed
+INTEREST RATE RISK
+Many Siemens units are located outside the euro zone. Since the
+financial reporting currency of Siemens is the euro, the financial
+statements of these subsidiaries are translated into euro for the
+preparation of the Consolidated Financial Statements. To con-
+sider the effects of foreign currency translation in the risk man-
+agement, the general assumption is that investments in for-
+eign-based operations are permanent and that reinvestment is
+continuous. Effects from foreign currency exchange rate fluctu-
+ations on the translation of net asset amounts into euro are re-
+flected in the Company's consolidated equity position.
+Translation risk
+As of September 30, 2016 and 2015 the VaR relating to foreign
+currency exchange rates was €86 million and €179 million. This
+VaR was calculated under consideration of items of the Consoli-
+dated Statement of Financial Position in addition to firm commit-
+ments which are denominated in foreign currencies, as well as
+foreign currency denominated cash flows from forecast transac-
+tions for the following twelve months. A lower volatility between
+the U.S. dollar and the euro in comparison to the prior year re-
+sulted in a decrease of the VaR.
+Generally, the operating units conclude their hedging activities
+internally with Corporate Treasury. By applying a cost-optimizing
+portfolio approach Corporate Treasury itself hedges foreign cur-
+rency exchange rate risks with external counterparties and limits
+them Company-wide.
+According to the company policy each Siemens unit is responsi-
+ble for recording, assessing and monitoring its foreign currency
+transaction exposure. The net foreign currency position of each
+unit serves as a central performance measure and has to be
+hedged within a band of at least 75% but no more than 100%.
+units are preferably carried out in their functional currency or on
+a hedged basis.
+Operating units (Industrial business and SFS) are prohibited
+from borrowing or investing in foreign currencies on a specula-
+tive basis. Intercompany financing or investments of operating
+Each Siemens unit conducting businesses with international
+counterparties leading to future cash flows denominated in a
+currency other than its functional currency is exposed to risks
+from changes in foreign currency exchange rates. In the ordinary
+course of business Siemens units are exposed to foreign currency
+exchange rate fluctuations, particularly between the U.S. dollar
+and the euro. Foreign currency exchange rate exposure is partly
+balanced by purchasing of goods, commodities and services in
+the respective currencies as well as production activities and
+other contributions along the value chain in the local markets.
+FOREIGN CURRENCY EXCHANGE RATE RISK
+Transaction risk
+Any market sensitive instruments, including equity and inter-
+est bearing investments, that our Company's pension plans
+hold are not included in the following quantitative and quali-
+tative disclosures.
+Actual results that are included in the Consolidated Statements
+of Income or Consolidated Statements of Comprehensive Income
+may differ substantially from VaR figures due to fundamental
+conceptual differences. While the Consolidated Statements of
+Income and Consolidated Statements of Comprehensive Income
+are prepared in accordance with IFRS, the VaR figures are the
+output of a model with a purely financial perspective and repre-
+sent the potential financial loss which will not be exceeded
+within ten days with a probability of 99.5%. Although VaR is an
+important tool for measuring market risk, the assumptions on
+which the model is based give rise to some limitations including
+the following. A ten day holding period assumes that it is possible
+to dispose of the underlying positions within this period. This
+may not be valid during continuing periods of illiquidity markets.
+A 99.5% confidence level means, that there is a 0.5% statistical
+probability that losses could exceed the calculated VaR. The use
+of historical data as a basis for estimating the statistic behavior
+of the relevant markets and finally determining the possible
+range of the future outcomes on the basis of this statistic behav-
+ior may not always cover all possible scenarios, especially those
+of an exceptional nature.
+In order to quantify market risks Siemens has implemented a sys-
+tem based on parametric variance-covariance Value at Risk (VAR),
+which is also used for internal management of the Corporate
+Treasury activities. The VaR figures are calculated based on his-
+torical volatilities and correlations of various risk factors, a ten
+day holding period, and a 99.5% confidence level.
+90 Consolidated Financial Statements
+Increasing market fluctuations may result in significant earnings
+and cash flow volatility risk for Siemens. The Company's operat-
+ing business as well as its investment and financing activities are
+affected particularly by changes in foreign exchange rates, inter-
+est rates and equity prices. In order to optimize the allocation of
+the financial resources across the Siemens segments and entities,
+as well as to achieve its aims, Siemens identifies, analyzes and
+manages the associated market risks. The Company seeks to
+manage and control these risks primarily through its regular op-
+erating and financing activities, and uses derivative financial in-
+struments when deemed appropriate.
+The Company's operating units apply hedge accounting for cer-
+tain significant forecast transactions and firm commitments de-
+nominated in foreign currencies. Particularly, the Company has
+entered into foreign currency exchange contracts to reduce the
+risk of variability of future cash flows resulting from forecast sales
+and purchases as well as firm commitments. This risk results
+mainly from contracts denominated in US$ both from Siemens'
+operating units entering into long-term contracts e.g. project
+business and from standard product business.
+Cash flow hedges
+Consolidated Financial Statements 89
+not designated in a hedging relationship
+The Company manages its risks associated with fluctuations in
+foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a
+Company-wide portfolio approach. Under this approach the
+Company-wide risks are aggregated centrally, and various deriv-
+ative financial instruments, primarily foreign currency exchange
+contracts, foreign currency swaps and options, are utilized to
+minimize such risks. Such a strategy does not qualify for hedge
+accounting treatment. The Company also accounts for foreign
+currency derivatives, which are embedded in sale and purchase
+contracts.
+713
+880
+570
+instruments and hedging activities
+NOTE 23 Derivative financial
+843
+1,604
+1,065
+1,032
+1,874
+11
+1,885
+Financial liabilities - Derivative financial liabilities
+2,668
+10
+2,678
+amounts
+Net
+1,297
+Related
+(in millions of €)
+Sep 30, 2016
+Liability
+Derivative financial instruments
+FOREIGN CURRENCY EXCHANGE RATE
+RISK MANAGEMENT
+241
+1,919
+3,228
+691
+129
+1,500
+596
+3,051
+381
+1,824
+491
+1,885
+and combined interest
+and currency swaps
+Other (embedded
+derivatives, options,
+commodity swaps)
+Interest rate swaps
+exchange contracts
+Foreign currency
+Sep 30, 2015
+Liability
+Asset
+Asset
+2,634
+132
+2,641
+1,440
+Sep 30,
+Assets
+In fiscal 2016 and 2015, Profit of SFS includes interest income of
+€1,161 million and €1,086 million, respectively and interest ex-
+penses of €377 million and €340 million, respectively.
+Consolidated Financial Statements
+(1,119)
+(1,994)
+(366)
+(349)
+(543)
+(674)
+acquired in business combinations
+Eliminations, Corporate Treasury,
+and other reconciling items
+Reconciliation to
+Amortization of intangible assets
+(440)
+(439)
+Centrally carried pension expense
+(690)
+(449)
+205
+separately, considering the term structure of SFS's financial
+assets and liabilities. The Company's interest rate risk results
+primarily from the funding in U.S. dollar, British pound and euro.
+714
+(215)
+(in millions of €)
+Centrally managed portfolio activities
+Siemens Real Estate
+Corporate items
+2016
+Assets Centrally managed portfolio activities
+Assets Siemens Real Estate
+For their 25th and 40th service anniversary eligible employees re-
+ceive jubilee shares. There were 4.39 million and 4.46 million
+entitlements to jubilee shares outstanding as of September 30,
+2016 and 2015, respectively.
+98 Consolidated Financial Statements
+60,851
+63,126
+(34,315)
+(35,423)
+42,282
+42,086
+Liability-based adjustments
+Eliminations, Corporate Treasury, other items
+Reconciliation to Consolidated Financial
+Statements
+3,103
+4,089
+45,576
+47,072
+Intragroup financing receivables
+Tax-related assets
+(2,012)
+(1,474)
+Assets Corporate items and pensions
+Asset-based adjustments:
+4,895
+4,964
+1,322
+1,812
+2015
+2015
+2016
+Fiscal year
+Accounting policies for Segment information are generally the
+same as those used for the Consolidated Financial Statements.
+Lease transactions, however, are classified as operating leases for
+internal and segment reporting purposes. Intersegment transac-
+tions are based on market prices.
+SEGMENTS
+MEASUREMENT
+Eliminations, Corporate Treasury and other reconciling
+items - comprise consolidation of transactions within the seg-
+ments, certain reconciliation and reclassification items and the
+activities of the Company's Corporate Treasury. It also includes
+interest income and expense, such as, for example, interest not
+allocated to segments or Centrally managed portfolio activities
+(referred to as financing interest), interest related to Corporate
+Treasury activities or resulting consolidation and reconciliation
+effects on interest.
+Pensions - includes the Company's pension related income (ex-
+pense) not allocated to the segments, SRE or Centrally managed
+portfolio activities.
+2,549
+OFFSETTING
+Siemens enters into master netting agreements and similar agree-
+ments for derivative financial instruments. The requirements to
+offset recognized financial instruments are usually not met. The
+following table reflects financial assets and financial liabilities that
+are subject to netting agreements and similar agreements:
+(in millions of €)
+Financial assets
+Financial liabilities - Derivative financial liabilities
+Sep 30, 2016
+Amounts set
+off in the
+Statement of
+Gross
+Financial
+amounts
+Position
+Net amounts
+in the
+Statement of
+Financial
+Position
+Related
+amounts not
+set off in the
+Statement of
+Financial
+Position
+Net
+Profit
+Siemens' Managing Board is responsible for assessing the perfor-
+Imance of the segments (chief operating decision maker). The
+Company's profitability measure of the segments except for SFS is
+earnings before financing interest, certain pension costs, income
+taxes and amortization expenses of intangible assets acquired in
+business combinations as determined by the chief operating de-
+cision maker (Profit). The major categories of items excluded
+from Profit are presented below.
+Financing interest, excluded from Profit, is any interest income or
+expense other than interest income related to receivables from
+customers, from cash allocated to the segments and interest ex-
+penses on payables to suppliers. Financing interest is excluded
+from Profit because decision-making regarding financing is typi-
+cally made at the corporate level.
+(in millions of €)
+Profit
+CONSOLIDATED FINANCIAL STATEMENTS
+RECONCILIATION TO
+Centrally managed portfolio activities follow the measurement
+principles of the segments except for SFS. SRE applies the mea-
+surement principles of SFS.
+CENTRALLY MANAGED
+PORTFOLIO ACTIVITIES AND SRE
+-
+MEASUREMENT
+Amortization, depreciation and impairments:
+Amortization, depreciation and impairments includes deprecia-
+tion and impairments of property, plant and equipment as well
+as amortization and impairments of intangible assets each net of
+reversals of impairment.
+Free cash flow of the segments, except for SFS, constitutes cash
+flows from operating activities less additions to intangible assets
+and property, plant and equipment. It excludes financing inter-
+est, except for cases where interest on qualifying assets is capi-
+talized or classified as contract costs and it also excludes income
+tax as well as certain other payments and proceeds. Free cash
+flow of SFS includes related financing interest payments and pro-
+ceeds; income tax payments and proceeds of SFS are excluded.
+7
+Free cash flow definition:
+Orders:
+Management determined Assets (Net capital employed) as a
+measure to assess capital intensity of the segments except for
+SFS. Its definition corresponds to the Profit measure except for
+amortization expenses of intangible assets acquired in business
+combinations which are not part of Profit, however, the related
+intangible assets are included in the segments' Assets. Segment
+Assets is based on Total assets of the Consolidated Statements
+of Financial Position, primarily excluding intragroup financing
+receivables, tax related assets and assets of discontinued opera-
+tions, since the corresponding positions are excluded from Profit.
+Assets of Mobility include the project-specific intercompany
+financing of a long-term project. The remaining assets are re-
+duced by non-interest-bearing liabilities other than tax related
+liabilities, e.g. trade payables, to derive Assets. In contrast, Assets
+of SFS is Total assets.
+Asset measurement principles:
+Profit of the segment SFS is Income before income taxes. In con-
+trast to performance measurement principles applied to other
+segments, interest income and expenses is an important source
+of revenue and expense of SFS.
+Profit of the segment SFS:
+ments.
+performance. This may also be the case for items that refer to
+more than one reportable segment, SRE and (or) Centrally man-
+aged portfolio activities or have a corporate or central character.
+Costs for support functions are primarily allocated to the seg-
+Consolidated Financial Statements 97
+Amortization expenses of intangible assets acquired in business
+combinations are not part of Profit. Furthermore, income taxes
+are excluded from Profit since income tax is subject to legal
+structures, which typically do not correspond to the structure of
+the segments. The effect of certain litigation and compliance
+issues is excluded from Profit, if such items are not indicative of
+Decisions on essential pension items are made centrally. Accord-
+ingly, Profit primarily includes amounts related to service cost of
+pension plans only, while all other regularly recurring pension
+related costs are included in reconciliations in line item Centrally
+carried pension expense.
+Orders are determined principally as estimated revenue of ac-
+cepted purchase orders and order value changes and adjust-
+ments, excluding letters of intent.
+If there are no conflicting country-specific regulations, all Siemens
+operating units generally obtain any required financing through
+Corporate Treasury in the form of loans or intercompany clearing
+accounts. The same concept is adopted for deposits of cash gen-
+erated by the units.
+(in thousands)
+EQUITY PRICE RISK
+10,172
+9,988
+Process Industries and Drives
+8,939
+9,144
+7,285
+7,777
+1,753
+1,777
+9,038
+9,553
+Healthineers
+847
+13,830
+13,497
+12,896
+38
+35
+13,535
+12,930
+Industrial Business
+87,802
+83,723
+77,573
+73,481
+3,539
+13,349
+Financial Services (SFS)
+781
+9,390
+11,344
+702
+578
+11,940
+11,922
+Building Technologies
+6,435
+6,099
+5,982
+5,860
+174
+139
+9,140
+6,156
+Mobility
+7,875
+10,262
+7,794
+7,477
+31
+31
+7,825
+7,508
+Digital Factory
+10,332
+10,036
+5,999
+11,238
+979
+824
+> Financial Services (SFS) supports its customers' investments
+with leasing solutions and equipment, project and structured
+financing in the form of debt and equity investments.
+RECONCILIATION TO
+CONSOLIDATED FINANCIAL STATEMENTS
+Centrally managed portfolio activities (CMPA) – in general,
+comprises equity stakes held by Siemens that are accounted for
+the equity method or as available-for-sale financial assets and
+that for strategic reasons are not allocated to a segment, Siemens
+Real Estate (SRE), Corporate items or Corporate Treasury. CMPA
+also includes activities generally intended for divestment or clo-
+sure as well as activities remaining from divestments and discon-
+tinued operations.
+Siemens Real Estate (SRE) - manages the Group's entire real
+estate business portfolio, operates the properties, and is respon-
+sible for building projects and the purchase and sale of real estate.
+Corporate items - includes corporate costs, such as group man-
+aging costs, basic research of Corporate Technology, corporate
+projects and non-operating investments or results of corpo-
+rate-related derivative activities.
+96 Consolidated Financial Statements
+Profit
+Assets
+Free cash flow
+Fiscal year
+Fiscal year
+> Healthineers, a supplier of technology to the healthcare indus-
+try and a leader in medical imaging and laboratory diagnostics,
+Additions to intangible assets
+and property, plant & equipment
+Fiscal year
+Fiscal year
+2016
+2015
+Sep 30, 2016
+Sep 30, 2015
+2016
+2015
+2016
+2015
+2016
+2015
+1,872
+Amortization,
+depreciation & impairments
+1,048
+> Process Industries and Drives (PD) offers a comprehensive
+product, software, solution and service portfolio for moving,
+measuring, controlling and optimizing all kinds of mass flows,
+> Mobility (MO) combines all Siemens businesses in the area of
+passenger and freight transportation, including rail vehicles,
+rail automation systems, rail electrification systems, road traf-
+fic technology, IT solutions and related services,
+855
+154
+3,497
+193
+81,112
+76,978
+979
+1,048
+Reconciliation to
+Consolidated Financial Statements
+(2,300)
+(2,432)
+Siemens (continuing operations)
+> Digital Factory (DF) offers a comprehensive product portfolio
+and system solutions used in manufacturing industries, com-
+plemented by lifecycle and data-driven services,
+86,480
+1,247
+79,644
+1,299
+75,636
+(3,694)
+(3,690)
+(2,447)
+79,644
+(2,391)
+75,636
+1 This supplemental information on Orders is provided on a voluntary basis.
+It is not part of the Consolidated Financial Statements subject to the audit opinion.
+DESCRIPTION OF REPORTABLE SEGMENTS
+Siemens has nine reportable segments, being:
+> Power and Gas (PG), which offers a broad spectrum of prod-
+ucts, solutions and services for generating electricity from
+fossil fuels and for producing and transporting oil and gas,
+> Wind Power and Renewables (WP) designs, manufactures and
+installs wind turbines and provides services for onshore and
+offshore applications,
+> Energy Management (EM) offers a wide spectrum of prod-
+ucts, systems, solutions, software and services for transmit-
+ting and distributing power and for developing intelligent grid
+infrastructure,
+> Building Technologies (BT) is a provider of automation tech-
+nologies and digital services for safe, secure and efficient
+buildings and infrastructures throughout their lifecycles,
+82,340
+12,956
+Energy Management
+5,660
+345
+349
+349
+NOTE 27
+Earnings per share
+(shares in thousands; earnings per share in €)
+Income from continuing operations
+Less: Portion attributable to
+non-controlling interest
+Fiscal year
+2016
+2015
+5,396
+5,349
+(134)
+349
+(98)
+5,262
+5,251
+808,686
+823,408
+11,228
+9,425
+NOTE 26 Personnel costs
+Weighted average shares outstanding - diluted
+819,914
+832,832
+Basic earnings per share
+(from continuing operations)
+Income from continuing operations
+attributable to shareholders of Siemens AG
+Weighted average shares outstanding - basic
+Effect of dilutive share-based payment
+6.51
+35
+35
+As of September 30, 2016 and 2015 the VaR relating to the inter-
+est rate was €485 million and €500 million.
+operations
+Fiscal year
+operations
+discontinued
+Continuing
+Fiscal year
+2016
+2015
+2016
+2015
+Manufacturing and services
+Sales and marketing
+Research and development
+Administration
+and general services
+Continuing and
+216
+216
+214
+65
+67
+65
+68
+33
+32
+33
+33
+35
+34
+212
+6.38
+Diluted earnings per share
+Fiscal year
+(in millions of €)
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+Power and Gas
+19,454
+15,742
+Fiscal year
+16,412
+58
+88
+16,471
+13,418
+Wind Power and Renewables
+7,973
+6,136
+5,974
+5,658
+2
+2
+5,976
+13,330
+Fiscal year
+Fiscal year
+Fiscal year
+(from continuing operations)
+6.42
+6.30
+(in millions of €)
+2016
+2015
+Wages and salaries
+23,431
+22,611
+Statutory social welfare contributions
+and expenses for optional support
+3,562
+3,404
+Expenses relating to
+post-employment benefits
+1,218
+28,210
+1,163
+27,177
+Severance charges amount to €598 million and €804 million
+(thereof at segment Process Industries and Drives €254 million
+and €74 million) in fiscal 2016 and 2015, respectively. Item
+Expenses relating to post-employment benefits includes service
+costs for the period. Personnel costs for continuing and discon-
+tinued operations amount to €28,232 million and €27,584 million,
+respectively, in fiscal 2016 and 2015. Employees were engaged
+in (averages; part time employees are included proportionally):
+The dilutive earnings per share computation in fiscal 2016 and
+2015 does not contain 22,8 million and 22,7 million shares, re-
+spectively, relating to warrants issued with bonds. The inclusion
+of those shares would have been antidilutive in the years pre-
+sented. In the future, the warrants could potentially dilute basic
+earnings per share.
+Consolidated Financial Statements 95
+NOTE 28
+Segment information
+Orders¹
+External revenue
+Intersegment Revenue
+Total revenue
+1,415
+9,066
+12,963
+1,149
+Fiscal year
+2015
+2016
+4,985,998
+1,528,957
+Changes in the stock awards held by members of the senior man-
+agement and other eligible employees are:
+In fiscal 2016 and 2015, 2,044,213 and 1,162,028 stock awards,
+respectively, were granted contingent upon attaining the pro-
+spective performance-based target of Siemens stock relative to
+five competitors. The fair value of equity-settled stock awards
+amounting to €117 million and €57 million, respectively, in fiscal
+2016 and 2015, was calculated by applying a valuation model. In
+fiscal 2016 and 2015, inputs to that model include an expected
+weighted volatility of Siemens shares of 22% and 22%, respec-
+tively, and a market price of €92.86 and €88.03 per Siemens
+share. Expected volatility was determined by reference to historic
+volatilities. The model applies a risk-free interest rate of up to
+0.1% in fiscal 2016 and up to 0.3% in fiscal 2015 and an expected
+dividend yield of 3.8% in fiscal 2016 and 3.8% in fiscal 2015. As-
+sumptions concerning share price correlations were determined
+by reference to historic correlations.
+Commitments to members of the senior
+management and other eligible employees
+model. In fiscal 2016 and 2015, inputs to that model include an
+expected weighted volatility of Siemens shares of 22% and 22%,
+respectively, and a market price of €92.86 and €88.03 per
+Siemens share. Expected volatility was determined by reference
+to historic volatilities. The model applies a risk-free interest rate
+of up to 0.1% and 0.3% in fiscal 2016 and 2015, respectively and
+an expected dividend yield of 3.8% in fiscal 2016 and 2015. As-
+sumptions concerning share price correlations were determined
+by reference to historic correlations.
+Consolidated Financial Statements 93
+Commitments to members of the Managing Board
+In fiscal 2016 and 2015, agreements were entered into which en-
+title members of the Managing Board to stock awards contingent
+upon attaining the prospective performance-based target of
+Siemens stock relative to five competitors. The fair value of these
+entitlements amounting to €9 million and €9 million, respectively,
+in fiscal 2016 and 2015, was calculated by applying a valuation
+Until fiscal 2014, additionally one portion of the variable compen-
+sation component (bonus) for members of the Managing Board
+was granted in the form of non-forfeitable awards of Siemens
+stock (Bonus Awards) subject to a vesting period of one year.
+Beneficiaries will receive one Siemens share without payment of
+consideration for each Bonus Award, following an additional
+waiting period of four years.
+Stock awards are tied to performance criteria. The annual target
+amount for stock awards can be bound to the average of earnings
+per share (EPS, basic) of the past three fiscal years and/or to the
+share price performance of Siemens relative to the share price
+performance of five important competitors during the four-year
+restriction period. The target attainment for the performance
+criteria ranges between 0% and 200%. If the target attainment
+of the prospective performance-based target of Siemens stock
+relative to five competitors exceeds 100%, an additional cash pay-
+ment results corresponding to the outperformance. The vesting
+period is four years and five years for stock awards granted to
+members of the Managing Board until fiscal 2014.
+The Company grants stock awards to members of the Managing
+Board, members of the senior management and other eligible em-
+ployees. Stock awards are subject to a restriction period of about
+four years and entitle the beneficiary to Siemens shares without
+payment of consideration following the restriction period.
+Non-vested, beginning of period
+STOCK AWARDS
+NOTE 25 Share-based payment
+Concerning trade receivables and other receivables, as well as
+loans or receivables included in line item Other financial assets
+that are neither impaired nor past due, there were no indications
+that defaults in payment obligations will occur, which lead to
+a decrease in the net assets of Siemens. Overdue financial instru-
+ments are generally impaired on a portfolio basis in order to
+The maximum exposure to credit risk of financial assets, without
+taking account of any collateral, is represented by their carrying
+amount. As of September 30, 2016 and 2015 the collateral for
+financial instruments classified as financial assets measured at
+fair value in the form of netting agreements for derivatives in the
+event of insolvency of the respective counterparty amounted to
+€994 million and €1,065 million, respectively. As of Septem-
+ber 30, 2016 and 2015 the collateral held for financial instru-
+ments classified as receivables from finance leases amounted to
+€1,949 million and €2,003 million, respectively, mainly in the
+form of the leased equipment. As of September 30, 2016 and
+2015 the collateral held for financial instruments classified as fi-
+nancial assets measured at cost or amortized cost amounted to
+€3,590 million and €3,165 million, respectively. The collateral
+mainly consisted of property, plant and equipment. Credit risks
+arising from irrevocable loan commitments are equal to the ex-
+pected future pay-offs resulting from these commitments. As of
+September 30, 2016 and 2015 the collateral held for these com-
+mitments amounted to €1,177 million and €1,445 million, respec-
+tively, mainly in the form of inventories and receivables.
+Corporate Treasury has established the Siemens Credit Ware-
+house to which numerous operating units from the Siemens
+Group regularly transfer business partner data as a basis for a
+centralized rating process. Furthermore, the Siemens Credit
+Warehouse purchases trade receivables from numerous operat-
+ing units with a remaining term up to one year. Due to the iden-
+tification, quantification and active management of the credit
+risk the Siemens Credit Warehouse increases the transparency
+with regard to credit risk. In addition, the Siemens Credit Ware-
+house may provide Siemens with an additional source of liquidity
+and strengthens Siemens' funding flexibility.
+For analysis and monitoring of the credit risk the Company
+applies different systems and processes. A central IT application
+processes data from the operating units together with rating
+and default information and calculates an estimate which may
+be used as a basis for individual bad debt provisions. In addition
+to this automated process, qualitative information is considered,
+in particular to incorporate the latest developments.
+reflect losses incurred within the respective portfolios. When sub-
+stantial expected payment delays become evident, overdue
+financial instruments are assessed individually for additional
+impairment and are further allowed for as appropriate.
+specialists, are continuously updated and considered by invest-
+ments in cash and cash equivalents, and in determining the con-
+ditions under which direct or indirect financing will be offered to
+customers.
+Consolidated Financial Statements
+92
+22
+Ratings, defined and analyzed by SFS, and individually defined
+credit limits are based on generally accepted rating method-
+ologies, with the input consisting of information obtained from
+the customer, external rating agencies, data service providers
+and Siemens' credit default experiences. Ratings and credit limits
+for financial institutions as well as Siemens' public and private
+customers, which are determined by internal risk assessment
+The effective monitoring and controlling of credit risk through
+credit evaluations and ratings is a core competency of our risk
+management system. In this context, Siemens has implemented
+a binding credit policy for all entities.
+Share-based payment awards may be settled in newly issued
+shares of capital stock of Siemens AG, in treasury shares or in
+cash. Share-based payment awards may forfeit if the employ-
+ment of the beneficiary terminates prior to the expiration of the
+vesting period. Total pretax expense for share-based payment
+amounted to €332 million and €203 million for the years ended
+September 30, 2016 and 2015, respectively, and refers primarily
+to equity-settled awards.
+Credit risk is defined as an unexpected loss in financial instru-
+ments if the contractual partner is failing to discharge its obliga-
+tions in full and on time or if the value of collateral declines.
+6,049,250
+Vested and fulfilled
+Forfeited
+1,750,176
+785,000
+610,771
+(538,837) (548,947)
+Vested and fulfilled
+Granted
+1,655,780
+Outstanding, beginning of period
+Fiscal year
+2015
+2016
+Consolidated Financial Statements
+94
+94
+Resulting Matching Shares
+Granted
+Under the Base Share Program employees of Siemens AG and par-
+ticipating domestic Siemens companies may invest a fixed amount
+of their compensation in Siemens shares, sponsored by Siemens.
+The shares are bought at market price at a predetermined date in
+the second quarter and grant the right to receive matching shares
+under the same conditions applying to the Share Matching Plan
+described above. The fair value of the Base Share Program amounted
+to €35 million and €33 million in fiscal 2016 and 2015, respectively.
+Under the Monthly Investment Plan employees other than senior
+managers may invest a specified part of their compensation in
+Siemens shares on a monthly basis over a period of twelve
+months. Shares are purchased at market price at a predetermined
+date once a month. If the Managing Board decides that shares
+acquired under the Monthly Investment Plan are transferred to the
+Share Matching Plan, plan participants will receive the right to
+matching shares under the same conditions applying to the Share
+Matching Plan described above with a vesting period of about two
+years since fiscal 2016 (previously about three years). The Manag-
+ing Board decided that shares acquired under the tranches issued
+in fiscal 2015 and 2014 are transferred to the Share Matching Plan
+as of February 2016 and February 2015, respectively.
+Monthly Investment Plan
+Under the Share Matching Plan senior managers may invest a
+specified part of their variable compensation in Siemens shares
+(investment shares). The shares are purchased at the market
+price at a predetermined date in the second quarter. Plan partic-
+ipants receive the right to one Siemens share without payment
+of consideration (matching share) for every three investment
+shares continuously held over a period of about three years (vest-
+ing period) provided the plan participant has been continuously
+employed by Siemens until the end of the vesting period.
+Share Matching Plan
+In fiscal 2016, Siemens issued a new tranche under each of the
+plans of the Share Matching Program.
+AND ITS UNDERLYING PLANS
+SHARE MATCHING PROGRAM
+(159,754)
+(305,951)
+6,049,250
+2,044,213
+(834,605)
+(1,029,991)
+(57,437)
+6,171,430
+Non-vested, end of period
+Settled
+Forfeited
+Base Share Program
+CREDIT RISK
+2 A considerable portion result from asset-based lending transactions meaning that the respective
+loans can only be drawn after sufficient collateral has been provided by the borrower.
+1 Based on the maximum amounts Siemens could be required to settle in the event of default
+by the primary debtor.
+941
+89
+414
+Loans from banks
+Other financial
+15,570
+9,585
+4,271
+5,793
+Notes and bonds
+Non-derivative financial
+liabilities
+and
+there-
+after
+to
+2021
+6
+2018
+2019
+2022
+Fiscal year
+(in millions of €)
+are determined based on each particular settlement date of an
+instrument and based on the earliest date on which Siemens
+could be required to pay. Cash outflows for financial liabilities
+(including interest) without fixed amount or timing are based on
+the conditions existing at September 30, 2016.
+The following table reflects the contractually fixed pay-offs for
+settlement, repayments and interest. The disclosed expected
+undiscounted net cash outflows from derivative financial liabilities
+In addition, Siemens constantly monitors funding options avail-
+able in the capital markets, as well as trends in the availability
+and costs of such funding, with a view to maintaining financial
+flexibility and limiting repayment risks.
+Liquidity risk results from the Company's inability to meet its finan-
+cial liabilities. Siemens follows a deliberated financing policy that
+is aimed towards a balanced financing portfolio, a diversified
+maturity profile and a comfortable liquidity cushion. Siemens
+mitigates liquidity risk by the implementation of an effective
+working capital and cash management, arranged credit facilities
+with highly rated financial institutions, via a debt issuance pro-
+gram and via a global multi-currency commercial paper program.
+Liquidity risk may also be mitigated by the Siemens Bank GmbH,
+which increases the flexibility of depositing cash or refinancing.
+8,871
+Siemens' investment portfolio consists of direct and indirect in-
+vestments in publicly traded companies held for purposes other
+than trading. The direct participations result mainly from strate-
+gic partnerships, strengthening Siemens' focus on its core busi-
+ness activities or compensation from merger and acquisitions
+transactions; indirect investments in fund shares are mainly
+transacted for financial reasons.
+LIQUIDITY RISK
+These investments are monitored based on their current market
+value, affected primarily by fluctuations in the volatile technol-
+ogy-related markets worldwide. As of September 30, 2016 and
+2015 the market value of Siemens' portfolio in publicly traded
+companies was €2,169 million compared to €1,814 million in the
+prior year. As of September 30, 2016 and 2015, the VaR relating
+to the equity price was €227 and €189 million. The increases in
+the market value and of the VaR were due mainly to higher mar-
+ket values of our stakes in OSRAM and Atos.
+2017
+indebtedness
+818
+22
+11
+125
+184
+3,068
+Irrevocable loan commitments²
+799
+177
+526
+277
+768
+25
+84
+118
+1,264
+Other financial liabilities
+Derivative financial liabilities
+Credit guarantees¹
+5
+6
+31
+8,006
+107
+30
+56
+23
+Trade payables
+Obligations under
+finance leases
+50
+15
+Settled
+(95,658)
+(38,304)
+Siemens provides its customers with various forms of direct and
+indirect financing particularly in connection with large projects.
+Hence, credit risks arise are determined by the solvency of the
+debtors, the recoverability of the collaterals and the global eco-
+nomic development.
+(85,056)
+57
+85
+86
+678
+588
+2,868
+2,526
+497
+118
+99
+127
+132
+546
+126
+1,685
+5,731
+4,906
+1,771
+1,790
+179
+184
+304
+281
+243
+581
+1,800
+1,690
+598
+1,337
+1,324
+1,272
+206
+225
+522
+350
+464
+160
+(190)
+(346)
+330
+389
+223
+119
+137
+132
+895
+570
+4,335
+3,929
+375
+691
+195
+185
+218
+230
+577
+553
+2,152
+618
+66
+(2,640)
+5,533
+18
+17
+Outstanding, end of period
+219
+(1,994)
+7,404
+(1,119)
+7,218
+63,126
+60,851
+125,717
+120,348
+(3,346)
+4,984
+597
+884
+471
+341
+2,135
+1,897
+2,764
+JUBILEE SHARE PROGRAM
+The Managing Board decides annually on the issuance of a new
+Siemens Profit Sharing tranche and determines the targets to be
+met for the current fiscal year. At fiscal year-end, based on the
+actual target achievement, the Managing Board decides in its
+discretion on the amount to be transferred to the Profit-Shar-
+ing-Pool; this transfer is limited to a maximum of €400 million
+annually. If the Pool amounts to a minimum of €400 million after
+one or more fiscal years, it will be transferred to eligible employ-
+ees below senior management in full or partially through the
+grant of free Siemens shares. As of September 30, 2016,
+€200 million are in the Profit-Sharing-Pool. Expense is recognized
+pro rata over the estimated vesting period.
+SIEMENS PROFIT SHARING
+The weighted average fair value of matching shares granted in
+fiscal 2016 and 2015 amounting to €64.56 and €69.43 per share
+was determined as the market price of Siemens shares less the
+present value of expected dividends taking into account non-vest-
+ing conditions.
+591
+1,655,780
+1,767,980
+(71,164)
+357
+680
+216
+26,446
+160
+165
+231
+240
+2,325
+2,184
+11,211
+11,153
+2,154
+24,970
+392
+346
+563
+545
+2,048
+7,737
+600
+653
+8,744
+2,191
+1,409
+1,990
+7,446
+7,493
+34,527
+36,145
+1,521
+Siemens Industry Software S.r.I., Milan/Italy
+Ellessrob 20-V B.V., Amsterdam/Netherlands
+100
+Ellessrob 5-VI B.V., Amsterdam/Netherlands
+100
+Siemens Healthcare S.r.I., Milan/Italy
+100
+Ellessrob 3-VIII B.V., Amsterdam/Netherlands
+100
+Samtech Italia S.r.I., Milan/Italy
+100
+100
+100
+100
+Ellessrob 5-VII B.V., Amsterdam/Netherlands
+NEM Energy B.V., The Hague/Netherlands
+100
+100
+Siemens Renting s.r.l. in Liquidazione, Milan/Italy
+100
+next47 B.V., The Hague/Netherlands
+1008
+Siemens S.p.A., Milan/Italy
+100
+Omnetric B.V., The Hague/Netherlands
+100
+100
+Siemens Postal, Parcel & Airport Logistics S.r.I., Milan/Italy
+Dresser-Rand Italia S.r.I., Tribogna/Italy
+Siemens HealthCare Ltd., Rosh HaAyin/Israel
+Dresser-Rand Services B.V., Spijkenisse/Netherlands
+Siemens Transformers S.p.A., Trento/Italy
+Siemens Lda., Maputo/Mozambique
+100
+100
+Siemens Pty. Ltd., Windhoek/Namibia
+100
+Siemens Industry Software Ltd., Airport City/Israel
+100
+Castor III B.V., Amsterdam/Netherlands
+100
+Siemens Israel Ltd., Rosh HaAyin/Israel
+100
+100
+D-R International Holdings (Netherlands) B.V.,
+1008
+Amsterdam/Netherlands
+100
+Siemens Product Lifecycle Management Software 2 (IL) Ltd.,
+Dresser-Rand B.V., Spijkenisse/Netherlands
+100
+Airport City/Israel
+100
+Dresser-Rand International B.V., Spijkenisse/Netherlands
+100
+UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
+100
+Siemens Israel Projects Ltd., Rosh HaAyin/Israel
+100
+Siemens International Holding B.V., The Hague/Netherlands
+100
+Siemens Financieringsmaatschappij N.V.,
+Obschestwo s ogranitschennoj Otwetstwennostju (in parts)
+The Hague/Netherlands
+100
+"Dresser-Rand", Moscow/Russian Federation
+100
+Siemens Gas Turbine Technologies Holding B.V.,
+000 Legion II, Moscow/Russian Federation
+100
+The Hague/Netherlands
+65
+000 Siemens, Moscow/Russian Federation
+100
+100
+100
+000 Siemens Elektroprivod,
+Siemens Industry Software B.V.,
+St. Petersburg/Russian Federation
+100
+'s-Hertogenbosch/Netherlands
+100
+000 Siemens Gas Turbine Technologies, Leningrad
+100
+100
+Oblast/Russian Federation
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
+Siemens Healthcare Nederland B.V., The Hague/Netherlands
+SIMEA SIBIU S. R.L., Sibiu/Romania
+100
+Siemens Finance B.V., The Hague/Netherlands
+Trench Italia S.r.I., Savona/Italy
+100
+Siemens Diagnostics Holding II B.V., The Hague/Netherlands
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Consolidated Financial Statements
+105
+Equity interest
+Equity interest
+September 30, 2016
+in %
+September 30, 2016
+in %
+Siemens D-R Holding B.V., The Hague/Netherlands
+100
+Siemens S.R.L., Bucharest/Romania
+100
+Pollux III B.V., Amsterdam/Netherlands
+100
+100
+100
+Samtech SA, Angleur/Belgium
+79
+Samtech France SAS, Massy/France
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+100
+10 Exemption pursuant to Section 264b German Commercial Code.
+104 Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2016
+in %
+September 30, 2016
+in %
+Siemens Financial Services SAS, Saint-Denis/France
+Siemens France Holding SAS, Saint-Denis/France
+Siemens Healthcare SAS, Saint-Denis/France
+100
+Siemens Healthcare Limited Liability Partnership,
+100
+Almaty/Kazakhstan
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+PETNET Solutions SAS, Lisses/France
+100
+Antwerp/Belgium
+Siemens Medical Solutions Diagnostics Holding I B.V.,
+Steiermärkische Medizinarchiv GesmbH, Graz/Austria
+Trench Austria GmbH, Leonding/Austria
+52
+Siemens Limited for Trading, Cairo/Egypt
+100
+Siemens Technologies S.A.E., Cairo/Egypt
+90
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
+GmbH, Vienna/Austria
+Siemens Healthcare Oy, Espoo/Finland
+100
+100
+Siemens Osakeyhtiö, Espoo/Finland
+100
+Siemens W.L.L., Manama/Bahrain
+51
+CD-adapco France SAS, Bobigny/France
+100
+Limited Liability Company Siemens Technologies,
+D-R Holdings (France) SAS, Le Havre/France
+100
+Minsk/Belarus
+100
+Dresser-Rand SAS, Le Havre/France
+100
+Dresser-Rand Machinery Repair Belgie N.V.,
+Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
+100
+100
+100
+Siemens TOO, Almaty/Kazakhstan
+100
+100
+Budapest/Hungary
+100
+Siemens d.o.o., Podgorica/Montenegro
+100
+Siemens Healthcare Kft., Budapest/Hungary
+Siemens Zrt., Budapest/Hungary
+Siemens Sherkate Sahami (Khass),
+100
+Guascor Maroc, S.A.R.L., Agadir/Morocco
+100
+100
+SCIENTIFIC MEDICAL SOLUTION DIAGNOSTICS S.A.R.L.,
+Casablanca/Morocco
+100
+Teheran/Iran, Islamic Republic of
+97
+97
+Siemens Healthcare SARL, Casablanca/Morocco
+1008
+Siemens Healthcare Medical Solutions Limited,
+Swords, County Dublin/Ireland
+100
+Siemens Plant Operations Tahaddart SARL, Tangier/Morocco
+Siemens S.A., Casablanca/Morocco
+100
+100
+Siemens Limited, Dublin/Ireland
+TFM International S.A. i.L., Luxembourg/Luxembourg
+Siemens Wind Power Blades, SARL AU, Tangier/Morocco
+evosoft Hungary Szamitastechnikai Kft.,
+Luxembourg/Luxembourg
+Siemens Industry Software SAS, Châtillon/France
+100
+Siemens Lease Services SAS, Saint-Denis/France
+100
+Siemens Electrical & Electronic Services K.S.C.C.,
+Kuwait City/Kuwait
+492
+SIEMENS Postal Parcel Airport Logistics SAS, Paris/France
+100
+Siemens SAS, Saint-Denis/France
+100
+Trench France SAS, Saint-Louis/France
+100
+Siemens Oil & Gas Equipment Limited, Accra/Ghana
+90
+D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
+D-R Luxembourg Holding 2, SARL, Luxembourg/Luxembourg
+D-R Luxembourg Holding 3, SARL, Luxembourg/Luxembourg
+D-R Luxembourg International SARL,
+100
+100
+100
+Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
+Athens/Greece
+Luxembourg/Luxembourg
+100
+100
+D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
+100
+Siemens Healthcare Industrial and Commercial Société
+Anonyme, Athens/Greece
+Dresser-Rand Holding (Delaware) LLC, SARL,
+100
+100
+000 Siemens Industry Software,
+Microenergía 21, S.A., Zumaia/Spain
+100
+Siemens AB, Upplands Väsby/Sweden
+100
+678
+Siemens Financial Services AB, Stockholm/Sweden
+100
+Enviroil Vasca, S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Healthcare AB, Stockholm/Sweden
+100
+Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
+100
+Siemens Industrial Turbomachinery AB,
+100
+Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
+Finspång/Sweden
+100
+Guascor Borja AIE, Zumaia/Spain
+708
+Siemens Industry Software AB, Kista/Sweden
+100
+Guascor Explotaciones Energéticas, S.A.,
+SKR Lager 20 KB, Finspång/Sweden
+100
+Vitoria-Gasteiz/Spain
+100
+Dresser-Rand Sales Company S.A., Freiburg/Switzerland
+100
+Madrid/Spain
+100
+ay
+100
+Johannesburg/South Africa
+03
+Siemens Healthcare Proprietary Limited,
+SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS, S.L.
+Sociedad Unipersonal, Madrid/Spain
+100
+Halfway House/South Africa
+100
+Siemens Rail Automation S.A.U., Madrid/Spain
+100
+Siemens Proprietary Limited, Midrand/South Africa
+70
+Siemens Renting S.A., Madrid/Spain
+100
+Axastse Solar, S. L., Vitoria-Gasteiz/Spain
+100
+Siemens S.A., Madrid/Spain
+100
+B2B Energía, S.A., Vitoria-Gasteiz/Spain
+858
+Siemens Wind HoldCo, S.L., Zamudio/Spain
+100
+Desimpacte de Purines Altorricón S.A., Altorricón/Spain
+Desimpacto de Purines Turégano, S.A., Turégano/Spain
+Dresser-Rand Holdings Spain S. L. U., Vitoria-Gasteiz/Spain
+Empresa de Reciclajes de Residuos Ambientales, S.A.,
+Vitoria-Gasteiz/Spain
+70
+100
+Sistemas y Nuevas Energias, S.A, Vitoria-Gasteiz/Spain
+1008
+Telecomunicación, Electrónica y Conmutación S.A.,
+100
+Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
+100
+Huba Control AG, Würenlos/Switzerland
+100
+Zurich/Switzerland
+100
+Guascor Solar Operacion and Mantenimiento, S.L.,
+Siemens Power Holding AG, Zug/Switzerland
+100
+Vitoria-Gasteiz/Spain
+100
+Siemens Schweiz AG, Zurich/Switzerland
+100
+Guascor Solar S.A., Vitoria-Gasteiz/Spain
+100
+systransis AG, Risch/Switzerland
+100
+Guascor Wind, S. L., Vitoria-Gasteiz/Spain
+100
+Inversiones Analcima 6 S.L., Vitoria-Gasteiz/Spain
+100
+Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
+United Republic of
+100
+100
+1008
+Siemens S.A., Tunis/Tunisia
+100
+Microenergía Vasca, S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Finansal Kiralama A.S., Istanbul/Turkey
+Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
+Siemens Industry Software S.L., Barcelona/Spain
+Siemens Postal, Parcel & Airport Logistics AG,
+Guascor Servicios, S.A., Madrid/Spain
+100
+Guascor Isolux AIE, Vitoria-Gasteiz/Spain
+608
+Komykrieng AG, Gossau/Switzerland
+100
+Guascor Postensa AIE, Zumaia/Spain
+898
+Polarion AG, Gossau/Switzerland
+100
+Guascor Power Investigacion y Desarollo, S.A.,
+Siemens Fuel Gasification Technology Holding AG,
+Vitoria-Gasteiz/Spain
+100
+Zug/Switzerland
+100
+Guascor Power, S.A., Zumaia/Spain
+100
+Siemens Healthcare AG, Zurich/Switzerland
+100
+Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
+100
+Guascor Proyectos, S.A., Madrid/Spain
+1008
+Siemens Industry Software AG, Zurich/Switzerland
+100
+100
+The Hague/Netherlands
+Siemens Employee Share Ownership Trust,
+Siemens Holding S.L., Madrid/Spain
+Siemens L.L.C., Muscat/Oman
+51
+ISCOSA Industries and Maintenance Ltd.,
+Riyadh/Saudi Arabia
+51
+Siemens Healthcare (Private) Limited, Lahore/Pakistan
+100
+Siemens Ltd., Riyadh/Saudi Arabia
+51
+Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
+75
+VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
+51
+1008
+AXIT Sp. z o.o., Wroclaw/Poland
+Siemens d.o.o. Beograd, Belgrade/Serbia
+100
+Siemens Finance Sp. z o.o., Warsaw/Poland
+100
+Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
+100
+Siemens Healthcare Sp. z o.o., Warsaw/Poland
+100
+OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
+100
+Siemens Industry Software Sp. z o.o., Warsaw/Poland
+100
+100
+Siemens Wind Power AS, Oslo/Norway
+501
+Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
+Moscow/Russian Federation
+100
+Siemens Nederland N.V., The Hague/Netherlands
+100
+Termotron Rail Automation Holding B.V.,
+000 Siemens Transformers, Voronezh/Russian Federation
+Siemens Finance LLC, Vladivostok/Russian Federation
+100
+100
+The Hague/Netherlands
+501
+Siemens Healthcare Limited Liability Company,
+Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
+100
+Moscow/Russian Federation
+100
+Siemens Ltd., Lagos/Nigeria
+100
+Dresser-Rand AS, Kongsberg/Norway
+100
+Technologies of Rail Transport Limited Liability Company,
+Moscow/Russian Federation
+1008
+Siemens AS, Oslo/Norway
+100
+Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
+51
+Siemens Healthcare AS, Oslo/Norway
+100
+Siemens Sp. z o.o., Warsaw/Poland
+100
+SAT Systémy automatizacnej techniky spol. s.r.o.,
+Bratislava/Slovakia
+60
+100
+Dresser-Rand Southern Africa (Pty) Ltd.,
+Siemens Industry Software S.R.L., Brasov/Romania
+100
+Midrand/South Africa
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+106
+Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2016
+in %
+September 30, 2016
+in %
+Linacre Investments (Pty) Ltd., Kenilworth/South Africa
+03
+Siemens Healthcare S.R.L., Bucharest/Romania
+100
+100
+100
+Siemens Healthcare, Lda., Amadora/Portugal
+100
+Siemens Convergence Creators, s. r. o., Bratislava/Slovakia
+100
+Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
+Siemens Healthcare s.r.o., Bratislava/Slovakia
+100
+Lisbon/Portugal
+100
+Siemens s.r.o., Bratislava/Slovakia
+100
+Siemens S.A., Amadora/Portugal
+100
+SIPRIN s.r.o., Bratislava/Slovakia
+100
+Siemens W.L.L., Doha/Qatar
+402
+Siemens d.o.o., Ljubljana/Slovenia
+100
+SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
+Siemens Healthcare d.o.o, Ljubljana/Slovenia
+100
+Bucharest/Romania
+100
+Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
+100
+Siemens Convergence Creators S.R.L., Brasov/Romania
+Dresser-Rand Service Centre (Pty) Ltd., Midrand/South Africa
+Siemens Healthcare S.A.E., Cairo/Egypt
+100
+1008
+100
+NEO New Oncology GmbH, Cologne
+100
+next47 GmbH, Munich
+10011
+Omnetric GmbH, Munich
+51
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
+Objekt Tübingen KG, Grünwald
+10010
+September 30, 2016
+Equity interest
+in %
+Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
+10011
+SUBSIDIARIES
+Project Ventures Butendiek Holding GmbH, Erlangen
+Projektbau-Arena-Berlin GmbH, Grünwald
+10011
+10011
+Germany (117 companies)
+R&S Restaurant Services GmbH, Munich
+100
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+10011
+REMECH Systemtechnik GmbH, Kamsdorf
+10011
+Alpha Verteilertechnik GmbH, Cham
+10011
+Anlagen- und Rohrleitungsbau Ratingen GmbH, Ratingen
+Mannesmann Demag Krauss-Maffei GmbH, Munich
+1008
+in %
+Equity interest
+43.7
+Other attestation services
+3.2
+7.1
+Tax services
+0.4
+0.1
+Other services
+0.1
+49.5
+51.0
+In fiscal 2016 and 2015, 41% and 45%, respectively, of the total
+fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
+schaft, Germany.
+100
+Consolidated Financial Statements
+Audit Services relate primarily to services provided by EY for au-
+diting Siemens' Consolidated Financial Statements and for audit-
+ing the statutory financial statements of Siemens AG and its sub-
+sidiaries. Other Attestation Services include primarily audits of
+financial statements in connection with M&A activities, comfort
+letters and other attestation services required under regulatory
+requirements, agreements or requested on a voluntary basis.
+NOTE 32
+Corporate Governance
+The Managing Board and the Supervisory Board of Siemens
+Aktiengesellschaft provided the declaration required by Sec-
+tion 161 of the German stock corporation law (AktG) as of Octo-
+ber 1, 2016, which is available on the Company's website at:
+WWW.SIEMENS.COM/GCG-CODE
+NOTE 33
+Subsequent events
+In June 2016, Siemens and Gamesa Corporación Tecnológica, S.A.
+(Gamesa) signed binding agreements to merge the Siemens
+wind power business, including service, with Gamesa. Siemens
+will own 59% of the shares of the combined entity. As part of the
+merger, Siemens will fund a cash payment of €1 billion, which
+will be distributed to Gamesa's shareholders (excluding Siemens)
+immediately following the completion of the merger. In Octo-
+ber 2016, the Gamesa shareholders approved the merger. Closing
+of the transaction is subject to the approvals of the antitrust and
+regulatory authorities.
+In November 2016, Siemens announced the acquisition of Mentor
+Graphics (U.S.), a design automation and industrial software pro-
+vider. The purchase price is US$37.25 per share in cash, which
+represents an enterprise value of US$4.5 billion. Mentor Graphics
+will be integrated in the Digital Factory Division. Closing of the
+transaction is subject to customary conditions and is expected in
+the third quarter of fiscal 2017.
+In November 2016, Siemens announced its intention to further
+strengthen Healthineers in Siemens for the future and is there-
+fore planning to publicly list its healthcare business. Siemens will
+announce more precise details regarding the date and scope of
+the placement when plans for the public listing are further ad-
+vanced. The listing will also depend, among other things, on the
+stock market environment.
+Consolidated Financial Statements
+101
+NOTE 34 List of subsidiaries and
+associated companies pursuant to
+Section 313 para. 2 of the German
+Commercial Code
+September 30, 2016
+45.9
+RISICOM Rückversicherung AG, Grünwald
+Samtech Deutschland GmbH, Hamburg
+100
+10011
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
+Grünwald
+10010
+evosoft GmbH, Nuremberg
+10011
+FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
+Munich
+Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
+Grünwald
+10010
+10010
+HanseCom Gesellschaft für Informations- und
+Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
+Grünwald
+10010
+Kommunikationsdienstleistungen mbH, Hamburg
+HanseCom Public Transport Ticketing Solutions GmbH,
+Hamburg
+74
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
+Grünwald
+10010
+74
+HSP Hochspannungsgeräte GmbH, Troisdorf
+10011
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
+Grünwald
+10010
+ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
+IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
+Jawa Power Holding GmbH, Erlangen
+85
+100
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
+Grünwald
+10010
+10011
+Dresser-Rand GmbH, Oberhausen
+100
+100
+10010
+Atecs Mannesmann GmbH, Erlangen
+100
+AXIT GmbH, Frankenthal
+100
+Berliner Vermögensverwaltung GmbH, Berlin
+10011
+Siemens Automotive ePowertrain Systems GmbH, Erlangen
+Siemens Automotive ePowertrain Systems Holding GmbH,
+Erlangen
+100
+100
+BWI Services GmbH, Meckenheim
+100
+Siemens Bank GmbH, Munich
+100
+CAPTA Grundstücksgesellschaft mbH & Co. KG i.L., Grünwald
+10010
+Siemens Beteiligungen Inland GmbH, Munich
+10011
+Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
+DA Creative GmbH, Munich
+100
+Siemens Beteiligungen Management GmbH, Grünwald
+1008
+100
+Siemens Beteiligungen USA GmbH, Berlin
+10011
+Dade Behring Beteiligungs GmbH, Eschborn
+100
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Grünwald
+Dade Behring Grundstücks GmbH, Marburg
+KompTime GmbH, Munich
+Audit services
+2016
+11,959
+79,644
+11,765
+75,636
+42,057
+assets
+Sep 30,
+2015
+20,085
+21,702
+18,577
+15,118
+79,644
+75,636
+2,791
+41,453
+10,739
+68,905
+64,392
+18,579
+61,065
+18,443
+57,194
+16,769
+15,263
+17,776
+16,540
+34,546
+17,576
+6,748
+34,705
+17,296
+11,244
+15,135
+7,511
+111
+19,013
+3,132
+Samtech Iberica Engineering & Software Services S.L.,
+Barcelona/Spain
+NOTE 29 Information about geographies
+(in millions of €)
+Europe, C.I.S., Africa, Middle East
+Americas
+Asia, Australia
+Siemens
+thereof Germany
+thereof foreign countries
+therein U.S.
+2016
+41,819
+Revenue by location
+of customers
+Revenue by location
+22,707
+Fiscal year
+2015
+2016
+45,325
+22,360
+of companies
+Fiscal year
+2015
+42,432
+21,440
+2016
+19,912
+Non-current
+2015
+Non-current assets consist of property, plant and equipment,
+goodwill and other intangible assets.
+JOINT VENTURES AND ASSOCIATES
+377
+Associates
+114
+113
+343
+638
+447
+280
+569
+1,015
+As of September 30, 2016 and 2015, guarantees to joint ventures
+and associates amounted to €1,500 million and €2,145 million,
+respectively, including the HERKULES obligations of €600 million
+and €1,090 million, respectively. As of September 30, 2016 and
+2015, guarantees to joint ventures amounted to €553 million and
+€472 million, respectively. As of September 30, 2016 and 2015,
+loans given to joint ventures and associates amounted to €82 mil-
+lion and €68 million, therein €78 million and €54 million related
+to joint ventures, respectively. As of September 30, 2016 and
+2015, the Company had commitments to make capital contribu-
+tions of €48 million and €38 million to its joint ventures and as-
+sociates, therein €39 million and €26 million related to joint ven-
+tures, respectively. For a loan raised by a joint venture, which is
+secured by a Siemens guarantee, Siemens granted an additional
+collateral. As of September 30, 2016 and 2015 the outstanding
+amount totaled to €116 million and €124 million, respectively.
+As of September 30, 2016 and 2015 there were loan commit-
+ments to joint ventures and associates amounting to €72 million
+and €134 million, respectively, therein €72 million and €58 mil-
+lion, respectively related to joint ventures.
+Consolidated Financial Statements 99
+RELATED INDIVIDUALS
+In fiscal 2016 and 2015, members of the Managing Board
+received cash compensation of €20.2 million and €19.6 million.
+The fair value of stock-based compensation amounted to
+€8.7 million and €7.9 million for 113,230 and 113,281 Stock
+Awards, respectively, in fiscal 2016 and 2015. In fiscal 2016 and
+2015, the Company granted contributions under the BSAV to
+members of the Managing Board totaling €4.6 million and
+€4.8 million, respectively.
+Therefore in fiscal 2016 and 2015, compensation and benefits,
+attributable to members of the Managing Board amounted to
+€33.5 million and €32.2 million in total, respectively.
+In fiscal 2016 and 2015, expense related to share-based pay-
+ment and to the Share Matching Program amounted to
+€8.3 million and 8.1 million (including Stock Awards in connec-
+tion with the departure from members of the Managing Board),
+respectively.
+Former members of the Managing Board and their surviving
+dependents received emoluments within the meaning of Sec-
+tion 314 para. 1 No. 6 b of the German Commercial Code totaling
+€52.3 million and €30.5 million (including €9.6 million in con-
+nection with the departure from members of the Managing
+Board) in fiscal 2016 and 2015, respectively.
+The defined benefit obligation (DBO) of all pension commitments
+to former members of the Managing Board and their survivors as
+of September 30, 2016 and 2015 amounted to €216.3 million and
+€228.3 million, respectively.
+Compensation attributable to members of the Supervisory Board
+comprises in fiscal 2016 and 2015 of a base compensation and
+additional compensation for committee work and amounted to
+€5.2 million and €5.1 million (including meeting fees), respectively.
+Information regarding the remuneration of the members of the
+Managing Board and Supervisory Board is disclosed on an indi-
+vidual basis in the Compensation Report, which is part of the
+combined management report.
+In fiscal 2016 and 2015, no other major transactions took place
+between the Company and the members of the Managing Board
+and the Supervisory Board.
+Some of our board members hold, or in the last year have held,
+positions of significant responsibility with other entities. We have
+relationships with almost all of these entities in the ordinary
+course of our business whereby we buy and sell a wide variety of
+products and services on arm's length terms.
+NOTE 31
+Principal accountant fees
+and services
+Fees related to professional services rendered by the Company's
+principal accountant, EY, for fiscal 2016 and 2015 are:
+Fiscal year
+(in millions of €)
+227
+NOTE 30 Related party transactions
+167
+Joint ventures
+Siemens has relationships with many joint ventures and associ-
+ates in the ordinary course of business whereby Siemens buys
+and sells a wide variety of products and services generally on
+arm's length terms.
+Sales of goods
+and services and
+other income
+Purchases of goods
+and services
+and other expenses
+Fiscal year
+2015
+(in millions of €)
+2016
+Fiscal year
+2015
+2016
+Joint ventures
+1,052
+365
+48
+Associates
+1,379
+687
+174
+2,431
+1,052
+223
+39
+197
+236
+Receivables
+Liabilities
+Sep 30,
+(in millions of €)
+2016
+2015
+2016
+Sep 30,
+2015
+333
+75
+10011
+10010
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Consolidated Financial Statements
+103
+Equity interest
+Equity interest
+September 30, 2016
+in %
+September 30, 2016
+in %
+Europe, Commonwealth of Independent States
+(C.I.S.), Africa, Middle East (without Germany)
+(310 companies)
+Siemens Healthcare SA/NV, Beersel/Belgium
+100
+Siemens Industry Software NV, Leuven/Belgium
+100
+ESTEL Rail Automation SPA, Algiers/Algeria
+Siemens Spa, Algiers/Algeria
+51
+100
+Siemens Product Lifecycle Management Software II (BE)
+BVBA, Anderlecht/Belgium
+100
+Siemens S.A./N.V., Beersel/Belgium
+100
+Siemens S.A., Luanda/Angola
+51
+ETM professional control GmbH, Eisenstadt/Austria
+7 Significant influence due to contractual arrangements or legal circumstances
+100
+6 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+Trench Germany GmbH, Bamberg
+10011
+Siemens Power Control GmbH, Langen
+10011
+Siemens Private Finance Versicherungsvermittlungs-
+Verwaltung SeaRenergy Offshore Projects GmbH i.L.,
+Hamburg
+100
+gesellschaft mbH, Munich
+10011
+Siemens Project Ventures GmbH, Erlangen
+10011
+VIB Verkehrsinformationsagentur Bayern GmbH, Munich
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+51
+100
+Siemens Real Estate GmbH & Co. KG, Grünwald
+10010
+VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
+943
+Siemens Real Estate Management GmbH, Grünwald
+Siemens Spezial-Investmentaktiengesellschaft mit TGV,
+Munich
+1008
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
+Munich
+100
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+10011
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+5 No control due to contractual arrangements or legal circumstances.
+10011
+Hochquellstrom-Vertriebs GmbH, Vienna/Austria
+Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
+Siemens Medicina d.o.o, Sarajevo/Bosnia and Herzegovina
+Siemens EOOD, Sofia/Bulgaria
+Siemens Gebäudemanagement & -Services G.m.b.H.,
+Vienna/Austria
+100
+Siemens Electric Machines s.r.o., Drasov/Czech Republic
+Siemens Healthcare, s.r.o., Prague/Czech Republic
+100
+100
+Siemens Healthcare Diagnostics GmbH, Vienna/Austria
+Siemens Industry Software GmbH, Linz/Austria
+Siemens Konzernbeteiligungen GmbH, Vienna/Austria
+Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
+Siemens Metals Technologies Vermögensverwaltungs
+GmbH, Vienna/Austria
+100
+100
+Siemens Industry Software, s.r.o., Prague/Czech Republic
+Siemens, s.r.o., Prague/Czech Republic
+100
+100
+100
+Siemens A/S, Ballerup/Denmark
+100
+100
+Siemens Healthcare A/S, Ballerup/Denmark
+100
+Siemens Industry Software A/S, Ballerup/Denmark
+100
+100
+Siemens Wind Power A/S, Brande/Denmark
+100
+Siemens Personaldienstleistungen GmbH, Vienna/Austria
+Siemens Urban Rail Technologies Holding GmbH,
+Vienna/Austria
+100
+NEM Energy Egypt LLC, Alexandria/Egypt
+100
+Siemens Health Care LLC, Cairo/Egypt
+100
+100
+Prague/Czech Republic
+100
+100
+100
+100
+ITH icoserve technology for healthcare GmbH,
+Innsbruck/Austria
+Siemens Healthcare EOOD, Sofia/Bulgaria
+100
+69
+Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
+51
+KDAG Beteiligungen GmbH, Vienna/Austria
+Omnetric GmbH, Vienna/Austria
+100
+100
+Siemens Convergence Creators d.o.o., Zagreb/Croatia
+Siemens d.d., Zagreb/Croatia
+100
+100
+Priamos Grundstücksgesellschaft m.b.H., Vienna/Austria
+Siemens Aktiengesellschaft Österreich, Vienna/Austria
+Siemens Convergence Creators GmbH, Eisenstadt/Austria
+Siemens Convergence Creators GmbH, Vienna/Austria
+100
+Siemens Healthcare d.o.o., Zagreb/Croatia
+100
+100
+100
+J. N. Kelly Security Holding Limited, Larnaka/Cyprus
+OEZ s.r.o., Letohrad/Czech Republic
+100
+100
+100
+Siemens Convergence Creators Holding GmbH,
+Vienna/Austria
+Polarion Software s.r.o., Prague/Czech Republic
+Siemens Convergence Creators, s.r.o.,
+100
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
+Grünwald
+Siemens Postal, Parcel & Airport Logistics GmbH, Constance
+SYKATEC Systeme, Komponenten, Anwendungstechnologie
+GmbH, Erlangen
+Siemens Technology Accelerator GmbH, Munich
+10011
+10010
+Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
+10010
+Siemens Convergence Creators Management GmbH,
+Hamburg
+1008
+Siemens Technopark Mülheim Verwaltungs GmbH,
+Grünwald
+100
+Siemens Finance & Leasing GmbH, Munich
+10011
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+10010
+Siemens Financial Services GmbH, Munich
+10011
+Siemens Fonds Invest GmbH, Munich
+10011
+Siemens Technopark Nürnberg Verwaltungs GmbH,
+Grünwald
+100
+Siemens Fuel Gasification Technology GmbH & Co. KG,
+Freiberg
+Siemens Treasury GmbH, Munich
+10011
+10010
+Siemens Turbomachinery Equipment GmbH, Frankenthal
+10011
+Siemens Fuel Gasification Technology Verwaltungs GmbH,
+Freiberg
+Siemens Venture Capital GmbH, Munich
+1008
+10011
+in %
+in %
+Kyra 1 GmbH, Erlangen
+10011
+Kyros 51 GmbH, Munich
+1008
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
+Grünwald
+10010
+Kyros 52 GmbH, Munich
+1008
+Lincas Electro Vertriebsgesellschaft mbH, Hamburg
+Siemens Campus Erlangen Objektmanagement GmbH,
+Grünwald
+1008
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+102 Consolidated Financial Statements
+Equity interest
+September 30, 2016
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+Siemens Convergence Creators GmbH & Co. KG, Hamburg
+Equity interest
+September 30, 2016
+10011
+1008
+1008
+Siemens Industriepark Karlsruhe GmbH & Co. KG,
+Grünwald
+10010
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+SIMAR Nordost Grundstücks-GmbH, Grünwald
+10010
+10011
+Siemens Industry Software GmbH, Cologne
+10011
+SIMAR Nordwest Grundstücks-GmbH, Grünwald
+10011
+Siemens Insulation Center GmbH & Co. KG, Zwönitz
+10010
+SIMAR Ost Grundstücks-GmbH, Grünwald
+10011
+Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
+1008
+SIMAR Süd Grundstücks-GmbH, Grünwald
+10011
+Siemens Liquidity One, Munich
+100
+SIMAR West Grundstücks-GmbH, Grünwald
+10011
+Siemens Medical Solutions Health Services GmbH,
+Grünwald
+SIMOS Real Estate GmbH, Munich
+10011
+100
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+100
+10010
+Siemens Wind Power GmbH & Co. KG, Hamburg
+SIM 16. Grundstücksverwaltungs- und -beteiligungs-
+GmbH & Co. KG, Munich
+Siemens Industriegetriebe GmbH, Penig
+Siemens Global Innovation Partners Management GmbH,
+Munich
+Siemens Wind Power Management GmbH, Hamburg
+1008
+1008
+Siemens-Fonds C-1, Munich
+100
+Siemens Healthcare Diagnostics GmbH, Eschborn
+100
+Siemens-Fonds Pension Captive, Munich
+100
+Siemens Healthcare Diagnostics Holding GmbH, Eschborn
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+Siemens Healthcare GmbH, Erlangen
+100
+Siemens-Fonds Principals, Munich
+100
+100
+Siemens-Fonds S-7, Munich
+100
+10011
+Siemens-Fonds S-8, Munich
+100
+Siemens Immobilien Chemnitz-Voerde GmbH, Grünwald
+Siemens Immobilien GmbH & Co. KG, Grünwald
+100
+10010
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH,
+Munich
+100
+Siemens Immobilien Management GmbH, Grünwald
+1008
+10011
+38,799
+100
+100
+100
+GYM Renewables Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Postal, Parcel & Airport Logistics Limited,
+GYM Renewables ONE Limited,
+Frimley, Surrey/United Kingdom
+100
+Siemens plc, Frimley, Surrey/United Kingdom
+Frimley, Surrey/United Kingdom
+Siemens Protection Devices Limited,
+Industrial Turbine Company (UK) Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Rail Automation Holdings Limited,
+100
+Materials Solutions Holdings Limited,
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Industry Software Simulation and Test Limited,
+D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Dresser-Rand (U.K.) Limited,
+100
+Siemens Pension Funding (General) Limited,
+100
+Frimley, Surrey/United Kingdom
+100
+Dresser-Rand Company Ltd.,
+Siemens Pension Funding Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+Frimley, Surrey/United Kingdom
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+100
+6 No significant influence due to contractual arrangements or legal circumstances.
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+108
+Consolidated Financial Statements
+100
+7 Significant influence due to contractual arrangements or legal circumstances
+Samtech UK Limited, Frimley, Surrey/United Kingdom
+Siemens Transmission & Distribution Limited,
+100
+Siemens Rail Automation Limited,
+Materials Solutions Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Rail Systems Project Holdings Limited,
+Preactor International Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Rail Systems Project Limited,
+Project Ventures Rail Investments | Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+D-R Dormant Ltd., Frimley, Surrey/United Kingdom
+100
+Electrium Sales Limited, Frimley, Surrey/United Kingdom
+100
+Equity interest
+September 30, 2016
+in %
+September 30, 2016
+in %
+100% foreign owned subsidiary "Siemens Ukraine",
+Kiev/Ukraine
+100
+Equity interest
+SBS Pension Funding (Scotland) Limited Partnership,
+Edinburgh/United Kingdom
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
+Kiev/Ukraine
+Siemens Financial Services Holdings Ltd., Stoke Poges,
+100
+Buckinghamshire/United Kingdom
+100
+Dresser-Rand Field Operations Middle East LLC,
+Siemens Financial Services Ltd.,
+573
+Frimley, Surrey/United Kingdom
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
+Siemens Sanayi ve Ticaret A.S., Istanbul/Turkey
+100
+100
+SIEMENS HEALTHCARE, S.L.U., Getafe/Spain
+100
+Dresser-Rand Turkmen Company, Ashgabat/Turkmenistan
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+Abu Dhabi/United Arab Emirates
+492
+107
+100
+Siemens Middle East Limited,
+Siemens Healthcare Limited, Frimley, Surrey/United Kingdom
+100
+Masdar City/United Arab Emirates
+100
+100
+CD-adapco New Hampshire Co., Ltd.,
+100
+Siemens Industrial Turbomachinery Ltd.,
+100
+Frimley, Surrey/United Kingdom
+100
+Computational Dynamics Limited,
+Siemens Industry Software Limited,
+Frimley, Surrey/United Kingdom
+Stoke Poges, Buckinghamshire/United Kingdom
+Frimley, Surrey/United Kingdom
+Frimley, Surrey/United Kingdom
+Siemens Holdings plc, Frimley, Surrey/United Kingdom
+Gulf Steam Generators L.L.C.,
+492
+Siemens Healthcare Diagnostics Ltd.,
+Dubai/United Arab Emirates
+100
+Frimley, Surrey/United Kingdom
+SD (Middle East) LLC, Dubai/United Arab Emirates
+492
+Siemens Healthcare Diagnostics Manufacturing Ltd,
+100
+Siemens LLC, Abu Dhabi/United Arab Emirates
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Healthcare L.L.C., Dubai/United Arab Emirates
+492
+Siemens Healthcare Diagnostics Products Ltd,
+Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
+Melville, NY/United States
+100
+Siemens Electrical, LLC, Wilmington, DE/United States
+Siemens Energy, Inc., Wilmington, DE/United States
+CD-adapco Battery Design LLC, Dover, DE/United States
+502
+100
+100
+Wilmington, DE/United States
+Siemens Credit Warehouse, Inc.,
+Siemens Demag Delaval Turbomachinery, Inc.,
+100
+Couva/Trinidad and Tobago
+100
+Wilmington, DE/United States
+Dresser-Rand Trinidad & Tobago Limited,
+100
+100
+Analysis & Design Application Co. Ltd.,
+D-R International Sales Inc.,
+100
+Wilmington, DE/United States
+Dresser-Rand Group Inc., Wilmington, DE/United States
+Siemens S.A.C., Lima/Peru
+Wilmington, DE/United States
+100
+Wilmington, DE/United States
+Siemens Generation Services Company,
+Dresser-Rand Global Services, Inc.,
+100
+Siemens Financial Services, Inc.,
+Siemens Fossil Services, Inc., Wilmington, DE/United States
+Dresser-Rand Company, Bath, NY/United States
+100
+Siemens Financial, Inc., Wilmington, DE/United States
+100
+D-R Steam LLC, Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+100
+100
+499
+100
+100
+Siemens Innovaciones S.A. de C.V., Mexico City/Mexico
+501
+PETNET Indiana LLC, Indianapolis, IN/United States
+100
+Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
+51
+P.E.T.NET Houston, LLC, Austin, TX/United States
+PETNET Solutions Cleveland, LLC,
+100
+100
+Omnetric Corp., Wilmington, DE/United States
+100
+Mexico City/Mexico
+100
+Bingham Farms, MI/United States
+Siemens Healthcare Servicios S. de R.L. de C.V.,
+100
+Siemens Industry Software, S.A. de C.V., Mexico City/Mexico
+Siemens Servicios S.A. de C.V., Mexico City/Mexico
+Siemens, S.A. de C.V., Mexico City/Mexico
+100
+Wilmington, DE/United States
+Siemens Healthcare S.A.C., Surquillo/Peru
+100
+Wilmington, DE/United States
+100
+Siemens S.A., Panama City/Panama
+Siemens Convergence Creators Corp.,
+100
+Panama City/Panama
+100
+Siemens Capital Company LLC, Wilmington, DE/United States
+Siemens Healthcare Diagnostics Panama, S.A.,
+100
+Red Cedar Technology, Inc., East Lansing, MI/United States
+100
+Siemens S.A., Managua/Nicaragua
+100
+PETNET Solutions, Inc., Knoxville, TN/United States
+100
+63
+Siemens Corporation, Wilmington, DE/United States
+Siemens Government Technologies, Inc.,
+1008
+Wilmington, DE/United States
+1008
+100
+100
+100
+Exemplar Health (SCUH) Trust 4, Bayswater/Australia
+Siemens Healthcare Pty. Ltd., Melbourne/Australia
+Siemens Ltd., Bayswater/Australia
+100
+Siemens USA Holdings, Inc., Wilmington, DE/United States
+Siemens Wind Power Inc., Wilmington, DE/United States
+100
+SMI Holding LLC, Wilmington, DE/United States
+Siemens Public, Inc., Wilmington, DE/United States
+100
+Exemplar Health (SCUH) Trust 3, Bayswater/Australia
+Siemens Product Lifecycle Management Software Inc.,
+Wilmington, DE/United States
+100
+Exemplar Health (SCUH) Holdings 4 Pty Limited,
+Bayswater/Australia
+100
+Wilmington, DE/United States
+Siemens Power Generation Service Company, Ltd.,
+100
+100
+Synchrony, Inc., Salem, VA/United States
+Baltimore, MD/United States
+100
+Beijing Siemens Cerberus Electronics Ltd., Beijing/China
+100
+60
+Beijing Siemens Automotive E-Drive Systems Co., Ltd.,
+Changzhou, Changzhou/China
+100
+Nimbus Technologies, LLC,
+Siemens Healthcare Ltd., Dhaka/Bangladesh
+Wheelabrator Air Pollution Control Inc.,
+100
+100
+1008
+100
+SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater/Australia
+Siemens Wind Power Pty. Ltd., Bayswater/Australia
+100
+Siemens S.A., Montevideo/Uruguay
+Engines Rental, S.A., Montevideo/Uruguay
+Winergy Drive Systems Corporation,
+Wilmington, DE/United States
+Siemens Bangladesh Ltd., Dhaka/Bangladesh
+Exemplar Health (SCUH) Holdings 3 Pty Limited,
+Bayswater/Australia
+100
+Wilmington, DE/United States
+7 Significant influence due to contractual arrangements or legal circumstances
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+8 Not consolidated due to immateriality.
+100
+100
+Wilmington, DE/United States
+Los Angeles, CA/United States
+Dresser-Rand International Holdings, LLC,
+Siemens Healthcare Diagnostics Inc.,
+100
+Wilmington, DE/United States
+100
+Siemens Industry, Inc., Wilmington, DE/United States
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens Postal, Parcel & Airport Logistics LLC,
+1008
+Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
+100
+Siemens Molecular Imaging, Inc., Wilmington, DE/United States
+1008
+Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
+100
+Wilmington, DE/United States
+100
+Exemplar Health (NBH) Trust 2, Bayswater/Australia
+Siemens Medical Solutions USA, Inc.,
+in %
+September 30, 2016
+in %
+September 30, 2016
+Equity interest
+Equity interest
+110 Consolidated Financial Statements
+Dresser-Rand Holding (Luxembourg) LLC,
+100
+Dresser-Rand Participações Ltda., São Paulo/Brazil
+100
+Buenos Aires/Argentina
+100
+1008
+100
+Trench Ltd., Saint John/Canada
+VA TECH International Argentina SA,
+Siemens Wind Power Limited, Oakville/Canada
+100
+100
+Siemens S.A., Buenos Aires/Argentina
+100
+Siemens IT Services S.A., Buenos Aires/Argentina
+Siemens Transformers Canada Inc.,
+100
+Siemens Healthcare S.A., Buenos Aires/Argentina
+100
+Siemens Postal, Parcel & Airport Logistics Ltd.,
+Oakville/Canada
+100
+Trois-Rivières, Québec/Canada
+Guascor Argentina, S.A., Buenos Aires/Argentina
+Wheelabrator Air Pollution Control (Canada) Inc.,
+Ontario/Canada
+Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
+100
+Siemens S.A., Santiago de Chile/Chile
+100
+Rio de Janeiro/Brazil
+100
+Acciones, Santiago de Chile/Chile
+Chemtech Servicos de Engenharia e Software Ltda.,
+Siemens Soluciones Tecnologicas S.A.,
+Siemens Healthcare Equipos Médicos Sociedad por
+São Paulo/Brazil
+100
+Grand Cayman/Cayman Islands
+CD-adapco Solucoes Cae Suporte de Programas Ltda.,
+Siemens Healthcare Diagnostics Manufacturing Limited,
+100
+Santa Cruz de la Sierra/Bolivia, Plurinational State of
+100
+100
+100
+Artadi S.A., Buenos Aires/Argentina
+100
+100
+Frimley, Surrey/United Kingdom
+VA Tech Reyrolle Distribution Ltd.,
+100
+VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
+100
+Siemens Eletroeletronica Limitada, Manaus/Brazil
+100
+Siemens Healthcare Diagnósticos S.A., São Paulo/Brazil
+Siemens Industry Software Ltda., São Caetano do Sul/Brazil
+Siemens Ltda., São Paulo/Brazil
+Frimley, Surrey/United Kingdom
+75
+Minuano Participações Eólicas Ltda., São Paulo/Brazil
+OMNETRIC Group Tecnologia e Servicos de Consultoria
+Ltda., Belo Horizonte/Brazil
+The Preactor Group Limited,
+1008
+in %
+September 30, 2016
+in %
+Siemens Wind Power Limited,
+Frimley, Surrey/United Kingdom
+100
+100
+100
+100
+Siemens Industry Software Ltd., Oakville/Canada
+Americas (129 companies)
+100
+Siemens Healthcare Limited, Oakville/Canada
+100
+Siemens Financial Ltd., Oakville/Canada
+100
+Zenco Systems Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Canada Limited, Oakville/Canada
+100
+Oxfordshire/United Kingdom
+100
+Dresser-Rand Canada, ULC, Vancouver/Canada
+VTW Anlagen UK Ltd., Banbury,
+1008
+Siemens Wind Power Ergia Eolica LTDA, São Paulo/Brazil
+100
+VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
+100
+Mexico City/Mexico
+Dresser-Rand Colombia S.A.S., Bogotá/Colombia
+Dresser-Rand Comercio e Industria Ltda., Campinas/Brazil
+Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
+100
+Guatemala/Guatemala
+Dresser-Rand International Inc.,
+SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
+in %
+Equity interest
+September 30, 2016
+in %
+Wilmington, DE/United States
+September 30, 2016
+109
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+8 Not consolidated due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances
+6 No significant influence due to contractual arrangements or legal circumstances.
+Equity interest
+5 No control due to contractual arrangements or legal circumstances.
+100
+100
+NEM USA Corp., Wilmington, DE/United States
+Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
+100
+100
+100
+100
+100
+100
+Siemens S.A., Guatemala/Guatemala
+Dresser-Rand LLC, Wilmington, DE/United States
+Dresser-Rand Power LLC, Wilmington, DE/United States
+Dresser-Rand Services, LLC, Wilmington, DE/United States
+eMeter Corporation, Wilmington, DE/United States
+Guascor Inc., Baton Rouge, LA/United States
+Mannesmann Corporation, New York, NY/United States
+Ciudad Juárez/Mexico
+Indústria de Trabajos Eléctricos S.A. de C.V.,
+100
+Grupo Siemens S.A. de C.V., Mexico City/Mexico
+100
+Dresser-Rand de Mexico S.A. de C.V., Mexico City/Mexico
+100
+Siemens S.A., Tegucigalpa/Honduras
+100
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+90
+100
+Siemens, S.R.L., Santo Domingo/Dominican Republic
+Guascor Empreendimentos Energéticos, Ltda.,
+Taboão da Serra/Brazil
+100
+Siemens S.A., San José/Costa Rica
+85
+Guascor do Brasil Ltda., São Paulo/Brazil
+Sociedad Energética Del Caribe, S.R.L.,
+100
+100
+100
+100
+Siemens S.A., Tenjo/Colombia
+100
+100
+Siemens Healthcare S.A.S., Tenjo/Colombia
+100
+Siemens Healthcare Diagnostics S.A., San José/Costa Rica
+Guascor Serviços Ltda., Taboão da Serra/Brazil
+60
+Higüey/Dominican Republic
+1 Control due to a majority of voting rights.
+100
+100
+Siemens S.A., San Salvador/El Salvador
+89
+Jaguarí Energética, S.A., Jaguari/Brazil
+Antiguo Cuscatlán/El Salvador
+100
+Siemens Healthcare, Sociedad Anonima,
+Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
+Canoas/Brazil
+1008
+100
+100
+Siemens-Healthcare Cia. Ltda., Quito/Ecuador
+90
+Guascor Wind do Brasil, Ltda., São Paulo/Brazil
+Siemens S.A., Quito/Ecuador
+90
+Guascor Solar do Brasil, Taboão da Serra/Brazil
+100
+100
+Siemens Sensors & Communication Ltd., Dalian/China
+100
+75
+Siemens Ltd., Mumbai/India
+100
+CSI Services Pte. Ltd., Singapore/Singapore
+100
+100
+CD-adapco S.E.A. Pte. Ltd., Singapore/Singapore
+Siemens Industry Software (India) Private Limited,
+New Delhi/India
+Siemens Healthcare Pte. Ltd., Singapore/Singapore
+100
+Siemens Power Operations, Inc., Manila/Philippines
+Siemens, Inc., Manila/Philippines
+100
+Siemens Healthcare Private Limited, Mumbai/India
+100
+Mumbai/India
+100
+100
+100
+100
+100
+100
+Siemens Industry Software Pte. Ltd., Singapore/Singapore
+P.T. Siemens Indonesia, Jakarta/Indonesia
+100
+Taipei/Taiwan, Province of China
+100
+Siemens Industry Software (TW) Co., Ltd.,
+Siemens Technology and Services Private Limited,
+Mumbai/India
+100
+Siemens Healthcare Limited, Taipei/Taiwan, Province of China
+Siemens Postal and Parcel Logistics Technologies Private
+Limited, Mumbai/India
+100
+100
+Siemens Pte. Ltd., Singapore/Singapore
+100
+100
+Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
+Singapore/Singapore
+Siemens Postal Parcel & Airport Logistics Private Limited,
+Mumbai/India
+1008
+100
+Siemens Rail Automation Pvt. Ltd., Mumbai/India
+100
+100
+100
+in %
+CD-adapco India Private Limited, Bangalore/India
+Dresser-Rand India Private Limited, Mumbai/India
+Siemens Postal, Parcel & Airport Logistics Limited,
+Hong Kong/Hong Kong
+September 30, 2016
+Equity interest
+112 Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+September 30, 2016
+9 Not accounted for using the equity method due to immateriality.
+7 Significant influence due to contractual arrangements or legal circumstances
+6 No significant influence due to contractual arrangements or legal circumstances.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+8 Not consolidated due to immateriality.
+Equity interest
+in %
+100
+100
+100
+100
+Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
+HRSG Systems (Malaysia) SDN. BHD., Kuala Lumpur/Malaysia
+Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
+Siemens Industry Software Sdn. Bhd., Penang/Malaysia
+Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
+VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens (N.Z.) Limited, Auckland/New Zealand
+Siemens Healthcare Limited, Auckland/New Zealand
+Siemens Healthcare Inc., Manila/Philippines
+Siemens Financial Services Private Limited,
+100
+Mumbai/India
+Siemens Convergence Creators Private Limited,
+100
+Preactor Software India Private Limited, Bangalore/India
+501
+New Delhi/India
+Powerplant Performance Improvement Ltd.,
+100
+PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
+New Delhi/India
+100
+100
+492,8
+Dresser-Rand & Enserv Services Sdn. Bhd.,
+Kuala Lumpur/Malaysia
+100
+100
+Siemens Ltd., Taipei/Taiwan, Province of China
+PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
+PT. Siemens Industrial Power, Kota Bandung/Indonesia
+Equity interest
+Equity interest
+114
+113
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+September 30, 2016
+8 Not consolidated due to immateriality.
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+6 No significant influence due to contractual arrangements or legal circumstances.
+1 Control due to a majority of voting rights.
+499
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
+des Stadt- und Regionalverkehrs mbH, Cologne
+7 Significant influence due to contractual arrangements or legal circumstances
+100
+FEAG Fertigungscenter für Elektrische Anlagen GmbH,
+Erlangen
+in %
+509
+LIB Verwaltungs-GmbH, Leipzig
+575,9
+Parallel Graphics Ltd., Dublin/Ireland
+409
+Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
+48
+Eviop-Tempo A.E. Electrical Equipment Manufacturers,
+Vassiliko/Greece
+IFTEC GmbH & Co. KG, Leipzig
+40
+50
+25
+TRIXELL SAS, Moirans/France
+499
+40
+Compagnie Electrique de Bretagne SAS, Paris/France
+in %
+September 30, 2016
+Infineon Technologies Bipolar GmbH & Co. KG, Warstein
+100
+Siemens Industry Software Ltd., Seoul/Korea, Republic of
+Siemens Ltd. Seoul, Seoul/Korea, Republic of
+50
+100
+Siemens Ltd., Ho Chi Minh City/Viet Nam
+100
+Dresser Rand Japan K.K., Tokyo/Japan
+100
+Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
+100
+CD-adapco Co., Ltd., Yokohama/Japan
+Siemens Healthcare Diagnostics K.K., Tokyo/Japan
+99
+63
+Acrorad Co., Ltd., Okinawa/Japan
+100
+Siemens Healthcare Limited, Bangkok/Thailand
+60
+100
+Dresser-Rand (Thailand) Limited, Rayong/Thailand
+100
+Siemens Limited, Bangkok/Thailand
+100
+Siemens Healthcare K.K., Tokyo/Japan
+100
+Caterva GmbH, Pullach i. Isartal
+100
+Siemens Healthcare Limited, Seoul/Korea, Republic of
+505
+BWI Informationstechnik GmbH, Meckenheim
+100
+Dresser-Rand Korea, Ltd., Seoul/Korea, Republic of
+499
+BELLIS GmbH, Braunschweig
+100
+CD-adapco Korea, Ltd., Seoul/Korea, Republic of
+259
+ATS Projekt Grevenbroich GmbH, Schüttorf
+100
+Siemens K.K., Tokyo/Japan
+Germany (27 companies)
+100
+Siemens Japan Holding K.K., Tokyo/Japan
+ASSOCIATED COMPANIES AND JOINT VENTURES
+100
+Camstar Systems, Software (Shanghai) Company Limited,
+Shanghai/China
+Siemens Ltd., Hong Kong/Hong Kong
+Hong Kong/Hong Kong
+September 30, 2016
+Equity interest
+111
+Consolidated Financial Statements
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+10 Exemption pursuant to Section 264b German Commercial Code.
+9 Not accounted for using the equity method due to immateriality.
+8 Not consolidated due to immateriality.
+in %
+7 Significant influence due to contractual arrangements or legal circumstances
+5 No control due to contractual arrangements or legal circumstances.
+4 No control due to substantive removal or participation rights held by other parties.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
+100
+6 No significant influence due to contractual arrangements or legal circumstances.
+60
+September 30, 2016
+100
+Siemens Financial Services Ltd., Beijing/China
+100
+Siemens Shanghai Medical Equipment Ltd., Shanghai/China
+100
+Siemens Finance and Leasing Ltd., Beijing/China
+100
+September 30, 2016
+100
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
+Beijing/China
+Siemens Real Estate Management (Beijing) Ltd., Co.,
+Beijing/China
+Siemens Factory Automation Engineering Ltd.,
+85
+Siemens Electrical Drives Ltd., Tianjin/China
+100
+in %
+Equity interest
+Siemens Power Plant Automation Ltd., Nanjing/China
+100
+Siemens Eco-City Innovation Technologies (Tianjin) Co.,
+Ltd., Tianjin/China
+1008
+75
+1008
+Caracas/Venezuela, Bolivarian Republic of
+Siemens Healthcare S.A.,
+100
+Shanghai/China
+100
+Caracas/Venezuela, Bolivarian Republic of
+Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
+IBS Industrial Business Software (Shanghai), Ltd.,
+Shanghai/China
+Guascor Venezuela S.A.,
+DPC (Tianjin) Co., Ltd., Tianjin/China
+100
+Maracaibo/Venezuela, Bolivarian Republic of
+100
+CD-adapco Software Technology (Shanghai) Co.,Ltd.,
+Shanghai/China
+Dresser-Rand de Venezuela, S.A.,
+100
+Via Stylos S.A., Montevideo/Uruguay
+100
+100
+Siemens Rail Automation, C.A.,
+MWB (Shanghai) Co Ltd., Shanghai/China
+Siemens Circuit Protection Systems Ltd., Shanghai,
+Shanghai/China
+100
+100
+Australia Hospital Holding Pty Limited, Bayswater/Australia
+CD-ADAPCO AUSTRALIA PTY LTD, Melbourne/Australia
+Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
+Exemplar Health (NBH) Holdings 2 Pty Limited,
+Bayswater/Australia
+100
+Siemens Business Information Consulting Co., Ltd,
+Beijing/China
+Asia, Australia (140 companies)
+10
+70
+Siemens Building Technologies (Tianjin) Ltd.,
+Tianjin/China
+100
+Dade Behring Hong Kong Holdings Corporation,
+Tortola/Virgin Islands, British
+100
+Siemens Automotive ePowertrain Systems (Shanghai) Co.,
+Ltd., Shanghai/China
+100
+Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
+100
+Caracas/Venezuela, Bolivarian Republic of
+65
+100
+100
+Siemens Shenzhen Magnetic Resonance Ltd.,
+Shenzhen/China
+100
+65
+Trench High Voltage Products Ltd., Shenyang,
+Shenyang/China
+Siemens Logistics Automation Systems (Beijing) Co., Ltd,
+Beijing/China
+100
+Siemens Investment Consulting Co., Ltd., Beijing/China
+60
+100
+Siemens Ltd., China, Beijing/China
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
+Smart Metering Solutions (Changsha) Co. Ltd.,
+Changsha/China
+Shanghai/China
+Siemens International Trading Ltd., Shanghai,
+100
+Shanghai/China
+100
+Siemens Wiring Accessories Shandong Ltd., Zibo/China
+Siemens Industry Software (Shanghai) Co., Ltd.,
+100
+100
+Siemens Wind Power Blades (Shanghai) Co., Ltd.,
+Shanghai/China
+100
+51
+80
+Siemens Numerical Control Ltd., Nanjing, Nanjing/China
+Siemens Power Automation Ltd., Nanjing/China
+Siemens Industry Software Limited,
+85
+100
+Siemens Healthcare Limited, Hong Kong/Hong Kong
+Siemens Medium Voltage Switching Technologies (Wuxi)
+Ltd., Wuxi/China
+100
+Yangtze Delta Manufacturing Co. Ltd., Hangzhou,
+Hangzhou/China
+Samtech HK Limited, Hong Kong/Hong Kong
+100
+Camstar Systems (Hong Kong) Limited,
+Hong Kong/Hong Kong
+Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
+Tianjin/China
+51
+Shanghai/China
+1008
+Asia Care Holding Limited, Hong Kong/Hong Kong
+Siemens Manufacturing and Engineering Centre Ltd.,
+100
+100
+Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
+84
+Siemens Switchgear Ltd., Shanghai, Shanghai/China
+Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
+Hangzhou/China
+100
+Siemens Surge Arresters Ltd., Wuxi/China
+100
+Siemens Healthcare Ltd., Shanghai/China
+100
+Siemens Standard Motors Ltd., Yizheng/China
+55
+100
+Changzhi/China
+Siemens Special Electrical Machines Co. Ltd.,
+51
+Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
+Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
+Shanghai/China
+70
+100
+Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
+100
+77
+51
+Siemens High Voltage Switchgear Co., Ltd.,
+Siemens Technology Development Co., Ltd. of Beijing,
+Beijing/China
+100
+Siemens Venture Capital Co., Ltd., Beijing/China
+Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
+Huludao/China
+100
+Siemens Transformer (Wuhan) Company Ltd.,
+Wuhan City/China
+100
+Chengdu, Chengdu/China
+Siemens Industrial Automation Products Ltd.,
+90
+Siemens Transformer (Jinan) Co., Ltd, Jinan/China
+94
+Guangzhou/China
+63
+Siemens Transformer (Guangzhou) Co., Ltd.,
+Guangzhou/China
+Siemens High Voltage Switchgear Guangzhou Ltd.,
+51
+Shanghai, Shanghai/China
+90
+90
+Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
+Yixing/China
+Equity interest
+44
+259
+Oceanic Global Investment Funds PLC, Dublin/Ireland
+Medical Systems S.p.A., Genoa/Italy
+506
+(3)
+4
+12
+437
+4,097
+1005,6
+(56)
+1,312
+456
+ATOS SE, Bezons/France
+6
+Corporate XII S.A. (SICAV-FIS), Luxembourg/Luxembourg
+1005,6
+14
+7,402
+MEASD SPC DWC-LLC, Dubai/United Arab Emirates
+1005,6
+Dresser-Rand Company Retirement Plan Trustees Limited, Frimley, Surrey/United Kingdom
+Pyreos Limited, Edinburgh/United Kingdom
+1005,6
+0
+0
+236
+(4)
+98
+(6)
+SMATRICS GmbH & Co KG, Vienna/Austria
+SIM 9. Grundstücksverwaltungs- und -beteiligungs-GmbH, Munich
+125
+206
+0
+3
+1005,6
+47
+452
+MAENA Grundstücks-Verwaltungsgesellschaft mbH & Co. KG, Grünwald
+OSRAM Licht AG, Munich
+Siemens Global Innovation Partners | GmbH & Co. KG, Munich
+975,6
+5
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (9 companies)
+(89)
+157
+2,488
+506
+7
+80
+100 5,6
+0
+8
+1005,6
+(2)
+6
+Siemens Pensionsfonds AG, Grünwald
+18
+Siemens Benefits Scheme Limited, Frimley, Surrey/United Kingdom
+744,6
+0
+Exemption pursuant to Section 264 (3) German Commercial Code.
+12 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+N/A No financial data available.
+116 Consolidated Financial Statements
+C.
+ADDITIONAL
+INFORMATION
+C.1 Responsibility Statement
+To the best of our knowledge, and in accordance with the appli-
+cable reporting principles, the Consolidated Financial Statements
+give a true and fair view of the assets, liabilities, financial posi-
+tion and profit or loss of the Group, and the Group Management
+Report, which has been combined with the Management Report
+Munich, November 28, 2016
+Siemens Aktiengesellschaft
+The Managing Board
+An
+11
+Joe Kaeser
+Dr. Roland Busch
+Lisa Davis
+for Siemens Aktiengesellschaft, includes a fair review of the
+development and performance of the business and the position
+of the Group, together with a description of the material oppor-
+tunities and risks associated with the expected development
+of the Group.
+Sha
+Alaus Helmch
+Klaus Helmrich
+да пошел
+Janina Kuge
+Prof.Dr Siegfried Russwurm
+Dr. Ralf P. Thomas
+1.1
+118 Additional Information
+2.гл
+Exemption pursuant to Section 264b German Commercial Code.
+10
+9 Not accounted for using the equity method due to immateriality.
+0
+Americas (3 companies)
+Guascor México S.A. de CV, Mexico City/Mexico
+BuildingIQ, Inc., San Mateo, CA/United States
+¡BAHN Corporation, South Jordan, UT/United States
+Asia, Australia (1 company)
+Atlantis Resources Limited, Singapore/Singapore
+506
+N/A
+N/A
+19
+(4)
+16
+9
+(3)
+34
+8
+3
+78
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+5
+50
+1005,6
+BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
+Nanjing/China
+509
+Primetals Technologies, Limited, London/United Kingdom
+49
+RWG (Repair & Overhauls) Limited,
+Shanghai Electric Power Generation Equipment Co., Ltd.,
+Shanghai/China
+40
+40
+Aberdeen/United Kingdom
+50
+Siemens Traction Equipment Ltd., Zhuzhou,
+Joint Venture Service Center, Chirchik/Uzbekistan
+509
+499
+50
+Americas (15 companies)
+Tianjin ZongXi Traction Motor Ltd., Tianjin/China
+Xi'An X-Ray Target Ltd., Xi'an/China
+50
+43
+Bytemark Inc., New York, NY/United States
+23
+CEF-L Holding, LLC, Wilmington, DE/United States
+27
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
+Yangzhong/China
+50
+Cyclos Semiconductor, Inc., Wilmington, DE/United States
+Zhuzhou/China
+329
+Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
+509
+Asia, Australia (20 companies)
+50
+Cross London Trains Holdco 2 Limited,
+London/United Kingdom
+Exemplar Health (NBH) Partnership, Melbourne/Australia
+Exemplar Health (SCUH) Partnership, Sydney/Australia
+33
+PHM Technology Pty Ltd, Melbourne/Australia
+50
+50
+259
+Ethos Energy Group Limited, Aberdeen/United Kingdom
+49
+Saitong Railway Electrification (Nanjing) Co., Ltd.,
+ChinaInvent (Shanghai) Instrument Co., Ltd,
+Shanghai/China
+309
+25
+DBEST (Beijing) Facility Technology Management Co., Ltd.,
+Lincs Renewable Energy Holdings Limited,
+Beijing/China
+25
+London/United Kingdom
+50
+GSP China Technology Co., Ltd., Beijing/China
+50
+Odos Imaging Ltd., Edinburgh/United Kingdom
+Galloper Wind Farm Holding Company Limited, Swindon,
+Wiltshire/United Kingdom
+Echogen Power Systems, Inc., Wilmington, DE/United States
+32
+Frustum, Inc., New York, NY/United States
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+Consolidated Financial Statements
+115
+September 30, 2016
+Equity interest
+in %
+Net income
+4 No control due to substantive removal or participation rights held by other parties.
+Equity
+in millions of €
+OTHER INVESTMENTS 12
+Germany (10 companies)
+Ausbildungszentrum für Technik, Informationsverarbeitung und Wirtschaft gemeinnützige GmbH (ATIW),
+Paderborn
+1005,6
+0
+1
+BOMA Verwaltungsgesellschaft mbH & Co. KG, Grünwald
+1005,6
+3
+(36)
+in millions of €
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+219
+Bangalore International Airport Ltd., Bangalore/India
+Transparent Energy Systems Private Limited, Pune/India
+P.T. Jawa Power, Jakarta/Indonesia
+26
+259
+50
+Panda Hummel Station Intermediate Holdings I LLC,
+PT Asia Care Indonesia, Jakarta/Indonesia
+40
+Wilmington, DE/United States
+32
+Panda Stonewall Intermediate Holdings I, LLC,
+Wilmington, DE/United States
+37
+Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
+Advance Gas Turbine Solutions SDN. BHD.,
+Kuala Lumpur/Malaysia
+50
+43
+PhSiTh LLC, New Castle, DE/United States
+33
+Power Automation Pte. Ltd., Singapore/Singapore
+49
+Powerit Holdings, Inc., Seattle, WA/United States
+219
+Modern Engineering and Consultants Co. Ltd.,
+Rether networks, Inc., Berkeley, CA/United States
+309
+Bangkok/Thailand
+409
+INPRO Innovationsgesellschaft für fortgeschrittene Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
+Kyros Beteiligungsverwaltung GmbH, Grünwald
+Equity interest
+Ludwig Bölkow Campus GmbH, Taufkirchen
+11 Exemption pursuant to Section 264 (3) German Commercial Code.
+339
+ZAO Systema-Service, St. Petersburg/Russian Federation
+Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
+26
+31
+249
+Ardora, S.A., Vigo/Spain
+49
+359
+Desgasificación de Vertederos, S.A, Madrid/Spain
+509
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to substantive removal or participation rights held by other parties.
+239
+Noliac A/S, Kvistgaard/Denmark
+Kriegers Flak ApS, Copenhagen/Denmark
+A2SEA A/S, Fredericia/Denmark
+359
+Aspern Smart City Research GmbH & Co KG, Vienna/Austria
+Metropolitan Transportation Solutions Ltd.,
+OIL AND GAS PROSERV LLC, Baku/Azerbaijan
+259
+OOO VIS Automation mit Zusatz »>Ein Gemeinschafts-
+unternehmen von VIS und Siemens<<,
+T-Power NV, Brussels/Belgium
+20
+Moscow/Russian Federation
+49
+40
+Meomed s.r.o., Prerov/Czech Republic
+479
+ZAO Interautomatika, Moscow/Russian Federation
+46
+5 No control due to contractual arrangements or legal circumstances.
+6 No significant influence due to contractual arrangements or legal circumstances.
+7 Significant influence due to contractual arrangements or legal circumstances
+8 Not consolidated due to immateriality.
+Nertus Mantenimiento Ferroviario y Servicios S.A.,
+Barcelona/Spain
+515
+Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
+Caracas/Venezuela, Bolivarian Republic of
+409
+Soleval Renovables S.L., Sevilla/Spain
+50
+Innovex Capital En Tecnologia, C.A.,
+Solucia Renovables 1, S.L., Lebrija/Spain
+Tusso Energía, S.L., Sevilla/Spain
+Certas AG, Zurich/Switzerland
+Interessengemeinschaft TUS, Männedorf/Switzerland
+50
+Caracas/Venezuela, Bolivarian Republic of
+207,9
+509
+279
+000 Transconverter, Moscow/Russian Federation
+309
+509
+9 Not accounted for using the equity method due to immateriality.
+10 Exemption pursuant to Section 264b German Commercial Code.
+Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2016
+in %
+September 30, 2016
+in %
+Explotaciones y Mantenimientos Integrales, S.L.,
+Getxo/Spain
+509
+Siemens First Capital Commercial Finance, LLC,
+Wilmington, DE/United States
+515
+Gate Solar Gestión, S.L. Unipersonal, Vitoria-Gasteiz/Spain
+Hydrophytic, S.L., Vitoria-Gasteiz/Spain
+509
+USARAD Holdings, Inc., Fort Lauderdale, FL/United States
+Veo Robotics, Inc., Cambridge, MA/United States
+449
+BioMensio Oy, Tampere/Finland
+26
+Electrogas Malta Limited, Marsaskala/Malta
+33
+Siemens EuroCash, Munich
+67
+Energie Electrique de Tahaddart S.A., Tangier/Morocco
+20
+Siemens Venture Capital Fund 1 GmbH, Munich
+1005,9
+Admiraal de Ruyter Windpark C.V.,
+Sternico GmbH, Wendeburg
+329
+Amsterdam/Netherlands
+339
+Symeo GmbH, Neubiberg
+655,9
+23
+thinkstep AG, Leinfelden-Echterdingen
+Aspern Smart City Research GmbH, Vienna/Austria
+Temir Zhol Electrification LLP, Astana/Kazakhstan
+Rosh HaAyin/Israel
+20
+Magazino GmbH, Munich
+50
+Transfima GEIE, Milan/Italy
+429
+Maschinenfabrik Reinhausen GmbH, Regensburg
+26
+Transfima S.p.A., Milan/Italy
+499
+MeVis BreastCare GmbH & Co. KG, Bremen
+49
+VAL 208 Torino GEIE, Milan/Italy
+865,9
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+49
+29
+OWP Butendiek GmbH & Co. KG, Bremen
+339
+g|
+50
+Windpark Monarch Management B.V.,
+Amsterdam/Netherlands
+259
+ZeeEnergie C.V., Amsterdam/Netherlands
+207
+ZeeEnergie Management B.V., Eemshaven/Netherlands
+209
+Wirescan AS, Trollaasen/Norway
+339
+Arelion GmbH in Liqu., Pasching b. Linz/Austria
+259
+Rousch (Pakistan) Power Ltd., Lahore/Pakistan
+Admiraal De Ruyter Windpark Management B.V.,
+Amsterdam/Netherlands
+259
+Windpark Monarch C.V., Amsterdam/Netherlands
+Europe, Commonwealth of Independent States
+(C.I.S.), Africa, Middle East (without Germany)
+(58 companies)
+ubimake GmbH, Berlin
+Buitengaats C.V., Amsterdam/Netherlands
+207
+509
+50
+Buitengaats Management B.V., Eemshaven/Netherlands
+Infraspeed Maintainance B.V., Zoetermeer/Netherlands
+359
+50
+209
+Veja Mate Offshore Project GmbH, Gadebusch
+41
+Voith Hydro Holding GmbH & Co. KG, Heidenheim
+Voith Hydro Holding Verwaltungs GmbH, Heidenheim
+WERKBLIQ GmbH, Bielefeld
+35
+Ural Locomotives Holding Besloten Vennootschap,
+The Hague/Netherlands
+50
+Transrapid International Verwaltungsgesellschaft mbH i.L.,
+Berlin
+The Compensation Committee met three times. It also made
+one decision by written circulation. The Compensation Commit-
+tee prepared, in particular, proposals for the full Supervisory
+Board regarding the determination of targets for variable com-
+pensation, the determination and review of the appropriateness
+of Managing Board compensation and the approval of the Com-
+pensation Report.
+-
+The Mediation Committee did not have to meet.
+At our meeting on September 23, 2016, the Managing Board re-
+ported to us on the state of the Company and on the business
+position of the Energy Management, Power and Gas, and Power
+Generation Services Divisions. As part of our regular review, we
+adjusted - following preparation by the Compensation Commit-
+tee - the amount of Managing Board compensation for fiscal 2017.
+After the Supervisory Board and Prof. Dr. Siegfried Russwurm had
+mutually agreed that his contract, which expires on March 31,
+2017, would not be renewed, the Supervisory Board decided, as
+recommended by the Chairman's Committee, not to extend
+Prof. Dr. Siegfried Russwurm's Managing Board appointment,
+which is in effect until March 31, 2017. Finally, we discussed the
+efficiency review of our activities.
+The Audit Committee met six times. In the presence of the inde-
+pendent auditors as well as the President and Chief Executive
+Officer and the Chief Financial Officer, the Committee dealt with
+the financial statements and the Combined Management Report
+The Compliance Committee met four times. It primarily dis-
+cussed the quarterly reports and the annual report of the Chief
+Compliance Officer.
+122 Additional Information
+The Innovation and Finance Committee met four times. The
+focuses of its meetings included the Committee's recommenda-
+tion regarding the budget for fiscal 2016, the discussion of the
+Company's strategy and pension system as well as the prepara-
+tion and approval of investment and divestment projects. The
+Committee also concerned itself intensively with the Company's
+innovation and technology focuses. For example, at the Commit-
+tee's meeting on December 1, 2015, the Managing Board re-
+ported as part of a technology focus - on Germany's Energy
+Transition 2.0. At this meeting, the Committee also received a
+report on the organization of and business situation at the Wind
+Power and Renewables Division. At the Committee's meeting on
+May 2, 2016, the Managing Board reported in detail on the Com-
+pany's participation in the 2016 Hannover Messe. Finally, at its
+meeting on August 2, 2016, the Innovation and Finance Commit-
+tee discussed the technology focus "decentralized energy sys-
+tems" and the next47 initiative, the establishment of a separately
+managed unit for startups.
+The Nominating Committee met once. It concerned itself with
+the long-term succession planning for the Supervisory Board and
+prepared the Supervisory Board's proposal to the Annual Share-
+holders' Meeting on January 26, 2016, regarding the early reelec-
+tion of three shareholder representatives on the Supervisory
+Board. The Nominating Committee based this decision on the
+consideration that a high degree of continuity beyond the year
+2018 and the regular election of Supervisory Board members
+scheduled for that year would also have to be guaranteed in the
+work of the Supervisory Board in order to ensure the successful
+implementation of Siemens "Vision 2020".
+CORPORATE GOVERNANCE CODE
+The Chairman's Committee met five times. It also made five
+decisions by written circulation. Between meetings, I discussed
+topics of major importance with the members of the Chairman's
+Committee. The Committee concerned itself, in particular, with
+personnel topics and corporate governance issues as well as with
+AND CONTROL STRUCTURE.
+WORK IN THE SUPERVISORY BOARD COMMITTEES
+The Supervisory Board has established seven standing commit-
+tees, which prepare proposals and issues to be dealt with at its
+plenary meetings. Some of the Supervisory Board's decision-
+making powers have also been delegated to these committees
+within the permissible legal framework. The committee chairper-
+sons report to the Supervisory Board on their committees' work
+at the subsequent Board meetings. A list of the members and a
+detailed explanation of the tasks of the individual Supervisory
+Board committees are contained in chapter c.4.1 MANAGEMENT
+SECTION 289A OF THE GERMAN COMMERCIAL CODE.
+At our meeting on September 23, 2016, we approved an unqual-
+ified Declaration of Conformity in accordance with Section 161 of
+the German Stock Corporation Act (Aktiengesetz). Information
+on corporate governance at Siemens is available in chapter
+→ C.4 CORPORATE GOVERNANCE. Our Declaration of Conformity has
+been made permanently available to our shareholders on our
+website. The current Declaration of Conformity is also available
+in chapter c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO
+business situation of the Financial Services Division. In addition,
+the Managing Board informed us in detail about regional busi-
+ness developments in the U.S. At the same meeting, the Super-
+visory Board also approved various Managing Board proposals
+regarding financing measures. Finally, as part of a focus on tech-
+nology, the Supervisory Board concerned itself with the next47
+initiative, the establishment of a separate unit for startups, and
+with the activities and recommendations of the Siemens Tech-
+nology & Innovation Council.
+for Siemens AG and the Siemens Group. The Audit Committee
+discussed the Half-year Financial Report and the quarterly state-
+ments with the Managing Board and the independent auditors.
+In the presence of the independent auditors, it also discussed the
+report on the auditors' review of the Company's Half-year Con-
+solidated Financial Statements and of its Interim Group Manage-
+ment Report. The Committee recommended that the Supervisory
+Board propose to the Annual Shareholders' Meeting the election
+of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft as the
+independent auditors. The Committee appointed the indepen-
+dent auditors for fiscal 2016, defined the audit focal points and
+determined the auditors' fee. The Committee monitored the se-
+lection, independence, qualification, rotation and efficiency of
+the independent auditors. Furthermore, the Audit Committee
+dealt with the Company's accounting process, risk management
+system and the effectiveness, resources and findings of the inter-
+nal audit as well as with reports concerning potential and pend-
+ing legal disputes.
+the assumption by Managing Board members of positions at
+other companies and institutions.
+DETAILED DISCUSSION OF THE AUDIT
+OF THE FINANCIAL STATEMENTS
+Currently, there is one Managing Board committee, the Equity
+and Employee Stock Committee. This committee oversees, in par-
+ticular, the utilization of authorized capital in connection with
+the issuance of employee stock and the implementation of cer-
+tain capital measures. It also determines the scope and condi-
+tions of the share-based compensation components and/or pro-
+grams for employees and managers (with the exception of the
+Managing Board).
+of Siemens AG, the Consolidated Financial Statements of the
+Siemens Group and the Combined Management Report in detail
+at its meeting on November 29, 2016. The audit reports prepared
+by the independent auditors were distributed to all members of
+the Supervisory Board and comprehensively reviewed at the
+Supervisory Board's meeting on November 30, 2016, in the pres-
+ence of the independent auditors, who reported on the scope,
+focal points and main findings of their audit. No major weak-
+nesses in the Company's internal control or risk management
+systems were reported. At this meeting, the Managing Board ex-
+plained the financial statements of Siemens AG and the Siemens
+Group as well as the Company's risk management system.
+Information on the compensation paid to the members of the
+Managing Board is provided in chapter → A.10 COMPENSATION
+121
+In fiscal 2016, the committee comprised Joe Kaeser (Chairman),
+Janina Kugel and Dr. Ralf P. Thomas.
+Board cooperate closely for the benefit of the Company. The
+Managing Board informs the Supervisory Board regularly, com-
+prehensively and without delay on all issues of importance to the
+Company with regard to strategy, planning, business develop-
+ment, financial position, earnings, compliance and risks. When
+filling managerial positions at the Company, the Managing Board
+takes diversity into consideration and, in particular, aims for an
+appropriate consideration of women and internationality. The
+Managing Board has defined targets for the proportion of women
+at the two management levels below the Managing Board.
+The Managing Board prepares the Company's Quarterly State-
+ments and Half-year Financial Report, the Annual Financial State-
+ments of Siemens AG, the Consolidated Financial Statements
+and the Combined Management Report of Siemens AG and the
+Siemens Group. In addition, the Managing Board must ensure
+that the Company adheres to statutory requirements, official reg-
+ulations and internal Company policies (compliance) and works
+to achieve compliance with these provisions and policies within
+the Siemens Group. The Managing Board and the Supervisory
+As the Company's top management body, the Managing Board is
+committed to serving the interests of the Company and achieving
+sustainable growth in company value. The members of the Man-
+aging Board are jointly responsible for the entire management of
+the Company and decide on the basic issues of business policy
+and corporate strategy as well as on the Company's annual and
+multi-year plans.
+C.4.1.1 MANAGING BOARD
+and control structure
+The independent auditors, Ernst & Young GmbH Wirtschaftsprü-
+fungsgesellschaft, audited the Annual Financial Statements of
+Siemens AG, the Consolidated Financial Statements of the
+Siemens Group and the Combined Management Report for
+Siemens AG and the Siemens Group for fiscal 2016 and issued an
+unqualified opinion. Ernst & Young GmbH Wirtschaftsprüfungs-
+gesellschaft, of Stuttgart, Germany, has served as independent
+auditors of Siemens AG and the Siemens Group since fiscal 2009.
+Katharina Breitsameter has signed as auditor since fiscal 2016, and
+Thomas Spannagl has signed as auditor responsible for the audit
+since fiscal 2014. The Annual Financial Statements of Siemens AG
+and the Combined Management Report for Siemens AG and the
+Siemens Group were prepared in accordance with the require-
+ments of German law. The Consolidated Financial Statements of
+the Siemens Group were prepared in accordance with the Inter-
+national Financial Reporting Standards (IFRS) as adopted by the
+EU and with the additional requirements of German law set out
+in Section 315a (1) of the German Commercial Code (Handels-
+gesetzbuch). The Consolidated Financial Statements of the
+Siemens Group also comply with the IFRS as issued by the Inter-
+national Accounting Standards Board (IASB). The independent
+auditors conducted their audit in accordance with Section 317 of
+the German Commercial Code and German generally accepted
+standards for the audit of financial statements promulgated by
+the Institut der Wirtschaftsprüfer (IDW) as well as in supplemen-
+tary compliance with the International Standards on Auditing
+(ISA). The abovementioned documents as well as the Managing
+Board's proposal for the appropriation of net income were sub-
+mitted to us by the Managing Board in advance. The Audit Com-
+mittee discussed the dividend proposal in detail at its meeting on
+November 8, 2016. It discussed the Annual Financial Statements
+C.4.1 Management
+123
+Additional Information
+Dr. Gerhard Cromme
+Chairman
+Gerhard Comme
+For the Supervisory Board
+On behalf of the Supervisory Board, I would like to thank the
+members of the Managing Board as well as the employees and
+employee representatives of Siemens AG and all Group compa-
+nies for their outstanding commitment and constructive cooper-
+ation in fiscal 2016.
+CHANGES IN THE COMPOSITION OF THE
+SUPERVISORY AND MANAGING BOARDS
+The Annual Shareholders' Meeting on January 26, 2016, approved
+the early reelection of Dr. Nicola Leibinger-Kammüller, Jim Hage-
+mann Snabe and Werner Wenning for additional five-year terms
+as shareholder representatives on the Supervisory Board. There
+were no changes in the Managing Board in fiscal 2016.
+The Supervisory Board concurs with the results of the audit.
+Following the definitive findings of the Audit Committee's exam-
+ination and our own examination, we have no objections. The
+Managing Board prepared the Annual Financial Statements of
+Siemens AG and the Consolidated Financial Statements of the
+Siemens Group. We approved the Annual Financial Statements
+and the Consolidated Financial Statements. In view of our ap-
+proval, the Annual Financial Statements of Siemens AG are ad-
+opted as submitted. We endorsed the Managing Board's proposal
+that the net income available for distribution be used to pay out
+a dividend of €3.60 per share entitled to a dividend and that the
+amount of net income attributable to shares of stock not entitled
+to receive a dividend for fiscal 2016 be carried forward.
+C.4 Corporate Governance
+Additional Information
+Term expires
+At our meeting on May 3, 2016, the Managing Board reported to
+us on the Company's current business and financial position fol-
+lowing the conclusion of the second quarter. We also discussed
+the strategic orientation of the Digital Factory Division. In addi-
+tion, the Managing Board reported in detail on the Company's
+participation in the 2016 Hannover Messe. The Managing Board
+also provided a report on the personnel strategy that the Com-
+pany was pursuing in order to foster leadership development.
+Following preparation by the Audit Committee, the Supervisory
+Board concerned itself with the changed legal requirements re-
+sulting from the European Union (EU) rules on statutory audits
+and the German Audit Reform Act and, in this context, approved
+an amendment to the Bylaws for the Audit Committee.
+We have audited the accompanying group management report,
+which is combined with the management report of Siemens
+Aktiengesellschaft, for the business year from October 1, 2015 to
+September 30, 2016. The management of the company is respon-
+sible for the preparation of the group management report in
+compliance with the applicable requirements of German commer-
+cial law pursuant to Sec. 315a (1) HGB. We are required to conduct
+our audit in accordance with Sec. 317 (2) HGB and German gener-
+ally accepted standards for the audit of the group management
+report promulgated by the IDW. Accordingly, we are required to
+plan and perform the audit of the group management report to
+obtain reasonable assurance about whether the group manage-
+ment report is consistent with the consolidated financial state-
+ments and the audit findings, and as a whole provides a suitable
+view of the Group's position and suitably presents the opportuni-
+ties and risks of future development.
+REPORT ON THE GROUP MANAGEMENT REPORT
+119
+Additional Information
+In our opinion, based on the findings of our audit, the consoli-
+dated financial statements comply in all material respects with
+IFRS as adopted by the EU, the supplementary requirements of
+German commercial law pursuant to Sec. 315a (1) HGB and full
+IFRS as issued by the IASB and give a true and fair view of the net
+assets and financial position of the Group as at September 30,
+2016 as well as the results of operations for the business year
+then ended, in accordance with these requirements.
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
+of the consolidated financial statements has not led to any reser-
+vations.
+Audit Opinion
+We believe that the audit evidence we have obtained is sufficient
+and appropriate to provide a basis for our audit opinion.
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we state that our audit
+of the group management report has not led to any reservations.
+An audit involves performing audit procedures to obtain audit
+evidence about the amounts and disclosures in the consolidated
+financial statements. The selection of audit procedures depends
+on the auditor's professional judgment. This includes the assess-
+ment of the risks of material misstatement of the consolidated
+financial statements, whether due to fraud or error. In assessing
+those risks, the auditor considers the internal control system rel-
+evant to the entity's preparation of the consolidated financial
+statements that give a true and fair view. The aim of this is to plan
+and perform audit procedures that are appropriate in the given
+circumstances, but not for the purpose of expressing an opinion
+on the effectiveness of the group's internal control system. An
+audit also includes evaluating the appropriateness of accounting
+policies used and the reasonableness of accounting estimates
+made by management, as well as evaluating the overall presen-
+tation of the consolidated financial statements.
+Auditor's Responsibility
+The management of Siemens Aktiengesellschaft is responsible
+for the preparation of these consolidated financial statements.
+This responsibility includes preparing these consolidated finan-
+cial statements in accordance with International Financial Re-
+porting Standards (IFRS) as adopted by the European Union (EU),
+the supplementary requirements of German law pursuant to
+Sec. 315a (1) HGB ["Handelsgesetzbuch": German Commercial
+Code] and full IFRS as issued by the International Accounting
+Standards Board (IASB), to give a true and fair view of the net
+assets, financial position and results of operations of the group
+in accordance with these requirements. The company's manage-
+ment is also responsible for the internal controls that manage-
+ment determines are necessary to enable the preparation of
+consolidated financial statements that are free from material
+misstatement, whether due to fraud or error.
+Management's Responsibility for the
+Consolidated Financial Statements
+We have audited the accompanying consolidated financial state-
+ments of Siemens Aktiengesellschaft, Berlin and Munich, and its
+subsidiaries, which comprise the consolidated statements of in-
+come, comprehensive income, financial position, cash flow and
+changes in equity, and notes to the consolidated financial state-
+ments for the business year from October 1, 2015 to Septem-
+ber 30, 2016.
+REPORT ON THE CONSOLIDATED
+FINANCIAL STATEMENTS
+To Siemens Aktiengesellschaft, Berlin and Munich
+C.2 Independent Auditor's Report
+REPORT.
+Our responsibility is to express an opinion on these consolidated
+financial statements based on our audit. We conducted our audit
+in accordance with Sec. 317 HGB and German generally accepted
+standards for the audit of financial statements promulgated by
+the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
+Germany] (IDW) as well as in supplementary compliance with
+International Standards on Auditing (ISA). Accordingly, we are
+required to comply with ethical requirements and plan and per-
+form the audit to obtain reasonable assurance about whether the
+consolidated financial statements are free from material mis-
+statement.
+At our meeting on August 3, 2016, the Managing Board reported
+to us on the Company's business and financial position follow-
+ing the conclusion of the third quarter - in particular, on the
+status of the planned merger of Siemens Wind Power with the
+publicly-listed Spanish company Gamesa Corporación Tecno-
+lógica, S.A. as well as on the status of the implementation of
+Siemens "Vision 2020". We also dealt with the business model and
+In our opinion, based on the findings of our audit of the consol-
+idated financial statements and group management report, the
+group management report is consistent with the consolidated
+financial statements, and as a whole provides a suitable view of
+the Group's position and suitably presents the opportunities and
+risks of future development.
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+At our extraordinary meeting on February 9, 2016, we approved
+the planned merger of Siemens' wind power business with the
+publicly-listed Spanish company Gamesa Corporación Tecno-
+lógica, S.A.
+At our meeting on January 25, 2016, the Managing Board re-
+ported to us on the Company's business and financial position
+following the conclusion of the first quarter. The Supervisory
+Board approved the acquisition of the U.S.-based simulation soft-
+ware company CD-adapco Ltd. The Managing Board also reported
+on the further development of the organizational setup of the
+Process Industries and Drives Division.
+On December 2, 2015, we discussed the financial statements and
+the Combined Management Report for Siemens AG and the
+Siemens Group as of September 30, 2015, and the Annual Report
+for 2015, including the Report of the Supervisory Board, the Cor-
+porate Governance Report and the Compensation Report as well
+as the agenda for the Annual Shareholders' Meeting on Janu-
+ary 26, 2016. The Managing Board reported on the current status
+of acquisitions and divestments – in particular, on the status of
+the integration of the Dresser Rand Group Inc., which had been
+acquired, and of the aeroderivative gas turbine and compressor
+business acquired from Rolls-Royce plc as well as on the status of
+the implementation of the Siemens "Vision 2020" strategy. We
+also discussed the annual report of the Chief Compliance Officer.
+the Company's stake in Unify Holdings B.V. At this meeting, we
+also approved a share buyback with a volume of up to €3 billion
+extending through November 15, 2018 at the latest.
+At our meeting on November 11, 2015, we discussed the Compa-
+ny's key financial figures for fiscal 2015 and approved the budget
+for 2016. On the basis of reported target achievement, we also
+defined the compensation of the Managing Board members for
+fiscal 2015. The appropriateness of this compensation was con-
+firmed by an internal review. On the recommendation of the
+Compensation Committee, we also approved the targets for Man-
+aging Board compensation for fiscal 2016. The remuneration sys-
+tem for the Managing Board members for fiscal 2016 is un-
+changed vis-à-vis the remuneration system for fiscal 2015, which
+the Annual Shareholders' Meeting approved by a majority of
+more than 92% on January 27, 2015. At our meeting on Novem-
+ber 11, 2015, the Managing Board also informed us about the
+Company's business position, plans for the future setup of
+Siemens' Process Industries and Drives Division, and the sale of
+We held a total of six regular plenary meetings and one extraor-
+dinary Supervisory Board meeting in fiscal 2016. Topics of discus-
+sion at our regular plenary meetings were revenue, profit and
+employment development at Siemens AG, at the Company's op-
+erating units and at the Siemens Group as well as the Company's
+financial position and the results of its operations. We also con-
+cerned ourselves as required with major investment and divest-
+ment projects and with particular risks to the Company.
+TOPICS AT THE PLENARY MEETINGS
+OF THE SUPERVISORY BOARD
+In fiscal 2016, the Supervisory Board performed, in accordance
+with its obligations, the duties assigned to it by law, the Siemens
+Articles of Association and the Bylaws for the Supervisory Board.
+We regularly advised the Managing Board on the management
+of the Company and monitored the Managing Board's activities.
+We were directly involved at an early stage in all major decisions
+regarding the Company. In written and oral reports, the Manag-
+ing Board regularly provided us with timely and comprehensive
+information on Company planning and business operations as
+well as on the strategic development and current state of the
+Company. On the basis of reports submitted by the Managing
+Board, we considered in detail business development and all de-
+cisions and transactions of major significance to the Company.
+Deviations from business plans were explained to us in detail and
+intensively discussed. The Managing Board coordinated the Com-
+pany's strategic orientation with us. The proposals made by the
+Managing Board were approved by the Supervisory Board and/or
+the relevant Supervisory Board committees after in-depth exam-
+ination and consultation. In my capacity as Chairman of the Su-
+pervisory Board, I was also in regular contact with the Managing
+Board and, in particular, with the President and Chief Executive
+Officer and was kept up-to-date on current developments in the
+Company's business situation and on key business transactions.
+Munich, November 28, 2016
+Berlin and Munich, November 30, 2016
+120 Additional Information
+[German Public Auditor]
+Wirtschaftsprüferin
+Breitsameter
+Buiber
+[German Public Auditor]
+Spannagl
+Wirtschaftsprüfer
+дашия
+C.3 Report of the Supervisory Board
+124 Additional Information
+Members of the Managing Board and positions
+held by Managing Board members
+In fiscal 2016, the Managing Board comprised the following
+members:
+Members of the Supervisory Board and positions
+held by Supervisory Board members
+The Supervisory Board of Siemens AG has 20 members. As stipu-
+lated by the German Codetermination Act (Mitbestimmungs-
+gesetz), half of the members represent Company shareholders,
+and half represent Company employees. The employee represen-
+tatives' names are marked below with an asterisk (*). The terms
+of office of the Supervisory Board members will, as a general rule,
+expire at the conclusion of the Annual Shareholders' Meeting in
+2018. The terms of office of Dr. Leibinger-Kammüller, Mr. Snabe
+and Mr. Wenning will expire at the conclusion of the Annual
+Shareholders' Meeting in 2021.
+Information on the work of the Supervisory Board is provided in
+chapter c.3 REPORT OF THE SUPERVISORY BOARD. The compensa-
+tion paid to the members of the Supervisory Board is explained
+in chapter A.10 COMPENSATION REPORT.
+Board specify that such authority be delegated to the Innovation
+and Finance Committee of the Supervisory Board. In the Bylaws
+for the Managing Board, the Supervisory Board has established
+the rules that govern the Managing Board's work.
+The Supervisory Board oversees and advises the Managing Board
+in its management of the Company's business. At regular inter-
+vals, the Supervisory Board discusses business development,
+planning, strategy and strategy implementation. It reviews the
+Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements and the Combined Management Report of
+Siemens AG and the Siemens Group, and the proposal for the
+appropriation of net income. It approves the Annual Financial
+Statements of Siemens AG as well as the Consolidated Financial
+Statements, based on the results of the preliminary review con-
+ducted by the Audit Committee and taking into account the re-
+ports of the independent auditors. The Supervisory Board de-
+cides on the Managing Board's proposal for the appropriation of
+net income and the Report of the Supervisory Board to the An-
+nual Shareholders' Meeting. In addition, the Supervisory Board
+or the Compliance Committee, which is described in more detail
+below, concern themselves with monitoring the Company's
+adherence to statutory provisions, official regulations and inter-
+nal Company policies (compliance). The Supervisory Board also
+appoints the members of the Managing Board and determines
+each member's portfolios. Important Managing Board deci-
+sions - such as those regarding major acquisitions, divestments,
+fixed asset investments or financial measures require Super-
+visory Board approval, unless the Bylaws for the Supervisory
+C.4.1.2 SUPERVISORY BOARD
+125
+Additional Information
+(Deputy Chairman)
+> Siemens Corp., USA
+Österreich, Austria
+> Siemens Aktiengesellschaft
+Positions outside Germany:
+> Siemens Healthcare GmbH, Munich
+German positions:
+> VA TECH T&D Co. Ltd., Saudi Arabia
+> Siemens W.L.L., Qatar
+> Siemens Ltd., Saudi Arabia
+> ISCOSA Industries and Maintenance
+Ltd., Saudi Arabia (Deputy Chairman)
+> Siemens Healthcare GmbH, Munich
+Positions outside Germany:
+>Arabia Electric Ltd. (Equipment),
+Saudi Arabia
+German positions:
+> Siemens Healthcare GmbH, Munich
+German positions:
+> Siemens Schweiz AG, Switzerland
+(Chairman)
+> Siemens Proprietary Ltd., South
+Africa (Chairman)
+In fiscal 2016, the Supervisory Board comprised the following
+members:
+> Siemens Aktiengesellschaft
+Österreich, Austria (Chairman)
+Name
+Birgit Steinborn*
+First Deputy Chairwoman
+German positions:
+June 23,
+1957
+126 Additional Information
+1 Shareholders' Committee.
+Hans Michael Gaul, Dr. iur. Supervisory Board Member
+Supervisory Board Member
+July 11,
+2014
+July 24,
+1952
+Chairman of the Works Council
+of Siemens Dynamowerk, Berlin,
+Germany
+2013
+January 23,
+October 21,
+1946
+2008
+January 24,
+March 26,
+1960
+January 23,
+2003
+Member since
+Date of birth
+February 25,
+1943
+Michael Diekmann
+Olaf Bolduan*
+Chairman of the Supervisory Board
+of Bayer AG
+Chairwoman of the Central Works
+Council of Siemens AG
+Chairman of the Supervisory Board
+of Siemens AG
+Occupation
+Werner Wenning
+Second Deputy Chairman
+Gerhard Cromme, Dr. iur.
+Chairman
+> Siemens AB, Sweden (Chairman)
+Positions outside Germany:
+> Siemens Corp., USA (Chairwoman)
+Dr. rer. pol.
+Ralf P. Thomas,
+March 31,
+2017
+January 1,
+2008
+June 27,
+1963
+Siegfried Russwurm,
+Prof. Dr.-Ing.
+January 31,
+2020
+February 1,
+2015
+January 12,
+1970
+Janina Kugel
+March 31,
+2021
+April 1,
+2011
+May 24,
+1958
+Klaus Helmrich
+July 31,
+2019
+August 1,
+2014
+October 15,
+1963
+Lisa Davis
+March 31,
+2021
+2011
+1964
+Dr. rer. nat.
+November 22, April 1,
+Roland Busch,
+July 31,
+2018
+March 7,
+1961
+September 18, September 17,
+2013
+2018
+Memberships in supervisory boards whose establishment is required by law
+or in comparable domestic or foreign controlling bodies of business enterprises
+External positions
+Positions outside Germany:
+> Siemens Ltd., India
+> Siemens Ltd., China (Chairman)
+Logistics GmbH, Constance
+Positions outside Germany:
+> Siemens Postal, Parcel & Airport
+German positions:
+> Siemens Ltd., India
+Positions outside Germany:
+Group company positions
+(as of September 30, 2016)
+> Deutsche Messe AG, Hanover
+German positions:
+> Konecranes Plc., Finland
+➤ Bayer AG, Leverkusen (Chairman)
+> Henkel AG & Co. KGaA, Düsseldorf¹
+Positions outside Germany:
+German positions:
+> inpro Innovationsgesellschaft
+für fortgeschrittene Produktions-
+systeme in der Fahrzeugindustrie
+mbH, Berlin
+> EOS Holding AG, Krailling
+German positions:
+> OSRAM GmbH, Munich
+(Deputy Chairman)
+Positions outside Germany:
+> Atos SE, France
+> OSRAM Licht AG, Munich
+(Deputy Chairman)
+German positions:
+> NXP Semiconductors B.V.,
+Netherlands
+Positions outside Germany:
+> Allianz Deutschland AG, Munich
+> Daimler AG, Stuttgart
+German positions:
+(as of September 30, 2016)
+> Pensions-Sicherungs-Verein
+Versicherungsverein auf Gegen-
+seitigkeit, Cologne
+> Henkel Management AG, Düsseldorf
+December 23, January 24,
+1954
+March 2,
+1942
+1 Shareholders' Committee.
+April 1,
+2009
+March 3,
+1964
+General Counsel, Managing Board
+of IG Metall
+Sibylle Wankel*
+October 1,
+2013
+October 27,
+1965
+Supervisory Board Member
+September 13, March 1,
+1957
+2014
+1971
+Chairman of the Committee
+of Spokespersons of the Siemens
+Group; Chairman of the Central
+Committee of Spokespersons
+of Siemens AG
+Chairwoman and Managing Director
+of Hacı Ömer Sabancı Holding A.Ş.
+Managing Director and Spokesperson July 14,
+of Siemens Stiftung
+January 27,
+2015
+January 23,
+2013
+August 14,
+1955
+Jim Hagemann Snabe
+Michael Sigmund*
+Nathalie von Siemens,
+Dr. phil.
+Güler Sabancı
+> Henkel AG & Co. KGaA, Düsseldorf¹
+Aktiengesellschaft, Munich (Chairman)
+Bayerische Motoren Werke
+> ENGIE S.A., France (Chairman)
+> Société Générale S.A., France
+> Suez S.A., France (Chairman)
+German positions:
+> Voith GmbH, Heidenheim
+Positions outside Germany:
+> Axel Springer SE, Berlin
+German positions:
+> Messer Group GmbH, Sulzbach
+> Siemens Healthcare GmbH, Munich
+German positions:
+Name
+Joe Kaeser
+President and
+Chief Executive Officer
+Date of birth
+128 Additional Information
+The Chairman's Committee makes proposals, in particular,
+regarding the appointment and dismissal of Managing Board
+members and handles contracts with members of the Managing
+Board. When making recommendations for first-time appoint-
+ments, it takes into account that the terms of these appoint-
+ments shall not, as a rule, exceed three years. In preparing rec-
+ommendations on the appointment of Managing Board members,
+the Chairman's Committee takes into account the candidates'
+professional qualifications, international experience and leader-
+ship qualities, the age limit specified for Managing Board mem-
+bers, the Managing Board's long-range plans for succession as
+well as its diversity. It also takes into account the targets for the
+proportion of women on the Managing Board specified by the
+Supervisory Board. The Chairman's Committee concerns itself
+with questions regarding the Company's corporate governance
+and prepares the resolutions to be approved by the Supervisory
+Board regarding the Declaration of Conformity with the Code -
+The Supervisory Board has seven committees, whose duties, re-
+sponsibilities and procedures fulfill the requirements of the Ger-
+man Stock Corporation Act (Aktiengesetz) and the Code. The
+chairmen of these committees provide the Supervisory Board
+with regular reports on their committees' activities.
+Supervisory Board Committees
+-
+These objectives for the Supervisory Board's composition have
+been fully achieved: a considerable number of Supervisory Board
+members are currently engaged in international activities and/or
+have many years of international experience. Since the Super-
+visory Board election in 2015, the Supervisory Board has had six
+female members. Dr. Nicola Leibinger-Kammüller is a member of
+the Nominating Committee. The Supervisory Board has an ade-
+quate number of independent members. In the opinion of the
+Supervisory Board, a minimum of 16 Supervisory Board members
+are independent in the meaning of Section 5.4.2 of the Code.
+Some Supervisory Board members hold – or have held in the past
+fiscal year high-ranking positions at other companies with
+which Siemens does business. Transactions between Siemens
+and such companies are carried out on an arm's-length basis. We
+believe that these transactions do not compromise the indepen-
+dence of the Supervisory Board members in question. The regu-
+lations establishing limits on age and limiting membership in the
+Supervisory Board to three full terms of office (15 years) are com-
+plied with.
+> The limits on age and length of membership established in the
+Bylaws for the Supervisory Board will be taken into consider-
+ation. In addition, no more than two former members of the
+Managing Board of Siemens AG shall belong to the Super-
+visory Board.
+German positions:
+be able to devote the necessary regularity and diligence to
+their mandate.
+> In its election proposals, the Supervisory Board shall also pay
+particular close attention to ensuring diversity. In accordance
+with the German Law for Equal Participation of Women and
+Men in Management Positions in the Private and Public Sec-
+tors, the Supervisory Board is composed of at least 30 percent
+women and at least 30 percent men. The Nominating Commit-
+tee shall continue to include at least one female member.
+Qualified women shall be included during the initial process
+of selecting potential candidates for new elections or for the
+filling of Supervisory Board positions that have become va-
+cant, and they shall be given appropriate consideration in
+nominations.
+> The composition of the Supervisory Board of Siemens AG shall
+be such that qualified control and advice for the Managing
+Board is ensured. The candidates proposed for election to the
+Supervisory Board shall have the expertise, skills and profes-
+sional experience necessary to carry out the functions of a
+Supervisory Board member in a multinational company and
+safeguard the reputation of Siemens in public. In particular,
+care shall be taken in regard to the personality, integrity, com-
+mitment, professionalism and independence of the individuals
+proposed for election. The goal is to ensure that, in the Super-
+visory Board, as a group, all know-how and experience is avail-
+able that is considered essential in view of Siemens' activities.
+➤ Taking the Company's international orientation into account,
+care shall also be taken to ensure that the Supervisory Board
+has an adequate number of members with extensive inter-
+national experience. Our goal is to make sure that the present
+considerable share of Supervisory Board members with exten-
+sive international experience is maintained.
+Objectives of the Supervisory Board's composition
+The composition of the Supervisory Board is to be such that its
+members as a group have the knowledge, skills and professional
+experience necessary to perform its duties properly. In fiscal
+2015, the Supervisory Board - taking into account the recom-
+mendations of the German Corporate Governance Code (Code)
+– approved the following concrete objectives for its composition:
+127
+Additional Information
+> Daimler AG, Stuttgart
+German positions:
+Bang & Olufsen A/S, Denmark
+(Deputy Chairman)
+> A.P. Møller-Mærsk A/S, Denmark
+Positions outside Germany:
+> SAP SE, Walldorf
+> Allianz SE, Munich
+> An adequate number of independent members shall belong to
+the Supervisory Board. Material and not only temporary con-
+flicts of interest, such as organizational functions or advisory
+capacities with major competitors of the Company, shall be
+avoided. Under the presumption that the mere exercise of
+Supervisory Board duties as an employee representative gives
+no cause to doubt the compliance with the independence cri-
+teria pursuant to Section 5.4.2 of the Code, the Supervisory
+Board shall have a minimum of sixteen members who are in-
+dependent in the meaning of the Code. In any case, the Super-
+visory Board shall be composed in such a way that a number
+of at least six independent shareholder representatives in the
+meaning of Section 5.4.2 of the Code is achieved. In addition,
+the Supervisory Board members shall have sufficient time to
+First
+appointed
+May 1,
+2006
+> Premium Aerotec GmbH, Augsburg
+(Deputy Chairman)
+German positions:
+June 24,
+1956
+Date of birth
+Executive Managing Board Member
+of IG Metall
+Chairman of the Siemens Europe
+Committee
+Chairman of the Works Council
+of Siemens Erlangen Süd, Germany
+Deputy Chairman of the Central
+Works Council of Siemens AG
+Chairwoman of the Combine Works
+Council of Siemens AG
+Jürgen Kerner*
+Harald Kern*
+Robert Kensbock*
+Hans-Jürgen Hartung*
+Bettina Haller*
+Trade Union Secretary of
+the Managing Board of IG Metall
+Occupation
+Reinhard Hahn*
+Name
+> HSBC Trinkaus & Burkhardt AG, Düsseldorf
+> BDO AG Wirtschaftsprüfungsgesellschaft,
+Hamburg (Deputy Chairman)
+German positions:
+> Linde AG, Munich (Deputy Chairman)
+> Fresenius SE & Co. KGaA, Bad Homburg
+(Deputy Chairman)
+> Fresenius Management SE, Bad Homburg
+> BASF SE, Ludwigshafen am Rhein
+(Deputy Chairman)
+German positions:
+January 24,
+2008
+2008
+Member since
+January 27,
+2015
+Memberships in supervisory boards whose establish-
+ment is required by law or in comparable domestic
+or foreign controlling bodies of business enterprises
+(as of September 30, 2016)
+German positions:
+January 27,
+2015
+May 29,
+1956
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+January 23,
+2013
+April 1,
+1949
+Chairman of the Board of Directors
+of ENGIE S.A.
+2008
+December 15, January 24,
+1959
+President and Chairwoman of the
+Managing Board of TRUMPF GmbH
++ Co. KG
+Norbert Reithofer, Dr.-Ing.
+Dr.-Ing. E.h.
+Gérard Mestrallet
+Nicola Leibinger-
+Kammüller, Dr. phil.
+> Airbus Operations GmbH, Hamburg
+> MAN SE, Munich (Deputy Chairman)
+January 25,
+2012
+January 22,
+January 24,
+2008
+March 16,
+1960
+January 23,
+2013
+March 13,
+1971
+January 27,
+2009
+March 10,
+1952
+April 1,
+2007
+March 14,
+1959
+> Siemens Healthcare GmbH, Munich
+(Deputy Chairman)
+> Pfleiderer GmbH, Neumarkt
+1969
+Memberships in supervisory boards whose establish-
+ment is required by law or in comparable domestic
+or foreign controlling bodies of business enterprises
+(as of September 30, 2016)
+Siemens AG is subject to German corporate law. Therefore, it has
+a two-tier board structure, consisting of a Managing Board and a
+Supervisory Board.
+This document is an English language translation of the German
+document. In case of discrepancies, the German language docu-
+ment is the sole authoritative and universally valid version.
+WWW.SIEMENS.COM/DIRECTORS-DEALINGS
+meeting to vote by proxy. Furthermore, shareholders may exer-
+cise their right to vote in writing or by means of electronic com-
+munications (absentee voting). The Managing Board may enable
+shareholders to participate in the Annual Shareholders' Meeting
+without the need to be present at the venue and without a proxy
+and to exercise some or all of their rights fully or partially by
+means of electronic communications. Shareholders may submit
+proposals regarding the proposals of the Managing and Super-
+visory Boards and may contest decisions of the Annual Share-
+holders' Meeting. Shareholders owning Siemens stock with an
+aggregate notional value of €100,000 or more may also demand
+the judicial appointment of special auditors to examine specific
+issues. The reports, documents and information required by law,
+including the Annual Report, may be downloaded from our web-
+site. The same applies to the agenda for the Annual Shareholders'
+Meeting and to any counterproposals or shareholders' nomina-
+tions that require disclosure.
+As part of our investor relations activities, we inform our inves-
+tors comprehensively about developments within the Company.
+For communication purposes, Siemens makes extensive use of
+the Internet. We publish quarterly statements, half-year financial
+and annual reports, earnings releases, ad hoc announcements,
+analyst presentations, letters to shareholders and press releases
+as well as the financial calendar for the current year, which con-
+tains the publication dates of significant financial communica-
+tions and the date of the Annual Shareholders' Meeting, at:
+WWW.SIEMENS.COM/INVESTORS
+Our Articles of Association, the Bylaws for the Supervisory Board,
+the Bylaws for the most important Supervisory Board commit-
+tees, the Bylaws for the Managing Board, all our Declarations
+of Conformity with the Code and a variety of other corporate-
+governance-related documents are posted on our website at:
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
+C.4.2 Corporate Governance
+statement pursuant to Section 289a
+of the German Commercial Code
+The Corporate Governance statement pursuant to Section 289a
+of the German Commercial Code (Handelsgesetzbuch) is an inte-
+gral part of the Combined Management Report. In accordance
+with Section 317 para. 2 sentence 3 of the German Commercial
+Code, the disclosures made within the scope of Section 289a
+of the German Commercial Code are not subject to the audit by
+the auditors.
+Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
+pean Parliament and Council on market abuse (Market Abuse
+Regulation), members of the Managing Board and the Super-
+visory Board are legally required to disclose all transactions con-
+ducted on their own account relating to the shares or debt instru-
+ments of Siemens AG or to derivatives or financial instruments
+linked thereto if the total value of such transactions entered into
+by a board member or any closely associated person reaches or
+exceeds €5,000 in any calendar year. All transactions reported to
+Siemens AG in accordance with this requirement have been duly
+published and are available on the Company's website at:
+Additional Information
+C.4.2.1 DECLARATION OF CONFORMITY WITH
+THE GERMAN CORPORATE GOVERNANCE CODE
+The Managing Board and the Supervisory Board of Siemens AG
+approved the following Declaration of Conformity pursuant to
+Section 161 of the German Stock Corporation Act as of Octo-
+ber 1, 2016:
+"Declaration of Conformity by the Managing Board and the
+Supervisory Board of Siemens Aktiengesellschaft with the
+German Corporate Governance Code
+Siemens AG fully complies and will continue to comply with
+the recommendations of the German Corporate Governance
+Code ("Code") in the version of May 5, 2015, published by the
+Federal Ministry of Justice in the official section of the Fed-
+eral Gazette ("Bundesanzeiger").
+Since making its last Declaration of Conformity dated Octo-
+ber 1, 2015, Siemens AG has complied with the recommenda-
+tions of the Code.
+Berlin and Munich, October 1, 2016
+Siemens Aktiengesellschaft
+The Managing Board The Supervisory Board"
+131
+-
+As of the same date, the Supervisory Board's current members
+held Siemens shares representing less than 0.01% of the capital
+stock of Siemens AG, which totaled 850,000,000 shares. These
+figures do not include the 10,878,800 shares (as of Septem-
+ber 30, 2016) or 1.28% of the capital stock of Siemens AG, which
+totaled 850,000,000 shares, over which the von Siemens-
+Vermögensverwaltung GmbH (vSV) has voting control under
+powers of attorney based on an agreement between among
+others - members of the Siemens family, including Dr. Natalie
+von Siemens, and VSV. These shares are voted together by vSV,
+taking into account the proposals of a family partnership estab-
+lished by the family's members or of one of its governing bodies.
+As of September 30, 2016, the Managing Board's current mem-
+bers held a total of 205,009 Siemens shares, representing 0.02%
+of the capital stock of Siemens AG, which totaled 850,000,000
+shares.
+Nathalie von Siemens, Dr. phil.
+7
+7
+100%
+Michael Sigmund
+7
+7
+100%
+Jim Hagemann Snabe
+21
+21
+100%
+Sibylle Wankel
+11
+11
+100%
+130
+Additional Information
+C.4.1.3 SHARE OWNERSHIP AND SHARE TRANS-
+ACTIONS BY MEMBERS OF THE MANAGING AND
+SUPERVISORY BOARDS
+C.4.2.2 INFORMATION ON CORPORATE
+GOVERNANCE PRACTICES
+100%
+Suggestions of the Code
+Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
+over offer, a management board should convene an extraordi-
+nary general meeting at which shareholders discuss the takeover
+offer and may decide on corporate actions. The convening of a
+shareholders' meeting – even taking into account the shortened
+time limits stipulated in the German Securities Acquisition and
+Takeover Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
+organizational challenge for large publicly listed companies. It
+appears doubtful whether the associated effort is justified in
+cases where no relevant decisions by the shareholders' meeting
+are intended. Therefore, extraordinary shareholders' meetings
+shall be convened only in appropriate cases.
+Address
+Internet
+Siemens AG
+Wittelsbacherplatz 2
+80333 Munich
+Germany
+WWW.SIEMENS.COM
+Phone
+133
+Fax
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
++49 89 636-1332474 (Investor Relations)
+press@siemens.com
+investorrelations@siemens.com
+© 2016 by Siemens AG, Berlin and Munich
+DIGITALIZATION
+ELECTRIFICATION
+AUTOMATION
+siemens.com
+Order no. CGXX-C10020-00-7600
+E-mail
+Additional Information
+WWW.SIEMENS.
+COM/INVESTOR/EN/
+Further corporate governance practices applied beyond legal
+requirements are contained in our Business Conduct Guidelines.
+Our Company's values and Business Conduct
+Guidelines
+In the 169 years of its existence, our Company has built an excel-
+lent reputation around the world. Technical performance, inno-
+vation, quality, reliability, and international engagement have
+made Siemens one of the leading companies in electronics and
+electrical engineering. It is top performance with the highest eth-
+ics that has made Siemens strong. This is what the Company
+should continue to stand for in the future.
+The Business Conduct Guidelines provide the ethical and legal
+framework within which we want to maintain our successful ac-
+tivities. They contain the basic principles and rules for our con-
+duct within our Company and in relation to our external partners
+and the general public. They set out how we meet our ethical and
+legal responsibility as a Company and give expression to our cor-
+porate values of being "Responsible" - "Excellent" - "Innovative".
+C.4.2.3 OPERATION OF THE MANAGING BOARD
+AND THE SUPERVISORY BOARD, AND COMPOSITION
+AND OPERATION OF THEIR COMMITTEES
+A general description of the functions and operation of the Man-
+aging Board and the Supervisory Board can be found in chapter
+C.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further details can
+be derived from the bylaws for the corporate bodies concerned.
+This information and these documents, including the Code and
+the Business Conduct Guidelines, are available at: www.
+SIEMENS.COM/289A
+C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
+ON THE MANAGING BOARD AND AT THE TWO
+MANAGEMENT LEVELS IMMEDIATELY BELOW
+THE MANAGING BOARD; INFORMATION ON SUPER-
+VISORY BOARD COMPLIANCE WITH MINIMUM
+GENDER QUOTA REQUIREMENTS
+At Siemens AG, the target for the share of women on the Manag-
+ing Board has been set at a minimum of 2/7 and the correspond-
+ing target for each of the two management levels immediately
+below the Managing Board has been set at 10%, applicable in
+each case until June 30, 2017.
+The composition of the Supervisory Board fulfilled the legal re-
+quirements regarding the minimum gender quota in the report-
+ing period.
+132
+Additional Information
+C.5 Notes and forward-looking statements
+This document contains statements related to our future business
+and financial performance and future events or developments
+involving Siemens that may constitute forward-looking state-
+ments. These statements may be identified by words such as
+"expect," "look forward to," "anticipate," "intend," "plan," "believe,"
+"seek," "estimate," "will," "project" or words of similar meaning.
+We may also make forward-looking statements in other reports,
+in presentations, in material delivered to shareholders and in
+press releases. In addition, our representatives may from time to
+time make oral forward-looking statements. Such statements are
+based on the current expectations and certain assumptions of
+Siemens' management, of which many are beyond Siemens' con-
+trol. These are subject to a number of risks, uncertainties and
+factors, including, but not limited to those described in disclo-
+sures, in particular in the chapter Risks in this Annual Report.
+Should one or more of these risks or uncertainties materialize,
+or should underlying expectations not occur or assumptions
+prove incorrect, actual results, performance or achievements of
+Siemens may (negatively or positively) vary materially from those
+described explicitly or implicitly in the relevant forward-looking
+statement. Siemens neither intends, nor assumes any obligation,
+to update or revise these forward-looking statements in light of
+developments which differ from those anticipated.
+-
+This document includes - in the applicable financial reporting
+framework not clearly defined – supplemental financial mea-
+sures that are or may be alternative performance measures
+(non-GAAP-measures). These supplemental financial measures
+should not be viewed in isolation or as alternatives to measures
+of Siemens' net assets and financial positions or results of opera-
+tions as presented in accordance with the applicable financial
+reporting framework in its Consolidated Financial Statements.
+Other companies that report or describe similarly titled alterna-
+tive performance measures may calculate them differently.
+Due to rounding, numbers presented throughout this and other
+documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+For technical reasons, there may be differences between the
+accounting records appearing in this document and those pub-
+lished pursuant to legal requirements.
+The "Sustainability Information 2016” which reports on Sustain-
+ability and Citizenship at Siemens is available at:
+Siemens voluntarily complies with the Code's non-binding sug-
+gestions, with the following exception:
+7
+C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
+AND INVESTOR RELATIONS
+Shareholders exercise their rights in the Annual Shareholders'
+Meeting. An ordinary Annual Shareholders' Meeting normally
+takes place within the first four months of each fiscal year. The
+Annual Shareholders' Meeting decides, among other things, on
+the appropriation of unappropriated net income, the ratification
+of the acts of the Managing and Supervisory Boards, and the
+appointment of the independent auditors. Amendments to the
+Articles of Association and measures that change the Company's
+capital stock are approved at the Annual Shareholders' Meeting
+and are implemented by the Managing Board. The Managing
+Board facilitates shareholder participation in this meeting
+through electronic communications – in particular, via the Inter-
+net and enables shareholders who are unable to attend the
+Güler Sabancı
+(First Deputy Chairwoman)
+Werner Wenning
+Supervisory Board
+and Committee meetings
+Participation
+Presence
+30
+30
+100%
+29
+29
+100%
+(Second Deputy Chairman)
+20
+20
+100%
+Olaf Bolduan
+7
+6
+Birgit Steinborn
+86%
+Gerhard Cromme, Dr. iur.
+(Chairman)
+Disclosure of participation by individual Super-
+visory Board members in meetings of the Super-
+visory Board of Siemens AG and its Committees
+in fiscal 2016
+-
+including the explanation of deviations from the Code and
+regarding the approval of the Corporate Governance Report as
+well as the Report of the Supervisory Board to the Annual Share-
+holders' Meeting. Furthermore, the Chairman's Committee sub-
+mits recommendations to the Supervisory Board regarding the
+composition of the Supervisory Board committees and decides
+whether to approve contracts and business transactions with
+Managing Board members and parties related to them.
+In fiscal 2016, the Chairman's Committee comprised Dr. Gerhard
+Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
+Wenning.
+The Compensation Committee prepares, in particular, the pro-
+posals for decisions by the Supervisory Board's plenary meetings
+regarding the system of Managing Board compensation, includ-
+ing the implementation of this system in Managing Board con-
+tracts, the definition of the targets for variable Managing Board
+compensation, the determination and review of the appropriate-
+ness of the total compensation of individual Managing Board
+members and the approval of the annual Compensation Report.
+In fiscal 2016, the Compensation Committee comprised Werner
+Wenning (Chairman), Dr. Gerhard Cromme, Michael Diekmann,
+Robert Kensbock, Jürgen Kerner and Birgit Steinborn.
+The Audit Committee oversees, in particular, the accounting
+process and conducts a preliminary review of the Annual Finan-
+cial Statements of Siemens AG, the Consolidated Financial State-
+ments and the Combined Management Report of Siemens AG
+and the Siemens Group. On the basis of the independent audi-
+tors' report on their audit of the annual financial statements, the
+Audit Committee makes, after its preliminary review, recom-
+mendations regarding Supervisory Board approval of the Annual
+Financial Statements of Siemens AG and the Consolidated Finan-
+cial Statements. The Audit Committee discusses the Quarterly
+Statements and Half-year Financial Report with the Managing
+Board and independent auditors and deals with the auditors' re-
+port on the review of the Half-year Consolidated Financial State-
+ments and Interim Group Management Report. It concerns itself
+with the Company's risk monitoring system and oversees the
+effectiveness of the internal control, risk management and the
+internal audit systems. The Audit Committee receives regular re-
+ports from the Internal Audit Department. It prepares the Super-
+visory Board's recommendation to the Annual Shareholders'
+Meeting concerning the election of the independent auditors and
+submits the corresponding proposal to the Supervisory Board. It
+awards the audit contract to the independent auditors elected by
+the Annual Shareholders' Meeting and monitors the independent
+audit of the financial statements as well as the auditors' selec-
+tion, independence, qualification, rotation and efficiency.
+In fiscal 2016, the Audit Committee comprised Dr. Hans Michael
+Gaul (Chairman), Dr. Gerhard Cromme, Bettina Haller, Robert
+Kensbock, Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim
+Hagemann Snabe and Birgit Steinborn. Pursuant to the German
+Stock Corporation Act, the Audit Committee must include at least
+one Supervisory Board member with knowledge and experience
+in the areas of accounting or the auditing of financial statements.
+Pursuant to the Code, the chairman or chairwoman of the Audit
+Committee shall have specialist knowledge and experience in the
+application of accounting principles and internal control pro-
+cesses, shall be independent and may not be a former Managing
+Board member whose appointment ended less than two years
+ago. The Chairman of the Audit Committee, Dr. Hans Michael
+Gaul, fulfills these requirements.
+The Compliance Committee concerns itself, in particular, with
+monitoring the Company's adherence to statutory provisions,
+official regulations and internal Company policies.
+In fiscal 2016, the Compliance Committee comprised Dr. Gerhard
+Cromme (Chairman), Dr. Hans Michael Gaul, Bettina Haller, Harald
+Kern, Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
+Birgit Steinborn and Sibylle Wankel.
+The Nominating Committee is responsible for making recom-
+mendations to the Supervisory Board on suitable candidates for
+election as shareholder representatives on the Supervisory Board
+by the Annual Shareholders' Meeting. In preparing these recom-
+mendations, the objectives specified by the Supervisory Board
+regarding its composition - including, in particular, indepen-
+dence and diversity – are to be taken into account as well as the
+required knowledge, abilities and professional experience of the
+proposed candidates. Attention shall also be paid to an appropri-
+ate participation of women and men in accordance with the legal
+requirements relating to the gender quota.
+In fiscal 2016, the Nominating Committee comprised Dr. Gerhard
+Cromme (Chairman), Dr. Hans Michael Gaul, Dr. Leibinger-
+Kammüller and Werner Wenning.
+The Mediation Committee submits proposals to the Supervisory
+Board in the event that the Supervisory Board cannot reach the
+two-thirds majority required for the appointment or dismissal of
+a Managing Board member.
+In fiscal 2016, the Mediation Committee comprised Dr. Gerhard
+Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
+Wenning.
+7
+Additional Information
+129
+―
+and resolutions regarding questions relating to the Company's
+financial situation and structure - including annual planning
+(budget) - as well as the Company's fixed asset investments and
+its financial measures. In addition, the Innovation and Finance
+Committee has been authorized by the Supervisory Board to
+decide on the approval of transactions and measures that require
+Supervisory Board approval and have a value of less than
+€600 million.
+In fiscal 2016, the Innovation and Finance Committee comprised
+Dr. Gerhard Cromme (Chairman), Robert Kensbock, Harald Kern,
+Jürgen Kerner, Dr. Norbert Reithofer, Jim Hagemann Snabe, Birgit
+Steinborn and Werner Wenning.
+Supervisory Board Members
+Michael Diekmann
+The Innovation and Finance Committee discusses, in particular,
+based on the Company's overall strategy, the Company's focuses
+of innovation and prepares the Supervisory Board's discussions
+9
+15
+15
+100%
+Jürgen Kerner
+25
+22
+88%
+Nicola Leibinger-Kammüller, Dr. phil.
+18
+18
+100%
+7
+5
+71%
+Norbert Reithofer, Dr.-Ing. Dr.-Ing. E.h.
+11
+10
+91%
+10
+Harald Kern
+100%
+Gérard Mestrallet
+20
+90%
+20
+Hans Michael Gaul, Dr. iur.
+18
+18
+100%
+7
+7
+100%
+Bettina Haller
+Reinhard Hahn
+17
+100%
+Robert Kensbock
+Hans-Jürgen Hartung
+7
+7
+100%
+17
+6,136
+2.8%
+7.8%
+Profit margin
+Actual
+30%
+6%
+190%
+160
+5,660
+464
+Profit
+5,976
+% Change
+Comp.
+35%
+9%
+Revenue
+7,973
+number of orders for large offshore wind-farms in the U.K., in-
+cluding service. Order intake in the Americas and Asia, Australia
+showed a double-digit decline year-over-year. Revenue was up
+clearly due to strong conversion from the backlog, which resulted
+in increases in all of the Division's businesses. On a regional basis,
+substantial increases in Europe, C.I.S., Africa, Middle East and
+Asia, Australia more than offset a substantial decline in the Amer-
+icas. Strong profitability in fiscal 2016 included a more favorable
+revenue mix including a higher share from the offshore and ser-
+vice businesses, lower production and installation costs, and pos-
+itive effects from project execution and completion. In fiscal 2015,
+profit was held back by expenses from ramping up commercial-
+scale production of certain turbine offerings.
+12,956
+(in millions of €)
+Orders
+2016
+Fiscal year
+2015
+% Change
+Actual
+Comp.
+12,963
+Combined Management Report
+2%
+11,940
+Profit margin
+Orders
+11,922
+570
+4.8%
+895
+7.5%
+A.3.2.3 ENERGY MANAGEMENT
+Fiscal year
+2015
+15,742
+(in millions of €)
+0%
+57%
+Reported revenue related to external customers went up moder-
+ately year-over-year and increased in most industrial businesses.
+Key growth drivers in Europe, C.I.S., Africa, Middle East in-
+cluded Power and Gas, Wind Power and Renewables and Mobility
+due to strong conversion from their respective order backlogs.
+These increases were partly offset by declines in Energy Manage-
+ment and in Process Industries and Drives. In Germany, revenues
+decreased moderately, primarily due to Wind Power and Renew-
+ables. In the Americas, revenue came in higher year-over-year,
+driven primarily by increases in Power and Gas, in Healthineers
+and in Mobility. Wind Power and Renewables reported a substan-
+tial decline. The pattern in the U. S. was nearly the same as for
+the region. Revenue in Asia, Australia came in near the prior-
+year level, as declines in Mobility and Process Industries and
+Drives offset growth in all other industrial businesses. In China,
+only Power and Gas, Healthineers and Building Technologies were
+able to increase revenue for the fiscal year.
+A.3.2 Segment information analysis
+A.3.2.1 POWER AND GAS
+(in millions of €)
+Orders
+2016
+Fiscal year
+2015
+% Change
+Actual
+Comp.
+19,454
+24%
+16%
+Revenue
+2016
+16,471
+23%
+12%
+Profit
+1,872
+1,415
+32%
+Profit margin
+11.4%
+10.5%
+10
+10
+Combined Management Report
+Revenue and orders benefited from portfolio effects. Dresser-
+Rand and the Rolls-Royce Energy aero-derivative gas turbine and
+compressor business, which were both acquired in fiscal 2015,
+contributed nine and 12 percentage points to fiscal 2016 order
+and revenue growth, respectively. Orders increased year-over-
+year, due mainly to a higher volume from large orders in the
+solutions business, including in particular large orders for power
+plants, including service, from Egypt totaling €4.7 billion. The
+regional picture was mixed; order intake increased substantially
+in the reporting regions Europe, C.I.S., Africa, Middle East and
+the Americas and declined clearly in Asia, Australia. Revenue was
+also up, due mainly to growth in the solutions and large gas tur-
+bine businesses. On a regional basis, strong order execution led
+to substantial revenue growth in Europe, C.I.S., Africa, Middle
+East, particularly including in Egypt. Revenue also increased in
+the other two reporting regions. Profit was substantially higher
+year-over-year and included a continuing strong contribution
+from the service business. In fiscal 2016, profit benefited from
+positive effects totaling €118 million from the measurement of
+inventories. Both years included positive and negative effects
+related to large projects. In total, the effect in fiscal 2016 was
+positive, including €130 million from revised estimates related to
+resumption of long-term construction and service contracts in
+Iran following the ending or easing of EU and U.S. sanctions. In
+contrast, it was negative in fiscal 2015, including charges of
+€106 million related to a project which incurred higher costs for
+materials and from customer delays. Costs for the integration of
+Dresser-Rand were €59 million in fiscal 2016 compared to
+€19 million in fiscal 2015. Finally, severance charges were sharply
+lower in fiscal 2016, at €69 million compared to €192 million in
+fiscal 2015. The Division continues to face challenges in an ag-
+gressively competitive market for large gas turbines arising from
+overcapacities across the industry, which results in increased
+price pressure.
+A.3.2.2 WIND POWER AND RENEWABLES
+13,418
+2%
+18
+Profit
+Revenue
+10,172
+9,988
+2%
+2%
+Profit
+577
+553
+5%
+Profit margin
+9.4%
+9.2%
+Profit
+Profit margin
+1,690
+1,685
+0%
+16.6%
+16.9%
+Orders and revenue in Building Technologies increased in both
+the solutions and service business and the product and systems
+business. On a geographic basis, orders were up in all regions,
+while revenue rose in the Americas and Asia, Australia but de-
+clined slightly in the Europe, C.I.S., Africa, Middle East region.
+Growth was particularly strong in the U.S., for both orders and
+revenue. Profit improvement was due to an increase in the Divi-
+sion's product business, only partly offset by a modest decline in
+profit in the solutions and service business. Profit in both periods
+included severance charges, which were €16 million in fiscal
+2016, down from €24 million in fiscal 2015.
+A.3.2.5 MOBILITY
+% Change
+(in millions of €)
+2016
+Fiscal year
+2015
+Actual
+Orders
+7,875
+10,262
+1 As defined by the International Monetary Fund.
+3%
+3%
+5,999
+6,156
+Order intake was flat year-over-year, burdened by negative cur-
+rency translation effects, as a decline in the solutions business
+was offset by growth in the Division's other businesses. On a re-
+gional basis, a substantial increase in Asia, Australia and slight
+growth in Europe, C.I.S., Africa, Middle East were offset by a sig-
+nificant decline in the Americas. Revenue was also burdened by
+negative currency translation effects. A decline in the medium
+voltage and system business was offset by growth in the Divi-
+sion's other businesses, in particular in the solutions, high volt-
+age products and transformer businesses. On a regional basis,
+moderate growth in the Americas was offset by a moderate de-
+cline in Europe, C.I.S., Africa, Middle East, while revenue in Asia,
+Australia was flat year-over-year. Stronger profitability in a major-
+ity of the Division's businesses compared to the prior-year in-
+cluded significant improvements in the high voltage products
+business and in the solutions business due to stringent project
+execution. The prior year included a higher proportion of projects
+with low margins. Severance charges were €71 million and
+���88 million in fiscal 2016 and fiscal 2015, respectively.
+Order intake reached a new high for a fiscal year, due mainly to
+a higher volume from large orders, particularly in the offshore
+business, which for Siemens means primarily in Europe. As a
+result, orders more than doubled in the Europe, C.I.S., Africa,
+Middle East reporting region and included, among others, a
+Combined Management Report 11
+A.3.2.4 BUILDING TECHNOLOGIES
+A.3.2.6 DIGITAL FACTORY
+Fiscal year
+% Change
+Fiscal year
+% Change
+(in millions of €)
+2016
+2015
+Actual
+Comp.
+Revenue
+(in millions of €)
+2015
+Actual
+Comp.
+Orders
+6,435
+6,099
+6%
+6%
+Orders
+10,332
+10,036
+3%
+3%
+Revenue
+2016
+Despite further softening in the macroeconomic environment
+in fiscal 2016, reported orders related to external customers in-
+creased moderately year-over-year. Within the regions, order de-
+velopment depended strongly on the timing and location of large
+contract wins in the Divisions that typically take in such orders.
+In the Europe, C.I.S., Africa, Middle East region, orders in-
+creased clearly, as substantial growth in Wind Power and Renew-
+ables and in Power and Gas more than offset a substantial decline
+in Mobility. All three results were due to changes in the volume
+from large orders. Orders came in significantly lower in Germany,
+due to lower levels of large orders in Wind Power and Renewables
+and in Mobility compared to fiscal 2015. Orders in the Americas
+region were flat year-over-year, as growth primarily in Power and
+Gas, in Building Technologies and in Healthineers offset double-
+digit declines in Wind Power and Renewables and in Energy Man-
+agement, both due to a lower volume of large orders. U.S. orders
+increased moderately, supported by portfolio and currency trans-
+lation effects, and mainly followed the pattern for the region,
+with the exception that Energy Management came in near the
+prior-year level. Orders went up in the Asia, Australia region due
+mainly to a higher volume from large orders in Energy Manage-
+ment and a clear increase in Healthineers, only partially offset by
+declines primarily in Power and Gas and in Wind Power and Re-
+newables. China increased orders moderately, in particular with
+double-digit growth in Power and Gas, in Energy Management
+Less: Fair value hedge accounting adjustment
+5%
+(II) Average capital employed
+(I)/(II) ROCE
+1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
+debt, and related hedging activities, as well as interest income on corporate assets.
+Average capital employed is determined using the average of the
+respective balances as of the quarterly reporting dates in the
+period under review.
+Calculation of capital employed
+Total equity
+Plus: Long-term debt
+Plus: Short-term debt and current maturities of long-term debt
+Less: Cash and cash equivalents
+Less: Current available-for-sale financial assets
+Plus: Post-employment benefits
+Less: SFS Debt
+Revenue
+Plus: Adjustments from assets classified as held for disposal and
+liabilities associated with assets classified as held for disposal
+Less: Adjustment for deferred taxes on net accumulated
+actuarial gains/losses on post-employment benefits
+Capital employed (continuing and discontinued operations)
+Combined Management Report 9
+A.3 Results of operations
+A.3.1 Orders and revenue by region
+Negative currency translation effects took one percentage point
+each from order and revenue development; portfolio effects
+added one percentage point to order development and two per-
+centage points to revenue growth. The resulting ratio of orders
+to revenue (book-to-bill) for Siemens in fiscal 2016 was 1.09,
+again well above 1. The order backlog (defined as the sum of
+order backlogs of the industrial businesses) was €113 billion as of
+September 30, 2016.
+and in Healthineers. These increases were partly offset by de-
+creases in Mobility, in Wind Power and Renewables and in Process
+Industries and Drives.
+Revenue (location of customer)
+(in millions of €)
+2016
+Fiscal year
+2015
+Actual
+% Change
+Comp.
+Europe, C.I.S., Africa,
+Middle East
+therein: Germany
+Americas
+41,819 38,799
+10,739 11,244
+22,707
+21,702
+8%
+8%
+(4)%
+(5)%
+21.0%
+5%
+14.3%
+41,573
+A.2.4 Capital structure
+Sustainable revenue and profit development is supported by a
+healthy capital structure. Accordingly, a key consideration within
+the framework of One Siemens is to maintain ready access to the
+capital markets through various debt products and preserve our
+ability to repay and service our debt obligations over time. Our
+primary measure for managing and controlling our capital struc-
+ture is the ratio of industrial net debt to EBITDA. This financial
+measure indicates the approximate amount of time in years that
+would be needed to cover industrial net debt through income
+from continuing operations, without taking into account inter-
+est, taxes, depreciation and amortization. We aim to achieve a
+ratio of up to 1.0.
+A.2.6 Calculation of return
+on capital employed
+Calculation of ROCE
+(in millions of €)
+Net income
+Less: Other interest expenses/income, net¹
+Plus: SFS Other interest expenses/income
+Plus: Net interest expenses from
+post-employment benefits
+Fiscal year
+2016
+2015
+5,584
+7,380
+(544)
+(662)
+784
+746
+282
+263
+A.2.5 Dividend
+We intend to continue providing an attractive return to our share-
+holders. Therefore, we intend to propose a dividend whose dis-
+tribution volume is within a dividend payout range of 40% to
+60% of net income, which we may adjust for this purpose to ex-
+clude selected exceptional non-cash effects. As in the past, we
+intend to fund the dividend payout from Free cash flow.
+At the Annual Shareholders' Meeting, the Managing Board, in
+agreement with the Supervisory Board, will submit the follow-
+ing proposal to allocate the unappropriated net income of
+Siemens AG for fiscal 2016: to distribute a dividend of €3.60 on
+each share of no par value entitled to the dividend for fiscal year
+2016 existing at the date of the Annual Shareholders' Meeting,
+with the remaining amount to be carried forward. Payment of the
+proposed dividend is contingent upon approval by Siemens
+shareholders at the Annual Shareholders' Meeting on February 1,
+2017. The prior-year dividend was €3.50 per share.
+The proposed dividend of €3.60 per share for fiscal 2016 rep-
+resents a total payout of €2.9 billion based on the estimated
+number of shares entitled to dividend at the date of the Annual
+Shareholders' Meeting. Based on net income of €5.6 billion for
+fiscal 2016, the dividend payout percentage is 52%.
+Less: Interest adjustments
+(discontinued operations)
+Less: Taxes on interest adjustments
+(tax rate (flat) 30%)
+(156)
+(104)
+(I) Income before interest after tax
+5,949
+7,623
+36,367
+1%
+Orders (location of customer)
+therein: U.S.
+25,239
+8%
+9%
+(13)%
+0%
+(3)%
+therein: U.S.
+18,162 17,357
+5%
+(2)%
+Asia, Australia
+15,501 15,033
+3%
+3%
+therein: China
+6,850
+6,623
+3%
+7%
+Siemens
+86,480
+82,340
+5%
+4%
+therein: emerging
+markets¹
+30,512
+29,730
+3%
+27,268
+markets¹
+therein: emerging
+9%
+16,769 15,263
+10%
+3%
+Asia, Australia
+15,118
+15,135
+0%
+(1)%
+(in millions of €)
+2016
+Fiscal year
+2015
+% Change
+therein: China
+6,439
+1 As defined by the International Monetary Fund.
+6,938
+(6)%
+Actual
+Comp.
+Siemens
+79,644
+75,636
+5%
+4%
+Europe, C.I.S., Africa,
+Middle East
+46,185
+therein: Germany
+Americas
+42,539
+10,525 11,991 (12)%
+24,794 24,769
+9%
+(7)%
+7,825
+0%
+Profit
+(in millions of €)
+Profit
+A.3.2.10 RECONCILIATION TO CONSOLIDATED
+FINANCIAL STATEMENTS
+Financial Services (SFS) recorded stable results in the debt busi-
+ness. Results from the equity investments business came in above
+the high level of fiscal 2015, due primarily to a positive effect of
+€92 million resulting from an at-equity investment. Fiscal 2015
+included a net gain in connection with the sale of renewable
+energy projects. Despite substantial early terminations of financ-
+ings, total assets have increased since the end of fiscal 2015.
+A.3.2.8 HEALTHINEERS
+partly offset by growth from the wind power components busi-
+ness. On a regional basis, orders were down in Asia, Australia,
+particularly in China, and in Europe, C.I.S., Africa, Middle East,
+while they increased in the Americas, due mainly to strong de-
+Imand for the Division's offerings for the wind power industry.
+Revenue was down in all three reporting regions. Underutiliza-
+tion and a shift in demand particularly in the large drives and the
+oil & gas and marine businesses heavily impacted the Division's
+profit in fiscal 2016. To reduce the size of its manufacturing ca-
+pacity and align its global footprint to changed market demand,
+the Division took €254 million in severance charges. For compar-
+ison, profit in the prior fiscal year was burdened by a warranty
+charge of €96 million and severance charges of €74 million.
+12 Combined Management Report
+The global weakness in oil and gas and other commodity-related
+markets continued to impact Process Industries and Drives. This
+was particularly evident in the Division's oil & gas and marine busi-
+ness, where orders fell by a quarter compared to fiscal 2015, and
+in its large drives business, which saw a moderate decline in or-
+ders. These decreases were only partly offset by order growth in
+the Division's wind power components business. Revenue shows
+a similar development, as both the oil & gas and marine and the
+large drives businesses saw considerable declines in revenue only
+Revenue
+6.1%
+2.7%
+(58)%
+581
+243
+Profit
+Profit margin
+(4)%
+(5)%
+7,508
+21.0%
+-
+As a result of the development described for the segments,
+Income from continuing operations before income taxes
+increased 3%. This amount also included higher expenses - as
+planned for selling and R&D, primarily at Digital Factory and
+Healthineers, as we continued targeted investments aimed at
+organic volume growth and strengthening our capacities for
+innovation. Severance charges for continuing operations were
+€598 million, of which €541 million were in the Industrial Busi-
+ness. In fiscal 2015, severance charges for continuing operations
+were €804 million, of which €564 million were in the Industrial
+Business.
+The tax rate of 27% was positively influenced by successful ap-
+peals of tax decisions for prior years. In fiscal 2015, the tax rate
+was lower, due mainly to the disposition of the stake in BSH
+which was mostly tax-free. As a result, Income from continuing
+operations increased 1%.
+Income from discontinued operations, net of income taxes
+was substantially lower compared to the prior year. In fiscal 2016,
+it primarily included a gain of €102 million from the sale of the
+remaining assets in the hearing aid business and €76 million re-
+lated to the former Siemens IT Solutions and Services activities.
+In the prior year, the line item primarily included gains from the
+disposal of the hearing aid and hospital information businesses,
+totaling €1.7 billion and €0.2 billion, respectively.
+Fiscal year
+2016
+2015
+Centrally managed portfolio activities
+Siemens Real Estate
+(543)
+(674)
+acquired in business combinations
+4%
+4%
+Amortization of intangible assets
+(440)
+(439)
+Centrally carried pension expense
+Comp.
+Actual
+The decrease in Basic earnings per share reflects the lower net
+income compared to fiscal 2015, which included the substantial
+disposal gains related to the sale of the hearing aid business and
+the BSH stake that added €3.66 to basic earnings per share.
+At 14.3%, ROCE was below the range established in our One
+Siemens financial framework, as expected. ROCE declined com-
+pared to fiscal 2015 due to lower net income and a significant
+increase in average capital employed with the acquisition of
+Dresser-Rand at the end of the third quarter of fiscal 2015.
+(690)
+Corporate items
+% Change
+Fiscal year
+2015
+13,349
+13,830
+Orders
+2016
+(in millions of €)
+205
+132
+714
+(215)
+(449)
+14
+Combined Management Report
+A.4 Net assets position
+5%
+790
+644
+23%
+1,204
+1,151
+5%
+190
+122
+56%
+55,329
+17,253
+51,442
+24,159
+23,166
+4%
+Other intangible assets
+7,742
+8,077
+(4)%
+Property, plant and equipment
+10,157
+10,210
+(1)%
+8%
+Revenue
+18,160
+5,157
+Sep 30,
+(in millions of €)
+Cash and cash equivalents
+2016
+2015
+% Change
+10,604
+9,957
+6%
+Available-for-sale financial assets
+1,293
+32%
+1,175
+Trade and other receivables
+16,287
+2%
+Other current financial assets
+Inventories
+Current income tax assets
+Other current assets
+Assets classified as held for disposal
+Total current assets
+Goodwill
+6,800
+10%
+Investments accounted for using the equity method
+13,535
+5%
+Financial Services (SFS)
+10.1%
+10.8%
+Profit margin Industrial Business
+13%
+7,737
+8,744
+6%
+2,184
+2,325
+(58)%
+581
+243
+0%
+1,685
+1,690
+15%
+588
+678
+5%
+553
+577
+57%
+653
+Reconciliation to Consolidated Financial Statements
+(1,994)
+600
+(1,119)
+(24)%
+8.84
+6.74
+14.3%
+Basic earnings per share
+ROCE
+(24)%
+7,380
+5,584
+(91)%
+2,031
+188
+Income from discontinued operations, net of income taxes
+Net income
+570
+1%
+5,396
+Income from continuing operations
+(7)%
+(1,869)
+(2,008)
+Income tax expenses
+3%
+7,218
+7,404
+Income from continuing operations before income taxes
+9%
+(78)%
+5,349
+895
+Industrial Business
+Healthineers
+2016
+Fiscal year
+2015
+600
+20.9%
+Total assets
+(in millions of €)
+21.6%
+ROE (after taxes)
+653
+Income before income taxes
+2016
+(in millions of €)
+A.3.2.9 FINANCIAL SERVICES
+Sep 30,
+2015
+All businesses posted order increases and nearly all recorded rev-
+enue growth, led by the diagnostic imaging business. Orders
+grew in the Asia, Australia region, most notably in China, and in
+the Americas region, due to the U.S. All regions contributed to
+revenue growth, particularly the Americas region, due to the U.S,
+and the Asia, Australia region. Profit growth was driven by the
+diagnostic imaging business, which continued to account for the
+largest share of Healthineers profit overall. Profit was burdened
+by severance charges in both periods, totaling €61 million in fis-
+cal 2016 and €62 million in fiscal 2015. Profit development in
+fiscal 2016 benefited from currency tailwinds. For comparison,
+fiscal 2015 included a €64 million gain from divestment of the
+microbiology business.
+(1,994)
+(366)
+(349)
+Eliminations, Corporate Treasury
+and other reconciling items
+Reconciliation to Consolidated
+Financial Statements
+16.9%
+6%
+2,184
+2,325
+17.2%
+Profit margin
+Profit
+5%
+(1,119)
+12,930
+26,446
+Centrally managed portfolio activities (CMPA) included pri-
+marily a loss from at-equity investments (including impairments)
+after a positive result in the prior year. In particular, fiscal 2015
+included a gain of €1.4 billion on the disposal of Siemens' stake
+in BSH Bosch und Siemens Hausgeräte GmbH (BSH). This was
+partly offset by an equity investment loss of €275 million related
+to Unify Holdings B.V. (Unify), an impairment of €138 million re-
+lated to Siemens' stake in Primetals Technologies Ltd. and losses
+from other businesses.
+Process Industries and Drives
+Digital Factory
+Mobility
+Building Technologies
+Energy Management
+190%
+160
+464
+Wind Power and Renewables
+32%
+1,415
+24,970
+1,872
+% Change
+2015
+2016
+(in millions of €, earnings per share in €)
+Fiscal year
+A.3.3 Income
+13
+Combined Management Report
+Expenses in Eliminations, Corporate Treasury and other rec-
+onciling items were lower despite an increase in interest ex-
+penses mainly associated with US$7.75 billion in bonds issued
+end of May 2015. For comparison, fiscal 2015 was burdened even
+more by negative effects from changes in the fair value of inter-
+est rate derivatives related to interest rate management at Cor-
+porate Treasury.
+Corporate items were influenced by a number of items, includ-
+ing €43 million in severance charges for corporate reorganization
+of support functions compared to €198 million in such charges in
+fiscal 2015.
+Income from Siemens Real Estate continues to be highly depen-
+dent on the disposals of real estate. In fiscal 2016, the profit of
+disposals of real estate were lower than in the prior year.
+Power and Gas
+3,012
+15,982
+2%
+In addition to these commitments, we issued other guarantees.
+To the extent future claims are not considered remote, maximum
+future payments from these commitments amounting to €0.9 bil-
+lion (September 30, 2015: €1.8 billion). The decrease in other
+guarantees is related to indemnifications issued in connection
+with dispositions of businesses.
+Future payment obligations under non-cancellable operating
+leases amounted to €3.5 billion (September 30, 2015: €3.4 bil-
+lion).
+Irrevocable loan commitments amounted to €3.4 billion (Septem-
+ber 30, 2015: €3.6 billion). A considerable portion of these com-
+mitments resulted from asset-based lending transactions, mean-
+ing that the respective loans can be drawn only after the borrower
+has provided sufficient collateral.
+Combined Management Report
+17
+A.5.2 Cash flows
+(in millions of €)
+Cash flows from operating activities
+Fiscal year
+2016
+Net income
+5,584
+Change in operating net working capital
+(1,241)
+Other reconciling items to cash flows from operating activities – continuing operations
+3,324
+Cash flows from operating activities – continuing operations
+7,668
+Cash flows from operating activities - discontinued operations
+9,553
+(57)
+Cash flows from operating activities - continuing and discontinued operations
+7,611
+Cash flows from investing activities
+Additions to intangible assets and property, plant and equipment
+(2,135)
+Acquisitions of businesses, net of cash acquired
+As of September 30, 2016 the undiscounted amount of maximum
+potential future payments related to credit guarantees, guaran-
+tees of third-party performance and HERKULES obligations
+amounted to €3.7 billion (September 30, 2015: €4.2 billion).
+(922)
+Off-balance-sheet commitments
+For further information about our debt see → NOTE 15 in → B.6
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
+tion about the functions and objectives of our financial manage-
+ment see NOTE 24 in →B.6 NOTES TO CONSOLIDATED FINANCIAL
+5%
+90,901
+85,292
+7%
+72%
+71%
+34,211
+28%
+605
+34,474
+(1)%
+29%
+581
+4%
+125,717
+120,348
+4%
+The increase in short-term debt and current maturities of
+long-term debt was due mainly to reclassifications of long-term
+fixed-rate instruments totaling €5.0 billion. This increase was
+partly offset by repayments of commercial paper of €0.9 billion
+and fixed-rate instruments of €0.5 billion.
+Long-term debt decreased mainly due to the above mentioned
+reclassifications and the redemption of hybrid capital bonds to-
+taling €1.8 billion. This decrease was partly offset by the issu-
+ance in September 2016 of instruments totaling US$6.0 billion
+(€5.4 billion) in six tranches with different maturities up to
+30 years.
+The main factors relating to the change in total equity attribut-
+able to shareholders of Siemens AG were a negative €2.9 bil-
+lion in other comprehensive income, net of income taxes, mainly
+due to remeasurements of defined benefit plans, and dividend
+payments of €2.8 billion (for fiscal 2015). These negative factors
+were nearly offset by fiscal 2016 net income attributable to share-
+holders of Siemens AG of €5.5 billion.
+Combined Management Report
+Post-employment benefits
+The funded status of our defined benefit plans - meaning de-
+fined benefit obligation (DBO) less fair value of plan assets -
+showed an underfunding of €13.4 billion as of September 30,
+2016 (€9.5 billion as of September 30, 2015). Within these fig-
+ures, the underfunding for pension benefit plans amounted to
+€12.8 billion as of September 30, 2016 (€9.0 billion as of Septem-
+ber 30, 2015) and the underfunding of other post-employment
+benefit plans amounted to €0.5 billion (€0.5 billion as of Sep-
+tember 30, 2015). The increase in the underfunding of our de-
+fined benefit plans was mainly due to lower discount rate as-
+sumptions. This effect was partly offset by a significant increase
+in return on plan assets and a lower pension progression assump-
+tion in Germany.
+Capital structure ratio
+Our capital structure ratio as of September 30, 2016 increased
+from 0.6 a year earlier to 1.0, which was in line with our target
+established in our One Siemens financial framework. The change
+was due primarily to the increase in post-employment benefits
+compared to the prior year, reflecting the above-mentioned in-
+crease in the underfunding of our defined benefit plans.
+In November 2015, we announced a share buyback of up to €3 bil-
+lion ending at the latest on November 15, 2018. The buybacks will
+be made under the current authorization granted at the Annual
+Shareholders' Meeting on January 27, 2015. Shares repurchased
+may be used solely for cancelling and reducing capital stock; for
+issuing shares to employees, to members of the Managing Board
+and board members of affiliated companies; and for meeting ob-
+ligations from or in connection with convertible bonds or warrant
+bonds. Under the program we repurchased 2,517,727 treasury
+shares at an average cost per share of €91.24, totaling €0.2 bil-
+lion (including incidental transaction charges).
+2,947
+As of September 30, 2016 we recorded, in total, €28.6 billion in
+notes and bonds (maturing until 2046), €1.4 billion in loans from
+banks (maturing until 2023), €0.9 billion in other financial in-
+debtedness (maturing until 2027) and €0.1 billion in obligations
+under finance leases. Notes, bonds and loans from banks were
+issued mainly in the euro and U.S. dollar, and to a lower extent
+in the British pound.
+We have three credit facilities at our disposal for general corpo-
+rate purposes. These credit facilities amounted to €7.1 billion and
+were unused as of September 30, 2016.
+STATEMENTS.
+Change in receivables from financing activities of SFS
+(1,356)
+Other purchases of assets
+The cash inflows from other disposals of assets primarily in-
+cluded disposals from above-mentioned eligible collateral, pro-
+ceeds from the sale of shares in a fund at Corporate Treasury, and
+real estate disposals at SRE.
+discontinued
+The cash inflows from investing activities
+operations - included proceeds from the sale of the remaining
+assets in the hearing aid business.
+The change in short-term debt and other financing activities
+included the net cash outflows related to commercial paper and
+from loans to banks.
+9,038
+(1)%
+(2)%
+9,144
+8,939
+Comp.
+Actual
+2015
+2016
+(in millions of €)
+Orders
+% Change
+Fiscal year
+Orders in Mobility declined due mainly to a sharply lower volume
+from large orders year-over-year. The largest contract wins in fis-
+cal 2016 included an order for light rail vehicles in the U.S., a
+commuter rail contract in Germany and a rail automation order in
+Algeria, totaling €1.2 billion. Large orders in fiscal 2015 included
+an order worth €1.7 billion for regional trains and maintenance
+in Germany and a €1.6 billion long-term order for maintenance
+in Russia. Revenue grew in all businesses except for the rail infra-
+structure business where revenue was down moderately year-
+over-year. The strongest contribution to revenue growth came
+from execution of large rolling stock projects. On a geographic
+basis, strong revenue increases in Europe, C.I.S., Africa, Middle
+East and the Americas more than offset a decline in Asia, Austra-
+lia, which reported a sharp drop in China. Profit development
+benefited from positive effects related to solid project execution
+on large contracts, and from a sharp reduction in severance
+charges which fell to €16 million from €68 million a year earlier.
+A.3.2.7 PROCESS INDUSTRIES AND DRIVES
+Despite challenging market conditions, Digital Factory increased
+orders, revenue and profit year-over-year. The driving force for all
+three was the Division's PLM software business, which achieved
+double-digit growth in orders and revenue, supported by the ac-
+quisition of CD-adapco which closed in the third quarter of fiscal
+2016. The Division's high-margin factory automation business
+contributed to order and revenue growth to a significantly lesser
+extent, while volume in the motion control business declined
+slightly year-over-year. On a regional basis, orders and revenue
+increased in all regions, with the strongest growth coming from
+the Europe, C.I.S., Africa, Middle East region. Profit came in
+slightly above the prior-year level as a double-digit increase in the
+PLM business and a slight increase in the factory automation
+business were largely offset by declines in other businesses. Prof-
+itability in fiscal 2016 was held back by deferred revenue adjust-
+ments and transaction and integration costs related to the acqui-
+sition of CD-adapco, totaling €43 million. In addition, Division
+profit included severance charges in both periods, €49 million in
+fiscal 2016 compared to €53 million in fiscal 2015.
+7.8%
+8.7%
+Profit margin
+6%
+Comp.
+(22)%
+(23)%
+4%
+15%
+588
+678
+The cash outflows for other purchases of assets primarily in-
+cluded additions of assets eligible as central bank collateral and
+to a lesser extent payments related to equity investments.
+The cash outflows for acquisitions of businesses, net of cash
+acquired, primarily included payments totaling €0.9 billion re-
+lated to the acquisition of CD-adapco.
+The conversion of profit into cash inflows from operating activ-
+ities was mainly driven by Healthineers as well as the Digital Fac-
+tory and Power and Gas Divisions. This conversion was affected
+by a build-up of operating net working capital primarily driven
+by an increase in the line items Inventories and Trade and other
+receivables in the Industrial Business, which was primarily due to
+Power and Gas and Energy Management.
+(2,710)
+(1,409)
+Other disposals of assets
+1,417
+Cash flows from investing activities - continuing operations
+(4,406)
+Cash flows from investing activities – discontinued operations
+262
+Cash flows from investing activities - continuing and discontinued operations
+(4,144)
+Cash flows from financing activities
+Purchase of treasury shares
+(463)
+Issuance of long-term debt
+45,730
+Repayment of long-term debt (including current maturities of long-term debt)
+(2,253)
+Change in short-term debt and other financing activities
+Interest paid
+Dividends paid to shareholders of Siemens AG
+(1,408)
+(809)
+(2,827)
+Other cash flows from financing activities - continuing operations
+(249)
+(2,710)
+Cash flows from financing activities - continuing operations
+Cash flows from financing activities - discontinued operations
+Cash flows from financing activities - continuing and discontinued operations
+5,300
+47,986
+Debt and credit facilities
+2,297
+2016
+2015
+8%
+Short-term debt and current maturities of long-term debt
+6,206
+2,979
+108%
+Trade payables
+8,048
+7,774
+4%
+Other current financial liabilities
+1,933
+2,085
+(7)%
+Current provisions
+4,166
+4,489
+(7)%
+Current income tax liabilities
+2,085
+1,828
+14%
+Other current liabilities
+20,437
+20,368
+0%
+(in millions of €)
+Liabilities associated with assets classified as held for disposal
+Sep 30,
+A.5.1 Capital structure
+Other financial assets
+20,610
+20,821
+(1)%
+Deferred tax assets
+Other assets
+Total non-current assets
+Total assets
+3,431
+2,591
+32%
+1,279
+1,094
+17%
+70,388
+125,717
+68,906
+2%
+120,348
+4%
+Our total assets in fiscal 2016 were influenced by negative cur-
+rency translation effects of €1.1 billion, primarily involving the
+British pound.
+The increase in other current financial assets was driven by
+higher loans receivable at SFS. These higher current loans receiv-
+ables were mainly due to new business and the reclassification of
+non-current loans receivables.
+The increase in inventories was driven mainly by a build-up in
+Energy Management, Power and Gas and Wind Power and
+Renewables.
+The increase in goodwill included the acquisition of CD-adapco.
+Deferred tax assets increased mainly due to income tax effects
+related to remeasurement of defined benefits plans.
+Combined Management Report
+15
+16
+A.5 Financial position
+Our capital structure developed as follows:
+40
+% Change
+5%
+24,761
+26,682
+(7)%
+Post-employment benefits
+Deferred tax liabilities
+Provisions
+Other financial liabilities
+Other liabilities
+Total non-current liabilities
+Total liabilities
+Debt ratio
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+Non-controlling interests
+Total liabilities and equity
+13,695
+9,811
+40%
+829
+609
+36%
+5,087
+4,865
+5%
+1,142
+39
+(22)%
+2,471
+Long-term debt
+8%
+1,466
+42,916
+Total current liabilities
+39,562
+We are exposed to currency translation effects, particularly involv-
+ing the US$, the British £ and currencies of emerging markets,
+particularly the Chinese yuan. During fiscal 2016, the average ex-
+change rate conversion for our large volume of US$-denominated
+revenue was US$1.11 per €. While we expect volatility in global
+currency markets to continue in fiscal 2017, we have improved
+our natural hedge on a global basis through geographic distribu-
+tion of our production facilities during the past. Nevertheless,
+Siemens is still a net exporter from the Euro zone to the rest of
+the world, so a weak Euro is principally favorable for our business
+and a strong Euro is principally unfavorable. In addition to the
+natural hedging strategy just mentioned, we also hedge currency
+risk in our export business using derivative financial instruments.
+We expect these steps to help us limit effects on income related
+to currency in fiscal 2017.
+In fiscal year 2017, the world economy is expected to grow only
+slightly faster than in fiscal 2016, but still well below the long-
+term historical trend. Global GDP is expected to expand by 2.8%,
+with fixed investments growing by 3.2%. Fixed investments in
+emerging countries (+4.4%) are expected to grow faster than in
+advanced economies (+1.9%).
+A.8.1.1 WORLDWIDE ECONOMY
+A.8.1 Report on expected
+developments
+and associated material opportunities and risks
+A.8 Report on expected developments
+21
+Combined Management Report
+The U.S. has substantially resolved its inventory reduction, en-
+abling GDP to grow substantially faster (+2.2%) than in 2016
+(+1.4%). The good shape of the country's labor markets and in-
+creasing wage growth support consumer spending, which is ex-
+pected to remain the mainstay of the economy. Improved trends
+in housing and capital spending are also expected to support
+growth. In particular, business fixed investment is expected to
+pick up, as a recovery in commodity prices is increasing capital
+spending in resource extraction and related industries. Never-
+theless, potential impacts resulting from political uncertainty in
+the wake of the U.S. presidential election have to be monitored.
+In November 2016, Siemens announced its intention to further
+strengthen Healthineers in Siemens for the future and is there-
+fore planning to publicly list its healthcare business. Siemens will
+announce more precise details regarding the date and scope of
+the placement when plans for the public listing are further ad-
+vanced. The listing will also depend, among other things, on the
+stock market environment.
+In October 2016, the shareholders of Gamesa approved binding
+agreements to merge Siemens's wind power business, including
+service, with Gamesa. Closing of the transaction is subject to the
+approval of the antitrust and regulatory authorities.
+We intend to continue providing an attractive return to share-
+holders. As in the past, we intend to fund our dividend payout
+from Free cash flow. The Siemens Managing Board, in agreement
+with the Supervisory Board, proposes a dividend of €3.60 per
+share, up from €3.50 a year earlier.
+Free cash flow from continuing and discontinued operations
+for fiscal 2016 rose to €5.5 billion, up 17% compared to the prior
+fiscal year.
+We evaluate our capital structure using the ratio of industrial net
+debt to EBITDA. For fiscal 2016, this ratio was 1.0, up from 0.6 in
+fiscal 2015. This was close to our forecast, which was to reach a
+ratio below but near 1.0.
+ROCE was 14.3% in fiscal 2016. We thus reached our forecast for
+fiscal 2016, which was to achieve a double-digit ROCE but to
+come in substantially below the amount of fiscal 2015, which
+was 21.0%. This decline was due to a combination of lower net
+income, which in the prior fiscal year benefited from the
+above-mentioned divestment gains, and an increase in average
+capital employed, resulting mainly from the acquisition of
+Dresser-Rand.
+Net income in fiscal 2016 was €5.6 billion and basic EPS from net
+income was €6.74 both down 24% compared to the prior fiscal
+year, which included a gain of €3.0 billion within net income and
+€3.66 within earnings per share from the sale of our hearing aid
+business and our stake in BSH. Excluding these gains, net income
+rose 28%. We thus exceeded our fiscal 2016 forecast for a signif-
+icant increase in net income excluding these gains. This in turn
+enabled us to exceed our forecast for basic EPS from net income,
+which we raised twice during fiscal 2016: first from the range of
+€5.90 to €6.20 to the range of €6.00 to €6.40, and then from the
+latter range to €6.50 to €6.70. Net income development bene-
+fited from our continuous efforts to increase productivity. In fiscal
+2016, total cost productivity improved by 5%, above our fiscal
+2016 target of 3% to 4%.
+A.7 Subsequent events
+In November 2016, Siemens announced the acquisition of Mentor
+Graphics (U.S.), a design automation and industrial software pro-
+vider. The purchase price is US$37.25 per share in cash, which
+represents an enterprise value of US$4.5 billion. Mentor Graphics
+will be integrated in the Digital Factory Division. Closing of the
+transaction is subject to customary conditions and is expected in
+the third quarter of fiscal 2017.
+Revenue growth
+In China, economic growth is projected to slow to 6.3% in 2017
+after 6.6% in 2016. Some questions exist about the sustainability
+of development in the country's financial and real estate sectors.
+With China's debt-to-GDP ratio rising strongly in recent years,
+the risks of a financial imbalance have increased. In addition,
+large housing price increases in several large cities have raised
+concerns about another real estate bubble.
+20 Combined Management Report
+We continue to anticipate headwinds for macroeconomic growth
+and investment sentiment in our markets in fiscal 2017 due to the
+We are basing our outlook for fiscal 2017 for the Siemens Group
+and its segments on the above-mentioned expectations and
+assumptions regarding the overall economic situation and spe-
+cific market conditions for the next fiscal year. Furthermore, this
+outlook is based on the current business portfolio of Siemens,
+excluding potential burdens associated with pending portfolio
+matters in fiscal 2017. An acquisition of Mentor Graphics to ex-
+pand our digital industrial leadership and a merger of our wind
+power business, including service with Gamesa would among
+other things result in additional revenue, purchase price allo-
+cation effects, integration costs as well as assets and liabilities.
+The merger with Gamesa would also result in increases in
+non-controlling interests. In addition, we are further strengthening
+Healthineers in Siemens for the future and are therefore planning
+to publicly list our healthcare business. We will announce more
+precise details regarding the date and scope of the placement
+when plans for the public listing are further advanced. The listing
+will also depend, among other things, on the stock market
+environment.
+A.8.1.3 SIEMENS GROUP
+Our SFS Division is geared to Siemens' Industrial Business and its
+markets. As such SFS is, among other factors, influenced by the
+business development of the markets served by our Industrial
+Business. SFS will continue to focus its business scope on areas
+of intense domain know-how, thereby limiting risk and exposure
+going forward.
+such as centralized tendering and reimbursement budget con-
+trol. For Brazil, the recession is expected to continue to impact
+healthcare investments.
+For fiscal 2017, we expect markets for Healthineers to stay on a
+moderate growth path. Healthineers' markets continue to benefit
+from long-term trends such as growing and aging populations
+and from broader access to healthcare, but are restricted by
+public spending constraints and by consolidation of healthcare
+providers. On a geographic basis, we expect slight to moderate
+growth in the U.S., held back by continued pressure to increase
+utilization of existing equipment and to reduce reimbursement
+rates. For Europe, we expect slight growth, with equipment re-
+placement and business with large customers such as hospital
+chains gaining further importance. For China, we expect health-
+care spending to rise, due to an aging population, urbanization,
+growing chronic disease incidence and expanded access to
+health insurance, partly held back by governmental restrictions
+In fiscal 2017, market volume for the markets served by the Pro-
+cess Industries and Drives Division is expected to come in
+slightly below the level of fiscal 2016. While this decline is fore-
+cast to be driven by an ongoing fall in investments in the oil and
+gas and the mining markets, we expect this downturn to gradu-
+ally come to an end during fiscal 2017.
+In Europe, economic activity is expected to remain hampered by
+political risks. Negotiations between the U.K. and the European
+Union regarding the U.K.'s exit from the EU have been announced
+for spring 2017 and could become contentious. The exit process
+could heighten business and consumer uncertainty, reduce in-
+vestment in the U.K., and pose some risk to financial markets.
+This is also true for the banking sector which in some countries
+suffers from non-performing loans and a capital shortage. GDP
+growth is forecast at 1.5% in 2017 after 1.8% in 2016.
+Conditions for the markets addressed by the Digital Factory
+Division are expected to improve modestly in fiscal 2017. Global
+manufacturing production is forecasted to grow slightly in fiscal
+2017, though global political and economic uncertainties are ex-
+pected to continue to restrain investment decisions of key cus-
+tomers. Market growth is expected to benefit from ongoing rising
+demand from consumer-oriented manufacturing industries, es-
+pecially in industrialized countries. Also, price stabilization in
+some raw material markets is anticipated to end the economic
+downturn in a number of emerging countries. Overall, we see
+potential for the machine-building industry to return to slight
+growth during the course of fiscal 2017, and the trend towards
+digitalization is expected to continue to drive growth in the
+industry software market.
+22 Combined Management Report
+For the markets served by the Building Technologies Division,
+we expect solid growth in fiscal 2017. The regional differences in
+growth dynamics are narrowing further, with modestly increas-
+ing growth rates in developed countries and slowing growth in
+emerging markets. Above-average growth is anticipated in the
+Middle East, China, India and the U.S. A majority of the European
+countries are anticipated to continue their recovery, led by Ger-
+many, Spain and some of the Northern European countries. On
+the other hand, growth might be impacted in countries with sig-
+nificant exposure to weak commodity markets and in countries
+with geopolitical uncertainties.
+For the markets served by the Energy Management Division, we
+expect slight overall growth in fiscal 2017. The Division's markets
+are experiencing rising power consumption due to urbanization
+and electrification in emerging countries. Also the energy mix is
+changing, with a rising share of renewable energy. Furthermore,
+there is a trend towards decentralized power generation. Within
+the Division's key industries, we expect moderate growth in de-
+mand from the metals markets, driven by the Europe, C.I.S.,
+Africa, Middle East and the Asia, Australia regions and from the
+construction markets. For the oil and gas market, a slight recov-
+ery is expected. Demand from data centers is also expected to
+contribute to growth. The base market for utilities is expected
+to continue to grow, but with large investments such as in the
+Middle East not reaching the level of fiscal 2016.
+We expect the markets served by the Wind Power and Renew-
+ables Division to return to moderate growth in fiscal 2017.
+Growth is expected to be driven by the Americas, particularly the
+U.S. and continued growth in the offshore wind power market
+segment. Overall, we expect a continuation of the trend towards
+an increasing share of renewable energy within the energy mix.
+Within the onshore wind power market, we expect demand in
+the low-wind segment to remain significant.
+For fiscal 2017, we expect market volume for the markets served
+by the Power and Gas Division to remain near the level of fiscal
+2016. We anticipate a decline in the gas turbine market and a
+slight recovery in the compression market. Our expectation for
+the compression market is based on the assumptions that oil
+prices will continue to recover and replacement demand will
+grow, particularly to support enhanced extraction techniques
+employed in partially depleted fields. We expect flat demand in
+the steam turbine market, and a decline in demand for coal-fired
+power plants in China. Overall, we assume a shift to more flexible
+power generation and stronger demand for combined heat and
+power generation.
+A.8.1.2 MARKET DEVELOPMENT
+The forecasts presented here for GDP and fixed investments are
+based on a report from IHS Markit dated October 15, 2016.
+For fiscal 2017, we expect markets served by the Mobility Divi-
+sion to continue to grow moderately. We anticipate that rail op-
+erators in Germany will continue to make significant invest-
+ments. In the Middle East and Africa, we expect tenders of
+further large turnkey and rolling stock projects. In China, we
+expect investments in high-speed trains, urban transport and
+rail infrastructure to continue to drive growth. In India, market
+growth should continue from planned projects for commuter
+and high-speed passenger lines, freight rail, and related infra-
+structure as part of the transportation infrastructure build-out.
+Overall, local rail transport is expected to gain importance as
+urbanization is progressing. In emerging countries, rising in-
+comes are expected to result in greater demand for public trans-
+port solutions.
+Despite the positive developments expected for the world econ-
+omy in 2017, first and foremost the acceleration of the U.S. econ-
+omy, the risks remain substantial, particularly in the geopolitical
+sphere (see A.8.3. RISKS). In addition, central banks raising
+interest rates might induce financial turbulence, substantial
+swings in capital flows, and readjustment of exchange rates.
+Emerging markets might be especially vulnerable to these
+shocks.
+The profit margin of the Industrial Business increased to 10.8%,
+up from 10.1% in fiscal 2015. We thus reached the upper end of
+the range of 10% to 11% that was forecast for fiscal 2016. All
+industrial businesses except for Process Industries and Drives
+reached their margin ranges, with three Divisions that were
+below their margin ranges in fiscal 2015, entering their ranges
+in fiscal 2016: Power and Gas, Wind Power and Renewables and
+Energy Management. SFS, which is outside our Industrial Business,
+achieved a return on equity after tax of 21.6%, again above the
+upper end of its margin range.
+Industrial Business profit grew 13% to €8.7 billion. As with reve-
+nue, all industrial businesses except for Process Industries and
+Drives increased their profit year-over-year. Wind Power and Re-
+newables nearly tripled its profit compared to fiscal 2015, sup-
+ported by a number of factors including successful implementa-
+tion of measures for ramping up commercial-scale production of
+turbine offerings. The Energy Management Division continued
+its strong turnaround, with high double-digit profit growth.
+Power and Gas achieved double-digit profit growth, benefiting
+from among others a positive effect following the ending or eas-
+ing of sanctions on Iran; Power and Gas took significant project
+charges and higher severance in the prior year. Mobility contin-
+ued its solid project execution and also achieved double-digit
+profit growth. Healthineers and our Digital Factory and Building
+Technologies Divisions exceeded the already high profit levels
+they had reached in fiscal 2015. The decline in profit at Process
+Industries and Drives was due to the above-mentioned market
+conditions and charges related to measures taken to address
+those challenges.
+5,533
+(57)
+Fiscal year 2016
+Continuing and
+discontinued operations
+7,611
+(2,135)
+5,476
+With our ability to generate positive operating cash flows, our
+total liquidity (defined as cash and cash equivalents as well as
+available-for-sale financial assets) of €11.9 billion, our €7.1 billion
+in unused lines of credit, and given our credit ratings at year-end,
+we believe that we have sufficient flexibility to fund our capital
+requirements. Also in our opinion, our operating net working
+capital is sufficient for our present requirements.
+Investing activities
+Additions to intangible assets and property, plant and equipment
+from continuing operations totaled €2.1 billion in fiscal 2016.
+Within the Industrial Business ongoing investments related
+mainly to technological innovations; extending our capacities for
+designing, manufacturing and marketing new solutions; improv-
+ing productivity and our global footprint; and replacements of
+fixed assets. These investments amounted to €1.5 billion in fiscal
+2016. The remaining portion in fiscal 2016, €0.6 billion, related
+mainly to SRE, including significant amounts related to office proj-
+ects, such as new corporate office buildings in Germany, and to
+support investing activities particularly at Wind Power and Renew-
+ables. SRE is responsible for uniform and comprehensive manage-
+ment of Company real estate worldwide, and supports the Indus-
+trial Business and corporate activities with customer-specific real
+estate solutions.
+Combined Management Report
+With regard to capital expenditures for continuing operations, we
+expect a moderate spending increase in fiscal 2017. In addition
+we plan to invest significant amounts in coming years in attrac-
+tive innovation fields in connection with next47.
+Focus areas of ongoing investing activities of the Industrial
+Business are:
+The investments of Power and Gas are focused on replacement,
+enhancing productivity and innovation, mainly relating to our
+large gas turbines and generators business, including upcoming
+spending for a new technology platform.
+Energy Management is spending the larger portion of its capital
+expenditures for innovation, particularly in the low voltage and
+products business. Further investments are primarily related to
+the expansion of factories and technical equipment and to the
+replacement of fixed assets.
+The investments of Building Technologies mainly relate to the
+products and systems business, particularly innovation projects,
+such as control and service platforms.
+Mobility's investments mainly focus on meeting project de-
+mands and maintaining or enhancing its production and service
+facilities, including capital expenditures for improving its respec-
+tive positions in growing market segments.
+(2,135)
+Outside the Industrial Business, the loss was higher than in fiscal
+2015, which included a gain of €1.4 billion from the sale of our
+stake in BSH. In contrast, the loss from other at-equity invest-
+ments was lower and costs related to Corporate Items declined
+substantially compared to the prior year.
+(57)
+Discontinued
+operations
+Revenue rose to €79.6 billion, also up 5% compared to fiscal
+2015. All our industrial businesses increased revenue year-over-
+year, except for the Process Industries and Drives Division. Exclud-
+ing currency translation effects, overall revenue rose 6%. Our
+forecast was to achieve moderate revenue growth excluding cur-
+rency translation effects. As expected, portfolio effects added
+2 percentage points to growth. The strongest contribution to
+revenue growth came from the Power and Gas Division, which
+achieved a double-digit growth rate even after excluding positive
+portfolio effects, primarily related to the acquisition of Dresser-
+Rand at the end of the third quarter of fiscal 2015. Revenue
+growth at Power and Gas included strong contributions from
+project execution on orders from Egypt.
+Orders increased 5% year-over-year to €86.5 billion, for a book-
+to-bill ratio of 1.09, thus fulfilling our expectation for a ratio
+clearly above 1.0. All industrial businesses contributed to order
+growth except for the Mobility Division, which recorded lower
+volume from large orders year-over-year, and the Process Indus-
+tries and Drives Division, which is suffering from weak demand
+in commodity-related markets. Order growth was particularly
+impressive in the Power and Gas and the Wind Power and Renew-
+ables Divisions. While Power and Gas recorded among others
+large orders for power plants in Egypt, Wind Power and Renew-
+ables won among others a number of contracts for large offshore
+wind-farms including service in the U.K.
+In fiscal 2016, we were particularly successful in executing on our
+financial target system, enabling us to twice raise our forecast for
+basic earnings per share (EPS) (net income) and to gain market
+share in most of our businesses. Despite an unfavorable economic
+environment and rising global uncertainties, we reached or ex-
+ceeded the targets set for our primary measures for fiscal 2016.
+We achieved revenue growth of 6%, net of effects from currency
+translation, including two percentage points from portfolio
+effects. Net income and basic earnings per share (EPS) (net
+income) rose by more than a quarter compared to fiscal 2015
+excluding the portfolio gains from the divestment of the hearing
+aid business and our stake in BSH. As forecast, Return on capital
+employed (ROCE) was double-digit. Our capital structure ratio
+was 1.0, close to our forecast.
+We also made further progress in streamlining our management
+structures and processes. Following cost savings of approximately
+€0.4 billion in fiscal 2015, we reduced cost by an additional
+€0.6 billion in fiscal 2016, thus achieving cost savings of €1.0 bil-
+lion compared to fiscal 2014.
+In fiscal 2016, we successfully continued implementing our "Vision
+2020" concept. We made further significant steps to strengthen
+our business focus in electrification, automation and digitaliza-
+tion by acquiring CD-adapco, a U.S.-based provider of simulation
+software, and by signing binding agreements to merge our wind
+power business, including service, with Gamesa to strengthen
+our wind power business both regionally and in the global on-
+shore market. We sold our remaining financial assets in the hear-
+ing aid business and our share in Unify Holdings B.V. to Atos SE.
+For Process Industries and Drives we implemented measures to
+address the Division's structural challenges with regard to adjust-
+ing regional footprint and reducing overcapacities. We also
+made substantial progress in our ongoing initiative to improve
+profitability of low-margin businesses throughout our Industrial
+Business. Beginning with fiscal 2017 we founded next47, a sepa-
+rate unit that pools our existing startup activities to foster disrup-
+tive ideas more vigorously and accelerate the development of
+new technologies.
+A.6 Overall assessment of the economic position
+19
+Combined Management Report
+Healthineers' investments are mainly driven by enhancing com-
+petitiveness and innovation notably in the diagnostics busi-
+nesses, including large amounts relating to intangible assets,
+particularly capitalized development expenses for new platforms
+and to upcoming spending for factories, especially in China.
+Process Industries and Drives makes most of its capital expen-
+ditures for the purpose of rationalization, replacement and mod-
+ification required for transition to innovative products, particu-
+larly relating to the large drives business.
+Major spending of Digital Factory relates to the factory automa-
+tion, motion control systems and control products businesses,
+including investments in production facilities in China.
+We report Free cash flow as a supplemental liquidity measure:
+Free cash flow
+(in millions of €)
+Cash flows from operating activities
+Additions to intangible assets and property, plant and equipment
+Free cash flow
+Continuing
+operations
+7,668
+23
+The investments of Wind Power and Renewables are focused
+on the extension, modernization and optimization of existing
+plants to allow for the large-scale manufacturing of innovative
+products, including construction of production and service facil-
+ities such as in the U.K., Germany, Morocco and Egypt. To a lesser
+extent, Wind Power and Renewables also focuses on transporta-
+tion solutions particularly for delivering large turbines.
+In fiscal 2016, most of our industrial businesses contributed to
+organic revenue growth, and we expect a similar development in
+fiscal 2017. The principle exception is the Power and Gas Division,
+which contributed double-digit growth in fiscal 2016.
+Responsibilities are assigned for all relevant risks and opportuni-
+ties, with the hierarchical level of responsibility depending on the
+significance of the respective risk or opportunity. In a first step,
+assuming responsibility for a specific risk or opportunity involves
+choosing one of our general response strategies. Our general
+response strategies with respect to risks are avoidance, transfer,
+reduction or acceptance of the relevant risk. Our general re-
+sponse strategy with respect to opportunities is to 'seize' the rel-
+evant opportunity. In a second step, responsibility for a risk or
+opportunity also involves the development, initiation and moni-
+toring of appropriate response measures corresponding to the
+chosen response strategy. These response measures have to be
+specifically tailored to allow for effective risk management.
+Accordingly, we have developed a variety of response measures
+with different characteristics. For example, we mitigate the risk
+of fluctuations in currency and interest rates by engaging in
+hedging activities. Regarding our long-term projects, systematic
+and comprehensive project management with standardized proj-
+ect milestones, including provisional acceptances during project
+execution and complemented by clearly defined approval pro-
+cesses, assists us in identifying and responding to project risks at
+an early stage, even before the bidding phase. Furthermore, we
+maintain appropriate insurance levels for potential cases of dam-
+age and liability risks in order to reduce our exposure to such risks
+and to avoid or minimize potential losses. Among others, we ad-
+dress the risk of fluctuation in economic activity and customer
+demand by closely monitoring the macroeconomic conditions
+and developments in relevant industries, and by adjusting capac-
+ity and implementing cost-reduction measures in a timely and
+consistent manner, if deemed necessary.
+A.8.2.3 RISK MANAGEMENT ORGANIZATION
+AND RESPONSIBILITIES
+To oversee the ERM process and to further drive the integration
+and harmonization of existing control activities to align with legal
+and operational requirements, the Managing Board established
+a Risk Management and Internal Control Organization, headed by
+the Chief Risk & Internal Control Officer, and a Corporate Risk and
+Internal Control Committee (CRIC). The CRIC obtains risk and op-
+portunity information from the Risk Committees established at
+the Industrial Business, SFS, and regional organizations and from
+the heads of Corporate Units. In order to allow for a meaningful
+discussion on Siemens group level individual risk and opportuni-
+ties of similar cause-and-effect nature are aggregated into risk
+and opportunity themes. This aggregation naturally results in a
+mixture of risks, including those with a primarily qualitative as-
+sessment and those with a primarily quantitative risk assessment.
+Accordingly, we do not foresee a purely quantitative assessment
+of risk themes. This information then forms the basis for the eval-
+uation of the company-wide risk and opportunity situation. The
+CRIC reports to and supports the Managing Board on matters
+relating to the implementation, operation and oversight of the
+risk and internal control system and assists the Managing Board
+for example in reporting to the Audit Committee of the Super-
+visory Board. The CRIC is composed of the Chief Risk & Internal
+Control Officer, as the chairperson, members of the Managing
+Board and selected heads of Corporate Units.
+A.8.3 Risks
+Below we describe the risks that could have a material adverse
+effect on our business, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and repu-
+tation. The order in which the risks are presented in each of the
+four categories reflects the currently estimated relative exposure
+for Siemens associated with these risks and thus provides an in-
+dication of the risks' current importance to us. Additional risks
+not known to us or that we currently consider immaterial may
+also negatively impact our business objectives and operations.
+Unless otherwise stated, the risks described below relate to all of
+our segments.
+A.8.3.1 STRATEGIC RISKS
+Competitive environment: The worldwide markets for our prod-
+ucts and solutions are highly competitive in terms of pricing,
+product and service quality, product development and introduc-
+tion time, customer service, financing terms and shifts in market
+demands. We face strong existing competitors and also compet-
+itors from emerging markets, which may have a better cost struc-
+ture. Some industries in which we operate are undergoing con-
+solidation, which may result in stronger competition and a
+change in our relative market position. Furthermore, we notice
+that suppliers (and to some extent even customers), especially
+from emerging countries (e.g. China), could develop into serious
+competitors for Siemens. We address these risks with various
+measures, for example, benchmarking, strategic initiatives, sales
+push initiatives, executing productivity measures and target cost
+projects, rightsizing of our factory footprint, exporting from low-
+cost countries to price-sensitive markets, and optimizing our
+product portfolio. We continuously monitor and analyze compet-
+itive and market information in order to be able to anticipate
+unfavorable changes in the competitive environment rather than
+reacting to such changes.
+Economic, political and geopolitical conditions (macroeco-
+nomic environment): We see a high level of uncertainty regard-
+ing the global economic outlook. Significant downside risks stem
+e.g. from consequences of the Brexit vote in June of 2016, from
+political uncertainty in the wake of the U.S. presidential election
+and from an increasing trend towards populism. The U.K. exit
+Combined Management Report
+process could heighten business and consumer uncertainty, re-
+duce investment in the U.K., pose risks to financial markets and
+may increase the uncertainties about the future of the EU in the
+course of the U.K. exit negotiations. A further and massive loss
+of economic confidence and a prolonged period of reluctance in
+investment decisions and awarding of new orders would hit our
+businesses. We continuously monitor the exit process and es-
+tablished, for example, a task force team coordinating our local
+and global mitigation measures. Further, a substantial business
+risk stems from a significant weakening of Chinese economic
+growth and the potential for corrections or even a collapse in
+the country's real estate market, banking sector or stock market.
+The downturn could get worse, if Chinese authorities fail to re-
+form the state-owned enterprises in the industry and banking
+sector and to further liberalize and open the economy. Both
+global and regional investment climates could collapse due to
+political upheavals, further independence debates within coun-
+tries in the European Union, or sustained success for protection-
+ist, anti-EU and anti-business parties and policy. A rapid tighten-
+ing of monetary policy by the U.S. Federal Reserve could cause
+a depreciation spiral among emerging market currencies. This
+could lead to a renewed emerging market crisis because debt
+levels of emerging market enterprises have risen, making them
+dependent on favorable global financial conditions to ser-
+vice debts denominated in foreign currencies. A terrorist mega-
+attack, or a series of such attacks in major economies, could
+depress economic activity globally and undermine consumer
+and business confidence. Further risks stem from political ten-
+sions (e.g. Syria, Turkey, Ukraine) and a loss of confidence in the
+automotive sector.
+In general, due to the significant proportion of long-cycle busi-
+nesses in our Divisions and the importance of long-term con-
+tracts for Siemens, there is usually a time lag between the devel-
+opment of macroeconomic conditions and their impact on our
+financial results. In contrast, short-cycle business activities of the
+Digital Factory Division and parts of Process Industries and Drives
+Division and in the Energy Management Division react quickly to
+volatility in market demand. If the moderate recovery of macro-
+economic growth stalls again and if we are not successful in
+adapting our production and cost structure to subsequent
+changes in conditions in the markets in which we operate, there
+can be no assurance that we will not experience adverse effects.
+For example, it may become more difficult for our customers
+to obtain financing. As a result, they may modify, delay or cancel
+plans to purchase our products and services, or fail to follow
+through on purchases or contracts already executed. Further-
+more, the prices for our products and services may decline, as a
+result of adverse market conditions, to a greater extent than we
+currently anticipate. In addition, contracted payment terms, es-
+pecially regarding the level of advance payments by our custom-
+ers relating to long-term projects, may become less favorable,
+which could negatively impact our financial condition. Siemens'
+global setup with operations in almost all relevant economies,
+the wide variety of our offerings following different business
+cycles, and our varying business models (e.g. product, software,
+solution, project and service-business) help us to absorb the im-
+pact of an adverse development in a single market.
+Disruptive Technologies (incl. Digitalization): The markets in
+which our businesses operate experience rapid and significant
+changes due to the introduction of innovative and disruptive tech-
+nologies. In the fields of digitalization (e.g. internet of things,
+web of systems, Industrie 4.0), there are risks of new competi-
+tors, substitutions of existing products/solutions/services, new
+business models (e.g. in terms of pricing) and finally the risk that
+our competitors may have faster time-to-market strategies and
+introduce their digital products and solutions faster than
+Siemens. Our operating results depend to a significant extent on
+our ability to anticipate and adapt to changes in our markets and
+to reduce the costs of producing our products. Introducing new
+products and technologies requires a significant commitment to
+research and development, which in return requires expenditure
+of considerable financial resources that may not always result in
+success. Our results of operations may suffer if we invest in tech-
+nologies that do not operate or may not be integrated as ex-
+pected, or that are not accepted in the marketplace as antici-
+pated, or if our products or systems are not introduced to the
+market in a timely manner, particularly compared to our compet-
+itors, or become obsolete. We constantly apply for new patents
+and actively manage our intellectual property portfolio to secure
+our technological position. However, our patents and other intel-
+lectual property may not prevent competitors from independently
+developing or selling products and services that are similar to or
+duplicates of ours.
+Footprint: The risk is that we are not flexible enough in adjusting
+our manufacturing footprint to quickly respond to changing mar-
+kets, resulting in a non-competitive cost position and a loss of
+business. To mitigate this risk, we continuously monitor and
+analyze competitive and market information. Furthermore, we
+closely monitor the implementation of the planned measures,
+Combined Management Report
+27
+maintain strict cost management, and conduct ongoing discus-
+sions with all concerned interest groups.
+Portfolio measures, at-equity investments, other investments
+and strategic alliances: Our strategy includes divesting activi-
+ties in some business areas and strengthening others through
+portfolio measures, including mergers and acquisitions. With
+respect to divestments, we may not be able to divest some of our
+activities as planned, and the divestitures we do carry out could
+have a negative impact on our business, financial condition, re-
+sults of operations and our reputation. Mergers and acquisitions
+are inherently risky because of difficulties that may arise when
+integrating people, operations, technologies and products. There
+can be no assurance that any of the businesses we acquired can
+be integrated successfully and in a timely manner as originally
+planned, or that they will perform as anticipated once integrated.
+In addition, we may incur significant acquisition, administrative,
+tax and other expenditure in connection with these transactions,
+including costs related to integration of acquired businesses. Fur-
+thermore, portfolio measures may result in additional financing
+needs and adversely affect our capital structure. Acquisitions led
+to substantial addition to intangible assets, including goodwill in
+our Statements of Financial Position. If we were to encounter
+continuing adverse business developments or if we were other-
+wise to perform worse than expected at acquisition activities,
+then these intangible assets, including goodwill, might have to
+be impaired, which could adversely affect our business, financial
+condition and results of operations. Our investment portfolio
+consists of investments held for purposes other than trading.
+Furthermore, we hold other investments, for example, Atos SE
+and OSRAM Licht AG. Any factors negatively influencing the fi-
+nancial condition and results of operations of our at-equity in-
+vestments and other investments, could have an adverse effect
+on our equity pick-up related to these investments or may result
+in a related write-off. In addition, our business, financial condi-
+tion and results of operations could also be adversely affected in
+connection with loans, guarantees or non-compliance with fi-
+nancial covenants related to these at-equity investments and
+other investments. Furthermore, such investments are inherently
+risky as we may not be able to sufficiently influence corporate
+governance processes or business decisions taken by our equity
+investments, other investments and strategic alliances that may
+have a negative effect on our business. In addition, joint ventures
+bear the risk of difficulties that may arise when integrating peo-
+ple, operations, technologies and products. Strategic alliances
+may also pose risks for us because we compete in some business
+areas with companies with which we have strategic alliances.
+Besides other measures, we handle these risks with standardized
+processes as well as dedicated roles and responsibilities in the
+areas of mergers, acquisitions, divestments and carve outs. This
+includes post closing actions as well as claim management and
+centrally managed portfolio activities.
+A.8.3.2 OPERATIONAL RISKS
+IT security: Our business portfolio is dependent on digital tech-
+nologies. We observe a global increase of IT security threats and
+higher levels of professionalism in computer crime, which pose a
+risk to the security of products, systems and networks and the
+confidentiality, availability and integrity of data. Like other large
+multinational companies we are facing active cyber threats from
+sophisticated adversaries that are supported by organized crime
+and nation states engaged in economic espionage. We attempt
+to mitigate these risks by employing a number of measures, in-
+cluding employee training, comprehensive monitoring of our
+networks and systems through Cyber Security Operation Centers,
+and maintenance of backup and protective systems such as fire-
+walls and virus scanners. Our contractual arrangements with ser-
+vice providers, aim to ensure that these risks are reduced. None-
+theless, our systems, products, solutions and services, as well as
+those of our service providers remain potentially vulnerable to
+attacks. Such attacks could potentially lead to the publication,
+manipulation, espionage or leakage of information, improper use
+of our systems, defective products, production downtimes and
+supply shortages, with potential adverse effects on our reputa-
+tion, our competitiveness and results of our operations.
+Operational failures and quality problems in our value chain
+processes: Our value chain comprises all steps, from research
+and development to supply chain management, production, mar-
+keting, sales and services. Operational failures in our value chain
+processes could result in quality problems or potential product,
+labor safety, regulatory or environmental risks. Such risks are par-
+ticularly present in our Industrial Business in relation to our pro-
+duction and manufacturing facilities, which are located all over
+the world and have a high degree of organizational and techno-
+logical complexity. From time to time, some of the products we
+sell might have quality issues resulting from the design or man-
+ufacture of the products or of the commissioning of the products
+or from the software integrated into them. Our Healthineers
+business, for example, is subject to regulatory authorities includ-
+ing the U.S. Food and Drug Administration and the European
+Commission's Health and Consumer Policy Department, which
+require us to make specific efforts to safeguard our product
+safety. If we are not able to comply with these requirements, our
+business and reputation may be adversely affected. Several mea-
+sures for quality improvement and claim prevention are estab-
+lished and the increased use of quality management tools is im-
+proving visibility and assists us strengthen the root cause and
+prevention process.
+Operational optimization alignments and cost reduction ini-
+tiatives: We are in a continuous process of operational optimiza-
+tion alignments and constantly engage in cost-reduction initia-
+tives, including ongoing capacity adjustment measures and
+structural initiatives. Consolidation of business activities and
+28 Combined Management Report
+complex geopolitical environment. Therefore, we expect modest
+growth in revenue, net of effects from currency translation and
+portfolio transactions.
+effects and are aggregated within and for each of the organiza-
+tions mentioned above.
+26
+Continuous low Oil/Commodity Prices: The longer than ex-
+pected low oil price could reduce demand for Oil & Gas products.
+Additionally, countries depending on high oil and commodity
+prices (e.g. Russia, Venezuela, Middle East) might reduce public
+spending. Both would result in a decline in order intake and reve-
+nue for our businesses that serve oil and gas markets, as well as
+underutilization of resources. We attempt to mitigate these risks
+by close monitoring of the market situation, especially in the oil
+and gas business. We consistently strive to adjust our capacity,
+improve our cost structure, and increase our competitiveness in
+this market.
+Combined Management Report
+We expect revenue growth to benefit from conversion of our or-
+der backlog (defined as the sum of order backlogs of our indus-
+trial businesses) which totaled €113 billion as of September 30,
+2016. From this backlog, we expect to convert approximately
+€39 billion of past orders into current revenue in fiscal 2017.
+Within this amount, we expect for fiscal 2017 approximately
+€12 billion in revenue conversion from the €44 billion backlog of
+the Power and Gas Division, approximately €7 billion in revenue
+conversion from the €12 billion backlog of the Energy Manage-
+ment Division, approximately €7 billion in revenue conversion
+from the €26 billion backlog of the Mobility Division, approxi-
+mately €4 billion in revenue conversion from the €15 billion
+backlog of the Wind Power and Renewables Division, approxi-
+mately €3 billion in revenue conversion from the €5 billion back-
+log of the Process Industries and Drives Division, approximately
+€2 billion in revenue conversion from the €3 billion backlog of
+the Building Technologies Division, approximately €2 billion in
+revenue conversion from the €2 billion backlog of the Digital Fac-
+tory Division and approximately €2 billion in revenue conversion
+from the €5 billion backlog of Healthineers.
+25
+We anticipate that orders will exceed revenue for a book-to-bill
+ratio above 1.
+Profitability
+We expect higher net income year-over-year, and basic EPS from
+net income in the range of €6.80 to €7.20 as compared to €6.74
+in fiscal 2016 which included €0.23 from discontinued operations.
+Our forecast for net income and corresponding basic EPS is based
+on a number of assumptions: We assume stabilization in the mar-
+ket environment for our high-margin short-cycle businesses in
+fiscal 2017. As part of our One Siemens framework, we target a
+total cost productivity improvement of 3% to 5% in fiscal 2017.
+Also, we assume continued solid project execution. Furthermore,
+we anticipate no material currency-related effects on income.
+Along with these assumptions, we anticipate pricing pressure on
+our offerings of around 2% to 3% in fiscal 2017 along the lines of
+fiscal 2016, with the Power and Gas Division and the Wind Power
+and Renewables Division being affected the most. Furthermore,
+we expect wage inflation of around 3% to 4%. Also, we plan to
+increase R&D and selling expenses aimed at strengthening our
+capacities for innovation and organic growth. Our forecast for net
+income and corresponding basic EPS further excludes charges
+related to legal and regulatory matters.
+Within our Reconciliation to Consolidated Financial Statements,
+we expect results related to CMPA to continue to be highly vola-
+tile from quarter to quarter during fiscal 2017. Expenses for Cor-
+porate items are expected to be approximately €0.6 billion, with
+costs in the second half-year higher than in the first half and
+to include expenses related to our newly founded next47 startup
+unit. While we anticipate that SRE will continue with real estate
+disposals depending on market conditions, we expect gains from
+disposals to be lower in fiscal 2017 than in fiscal 2016. Centrally
+carried pension expenses are expected to total approximately
+€0.5 billion in fiscal 2017. Amortization of intangible assets ac-
+quired in business combinations was €674 million in fiscal 2016
+and we expect a similar level in fiscal 2017, based on our current
+business portfolio. Eliminations, Corporate Treasury and other
+reconciling items are also anticipated to be on the prior-year level
+despite higher interest expense related primarily to bonds issued
+in fiscal 2016.
+We do not expect material influence on financial results from
+discontinued operations in fiscal 2017. For comparison, income
+from discontinued operations in fiscal 2016 was €0.2 billion. We
+anticipate our tax rate for fiscal 2017 to be in the range of 26%
+to 30%.
+Capital efficiency
+Within our One Siemens financial framework, we aim in general
+to achieve a ROCE in the range of 15% to 20%. We expect ROCE
+for fiscal 2017 to come close to or reach the lower end of our
+target range, compared to 14.3% for fiscal 2016. Burdens from
+pending portfolio matters, which are excluded from our outlook,
+could materially reduce our expectation for ROCE for fiscal 2017.
+24
+For fiscal 2017, we expect all but one of our industrial businesses
+to be in their ranges for profit margin as defined in our financial
+performance system (see → A.2 FINANCIAL PERFORMANCE SYSTEM).
+The exception is Process Industries and Drives, which initiated
+measures during fiscal 2016 to reduce the size of its manufactur-
+ing capacity and align its global footprint to changed market
+demand. We expect these measures to become effective largely
+after fiscal 2017. Overall, we expect a profit margin for our Indus-
+trial Business of 10.5% to 11.5%, compared to 10.8% in fiscal 2016,
+in part due to our ongoing initiative to improve profitability of
+low-margin businesses. We expect SFS, which is reported outside
+Industrial Business, to achieve a return on equity (ROE) within its
+margin range in fiscal 2017 and to keep its profit near the prior-
+year level excluding the positive effect of €92 million, which re-
+sulted from an at-equity investment.
+Capital structure
+Risk management at Siemens builds on a comprehensive, inter-
+active and management-oriented Enterprise Risk Management
+(ERM) approach that is integrated into the organization and that
+addresses both risks and opportunities. Our ERM approach is
+based on the worldwide accepted Enterprise Risk Management -
+Integrated Framework (2004) developed by the Committee of
+Sponsoring Organizations of the Treadway Commission (COSO).
+The framework connects the ERM process with our financial re-
+porting process and our internal control system. It considers a
+company's strategy, the efficiency and effectiveness of its busi-
+ness operations, the reliability of its financial reporting as well
+as compliance with relevant laws and regulations to be equally
+important.
+Combined Management Report
+tor such risks more closely as our business progresses. Our inter-
+nal auditors regularly review the adequacy and effectiveness of
+our risk management system. Accordingly, if deficits are de-
+tected, it is possible to adopt appropriate measures for their elim-
+ination. This coordination of processes and procedures is in-
+tended to help ensure that the Managing Board and the
+Supervisory Board are fully informed about significant risks in a
+timely manner.
+A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
+We have implemented and coordinated a set of risk manage-
+ment and control systems which support us in the early recogni-
+tion of developments that could jeopardize the continuity of our
+business. The most important of these systems include our en-
+terprise-wide processes for strategic planning and management
+reporting. Strategic planning is intended to support us in consid-
+ering potential risks well in advance of major business decisions,
+while management reporting is intended to enable us to moni-
+A.8.2 Risk management
+Overall, the actual development for Siemens and its Segments
+may vary, positively or negatively, from our outlook due to the
+risks and opportunities described below or if our expectations
+and assumptions do not materialize.
+A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
+Our risk management policy stems from a philosophy of pursuing
+sustainable growth and creating economic value while managing
+appropriate risks and opportunities and avoiding inappropriate
+risks. As risk management is an integral part of how we plan and
+execute our business strategies, our risk management policy is
+set by the Managing Board. Our organizational and accountabil-
+ity structure requires each of the respective managements of our
+Industrial Business, SFS, regions and Corporate Units to imple-
+ment risk management programs that are tailored to their spe-
+cific industries and responsibilities, while being consistent with
+the overall policy.
+This outlook assumes stabilization in the market environment
+for our high-margin short-cycle businesses. It further excludes
+charges related to legal and regulatory matters as well as poten-
+tial burdens associated with pending portfolio matters.
+We continue to anticipate headwinds for macroeconomic growth
+and investment sentiment in our markets due to the complex
+geopolitical environment. Therefore, we expect modest growth
+in revenue, net of effects from currency translation and portfolio
+transactions. We further anticipate that orders will exceed reve-
+nue for a book-to-bill ratio above 1. For our Industrial Business,
+we expect a profit margin of 10.5% to 11.5%. We expect basic
+EPS from net income in the range of €6.80 to €7.20, compared
+to €6.74 in fiscal 2016 which included €0.23 from discontinued
+operations.
+A.8.1.4 OVERALL ASSESSMENT
+We aim in general for a capital structure, defined as the ratio of
+industrial net debt to EBITDA, of up to 1.0, and expect to achieve
+this in fiscal 2017.
+The ERM process aims for early identification and evaluation of,
+and response regarding, risks and opportunities that could mate-
+rially affect the achievement of our strategic, operational, finan-
+cial and compliance objectives. The time horizon covered by ERM
+is typically three years. Our ERM is based on a net risk approach,
+addressing risks and opportunities remaining after the execution
+of existing control measures. If risks have already been consid-
+ered in plans, budgets, forecasts or the financial statements (e.g.
+as a provision or risk contingency), they are supposed to be in-
+corporated with their financial impact in the entity's business
+objectives. As a consequence, only additional risks arising from
+the same subject (e.g. deviations from business objectives, dif-
+ferent impact perspectives) should be considered for the ERM. In
+order to provide a comprehensive view on our business activities,
+risks and opportunities are identified in a structured way combin-
+ing elements of both top-down and bottom-up approaches. Risks
+and opportunities are generally reported on a quarterly basis.
+This regular reporting process is complemented by an ad-hoc
+reporting process that aims to escalate critical issues in a timely
+manner. Relevant risks and opportunities are prioritized in terms
+of impact and likelihood, considering different perspectives, in-
+cluding business objectives, reputation and regulatory matters.
+The bottom-up identification and prioritization process is supple-
+mented by workshops with the respective managements of the
+Industrial Business, SFS, regions and Corporate Units. This top-
+down element ensures that potential new risks and opportunities
+are discussed at management level and are included in the sub-
+sequent reporting process, if found to be relevant. Reported risks
+and opportunities are analyzed regarding potential cumulative
+11,553
+7,511
+19,064
+and other liabilities
+11,250
+8,360
+19,610
+Trade payables, liabilities
+to affiliated companies
+The increase in Equity was attributable to net income for the year
+of €3.0 billion and issuance of treasury stock of €0.4 billion in
+conjunction with our share-based compensation program. These
+factors were partly offset by dividends paid in fiscal 2016 (for
+fiscal 2015) of €2.8 billion. In addition, equity was reduced due
+to share buybacks during the year amounting to €0.4 billion. The
+equity ratios at September 30, 2016 and 2015 were 28% and 27%,
+respectively.
+Financial assets went up due to a €0.5 billion increase in loans
+and an increase of €0.3 billion in shares in affiliated companies.
+The decrease in Receivables and other assets was due primarily
+to lower receivables from affiliated companies as a result of intra-
+group financing activities.
+Cash and cash equivalents and marketable securities are sig-
+nificantly affected by the liquidity management of Siemens AG.
+The liquidity management is based on the finance strategy of the
+Siemens Group. Therefore, the change in liquidity of Siemens AG
+was not driven only by business activities of Siemens AG.
+The decrease in Pension and similar commitments resulted
+mainly from a €0.8 billion reduction related to the above-men-
+tioned adjustments of the discount rate and from lower interest
+and service costs, which declined €0.3 billion, partly offset by a
+decrease of €0.4 billion in transfers of pension obligations.
+(78)%
+(30)%
+Other provisions increased due primarily to higher provisions for
+losses from derivative financial transactions, increased tax provi-
+sions and higher provisions for personnel costs, each of which
+increased by €0.3 billion.
+(3)%
+11%
+3%
+62
+887
+with an equity portion
+Advance payments received
+The decrease in Trade payables, liabilities to affiliated compa-
+nies and other liabilities was due primarily to lower liabilities to
+affiliated companies as a result of intra-group financing activities.
+19,368
+19,247
+1%
+Special reserve
+700
+708
+(1)%
+Provisions
+Pensions and similar
+commitments
+Other provisions
+Liabilities
+Liabilities to banks
+14
+619
+A.9.3 Corporate Governance
+statement
+> Target parameter: stock price
+GOVERNANCE STATEMENT PURSUANT TO SECTION 289A OF THE GERMAN
+COMMERCIAL CODE.
+Maximum amounts of compensation
+Share Ownership Guidelines
+Stock-based
+component
+(Stock Awards):
+max. 300% of
+target amount
+Long-term stock-based compensation
+Equity
+Target compensation
+compared to 5 competitors
+Variable compensation (Bonus)
+> 3 targets
+one-third each
+> Variability: 0-200%
+add. ±20% adjustment
+Bonus: 0-200%
+add. +20%
+adjustment
+> Variability: 0-200%
+Remuneration system for Managing Board members
+The system and levels for the Managing Board's remuneration are
+determined and regularly reviewed by the full Supervisory Board,
+based on proposals by the Compensation Committee. The Super-
+visory Board reviews remuneration levels annually to ensure that
+they are appropriate. In this process, the Company's economic
+situation, performance and outlook as well as the tasks and per-
+formance of the individual Managing Board members are taken
+into account. In addition, the Supervisory Board considers the
+common level of remuneration in comparison with peer compa-
+nies and with the compensation structure in place in other areas
+of the Company. It also takes due account of the relationship
+between the Managing Board's remuneration and that of senior
+management and staff, both overall and with regard to its devel-
+opment over time. For this purpose, the Supervisory Board has
+also determined how senior management and the relevant staff
+are to be differentiated. The remuneration system that has been
+in place for Managing Board members since fiscal 2015 was ap-
+proved at the Annual Shareholders' Meeting on January 27, 2015.
+The individual components of compensation - base compensa-
+tion, variable compensation (Bonus) and long-term stock-based
+compensation - are weighted equally, and each comprises about
+one-third of target compensation. This equal weighting is also
+applied to the three target parameters of variable compensation.
+The remuneration system for the Siemens Managing Board is in-
+tended to provide an incentive for successful corporate manage-
+ment with an emphasis on sustainability. Managing Board mem-
+bers are expected to make a long-term commitment to and on
+behalf of the Company and may benefit from any sustained in-
+crease in the Company's value. For this reason, a substantial
+portion of their total remuneration is linked to the long-term
+performance of Siemens stock. Their remuneration is to be com-
+mensurate with the Company's size and economic position. Ex-
+ceptional achievements are to be rewarded adequately, while
+falling short of targets is to result in an appreciable reduction in
+remuneration. Their compensation is also structured so as to be
+attractive in comparison to that of competitors, with a view to
+attracting outstanding managers to the Company and retaining
+them for the long term.
+Deferred income
+Total liabilities and equity
+29,118
+29,752
+385
+69,814
+31,545
+32,494
+(8)%
+(8)%
+367
+71,880
+5%
+(3)%
+(49)%
+36
+Combined Management Report
+A.10 Compensation Report
+This report is based on the recommendations of the German
+Corporate Governance Code (Code) and the requirements of the
+German Commercial Code (Handelsgesetzbuch), the German
+Accounting Standards (Deutsche Rechnungslegungs Standards)
+and the International Financial Reporting Standards (IFRS).
+A.10.1 Remuneration of Managing
+Board members
+A.10.1.1 REMUNERATION SYSTEM
+The Corporate Governance statement pursuant to Section 289a
+of the German Commercial Code is an integral part of the Com-
+bined Management Report and is presented in → C.4.2 CORPORATE
+Liabilities and equity
+Financial assets
+29
+71,880
+93%
+(1)%
+Revenue decreased moderately as declines of €1.3 billion in En-
+ergy Management and €0.2 billion in Power and Gas more than
+offset a sharp increase of €0.9 billion in Wind Power and Renew-
+ables. On a geographical basis, 73% of revenue was generated in
+the Europe, C.I.S., Africa, Middle East region, 18% in the Asia,
+Australia region and 9% in the Americas region. Exports from Ger-
+many accounted for 64% of overall revenue. In fiscal 2016, orders
+for Siemens AG amounted to €28.9 billion. Within Siemens AG,
+the development of revenue, primarily in connection with large
+orders, depends strongly on the completion of contracts.
+Gross profit was lower year-over-year due mainly to declines of
+€0.5 billion in Power and Gas and €0.1 billion in Energy Manage-
+ment.
+Research and development (R&D) expenses as a percentage
+of revenue (R&D intensity) increased by one percentage point
+year-over year, to 10%. On an average basis, we employed 10,100
+people in R&D in fiscal 2016. For additional information see
+→ A.1.1.3 RESEARCH AND DEVELOPMENT.
+Other operating income (expenses), net came in higher year-
+over-year due to a decrease of €0.5 billion in other operating
+expenses, only partly offset by a decline of €0.1 billion in other
+operating income. The increase is explained mainly by factors in
+the prior year. For comparison, fiscal 2015 included, within other
+operating expenses, additions to post-closing provisions in con-
+nection with the disposal of businesses.
+(2,714)
+3,084
+The decrease in Financial income, net was primarily attributable
+to lower income from investments, net which decreased by
+€4.4 billion. Other financial income (expenses), net increased by
+€1.3 billion compared to the prior year.
+-
+-
+The improvement in other financial income (expenses), net re-
+sulted mainly from a €0.8 billion reduction in expenses from accre-
+tion of pension provisions – due to a regulatory change which in-
+creased the weighted average discount rate - and from a €0.7 billion
+decrease in the realized loss related to interest and foreign currency
+derivatives. These positive factors were only partly offset by €0.3
+billion lower gains on the realization of monetary balance sheet
+items denominated in foreign currencies and provisions for risks in
+Combined Management Report
+35
+derivatives, which were €0.2 billion higher. For comparison, fiscal
+2015 included impairments of loan receivables of Unify Holdings
+B.V. and Unify Germany Holdings B.V. amounting to €0.2 billion.
+Income from investments, net declined due to a decrease of
+€2.1 billion in income from profit transfers - in particular from
+Siemens Beteiligungen Inland GmbH, which came in €2.0 billion
+lower and an increase of €0.1 billion from losses from the dis-
+posal of investments. These factors were only partly offset by an
+increase of €0.5 billion from profit distribution - in particular
+from Siemens Beteiligungsverwaltung GmbH & Co. OHG amount-
+ing to €0.9 billion and a decline of €0.2 billion from impair-
+ments on investments. For comparison, fiscal 2015 included a
+gain of €2.8 billion on the disposal of Siemens' stake in BSH.
+3,060
+Unappropriated net income
+(195)
+Result from ordinary activities
+3,158
+5,918
+Income taxes
+(160)
+(300)
+Net income
+2,999
+5,618
+Profit carried forward
+256
+179
+(47)%
+47%
+(47)%
+43%
+Allocation to other
+retained earnings
+The decline in Income taxes resulted from lower income tax ex-
+penses due to the absence of burdens of tax audits from the prior
+year as well as tax refunds that arose from positive appeal deci-
+sions for prior years in fiscal 2016. That was partly offset by changes
+in deferred taxes due primarily to an adjusted discount rate ap-
+plied for the provision for Pensions and similar commitments.
+23%
+(3)%
+A.9.2 Net assets and financial position
+2016
+3,642
+20,359
+Prepaid expenses
+81
+Deferred tax assets
+2,256
+securities
+3,816
+23,308
+83
+2,333
+(3)%
+(3)%
+Active difference
+resulting from offsetting
+35
+Total assets
+69,814
+(5)%
+(13)%
+Cash and cash equivalents,
+(14)%
+19,492
+Sep 30,
+2015
+% Change
+(in millions of €)
+Assets
+Non-current assets
+Intangible and tangible assets
+2,472
+Compensation
+44,611
+47,083
+2,439
+43,688
+46,127
+1%
+2%
+2%
+Current assets
+Receivables and other assets
+16,717
+Statement of Financial Position of Siemens AG in accordance
+with German Commercial Code (condensed)
+overall
+max. 1.7 times
+target compensation
+Base
+finding a consensus with customers while also improving cus-
+tomer relationship management. At the same time, we reduce
+quality problems by proactively addressing supplier issues up front.
+Excellent project execution: By expanding project management
+efforts as well as learning from our mistakes in project execution
+through a formalized lessons learned approach, we see an oppor-
+tunity to continuously reduce non-conformance costs and ensure
+on-time delivery of our projects and solutions. Furthermore, strin-
+gent project risk and opportunity management, time schedule
+management, performance bonuses and highly professional man-
+agement of consortium partners and suppliers all help us to avoid
+liquidated damages and ultimately improve our profit position. In
+addition, improvements of our claim management processes en-
+able us to reduce costs incurred as a result of customer claims by
+Political stabilization of certain critical countries and resil-
+ience of worldwide economic environment: We see an oppor-
+tunity that political stabilization of certain critical countries and
+lifting of sanctions (e.g. Iran) may lead to higher revenue volume
+that was unavailable in past years. Furthermore, a return to more
+robust macroeconomic growth could also lead to additional vol-
+ume and profit for Siemens.
+Continuously developing and implementing initiatives to
+reduce costs, boost sales efforts, adjust capacities, improve
+our processes, realize synergies: In an increasingly competitive
+market environment, a competitive cost structure complements
+the competitive advantage of being innovative. We believe that
+further improvements in our cost position can strengthen our
+global competitive position and secure our market presence
+against emerging and incumbent competitors. For example, we
+expect to create sustainable value from productivity measures in
+connection with our "Vision 2020" concept. Moreover, establish-
+ing a stringent claim management process can help us realize
+opportunities by enforcing our claims on our contract partners
+even more strongly.
+Mergers, acquisitions, equity investments, partnerships di-
+vestments and streamline our portfolio: We constantly monitor
+our current and future markets for opportunities for strategic
+mergers and acquisitions, equity investments or partnerships to
+complement our organic growth. Such activities may help us to
+strengthen our position in our existing markets, provide access to
+new markets or complement our technological portfolio in selected
+areas. Opportunities might also arise from well executed divest-
+ments that further optimize our portfolio while generating gains.
+chains, we have identified several growth fields in which we see
+our greatest long-term potential. We are orienting our resource
+allocation toward these growth fields and have announced con-
+crete measures in this direction. Across all Divisions, Siemens is
+profiting from its undisputed strength in the digital enterprise. For
+example, the company's new cloud based MindSphere platform
+enhances the availability of customers' digital products and sys-
+tems and improves their productivity and efficiency.
+Localizing value chain activities: Localizing certain value chain
+activities, such as procurement, manufacturing, maintenance
+and service in emerging markets, could enable us to reduce costs
+and strengthen our global competitive position, in particular
+compared to competitors based in countries where they can op-
+erate with more favorable cost structures. Moreover, our local
+footprint in many countries might help us to take advantage of a
+possible growth of markets and leverage a shift in markets, re-
+sulting in increased market penetration and market share.
+Success from innovation along electrification, automation
+and digitalization: Innovation is a central part of Siemens "Vision
+2020," an entrepreneurial concept leading Siemens into the
+future in three stages: first we "drive performance," then we
+"strengthen core," and finally we "scale up" to attain our Vision
+2020 goals. We do this by investing significantly in R&D in order
+to develop innovative, sustainable solutions for our customers and
+to simultaneously safeguard our competitiveness. We are an in-
+novative company and invent new technologies that we expect
+will meet future demands arising from the megatrends of demo-
+graphic change, urbanization, climate change and globalization.
+We are granted thousands of new patents every year and contin-
+uously develop new concepts and convincing business models.
+We open up access to new markets and customers through new
+marketing and sales strategies as well as Divisional master plans.
+For example, we established next47, an independent unit de-
+signed to found, partner with and invest in start-ups with innova-
+tive ideas for shaping the future of electrification, automation and
+digitalization, and thereby turn those ideas into viable businesses.
+This will help Siemens create the next generation of path-break-
+ing innovations in such fields as artificial intelligence, decentral-
+ized electrification, autonomous machines, block chain applica-
+tions and connected e-mobility. Siemens is positioned along the
+value chains of electrification, automation and digitalization in
+order to increase future market penetration. Along these value
+A.8.4 Opportunities
+At present, no risks have been identified that either individually
+or in combination could endanger our ability to continue as a
+going concern.
+Even though the assessments of individual risk exposures have
+changed during fiscal 2016 due to developments in the external
+environment, effects of our own mitigation measures and the
+revision of our plans, the overall risk situation for Siemens did not
+change significantly as compared to the prior year.
+The most significant challenges have been mentioned first in
+each of the four categories Strategic, Operations, Financial and
+Compliance. The risks caused by highly competitive environment
+continue to be the most significant as in the prior year.
+A.8.3.5 ASSESSMENT OF THE
+OVERALL RISK SITUATION
+For additional information with respect to specific proceedings, see
+NOTE 21 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Within our Enterprise Risk Management (ERM) we regularly iden-
+tify, evaluate and respond to opportunities that present them-
+selves in our various fields of activity. Below we describe our most
+significant opportunities. Unless otherwise stated, the opportu-
+nities described below relate to all of our segments. The order in
+which the opportunities are presented reflects the currently esti-
+mated relative exposure for Siemens associated with these oppor-
+tunities and thus provides an indication of the opportunities'
+current importance to us. The described opportunities are not
+necessarily the only ones we encounter. In addition, our assess-
+ment of opportunities is subject to change as our Company, our
+markets and technologies are constantly developing. It is also
+possible that opportunities we see today will never materialize.
+Climate change: While climate change is widely considered a
+risk, we consider climate change mitigation an opportunity for
+Siemens. In line with the global agreement in Paris (COP21) which
+entered into force in November 2016. Siemens strives to support
+a trend towards reducing CO2 emissions both in own operations
+as well as for our customers based on technologies from our en-
+vironmental portfolio, such as low-carbon power generation
+from renewable energy sources.
+Assessment of the overall opportunities situation: The most
+significant opportunity for Siemens is "Success from innovation
+along electrification, automation and digitalization" compared to
+"Mergers, acquisitions, equity investments, partnerships and di-
+vestments" as disclosed in our prior year reporting. Even though
+our assessment of individual opportunities has changed during
+fiscal year 2016 due to developments in the external environ-
+ment, our endeavors to profit from them and the revision of our
+plans, the overall opportunity situation did not change signifi-
+cantly compared to the prior year.
+A.8.5 Significant characteristics of
+the accounting-related internal
+control and risk management system
+A.9 Siemens AG
+Combined Management Report
+34
+Our internal audit function systematically evaluates our financial
+reporting integrity, the effectiveness of the control system and
+the risk management system, and the adherence to our compli-
+ance policies. In addition, the Audit Committee is integrated into
+our control system. In particular, it oversees the accounting pro-
+cess and the effectiveness of the control system, the risk manage-
+ment system and the internal audit system. Furthermore, we have
+set up a Disclosure Committee which is responsible for reviewing
+certain financial and non-financial information prior to publica-
+tion. Moreover, we have rules for accounting-related complaints.
+On a quarterly basis, an internal certification process is executed.
+Management of different levels of our organization, supported
+by confirmations of management of entities under their respon-
+sibility, confirms the accuracy of the financial data that has been
+reported to Siemens' corporate headquarters and reports on the
+effectiveness of the related control systems.
+Qualification of employees involved in the accounting process is
+ensured through appropriate selection processes and regular
+training. As a fundamental principle, based on materiality con-
+siderations, the four eyes principle applies and specific proce-
+dures must be adhered to for data authorization. Additional con-
+trol mechanisms include target-performance comparisons and
+analyses of the composition of and changes in individual line
+items, both in the closing data submitted by reporting units and
+in the Consolidated Financial Statements. In line with our infor-
+mation security requirements, accounting-related IT systems
+contain defined access rules protecting them from unauthorized
+access. The manual and system-based control mechanisms re-
+ferred to above generally also apply when reconciling the IFRS
+closing data to the Annual Financial Statements of Siemens AG.
+level. In particular cases, such as valuations relating to post-
+employment benefits, external experts are used. The reported
+closing data is used to prepare the financial statements in the
+consolidation system. The steps necessary to prepare the financial
+statements are subject to both manual and automated controls.
+The base data used in preparing our financial statements consists
+of the closing data reported by the operations of Siemens AG and
+its subsidiaries. The preparation of the closing data of most of our
+entities is supported by an internal shared services organization.
+Furthermore, other accounting activities, such as governance
+and monitoring related activities, are usually bundled on regional
+Our Consolidated Financial Statements are prepared on the basis
+of a centrally issued conceptual framework which primarily con-
+sists of uniform Financial Reporting Guidelines and a chart of
+accounts. For Siemens AG and other companies within the
+Siemens group required to prepare financial statements in accor-
+dance with German Commercial Code, this conceptual frame-
+work is complemented by mandatory regulations specific to the
+German Commercial Code. The need for adjustments in the con-
+ceptual framework due to regulatory changes is analyzed on an
+ongoing basis. Accounting departments are informed quarterly
+about current topics and deadlines from an accounting and clos-
+ing process perspective.
+At the end of each fiscal year, our management performs an eval-
+uation of the effectiveness of the implemented control system,
+both in design and operating effectiveness. We have a standard-
+ized procedure under which necessary controls are defined, doc-
+umented in accordance with uniform standards, and tested reg-
+ularly on their effectiveness. Nevertheless, there are inherent
+limitations on the effectiveness of any control system, and no
+system, including one determined to be effective, may prevent
+or detect all misstatements.
+Our ERM approach is based on COSO's "Enterprise Risk Manage-
+ment - Integrated Framework". As one of the objectives of
+this framework is reliability of a company's financial reporting, it
+includes an accounting-related perspective. Our accounting-
+related internal control system (control system) is based on
+the internationally recognized "Internal Control - Integrated
+Framework" also developed by COSO. The two systems are com-
+plementary.
+33
+Combined Management Report
+The overarching objective of our accounting-related internal con-
+trol and risk management system is to ensure that financial re-
+porting is conducted in a proper manner, such that the Consoli-
+dated Financial Statements and the Combined Management
+Report of Siemens group as well as the Annual Financial State-
+ments of Siemens AG as the parent company are prepared in
+accordance with all relevant regulations.
+The following discussion describes information required pursu-
+ant to Section 289 (5) and Section 315 (2) no. 5 of the German
+Commercial Code (Handelsgesetzbuch) and explanatory report.
+Siemens maintains liability insurance for certain legal risks at lev-
+els our management believes are appropriate and consistent with
+industry practice. The insurance policy, however, does not protect
+Siemens against reputational damage. Moreover, Siemens may
+incur losses relating to legal proceedings beyond the limits, or out-
+side the coverage, of such insurance or exceeding any provisions
+made for legal proceedings related losses. Finally, there can be no
+assurance that Siemens will be able to maintain adequate insur-
+ance coverage on commercially reasonable terms in the future.
+The Annual Financial Statements of Siemens AG have been pre-
+pared in accordance with the rules set out in the German Com-
+mercial Code (Handelsgesetzbuch).
+Some of these legal disputes and proceedings could result in ad-
+verse decisions for Siemens that may have material effects on our
+financial position, the results of operations and/or cash flows.
+Protectionism (incl. Localization): Protectionist trade policies
+and changes in the political and regulatory environment in the
+markets in which we operate, such as import and export controls,
+tariffs and other trade barriers including debarment from certain
+markets and price or exchange controls, could affect our business
+in several national markets; could impact our business, financial
+position and results of operations; and may expose us to penal-
+ties, other sanctions and reputational damage. In addition, the
+uncertainty of the legal environment in some regions could limit
+our ability to enforce our rights and subject us to increasing costs
+related to appropriate compliance programs.
+Examinations by tax authorities and changes in tax regula-
+tions: We operate in nearly all countries of the world and there-
+fore are subject to many different tax regulations. Changes in tax
+law in any of these jurisdictions could result in higher tax ex-
+pense and payments. Furthermore, legislative changes could
+impact our tax receivables and liabilities as well as deferred tax
+assets and deferred tax liabilities. In addition, the uncertain tax
+environment in some regions could limit our ability to enforce
+our rights. As a globally operating organization, we conduct busi-
+ness in countries subject to complex tax rules, which may be
+interpreted in different ways. Future interpretations or develop-
+ments of tax regimes may affect our business, financial condi-
+tion and results of operations. We are regularly examined by tax
+authorities in various jurisdictions and we continuously identify
+and assess resulting risks.
+Risks from pension obligations: The funded status of our pen-
+sion plans may be affected by change in actuarial assumptions,
+including the discount rate, as well as movements in financial
+markets or a change in the mix of assets in our investment port-
+folio. A significant increase in the underfunding may have a neg-
+ative effect on our capital structure and rating, and thus may
+tighten refinancing options and increase costs. In order to com-
+ply with local pension regulations in selected foreign countries,
+we may face a risk of increasing cash outflows to reduce an
+underfunding of our pension plans in these countries.
+Credit Risks: We provide our customers with various forms of
+direct and indirect financing of orders and projects. SFS in partic-
+ular bears credit risks due to its financing activities. In part, we
+take a security interest in the assets we finance, or we receive
+additional collateral. Our business, financial condition and results
+of operations may be adversely affected if the credit quality of
+our customers deteriorates or if they default on their payment
+obligation to us, if the value of the assets in which we have taken
+a security interest or additional collateral declines, or if the proj-
+ects in which we invest are unsuccessful. Positive market values
+from derivatives and deposits with banks induce credit risk
+against these banks. We monitor these market value develop-
+ments very closely. A default by a major trading partner may have
+negative impact on our financial position and the results of finan-
+cial operations.
+Liquidity and financing risks: Political and economic develop-
+ments in the EU as well as the ongoing euro zone sovereign debt
+crisis continue to influence global capital markets. Our treasury
+and financing activities could face adverse deposit and/or financ-
+ing conditions from negative developments related to financial
+markets, such as (1) limited availability of funds (particularly U.S.
+dollar funds) and hedging instruments; (2) an updated evalua-
+tion of our solvency, particularly from rating agencies; (3) nega-
+tive interest rates; and (4) impacts arising from more restrictive
+regulation of the financial sector, central bank policy, or financial
+instruments. Widening credit spreads due to uncertainty and risk
+aversion in the financial markets might lead to adverse changes
+of fair market values of our financial assets, in particular our de-
+rivative financial instruments. Negative developments could also
+further increase the costs for buying protection against credit risks
+due to a potential increase in counterparty risks. Siemens reduces
+funding risks through diversification into different funding instru-
+ments, currencies, markets and investor groups. Liquidity risks are
+mitigated by depositing cash into different categories of instru-
+ments and with a range of counterparties of investment grade
+credit quality; the associated counterparty risks are centrally and
+closely monitored (including risks resulting from derivatives).
+significant effects on our business, financial condition and results
+of operations.
+29
+For further information on post-employment benefits, derivative
+financial instruments, hedging activities, financial risk manage-
+ment and measurements, see → NOTE 16, 23 AND 24 in → B.6 NOTES
+Combined Management Report
+A.8.3.3 FINANCIAL RISKS
+Interruption of the supply chain: The financial performance of
+our Industrial Business depends on reliable and effective supply
+chain management for components, sub-assemblies and materi-
+als. Capacity constraints and supply shortages resulting from
+ineffective supply chain management may lead to delays and
+additional cost. We rely on third parties to supply us with parts,
+components and services. Using third parties to manufacture,
+assemble and test our products reduces our control over manu-
+facturing yields, quality assurance, product delivery schedules
+and costs. Although we work closely with our suppliers to avoid
+supply-related problems, there can be no assurance that we will
+not encounter supply problems in the future. Shortages and de-
+lays could materially harm our business. Unanticipated increases
+in the price of components or raw materials due to market short-
+ages or other reasons could also adversely affect performance.
+Furthermore, we may be exposed to the risk of delays and inter-
+ruptions in the supply chain as a consequence of catastrophic
+events, particularly if we are unable to identify alternative sources
+of supply or means of transportation in a timely manner or at all.
+Besides other measures, we mitigate fluctuation in the global raw
+material markets with various hedging instruments.
+tense in the industries and regions in which our businesses oper-
+ate. We have ongoing demand for highly skilled employees. Our
+future success depends in part on our continued ability to hire,
+integrate, develop and retain engineers and other qualified per-
+sonnel. We address this risk for example with structured succes-
+sion planning, employer branding, retention and career manage-
+ment. Furthermore the company is strengthening the capabilities
+and skills of our Talent Acquisition teams and has defined a strat-
+egy of pro-active search for people with the required skills in our
+respective industries and markets.
+Shortage of Skilled Personnel: Competition for highly qualified
+personnel (e.g. specialists, experts, "digital" talents) remains in-
+Cost overruns or additional payment obligations related to
+the management of our long-term, fixed-price or turnkey proj-
+ects: A number of our industrial businesses conduct activities,
+especially large projects, under long-term contracts that are
+awarded on a competitive bidding basis. Such contracts typically
+arise in Power and Gas, Wind Power and Renewables, Mobility,
+and parts of Energy Management and Process Industries and
+Drives. Some of these contracts are inherently risky because we
+may assume substantially all of the risks associated with complet-
+ing a project and meeting post-completion warranty obligations.
+For example, we may face the risk that we must satisfy technical
+requirements of a project even though we have not gained expe-
+rience with those requirements before we win the project. The
+profit margins realized on fixed-priced contracts may vary from
+original estimates as a result of changes in costs and productivity
+over the contract's term. We sometimes bear the risk of unantic-
+ipated project modifications, shortage of key personnel, quality
+problems, financial difficulties of our customers and/or signifi-
+cant partners, cost overruns or contractual penalties caused by
+unexpected technological problems, unforeseen developments
+at the project sites, unforeseen changes or difficulties in the reg-
+ulatory or political environment, performance problems with our
+suppliers, subcontractors and consortium partners or other logis-
+tical difficulties. Some of our multi-year contracts also contain
+demanding installation and maintenance requirements in addi-
+tion to other performance criteria relating to timing, unit cost
+and compliance with government regulations requirements,
+which, if not satisfied, could subject us to substantial contractual
+penalties, damages, non-payment and contract termination.
+There can be no assurance that contracts and projects, in partic-
+ular those with long-term duration and fixed-price calculation,
+can be completed profitably. To tackle those risks we imple-
+mented a global project management organization to systemat-
+ically improve the know-how of the project management person-
+nel. For very complex projects we conduct dedicated risk
+assessments in very early stages of the sales phase before we
+decide to hand over a binding offer to our customer.
+manufacturing facilities, and the streamlining of product port-
+folios, are also part of these cost-reduction efforts. These mea-
+sures may not be implemented as planned, may turn out to be
+less effective than anticipated, may become effective later than
+estimated or may not become effective at all. Any future contri-
+bution of these measures to our profitability will be influenced
+by the actual savings achieved and by our ability to sustain them.
+Furthermore, a delay in critical R&D projects could lead to nega-
+tive impacts in running projects. We constantly control and mon-
+itor the progress of these projects and initiatives using standard-
+ized controlling and milestone tracking approaches.
+Market price risks: We are exposed to fluctuations in exchange
+rates, especially between the U.S. dollar and the euro, because a
+high percentage of our business volume is conducted in U.S. dol-
+lar and as exports from Europe. In addition, we are exposed to
+currency effects involving the currencies of emerging markets, in
+particular the Chinese yuan. A strengthening of the euro (partic-
+ularly against the U.S. dollar) may change our competitive posi-
+tion, as many of our competitors may benefit from having a
+substantial portion of their costs based in weaker currencies,
+enabling them to offer their products at lower prices. As a result,
+a strong euro in relation to the U.S. dollar and other currencies
+could have an adverse impact on our results of operations. We
+are also exposed to fluctuations in interest rates. Negative devel-
+opments in the financial markets and changes in the central bank
+policies may negatively impact our results. Certain currency risks
+as well as interest rate risks are hedged using derivative financial
+instruments. Depending on the development of foreign cur-
+rency exchange and interest rates, hedging activities could have
+TO CONSOLIDATED FINANCIAL STATEMENTS.
+A.8.3.4 COMPLIANCE RISKS
+Regulatory risks and potential sanctions: As a globally operat-
+ing organization, we conduct business with customers in coun-
+tries which are subject to export control regulations, embargoes,
+economic sanctions or other forms of trade restrictions (hereaf-
+ter referred to as "sanctions") imposed by the U.S., the European
+Union or other countries or organizations. New or expanded
+sanctions in countries in which we do business may result in a
+curtailment of our existing business in such countries or indirectly
+in other countries. We are also aware of initiatives by institutional
+investors, such as pension funds or insurance companies, to
+adopt or consider adopting policies prohibiting investment in and
+transactions with, or requiring divestment of interests in entities
+doing business with, countries identified as state sponsors of ter-
+rorism by the U.S. Department of State. It is possible that such
+initiatives may result in us being unable to gain or retain inves-
+tors, customers or suppliers. In addition, the termination of our
+activities in sanctioned countries may expose us to customer
+claims and other actions. Our reputation could also suffer due to
+our activities with counterparties in or affiliated with these coun-
+tries. Due to the political agreement based on the Joint Compre-
+hensive Plan of Action (JCPOA) regarding the Iranian nuclear
+program, Siemens has revised its group-wide policies to allow
+new business activities with customers or end customers in Iran
+that are not designated on the EU or U.S. sanctions lists, provided
+that these activities do not breach the EU sanctions regulations
+or the U.S. Secondary Sanctions (if applicable).
+losses may have an adverse effect on our business, financial con-
+dition and results of our operations.
+32
+31
+Combined Management Report
+In addition, while we have procedures in place to ensure compli-
+ance with applicable governmental regulations in the conduct of
+our business operations, it cannot be excluded that violations of
+applicable governmental regulations may be caused either by us
+or by third parties that we contract with, including suppliers or
+service providers, whose activities may be attributed to us. Any
+such violations expose us to the risk of liability, reputational dam-
+age or loss of licenses or permits that are important to our busi-
+ness operations. In particular, we could also face liability for
+damage or remediation for environmental contamination at
+the facilities we design or operate. With regard to certain envi-
+ronmental risks, we maintain liability insurance at levels that
+our management believes are appropriate and consistent with
+industry practice. We may incur environmental losses beyond the
+limits, or outside the coverage, of such insurance, and such
+Environmental, health & safety and other governmental reg-
+ulations: Some of the industries in which we operate are highly
+regulated. Current and future environmental, health & safety and
+other governmental regulations or changes thereto may require
+us to change the way we run our operations and could result in
+significant increases in our operating or production costs. Fur-
+thermore, we see the risk of potential environment, health & safety
+incidents as well as potential non-compliance with environment,
+health & safety regulations affecting Siemens and our contractors
+or sub-suppliers, resulting in e.g. serious injuries, penalties, loss
+of reputation and internal or external investigations.
+Changes of regulations, laws and policies: As a diversified com-
+pany with global businesses we are exposed to various product-
+and country-related regulations, laws and policies influencing our
+processes. We exercise our duty within the supply chain, as our
+customers request transparency in the supply chain and as the
+obligation to do so already forms an element of customer con-
+tracts. If we are unable to achieve sufficient confidence through-
+out our supply chain, or if any risks associated with these kinds
+of regulations, laws and policies were to materialize, our reputa-
+tion could also be adversely affected. We continuously monitor
+the political and regulatory landscape in all our key markets to
+anticipate potential problem areas, so that we are able to quickly
+adjust our business activities accordingly upon any change in
+conditions.
+Besides other measures, Siemens established a global compliance
+organization which conducts among others compliance risk miti-
+gation processes such as Compliance Risk Assessments, and which
+has been reviewed by external compliance experts.
+ment's attention and resources from other issues facing our busi-
+ness. Furthermore, we might be exposed to compliance risks in
+connection with recently acquired operations that are in the
+ongoing process of integration.
+In addition, future developments in ongoing and potential future
+investigations, such as responding to the requests of governmen-
+tal authorities and cooperating with them, could divert manage-
+A considerable part of our business activities involve govern-
+ments and companies with public shareholders. We also partici-
+pate in a number of projects funded by government agencies and
+intergovernmental and supranational organizations, such as mul-
+tilateral development banks. Ongoing or potential future investi-
+gations into allegations of corruption, of antitrust violations or of
+other violations of law could also impair relationships with such
+business partners or could result in the exclusion of public con-
+tracts. Such investigations may also adversely affect existing pri-
+vate business relationships and our ability to pursue potentially
+important strategic projects and transactions, such as strategic
+alliances, joint ventures or other business cooperation, or could
+result in the cancellation of certain of our existing contracts.
+Moreover, third parties, including our competitors, could initiate
+significant litigation.
+Current and future investigations regarding allegations of
+corruption, of antitrust violations and of other violations of
+law: Proceedings against us regarding allegations of corruption,
+of antitrust violations and of other violations of law may lead to
+criminal and civil fines as well as penalties, sanctions, injunctions
+against future conduct, profit disgorgements, disqualifications
+from directly and indirectly engaging in certain types of business,
+the loss of business licenses or permits or other restrictions and
+legal consequences. Accordingly, we may among other things be
+required to comply with potential obligations and liabilities
+arising in connection with such investigations and proceedings,
+including potential tax penalties. Moreover, any findings related
+to public corruption that are not covered by the 2008 and
+2009 corruption charge settlements, which we concluded with
+American and German authorities, may endanger our business
+with government agencies and intergovernmental and supra-
+national organizations. Monitors could again be appointed to
+review future business practices and we may otherwise be
+required to further modify our business practices and our com-
+pliance program.
+uct, economic and governmental instability, the potential for
+nationalization of private assets and the imposition of exchange
+controls. Asian markets in particular are important for our long-
+term growth strategy, and our sizeable activities in China operate
+under a legal system that is still developing and is subject to
+change. Our long-term growth strategy could be limited by gov-
+ernments preferentially supporting local competitors. With our
+dedicated regional organizations we tackle these risks by con-
+stantly monitoring the latest trends and defining our response
+strategies which include an ongoing evaluation of our localiza-
+tion approach.
+30 Combined Management Report
+Emerging market operations involve various risks, including civil
+unrest, health concerns, cultural differences such as employ-
+ment and business practices, volatility in gross domestic prod-
+Current or future litigation: Siemens is and will be in the course
+of its normal business operations involved in numerous legal dis-
+putes and proceedings in various jurisdictions. These legal dis-
+putes and proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages,
+equitable remedies or criminal or civil sanctions, fines or dis-
+gorgement of profit. In individual cases this may also lead to for-
+mal or informal exclusion from tenders or the revocation or loss
+of business licenses or permits. In addition, further legal disputes
+and proceedings may be commenced or the scope of pending
+legal disputes and proceedings may be expanded. Asserted
+claims are generally subject to interest rates.
+Siemens AG is the parent company of the Siemens Group. Results
+for Siemens AG are significantly influenced by directly or indi-
+rectly owned subsidiaries and investments. The business devel-
+opment of Siemens AG is fundamentally subject to the same risks
+and opportunities as the Siemens Group. Due to the interrela-
+tions between Siemens AG and its subsidiaries and the relative
+size of Siemens AG within the Group, the outlook of the Group
+also largely reflects our expectations for Siemens AG. Therefore,
+the foregoing explanations for the Siemens Group apply also for
+Siemens AG. We expect that income from investments will sig-
+nificantly influence the profit of Siemens AG.
+Combined Management Report
+As of September 30, 2016, the number of employees was 94,363.
+Changes in the share price are measured on the basis of a twelve-
+month reference period (compensation year) over three years
+(performance period), while Stock Awards are restricted for a
+period of four years. When this restriction period expires, the
+Supervisory Board determines how much better or worse
+Siemens stock has performed relative to the stock of its compet-
+itors. This determination yields a target achievement of between
+Long-term stock-based compensation is linked to the performance
+of Siemens stock compared to its competitors. The Supervisory
+Board will decide on a target system (target value for 100% and
+target line) for the performance of Siemens stock relative to the
+stock of - at present – five competitors (ABB, General Electric,
+Rockwell, Schneider Electric and Toshiba). If significant changes
+occur among these competitors during the period under consid-
+eration, the Supervisory Board may take these changes into ac-
+count, as appropriate, in determining the values for comparison
+and/or calculating the relevant stock prices of those competitors.
+-
+In the event of 100% target achievement, the annual target
+amount for the monetary value of the Stock Awards commitment
+is €2,120,000 for the President and CEO (effective October 1,
+2015). For the CFO and for those members of the Managing
+Board who are responsible for Divisions (including Healthineers)
+it is €1,080,000. For the other member of the Managing Board,
+it is €1,040,000. Since fiscal 2015, the Supervisory Board has had
+the option of increasing the target amount for each member of
+the Managing Board, on an individual basis, by as much as 75%
+for one fiscal year at a time. This option enables the Supervisory
+Board to take account of each Managing Board member's indi-
+vidual accomplishments and experience as well as the scope and
+demands of his or her position.
+Long-term stock-based compensation consists of a grant of for-
+feitable stock commitments (Stock Awards) at the beginning of
+the fiscal year. Beneficiaries receive one free share of Siemens
+stock per Stock Award after an approximately four-year restriction
+period and subject to target achievement. If the employment
+agreement begins during the fiscal year, an equivalent number
+of Siemens Phantom Stock Awards will be granted instead of
+Stock Awards. In lieu of a transfer of shares, only a cash equiva-
+lent is given at the end of the restriction period for Siemens Phan-
+tom Stock Awards. Beyond that, the same provisions agreed upon
+for Siemens Stock Awards apply. In the event of extraordinary
+unforeseen developments that impact the share price, the Super-
+visory Board may decide to reduce the number of promised Stock
+Awards retroactively, or it may decide that in lieu of a transfer of
+Siemens stock only a cash settlement in a defined and limited
+amount will be paid, or may decide to postpone transfers of
+Siemens stock for payable Stock Awards until the developments
+have ceased to impact the share price.
+Long-term stock-based compensation
+At its duty-bound discretion, the Supervisory Board may revise
+the amount resulting from target achievement upward or down-
+ward by as much as 20%; the adjusted amount of the Bonus paid
+can thus be as much as 240% of the target amount. In choosing
+the factors to be considered in deciding on possible revisions of
+the Bonus payouts (±20%), the Supervisory Board takes account
+of incentives for sustainable corporate management. Decisions
+to make discretionary adjustments may take factors such as the
+results of an employee survey or a customer satisfaction survey
+into account as well as the Company's economic situation. The
+revision option may also be exercised in recognition of Managing
+Board members' individual achievements. The Bonus is paid en-
+tirely in cash.
+For 100% target achievement (target amount), the amount of the
+Bonus equals the amount of base compensation. The Bonus is
+subject to a ceiling (cap) of 200%. If targets are substantially
+missed, variable compensation may not be paid at all (0%).
+Variable compensation (Bonus) is based on the Company's busi-
+ness performance in the past fiscal year. The Bonus depends on
+an equal one-third weighting of target achievement of the target
+parameters return on capital employed, earnings per share and
+individual targets. To achieve a consistent target system Compa-
+ny-wide, corresponding targets - in addition to other factors -
+also apply to senior managers.
+Performance-based components
+Variable compensation (Bonus)
+Fringe benefits include the costs, or the cash equivalent, of non-
+monetary benefits and other perquisites, such as the provision of
+a company car, contributions toward the cost of insurance, the
+reimbursement of expenses for legal advice and tax advice, ac-
+commodation and moving expenses, including a gross-up
+for
+any
+taxes due in this regard, currency adjustment payments and costs
+relating to preventive medical examinations.
+Fringe benefits
+Base compensation is paid as a monthly salary. Since October 1,
+2015, the base compensation of President and CEO Joe Kaeser
+has amounted to €2,034,000 per year. The base compensation
+of the CFO and of those members of the Managing Board who
+are responsible for Divisions (including Healthineers) has been
+€1,042,800 per year. For the other member of the Managing
+Board, it has been €988,800 per year.
+Non-performance-based components
+Base compensation
+In fiscal 2016, the Managing Board's remuneration system had
+the following components:
+38
+37
+compensation
+Performance-based component with deferred payout
+Non-performance-based component
+Base
+compensation
+Performance-based component
+Base
+Combined Management Report
+compensation
+We intend to continue providing an attractive return to share-
+holders. Therefore, we intend to propose a dividend whose distri-
+bution volume is within a dividend payout range of 40% to 60%
+of net income of the Siemens Group, which we may adjust for this
+purpose to exclude selected exceptional non-cash effects.
+President
+and CEO:
+3 times base
+compensation
+Managing
+Board
+member:
+2 times
+base com-
+pensation
+Combined Management Report
+יו
+6,122
+Obligation to hold shares during term of office on the Managing Board
+ments 3,732 (prior year 8,142)
+2%
+(6)%
+6,293
+24%
+23%
+as percentage of revenue
+5,945
+Gross profit
+Cost of Sales
+Research and
+Revenue
+% Change
+25,763 26,454
+(19,818) (20,161)
+Fiscal year
+2015
+2016
+Statement of Income of Siemens AG in accordance
+with German Commercial Code (condensed)
+A.9.1 Results of operations
+3,092
+(in millions of €)
+development expenses
+(3)%
+(2,454)
+thereof Income from invest-
+Financial income, net
+n/a
+(270)
+134
+Other operating income
+(expenses), net
+(3,558) (3,810)
+administrative expenses
+Selling and general
+(2)%
+(2,417)
+7%
+1,410
+0
+903
+0
+0
+177
+2,310
+0
+0
+397
+0
+465
+0
+0
+0
+0
+1,407
+0
+0
+0
+0
+0
+0
+67
+1,370
+0
+0
+1,376
+1,043
+832
+CFO
+2016
+2015
+0
+Managing Board member
+2016
+2015
+2016
+2015
+989
+626
+1,043
+1,010
+1,010
+39
+25
+78
+78
+61
+67
+1,027
+651
+1,121
+1,088
+1,104
+1,078
+1,282
+1,317
+0
+The defined benefit obligation (DBO) of all pension commitments
+to former members of the Managing Board and their surviving
+dependents as of September 30, 2016, amounted to €216,3 (2015:
+€228.3) million. This figure is included in → NOTE 16 in → B.6
+0
+29,412
+Prof. Dr. Siegfried Russwurm
+35,437
+82,892
+14,286
+25,273
+8,666
+20,043
+78,633
+Dr. Ralf P. Thomas
+Total
+5,030
+136,423
+13,757
+51,124
+4,347
+3,813
+5,030
+57,250
+463,708
+113,230
+82,903
+32,212
+90,241
+508,005
+1 The weighted average fair value as of the grant date for
+fiscal 2016 was €76.95 per granted share.
+2 For one half of the Stock Awards 2011, target attainment
+depended on the EPS value for the past three fiscal years
+and amounted to 114%. For the other half, target attainment
+14,286
+was linked to the performance of Siemens stock compared
+to defined competitors during the four-year vesting period.
+It amounted to 0%. Siemens Stock Awards 2011 that had
+already been granted were thus forfeited without replace-
+ment in accordance with the plan rules.
+15,655
+75,263
+28,043
+25,273
+8,666
+25,631
+138,923
+Dr. Roland Busch
+27,122
+72,383
+14,286
+13,773
+5,330
+19,425
+Janina Kugel
+75,263
+576
+38,975
+14,286
+576
+53,261
+Klaus Helmrich
+27,233
+73,254
+14,286
+14,237
+5,737
+19,536
+Lisa Davis
+129,425
+3 Amounts also include stock commitments (Stock Awards)
+granted in November 2015 for fiscal 2016. These amounts
+may further include stock commitments received as com-
+pensation by the Managing Board member before joining
+the Managing Board.
+the end of the vesting period. At the beginning of fiscal 2016, the
+following members of the Managing Board had entitlements to
+matching shares, which they had acquired before joining the
+Managing Board: Dr. Ralf P. Thomas, 780 shares and Janina Kugel,
+three shares. In fiscal 2016, no entitlements to matching shares
+were acquired. In fiscal 2016, the following entitlements to
+matching shares were due: 780 shares, Dr. Ralf P. Thomas. During
+fiscal 2016, no entitlements to matching shares were forfeited.
+Entitlements to matching shares at the end of fiscal 2016 show
+the following balance: Janina Kugel, three shares with a fair value
+of €174.
+200%
+1,967,900
+21,861
+324%
+3,190,849
+35,446
+200%
+1,934,150
+21,486
+350%
+3,388,083
+37,637
+104,110
+200%
+21,861
+747%
+7,354,814
+81,702
+10,526,888
+116,940
+23,305,728
+258,895
+1 The amount of the obligation is based on the average base
+compensation for the four years prior to the respective dates
+of proof.
+2 Based on the average Xetra opening price of €90.02 for the
+fourth quarter of 2015 (October-December).
+48 Combined Management Report
+3 As of March 11, 2016 (date of proof), including Bonus
+Awards.
+1,967,900
+Shares from the Share Matching Plan
+Fiscal 2011 was the last year in which Managing Board members
+were entitled to participate in the Siemens Share Matching Plan.
+Under the plan, they were entitled to invest up to 50% of the
+annual gross amount of their variable cash compensation, as de-
+termined for fiscal 2010, in Siemens shares. After the expiration
+of a vesting period of approximately three years, plan partici-
+pants are entitled to receive one free matching share of Siemens
+stock for every three Siemens shares acquired and continuously
+held under the plan, provided the participants were employed
+without interruption at Siemens AG or a Siemens company until
+9,371,982
+51,732
+Combined Management Report
+47
+Share Ownership Guidelines
+The deadlines by which the individual Managing Board members
+must provide first-time proof of compliance with the Siemens
+Share Ownership Guidelines vary from member to member, de-
+pending on when he or she was appointed to the Managing
+Board. The following table shows the number of Siemens shares
+that were held by Managing Board members in office at Septem-
+ber 30, 2016, as of the March 2016 deadline for proving compli-
+ance with the Share Ownership Guidelines as well as the number
+that are to be held permanently with a view to future deadlines.
+Obligations under Share Ownership Guidelines
+Required
+Proven
+(Amounts in number of units or €)
+Percentage
+of base
+compensation¹
+Value¹
+Number
+of shares²
+604%
+Percentage
+of base
+compensation¹
+Value²
+of shares 3
+Managing Board members serving
+as of September 30, 2016, and required
+to show proof as of March 11, 2016
+Joe Kaeser
+Dr. Roland Busch
+Klaus Helmrich
+Prof. Dr. Siegfried Russwurm
+Total
+300%
+4,656,938
+Number
+0
+41,025
+serving as of September 30, 2016
+Joe Kaeser
+Dr. Roland Busch
+Lisa Davis
+Klaus Helmrich
+Janina Kugel
+Prof. Dr. Siegfried Russwurm
+Dr. Ralf P. Thomas
+Total¹
+2016
+Total
+contributions² for
+2015
+Defined benefit obligation³ for all pension
+commitments excluding deferred compensation4
+2016
+serving as of September 30, 2016
+2015
+1,051,680
+10,391,542
+8,056,163
+583,968
+565,824
+4,342,427
+3,243,101
+583,968
+565,824
+3,817,196
+3,126,396
+583,968
+1,139,040
+565,824
+Managing Board members
+The following table shows individualized details of the contribu-
+tions (allocations) under the BSAV for fiscal 2016 as well as the
+defined benefit obligations for pension commitments.
+177
+0
+0
+97
+0
+20
+2,309
+1,482
+4,845
+2,465
+2,958
+0
+2,665
+(Amounts in €)
+530
+2,839
+602
+5,447
+603
+3,068
+603
+3,561
+604
+3,269
+amounted to 114%. For the other half, target attainment
+was linked to the performance of Siemens stock compared
+to defined competitors during the four-year vesting period.
+It amounted to 0%. Siemens Stock Awards 2011 that had
+already been granted were thus forfeited without replace-
+ment in accordance with the plan rules.
+4 One half of the Bonus for fiscal 2011 was granted in the
+form of non-forfeitable awards of Siemens stock (Bonus
+Awards). After the expiration of the four-year waiting
+period in November 2015, the beneficiaries received one
+share of Siemens stock for each Bonus Award.
+5 "Other" includes the adjustment of the Siemens Stock
+Awards 2011 and Bonus Awards 2011 (transfer in Novem-
+ber 2015) in accordance with Section 23 and Section 125 of
+the German Transformation Act (Umwandlungsgesetz)
+due to the spin-off of OSRAM.
+Combined Management Report
+45
+Pension benefit commitments
+For fiscal 2016, the members of the Managing Board were granted
+contributions under the BSAV totaling €4.6 million (2015: €4.8 mil-
+lion), based on a resolution of the Supervisory Board dated No-
+vember 9, 2016. Of this amount, €0.1 million (2015: €0.1 million)
+related to the funding of pension commitments earned prior to
+transfer to the BSAV.
+The contributions under the BSAV are added to the personal pen-
+sion accounts each January, following the close of the fiscal year.
+Until a beneficiary's date of retirement, his or her pension ac-
+count is credited with an annual interest payment (guaranteed
+interest) on January 1 of each year. The interest rate is currently
+1.25%.
+103
+1,586
+Joe Kaeser
+4,607,800
+553,728
+Balance at beginning of
+fiscal 2016
+Granted
+during
+fiscal year¹
+Non-
+forfeitable
+commitments
+Forfeitable
+commitments
+of Bonus
+Awards
+of Stock
+Awards
+Forfeitable
+commitments
+of Stock
+Vested and
+fulfilled
+during
+fiscal year
+The following table shows the changes in the balance of the
+stock commitments held by Managing Board members in fiscal
+2016:
+Commitments
+Commitments
+of Bonus
+Awards and
+Stock Awards
+of Stock
+Awards
+Non-
+forfeitable
+commitments
+of Bonus
+Awards
+Balance at end of
+fiscal 20163
+Forfeitable
+commitments
+of Stock
+Awards
+(Amounts in number of units)
+Awards
+Managing Board members
+Forfeited
+during
+fiscal year²
+3,522,681
+Stock commitments
+STOCK-BASED COMPENSATION INSTRUMENTS
+350,560
+1,084,971
+438,713
+583,968
+565,824
+6,083,534
+4,824,749
+583,968
+4,612,608
+565,824
+4,231,360
+4,297,199
+3,225,678
+IN FISCAL 2016
+34,624,669
+1 Compared to the amount presented in the 2015 Compensa-
+tion Report, the total figure for 2015 does not include the
+contribution of €565,824 for former Managing Board
+member Prof. Dr. Hermann Requardt or this defined benefit
+obligation of €6,977,620.
+2 The expenses (service cost) recognized in accordance with
+the IFRS in fiscal 2016 for Managing Board members' entitle-
+ments under the BSAV in fiscal 2016 amounted to
+€4,615,543 (2015: €4,804,639).
+3 The defined benefit obligations reflect one-time special
+contributions to the BSAV for new appointments from
+outside the Company and for special contributions in
+connection with departures from the Managing Board,
+amounting to €0 (2015: €279,552).
+4 Deferred compensation totals €3,829,397 (2015: €4,947,717),
+including €3,428,243 for Joe Kaeser (2015: €3,207,002),
+€343,953 for Klaus Helmrich (2015: €305,023) and €57,201
+for Dr. Ralf P. Thomas (2015: €49,794) as well as €0 (2015:
+€1,385,898) for former Managing Board member
+Prof. Dr. Hermann Requardt.
+In fiscal 2016, former members of the Managing Board and their
+surviving dependents received emoluments within the meaning
+of Section 314 para. 1 No. 6 b of the German Commercial Code
+totaling €52.3 million (2015: €30.5 million). This figure includes
+the lump-sum payments of the pension benefit balance of the
+former Managing Board members Prof. Dr. Hermann Requardt
+and Peter Y. Solmssen. In the case of Mr. Solmssen, the special
+contribution to the pension benefit balance allocated in Janu-
+ary 2009 in the amount of €10.518 million takes effect. This
+special contribution was promised at appointment to compen-
+sate him for short-term and long-term pecuniary disadvantages
+with his former employer. The figure also includes the agreed-
+upon cash settlement for Stock Awards granted in the past to
+Prof. Dr. Hermann Requardt.
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Other
+No loans or advances from the Company are provided to mem-
+bers of the Managing Board.
+46
+Combined Management Report
+A.10.1.3 ADDITIONAL INFORMATION ON
+26,437,481
+Managing Board member
+2016
+0
+55
+1,063
+1,098
+1,098
+1,098
+227
+1,238
+683
+1,726
+1,043 1,043
+683
+1,726
+2016
+2016
+(min) (max)
+1,043
+683
+1,726
+2016
+2016
+2015
+2016 (min)
+(max)
+1,010
+42
+1,052
+1,043
+1,043
+1,043
+48
+48
+48
+1,091
+1,091
+55
+55
+1,010
+1,043
+Combined Management Report
+Joe Kaeser
+President and CEO
+Dr. Roland Busch
+Managing Board member
+Lisa Davis'
+Managing Board member
+Klaus Helmrich
+Managing Board member
+2015
+2016
+2016
+(min) (max)
+1,091
+2016
+2016
+2016
+2016
+(min) (max)
+2015
+2016
+1,878
+102
+2,034
+102
+1,980
+2,034 2,034
+102
+102
+2,136 2,136 2,136
+1,010
+53
+1,043
+1,043
+2015
+1,878
+2,034
+0
+1,700
+5,984
+1,099
+3,868
+611
+576
+3,857 4,443
+0 3,240
+1,726 5,382
+576
+576
+2,301 5,957
+998
+1,099
+0
+3,240
+3,061
+3,233
+1,091
+3,843
+5,382
+602
+602
+602
+3,664 3,835
+1,693
+5,984
+2,683 2,773
+6,535 7,066
+1,444
+1,387
+3,505 3,584
+1,477 1,387
+3,713 4,212
+604
+€105,227), Barbara Kux - €42,052 (2015: €105,227), Peter
+Löscher - €103,403 (2015: €230,387), Prof. Dr. Hermann
+Requardt - €5,624 (2015: €1,107,522), Peter Y. Solmssen -
+€35,857 (2015: €141,258), and Dr. Michael Süß - €248
+(2015: €28,666). In fiscal 2016, the development of the
+OSRAM share price lead to a respective adjustment of the
+OSRAM cash compensation and thus to earnings in the
+amount of €301,027. Especially for former Managing
+Board members those earnings are evident, since they
+were set off against the usual liabilities arising from other
+share based payments and with respect to former Manag-
+ing Board members, no essential amount of accruals has
+been built up for the remaining tranches.
+3,675
+603
+4,882
+1,010
+1,043
+0
+2,503
+1,010
+1,043
+0
+2,503
+1,010 1,043
+0
+603
+2,503
+0 6,360
+5,729 6,328 2,136 10,520
+1,096 1,101 1,101 1,101
+6,825 7,428 3,236 11,620
+998
+1,099
+0
+3,240
+3,071
+3,240
+1,098
+5,382
+998
+3,246
+603
+1,871 2,158
+1,376 1,370
+3,427 3,560
+3 The expenses recognized for stock-based compensation
+for members of the Managing Board in accordance with
+the IFRS in fiscal 2016 and fiscal 2015 amounted to
+€8,294,921 and €8,109,155, respectively. The following
+amounts pertained to the members of the Managing
+Board in fiscal 2016: Joe Kaeser €2,378,584 (2015:
+€2,003,783), Dr. Roland Busch €1,283,779 (2015:
+€1,129,224), Lisa Davis €698,432 (2015: €284,928), Klaus
+Helmrich €1,284,349 (2015: €1,076,237), Janina Kugel
+€704,026 (2015: €140,185), Prof. Dr. Siegfried Russwurm
+€1,302,593 (2015: €1,239,596), and Dr. Ralf P. Thomas
+€872,394 (2015: €516,915). The corresponding expense,
+determined in the same way, for former Managing Board
+members was as follows: Brigitte Ederer - €42,052 (2015:
+1 Fringe benefits include the costs, or the cash equivalent,
+of non-monetary benefits and other perquisites, such as
+the provision of company cars in the amount of €159,687
+(2015: €158,131), contributions toward the cost of insur-
+ance in the amount of €139,795 (2015: €134,170), the
+reimbursement of expenses for legal advice and tax advice,
+accommodation and moving expenses, including any
+taxes due in his regard, currency adjustment payments
+and costs relating to preventive medical examinations
+in the amount of €765,327 (2015: €330,620).
+Combined Management Report
+39
+40
+the length of time he or she has been a Managing Board member
+as well as the annual and long-term expense to the Company
+resulting from that provision. The non-forfeitability of pension
+benefit commitments is determined in compliance with the pro-
+visions of the German Company Pensions Act (Betriebsrentenge-
+setz). Special contributions may be granted to Managing Board
+members on the basis of individual decisions by the Supervisory
+Board. If a member of the Managing Board earned a pension ben-
+efit entitlement from the Company before the BSAV was intro-
+duced, a portion of his or her contributions went toward
+financing that prior commitment.
+Managing Board members are eligible to receive benefits under
+the BSAV at the age of 60 or - in the case of benefit commitments
+made on or after January 1, 2012 - the age of 62. As a rule, the
+accrued pension benefit balance is paid out to Managing Board
+members in twelve annual installments. A Managing Board mem-
+ber or his or her surviving dependents may also request that his
+or her pension benefit balance be paid out in fewer installments
+or as a lump sum, subject to the Company's consent. The accrued
+pension benefit balance may also be paid out as a pension. As a
+further alternative, Managing Board members may choose to
+combine pension payments with payments in one to twelve install-
+ments. If the pension option is chosen, a decision must be made
+as to whether the payout should include pensions for surviving
+dependents. If a member of the Managing Board dies while receiv-
+ing a pension, benefits will be paid to his or her surviving depen-
+dents if the member has chosen such benefits. The Company will
+then provide a limited-term pension to surviving children until
+they reach the age of 27 or, in the case of benefit commitments
+made on or after January 1, 2007, until they reach the age of 25.
+Benefits from the retirement benefit system that was in place
+before the BSAV was established are normally granted as pension
+benefits with a surviving dependent's pension. In this case also,
+payout in installments or a lump-sum payment may be chosen
+instead of pension payments.
+Like other eligible employees of Siemens AG, Managing Board
+members who were employed by the Company on or before Sep-
+tember 30, 1983, are entitled to receive transition payments for
+the first six months after retirement, equal to the difference be-
+tween their final base compensation and the retirement benefits
+payable under the corporate pension plan if they retire immedi-
+ately after the termination of their Managing Board membership.
+The provisions of the German Company Pensions Act (Betriebs-
+rentengesetz) do not apply to this benefit.
+Commitments in connection with the termination
+of Managing Board membership
+Managing Board employment contracts provide for a compensa-
+tory payment if membership on the Managing Board is termi-
+nated prematurely by mutual agreement and without serious
+cause. The amount of this payment must not exceed the value of
+two years' compensation and compensate no more than the re-
+maining term of the contract (cap). The amount of the compen-
+satory payment is calculated on the basis of base compensation,
+together with the variable compensation and the long-term
+stock-based compensation actually received during the last fiscal
+year before termination. The compensatory payment is payable
+in the month when the member leaves the Managing Board. In
+addition, a one-time special contribution is made to the BSAV.
+The amount of this contribution is based on the BSAV contribu-
+tion that the Managing Board member received in the previous
+year and on the remaining term of his or her appointment, but
+is limited to not more than two years' contributions (cap). The
+above benefits are not paid if an amicable termination of the
+member's activity on the Managing Board is agreed upon at the
+member's request, or if there is serious cause for the Company
+to terminate the employment relationship.
+In the event of a change of control that results in a substantial
+change in a Managing Board member's position - for example,
+due to a change in corporate strategy or a change in the Manag-
+ing Board member's duties and responsibilities - the Managing
+Board member has the right to terminate his or her contract with
+the Company. A change of control exists one or more share-
+holders acting jointly or in concert acquire a majority of the vot-
+ing rights in Siemens AG and exercise a controlling influence or if
+Siemens AG becomes a dependent enterprise as a result of enter-
+ing into an intercompany agreement within the meaning of Sec-
+tion 291 of the German Stock Corporation Act (Aktiengesetz) or
+if Siemens AG is to be merged into an existing corporation or
+other entity. If this right of termination is exercised, the Manag-
+ing Board member is entitled to a severance payment in the
+amount of not more than two years' compensation. The calcula-
+tion of the annual compensation will include not only the base
+compensation and the target amount for the Bonus, but also the
+target amount for Stock Awards, in each case based on the most
+recent fiscal year completed prior to the termination of the mem-
+ber's contract. The stock-based components for which a firm
+commitment already exists will remain unaffected. There is no
+entitlement to a severance payment if the Managing Board mem-
+ber receives benefits from third parties in connection with a
+change of control. Moreover, there is no right to terminate if the
+change of control occurs within a period of twelve months prior
+to a Managing Board member's retirement.
+Compensatory or severance payments also cover non-monetary
+benefits by including an amount of 5% of the total compensation
+or severance amount. Compensatory or severance payments will
+be reduced by 10% as a lump-sum allowance for discounted val-
+ues and for income earned elsewhere. However, this reduction
+will apply only to the portion of the compensatory or severance
+Combined Management Report
+payment that was calculated without taking into account the first
+six months of the remaining term of the Managing Board mem-
+ber's employment contract.
+Stock commitments that were made as long-term stock-based
+compensation and for which the restriction period is still in effect
+will be forfeited without replacement if the employment agree-
+ment is not extended after the end of an appointment period,
+either at the Managing Board member's request or because there
+is serious cause that would have entitled the Company to revoke
+the appointment or terminate the contract. However, once
+granted, Stock Awards are not forfeited if the employment agree-
+ment is terminated by mutual agreement at the Company's re-
+quest, or because of retirement, disability or death or in connec-
+tion with a spinoff, the transfer of an operation, or a change of
+activity within the corporate group. In these cases, the Stock
+Awards will remain in effect upon termination of the employ-
+ment agreement and will be honored on expiration of the restric-
+tion period.
+A.10.1.2 REMUNERATION OF MANAGING BOARD
+MEMBERS FOR FISCAL 2016
+At the beginning of the fiscal year, the Supervisory Board set the
+target parameters return on capital employed (ROCE) and earn-
+ings per share (EPS) for all members of the Managing Board, in
+each case on the basis of continuing and discontinued opera-
+tions. The target values for the EPS component were defined on
+a multi-year basis. In defining the target for variable compensa-
+tion, the Supervisory Board also defined individual targets so as
+to take fuller account of the individual performance of each Man-
+aging Board member. As a rule, up to five individual targets were
+defined for this purpose. These targets take account of business-
+related targets such as market coverage and business perfor-
+mance as well as targets such as customer and employee satis-
+faction, innovation and sustainability. An internal review of the
+appropriateness of Managing Board compensation for fiscal 2016
+has confirmed that the remuneration of the Managing Board re-
+sulting from target achievement for fiscal 2016 is to be consid-
+ered appropriate. In light of this review and following a review of
+the achievement of the targets defined at the beginning of the
+fiscal year, the Supervisory Board has decided to define the
+amounts of variable compensation, stock commitments and pen-
+sion benefit contributions as follows:
+Variable compensation (Bonus)
+The following targets were set and attained with respect to the
+two target parameters ROCE and EPS for variable compensation:
+Target parameter
+Return on capital employed, ROCE¹
+Earnings per share, basic EPS1 (02014-2016)
+Like employees of Siemens AG, the members of the Managing
+Board are included in the Siemens Defined Contribution Benefit
+Plan (BSAV). Under the BSAV, Managing Board members receive
+contributions that are credited to their personal pension accounts.
+The amount of these annual contributions is based on a pre-
+determined percentage related to their base compensation and
+the target amount for their Bonuses. This percentage is decided
+upon annually by the Supervisory Board. Most recently it was
+set at 28%. In making its decisions, the Supervisory Board takes
+account of the intended level of provision for each individual and
+Pension benefit commitments
+Compliance with these guidelines must be proven for the first
+time after a four-year buildup phase. Thereafter, it must be proven
+annually. If the value of a Managing Board member's accrued
+holdings declines below the required minimum due to fluctua-
+tions in the market price of Siemens stock, he or she must acquire
+additional shares.
+Changes that have been made to base compensation in the mean-
+time are included. Non-forfeitable stock commitments (Bonus
+Awards) which were granted until fiscal 2014 are taken into
+account in determining compliance with the Share Ownership
+Guidelines.
+0% and 200% (cap). If target attainment is above 100%, an addi-
+tional cash payment corresponding to the outperformance will
+be made. If target attainment is less than 100%, a number of
+stock commitments equivalent to the shortfall from the target
+will expire without replacement.
+The value of the Siemens stock to be transferred for Stock Awards
+after the end of the restriction period is subject to a ceiling of
+300% of the respective target amount. If this maximum amount
+of compensation is exceeded, the corresponding entitlement to
+stock commitments will be forfeited without replacement.
+With regard to the further terms of the Stock Awards, the same
+principles apply in general to the Managing Board and to senior
+managers. These principles are discussed in more detail in
+→ NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Transparency through simplicity:
+Three equally balanced components within the remuneration system and three equally balanced targets within the Bonus
+1/3
+13
+Base compensation
+Variable compensation
+(Bonus)
+1/3
+1 Continuing and discontinued operations.
+1/3
+ROCE
+Earnings
+per share
+Individual
+targets
+1/3
+Long-term
+stock-based compensation
+(Siemens Stock Awards)
+Performance of Siemens stock
+compared to 5 competitors
+Maximum amount for compensation overall
+In addition to the maximum amounts of compensation for vari-
+able compensation and long-term stock-based compensation, a
+maximum amount for compensation overall has been defined.
+Since fiscal 2014, this amount cannot be more than 1.7 times
+higher than target compensation. Target compensation comprises
+base compensation, the target amount for variable compensation
+and the target amount for long-term stock-based compensation,
+excluding fringe benefits and pension benefit commitments.
+When fringe benefits and pension benefit commitments for a
+given fiscal year are included, the maximum amount of compen-
+sation overall for that year will increase accordingly.
+Share Ownership Guidelines
+-
+The Siemens Share Ownership Guidelines are an integral part of
+the remuneration system for the Managing Board and senior ex-
+ecutives. These guidelines require that – after a specified buildup
+phase Managing Board members hold Siemens stock worth a
+multiple of their base compensation – 300% for the President
+and CEO, 200% for the other members of the Managing Board -
+throughout their terms of office on the Managing Board. The
+determining figure in this context is the average base compensa-
+tion that a member of the Managing Board has received over the
+four years before the applicable dates of proof of compliance.
+1/3
+100% of target
+12.76%
+€6.76
+Actual FY 2016 figure
+14.31%
+€7.32
+components
+Total compensation
+without long-term incentive effect,
+non-stock-based
+One-year variable compensation
+(Bonus) - Payout amount
+Managing Board members serving as of September 30, 2016
+(Amounts in thousands of €)
+Non-performance-
+based components
+Performance-based
+components
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total
+Performance-based
+without long-term incentive effect,
+non-stock-based
+Total 5
+Service Cost
+Total (Code) 6
+One-year variable compensation
+(Bonus) - Target amount
+Multi-year variable compensation 2,3
+Siemens Stock Awards4
+(restriction period: 4 years)
+Total compensation of all Managing Board members for fiscal 2016, in accordance with the applicable reporting standards, amounted to €28.90 million
+(2015: €27.42 million). The payout amount presented below is to be used instead of the target value according to the Code for one-year variable
+compensation. Service costs for pension benefits are not included.
+Performance-based
+components
+without long-term incentive effect,
+non-stock-based
+One-year variable compensation
+(Bonus) Payout amount
+Total compensation
+with long-term incentive effect,
+stock-based
+2 The figures for individual maximums for multi-year vari-
+able compensation reflect the possible maximum value in
+accordance with the maximum amount agreed upon for
+fiscal 2016 - that is, 300% of the applicable target amount.
+Total compensation of all Managing Board members for fiscal 2016, in accordance with the applicable reporting standards, amounted to €28.90 million
+(2015: €27.42 million). The payout amount presented below is to be used instead of the target value according to the Code for one-year variable
+compensation. Service costs for pension benefits are not included.
+(Bonus) - Target amount
+Target achievement
+151.67%
+137.33%
+The achievement of individual targets was also taken into ac-
+count when determining overall target achievement. In its overall
+assessment, the Supervisory Board decided not to make any dis-
+cretionary adjustments to the Bonus payout amounts. In fiscal
+2016, Bonus-related target achievement by Managing Board
+members was between 126.34% and 136.33%.
+Long-term stock-based compensation
+Since beneficiaries are not entitled to receive dividends, the num-
+ber of stock commitments granted was based on the closing
+price of Siemens stock in Xetra trading on the date of award less
+the present value of dividends expected during the restriction
+period. The share price used to determine the number of stock
+commitments was €75.60 (2015: €72.30).
+Total compensation
+On the basis of the Supervisory Board's decisions described
+above, Managing Board compensation for fiscal 2016 totaled
+€28.90 million, an increase of 5.4% (2015: €27.42 million). Of this
+total amount, €20.19 million (2015: €19.56 million) was attribut-
+able to cash compensation and €8.71 million (2015: €7.86 mil-
+lion) to stock-based compensation.
+The compensation presented on the following pages was granted
+to the members of the Managing Board for fiscal 2016 (individual
+disclosure). Due to rounding, the figures presented in the table
+may not add up precisely to the totals provided.
+Combined Management Report
+41
+42
+Managing Board members serving as of September 30, 2016
+Multi-year variable compensation 2,3
+Siemens Stock Awards 4
+(restriction period: 4 years)
+(Amounts in thousands of €)
+based components
+Performance-based
+components
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total
+without long-term incentive effect,
+non-stock-based
+with long-term incentive effect,
+stock-based
+Total 5
+Service Cost
+Total (Code) 6
+One-year variable compensation
+Non-performance-
+Janina Kugel
+604
+Dr. Ralf P. Thomas
+1,238
+Prof. Dr. Siegfried Russwurm
+1,052
+2,773
+2,683
+1,387
+1,444
+1,387
+1,477
+1,370
+1,376
+1,726
+2,310
+1,259
+0
+Dr. Ralf P. Thomas
+Prof. Dr. Siegfried Russwurm
+Janina Kugel
+3,032
+604
+602
+4,418
+611
+3,326
+576
+3,688
+604
+3,111
+0
+4,399
+1,063
+1,980
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+2,034
+1,878
+1,043
+1,010
+1,098
+1,043
+1,043
+1,010
+102
+102
+55
+53
+683
+227
+48
+42
+2,136
+1,010
+Managing Board member
+5,760
+603
+0
+0
+0
+0
+0
+0
+0
+703
+0
+0
+0
+0
+703
+1,407
+0
+598
+0
+0
+0
+555
+0
+903
+0
+1,301
+0
+8,416
+0
+0
+1,096
+1,101
+2,429
+3,816
+2,715
+3,113
+2,507
+3,797
+4,664
+7,316
+0
+0
+55
+0
+0
+53
+0
+97
+0
+0
+0
+0
+0
+0
+0
+Klaus Helmrich
+1,091
+Lisa Davis
+61
+1,104
+1,104
+1,104
+626
+989
+0
+2,373
+1,010
+1,043
+0
+2,503
+1,010 1,043
+0
+2,503
+665
+1,059
+1,942 3,075
+103
+530
+2,045 3,604
+0
+3,120
+1,027 5,130
+530 530
+1,557 5,660
+998 1,099
+3,097 3,263
+603
+602
+3,700 3,865
+0 3,240
+1,121 5,382
+602
+602
+1,723 5,983
+998 1,099
+3,086 3,246
+604
+603
+3,690 3,849 1,707
+0
+61
+1,043
+1,043
+(max)
+Managing Board member
+2015
+2016
+2016
+2016
+(min) (max)
+2015
+626
+989
+989
+25
+39
+39
+3,240
+989
+39
+1,027
+1,027 1,027
+1,010
+78
+1,088
+Managing Board member
+2016
+2016
+2016 (min) (max)
+1,043
+1,043 1,043
+78
+78
+78
+1,121 1,121 1,121
+CFO
+2016
+2016
+2015
+Managing Board member
+2016
+1,043
+61
+(min)
+651
+1,104
+603
+1,010
+67
+1,078
+603
+Service Cost
+Total (Code)
+Managing Board members serving as of September 30, 2016
+(Amounts in thousands of €)
+Non-performance-
+based components
+Performance-based
+components
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total
+without long-term incentive effect, non-stock-based
+with long-term incentive effect, stock-based
+One-year variable compensation (Bonus) - Payout amount²
+Multi-year variable compensation
+Siemens Stock Awards (restriction period: 2011-2015)³
+Bonus Awards (waiting period: 2011 - 2015)4
+Share Matching Plan (vesting period: 2013-2015)
+Share Matching Plan (vesting period: 2012 - 2014)
+Total
+Other5
+Service Cost
+Total (Code)
+1 Fringe benefits include the costs, or the cash equivalent,
+of non-monetary benefits and other perquisites, such as
+the provision of company cars in the amount of €159,687
+(2015: €158,131), contributions toward the cost of insur-
+ance in the amount of €139,795 (2015: €134,170), the
+reimbursement of expenses for legal advice and tax
+advice, accommodation and moving expenses, including
+any taxes due in this regard, currency adjustment pay-
+ments and costs relating to preventive medical examina-
+tions in the amount of €765,327 (2015: €330,620).
+2 The payout amount of one-year variable compensation
+(Bonus) presented above therefore represents the amount
+awarded for fiscal 2016, which will be paid out in January
+2017.
+3 Starting with the Siemens Stock Awards tranche of 2011,
+the restriction period was extended from three to four
+years. Shares from the Siemens Stock Awards 2011 were
+thus only transferred in November 2015. Therefore, no
+allocation for Siemens Stock Awards was made in fiscal
+2015. For one half of these Stock Awards target attainment
+depended on the EPS for the past three fiscal years and
+44 Combined Management Report
+Joe Kaeser
+President and CEO
+Dr. Roland Busch
+Managing Board member
+5,382
+Total
+Other5
+0
+One-year variable compensation (Bonus) - Payout amount²
+Multi-year variable compensation
+Siemens Stock Awards (restriction period: 2011-2015)³
+Bonus Awards (waiting period: 2011-2015)4
+Share Matching Plan (vesting period: 2013-2015)
+Share Matching Plan (vesting period: 2012 - 2014)
+5,984
+832 1,282
+2,148 3,368
+1,376
+3,463
+1,317
+3,538
+1,410
+3,486
+1,370
+3,573
+5 Total maximum compensation for fiscal 2016 represents the
+contractual maximum amount for overall compensation, exclud-
+ing fringe benefits and pension benefit commitments. At 1.7
+times target compensation (base compensation, target amount
+for the Bonus and the target amount for long-term stock-based
+compensation), the maximum amount is less than the total of
+the individual contractual caps for performance-based compo-
+nents.
+6 Total compensation reflects the current fair value of stock-based
+compensation components on the award date. On the basis of
+the current monetary values of stock-based compensation
+components, total compensation amounted to €28,747,477
+(2015: €27,756,633).
+7 Ms. Davis's compensation is paid out in Germany in euros. It has
+been agreed that any tax liability that arises due to tax rates that
+are higher in Germany than in the U.S. will be reimbursed. For
+base compensation of calendar year 2015 as well as for the
+Bonus of fiscal 2015, a currency-adjustment payment was
+granted.
+Combined Management Report
+4 For Stock Awards granted in fiscal 2016, target attainment
+depends solely on the performance of Siemens stock compared
+to defined competitors. The monetary values relating to 100%
+target achievement were €8,560,190 (2015: €8,190,219). The
+amounts for individual Managing Board members were as
+follows: Joe Kaeser €2,120,051 (2015: €1,950,003), Dr. Roland
+Busch €1,080,022 (2015: €1,040,036), Lisa Davis €1,080,022
+(2015: €1,040,036), Klaus Helmrich €1,080,022 (2015:
+€1,040,036), Janina Kugel €1,040,029 (2015: €693,357),
+Prof. Dr. Siegfried Russwurm €1,080,022 (2015: €1,040,036),
+Dr. Ralf P. Thomas €1,080,022 (2015: €1,040,036) and for former
+Managing Board member Prof. Dr. Hermann Requardt €0 (2015:
+€346,679).
+Allocations
+43
+without long-term incentive effect, non-stock-based
+with long-term incentive effect, stock-based
+Fixed compensation (base compensation)
+Fringe benefits¹
+Performance-based
+Non-performance-
+based components
+components
+(Amounts in thousands of €)
+Managing Board members serving as of September 30, 2016
+multi-year variable compensation granted for fiscal 2016 and
+shown above, this table includes the actual figure for multi-year
+variable compensation granted in previous years and allocated in
+fiscal 2016. Due to rounding, the figures presented in the table
+may not add up precisely to the totals provided.
+The following table shows allocations for fiscal 2016 for fixed
+compensation, fringe benefits, one-year variable compensation
+and multi-year variable compensation - by reference year - as
+well as the expense of pension benefits. In deviation from the
+Total
+280,000
+280,000
+605,000
+45,000
+280,000
+Meeting
+Total
+fee
+attendance
+Base
+compen-
+sation
+compen-
+sation for
+committee
+work
+48,000
+280,000
+608,000
+220,000
+Werner Wenning
+220,000
+200,000
+43,500
+463,500
+200,000
+200,000
+45,000
+445,000
+Total
+140,000
+30,000
+390,000
+220,000
+Birgit Steinborn¹
+fee
+Supervisory Board members
+compen-
+sation for
+committee
+work
+140,000
+Total liabilities and equity
+58 Consolidated Financial Statements
+120,348
+35,056
+581
+A.10.2 Remuneration of Supervisory
+Board members
+The current remuneration policies for the Supervisory Board were
+authorized at the Annual Shareholders' Meeting held on Janu-
+ary 28, 2014, and are effective as of fiscal 2014. Details are set out
+in Section 17 of the Articles of Association of Siemens AG. The
+remuneration of the Supervisory Board consists entirely of fixed
+compensation; it reflects the responsibilities and scope of the
+work of the Supervisory Board members. The Chairman and Dep-
+uty Chairmen of the Supervisory Board as well as the Chairmen
+and members of the Audit Committee, the Chairman's Commit-
+tee, the Compensation Committee, the Compliance Committee
+and the Innovation and Finance Committee receive additional
+compensation.
+Under current rules, the members of the Supervisory Board re-
+ceive an annual base compensation of €140,000; the Chair-
+man of the Supervisory Board receives a base compensation of
+€280,000, and each of the Deputy Chairmen receives €220,000.
+The members of the Supervisory Board committees receive the
+following additional fixed compensation for their committee
+work: the Chairman of the Audit Committee receives €160,000,
+and each of the other members of the Committee receives
+€80,000; the Chairman of the Chairman's Committee receives
+€120,000, and each of the other members of the Committee re-
+ceives €80,000; the Chairman of the Compensation Committee
+receives €100,000, and each of the other members of the Com-
+mittee receives €60,000 (compensation for any work on the
+Chairman's Committee counts toward compensation for work on
+the Compensation Committee); the Chairman of the Innovation
+and Finance Committee receives €80,000, and each of the other
+members of the Committee receives €40,000; the Chairman of
+the Compliance Committee receives €80,000, and each of the
+other members of the Committee receives €40,000. However, no
+additional compensation is paid for work on the Compliance
+Committee if a member of that Committee is already entitled to
+compensation for work on the Audit Committee.
+If a Supervisory Board member does not attend a meeting of the
+Supervisory Board, one-third of the aggregate compensation due
+to that member is reduced by the percentage of Supervisory
+Board meetings not attended by the member in relation to the
+total number of Supervisory Board meetings held during the fis-
+cal year. In the event of changes in the composition of the Super-
+visory Board and/or its committees, compensation is paid on a
+pro rata basis, rounding up to the next full month.
+In addition, the members of the Supervisory Board are entitled to
+receive a fee of €1,500 for each meeting of the Supervisory Board
+and its committees that they attend.
+The members of the Supervisory Board are reimbursed for out-
+of-pocket expenses incurred in connection with their duties and
+for any value-added taxes to be paid on their remuneration. For
+the performance of his duties, the Chairman of the Supervisory
+Board is also entitled to an office with secretarial support and the
+use of a carpool service.
+No loans or advances from the Company are provided to mem-
+bers of the Supervisory Board.
+Combined Management Report
+49
+The compensation shown below was determined for each of the
+members of the Supervisory Board for fiscal 2016 (individualized
+disclosure).
+(Amounts in €)
+serving as of
+September 30, 2016
+Dr. Gerhard Cromme
+Additional
+2016
+Additional
+2015
+Base
+compen-
+sation
+Meeting
+attendance
+605
+34,816
+125,717
+Total equity
+Olaf Bolduan¹
+(89)
+(43)
+210
+22, 23
+(7)
+4
+354
+434
+1,089
+(888)
+(42)
+(370)
+(2,636)
+(107)
+1,065
+(370)
+(2,636)
+16
+7,380
+5,584
+2015
+2016
+Note
+Fiscal year
+Shareholders of Siemens AG
+Non-controlling interests
+Attributable to:
+(7)
+(244)
+1,399
+(141)
+Deferred tax assets
+Other financial assets
+Investments accounted for using the equity method
+Property, plant and equipment
+Other intangible assets
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Current income tax assets
+Inventories
+Other current financial assets
+Trade and other receivables
+Total comprehensive income
+Available-for-sale financial assets
+Assets
+(in millions of €)
+B.3 Consolidated Statements of Financial Position
+Consolidated Financial Statements 57
+40
+133
+8,275
+2,571
+134
+8,408
+2,705
+1,029
+(2,879)
+149
+Cash and cash equivalents
+Other assets
+Other comprehensive income, net of income taxes
+Items that may be reclassified subsequently to profit or loss
+Diluted earnings per share
+Net income
+Income from discontinued operations
+Income from continuing operations
+Basic earnings per share
+Shareholders of Siemens AG
+Non-controlling interests
+Attributable to:
+Net income
+Income from discontinued operations, net of income taxes
+Income from continuing operations
+7,380
+5,584
+2,031
+188
+3
+5,349
+5,396
+(1,869)
+(2,008)
+7
+Income tax expenses
+7,218
+7,404
+Income from continuing operations before income taxes
+(500)
+(373)
+Income from continuing operations
+Income from discontinued operations
+Net income
+56 Consolidated Financial Statements
+27
+22
+therein: Income tax effects
+Derivative financial instruments
+therein: Income tax effects
+Available-for-sale financial assets
+Currency translation differences
+therein: Income (loss) from investments accounted for using the equity method, net
+Items that will not be reclassified to profit or loss
+therein: Income tax effects
+Remeasurements of defined benefit plans
+Net income
+(in millions of €)
+B.2 Consolidated Statements of Comprehensive Income
+8.74
+therein: Income (loss) from investments accounted for using the equity method, net
+6.65
+0.23
+6.30
+6.42
+27
+8.84
+6.74
+2.47
+0.23
+6.38
+6.51
+7,282
+98
+134
+5,450
+2.44
+Total non-current assets
+Total assets
+September 30,
+9,811
+13,695
+26,682
+24,761
+5677
+17
+Equity
+Total liabilities
+Total non-current liabilities
+Other liabilities
+Other financial liabilities
+Provisions
+Deferred tax liabilities
+16
+Post-employment benefits
+15
+Long-term debt
+39,562
+42,916
+Total current liabilities
+39
+40
+3
+Liabilities associated with assets classified as held for disposal
+20,368
+20,437
+14
+829
+609
+5,087
+4,865
+Non-controlling interests
+34,474
+34,211
+Total equity attributable to shareholders of Siemens AG
+(6,218)
+(3,605)
+2,163
+1,921
+30,152
+27,454
+5,733
+5,890
+2,643
+Other current liabilities
+2,550
+Other components of equity
+Retained earnings
+Capital reserve
+Issued capital
+18
+85,292
+90,901
+45,730
+47,986
+2,297
+2,471
+1,466
+1,142
+Treasury shares, at cost
+1,828
+2,085
+Current income tax liabilities
+24,159
+122437
+11
+51,442
+55,329
+122
+190
+3
+1,151
+1,204
+644
+790
+17,253
+23,166
+18,160
+5,157
+6,800
+9
+15,982
+16,287
+8
+1,175
+1,293
+9,957
+10,604
+2015
+2016
+Note
+10
+Other financial income (expenses), net
+7,742
+10,157
+4,489
+4,166
+17
+Current provisions
+2,085
+1,933
+Other current financial liabilities
+7,774
+8,048
+Trade payables
+2,979
+6,206
+15
+8,077
+Short-term debt and current maturities of long-term debt
+120,348
+125,717
+68,906
+70,388
+1,094
+1,279
+2,591
+3,431
+20,821
+20,610
+2,947
+3,012
+10,210
+Liabilities and equity
+(818)
+(989)
+Interest expenses
+Dr. Norbert Reithofer
+149,000
+9,000
+140,000
+134,167
+7,500
+126,667
+Gérard Mestrallet
+188,333
+15,000
+33,333
+140,000
+247,000
+27,000
+80,000
+140,000
+Dr. Nicola Leibinger-Kammüller
+333,722
+31,500
+170,000
+132,222
+373,000
+33,000
+200,000
+140,000
+Jürgen Kerner¹
+241,000
+133,333
+38,095
+15,000
+186,429
+120,000
+140,000
+Jim Hagemann Snabe
+149,000
+9,000
+140,000
+150,500
+10,500
+140,000
+Michael Sigmund
+109,500
+4,500
+105,000
+21,000
+150,500
+140,000
+Dr. Nathalie von Siemens
+149,000
+9,000
+140,000
+150,500
+10,500
+140,000
+Güler Sabancı
+112,648
+4,500
+14,815
+93,333
+10,500
+80,000
+140,000
+242,500
+150,500
+10,500
+140,000
+Reinhard Hahn¹
+327,000
+27,000
+160,000
+140,000
+327,000
+27,000
+160,000
+140,000
+Dr. Hans Michael Gaul
+105,000
+202,389
+56,667
+132,222
+203,976
+13,500
+57,143
+133,333
+Michael Diekmann
+149,000
+9,000
+140,000
+142,333
+9,000
+133,333
+13,500
+31,500
+4,500
+Bettina Haller¹
+22,500
+80,000
+140,000
+Harald Kern¹
+350,000
+30,000
+180,000
+140,000
+350,000
+30,000
+180,000
+140,000
+Robert Kensbock¹
+109,500
+149,000
+140,000
+150,500
+10,500
+140,000
+Hans-Jürgen Hartung
+244,000
+24,000
+80,000
+140,000
+245,500
+25,500
+80,000
+140,000
+9,000
+393,000
+291,500
+113,333
+Revenue
+(in millions of €, per share amounts in €)
+Fiscal year
+B.1 Consolidated Statements of Income
+STATEMENTS
+FINANCIAL
+CONSOLIDATED
+B.
+Combined Management Report
+We are not aware of, nor have we during the last fiscal year been
+notified of, any shareholder directly or indirectly holding 10%
+or more of the voting rights. There are no shares with special
+rights conferring powers of control. Shares of stock issued by
+Siemens AG to employees under its employee share program
+and/or as share-based compensation are transferred directly to
+the employees. The beneficiary employees who hold shares of
+employee stock may exercise their control rights in the same way
+as any other shareholder directly in accordance with applicable
+laws and the Articles of Association.
+A.11.7 Other takeover-relevant
+information
+severance payment if the Managing Board member receives ben-
+efits from third parties in connection with a change of control.
+A right to terminate the contract does not exist if the change
+of control occurs within a period of twelve months prior to a
+Managing Board member's retirement.
+In the event of a change of control that results in a substantial
+change in the position of a Managing Board member (for exam-
+ple, due to a change in corporate strategy or a change in the
+Managing Board member's duties and responsibilities), the
+member of the Managing Board has the right to terminate his or
+her contract with the Company for good cause. A change of con-
+trol exists if one or several shareholders acting jointly or in con-
+cert acquire a majority of the voting rights in Siemens AG and
+exercise a controlling influence, or if Siemens AG becomes a de-
+pendent enterprise as a result of entering into an intercompany
+agreement within the meaning of Section 291 of the German
+Stock Corporation Act, or if Siemens AG is to be merged into an
+existing corporation or other entity. If this right of termination is
+exercised, the Managing Board member is entitled to a severance
+payment in the amount of no more than two years' compensa-
+tion. The calculation of the annual compensation includes not
+only the base compensation and the target amount for the bo-
+nus, but also the target amount for the stock awards, in each case
+based on the most recent completed fiscal year prior to termina-
+tion of the contract. The stock-based compensation components
+for which a firm commitment already exists will remain un-
+affected. Additionally, the severance payments cover non-mone-
+tary benefits by including an amount of 5% of the total severance
+amount. Severance payments will be reduced by 10% as a lump-
+sum allowance for discounted values and for income earned else-
+where. However, this reduction will apply only to the portion of
+the severance payment that was calculated without taking ac-
+count of the first six months of the remaining term of the Man-
+aging Board member's contract. There is no entitlement to a
+A.11.6 Compensation agreements
+with members of the Managing
+Board or employees in the event
+of a takeover bid
+concert.
+the warrants issued in 2012 against new warrants in Septem-
+ber 2015. In case of a change of control, the terms and conditions
+of each warrant enable their holders to receive a higher number
+of Siemens shares in accordance with an adjusted strike price if
+they exercise their option rights within a certain period of time
+after the change of control. This period of time shall end either
+(1) not less than 30 days and no more than 60 days after publica-
+tion of the notice of the issuer regarding the change of control,
+as determined by the issuer or (2) 30 days after the change
+of control first becomes publicly known. The strike price adjust-
+ment decreases depending on the remaining term of the war-
+rants and is determined in detail in the terms and conditions of
+the warrants. In this context, a change of control occurs if control
+of Siemens AG is acquired by a person or by persons acting in
+54
+53
+Combined Management Report
+In February 2012, Siemens issued bonds with warrant units with
+a volume of US$3 billion. Siemens exchanged the major part of
+Framework agreements concluded by Siemens AG under Interna-
+tional Swaps and Derivatives Association Inc. documentation
+(ISDA Agreements) grant the counterparty a right of termination
+when Siemens AG consolidates with, merges into, or transfers
+substantially all its assets to a third party. However, this right of
+termination exists only, if (1) the resulting entity's creditworthi-
+ness is materially weaker than Siemens AG's immediately prior to
+such event or (2) the resulting entity fails to simultaneously as-
+sume Siemens AG's obligations under the ISDA Agreement. Addi-
+tionally, some ISDA Agreements grant the counterparty a right of
+termination if a third party acquires beneficial ownership of eq-
+uity securities that enable it to elect a majority of Siemens AG's
+Supervisory Board or otherwise acquire the power to control
+Siemens AG's material policy-making decisions and if the credit-
+worthiness of Siemens AG is materially weaker than it was imme-
+diately prior to such an event. In either situation, ISDA Agree-
+ments are designed such that upon termination all outstanding
+payment claims documented under them are to be netted.
+In March 2013, a consolidated subsidiary as borrower and
+Siemens AG as guarantor entered into two bilateral loan agree-
+ments, each of which has been drawn in the full amount of
+US$500 million. Both agreements provide their respective lend-
+ers with a right of termination in the event that (1) Siemens AG
+becomes a subsidiary of another company or (2) a person or a
+group of persons acting in concert acquires effective control over
+Siemens AG by being able to exercise decisive influence over its
+activities (Art. 3(2) of Council Regulation (EC) 139/2004).
+Siemens AG maintains two lines of credit in an amount of €4 bil-
+lion and an amount of US$3 billion, respectively, which provide its
+lenders with a right of termination in the event that (1) Siemens AG
+becomes a subsidiary of another company or (2) a person or a
+group of persons acting in concert acquires effective control over
+Siemens AG by being able to exercise decisive influence over its
+activities (Art. 3(2) of Council Regulation (EC) 139/2004).
+A.11.5 Significant agreements which
+take effect, alter or terminate upon
+a change of control of the Company
+following a takeover bid
+For details on the authorizations referred to above, especially
+with the restrictions to exclude subscription rights and the terms
+to include shares when calculating such restrictions, please re-
+fer to the relevant resolution and to Section 4 of the Articles of
+Association.
+In November 2015, the Company announced that it would carry
+out a share buyback of up to €3 billion in volume within the fol-
+lowing up to 36 months. The buyback commenced on Febru-
+ary 2, 2016 using the authorizations given by the Annual Share-
+holders' Meeting on January 27, 2015. Under this share buyback
+Siemens repurchased 2,517,727 shares by September 30, 2016.
+The total consideration paid for these shares amounted to about
+€230 million (excluding incidental transaction charges). The buy-
+back has the sole purposes of retirement, of issuing shares to
+employees, board members of affiliated companies and mem-
+bers of the Managing Board of Siemens AG, as well as of servic-
+ing/securing the obligations or rights to acquire Siemens shares
+arising particularly from or in connection with convertible bonds
+and warrant bonds. As of September 30, 2016, the Company held
+41,721,682 shares of stock in treasury.
+Furthermore, the Supervisory Board is authorized to use shares
+acquired on the basis of this or any previously given authorization
+to meet obligations or rights to acquire Siemens shares that were
+or will be agreed with members of the Managing Board within the
+framework of rules governing Managing Board compensation.
+Cost of sales
+Gross profit
+Note
+2016
+1,260
+1,314
+Interest income
+1,235
+134
+4
+Income (loss) from investments accounted for using the equity method, net
+(389)
+(427)
+6
+Other operating expenses
+476
+328
+> used to service or secure obligations or rights to acquire
+Siemens shares arising particularly from or in connection with
+convertible bonds or warrant bonds issued by the Company or
+any of its consolidated subsidiaries (exclusion of subscription
+rights, limited to 10% of the capital stock, by mutatis mutandis
+application of Section 186 para. 3 sentence 4 German Stock
+Corporation Act).
+5
+(11,409)
+(11,669)
+Selling and general administrative expenses
+(4,483)
+(4,732)
+Research and development expenses
+21,847
+23,819
+(53,789)
+(55,826)
+75,636
+79,644
+2015
+Other operating income
+> sold, with the approval of the Supervisory Board, to third par-
+ties against payment in cash if the price at which such Siemens
+shares are sold is not significantly lower than the market price
+of Siemens stock (exclusion of subscription rights, limited to
+10% of the capital stock, by mutatis mutandis application of
+Section 186 para. 3 sentence 4 German Stock Corporation
+Act) or
+> offered and transferred, with the approval of the Supervisory
+Board, to third parties against non-cash contributions
+used in connection with share-based compensation programs
+and/or employee share programs of the Company or any of its
+affiliated companies and issued to individuals currently or for-
+merly employed by the Company or any of its affiliated com-
+panies as well as to board members of any of the Company's
+affiliated companies
+A.11.1 Composition of common stock
+(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
+and explanatory report
+A.11 Takeover-relevant information
+Combined Management Report
+50
+of the Company. The insurance policy for fiscal 2016 includes a
+deductible for the members of the Managing Board and the
+Supervisory Board that complies with the requirements of the
+German Stock Corporation Act and the Code.
+The Company provides a group insurance policy for Supervisory
+and Managing Board members and certain other employees of
+the Siemens Group. The policy is taken out for one year at a time
+renewed annually. It covers the personal liability of the insured
+in cases of financial loss associated with their activities on behalf
+A.10.3 Other
+compensation of €252,185 paid to former Supervisory Board
+members Gerd von Brandenstein, Prof. Dr. Peter Gruss and
+Berthold Huber.
+2 The total figure, compared to the amount presented in the
+2015 Compensation Report, does not include the total
+dance with the guidelines of the Confederation of German
+Trade Unions (DGB).
+1 These employee representatives on the Supervisory Board
+and the representatives of the trade unions on the Super-
+visory Board have declared their willingness to transfer their
+compensation to the Hans Boeckler Foundation, in accor-
+4,866,648
+A.11.3 Legislation and provisions of
+the Articles of Association applicable
+to the appointment and removal
+of members of the Managing Board
+and governing amendment to the
+rights and obligations. The shareholders' rights and obligations Articles of Association
+183,500
+37,778
+1,545,926
+132,222
+2,932,221
+5,150,905
+429,000
+1,655,238
+196,500
+16,500
+40,000
+140,000
+3,066,667
+Total²
+Sibylle Wankel¹
+274,056
+28,500
+13,500
+388,500
+132,222
+As of September 30, 2016, the Company's common stock totaled
+€2.550 billion. The capital stock is divided into 850 million regis-
+tered shares with no par value and a notional value of €3.00 per
+share. The shares are fully paid in. All shares confer the same
+A.11.2 Restrictions on voting rights
+or transfer of shares
+> retired
+In addition to selling them over the stock exchange or through a
+public sales offer to all shareholders, the Managing Board is au-
+thorized by resolution of the Shareholders' Meeting on Janu-
+ary 27, 2015 to also use Siemens shares repurchased on the basis
+of this or any previously given authorization for every permissible
+purpose, in particular as follows: Such Siemens shares may be
+Combined Management Report
+52
+62
+The Company may not repurchase its own shares unless so au-
+thorized by a resolution duly adopted by the shareholders at a
+general meeting or in other very limited circumstances set forth
+in the German Stock Corporation Act. On January 27, 2015, the
+Shareholders' Meeting authorized the Company to acquire until
+January 26, 2020 up to 10% of its capital stock existing at the
+date of adopting the resolution or - if this value is lower - as of
+the date on which the authorization is exercised. The aggregate
+of shares of stock of Siemens AG repurchased under this autho-
+rization and any other Siemens shares previously acquired and
+still held in treasury by the Company or attributable to the Com-
+pany pursuant to Sections 71d and 71e of the German Stock Cor-
+poration Act may at no time exceed 10% of the then existing
+capital stock. Any repurchase of Siemens shares shall be accom-
+plished at the discretion of the Managing Board either (1) by ac-
+quisition over the stock exchange or (2) through a public share
+repurchase offer. The Managing Board is additionally authorized
+to complete the repurchase of Siemens shares in accordance with
+the authorization described above by using certain derivatives
+(put and call options, forward purchases and any combination of
+these derivatives). In exercising this authorization, all stock re-
+purchases based on the derivatives are limited to a maximum
+volume of 5% of Siemens' capital stock existing at the date of
+adopting the resolution at the Shareholders' Meeting. A deriva-
+tive's term of maturity may not, in any case, exceed 18 months
+and must be chosen in such a way that the repurchase of Siemens
+shares upon exercise of the derivative will take place no later
+than January 26, 2020.
+In February 2012, Siemens issued bonds with warrant units with
+a volume of US$3 billion. Siemens exchanged the major part of
+the warrants issued in 2012 against new warrants in Septem-
+ber 2015; for this purpose, Siemens issued new bonds with war-
+rants. At exchange, the new warrants resulted in option rights
+entitling their holders to receive approximately 20.3 million
+Siemens shares. The terms and conditions of the warrants enable
+Siemens to service exercised option rights using either condi-
+tional capital or treasury stock, and also enable Siemens to buy
+back the warrants.
+The total amount of new shares issued or to be issued under
+Authorized Capitals or in accordance with the bonds mentioned
+above, in exchange for contributions in cash and in kind and with
+shareholders' subscription rights excluded, may in certain cases
+be subject to further restrictions, such as the restriction that they
+may not exceed 20% of the capital stock. The details of those
+restrictions are described in the relevant authorization.
+> The exclusion is necessary in order to grant holders of conver-
+sion or option rights or conversion or option obligations on
+Siemens shares a compensation for the effects of dilution.
+> The exclusion is necessary with regard to fractional amounts
+resulting from the subscription ratio.
+> The issue price of the new shares/bonds is not significantly
+lower than the stock market price of the Siemens shares al-
+ready listed or the theoretical market price of the bonds com-
+puted in accordance with generally accepted actuarial meth-
+ods (exclusion of subscription rights, limited to 10% of the
+capital stock, in accordance with or by mutatis mutandis
+application of Section 186 para. 3 sentence 4 German Stock
+Corporation Act).
+The new shares under Authorized Capital 2014 and the bonds
+under the aforementioned authorizations are to be issued
+against cash or non-cash contributions. They are, as a matter of
+principle, to be offered to shareholders for subscription. The
+Managing Board is authorized to exclude, with the approval of
+the Supervisory Board, subscription rights of shareholders in the
+event of capital increases against contributions in kind. In the
+event of capital increases against contributions in cash, the Man-
+aging Board is authorized to exclude shareholders' subscription
+rights with the approval of the Supervisory Board in the follow-
+ing cases:
+By resolutions of the Shareholders' Meetings of January 28, 2014
+and January 27, 2015, the Managing Board is authorized to issue
+bonds with conversion rights or with warrants attached, or a
+combination of these instruments, each entitling the holders to
+subscribe to up to 80 million registered shares of Siemens AG of
+no par value. Based on these two authorizations the Company or
+consolidated subsidiaries of the Company may issue bonds until
+January 27, 2019 and January 26, 2020, respectively, each in an
+aggregate principal amount of up to €15 billion. In order to grant
+shares of stock to holders/creditors of such convertible bonds or
+warrant bonds, the capital stock was conditionally increased by
+resolutions of the Shareholders' Meetings 2014 and 2015, each
+by up to 80 million registered shares of no par value (Condi-
+tional Capitals 2014 and 2015), i.e. in total by up to €480 million
+through the issuance of up to 160 million shares of no par value.
+are governed in detail by the provisions of the German Stock Cor-
+poration Act, in particular by Sections 12, 53a et seq., 118 et seq.
+and 186 of the German Stock Corporation Act.
+As of September 30, 2016, the total unissued authorized capital
+of Siemens AG therefore consisted of €618.6 million nominal
+that may be issued, with varying terms by issuance, in install-
+ments of up to 206.2 million registered shares of no par value.
+and the Supervisory Board may allocate to other retained earnings
+under Section 58 para. 2 of the German Stock Corporation Act.
+51
+Combined Management Report
+The Managing Board is authorized to increase, with the approval
+of the Supervisory Board, the capital stock until January 25, 2021
+by up to €90 million through the issuance of up to 30 million
+registered shares of no par value against contributions in cash
+(Authorized Capital 2016). Subscription rights of existing share-
+holders are excluded. The new shares shall be issued under the
+condition that they are offered exclusively to employees of
+Siemens AG and any of its affiliated companies. To the extent
+permitted by law, employee shares may also be issued in such a
+manner that the contribution to be paid on such shares is covered
+by that part of the annual net income which the Managing Board
+of the total number of shares held by the family's members. The
+powers of attorney are based on an agreement between the VSV
+and, among others, members of the Siemens family. The shares
+are voted together by VSV, taking into account the proposals of a
+family partnership established by the family's members or of one
+of this partnership's governing bodies.
+behalf of members of the Siemens family. These shares are part to issue and repurchase shares
+A.11.4 Powers of the Managing Board
+Resolutions of the Shareholders' Meeting require a simple major-
+ity vote, unless a greater majority is required by law. Pursuant to
+Section 179 para. 2 of the German Stock Corporation Act, amend-
+ments to the Articles of Association require a majority of at least
+three-quarters of the capital stock represented at the time of the
+casting of the votes, unless another capital majority is prescribed
+by the Articles of Association.
+According to Section 179 of the German Stock Corporation Act,
+any amendment to the Articles of Association requires a resolu-
+tion of the Shareholders' Meeting. The authority to adopt purely
+formal amendments to the Articles of Association was trans-
+ferred to the Supervisory Board under Section 13 para. 2 of the
+Articles of Association. In addition, by resolutions of the Share-
+holders' Meetings the Supervisory Board has been authorized to
+amend Section 4 of the Articles of Association in accordance with
+the utilization of the Authorized and Conditional Capitals, and
+after expiration of the then-applicable authorization and utiliza-
+tion period.
+The appointment and removal of members of the Managing
+Board is subject to the provisions of Sections 84 and 85 of the
+German Stock Corporation Act and Section 31 of the German
+Codetermination Act (Mitbestimmungsgesetz). According to Sec-
+tion 8 para. 1 of the Articles of Association, the Managing Board
+is comprised of several members, the number of which is deter-
+mined by the Supervisory Board.
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
+sustained basis, powers of attorney allowing it to exercise the
+voting rights for 10,878,800 shares (as of September 30, 2016) on
+Shares issued to employees worldwide under the employee share
+program implemented since the beginning of fiscal 2009, in par-
+ticular the Share Matching Plan, are freely transferable unless
+applicable local laws provide otherwise. Under the rules of the
+program, however, in order to receive one matching share free
+of charge for each three shares purchased, participants are re-
+quired to hold the shares purchased by them for a vesting period
+of several years, during which the participants have to be contin-
+uously employed by Siemens AG or another Siemens company.
+The right to receive matching shares is forfeited if the purchased
+shares are sold, transferred, hedged on, pledged or hypothecated
+in any way during the vesting period.
+At the Shareholders' Meeting, each share of stock has one vote
+and accounts for the shareholders' proportionate share in the
+Company's net income. An exception from this rule applies with
+regard to treasury shares held by the Company, which do not
+entitle the Company to any rights. Under Section 136 of the Ger-
+man Stock Corporation Act the voting right of the affected shares
+is excluded by law.
+Furthermore, the Managing Board is authorized to increase, with
+the approval of the Supervisory Board, the capital stock until Jan-
+uary 27, 2019 by up to €528.6 million through the issuance of up
+to 176.2 million registered shares of no par value against cash con-
+tributions and/or contributions in kind (Authorized Capital 2014).
+33,000
+31,514
+68
+Dividends attributable to non-controlling interests
+(236)
+(145)
+Cash flows from financing activities - continuing operations
+(2,710)
+1,051
+Cash flows from financing activities - discontinued operations
+5
+Cash flows from financing activities - continuing and discontinued operations
+(2,710)
+1,056
+Effect of changes in exchange rates on cash and cash equivalents
+(98)
+83
+Change in cash and cash equivalents
+660
+1,923
+Cash and cash equivalents at beginning of period
+9,958
+(2,728)
+(2,827)
+Dividends paid to shareholders of Siemens AG
+(596)
+(4,144)
+Consolidated Financial Statements
+Cash flows from financing activities
+Purchase of treasury shares
+(463)
+(2,700)
+Other transactions with owners
+(13)
+10
+8,034
+Issuance of long-term debt
+7,213
+Repayment of long-term debt (including current maturities of long-term debt)
+(2,253)
+(354)
+Change in short-term debt and other financing activities
+(1,408)
+351
+Interest paid
+(809)
+5,300
+Cash flows from investing activities - continuing and discontinued operations
+Cash and cash equivalents at end of period
+9,958
+Re-issuance of treasury shares
+Cancellation of treasury shares
+Transactions with non-controlling interests
+Other changes in equity
+Balance as of September 30, 2016
+60 Consolidated Financial Statements
+Issued capital
+2,643
+Capital reserve
+5,525
+Retained earnings
+25,729
+7,282
+(367)
+(2,728)
+79
+(43)
+23
+289
+106
+(10)
+Purchase of treasury shares
+Share-based payment
+Dividends
+Other comprehensive income, net of income taxes
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
+operations at end of period
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+13
+10,604
+9,957
+Consolidated Financial Statements 59
+B.5 Consolidated Statements of Changes in Equity
+(in millions of €)
+Balance as of October 1, 2014
+10,618
+Net income
+Dividends
+Share-based payment
+Purchase of treasury shares
+Re-issuance of treasury shares
+Transactions with non-controlling interests
+Other changes in equity
+Balance as of September 30, 2015
+Balance as of October 1, 2015
+Net income
+Other comprehensive income, net of income taxes
+2,889
+262
+Cash flows from investing activities - discontinued operations
+366
+(Income) loss related to investing activities
+Other non-cash (income) expenses
+Change in operating net working capital
+Inventories
+(1,009)
+(793)
+Trade and other receivables
+(579)
+(811)
+Trade payables
+327
+(247)
+Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
+Additions to assets leased to others in operating leases
+20
+914
+(484)
+(451)
+Change in other assets and liabilities
+400
+(1,603)
+(373)
+(442)
+B.4 Consolidated Statements of Cash Flows
+(in millions of €)
+Fiscal year
+2016
+2015
+Cash flows from operating activities
+Net income
+5,584
+7,380
+(281)
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+Income from discontinued operations, net of income taxes
+(2,031)
+Amortization, depreciation and impairments
+2,764
+2,549
+Income tax expenses
+Interest (income) expenses, net
+2,008
+1,869
+(325)
+(188)
+852
+Income taxes paid
+Dividends received
+Disposal of businesses, net of cash disposed
+(922)
+(8,254)
+(271)
+(568)
+(1,139)
+(899)
+(1,356)
+(1,667)
+Change in receivables from financing activities
+Disposal of investments, intangibles and property, plant and equipment
+3,474
+9
+445
+Disposal of current available-for-sale financial assets
+1,031
+651
+Cash flows from investing activities - continuing operations
+(4,406)
+(8,716)
+377
+2,643
+Purchase of current available-for-sale financial assets
+Acquisitions of businesses, net of cash acquired
+(1,718)
+(2,306)
+302
+495
+Interest received
+1,219
+1,138
+Cash flows from operating activities - continuing operations
+7,668
+Purchase of investments
+6,881
+(57)
+(270)
+Cash flows from operating activities - continuing and discontinued operations
+7,611
+6,612
+Cash flows from investing activities
+Additions to intangible assets and property, plant and equipment
+(2,135)
+(1,897)
+Cash flows from operating activities - discontinued operations
+5,733
+(5,827)
+2,643
+Sales from multiple element arrangements: Sales of goods and
+services as well as software arrangements sometimes involve the
+provision of multiple elements. In these cases, the Company de-
+termines whether the contract or arrangement contains more
+than one unit of accounting. If certain criteria are met, foremost
+if the delivered element(s) has (have) value to the customer on
+a stand-alone basis, the arrangement is separated and the appro-
+priate revenue recognition convention is then applied to each
+separate unit of accounting. Generally, the total arrangement
+consideration is allocated to the separate units of accounting
+based on their relative fair values. If the criteria for the separation
+of units of accounting are not met, revenue is deferred until such
+criteria are met or until the period in which the last undelivered
+element is delivered.
+Income from interest: Interest is recognized using the effective
+interest method.
+Income from royalties: Royalties are recognized on an accrual ba-
+sis in accordance with the substance of the relevant agreement.
+Income from operating leases: Operating lease income for equip-
+ment rentals is recognized on a straight-line basis over the lease
+term.
+Functional costs - In general, operating expenses by types are
+assigned to the functions following the functional area of the cor-
+responding profit and cost centers. Amortization, depreciation and
+impairment of intangible assets and property, plant and equipment
+are included in functional costs depending on the use of the assets.
+Product-related expenses - Provisions for estimated costs re-
+lated to product warranties are recorded in line item Cost of sales
+at the time the related sale is recognized.
+Research and development costs - Costs of research activities
+are expensed as incurred. Costs of development activities are
+capitalized when the recognition criteria in IAS 38 are met. Capi-
+talized development costs are stated at cost less accumulated
+amortization and impairment losses with an amortization period
+of generally three to ten years.
+Consolidated Financial Statements 63
+Earnings per share - Basic earnings per share are computed by
+dividing income from continuing operations, income from dis-
+continued operations and net income, all attributable to ordinary
+shareholders of Siemens AG by the weighted average number of
+shares outstanding during the year. Diluted earnings per share
+are calculated by assuming conversion or exercise of all poten-
+tially dilutive securities and share-based payment plans.
+Goodwill - Goodwill is not amortized, but instead tested for im-
+pairment annually, as well as whenever there are events or
+changes in circumstances (triggering events) which suggest that
+the carrying amount may not be recoverable. Goodwill is carried
+at cost less accumulated impairment losses.
+The goodwill impairment test is performed at the level of a cash-
+generating unit or a group of cash-generating units, generally
+represented by a segment. As of fiscal 2016, this also applies to
+Healthineers as a result of a change in the organization of the
+business and the related reporting structure. In fiscal 2015, the
+impairment tests for Healthineers were performed one level be-
+low the segment. This is the lowest level at which goodwill is
+monitored for internal management purposes.
+For the purpose of impairment testing, goodwill acquired in a
+business combination is allocated to the cash-generating unit or
+the group of cash-generating units that is expected to benefit
+from the synergies of the business combination. If the carrying
+amount of the cash-generating unit or the group of cash-gener-
+ating units, to which the goodwill is allocated, exceeds its recov-
+erable amount, an impairment loss on goodwill allocated to this
+cash-generating unit or this group of cash-generating units is
+recognized. The recoverable amount is the higher of the
+cash-generating unit's or the group of cash-generating units' fair
+value less costs to sell and its value in use. If either of these
+amounts exceeds the carrying amount, it is not always necessary
+to determine both amounts. These values are generally deter-
+mined based on discounted cash flow calculations. Impairment
+losses on goodwill are not reversed in future periods.
+The determination of the recoverable amount of a cash-generat-
+ing unit or a group of cash-generating units to which goodwill
+is allocated involves the use of estimates by management. The
+outcome predicted by these estimates is influenced e.g. by the
+successful integration of acquired entities, volatility of capital
+markets, interest rate developments, foreign exchange rate fluc-
+tuations and the outlook on economic trends. In determining
+recoverable amounts, discounted cash flow calculations use five-
+year projections that are based on financial forecasts. Cash flow
+projections take into account past experience and represent
+management's best estimate about future developments. Cash
+flows after the planning period are extrapolated using individual
+growth rates. Key assumptions on which management has based
+its determination of fair value less costs to sell and value in use
+include estimated growth rates and weighted average cost of
+capital. These estimates, including the methodology used, can
+have a material impact on the respective values and ultimately
+the amount of any goodwill impairment.
+Other intangible assets - The Company amortizes intangible
+assets with finite useful lives on a straight-line basis over their
+respective estimated useful lives. Estimated useful lives for pat-
+ents, licenses and other similar rights generally range from three
+to five years, except for intangible assets with finite useful lives
+acquired in business combinations. Intangible assets acquired in
+business combinations primarily consist of customer relation-
+ships and trademarks as well as technology. Useful lives in spe-
+cific acquisitions ranged from four to 20 years for customer rela-
+tionships and trademarks and from seven to 25 years for
+technology.
+Property, plant and equipment - Property, plant and equip-
+ment, is valued at cost less accumulated depreciation and impair-
+ment losses. Depreciation expense is recognized using the
+straight-line method. The following useful lives are assumed:
+Factory and office buildings
+Other buildings
+Technical machinery & equipment
+Furniture & office equipment
+Equipment leased to others
+Rendering of services: For long-term service contracts, revenues
+are recognized on a straight-line basis over the term of the con-
+tract or, if the performance pattern is other than straight-line, as
+the services are provided, i.e. under the percentage-of-comple-
+tion method as described above.
+is expected to be the most likely scenario, all relevant facts and
+circumstances relating to the contract are considered on an in-
+dividual basis.
+The percentage-of-completion method places considerable im-
+portance on accurate estimates of the extent of progress to-
+wards completion and may involve estimates on the scope of
+deliveries and services required for fulfilling the contractually
+defined obligations. These significant estimates include total
+contract costs, total contract revenues, contract risks, including
+technical, political and regulatory risks, and other judgments.
+Under the percentage-of-completion method, changes in esti-
+mates may lead to an increase or decrease of revenue. The cred-
+itworthiness of our customers is taken into account in estimating
+the probability that economic benefits associated with a contract
+will flow to the Company. In addition, we need to assess whether
+the contract is expected to continue or to be terminated. In de-
+termining whether the continuation or termination of a contract
+Sales from construction contracts: When the outcome of a con-
+struction contract can be estimated reliably, revenues from con-
+struction-type projects are recognized under the percent-
+age-of-completion method, based on the percentage of costs
+incurred to date compared to the total estimated contract costs.
+An expected loss on the construction contract is recognized as an
+expense immediately. Siemens applies the requirements of IAS 11
+regarding contract variations to contract terminations, since con-
+tract terminations are also changes to the agreed delivery and
+service scope.
+34,211
+605
+34,816
+Consolidated Financial Statements 61
+B.6 Notes to Consolidated Financial Statements
+NOTE 1 Basis of presentation
+The accompanying Consolidated Financial Statements present
+the operations of Siemens AG with registered offices in Berlin
+and Munich, Germany, and its subsidiaries (the Company or
+Siemens). They have been prepared in accordance with Interna-
+tional Financial Reporting Standards (IFRS), as adopted by the
+European Union as well as with the additional requirements set
+forth in Section 315a (1) of the German Commercial Code (HGB).
+The financial statements are also in accordance with IFRS as is-
+sued by the International Accounting Standards Board (IASB).
+The Consolidated Financial Statements were authorized for issue
+by the Managing Board on November 28, 2016.
+Siemens prepares and reports its Consolidated Financial State-
+ments in euros (€). Due to rounding, numbers presented may not
+add up precisely to totals provided. Siemens is a German based
+multinational technology company with core activities in the
+fields of electrification, automation and digitalization.
+NOTE 2 Significant accounting policies
+and critical accounting estimates
+20 to 50 years
+Certain of these accounting policies require critical accounting
+estimates that involve complex and subjective judgments and
+the use of assumptions, some of which may be for matters that
+are inherently uncertain and susceptible to change. Such critical
+accounting estimates could change from period to period and
+have a material impact on the Company's results of operations,
+financial positions and cash flows. Critical accounting estimates
+could also involve estimates where Siemens reasonably could
+have used a different estimate in the current accounting period.
+Siemens cautions that future events often vary from forecasts
+and that estimates routinely require adjustment.
+Business combinations - Cost of an acquisition is measured at
+the fair value of the assets given and liabilities incurred or as-
+sumed at the date of exchange. Identifiable assets acquired and
+liabilities assumed in a business combination (including contin-
+gent liabilities) are measured initially at their fair values at the
+acquisition date, irrespective of the extent of any non-controlling
+interest. Non-controlling interests are measured at the propor-
+tional fair value of assets acquired and liabilities assumed (partial
+goodwill method). If there is no loss of control, transactions with
+non-controlling interests are accounted for as equity transactions
+not affecting profit and loss. At the date control is lost, any re-
+tained equity interests are remeasured to fair value. In case of a
+written put option on non-controlling interests the Company as-
+sesses whether the prerequisites for the transfer of present own-
+ership interest are fulfilled at the balance sheet date. If the Com-
+pany is not the beneficial owner of the shares underlying the put
+option, the exercise of the put option will be assumed at each
+balance sheet date and treated as equity transaction between
+shareholders with the recognition of a purchase liability at the
+respective exercise price. The non-controlling interests partici-
+pate in profits and losses during the reporting period.
+Associates - Associates are companies over which Siemens has
+the ability to exercise significant influence over operating and
+financial policies (generally through direct or indirect ownership
+of 20% to 50% of the voting rights). These are recorded in the
+Consolidated Financial Statements using the equity method and
+are initially recognized at cost. Siemens' share of its associate's
+post-acquisition profits or losses is recognized in the Consolidated
+Statements of Income, and its share of post-acquisition changes
+in equity that have not been recognized in the associate's profit
+or loss is recognized directly in equity. The cumulative post-acqui-
+sition changes are adjusted against the carrying amount of the
+investment in the associate. When Siemens' share of losses in an
+associate equals or exceeds its interest in the associate, Siemens
+does not recognize further losses, unless it incurs obligations or
+makes payments on behalf of the associate. The interest in an
+associate is the carrying amount of the investment in the associ-
+ate together with any long-term interests that, in substance, form
+part of Siemens' net investment in the associate.
+Joint ventures - Joint ventures are entities over which Siemens
+and one or more parties have joint control. Joint control requires
+unanimous consent of the parties sharing control in decision
+making on relevant activities.
+Foreign currency translation - Assets and liabilities of foreign
+subsidiaries, where the functional currency is other than the
+euro, are translated using the spot exchange rate at the end of
+the reporting period, while the Consolidated Statements of In-
+come are translated using average exchange rates during the
+period. Differences arising from such translations are recognized
+within equity and reclassified to net income when the gain or loss
+on disposal of the foreign subsidiary is recognized. The Consoli-
+dated Statements of Cash Flow are translated at average ex-
+change rates during the period, whereas cash and cash equiva-
+lents are translated at the spot exchange rate at the end of the
+reporting period.
+62 Consolidated Financial Statements
+Foreign currency transaction - Transactions that are denomi-
+nated in a currency other than the functional currency of an en-
+tity, are recorded at that functional currency applying the spot
+exchange rate at the date when the underlying transactions are
+initially recognized. At the end of the reporting period, foreign
+currency-denominated monetary assets and liabilities are reval-
+ued to functional currency applying the spot exchange rate pre-
+vailing at that date. Gains and losses arising from these foreign
+currency revaluations are recognized in net income. Those for-
+eign currency-denominated transactions which are classified as
+non-monetary are remeasured using the historical spot ex-
+change rate.
+Revenue recognition - Under the condition that persuasive
+evidence of an arrangement exists, revenue is recognized to the
+extent that it is probable that the economic benefits will flow to
+the Company and the revenue can be reliably measured, regard-
+less of when the payment is being made. In cases where the in-
+flow of economic benefits is not probable due to customer re-
+lated credit risks, the revenue recognized is subject to the amount
+of payments irrevocably received.
+Sale of goods: Revenue is recognized when the significant risks
+and rewards of ownership of the goods have passed to the buyer,
+usually on delivery of the goods.
+Basis of consolidation - The Consolidated Financial Statements
+include the accounts of Siemens AG and its subsidiaries over
+which the Company has control. Siemens controls an investee if
+it has power over the investee. In addition, Siemens is exposed
+to, or has rights to, variable returns from the involvement with
+the investee and Siemens has the ability to use its power over the
+investee to affect the amount of Siemens' return.
+(3,605)
+5 to 10 years
+Impairment of property, plant and equipment and other
+intangible assets - The Company reviews property, plant and
+equipment and other intangible assets for impairment whenever
+events or changes in circumstances indicate that the carrying
+amount of an asset may not be recoverable. In addition, intangi-
+ble assets not yet available for use are subject to an annual im-
+pairment test. Impairment testing of property, plant and equip-
+ment and other intangible assets involves the use of estimates in
+determining the assets' recoverable amount which can have a
+material impact on the respective values and ultimately the
+amount of any impairment.
+Fair value hedges: The carrying amount of the hedged item is
+adjusted by the gain or loss attributable to the hedged risk.
+Where an unrecognized firm commitment is designated as
+hedged item, the subsequent cumulative change in its fair value
+is recognized as a separate financial asset or liability with corre-
+sponding gain or loss recognized in net income. For hedged
+items carried at amortized cost, the adjustment is amortized un-
+til maturity of the hedged item. For hedged firm commitments
+the initial carrying amount of the assets or liabilities that result
+from meeting the firm commitments are adjusted to include the
+cumulative changes in the fair value that were previously recog-
+nized as separate financial assets or liabilities.
+Cash flow hedges: The effective portion of changes in the fair
+value of derivative instruments designated as cash flow hedges
+are recognized in line item Other comprehensive income, net of
+income taxes (applicable deferred income tax), and any ineffec-
+tive portion is recognized immediately in net income. Amounts
+accumulated in equity are reclassified into net income in the
+same periods in which the hedged item affects net income.
+Share-based payment - Share-based payment awards at Siemens
+are predominately designed as equity-settled. Fair value is mea-
+sured at grant date and is expensed over the vesting period.
+Fair value is determined as the market price of Siemens shares,
+considering dividends during the vesting period the grantees are
+not entitled to and market conditions and non-vesting condi-
+tions, if applicable.
+Prior-year information - The presentation of certain prior-year
+information has been reclassified to conform to the current year
+presentation.
+RECENT ACCOUNTING PRONOUNCEMENTS,
+NOT YET ADOPTED
+The following pronouncements, issued by the IASB, are not yet
+effective and have not yet been adopted by the Company:
+In July 2014, the IASB issued IFRS 9, Financial Instruments. IFRS 9
+introduces a single approach for the classification and measure-
+ment of financial assets according to their cash flow characteris-
+tics and the business model they are managed in, and provides a
+new impairment model based on expected credit losses. IFRS 9
+also includes new regulations regarding the application of hedge
+accounting to better reflect an entity's risk management activi-
+ties especially with regard to managing non-financial risks. The
+new standard is effective for annual reporting periods beginning
+on or after January 1, 2018, while early application is permitted.
+The Company will adopt IFRS 9 for the fiscal year beginning as of
+October 1, 2018 and is currently assessing the impacts of its adop-
+tion on the Company's Consolidated Financial Statements.
+In May 2014, the IASB issued IFRS 15, Revenue from Contracts with
+Customers. According to the new standard, revenue is recog-
+nized to depict the transfer of promised goods or services to a
+customer in an amount that reflects the consideration to which
+the Company expects to be entitled in exchange for those goods
+or services. Revenue is recognized when, or as, the customer ob-
+tains control of the goods or services. IFRS 15 also includes guid-
+ance on the presentation of contract balances, that is, assets and
+liabilities arising from contracts with customers, depending on
+the relationship between the entity's performance and the cus-
+tomer's payment. IFRS 15 supersedes IAS 11, Construction Con-
+tracts and IAS 18, Revenue as well as related interpretations. The
+standard is effective for annual periods beginning on or after
+January 1, 2018; early application is permitted. The Company will
+adopt the standard for the fiscal year beginning as of October 1,
+2017 retrospectively, i.e. the comparable period will be presented
+in accordance with IFRS 15. Currently, it is expected that changes
+in the total amount of revenue to be recognized for a customer
+contract will be very limited. In addition, for certain types of con-
+tracts, the timing for recognizing revenue will change, in partic-
+ular revenue may be recognized earlier if variable consideration
+components exist, re-allocations of the transaction price be-
+tween performance obligations take place or licenses are trans-
+ferred to the customer. Based on analyses performed, the vast
+majority of construction-type contracts currently accounted for
+Consolidated Financial Statements 67
+under the percentage-of-completion method is expected to fulfill
+the requirements for revenue recognition over time. Besides,
+changes to the Statement of Financial Position are expected, e.g.
+separate line items for contract assets and contract liabilities are
+required, and quantitative and qualitative disclosures are added.
+The Company does not expect significant impacts on its Consol-
+idated Financial Statements.
+In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
+nates the current classification model for lessee's lease contracts
+as either operating or finance leases and, instead, introduces a
+single lessee accounting model requiring lessees to recognize
+right-of-use assets and lease liabilities for leases with a term of
+more than twelve months. This brings the previous off-balance
+leases on the balance sheet in a manner largely comparable to
+current finance lease accounting. IFRS 16 is effective for annual
+periods beginning on or after January 1, 2019; earlier application
+is permitted if IFRS 15 is already applied. The Company is cur-
+rently assessing the impact of adopting IFRS 16 on the Company's
+Consolidated Financial Statements and will adopt the standard
+for the fiscal year beginning as of October 1, 2019.
+NOTE 3 Acquisitions, dispositions
+and discontinued operations
+ACQUISITIONS
+In April 2016, Siemens acquired all shares of CD-adapco Ltd.,
+U.S., a global engineering simulation company with software
+solutions covering a wide range of engineering disciplines. The
+acquisition supplements Siemens' industry software portfolio
+and delivers on Siemens' strategy to further expand the digital
+enterprise portfolio. The acquired business will be integrated in
+the Digital Factory Division. The purchase price amounts to
+US$971 million (€853 million as of the acquisition date) paid in
+cash and is subject to customary cash/debt and working capital
+adjustments. The preliminary purchase price allocation as of the
+acquisition date resulted in Other intangible assets of €395 mil-
+lion and Deferred tax liabilities of €105 million. Other intangible
+assets mainly relate to technology of €273 million and customer
+relationships of €118 million. Preliminary goodwill of €569 mil-
+lion comprises intangible assets that are not separable such as
+employee know-how and expected synergy effects. Including
+earnings effects from purchase price allocation and integration
+costs, the acquired business contributed revenue of €63 million
+and a net income of €(27) million to Siemens for the period from
+acquisition to September 30, 2016. Revenue and net income of
+the combined entity in fiscal 2016 would have been €79,722 mil-
+lion and €5,566 million, respectively, had CD-adapco been in-
+cluded as of October 1, 2015.
+In June 2015, Siemens acquired all shares of Dresser-Rand Group
+Inc., Houston, Texas (U.S.) and Paris (France). The purchase price
+allocation was finalized in the third quarter of fiscal 2016. The
+purchase price amounts to US$6,692 million (€5,981 million as
+of the acquisition date) paid in cash. The following figures result
+from the purchase price allocation as of the acquisition date:
+Other intangible assets €2,839 million, Property, plant and equip-
+ment €240 million, Trade and other receivables €318 million,
+Inventories €480 million, Other current financial assets €145 mil-
+lion, Cash and cash equivalents €175 million, Debt including out-
+standing financial debt settled €1,043 million, Trade payables
+€219 million, Provisions €118 million, Other current liabilities
+€386 million and Deferred tax liabilities €935 million. Intangible
+assets mainly relate to customer relationships of €2,383 million
+and technology of €393 million. The gross contractual amount of
+the trade and other receivables acquired is €469 million. Good-
+will amounts to €4,580 million and is largely based on synergies,
+such as sales synergies mainly resulting from the extended port-
+folio and enhanced service opportunities, and cost synergies,
+especially in research and development, purchasing, general ad-
+ministration functions, as well as manufacturing.
+In December 2014, Siemens acquired the Rolls-Royce Energy aero-
+derivative gas turbine and compressor business of Rolls-Royce
+plc, U.K. (Rolls-Royce). The purchase price allocation was final-
+ized in the first quarter of fiscal 2016. The contractually agreed
+purchase price amounts to £785 million (€990 million as of the
+acquisition date) paid in cash. That amount was subject to
+post-closing adjustments amounting to £29 million (€37 million
+as of the acquisition date). In addition, as part of the transaction,
+Siemens paid Rolls-Royce £200 million (€252 million as of the
+acquisition date) for a 25 year exclusive technology licensing
+agreement and for preferred access to supply and engineering
+services of Rolls-Royce. Goodwill amounts to €408 million and is
+largely based on synergies, such as cost synergies, especially in
+manufacturing, purchasing, research and development, as well
+as general administration functions, and sales synergies mainly
+resulting from the extension of the gas turbine portfolio.
+30,152
+In fiscal 2016 and 2015, Income from discontinued operations,
+net of income taxes, includes gains related to the sale of the
+hearing aid business of €102 million and €1.7 billion, respec-
+tively; in fiscal 2015, Siemens recognized a pretax gain on
+disposal for the sale of its hospital information business of
+€516 million.
+Derivative financial instruments - Derivative financial instru-
+ments, such as foreign currency exchange contracts and interest
+rate swap contracts are measured at fair value and classified as
+held for trading unless they are designated as hedging instru-
+ments, for which hedge accounting is applied. Changes in the fair
+value of derivative financial instruments are recognized either in
+net income or, in the case of a cash flow hedge, in line item Other
+comprehensive income, net of income taxes (applicable deferred
+income tax). Certain derivative instruments embedded in host
+contracts are also accounted for separately as derivatives.
+Financial liabilities - Siemens measures financial liabilities, ex-
+cept for derivative financial instruments, at amortized cost using
+the effective interest method.
+economic trends and analysis of historical bad debts on a port-
+folio basis. For the determination of the country-specific compo-
+nent of the individual allowance, Siemens also considers country
+credit ratings, which are centrally determined based on informa-
+tion from external rating agencies. Regarding the determination
+of the valuation allowance derived from a portfolio-based analy-
+sis of historical bad debts, a decline of receivables in volume re-
+sults in a corresponding reduction of such provisions and vice
+versa. As of September 30, 2016 and 2015, Siemens recorded a
+valuation allowance for trade and other receivables (including
+leases) of €1,211 million and €1,123 million, respectively.
+66 Consolidated Financial Statements
+Discontinued operations and non-current assets held for dis-
+posal - Discontinued operations are reported when a component
+of an entity is classified as held for disposal or has been disposed
+of, if the component represents a separate major line of business
+or geographical area of operations and is part of a single co-ordi-
+nated plan to dispose of a separate major line of business or geo-
+graphical area of operations. In the Consolidated Statements of
+Income, income (loss) from discontinued operations is reported
+64 Consolidated Financial Statements
+separately from income and expenses from continuing opera-
+tions; prior periods are presented on a comparable basis. In the
+Consolidated Statements of Cash Flow, the cash flows from dis-
+continued operations are presented separately from cash flows
+of continuing operations; prior periods are presented on a com-
+parable basis. The disclosures in the Notes to the Consolidated
+Financial Statements outside NOTE 3 ACQUISITIONS, DISPOSITIONS
+AND DISCONTINUED OPERATIONS that refer to the Consolidated State-
+ments of Income and the Consolidated Statements of Cash Flow
+relate to continuing operations.
+Siemens classifies a non-current asset or a disposal group as held
+for disposal if its carrying amount will be recovered principally
+through a sale transaction rather than through continuing use.
+The disclosures in the Notes to Consolidated Financial State-
+ments outside NOTE 3 ACQUISITIONS, DISPOSITIONS AND DISCON-
+TINUED OPERATIONS that refer to the Consolidated Statements of
+Financial Position generally relate to assets that are not held for
+disposal. Siemens reports non-current assets or disposal groups
+held for disposal separately in → NOTE 3 ACQUISITIONS, DISPOSITIONS
+AND DISCONTINUED OPERATIONS. Non-current assets classified as
+held for disposal and disposal groups are measured at the lower
+of their carrying amount and fair value less costs to sell. Depreci-
+ation and amortization ceases. The determination of the fair
+value less costs to sell includes the use of estimates and assump-
+tions that tend to be uncertain.
+Income taxes - Tax positions under respective local tax laws
+and tax authorities' views can be complex and subject to differ-
+ent interpretations of tax payers and local tax authorities.
+Different interpretations of tax laws may result in additional tax
+payments for prior years and are taken into account based on
+management's considerations. Under the liability method,
+deferred tax assets and liabilities are recognized for future tax
+consequences attributable to differences between the financial
+statement carrying amounts of existing assets and liabilities
+and their respective tax bases. Deferred tax assets are recog-
+nized if sufficient future taxable profit is available, including
+income from forecasted operating earnings, the reversal of
+existing taxable temporary differences and established tax
+planning opportunities. As of each period-end, Siemens evalu-
+ates the recoverability of deferred tax assets, based on pro-
+jected future taxable profits. Based upon the level of historical
+taxable income and projections for future taxable income over
+the periods in which the deferred tax assets are deductible,
+Siemens believes it is probable the Company will realize the
+benefits of these deductible differences. As future develop-
+ments are uncertain and partly beyond Siemens's control,
+assumptions are necessary to estimate future taxable profits as
+well as the period in which deferred tax assets will recover.
+Estimates are revised in the period in which there is sufficient
+evidence to revise the assumption.
+Inventories - Inventories are valued at the lower of acquisition
+or production costs and net realizable value, costs being gener-
+ally determined on the basis of an average or first-in, first-out
+method.
+Defined benefit plans - Siemens measures the entitlements by
+applying the projected unit credit method. The approach reflects
+an actuarially calculated net present value of the future benefit
+entitlement for services already rendered. In determining the
+net present value of the future benefit entitlement for service
+already rendered (Defined Benefit Obligation (DBO)), the ex-
+pected rates of future salary increase and expected rates of fu-
+ture pension progression are considered. The assumptions used
+for the calculation of the DBO as of the period-end of the preced-
+ing fiscal year are used to determine the calculation of service
+cost and interest income and expense of the following year. The
+net interest income or expense for the fiscal year will be based
+on the discount rate for the respective year multiplied by the net
+defined benefit liability (asset) at the preceding fiscal year's pe-
+riod-end date.
+Service cost and past service cost for post-employment benefits
+and administration costs unrelated to the management of plan
+assets are allocated among functional costs. Past service cost and
+settlement gains (losses) are recognized immediately in profit or
+loss. For unfunded plans, the amount of line item Post-employ-
+ment benefits equals the DBO. For funded plans, Siemens offsets
+the fair value of the plan assets with the DBO. Siemens recog-
+nizes the net amount, after adjustments for effects relating to
+any asset ceiling.
+Remeasurements comprise actuarial gains and losses as well as
+the difference between the return on plan assets and the
+amounts included in net interest on the net defined benefit lia-
+bility (asset). They are recognized in Other comprehensive in-
+come, net of income taxes.
+5 to 10 years
+generally 5 years
+generally 3 to 5 years
+Actuarial valuations rely on key assumptions including discount
+rates, expected compensation increases, rate of pension progres-
+sion and mortality rates. Discount rates used are determined
+by reference to yields on high-quality corporate bonds of appro-
+priate duration and currency at the end of the reporting period.
+In case such yields are not available discount rates are based on
+government bonds yields. Due to changing market, economic
+and social conditions the underlying key assumptions may differ
+from actual developments.
+Consolidated Financial Statements 65
+amount of the obligation. If the effect is material, provisions are
+recognized at present value by discounting the expected future
+cash flows at a pretax rate that reflects current market assess-
+ments of the time value of money. When a contract becomes
+onerous, the
+present obligation under the contract is recognized
+as a provision.
+Significant estimates are involved in the determination of provi-
+sions related to onerous contracts, warranty costs, asset retire-
+ment obligations, legal and regulatory proceedings as well as
+governmental investigations (Legal Proceedings). Siemens re-
+cords a provision for onerous sales contracts when current esti-
+mates of total contract costs exceed expected contract revenue.
+Onerous sales contracts are identified by monitoring the prog-
+ress of the project and updating the estimate of total contract
+costs which also requires significant judgment relating to
+achieving certain performance standards as well as estimates
+involving warranty costs and estimates regarding project delays
+including the assessment of responsibility splits between the
+contract partners for these delays. Uncertainties regarding asset
+retirement obligations include the estimated costs of decom-
+missioning and final waste storage because of the long time
+frame over which future cash outflows are expected to occur
+including the respective interest accretion. Amongst others, the
+estimated cash outflows could alter significantly if, and when,
+political developments affect the government's plans to develop
+the final storage.
+Legal Proceedings often involve complex legal issues and are
+subject to substantial uncertainties. Accordingly, considerable
+judgment is part of determining whether it is probable that
+there is a present obligation as a result of a past event at the
+end of the reporting period, whether it is probable that such a
+Legal Proceeding will result in an outflow of resources and
+whether the amount of the obligation can be reliably estimated.
+Internal and external counsels are generally part of the deter-
+mination process. Due to new developments, it may be neces-
+sary, to record a provision for an ongoing Legal Proceeding or
+to adjust the amount of a previously recognized provision. Upon
+resolution of a Legal Proceeding, Siemens may incur charges in
+excess of the recorded provisions for such matters. The out-
+come of Legal Proceedings may have a material effect on
+Siemens' financial position, its results of operations and/or its
+cash flows.
+Termination benefits - Termination benefits are provided as a
+result of an entity's offer made in order to encourage voluntary
+redundancy before the normal retirement date or from an enti-
+ty's decision to terminate the employment. Termination benefits
+in accordance with IAS 19, Employee Benefits, are recognized as
+a liability and an expense when the entity can no longer with-
+draw the offer of those benefits.
+Financial instruments - A financial instrument is any contract
+that gives rise to a financial asset of one entity and a financial
+liability or equity instrument of another entity. Siemens does not
+use the category held to maturity and does not use the option to
+designate financial assets or financial liabilities at fair value
+through profit or loss at inception (Fair Value Option). Based on
+their nature, financial instruments are classified as financial as-
+sets and financial liabilities measured at cost or amortized cost
+and financial assets and financial liabilities measured at fair value
+and as receivables from finance leases. Regular way purchases or
+sales of financial assets are accounted for at the trade date. Ini-
+tially, financial instruments are recognized at their fair value.
+Transaction costs are only included in determining the carrying
+amount, if the financial instruments are not measured at fair
+value through profit or loss. Receivables from finance leases are
+recognized at an amount equal to the net investment in the
+lease. Subsequently, financial assets and liabilities are measured
+according to the category to which they are assigned cash and
+cash equivalents, available-for-sale financial assets, loans and
+receivables, financial liabilities measured at amortized cost or
+financial assets and liabilities classified as held for trading.
+Cash and cash equivalents - The Company considers all highly
+liquid investments with less than three months maturity from the
+date of acquisition to be cash equivalents. Cash and cash equiv-
+alents are measured at cost.
+Available-for-sale financial assets - Investments in equity instru-
+ments, debt instruments and fund shares are measured at fair
+value, if reliably measurable. Unrealized gains and losses, net of
+applicable deferred income tax expenses, are recognized in line
+item Other comprehensive income, net of income taxes. Pro-
+vided that fair value cannot be reliably determined, Siemens
+measures available-for-sale financial assets at cost. This applies
+to equity instruments that do not have a quoted market price in
+an active market, and decisive parameters cannot be reliably es-
+timated to be used in valuation models for the determination of
+fair value. Siemens considers all available evidence such as mar-
+ket conditions and prices, investee-specific factors and the dura-
+tion as well as the extent to which fair value is less than acquisi-
+tion cost in evaluating potential impairment of its available-for-sale
+financial assets. The Company considers a decline in fair value as
+objective evidence of impairment, if the decline exceeds 20% of
+costs or continues for more than six months.
+Loans and receivables - Financial assets classified as loans and
+receivables are measured at amortized cost using the effective
+interest method less any impairment losses. Impairment losses on
+trade and other receivables are recognized using separate allow-
+ance accounts. The allowance for doubtful accounts involves
+significant management judgment and review of individual re-
+ceivables based on individual customer creditworthiness, current
+Provisions - A provision is recognized in the Statement of Finan-
+cial Position when it is probable that the Company has a present
+legal or constructive obligation as a result of a past event, it is
+probable that an outflow of economic benefits will be required
+to settle the obligation and a reliable estimate can be made of the
+(148)
+DISCONTINUED OPERATIONS
+909
+Non controlling
+interests
+Total equity
+560
+7,282
+98
+7,380
+1,049
+354
+(42)
+993
+35
+1,029
+(2,728)
+(145)
+(2,873)
+36
+36
+(2,703)
+233
+30,954
+Total equity
+attributable to
+shareholders
+of Siemens AG
+(3,747)
+(314)
+1,160
+5,733
+5,450
+(2,637)
+(2,827)
+158
+(67)
+(1)
+(93)
+(2,703)
+(2,575)
+(42)
+5,890
+27,454
+Currency trans-
+lation differences
+Available-for-sale
+financial assets
+Derivative financial
+instruments
+Treasury
+shares at cost
+745
+373
+2,550
+(2,703)
+30,152
+256
+208
+(2,879)
+(2,879)
+(2,827)
+(239)
+(3,066)
+256
+91
+(446)
+434
+(446)
+391
+390
+390
+2,668
+(42)
+92
+51
+36
+37
+(446)
+(885)
+91
+134
+289
+5,584
+96
+33
+129
+1,794
+726
+(357)
+(6,218)
+34,474
+289
+35,056
+581
+35,056
+581
+34,474
+5,450
+(357)
+726
+1,794
+(6,218)
+(in millions of €)
+Discontinued operations
+2016
+2015
+Continuing operations
+2,008
+1,869
+Assets
+(2)
+Liabilities and Post-employment benefits
+Non-current and current assets
+1,836
+1,936
+8,742
+7,539
+Income and expenses recognized
+directly in equity
+(996)
+139
+210
+Sep 30,
+2015
+(15)
+(in millions of €)
+Change in tax rates
+8
+(43)
+Foreign tax rate differential
+(280)
+(107)
+Tax effect of investments accounted
+for using the equity method
+(92)
+26
+2016
+Other, net
+2
+Actual income tax expenses
+2,008
+1,869
+Deferred income tax assets and liabilities on a gross basis are
+summarized as follows:
+As of September 30, 2016 and 2015, €953 and €458 million of the
+unrecognized tax loss carryforwards expire over the periods to 2031.
+Siemens has not recognized deferred tax liabilities for income
+taxes or foreign withholding taxes on the cumulative earnings of
+subsidiaries of €26,585 million and €27,507 million, respectively
+in fiscal 2016 and 2015 because the earnings are intended to be
+permanently reinvested in the subsidiaries.
+Including items charged or credited directly to equity and the
+expense (benefit) from continuing and discontinued operations,
+the income tax expense (benefit) consists of the following:
+Fiscal year
+(6)
+1,010
+Deferred tax liabilities
+Other
+(in millions of €)
+2016
+Sep 30,
+2015
+Trade receivables from the sale
+of goods and services
+14,280
+13,909
+As of September 30, 2016, the Company has certain tax losses
+subject to significant limitations. For those losses deferred tax
+assets are not recognized, as it is not probable that gains will be
+generated to offset those losses.
+Receivables from finance leases
+2,007
+2,073
+16,287
+15,982
+Consolidated Financial Statements
+In fiscal 2016 and 2015, the long-term portion of receivables from
+finance leases is reported in Other financial assets and amounts
+to €3,557 million and €3,264 million, respectively.
+Changes to the valuation allowance of current and long-term re-
+ceivables which belong to the class of financial assets measured
+at (amortized) cost are as follows (excluding receivables from
+finance leases):
+The gross investment in leases and the present value of minimum
+future lease payments receivable are due as follows:
+Gross investment
+(44)
+in leases
+1,983
+2,602
+Total deferred tax assets, net
+8,339
+114
+237
+Tax loss and credit carryforward
+547
+610
+Deferred tax assets
+11,240
+10,322
+Liabilities
+2,218
+Non-current and current assets
+7,272
+NOTE 8 Trade and other receivables
+Liabilities
+930
+732
+Other
+120
+336
+8,638
+7,588
+deferred tax assets and tax credits
+Fiscal year
+(20)
+(in millions of €)
+Income (loss) from continuing operations
+Fiscal year
+2015
+2016
+288
+38
+Income (loss) from discontinued operations
+1
+Other comprehensive income,
+net of income taxes
+Total comprehensive income
+(31)
+257
+20
+58
+Item Income (loss) from investments accounted for using the eq-
+uity method, net, includes Siemens' share in BWI Informations-
+technik GmbH's (BWI) earnings of €16 million and €27 million,
+respectively, in fiscal 2016 and 2015. The carrying amount of all
+individually not material associates includes the carrying amount
+of BWI, amounting to €95 million and €114 million, respectively,
+as of September 30, 2016 and 2015. Siemens holds a 50.05%
+stake in BWI. BWI is not controlled by Siemens due to significant
+participating rights of the two other shareholders. Together with
+the HERKULES obligations the Company's maximum exposure to
+loss from BWI as of September 30, 2016 and 2015 amounts to
+€695 million and €1,204 million, respectively. BWI finances its
+operations on its own.
+NOTE 5 Other operating income
+In fiscal 2016 and 2015, Other operating income includes gains
+on sales of property, plant and equipment of €177 million and
+€232 million, respectively.
+NOTE 6 Other operating expenses
+Other operating expenses in fiscal 2016 and 2015 include losses
+on sales of property, plant and equipment, and effects from in-
+surance, legal and regulatory matters.
+NOTE 7 Income taxes
+As of September 30, 2016 and 2015, the carrying amount of all
+individually not material associates amounts to €2,242 million
+and €2,046 million, respectively. Summarized financial infor-
+mation for all individually not material associates adjusted for
+the percentage of ownership held by Siemens, is presented be-
+low. Items included in the Statements of Comprehensive In-
+come are presented for the twelve month period applied under
+the equity method.
+Income tax expense (benefit) consists of the following:
+In fiscal 2015, Siemens recognized proportionate losses of
+€275 million as a consequence of a funding commitment pro-
+vided to Unify Holdings B.V. The investment was sold in the
+second quarter of fiscal 2016.
+134
+Present value of
+minimum future lease
+payments receivable
+NOTE 4 Interests in other entities
+Investments accounted for using the equity method
+(in millions of €)
+Fiscal year
+2015
+(87)
+2016
+Share of profit (loss), net
+316
+Gains (losses) on sales, net
+(53)
+1,477
+Impairment and reversals of impairment
+(129)
+(155)
+Income (loss) from
+investments accounted for
+using the equity method, net
+1,235
+(in millions of €)
+Current tax
+Deferred tax
+Income tax expenses
+192
+2,295
+2,238
+Tax loss carryforward
+2,013
+1,142
+2,201
+1,334
+Expected income tax expenses
+Increase (decrease) in
+income taxes resulting from:
+Non-deductible losses and expenses
+600
+474
+Tax-free income
+(227)
+(709)
+Taxes for prior years
+(223)
+188
+Deductible temporary differences
+2015
+2016
+2016
+2015
+1,773
+2,014
+235
+(145)
+2,008
+1,869
+The current income tax expenses in fiscal 2016 and 2015 include
+adjustments recognized for current tax of prior years in the
+amount of €(29) million and €79 million, respectively. The de-
+ferred tax expense (benefit) in fiscal 2016 and 2015 includes tax
+effects of the origination and reversal of temporary differences
+of €54 million and €(30) million, respectively.
+Change in realizability of
+In Germany, the calculation of current tax is based on a com-
+bined tax rate of 31%, consisting of a corporate tax rate of 15%,
+a solidarity surcharge thereon of 5.5% and an average trade tax
+rate of 15%. For foreign subsidiaries, current taxes are calculated
+based on the local tax laws and applicable tax rates in the indi-
+vidual foreign countries. Deferred tax assets and liabilities in
+Germany and abroad are measured at the tax rates that are ex-
+pected to apply to the period when the asset is realized or the
+liability is settled.
+70
+Income tax expense (current and deferred) differs from the
+amounts computed by applying a combined statutory German
+income tax rate of 31% as follows:
+Deferred tax assets have not been recognized with respect of the
+following items (gross amounts):
+(in millions of €)
+Sep 30,
+Fiscal year
+(in millions of €)
+2016
+2015
+Consolidated Financial Statements 69
+(in millions of €)
+1,989
+Sep 30,
+US$
+100
+87
+US$
+100
+87
+US$
+400
+358
+US$
+400
+356
+US$
+300
+268
+US$
+300
+267
+US$
+400
+358
+US$
+400
+357
+10,048
+10,799
+5.75%/2006/October 2016/US$ fixed-rate instruments
+445
+500
+US$
+447
+350
+405
+£
+350
+472
+3.75%/2012/September 2042/GBP fixed-rate instruments
+£
+650
+740
+£
+650
+863
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+1.5%/2013/March 2018/US$ fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+2013/June 2020/US$ floating-rate instruments
+US$
+2014/March 2019/US$ floating-rate instruments
+2014/September 2021/US$ floating-rate instruments
+Total Debt Issuance Program
+1,250
+1,285
+€
+1,250
+1,278
+€
+1,000
+996
+€
+1,000
+996
+US$
+500
+€
+£
+1,750
+1,750
+3.25%/2015/May 2025/US$-fixed-rate-instruments
+US$
+1,500
+1,336 US$
+1,500
+1,331
+4.40%/2015/May 2045/US$-fixed-rate-instruments
+US$
+1,750
+1,546
+US$
+1,750
+1,539
+US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
+US$
+350
+308
+1.30%/2016/September 2019/US$-fixed-rate-instruments
+US$
+1,100
+984
+1.70%/2016/September 2021/US$-fixed-rate-instruments
+US$
+1,100
+983
+2.00%/2016/September 2023/US$-fixed-rate-instruments
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+3.30%/2016/September 2046/US$-fixed-rate-instruments
+Total US$ Bonds
+US$
+1,557
+1,750
+1,564 US$
+1,750
+1,600
+6.125%/2006/August 2026/US$ fixed-rate instruments
+US$
+1,750
+1,982 US$
+1,750
+2,023
+US$3m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
+US$
+500
+448 US$
+500
+446
+1,570 US$
+1.45%/2015/May 2018/US$-fixed-rate-instruments
+1,250
+1,119
+US$
+1,250
+1,114
+2.15%/2015/May 2020/US$-fixed-rate-instruments
+US$
+1,000
+893 US$
+1,000
+889
+2.90%/2015/May 2022/US$-fixed-rate-instruments
+US$
+US$
+2.75%/2012/September 2025/GBP fixed-rate instruments
+996
+1,000
+217
+Interest rates in this Note are per annum. In fiscal 2016 and 2015,
+weighted-average interest rates for loans from banks, other finan-
+cial indebtedness and obligations under finance leases were
+3.9% (2015: 2.8%), 0.5% (2015: 0.2%) and 4.8% (2015: 4.7%),
+respectively.
+CREDIT FACILITIES
+As of September 30, 2016 and 2015, €7.1 billion and €7.1 billion
+of lines of credit are unused. The facilities are for general corpo-
+rate purposes. The €4.0 billion syndicated credit facility was
+extended by one year until June 25, 2021. The US$3.0 billion
+syndicated credit facility matures on September 27, 2020. The
+€450 million revolving bilateral credit facility is unused and was
+extended from September 30, 2016 to September 30, 2017.
+(in millions of €)
+2016
+Loans receivable
+11,838
+12,477
+Receivables from finance leases
+3,557
+Derivative financial instruments
+2,293
+2,398
+Available-for-sale financial assets
+2,662
+2,464
+Other
+260
+20,610
+20,821
+Item Loans receivable primarily relate to long-term loan trans-
+actions of SFS.
+NOTE 14 Other current liabilities
+(in millions of €)
+Sep 30,
+2016
+2015
+3,264
+Sep 30,
+2015
+NOTE 13 Other financial assets
+1,063
+ness (maturing until 2027)
+817
+1,737
+87
+68
+(in millions of €)
+2016
+2015
+Obligations under
+Within one year
+326
+319
+finance leases
+Billings in excess of costs and
+After one year but not more than five years
+652
+Total debt
+15
+31
+123
+115
+6,206
+2,979 24,761
+26,682
+More than five years
+85
+92
+1,099
+689
+estimated earnings on uncompleted
+contracts and related advances
+10,892
+500
+456
+5.625%/2008/June 2018/EUR fixed-rate instruments
+€
+1,600
+1,719
+€
+1,600
+1,779
+5.125%/2009/February 2017/EUR fixed-rate instruments
+€
+2,000
+2,028
+US$
+€
+2,090
+US$3m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
+US$
+400
+358
+US$
+400
+357
+1.5%/2012/March 2020/EUR fixed-rate instruments
+€
+1,000
+997
+€
+2,000
+750
+of €¹
+in millions
+10,982
+Liabilities to personnel
+5,401
+5,437
+Accruals for pending invoices
+1,175
+1,242
+Other
+2,968
+2,708
+20,437
+20,368
+Consolidated Financial Statements 75
+(in millions)
+76
+(interest/issued/maturity)
+5.625%/2006/March 2016/US$ fixed-rate instruments
+Currency
+notional
+amount
+(in millions)
+Sep 30, 2016
+Carrying
+amount
+in millions
+of €¹
+notional
+Currency
+Sep 30, 2015
+Carrying
+amount
+amount
+NOTES AND BONDS
+Sep 30,
+666
+1,700
+Employer contributions
+618
+611
+(618)
+(611)
+Plan participants' contributions
+144
+133
+144
+133
+Benefits paid
+(1,854)
+(1,753)
+(1,694)
+(1,616)
+(160)
+(137)
+Settlement payments
+(53)
+(47)
+(45)
+(47)
+(8)
+Business combinations, disposals and other
+(10)
+602
+(9)
+205
+3,703
+1
+(109)
+7
+11
+795
+801
+Return on plan assets excluding
+amounts included in net interest
+income and net interest expenses
+Actuarial (gains) losses
+2,473
+(245)
+6,284
+(41)
+Effects of asset ceiling
+515
+(2,473)
+6,284
+(41)
+(109)
+1
+(109)
+1
+Remeasurements recognized
+in the Consolidated Statements
+of Comprehensive Income
+6,284
+(41)
+2,473
+(245)
+245
+646
+(2)
+Foreign currency translation effects
+6,930
+4,859
+4,597
+3,347
+3,162
+1,512
+1,435
+6,188
+5,612
+6,047
+5,696
+9
+107
+151
+22
+3,671
+3,432
+3,064
+2,947
+68
+66
+675
+551
+1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
+78
+Consolidated Financial Statements
+Fiscal year
+10,184
+14,539
+15,275
+21,469
+(758)
+897
+(792)
+793
+7
+(1)
+40
+103
+Other reconciling items
+(2,531)
+Balance at fiscal year-end
+42,176
+(167) (1,777)
+36,818 28,809
+88
+390
+(749)
+(557)
+27,296
+119
+214
+13,486
+9,737
+thereof:
+Germany
+U.S.
+U.K.
+CH
+25,460
+7
+818
+1,436
+1,605
+33
+33
+€
+31
+31
+€
+31
+31
+2,705
+2,670
+28,554
+25,955
+1 Includes adjustments for fair value hedge accounting.
+Consolidated Financial Statements
+Debt Issuance Program - The Company has a program for the
+issuance of debt instruments in place under which instruments
+up to €15.0 billion can be issued as of September 30, 2016 and
+2015, respectively. As of September 30, 2016 and 2015 €9.9 bil-
+lion and €10.5 billion in notional amounts were issued and are
+outstanding. Siemens redeemed the 5.625% US$ 500 million
+fixed-rate instrument at face value on March 16, 2016 as due.
+US$ Bonds - In September 2016, Siemens issued instruments
+totaling US$6 billion (€5.4 billion as of September 30, 2016) in
+six tranches.
+Hybrid Capital Bond - On August 1, 2016 Siemens has irrevoca-
+bly called for redemption of the hybrid bonds and redeemed
+them at face value on September 14, 2016.
+Bond with Warrant Units - Each of the US$1.5 billion instru-
+ments were issued with 6,000 detachable warrants. As of Sep-
+tember 30, 2016 and 2015, terms for 10,661 warrants exchanged
+in fiscal 2015 entitle the holder to receive 1,914.0511 and
+1,902.0024 Siemens AG shares, respectively, per warrant at an
+exercise price of €98.1389 and €98.7606, respectively, per share;
+terms for the 1,339 not exchanged warrants entitle the holder to
+receive 1,823.4130 and 1,811.9349 Siemens AG shares, respec-
+tively, per warrant as well as 151.5630 and 160.4987 OSRAM
+shares, respectively, at an exercise price of €187,842.81. As of
+September 30, 2016, one warrant was exercised. The number of
+shares may be adjusted under the terms of the warrants. As of
+September 30, 2016 and 2015, the warrants offer option rights to
+22.8 million and 22.7 million Siemens AG shares, respectively.
+ASSIGNABLE AND TERM LOANS
+As of September 30, 2016 and 2015, two bilateral US$500 million
+term loan facilities (in aggregate €896 million and €893 million
+respectively) are outstanding until March 26, 2020.
+COMMERCIAL PAPER PROGRAM
+Siemens has a US$9.0 billion (€8.1 billion as of September 30,
+2016) commercial paper program in place including US$ extend-
+ible notes capabilities. As of September 30, 2016 and 2015,
+US$700 million (€627 million) and US$1.7 billion (€1.5 billion),
+respectively, were outstanding. Siemens' commercial papers
+have a maturity of generally less than 90 days. Interest rates
+ranged from 0.13% to 0.74% in fiscal 2016 and from 0.11% to
+0.32% in fiscal 2015.
+NOTE 16
+Post-employment benefits
+Siemens provides post-employment defined benefit plans or de-
+fined contribution plans to almost all of the Company's domestic
+employees and the majority of the Company's foreign employees.
+DEFINED BENEFIT PLANS
+The defined benefit plans open to new entrants are based pre-
+dominantly on contributions made by the Company. Only to a
+certain extent, those plans are affected by longevity, inflation
+and compensation increases and take into account country spe-
+cific differences. The Company's major plans are funded with
+assets in segregated entities. In accordance with local laws and
+bilateral agreements with benefit trusts (trust agreement) those
+plans are managed in the interest of the beneficiaries. The de-
+fined benefit plans cover 509,000 participants, including 214,000
+active employees, 93,000 former employees with vested benefits
+and 202,000 retirees and surviving dependents.
+€
+33
+33
+€
+1,517
+US$
+1,000
+887
+15,801
+10,497
+5.25%/2006/September 2066/EUR fixed-rate instruments
+€
+900
+934
+6.125%/2006/September 2066/GBP fixed-rate instruments
+Total Hybrid Capital Bonds
+£
+750
+Germany:
+1,055
+1.65%/2012/August 2019 US$ fixed-rate instruments
+US$
+US$
+1,500
+1,332
+US$
+1,500
+1,314
+1,500
+1,309
+US$
+1,500
+1,292
+3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
+3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
+Total Bonds with Warrant Units
+1.05%/2012/August 2017 US$ fixed-rate instruments
+In Germany, Siemens AG provides pension benefits through the
+plan BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
+zen legacy plans and deferred compensation plans. The majority
+of Siemens' active employees participate in the BSAV. Those ben-
+efits are predominantly based on contributions made by the
+Company and returns earned on such contributions, subject to a
+minimum return guaranteed by the Company. In connection with
+the implementation of the BSAV, benefits provided under the
+frozen legacy plans were modified to substantially eliminate the
+effects of compensation increases. However, these frozen plans
+still expose the Company to investment risk, interest rate risk and
+longevity risk. The pension plans are funded via contractual trust
+arrangements (CTA). In Germany no legal or regulatory minimum
+funding requirements apply.
+U.S.:
+Siemens Corporation sponsors the Siemens Pension Plans, which
+for the most part have been frozen to new entrants and to future
+benefit accruals, except for interest credits on cash balance ac-
+counts. Siemens Corporation has appointed the Investment Com-
+mittee as the named fiduciary for the management of the assets
+of the Plans. The Plans' assets are held in a Master Trust and the
+trustee of the Master Trust is responsible for the administration
+of the assets of the trust, taking directions from the Investment
+Committee. The Plans are subject to the funding requirements
+under the Employee Retirement Income Security Act of 1974 as
+amended, (ERISA). There is a regulatory requirement to maintain
+a minimum funding level of 80% in the defined benefit plans in
+order to avoid benefit restrictions. At its discretion, Siemens Cor-
+poration may contribute in excess of this regulatory requirement.
+Annual contributions are calculated by independent actuaries.
+214
+202
+9,737
+9,288
+Current service cost
+Interest expenses
+523
+1,078
+536
+1,076
+523
+7
+11
+1,085
+1,087
+26,505
+Interest income
+825
+(809)
+(825)
+Other¹
+5
+(177)
+8
+(179)
+(4)
+2
+Components of defined benefit
+costs recognized in the
+Consolidated Statements of income
+809
+US$
+27,296
+36,818
+Consolidated Financial Statements 77
+U.K.:
+Siemens plc offers benefits through the Siemens Benefit Scheme
+for which, until the start of retirement, an inflation increase of
+the accrued benefits is mandatory. The required funding is deter-
+mined by a funding valuation carried out every third year based
+on legal requirements. Due to deviating guidelines for the deter-
+mination of the discount rates, the technical funding deficit is
+usually larger than the IFRS funding deficit. To reduce the deficit
+Siemens entered into an agreement with the trustees to provide
+annual payments of GB£31 (€42) million until fiscal 2033. The
+agreement also provides for a cumulative advance payment by
+Siemens AG compensating the remaining annual payments at
+the date of early termination of the agreement due to cancella-
+tion or insolvency.
+Switzerland:
+Following the Swiss law of occupational benefits (BVG) each em-
+ployer has to grant post-employment benefits for qualifying em-
+ployees. Accordingly Siemens in Switzerland sponsors several
+cash balance plans. These plans are administered by foundations.
+The board of the main foundation is composed of equally many
+employer and employee representatives. The board of the foun-
+dation is responsible for investment policy and the asset manage-
+ment, as well as for any changes in the plan rules and the deter-
+mination of contributions to finance the benefits. The Company
+is required to make total contributions at least as high as the sum
+of the employee contributions set out in the plan rules. In case of
+an underfunded plan the Company together with the employees
+may be asked to pay supplementary contributions according to a
+well defined framework of recovery measures.
+Development of the defined benefit plans
+Defined benefit
+obligation (DBO)
+Fair value of
+plan assets
+Effects of
+asset ceiling
+Net defined
+benefit balance
+(1)
+(11)
+35,591
+(III)
+Fiscal year
+Fiscal year
+(1 - 11 + 111)
+Fiscal year
+(in millions of €)
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+Balance at begin of fiscal year
+Fiscal year
+Other financial indebted-
+536
+992
+23,166
+24,159
+17,783
+23,166
+The goodwill impairment test is performed at the level of a
+cash-generating unit or a group of cash-generating units, gener-
+ally represented by a segment. As of fiscal 2016, this also applies
+to Healthineers as a result of a change in the organization of the
+business and the related reporting structure. In fiscal 2015, the
+impairment tests for Healthineers were performed one level be-
+low the segment.
+Siemens performs the mandatory annual impairment test in the
+three months ended September 30. The recoverable amounts for
+the annual impairment test 2016 for Siemens' groups of cash-
+generating units were estimated to be higher than the carrying
+amounts. Key assumptions on which Siemens based its determi-
+nations of the fair value less costs to sell for the groups of
+cash-generating units include terminal value growth rates up to
+1.7% in fiscal 2016 and 2.5% in fiscal 2015, respectively and af-
+ter-tax discount rates of 5.0% to 9.0% in fiscal 2016 and 6.0% to
+9.5% in fiscal 2015. Where possible, reference to market prices is
+made.
+For the purpose of estimating the fair value less costs to sell of
+the groups of cash-generating units, cash flows were projected
+for the next five years based on past experience, actual operating
+results and management's best estimate about future develop-
+ments as well as market assumptions. The determined fair value
+of the groups of cash-generating units is assigned to level 3 of
+the fair value hierarchy.
+72
+Consolidated Financial Statements
+The fair value less costs to sell is mainly driven by the terminal
+value which is particularly sensitive to changes in the assump-
+tions on the terminal value growth rate and discount rate. Both
+assumptions are determined individually for each group of
+cash-generating units. Discount rates are based on the weighted
+average cost of capital (WACC) for the groups of cash-generating
+units (for SFS the discount rate represents cost of equity). The
+discount rates are calculated based on a risk-free rate of interest
+and a market risk premium. In addition, the discount rates reflect
+the current market assessment of the risks specific to each group
+of cash-generating units by taking into account specific peer
+group information on beta factors, leverage and cost of debt.
+The parameters for calculating the discount rates are based on
+external sources of information. The peer group is subject to an
+annual review and adjusted, if necessary. Terminal value growth
+rates take into consideration external macroeconomic sources of
+data and industry specific trends.
+The following table presents key assumptions used to determine
+fair value less costs to sell for impairment test purposes for the
+groups of cash-generating units to which a significant amount of
+goodwill is allocated:
+(in millions of €)
+Healthineers
+Digital Factory
+Power and Gas (without part of Power Generation Services)
+Power Generation Services (part of Power and Gas)
+Revenue figures in the five-year planning period of the groups of
+cash-generating units to which a significant amount of goodwill
+is allocated include average revenue growth rates (excluding
+portfolio effects) of between 0.3% and 5.3% (2.6% and 5.9% in
+fiscal 2015).
+Terminal value
+Goodwill
+growth rate
+Sep 30, 2016
+After-tax
+discount rate
+8,301
+1.7%
+6.5%
+3,933
+1.7%
+8.0%
+1,905
+1,909
+(1)
+1
+2016
+2015
+25,071
+19,546
+(127)
+1,187
+Acquisitions and purchase accounting adjustments
+1,144
+4,599
+Dispositions and reclassifications to assets classified as held for disposal
+(20)
+(261)
+Balance at year-end
+3,552
+26,068
+Accumulated impairment losses and other changes
+Balance at beginning of year
+Translation differences and other
+Impairment losses recognized during the period
+Dispositions and reclassifications to assets classified as held for disposal
+Balance at year-end
+Carrying amount
+Balance at beginning of year
+Balance at year-end
+1,905
+1,763
+2
+140
+1
+3
+25,071
+Fiscal year
+1.7%
+3,158
+Gross
+carrying
+lation
+business
+carrying
+Accumu-
+lated depre-
+ciation/
+amortiza-
+Deprecia-
+tion/amor-
+tization
+Carrying and impair-
+amount
+diffe-
+combi-
+(in millions of €)
+10/01/2015
+rences
+nations Additions
+Reclassi-
+fications
+Retire-
+amount
+ments¹ 09/30/2016
+tion and
+impairment
+amount
+09/30/2016
+ment in
+fiscal 2016
+Internally generated
+technology
+through
+Trans-
+Gross
+Additions
+1.7%
+8.0%
+(in millions of €)
+Diagnostics of Healthineers
+Goodwill
+5,108
+Terminal value
+growth rate
+Sep 30, 2015
+After-tax
+discount rate
+2.5%
+6.5%
+Power and Gas (without part of Power Generation Services)
+3,587
+1.7%
+8.0%
+8.0%
+Digital Factory
+1.7%
+8.5%
+Imaging & Therapy Systems of Healthineers
+2,790
+2.0%
+6.5%
+Power Generation Services (part of Power and Gas)
+2,613
+1.7%
+8.0%
+The sensitivity analysis for the groups of cash-generating units
+to which a significant amount of goodwill is allocated was based
+on a reduction in after-tax future cash flows by 10% or an in-
+crease in after-tax discount rates by one percentage point or a
+reduction in the terminal value growth rate by one percentage
+point. Siemens concluded that no impairment loss would need
+to be recognized on goodwill in any of the groups of cash-gen-
+erating units.
+Consolidated Financial Statements 73
+NOTE 12 Other intangible assets and
+property, plant and equipment
+3,328
+Translation differences and other
+Balance at beginning of year
+Cost
+of Income in the current period
+284
+168
+Write-offs charged against the allowance
+Recoveries of amounts previously written-off
+Foreign exchange translation differences
+Reclassifications to line item Assets held for
+disposal and dispositions of those entities
+Valuation allowance as of fiscal year-end
+(181)
+(145)
+9
+7
+(33)
+(9)
+(26)
+1,013
+933
+Minimum future lease payments to be received are as follows:
+2015
+Investments in finance leases primarily relate to industrial ma-
+chinery, medical equipment, transportation systems, equipment
+for information technology and office machines. Actual cash
+flows will vary from contractual maturities due to future sales of
+finance receivables, prepayments and write-offs.
+NOTE 9 Other current financial assets
+As of September 30, 2016 and 2015, Other current financial as-
+sets include loans receivables of €4,910 million and €3,128 mil-
+lion, respectively and derivative financial instruments of
+€758 million and €830 million, respectively.
+Sep 30,
+(in millions of €)
+2016
+Within one year
+2,378
+After one year but not more than five years
+More than five years
+3,358
+752
+6,488
+recorded in the Consolidated Statements
+Increase in valuation allowances
+beginning of fiscal year
+Valuation allowance as of
+1,000
+Sep 30,
+2016
+2015
+(in millions of €)
+2016
+2015
+2016
+2015
+933
+938
+Within one year
+One to five years
+Thereafter
+2,397
+2,474
+3,322
+246
+6,042
+2,492
+2,072
+3,405
+3,374
+2,940
+2,965
+1,038
+263
+564
+228
+6,840
+6,129
+5,457
+5,265
+1,952
+NOTE 10 Inventories
+The following table shows a reconciliation of minimum future lease
+payments to the gross and net investment in leases and to the
+present value of the minimum future lease payments receivable:
+(in millions of €)
+Gross investment in leases
+6,840
+6,129
+18,160
+17,253
+Less: Unearned finance income
+(1,078)
+(601)
+Net investment in leases
+5,762
+5,527
+Less: Allowance for doubtful accounts
+(198)
+(2,554)
+(190)
+(108)
+(72)
+Present value of minimum future
+lease payments receivable
+5,457
+5,265
+Cost of sales include inventories recognized as expense amount-
+ing to €54,706 million and €51,735 million, respectively, in fiscal
+2016 and 2015. Compared to prior year, write-downs increased
+(decreased) by €(3) million and €97 million as of September 30,
+2016 and 2015.
+Consolidated Financial Statements 71
+In the second quarter of fiscal 2016, Siemens revised project calcu-
+lations related to the resumption of long-term contracts with cus-
+tomers in Iran following the ending or easing of EU and U.S. sanc-
+tions in accordance with accounting guidance for construction
+and service contracts. The resulting adjustments increased reve-
+nue by €174 million as well as profit at Power and Gas and Income
+from continuing operations before income taxes by €130 million.
+Construction contracts, here and as follows, include service con-
+tracts accounted for under the percentage of completion method.
+The aggregate amount of costs incurred and recognized profits
+less recognized losses for construction contracts in progress, as
+of September 30, 2016 and 2015 amounted to €83,556 million
+and €82,196 million, respectively. Revenue from construction
+contracts amounted to €32,635 million and €30,261 million, re-
+spectively, for fiscal 2016 and 2015. Advance payments received
+on construction contracts in progress were €8,705 million and
+€8,674 million as of September 30, 2016 and 2015. Retentions in
+connection with construction contracts were €288 million and
+€225 million in fiscal 2016 and 2015, respectively.
+NOTE 11 Goodwill
+(in millions of €)
+residual value
+2,995
+(2,506)
+87
+Sep 30,
+2016
+2015
+Raw materials and supplies
+2,487
+2,631
+Work in progress
+4,281
+4,417
+Costs and earnings in excess
+of billings on uncompleted contracts
+10,046
+9,162
+Advance payments received
+(in millions of €)
+Sep 30,
+2015
+Minimum future lease payments
+6,488
+6,042
+Finished goods and products held for resale
+Advances to suppliers
+3,261
+3,046
+591
+551
+20,666
+19,807
+Plus: Unguaranteed residual values
+353
+2016
+324
+Less: Present value of unguaranteed
+3,067
+4,827
+(370)
+(7,185)
+8,077
+(778)
+Land and bulidings
+7,356
+169
+143
+199
+135
+(257)
+7,745
+(3,656)
+4,089
+(256)
+Technical machinery
+and equipment
+7,140
+167
+172
+282
+263
+(252)
+7,770
+(5,111)
+2,660
+(2,715)
+7,542
+(444) 15,262
+390
+3,796
+211
+337
+(302)
+2,995
+(1,619)
+1,376
+(176)
+Acquired technology
+including patents, licenses
+and similar rights
+3,525
+190
+923
+(513)
+53
+4,725
+(2,851)
+1,874
+(231)
+Customer relationships
+and trademarks
+4,552
+293
+2,873
+(176)
+Other intangible assets
+10,826
+693
+34
+Furniture and office
+equipment
+5,786
+and equipment
+23,968
+566
+487
+2,018
+(1,805) 25,234
+(15,024) 10,210
+(1,769)
+1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
+74
+Consolidated Financial Statements
+The gross carrying amount of Advances to suppliers and con-
+struction in progress includes €677 million and €787 million, re-
+spectively of property, plant and equipment under construction
+in fiscal 2016 and 2015. As of September 30, 2016 and 2015, con-
+tractual commitments for purchases of property, plant and
+equipment are €643 million and €474 million, respectively.
+Minimum future lease payments under operating leases are:
+Property, plant
+NOTE 15 Debt
+Current debt
+Sep 30,
+Non-current debt
+Sep 30,
+2016
+2015
+2016
+2015
+4,994
+456 23,560
+25,498
+380
+(252)
+755
+(in millions of €)
+Notes and bonds
+(maturing until 2046)
+Loans from banks
+(maturing until 2023)
+2,750
+6
+(1)
+109
+49
+580
+73
+5,829
+(4,510)
+1,319
+(662)
+Equipment leased to others
+2,927
+117
+57
+457
+855
+(4)
+3,033
+(1,746)
+1,287
+(345)
+Advances to suppliers and
+construction in progress
+760
+5
+66
+500
+(467)
+(7)
+856
+(521)
+technology
+(768)
+ment in
+fiscal 2015
+(932)
+Land and bulidings
+7,745
+(65)
+20
+274
+218
+(333)
+7,859
+(3,673)
+4,186
+(253)
+Technical machinery
+(7,727) 7,742
+and equipment
+(67)
+(39)
+288
+270
+(271)
+7,950
+(5,412)
+2,539
+(542)
+Furniture and office
+equipment
+5,829
+(29)
+7,770
+22
+15,469
+328
+(1,562)
+1,505
+Internally generated
+(189)
+Acquired technology
+including patents, licenses
+and similar rights
+4,725
+(37)
+260
+64
+(143)
+4,870
+388
+(2,974)
+(253)
+Customer relationships
+and trademarks
+7,542
+(77)
+68
+7,532
+(3,191)
+4,341
+(490)
+Other intangible assets
+15,262
+(115)
+1,896
+632
+(395)
+(448)
+(14)
+2,273
+(1,516)
+25,717
+(15,560)
+10,157
+(1,831)
+1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
+Additions
+Gross
+carrying
+Trans-
+and impair-
+lation
+business
+amount
+diffe-
+combi-
+Reclassi-
+(in millions of €)
+10/01/2014
+rences
+nations Additions fications
+Gross
+carrying
+Retire-
+amount
+ments¹ 09/30/2015
+Accumu-
+lated depre-
+ciation/
+amortiza-
+tion and
+impairment
+85
+Carrying
+amount
+09/30/2015
+Deprecia-
+tion/amor-
+tization
+(260)
+25,234
+through
+Property, plant
+6,092
+(4,764)
+1,328
+and equipment
+(690)
+Equipment leased to others
+3,033
+(83)
+23
+484
+(452)
+3,015
+(1,710)
+1,305
+10
+Advances to suppliers and
+2
+(2)
+(348)
+801
+(12)
+799
+595
+(582)
+(16)
+856
+construction in progress
+(40)
+with the Israeli authorities. On May 2, 2016, the DA filed criminal
+charges versus Siemens Israel Ltd. Siemens AG was not indicted, as
+it was possible for Siemens AG to conclude a non-prosecution
+agreement with the DA that obliged Siemens AG to pay an amount
+in the mid double-digit euro million range.
+As previously reported, in May 2013, Siemens Ltda., Brazil, (Siemens
+Ltda.) entered into a leniency agreement with the Administrative
+Council for Economic Defense (CADE) and other relevant Brazilian
+authorities relating to possible antitrust violations in connection with
+alleged anticompetitive irregularities in metro and urban train proj-
+ects, in which Siemens Ltda. and partially Siemens AG, as well as a
+number of other companies participated as contractor. In March 2014,
+CADE commenced administrative proceedings, confirming Siemens
+Ltda.'s immunity from administrative fines for the reported potential
+misconduct. In connection with the above mentioned metro and
+urban train projects, several Brazilian authorities initiated investiga-
+tions relating to alleged criminal acts (corruptive payments, anti-
+competitive conduct, undue influence on public tenders).
+84 Consolidated Financial Statements
+Consolidated Financial Statements 85
+As previously reported, in March 2014, Siemens was informed that
+in connection with the above mentioned metro and urban train proj-
+ects the Public Prosecutor's Office São Paulo has requested criminal
+proceedings at court into alleged violations of Brazilian antitrust law
+against a number of individuals including current and former
+Siemens employees. The proceedings continue; the Public Prosecu-
+tor's Office São Paulo has, in the meantime, appealed all decisions
+where the courts denied opening criminal trials.
+As previously reported, in May 2014, the Public Affairs Office
+(Ministério Público) São Paulo initiated a lawsuit against Siemens
+Ltda. as well as other companies and several individuals claiming,
+inter alia, damages in an amount of BRL2.5 billion (approximately
+€687 million as of September 2016) plus adjustments for inflation
+and related interest in relation to train refurbishment contracts en-
+tered into between 2008 and 2011. A technical note issued by the
+Brazilian cartel authority CADE earlier in 2014 had not identified ev-
+idence suggesting Siemens Ltda.'s involvement in anticompetitive
+conduct in relation to these refurbishment contracts. In January 2015
+the district court of São Paulo admitted a lawsuit of the State of São
+Paulo and two customers against Siemens Ltda., Siemens AG and
+other companies and individuals claiming damages in an unspeci-
+fied amount. In March 2015, the district court of São Paulo admitted
+a lawsuit of the Public Affairs Office (Ministério Público) São Paulo
+against Siemens Ltda. and other companies claiming, inter alia, dam-
+ages in an amount of BRL487 million (approximately €134 million as
+of September 2016) plus adjustments for inflation and related inter-
+est in relation to train maintenance contracts entered into in 2000
+and 2002. In September 2015, the district court of São Paulo admit-
+ted another lawsuit of the Public Affairs Office (Ministério Público)
+São Paulo against Siemens Ltda. and other companies claiming,
+inter alia, damages in an amount of BRL918 million (approximately
+As previously reported, the Vienna public prosecutor in Austria is
+conducting an investigation into payments between calendar 1999
+and calendar 2006 relating to Siemens Aktiengesellschaft Österre-
+ich, Austria, for which adequate services rendered could not be iden-
+tified. In September 2011, the Vienna public prosecutor extended the
+investigations to include a tax evasion matter for which Siemens AG
+Österreich is potentially liable. In November 2016, the proceedings
+against Siemens Aktiengesellschaft Österreich were stopped.
+As previously reported, CADE is conducting unrelated to the
+above mentioned proceedings two further investigations into
+possible antitrust behavior in the field of gas-insulated and air-
+insulated switchgear from the 1990's to 2006. Siemens is cooperat-
+ing with the authorities.
+As previously reported, in June 2015, Siemens Ltda. once again
+appealed to the Supreme Court against a decision confirming the
+decision of the previous court to suspend Siemens Ltda. from par-
+ticipating in public tenders and signing contracts with public ad-
+ministrations in Brazil for a five year term based on alleged irregu-
+larities in calendar 1999 and 2004 public tenders with the Brazilian
+Postal authorities. In July 2015, the court suspended enforcement
+of the debarment decision pending the appeal.
+Siemens is in the course of its normal business operations involved
+in numerous Legal Proceedings in various jurisdictions. These Legal
+Proceedings could result, in particular, in Siemens being subject to
+payment of damages and punitive damages, equitable remedies or
+criminal or civil sanctions, fines or disgorgement of profit. In individ-
+ual cases this may also lead to formal or informal exclusion from
+tenders or the revocation or loss of business licenses or permits. In
+addition, further Legal Proceedings may be commenced or the scope
+of pending Legal Proceedings may be expanded. Asserted claims are
+generally subject to interest rates.
+As previously reported, the Israeli Exchange Supervisory Authority
+(ISA) concluded its investigation regarding potentially illegal
+payments that were allegedly paid to Israeli Electric Company-
+representatives in the early 2000's, and transferred the investigation
+files to the Israeli District Attorney (DA) in August 2015, in order to
+decide whether or not to take any legal steps against any of the
+suspects named in the ISA investigation. Siemens fully cooperated
+For Legal Proceedings information required under IAS 37, Provisions,
+Contingent Liabilities and Contingent Assets is not disclosed if the
+Company concludes that disclosure can be expected to seriously
+prejudice the outcome of the matter.
+Some of these Legal Proceedings could result in adverse decisions
+for Siemens that may have material effects on its financial position,
+the results of its operations and/or its cash flows in the respective
+reporting period. At present, Siemens does not expect any matters
+not described in this Note to have material effects on its financial
+position, the results of its operations and/or its cash flows.
+€252 million as of September 2016) plus adjustments for inflation
+and related interest in relation to train maintenance contracts
+entered into in 2006 and 2007. Siemens will defend itself against
+these actions. It cannot be excluded that further significant damage
+claims will be brought by customers or the state against Siemens.
+Based on the above mentioned conclusion of the Israeli Antitrust
+Authority, two electricity consumer groups filed motions to certify
+a class action for cartel damages against a number of companies
+including Siemens AG with an Israeli State Court in Septem-
+ber 2013. One of the class actions has been dismissed by the court
+in fiscal year 2015. The remaining class action seeks compensation
+for alleged damages amounting to ILS2.8 billion (approximately
+€667 million as of September 2016). In addition, the Israel Electric
+Corporation (IEC) filed at the end of December 2013 with an Israeli
+State Court a separate ILS3.8 billion (approximately €898 million as
+of September 2016) claim for damages against Siemens AG and
+other companies that allegedly formed a cartel in the Israeli gas-
+insulated switchgear market. Siemens AG is defending itself against
+the actions.
+870
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED COMPLIANCE VIOLATIONS
+As previously reported, in July 2008, Hellenic Telecommunications
+Organization S.A. (OTE) filed a lawsuit against Siemens AG with the
+district court of Munich, Germany, seeking to compel Siemens AG to
+disclose the outcome of its internal investigations with respect to
+OTE. OTE seeks to obtain information with respect to allegations of
+undue influence and/or acts of bribery in connection with contracts
+concluded between Siemens AG and OTE from calendar 1992 to
+2006. At the end of July 2010, OTE expanded its claim and requested
+payment of damages by Siemens AG of at least €57 million to OTE
+for alleged bribery payments to OTE employees. In October 2014 OTE
+increased its damage claim to the amount of at least €68 million.
+Siemens AG continues to defend itself against the expanded claim.
+882
+773
+After one year but not more than five years
+More than five years
+Within one year
+1,707
+3,458
+As previously reported, in September 2011, the Israeli Antitrust
+Authority requested that Siemens present its legal position regard-
+ing an alleged anti-competitive arrangement between April 1988
+and April 2004 in the field of gas-insulated switchgear. In Septem-
+ber 2013, the Israeli Antitrust Authority concluded that Siemens AG
+was a party to an illegal restrictive arrangement regarding the
+Israeli gas-insulated switchgear market between 1988 and 2004,
+with an interruption from October 1999 to February 2002. The
+Company appealed against this decision in May 2014.
+1,662
+993
+3,428
+The Company is jointly and severally liable and has capital contri-
+bution obligations as a partner in commercial partnerships and
+as a participant in various consortiums.
+NOTE 21
+Legal proceedings
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED BREACHES OF CONTRACT
+As previously reported, Siemens AG is a member of a supplier con-
+sortium that has been contracted to construct the nuclear power
+plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj (TVO) on
+a turnkey basis. The agreed completion date for the nuclear power
+plant was April 30, 2009. Siemens AG's share of the contract value
+is approximately 27%. The other member of the supplier consor-
+tium is a further consortium consisting of Areva NP S.A.S. and its
+wholly-owned subsidiary, Areva GmbH. Completion of the power
+plant has been delayed for reasons which are in dispute. In De-
+cember 2008, the supplier consortium filed a request for arbitra-
+tion against TVO demanding an extension of the construction
+time, additional compensation, milestone payments, damages
+and interest. TVO rejected the claims and asserted counterclaims
+against the supplier consortium consisting primarily of damages
+due to the delay. In August 2015, TVO updated its counterclaims
+to approximately €2.3 billion. In February 2016, the supplier con-
+sortium updated its monetary claims to approximately €3.5 bil-
+lion. The amounts claimed by the parties do not cover the total
+period of delay and may be updated further. On November 7, 2016
+a partial award on certain preliminary questions identified for
+early treatment was issued. The majority of the facts underlying
+the claims regarding delay and disruption that occurred during
+project execution are not covered by the partial award. A further
+partial award on additional preliminary questions for early treat-
+ment is expected during the first half of calendar year 2017. A final
+arbitration judgment on the claims and counterclaims is expected
+at the earliest during the second half of calendar year 2017.
+As previously reported, during fiscal year 2014, Siemens Indus-
+trial Turbomachinery Ltd., United Kingdom, was sued before an
+Iranian Court. The Parties have finalized their dispute at the end
+of calendar year 2015.
+Total operating rental expenses for the years ended September 30,
+2016 and 2015 were €1,158 million and €1,118 million, respectively.
+NOTE 22 Additional disclosures
+53,092
+The following table discloses the carrying amounts of each
+608
+2,518
+2,620
+3,955
+3,639
+55,594
+534
+40,591
+1,190
+1,383
+40,986
+536
+2015
+310
+42,091
+39,067
+on financial instruments
+9,957
+2015
+36,268
+category of financial assets and financial liabilities:
+(in millions of €)
+Loans and receivables¹
+Cash and cash equivalents
+Derivatives designated in a hedge accounting relationship
+Financial assets held for trading
+10,604
+Available-for-sale financial assets²
+Financial liabilities measured at amortized cost³
+Financial liabilities held for trading4
+Derivatives designated in a hedge accounting relationship4
+Financial liabilities
+Sep 30,
+2016
+37,984
+Financial assets
+2016
+0.6
+(in millions of €)
+Debt to equity ratio
+2016
+2,623
+22,418
+8.55
+Sep 30,
+2015
+2,417
+21,198
+SFS debt
+8.77
+ness.
+Siemens' current corporate credit ratings are:
+Standard &
+Sep 30, 2015
+Sep 30, 2016
+Moody's
+Investors
+Equity allocated to SFS differs from the carrying amount of equity
+as it is mainly allocated based on the risks of the underlying busi-
+Poor's
+Allocated equity
+The SFS business is capital intensive and operates a larger
+amount of debt to finance its operations compared to the indus-
+trial business.
+Plus/Less: Interest income, interest expenses
+and other financial income (expenses), net
+Plus: Amortization,
+depreciation and impairments
+EBITDA
+Income from continuing operations
+before income taxes
+1 Reported in the following line items of the Statements
+of Financial Position: Trade and other receivables, Other
+current financial assets and Other financial assets, except
+for separately disclosed €2,662 million and €2,464 million
+available-for-sale financial assets and €3,051 million
+and €3,228 million derivative financial instruments as
+of September 30, 2016 and 2015, respectively. Includes
+€14,280 million and €13,909 million trade receivables from
+the sale of goods and services in fiscal 2016 and 2015,
+Industrial net debt/EBITDA
+7,404
+7,218
+(in millions of €)
+48
+2,764
+10,216
+2,549
+9,825
+1.0
+1 The adjustment considers that both Moody's and S&P view SFS as a captive finance company.
+These rating agencies generally recognize and accept higher levels of debt attributable to
+captive finance subsidiaries in determining credit ratings. Following this concept, Siemens
+excludes SFS Debt in order to derive an industrial net debt which is not affected by SFS's
+financing activities.
+2 Debt is generally reported with a value representing approximately the amount to be repaid.
+However, for debt designated in a hedging relationship (fair value hedges), this amount is
+adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
+Siemens deducts these changes in market value in order to end up with an amount of debt
+that approximately will be repaid.
+82 Consolidated Financial Statements
+58
+Service
+Ratings
+Services
+Moody's
+Investors
+859
+Guarantees of third-party performance
+HERKULES obligations
+2,319
+2,292
+600
+3,718
+799
+1,090
+4,241
+default or non-payment by the primary debtor, Siemens will be
+required to settle such financial obligations. The maximum
+amount of these guarantees is equal to the outstanding balance
+of the credit or, in case where a credit line is subject to variable
+utilization, the nominal amount of the credit line. These guaran-
+tees have terms up to 22 years and 18 years, respectively, in fiscal
+2016 and 2015. For credit guarantees amounting to €270 million
+and €271 million as of September 30, 2016 and 2015, respec-
+tively, the Company held collateral mainly in the form of inven-
+tories and trade receivables. The Company accrued €73 million
+and €93 million relating to credit guarantees as of September 30,
+2016 and 2015, respectively.
+Furthermore, Siemens issues guarantees of third-party perfor-
+mance, which mainly include performance bonds and guaran-
+tees of advanced payments in a consortium. In the event of
+non-fulfillment of contractual obligations by the consortium
+partner(s), Siemens will be required to pay up to an agreed-upon
+maximum amount. These agreements typically have terms of up
+to ten years. Generally, consortium agreements provide for fall-
+back guarantees as a recourse provision among the consortium
+partners. As of September 30, 2016 and 2015, the Company ac-
+crued €4 million and €3 million, respectively, relating to perfor-
+mance guarantees.
+In fiscal 2007, The Federal Republic of Germany commissioned
+a consortium consisting of Siemens and IBM Deutschland
+GmbH (IBM) to modernize and operate the non-military infor-
+mation and communications technology of the German Federal
+Armed Forces (Bundeswehr). This project is called HERKULES.
+A project company, BWI Informationstechnik GmbH, provides
+the services required by the terms of the contract. Siemens is
+a shareholder in the project company. The guarantees issued
+by Siemens in connection with the project are connected to
+each other legally and economically. The guarantees ensure
+that BWI has sufficient resources to provide the required ser-
+vices and to fulfill its contractual obligations. After expiration
+of the contract in December 2016, there will be a maximum
+remaining guarantee amount of €200 million until April 2019
+at the latest.
+In addition to guarantees disclosed in the table above, the Com-
+pany issued other guarantees. To the extent future claims are not
+considered remote, maximum future payments from these obli-
+gations amount to €853 million and €1,755 million as of Septem-
+ber 30, 2016 and 2015, respectively. These commitments include
+indemnifications issued in connection with dispositions of busi-
+nesses. Such indemnifications may protect the buyer from po-
+tential tax, legal and other risks in conjunction with the pur-
+chased business. As of September 30, 2016 and 2015, the
+accrued amount for such other commitments is €456 million
+and €559 million, respectively.
+Consolidated Financial Statements 83
+Future payment obligations under non-cancellable operating
+leases are:
+Item Credit guarantees covers the financial obligations of third
+parties generally in cases where Siemens is the vendor and (or)
+contractual partner or Siemens is liable for obligations of associ-
+ated companies accounted for using the equity method. Addi-
+tionally, credit guarantees are issued in the course of the SFS
+business. Credit guarantees generally provide that in the event of
+Credit guarantees
+2015
+2016
+Service
+Standard &
+Poor's
+Ratings
+Services
+Long-term debt
+A1
+A+
+A1
+Short-term debt
+P-1
+A-1+
+P-1
+A+
+A-1+
+NOTE 20 Commitments and
+contingencies
+The following table presents the undiscounted amount of maxi-
+mum potential future payments for major groups of guarantees:
+(in millions of €)
+Sep 30,
+Sep 30,
+thereof €665 million and €726 million with a term of more
+than twelve months.
+168
+3 Reported in the following line items of the Statements of
+Financial Position: Short-term debt and current maturities
+of long-term debt, Trade payables, Other current financial
+46
+2,620
+329
+329
+279
+279
+2,574
+1,919
+1,383
+1,383
+534
+534
+Consolidated Financial Statements 87
+The fair value of available-for-sale financial equity instruments
+quoted in an active market is based on price quotations at the
+period-end date. The fair value of debt instruments is either based
+on prices provided by price service agencies or estimated by dis-
+counting future cash flows using current market interest rates.
+1,919
+Non-current available-for-sale financial assets measured at
+fair value include interests in Atos SE (Atos) and OSRAM of
+€2,156 million and €1,703 million, respectively, as of Septem-
+ber 30 2016 and 2015. Unrealized gains (losses) in fiscal 2016 and
+2015 resulting from non-current available-for-sale financial as-
+sets measured at fair value are €445 million and €367 million
+and, respectively.
+In connection with cash flow hedges
+Derivative financial instruments
+6,667
+1,980
+318
+2,299
+1,131
+10
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+1,141
+46
+3,228
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+In connection with fair value hedges
+In connection with cash flow hedges
+Financial liabilities measured at fair value -
+3,181
+374
+Siemens determines the fair values of derivative financial instru-
+ments depending on the specific type of instrument. Fair values
+of derivative interest rate contracts are estimated by discounting
+expected future cash flows using current market interest rates
+and yield curves over the remaining term of the instrument. In-
+terest rate futures are valued on the basis of quoted market
+prices, if available. Fair values of foreign currency derivatives are
+based on forward exchange rates. Options are generally valued
+based on quoted market prices or based on option pricing mod-
+els. In determining the fair values of the derivative financial in-
+struments, no compensating effects from underlying transac-
+tions (e.g. firm commitments and forecast transactions) are
+taken into consideration.
+The unquoted equity instrument allocated to level 3 of the fair
+value hierarchy relates to an investment in an offshore wind
+farm. The fair value is determined based on discounted cash flow
+calculations. The most significant unobservable input used to
+determine the fair value is the cash flow forecast which is mainly
+based on the future power generation income. This income is
+generally subject to future market developments and thus price
+volatility. Since a long-term power purchase agreement is in
+place that mitigates price volatility, significant changes to the
+cash flow forecast are unlikely and thus, no significant effects on
+Other comprehensive income, net of income taxes, are expected.
+Interest income (expense) includes interest from financial assets
+and financial liabilities not at fair value through profit or loss:
+(in millions of €)
+Total interest income on financial assets
+Total interest expenses on financial liabilities
+Fiscal year
+2016
+2015
+Net gains (losses) in fiscal 2016 and 2015, on financial liabilities
+measured at amortized cost are comprised of gains (losses) from
+derecognition and the ineffective portion of fair value hedges.
+Net gains (losses) in fiscal 2016 and 2015 on financial assets and
+financial liabilities held for trading consist of changes in the fair
+value of derivative financial instruments, including interest in-
+come and expense, for which hedge accounting is not applied.
+The amounts presented include foreign currency gains and losses
+from the realization and valuation of the financial assets and lia-
+bilities mentioned above.
+1,291
+(874)
+(739)
+In fiscal 2016 and 2015, gains (losses) reclassified from Other
+comprehensive income to the Consolidated Statements of In-
+come relating to cash flow hedges were €(61) million and €(268)
+million, respectively; unrealized gains (losses) recognized in
+Other comprehensive income amounted to €149 million and
+€(311) million, respectively.
+88
+Industrial net debt
+Consolidated Financial Statements
+1,248
+The Company limits default risks resulting from derivative finan-
+cial instruments by generally transacting with financial institu-
+tions with a minimum credit rating of investment grade. Based
+on Siemens' net risk exposure towards the counterparty, the re-
+sulting credit risk is taken into account via a credit valuation ad-
+justment.
+Financial assets and financial
+liabilities held for trading
+(211)
+Net gains (losses) of financial instruments are:
+(in millions of €)
+Fiscal year
+2016
+2015
+Cash and cash equivalents
+Available-for-sale financial assets
+Loans and receivables
+(945)
+(19)
+70
+39
+(442)
+(42)
+Financial liabilities measured
+at amortized cost
+(1,049)
+(24)
+4,313
+1,980
+Financial assets measured at fair value:
+Available-for-sale financial assets: equity instruments
+Available-for-sale financial assets: debt instruments
+Derivative financial instruments
+25,955
+3,559
+207
+147
+Fixed-rate and variable-rate receivables with a remaining term of
+more than twelve months, including receivables from finance
+leases, are evaluated by the Company based on parameters such
+as interest rates, specific country risk factors, individual credit-
+worthiness of the customer, and the risk characteristics of the
+financed project. Based on this evaluation, allowances for these
+receivables are recognized.
+The fair value of notes and bonds is based on prices provided
+by price service agencies at the period-end date (Level 2). The fair
+value of loans from banks and other financial indebtedness, ob-
+ligations under finance leases as well as other non-current finan-
+cial liabilities is estimated by discounting future cash flows using
+rates currently available for debt of similar terms and remaining
+maturities (Level 2).
+26,516
+3,544
+The following table allocates financial assets and financial liabil-
+ities measured at fair value to the three levels of the fair value
+hierarchy:
+Financial assets measured at fair value:
+Available-for-sale financial assets: equity instruments
+Available-for-sale financial assets: debt instruments
+Derivative financial instruments
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+In connection with fair value hedges
+In connection with cash flow hedges
+Financial liabilities measured at fair value -
+Derivative financial instruments
+(in millions of €)
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+2,276
+138
+amount
+liabilities, Long-term debt and Other financial liabilities,
+except for separately disclosed derivative financial instru-
+ments of €1,500 million and €1,919 million, respectively,
+as of September 30, 2016 and 2015.
+4 Reported in line items Other current financial liabilities and
+Other financial liabilities.
+Cash and cash equivalents includes €330 million and €378 million
+as of September 30, 2016 and 2015, respectively, which are not
+available for use by Siemens mainly due to minimum reserve re-
+quirements with banks. As of September 30, 2016 and 2015, the
+carrying amount of financial assets Siemens has pledged as col-
+lateral amounted to €214 million and €345 million, respectively.
+The following table presents the fair values and carrying amounts
+of financial assets and financial liabilities measured at cost or
+amortized cost for which the carrying amounts do not approxi-
+mate fair value:
+(in millions of €)
+Notes and bonds
+28,554
+Loans from banks and other financial indebtedness
+Obligations under finance leases
+Sep 30, 2016
+Fair value
+30,235
+2,270
+203
+Carrying
+amount
+Sep 30, 2015
+Carrying
+Fair value
+86 Consolidated Financial Statements
+In connection with cash flow hedges
+Sep 30, 2016
+Level 1
+371
+371
+1,500
+1,500
+1,190
+1,190
+163
+305
+Sep 30, 2015
+(in millions of €)
+Level 1
+Level 2
+Level 3
+Total
+305
+163
+2,518
+2,518
+Level 2
+Level 3
+Total
+2,191
+4,311
+310
+6,812
+2,191
+301
+2,492
+1,259
+10
+1,269
+3,051
+3,051
+2 Includes equity instruments classified as available-for-sale,
+for which a fair value could not be reliably measured and
+which are therefore recognized at cost.
+Less: 50% nominal amount hybrid bond
+Less: Fair value hedge accounting adjustment²
+Sep 30,
+Less: SFS Debt¹
+5,206
+Equity securities
+2016
+DEFINED CONTRIBUTION PLANS AND STATE PLANS
+The amount recognized as expense for defined contribution
+plans amounts to €676 million and €594 million in fiscal 2016
+and 2015, respectively. Contributions to state plans amount to
+€1,423 million and €1,372 million in fiscal 2016 and 2015, respec-
+tively.
+Employer contributions expected to be paid to defined benefit
+plans in fiscal 2017 are €690 million. Over the next ten fiscal
+years, average annual benefit payments of €1,908 million and
+€1,912 million, respectively, are expected as of September 30,
+2016 and 2015. The weighted average duration of the DBO for
+Siemens defined benefit plans was 14 years as of September 30,
+2016 and 13 years as of September 30, 2015.
+Future cash flows
+Virtually all equity securities have quoted prices in active mar-
+kets. The fair value of fixed income securities is based on prices
+provided by price service agencies. The fixed income securities
+are traded in highly liquid markets and almost all fixed income
+securities are investment grade.
+2015
+(in millions of €)
+Disaggregation of plan assets
+As a significant risk, the Company considers a decline in the
+plans' funded status due to adverse developments of plan assets
+and/or defined benefit obligations resulting from changing pa-
+rameters. Accordingly, Siemens implemented a risk management
+concept aligned with the defined benefit obligations (Asset Lia-
+bility Matching). Risk management is based on a worldwide de-
+fined risk threshold (value-at-risk). The concept, the value at risk
+and the asset development including the investment strategy are
+monitored and adjusted on an ongoing basis under consultation
+of senior external experts. Independent asset managers are se-
+lected based on quantitative and qualitative analysis, which in-
+cludes their performance and risk evaluation. Derivatives are
+used to reduce risks as part of risk management.
+Asset Liability Matching Strategies
+Consolidated Financial Statements 79
+As in prior year, sensitivity determinations apply the same meth-
+odology as applied for the determination of the post-employ-
+ment benefit obligation. Sensitivities reflect changes in the DBO
+solely for the assumption changed.
+The DBO effect of a 10% reduction in mortality rates for all ben-
+eficiaries would be an increase of €1,395 million and €1,021 mil-
+lion, respectively, as of September 30, 2016 and 2015.
+The discount rate was derived from high-quality corporate bonds
+with an issuing volume of more than 100 million units in the re-
+spective currency zones, which have been awarded an AA rating
+(or equivalent) by at least one of the three rating agencies
+Moody's Investor Service, Standard & Poor's Rating Services or
+Fitch Ratings.
+(1,379)
+1,717
+(1,858)
+2,107
+Rate of pension
+progression
+1.0%
+0.4%
+(93)
+101
+(105)
+113
+sation increase
+3.9%
+6,285
+U.S. equities
+872
+1,366
+1,351
+721
+Real estate
+772
+827
+Private Equity
+1,403
+2,074
+Hedge Funds
+3,526
+3,622
+Alternative investments
+10,488
+10,899
+2.4%
+Corporate bonds
+5,496
+Government bonds
+15,206
+16,395
+Fixed income securities
+1,993
+1,903
+Global equities
+1,143
+821
+Emerging markets
+1,783
+1,610
+European equities
+4,718
+Rate of compen-
+4.3%
+3.6%
+Actuarial assumptions
+The changes in financial assumptions include a reduction of the
+pension progression rate for a German frozen legacy plan from
+1.8% as of September 30, 2015 to 1.5% as of September 30, 2016
+due to a lower inflation assumption which reduced the DBO by
+€487 million.
+2015
+2016
+Sep 30,
+The rates of compensation increase and pension progression for
+countries with significant effects are shown in the following table.
+Inflation effects, if applicable, are included in the assumptions below.
+(41)
+6,284
+Total
+(59)
+(93)
+Experience (gains) losses
+(8)
+6,506
+The weighted-average discount rate used for the actuarial valua-
+tion of the DBO at period-end was as follows:
+Changes in financial assumptions
+(129)
+Changes in demographic assumptions
+Fiscal year
+2015
+2016
+(in millions of €)
+BVG 2015 G
+SAPS S2 (Standard mortality tables
+for Self Administered Pension Schemes
+with allowance for future mortality
+improvements)
+CH
+U.K.
+Heubeck Richttafeln 2005G (modified)
+RP-2015 mortality table with MP-2015
+generational projection
+Germany
+U.S.
+Applied mortality tables are:
+The remeasurements comprise actuarial (gains) and losses result-
+ing from:
+The net defined benefit balance of €13,486 million and
+€9,737 million as of September 30, 2016 and 2015 comprised
+€13,695 million and €9,811 million net defined benefit liability
+and €209 million and €75 million net defined benefit asset, re-
+spectively. Net interest expenses amounted to €282 million and
+€263 million, respectively, in fiscal 2016 and 2015. Similar to the
+prior year, the DBO is attributable to active employees 33%, to
+former employees with vested rights 15% and to retirees and sur-
+viving dependants 52%.
+26
+Multi strategy funds'
+Compensation increase
+U.K.
+3.6%
+Sep 30, 2015
+decrease
+2,380
+increase
+(2,121)
+Sep 30, 2016
+decrease
+3,174
+(2,774)
+increase
+(in millions of €)
+Discount rate
+2.7%
+1.0%
+3.0%
+1.7%
+2015
+2016
+Plus: Post-employment benefits
+Plus: Credit guarantees
+Sep 30,
+3.6%
+CH
+U.S.
+Germany
+Discount rate
+A one-half-percentage-point change of the above assumptions
+would result in the following increase (decrease) of the DBO:
+2.9%
+2.9%
+1.7%
+1.4%
+Sensitivity analysis
+Germany
+U.K.
+Pension progression
+1.5%
+1.5%
+CH
+U.K.
+1,696
+Effect on DBO due to a one-half percentage-point
+Derivatives
+NOTE 19 Additional capital disclosures
+Other includes transaction-related and post-closing provisions in
+connection with portfolio activities as well as provisions for Legal
+Proceedings, as far as the risks that are subject to such Legal
+Proceedings are not already covered by project accounting. Pro-
+visions for Legal Proceedings amounted to €430 million and
+€398 million as of September 30, 2016 and 2015, respectively.
+total expected payments until the 2070's. Declined discount rates
+increased the carrying amount of the provision by €355 million
+as of September 30, 2016 and by €283 million as of Septem-
+ber 30, 2015. At the same time, the provision was decreased by
+€170 million as of September 30, 2016, due to reduced cost esti-
+mates, and €282 million as of September 30, 2015, mainly due to
+reduced assumed inflation rates.
+Consolidated Financial Statements 81
+As of September 30, 2016 and 2015, the provision totals
+€1,551 million and €1,359 million, respectively, and is recorded
+net of a present value discount of €206 million and €594 million,
+respectively, reflecting the assumed continuous outflow of the
+waste. This process will be supported by continuing engineering
+studies and radioactive sampling under the supervision of Ger-
+man federal and state authorities. The decontamination, disas-
+sembly and final waste conditioning are planned to continue
+until 2018; thereafter, the Company is responsible for intermedi-
+ate storage of the radioactive materials until they are handed
+over to a final storage facility. With respect to the Hanau facility,
+the asset retirement has been completed and intermediate stor-
+age has been set up. On September 21, 2006, the Company re-
+ceived official notification from the authorities that the Hanau
+facility has been released from the scope of application of the
+German Atomic Energy Act and that its further use is unrestricted.
+The ultimate costs of the remediation are contingent on the de-
+cision of the federal government on the location of the final stor-
+age facilities and the date of their availability. Several parameters
+relating to the development of a final storage facility for radioac-
+tive waste are based on the assumptions for the so called Schacht
+Konrad final storage. Parameters related to the life-span of the
+German nuclear reactors assume a phase-out until 2022. The val-
+uation uses assumptions to reflect the current and detailed cost
+estimates, price inflation and discount rates as well as a continu-
+ous outflow until the 2070's related to the costs for dismantling
+as well as intermediate and final storage. Amongst others, the
+estimated cash outflows related to the asset retirement obliga-
+tion could alter significantly if, and when, political developments
+affect the government's plans to develop the so called Schacht
+Konrad. For discounting the cash outflows, the Company uses
+current interest rates as of the balance sheet date.
+Environmental clean-up costs relate to remediation and environ-
+mental protection liabilities which have been accrued based on
+the estimated costs of decommissioning facilities for the produc-
+tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
+many (Hanau facilities), as well as a nuclear research and service
+center in Karlstein, Germany (Karlstein facilities). According to
+the German Atomic Energy Act, when such a facility is closed, the
+resulting radioactive waste must be collected and delivered to a
+government-developed final storage facility. In this regard, the
+Company has developed a plan to decommission the Hanau and
+Karlstein facilities in the following steps: clean-out, decontami-
+nation and disassembly of equipment and installations, decon-
+tamination of the facilities and buildings, sorting of radioactive
+materials, and intermediate and final storage of the radioactive
+The Company is subject to asset retirement obligations related to
+certain items of property, plant and equipment. Such asset retire-
+ment obligations are primarily attributable to environmental
+clean-up costs and to costs primarily associated with the removal
+of leasehold improvements at the end of the lease term.
+In fiscal 2016, order related losses and risks include project
+charges for the construction of a power plant mainly due to in-
+creased cost estimates which reduced earnings by €172 million
+(primarily presented in cost of sales).
+Warranties mainly relate to products sold. Order related losses
+and risks are provided for anticipated losses and risks on uncom-
+pleted construction, sales and leasing contracts.
+Except for asset retirement obligations, the majority of the Com-
+pany's provisions are generally expected to result in cash out-
+flows during the next one to 15 years.
+5,087
+9,253
+1,877
+796
+1,611
+1,593
+1,517
+675
+4,249
+2,022
+77
+34
+5
+23
+15
+378
+9
+369
+3
+(2)
+(41)
+5
+A key consideration of our capital structure management is to
+maintain ready access to capital markets through various debt
+instruments and to sustain our ability to repay and service our
+debt obligations over time. In order to achieve this, Siemens in-
+tends to maintain an Industrial net debt divided by EBITDA (con-
+tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
+proximate number of years that would be needed to cover the
+Industrial net debt through continuing income, without taking
+into account interest, taxes, depreciation and amortization.
+NOTE 18
+Equity
+Siemens' issued capital is divided into 850 million and 881 million
+registered shares with no par value and a notional value of €3.00
+per share as of September 30, 2016 and 2015, respectively;
+31 million shares were retired in fiscal 2016. The shares are fully
+paid in. At the Shareholders' Meeting, each share has one vote
+and accounts for the shareholders' proportionate share in the
+Company's net income. All shares confer the same rights and
+obligations.
+733
+6,107
+10,505
+(936)
+(643)
+(958)
+859
+799
+9,811
+13,695
+(22,418) (21,198)
+18,528
+19,071
+(1,175)
+(24)
+(1,293)
+(9,957)
+(10,604)
+Less: Cash and cash equivalents
+26,682
+24,761
+Plus: Long-term debt
+2,979
+6,206
+Short-term debt and current maturities
+of long-term debt
+Sep 30,
+2015
+(in millions of €)
+Dividends paid per share were €3.50 and €3.30, respectively, in
+fiscal 2016 and 2015. The Managing Board and the Supervisory
+Board propose to distribute a dividend of €3.60 per share entitled
+to the dividend, in total representing approximately €2.9 billion
+in expected payments. Payment of the proposed dividend is con-
+tingent upon approval at the Shareholders' Meeting on Febru-
+ary 1, 2017.
+As of September 30, 2016 and 2015, total authorized capital of
+Siemens AG is €618.6 million nominal, issuable in installments
+based on various time-limited authorizations, by issuance of up
+to 206.2 million registered shares of no par value. In addition, as
+of September 30, 2016 and 2015, Siemens AG's conditional capi-
+tal is €1,080.6 million nominal or 360.2 million shares. It can
+primarily be used for serving convertible bonds or warrants un-
+der warrant bonds that could or can be issued based on various
+time-limited authorizations approved by the respective Share-
+holders' Meeting.
+In fiscal 2016 and 2015, Siemens repurchased 4,888,596 and
+29,419,671 shares, respectively. In fiscal 2016 and 2015, Siemens
+transferred 4,543,673 and 2,788,059 treasury shares, respec-
+tively, in connection with share-based payments. As of Septem-
+ber 30, 2016 and 2015, the Company has treasury shares of
+41,721,682 and 72,376,759, respectively.
+Less: Current available-for-sale financial assets
+Net debt
+(21)
+2016
+(391)
+Translation differences
+Reversals
+Usage
+Additions
+Thereof non-current
+Balance as of October 1, 2015
+(in millions of €)
+NOTE 17 Provisions
+80 Consolidated Financial Statements
+1 Multi strategy funds comprise absolute return funds and diversified growth funds that invest
+in various asset classes within a single fund and aim to stabilize return and reduce volatility.
+27,296
+28,809
+Total
+572
+Accretion expense and effect of changes in discount rates
+928
+465
+Cash and cash equivalents
+(614)
+(572)
+Credit/Inflation/Price risks
+26
+47
+Foreign currency risk
+1,079
+1,022
+Interest risk
+491
+(1,781)
+497
+Other assets
+Other changes
+483
+Asset
+(175)
+(393)
+Balance as of September 30, 2016
+Thereof non-current
+(822)
+(1,891)
+(364)
+(7)
+(493)
+(1,027)
+696
+4
+572
+1,887
+4,865
+801
+3,158
+689
+Warranties
+1,393
+losses and risks
+obligations
+Total
+4,220
+Other
+1,829
+1,415
+1,888
+9,353
+1,981
+Order related
+retirement
+C.5
+of Financial Position
+A.5
+P 18
+B.4
+p 61
+Net assets position
+A.6
+Financial position
+Consolidated Statements
+of Cash Flows
+p22
+B.5
+Overall assessment
+p 137
+p 62
+p 147
+C.4
+B.2
+p 17
+A.2
+of the economic position
+p9
+C.2
+p 127
+Financial performance system
+p 59
+Consolidated Statements
+A.3
+p 11
+of Comprehensive Income
+C.3
+p 133
+Results of operations
+B.3
+p 60
+A.4
+Consolidated Statements
+Consolidated Statements
+Siemens has the following reportable segments: the Divisions
+Power and Gas; Energy Management; Building Technologies;
+Mobility; Digital Factory and Process Industries and Drives;
+as well as the Strategic Units Healthineers and Siemens Gamesa
+Renewable Energy, which together form our Industrial Business.
+The Division Financial Services (SFS) supports the activities of
+our Industrial Business and also conducts its own business with
+external customers. As "global entrepreneurs” our Divisions and
+Strategic Units carry business responsibility worldwide, including
+with regard to their operating results.
+A.7
+Notes and forward-looking
+statements
+A.
+Combined
+Management Report
+A.1 Business and economic environment
+A.1.1 The Siemens Group
+A.1.1.1 ORGANIZATION AND BASIS
+OF PRESENTATION
+We are a technology company with core activities in the fields of
+electrification, automation and digitalization, and activities in
+nearly all countries of the world. Siemens comprises Siemens AG,
+a stock corporation under the Federal laws of Germany, as the
+parent company and its subsidiaries. Our Company is incorpo-
+rated in Germany, with our corporate headquarters situated in
+Munich. As of September 30, 2017, Siemens had around 372,000
+employees (part time employees are included proportionally).
+Our reportable segments may do business with each other, lead-
+ing to corresponding orders and revenue. Such orders and reve-
+nue are eliminated on the Group level.
+A.1.1.2 BUSINESS DESCRIPTION
+The Power and Gas Division offers a broad spectrum of products
+and solutions for generating electricity from fossil fuels and for
+producing and transporting oil and gas. The portfolio includes
+gas turbines, steam turbines, generators to be applied to gas or
+steam power plants, compressor trains, integrated power plant
+solutions, and instrumentation and control systems for power
+generation. Customers include public utilities and independent
+power producers; companies in engineering, procurement and
+construction that serve utilities and power producers; sovereign
+and multinational oil companies; and industrial customers that
+generate power for their own consumption (prosumers). Due to
+the broad range of its offerings, the Division's revenue mix may
+vary from reporting period to reporting period depending on the
+share of revenue attributable to products, solutions and services.
+Because typical profitability levels differ among these three rev-
+enue sources, the revenue mix in a reporting period accordingly
+affects Division profit for that period. Several trends are affecting
+the Division's businesses. The ongoing strong growth in demand
+for renewable power generation and the associated volatility in
+power generation shift market demand from fossil baseload
+generation to highly flexible, highly efficient and affordable
+gas power plants with low emissions, in particularly in Europe,
+China, and the U.S. A second trend is that the development and
+execution of large projects increasingly requires financing by the
+original equipment manufacturer (OEM), including equity partic-
+ipation, particularly in Latin America, the Middle East and Africa.
+For the Division, this role is fulfilled by Financial Services, which
+can offer customers a range of financing and equity options
+backed by domain know-how. In addition, the markets of the
+Division are strongly affected by changes in national energy reg-
+ulations, such as support of renewable energy, the security of
+supply through capacity markets or strategic reserve capacity,
+carbon pricing and climate change targets, and energy and elec-
+tricity market design. After years of strong public sector support
+for renewable energy, the cost of energy and electricity as a com-
+petitive factor is gaining more relevance in investment decisions
+involving choices between renewable and fossil generation.
+The Power Generation Services Division offers a comprehensive
+set of services for products, solutions and technologies of the
+Power and Gas Division, covering performance enhancements,
+maintenance services, customer training and professional con-
+sulting. Financial results of the Power and Gas Division include
+the financial results of the Power Generation Services Division,
+which itself is not a reportable segment. Based on this business
+model, all discussions of the services business for Power and Gas
+concern the Power Generation Services Division.
+The Energy Management Division offers a wide spectrum of
+software, products, systems, solutions, and services for transmit-
+ting, distributing and managing electrical power and for provid-
+ing intelligent power infrastructure. The Division's customers
+encompass a wide range of direct customers and channel part-
+ners including power providers, transmission and distribution
+system operators, industrial companies, infrastructure develop-
+ers, construction companies, distributors and OEMs. Its activities
+across many regional and vertical markets as well as its participa-
+tion in long-cycle and short-cycle businesses provide a balanced
+and resilient business mix. The Division's revenue and portfolio
+mix may vary across reporting periods. In particular, orders, rev-
+enue and profit development can be influenced by the relative
+contribution from its transmission solutions business. End cus-
+tomers and OEMs use the Division's offerings to process, transmit
+and manage electrical power from the source down to various
+load points along multiple voltage levels. The Division's distrib-
+uted, intelligent solutions for smart grids enable a bidirectional
+flow of energy and information, which, among other things, is
+required for integrating fluctuating renewable energy sources,
+electrical storage or manageable loads. Energy Management
+generally benefits from major trends and changes in global elec-
+trical power systems, in particular decarbonization, decentraliza-
+tion and digitalization. Decarbonization involves the buildup of
+generation capacities from renewable sources and the electrifi-
+cation of heat and transport sectors. Another trend is decentral-
+ization - the integration of wind power, photovoltaics, biomass,
+2
+Combined Management Report
+Consolidated Statements
+of Income
+Corporate Governance
+of Changes in Equity
+Report of the Supervisory Board
+Notes to Consolidated
+p 23
+Non-financial matters
+A.8
+p24
+Report on expected developments
+and associated material opportunities
+and risks
+A.9
+p 36
+Siemens AG
+A.10
+P 39
+Compensation Report
+A.11
+p 53
+Takeover-relevant information
+B.6
+p 64
+Financial Statements
+Business and economic environment
+Following a decline in market volume in fiscal 2016, the market
+served by SGRE grew in fiscal 2017 due to higher demand in both
+the onshore and the offshore markets, with the latter growing
+faster. On a regional basis, growth was driven by the U.S. Market
+growth in the region Asia, Australia, was held back by lower de-
+mand in China, where the largest national wind market in the
+world remains largely closed to foreign manufacturers, as well as
+by a halt in the Indian market during the fiscal year following the
+introduction of an auction system for new power generation con-
+tracts. Market volume in the region Europe, C.I.S., Africa, Middle
+East came in slightly lower year-over-year. The competitive situ-
+ation in wind power differs in the two major market segments.
+In the markets for onshore wind farms, competition is widely
+dispersed without any one company holding a dominant share of
+the market, while markets for offshore wind farms continue to be
+served by a few experienced players. Consolidation is moving
+forward in both on- and offshore segments, including exits of
+smaller players. The key drivers of consolidation are increasing
+price pressure as well as technology challenges and market ac-
+cess challenges, which increase development costs and the im-
+portance of risk-sharing in offshore wind power. Market develop-
+ment continues to depend strongly on energy policy, including
+tax incentives in the U.S. and regulatory frameworks in Germany
+and the U.K. With continued technological progress and cost re-
+duction, dependency on subsidy schemes is expected to decrease
+even further.
+p 58
+to outcome-focused care. A major step forward is the Digital Eco-
+system platform to link healthcare providers and solution provid-
+ers with one another as well as to bring together their data, ap-
+plications and services. Users gain new insights through data
+analytics and use it to network with their peers.
+Combined Management Report
+6
+Healthineers' R&D activities are strongly focused on the devel-
+opment of innovative product lines which use new technologies
+such as artificial intelligence. This will, amongst other results,
+enable faster handling of medical information and can lead to
+more precise and personalized clinical decisions. It also promises
+added value: New computer algorithms can detect hidden pat-
+terns in the data and give physicians valuable support for diagno-
+sis and therapy decisions. Besides constantly innovating its port-
+folio, Healthineers continuously extends existing products and
+solutions. Diagnostics performance for customers improves with
+systems such as the recently launched Atellica. This laboratory
+diagnostics platform transports samples ten times faster than pre-
+vious systems and it is also more flexible. Expanding the innova-
+tion map beyond the established portfolio, and investing in new
+ideas, strengthen the ability to tap opportunities in new fields.
+The services business is expanding beyond product related ser-
+vices by adding a digital services portfolio and increasing enter-
+prise transformation services to help customers in their transition
+The R & D activities in the Process Industries and Drives Division
+are continuously concentrating on the digital transformation of
+products, solutions and services, especially via focused integra-
+tion of information and communication technologies. The digital
+enhancement of automation and drives platforms is a key en-
+abler for additional customer value for all verticals in the process
+industry, such as oil & gas, chemicals and pharmaceuticals. Exam-
+ples are connecting motors to MindSphere and Digital Enterprise
+for process industries. Increased operational efficiency and digi-
+tal services such as condition monitoring or predictive mainte-
+nance are examples for benefits in process plant operation. The
+digitalization of our process automation and industrial commu-
+nication portfolio includes a holistic industrial security concept.
+Another central objective of our R&D activities is to further in-
+crease energy efficiency while reducing the consumption of raw
+materials and cutting emissions.
+tion of Mentor Graphics further extends the possibilities of the
+digital twin: In addition to designing and testing the mechanics
+and software of new products, it is now also possible to develop
+and simulate electrical and electronic systems in an integrated
+way. A further core area of development is MindSphere, the
+open, cloud-based operating system for the Industrial Internet of
+Things (IoT). MindSphere is used as a basis for innovative appli-
+cations (MindApps) and new digital services based on these
+apps, such as predictive maintenance. Open application pro-
+gramming interfaces (APIs) enable MindSphere users to easily
+and efficiently develop and sell their own apps. MindSphere
+therefore makes it possible for customers to clearly expand their
+portfolios and tap into the additional business potential offered
+by their installed base. A network of partners in the fields of app
+development, connectivity and technology further enriches the
+open ecosystem.
+R&D activities at the Digital Factory Division are aimed at fur-
+ther enhancing speed, flexibility, quality and efficiency within
+companies of the discrete manufacturing industry. The key lever
+is to automate and digitalize the entire value-added process -
+from product development through production design to actual
+production - with the highest possible IT security. The focus of
+research lies on further developing the Digital Enterprise portfo-
+lio. This involves preparing an integrated digital twin for physical
+products, production processes and production facilities and
+then implementing these facilities and efficiently manufacturing
+the products in the real world. This close dovetailing between the
+virtual and real worlds enables customers to simulate and opti-
+mize their products, their machinery and facilities at an early
+stage, while assuring high-performance production. The acquisi-
+The R&D efforts of Siemens Gamesa Renewable Energy are
+focused on innovative products and solutions that allow it to take
+the lead in wind power performance, improve competitiveness,
+and build a stronger business case for its customers. Using digi-
+talization, among other efforts, includes more intelligent moni-
+toring and analysis of turbine conditions as well as smart diag-
+nostic services.
+The Mobility Division's R&D strategy aims to fulfill customers'
+demand for maximum availability, high throughput and en-
+hanced
+passenger experience. Although there is a growing need
+for mobility worldwide, possibilities for building new roads and
+railways are limited. Meeting the demand for mobility requires
+intelligent solutions that make transport more efficient, safe and
+environmentally friendly. Decarbonization and seamlessly con-
+nected intermodal (e)mobility are key factors for the future of
+transportation. Reflecting this, Mobility's R&D activities empha-
+size digitalization in developing state-of-the art mobility solu-
+tions for rail and road combined with new business models such
+as availability-as-a-service (AaaS) via our data analytics platform
+Railigent and other MindSphere based applications. Together
+with next47, Mobility invests in the future mobility landscape
+together with other partners in areas such as sensor technolo-
+gies, connectivity/loT solutions, software for intermodal trans-
+port and additive manufacturing.
+of new technologies, e.g. Process Bus communication for appli-
+cations in energy management or NCITS (Non-Conventional
+Instrument Transformer), enables a cost-effective investment
+and economic operation of digital substations as well as a secure
+and reliable grid operation.
+5
+Combined Management Report
+The R&D activities of our Energy Management Division focus on
+preparing our portfolio for changes on all voltage levels in the
+world of electricity. The increasing infeed of renewable energy to
+power grids requires that those grids become more flexible and
+efficient, particularly with distributed generation on the rise. The
+digitalization of future grids will enable intelligent grid operation
+and data-driven services. Our innovations are centered on power
+electronics, digitalization and grid stabilization. The development
+Research and Development in our Businesses
+R&D at the Power and Gas Division concentrates on developing
+products and solutions for enhancing efficiency, flexibility and
+economy in power generation as well as in the oil and gas indus-
+try. These products and solutions include turbomachinery – pri-
+marily high-performance, low-emission gas turbines for single
+operation or for combined cycle power plants - and compressor
+solutions for various process industries. The Division's current
+technology initiative, which started in fiscal 2015, is aimed at
+intensifying R & D in innovative materials, advanced manufactur-
+ing methods and plant optimization. In fiscal 2017, Siemens
+introduced a new 44-megawatt aeroderivative gas turbine for
+mobile power generation which currently is the most powerful
+mobile unit on the market. The Division announced that it
+will test and validate its largest gas turbine (HL-class) under re-
+al-world conditions. This will pave the way for achieving the next
+level of efficiency; we aim for 63 percent efficiency near-term,
+with a mid-term goal to reach 65 percent.
+In fiscal 2017, we reported research and development expenses
+of €5.2 billion, compared to €4.7 billion in fiscal 2016. The result-
+ing R&D intensity, defined as the ratio of R&D expenses and
+revenue, was 6.2%, thus above the R & D intensity of 5.9% in fiscal
+2016. Additions to capitalized development expenses amounted
+to €0.4 billion in fiscal 2017, compared to €0.3 billion in fiscal
+2016. As of September 30, 2017, Siemens held approximately
+63,000 granted patents worldwide in its continuing operations.
+As of September 30, 2016, we held approximately 59,800 granted
+patents. On average, we had 37,800 R&D employees in fiscal
+2017.
+Siemens' unit for partnership with start-ups, next47, is focusing
+on three pillars: Capital, Catalyst and Create. The unit provides
+capital to help start-ups expand and scale. As a catalyst, next47
+can accelerate growth for start-ups by making it easy to access
+and use the powerful Siemens ecosystem. And next47 serves as
+the creator of next-generation businesses for Siemens by build-
+ing, buying and partnering with start-ups at any stage. The
+next47 unit is focused on anticipating how technologies includ-
+ing 3D printing, robotics and drones, artificial intelligence and
+virtual reality will impact and potentially disrupt our end markets.
+This intelligence enables Siemens and Siemens' customers to
+grow and thrive in the age of digitalization.
+R&D work at the Building Technologies Division focuses on op-
+timizing comfort and operational and energy efficiency in build-
+ings and infrastructures, protecting against fire and security
+hazards, and minimizing related risks. We drive the digital trans-
+formation of the building industry by creating open-standards-
+based Building Information Modeling (BIM)-ready products and
+services. Digitalization improves productivity across the entire
+building life cycle, enabling new product ordering and configu-
+ration options through our online store Siemens Industry Mall.
+New mobile device apps close the feedback loop to building oc-
+cupants, enabling increased comfort and safety with lower en-
+ergy consumption. The digitalization portfolio will expand on the
+basis of Siemens MindSphere.
+A.1.2 Economic environment
+A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
+The global economy started to accelerate at the beginning of
+fiscal 2017 and gained further momentum in the subsequent
+quarters. Expansion of world gross domestic product (GDP),
+which in 2016 was the weakest since the global financial crisis at
+2.5%, is projected to rise to 3.1% in 2017 (based on market ex-
+change rates).
+storage and other intermittent or distributed energy resources
+into highly efficient and reliable power networks. The digitaliza-
+tion trend involves providing intelligent solutions for connectiv-
+ity, the management of complex energy networks, and services
+that are enabled by digital technologies.
+The global upswing was broad-based on a regional and structural
+basis. In both emerging markets and advanced countries, eco-
+nomic activity gained strength. Growth forecasts for 2017 im-
+proved in particular for Europe from 1.5% at the beginning of
+fiscal 2017 to 2.3% and for China from 6.3% to 6.8%. The only
+negative surprise was the Middle East region. The 2017 growth
+projection decreased to 1.4% after starting at 2.8% at the begin-
+ning of fiscal 2017. Lower oil prices and oil production cuts had
+bigger impact than anticipated.
+-
+From a structural perspective, all components of GDP – private
+consumption, fixed investment, trade and to a lesser extent
+government expenditure - contributed to growth, giving the
+acceleration of the global economy a solid and well balanced
+foundation.
+Uncertainties mainly stemming from (geo) political risks had very
+limited effects on the global economy: International tensions
+with North Korea and Iran increased; negotiations regarding the
+U.K. leaving the European Union are complicated and separatist
+tensions in Spain added significant uncertainty. These develop-
+ments potentially weigh on investment decisions but this barely
+materialized in fiscal 2017.
+The partly estimated figures presented here for GDP and fixed
+investments are based on an IHS Markit report dated Octo-
+ber 15, 2017.
+A.1.2.2 MARKET DEVELOPMENT
+In a highly competitive market environment, markets served by
+the Power and Gas Division declined significantly in fiscal 2017.
+This development was again particularly evident in the market for
+steam turbines where volume shrank substantially year-over-year
+due to an ongoing shift from coal-fired to gas-fired and renew-
+able power generation and due to emission regulation such as in
+China. Volume in the market segment for large gas turbines also
+declined substantially due mainly to delays of large projects in
+the Middle East and customer restraint due to ongoing uncer-
+tainty regarding changes in the market design and weak power
+demand growth. Volume in compression markets remained on
+a low level as customers continued to hold back investments.
+The Division's competition consists mainly of two groups: a rela-
+tively small number of equipment manufacturers, some with
+very strong positions in their domestic markets, and on the other
+hand a large number of engineering, procurement and construc-
+tion contractors. The gas turbine market is experiencing overca-
+pacity among OEMs and engineering, procurement and con-
+struction contractors, which is leading to market consolidation.
+Global markets addressed by the Energy Management Division
+grew slightly in fiscal 2017. Weaknesses in the Middle East and
+global commodity markets including oil and gas, metals and min-
+ing were offset by growth in transmission interconnections, in-
+telligent energy and storage solutions and critical infrastructure
+such as data centers. North America and Asia were key growth
+contributors. Markets in Europe showed stable development,
+with pockets of growth such as integration of renewable energy
+sources into the grid. Competitors of the Energy Management
+Division consist mainly of a small number of large multinational
+companies. International competition is increasing from manu-
+facturers in emerging countries including China, India and Korea.
+Markets for the Building Technologies Division grew solidly in
+fiscal 2017. Growth was driven by solid demand from the U.S. and
+Asia. Within the Europe, C.I.S., Africa, Middle East region, mar-
+kets in the Middle East grew more strongly than the region over-
+all. The recovery of the European market was weaker than ex-
+pected but included stable growth in Germany. The Division's
+principal competitors are multinational companies. Its solutions
+and services business also competes with system integrators and
+small local companies. The Division faces continuing price pres-
+sure, particularly in its solutions business, due to strong compe-
+tition from system houses and some larger competitors.
+Overall, markets for the Mobility Division remained strong in fis-
+cal 2017, with different dynamics among the regions. Market
+development in the Europe, C.I.S., Africa, Middle East region was
+characterized by continuing awards of mid-size and large orders,
+particularly in Germany and the U.K. Demand in the Middle East
+Combined Management Report 7
+and Africa was held back by ongoing uncertainties related to
+budget constraints and political climates. In the Americas region,
+stable investment activities were driven by demand for urban
+transport, especially in the U.S. Within the Asia, Australia region,
+Chinese markets saw ongoing investments in high-speed trains,
+urban transport and rail infrastructure, while India continues to
+invest in modernizing the country's transportation infrastruc-
+ture. The Division's principal competitors are multinational com-
+panies. Consolidation among Mobility's competitors is continu-
+ing. This has already led to the formation of a strong market
+leader in China, which is changing global market dynamics.
+Markets served by the Digital Factory Division returned to growth
+in fiscal 2017. Within its main markets, global manufacturing pro-
+duction grew moderately in real terms, driven mainly by consum-
+er-related industries such as electronics and automotive and by
+demand from infrastructure-related production industries.
+Growth in the machine-building and equipment industries bene-
+fited from a growing investment propensity. On a geographic
+basis, the Division's markets grew in all three reporting regions,
+with the highest growth rates in the region Asia, Australia, par-
+ticularly including China, where strong market growth also ben-
+efited from governmental investment programs. The competition
+for Digital Factory's business activities can be grouped into two
+categories: multinational companies that offer a relatively broad
+portfolio and companies that are active only in certain geo-
+graphic or product markets.
+Market volume for the markets addressed by the Process Indus-
+tries and Drives Division grew moderately in fiscal 2017. This
+was due mainly to improved market conditions in global manu-
+facturing production, particularly in China. Consumer-related
+industries, such as food and beverage and pharmaceuticals, con-
+tinued on their growth path. Growth in the Division's markets
+overall continued to be held back by weakness in commodity-re-
+lated industries such as oil and gas, metals and mining. Following
+a recovery in raw materials prices at low levels in the first half of
+fiscal 2017 and stable price development thereafter, the environ-
+ment for capital expenditures began to improve towards the end
+of the fiscal year in mining, oil and gas and, to a lesser extent, the
+metals industry. The Division's competitors can be grouped into
+two categories: multinational companies that offer a relatively
+broad portfolio and companies that are active only in certain geo-
+graphic or product markets. Consolidation is taking place mostly
+in particular market segments and not across the broad base of
+the Division's portfolio. In particular, consolidation in solu-
+tion-driven markets is going in the direction of in-depth niche
+market expertise. Most major competitors have established
+global bases for their businesses. In addition, the competition has
+become increasingly focused on technological improvements
+and cost position.
+Markets served by Healthineers grew moderately in fiscal 2017
+driven by growth in Latin America and Asia, Australia, including
+further stabilization in China. In contrast, market volume in Eu-
+rope and the U.S. remained near prior-year levels. The diagnostic
+imaging market segment grew moderately. While demand for
+imaging procedures continued to grow, this trend was partly off-
+set by price pressure on new purchases and increased utilization
+rates for installed systems. The markets for ultrasound and in-vi-
+tro diagnostics grew even more strongly. The development in the
+ultrasound market segment benefits from a wider range of appli-
+cations and increasing patient access to diagnostic imaging tech-
+nology. The market for in-vitro diagnostics is expanding due to
+population and income growth in emerging markets and the
+rising importance of diagnostics in improving healthcare quality.
+Growth in the area of molecular diagnostics was particularly
+strong, driven by technological advances and a broader spectrum
+of applications. For the healthcare industry as a whole, the trend
+towards consolidation continues. Competition among the lead-
+ing companies is strong, including with respect to price.
+8 Combined Management Report
+Both within and beyond these focus areas, R&D activities are
+carried out by cross-functional teams involving both our busi-
+nesses and our central R&D department Corporate Technology
+(CT). In addition, we work closely with scholars from leading
+universities and research institutions. These partnerships, along
+with close collaborations with start-up companies and the use of
+crowd innovation methods, are an important part of Siemens'
+open innovation concept.
+> We also invest in industrial cyber security - a key enabler for
+the digitalization of industries as well as a growing source of
+competitive advantage - and test the emerging blockchain
+technology in various application scenarios.
+> The growing connectivity of field devices gives rise to the In-
+dustrial Internet of Things (IoT), and hence to the potential
+for massively distributed industrial systems. With MindSphere,
+we have introduced an open, cloud-based operating system
+for this IIoT. MindSphere allows our businesses, customers
+and partners to develop and deploy applications and digital
+services based on data gathered from assets, such as a prod-
+uct or in the field, e.g. to predict equipment failure, increase
+asset availability, improve product designs or increase product
+or plant performances.
+> We are continuously adopting and developing foundational
+digital technologies, such as data analytics and artificial intel-
+ligence or modeling and simulation technologies. The former
+are essential to generate value and impact out of the growing
+amount of data generated in the field; the latter enable the
+creation of a digital twin for physical products, systems and
+infrastructures, e.g. for the purpose of virtually testing and
+commissioning a system prior to building it.
+The Mobility Division combines all Siemens businesses in the
+area of passenger and freight transportation, including rail vehi-
+cles, rail automation systems, rail electrification systems, road
+traffic technology, digital solutions and related services. The Di-
+vision also provides its customers with consulting, planning, fi-
+nancing, construction, service and operation of turnkey mobility
+systems. Moreover, Mobility offers integrated mobility solutions
+for networking of different types of traffic systems. The principal
+customers of the Mobility Division are public and state-owned
+companies in the transportation and logistics sectors. Markets
+served by Mobility are driven primarily by public spending. Cus-
+tomers usually have multi-year planning and implementation
+horizons, and their contract tenders therefore tend to be inde-
+pendent of short-term economic trends.
+SIEMENS
+Ingenuity for life
+Annual Report
+2017
+siemens.com
+Table of contents
+A.
+Combined Management Report
+B.
+C.
+Consolidated Financial Statements
+Additional Information
+P 126
+Responsibility Statement
+Independent Auditor's Report
+A.1
+p2
+B.1
+In September 2017, Siemens and Alstom SA, France (Alstom)
+signed a memorandum of understanding to combine Siemens'
+mobility business including the rail traction drives business,
+which is included in the Process Industries and Drives Division,
+with the publicly listed company Alstom. The two businesses are
+largely complementary in terms of activities and geographies.
+The combined entity is expected to offer a significantly increased
+range of diversified product and solution offerings to meet
+multi-facetted, customer-specific needs. According to the mem-
+orandum, Siemens will receive newly issued shares in the com-
+bined company representing 50% of Alstom's share capital as-
+suming full dilution through exercise of all potentially dilutive
+securities and share-based payment plans. Further, Siemens will
+receive warrants allowing it to acquire Alstom shares represent-
+ing 2% of its share capital, which can be exercised earliest four
+years after closing of the transaction. The transaction will be sub-
+C.1
+ject to Alstom's shareholders' approval, anticipated in the second
+quarter of calendar 2018. The transaction is also subject to clear-
+ance from relevant antitrust and regulatory authorities. Closing
+of the transaction is expected at the end of calendar 2018.
+The Process Industries and Drives Division offers a comprehen-
+sive product, software, solution and service portfolio for moving,
+measuring, controlling and optimizing all kinds of mass flows.
+With its know-how in vertical industries including oil and gas,
+shipbuilding, mining, cement, fiber, chemicals, food and bever-
+age, and pharmaceuticals, the Division increases productivity,
+reliability and flexibility of machinery and installations along their
+entire life cycle jointly with its customers. Based on data models
+and analysis methods, Process Industries and Drives paves the
+way together with its customers to create a "Digital Enterprise,"
+from process simulation via plant design and documentation
+through to asset and performance management. The Division's
+offerings include an integrated portfolio with products, compo-
+nents and systems such as couplings, gears, motors and convert-
+ers, process instrumentation systems, process analytics devices,
+wired and wireless communication, industrial identification and
+power supplies up to systems level with decentralized control sys-
+tems, industrial software as well as customized, application-spe-
+cific systems and solutions. It also sells gears, couplings and drive
+solutions to other Siemens Divisions and Strategic Units, which
+use them in rail transport and wind turbines. Demand within the
+> An example of a disruptive development is electrically pow-
+ered flight. In cooperation with Airbus, Siemens intends to
+demonstrate by 2020 that electricity can be used to power
+large planes.
+> Future mobility systems will be increasingly electrified and
+connected. Amongst others, our R&D efforts are aiming for
+ubiquitous electric charging as well as the digitally supported
+integration and management of multi-modal transportation
+systems.
+> Automation technologies continue to evolve. Our R & D activ-
+ities aim to reduce engineering efforts, enhance flexibility and
+increase our customers' productivity.
+> Turbo machinery, switching gear and other power equipment
+stand to benefit from novel materials enabling higher gener-
+ation efficiency and fewer losses in power transmission and
+distribution. In particular, the ability to print parts with novel
+topologies using 3D printers embedded in an integrated, dig-
+ital tool chain is a key innovation driver.
+units. These are also key ingredients for distributed energy
+systems, which combine onsite generation with local con-
+sumption to offer secure power supply at lower cost.
+4 Combined Management Report
+The stable operating of power grids in the presence of inter-
+mittent, renewable power generation depends, amongst
+other factors, on further advances in power electronics as well
+as the availability of economically viable large energy storage
+Our research and development (R&D) activities are ultimately
+geared to developing innovative, sustainable solutions for our
+customers - and the Siemens businesses - and simultaneously
+safeguarding our competitiveness. To this end, we are focusing
+our R&D activities on a number of selected technologies and in-
+novation fields. Examples include the following:
+A.1.1.3 RESEARCH AND DEVELOPMENT
+The Financial Services (SFS) Division supports its customers'
+investments with leasing solutions and equipment, project and
+structured financing in the form of debt and equity investments.
+Based on its comprehensive financing know-how and specialist
+technology expertise in the areas of Siemens businesses, SFS
+provides financial solutions for Siemens customers as well as
+other companies, and also manages financial risks of Siemens.
+SFS operates the Corporate Treasury of the Siemens Group,
+which includes managing liquidity, cash and interest risks as well
+as certain foreign exchange, credit and commodities risks. Busi-
+ness activities and tasks of Corporate Treasury are reported in
+the segment information within Reconciliation to Consolidated
+Financial Statements.
+of the combined entity. For more information on the merger, see
+→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. The
+merged businesses are highly complementary regarding global
+footprint, existing product portfolios and technologies. SGRE of-
+fers wind turbines utilizing various pitch and speed technologies,
+and is active in the development, construction and sale of wind
+farms. The current product offering comprises geared as well as
+direct drive turbines, both for onshore and offshore application.
+In addition, SGRE provides services for the management, opera-
+tion and maintenance of wind farms. Its primary customers are
+large utilities and independent power producers. SGRE's revenue
+mix may vary from reporting period to reporting period depend-
+ing on the mix of onshore and offshore projects in the respective
+periods. The share of renewable energy in the global energy mix
+will continue to increase, but the trend toward evaluating com-
+peting power sources using life-cycle costs will continue to put
+pressure on the prices of wind power providers. To address this
+trend, SGRE focuses on improving its supply chain and signifi-
+cantly decreasing costs by leveraging synergies in the manufac-
+turing footprint subsequent to the merger. A higher share of re-
+newable energy in electrical grids also increases the demand for
+predictability of the energy supply and increased capability for
+integrating it into the overall energy mix, which SGRE addresses
+by pursuing innovation areas such as digitalization.
+Siemens Gamesa Renewable Energy (SGRE) - In April 2017,
+Siemens contributed its wind power business, including service,
+into the publicly listed company Gamesa Corporación Tecnológica,
+S.A., Spain (Gamesa), and in return received newly issued shares
+of the combined entity Siemens Gamesa Renewable Energy, S.A.,
+Spain. Siemens as majority shareholder holds 59% of the shares
+Healthineers is one of the world's largest suppliers of technol-
+ogy to the healthcare industry and a leader in diagnostic imaging
+and laboratory diagnostics. It provides medical technology and
+software solutions as well as clinical consulting services, sup-
+ported by a complete set of training and service offerings. This
+comprehensive portfolio supports customers along the contin-
+uum of care from prevention and early detection to diagnosis,
+treatment and follow-up care. Its business activities are to a cer-
+tain extent resilient to short-term economic trends as large por-
+tions of its revenue stem from recurring business. They are, how-
+ever, dependent on regulatory and public policy developments
+around the world. The global healthcare market served by
+Healthineers is transforming, putting healthcare providers under
+pressure for better outcomes at lower cost. Drivers of this trans-
+formation include increasing societal resistance to healthcare
+costs, payers becoming more professional, a shift to value-based
+reimbursement, chronic disease burdens, and rapid scientific
+progress. As a result, healthcare providers are consolidating into
+networked structures, resulting in larger clinic and laboratory
+chains often internationally - which act increasingly like large
+enterprises. Applying this industrial logic to the healthcare mar-
+ket can lead to systematic improvements in quality, while at the
+same time reducing costs. To capture these benefits, regulatory
+schemes around the world increasingly seek to shift healthcare
+incentive systems away from a basis in number of procedures to
+a basis in outcomes achieved. In fiscal 2017, Healthineers was
+organized into six business areas: Diagnostic Imaging, Laboratory
+Diagnostics, Advanced Therapies, Ultrasound, Point of Care Diag-
+nostics and Services. During fiscal 2017, the Managing Board of
+Siemens AG announced that it intends to publicly list a minority
+stake in the Healthineers business in the first half of calendar
+2018, depending on market conditions.
+-
+As part of the above-mentioned memorandum of understanding
+to combine Siemens' mobility businesses with Alstom, Process
+Industries and Drives will transfer its rail traction drives business
+to the combined company.
+industries served by the Division generally shows a delayed re-
+sponse to changes in the overall economic environment. Even so,
+the Division is strongly dependent on investment cycles in its key
+industries. In commodity-based process industries such as oil and
+gas or mining, these cycles are driven mainly by commodity price
+fluctuations rather than changes in produced volumes.
+Combined Management Report 3
+The Digital Factory Division offers a comprehensive product
+portfolio and system solutions used in manufacturing industries,
+complemented by product lifecycle and data-driven services.
+These offerings enable customers to optimize entire value chains
+from product design and development to production and ser-
+vices. This is supplemented by the MindSphere platform that
+connects machines and physical infrastructure to the digital
+world. With its comprehensive offering, the Division supports
+manufacturing companies with their transformation towards the
+"Digital Enterprise," resulting in increased flexibility and effi-
+ciency of production processes and reduced time to market for
+new products. The Division supplies customers mainly in discrete
+and hybrid manufacturing industries. Changes in the level of cus-
+tomer demand are strongly driven by macroeconomic cycles, and
+can lead to significant short-term variation in the Division's prof-
+itability. In the second quarter of fiscal 2017, Digital Factory fur-
+ther strengthened and expanded its industrial software business
+by acquiring Mentor Graphics Corporation (Mentor Graphics),
+a U.S.-based provider of electronic design automation software.
+For more information on the acquisition of Mentor Graphics, see
+→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. In
+the first quarter of fiscal 2017, Digital Factory contributed its eCar
+business to a newly formed joint venture, Valeo Siemens eAuto-
+motive; Siemens' share in the joint venture is reported within
+Centrally managed portfolio activities (CMPA).
+The Building Technologies Division is a leading provider of au-
+tomation technologies and digital services for safe, secure and
+efficient buildings and infrastructures throughout their lifecycles.
+The Division offers products, solutions, services and software for
+fire safety, security, building automation, heating, ventilation, air
+conditioning and energy management. The large customer base
+is widely dispersed. It includes owners, operators and tenants for
+both public and commercial buildings; building construction gen-
+eral contractors; and system houses. Changes in the overall eco-
+nomic environment generally have a delayed effect on the Divi-
+sion's business activities. Particularly in the solutions and service
+businesses, Building Technologies is affected by changes in the
+non-residential construction markets with a time lag of two to
+four quarters.
+DESCRIPTION OF REPORTABLE SEGMENTS
+Siemens has nine reportable segments, being:
+Siemens Real Estate (SRE) - except for SGRE, SRE manages the
+Group's entire real estate business portfolio, operates the prop-
+erties, and is responsible for building projects and the purchase
+and sale of real estate.
+1,885
+156
+1,350
+and combined interest
+and currency swaps
+Other (embedded
+Interest rate swaps
+exchange contracts
+Foreign currency
+Asset
+Sep 30, 2017
+Liability
+Asset
+(in millions of €)
+880
+Sep 30, 2016
+Liability
+570
+475
+491
+653
+derivatives, options,
+commodity swaps)
+192
+2018
+(in millions of €)
+Periods in which the hedged forecast transactions or the firm
+commitments denominated in foreign currency are expected to
+impact profit or loss:
+The Company's operating units apply hedge accounting for cer-
+tain significant forecast transactions and firm commitments de-
+nominated in foreign currencies. Particularly, the Company has
+entered into foreign currency exchange contracts to reduce the
+risk of variability of future cash flows resulting from forecast sales
+and purchases as well as firm commitments. This risk results
+mainly from contracts denominated in US$ both from Siemens'
+operating units entering into long-term contracts e.g. project
+business and from standard product business.
+Cash flow hedges
+Consolidated Financial Statements 91
+contracts.
+The Company manages its risks associated with fluctuations in
+foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a
+Company-wide portfolio approach. Under this approach the
+Company-wide risks are aggregated centrally, and various deriv-
+ative financial instruments, primarily foreign currency exchange
+contracts, foreign currency swaps and options, are utilized to
+minimize such risks. Such a strategy does not qualify for hedge
+accounting treatment. The Company also accounts for foreign
+currency derivatives, which are embedded in sale and purchase
+Derivative financial instruments not designated
+in a hedging relationship
+RISK MANAGEMENT
+FOREIGN CURRENCY EXCHANGE RATE
+129
+1,500
+596
+3,051
+823
+2,314
+311
+Fair values of each type of derivative financial instruments recorded
+as financial assets or financial liabilities are:
+instruments and hedging activities
+NOTE 23 Derivative financial
+off in the
+Statement of
+Amounts set
+Sep 30, 2016
+153
+538
+691
+5
+697
+1,383
+647
+2,030
+5
+2,035
+Net
+amounts
+Related
+amounts not
+set off in the
+Statement of
+Financial
+Position
+(in millions of €)
+Financial assets
+Gross
+amounts
+Financial
+Position
+595
+838
+1,433
+6
+1,440
+Financial liabilities - Derivative financial liabilities
+1,640
+2019
+994
+7
+2,641
+Net
+amounts
+Financial
+Position
+amounts not
+set off in the
+Statement of
+Related
+Net amounts
+in the
+Statement of
+Financial
+Position
+2,634
+2020
+to
+2022
+Expected gain (loss) to be
+reclassified from line item
+Other comprehensive income,
+net of income taxes into
+Notes and bonds
+Non-derivative financial
+liabilities
+there-
+after
+to
+2022
+2019
+2018
+and
+2020
+2023
+Fiscal year
+(in millions of €)
+The following table reflects the contractually fixed pay-offs for
+settlement, repayments and interest. The disclosed expected un-
+discounted net cash outflows from derivative financial liabilities
+are determined based on each particular settlement date of an
+instrument and based on the earliest date on which Siemens
+could be required to pay. Cash outflows for financial liabilities
+(including interest) without fixed amount or timing are based on
+the conditions existing at September 30, 2017.
+In addition, Siemens constantly monitors funding options avail-
+able in the capital markets, as well as trends in the availability
+and costs of such funding, with a view to maintaining financial
+flexibility and limiting repayment risks.
+Liquidity risk results from the Company's inability to meet its fi-
+nancial liabilities. Siemens follows a deliberated financing policy
+that is aimed towards a balanced financing portfolio, a diversified
+maturity profile and a comfortable liquidity cushion. Siemens
+mitigates liquidity risk by the implementation of an effective
+working capital and cash management, arranged credit facilities
+with highly rated financial institutions, via a debt issuance pro-
+gram and via a global multi-currency commercial paper program.
+Liquidity risk may also be mitigated by the Siemens Bank GmbH,
+which increases the flexibility of depositing cash or refinancing.
+LIQUIDITY RISK
+4,328
+3,790
+11,102
+Loans from banks
+3
+19
+9,730
+112
+36
+18
+35
+These investments are monitored based on their current market
+value, affected primarily by fluctuations in the volatile technolo-
+gy-related markets worldwide. As of September 30, 2017 and
+2016 the market value of Siemens' portfolio in publicly traded
+companies was €2,875 million compared to €2,169 million in the
+prior year. As of September 30, 2017 and 2016, the VaR relating
+to the equity price was €208 and €227 million. The increase in
+the market values, due mainly to our stakes in Atos and OSRAM,
+was more than offset by a decline in the volatilities of these
+stakes, resulting in an overall decrease of the VaR. The major part
+of our stake in OSRAM has been sold in October 2017.
+Trade payables
+23
+27
+677
+Other financial
+indebtedness
+Obligations under
+finance leases
+17,659
+3
+328 1,037
+1,303
+61
+in the
+Statement of
+Financial
+Position
+Siemens' investment portfolio consists of direct and indirect in-
+vestments in publicly traded companies held for purposes other
+than trading. The direct participations result mainly from strate-
+gic partnerships, strengthening Siemens' focus on its core busi-
+ness activities or compensation from merger and acquisitions
+transactions; indirect investments in fund shares are mainly
+transacted for financial reasons.
+Consolidated Financial Statements 93
+NOTE 24 Financial risk management
+The Company had interest rate swap contracts to pay variable
+rates of interest of an average of (0.3)% and (0.2)% as of Septem-
+ber 30, 2017 and 2016, respectively and received fixed rates of
+interest (average rate of 1.1% and 3.3%, as of September 30, 2017
+and 2016, respectively). The notional amount of indebtedness
+hedged as of September 30, 2017 and 2016 was €1,650 million
+and €3,650 million, respectively. This changed 7% and 14% of the
+Company's underlying notes and bonds from fixed interest rates
+into variable interest rates as of September 30, 2017 and 2016,
+respectively. The notional amounts of these contracts mature at
+varying dates based on the maturity of the underlying hedged
+items. The net fair value of interest rate swap contracts (excluding
+accrued interest) used to hedge indebtedness as of September 30,
+2017 and 2016 was €37 million and €93 million, respectively.
+Fair value hedges of fixed-rate debt obligations
+Under the interest rate swap agreements outstanding during the
+years ended September 30, 2017 and 2016, the Company has
+agreed to pay a variable rate of interest multiplied by a notional
+principal amount, and to receive in return an amount equal to a
+specified fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements offset an
+impact of future changes in interest rates designated as the
+hedged risk on the fair value of the underlying fixed-rate debt
+obligations. Carrying amount adjustments to debt for fair value
+changes attributable to the respective interest rate risk being
+hedged are included in Other financial income (expenses), net
+and resulted in a gain (loss) of €57 million and €149 million, re-
+spectively, in fiscal 2017 and 2016; the related swap agreements
+resulted in a gain (loss) of €(57) million and €(152) million, re-
+spectively. Net cash receipts and payments relating to such inter-
+est rate swap agreements are recorded as interest expenses.
+Since fiscal 2015, Siemens applies cash flow hedge accounting
+to a revolving portfolio of floating-rate commercial papers of
+nominal US$700 million. To benefit from low interest rates in the
+USA, Siemens pays a fixed rate of interest and receives a variable
+rate of interest, offsetting future changes in interest payments of
+the underlying floating-rate commercial papers. Net cash receipts
+and payments are recorded as interest expenses.
+Cash flow hedges of floating-rate
+commercial papers
+Interest rate risk management relating to the Group, excluding
+SFS' business, uses derivative financial instruments under a port-
+folio-based approach to manage interest risk actively relative to
+a benchmark. The interest rate management relating to the SFS
+business remains to be managed separately, considering the
+term structure of SFS' financial assets and liabilities on a portfolio
+basis. Neither approach qualifies for hedge accounting treat-
+ment. Net cash receipts and payments in connection with inter-
+est rate swap agreements are recorded as interest expense in
+Other financial income (expenses), net.
+Derivative financial instruments not designated
+in a hedging relationship
+INTEREST RATE RISK MANAGEMENT
+38
+87
+15
+80
+2023
+and
+there-
+after
+Fiscal year
+revenue or cost of sales
+Increasing market fluctuations may result in significant earnings
+and cash flow volatility risk for Siemens. The Company's operat-
+ing business as well as its investment and financing activities are
+affected particularly by changes in foreign exchange rates, inter-
+est rates and equity prices. In order to optimize the allocation of
+the financial resources across the Siemens segments and entities,
+as well as to achieve its aims, Siemens identifies, analyzes and
+manages the associated market risks. The Company seeks to man-
+age and control these risks primarily through its regular operating
+and financing activities, and uses derivative financial instruments
+when deemed appropriate.
+In order to quantify market risks Siemens has implemented a sys-
+tem based on parametric variance-covariance Value at Risk (VaR),
+which is also used for internal management of the Corporate Trea-
+sury activities. The VaR figures are calculated based on historical
+92
+22
+As of September 30, 2017 and 2016 the VaR relating to the inter-
+est rate was €479 million and €485 million.
+If there are no conflicting country-specific regulations, all Siemens
+operating units generally obtain any required financing through
+Corporate Treasury in the form of loans or intercompany clearing
+accounts. The same concept is adopted for deposits of cash gen-
+erated by the units.
+Interest rate risk is the risk that the fair value or future cash flows
+of a financial instrument will fluctuate because of changes in
+market interest rates. This risk arises whenever interest terms of
+financial assets and liabilities are different. In order to manage
+the Company's position with regard to interest rate risk, interest
+income and interest expenses, Corporate Treasury performs a
+comprehensive corporate interest rate risk management by using
+fixed or variable interest rates from bond issuances and deriva-
+tive financial instruments when appropriate. The interest rate risk
+relating to the Group, excluding SFS' and SGRE' businesses, is
+mitigated by managing interest rate risk actively relatively to a
+benchmark. The interest rate risk relating to the SFS's and SGRE's
+businesses is managed separately, considering the term structure
+of financial assets and liabilities. The Company's interest rate risk
+results primarily from the funding in U.S. dollar, British pound
+and euro.
+INTEREST RATE RISK
+Many Siemens units are located outside the euro zone. Since the
+financial reporting currency of Siemens is the euro, the financial
+statements of these subsidiaries are translated into euro for the
+preparation of the Consolidated Financial Statements. To con-
+sider the effects of foreign currency translation in the risk man-
+agement, the general assumption is that investments in for-
+eign-based operations are permanent and that reinvestment is
+continuous. Effects from foreign currency exchange rate fluctu-
+ations on the translation of net asset amounts into euro are re-
+flected in the Company's consolidated equity position.
+Translation risk
+As of September 30, 2017 and 2016 the VaR relating to foreign
+currency exchange rates was €87 million and €86 million. This
+VaR was calculated under consideration of items of the Consoli-
+dated Statement of Financial Position in addition to firm commit-
+ments which are denominated in foreign currencies, as well as
+foreign currency denominated cash flows from forecast transac-
+tions for the following twelve months.
+EQUITY PRICE RISK
+Generally, the operating units conclude their hedging activities
+internally with Corporate Treasury. By applying a cost-optimiz-
+ing portfolio approach Corporate Treasury itself hedges foreign
+currency exchange rate risks with external counterparties and
+limits them.
+Operating units (Industrial business and SFS) are prohibited from
+borrowing or investing in foreign currencies on a speculative basis.
+Intercompany financing or investments of operating units are pref-
+erably carried out in their functional currency or on a hedged basis.
+Each Siemens unit conducting businesses with international
+counterparties leading to future cash flows denominated in a
+currency other than its functional currency is exposed to risks
+from changes in foreign currency exchange rates. In the ordinary
+course of business Siemens units are exposed to foreign currency
+exchange rate fluctuations, particularly between the U.S. dollar
+and the euro. Foreign currency exchange rate exposure is partly
+balanced by purchasing of goods, commodities and services in
+the respective currencies as well as production activities and
+other contributions along the value chain in the local markets.
+FOREIGN CURRENCY EXCHANGE RATE RISK
+Transaction risk
+Any market sensitive instruments, including equity and interest
+bearing investments, that our Company's pension plans hold are not
+included in the following quantitative and qualitative disclosures.
+Actual results that are included in the Consolidated Statements
+of Income or Consolidated Statements of Comprehensive Income
+may differ substantially from VaR figures due to fundamental
+conceptual differences. While the Consolidated Statements of
+Income and Consolidated Statements of Comprehensive Income
+are prepared in accordance with IFRS, the VaR figures are the
+output of a model with a purely financial perspective and repre-
+sent the potential financial loss which will not be exceeded
+within ten days with a probability of 99.5%. Although VaR is an
+important tool for measuring market risk, the assumptions on
+which the model is based give rise to some limitations including
+the following. A ten day holding period assumes that it is possible
+to dispose of the underlying positions within this period. This
+may not be valid during continuing periods of illiquid markets. A
+99.5% confidence level means, that there is a 0.5% statistical
+probability that losses could exceed the calculated VaR. The use
+of historical data as a basis for estimating the statistic behavior
+of the relevant markets and finally determining the possible
+range of the future outcomes on the basis of this statistic behav-
+ior may not always cover all possible scenarios, especially those
+of an exceptional nature.
+volatilities and correlations of various risk factors, a ten day hold-
+ing period, and a 99.5% confidence level.
+Consolidated Financial Statements
+According to the company policy Siemens units are responsible
+for recording, assessing and monitoring its foreign currency trans-
+action exposure. The net foreign currency position of Siemens
+units serves as a central performance measure and has to be
+hedged within a band of at least 75% but no more than 100%.
+Net amounts
+off in the
+Statement of
+Amounts set
+In connection with cash flow hedges
+In connection with fair value hedges
+(including embedded derivatives)
+Not designated in a hedge accounting relationship
+Derivative financial instruments
+Available-for-sale financial assets: debt instruments
+333
+333
+46
+46
+1,935
+54
+1,882
+2,314
+54
+Financial liabilities measured at fair value - Derivative financial instruments
+823
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+Level 1
+Sep 30, 2016
+In connection with cash flow hedges
+In connection with fair value hedges
+(including embedded derivatives)
+Not designated in a hedge accounting relationship
+Available-for-sale financial assets: debt instruments
+Derivative financial instruments
+2,261
+Available-for-sale financial assets: equity instruments
+(in millions of €)
+140
+140
+682
+682
+823
+In connection with cash flow hedges
+Financial assets measured at fair value
+Level 2
+1,243
+1,232
+3,312
+115
+28,554
+30,235
+28,797
+32,303
+3,299
+178
+Carrying
+amount
+Sep 30, 2016
+Fair value
+Carrying
+amount
+Fair value
+Sep 30, 2017
+Loans from banks and other financial indebtedness
+Obligations under finance leases
+Notes and bonds
+(in millions of €)
+98 Consolidated Financial Statements
+2,270
+203
+2,276
+138
+Fixed-rate and variable-rate receivables with a remaining term of
+more than twelve months, including receivables from finance leases,
+are evaluated by the Company based on parameters such as interest
+rates, specific country risk factors, individual creditworthiness of the
+customer, and the risk characteristics of the financed project. Based
+on this evaluation, allowances for these receivables are recognized.
+The fair value of notes and bonds is based on prices provided by price
+service agencies at the period-end date (Level 2). The fair value of
+3,253
+281
+95
+2,877
+6,810
+346
+Total
+11
+Level 3
+Level 1
+2,877
+Sep 30, 2017
+Available-for-sale financial assets: equity instruments
+Financial assets measured at fair value
+(in millions of €)
+The following table allocates financial assets and financial liabil-
+ities measured at fair value to the three levels of the fair value
+hierarchy:
+loans from banks and other financial indebtedness, obligations
+under finance leases as well as other non-current financial liabil-
+ities is estimated by discounting future cash flows using rates
+currently available for debt of similar terms and remaining ma-
+turities (Level 2).
+Level 2
+3,587
+3
+Level 3
+2,191
+Interest income (expense) includes interest from financial assets
+and financial liabilities not at fair value through profit or loss:
+Amounts presented include foreign currency gains and losses
+from realizing and measuring financial assets and liabilities; in
+particular, fiscal 2017 includes net gains from financial liabilities
+measured at amortized cost due to foreign currency changes on
+issued bonds denominated in US$ due to an appreciation of the
+EUR as well as an increase in nominal amounts outstanding due
+to newly issued US$ bonds, which are offset in the income state-
+ment by compensating measurement effects on the correspond-
+ing internal foreign currency financing transactions. Net gains
+(losses) in fiscal 2017 and 2016 on financial assets and financial
+liabilities held for trading consist of changes in the fair value of
+derivative financial instruments, including interest income and
+expense, for which hedge accounting is not applied.
+(211)
+(163)
+Financial assets and financial
+liabilities held for trading
+168
+1,662
+at amortized cost
+Financial liabilities measured
+(442)
+(174)
+70
+(4)
+(19)
+(5)
+(in millions of €)
+Total interest income on financial assets
+Total interest expenses on financial liabilities
+Fiscal year
+2017
+Financial
+Position
+amounts
+Gross
+Sep 30, 2017
+Financial liabilities - Derivative financial liabilities
+Financial assets
+(in millions of €)
+Cash and cash equivalents
+Available-for-sale financial assets
+Loans and receivables
+Siemens enters into master netting agreements and similar
+agreements for derivative financial instruments. The require-
+ments to offset recognized financial instruments are usually not
+met. The following table reflects financial assets and financial
+liabilities that are subject to netting agreements and similar
+agreements:
+90 Consolidated Financial Statements
+In fiscal 2017 and 2016, gains (losses) reclassified from Other
+comprehensive income to the Consolidated Statements of In-
+come relating to cash flow hedges were €54 million and €(61)
+million, respectively; unrealized gains (losses) recognized in
+Other comprehensive income amounted to €232 million and
+€149 million, respectively.
+(874)
+(901)
+1,291
+1,467
+2016
+OFFSETTING
+Total
+2016
+Fiscal year
+371
+163
+2,518
+2,518
+3,051
+3,051
+1,269
+10
+1,259
+2,492
+301
+2,191
+6,812
+310
+4,311
+371
+Financial liabilities measured at fair value - Derivative financial instruments
+1,500
+1,500
+(in millions of €)
+Net gains (losses) of financial instruments are:
+generally subject to future market developments and thus price
+volatility. Since a long-term power purchase agreement is in
+place that mitigates price volatility, significant changes to the
+cash flow forecast are unlikely and thus, no significant effects on
+Other comprehensive income, net of income taxes, are expected.
+The unquoted equity instrument allocated to level 3 of the fair
+value hierarchy relates to an investment in an offshore wind
+farm. The fair value is determined based on discounted cash flow
+calculations. The most significant unobservable input used to
+determine the fair value is the cash flow forecast which is mainly
+based on the future power generation income. This income is
+The Company limits default risks resulting from derivative finan-
+cial instruments by generally transacting with financial institu-
+tions with a minimum credit rating of investment grade. Based
+on Siemens' net risk exposure towards the counterparty, the re-
+sulting credit risk is taken into account via a credit valuation ad-
+justment.
+Siemens determines the fair values of derivative financial instru-
+ments depending on the specific type of instrument. Fair values
+of derivative interest rate contracts are estimated by discounting
+expected future cash flows using current market interest rates
+and yield curves over the remaining term of the instrument. In-
+terest rate futures are valued on the basis of quoted market
+prices, if available. Fair values of foreign currency derivatives are
+based on forward exchange rates. Options are generally valued
+based on quoted market prices or based on option pricing mod-
+els. In determining the fair values of the derivative financial in-
+struments, no compensating effects from underlying transac-
+tions (e.g. firm commitments and forecast transactions) are
+taken into consideration.
+Available-for-sale financial assets measured at fair value include
+interests in Atos SE (Atos) and OSRAM Licht AG (Osram) of
+€2,871 million and €2,156 million, respectively, as of Septem-
+ber 30, 2017 and 2016. Unrealized pre-tax gains (losses) in fiscal
+2017 and 2016 resulting from non-current available-for-sale fi-
+nancial assets measured at fair value are €700 million and
+€445 million, respectively. In September 2017, 18.155 million
+shares in Osram representing a 17.34% stake in Osram met the
+criteria for asset held for disposal classification. Those Osram
+shares were previously reported as non-current available-for-sale
+equity instruments and are held in Centrally managed portfolio
+activities. Upon the sale of the shares for €1.2 billion in cash in
+October 2017, €649 million accumulated fair value changes rec-
+ognized in equity will be reclassified through Other comprehen-
+sive income, net of income taxes to Net income. Siemens retains
+108,414 shares in Osram to service the warrants relating to
+Siemens and Osram shares.
+2017
+The fair value of available-for-sale financial equity instruments
+quoted in an active market is based on price quotations at the
+period-end date. The fair value of debt instruments is either based
+on prices provided by price service agencies or estimated by dis-
+counting future cash flows using current market interest rates.
+305
+305
+In connection with cash flow hedges
+1,190
+1,190
+(including embedded derivatives)
+Not designated in a hedge accounting relationship
+Consolidated Financial Statements 89
+Other financial liabilities
+Derivative financial liabilities
+Credit guarantees¹
+163
+129
+702
+638
+11,238
+11,639
+12,963
+13,628
+Energy Management
+16,471
+15,467
+58
+53
+16,412
+15,413
+19,454
+13,422
+12,277
+Power and Gas
+11,940
+6,913
+8,099
+31
+18
+7,794
+8,081
+7,875
+8,963
+Mobility
+6,156
+6,523
+174
+166
+5,982
+6,356
+6,435
+Building Technologies
+2016
+2017
+Fiscal year
+post-employment benefits
+Expenses relating to
+3,562
+3,766
+and expenses for optional support
+Statutory social welfare contributions
+23,431
+24,632
+Wages and salaries
+2016
+2017
+(in millions of €)
+Fiscal year
+6.42
+7.23
+1,214
+1,218
+29,613
+28,210
+Fiscal year
+2016
+2017
+Fiscal year
+2016
+2017
+2016
+2017
+(in millions of €)
+7,825
+Fiscal year
+Intersegment Revenue
+External revenue
+Orders¹
+Segment information
+NOTE 28
+Consolidated Financial Statements 97
+40
+Total revenue
+Digital Factory
+11,532
+10,332
+(2,300)
+86,480
+85,669
+Siemens (continuing operations)
+(1,730)
+Consolidated Financial Statements
+Reconciliation to
+979
+81,112
+84,331
+921
+154
+147
+3,539
+3,321
+77,573
+824
+774
+1,266
+83,049
+1,247
+79,644
+(3,468)
+(3,694)
+CONSOLIDATED FINANCIAL STATEMENTS
+Centrally managed portfolio activities (CMPA) – in general,
+comprises equity stakes held by Siemens that are accounted for
+by the equity method or as available-for-sale financial assets and
+that for strategic reasons are not allocated to a segment, Siemens
+Real Estate (SRE), Corporate items or Corporate Treasury. CMPA
+also includes activities generally intended for divestment or clo-
+sure as well as activities remaining from divestments and discon-
+tinued operations.
+1,079
+RECONCILIATION TO
+> Financial Services (SFS) supports its customers' investments
+with leasing solutions and equipment, project and structured
+financing in the form of debt and equity investments.
+> Siemens Gamesa Renewable Energy offers wind turbines uti-
+lizing various pitch and speed technologies, and is active in
+the development, construction and sale of wind farms; it pro-
+vides services including management, operation and mainte-
+nance of wind farms,
+> Healthineers, a supplier of technology to the healthcare in-
+dustry and a leader in diagnostic imaging and laboratory di-
+agnostics,
+> Process Industries and Drives offers a comprehensive product,
+software, solution and service portfolio for moving, measur-
+ing, controlling and optimizing all kinds of mass flows,
+979
+> Digital Factory offers a comprehensive product portfolio and
+system solutions used in manufacturing industries, comple-
+mented by product lifecycle and data-driven services,
+> Building Technologies is a provider of automation technolo-
+gies and digital services for safe, secure and efficient build-
+ings and infrastructures throughout their lifecycles,
+> Energy Management offers a wide spectrum of software,
+products, systems, solutions, and services for transmitting,
+distributing and managing electrical power and for providing
+intelligent power infrastructure,
+> Power and Gas, which offers a broad spectrum of products,
+solutions and services for generating electricity from fossil
+fuels and for producing and transporting oil and gas,
+It is not part of the Consolidated Financial Statements subject to the audit opinion.
+1 This supplemental information on Orders is provided on a voluntary basis.
+(2,447)
+79,644
+(2,202)
+83,049
+> Mobility combines all Siemens businesses in the area of pas-
+senger and freight transportation, including rail vehicles, rail
+automation systems, rail electrification systems, road traffic
+technology, digital solutions and related services,
+Diluted earnings per share
+(from continuing operations)
+921
+81,009
+9,038
+8,876
+1,753
+1,681
+7,285
+7,195
+8,939
+9,034
+Process Industries and Drives
+10,172
+11,378
+781
+720
+9,390
+10,658
+Healthineers
+14,218
+13,830
+13,748
+87,802
+86,477
+Industrial Business
+5,976
+7,922
+2
+3
+Financial Services (SFS)
+7,919
+8,768
+Siemens Gamesa Renewable Energy
+13,535
+13,789
+38
+42
+13,497
+7,973
+Basic earnings per share
+5,974
+7.38
+Granted
+6,171,430
+Non-vested, beginning of period
+2017
+Under the Base Share Program employees of Siemens AG and
+participating domestic Siemens companies may invest a fixed
+amount of their compensation in Siemens shares, sponsored by
+Siemens. The shares are bought at market price at a predeter-
+mined date in the second quarter and grant the right to receive
+matching shares under the same conditions applying to the
+Share Matching Plan described above. The fair value of the Base
+Share Program amounted to €36 million and €35 million in fiscal
+2017 and 2016, respectively.
+Base Share Program
+Under the Monthly Investment Plan employees other than senior
+managers may invest a specified part of their compensation in
+Siemens shares on a monthly basis over a period of twelve
+months. Shares are purchased at market price at a predetermined
+date once a month. If the Managing Board decides that shares
+acquired under the Monthly Investment Plan are transferred to
+the Share Matching Plan, plan participants will receive the right
+to matching shares under the same conditions applying to the
+Share Matching Plan described above with a vesting period of
+about two years since fiscal 2016 (previously about three years).
+The Managing Board decided that shares acquired under the
+tranches issued in fiscal 2016 and 2015 are transferred to the
+Share Matching Plan as of February 2017 and February 2016, re-
+spectively.
+Monthly Investment Plan
+Under the Share Matching Plan senior managers may invest a
+specified part of their variable compensation in Siemens shares
+(investment shares). The shares are purchased at the market
+price at a predetermined date in the second quarter. Plan partic-
+ipants receive the right to one Siemens share without payment
+of consideration (matching share) for every three investment
+shares continuously held over a period of about three years (vest-
+ing period) provided the plan participant has been continuously
+employed by Siemens until the end of the vesting period.
+Share Matching Plan
+In fiscal 2017, Siemens issued a new tranche under each of the
+plans of the Share Matching Program.
+AND ITS UNDERLYING PLANS
+SHARE MATCHING PROGRAM
+Fiscal year
+2016
+Changes in the stock awards held by members of the senior man-
+agement and other eligible employees are:
+2,078,828
+6,049,250
+2,044,213
+Vested and fulfilled
+(724,504)
+2016
+Fiscal year
+Resulting Matching Shares
+96 Consolidated Financial Statements
+6,171,430
+6,416,946
+Non-vested, end of period
+In fiscal 2017 and 2016, 2,078,828 and 2,044,213 stock awards,
+respectively, were granted contingent upon attaining the pro-
+spective performance-based target of Siemens stock relative to
+five competitors. The fair value of equity-settled stock awards
+amounted to €138 million and €117 million, respectively, in fiscal
+2017 and 2016; fair value was calculated by applying a valuation
+model. In fiscal 2017 and 2016 inputs to that model include an
+expected weighted volatility of Siemens shares of 22.79% and
+22%, respectively, and a market price of €107.95 and €92.86 per
+Siemens share. Expected volatility was determined by reference
+to historic volatilities. The model applies a risk-free interest rate
+of up to 0.03% in fiscal 2017 and up to 0.1% in fiscal 2016 and an
+expected dividend yield of 3.33% and 3.8% in fiscal 2017 and
+2016, respectively. Assumptions concerning share price correla-
+tions were determined by reference to historic correlations.
+(57,437)
+Settled
+(856,355)
+to cash-settled
+Modified from equity-settled
+(224,952) (1,029,991)
+Forfeited
+(834,605)
+(27,501)
+Severance charges amount to €466 million and €598 million in
+fiscal 2017 and 2016, respectively. Item Expenses relating to
+post-employment benefits includes service costs for the period.
+Personnel costs for continuing and discontinued operations
+amount to €29,622 million and €28,232 million, respectively, in
+fiscal 2017 and 2016.
+Commitments to members of the senior
+management and other eligible employees
+Commitments to members of the Managing Board
+2 A considerable portion result from asset-based lending transactions meaning that the respective
+loans can only be drawn after sufficient collateral has been provided by the borrower.
+1 Based on the maximum amounts Siemens could be required to settle in the event of default
+by the primary debtor.
+2
+177
+303
+2,875
+Irrevocable loan commitments²
+639
+61
+176
+205
+420
+6.51
+13
+290
+CREDIT RISK
+Credit risk is defined as an unexpected loss in financial instru-
+ments if the contractual partner is failing to discharge its obliga-
+tions in full and on time or if the value of collateral declines.
+Siemens provides its customers with various forms of direct and
+indirect financing particularly in connection with large projects.
+Hence, credit risks are determined by the solvency of the debtors,
+the recoverability of the collaterals, the success of projects we
+invested in and the global economic development.
+The effective monitoring and controlling of credit risk through
+credit evaluations and ratings is a core competency of our risk
+management system. In this context, Siemens has implemented
+a binding credit policy.
+Consolidated Financial Statements 95
+Since related taxation is not yet entirely certain, Stock Awards of
+Siemens AG that vested in November 2016 were settled in cash
+rather than in equity instruments. The fair value of €107 million
+at modification date was reclassified from equity to liabilities.
+Until fiscal 2014, additionally one portion of the variable compen-
+sation component (bonus) for members of the Managing Board
+was granted in the form of non-forfeitable awards of Siemens
+stock (Bonus Awards) subject to a vesting period of one year.
+Beneficiaries will receive one Siemens share without payment of
+consideration for each Bonus Award, following an additional
+waiting period of four years.
+Stock awards are tied to performance criteria. The annual target
+amount for stock awards can be bound to the average of earnings
+per share (EPS, basic) of the past three fiscal years and/or to the
+share price performance of Siemens relative to the share price
+performance of five important competitors during the four-year
+restriction period. The target attainment for the performance
+criteria ranges between 0% and 200%. If the target attainment
+of the prospective performance-based target of Siemens stock
+relative to five competitors exceeds 100%, an additional cash pay-
+ment results corresponding to the outperformance. The vesting
+period is four years and five years for stock awards granted to
+members of the Managing Board until fiscal 2014.
+The Company grants stock awards to members of the Managing
+Board, members of the senior management and other eligible em-
+ployees. Stock awards are subject to a restriction period of about
+four years and entitle the beneficiary to Siemens shares without
+payment of consideration following the restriction period.
+STOCK AWARDS
+Share-based payment awards may be settled in newly issued
+shares of capital stock of Siemens AG, in treasury shares or in
+cash. Share-based payment awards may forfeit if the employ-
+ment of the beneficiary terminates prior to the expiration of the
+vesting period. Total pretax expense for share-based payment
+amounted to €512 million and €332 million for the years ended
+September 30, 2017 and 2016, respectively, €416 million and
+€287 million relate to equity-settled awards in fiscal 2017 and
+2016. The carrying amount of liabilities from share-based pay-
+ment transactions is €124 million and €65 million as of Septem-
+ber 30, 2017 and 2016.
+In fiscal 2017 and 2016, agreements were entered into which en-
+title members of the Managing Board to stock awards most of
+which are contingent upon attaining the prospective perfor-
+mance-based target of Siemens stock relative to five competitors.
+The fair value of these entitlements amounting to €13 million
+and €9 million, respectively, in fiscal 2017 and 2016, was calcu-
+lated by applying a valuation model. In fiscal 2017 and 2016, in-
+puts to that model include for the majority of the stock awards
+granted an expected weighted volatility of Siemens shares of
+22.72% and 22%, respectively, and a market price of €106.40 and
+€92.86 per Siemens share. Expected volatility was determined by
+reference to historic volatilities. The model applies a risk-free in-
+terest rate of up to (0.02)% and 0.1% in fiscal 2017 and 2016, re-
+spectively and an expected dividend yield of 3.38% in fiscal 2017
+and 3.8% in fiscal 2016. Assumptions concerning share price cor-
+relations were determined by reference to historic correlations.
+NOTE 25 Share-based payment
+The maximum exposure to credit risk of financial assets, without
+taking account of any collateral, is represented by their carrying
+amount. As of September 30, 2017 and 2016 the collateral for fi-
+nancial instruments classified as financial assets measured at fair
+value in the form of netting agreements for derivatives in the
+event of insolvency of the respective counterparty amounted to
+€647 million and €994 million, respectively. As of September 30,
+2017 and 2016 the collateral held for financial instruments classi-
+fied as receivables from finance leases amounted to €1,967 mil-
+lion and €1,949 million, respectively, mainly in the form of the
+leased equipment. As of September 30, 2017 and 2016 the collat-
+eral held for financial instruments classified as financial assets
+measured at cost or amortized cost amounted to €3,347 million
+and €3,590 million, respectively. The collateral mainly consisted
+of property, plant and equipment. Credit risks arising from irre-
+vocable loan commitments are equal to the expected future pay-
+offs resulting from these commitments. As of September 30,
+2017 and 2016 the collateral held for these commitments
+amounted to €843 million and €1,177 million, respectively,
+mainly in the form of inventories and receivables.
+For analysis and monitoring of the credit risk the Company ap-
+plies different systems and processes. A central IT application
+processes data from operating units together with rating and
+default information and calculates an estimate which may be
+used as a basis for individual bad debt provisions. In addition to
+this automated process, qualitative information is considered, in
+particular to incorporate the latest developments.
+Consolidated Financial Statements
+94
+94
+tomers.
+Ratings, defined and analyzed by SFS, and individually defined
+credit limits are based on generally accepted rating methodolo-
+gies, with the input consisting of information obtained from the
+customer, external rating agencies, data service providers and
+Siemens' credit default experiences. Ratings and credit limits for
+financial institutions as well as Siemens' public and private cus-
+tomers, which are determined by internal risk assessment spe-
+cialists, are continuously updated and considered by investments
+in cash and cash equivalents, and in determining the conditions
+under which direct or indirect financing will be offered to cus-
+Concerning trade receivables and other receivables, as well as
+loans or receivables included in line item Other financial assets
+that are neither impaired nor past due, there were no indications
+that defaults in payment obligations will occur, which lead to a
+decrease in the net assets of Siemens. Overdue financial instru-
+ments are generally impaired on a portfolio basis in order to re-
+flect losses incurred within the respective portfolios. When sub-
+stantial expected payment delays become evident, overdue
+financial instruments are assessed individually for additional
+impairment and are further allowed for as appropriate.
+Employees were engaged in (averages; part time employees are
+included proportionally):
+Corporate Treasury has established the Siemens Credit Ware-
+house to which numerous operating units from the Siemens
+Group regularly transfer business partner data as a basis for a
+centralized rating and credit limit recommendation process. Fur-
+thermore, the Siemens Credit Warehouse purchases trade receiv-
+ables from numerous operating units with a remaining term up
+to one year. Due to the identification, quantification and active
+management of the credit risk the Siemens Credit Warehouse
+increases the transparency with regard to credit risk. In addition,
+the Siemens Credit Warehouse may provide Siemens with an ad-
+ditional source of liquidity and strengthens Siemens' funding
+flexibility.
+Outstanding, beginning of period
+Earnings per share
+NOTE 27
+349
+363
+349
+363
+35
+36
+35
+36
+33
+38
+33
+38
+Research and development
+Administration
+and general services
+(shares in thousands; earnings per share in €)
+Income from continuing operations
+Less: Portion attributable to
+non-controlling interest
+Fiscal year
+2017
+2016
+819,914
+829,164
+Weighted average shares outstanding - diluted
+(from continuing operations)
+2017
+3,392
+11,228
+65
+13,591
+812,180
+5,262
+5,993
+Income from continuing operations
+attributable to shareholders of Siemens AG
+Weighted average shares outstanding - basic
+Effect of dilutive share-based payment
+Effect of dilutive warrants
+(134)
+(133)
+6,126
+808,686
+66
+5,396
+66
+For their 25th and 40th service anniversary eligible employees re-
+ceive jubilee shares. There were 4.26 million and 4.39 million
+entitlements to jubilee shares outstanding as of September 30,
+2017 and 2016, respectively.
+JUBILEE SHARE PROGRAM
+The Managing Board decides annually on the issuance of a new
+Siemens Profit Sharing tranche and determines the targets to be
+met for the current fiscal year. At fiscal year-end, based on the
+actual target achievement, the Managing Board decides in its
+discretion on the amount to be transferred to the Profit-Shar-
+ing-Pool; this transfer is limited to a maximum of €400 million
+annually. If the Pool amounts to a minimum of €400 million after
+one or more fiscal years, it will be transferred to eligible employ-
+ees below senior management in full or partially through the
+grant of free Siemens shares. As of September 30, 2017, €300 mil-
+lion are in the Profit-Sharing-Pool. Expense is recognized pro rata
+over the estimated vesting period. In November 2017, €100 mil-
+lion were transferred to the Profit-Sharing-Pool; it was decided
+that the Pool amounting to €400 million will be transferred to
+eligible employees in March 2018.
+SIEMENS PROFIT SHARING
+The weighted average fair value of matching shares granted in
+fiscal 2017 and 2016 amounting to €92.68 and €64.56 per share
+was determined as the market price of Siemens shares less the
+present value of expected dividends taking into account non-vest-
+ing conditions.
+1,850,052
+Outstanding, end of period
+NOTE 26 Personnel costs
+(95,658)
+710,356
+(473,113) (538,837)
+(106,160)
+(49,011)
+1,767,980
+65
+Granted
+Settled
+Forfeited
+Vested and fulfilled
+1,655,780
+785,000
+Continuing
+(38,304)
+1,767,980
+Continuing and
+discontinued
+Manufacturing and services
+operations
+216
+2016
+223
+2017
+2017
+216
+2016
+Sales and marketing
+(in thousands)
+Fiscal year
+Fiscal year
+operations
+223
+1009
+1009
+10010
+HSP Hochspannungsgeräte GmbH, Troisdorf
+100
+ILLIT Grundstücksverwaltungs-Management GmbH,
+Grünwald
+HaCon Ingenieurgesellschaft mbH, Hanover
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
+Grünwald
+100
+100
+Gamesa Wind GmbH, Aschaffenburg
+Gamesa Energie Deutschland GmbH, Oldenburg
+1009
+Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
+Grünwald
+1007
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
+Grünwald
+59
+1009
+Fluence Energy GmbH, Erlangen
+100
+Flowmaster GmbH, Frankfurt
+Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
+Grünwald
+85
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1009
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+100
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
+Grünwald
+4 No control due to contractual arrangements or legal circumstances.
+1 Control due to a majority of voting rights.
+1009
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
+Grünwald
+10010
+10010
+KompTime GmbH, Munich
+Jawa Power Holding GmbH, Erlangen
+1009
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
+Grünwald
+100
+IPGD Grundstücksverwaltungs-Gesellschaft mbH,
+Grünwald
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Flender GmbH, Bocholt
+100
+1009,11
+AXIT GmbH, Frankenthal
+10010
+10010
+Project Ventures Butendiek Holding GmbH, Erlangen
+Projektbau-Arena-Berlin GmbH, Grünwald
+Atecs Mannesmann GmbH, Erlangen
+10010
+Alpha Verteilertechnik GmbH, Cham
+10010
+Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
+10010
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+100
+1009
+100
+Adwen Verwaltungs GmbH, Bremerhaven
+100
+Adwen GmbH, Bremerhaven
+51
+Omnetric GmbH, Munich
+100
+Adwen Blades GmbH, Stade
+104 Consolidated Financial Statements
+10010
+next47 Services GmbH, Munich
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
+Objekt Tübingen KG, Grünwald
+1009
+R&S Restaurant Services GmbH, Munich
+Berliner Vermögensverwaltung GmbH, Berlin
+Siemens Beteiligungsverwaltung GmbH & Co. OHG,
+Grünwald
+FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
+Munich
+10010
+evosoft GmbH, Nuremberg
+10010
+1007
+Siemens Beteiligungen Management GmbH, Grünwald
+Siemens Beteiligungen USA GmbH, Berlin
+100
+EBV Holding Verwaltung GmbH, Oldenburg
+10010
+Dresser-Rand GmbH, Oberhausen
+100
+10010
+100
+Dade Behring Grundstücks GmbH, Marburg
+100
+Siemens Bank GmbH, Munich
+100
+100
+RISICOM Rückversicherung AG, Grünwald
+Capta Grundstücks-Verwaltungsgesellschaft mbH,
+Grünwald
+10010
+REMECH Systemtechnik GmbH, Kamsdorf
+10010
+Siemens Beteiligungen Inland GmbH, Munich
+Equity interest
+100⁹
+in %
+100
+Siemens Industry Software GmbH, Cologne
+10010
+10010
+10010
+10010
+SIMAR Nordost Grundstücks-GmbH, Grünwald
+SIMAR Nordwest Grundstücks-GmbH, Grünwald
+SIMAR Ost Grundstücks-GmbH, Grünwald
+SIMAR Süd Grundstücks-GmbH, Grünwald
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+100
+Siemens Industriegetriebe GmbH, Penig
+1007
+Siemens Immobilien Management GmbH, Grünwald
+1009
+Siemens Immobilien GmbH & Co. KG, Grünwald
+1009
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+10010
+Siemens Healthcare GmbH, Erlangen
+100
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+100
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+100
+SIMAR West Grundstücks-GmbH, Grünwald
+10010
+Siemens Insulation Center GmbH & Co. KG, Zwönitz
+1009
+VIB Verkehrsinformationsagentur Bayern GmbH, Munich
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+100
+10010
+100
+100
+Verwaltung SeaRenergy Offshore Projects GmbH i.L.,
+Hamburg
+1007
+Siemens Middle East Management GmbH, Grünwald
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+Siemens Postal, Parcel & Airport Logistics GmbH, Constance
+Siemens Power Control GmbH, Langen
+1007
+Siemens Middle East Holding GmbH & Co. KG, Grünwald
+10010
+Siemens-Fonds S-8, Munich
+Trench Germany GmbH, Bamberg
+100
+TASS International GmbH, Wiesbaden
+Siemens Medical Solutions Health Services GmbH,
+Grünwald
+10010
+SYKATEC Systeme, Komponenten, Anwendungstechnologie
+GmbH, Erlangen
+100
+Siemens Liquidity One, Munich
+1007
+Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
+10010
+SIMOS Real Estate GmbH, Munich
+100
+100
+Siemens Healthcare Diagnostics Holding GmbH, Eschborn
+100
+10010
+Siemens Finance & Leasing GmbH, Munich
+1007
+100
+1009
+10010
+Siemens Technology Accelerator GmbH, Munich
+Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
+Siemens Technopark Mülheim Verwaltungs GmbH,
+Grünwald
+Siemens Convergence Creators Management GmbH,
+Hamburg
+1009
+Siemens Convergence Creators GmbH & Co. KG, Hamburg
+10010
+Siemens Financial Services GmbH, Munich
+1007
+100
+1007
+1009
+in %
+Equity interest
+Siemens Real Estate GmbH & Co. KG, Grünwald
+Siemens Real Estate Management GmbH, Grünwald
+Siemens Spezial-Investmentaktiengesellschaft mit TGV,
+Munich
+1007
+Siemens Campus Erlangen Objektmanagement GmbH,
+Grünwald
+1009
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
+Grünwald
+September 30, 2017
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+Siemens Compressor Systems GmbH, Leipzig
+September 30, 2017
+10010
+1009
+Siemens-Fonds S-7, Munich
+100
+Siemens Healthcare Diagnostics GmbH, Eschborn
+100
+Siemens-Fonds Principals, Munich
+1007
+100
+Siemens-Fonds Pension Captive, Munich
+Siemens Global Innovation Partners Management GmbH,
+Munich
+100
+1007
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Technopark Nürnberg Verwaltungs GmbH,
+Grünwald
+Siemens Wind Power Management GmbH, Hamburg
+Siemens-Fonds C-1, Munich
+Siemens Fuel Gasification Technology Verwaltungs GmbH,
+Freiberg
+1009
+10010
+Siemens Turbomachinery Equipment GmbH, Frankenthal
+Siemens Wind Power GmbH & Co. KG, Hamburg
+1009
+Siemens Fuel Gasification Technology GmbH & Co. KG,
+Freiberg
+10010
+Siemens Treasury GmbH, Munich
+10010
+Siemens Fonds Invest GmbH, Munich
+100
+1007
+10010
+25,574
+100
+23,516
+41,819
+19,912
+Sep 30,
+2016
+assets
+Non-current
+11,959
+83,049
+13,088
+111
+19,886
+2017
+22,360
+45,325
+2016
+of companies
+Fiscal year
+22,607
+47,355
+2017
+2016
+Fiscal year
+43,367
+2017
+22,707
+19,013
+16,166
+15,118
+Non-current assets consist of property, plant and equipment,
+goodwill and other intangible assets.
+8,324
+49,809
+18,579
+79,644
+7,511
+34,546
+17,576
+18,108
+17,776
+17,934
+16,769
+16,976
+Revenue by location
+41,485
+63,173
+68,905
+71,907
+19,876
+10,739
+11,142
+42,057
+79,644
+83,049
+3,132
+4,349
+61,065
+NOTE 30 Related party transactions
+Revenue by location
+of customers
+thereof foreign countries
+Assets Corporate items and pensions
+4,964
+4,533
+1,812
+3,448
+Assets Centrally managed portfolio activities
+Assets Siemens Real Estate
+Sep 30,
+2016
+2017
+(in millions of €)
+Assets
+In fiscal 2017 and 2016, Profit of SFS includes interest income of
+€1,241 million and €1,161 million, respectively and interest ex-
+penses of €442 million and €377 million, respectively. In fiscal
+2017, CMPA includes the following effects from asset retirement
+obligations for environmental clean-up costs: €543 million gains
+due to changes in interest rates, €312 million gains due to re-
+duced assumed inflation rates and a loss of €179 million from
+interest rate swaps not designated in a hedge relationship in con-
+nection with those asset retirement obligations.
+(1,994)
+(1,785)
+(349)
+(323)
+(674)
+(1,016)
+(439)
+(407)
+Centrally carried pension expense
+Amortization of intangible assets
+acquired in business combinations
+Eliminations, Corporate Treasury,
+and other reconciling items
+Reconciliation to
+Consolidated Financial Statements
+(449)
+(714)
+517
+(1,346)
+(1,474)
+Asset-based adjustments:
+Intragroup financing receivables
+thereof Germany
+Siemens
+Asia, Australia
+Americas
+Europe, C.I.S., Africa, Middle East
+(in millions of €)
+NOTE 29 Information about geographies
+Consolidated Financial Statements
+100
+63,126
+62,430
+therein U.S.
+Statements
+(35,419)
+(36,100)
+Eliminations, Corporate Treasury, other items
+42,082
+43,161
+Liability-based adjustments
+4,089
+3,258
+Tax-related assets
+47,072
+45,475
+Reconciliation to Consolidated Financial
+JOINT VENTURES AND ASSOCIATES
+Siemens has relationships with many joint ventures and associ-
+ates in the ordinary course of business whereby Siemens buys
+and sells a wide variety of products and services generally on
+arm's length terms.
+Sales of goods
+and services and
+other income
+NOTE 33
+WWW.SIEMENS.
+COM/GCG-CODE
+The Managing Board and the Supervisory Board of Siemens Ak-
+tiengesellschaft provided the declaration required by Section 161
+of the German stock corporation law (AktG) as of October 1, 2017,
+which is available on the Company's website at:
+NOTE 32 Corporate Governance
+102 Consolidated Financial Statements
+Audit Services relate primarily to services provided by EY for au-
+diting Siemens' Consolidated Financial Statements and for audit-
+ing the statutory financial statements of Siemens AG and its sub-
+sidiaries. Other attestation services include primarily audits of
+financial statements in connection with M&A activities, comfort
+letters and other attestation services required under regulatory
+requirements, agreements or requested on a voluntary basis.
+In fiscal 2017 and 2016, 40% and 41%, respectively, of the total
+fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
+schaft, Germany.
+49.5
+56.5
+0.4
+0.2
+3.2
+3.7
+Other attestation services
+Tax services
+45.9
+52.6
+Audit services
+2016
+2017
+(in millions of €)
+Fiscal year
+Fees related to professional services rendered by the Company's
+principal accountant, EY, for fiscal 2017 and 2016 are:
+Subsequent events
+In November 2017, Siemens announced its plans for capacity
+adjustment measures at Power and Gas, SGRE and Process
+Industries and Drives, which are expected to result in significant
+severance charges and also include the closure, consolidation
+as well as the potential sale of locations.
+Consolidated Financial Statements
+NEO New Oncology GmbH, Cologne
+AD 8MW GmbH & Co. KG, Bremerhaven
+Germany (129 companies)
+SUBSIDIARIES
+100
+Mentor Graphics Development (Deutschland) GmbH,
+Villingen-Schwenningen
+in %
+September 30, 2017
+100
+Mentor Graphics (Deutschland) GmbH, Munich
+Equity interest
+Principal accountant fees
+and services
+100
+1007
+Kyros 54 GmbH, Munich
+1007
+1007
+10010
+in %
+Equity interest
+Kyra 1 GmbH, Erlangen
+Kyros 52 GmbH, Hanover
+Kyros 53 GmbH, Munich
+September 30, 2017
+NOTE 34 List of subsidiaries and
+associated companies pursuant to
+Section 313 para. 2 of the German
+Commercial Code
+103
+Lincas Electro Vertriebsgesellschaft mbH, Grünwald
+NOTE 31
+Some of our board members hold, or in the last year have held,
+positions of significant responsibility with other entities. We have
+relationships with almost all of these entities in the ordinary
+course of our business whereby we buy and sell a wide variety of
+products and services on arm's length terms.
+In fiscal 2017 and 2016, no other major transactions took place
+between the Company and the members of the Managing Board
+and the Supervisory Board.
+Sep 30,
+Sep 30,
+Liabilities
+Receivables
+As of September 30, 2017 and 2016, guarantees to joint ventures
+and associates amounted to €726 million and €1,500 million, re-
+spectively. As of September 30, 2017 and 2016, guarantees to
+joint ventures amounted to €488 million and €553 million, re-
+spectively. As of September 30, 2017 and 2016, loans given to
+joint ventures and associates amounted to €222 million and
+€82 million, therein €218 million and €78 million related to joint
+ventures, respectively. As of September 30, 2017 and 2016, the
+Company had commitments to make capital contributions of
+€76 million and €48 million to its joint ventures and associates,
+therein €16 million and €39 million related to joint ventures, re-
+spectively. For a loan raised by a joint venture, which is secured
+by a Siemens guarantee, Siemens granted an additional collat-
+eral. As of September 30, 2017 and 2016 the outstanding amount
+totaled to €113 million and €116 million, respectively. As of Sep-
+tember 30, 2017 and 2016 there were loan commitments to joint
+ventures amounting to €147 million and €72 million, respectively.
+316
+336
+2,442
+2,632
+174
+218
+(in millions of €)
+1,379
+Associates
+142
+119
+1,062
+2,094
+Joint ventures
+2017
+Fiscal year
+2016
+2017
+(in millions of €)
+Purchases of goods
+and services
+and other expenses
+Fiscal year
+2016
+538
+next47 GmbH, Munich
+2017
+2017
+Information regarding the remuneration of the members of the
+Managing Board and Supervisory Board is disclosed on an indi-
+vidual basis in the Compensation Report, which is part of the
+combined management report.
+Compensation attributable to members of the Supervisory Board
+comprises in fiscal 2017 and 2016 of a base compensation and
+additional compensation for committee work and amounted
+€5.2 million (including meeting fees), which is unchanged com-
+pared to prior year.
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their sur-
+viving dependents as of September 30, 2017 and 2016 amounted
+to €191.5 million and €216.3 million, respectively.
+Former members of the Managing Board and their surviving
+dependents received emoluments within the meaning of Sec-
+tion 314 para. 1 No. 6 b of the German Commercial Code totaling
+€34.1 million and €52.3 million in fiscal 2017 and 2016, respec-
+tively.
+In fiscal 2017 and 2016, expense related to share-based payment
+and to the Share Matching Program amounted to €19.0 million
+and 8.3 million, respectively.
+Therefore in fiscal 2017 and 2016, compensation and benefits,
+attributable to members of the Managing Board amounted to
+€40.5 million and €33.5 million in total, respectively.
+In fiscal 2017 and 2016, members of the Managing Board received
+cash compensation of €20.7 million and €20.2 million. The fair
+value of stock-based compensation amounted to €13.2 million
+and €8.7 million for 132,831 and 113,230 Stock Awards, respec-
+tively, in fiscal 2017 and 2016. In fiscal 2017 and 2016, the Com-
+pany granted contributions (including one-time special contribu-
+tions) under the BSAV to members of the Managing Board
+totaling €6.6 million and €4.6 million, respectively.
+RELATED INDIVIDUALS
+Consolidated Financial Statements 101
+579
+392
+2016
+447
+343
+266
+114
+43
+Associates
+236
+126
+333
+277
+Joint ventures
+2016
+320
+100
+in %
+VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
+11
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Societe d'Exploitation du Parc Eolien de
+Pouilly-sur-Vingeanne SARL, Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Chaintrix Bierges
+SARL, Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Plancy l'Abbaye
+SARL, Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Cernon SARL,
+100
+Societe d'Exploitation du Parc Eolien de Orge et Ornain
+SARL, Saint-Priest/France
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+107
+Societe d'Exploitation du Parc Eolien de Saint Bon SARL,
+100
+Siemens Industry Software SAS, Châtillon/France
+100
+Saint-Priest/France
+100
+Siemens Healthcare SAS, Saint-Denis/France
+Societe d'Exploitation du Parc Eolien de Saint Amand SARL,
+100
+Siemens Gamesa Renewable Energy S.A.S.,
+Saint-Denis Cedex/France
+100
+100
+Saint-Priest/France
+100
+Siemens Gamesa Renewable Energy France SAS,
+Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Pringy SARL,
+in %
+September 30, 2017
+September 30, 2017
+Equity interest
+Equity interest
+108
+Societe d'Exploitation du Parc Eolien de Romigny SARL,
+Siemens Lease Services SAS, Saint-Denis/France
+Saint-Priest/France
+100
+Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Landresse SARL,
+100
+100
+Societe d'Exploitation du Parc Eolien de la Tete des Boucs
+SARL, Saint-Priest/France
+100
+100
+100
+Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de la Loye SARL,
+100
+Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
+Gamesa Eolica France, S.A.R.L., Saint-Priest/France
+Dresser-Rand SAS, Le Havre/France
+D-R Holdings (France) SAS, Le Havre/France
+Adwen France SAS, Puteaux/France
+Siemens Osakeyhtiö, Espoo/Finland
+100
+Societe d'Exploitation du Parc Eolien de la Côte du Cerisat
+SAS, Saint-Priest/France
+100
+Siemens Healthcare Oy, Espoo/Finland
+100
+100
+Mentor Graphics (France) SARL, Meudon La Forêt/France
+Mentor Graphics Development (France) SAS, Paris/France
+100
+100
+Societe d'Exploitation du Parc Eolien de Moulins du Puits
+SAS, Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Bouclans SARL,
+100
+Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Margny SARL,
+Societe d'Exploitation du Parc Eolien de Bonboillon SARL,
+100
+Societe d'Exploitation du Parc Eolien de Broyes SARL,
+Saint-Priest/France
+PETNET Solutions SAS, Lisses/France
+Societe d'Exploitation du Parc Eolien de Mantoche SARL,
+100
+Meta Systems SARL, Meudon La Forêt/France
+100
+Societe d'Exploitation du Parc Eolien de Mailly-le-Camp
+SARL, Saint-Priest/France
+100
+not-Saint-Martin/France
+Mentor Graphics Development Crolles SARL, Monbon-
+100
+Societe d'Exploitation du Parc Eolien de Longueville sur
+Aube SARL, Saint-Priest/France
+100
+100
+Saint-Priest/France
+100
+10012
+Societe d'Exploitation du Parc Eolien du Vireaux SAS,
+Mentor Graphics (Holdings) Unlimited Company,
+100
+Saint-Priest/France
+100
+Gamesa Ireland Limited, Dublin/Ireland
+Societe d'Exploitation du Parc Eolien d'Orchamps SARL,
+97
+Teheran/Iran, Islamic Republic of
+100
+Siemens Sherkate Sahami (Khass),
+Societe d'Exploitation du Parc Eolien de Vernierfontaine
+SARL, Saint-Priest/France
+100
+Siemens Zrt., Budapest/Hungary
+100
+Siemens Wind Power Kft., Budapest/Hungary
+100
+Siemens Healthcare Kft., Budapest/Hungary
+100
+100
+100
+evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
+Mentor Graphics Magyarország Kft., Budapest/Hungary
+Siemens Gamesa Megújuló Energia Hungary Kft,
+Budapest/Hungary
+Saint-Priest/France
+100
+Mentor Graphics (Ireland) Limited,
+Siemens Financial Services SAS,
+Corporate items
+Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+888
+5 No significant influence due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Mentor Graphics Development Services Limited,
+Shannon, County Clare/Ireland
+100
+Siemens France Holding SAS, Saint-Denis/France
+100
+Saint-Denis/France
+100
+Shannon, County Clare/Ireland
+4 No control due to contractual arrangements or legal circumstances.
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Vaudrey SARL,
+100
+86
+86
+86
+86
+86
+90
+Siemens Oil & Gas Equipment Limited, Accra/Ghana
+Elliniki Eoliki Attikis Energiaki S.A., Athens/Greece
+Elliniki Eoliki Energiaki Pirgos S.A., Athens/Greece
+Elliniki Eoliki Kopriseza S.A., Athens/Greece
+Elliniki Eoliki Kseropousi S.A., Athens/Greece
+Elliniki Eoliki Likourdi S.A., Athens/Greece
+Energiaki Arvanikou M.E.P.E., Athens/Greece
+Societe d'Exploitation du Parc Eolien de Sceaux SARL,
+100
+Saint-Priest/France
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Savoisy SARL,
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Sambourg SARL,
+100
+Societe d'Exploitation du Parc Eolien de Saint-Lumier en
+Champagne SARL, Saint-Priest/France
+100
+Trench France SAS, Saint-Louis/France
+100
+100
+100
+SIEMENS Postal Parcel Airport Logistics SAS, Paris/France
+Siemens SAS, Saint-Denis/France
+Societe d'Exploitation du Parc Eolien de Saint Loup de
+Saintonge SAS, Saint-Priest/France
+100
+Siemens Gamesa Renewable Energy Oy, Helsinki/Finland
+100
+Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Trepot SARL,
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Souvans SARL,
+100
+100
+Anonyme, Athens/Greece
+Societe d'Exploitation du Parc Eolien de Source de Seves
+SARL, Saint-Priest/France
+Siemens Healthcare Industrial and Commercial Société
+Societe d'Exploitation du Parc Eolien de Sommesous SARL,
+100
+100
+100
+Siemens Gamesa Renewable Energy AE, Athens/Greece
+Siemens Gamesa Renewable Energy Greece E.P.E.,
+Athens/Greece
+Societe d'Exploitation du Parc Eolien de Soude SARL,
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Songy SARL,
+100
+86
+Eoliki Peloponnisou Lakka Energiaki S.A., Athens/Greece
+Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
+Athens/Greece
+100
+Saint-Priest/France
+10010
+100
+100
+100
+Siemens Gamesa Renewable Energy Belgium, SPRL,
+Brussels/Belgium
+100
+Mentor Graphics Development Services Closed Joint Stock
+Company, Yerevan/Armenia
+77
+Samtech SA, Angleur/Belgium
+51
+Siemens S.A., Luanda/Angola
+100
+Mentor Graphics (Belgium) BVBA, Brussels/Belgium
+100
+Siemens Spa, Algiers/Algeria
+1007
+Flender S.P.R.L., Beersel/Belgium
+51
+ESTEL Rail Automation SPA, Algiers/Algeria
+1007
+Antwerp/Belgium
+(519 companies)
+Dresser-Rand Machinery Repair Belgie N.V.,
+(C.I.S.), Africa, Middle East (without Germany)
+Europe, Commonwealth of Independent States
+100
+ETM professional control GmbH, Eisenstadt/Austria
+100
+Siemens Healthcare SA/NV, Beersel/Belgium
+100
+100
+100
+Siemens EOOD, Sofia/Bulgaria
+100
+100
+100
+Siemens Medicina d.o.o., Sarajevo/Bosnia and Herzegovina
+Gamesa Wind Bulgaria, EOOD, Sofia/Bulgaria
+100
+Priamos Grundstücksgesellschaft m.b.H., Vienna/Austria
+Siemens Aktiengesellschaft Österreich, Vienna/Austria
+Siemens Convergence Creators GmbH, Eisenstadt/Austria
+Siemens Convergence Creators GmbH, Vienna/Austria
+100
+100
+Minsk/Belarus
+Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
+KDAG Beteiligungen GmbH, Vienna/Austria
+Omnetric GmbH, Vienna/Austria
+100
+Siemens Wind Power BVBA, Beersel/Belgium
+69
+100
+Siemens S.A./N.V., Beersel/Belgium
+ITH icoserve technology for healthcare GmbH,
+Innsbruck/Austria
+100
+Siemens Industry Software NV, Leuven/Belgium
+100
+Hochquellstrom-Vertriebs GmbH, Vienna/Austria
+100
+100
+Limited Liability Company Siemens Technologies,
+Siemens W.L.L., Manama/Bahrain
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+10010
+Siemens Project Ventures GmbH, Erlangen
+10010
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
+Munich
+10010
+gesellschaft mbH, Munich
+Siemens Private Finance Versicherungsvermittlungs-
+943
+Consolidated Financial Statements
+105
+September 30, 2017
+Windfarm 33 GmbH, Oldenburg
+Windfarm 35 GmbH, Oldenburg
+100
+Windfarm Ringstedt II GmbH, Oldenburg
+100
+Siemens Gamesa Renevable Energy Limited Liability
+Company, Baku/Azerbaijan
+100
+Windfarm Groß Haßlow GmbH, Oldenburg
+100
+Windfarm Ganderkesee-Lemwerder GmbH, Oldenburg
+100
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
+GmbH, Vienna/Austria
+100
+51
+Windfarm 41 GmbH, Oldenburg
+Windfarm 40 GmbH, Oldenburg
+100
+Trench Austria GmbH, Leonding/Austria
+100
+52
+Steiermärkische Medizinarchiv GesmbH, Graz/Austria
+100
+in %
+September 30, 2017
+Equity interest
+Equity interest
+in %
+100
+Siemens Healthcare EOOD, Sofia/Bulgaria
+Siemens SARL, Abidjan/Côte d'Ivoire
+100
+100
+100
+Saint-Priest/France
+100
+Siemens Healthcare A/S, Ballerup/Denmark
+Societe d'Exploitation du Parc Eolien de Clamanges SARL,
+100
+Siemens Gamesa Renewable Energy A/S, Brande/Denmark
+100
+Saint-Priest/France
+100
+Siemens A/S, Ballerup/Denmark
+Societe d'Exploitation du Parc Eolien de Chepniers SARL,
+100
+100
+Societe d'Exploitation du Parc Eolien de Champsevraine,
+SARL, Saint-Priest/France
+100
+Siemens Industry Software, s.r.o., Prague/Czech Republic
+Siemens, s.r.o., Prague/Czech Republic
+100
+Siemens Healthcare, s.r.o., Prague/Czech Republic
+in %
+September 30, 2017
+in %
+September 30, 2017
+Siemens Industry Software A/S, Ballerup/Denmark
+100
+Societe d'Exploitation du Parc Eolien de Coupetz SARL,
+Mentor Graphics Egypt Company (A Limited Liability
+Mentor Graphics Development (Finland) OY, Turku/Finland
+100
+Mentor Graphics (Finland) OY, Espoo/Finland
+100
+Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Guerfand SARL,
+90
+100
+Saint-Priest/France
+100
+Equity interest
+Siemens Technologies S.A.E., Cairo/Egypt
+Siemens Wind Power LLC, Cairo/Egypt
+Societe d'Exploitation du Parc Eolien de Germainville SAS,
+100
+100
+Prudemanche SAS, Saint-Priest/France
+100
+NEM Energy Egypt LLC, Alexandria/Egypt
+Siemens Healthcare S.A.E., Cairo/Egypt
+Societe d'Exploitation du Parc Eolien de Dampierre
+100
+Company - Private Free Zone), Cairo/Egypt
+100
+Saint-Priest/France
+Siemens Limited for Trading, Cairo/Egypt
+Equity interest
+106 Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+100
+Nicosia/Cyprus
+Siemens Gamesa Renewable Energy Limited,
+100
+100
+Willemstad/Curaçao
+100
+Siemens Konzernbeteiligungen GmbH, Vienna/Austria
+Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
+Siemens Metals Technologies Vermögensverwaltungs
+GmbH, Vienna/Austria
+Mentor Graphics (Netherlands Antilles) N.V.,
+100
+100
+100
+100
+100
+Siemens Healthcare Diagnostics GmbH, Vienna/Austria
+Siemens Industry Software GmbH, Linz/Austria
+100
+100
+100
+Siemens Convergence Creators d.o.o., Zagreb/Croatia
+Siemens d.d., Zagreb/Croatia
+Siemens Gebäudemanagement & -Services G.m.b.H.,
+Vienna/Austria
+100
+51
+Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
+Siemens Convergence Creators Holding GmbH,
+Vienna/Austria
+Siemens Gamesa Renewable Energy d.o.o., Zagreb/Croatia
+Siemens Healthcare d.o.o., Zagreb/Croatia
+Societe d'Exploitation du Parc Eolien de la Brie des Etangs
+SARL, Saint-Priest/France
+OEZ s.r.o., Letohrad/Czech Republic
+Siemens Personaldienstleistungen GmbH, Vienna/Austria
+Siemens Urban Rail Technologies Holding GmbH,
+Vienna/Austria
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+100
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+100
+Siemens Electric Machines s.r.o., Drasov/Czech Republic
+100
+Siemens Wind Power GmbH, Vienna/Austria
+100
+Prague/Czech Republic
+75
+Siemens Convergence Creators, s.r.o.,
+100
+Polarion Software s.r.o., Prague/Czech Republic
+100
+1 Control due to a majority of voting rights.
+132
+Shannon, County Clare/Ireland
+(215)
+2,135
+132
+135
+99
+105
+497
+1,046
+2,868
+2,734
+678
+743
+85
+89
+66
+47
+598
+820
+1,690
+1,324
+9,217
+1,963
+2,325
+2,490
+231
+213
+160
+164
+618
+373
+1,800
+2,002
+243
+440
+304
+450
+179
+195
+1,771
+5,731
+1,241
+577
+218
+2017
+2016
+2017
+Sep 30, 2016
+Sep 30, 2017
+2016
+2017
+Fiscal year
+Fiscal year
+Fiscal year
+Fiscal year
+Amortization,
+depreciation & impairments
+Additions to intangible assets
+and property, plant & equipment
+Free cash flow
+Assets
+Profit
+187
+2016
+2017
+2016
+1,591
+213
+195
+198
+375
+1,002
+4,335
+4,178
+895
+10,973
+932
+501
+206
+222
+1,149
+392
+9,066
+9,976
+1,872
+522
+11,211
+784
+2,154
+Profit of the segment SFS:
+Amortization expenses of intangible assets acquired in business
+combinations are not part of Profit. Furthermore, income taxes
+are excluded from Profit since income tax is subject to legal struc-
+tures, which typically do not correspond to the structure of the
+segments. The effect of certain litigation and compliance issues
+is excluded from Profit, if such items are not indicative of perfor-
+mance. This may also be the case for items that refer to more
+than one reportable segment, SRE and (or) CMPA or have a cor-
+porate or central character. Costs for support functions are pri-
+marily allocated to the segments.
+Consolidated Financial Statements 99
+Decisions on essential pension items are made centrally. Accord-
+ingly, Profit primarily includes amounts related to service cost of
+pension plans only, while all other regularly recurring pension
+related costs are included in reconciliations in line item Centrally
+carried pension expense.
+Financing interest, excluded from Profit, is any interest income or
+expense other than interest income related to receivables from
+customers, from cash allocated to the segments and interest ex-
+penses on payables to suppliers. Financing interest is excluded
+from Profit because decision-making regarding financing is typi-
+cally made at the corporate level.
+Siemens' Managing Board is responsible for assessing the perfor-
+Imance of the segments (chief operating decision maker). The
+Company's profitability measure of the segments except for SFS
+is earnings before financing interest, certain pension costs,
+income taxes and amortization expenses of intangible assets
+acquired in business combinations as determined by the chief
+operating decision maker (Profit). The major categories of items
+excluded from Profit are presented below.
+Profit
+Accounting policies for Segment information are generally the
+same as those used for the Consolidated Financial Statements.
+Lease transactions, however, are classified as operating leases for
+internal and segment reporting purposes. Intersegment transac-
+tions are based on market prices.
+MEASUREMENT - SEGMENTS
+Eliminations, Corporate Treasury and other reconciling
+items - comprise consolidation of transactions within the seg-
+ments, certain reconciliation and reclassification items and the
+activities of the Company's Corporate Treasury. It also includes
+interest income and expense, such as, for example, interest not
+allocated to segments or CMPA (referred to as financing interest),
+interest related to Corporate Treasury activities or resulting con-
+solidation and reconciliation effects on interest.
+Pension - includes the Company's pension related income (ex-
+pense) not allocated to the segments, SRE or CMPA.
+Corporate items - includes corporate costs, such as group man-
+aging costs, basic research of Corporate Technology, corporate
+projects and non-operating investments or results of corpo-
+rate-related derivative activities.
+2,764
+3,211
+2,135
+2,406
+357
+Asset measurement principles:
+354
+Management determined Assets (Net capital employed) as a
+measure to assess capital intensity of the segments except for
+SFS. Its definition corresponds to the Profit measure except for
+amortization expenses of intangible assets acquired in business
+combinations which are not part of Profit, however, the related
+intangible assets are included in the segments' Assets. Segment
+Assets is based on Total assets of the Consolidated Statements of
+Financial Position, primarily excluding intragroup financing re-
+ceivables, tax related assets and assets of discontinued opera-
+tions, since the corresponding positions are excluded from Profit.
+The remaining assets are reduced by non-interest-bearing liabili-
+ties other than tax related liabilities, e.g. trade payables, to derive
+Assets. In contrast, Assets of SFS is Total assets. Assets of Mobility
+include the project-specific intercompany financing of a long-
+term project. Assets of SGRE include real estate, while real estate
+of all other Siemens segments is carried at SRE.
+Orders are determined principally as estimated revenue of ac-
+cepted purchase orders and order value changes and adjust-
+ments, excluding letters of intent.
+488
+2,153
+Centrally managed portfolio activities
+Siemens Real Estate
+2016
+2017
+(in millions of €)
+Fiscal year
+Profit
+CONSOLIDATED FINANCIAL STATEMENTS
+RECONCILIATION TO
+Centrally managed portfolio activities follow the measurement
+principles of the segments except for SFS. SRE applies the mea-
+surement principles of SFS.
+PORTFOLIO ACTIVITIES AND SRE
+-
+MEASUREMENT – CENTRALLY MANAGED
+Amortization, depreciation and impairments:
+Amortization, depreciation and impairments includes deprecia-
+tion and impairments of property, plant and equipment as well
+as amortization and impairments of intangible assets each net of
+reversals of impairment.
+Free cash flow of the segments, except for SFS, constitutes cash
+flows from operating activities less additions to intangible assets
+and property, plant and equipment. It excludes financing inter-
+est, except for cases where interest on qualifying assets is capi-
+talized or classified as contract costs and it also excludes income
+tax as well as certain other payments and proceeds. Free cash
+flow of SFS includes related financing interest payments and pro-
+ceeds; income tax payments and proceeds of SFS are excluded.
+Free cash flow definition:
+Orders:
+597
+Profit of the segment SFS is Income before income taxes. In con-
+trast to performance measurement principles applied to other
+segments, interest income and expenses is an important source
+of revenue and expense of SFS.
+223
+7,471
+44,984
+8,744
+9,453
+137
+510
+476
+330
+(279)
+(190)
+4,663
+464
+338
+563
+538
+543
+392
+7,493
+1,835
+36,145
+1,521
+(2,640)
+5,533
+(3,386)
+4,819
+63,126
+125,717
+62,430
+133,804
+(1,994)
+7,404
+(1,785)
+8,306
+207
+18
+29
+216
+427
+734
+26,446
+26,390
+653
+639
+680
+2,191
+2,649
+100
+100
+Siemens Wind Power, S.L., Tres Cantos/Spain
+100
+100
+International Wind Farm Development VII, S.L.,
+Zamudio/Spain
+100
+International Wind Farm Development VI, S.L.,
+Zamudio/Spain
+100
+100
+83
+100
+International Wind Farm Developments II, S.L.,
+Sistemas Energéticos Alcohujate, S.A. Unipersonal,
+Toledo/Spain
+100
+Zamudio/Spain
+100
+100
+Sistema Eléctrico de Conexión Montes Orientales, S.L.,
+Granada/Spain
+Siemens Industry Software S.L., Barcelona/Spain
+SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS,
+S.L. Sociedad Unipersonal, Madrid/Spain
+Siemens Rail Automation S.A.U., Madrid/Spain
+Siemens Renting S.A., Madrid/Spain
+Siemens S.A., Madrid/Spain
+100
+International Wind Farm Development V, S.L.,
+Zamudio/Spain
+International Wind Farm Developments IX, S.L.,
+Siemens Gamesa Renewable Energy Wind Farms, S.A.,
+Zamudio/Spain
+Guascor Power, S.A., Zumaia/Spain
+100
+Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Gamesa Renewable Finance, S.A., Zamudio/Spain
+SIEMENS HEALTHCARE, S. L. U., Getafe/Spain
+100
+100
+100
+100
+Siemens Holding S.L., Madrid/Spain
+100
+100
+Guascor Wind, S. L., Vitoria-Gasteiz/Spain
+1007
+International Wind Farm Development IV, S.L.,
+Zamudio/Spain
+100
+Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
+Guascor Solar S.A., Vitoria-Gasteiz/Spain
+Sistemas Energéticos Alto da Croa, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+Zamudio/Spain
+Sarriguren/Spain
+100
+Sistemas Energéticos Cabanelas, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+Siemens Gamesa Renewable Energy Eolica, S.L.,
+Sistemas Energéticos Cabezo Negro, S.A. Unipersonal,
+Sarriguren/Spain
+100
+Siemens Gamesa Renewable Energy Apac, S.L.,
+Zaragoza/Spain
+Siemens Gamesa Renewable Energy Europa S.L.,
+Sistemas Energéticos Campoliva, S.A. Unipersonal,
+Zamudio/Spain
+100
+Zaragoza/Spain
+Siemens Gamesa Renewable Energy
+Sistemas Energéticos Carril, S.L. Unipersonal,
+Vitoria-Gasteiz/Spain
+100
+60
+Sistemas Energéticos Boyal, S.L., Zaragoza/Spain
+100
+100
+Mentor Graphics (Espana) SL, Madrid/Spain
+100
+Sistemas Energéticos Argañoso, S. L. Unipersonal,
+Zamudio/Spain
+100
+Microenergía 21, S.A., Zumaia/Spain
+1007
+Parque Eolico Dos Picos, S. L. U., Zamudio/Spain
+100
+Sistemas Energéticos Arinaga, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+100
+Samtech Iberica Engineering & Software Services S.L.,
+Barcelona/Spain
+100
+Sistemas Energéticos Balazote, S.A. Unipersonal,
+Zamudio/Spain
+100
+Siemens Gamesa Renewable Energy 9REN, S.L.,
+Sistemas Energéticos Barandon, S.A., Valladolid/Spain
+100
+Madrid/Spain
+100
+Guascor Power Investigacion y Desarollo, S.A.,
+Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
+Siemens Gamesa Renewable Energy S.A., Zamudio/Spain
+70
+100
+100
+677
+Siemens Employee Share Ownership Trust,
+Johannesburg/South Africa
+03
+Estructuras Metalicas Singulares, S.A. Unipersonal,
+Tajonar/Spain
+Desimpacto de Purines Altorricón S.A., Altorricón/Spain
+Desimpacto de Purines Turégano, S.A., Turégano/Spain
+Dresser-Rand Holdings Spain S.L.U., Vitoria-Gasteiz/Spain
+Empresa de Reciclajes de Residuos Ambientales, S.A.,
+Vitoria-Gasteiz/Spain
+100
+Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
+100
+House/South Africa
+100
+Gamesa Electric, S.A. Unipersonal, Zamudio/Spain
+100
+Siemens Proprietary Limited, Midrand/South Africa
+70
+Siemens Healthcare Proprietary Limited, Halfway
+03
+Linacre Investments (Pty) Ltd., Kenilworth/South Africa
+100
+Convertidor Solar Trescientos Setenta, S.L.U.,
+Crabtree South Africa Pty. Limited, Midrand/South Africa
+1007
+San Cristóbal de La Laguna/Spain
+100
+Innovation & Technology, S.L., Sarriguren/Spain
+1007
+Dresser-Rand Service Centre (Pty) Ltd.,
+Midrand/South Africa
+100
+Convertidor Solar Trescientos Veinte, S.L.U., Madrid/Spain
+Convertidor Solar Trescientos, S. L. U., Madrid/Spain
+Convertidor Solar Uno, S. L. U., Madrid/Spain
+100
+100
+100
+Dresser-Rand Southern Africa (Pty) Ltd.,
+Midrand/South Africa
+100
+Gamesa Wind South Africa (Proprietary) Limited,
+Cape Town/South Africa
+SIEMENS WIND POWER (PTY) LTD, Midrand/South Africa
+59
+100
+100
+Equity interest
+Equity interest
+September 30, 2017
+Guascor Borja AIE, Zumaia/Spain
+in %
+September 30, 2017
+in %
+707,12
+111
+Guascor Explotaciones Energéticas, S.A.,
+Vitoria-Gasteiz/Spain
+100
+100
+Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Gamesa Renewable Energy Latam, S.L.,
+Sarriguren/Spain
+100
+Guascor Isolux AIE, Vitoria-Gasteiz/Spain
+607,12
+Siemens Gamesa Renewable Energy Invest, S.A.,
+Zamudio/Spain
+Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Siemens AG is a shareholder with unlimited liability of this company.
+Siemens Wind Power Employee Share Ownership Trust,
+Midrand/South Africa
+03
+Gerr Grupo Energético XXI, S.A. Unipersonal,
+Barcelona/Spain
+Adwen Offshore, S.L., Zamudio/Spain
+100
+Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Gamesa Energy Transmission, S.A. Unipersonal,
+Zamudio/Spain
+100
+100
+100
+100
+100
+Siemens Schweiz AG, Zurich/Switzerland
+100
+Sistemas Energéticos Mansilla, S.L.,
+systransis AG, Risch/Switzerland
+100
+Villarcayo de Merindad de Castilla la Vieja/Spain
+Siemens Power Holding AG, Zug/Switzerland
+78
+Sistemas Energéticos Monte Genaro, S.L.U.,
+Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
+United Republic of
+100
+Zamudio/Spain
+100
+Mentor Graphics Tunisia SARL, Tunis/Tunisia
+100
+Sistemas Energéticos Serra de Lourenza, S.A. Unipersonal,
+Zamudio/Spain
+28
+Sistemas Energéticos Loma del Viento, S.A. Unipersonal,
+Sevilla/Spain
+100
+Zurich/Switzerland
+Sistemas Energéticos La Cámara, S.L., Sevilla/Spain
+100
+Sistemas Energéticos La Plana, S.A.,
+Mentor Graphics (Schweiz) AG, Kilchberg/Switzerland
+Polarion AG, Zurich/Switzerland
+100
+100
+Villanueva de Gállego/Spain
+90
+Siemens Healthcare AG, Zurich/Switzerland
+100
+Sistemas Energéticos Ladera Negra, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
+100
+100
+Siemens Industry Software AG, Zurich/Switzerland
+100
+Sistemas Energéticos Loma del Reposo, S.L. Unipersonal,
+Zamudio/Spain
+Siemens Postal, Parcel & Airport Logistics AG,
+100
+Siemens S.A., Tunis/Tunisia
+100
+100
+Siemens Finansal Kiralama A.S., Istanbul/Turkey
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10
+Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+6 Significant influence due to contractual arrangements or legal circumstances.
+Consolidated Financial Statements
+114
+September 30, 2017
+Equity interest
+in %
+September 30, 2017
+Equity interest
+in %
+Dresser-Rand Turkmen Company,
+113
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+100
+Sistemas Energéticos Sierra de Las Estancias,
+Siemens Gamesa Turkey Renewable Energy Limited
+S.A. Unipersonal, Sevilla/Spain
+100
+Company, Istanbul/Turkey
+100
+Sistemas Energéticos Sierra de Valdefuentes, S.L.U.,
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
+100
+Zamudio/Spain
+100
+Sistemas Energéticos Sierra del Carazo, S.L.U.,
+Zamudio/Spain
+100
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul/Turkey
+Siemens Wind Power Rüzgar Enerjisi Anonim Sirketi,
+Kartal/Istanbul/Turkey
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+100
+Zamudio/Spain
+Komykrieng AG, Zurich/Switzerland
+Zamudio/Spain
+September 30, 2017
+Equity interest
+in %
+Sistemas Energéticos Cuntis, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+Sistemas Energéticos Tablero Tabordo, S.L.,
+Las Palmas de Gran Canaria/Spain
+100
+Sistemas Energéticos de Tarifa, S.L. Unipersonal,
+in %
+Zamudio/Spain
+Sistemas Energéticos Tomillo, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+100
+Sistemas Energéticos del Sur S.A., Sevilla/Spain
+70
+Sistemas Energéticos del Umia, S.A. Unipersonal,
+Telecomunicación, Electrónica y Conmutación S.A.,
+Madrid/Spain
+100
+Santiago de Compostela/Spain
+100
+September 30, 2017
+Equity interest
+112 Consolidated Financial Statements
+Siemens Gamesa Renewable Energy
+International Wind Services, S.A., Zamudio/Spain
+100
+Sistemas Energéticos Cuerda Gitana, S.A. Unipersonal,
+Sevilla/Spain
+100
+1 Control due to a majority of voting rights.
+6 Significant influence due to contractual arrangements or legal circumstances.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+100
+100
+Fanbyn2 Vindenergi AB, Solna/Sweden
+Sistemas Energéticos Edreira, S.A. Unipersonal,
+100
+Sistemas Energéticos Fuerteventura, S.A. Unipersonal,
+Siemens Industrial Turbomachinery AB, Finspång/Sweden
+100
+San Cristóbal de La Laguna/Spain
+100
+Siemens Industry Software AB, Kista/Sweden
+100
+Siemens Healthcare AB, Stockholm/Sweden
+Sistemas Energeticos Islas Canarias, S.L.U.,
+100
+Las Palmas de Gran Canaria/Spain
+100
+Dresser Rand Sales Company GmbH, Zurich/Switzerland
+100
+Sistemas Energéticos Jaralón, S.A. Unipersonal,
+Huba Control AG, Würenlos/Switzerland
+100
+Siemens Wind Power AB, Upplands Väsby/Sweden
+100
+Zamudio/Spain
+100
+Gamesa Wind Sweden AB, Stockholm/Sweden
+100
+Santiago de Compostela/Spain
+100
+Lindom Vindenergi AB, Solna/Sweden
+100
+Sistemas Energéticos El Valle, S.L., Sarriguren/Spain
+100
+Lingbo SPW AB, Solna/Sweden
+100
+Sistemas Energéticos Finca San Juan, S.L.U.,
+Mentor Graphics (Scandinavia) AB, Kista/Sweden
+100
+Las Palmas de Gran Canaria/Spain
+100
+Siemens AB, Upplands Väsby/Sweden
+100
+Sistemas Energéticos Fonseca, S.A. Unipersonal,
+Siemens Financial Services AB, Stockholm/Sweden
+100
+Siemens Healthcare d.o.o., Ljubljana/Slovenia
+7 Not consolidated due to immateriality.
+Convertidor Solar Trescientos Sesenta y Siete, S.L.U.,
+San Cristóbal de La Laguna/Spain
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+6 Significant influence due to contractual arrangements or legal circumstances.
+Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+in %
+Siemens D-R Holding II B.V., The Hague/Netherlands
+100
+109
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Omnetric B.V., The Hague/Netherlands
+Almaty/Kazakhstan
+100
+Pollux III B.V., Amsterdam/Netherlands
+100
+100
+100
+100
+Siemens TOO, Almaty/Kazakhstan
+100
+Siemens Diagnostics Holding II B.V.,
+Siemens Gamesa Renewable Energy Limited,
+Nairobi/Kenya
+The Hague/Netherlands
+100
+Siemens D-R Holding B.V., The Hague/Netherlands
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+Siemens Finance B.V., The Hague/Netherlands
+Siemens Healthcare Limited Liability Partnership,
+100
+100
+Siemens Healthineers Holding III B.V.,
+Siemens Wind Power Sp. z o.o., Warsaw/Poland
+100
+The Hague/Netherlands
+100
+Smardzewo Windfarm Sp. z o.o., Slawno/Poland
+100
+Siemens Industry Software B.V.,
+100
+Ujazd Sp. z o.o., Warsaw/Poland
+'s-Hertogenbosch/Netherlands
+100
+Siemens Gamesa Renewable Energy, S.A.,
+Siemens International Holding B.V.,
+Venda do Pinheiro/Portugal
+100
+The Hague/Netherlands
+100
+100
+Siemens Sp. z o.o., Warsaw/Poland
+100
+The Hague/Netherlands
+100
+Siemens Financieringsmaatschappij N.V.,
+Mentor Graphics Polska Sp. z o.o., Poznan/Poland
+100
+The Hague/Netherlands
+100
+Osiek Sp. z o.o., Warsaw/Poland
+100
+Siemens Gas Turbine Technologies Holding B.V.,
+Siemens Finance Sp. z o.o., Warsaw/Poland
+100
+The Hague/Netherlands
+65
+65
+Siemens Healthcare Sp. z o.o., Warsaw/Poland
+100
+Siemens Healthcare Nederland B.V.,
+Siemens Industry Software Sp. z o.o., Warsaw/Poland
+100
+Gamesa Energia Polska Sp. z o.o., Warsaw/Poland
+Lichnowy Windfarm Sp. z o.o., Warsaw/Poland
+Siemens Healthcare, Lda., Amadora/Portugal
+NEM Energy B.V., Zoeterwoude/Netherlands
+Trench Italia S.r.I., Savona/Italy
+Ltd., Airport City/Israel
+100
+Gamesa Morocco, SARL, Tangier/Morocco
+100
+UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
+100
+Guascor Maroc, S.A.R.L., Agadir/Morocco
+1007
+100
+9REN Services Italia S.r.I., Milan/Italy
+Dresser-Rand Italia S.r.I., Tribogna/Italy
+100
+Mentor Graphics Morocco SARL, Sala Al Jadida/Morocco
+Siemens Healthcare SARL, Casablanca/Morocco
+100
+100
+Mentor Graphics Torino S.R.L., Turin/Italy
+100
+Parco Eolico Banzy S.r.I., Rome/Italy
+100
+Siemens d.o.o., Podgorica/Montenegro
+Siemens Product Lifecycle Management Software 2 (IL)
+100
+100
+Luxembourg/Luxembourg
+100
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
+100
+TFM International S.A. i.L., Luxembourg/Luxembourg
+100
+Siemens HealthCare Ltd., Rosh HaAyin/Israel
+100
+Siemens Industry Software Ltd., Airport City/Israel
+100
+Siemens Gamesa Renewable Energy, SARL,
+Nouakchott/Mauritania
+100
+Siemens Israel Ltd., Rosh HaAyin/Israel
+100
+Siemens Gamesa Renewable Energy, Ltd,
+Siemens Israel Projects Ltd., Rosh HaAyin/Israel
+1007
+Cybercity/Mauritius
+100
+100
+Siemens Plant Operations Tahaddart SARL, Tangier/Morocco
+Siemens S.A., Casablanca/Morocco
+100
+Siemens Postal, Parcel & Airport Logistics S.r.I., Milan/Italy
+100
+Dresser-Rand International B.V., Spijkenisse/Netherlands
+100
+Siemens Renting s.r.l. in Liquidazione, Milan/Italy
+100
+Dresser-Rand Services B.V., Spijkenisse/Netherlands
+100
+100
+Siemens S.p.A., Milan/Italy
+Flowmaster Group NV, Eindhoven/Netherlands
+100
+Siemens Transformers S. p.A., Trento/Italy
+100
+Mentor Graphics (Netherlands) B.V.,
+Siemens Wind Power S.r.I., Milan/Italy
+100
+Eindhoven/Netherlands
+100
+Dresser-Rand B.V., Spijkenisse/Netherlands
+100
+Siemens Industry Software S.r.I., Milan/Italy
+Parco Eolico Manca Vennarda S.r.I., Rome/Italy
+100
+Siemens Wind Energy, SARL, Casablanca/Morocco
+100
+Samtech Italia S.r.I., Milan/Italy
+100
+Siemens Wind Power Blades, SARL AU, Tangier/Morocco
+100
+Siemens Gamesa Renewable Energy Italy, S.P.A., Rome/Italy
+100
+Castor III B.V., Amsterdam/Netherlands
+100
+Siemens Gamesa Renewable Energy Wind S.R.L., Rome/Italy
+100
+D-R International Holdings (Netherlands) B.V.,
+Siemens Healthcare S.r.I., Milan/Italy
+100
+Spijkenisse/Netherlands
+100
+100
+100
+100
+Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
+100
+Convertidor Solar Ciento Veintisiete, S.L.U.,
+Technologies of Rail Transport Limited Liability Company,
+Moscow/Russian Federation
+Madrid/Spain
+100
+1007
+Convertidor Solar Doscientos Noventa y Nueve, S.L.U.,
+Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
+100
+51
+100
+Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
+501
+Convertidor Solar Doscientos Noventa y Siete, S.L.U.,
+ISCOSA Industries and Maintenance Ltd.,
+Madrid/Spain
+100
+Riyadh/Saudi Arabia
+Madrid/Spain
+in %
+Equity interest
+Aljaraque Solar, S.L., Madrid/Spain
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+Ashgabat/Turkmenistan
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+110 Consolidated Financial Statements
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+Siemens Healthcare Limited Liability Company,
+Moscow/Russian Federation
+51
+1 Control due to a majority of voting rights.
+Convertidor Solar G.F. Dos, S.L.U., Madrid/Spain
+Siemens Healthcare Limited, Riyadh/Saudi Arabia
+60
+Convertidor Solar Trescientos Diecisiete, S.L.U.,
+Madrid/Spain
+100
+Siemens Convergence Creators, s. r. o.,
+Bratislava/Slovakia
+100
+Convertidor Solar Trescientos Sesenta y Nueve, S.L.U.,
+San Cristóbal de La Laguna/Spain
+100
+60
+Siemens Healthcare s.r.o., Bratislava/Slovakia
+Siemens s.r.o., Bratislava/Slovakia
+100
+Convertidor Solar Trescientos Sesenta y Ocho, S.L.U.,
+San Cristóbal de La Laguna/Spain
+100
+SIPRIN s.r.o., Bratislava/Slovakia
+100
+Siemens d.o.o., Ljubljana/Slovenia
+100
+100
+SAT Systémy automatizacnej techniky spol. s.r.o.,
+Bratislava/Slovakia
+100
+Madrid/Spain
+51
+Convertidor Solar G.F. Tres, S. L.U, Madrid/Spain
+100
+Siemens Ltd., Riyadh/Saudi Arabia
+51
+Convertidor Solar G.F. Uno S. L. U., Madrid/Spain
+100
+VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
+51
+Convertidor Solar Trescientos Diecinueve, S.L.U.,
+Siemens d.o.o. Beograd, Belgrade/Serbia
+100
+Madrid/Spain
+100
+Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
+100
+Convertidor Solar Trescientos Dieciocho, S.L.U.,
+OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
+100
+100
+Siemens Medical Solutions Diagnostics Holding | B.V.,
+100
+000 Siemens Transformers, Voronezh/Russian Federation
+Siemens Finance LLC, Vladivostok/Russian Federation
+100
+GER Baneasa, S.R.L., Bucharest/Romania
+100
+GER Baraganu, S.R.L, Bucharest/Romania
+100
+TASS International Safety Center B.V.,
+GER Independenta, S.R.L., Bucharest/Romania
+Mentor Graphics Romania SRL, Bucharest/Romania
+100
+Gamesa Wind Romania, S.R.L., Bucharest/Romania
+100
+100
+SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
+TASS International Software and Services B.V.,
+Bucharest/Romania
+100
+Rijswijk/Netherlands
+100
+TASS International Software B.V., Rijswijk/Netherlands
+Helmond/Netherlands
+100
+Gamesa Energy Romania, S.R.L., Bucharest/Romania
+402
+The Hague/Netherlands
+100
+Siemens Nederland N.V., The Hague/Netherlands
+100
+Siemens Wind Power B.V., The Hague/Netherlands
+100
+TASS International B.V., Rijswijk/Netherlands
+100
+TASS International Homologations B.V.,
+Helmond/Netherlands
+100
+TASS International Mobility Center B.V.,
+Helmond/Netherlands
+100
+888888
+Lisbon/Portugal
+100
+Siemens S.A., Amadora/Portugal
+100
+Siemens W.L.L., Doha/Qatar
+100
+100
+Siemens Convergence Creators S.R.L., Brasov/Romania
+Siemens Healthcare S.R.L., Bucharest/Romania
+100
+Siemens L.L.C., Muscat/Oman
+51
+St. Petersburg/Russian Federation
+100
+Gamesa Pakistan (Private) Limited, Karachi/Pakistan
+1007
+000 Siemens Gas Turbine Technologies,
+Mentor Graphics Pakistan Development (Private) Limited,
+Lahore/Pakistan
+000 Siemens Elektroprivod,
+Leningrad Oblast/Russian Federation
+100
+000 Siemens Industry Software,
+Siemens Healthcare (Private) Limited, Lahore/Pakistan
+Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
+AXIT Sp. z o.o., Wroclaw/Poland
+100
+Moscow/Russian Federation
+100
+75
+100
+100
+100
+Siemens Wind Power AS, Oslo/Norway
+100
+Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
+100
+Siemens Industry Software S.R.L., Brasov/Romania
+100
+Siemens Ltd., Lagos/Nigeria
+100
+Siemens S.R.L., Bucharest/Romania
+100
+Dresser-Rand AS, Kongsberg/Norway
+100
+SIMEA SIBIU S.R.L., Sibiu/Romania
+100
+Siemens AS, Oslo/Norway
+100
+000 Legion II, Moscow/Russian Federation
+100
+Siemens Healthcare AS, Oslo/Norway
+100
+000 Siemens, Moscow/Russian Federation
+100
+100
+Electrium Sales Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Generation Services Company,
+100
+Wilmington, DE/United States
+100
+Mentor Graphics Corporation,
+Siemens Government Technologies, Inc.,
+Wilsonville, OR/United States
+100
+100
+Wilmington, DE/United States
+Mentor Graphics Global Holdings, LLC,
+Siemens Healthcare Diagnostics Inc.,
+Wilmington, DE/United States
+100
+Los Angeles, CA/United States
+100
+Navitas Energy Inc, Minneapolis, MN/United States
+97
+100
+Siemens Healthcare Laboratory, LLC,
+eMeter Corporation, Wilmington, DE/United States
+Mannesmann Corporation, New York, NY/United States
+Dover, DE/United States
+Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Siemens Gamesa Renewable Energy PA, LLC,
+Dresser-Rand International Inc.,
+Wilmington, DE/United States
+100
+100
+Wilmington, DE/United States
+Siemens Gamesa Renewable Energy USA, INC,
+Dresser-Rand LLC, Wilmington, DE/United States
+100
+Dover, DE/United States
+100
+EcoHarmony West Wind, LLC, Minneapolis, MN/United
+States
+Siemens Gamesa Renewable Energy Wind, LLC,
+100
+100
+NEM USA Corp., Wilmington, DE/United States
+100
+Wilmington, DE/United States
+PETNET Solutions, Inc., Knoxville, TN/United States
+100
+Siemens Power Generation Service Company, Ltd.,
+Pocahontas Prairie Wind, LLC, Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Pocahontas Wind, LLC, Dover, DE/United States
+100
+100
+Siemens Capital Company LLC,
+Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Siemens Convergence Creators Corp.,
+Siemens Public, Inc., Wilmington, DE/United States
+Siemens USA Holdings, Inc., Wilmington, DE/United States
+100
+Siemens Product Lifecycle Management Software Inc.,
+Wilmington, DE/United States
+63
+Wilmington, DE/United States
+100
+Nimbus Technologies, LLC, Bingham Farms,
+MI/United States
+Siemens Industry, Inc., Wilmington, DE/United States
+100
+100
+Siemens Medical Solutions USA, Inc.,
+Omnetric Corp., Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+P.E.T.NET Houston, LLC, Austin, TX/United States
+51
+Siemens Molecular Imaging, Inc.,
+PETNET Indiana LLC, Indianapolis, IN/United States
+501
+Wilmington, DE/United States
+100
+PETNET Solutions Cleveland, LLC,
+Siemens Postal, Parcel & Airport Logistics LLC,
+Dresser-Rand International Holdings, LLC,
+Siemens Gamesa Renewable Energy Inc.,
+100
+Siemens Fossil Services, Inc., Wilmington, DE/United States
+Siemens S.A., Guatemala/Guatemala
+100
+Advanced Airfoil Components LLC,
+GESA Eólica Honduras, S.A., Tegucigalpa/Honduras
+Siemens S.A., Tegucigalpa/Honduras
+100
+Wilmington, DE/United States
+51
+100
+100
+Central Eólica de México S.A. de C.V., Mexico City/Mexico
+Dresser-Rand de Mexico S.A. de C.V., Mexico City/Mexico
+Gesa Energia, S. de R.L. de C.V., Mexico City/Mexico
+Gesa Eólica Mexico, S.A. de C.V., Mexico City/Mexico
+Gesa Oax | Sociedad Anomima de Capital Variable,
+Mexico City/Mexico
+CD-adapco Battery Design LLC, Dover, DE/United States
+Cedar Cap Wind, LLC, Dover, DE/United States
+502
+100
+1007
+100
+Dedicated2Imaging LLC, Wilmington, DE/United States
+Diversified Energy Transmissions, LLC,
+80
+100
+100
+Couva/Trinidad and Tobago
+100
+Guatemala/Guatemala
+Siemens S.A., Panama City/Panama
+100
+Antiguo Cuscatlán/El Salvador
+100
+Siemens Healthcare S.A.C., Surquillo/Peru
+100
+Siemens S.A., Antiguo Cuscatlán/El Salvador
+100
+Siemens S.A.C., Lima/Peru
+100
+SIEMENS GAMESA RENEWABLE ENERGY INSTALLATION &
+Siemens Wind Power Sociedad Anonima Cerrada, Lima/Peru
+100
+MAINTENANCE COMPAÑÍA LIMITADA, Guatemala/Guatemala
+1007
+Gamesa Puerto Rico, CRL, San Juan/Puerto Rico
+100
+SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
+Dresser-Rand Trinidad & Tobago Limited,
+Salem, OR/United States
+100
+100
+D-R International Sales Inc., Wilmington, DE/United States
+D-R Steam LLC, Wilmington, DE/United States
+Dresser-Rand Group Inc., Wilmington, DE/United States
+100
+100
+in %
+September 30, 2017
+in %
+100
+Siemens Energy, Inc., Wilmington, DE/United States
+Dresser-Rand Global Services, Inc.,
+100
+Dresser-Rand Holding (Luxembourg) LLC,
+Wilmington, DE/United States
+100
+888
+Wilmington, DE/United States
+100
+Siemens Financial, Inc., Wilmington, DE/United States
+100
+Siemens Financial Services, Inc.,
+Dresser-Rand Company, Bath, NY/United States
+September 30, 2017
+Wilmington, DE/United States
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+116 Consolidated Financial Statements
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10
+Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Equity interest
+Equity interest
+1007
+Wilmington, DE/United States
+100
+Siemens Corporation, Wilmington, DE/United States
+Bayswater/Australia
+100
+Shuangpai Majiang Wuxingling Wind Power Co., Ltd,
+Yongzhou/China
+100
+Exemplar Health (NBH) Trust 2, Bayswater/Australia
+100
+Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
+Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
+1007
+Exemplar Health (NBH) Holdings 2 Pty Limited,
+Siemens Building Technologies (Tianjin) Ltd.,
+Tianjin/China
+70
+1007
+Exemplar Health (SCUH) Holdings 3 Pty Limited,
+Siemens Business Information Consulting Co., Ltd,
+Beijing/China
+100
+Bayswater/Australia
+100
+Siemens Circuit Protection Systems Ltd.,
+70
+65
+MWB (Shanghai) Co Ltd., Shanghai/China
+1007
+Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
+100
+IBS Industrial Business Software (Shanghai), Ltd.,
+Shanghai/China
+100
+Dade Behring Hong Kong Holdings Corporation,
+Tortola/Virgin Islands, British
+100
+Inner Mongolia Gamesa Wind Co., Ltd., Wulanchabu/China
+Jilin Gamesa Wind Co., Ltd., Da'an/China
+100
+100
+Asia, Australia (218 companies)
+Mentor Graphics (Shanghai) Electronic Technology Co.,
+Ltd., Shanghai/China
+100
+Australia Hospital Holding Pty Limited, Bayswater/Australia
+100
+CD-ADAPCO AUSTRALIA PTY LTD, Melbourne/Australia
+100
+Mentor Graphics Technology (Shenzhen) Co., Ltd.,
+Shenzhen/China
+100
+Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
+Exemplar Health (SCUH) Holdings 4 Pty Limited,
+100
+Shanghai, Shanghai/China
+75
+Siemens Finance and Leasing Ltd., Beijing/China
+Siemens Financial Services Ltd., Beijing/China
+100
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+100
+5 No significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+118 Consolidated Financial Statements
+6 Significant influence due to contractual arrangements or legal circumstances.
+100
+Siemens Factory Automation Engineering Ltd.,
+Beijing/China
+100
+Bayswater/Australia
+100
+Exemplar Health (SCUH) Trust 3, Bayswater/Australia
+100
+Siemens Eco-City Innovation Technologies (Tianjin) Co.,
+Ltd., Tianjin/China
+60
+Exemplar Health (SCUH) Trust 4, Bayswater/Australia
+100
+Gamesa Australia Pty. Ltd., Melbourne/Australia
+100
+J.R.B. Engineering Pty Ltd, Bayswater/Australia
+100
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
+Siemens Electrical Drives Ltd., Tianjin/China
+100
+100
+85
+MRX Rail Services Pty Ltd, Bayswater/Australia
+100
+Siemens Gamesa Renewable Pty Ltd, Bayswater/Australia
+Siemens Healthcare Pty. Ltd., Melbourne/Australia
+Siemens Ltd., Bayswater/Australia
+15
+Siemens Healthcare, Sociedad Anonima,
+Caracas/Venezuela, Bolivarian Republic of
+Gamesa Wind (Tianjin) Co., Ltd., Tianjin/China
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+11
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+117
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+Siemens AG is a shareholder with unlimited liability of this company.
+1 Control due to a majority of voting rights.
+100
+Wind Portfolio Memberco, LLC, Dover, DE/United States
+100
+SMI Holding LLC, Wilmington, DE/United States
+Synchrony, Inc., Salem, VA/United States
+100
+100
+Siemens Credit Warehouse, Inc.,
+TASS International Inc., Livonia, MI/United States
+100
+Wilmington, DE/United States
+100
+Wheelabrator Air Pollution Control Inc.,
+Siemens Demag Delaval Turbomachinery, Inc.,
+Baltimore, MD/United States
+100
+Wilmington, DE/United States
+100
+Whitehall Wind, LLC, Missoula, MT/United States
+100
+Siemens Electrical, LLC, Wilmington, DE/United States
+100
+in %
+100
+Winergy Drive Systems Corporation,
+Wilmington, DE/United States
+100
+DPC (Tianjin) Co., Ltd., Tianjin/China
+100
+Caracas/Venezuela, Bolivarian Republic of
+100
+Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
+Guascor Venezuela S.A.,
+Shanghai/China
+100
+Gamesa Eólica VE, C.A.,
+Caracas/Venezuela, Bolivarian Republic of
+Siemens Healthcare S.A.,
+Gamesa (Beijing) Wind Energy System Development Co,
+Ltd, Beijing/China
+100
+Caracas/Venezuela, Bolivarian Republic of
+1007
+Gamesa Blade (Tianjin) Co., Ltd., Tianjin/China
+100
+Siemens Rail Automation, C.A.,
+1007
+100
+CD-adapco Software Technology (Shanghai) Co.,Ltd.,
+Shanghai/China
+100
+100
+Siemens Bangladesh Ltd., Dhaka/Bangladesh
+100
+Engines Rental, S.A., Montevideo/Uruguay
+1007
+Siemens Healthcare Ltd., Dhaka/Bangladesh
+100
+Gamesa Uruguay S.R.L., Montevideo/Uruguay
+100
+Beijing Siemens Cerberus Electronics Ltd., Beijing/China
+100
+Siemens S.A., Montevideo/Uruguay
+100
+Siemens Uruguay S.A., Montevideo/Uruguay
+100
+Camstar Systems Software (Shanghai) Company Limited,
+Shanghai/China
+100
+Dresser-Rand de Venezuela, S.A.,
+Maracaibo/Venezuela, Bolivarian Republic of
+SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater/Australia
+100
+Panama City/Panama
+100
+100
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Siemens Holdings plc, Frimley, Surrey/United Kingdom
+Siemens Industrial Turbomachinery Ltd.,
+4 No control due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+5 No significant influence due to contractual arrangements or legal circumstances.
+Industrial Turbine Company (UK) Limited,
+100
+Frimley, Surrey/United Kingdom
+100
+Flowmaster Limited,
+Siemens Healthcare Diagnostics Manufacturing Ltd,
+Alderton, Northamptonshire/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Glenouther Renewables Energy Park Limited,
+Siemens Healthcare Diagnostics Products Ltd,
+London/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+GYM Renewables Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Healthcare Limited,
+GYM Renewables ONE Limited,
+Frimley, Surrey/United Kingdom
+100
+Consolidated Financial Statements
+Frimley, Surrey/United Kingdom
+Equity interest
+in %
+Siemens Pension Funding Limited,
+Frimley, Surrey/United Kingdom
+100
+Guascor Empreendimentos Energéticos, Ltda., Belém/Brazil
+Guascor Serviços Ltda., Taboão da Serra/Brazil
+100
+100
+Siemens plc, Frimley, Surrey/United Kingdom
+100
+100
+Guascor Solar do Brasil Ltda., Manaus/Brazil
+Siemens Postal, Parcel & Airport Logistics Limited,
+Guascor Wind do Brasil, Ltda., São Paulo/Brazil
+1007
+Frimley, Surrey/United Kingdom
+100
+Siemens Protection Devices Limited,
+Industrial Turbine Brasil Geracao de Energia Ltda.,
+São Luís/Brazil
+100
+907
+Guascor do Brasil Ltda., São Paulo/Brazil
+100
+Frimley, Surrey/United Kingdom
+September 30, 2017
+Equity interest
+in %
+Siemens Industry Software Computational Dynamics
+Limited, Frimley, Surrey/United Kingdom
+Siemens Soluciones Tecnologicas S.A.,
+100
+Siemens Industry Software Limited,
+Frimley, Surrey/United Kingdom
+Santa Cruz de la Sierra/Bolivia, Plurinational State of
+Chemtech Servicos de Engenharia e Software Ltda.,
+Rio de Janeiro/Brazil
+100
+100
+Siemens Industry Software Simulation and Test Limited,
+Frimley, Surrey/United Kingdom
+100
+Siemens Pension Funding (General) Limited,
+Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
+Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
+Dresser-Rand Participações Ltda., Belém/Brazil
+1007
+100
+1007
+September 30, 2017
+Frimley, Surrey/United Kingdom
+100
+Siemens Healthcare Diagnostics Ltd.,
+Preactor International Limited,
+SD (Middle East) LLC, Dubai/United Arab Emirates
+492
+Frimley, Surrey/United Kingdom
+100
+Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
+Siemens Healthcare L.L.C., Dubai/United Arab Emirates
+Siemens LLC, Abu Dhabi/United Arab Emirates
+100
+Project Ventures Rail Investments | Limited,
+100
+492
+100
+492
+Samtech UK Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Middle East Limited,
+SBS Pension Funding (Scotland) Limited Partnership,
+Masdar City/United Arab Emirates
+100
+Frimley, Surrey/United Kingdom
+Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
+100
+MRX Technologies Limited, Frimley, Surrey/United Kingdom
+100% foreign owned subsidiary "Siemens Ukraine",
+Materials Solutions Limited,
+Kiev/Ukraine
+100
+Frimley, Surrey/United Kingdom
+100
+Gamesa Ukraine, LLC, Kiev/Ukraine
+100
+Mentor Graphics (UK) Limited,
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
+Newbury, Berkshire/United Kingdom
+100
+Kiev/Ukraine
+100
+MRX Rail Services UK Limited,
+Dresser-Rand Field Operations Middle East LLC,
+Abu Dhabi/United Arab Emirates
+Frimley, Surrey/United Kingdom
+100
+492
+Edinburgh/United Kingdom
+Hampton Court, Surrey/United Kingdom
+573
+100
+100
+Siemens Gamesa Renewable Energy Limited,
+Dresser-Rand (U.K.) Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Gamesa Renewable Energy UK Limited,
+D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
+Dresser-Rand Company Ltd.,
+100
+Frimley, Surrey/United Kingdom
+100
+Dresser-Rand Holding (Delaware) LLC, SARL,
+100
+Siemens Gamesa Renewable Energy Wind Limited,
+London/United Kingdom
+100
+Flomerics Group Limited,
+London/United Kingdom
+100
+Siemens Gamesa Renewable Energy B9 Limited,
+Larne/United Kingdom
+1007
+Sellafirth Renewable Energy Park Limited,
+Bargrennan Renewable Energy Park Limited,
+London/United Kingdom
+100
+London/United Kingdom
+100
+Siemens Financial Services Holdings Ltd.,
+CD-adapco New Hampshire Co., Ltd.,
+Stoke Poges, Buckinghamshire/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Financial Services Ltd.,
+Conworx Medical IT Ltd.,
+Stoke Poges, Buckinghamshire/United Kingdom
+100
+Marlow, Buckinghamshire/United Kingdom
+100
+D-R Dormant Ltd., Frimley, Surrey/United Kingdom
+Adwen UK Limited, London/United Kingdom
+Materials Solutions Holdings Limited,
+Frimley, Surrey/United Kingdom
+100
+Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
+Canoas/Brazil
+Nimbic Chile S.p.A., Las Condes/Chile
+100
+Gesacisa Desarolladora, S.A. de C.V., Mexico City/Mexico
+Gesan I S.A.P.I de C.V., Mexico City/Mexico
+100
+100
+Siemens Healthcare Equipos Médicos Sociedad por
+Grupo Siemens S.A. de C.V., Mexico City/Mexico
+100
+100
+Acciones, Santiago de Chile/Chile
+Siemens S.A., Santiago de Chile/Chile
+100
+Indústria de Trabajos Eléctricos S.A. de C.V.,
+Ciudad Juárez/Mexico
+100
+Siemens Wind Power SpA, Santiago de Chile/Chile
+100
+Dresser-Rand Colombia S.A.S., Bogotá/Colombia
+100
+100
+Gamesa Chile SpA, Santiago de Chile/Chile
+1007
+Gesa Oax III Sociedad Anomima de Capital Variable,
+Mexico City/Mexico
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+115
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+in %
+Wheelabrator Air Pollution Control (Canada) Inc.,
+Ontario/Canada
+100
+Gesa Oax II Sociedad de Responsabilidad Limitada de
+Capital Variable, Mexico City/Mexico
+1007
+Siemens Healthcare Diagnostics Manufacturing Limited,
+Grand Cayman/Cayman Islands
+100
+Servicios Eólicos Globales S. de R.L. de C.V.,
+Mexico City/Mexico
+Exemption pursuant to Section 264b German Commercial Code.
+100
+100
+57
+Siemens Postal, Parcel & Airport Logistics S. de R.L. de C.V.,
+Mexico City/Mexico
+1007
+Siemens, S.R.L., Santo Domingo/Dominican Republic
+100
+Siemens Servicios S.A. de C.V., Mexico City/Mexico
+100
+Sociedad Energética Del Caribe, S.R.L.,
+Santo Domingo/Dominican Republic
+Siemens, S.A. de C.V., Mexico City/Mexico
+Higüey/Dominican Republic
+100
+Gamesa Eólica Nicaragua S.A., Managua/Nicaragua
+100
+Siemens S.A., Quito/Ecuador
+100
+Siemens Healthcare Diagnostics Panama, S.A.,
+Siemens-Healthcare Cia. Ltda., Quito/Ecuador
+100
+Parques Eólicos del Caribe, S.A.,
+100
+Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
+Siemens S.A., Tenjo/Colombia
+100
+Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
+Mexico City/Mexico
+100
+Gamesa Eólica Costa Rica, S.R.L., San Rafael/Costa Rica
+100
+Siemens Healthcare Servicios S. de R.L. de C.V.,
+Siemens Healthcare Diagnostics S.A., San José/Costa Rica
+100
+Mexico City/Mexico
+100
+Siemens S.A., San José/Costa Rica
+100
+Siemens Industry Software, S.A. de C.V.,
+Gamesa Dominicana, S.A.S.,
+Mexico City/Mexico
+100
+Santo Domingo/Dominican Republic
+100
+Siemens Healthcare S.A.S., Tenjo/Colombia
+Siemens Rail Automation Holdings Limited,
+9
+7 Not consolidated due to immateriality.
+100
+Frimley, Surrey/United Kingdom
+100
+The Preactor Group Limited,
+Siemens Industry Software Ltda., São Caetano do Sul/Brazil
+Siemens Ltda., São Paulo/Brazil
+100
+100
+Frimley, Surrey/United Kingdom
+100
+100
+100
+Siemens Wind Power Energia Eólica Ltda., São Paulo/Brazil
+10367079 CANADA INC., Oakville/Canada
+100
+100
+VA Tech Reyrolle Distribution Ltd.,
+Dresser-Rand Canada, ULC, Vancouver/Canada
+10012
+Frimley, Surrey/United Kingdom
+VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
+Siemens Gamesa Energia Renovável Ltda., Camaçari/Brazil
+Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
+Siemens Transmission & Distribution Limited,
+100
+100
+Frimley, Surrey/United Kingdom
+100
+Jaguarí Energética, S.A., Jaguari/Brazil
+89
+Siemens Rail Automation Limited,
+Frimley, Surrey/United Kingdom
+100
+MINUANO PROMOÇÕES E PARTICIPAÇÕES EÓLICAS LTDA.,
+Belém/Brazil
+1007
+Siemens Rail Systems Project Holdings Limited,
+Frimley, Surrey/United Kingdom
+100
+OMNETRIC Group Tecnologia e Servicos de Consultoria
+Ltda., Belo Horizonte/Brazil
+100
+Siemens Rail Systems Project Limited,
+Siemens Eletroeletronica Limitada, Manaus/Brazil
+100
+Frimley, Surrey/United Kingdom
+100
+8 Not accounted for using the equity method due to immateriality.
+Gamesa Canada ULC, Halifax/Canada
+VA TECH T&D UK Ltd.,
+Siemens Transformers Canada Inc., Trois-Rivières,
+Siemens S.A., Buenos Aires/Argentina
+100
+Québec/Canada
+100
+VA TECH International Argentina SA,
+Siemens Wind Power Limited, Oakville/Canada
+100
+100
+Buenos Aires/Argentina
+Trench Limited, Saint John/Canada
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+100
+Siemens IT Services S.A., Buenos Aires/Argentina
+100
+Siemens Postal, Parcel & Airport Logistics Ltd.,
+Oakville/Canada
+Mentor Graphics (Canada) Limited, Kanata/Canada
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Canada Limited, Oakville/Canada
+100
+Siemens Financial Ltd., Oakville/Canada
+100
+Americas (165 companies)
+Siemens Healthcare Limited, Oakville/Canada
+100
+Artadi S.A., Buenos Aires/Argentina
+100
+Siemens Industry Software Ltd., Oakville/Canada
+100
+Guascor Argentina, S.A., Buenos Aires/Argentina
+100
+Siemens Healthcare S.A., Buenos Aires/Argentina
+100
+10012
+Mentor Graphics Development Services (Israel) Ltd.,
+Rehovot/Israel
+100
+D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
+100
+100
+D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
+Siemens Healthcare Medical Solutions Limited,
+Swords, County Dublin/Ireland
+492
+100
+Dublin/Ireland
+Siemens Gamesa Renewable Energy Limited,
+in %
+September 30, 2017
+in %
+September 30, 2017
+Equity interest
+Equity interest
+100
+D-R Luxembourg Holding 2, SARL,
+Siemens Limited, Dublin/Ireland
+Siemens Electrical & Electronic Services K.S.C.C.,
+Kuwait City/Kuwait
+Luxembourg/Luxembourg
+100
+100
+100
+Luxembourg/Luxembourg
+100
+Gamesa Israel, Ltd, Tel Aviv/Israel
+D-R Luxembourg International SARL,
+100
+Mentor Graphics (Israel) Limited, Herzilya Pituah/Israel
+100
+Luxembourg/Luxembourg
+10012
+Douglas/Isle of Man
+D-R Luxembourg Holding 3, SARL,
+Mentor Graphics International Unlimited,
+100
+9REN Israel Ltd., Tel Aviv/Israel
+218
+Advance Gas Turbine Solutions SDN. BHD.,
+Kuala Lumpur/Malaysia
+43
+Hickory Run Holdings, LLC, Wilmington, DE/United States
+206
+Power Automation Pte. Ltd., Singapore/Singapore
+49
+408
+32
+Modern Engineering and Consultants Co. Ltd.,
+Bangkok/Thailand
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+318
+Panda Hummel Station Intermediate Holdings I LLC,
+Wilmington, DE/United States
+50
+Bangalore International Airport Ltd., Bangalore/India
+32
+4 No control due to contractual arrangements or legal circumstances.
+26
+Baja Wind US LLC, Wilmington, DE/United States
+508
+Bytemark Inc., New York, NY/United States
+46
+CEF-L Holding, LLC, Wilmington, DE/United States
+Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
+27
+49
+258
+50
+Cyclos Semiconductor, Inc., Wilmington, DE/United States
+Echogen Power Systems, Inc., Wilmington, DE/United States
+First State Marine Wind LLC, Newark, DE/United States
+Frustum, Inc., New York, NY/United States
+328
+PT Asia Care Indonesia, Jakarta/Indonesia
+40
+Kintech Santalpur Wind Park Private Limited, Chennai/India
+Transparent Energy Systems Private Limited, Pune/India
+P.T. Jawa Power, Jakarta/Indonesia
+5 No significant influence due to contractual arrangements or legal circumstances.
+Europe, Commonwealth of Independent States (C.I.S.),
+7 Not consolidated due to immateriality.
+Automotive Facilities Brainport Holding N.V., Helmond/Netherlands
+Unincorporated Joint Venture Gwynt y Mor, Swindon, Wiltshire/United Kingdom
+Americas (1 company)
+Bentley Systems, Incorporated, Wilmington, DE/United States
+Equity interest
+in %
+Net income
+Equity
+in millions of €
+in millions of €
+1004,5
+1004,5
+7
+167
+33
+485
+17
+Medical Systems S.p.A., Genoa/Italy
+6 Significant influence due to contractual arrangements or legal circumstances.
+ATOS SE, Bezons/France
+Africa, Middle East (without Germany) (5 companies)
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+123
+September 30, 2017
+OTHER INVESTMENTS11
+Germany (3 companies)
+BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
+Kyros Beteiligungsverwaltung GmbH, Grünwald
+OSRAM Licht AG, Munich
+50
+Uhre Vindmollelaug I/S, Brande/Denmark
+Energia Eólica de Mexico S.A. de C.V., Mexico City/Mexico
+Shanghai Electric Power Generation Equipment Co., Ltd.,
+Shanghai/China
+Zhi Dao Railway Equipment Ltd., Taiyuan/China
+278
+408
+WS Tech Energy Global S.L., Viladecans/Spain
+49
+Certas AG, Zurich/Switzerland
+50
+Asia, Australia (21 companies)
+Interessengemeinschaft TUS, Männedorf/Switzerland
+5012
+Cross London Trains Holdco 2 Limited,
+Exemplar Health (NBH) Partnership, Melbourne/Australia
+Exemplar Health (SCUH) Partnership, Sydney/Australia
+50
+50
+London/United Kingdom
+33
+308
+PHM Technology Pty Ltd, Melbourne/Australia
+308
+Powerit Holdings, Inc., Seattle, WA/United States
+Rether networks, Inc., Berkeley, CA/United States
+USARAD Holdings, Inc., Fort Lauderdale, FL/United States
+Veo Robotics, Inc., Cambridge, MA/United States
+Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
+Caracas/Venezuela, Bolivarian Republic of
+Nuevas Estrategias de Mantenimiento, S.L.,
+PhSiTh LLC, New Castle, DE/United States
+33
+San Sebastián/Spain
+50
+Sistemes Electrics Espluga, S.A., Barcelona/Spain
+50
+Soleval Renovables S.L., Sevilla/Spain
+50
+Solucia Renovables 1, S.L., Lebrija/Spain
+50
+Tusso Energía, S.L., Sevilla/Spain
+508
+Windar Renovables, S.L., Avilés/Spain
+32
+218
+50
+298
+49
+40
+London/United Kingdom
+49
+RWG (Repair & Overhauls) Limited,
+Aberdeen/United Kingdom
+50
+Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
+Tianjin ZongXi Traction Motor Ltd., Tianjin/China
+Xi'An X-Ray Target Ltd., Xi'an/China
+50
+50
+43
+Joint Venture Service Center, Chirchik/Uzbekistan
+498
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
+Yangzhong/China
+50
+Americas (17 companies)
+315
+Ethos Energy Group Limited, Aberdeen/United Kingdom
+Primetals Technologies, Limited,
+Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
+Galloper Wind Farm Holding Company Limited,
+ChinaInvent (Shanghai) Instrument Co., Ltd,
+Shanghai/China
+308
+Swindon, Wiltshire/United Kingdom
+25
+Lincs Renewable Energy Holdings Limited,
+DBEST (Beijing) Facility Technology Management Co., Ltd.,
+Beijing/China
+25
+25
+London/United Kingdom
+50
+Odos Imaging Limited, Edinburgh/United Kingdom
+508
+Saitong Railway Electrification (Nanjing) Co., Ltd.,
+Nanjing/China
+508
+508
+2,473
+1 Control due to a majority of voting rights.
+0
+100
+100
+100
+Mathak Wind Farms Private Limited, Chennai/India
+Mentor Graphics (India) Private Limited, New Delhi/India
+Mentor Graphics (Sales and Services) Private Limited,
+Bangalore/India
+100
+Latur Renewable Private Limited, Chennai/India
+100
+Kutch Renewable Pvt Ltd, Chennai/India
+100
+100
+Mumbai/India
+100
+Koppal Renewable Private Limited, Chennai/India
+Kurnool Wind Farms Private Limited, Chennai/India
+Siemens Technology and Services Private Limited,
+100
+Siemens Wind Power Private Limited, Navi Mumbai/India
+Thoothukudi Renewable Private Limited, Chennai/India
+Tirupur Renewable Private Limited, Chennai/India
+Tuljapur Wind Farms Private Limited, Chennai/India
+Umrani Renewable Private Limited, Chennai/India
+Uppal Renewable Private Limited, Chennai/India
+VIRALIPATTI RENEWABLE Pvt. Ltd., Chennai/India
+100
+100
+100
+Our audit procedures did not lead to any reservations relating to
+the accounting for the merger of the Siemens wind power busi-
+ness with Gamesa.
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in connection with
+the merger of the Siemens wind power business with Gamesa,
+refer to NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL
+ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED FINANCIAL
+STATEMENTS. Explanations of the transaction as well as disclosures
+on the preliminary purchase price allocation are included in
+→ NOTE 3 ACQUISITIONS AND DISPOSITIONS in the NOTES TO THE
+CONSOLIDATED FINANCIAL STATEMENTS.
+Revenue recognition on construction contracts
+Reasons why the matter was determined to be a key audit
+matter: The Group conducts a significant portion of its business
+under construction contracts, particularly in the Divisions Power
+and Gas, Energy Management and Mobility as well as in the Stra-
+tegic Unit Siemens Gamesa Renewable Energy. Revenue from
+long-term construction contracts is recognized in accordance
+with IAS 11, Construction Contracts, based on the extent of prog-
+ress towards completion. We consider the accounting for con-
+struction contracts to be an area posing a significant risk of ma-
+terial misstatement (including the potential risk of management
+override of internal controls) and accordingly a key audit matter,
+because management's assessments significantly impact the de-
+termination of the extent of progress towards completion. These
+assessments include, in particular, the scope of deliveries and
+services required to fulfill contractually defined obligations, total
+contract costs, remaining costs to completion and total contract
+revenues, as well as contract risks including technical, political,
+regulatory and legal risks. Revenues, contract costs and profit
+recognition may deviate significantly from original estimates
+based on new knowledge about cost overruns and changes in
+project scope over the term of a construction contract.
+Audit approach: As part of our audit, we obtained an under-
+standing of the Group's internally established methods, pro-
+cesses and control mechanisms for project management in the
+bid and execution phase of construction contracts. We also as-
+sessed the design and operating effectiveness of the account-
+ing-related internal controls by examining business transactions
+specific to construction contracts, from the initiation of the trans-
+action through recognition in the consolidated financial state-
+ments, and testing internal controls over these processes.
+As part of our substantive audit procedures, we evaluated man-
+agement's estimates and assumptions based on a risk-based se-
+lection of a sample of contracts. Our sample particularly included
+projects that are subject to significant future uncertainties and
+risks, such as fixed-price or turnkey projects, projects with com-
+plex technical requirements or with a large portion of materials
+and services to be provided by suppliers, subcontractors or con-
+sortium partners, cross-border projects, and projects with
+changes in cost estimates, delays and/or low or negative mar-
+gins. Our audit procedures included, among others, review of
+the sample contracts and their terms and conditions including
+contractually agreed partial deliveries and services, termination
+Additional Information
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+100
+1007
+100
+100
+Furthermore, we analyzed the application of uniform accounting
+policies of the entities of the wind power business, the tax effects
+of the merger, and the processing of the initial consolidation of
+the Gamesa entities, including non-controlling interests, in the
+Siemens consolidation system. In addition, we evaluated the dis-
+closures in the notes to the consolidated financial statements
+regarding the merger of the Siemens wind power business with
+Gamesa in terms of their compliance with the requirements
+defined in IFRS 3.
+Siemens Rail Automation Pvt. Ltd., Navi Mumbai/India
+100
+Siemens Wiring Accessories Shandong Ltd., Zibo/China
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
+Smart Metering Solutions (Changsha) Co. Ltd.,
+Changsha/China
+100
+Siemens Industry Software (Shanghai) Co., Ltd.,
+Shanghai/China
+100
+Beijing/China
+Siemens Industry Software (Beijing) Co., Ltd.,
+100
+Siemens Wind Power Blades (Shanghai) Co., Ltd.,
+Shanghai/China
+84
+Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
+Huludao/China
+100
+Siemens Venture Capital Co., Ltd., Beijing/China
+100
+100
+Siemens Transformer (Wuhan) Company Ltd.,
+Wuhan City/China
+100
+100
+100
+TASS International Co. Ltd., Shanghai/China
+5 No significant influence due to contractual arrangements or legal circumstances.
+Yangtze Delta Manufacturing Co. Ltd.,
+100
+100
+XS Embedded (Shanghai) Co., Ltd., Shanghai/China
+Siemens Logistics Automation Systems (Beijing) Co., Ltd,
+Beijing/China
+65
+Shenyang/China
+100
+Siemens Investment Consulting Co., Ltd., Beijing/China
+Trench High Voltage Products Ltd., Shenyang,
+100
+Shanghai/China
+100
+60
+Siemens International Trading Ltd., Shanghai,
+An area of focus was the determination of the fair values of tech-
+nologies and the measurement of warranty obligations associ-
+ated with projects. In this regard, among other procedures, we
+assessed the appropriateness as audit evidence of the valuation
+report as well as the reports of the external experts in the wind
+power sector engaged by management through inquiries of the
+experts, and evaluated whether the assumptions used reflect
+the perspective of an external market participant as of the acqui-
+sition date.
+Our audit procedures in relation to the preliminary purchase price
+allocation included, in addition to assessing the consideration
+transferred by Siemens, the evaluation of the methodological
+approach of the external expert engaged by management with
+respect to the identification of assets acquired as well as the con-
+ceptual evaluation of valuation models considering the require-
+ments of IFRS 3. With the assistance of our internal valuation
+specialists, we examined the valuation methods applied in terms
+of the requirements defined in IFRS 13, Fair Value Measurement.
+Furthermore, we analyzed whether assumptions and estimates
+(such as growth rates, cost of capital, royalty rates or remaining
+useful lives) used in determining the fair value of identifiable
+assets acquired and liabilities assumed (including contingent
+liabilities) as of the acquisition date correspond to general and
+industry-specific market expectations. Additionally, we reper-
+formed the calculations in the models and reconciled the expected
+future cash flows underlying the measurements with, inter alia,
+internal business plans.
+Audit approach: As part of our group audit, among other pro-
+cedures, we analyzed management's assertion that Siemens has
+control over the combined entity based on agreements under
+corporate law and the criteria defined in IFRS 10, Consolidated
+Financial Statements.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+이 의
+11
+Values according to the latest available local GAAP financial statements; the underlying
+fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13
+A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+N/A = No financial data available.
+124 Consolidated Financial Statements
+C.
+Additional Information
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+C.1 Responsibility Statement
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+(5)
+1
+12
+632
+4,835
+455
+4
+101
+19
+0
+0
+10
+N/A
+N/A
+7
+80
+37
+To the best of our knowledge, and in accordance with the appli-
+cable reporting principles, the Consolidated Financial Statements
+give a true and fair view of the assets, liabilities, financial posi-
+tion and profit or loss of the Group, and the Group Management
+Report, which has been combined with the Management Report
+Munich, November 27, 2017
+Siemens Aktiengesellschaft
+The Managing Board
+We have audited the consolidated financial statements of Siemens
+Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the
+Group), which comprise the consolidated statements of income
+and comprehensive income for the fiscal year from October 1,
+2016 to September 30, 2017, the consolidated statements of
+financial position as of September 30, 2017, the consolidated
+statements of cash flows and changes in equity for the fiscal year
+then ended, and the notes to the consolidated financial state-
+ments, including a summary of significant accounting policies.
+We have also audited the group management report of Siemens
+Aktiengesellschaft, which is combined with the management
+report of Siemens Aktiengesellschaft, for the fiscal year from
+October 1, 2016 to September 30, 2017.
+In our opinion, based on the findings of our audit,
+> the accompanying consolidated financial statements comply,
+in all material respects, with International Financial Reporting
+Standards (IFRS) as adopted by the European Union (EU) and
+the supplementary provisions of German law pursuant to
+Sec. 315 a (1) HGB ["Handelsgesetzbuch": German Commercial
+Code] and full IFRS as issued by the International Accounting
+Standards Board (IASB), and give a true and fair view of the
+net assets and financial position of the Group as of Septem-
+ber 30, 2017 and its results of operations for the fiscal year
+from October 1, 2016 to September 30, 2017 in accordance
+with these requirements, and
+➤ the accompanying group management report as a whole pro-
+vides a suitable view of the Group's position. In all material
+respects, this group management report is consistent with the
+consolidated financial statements, complies with the provi-
+sions of German law and suitably presents the opportunities
+and risks of future development.
+In accordance with Sec. 322 (3) Sentence 1 HGB, we hereby state
+that our audit has not led to any reservations regarding the com-
+pliance of the consolidated financial statements and the group
+management report.
+BASIS FOR OPINIONS
+We conducted our audit of the consolidated financial statements
+and the group management report in accordance with Sec. 317
+HGB and Regulation (EU) No 537/2014 (EU Audit Regulation)
+as well as German generally accepted standards on auditing
+promulgated by the Institut der Wirtschaftsprüfer [Institute of
+Public Auditors in Germany] (IDW). We conducted the audit of
+the consolidated financial statements in supplementary compli-
+ance with International Standards on Auditing (ISA). Our respon-
+sibilities under those laws, rules and standards are further
+described in the "Auditor's responsibilities for the audit of the
+consolidated financial statements and the group management
+report" section of our report. We are independent of the group
+companies in accordance with European and German commer-
+cial law and professional provisions, and we have fulfilled our
+other German ethical responsibilities in accordance with these
+requirements. Furthermore, in accordance with Art. 10 (2) f) of
+the EU Audit Regulation, we declare that we have not provided
+any prohibited non-audit services referred to in Art. 5 (1) of the
+EU Audit Regulation. We believe that the audit evidence we have
+obtained is sufficient and appropriate to provide a basis for our
+opinions on the consolidated financial statements and on the
+group management report.
+KEY AUDIT MATTERS IN THE AUDIT OF THE
+CONSOLIDATED FINANCIAL STATEMENTS
+Key audit matters are those matters that, in our professional
+judgment, were of most significance in our audit of the consoli-
+dated financial statements for the fiscal year from October 1,
+2016 to September 30, 2017. These matters were addressed in
+the context of our audit of the consolidated financial statements
+as a whole, and in forming our auditor's opinion thereon, and we
+do not provide a separate opinion on these matters.
+Below, we describe what we consider to be the key audit matters:
+Merger of the Siemens wind power business
+with Gamesa
+Reasons why the matter was determined to be a key audit
+matter: On April 3, 2017, the merger of the Siemens wind power
+business with Gamesa Corporación Tecnológica S.A., Spain
+("Gamesa") was completed. The Siemens Group holds 59% of the
+shares while Gamesa's former shareholders hold 41% of the
+shares in the combined entity. Siemens accounts for the business
+combination in accordance with IFRS 3, Business Combinations.
+Due to the complexity of the transaction and the associated
+significant risk of material misstatement, and considering the
+assumptions and estimates required to be made by management
+as part of the purchase price allocation, the accounting for this
+business combination was a key audit matter.
+Additional Information
+127
+128
+OPINIONS
+Report on the audit of the Consoli-
+dated Financial Statements and
+the Group Management Report
+To Siemens Aktiengesellschaft, Berlin and Munich
+C.2 Independent Auditor's Report
+Ни
+Joe Kaeser
+27
+? 
+Pul
+Dr. Roland Busch
+Hel
+Janina Kugel
+Momen
+1913
+Dr. Ralf P. Thomas
+Cedrik Neike
+for Siemens Aktiengesellschaft, includes a fair review of the
+development and performance of the business and the position
+of the Group, together with a description of the material oppor-
+tunities and risks associated with the expected development
+of the Group.
+Mans Muril
+Klaus Helmrich
+بایستیار
+Michael Sen
+126 Additional Information
+Lisa Davis
+Panda Stonewall Intermediate Holdings I, LLC,
+Wilmington, DE/United States
+7 Not consolidated due to immateriality.
+Barcelona/Spain
+ATS Projekt Grevenbroich GmbH, Schüttorf
+258
+100
+BELLIS GmbH, Braunschweig
+498
+100
+Blitz F17-814 GmbH & Co. KG, Frankfurt
+33
+100
+Blitz F17-813 GmbH, Frankfurt
+338
+VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens (N.Z.) Limited, Auckland/New Zealand
+100
+Caterva GmbH, Pullach i. Isartal
+50
+100
+100
+Germany (32 companies)
+Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
+Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
+Siemens Industry Software Sdn. Bhd., Penang/Malaysia
+Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
+Siemens Industry Software Ltd., Seoul/Korea, Republic of
+Siemens Ltd. Seoul, Seoul/Korea, Republic of
+100
+Siemens Gamesa Renewable Energy LLC, Ho Chi Minh
+100
+City/Viet Nam
+1007
+Siemens Wind Power Limited, Seoul/Korea, Republic of
+100
+TASS International Co. Ltd., Seoul/Korea, Republic of
+Dresser-Rand & Enserv Services Sdn. Bhd.,
+Kuala Lumpur/Malaysia
+100
+Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
+Siemens Ltd., Ho Chi Minh City/Viet Nam
+100
+100
+492,7
+ASSOCIATED COMPANIES AND JOINT VENTURES
+100
+100
+Siemens Gamesa Renewable Energy New Zealand Limited,
+Auckland/New Zealand
+498
+CD-adapco S.E.A. Pte. Ltd., Singapore/Singapore
+100
+IFTEC GmbH & Co. KG, Leipzig
+50
+Gamesa Singapore Private Limited, Singapore/Singapore
+100
+Infineon Technologies Bipolar GmbH & Co. KG, Warstein
+40
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+498
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
+des Stadt- und Regionalverkehrs mbH, Cologne
+FEAG Fertigungscenter für Elektrische Anlagen GmbH,
+Erlangen
+Siemens, Inc., Manila/Philippines
+100
+Siemens Healthcare Limited, Auckland/New Zealand
+100
+EBV Windpark Almstedt-Breinum GmbH & Co. Betriebs-KG,
+Bremen
+644,8
+Siemens Healthcare Inc., Manila/Philippines
+100
+egrid applications & consulting GmbH, Kempten
+498
+Siemens Power Operations, Inc., Manila/Philippines
+100
+EOS Uptrade GmbH, Hamburg
+624
+Siemens Wind Power, Inc., Manila/Philippines
+100
+100
+Siemens Wind Power Limited, Bangkok/Thailand
+100
+Siemens Healthcare Limited, Seoul/Korea, Republic of
+100
+Mentor Graphics Asia Pte Ltd, Singapore/Singapore
+Siemens Healthcare Pte. Ltd., Singapore/Singapore
+100
+100
+PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
+PT. Siemens Industrial Power, Kota Bandung/Indonesia
+100
+Siemens Industry Software Pte. Ltd., Singapore/Singapore
+100
+60
+Acrorad Co., Ltd., Okinawa/Japan
+63
+Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
+Singapore/Singapore
+100
+Dresser Rand Japan K.K., Tokyo/Japan
+1007
+P.T. Siemens Indonesia, Jakarta/Indonesia
+Siemens Pte. Ltd., Singapore/Singapore
+1007
+in %
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+120 Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+Zalki Renewable Private Limited, Chennai/India
+100
+Gamesa Japan K.K., Kanagawa/Japan
+100
+Siemens Ltd., Taipei/Taiwan, Province of China
+100
+Yokohama/Japan
+100
+Dresser-Rand (Thailand) Limited, Rayong/Thailand
+100
+TASS International K.K., Yokohama/Japan
+100
+Mentor Graphics (Korea) Co., Limited, Bundang-gu,
+Seongnam-si, Gyeonggi-do/Korea, Republic of
+100
+Gamesa (Thailand) Co. Ltd., Bangkok/Thailand
+Siemens Healthcare Limited, Bangkok/Thailand
+Siemens Limited, Bangkok/Thailand
+100
+100
+99
+Siemens PLM Software Computational Dynamics K.K.,
+100
+Taipei/Taiwan, Province of China
+100
+Siemens Gamesa Renewable Energy Lanka Pvt. Ltd.,,
+Mentor Graphics Japan Co., Ltd., Tokyo/Japan
+100
+Colombo/Sri Lanka
+100
+Siemens Healthcare Diagnostics K.K., Tokyo/Japan
+100
+8 Not accounted for using the equity method due to immateriality.
+Siemens Healthcare Limited,
+100
+Taipei/Taiwan, Province of China
+100
+Siemens Japan Holding K.K., Tokyo/Japan
+100
+Siemens Industry Software (TW) Co., Ltd.,
+Siemens K.K., Tokyo/Japan
+Siemens Healthcare K.K., Tokyo/Japan
+514
+9
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+31
+358
+OIL AND GAS PROSERV LLC, Baku/Azerbaijan
+258
+Desgasificación de Vertederos, S.A, Madrid/Spain
+508
+T-Power NV, Brussels/Belgium
+20
+Meomed s.r.o., Prerov/Czech Republic
+478
+Energías Renovables San Adrián de Juarros, S.A.,
+San Adrián de Juarros/Spain
+45
+BioMensio Oy, Tampere/Finland
+238
+Compagnie Electrique de Bretagne SAS, Paris/France
+26
+40
+46
+44
+ZeeEnergie Management B.V., Eemshaven/Netherlands
+Wirescan AS, Trollaasen/Norway
+208
+338
+50
+Europe, Commonwealth of Independent States
+(C.I.S.), Africa, Middle East (without Germany)
+(61 companies)
+Rousch (Pakistan) Power Ltd., Lahore/Pakistan
+000 Transconverter, Moscow/Russian Federation
+000 VIS Automation mit Zusatz „Ein Gemeinschafts-
+unternehmen von VIS und Siemens",
+Moscow/Russian Federation
+26
+358
+49
+Arelion GmbH in Liqu., Pasching b. Linz/Austria
+Aspern Smart City Research GmbH, Vienna/Austria
+258
+448
+Aspern Smart City Research GmbH & Co KG,
+Vienna/Austria
+ZAO Interautomatika, Moscow/Russian Federation
+ZAO Systema-Service, St. Petersburg/Russian Federation
+Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
+Ardora, S.A., Vigo/Spain
+358
+Explotaciones y Mantenimientos Integrales, S.L.,
+Getxo/Spain
+TRIXELL SAS, Moirans/France
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+122 Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2017
+Nertus Mantenimiento Ferroviario y Servicios S.A.,
+in %
+September 30, 2017
+in %
+Siemens Industrial Automation Products Ltd., Chengdu,
+Chengdu/China
+508
+6 Significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+25
+Gate Solar Gestión, S.L. Unipersonal,
+Eviop-Tempo A.E. Electrical Equipment Manufacturers,
+Vassiliko/Greece
+Vitoria-Gasteiz/Spain
+508
+48
+Generación Eólica Extremeña, S.L., Plasencia/Spain
+308
+Parallel Graphics Ltd., Dublin/Ireland
+574,8
+Hydrophytic, S.L., Vitoria-Gasteiz/Spain
+508
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+5 No significant influence due to contractual arrangements or legal circumstances.
+Voith Hydro Holding Verwaltungs GmbH, Heidenheim
+Windkraft Trinwillershagen Entwicklungsgesellschaft mbH,
+Wiepkenhagen
+206,12
+ZeeEnergie C.V., Amsterdam/Netherlands
+50
+Magazino GmbH, Munich
+50
+Maschinenfabrik Reinhausen GmbH, Regensburg
+26
+Metropolitan Transportation Solutions Ltd.,
+Rosh HaAyin/Israel
+20
+MeVis BreastCare GmbH & Co. KG, Bremen
+49
+Reindeer Energy Ltd., Kokhav Ya'ir-Tzur Yigal/Israel
+33
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+498
+Trickster Howell LTD, Ramat/Israel
+50
+Frontline P.C.B. Solutions Limited Partnership,
+Rehovot/Israel
+OWP Butendiek GmbH & Co. KG, Bremen
+258
+508
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements 121
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
+408
+Frontline P.C.B. Solutions (1998) Ltd, Rehovot/Israel
+Equity interest
+in %
+508
+LIB Verwaltungs-GmbH, Leipzig
+Ludwig Bölkow Campus GmbH, Taufkirchen
+23
+Transfima GEIE, Milan/Italy
+428,12
+20
+206,12
+508
+ubimake GmbH i.L., Berlin
+508
+Valeo Siemens eAutomotive GmbH, Erlangen
+50
+Veja Mate Offshore Project GmbH, Gadebusch
+41
+Buitengaats Management B.V., Eemshaven/Netherlands
+Infraspeed Maintainance B.V., Zoetermeer/Netherlands
+Ural Locomotives Holding Besloten Vennootschap,
+The Hague/Netherlands
+208
+50
+50
+Voith Hydro Holding GmbH & Co. KG, Heidenheim
+35
+Energie Electrique de Tahaddart S.A., Tangier/Morocco
+Buitengaats C.V., Amsterdam/Netherlands
+Transrapid International Verwaltungsgesellschaft mbH i.L.,
+Berlin
+29
+thinkstep AG, Leinfelden-Echterdingen
+Siemens EuroCash, Munich
+66
+Transfima S.p.A., Milan/Italy
+498
+Siemens Venture Capital Fund 1 GmbH, Munich
+1004,8
+VAL 208 Torino GEIE, Milan/Italy
+Exemption pursuant to Section 264b German Commercial Code.
+864,8,11,12
+328
+Temir Zhol Electrification LLP, Astana/Kazakhstan
+49
+Symeo GmbH, Neubiberg
+554,8
+Electrogas Malta Limited, Marsaskala/Malta
+33
+Sternico GmbH, Wendeburg
+94
+4 No control due to contractual arrangements or legal circumstances.
+90
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+September 30, 2017
+Equity interest
+Equity interest
+Exemption pursuant to Section 264b German Commercial Code.
+Siemens Postal Parcel & Airport Logistics Private Limited,
+Navi Mumbai/India
+1007
+100
+75
+Siemens Ltd., Mumbai/India
+1007
+100
+Siemens Industry Software Computational Dynamics India
+Pvt. Ltd., Bangalore/India
+1007
+1007
+100
+Siemens Industry Software (India) Private Limited,
+New Delhi/India
+1007
+100
+GM Navarra Wind Energy Private Limited, Chennai/India
+Gudadanal Renewable Private Limited, Chennai/India
+Hattarwat Renewable Private Limited, Chennai/India
+Haveri Renewable Private Limited, Chennai/India
+Hungund Renewable Private Limited, Chennai/India
+Jalore Wind Park Private Limited, Chennai/India
+Jodhpur Wind Farms Private Limited, Chennai/India
+Kadapa Wind Farms Private Limited, Chennai/India
+Kod Renewable Pvt. Ltd., Chennai/India
+100
+100
+100
+Hong Kong/Hong Kong
+100
+International Wind Farm Development VII Limited,
+Shanghai/China
+51
+Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
+Tianjin/China
+Asia Care Holding Limited, Hong Kong/Hong Kong
+Camstar Systems (Hong Kong) Limited,
+Hong Kong/Hong Kong
+1007
+100
+100
+Siemens Medium Voltage Switching Technologies (Wuxi)
+Ltd., Wuxi/China
+International Wind Farm Development | Limited,
+Hong Kong/Hong Kong
+1007
+85
+International Wind Farm Development II Limited,
+Siemens Numerical Control Ltd., Nanjing, Nanjing/China
+80
+Hong Kong/Hong Kong
+1007
+Siemens Power Automation Ltd., Nanjing/China
+100
+Siemens Sensors & Communication Ltd., Dalian/China
+Siemens Shanghai Medical Equipment Ltd., Shanghai/China
+1007
+Hong Kong/Hong Kong
+100
+Beijing/China
+100
+International Wind Farm Development V Limited,
+1007
+Hong Kong/Hong Kong
+100
+Siemens Power Plant Automation Ltd., Nanjing/China
+International Wind Farm Development IV Limited,
+100
+Siemens Real Estate Management (Beijing) Ltd., Co.,
+Siemens Financial Services Private Limited, Mumbai/India
+Siemens Gamesa Renewable Private Limited, Chennai/India
+Siemens Healthcare Private Limited, Mumbai/India
+100
+100
+100
+Bapuram Renewable Private Limited, Chennai/India
+100
+PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
+New Delhi/India
+100
+Anantapur Wind Farms Private Limited, Chennai/India
+100
+Hong Kong/Hong Kong
+100
+1007
+Nirlooti Renewable Private Limited, Chennai/India
+Osmanabad Renewable Private Limited, Chennai/India
+Siemens Postal, Parcel & Airport Logistics Limited,
+100
+Siemens Ltd., Hong Kong/Hong Kong
+100
+1007
+Neelagund Renewable Private Limited, Chennai/India
+Nellore Renewable Pvt Ltd, Chennai/India
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+119
+Equity interest
+Equity interest
+Poovani Wind Farms Pvt. Ltd., Chennai/India
+September 30, 2017
+September 30, 2017
+in %
+Siemens Healthcare Limited, Hong Kong/Hong Kong
+100
+Siemens Industry Software Limited, Hong Kong/Hong Kong
+100
+in %
+Siemens Manufacturing and Engineering Centre Ltd.,
+100
+100
+100
+Gadag Renewable Private Limited, Chennai/India
+Gagodar Renewable Energy Pvt. Ltd., Chennai/India
+Ghatpimpri Renewable Pvt. Ltd., Chennai/India
+100
+SIEMENS FACTORING PRIVATE LIMITED, Mumbai/India
+100
+100
+1007
+100
+100
+Sanchore Renewable Private Limited, Chennai/India
+Sankanur Renewable Private Limited, Chennai/India
+Saunshi Renewable Private Limited, Chennai/India
+Siemens Convergence Creators Private Limited,
+Navi Mumbai/India
+100
+100
+100
+1007
+100
+Channapura Renewable Private Limited, Chennai/India
+Chikkodi Renewable Private Limited, Chennai/India
+Devarabanda Renewable Energy Pvt. Ltd., Chennai/India
+Dhone Renewable Private Limited, Chennai/India
+Dresser-Rand India Private Limited, Mumbai/India
+Flomerics India Private Limited, Mumbai/India
+100
+Powerplant Performance Improvement Ltd.,
+New Delhi/India
+501
+100
+Preactor Software India Private Limited, Bangalore/India
+100
+Bhuj Renewable Private Limited, Chennai/India
+Bidwal Renewable Private Limited, Chennai/India
+CALYPTO DESIGN SYSTEMS INDIA PRIVATE LIMITED,
+New Delhi/India
+Beed Renewable Energy Private Limited, Chennai/India
+Berkely Design Automation India Private Limited,
+New Delhi/India
+100
+100
+100
+100
+Rajgarh Wind Park Private Limited, Chennai/India
+Rangareddy Renewable Pvt Ltd, Chennai/India
+RSR Power Private Limited, Chennai/India
+99
+100
+Pugalur Renewable Private Limited, Chennai/India
+11
+51
+100
+77
+Changzhi/China
+100
+Siemens Special Electrical Machines Co. Ltd.,
+70
+Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
+51
+Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
+Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
+Shanghai/China
+100
+Siemens Shenzhen Magnetic Resonance Ltd.,
+Shenzhen/China
+100
+in %
+September 30, 2017
+in %
+Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
+Yixing/China
+Siemens Healthcare Diagnostics Manufacturing Ltd.,
+Shanghai, Shanghai/China
+Hangzhou, Hangzhou/China
+1007
+100
+Siemens Transformer (Jinan) Co., Ltd, Jinan/China
+Siemens High Voltage Switchgear Guangzhou Ltd.,
+Guangzhou/China
+63
+Siemens Transformer (Guangzhou) Co., Ltd.,
+Guangzhou/China
+51
+Siemens High Voltage Switchgear Co., Ltd., Shanghai,
+Shanghai/China
+90
+Siemens Technology Development Co., Ltd. of Beijing,
+Beijing/China
+51
+Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
+Hangzhou/China
+55
+Siemens Switchgear Ltd., Shanghai, Shanghai/China
+100
+Siemens Healthcare Ltd., Shanghai/China
+100
+Siemens Standard Motors Ltd., Yizheng/China
+Siemens Surge Arresters Ltd., Wuxi/China
+94
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens Ltd., China, Beijing/China
+Ralf P. Thomas,
+Dr. rer. pol.
+May 31,
+2020
+Siegfried Russwurm,
+Prof. Dr.-Ing.
+June 27,
+1963
+January 1,
+2008
+March 31,
+2017
+(until March 31, 2017)
+S.A., Spain
+> Siemens Corp., USA (Deputy Chairman)
+> Siemens Gamesa Renewable Energy
+Österreich, Austria
+> Siemens Aktiengesellschaft
+Positions outside Germany:
+> Siemens Healthcare GmbH, Munich
+German positions:
+> Siemens Gamesa Renewable Energy
+S.A., Spain
+> Siemens Healthcare GmbH, Munich
+Positions outside Germany:
+German positions:
+2023
+September 18, September 17,
+2013
+> Siemens Ltd., India
+April 1,
+2017
+March 7,
+1973
+Cedrik Neike
+January 31,
+2020
+June 23,
+1957
+First
+appointed
+May 1,
+2006
+Term expires
+At the
+end of the
+2021 Annual
+Sharehold-
+ers' Meeting
+Roland Busch,
+November 22, April 1,
+Dr. rer. nat.
+1964
+2011
+March 31,
+2021
+Lisa Davis
+October 15,
+1963
+August 1,
+2014
+July 31,
+2019
+Klaus Helmrich
+May 24,
+1958
+April 1,
+2011
+March 31,
+2021
+Janina Kugel
+January 12,
+1970
+February 1,
+2015
+> Siemens Ltd., China (Chairman)
+Positions outside Germany:
+> Siemens Healthcare GmbH, Munich
+German positions:
+> Deutsche Messe AG, Hanover
+> EOS Holding AG, Krailling
+>inpro Innovationsgesellschaft für
+fortgeschrittene Produktions-
+systeme in der Fahrzeugindustrie
+mbH, Berlin
+German positions:
+> Penske Automotive Group Inc., USA
+Positions outside Germany:
+> Atos SE, France
+April 1,
+2017
+> OSRAM GmbH, Munich
+(Deputy Chairman)
+(Deputy Chairman)
+> OSRAM Licht AG, Munich
+German positions:
+> NXP Semiconductors B.V., Netherlands
+Positions outside Germany:
+> Daimler AG, Stuttgart
+> Allianz Deutschland AG, Munich
+German positions:
+(as of September 30, 2017)
+External positions
+or in comparable domestic or foreign controlling bodies of business enterprises
+Memberships in supervisory boards whose establishment is required by law
+138 Additional Information
+March 7,
+1961
+German positions:
+> Pensions-Sicherungs-Verein
+Versicherungsverein auf Gegen-
+seitigkeit, Cologne
+Positions outside Germany:
+> Konecranes Plc., Finland
+Group company positions
+(as of September 30, 2017)
+Siemens Schweiz AG, Switzerland
+(Chairman)
+South Africa (Chairman)
+> Siemens Proprietary Ltd.,
+Österreich, Austria (Chairman)
+> Siemens Aktiengesellschaft
+Michael Sen
+> Siemens AB, Sweden (Chairman)
+Positions outside Germany:
+> Siemens Gamesa Renewable Energy
+S.A., Spain
+> Siemens Corp., USA
+(Chairwoman and CEO)
+March 31,
+2022
+Positions outside Germany:
+> Siemens W.L.L., Qatar
+> Siemens Ltd., Saudi Arabia
+Ltd., Saudi Arabia (Deputy Chairman)
+> ISCOSA Industries and Maintenance
+>Arabia Electric Ltd. (Equipment),
+Saudi Arabia
+November
+17, 1968
+> Siemens Postal, Parcel & Airport
+German positions:
+> Siemens Ltd., India
+Positions outside Germany:
+> VA TECH T&D Co. Ltd., Saudi Arabia
+Logistics GmbH, Constance
+Positions outside Germany:
+Positions outside Germany:
+rights, penalties for delay and breach of contract as well as liqui-
+dated damages. In order to evaluate whether revenues were rec-
+ognized on an accrual basis for the selected projects, we ana-
+lyzed billable revenues and corresponding cost of sales to be
+recognized in the statement of income in the reporting period
+considering the extent of progress towards completion, and ex-
+amined the accounting for the associated positions in the state-
+ment of financial position. Considering the requirements of
+IAS 11, we also assessed the accounting for contract amendments
+or contractually agreed options. We further performed inquiries
+of project management (both commercial and technical project
+managers) with respect to the development of the projects, the
+reasons for deviations between planned and actual costs, the
+current estimated costs to complete the projects, and manage-
+ment's assessments on probabilities that contract risks will mate-
+rialize. In designing our audit procedures, we also considered
+results from project audits conducted by the internal audit func-
+tion. Furthermore, we obtained evidence from third parties for
+selected projects (e.g. project acceptance documentation, con-
+tractual terms and conditions, and legal confirmations regarding
+alleged breaches of contract and asserted claims) and inspected
+plant and project locations. To identify anomalies in margin de-
+velopment throughout the projects' execution, we also applied
+data analysis procedures.
+-
+At an extraordinary meeting on September 26, 2017, the Super-
+visory Board approved the planned merger of Siemens' mobility
+business with the publicly listed company Alstom SA (France).
+CORPORATE GOVERNANCE CODE
+At our meeting on September 20, 2017, we approved an unqual-
+ified Declaration of Conformity in accordance with Section 161 of
+the German Stock Corporation Act (Aktiengesetz). Information
+on corporate governance at Siemens is available in chapter
+→ C.4 CORPORATE GOVERNANCE. Our Declaration of Conformity has
+been made permanently available to our shareholders on our
+website. The current Declaration of Conformity is also available
+in chapter c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO
+SECTIONS 289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
+WORK IN THE SUPERVISORY BOARD COMMITTEES
+The Supervisory Board has established seven standing commit-
+tees, which prepare proposals and issues to be dealt with at its
+plenary meetings. Some of the Supervisory Board's decision-mak-
+ing powers have also been delegated to these committees within
+the permissible legal framework. The committee chairpersons
+report to the Supervisory Board on their committees' work at the
+subsequent Board meetings. A list of the members and a detailed
+explanation of the tasks of the individual Supervisory Board
+committees are contained in chapter c.4.1 MANAGEMENT AND
+CONTROL STRUCTURE.
+The Chairman's Committee met seven times. It also made one
+decision by written circulation. Between meetings, I discussed
+topics of major importance with the members of the Chairman's
+Committee. The Committee concerned itself, in particular, with
+personnel topics and corporate governance issues, including the
+assumption by Managing Board members of positions at other
+companies and institutions.
+The Nominating Committee met six times. Outside these
+meetings, it also concerned itself intensively with the long-term
+succession planning for the Supervisory Board and, in particu-
+lar, with succession to the Chairmanship of the Supervisory
+Board and to the Chairmanship of the Audit Committee. At its
+meeting on January 31, 2017, the Nominating Committee ap-
+proved the nomination of Jim Hagemann Snabe as a candidate
+for election by the Supervisory Board to the position of Super-
+visory Board Chairman, with the election to take place at the
+Supervisory Board's constituent meeting after the elections to
+the Supervisory Board at the Annual Shareholders' Meeting on
+January 31, 2018. The Nominating Committee prepared the Su-
+pervisory Board's proposal to the Annual Shareholders' Meeting
+on January 31, 2018, regarding the upcoming regular election
+of seven shareholder representatives on the Supervisory Board.
+When searching for and evaluating candidates, the Nominating
+Committee took into consideration - in addition to the require-
+ments of the German Stock Corporation Act, the German Cor-
+porate Governance Code and the Bylaws for the Supervisory
+Board - the targets established by the Supervisory Board for its
+composition and the profile of skills and expertise defined by
+the Supervisory Board for its composition. The Nominating
+Committee was supported in its activities by an external person-
+nel consultant.
+The Compliance Committee met four times. It primarily dis-
+cussed the quarterly reports and the annual report of the Chief
+Compliance Officer.
+The Mediation Committee had no need to meet.
+The Compensation Committee met three times. It also made
+one decision by written circulation. The Compensation Commit-
+tee prepared, in particular, proposals for the Supervisory Board
+regarding the determination of targets for variable compensa-
+tion, the determination and review of the appropriateness of
+Managing Board compensation and the approval of the Compen-
+sation Report.
+The Innovation and Finance Committee held three ordinary
+and two extraordinary meetings. The focuses of its meetings
+included the Committee's recommendation regarding the bud-
+get for fiscal 2017 and the discussion of the Company's strategy,
+134
+Additional Information
+At our meeting on September 20, 2017, the Managing Board
+reported to us on the state of the Company and on the business
+position of the Process Industries and Drives Division and on the
+business position of next47, the separate unit for startups. On the
+recommendation of the Chairman's Committee, we extended
+Dr. Ralf Thomas's term of office as a member of the Managing
+Board, effective from September 18, 2018, until September 17,
+2023. In addition, we discussed the Mobility Division's strategic
+orientation. As part of our regular review, we adjusted - follow-
+ing preparation and a recommendation by the Compensation
+Committee the amount of Managing Board compensation for
+fiscal 2018. In a further continuation of the strategy focus of
+May 3, 2017, the Supervisory Board also concerned itself with the
+Company's strategic orientation. Finally, we discussed the effi-
+ciency review of our activities.
+including portfolio measures, as well as the preparation and ap-
+proval of investment and divestment projects. For example, the
+Committee prepared proposals for the Supervisory Board regard-
+ing the acquisition of Mentor Graphics Corporation, regarding
+the preparation of the public listing of the strategic unit Health-
+ineers and regarding actions relating to the strategic orientation
+of the Mobility Division. At its meeting on September 19, 2017,
+the Committee also approved the Managing Board decision con-
+cerning an investment in a combined cycle power plant project
+in the United Arab Emirates and prepared the proposal for the
+Supervisory Board regarding Managing Board decisions relating
+to financial measures. In addition, the Innovation and Finance
+Committee intensively discussed the Company's strategic orien-
+tation and its innovation and technology focuses. In particular,
+it discussed the activities and recommendations of the Siemens
+Technology & Innovation Council.
+The Supervisory Board considered in detail the strategic setup of
+the Mobility Division and discussed the further actions planned
+regarding the preparation of the public listing of the strategic
+unit Healthineers. In addition, the Supervisory Board concerned
+itself with the recommendations of the Siemens Technology &
+Innovation Council and, in a continuation of the strategy focus
+of May 3, 2017, discussed the Company's strategic orientation.
+Additional Information
+C.3 Report of the Supervisory Board
+Berlin and Munich, November 29, 2017
+In fiscal 2017, the Supervisory Board performed, in accordance
+with its obligations, the duties assigned to it by law, the Siemens
+Articles of Association and the Bylaws for the Supervisory Board.
+We regularly advised the Managing Board on the management
+of the Company and monitored the Managing Board's activities.
+We were directly involved at an early stage in all major decisions
+regarding the Company. In written and oral reports, the Managing
+Board regularly provided us with timely and comprehensive
+information on Company planning and business operations as
+well as on the strategic development and current state of the
+Company. On the basis of reports submitted by the Managing
+Board, we considered in detail business development and all de-
+cisions and transactions of major significance to the Company.
+Deviations from business plans were explained to us in detail and
+intensively discussed. The Managing Board coordinated the Com-
+pany's strategic orientation with us. The proposals made by the
+Managing Board were approved by the Supervisory Board and/or
+the relevant Supervisory Board committees after in-depth exam-
+ination and consultation. In my capacity as Chairman of the Super-
+visory Board, I was also in regular contact with the Managing
+Board and, in particular, with the President and Chief Executive
+Officer and was kept up-to-date on current developments in the
+Company's business situation and on key business transactions.
+TOPICS AT THE PLENARY MEETINGS
+OF THE SUPERVISORY BOARD
+We held a total of six regular plenary meetings and one extraor-
+dinary meeting in fiscal 2017. Topics of discussion at our regular
+plenary meetings were revenue, profit and employment develop-
+ment at Siemens AG, the Company's operating units and the
+Siemens Group as well as the Company's financial position and
+the results of its operations. We also concerned ourselves as re-
+quired with major investment and divestment projects and with
+certain risks to the Company.
+At our meeting on November 9, 2016, we discussed the Compa-
+ny's key financial figures for fiscal 2016 and approved the budget
+for 2017. On the basis of reported target achievement, we also
+defined the compensation of the Managing Board members for
+fiscal 2016. The appropriateness of this compensation was con-
+firmed by an internal review. On the recommendation of the
+Compensation Committee, we also approved the targets for
+Managing Board compensation for fiscal 2017. The remuneration
+system for the Managing Board members for fiscal 2017 is un-
+changed vis-à-vis the remuneration system for fiscal 2015, which
+the Annual Shareholders' Meeting approved by a majority of
+more than 92% on January 27, 2015. At our meeting on Novem-
+ber 9, 2016, we also approved the preparation of the public list-
+ing of the strategic unit Healthineers as well as the acquisition of
+Mentor Graphics Corporation.
+-
+On November 30, 2016, we discussed the financial statements
+and the Combined Management Report for Siemens AG and the
+Siemens Group as of September 30, 2016, the Annual Report for
+2016 (including the Report of the Supervisory Board, the Corpo-
+rate Governance Report and the Compensation Report) and the
+agenda for the Annual Shareholders' Meeting on February 1,
+2017. The Managing Board informed us about the current status
+of acquisitions and divestments in particular, the planned
+merger of Siemens' wind power business with the publicly listed
+company Gamesa Corporación Tecnológica S.A. (Spain) and the
+status of the integration of the two previously acquired compa-
+nies Dresser Rand Group Inc. and CD-adapco Ltd. In addition, the
+Managing Board reported on the status of the implementation of
+the "Vision 2020" strategy. We also discussed the annual report
+of the Chief Compliance Officer and the pension system. In addi-
+tion, the Managing Board informed us about the Mobility Divi-
+sion's business position and business development. Finally, at
+this meeting, the Supervisory Board approved the recommenda-
+tion of the Chairman's Committee that Michael Sen and Cedrik
+Neike be appointed full members of the Managing Board, effec-
+tive April 1, 2017.
+At our meeting on January 31, 2017, the Managing Board reported
+to us on the Company's business and financial position following
+the conclusion of the first quarter. The Supervisory Board ap-
+proved Managing Board decisions regarding financing measures.
+In addition, the Supervisory Board was informed about the Nom-
+inating Committee's decision that Jim Hagemann Snabe be nom-
+inated as a candidate for election by the Supervisory Board to the
+position of Supervisory Board Chairman on January 31, 2018.
+At our meeting on May 3, 2017, the Managing Board reported to
+us on the Company's current business and financial position fol-
+lowing the conclusion of the second quarter. The Supervisory
+Board defined the target – effective from July 1, 2017 - for the
+proportion of women on the Managing Board by June 30, 2022,
+as explained in greater detail in chapter c.4.2 CORPORATE GOVER-
+-
+NANCE STATEMENT PURSUANT TO SECTIONS 289 A AND 315 PARA. 5 OF THE
+GERMAN COMMERCIAL CODE. As part of a strategy focus, we con-
+cerned ourselves comprehensively and in detail with the Compa-
+ny's strategic orientation, taking into account current technology
+and innovation topics and the status of the implementation of
+the "Vision 2020" strategy.
+At our meeting on August 2, 2017, the Managing Board reported
+to us on the Company's business and financial position following
+the conclusion of the third quarter. On the recommendation of
+the Chairman's Committee, we extended Joe Kaeser's term of
+office as a member of the Managing Board and as President and
+CEO, effective from August 1, 2018, until the end of the Annual
+Shareholders' Meeting that will decide on the ratification of
+the acts of the members of the Managing Board for fiscal 2020.
+133
+Additional Information
+The Audit Committee met six times. In the presence of the inde-
+pendent auditors as well as the President and Chief Executive
+Officer and the Chief Financial Officer, the Committee dealt with
+the financial statements and the Combined Management Report
+for Siemens AG and the Siemens Group. The Audit Committee
+discussed the Half-year Financial Report and the quarterly state-
+ments with the Managing Board and the independent auditors.
+In the presence of the independent auditors, it also discussed the
+report on the auditors' review of the Company's Half-year Con-
+solidated Financial Statements and of its Interim Group Manage-
+ment Report. The Committee recommended that the Supervisory
+Board propose to the Annual Shareholders' Meeting the election
+of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (Stutt-
+gart, Germany) as the independent auditors. The Committee
+appointed the independent auditors for fiscal 2017, defined the
+audit focal points and determined the auditors' fee. The Commit-
+tee monitored the selection, independence, qualification, rota-
+tion and efficiency of the independent auditors. Furthermore,
+the Audit Committee dealt with the Company's accounting and
+accounting process, the effectiveness of its internal control sys-
+tem, its risk management system and the effectiveness, re-
+sources and findings of the internal audit as well as with reports
+concerning potential and pending legal disputes.
+The independent auditors, Ernst & Young GmbH Wirtschaftsprü-
+fungsgesellschaft (Stuttgart, Germany), audited the Annual Finan-
+cial Statements of Siemens AG, the Consolidated Financial State-
+ments of the Siemens Group and the Combined Management
+Report for Siemens AG and the Siemens Group for fiscal 2017 and
+issued an unqualified opinion. Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft (Stuttgart, Germany) has served as inde-
+pendent auditors of Siemens AG and the Siemens Group since
+The Managing Board and the Supervisory Board cooperate
+closely for the benefit of the Company. The Managing Board in-
+forms the Supervisory Board regularly, comprehensively and
+without delay on all issues of importance to the Company with
+regard to strategy, planning, business development, financial
+position, earnings, compliance and risks. When filling managerial
+positions at the Company, the Managing Board takes diversity
+into consideration and, in particular, aims for an appropriate con-
+sideration of women and internationality.
+The Supervisory Board has defined for a second time a target for
+the proportion of women in the Managing Board of Siemens AG
+and has set a deadline for its attainment. The Managing Board
+has defined again targets for the proportion of women at the
+two management levels below the Managing Board and has set
+a deadline for their attainment. Details are set out in chapter
+→ C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN ON THE MANAGING BOARD
+AND AT THE TWO MANAGEMENT LEVELS IMMEDIATELY BELOW THE MANAGING
+BOARD.
+The Managing Board has one committee, the Equity and Com-
+pensation Committee. This committee, to which the former
+Equity and Employee Stock Committee has been transferred,
+comprises the President and CEO, the Chief Financial Officer,
+the Chief Human Resources Officer and, as a consultative mem-
+ber, the Chief of Staff of Siemens AG. It is responsible for the
+duties assigned to it by decision of the Managing Board and has
+assumed the duties previously assigned to the Equity and Em-
+ployee Stock Committee - including, in particular, duties in con-
+nection with capital measures and equity-linked financial instru-
+ments, relating to the compensation of the employees and
+managers of the Siemens Group (except for the compensation
+of the members of the Managing Board and Top Management)
+and relating to share-based compensation components and em-
+ployee share plans.
+The Equity and Compensation Committee comprises Joe Kaeser
+(Chairman), Dr. Ralf P. Thomas, Janina Kugel and, as a consultative
+member, Mariel von Schumann (as of September 30, 2017).
+Information on the areas of responsibility and the curricula vitae of
+the members of the Managing Board are available on the Siemens
+Global Website at www.SIEMENS.COM/COMPANY-STRUCTURE. Infor-
+mation on the compensation paid to the members of the Managing
+Board is provided in chapter → A.10 COMPENSATION REPORT.
+Additional Information
+137
+Members of the Managing Board and positions
+held by Managing Board members
+In fiscal 2017, the Managing Board comprised the following
+members:
+Name
+Date of birth
+Joe Kaeser
+President and
+Chief Executive Officer
+SIEMENS.COM/SUSTAINABILITY-FIGURES
+DETAILED DISCUSSION OF THE AUDIT
+OF THE FINANCIAL STATEMENTS
+The Managing Board prepares the Company's Quarterly State-
+ments and Half-year Financial Report, the Annual Financial
+Statements of Siemens AG, the Consolidated Financial State-
+ments of the Siemens Group and the Combined Management
+Report of Siemens AG and the Siemens Group. In addition, the
+Managing Board ensures that the Company adheres to statutory
+requirements, official regulations and internal Company policies
+and works to achieve compliance with these provisions and pol-
+icies within the Siemens Group. The Managing Board has estab-
+lished a comprehensive compliance management system. De-
+tails are available on the Siemens Global Website at www.
+C.4.1.1 MANAGING BOARD
+fiscal 2009. Katharina Breitsameter has signed as auditor since
+fiscal 2016, and Thomas Spannagl has signed as auditor respon-
+sible for the audit since fiscal 2014. The Annual Financial State-
+ments of Siemens AG and the Combined Management Report for
+Siemens AG and the Siemens Group were prepared in accordance
+with the requirements of German law. The Consolidated Financial
+Statements of the Siemens Group were prepared in accordance
+with the International Financial Reporting Standards (IFRS) as
+adopted by the EU and with the additional requirements of Ger-
+man law set out in Section 315 a (1) of the German Commercial
+Code (Handelsgesetzbuch). The Consolidated Financial State-
+ments of the Siemens Group also comply with the IFRS as issued
+by the International Accounting Standards Board (IASB). The in-
+dependent auditors conducted their audit in accordance with
+Section 317 of the German Commercial Code, the EU Audit Regu-
+lation (Regulation (EU) No. 537/2014 of the European Parliament
+and of the Council of 16 April 2014 on specific requirements re-
+garding statutory audit of public-interest entities and repealing
+Commission Decision 2005/909/EC, "EU Audit Regulation") and
+German generally accepted standards for the audit of financial
+statements promulgated by the Institut der Wirtschaftsprüfer
+(IDW) as well as in supplementary compliance with the Interna-
+tional Standards on Auditing (ISA). The abovementioned docu-
+ments as well as the Managing Board's proposal for the appropri-
+ation of net income were submitted to us by the Managing Board
+in advance. The Audit Committee discussed the dividend proposal
+in detail at its meeting on November 7, 2017. It discussed the
+Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Combined
+Management Report in detail at its meeting on November 28,
+2017. In this context, the Audit Committee concerned itself, in
+particular, with key audit matters, including the audit procedures
+implemented. The audit reports prepared by the independent au-
+ditors were distributed to all members of the Supervisory Board
+and comprehensively reviewed at the Supervisory Board's meet-
+ing on November 29, 2017, in the presence of the independent
+auditors, who reported on the scope, focal points and main find-
+ings of their audit, addressing, in particular, key audit matters and
+the audit procedures implemented. No major weaknesses in the
+Company's internal control or risk management systems were
+reported. At this meeting, the Managing Board explained the
+financial statements of Siemens AG and the Siemens Group as
+well as the Company's risk management system. At its meeting
+on November 29, 2017, the Supervisory Board also approved the
+proposal to the Annual Shareholders' Meeting, taking into ac-
+count the Audit Committee's recommendation regarding the
+election of the independent auditors. This proposal was based on
+the Audit Committee's declaration that its recommendation was
+free of undue influence by third parties and that it had not en-
+tered into any contractual clause that could restrict the choice
+within the meaning of Art. 16, para. 6 of the EU Audit Regulation.
+Additional Information
+135
+The Supervisory Board concurs with the results of the audit.
+Following the definitive findings of the Audit Committee's exam-
+ination and our own examination, we have no objections. The
+Managing Board prepared the Annual Financial Statements of
+Siemens AG and the Consolidated Financial Statements of the
+Siemens Group. We approved the Annual Financial Statements
+and the Consolidated Financial Statements. In view of our ap-
+proval, the Annual Financial Statements of Siemens AG are
+adopted as submitted. We endorsed the Managing Board's pro-
+posal that the net income available for distribution be used to pay
+out a dividend of €3.70 per share entitled to a dividend and that
+the amount of net income attributable to shares of stock not
+entitled to receive a dividend for fiscal 2017 be carried forward.
+CHANGES IN THE COMPOSITION OF THE
+SUPERVISORY AND MANAGING BOARDS
+Prof. Dr. Siegfried Russwurm left the Managing Board, effective
+March 31, 2017. The Supervisory Board appointed Michael Sen
+and Cedrik Neike full members of the Managing Board, effective
+April 1, 2017. There were no changes in the composition of the
+Supervisory Board during the year under review. Effective at the
+end of the day on September 30, 2017, Hans-Jürgen Hartung left
+the Supervisory Board. Dorothea Simon was appointed a mem-
+ber of the Supervisory Board by order of the district court of Char-
+lottenburg, Germany, effective from October 1, 2017 until the end
+of the Annual Shareholders' Meeting on January 31, 2018.
+On behalf of the Supervisory Board, I would like to thank the
+members of the Managing Board as well as the employees and
+employee representatives of Siemens AG and all Group compa-
+nies for their outstanding commitment and constructive cooper-
+ation in fiscal 2017.
+For the Supervisory Board
+Gerhard Comme
+Dr. Gerhard Cromme
+Chairman
+не
+136 Additional Information
+C.4.1 Management
+and control structure
+Siemens AG is subject to German corporate law. Therefore, it has
+a two-tier board structure, consisting of a Managing Board and a
+Supervisory Board.
+As the Company's top management body, the Managing Board
+is committed to serving the interests of the Company and achiev-
+ing sustainable growth in company value. The members of the
+Managing Board are jointly responsible for the entire manage-
+ment of the Company and decide on the basic issues of business
+policy and corporate strategy as well as on the Company's annual
+and multi-year plans.
+[German Public Auditor]
+C.4 Corporate Governance
+Breitsameter
+Our audit procedures did not lead to any reservations relating to
+the accounting for uncertain tax positions and deferred taxes.
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in accounting for uncer-
+tain tax positions and deferred taxes, refer to → NOTE 2 SIGNIFI-
+CANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in
+the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. With respect
+to disclosures for deferred tax assets and liabilities, refer to
+→ NOTE 7 INCOME TAXES in the NOTES TO THE CONSOLIDATED FINANCIAL
+STATEMENTS.
+Other information
+Management is responsible for the following other information:
+➤ the Responsibility Statement in chapter → c.1 of the Annual
+Report 2017, and
+> Corporate Governance in chapter c.4 of the Annual Report
+2017.
+The Supervisory Board is responsible for the following other
+information:
+> the Report of the Supervisory Board in chapter
+Annual Report 2017.
+C.3 of the
+130
+Additional Information
+Our opinions on the consolidated financial statements and the
+group management report do not cover the other information
+and we do not express an opinion or any other form of assurance
+conclusion thereon.
+In connection with our audit, our responsibility is to read the
+other information, and, in doing so, consider whether the other
+information
+> is materially inconsistent with the consolidated financial
+statements, the group management report or our knowledge
+obtained in the audit, or
+> otherwise appears to be materially misstated.
+In assessing the recoverability of deferred tax assets, we particu-
+larly analyzed management's assumptions with respect to pro-
+jected future taxable income and compared them to internal
+business plans. As part of our audit procedures for deferred tax
+liabilities, we especially assessed management's assumptions
+regarding the permanent reinvestment of undistributed earnings
+of subsidiaries considering the dividend plans.
+If, based on the work we have performed, we conclude that there
+is a material misstatement of this other information, we are re-
+quired to report that fact. We have nothing to report in this regard.
+management's processes and tested internal controls imple-
+mented for the identification, recognition and measurement of
+tax positions. As part of our audit procedures for uncertain tax
+positions, we evaluated whether management's assessment of
+the tax effects of significant business transactions and events in
+fiscal year 2017, which could result in uncertain tax positions or
+impact the measurement of existing uncertain tax positions,
+comply with applicable tax law. This includes, in particular, tax
+effects from the acquisition or disposal of businesses, corporate
+(intragroup) restructuring activities, results of examinations by
+tax authorities, and cross-border transactions including the de-
+termination of transfer prices. In order to assess measurement
+and completeness, we also obtained confirmations from external
+tax advisors and inspected expert tax reports commissioned by
+Siemens for individual matters. Further, we evaluated manage-
+ment's assessments with respect to the prospects of success of
+appeal and tax court proceedings by inquiring of the Siemens tax
+department and by considering current tax case law.
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in accounting for provi-
+sions, refer to → NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRIT-
+ICAL ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED
+FINANCIAL STATEMENTS. With respect to proceedings out of or in
+connection with alleged breaches of contract and compliance
+violations, refer to → NOTE 21 LEGAL PROCEEDINGS. With respect to
+the uncertainties and estimates relating to asset retirement obli-
+gations, refer to → NOTE 17 PROVISIONS.
+Wirtschaftsprüferin
+Due to the large contract volume and risk profile, our audit pro-
+cedures especially focused on large contracts for the construc-
+tion of power plants on a turnkey basis, high-voltage-direct-cur-
+rent solutions, the delivery of high-speed and commuter trains,
+and the construction of offshore wind farms.
+Our audit procedures did not lead to any reservations relating to
+revenue recognition on construction contracts.
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in accounting for con-
+structing contracts, refer to → NOTE 2 SIGNIFICANT ACCOUNTING
+POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the NOTES TO THE
+CONSOLIDATED FINANCIAL STATEMENTS. With respect to provisions for
+order related losses and risks, refer to NOTE 17 PROVISIONS in
+the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
+Provisions for proceedings out of or in connection
+with alleged breaches of contract and compliance
+violations as well as provisions for asset retirement
+obligations
+Reasons why the matter was determined to be a key audit
+matter: We considered the accounting for provisions for pro-
+ceedings out of or in connection with alleged breaches of contract
+and compliance violations, including allegations of corruption
+and antitrust violations, and for asset retirement obligations to
+be a key audit matter. These matters are subject to inherent un-
+certainties and require estimates that could have a significant
+impact on the recognition and measurement of the respective
+provision and, accordingly, on net assets and results of opera-
+tions. Proceedings out of or in connection with alleged breaches
+of contract and compliance violations are subject to uncertain-
+ties because they frequently involve complex legal issues and
+accordingly, considerable management judgment, in particular
+when determining whether and in what amount a provision is
+required to account for the risks. The uncertainties and estimates
+with respect to asset retirement obligations pertain especially to
+the estimated costs of decommissioning, the estimated time
+frame over which cash outflows are expected, and the relevant
+discount rates.
+Audit approach: During our audit of the financial reporting of
+proceedings out of or in connection with alleged breaches of
+contract and compliance violations, we analyzed the processes
+and internal controls implemented by Siemens for the identifica-
+tion, assessment and accounting of legal and regulatory proceed-
+ings. To determine what potentially significant pending legal
+proceedings or claims asserted are known and whether manage-
+ment's estimates of the expected cash outflows are reasonable,
+our audit procedures included inquiries of management and
+other persons within the Group entrusted with these matters,
+obtaining written statements from in-house legal counsels with
+respect to the assessment of estimated cash outflows and their
+probability, obtaining confirmations from external legal advisors
+and evaluating internal statements concerning the accounting in
+the consolidated financial statements. Furthermore, we exam-
+ined legal consulting expense accounts for any indications of
+legal matters not yet considered, and inspected additional appro-
+priate evidence.
+We further considered alleged or substantiated non-compliance
+with statutory provisions, official regulations and internal com-
+pany policies (compliance violations) by inspecting internal and
+external statements on specific matters, obtaining written state-
+ments from external legal advisors, and by inquiring of the com-
+pliance organization. In this regard, we, among other procedures,
+evaluated the conduct and results of internal investigations by
+inspecting internal reports and the measures taken to remediate
+identified weaknesses, and assessed whether any risks are to be
+reflected in the consolidated financial statements.
+Based on the above described uncertainties, our audit proce-
+dures with respect to asset retirement obligations focused on the
+remediation and environmental protection liabilities for the de-
+commissioning of the facilities in Hanau, Germany (Hanau facil-
+ities), as well as for the nuclear research and service center in
+Karlstein, Germany (Karlstein facilities). Our audit procedures
+included, among others, assessing the appropriateness as audit
+evidence of an independent expert's report commissioned by
+Additional Information
+129
+management, evaluating the valuation methods used by drawing
+on the expertise of our valuation specialists, and assessing the
+significant estimates resulting from the long-term nature.
+Through inquiries of persons entrusted with the matter and in-
+spections of internal and external documents, we evaluated man-
+agement's assessment that Siemens is, as of September 30, 2017,
+not covered by the regulations for nuclear waste disposal which
+were partly amended in fiscal year 2017 ("Gesetz zur Neuordnung
+der Verantwortung in der kerntechnischen Entsorgung"), and
+therefore continues to adhere to the German Atomic Energy Act
+("deutsches Atomgesetz"), whereby radioactive waste resulting
+from the closure of the nuclear facility must be collected and de-
+livered to a government-developed final storage facility. In addi-
+tion, we assessed the adjustments to the assumed inflation rates
+and the changes to the applied interest yield curve in fiscal year
+2017 by inquiring of management and, with the assistance of our
+internal valuation specialists, by comparing the above-mentioned
+changes to publicly available market data.
+Furthermore, we evaluated the disclosures on proceedings out of
+or in connection with alleged breaches of contract and compli-
+ance violations as well as on asset retirement obligations in the
+notes to the consolidated financial statements.
+Our audit procedures did not lead to any reservations relating
+to the accounting for proceedings out of or in connection with
+alleged breaches of contract and compliance violations as well as
+for asset retirement obligations.
+Uncertain tax positions and deferred taxes
+Reasons why the matter was determined to be a key audit
+matter: Siemens operates in numerous countries and is subject
+to different local tax regulations. The accounting for uncertain
+tax positions as well as deferred taxes requires management to
+exercise considerable judgment and make estimates and assump-
+tions, and was therefore a key audit matter. This particularly per-
+tains to the measurement and completeness of uncertain tax
+positions, the recoverability of deferred tax assets and the mea-
+surement and completeness of deferred tax liabilities.
+RESPONSIBILITIES OF MANAGEMENT AND THE
+SUPERVISORY BOARD FOR THE CONSOLIDATED
+FINANCIAL STATEMENTS AND THE GROUP
+MANAGEMENT REPORT
+Audit approach: With the assistance of internal tax specialists
+who have knowledge of relevant tax regulations, we assessed
+In preparing the consolidated financial statements, management
+is responsible for assessing the Group's ability to continue as a
+going concern, disclosing, as applicable, matters related to going
+concern and using the going concern basis of accounting unless
+management either intends to liquidate the Group or to cease
+operations, or has no realistic alternative but to do so.
+OTHER REPORTING ITEMS IN ACCORDANCE WITH
+ART. 10 OF THE EU AUDIT REGULATION
+We were elected as auditor of the consolidated financial state-
+ments by the Annual Shareholders' Meeting on February 1, 2017.
+We were engaged by the Supervisory Board on February 1, 2017.
+We have been the auditor of Siemens Aktiengesellschaft for an
+uninterrupted period since the audit of the consolidated financial
+statements for the fiscal year from October 1, 2008 to Septem-
+ber 30, 2009.
+We confirm that the audit opinions included in this auditor's
+report are consistent with the additional report to the Audit
+Committee in accordance with Art. 11 of the EU Audit Regulation
+(audit report).
+consolidated financial statements, its compliance with the Responsible auditor
+legal provisions and the view it gives of the Group's position;
+We communicate with those charged with governance regard-
+ing, among other matters, the planned scope and timing of the
+audit and significant audit findings, including any significant de-
+ficiencies in internal control that we identify during our audit.
+We provide those charged with governance with a statement that
+we have complied with relevant ethical requirements regarding
+independence and communicate with them all relationships and
+The auditor responsible for the audit is Thomas Spannagl.
+Munich, November 27, 2017
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+дения
+Spannagl
+Wirtschaftsprüfer
+[German Public Auditor]
+Management is responsible for the preparation of consolidated
+financial statements that comply, in all material respects, with
+IFRSS as adopted by the EU and the supplementary provisions of
+German law pursuant to Sec. 315 a (1) HGB and full IFRS as issued
+by the IASB, for the preparation of consolidated financial state-
+ments that give a true and fair view of the net assets, financial
+position and results of operations of the Group in accordance
+with these requirements and for such internal control as manage-
+ment determines is necessary to enable the preparation of con-
+solidated financial statements that are free from material mis-
+statement, whether due to fraud or error.
+Buits an
+requirements
+> evaluate the group management report's consistency with the
+> perform procedures on the forward-looking statements made
+by management in the group management report. In partic-
+ular, on the basis of sufficient appropriate audit evidence, we
+walk through the significant assumptions underlying manage-
+ment's forward-looking statements and assess whether the
+forward-looking statements were appropriately derived from
+these assumptions. We do not provide a separate opinion on
+the forward-looking statements and underlying assumptions.
+There is a significant unavoidable risk that future events will
+differ materially from the forward-looking statements.
+> obtain sufficient appropriate audit evidence regarding the
+financial information of the entities or business activities
+within the Group to express opinions on the consolidated
+financial statements and the group management report.
+We are responsible for the direction, supervision and perfor-
+mance of the group audit. We remain solely responsible for
+our audit opinions;
+In addition, management is responsible for the preparation of
+the group management report that as a whole provides a suitable
+view of the Group's position and, in all material respects, is con-
+sistent with the consolidated financial statements, complies with
+the provisions of German law and suitably presents the opportu-
+nities and risks of future development and for such arrangements
+and measures (systems) as management deems necessary to
+enable the preparation of a group management report in accor-
+dance with the applicable provisions of German law and to fur-
+nish sufficient appropriate evidence for the statements in the
+group management report.
+The Supervisory Board is responsible for overseeing the Group's
+financial reporting process for the preparation of the consoli-
+dated financial statements and the group management report.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT
+OF THE CONSOLIDATED FINANCIAL STATEMENTS
+AND THE GROUP MANAGEMENT REPORT
+Our objectives are to obtain reasonable assurance about whether
+the consolidated financial statements as a whole are free from
+material misstatement, whether due to fraud or error, and
+whether the group management report as a whole provides a
+suitable view of the Group's position and, in all material respects,
+is consistent with the consolidated financial statements and our
+audit findings, complies with the provisions of German law and
+suitably presents the opportunities and risks of future develop-
+ment, and to issue an independent auditor's report that includes
+our opinions on the consolidated financial statements and the
+group management report.
+Reasonable assurance is a high level of assurance, but is not a
+guarantee that an audit conducted in accordance with Sec. 317
+HGB and the EU Audit Regulation as well as generally accepted
+standards on auditing promulgated by the IDW and in supple-
+mentary compliance with ISA will always detect a material mis-
+statement when it exists. Misstatements can arise from fraud or
+error and are considered material if, individually or in the aggre-
+gate, they could reasonably be expected to influence the eco-
+nomic decisions of users taken on the basis of these consolidated
+financial statements and the group management report.
+We exercise professional judgment and maintain professional
+skepticism throughout the audit. We also:
+> obtain an understanding of internal control relevant to the au-
+dit of the consolidated financial statements and the arrange-
+ments and measures relevant to the audit of the group man-
+agement report in order to design audit procedures that are
+appropriate in the circumstances, but not for the purpose of
+expressing an opinion on the effectiveness of these systems;
+> evaluate the appropriateness of accounting policies used and
+the reasonableness of accounting estimates and related dis-
+closures made by management;
+Additional Information
+131
+> identify and assess the risks of material misstatement of the
+consolidated financial statements and the group manage-
+ment report, whether due to fraud or error, design and per-
+form audit procedures responsive to those risks, and obtain
+audit evidence that is sufficient and appropriate to provide a
+basis for our opinions. The risk of not detecting a material
+misstatement resulting from fraud is higher than for one re-
+sulting from error, as fraud may involve collusion, forgery,
+intentional omissions, misrepresentations, or the override of
+internal control;
+> conclude on the appropriateness of management's use of the
+going concern basis of accounting and, based on the audit evi-
+dence obtained, whether a material uncertainty exists related
+to events or conditions that may cast significant doubt on the
+Group's ability to continue as a going concern. If we conclude
+that a material uncertainty exists, we are required to draw
+attention in our auditor's report to the related disclosures in
+the consolidated financial statements and the group manage-
+ment report or, if such disclosures are inadequate, to modify
+our respective opinion. Our conclusions are based on the
+audit evidence obtained up to the date of our auditor's report.
+other matters that may reasonably be thought to bear on our
+independence, and related safeguards.
+From the matters communicated with those charged with gover-
+nance, we determine those matters that were of most signi-
+ficance in the audit of the consolidated financial statements of
+the current period and are therefore the key audit matters. We
+describe each key audit matter in our auditor's report unless laws
+or regulations preclude public disclosure about the matter.
+However, future events or conditions may cause the Group to Report on other legal and regulatory
+cease to continue as a going concern;
+> evaluate the overall presentation, structure and content of the
+consolidated financial statements, including the disclosures,
+and whether the consolidated financial statements represent
+the underlying transactions and events in a manner that
+achieves a true and fair view of the net assets, financial posi-
+tion and results of operations of the Group in accordance with
+IFRS as adopted by the EU and the supplemental provisions of
+German law applicable pursuant to Sec. 315 a (1) HGB and full
+IFRS as issued by the IASB;
+132
+100%
+7
+21
+21
+Robert Kensbock
+100%
+7
+Hans-Jürgen Hartung
+7
+14
+17
+Bettina Haller
+100%
+Reinhard Hahn
+7
+Harald Kern
+82%
+16
+11
+81%
+100%
+Güler Sabancı
+92%
+12
+Norbert Reithofer, Dr.-Ing. Dr.-Ing. E.h.
+100%
+7
+7
+Gérard Mestrallet
+96%
+22
+23
+Nicola Leibinger-Kammüller, Dr. phil.
+96%
+27
+28
+Jürgen Kerner
+13
+23
+The Mediation Committee submits proposals to the Supervisory
+Board in the event that the Supervisory Board cannot reach the
+two-thirds majority required for the appointment or dismissal of
+a Managing Board member on the first ballot.
+Hans Michael Gaul, Dr. iur.
+Supervisory Board
+Werner Wenning
+(First Deputy Chairwoman)
+Birgit Steinborn
+Gerhard Cromme, Dr. iur
+(Chairman)
+Supervisory Board Members
+Disclosure of participation by individual
+Supervisory Board members in meetings
+of the Supervisory Board of Siemens AG
+and its committees in fiscal 2017
+143
+Additional Information
+In fiscal 2017, the Innovation and Finance Committee comprised
+Dr. Gerhard Cromme (Chairman), Robert Kensbock, Harald Kern,
+Jürgen Kerner, Dr. Norbert Reithofer, Jim Hagemann Snabe, Birgit
+Steinborn and Werner Wenning.
+The Innovation and Finance Committee discusses, in particular,
+based on the Company's overall strategy, the Company's fo-
+cuses of innovation and prepares the Supervisory Board's discus-
+sions and resolutions regarding questions relating to the Com-
+pany's financial situation and structure including annual
+planning (budget) - as well as the Company's fixed asset invest-
+ments and its financial measures. In addition, the Innovation
+and Finance Committee has been authorized by the Supervisory
+Board to decide on the approval of transactions and measures
+that require Supervisory Board approval and have a value of less
+than €600 million.
+In fiscal 2017, the Mediation Committee comprised Dr. Gerhard
+Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
+Wenning.
+7
+In fiscal 2017, the Nominating Committee comprised Dr. Gerhard
+Cromme (Chairman), Dr. Hans Michael Gaul, Dr. Nicola Leibin-
+ger-Kammüller and Werner Wenning.
+The Nominating Committee is responsible for making recom-
+mendations to the Supervisory Board on suitable candidates for
+election by the Annual Shareholders' Meeting as shareholder
+representatives on the Supervisory Board. In preparing these rec-
+ommendations, the objectives defined by the Supervisory Board
+for its composition – in particular, independence and diversity -
+are to be appropriately considered, as are the proposed candi-
+dates' required knowledge, abilities and professional experience.
+Fulfillment of the required profile of skills and expertise is also to
+be aimed at. Attention shall be paid to an appropriate participa-
+tion of women and men in accordance with the legal require-
+ments relating to the gender quota as well as to ensuring that the
+members of the Supervisory Board are, as a group, familiar with
+the sector in which the Company operates.
+In fiscal 2017, the Compliance Committee comprised Dr. Gerhard
+Cromme (Chairman), Dr. Hans Michael Gaul, Bettina Haller, Har-
+ald Kern, Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
+Birgit Steinborn and Sibylle Wankel.
+The Compliance Committee concerns itself, in particular, with
+monitoring the Company's adherence to statutory provisions,
+official regulations and internal Company policies (compliance).
+and Committee meetings
+23
+Participation
+38
+90%
+9
+10
+Michael Diekmann
+100%
+7
+7
+Olaf Bolduan
+100%
+28
+28
+(Second Deputy Chairman)
+100%
+32
+32
+100%
+38
+Presence
+7
+Since making its last Declaration of Conformity dated Octo-
+ber 1, 2016, Siemens AG has complied with the recommen-
+dations of the Code.
+Nathalie von Siemens, Dr. phil.
+This document includes - in the applicable financial reporting
+framework not clearly defined – supplemental financial mea-
+sures that are or may be alternative performance measures
+(non-GAAP-measures). These supplemental financial measures
+should not be viewed in isolation or as alternatives to measures
+of Siemens' net assets and financial positions or results of opera-
+tions as presented in accordance with the applicable financial
+reporting framework in its Consolidated Financial Statements.
+Other companies that report or describe similarly titled alterna-
+tive performance measures may calculate them differently.
+-
+This document contains statements related to our future business
+and financial performance and future events or developments
+involving Siemens that may constitute forward-looking state-
+ments. These statements may be identified by words such as "ex-
+pect," "look forward to," "anticipate,” “intend," "plan," "believe,"
+"seek," "estimate," "will," "project" or words of similar meaning.
+We may also make forward-looking statements in other reports,
+in presentations, in material delivered to shareholders and in
+press releases. In addition, our representatives may from time to
+time make oral forward-looking statements. Such statements are
+based on the current expectations and certain assumptions of
+Siemens' management, of which many are beyond Siemens' con-
+trol. These are subject to a number of risks, uncertainties and
+factors, including, but not limited to those described in disclo-
+sures, in particular in the chapter Risks in this Annual Report.
+Should one or more of these risks or uncertainties materialize, or
+should underlying expectations not occur or assumptions prove
+incorrect, actual results, performance or achievements of Siemens
+may (negatively or positively) vary materially from those de-
+scribed explicitly or implicitly in the relevant forward-looking
+statement. Siemens neither intends, nor assumes any obligation,
+to update or revise these forward-looking statements in light of
+developments which differ from those anticipated.
+C.5 Notes and forward-looking statements
+Additional Information
+146
+The composition of the Supervisory Board fulfilled the legal re-
+quirements regarding the minimum gender quota in the report-
+ing period.
+C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
+ON THE MANAGING BOARD AND AT THE
+TWO MANAGEMENT LEVELS IMMEDIATELY
+BELOW THE MANAGING BOARD; INFORMATION
+ON SUPERVISORY BOARD COMPLIANCE WITH
+MINIMUM GENDER QUOTA REQUIREMENTS
+At Siemens AG, the target for the share of women on the Managing
+Board has been set at a minimum of 2/8, and the corresponding
+target for each of the two management levels immediately
+below the Managing Board has been set at 20%, applicable in
+each case until June 30, 2022. Due to the appointment of
+Mr. Neike and Mr. Sen to the expanded Managing Board, which
+now has eight members, the target for the Managing Board of
+2/7 until June 30, 2017 has been missed since April 1, 2017. The
+target for the share of women for each of the two management
+levels immediately below the Managing Board at 10% was ful-
+filled until June 30, 2017. Until June 30, 2017, assignments to
+those two management levels were based on a global system of
+position levels. At the end of the reporting period, the company
+completely abolished this global system of position levels. As a
+result, the management levels on which the new targets are
+based have been redefined, and the new targets are not compa-
+rable to those in effect up to June 30, 2017.
+SIEMENS.COM/289A
+This information and these documents, including the Code and
+the Business Conduct Guidelines, are available at: www.
+A general description of the functions and operation of the
+Managing Board and the Supervisory Board can be found in chapter
+→ C.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further details can
+be derived from the bylaws for the corporate bodies concerned.
+C.4.2.3 OPERATION OF THE MANAGING BOARD
+AND THE SUPERVISORY BOARD, AND COMPOSITION
+AND OPERATION OF THEIR COMMITTEES
+The Business Conduct Guidelines provide the ethical and legal
+framework within which we want to maintain our successful ac-
+tivities. They contain the basic principles and rules for our con-
+duct within our Company and in relation to our external partners
+and the general public. They set out how we meet our ethical and
+legal responsibility as a Company and give expression to our cor-
+porate values of being "Responsible" - "Excellent" - "Innovative".
+In the 170 years of its existence, our Company has built an excel-
+lent reputation around the world. Technical performance, inno-
+vation, quality, reliability, and international engagement have
+made Siemens one of the leading companies in electronics and
+electrical engineering. It is top performance with the highest eth-
+ics that has made Siemens strong. This is what the Company
+should continue to stand for in the future.
+Our Company's values and
+Business Conduct Guidelines
+145
+Additional Information
+Due to rounding, numbers presented throughout this and other
+documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+Further corporate governance practices applied beyond legal
+requirements are contained in our Business Conduct Guidelines.
+This document is an English language translation of the German
+document. In case of discrepancies, the German language docu-
+ment is the sole authoritative and universally valid version.
+The "Sustainability Information 2017" which reports on Sustain-
+ability and Citizenship at Siemens is available at:
+© 2017 by Siemens AG, Berlin and Munich
+investorrelations@siemens.com
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
++49 89 636-1332474 (Investor Relations)
+press@siemens.com
+WWW.SIEMENS.COM
+Germany
+80333 Munich
+Werner-von-Siemens-Str. 1
+Siemens AG
+E-mail
+Fax
+Phone
+Internet
+Address
+147
+Additional Information
+WWW.SIEMENS.
+COM/INVESTOR/EN/
+For technical reasons, there may be differences between the
+accounting records appearing in this document and those pub-
+lished pursuant to legal requirements.
+100%
+Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
+over offer, a management board should convene an extraordinary
+general meeting at which shareholders discuss the takeover offer
+and may decide on corporate actions. The convening of a share-
+holders' meeting - even taking into account the shortened time
+limits stipulated in the German Securities Acquisition and Take-
+over Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
+organizational challenge for large publicly listed companies. It
+appears doubtful whether the associated effort is justified in
+cases where no relevant decisions by the shareholders' meeting
+are intended. Therefore, extraordinary shareholders' meetings
+shall be convened only in appropriate cases.
+Suggestions of the Code
+WWW.SIEMENS.COM/DIRECTORS-DEALINGS
+C.4.1.3 SHARE TRANSACTIONS BY MEMBERS
+OF THE MANAGING AND SUPERVISORY BOARDS
+Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
+pean Parliament and Council on market abuse (Market Abuse
+Regulation), members of the Managing Board and the Super-
+visory Board are legally required to disclose all transactions con-
+ducted on their own account relating to the shares or debt instru-
+ments of Siemens AG or to derivatives or financial instruments
+linked thereto, if the total value of such transactions entered into
+by a board member or any closely associated person reaches or
+exceeds €5,000 in any calendar year. All transactions reported
+to Siemens AG in accordance with this requirement have been
+duly published and are available on the Company's website at:
+100%
+11
+11
+95%
+21
+22
+Sibylle Wankel
+Jim Hagemann Snabe
+100%
+7
+7
+Michael Sigmund
+100%
+7
+7
+C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
+AND INVESTOR RELATIONS
+Siemens voluntarily complies with the Code's non-binding sug-
+gestions, with the following exception:
+Shareholders exercise their rights in the Annual Shareholders'
+Meeting. An ordinary Annual Shareholders' Meeting normally
+takes place within the first four months of each fiscal year. The
+Annual Shareholders' Meeting decides, among other things, on
+the appropriation of unappropriated net income, the ratification
+of the acts of the Managing and Supervisory Boards, and the
+appointment of the independent auditors. Amendments to the
+Articles of Association and measures that change the Company's
+capital stock are approved at the Annual Shareholders' Meeting
+and are implemented by the Managing Board. The Managing
+Board facilitates shareholder participation in this meeting
+through electronic communications – in particular, via the Inter-
+net and enables shareholders who are unable to attend the
+meeting to vote by proxy. Furthermore, shareholders may exer-
+cise their right to vote in writing or by means of electronic com-
+munications (absentee voting). The Managing Board may enable
+shareholders to participate in the Annual Shareholders' Meeting
+Additional Information
+C.4.2.2 INFORMATION ON
+CORPORATE GOVERNANCE PRACTICES
+The Managing Board The Supervisory Board"
+Siemens Aktiengesellschaft
+Berlin and Munich, October 1, 2017
+In fiscal 2017, the Audit Committee comprised Dr. Hans Michael
+Gaul (Chairman), Dr. Gerhard Cromme, Bettina Haller, Robert
+Kensbock, Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim
+Hagemann Snabe and Birgit Steinborn. The members of the Audit
+Committee are, as a group, familiar with the sector in which the
+Company operates. Pursuant to the German Stock Corporation
+Act, the Audit Committee must include at least one Supervisory
+Board member with knowledge and experience in the areas of
+accounting or the auditing of financial statements. Pursuant to
+the Code, the chairman or chairwoman of the Audit Committee
+shall have specialist knowledge and experience in the application
+of accounting principles and internal control processes, shall be
+independent and may not be a former Managing Board member
+whose appointment ended less than two years ago. The Chair-
+man of the Audit Committee, Dr. Hans Michael Gaul, fulfills these
+requirements.
+Siemens AG fully complies and will continue to comply with
+the recommendations of the German Corporate Governance
+Code ("Code") in the version of February 7, 2017, published
+by the Federal Ministry of Justice in the official section of the
+Federal Gazette ("Bundesanzeiger").
+"Declaration of Conformity by the Managing Board and the
+Supervisory Board of Siemens Aktiengesellschaft with the
+German Corporate Governance Code
+THE GERMAN CORPORATE GOVERNANCE CODE
+The Managing Board and the Supervisory Board of Siemens AG
+approved the following Declaration of Conformity pursuant to
+Section 161 of the German Stock Corporation Act as of October 1,
+2017:
+C.4.2.1 DECLARATION OF CONFORMITY WITH
+The Corporate Governance statement pursuant to Sections 289 a
+and 315 para. 5 of the German Commercial Code (Handelsgesetz-
+buch) is an integral part of the Combined Management Report.
+In accordance with Section 317 para. 2 sentence 4 of the German
+Commercial Code, the disclosures made within the scope of Sec-
+tions 289 a and 315 para. 5 of the German Commercial Code are
+not subject to the audit by the auditors.
+the German Commercial Code
+C.4.2 Corporate Governance
+statement pursuant to Sections
+289 a and 315 para. 5 of
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
+Our Articles of Association, the Bylaws for the Supervisory Board,
+the Bylaws for the most important Supervisory Board commit-
+tees, the Bylaws for the Managing Board, all our Declarations of
+Conformity with the Code and a variety of other corporate-
+governance-related documents are posted on our website at:
+WWW.SIEMENS.COM/INVESTORS
+As part of our investor relations activities, we inform our investors
+comprehensively about developments within the Company. For
+communication purposes, Siemens makes extensive use of the
+Internet. We publish Quarterly Statements, Half-year Financial
+and Annual Reports, earnings releases, ad hoc announcements,
+analyst presentations, letters to shareholders and press releases
+as well as the financial calendar for the current year, which con-
+tains the publication dates of significant financial communica-
+tions and the date of the Annual Shareholders' Meeting, at:
+without the need to be present at the venue and without a proxy
+and to exercise some or all of their rights fully or partially by
+means of electronic communications. Shareholders may submit
+proposals regarding the proposals of the Managing and Supervi-
+sory Boards and may contest decisions of the Annual Sharehold-
+ers' Meeting. Shareholders owning Siemens stock with an aggre-
+gate notional value of €100,000 or more may also demand the
+judicial appointment of special auditors to examine specific is-
+sues. The reports, documents and information required by law for
+the Annual Shareholders' Meeting, including the Annual Report,
+may be downloaded from our website. The same applies to the
+agenda for the Annual Shareholders' Meeting and to any counter-
+proposals or shareholders' nominations that require disclosure.
+144
+auditors and submits the corresponding proposal to the Super-
+visory Board. It awards the audit contract to the independent
+auditors elected by the Annual Shareholders' Meeting and moni-
+tors the independent audit of the financial statements as well as
+the auditors' selection, independence, qualification, rotation and
+efficiency.
+> Siemens Healthcare GmbH, Munich
+The Audit Committee oversees, in particular, the accounting
+and the accounting process and conducts a preliminary review of
+the Annual Financial Statements of Siemens AG, the Consoli-
+dated Financial Statements of the Siemens Group and the Com-
+bined Management Report of Siemens AG and the Siemens
+Group. On the basis of the independent auditors' report on their
+audit of the annual financial statements, the Audit Committee
+makes, after its preliminary review, recommendations regarding
+Supervisory Board approval of the Annual Financial Statements
+of Siemens AG and the Consolidated Financial Statements of the
+Siemens Group. The Audit Committee discusses the Quarterly
+Statements and Half-year Financial Report with the Managing
+Board and the independent auditors and deals with the auditors'
+report on the review of the Half-year Consolidated Financial
+Statements and Interim Group Management Report. It concerns
+itself with the Company's risk monitoring system and oversees
+the effectiveness of the internal control, risk management and
+the internal audit systems. The Audit Committee receives regular
+reports from the Internal Audit Department. It prepares the
+Supervisory Board's recommendation to the Annual Share-
+holders' Meeting concerning the election of the independent
+Member since
+Treasurer and full-time member
+of the Executive Committee of
+IG Metall
+Chairman of the Siemens Europe
+Committee
+Member of the Works Council of
+Siemens Erlangen Süd, Germany
+Deputy Chairman of the Central
+Works Council of Siemens AG
+Chairwoman of the Combine Works
+Council of Siemens AG
+Trade Union Secretary of
+the Managing Board of IG Metall
+Supervisory Board Member
+January 24,
+2008
+Occupation
+Harald Kern*
+Hans-Jürgen Hartung*
+(until September 30, 2017)
+Robert Kensbock*
+Bettina Haller*
+Reinhard Hahn*
+Hans Michael Gaul, Dr. iur.
+Name
+139
+Jürgen Kerner*
+Memberships in supervisory boards whose establish-
+ment is required by law or in comparable domestic
+or foreign controlling bodies of business enterprises
+(as of September 30, 2017)
+German positions:
+> HSBC Trinkaus & Burkhardt AG, Düsseldorf
+German positions:
+Gérard Mestrallet
+Nicola Leibinger-
+Kammüller, Dr. phil.
+January 25,
+2012
+January 22,
+1969
+January 24,
+2008
+March 16,
+1960
+January 23,
+2013
+March 13,
+1971
+January 27,
+2009
+March 10,
+1952
+April 1,
+2007
+March 14,
+1959
+January 27,
+2015
+June 24,
+1956
+March 2,
+1942
+Date of birth
+> Siemens Healthcare GmbH, Munich
+Additional Information
+(Deputy Chairman)
+> Fresenius SE & Co. KGaA, Bad Homburg
+> Fresenius Management SE, Bad Homburg
+January 24,
+2008
+March 26,
+1960
+Chairman of the Supervisory Board
+of Bayer AG
+Chairwoman of the Central Works
+Council of Siemens AG
+Birgit Steinborn*
+First Deputy Chairwoman
+Werner Wenning
+Second Deputy Chairman
+Member since
+January 23,
+2003
+Date of birth
+February 25,
+1943
+Chairman of the Supervisory Board
+of Siemens AG
+Gerhard Cromme, Dr. iur.
+Chairman
+Occupation
+Name
+In fiscal 2017, the Supervisory Board comprised the following
+members:
+Members of the Supervisory Board and positions
+held by Supervisory Board members
+The Supervisory Board of Siemens AG has 20 members. As stipu-
+lated by the German Codetermination Act (Mitbestimmungs-
+gesetz), half of the members represent Company shareholders, and
+half represent Company employees. The employee representatives'
+names are marked below with an asterisk (*). In general, the terms
+of office of the current Supervisory Board members will expire at
+the conclusion of the Annual Shareholders' Meeting in 2018. The
+terms of office of Dr. Nicola Leibinger-Kammüller, Jim Hagemann
+Snabe and Werner Wenning will expire at the conclusion of the
+Annual Shareholders' Meeting in 2021. Effective from October 1,
+2017, until the end of the ordinary Annual Shareholders' Meeting
+on January 31, 2018, Dorothea Simon has been appointed by court
+order as employee representative on the Supervisory Board. She
+succeeds Hans-Jürgen Hartung, who left the Supervisory Board at
+the end of September 30, 2017. The future Supervisory Board's em-
+ployee representatives were newly elected on October 5, 2017, in
+accordance with the provisions of the German Codetermination Act
+(Mitbestimmungsgesetz). Their election will take effect at the end
+of the ordinary Annual Shareholders' Meeting on January 31, 2018.
+Information on the work of the Supervisory Board is provided in
+chapter c.3 REPORT OF THE SUPERVISORY BOARD. The curricula vitae
+of the members of the Supervisory Board are available on the
+Siemens Global Website at www.SIEMENS.COM/SUPERVISORY-
+BOARD. The compensation paid to the members of the Supervi-
+sory Board is provided in chapter → A.10 COMPENSATION REPORT.
+The Supervisory Board oversees and advises the Managing Board
+in its management of the Company's business. At regular inter-
+vals, the Supervisory Board discusses business development,
+planning, strategy and strategy implementation. It reviews the
+Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Combined
+Management Report of Siemens AG and the Siemens Group, and
+the proposal for the appropriation of net income. It approves the
+Annual Financial Statements of Siemens AG as well as the Consol-
+idated Financial Statements of the Siemens Group, based on the
+results of the preliminary review conducted by the Audit Commit-
+tee and taking into account the reports of the independent audi-
+tors. The Supervisory Board decides on the Managing Board's
+proposal for the appropriation of net income and the Report of
+the Supervisory Board to the Annual Shareholders' Meeting. In
+addition, the Supervisory Board or the Compliance Committee,
+which is described in more detail below, concern themselves with
+monitoring the Company's adherence to statutory provisions, of-
+ficial regulations and internal Company policies (compliance). The
+Supervisory Board also appoints the members of the Managing
+Board and determines each member's portfolios. Important
+Managing Board decisions – such as those regarding major acqui-
+sitions, divestments, fixed asset investments or financial meas-
+ures - require Supervisory Board approval, unless the Bylaws for
+the Supervisory Board specify that such authority be delegated to
+the Innovation and Finance Committee of the Supervisory Board.
+In the Bylaws for the Managing Board, the Supervisory Board has
+established the rules that govern the Managing Board's work.
+C.4.1.2 SUPERVISORY BOARD
+October 21,
+1946
+Norbert Reithofer, Dr.-Ing.
+Dr.-Ing. E.h.
+January 23,
+2013
+Chairman of the Works Council
+of Siemens Dynamowerk, Berlin,
+Germany
+(Deputy Chairman)
+> BASF SE, Ludwigshafen am Rhein
+> Allianz SE, Munich (Chairman)
+German positions:
+December 23, January 24,
+1954
+2008
+> Henkel Management AG, Düsseldorf
+➤ Bayer AG, Leverkusen (Chairman)
+> Henkel AG & Co. KGaA, Düsseldorf¹
+German positions:
+> ODDO BHF SCA, France (Co-Chairman)
+> AUTO1 N.V., Netherlands (Chairman)
+Positions outside Germany:
+Memberships in supervisory boards whose establish-
+ment is required by law or in comparable domestic
+or foreign controlling bodies of business enterprises
+(as of September 30, 2017)
+1 Shareholders' Committee.
+Chairman of the Supervisory Board
+of Allianz SE
+Michael Diekmann
+July 11,
+2014
+July 24,
+1952
+Olaf Bolduan*
+Güler Sabancı
+Nathalie von Siemens,
+Dr. phil.
+President and Chairwoman of the
+Managing Board of TRUMPF GmbH
++ Co. KG
+Internationality
+When a new member is to be appointed, a review shall be per-
+formed to determine which of the areas of expertise deemed
+desirable for the Supervisory Board are to be strengthened.
+The goal is to ensure that, in the Supervisory Board, as a group,
+all knowhow and experience is available that is considered essen-
+tial in view of Siemens' activities. This includes, for instance,
+knowledge and experience in the areas of technology (including
+information technology and digitalization), procurement, manu-
+facturing and sales, finance, law (including compliance) and hu-
+man resources. In addition, the members of the Supervisory
+Board shall collectively have knowledge and experience in the
+business areas that are important for Siemens, in particular in the
+areas of industry, energy, healthcare and infrastructure. As a
+group, the members of the Supervisory Board are to be familiar
+with the sector in which the Company operates. At least one in-
+dependent member of the Supervisory Board shall have knowl-
+edge and expertise in the areas of accounting or the auditing of
+financial statements and specific knowledge and experience in
+applying accounting principles and internal control processes.
+In particular, the Supervisory Board shall also include members
+who have leadership experience as senior executives or members
+of a supervisory board (or comparable body) at a major company
+with international operations.
+The candidates proposed for election to the Supervisory Board
+shall have the knowledge, skills and experience necessary to
+carry out the functions of a Supervisory Board member in a mul-
+tinational company and safeguard the reputation of Siemens in
+public. In particular, care shall be taken in regard to the person-
+ality, integrity, commitment and professionalism of the individu-
+als proposed for election.
+Profile of required skills and expertise
+On September 20, 2017, the Supervisory Board - taking into ac-
+count the recommendations of the German Corporate Gover-
+nance Code (Code) - newly approved the objectives of its com-
+position, including a profile of the skills and expertise that the
+Supervisory Board should possess. The composition of the Super-
+visory Board of Siemens AG shall be such that qualified control
+and advice for the Managing Board is ensured.
+Objectives of the Supervisory Board's
+composition and profile of required skills
+and expertise of the Supervisory Board
+> Daimler AG, Stuttgart
+German positions:
+> A.P. Møller-Mærsk A/S, Denmark (Chairman)
+Positions outside Germany:
+> Allianz SE, Munich
+German positions:
+German positions:
+> Siemens Healthcare GmbH, Munich
+140 Additional Information
+1 Shareholders' Committee.
+Taking the Company's international orientation into account,
+care shall be taken to ensure that the Supervisory Board has an
+adequate number of members with extensive international expe-
+rience. The goal is to make sure that the present considerable
+share of Supervisory Board members with extensive international
+experience is maintained.
+April 1,
+2009
+Diversity
+In accordance with the German Law for Equal Participation of
+Women and Men in Management Positions in the Private and
+Public Sectors (Gesetz für die gleichberechtigte Teilhabe von
+Frauen und Männern an Führungspositionen in der Privatwirt-
+schaft und im öffentlichen Dienst), the Supervisory Board is com-
+posed of at least 30 percent women and at least 30 percent men.
+The Nominating Committee shall continue to include at least one
+female member.
+In fiscal 2017, the Compensation Committee comprised Werner
+Wenning (Chairman), Dr. Gerhard Cromme, Michael Diekmann,
+Robert Kensbock, Jürgen Kerner and Birgit Steinborn.
+The Compensation Committee prepares, in particular, the pro-
+posals for decisions by the Supervisory Board's plenary meetings
+regarding the system of Managing Board compensation, includ-
+ing the implementation of this system in Managing Board con-
+tracts, the definition of the targets for variable Managing Board
+compensation, the determination and review of the appropriate-
+ness of the total compensation of individual Managing Board
+members and the approval of the annual Compensation Report.
+In fiscal 2017, the Chairman's Committee comprised Dr. Gerhard
+Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
+Wenning.
+of women on the Managing Board specified by the Supervisory
+Board. The Chairman's Committee concerns itself with questions
+regarding the Company's corporate governance and prepares the
+resolutions to be approved by the Supervisory Board regarding
+the Declaration of Conformity with the Code - including the ex-
+planation of deviations from the Code - and regarding the ap-
+proval of the Corporate Governance Report as well as the Report
+of the Supervisory Board to the Annual Shareholders' Meeting.
+Furthermore, the Chairman's Committee submits recommenda-
+tions to the Supervisory Board regarding the composition of the
+Supervisory Board committees and decides whether to approve
+contracts and business transactions with Managing Board mem-
+bers and parties related to them.
+The Chairman's Committee makes proposals, in particular, re-
+garding the appointment and dismissal of Managing Board mem-
+bers and handles contracts with members of the Managing
+Board. When making recommendations for first-time appoint-
+ments, it takes into account that the terms of these appoint-
+ments shall not, as a rule, exceed three years. In preparing rec-
+ommendations on the appointment of Managing Board
+members, the Chairman's Committee takes into account the
+candidates' professional qualifications, international experience
+and leadership qualities, the age limit specified for Managing
+Board members, the long-range plans for succession as well as
+diversity. It also takes into account the targets for the proportion
+The Supervisory Board has seven committees, whose duties,
+responsibilities and procedures fulfill the requirements of the
+German Stock Corporation Act (Aktiengesetz) and the Code. The
+chairmen of these committees provide the Supervisory Board
+with regular reports on their committees' activities.
+Supervisory Board Committees
+The Supervisory Board also has an adequate number of indepen-
+dent members. In the opinion of the Supervisory Board, there are
+currently at least 17 Supervisory Board members who are indepen-
+dent in the meaning of Section 5.4.2 of the Code. Of these inde-
+pendent members, at least seven - namely, Michael Diekmann,
+Dr. Hans Michael Gaul, Gérard Mestrallet, Dr. Norbert Reithofer,
+Güler Sabancı, Jim Hagemann Snabe and Werner Wenning - are
+shareholder representatives. The regulations establishing limits
+on age and limiting membership in the Supervisory Board to three
+full terms of office (15 years) are complied with.
+With its current membership, the Supervisory Board meets all the
+above-mentioned objectives for its composition and fulfills the
+profile of required skills and expertise. The Supervisory Board
+members have the specialist and personal qualifications consid-
+ered necessary. As a group, they are familiar with the sector in
+which the Company operates and have the knowledge, skills and
+experience essential for Siemens. A considerable number of Super-
+visory Board members are engaged in international activities
+and/or have many years of international experience. Appropriate
+consideration has been given to diversity in the Supervisory
+Board. In fiscal 2017, the Supervisory Board had six female mem-
+bers. Since October 1, 2017, it has had seven female members,
+of whom three are shareholder representatives and four are em-
+ployee representatives. The mandatory minimum quota stipu-
+lated in Section 96, para. 2, sent. 1 of the German Stock Corpo-
+ration Act (Aktiengesetz) has therefore been met. Dr. Nicola
+Leibinger-Kammüller is a member of the Nominating Committee.
+Status of implementation of the objectives of the
+Supervisory Board's composition and profile of
+required skills and expertise; independent Super-
+visory Board members
+Additional Information 141
+In compliance with the age limit stipulated by the Supervisory
+Board in its Bylaws, only individuals who are no older than
+70 years of age shall, as a rule, be nominated for election to the
+Supervisory Board. Nominations shall take into account the reg-
+ular limit established by the Supervisory Board, which restricts
+membership on the Supervisory Board to a maximum of three
+full terms of office (15 years). The aim is to ensure that the
+Supervisory Board has an appropriate age structure and range of
+experience.
+Limits on age and on length of membership
+The Supervisory Board members shall have sufficient time to be
+able to exercise their mandates with the necessary regularity and
+diligence.
+No more than two former members of the Managing Board of
+Siemens AG shall belong to the Supervisory Board.
+An adequate number of independent members shall belong to
+the Supervisory Board. Material and not merely temporary con-
+flicts of interest, such as governing or advisory body functions at
+major competitors of the Company shall be avoided. Under the
+presumption that the mere exercise of Supervisory Board duties
+as an employee representative gives no cause to doubt compli-
+ance with the independence criteria pursuant to Section 5.4.2 of
+the Code, the Supervisory Board shall have a minimum of sixteen
+members who are independent in the meaning of the Code. In
+any case, the Supervisory Board shall be composed in such a way
+that a number of at least six independent shareholder represen-
+tatives in the meaning of Section 5.4.2 of the Code is achieved.
+Independence
+With regard to the composition of the Supervisory Board, atten-
+tion shall be paid to achieving sufficient diversity. Not only is
+appropriate consideration to be given to women. Diversity of
+cultural heritage, religion and ethnic background and a wide
+range of different professional backgrounds, experiences and
+ways of thinking are also to be promoted. When considering pos-
+sible candidates for new elections or for filling Supervisory Board
+positions that have become vacant, the Supervisory Board shall
+give appropriate consideration to diversity at an early stage in the
+selection process.
+142 Additional Information
+March 3,
+1964
+Sibylle Wankel*
+> ENGIE S.A., France (Chairman)
+> Société Générale S.A., France
+> Voith GmbH, Heidenheim
+Positions outside Germany:
+> Axel Springer SE, Berlin
+German positions:
+> Premium Aerotec GmbH, Augsburg
+(Deputy Chairman)
+> MAN SE, Munich (Deputy Chairman)
+> Airbus Operations GmbH, Hamburg
+> MAN Diesel & Turbo SE, Augsburg
+> Suez S.A., France (Chairman)
+German positions:
+German positions:
+Chairwoman and Managing Director
+of Hacı Ömer Sabancı Holding A.Ş.
+Managing Director and Spokesperson
+of Siemens Stiftung
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+January 23,
+2013
+April 1,
+1949
+Chairman of the Board of Directors
+of ENGIE S.A.
+2008
+December 15, January 24,
+1959
+May 29,
+1956
+General Counsel, Managing Board
+of IG Metall
+➤ Bayerische Motoren Werke
+> Henkel AG & Co. KGaA, Düsseldorf¹
+October 1,
+2013
+October 27,
+1965
+Chairman of the Board of Directors
+of A.P. Møller-Mærsk A/S
+October 1,
+2017
+August 3,
+1969
+Chairwoman of the Central Works
+Council of Siemens Healthcare GmbH
+September 13, March 1,
+1957
+2014
+Jim Hagemann Snabe
+Aktiengesellschaft, Munich (Chairman)
+January 27,
+2015
+Chairman of the Committee
+of Spokespersons of the Siemens
+Group; Chairman of the Central
+Committee of Spokespersons
+of Siemens AG
+Michael Sigmund*
+> Messer Group GmbH, Sulzbach
+German positions:
+January 27,
+2015
+July 14,
+1971
+January 23,
+2013
+August 14,
+1955
+Dorothea Simon*
+(since October 1, 2017)
+siemens.com
+Order no. CGXX-C10029-00-7600
+Combined Management Report
+Other liabilities
+Other financial liabilities
+(10)%
+5,087
+4,579
+Provisions
+93%
+829
+1,599
+Deferred tax liabilities
+(30)%
+13,695
+9,582
+Provisions for pensions and similar obligations
+8%
+24,761
+26,777
+Long-term debt
+1%
+42,916
+43,394
+Total non-current liabilities
+Total liabilities
+Debt ratio
+902
+28%
+33%
+26%
+34,211
+43,089
+Total liabilities and equity
+Non-controlling interests
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+72%
+13,943
+22,921 24,794
+Total current liabilities
+67%
+90,901
+89,278
+(4)%
+47,986
+45,884
+(1)%
+2,471
+2,445
+(21)%
+1,142
+(2)%
+139%
+40
+97
+2016
+2017
+(in millions of €)
+Sep 30,
+Our capital structure developed as follows:
+A.5.1 Capital structure
+A.5 Financial position
+17
+Combined Management Report
+Deferred tax assets decreased mainly due to income tax effects
+related to remeasurement of defined benefits plans.
+% Change
+Assets classified as held for disposal increased mainly due to
+reclassification of shares in OSRAM Licht AG (OSRAM) in an
+amount of €1.2 billion from other financial assets.
+In fiscal 2017, the acquisition of Mentor Graphics and the merger
+with Gamesa were the major factors related to the increase in
+trade and other receivables, partly offset by the Power and Gas
+Division due to declining business volume. While these transac-
+tions were also the largest factors for the increased goodwill and
+other intangible assets, the increase in inventories was mainly
+driven by the merger with Gamesa.
+Our total assets in fiscal 2017 were influenced by negative cur-
+rency translation effects of €4.7 billion, led by the U.S. dollar.
+6%
+125,717
+133,804
+17%
+7%
+70,388
+75,375
+1,279
+1,498
+The increase in other current financial assets was driven by
+higher loans receivable at SFS, which were mainly due to new
+business and reclassification of non-current loans receivable.
+1,438
+133,804
+Short-term debt and current maturities of long-term debt
+6,206
+Liabilities associated with assets classified as held for disposal
+(2)%
+20,437
+20,049
+Other current liabilities
+13%
+2,085
+2,355
+Current income tax liabilities
+2%
+5,447
+4,166
+Current provisions
+(25)%
+1,933
+1,444
+Other current financial liabilities
+21%
+8,048
+9,755
+Trade payables
+(12)%
+4,247
+(33)%
+605
+125,717
+(129)
+(156)
+(I) Income before interest after tax
+6,479
+5,949
+47,836
+2,490
+13.5%
+14.3%
+(II) Average capital employed
+(1)/(II) ROCE
+1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
+debt, and related hedging activities, as well as interest income on corporate assets.
+For purposes of calculating ROCE in interim periods, income be-
+fore interest after tax is annualized. Average capital employed is
+determined using the average of the respective balances as of
+the quarterly reporting dates in the period under review.
+Calculation of capital employed
+Total equity
+Plus: Long-term debt
+Plus: Short-term debt and current maturities of long-term debt
+Less: Cash and cash equivalents
+Less: Current available-for-sale financial assets
+Plus: Post-employment benefits
+Less: SFS Debt
+Less: Fair value hedge accounting adjustment
+Plus: Adjustments from assets classified as held for disposal and
+liabilities associated with assets classified as held for disposal
+Less: Adjustment for deferred taxes on net accumulated
+actuarial gains/losses on post-employment benefits
+Capital employed (continuing and discontinued operations)
+(tax rate (flat) 30%)
+Less: Taxes on interest adjustments
+The proposed dividend of €3.70 per share for fiscal 2017 repre-
+sents a total payout of €3.0 billion based on the estimated
+number of shares entitled to dividend at the date of the Annual
+Shareholders' Meeting. Based on net income of €6.2 billion for
+fiscal 2017, the dividend payout percentage is 49%.
+At the Annual Shareholders' Meeting, the Managing Board, in
+agreement with the Supervisory Board, will submit the follow-
+ing proposal to allocate the unappropriated net income of
+Siemens AG for fiscal 2017: to distribute a dividend of €3.70 on
+each share of no par value entitled to the dividend for fiscal year
+2017 existing at the date of the Annual Shareholders' Meeting,
+with the remaining amount to be carried forward. Payment of the
+proposed dividend is contingent upon approval by Siemens
+shareholders at the Annual Shareholders' Meeting on January 31,
+2018. The prior-year dividend was €3.60 per share.
+Within the framework of One Siemens, we seek to work profit-
+ably and as efficiently as possible with the capital provided by our
+shareholders and lenders. For purposes of managing and con-
+trolling our capital efficiency, we use return on capital employed,
+or ROCE, as our primary measure. We aim to achieve ROCE within
+a range of 15% to 20%.
+Combined Management Report 9
+A.2.4 Capital structure
+Sustainable revenue and profit development is supported by a
+healthy capital structure. Accordingly, a key consideration within
+the framework of One Siemens is to maintain ready access to the
+capital markets through various debt products and preserve our
+ability to repay and service our debt obligations over time. Our
+primary measure for managing and controlling our capital struc-
+ture is the ratio of industrial net debt to EBITDA. This financial
+measure indicates the approximate amount of time in years that
+would be needed to cover industrial net debt through income
+from continuing operations, without taking into account inter-
+est, taxes, depreciation and amortization. We aim to achieve a
+ratio of up to 1.0.
+A.2.6 Calculation of return
+on capital employed
+Calculation of ROCE
+(in millions of €)
+Net income
+Less: Other interest expenses/income, net'
+Plus: SFS Other interest expenses/income
+Plus: Net interest expenses from
+post-employment benefits
+Less: Interest adjustments
+(discontinued operations)
+Fiscal year
+10
+2017
+6,179
+5,584
+(568)
+(544)
+799
+784
+198
+282
+A.2.5 Dividend
+We intend to continue providing an attractive return to our share-
+holders. Therefore, we intend to propose a dividend whose dis-
+tribution volume is within a dividend payout range of 40% to
+60% of net income, which we may adjust for this purpose to ex-
+clude selected exceptional non-cash effects. As in the past, we
+intend to fund the dividend payout from Free cash flow.
+2016
+Combined Management Report
+A.3 Results of operations
+A.3.1 Orders and revenue by region
+43,367
+11,142
+23,516 22,707
+41,819
+4%
+4%
+10,739
+4%
+2%
+4%
+(1)%
+therein: Germany
+Americas
+Americas
+18
+The increase in non-controlling interests was due mainly to
+the merger with Gamesa.
+The main factors for the change in total equity attributable to
+shareholders of Siemens AG were €6.0 billion in net income
+attributable to shareholders of Siemens AG, €2.5 billion in other
+comprehensive income, net of income taxes, mainly due to
+remeasurements of defined benefit plans, and €2.5 billion in
+changes in equity resulting from the merger with Gamesa. This
+increase was partly offset by dividend payments of €2.9 billion
+(for fiscal 2016).
+-
+The merger with Gamesa and the acquisition of Mentor Graphics
+were the primary factors in the increase in deferred tax liabili-
+ties. While the merger with Gamesa also brought substantial
+new provisions, this effect was more than offset by positive
+factors mainly related to a major asset retirement obligation -
+resulting in a net decrease.
+Provisions for pensions and similar obligations fell on a reduc-
+tion of Siemens' defined benefit obligation (DBO) mainly due to
+increased discount rate assumptions.
+Long-term debt increased mainly due to the issuance of fixed-/
+floating-rate instruments totaling US$7.5 billion (€7.0 billion)
+in seven tranches with different maturities of up to 30 years.
+This was partly offset by the above mentioned reclassifications to
+short-term debt and current maturities of long-term debt.
+The increase in trade payables was due mainly to the merger
+with Gamesa.
+The decrease in short-term debt and current maturities of
+long-term debt was due mainly to the repayment of fixed-rate
+instruments totaling €4.9 billion. This was partly offset by reclas-
+sifications of long-term fixed-/floating-rate instruments totaling
+€3.7 billion.
+6%
+3%
+138%
+(2)%
+46,185
+Negative currency translation effects took one percentage point
+each from order development and revenue growth; portfolio
+transactions, primarily the merger of the wind power business
+with Gamesa and the acquisition of Mentor Graphics, added two
+percentage points to order development and three percentage
+points to revenue growth. The resulting ratio of orders to revenue
+(book-to-bill) for Siemens in fiscal 2017 was 1.03.
+Orders were up significantly in the Asia, Australia region due to
+growth in all industrial businesses other than Power and Gas, with
+SGRE and Digital Factory recording the largest increases. A num-
+ber of countries within the region posted significant growth.
+China posted the largest increase, with order growth at Digital
+Factory, SGRE and Process Industries and Drives partly offset by a
+substantial decline in Energy Management.
+Revenue (location of customer)
+Orders (location of customer)
+(in millions of €)
+Fiscal year
+% Change
+2017
+2016
+Actual
+(2)%
+Comp.
+2017
+Fiscal year
+2016
+% Change
+Europe, C.I.S., Africa,
+Middle East
+Actual
+Comp.
+Europe, C.I.S., Africa,
+therein: Germany
+Middle East
+45,048
+(in millions of €)
+To emphasize and evaluate our continuous efforts to improve
+productivity, we incorporated a measure called total cost produc-
+tivity into our One Siemens framework. We define this measure
+as the ratio of cost savings from defined productivity improve-
+ment measures to the aggregate of functional costs for the
+Siemens Group. We aim to achieve an annual value of 3% to 5%
+for total cost productivity.
+3,431
+Total assets
+Siemens Gamesa Renewable Energy
+Healthineers
+Process Industries and Drives
+Digital Factory
+Mobility
+Building Technologies
+Energy Management
+(15)%
+1,872
+1,591
+Power and Gas
+% Change
+2016
+2017
+(in millions of €, earnings per share in €)
+Fiscal year
+A.3.3 Income
+15
+Combined Management Report
+The positive swing at Centrally managed portfolio activities
+(CMPA) related primarily to the measurement of a major asset
+retirement obligation, including a net gain of €364 million result-
+ing from interest rate effects and €312 million attributable mainly
+to a reduced expected inflation rate. These positive effects were
+partly offset by higher losses from at-equity investments includ-
+ing a €230 million impairment of Siemens' stake in Primetals
+Technologies Ltd. in fiscal 2017, related to continuing adverse
+conditions in the market environment. Additionally in the current
+(1,994)
+Industrial Business
+932
+895
+4%
+Profit margin Industrial Business
+8%
+8,744
+9,453
+(27)%
+464
+338
+7%
+2,325
+2,490
+(1,785)
+81%
+440
+26%
+1,690
+2,135
+10%
+678
+743
+36%
+577
+784
+243
+(349)
+(323)
+(674)
+26,390
+2017
+Sep 30,
+2016
+Total assets
+(in millions of €)
+653
+21.6%
+19.9%
+ROE (after taxes)
+639
+Income before income taxes
+26,446
+2017
+2016
+Fiscal year
+A.3.2.9 FINANCIAL SERVICES
+Combined Management Report
+Order intake grew moderately on increases in a majority of the
+businesses, led by the diagnostic imaging business. On a re-
+gional basis, Europe, C.I.S., Africa and Middle East posted the
+highest increase, followed by growth in Asia, Australia, driven by
+China. Revenue was also up in a majority of the businesses,
+again led by the diagnostic imaging business. On a geographic
+basis, China accounted for more than half of the revenue in-
+crease year-over-year. Profit growth was driven by the diagnostic
+17.2%
+18.1%
+Profit margin
+7%
+2,325
+(in millions of €)
+11.2%
+Financial Services (SFS) again delivered strong earnings includ-
+ing lower credit hits. Within the equity business, the current year
+included a gain from the sale of SFS's stake in an offshore wind-
+farm project, while the prior year included a larger positive ef-
+fect, €92 million, resulting from an at-equity investment. Despite
+growth in new business, total assets were on the level of the end
+of fiscal 2016, due mainly to substantial early terminations of fi-
+nancings along with negative currency translation effects.
+CONSOLIDATED FINANCIAL STATEMENTS
+(1,016)
+Amortization of intangible assets
+acquired in business combinations
+Eliminations, Corporate Treasury
+and other reconciling items
+Reconciliation to Consolidated
+Financial Statements
+(439)
+(407)
+Centrally carried pension expense
+(449)
+(714)
+Corporate items
+132
+187
+A.3.2.10 RECONCILIATION TO
+Siemens Real Estate
+488
+Centrally managed portfolio activities
+2016
+2017
+(in millions of €)
+Fiscal year
+Profit
+The increase of Amortization of intangible assets acquired in
+business combinations related mainly to the merger with
+Gamesa and the acquisition of Mentor Graphics.
+Corporate items were influenced by a number of factors, includ-
+ing severance charges of €71 million (€43 million in fiscal 2016)
+for corporate reorganization of support functions as well as ex-
+penses in connection with creation of next47 beginning in Octo-
+ber 2016.
+period we recorded gains from reversals of provisions for guaran-
+tees related to a previous divestment. Effective with the begin-
+ning of fiscal 2018, CMPA includes the Olkiluoto project in Finland
+which was formerly part of Power and Gas.
+(215)
+2,297
+10.8%
+639
+190
+1,482
+22%
+1,204
+1,467
+39%
+790
+1,098
+10%
+18,160
+19,942
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Current income tax assets
+Inventories
+13%
+6,800
+7,664
+Other current financial assets
+> 200%
+58,429
+55,329
+6%
+Total non-current assets
+Other assets
+Deferred tax assets
+(8)%
+20,610
+19,044
+Other financial assets
+(9)%
+3,012
+2,727
+5%
+Investments accounted for using the equity method
+10,157
+10,977
+Property, plant and equipment
+41%
+7,742
+10,926
+Other intangible assets
+16%
+24,159
+27,906
+8%
+16,287
+17,160
+Trade and other receivables
+(72)%
+188
+53
+Income from discontinued operations, net of income taxes
+Net income
+14%
+5,396
+6,126
+Income from continuing operations
+(9)%
+(2,008)
+6,179
+(2,180)
+12%
+7,404
+8,306
+Income from continuing operations before income taxes
+10%
+(1,994)
+(1,785)
+Reconciliation to Consolidated Financial Statements
+(2)%
+653
+Income tax expenses
+Financial Services (SFS)
+5,584
+Basic earnings per share
+ROCE
+(4)%
+1,293
+1,242
+Available-for-sale financial assets
+(21)%
+10,604
+8,375
+Cash and cash equivalents
+% Change
+Sep 30,
+2016
+11%
+2017
+A.4 Net assets position
+Combined Management Report
+16
+The increase in Basic earnings per share reflects the higher net
+income compared to fiscal 2016, while the weighted average
+number of shares outstanding increased slightly year-over-year.
+At 13.5%, ROCE was below the range established in our One
+Siemens financial framework, as expected. The decline year-over-
+year was due primarily to the merger with Gamesa and the acqui-
+sition of Mentor Graphics, which led to a significant increase in
+average capital employed (the denominator for ROCE). Net in-
+come, the main component for the numerator, was also nega-
+tively affected by burdens related to these transactions.
+Income from discontinued operations, net of income taxes
+was sharply lower compared to the prior year. In fiscal 2016, it
+primarily included a gain of €102 million from the sale of the re-
+maining assets in the hearing aid business and €76 million re-
+lated to the former Siemens IT Solutions and Services activities.
+The tax rate for fiscal 2017 was 26%, positively influenced by uti-
+lization of previously impaired tax loss carryforwards and by de-
+cisions arising from tax audits. The tax rate 27% in the prior year
+was positively influenced by successful appeals of tax decisions
+for prior years. As a result, Income from continuing operations
+increased 14%.
+As a result of the development described for the segments,
+Income from continuing operations before income taxes
+increased 12%. This amount also included higher expenses - as
+planned - for selling and R&D, primarily at Digital Factory and
+Healthineers, as we continued targeted investments aimed at
+organic volume growth and strengthening our capacities for in-
+novation, such as for MindSphere at Digital Factory and Atellica
+at Healthineers. Severance charges for continuing operations
+were €466 million, of which €385 million were in the Industrial
+Business. In fiscal 2016, severance charges for continuing opera-
+tions were €598 million, of which €541 million were in the Indus-
+trial Business.
+10%
+6.74
+14.3%
+7.44
+13.5%
+(in millions of €)
+For purposes of managing and controlling profitability at the
+Group level, we use net income as our primary measure. This mea-
+sure is the main driver of basic earnings per share (EPS) from net
+income, which we use in communication to the capital markets.
+41,573
+15-20%
+8,963
+7,875
+Revenue
+8,099
+7,825
+Profit
+743
+678
+Actual
+14%
+4%
+10%
+Profit margin
+9.2%
+Orders
+8.7%
+Order growth at Mobility was driven primarily by the rolling stock
+business and supported by a higher volume from large orders.
+The current period included a number of significant contract
+wins in all three reporting regions, most notably in the region
+Europe, C.I.S. Africa, Middle East region, including an order for
+commuter rail and an order for a driverless metro, both in Austria,
+and large orders for the Division's new commuter rail platform
+Mireo in Germany. In the Asia, Australia region, the Division won
+a large turnkey project for the extension of a rapid transit system
+in Thailand. The largest contract wins in fiscal 2016 included an
+order for light rail vehicles in the U.S., a commuter rail contract
+in Germany and a rail automation order in Algeria. While revenue
+in the rolling stock business declined in the first half of the fiscal
+year due mainly to timing factors related to large rail projects,
+Mobility successfully executed on its large rolling stock and loco-
+motive orders, resulting in double-digit revenue growth in the
+rolling stock business in the second half. The Division's rail infra-
+structure business also contributed to revenue growth for the
+whole fiscal year. On a geographic basis, revenue increases in
+Europe, C.I.S., Africa, Middle East and the Americas more than
+offset a decline in Asia, Australia, which reported a sharp drop in
+China. Profit improved in the majority of the businesses, driven
+by higher revenue and successful project execution. The increase
+in severance charges, which were €46 million in the current pe-
+riod up from €16 million a year earlier, was largely offset by a
+€28 million gain related to pension plan amendments.
+A.3.2.5 DIGITAL FACTORY
+(in millions of €)
+Orders
+2017
+Fiscal year
+2016
+Actual
+% Change
+Comp.
+11,532
+10,332
+12%
+% Change
+Comp.
+16%
+6%
+8%
+Fiscal year
+2016
+(in millions of €)
+(in millions of €)
+2017
+2016
+Actual
+Orders
+6,913
+6,435
+7%
+Revenue
+6,523
+6,156
+2017
+Profit
+577
+6%
+36%
+Profit margin
+12.0%
+9.4%
+% Change
+Comp.
+8%
+7%
+Successfully executing its growth initiatives in both the regions
+and across its businesses, Building Technologies increased orders
+and revenue and grew faster than its market and major compet-
+itors. On a geographic basis, orders and revenue were up in all
+three reporting regions with the strongest growth contribution
+coming from the U.S. Profit and profitability increased due mainly
+to higher revenue and improvements in productivity. Profit devel-
+opment in fiscal 2017 benefited from a €94 million gain related
+to pension plan amendments. Severance charges were similar in
+both periods, at €18 million in fiscal 2017 and €16 million a year
+earlier.
+A.3.2.4 MOBILITY
+784
+Revenue
+11,378
+10,172
+9,038
+(2)%
+(1)%
+Profit
+440
+243
+81%
+Profit margin
+5.0%
+2.7%
+Orders for Process Industries and Drives increased slightly, as
+growth in the process automation and solution businesses and
+stabilization in demand for the Division's offerings in oil and gas
+and other commodity-related markets towards the end of the
+fiscal year more than offset a decline in demand for wind power
+components during the course of fiscal 2017. A decline in reve-
+nue in the solutions and the large drives businesses more than
+offset revenue growth in the process automation business. On a
+geographic basis, order growth came mainly from China, while
+the decline in revenue was due to the Americas region. Profit for
+the Division increased due primarily to sharply lower severance
+charges year-over-year, which were €48 million in fiscal 2017,
+down from €254 million in fiscal 2016. Within the Division's busi-
+nesses, the process automation business showed a strong oper-
+ating performance. Overall, profit and profitability for the Divi-
+sion were held back by ongoing operational challenges,
+particularly in the large drives business, and by charges related
+to capacity adjustments.
+8,876
+In line with common practice in the financial services business,
+our financial indicator for measuring capital efficiency at the Fi-
+nancial Services Division (SFS) is return on equity after tax, or
+ROE after tax. ROE is defined as SFS' profit after tax, divided by
+the Division's average allocated equity.
+% Change
+(in millions of €)
+Orders
+2017
+2016
+Actual
+Comp.
+8,768
+7,973
+10%
+(2)%
+Revenue
+Profit
+Profit margin
+Fiscal year
+Revenue
+2%
+1%
+12%
+9%
+Profit
+Profit margin
+2,135
+1,690
+26%
+18.8%
+16.6%
+In a more favorable market environment, Digital Factory in-
+creased order intake and revenue in all its businesses year-over-
+year. Improvements in the market conditions were most notable
+in the automotive and the machine building industries, support-
+ing an excellent performance by the Division's short-cycle busi-
+nesses, which expanded their leading market positions during
+the fiscal year. Orders and revenue in the product lifecycle man-
+agement software (PLM) business grew substantially due to
+strong demand combined with new volume resulting from the
+acquisition of Mentor Graphics at the end of the second quarter
+of fiscal 2017. On a geographic basis, orders and revenue were up
+in all reporting regions, with the strongest increase from Asia,
+Australia, particularly including China. The Division's profit im-
+provement was driven by the short-cycle businesses. Profit in the
+PLM business was held back by ongoing expenses related to fur-
+ther advancing Siemens' MindSphere platform. Furthermore, the
+business' profitability was impacted by deferred revenue adjust-
+ments and transaction and integration costs related to the acqui-
+sition of Mentor Graphics, totaling €104 million. In fiscal 2016,
+deferred revenue adjustments and transaction and integration
+costs related to the acquisition of CD-adapco totaled €43 million.
+Profit for the Division benefited from a gain of €175 million re-
+lated to the eCar business, which Digital Factory contributed to
+the joint venture Valeo Siemens eAutomotive. This positive effect
+was partly offset by higher severance charges, which increased
+to €134 million in fiscal 2017, up from €49 million in fiscal 2016.
+Combined Management Report
+13
+14
+A.3.2.6 PROCESS INDUSTRIES AND DRIVES
+% Change
+imaging business, which continued to account for the largest
+share of Healthineers profit overall, and by the advanced thera-
+pies business. Profit benefited from currency tailwinds in both
+periods. Severance charges were €57 million in fiscal 2017 and
+€61 million in fiscal 2016.
+A.3.2.8 SIEMENS GAMESA RENEWABLE ENERGY
+Fiscal year
+(in millions of €)
+2017
+2016
+Actual
+Comp.
+Orders
+9,034
+8,939
+Fiscal year
+A.3.2.3 BUILDING TECHNOLOGIES
+12 Combined Management Report
+Orders grew moderately year-over-year, due mainly to a higher
+volume from large orders in the solutions business, including an
+order totaling €0.8 billion for an offshore grid connection project
+in Germany, an order totaling €0.6 billion for substations in Qatar
+and a high-voltage direct current (HVDC) order totaling €0.4 bil-
+lion in India. The medium voltage and systems business and the
+low voltage and products business also posted higher orders
+year-over-year. These increases were partly offset by declines in
+the Division's other businesses. On a regional basis, orders were
+up in all three reporting regions, predominantly in Europe, C.I.S.,
+Africa, Middle East. Revenue was also up moderately with most
+of the Division's businesses recording moderate to clear in-
+creases. On a regional basis, revenue increased in all three re-
+porting regions, with significant growth in Asia, Australia. All of
+the Division's businesses delivered a positive contribution to
+profit, benefiting from lower severance charges that were
+€39 million and €71 million in fiscal 2017 and fiscal 2016, respec-
+tively. The high voltage products and transformer businesses
+showed significant improvement year-over-year.
+83,049
+79,644
+4%
+3%
+therein: China
+Siemens
+7,484
+85,669
+6,850
+86,480
+9%
+10%
+therein: emerging
+Siemens
+markets¹
+27,195
+5%
+3%
+(1)%
+(2)%
+therein: emerging
+markets¹
+27,239 30,448 (11)%
+(11)%
+1 As defined by the International Monetary Fund.
+1 As defined by the International Monetary Fund.
+Orders related to external customers came in only slightly below
+the high level a year ago despite substantial, ongoing contraction
+in markets for Power and Gas. The Division reported a sharply
+lower volume from large orders compared to the prior year, when
+it had won large contracts totaling €4.7 billion in Egypt. This fac-
+tor also influenced the decline in emerging markets. All other
+industrial businesses took in higher orders year-over-year. Digital
+Factory and Mobility recorded double-digit order growth, while
+higher orders at SGRE benefited from significant portfolio effects.
+28,464
+13%
+14%
+13%
+10,525
+32%
+32%
+therein: U.S.
+16,976
+16,769
+1%
+(1)%
+(8)%
+(10)%
+Asia, Australia
+16,166
+15,118
+7%
+6%
+therein: U.S.
+Asia, Australia
+16,905
+17,700 15,501
+18,162
+(7)%
+(9)%
+therein: China
+7,209
+6,439
+12%
+In the Europe, C.I.S., Africa, Middle East region, with the excep-
+tion of Power and Gas, all industrial businesses posted order
+growth, including double-digit growth in Mobility and Energy
+Management. Orders came in substantially higher in Germany,
+due to higher levels of large orders in SGRE, Energy Management
+and Mobility compared to fiscal 2016.
+7,922
+Orders in the Americas region were down clearly year-over-year
+on a substantial decline in Power and Gas. In addition, order intake
+at Mobility declined significantly, while Building Technologies and
+Digital Factory posted double-digit growth, the latter primarily due
+to portfolio effects from the acquisition of Mentor Graphics. The
+pattern of order development in the U.S. was roughly the same as
+in the Americas region, with double-digit growth at Building Tech-
+nologies and Digital Factory more than offset by substantial de-
+clines in Power and Gas, Mobility and SGRE.
+Growth drivers in Europe, C.I.S., Africa, Middle East included
+SGRE, Digital Factory and Mobility. These increases were partly
+offset by a clear revenue decline in Power and Gas. In Germany,
+revenue was up with increases in the majority of industrial busi-
+nesses partly offset by declines at Energy Management and
+Power and Gas.
+3%
+3%
+Orders
+13,422
+19,454
+(31)%
+(30)%
+Revenue
+15,467
+16,471
+Profit
+11,940
+1,591
+(6)%
+(15)%
+(5)%
+Profit
+Profit margin
+932
+7.6%
+895
+7.5%
+4%
+Profit margin
+10.3%
+11.4%
+Orders declined substantially year-over-year, due mainly to a
+sharply lower volume from large orders in the solutions business,
+which had recorded large orders for power plants, including ser-
+vice, from Egypt totaling €4.7 billion in fiscal 2016. In contracting
+markets for the Division's offerings, order intake was down in all
+businesses and in all three reporting regions. As a result of this
+continuing market weakness, revenue declined clearly and in all
+reporting regions, as a decrease in the new-unit business was
+only partly offset by an increase in the service business. Profit
+was significantly lower year-over-year despite a continuing
+strong contribution from the service business, on reduced capac-
+ity utilization following the weaker order intake, price declines,
+and higher net charges related to project execution and comple-
+tion year-over-year. In addition, profit in fiscal 2016 benefited
+from positive effects totaling €130 million from revised estimates
+related to resumption of long-term construction and service con-
+tracts in Iran following the ending or easing of EU and U.S. sanc-
+tions and €118 million from the measurement of inventories.
+Costs for the integration of Dresser-Rand were €33 million in
+fiscal 2017 compared to €59 million in fiscal 2016. Finally, sever-
+ance charges were lower in fiscal 2017, at €19 million compared
+to €69 million in fiscal 2016. Global energy trends continue to
+structurally reduce overall demand in markets for the Division's
+offerings, resulting in declining new-unit business and corre-
+sponding price pressure due to current overcapacities.
+1,872
+12,277
+Revenue
+Comp.
+In the Americas, revenue came in higher year-over-year, driven
+primarily by the merger with Gamesa, which brought new vol-
+ume in Latin America, and revenue growth in Digital Factory and
+Building Technologies. In the U.S., increases in Digital Factory,
+Building Technologies and Mobility were offset by declines in
+Power and Gas and in Process Industries and Drives.
+Revenue in Asia, Australia was up clearly year-over-year,
+as growth in Digital Factory, SGRE, Energy Management and
+Healthineers was partly offset by declines in Power and Gas and
+Mobility. China's growth outpaced the region overall, as all in-
+dustrial businesses except Mobility recorded higher revenue,
+with Digital Factory, SGRE and Energy Management posting the
+highest increases.
+Combined Management Report
+11
+A.3.2 Segment information analysis
+A.3.2.1 POWER AND GAS
+A.3.2.2 ENERGY MANAGEMENT
+Fiscal year
+% Change
+(in millions of €)
+2017
+2016
+Actual
+Comp.
+Fiscal year
+% Change
+Orders
+13,628
+12,963
+5%
+5%
+(in millions of €)
+2017
+2016
+Actual
+Revenue related to external customers went up moderately year-
+over-year and increased in the majority of industrial businesses,
+offsetting declines in Power and Gas and Process Industries and
+Drives. Higher revenue at SGRE benefited from substantial port-
+folio effects following the merger.
+5,976
+A.3.2.7 HEALTHINEERS
+7%
+A.2.1 Overview
+Within One Siemens, we have established a financial frame-
+work - for revenue growth, for profitability and capital efficiency,
+for our capital structure, and for our dividend policy.
+A.2.2 Revenue growth
+Within the framework of One Siemens, we aim to grow our rev-
+enue faster than the average weighted revenue growth of our
+most relevant competitors. Our primary measure for managing
+and controlling our revenue growth is comparable growth, be-
+cause it shows the development in our business net of currency
+translation effects, which arise from the external environment
+outside of our control, and portfolio effects, which involve busi-
+ness activities which are either new to or no longer a part of our
+business.
+Currency translation effects are the difference between revenue
+for the current period calculated using the exchange rates of the
+current period and revenue for the current period calculated us-
+ing the exchange rates of the comparison period. For calculating
+the percentage change year-over-year, this absolute difference is
+divided by revenue for the comparison period. A portfolio effect
+arises in the case of an acquisition or a disposition and is calcu-
+lated as the change year-over-year in revenue of the relevant
+business resulting specifically from the acquisition or disposition.
+For calculating the percentage change, this absolute change is
+divided by revenue for the comparison period. For orders, we
+apply the same calculations for currency translation and portfolio
+effects as described above.
+A.2.3 Profitability and capital
+efficiency
+Within the framework of One Siemens, we aim to achieve mar-
+gins through the entire business cycle that are comparable to
+those of our relevant competitors. Therefore, we have defined
+profit margin ranges for our industrial businesses, which are
+based on the profit margins of the respective relevant competi-
+tors. Profit margin is defined as profit of the respective business
+divided by its revenue.
+Profit margin ranges
+Power and Gas
+Energy Management
+Building Technologies
+Mobility
+A.2 Financial performance system
+Digital Factory
+Siemens Gamesa Renewable Energy
+SFS (ROE after tax)
+Margin range
+11-15%
+7-10%
+8-11%
+6-9%
+14-20%
+8-12%
+15-19%
+5-8%
+Process Industries and Drives
+Healthineers
+33%
+Profit
+(27)%
+Portfolio effects from the merger added 13 percentage points
+to order growth and 28 percentage points to revenue growth.
+Reported orders were up year-over-year on growth in Asia,
+Australia, while orders in Europe, C.I.S., Africa, Middle East and
+the Americas were close to the prior-year level. Order intake in
+the major onshore market India was impacted by the introduc-
+tion of an auction system for new wind-farm tenders. Reported
+revenue was up in all three reporting regions. Lower profit year-
+over-year included burdens of €134 million, primarily from in-
+ventory write-downs, and €103 million for integration costs and
+capacity adjustments including severance. Profitability was held
+back by sharp price declines in India and the U.S.
+464
+338
+(in millions of €)
+2017
+Fiscal year
+2016
+% Change
+Actual
+Comp.
+Orders
+14,218
+13,830
+3%
+4%
+Revenue
+13,789
+13,535
+7.8%
+4.3%
+2%
+With regard to capital expenditures for continuing operations, we
+expect a significant spending increase in fiscal 2018. In addition,
+we plan to invest significant amounts in coming years in attrac-
+tive innovation fields in connection with next47.
+Additions to intangible assets and property, plant and equipment
+from continuing operations totaled €2.4 billion in fiscal 2017.
+Within the Industrial Business, ongoing investments related
+mainly to technological innovations; extending our capacities for
+designing, manufacturing and marketing new solutions; improv-
+ing productivity; and replacements of fixed assets. These invest-
+ments amounted to €1.8 billion in fiscal 2017. The remaining
+portion in fiscal 2017 related mainly to SRE, including significant
+amounts related to office projects such as new office buildings in
+Germany. SRE is responsible for uniform and comprehensive
+management of Company real estate worldwide (except for
+SGRE), and supports the Industrial Business and corporate activ-
+ities with customer-specific real estate solutions.
+Investing activities
+With our ability to generate positive operating cash flows, our
+total liquidity (defined as cash and cash equivalents as well as
+available-for-sale financial assets) of €9.6 billion, our €7.8 billion
+in unused lines of credit, and our credit ratings at year-end, we
+believe that we have sufficient flexibility to fund our capital re-
+quirements. Also in our opinion, our operating net working cap-
+ital is sufficient for our present requirements.
+(2,406)
+4,769
+discontinued operations
+Continuing and
+Fiscal year 2017
+(50)
+4,819
+(2,406)
+Focus areas of ongoing investing activities of the Industrial Busi-
+7,176
+Within our Reconciliation to Consolidated Financial Statements, we
+expect expenses for Corporate items to be approximately €0.6 bil-
+lion and to include significant centrally carried expenses related to
+innovation and digitalization. Despite burdens such as carve-out
+related expenses stemming from portfolio measures, particularly
+including the planned public listing of a minority share in Healthi-
+neers in the first half of calendar 2018 and the planned merger of
+our mobility business with Alstom by the end of calendar 2018, we
+expect results related to CMPA to be positive due among other fac-
+tors to a €0.6 billion (after-tax) gain from the sale of our shares in
+OSRAM Licht AG at the beginning of fiscal 2018. Results related to
+CMPA are also expected to be highly volatile from quarter to quar-
+ter during the fiscal year. We anticipate that SRE will continue with
+real estate disposals depending on market conditions and generate
+results near the prior-year level. Centrally carried pension expenses
+are expected to total approximately €0.4 billion in fiscal 2018.
+Amortization of intangible assets acquired in business combina-
+tions are expected to rise to approximately €1.2 billion in fiscal 2018
+due primarily to the merger with Gamesa and the acquisition of
+Mentor Graphics. Eliminations, Corporate Treasury and other rec-
+onciling items, which were a negative €0.3 billion in fiscal 2017, are
+expected to increase by approximately €0.1 billion in fiscal 2018
+due mainly to higher interest expenses.
+ness are:
+Siemens has policies for environmental, employee and social
+matters, for the respect of human rights, and anti-corruption and
+bribery matters, among others. Reportable information which
+also relates to these non-financial matters is included in the
+→ COMBINED MANAGEMENT REPORT, in → NOTES 16, 17, 21, 25, and 26
+OF B.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, and in
+NOTES 16, 17, 20, 21, and 25 OF THE NOTES TO THE FINANCIAL STATE-
+MENTS in the ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG AS OF SEP-
+We intend to continue providing an attractive return to share-
+holders. As in the past, we intend to fund our dividend payout
+from Free cash flow. The Siemens Managing Board, in agreement
+with the Supervisory Board, proposes a dividend of €3.70 per
+share, up from €3.60 a year earlier.
+Free cash flow from continuing and discontinued operations for
+fiscal 2017 was €4.8 billion, down 13% compared to the prior
+fiscal year.
+We evaluate our capital structure using the ratio of industrial net
+debt to EBITDA. For fiscal 2017, this ratio was 0.9, compared to
+1.0 in fiscal 2016. We thus reached our forecast, which was to
+achieve a ratio of up to 1.0.
+ROCE for fiscal 2017 was 13.5%, down from 14.3% in fiscal 2016.
+This decline was due primarily to burdens related to the merger
+with Gamesa and the acquisition of Mentor Graphics, which we
+had excluded from our ROCE forecast for fiscal 2017. Excluding
+these burdens, ROCE reached the lower end of the 15% to 20%
+range that we generally aim to achieve. We thus reached our
+forecast, which was to come close to or reach the lower end of
+our target range.
+A.7 Non-financial matters
+Combined Management Report
+72
+22
+Net income in fiscal 2017 rose 11% to €6.2 billion, and basic EPS
+from net income was up 10% to €7.44. We thus reached our
+raised forecast, which was for an increase in basic EPS from net
+income in the range of €7.20 to €7.70, up from the range of
+€6.80 to €7.20 that was forecast in our Annual Report for fiscal
+2016. Net income development benefited from our continuous
+efforts to increase productivity. In fiscal 2017, total cost produc-
+tivity improved 5%, reaching the upper end of our fiscal 2017
+target of 3% to 5%.
+The loss outside the Industrial Business came in lower year-over-
+year. This was due mainly to positive effects related to the mea-
+surement of a major asset retirement. These effects were partly
+offset by higher amortization of intangible assets acquired in
+business combinations, mainly related to the merger with
+Gamesa and to the Mentor Graphics acquisition.
+The profit margin of our Industrial Business increased to 11.2%,
+up from 10.8% in the prior fiscal year. We thus reached our fore-
+cast as of the end of the first quarter of fiscal 2017, which was
+raised from a range of between 10.5% and 11.5% to a range of
+between 11.0% and 12.0%. Six of our eight industrial businesses
+improved their margins year-over-year, and five reached or
+exceeded their margin ranges. In challenging market environ-
+ments, Power and Gas, SGRE and Process Industries and Drives
+missed their target ranges in fiscal 2017. With a return on equity
+after tax of 19.9%, SFS, which is reported outside our Industrial
+Business, reached the upper end of its margin range.
+Industrial Business profit rose 8% to €9.5 billion. All industrial
+businesses except Power and Gas and SGRE increased their profit
+year-over-year. The strongest increases came from Digital Factory
+and Building Technologies, which together with Healthineers and
+Mobility achieved excellent results for the fiscal year. Energy
+Management continued its solid improvement. While profit at
+Process Industries and Drives grew, this increase was due pri-
+marily to lower severance charges year-over-year. As planned, we
+increased R&D and selling expenses in our industrial businesses,
+with a strong emphasis on digitalization, including the further
+advancement of our MindSphere platform.
+(50)
+Revenue rose to €83.0 billion, up 4% year-over-year. Except for
+Power and Gas and Process Industries and Drives, all industrial
+businesses contributed to revenue growth. Revenue growth was
+led by substantial growth at SGRE, due mainly to new volume
+from the merger with Gamesa, and by significant growth at
+Digital Factory due to the strength of the Division's short-cycle
+businesses and to the Mentor Graphics acquisition. Excluding
+currency translation and portfolio effects, overall revenue grew
+3%. For fiscal 2017, we had forecast modest growth in revenue,
+net of currency translation and portfolio effects.
+Also with regard to executing our financial target system, fiscal
+2017 was another very successful year for Siemens and for most
+of our industrial businesses and SFS. We raised our guidance for
+basic earnings per share (EPS) from net income after the first
+quarter. After the second quarter, we confirmed this raised fore-
+cast and included in the EPS guidance previously excluded bur-
+dens resulting from portfolio changes. We reached or exceeded
+all the targets set for our primary measures for fiscal 2017. We
+achieved revenue growth of 3% net of currency translation and
+portfolio effects. Net income and basic EPS from net income rose
+11% and 10%, respectively. Excluding burdens related to the
+acquisition of Mentor Graphics and the merger with Gamesa,
+Return on capital employed (ROCE) was slightly above the lower
+end of our target range of 15% to 20%. Our capital structure ratio
+came in slightly below 1.
+In fiscal 2017, we continued to stringently execute on our "Vision
+2020" concept. We reached significant milestones for the stra-
+tegic development of Siemens and initiated important measures
+to further strengthen our portfolio. At the beginning of fiscal
+2017, we founded next47, which pools our existing startup activ-
+ities to foster disruptive ideas more vigorously and accelerate the
+development of new technologies. In the second quarter, we
+acquired Mentor Graphics, an electronic design automation soft-
+ware provider, to further strengthen and expand our industrial
+software portfolio. At the beginning of the third quarter we
+closed the merger of our wind power business with Gamesa to
+form SGRE, a leading global wind power player in the onshore
+and offshore markets. In the fourth quarter, we announced our
+plans to publicly list a minority stake in the Healthineers business
+in the first half of calendar year 2018, depending on market
+conditions, in order to strengthen this Strategic Unit within
+Siemens by increasing the entrepreneurial and capital flexibility
+it needs to drive its strategic growth plans. Also in the fourth
+quarter, we signed a memorandum of understanding to combine
+our mobility business, including the rail traction drives business,
+with Alstom SA, France, in order to provide our customers around
+the world with an even more innovative and competitive product
+and solution portfolio. This transaction is expected to close at the
+end of calendar year 2018.
+A.6 Overall assessment of the economic position
+21
+Combined Management Report
+The investments of Siemens Gamesa Renewable Energy con-
+tinue to focus on the expansion of production capacity in Germany
+for offshore wind turbines as well as in Morocco for onshore
+blades, while in parallel the production capacities in other regions
+are reduced to address changing market conditions. Further
+investments relate to the emerging markets India and China to
+allow for the production of the next turbine generation.
+Healthineers' investments are driven mainly by enhancing com-
+petitiveness and innovation notably in the diagnostics busi-
+nesses, including large amounts relating to intangible assets,
+particularly capitalized development expenses for new platforms.
+Healthineers is also spending for factories, especially in China
+and the United States.
+Process Industries and Drives makes most of its capital expen-
+ditures for the purpose of rationalization, replacement, and ad-
+justment of innovative new or successor products, particularly
+in Europe.
+Major spending of Digital Factory in fiscal 2017 related to the
+factory automation, motion control systems, software and con-
+trol products businesses, including investments in production
+facilities in China. The portion of capital expenditures associated
+with software is expected to increase considerably in fiscal 2018.
+Mobility's investments focus mainly on meeting project de-
+mands and maintaining or enhancing its production facilities.
+The investments of Building Technologies relate mainly to the
+products and systems business, particularly innovation projects
+such as control and digital platforms.
+Energy Management is spending the larger portion of its capital
+expenditures for innovation, particularly in digital and low-volt-
+age grid edge products and solutions. Further investments are
+primarily related to the replacement of fixed assets, the expan-
+sion or relocation of factories and technical equipment.
+The investments of Power and Gas are focused on the enhance-
+ment of productivity and selective strategic localization. Invest-
+ing activities mainly relate to our gas turbines and turbine com-
+ponents.
+Orders for fiscal 2017 were €85.7 billion, down 1% year-over-year.
+The decline was due to contracting markets for Power and Gas,
+which in the prior fiscal year had recorded large orders for power
+plants in Egypt. All other industrial businesses recorded increases.
+Orders grew at double-digit rates at Mobility and Digital Factory,
+the latter on the particular strength of its short-cycle businesses
+and supported by new volume from the Mentor Graphics acqui-
+sition. Order growth at SGRE was due to new volume from the
+merger with Gamesa. At 1.03, our book-to-bill ratio fulfilled our
+expectation of a ratio above 1.0.
+7,225
+The cash inflows from the re-issuance of treasury shares and
+other transactions with owners resulted from the exercise of
+warrants in connection with the redemption of the US$1.5 billion
+bonds with warrant units.
+Continuing
+operations
+A.8.2 Risk management
+A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
+Our risk management policy stems from a philosophy of pursuing
+sustainable growth and creating economic value while managing
+appropriate risks and opportunities and avoiding inappropriate
+risks. As risk management is an integral part of how we plan and
+execute our business strategies, our risk management policy is
+set by the Managing Board. Our organizational and accountabil-
+ity structure requires each of the respective managements of
+our Industrial Business, Financial Services (SFS), regions and
+Corporate Units to implement risk management programs that
+are tailored to their specific industries and responsibilities, while
+being consistent with the overall policy.
+A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
+We have implemented and coordinated a set of risk management
+and control systems which support us in the early recognition of
+developments that could jeopardize the continuity of our busi-
+ness. The most important of these systems include our enter-
+prise-wide processes for strategic planning and management
+reporting. Strategic planning is intended to support us in consid-
+ering potential risks well in advance of major business decisions,
+while management reporting is intended to enable us to monitor
+such risks more closely as our business progresses. Our internal
+auditors regularly review the adequacy and effectiveness of our
+risk management system. Accordingly, if deficits are detected,
+it is possible to adopt appropriate measures for their elimination.
+This coordination of processes and procedures is intended to help
+ensure that the Managing Board and the Supervisory Board are
+fully informed about significant risks in a timely manner.
+Risk management at Siemens builds on a comprehensive, interac-
+tive and management-oriented Enterprise Risk Management
+(ERM) approach that is integrated into the organization and that
+addresses both risks and opportunities. Our ERM approach is based
+on the globally accepted COSO (Committee of Sponsoring Organi-
+zations of the Treadway Commission) 'Enterprise Risk Manage-
+ment - Integrated Framework' (2004) and is adapted to Siemens
+requirements. It additionally conforms to ISO (International Orga-
+nization for Standardization) Standard 31000 (2009). The frame-
+work connects the ERM process with our financial reporting pro-
+cess and our internal control system. It considers a company's
+strategy, the efficiency and effectiveness of its business opera-
+tions, the reliability of its financial reporting as well as compliance
+with relevant laws and regulations to be equally important.
+Our ERM process aims for early identification and evaluation of,
+and response regarding, risks and opportunities that could mate-
+rially affect the achievement of our strategic, operational, financial
+and compliance objectives. The time horizon covered by ERM is
+typically three years. Our ERM is based on a net risk approach,
+addressing risks and opportunities remaining after the execution
+of existing control measures. If risks have already been considered
+in plans, budgets, forecasts or the financial statements (e.g. as a
+provision or risk contingency), they are supposed to be incorpo-
+rated with their financial impact in the entity's business objectives.
+As a consequence, only additional risks arising from the same sub-
+ject (e.g. deviations from business objectives, different impact
+perspectives) should be considered for the ERM. In order to pro-
+vide a comprehensive view on our business activities, risks and
+opportunities are identified in a structured way combining ele-
+ments of both top-down and bottom-up approaches. Reporting
+generally follows a quarterly cycle while this regular reporting
+process is complemented by an ad-hoc reporting process that aims
+to escalate critical issues in a timely manner. Relevant risks and
+opportunities are prioritized in terms of impact and likelihood,
+considering different perspectives, including business objectives,
+reputation and regulatory matters. The bottom-up identification
+and prioritization process is supplemented by workshops with the
+respective managements of the Industrial Business, SFS, regions
+and Corporate Units. This top-down element ensures that poten-
+tial new risks and opportunities are discussed at the management
+level and are included in the subsequent reporting process, if
+found to be relevant. Reported risks and opportunities are ana-
+lyzed regarding potential cumulative effects and are aggregated
+within and for each of the organizations mentioned above.
+Combined Management Report
+27
+Responsibilities are assigned for all relevant risks and opportuni-
+ties, with the hierarchical level of responsibility depending on the
+significance of the respective risk or opportunity. In a first step,
+assuming responsibility for a specific risk or opportunity involves
+choosing one of our general response strategies. Our general re-
+sponse strategies with respect to risks are avoidance, transfer,
+reduction or acceptance of the relevant risk. Our general response
+strategy with respect to opportunities is to 'seize' the relevant
+opportunity. In a second step, responsibility for a risk or opportu-
+nity also involves the development, initiation and monitoring of
+appropriate response measures corresponding to the chosen re-
+sponse strategy. These response measures have to be specifically
+tailored to allow for effective risk management. Accordingly, we
+have developed a variety of response measures with different
+characteristics. For example, we mitigate the risk of fluctuations
+in currency and interest rates by engaging in hedging activities.
+Regarding our long-term projects, systematic and comprehensive
+project management with standardized project milestones, in-
+cluding provisional acceptances during project execution and
+complemented by clearly defined approval processes, assists us
+in identifying and responding to project risks at an early stage,
+even before the bidding phase. Furthermore, we maintain appro-
+priate insurance levels for potential cases of damage and liability
+risks in order to reduce our exposure to such risks and to avoid
+or minimize potential losses. Among others, we address the risk
+of fluctuation in economic activity and customer demand by
+closely monitoring the macroeconomic conditions and develop-
+ments in relevant industries, and by adjusting capacity and im-
+plementing cost-reduction measures in a timely and consistent
+manner, if deemed necessary.
+A.8.2.3 RISK MANAGEMENT ORGANIZATION
+AND RESPONSIBILITIES
+To oversee the ERM process and to further drive the integration
+and harmonization of existing control activities to align with legal
+and operational requirements, the Managing Board established
+a Risk Management and Internal Control Organization, headed by
+the Chief Risk & Internal Control Officer, and a Corporate Risk and
+Internal Control Committee (CRIC). The CRIC obtains risk and op-
+portunity information from the Risk Committees established at
+the Industrial Business, SFS, regions and Corporate Units. In order
+to allow for a meaningful discussion on Siemens group level in-
+dividual risk and opportunities of similar cause-and-effect nature
+are aggregated into risk and opportunity themes. This aggrega-
+tion naturally results in a mixture of risks, including those with
+a primarily qualitative assessment and those with a primarily
+quantitative risk assessment. Accordingly, we do not foresee a
+purely quantitative assessment of risk themes. This information
+then forms the basis for the evaluation of the company-wide risk
+and opportunity situation. The CRIC reports to and supports the
+Managing Board on matters relating to the implementation,
+operation and oversight of the risk and internal control system
+and assists the Managing Board for example in reporting to the
+Audit Committee of the Supervisory Board. The CRIC is composed
+of the Chief Risk & Internal Control Officer, as the chairperson,
+members of the Managing Board and selected heads of Corpo-
+rate Units.
+A.8.3 Risks
+Below we describe the risks that could have a material adverse
+effect on our business, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and repu-
+tation. The order in which the risks are presented in each of the
+four categories reflects the currently estimated relative exposure
+for Siemens associated with these risks and thus provides an in-
+dication of the risks' current importance to us. Additional risks
+not known to us or that we currently consider immaterial may
+also negatively impact our business objectives and operations.
+Unless otherwise stated, the risks described below relate to all of
+our segments.
+A.8.3.1 STRATEGIC RISKS
+Competitive environment: The worldwide markets for our
+products, solutions and services are highly competitive in terms
+of pricing, product and service quality, product development and
+introduction time, customer service, financing terms and shifts
+in market demands. We face strong existing competitors and also
+competitors from emerging markets, which may have a better
+cost structure. Some industries in which we operate are under-
+going consolidation, which may result in stronger competition,
+a change in our relative market position, or unexpected price
+erosion. Furthermore, there is a risk of take-overs of crucial sup-
+pliers by competitors and a risk that competitors are increasingly
+offering services for our installed base. We address these risks
+with various measures, for example benchmarking, strategic
+initiatives, sales push initiatives, executing productivity measures
+and target cost projects, rightsizing of our footprint, outsourc-
+ings, mergers and joint ventures, exporting from low-cost
+countries to price-sensitive markets, and optimizing our product
+portfolio. We continuously monitor and analyze competitive and
+market information in order to be able to anticipate unfavorable
+changes in the competitive environment rather than merely
+reacting to such changes.
+Economic, political and geopolitical conditions (macroeco-
+nomic environment): We see a high level of uncertainty regard-
+ing the global economic outlook. Significant downside risks stem
+e.g. from an increasing trend towards populism and from the
+consequences of the Brexit negotiations. The U.K. exit process
+could heighten business and consumer uncertainty, reduce in-
+vestment in the U.K., pose risks to financial markets and may
+increase the uncertainties about the future of the European
+Union (EU) in general. A further and massive loss of economic
+confidence and a prolonged period of reluctance in investment
+28
+Combined Management Report
+Overall, the actual development for Siemens and its Segments
+may vary, positively or negatively, from our outlook due to the
+risks and opportunities described below or if our expectations
+and assumptions do not materialize.
+This outlook excludes charges related to legal and regulatory
+matters, effects on EPS associated with minorities holding shares
+in Healthineers following the planned IPO, and potential effects
+which may follow the introduction of a new strategic program.
+We expect a mixed picture in our market environment in fiscal
+2018, ranging from strong markets for our short-cycle businesses
+to unfavorable dynamics in our energy generation markets, as
+well as geopolitical uncertainties that may restrict investment
+sentiment. For fiscal 2018 we expect modest growth in revenue,
+net of effects from currency translation and portfolio transac-
+tions, and anticipate that orders will exceed revenue for a book-
+to-bill ratio above 1. We expect a profit margin of 11.0% to 12.0%
+for our Industrial Business and basic EPS from net income in the
+range of €7.20 to €7.70, both excluding severance charges.
+A.8.1.4 OVERALL ASSESSMENT
+Additions to intangible assets and property, plant and equipment
+Free cash flow
+Cash flows from operating activities
+(in millions of €)
+Free cash flow
+We report Free cash flow as a supplemental liquidity measure:
+Combined Management Report
+20
+20
+TEMBER 30, 2017. These disclosures are - contrary to the disclo-
+sures in our separately available "Sustainability Information 2017"
+document - not subject to a specific framework to inform the
+users of the financial reports in a focused manner.
+Discontinued
+operations
+The cash inflows from other disposals of assets primarily in-
+cluded disposals from above-mentioned eligible collateral, pro-
+ceeds from real estate disposals at SRE and from the sale of invest-
+ments such as the stake in an offshore windfarm project at SFS.
+The cash outflows for other purchases of assets primarily in-
+cluded additions of assets eligible as central bank collateral and
+The cash outflows for acquisitions of businesses, net of cash
+acquired, primarily included payments totaling €4.1 billion re-
+lated to the acquisition of Mentor Graphics.
+Within our One Siemens financial framework, we aim in general
+to achieve a ROCE in the range of 15% to 20%. Due mainly to
+burdens on net income and average capital employed resulting
+from the acquisition of Mentor Graphics and the merger with
+26
+26
+Combined Management Report
+Gamesa, we expect ROCE to show a double-digit result in fiscal
+2018 but to come in below the lower end of our target range.
+Capital structure
+We aim in general for a capital structure, defined as the ratio of
+industrial net debt to EBITDA, of up to 1.0, and expect to achieve
+this in fiscal 2018.
+to payments related to several investments such as in connection
+with our Bentley Systems strategic alliance and the Valeo Siemens
+eAutomotive joint venture.
+Combined Management Report
+23
+24
+currency translation effects. We expect negative currency trans-
+lation effects from a weaker US$ and related currencies. Customers
+are expected to continue their effort to strengthen transmission and
+distribution grids to integrate the growing amount of decentralized
+renewable energy. We expect first signs of stabilization in the oil and
+gas and the metals and mining markets, though from low levels.
+In fiscal 2018, markets served by the Energy Management Division
+are expected to provide moderate, low single-digit growth excluding
+For fiscal 2018, we expect the markets served by our Power and
+Gas Division to remain challenging with market volume poten-
+tially declining again, even below the low level of fiscal 2017.
+However, the need for small and medium gas turbines, particu-
+larly in countries with a less developed energy infrastructure,
+is anticipated to continue. Volume in the compression market
+is expected to remain on a low level but we expect to see growing
+signs of a recovery during fiscal 2018 as some customers in the
+oil and gas industry revive investment plans. The steam turbine
+market is expected to continue to be impacted by the shift from
+coal to gas and renewable sources for power generation.
+In fiscal 2018, market volume measured in Euro is expected to be
+held back by negative currency translation effects.
+A.8.1.2 MARKET DEVELOPMENT
+The forecasts presented here for GDP and fixed investments are
+based on a report from IHS Markit dated October 15, 2017.
+GDP growth in China is expected to moderate further in calendar
+2018 to 6.5%, down from 6.8% in 2017. However, the near-term
+strength masks longer-term fragilities, especially very high debt
+levels. Also, the government has made only slow progress in re-
+ducing overcapacities.
+The expansion in Europe is expected to continue, with GDP fore-
+cast to grow 2.5%; especially the Eurozone should proceed with
+its recovery after a prolonged period of stagnation and recession.
+Supportive factors include continued monetary stimulus, re-
+duced headwinds from fiscal policy and improving confidence of
+companies and households.
+The U.S. economy is anticipated to see moderate growth of 2.4%
+even without stimulus in the form of substantial tax cuts or a big
+infrastructure program. GDP growth is driven by consumer spending,
+which is supported by declining unemployment, rising incomes and
+household wealth. Fixed investments are expected to increase by
+2.7% and should benefit from firming global markets. Interest rates
+are anticipated to continue to gradually rise led by central bank rates.
+In fiscal 2018, the world economy is expected to grow slightly
+faster than in fiscal 2017. Global GDP is projected to expand by
+3.2% in calendar 2018, the highest growth rate since 2010. Fixed
+investments are anticipated to grow by 3.6%, with a higher rate
+in emerging countries than in advanced economies. Emerging
+markets are forecast to benefit from stronger global growth and
+rising commodity prices.
+Capital structure ratio
+For the markets served by the Building Technologies Division, we
+expect solid growth again in fiscal 2018. Highest growth dynamics
+are forecast for Asia, with above-average growth in China and
+India. Markets in the Middle East are also expected to grow faster
+than the Division's markets overall. The U.S. is expected to grow in
+line with the global average and the majority of European coun-
+tries are anticipated to continue their recovery, led by Spain and
+some Eastern European countries.
+Our capital structure ratio as of September 30, 2017 decreased to
+0.9 from 1.0 a year earlier, both results being in line with the
+target established in our One Siemens financial framework. The
+change was due primarily to the above-mentioned decrease of
+provisions for pensions and similar obligations.
+Debt and credit facilities
+As of September 30, 2017 we recorded, in total, €28.8 billion in
+notes and bonds (maturing until 2047), €2.5 billion in loans from
+banks (maturing until 2027), €0.8 billion in other financial in-
+debtedness (maturing until 2029) and €0.1 billion in obligations
+under finance leases. Notes, bonds and loans from banks were
+issued mainly in U.S. dollar and euro, and to a lower extent in the
+British pound.
+We have credit facilities totaling €7.8 billion which were unused
+as of September 30, 2017.
+For further information about our debt see NOTE 15 in B.6
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
+tion about the functions and objectives of our financial risk man-
+agement see NOTE 24 in B.6 NOTES TO CONSOLIDATED FINANCIAL
+STATEMENTS.
+Off-balance-sheet commitments
+As of September 30, 2017 the undiscounted amount of maximum
+potential future payments related primarily to credit guarantees
+and guarantees of third-party performance amounted to €3.1 bil-
+lion (September 30, 2016: €3.7 billion).
+In addition to these commitments, we issued other guarantees.
+To the extent future claims are not considered remote, maximum
+future payments from these commitments amount to €0.6 bil-
+lion (September 30, 2016: €0.9 billion). The decrease in other
+guarantees is related to indemnifications issued in connection
+with dispositions of businesses.
+Future payment obligations under non-cancellable operating
+leases amounted to €3.3 billion (September 30, 2016: €3.5 bil-
+lion).
+Irrevocable loan commitments amounted to €3.4 billion (Sep-
+tember 30, 2016: €3.4 billion). A considerable portion of these
+commitments resulted from asset-based lending transactions,
+meaning that the respective loans can be drawn only after the
+borrower has provided sufficient collateral.
+Combined Management Report
+In November 2015, we announced a share buyback of up to
+€3 billion ending at the latest on November 15, 2018. The buy-
+backs will be made under the current authorization granted at
+the Annual Shareholders' Meeting on January 27, 2015. Shares
+repurchased may be used solely for retirement; for issuing shares
+to employees, to members of the Managing Board and board
+members of affiliated companies; and for servicing/securing the
+obligations or rights from or in connection with convertible
+bonds or warrant bonds. In fiscal 2017 we repurchased 7,922,129
+treasury shares under the program at an average cost per share
+of €117.85, totaling €0.9 billion (including incidental transaction
+charges).
+For fiscal 2018, we expect markets served by the Mobility Divi-
+sion to grow moderately. We anticipate that rail operators in
+Europe, particularly in Germany and the U.K., will continue to
+make significant investments. Markets in the Americas region are
+expected to remain strong, especially due to ongoing invest-
+ments in urban transport and infrastructure in the U.S. as well as
+demand for commuter transport in Argentina. In the Middle East
+and Africa, we expect tenders of further rolling stock and turnkey
+projects. In China, we expect investments in high-speed trains,
+urban transport and rail infrastructure to continue to drive
+growth. In India, market growth should continue from projects
+for commuter and urban transport as well as high-speed passen-
+ger lines, freight rail, and related infrastructure as part of the
+country's transportation infrastructure modernization. Overall,
+local rail transport and intermodal mobility solutions are ex-
+pected to gain importance as urbanization continues to progress
+around the world. In emerging countries, rising incomes are ex-
+pected to result in greater demand for public transport solutions.
+For fiscal 2018, markets addressed by the Digital Factory Division
+are expected to continue to grow. Global manufacturing produc-
+tion is forecast to grow moderately again, although growth rates
+in the automotive industries are expected to slow following
+strong growth in prior years. The machine-building industry is
+also forecast to grow as customers upgrade and modernize pro-
+duction facilities in an increasingly dynamic market environment.
+The trend towards digitalization is expected to continue to drive
+growth in the industrial software market. On a geographic basis,
+the strong growth rates experienced in China in fiscal 2017 are
+not expected to continue in fiscal 2018.
+In fiscal 2018, nominal volume for the markets served by the
+Process Industries and Drives Division is expected to decline
+slightly due to currency translation effects. Excluding this effect,
+market volume is anticipated to grow slightly. Within commodity-
+related markets (e.g. oil and gas, mining, minerals), a gradual re-
+covery in capital expenditures is expected to continue on a low
+level. Chemicals market is expected to further stabilize, whereas
+For fiscal 2018, taking into account the above-mentioned as-
+sumptions and exclusions, we expect all but two of our industrial
+businesses to be in or above their ranges for profit margin as
+defined in our financial performance system (see → A.2 FINAN-
+CIAL PERFORMANCE system). The exceptions are Power and Gas and
+Process Industries and Drives. Overall, we expect a profit margin
+for our Industrial Business of 11.0% to 12.0%. Taking into account
+the retrospective adoption of IFRS 15 as mentioned above, Indus-
+trial Business profit margin was 11.1% in fiscal 2017. We expect
+SFS, which is reported outside Industrial Business, to achieve a
+return on equity (ROE) within its margin range in fiscal 2018 and
+to keep its profit near the prior-year level.
+tion of around 3% to 4%. Also, we plan to increase R&D expenses
+aimed at strengthening our capacities for innovation.
+Our forecast for net income and corresponding basic EPS is based
+on a number of additional assumptions: As part of our One
+Siemens framework, we target a total cost productivity improve-
+ment of 3% to 5% in fiscal 2018. Also, we assume continued solid
+project execution. Furthermore, we anticipate clear currency-re-
+lated impacts on net income. Along with these assumptions, we
+anticipate pricing pressure on our offerings of around 2.5% over-
+all in fiscal 2018, with SGRE and the Power and Gas Division
+clearly above this average. Furthermore, we expect wage infla-
+For fiscal 2018, we expect net income to result in basic EPS from
+net income in the range of €7.20 to €7.70. Net income and basic
+EPS from net income for fiscal 2017 were €6.1 billion and €7.34,
+respectively, taking into account the retrospective adoption of
+IFRS 15 as mentioned above.
+Profitability
+We anticipate that orders in fiscal 2018 will exceed revenue for a
+book-to-bill ratio above 1.
+As of September 30, 2017, our order backlog totaled €126 billion.
+Thereof Power and Gas had an order backlog of €40 billion, Mo-
+bility of €26 billion, SGRE of €21 billion, Healthineers of €15 bil-
+lion, Energy Management of €13 billion, Process Industries and
+Drives and Building Technologies of €5 billion each and Digital
+Factory of €3 billion. We expect revenue growth in fiscal 2018 to
+benefit from conversion of our order backlog. From Siemens' back-
+log, we expect to convert approximately €44 billion of past orders
+into current revenue in fiscal 2018. Within this amount, we expect
+our segments involved in large long-term project business to con-
+tribute the following conversions of backlog into revenue for fiscal
+2018: For Power and Gas we expect approximately a €9 billion in
+revenue conversion, for Mobility, Energy Management and SGRE
+approximately €7 billion in revenue conversion each.
+In fiscal 2017, most of our industrial businesses contributed to or-
+ganic revenue growth, and we expect a similar development in fis-
+cal 2018. The principal exceptions are Power and Gas and SGRE,
+which continue to be impacted by market headwinds.
+We expect a mixed picture in our market environment in fiscal 2018,
+ranging from strong markets for our short-cycle businesses to un-
+favorable dynamics in our energy generation markets, as well as
+geopolitical uncertainties that may restrict investment sentiment.
+Therefore, for fiscal 2018 we expect modest growth in revenue, net
+of effects from currency translation and portfolio transactions.
+Revenue growth
+Based on these assumptions and exclusions, our outlook is as
+follows:
+Business, eliminations for transactions between the businesses,
+and changes arising from the adoption of IFRS 15.
+25
+Combined Management Report
+We are basing this outlook on our preliminary numbers under
+IFRS 15, Revenue from Contracts with Customers, which we will
+adopt beginning with fiscal 2018 retrospectively, i.e. results for fis-
+cal 2017 will be presented on a comparable basis. We do not expect
+the adoption of IFRS 15 to have a significant effect on Siemens'
+Consolidated Financial Statements. On a preliminary basis, the
+adoption of IFRS 15 is expected to reduce reported revenue for fiscal
+2017 by approximately €0.2 billion and reported basic EPS for fiscal
+2017 by approximately €0.10, resulting mainly from Profit Industrial
+Business. Reported Industrial Business profit margin for fiscal 2017
+is expected to decline by approximately 0.1 percentage points. As
+a result of the IFRS 15 adoption, below we report the backlog of the
+Siemens Group which, compared to the previous definition, now
+also includes the order backlog in businesses outside the Industrial
+We are exposed to currency translation effects, particularly involv-
+ing the US$, the British £ and currencies of emerging markets,
+particularly the Chinese yuan. While we expect volatility in global
+currency markets to continue in fiscal 2018, we have improved our
+natural hedge on a global basis through geographic distribution
+of our production facilities during the past. Nevertheless, Siemens
+is still a net exporter from the Euro zone to the rest of the world,
+so a weak Euro is principally favorable for our business and a
+strong Euro is principally unfavorable. In addition to the natural
+hedging strategy just mentioned, we also hedge currency risk in
+our export business using derivative financial instruments. We
+expect these steps to help us limit effects on income related to
+currency in fiscal 2018. Based on currency exchange rates as of
+beginning of November 2017, we nevertheless expect negative
+currency effects to significantly influence nominal order and
+revenue development, and to adversely affect Industrial Business
+profit with an impact in the mid-triple-digit millions of Euros.
+For fiscal 2018, we expect market-driven headwinds to continue
+to significantly impact volume development and profitability of
+Power and Gas, SGRE and Process Industries and Drives. These
+units are in the process of preparing capacity adjustment mea-
+sures, which we expect to result in significant severance charges.
+There are high uncertainties regarding the extent of the financial
+burdens for fiscal 2018, as these depend on the results of consul-
+tations with the relevant employee representatives and the im-
+plementation of the planned measures is expected to take seve-
+ral years. Therefore, we exclude all severance charges from this
+outlook. Severance charges in fiscal 2017 were €385 million for
+our Industrial Business and €466 million (pre-tax) for Siemens.
+We assume that severance charges in fiscal 2018 will be higher
+than in fiscal 2017. Furthermore, this outlook excludes potential
+effects which may follow the introduction of a new strategic pro-
+gram, which we expect to announce during fiscal 2018.
+ers and corresponding EPS. Effects on EPS associated with minori-
+ties holding shares in Healthineers following the planned IPO are
+excluded from this outlook. Furthermore, charges related to legal
+and regulatory matters are excluded from this outlook.
+We are basing our outlook for fiscal 2018 for the Siemens Group and
+its segments on the above-mentioned expectations and assump-
+tions regarding the overall economic situation and specific market
+conditions for the next fiscal year. We plan to publicly list a minority
+stake in Healthineers in the first half of calendar 2018, depending
+on market conditions, to further strengthen Healthineers in Siemens
+for the future. The public listing of a minority stake in Healthineers
+will among others result in an increase in non-controlling interests,
+which reduces net income attributable to Siemens AG's sharehold-
+A.8.1.3 SIEMENS GROUP
+Our SFS Division is geared to Siemens' Industrial Business and its
+markets. As such SFS is influenced by the business development
+of the markets served by our Industrial Business, among other
+factors. SFS will continue to focus its business scope on areas of
+intense domain know-how.
+For SGRE, we expect global wind installations to grow in fiscal
+2018, with growth driven by higher demand for onshore installa-
+tions, while offshore installations are expected to remain near
+the prior-year level. Some of the SGRE more relevant onshore
+markets like India and the U.S. will continue to experience higher
+than normal levels of volatility driven by the transition to fully
+competitive wind markets. This transition is expected to result in
+a low double-digit price decline in the onshore markets in fiscal
+2018. As a result volume for SGRE's markets measured in Euro is
+expected to decline year-over-year.
+For fiscal 2018, markets for Healthineers are expected to stay on
+a moderate growth path. Healthineers' markets continue to ben-
+efit from long-term trends such as growing and aging populations
+and from broader access to healthcare, but are restricted by pub-
+lic spending constraints and by consolidation of healthcare pro-
+viders. On a geographic basis, we expect slight growth in the U.S.,
+held back by continued pressure to increase utilization of existing
+equipment, reduced reimbursement rates and policy uncertainty.
+For Europe, we also expect slight growth, with equipment re-
+placement and business with large customers such as hospital
+chains gaining further importance. For China, we expect moder-
+ate growth due to continuously growing government spending on
+healthcare, promoting the private segment and expanding access
+on county level, pronounced effects of aging and growing inci-
+dence of chronic disease, partly held back by governmental re-
+strictions such as centralized tendering and regulatory oversight
+of large-scale equipment allocation and use. Governments in a
+number of countries show the intention to establish protectionist
+initiatives and policies which support local suppliers.
+we expect challenging market conditions for our wind-related
+components due to higher pricing pressure resulting from the on-
+going transition towards mature, fully competitive wind energy
+markets. On a geographic basis, the market growth momentum
+in China is expected to moderate in fiscal 2018 year-over-year,
+while markets in Europe and in the U.S. are expected to improve.
+Combined Management Report
+19
+A.5.2 Cash flows
+(in millions of €)
+Cash flows from operating activities
+Cash flows from financing activities
+Purchase of treasury shares
+Re-issuance of treasury shares and other transactions with owners
+Issuance of long-term debt
+Repayment of long-term debt (including current maturities of long-term debt)
+(931)
+1,123
+6,958
+(4,868)
+Change in short-term debt and other financing activities
+260
+Interest paid
+Dividends paid to shareholders of Siemens AG
+Capital efficiency
+Cash flows from financing activities - continuing operations
+Cash flows from financing activities - discontinued operations
+Cash flows from financing activities - continuing and discontinued operations
+(1,000)
+(2,914)
+(187)
+(1,560)
+(1,560)
+The conversion of profit into cash inflows from operating activ-
+ities was mainly driven by Healthineers and the Digital Factory
+Division. This conversion was held back by a build-up of operat-
+ing net working capital primarily due to an increase in invento-
+ries at SGRE and a decrease in billings in excess of costs and esti-
+mated earnings on uncompleted contracts and related advances
+at the Power and Gas Division.
+A.8.1.1 WORLDWIDE ECONOMY
+A.8.1 Report on expected
+developments
+A.8 Report on expected developments
+and associated material opportunities and risks
+(7,457)
+We do not expect material influence on financial results from
+discontinued operations in fiscal 2018. We anticipate our tax rate
+for fiscal 2018 to be in the range of 27% to 33%, up from 26% in
+fiscal 2017. We expect the increase in the tax rate to be driven by
+tax burdens related to the preparations of the initial public offer-
+ing of a minority stake in Healthineers and the merger of our
+mobility business with Alstom.
+Cash flows from investing activities - continuing and discontinued operations
+Cash flows from investing activities – discontinued operations
+Net income
+Change in operating net working capital
+Other reconciling items to cash flows from operating activities – continuing operations
+Cash flows from operating activities – continuing operations
+Cash flows from operating activities - discontinued operations
+Cash flows from operating activities - continuing and discontinued operations
+Cash flows from investing activities
+Additions to intangible assets and property, plant and equipment
+Acquisitions of businesses, net of cash acquired
+Change in receivables from financing activities of SFS
+Fiscal year
+2017
+6,179
+(1,595)
+2,641
+7,225
+(50)
+7,176
+(2,406)
+(4,385)
+(686)
+Other purchases of assets
+Other disposals of assets
+Cash flows from investing activities - continuing operations
+(1,382)
+1,404
+(7,456)
+(1)
+Dividends attributable to non-controlling interests
+14
+619
+Combined Management Report
+We intend to continue providing an attractive return to share-
+holders. Therefore, we intend to propose a dividend whose dis-
+tribution volume is within a dividend payout range of 40% to
+60% of net income of the Siemens Group, which we may adjust
+for this purpose to exclude selected exceptional non-cash effects.
+For fiscal 2018, we expect a net income of Siemens AG sufficient
+to fund the distribution of a corresponding dividend.
+Siemens AG is the parent company of the Siemens Group. Results
+for Siemens AG comprise the fields of business activities mainly of
+Power and Gas, Energy Management, Building Technologies, Mo-
+bility, Digital Factory, Process Industries and Drives as well as the
+activities of Siemens Real Estate and are significantly influenced
+by directly or indirectly owned subsidiaries and investments. The
+business development of Siemens AG is fundamentally subject to
+the same risks and opportunities as the Siemens Group. Due to
+the interrelations between Siemens AG and its subsidiaries and
+the relative size of Siemens AG within the Group, the outlook of
+the Group also largely reflects our expectations for Siemens AG.
+Therefore, the foregoing explanations for the Siemens Group ap-
+ply also for Siemens AG. We expect that income from investments
+will significantly influence the profit of Siemens AG.
+The Annual Financial Statements of Siemens AG have been pre-
+pared in accordance with the rules set out in the German Com-
+mercial Code (Handelsgesetzbuch).
+Our internal audit function systematically evaluates our financial
+reporting integrity, the effectiveness of the control system and
+the risk management system, and the adherence to our compli-
+ance policies. In addition, the Audit Committee is integrated into
+our control system. In particular, it oversees the accounting and
+the accounting process and the effectiveness of the internal con-
+trol system, the risk management system and the internal audit
+system. Furthermore, we have set up a Disclosure Committee
+which is responsible for reviewing certain financial and non-
+financial information prior to publication. Moreover, we have
+rules for accounting-related complaints.
+On a quarterly basis, an internal certification process is executed.
+Management of different levels of our organization, supported
+by confirmations of management of entities under their respon-
+sibility, confirms the accuracy of the financial data that has been
+reported to Siemens' corporate headquarters and reports on the
+effectiveness of the related control systems.
+Qualification of employees involved in the accounting process is
+ensured through appropriate selection processes and regular
+training. As a fundamental principle, based on materiality con-
+siderations, the "four eyes" principle applies and specific proce-
+dures must be adhered to for data authorization. Additional con-
+trol mechanisms include target-performance comparisons and
+analyses of the composition of and changes in individual line
+items, both in the closing data submitted by reporting units and
+in the Consolidated Financial Statements. In line with our infor-
+mation security requirements, accounting-related IT systems
+contain defined access rules protecting them from unauthorized
+access. The manual and system-based control mechanisms re-
+ferred to above generally also apply when reconciling the IFRS
+closing data to the Annual Financial Statements of Siemens AG.
+A.9 Siemens AG
+36
+35
+Combined Management Report
+The base data used in preparing our financial statements consists
+of the closing data reported by the operations of Siemens AG and
+its subsidiaries. The preparation of the closing data of most of our
+entities is supported by an internal shared services organization.
+Furthermore, other accounting activities, such as governance
+and monitoring related activities, are usually bundled on regional
+level. In particular cases, such as valuations relating to post-em-
+ployment benefits, external experts are used. The reported clos-
+ing data is used to prepare the financial statements in the con-
+solidation system. The steps necessary to prepare the financial
+statements are subject to both manual and automated controls.
+Our Consolidated Financial Statements are prepared on the basis
+of a centrally issued conceptual framework which primarily con-
+sists of uniform Financial Reporting Guidelines and a chart of
+accounts. For Siemens AG and other companies within the
+Siemens group required to prepare financial statements in accor-
+dance with German Commercial Code, this conceptual frame-
+work is complemented by mandatory regulations specific to the
+German Commercial Code. The need for adjustments in the con-
+ceptual framework due to regulatory changes is analyzed on an
+ongoing basis. Accounting departments are informed quarterly
+about current topics and deadlines from an accounting and clos-
+ing process perspective.
+After the merger of the Siemens wind power business with
+Gamesa, we have commenced to integrate the former Gamesa
+entities into our accounting-related internal control and risk
+management system. These integration efforts will continue in
+fiscal 2018.
+At the end of each fiscal year, our management performs an eval-
+uation of the effectiveness of the implemented control system,
+both in design and operating effectiveness. We have a standard-
+ized procedure under which necessary controls are defined, doc-
+umented in accordance with uniform standards, and tested reg-
+ularly on their effectiveness. Nevertheless, there are inherent
+limitations on the effectiveness of any control system, and no
+system, including one determined to be effective, may prevent
+or detect all misstatements.
+Our ERM approach is based on COSO's "Enterprise Risk Manage-
+ment - Integrated Framework". As one of the objectives of this
+framework is reliability of a company's financial reporting, it in-
+cludes an accounting-related perspective. Our accounting-related
+internal control system (control system) is based on the interna-
+tionally recognized "Internal Control - Integrated Framework"
+also developed by COSO. The two systems are complementary.
+Report of Siemens group as well as the Annual Financial State-
+ments of Siemens AG as the parent company are prepared in
+accordance with all relevant regulations.
+The overarching objective of our accounting-related internal con-
+trol and risk management system is to ensure that financial
+reporting is conducted in a proper manner, such that the Consol-
+idated Financial Statements and the Combined Management
+A.8.5 Significant characteristics of
+the accounting-related internal
+control and risk management system
+Assessment of the overall opportunities situation: The most
+significant opportunity for Siemens continues to be success from
+innovation along electrification, automation and digitalization as
+disclosed in our prior year reporting. Even though our assess-
+ment of individual opportunities has changed during fiscal year
+2017 due to developments in the external environment, our en-
+deavors to profit from them and the revision of our plans, the
+overall opportunity situation did not change significantly com-
+pared to the prior year.
+Climate change: While climate change is widely considered a
+risk, we consider climate change mitigation an opportunity for
+Siemens. In line with the global agreement in Paris (COP21) that
+entered into force in November 2016, Siemens strives to support
+a trend towards reducing CO2 emissions both in own operations
+as well as for our customers based on technologies from our en-
+vironmental portfolio, such as low-carbon power generation
+from renewable energy sources.
+Localizing value chain activities: Localizing certain value
+chain activities, such as procurement, manufacturing, mainte-
+nance and service in emerging markets could enable us to reduce
+costs and strengthen our global competitive position, in particu-
+lar compared to competitors based in countries where they can
+operate with more favorable cost structures. Moreover, our local
+footprint in many countries might help us to take advantage of a
+possible growth of markets and leverage a shift in markets, result-
+ing in increased market penetration and market share.
+an opportunity to continuously reduce non-conformance costs
+and ensure on-time delivery of our projects and solutions. Fur-
+thermore, stringent project risk and opportunity management,
+time schedule management, performance bonuses and highly
+professional management of consortium partners and suppliers
+all help us to avoid liquidated damages and ultimately improve
+our profit position. In addition, improvements of our claim man-
+agement processes enable us to reduce costs incurred as a result
+of customer claims by finding a consensus with customers while
+also improving customer relationship management. At the same
+time, we reduce quality problems by proactively addressing sup-
+plier issues up front.
+Combined Management Report
+Excellent project execution: By expanding project manage-
+ment efforts as well as learning from our mistakes in project ex-
+ecution through a formalized lessons learned approach, we see
+Continuously developing and implementing initiatives to
+reduce costs, boost sales efforts, adjust capacities, improve
+our processes, realize synergies: In an increasingly competi-
+tive market environment, a competitive cost structure comple-
+ments the competitive advantage of being innovative. We be-
+lieve that further improvements in our cost position can
+strengthen our global competitive position and secure our mar-
+ket presence against emerging and incumbent competitors. For
+example, we expect to create sustainable value from productivity
+measures in connection with our "Vision 2020" concept. More-
+over, in course of the digital transformation, we seek to standard-
+ize, automate and digitize our processes and make them leaner
+and more efficient.
+Economic/political stabilization of certain (critical) coun-
+tries and resilience of worldwide economic environment:
+We see an opportunity that political stabilization of certain criti-
+cal countries and (further) lifting of sanctions may lead to higher
+revenue volume that was unavailable in past years. Furthermore,
+a return to more robust macroeconomic growth could also lead
+to additional volume and profit for the company.
+Favorable political and regulatory environment: Govern-
+ment initiatives and subsidies (including tax benefits etc.) may
+lead to more government spending (investments in new projects,
+modernization of projects etc.) and ultimately result in an in-
+crease of revenue and profit for the company.
+In the first quarter of fiscal 2017, as part of the merger with
+Gamesa, Siemens AG transferred its Siemens wind power busi-
+ness to entities held by Siemens AG.
+Increased market penetration: Through divisional sales initia-
+tives and masterplans, we continuously strive to grow and ex-
+pand our business in established markets, open up new markets
+for existing portfolio elements and strengthen our installed base
+in order to gain a higher market share and increased profits.
+As of September 30, 2017, the number of employees was 92,300.
+A.9.1 Results of operations
+(3,627)
+administrative expenses
+Selling and general
+(7)%
+(2,454)
+(2,619)
+development expenses
+Research and
+23%
+26%
+as percentage of revenue
+16%
+5,945
+6,909
+Gross profit
+4%
+(1)%
+(19,979) (19,818)
+Cost of Sales
+25,763
+26,888
+Revenue
+% Change
+2016
+2017
+(in millions of €)
+Fiscal year
+Statement of Income of Siemens AG in accordance
+with German Commercial Code (condensed)
+Combined Management Report
+Mergers, acquisitions, equity investments, partnerships,
+divestments and streamlining our portfolio: We constantly
+monitor our current and future markets for opportunities for stra-
+tegic mergers and acquisitions, equity investments or partner-
+ships to complement our organic growth. Such activities may help
+us to strengthen our position in our existing markets, provide
+access to new or underserved markets or complement our tech-
+nological portfolio in selected areas. Opportunities might also
+arise from well executed divestments, carve outs and joint ven-
+tures which further optimize our portfolio while generating gains.
+applications for an optimization of energy consumption, opera-
+tion of highly efficient energy grids as well as scalable solutions
+for distributed and renewable energy generation.
+Success from innovation along electrification, automation
+and digitalization: Innovation is a central part of our "Vision
+2020," an entrepreneurial concept leading Siemens into the future
+in three stages: first we "drive performance," then we "strengthen
+core," and finally we "scale up" to attain our Vision 2020 goals.
+We do this by investing significantly in R&D in order to develop
+innovative, sustainable solutions for our customers and to simul-
+taneously safeguard our competitiveness. We are an innovative
+company and invent new technologies that we expect will meet
+future demands arising from the megatrends of demographic
+change, urbanization, climate change and globalization. We are
+granted thousands of new patents every year and continuously
+develop new concepts and convincing business models. We open
+up access to new markets and customers through new marketing
+and sales strategies as well as Divisional master plans. In 2016
+we established next47, an independent unit designed to found,
+partner with and invest in start-ups with innovative ideas for
+shaping the future of electrification, automation and digitaliza-
+tion, and thereby turn those ideas into viable businesses. This will
+help Siemens create the next generation of path-breaking inno-
+vations in such fields as artificial intelligence, decentralized elec-
+trification, autonomous machines, block chain applications and
+connected e-mobility. Siemens is positioned along the value
+chains of electrification, automation and digitalization in order to
+increase future market penetration. Along these value chains,
+we have identified several growth fields in which we see our
+greatest long-term potential. We are orienting our resource allo-
+cation toward these growth fields and have announced concrete
+measures in this direction. Across all Divisions, Siemens is profit-
+ing from its undisputed strength in the digital enterprise. For
+example, the Company's cloud based MindSphere platform en-
+hances the availability of customers' digital products and systems
+and improves their productivity and efficiency. In addition, we try
+to generate additional volume and profit from new and innova-
+tive digital products, services and solutions, including cyber secu-
+rity for our customers, preventive maintenance, data analytics,
+Credit Risks: We provide our customers with various forms of
+direct and indirect financing of orders and projects. SFS in partic-
+ular bears credit risks due to its financing activities.
+31
+Combined Management Report
+Liquidity and financing risks: Our treasury and financing activ-
+ities could face adverse deposit and/or financing conditions from
+negative developments related to financial markets, such as (1)
+limited availability of funds (particularly U.S. dollar funds) and
+hedging instruments; (2) an updated evaluation of our solvency,
+particularly from rating agencies; (3) negative interest rates; and
+(4) impacts arising from more restrictive regulation of the finan-
+cial sector, central bank policy, or financial instruments. Widening
+credit spreads due to uncertainty and risk aversion in the financial
+markets might lead to adverse changes of fair market values of our
+financial assets, in particular our derivative financial instruments.
+Market price risks: We are exposed to fluctuations in exchange
+rates, especially between the U.S. dollar and the euro, because a
+high percentage of our business volume is conducted as exports
+from Europe to areas using the U.S. dollar. In addition, we are
+exposed to currency effects involving the currencies of emerging
+markets, in particular the Chinese yuan. A strengthening of the
+euro may change our competitive position. We are also exposed
+to fluctuations in interest rates. Negative developments in the
+financial markets and changes in the central bank policies may
+negatively impact our results. Depending on the development of
+foreign currency exchange and interest rates, hedging activities
+could have significant effects on our business, financial condition
+and results of operations.
+A.8.3.3 FINANCIAL RISKS
+Shortage of skilled personnel: Competition for highly quali-
+fied personnel (e.g. specialists, experts, "digital" talents) remains
+intense in the industries and regions in which our businesses
+operate. We have ongoing demand for highly skilled employees.
+Our future success depends in part on our continued ability to
+hire, integrate, develop and retain engineers and other qualified
+personnel. We address this risk for example with structured suc-
+cession planning, employer branding, retention and career man-
+agement. Furthermore, the company is strengthening the capa-
+bilities and skills of our talent acquisition teams and has defined
+a strategy of pro-active search for people with the required skills
+in our respective industries and markets. A strong focus on im-
+plementing a technology for talent acquisition helps us to sup-
+port efficient processes and effective search for key talent.
+single-source suppliers for critical components. Shortages and de-
+lays could materially harm our business. Unanticipated increases
+in the price of components or raw materials due to market short-
+ages or other reasons could also adversely affect performance.
+Furthermore, we may be exposed to the risk of delays and inter-
+ruptions in the supply chain as a consequence of catastrophic
+events or suppliers' financial difficulties, particularly if we are
+unable to identify alternative sources of supply or means of trans-
+portation in a timely manner or at all. Besides other measures,
+we mitigate fluctuation in the global raw material markets with
+various hedging instruments.
+Interruption of the supply chain: The financial performance of
+our Industrial Business depends on reliable and effective supply
+chain management for components, sub-assemblies and materi-
+als. Capacity constraints and supply shortages resulting from
+ineffective supply chain management may lead to delays and
+additional cost. We rely on third parties to supply us with parts,
+components and services. Using third parties to manufacture,
+assemble and test our products reduces our control over manu-
+facturing yields, quality assurance, product delivery schedules
+and costs. Although we work closely with our suppliers to avoid
+supply-related problems, there can be no assurance that we will
+not encounter supply problems in the future, especially if we use
+Cost overruns or additional payment obligations related to
+the management of our long-term, fixed-price or turnkey
+and service projects: A number of our Industrial Businesses
+conduct activities, especially large projects, under long-term con-
+tracts that are awarded on a competitive bidding basis. Such con-
+tracts typically arise in Power and Gas, Siemens Gamesa Renew-
+able Energy, Mobility, and in various activities of Energy
+Management and Process Industries and Drives. Some of these
+contracts are inherently risky because we may assume substan-
+tially all of the risks associated with completing a project and
+meeting post-completion warranty obligations. For example, we
+may face the risk that we must satisfy technical requirements of
+a project even though we have not gained experience with those
+requirements before we win the project. The profit margins real-
+ized on fixed-priced contracts may vary from original estimates
+as a result of changes in costs and productivity over the contract's
+term. We sometimes bear the risk of unanticipated project mod-
+ifications, shortage of key personnel, quality problems, financial
+difficulties of our customers and/or significant partners, cost
+overruns or contractual penalties caused by unexpected techno-
+logical problems, unforeseen developments at the project sites,
+unforeseen changes or difficulties in the regulatory or political
+environment, performance problems with our suppliers, subcon-
+tractors and consortium partners or other logistical difficulties.
+Some of our multi-year contracts also contain demanding instal-
+lation and maintenance requirements in addition to other perfor-
+mance criteria relating to timing, unit cost and compliance with
+government regulations, which, if not satisfied, could subject us
+to substantial contractual penalties, damages, non-payment and
+contract termination. There can be no assurance that contracts
+and projects, in particular those with long-term duration and
+fixed-price calculation, can be completed profitably. To tackle
+those risks we implemented a global project management orga-
+nization to systematically improve the know-how of our project
+management personnel. For very complex projects we conduct
+dedicated risk assessments in very early stages of the sales phase
+before we decide to hand over a binding offer to our customer.
+progress of these projects and initiatives using standardized con-
+trolling and milestone tracking approaches.
+Combined Management Report
+Operational optimization and cost reduction initiatives:
+We are in a continuous process of operational optimization and
+constantly engage in cost-reduction initiatives, including ongo-
+ing capacity adjustment measures and structural initiatives. Con-
+solidation of business activities and manufacturing facilities,
+outsourcings/carve outs, joint ventures and the streamlining of
+product portfolios are all part of these cost-reduction efforts.
+These measures may not be implemented as planned, may turn
+out to be less effective than anticipated, may become effective
+later than estimated or may not become effective at all. Any fu-
+ture contribution of these measures to our profitability will be
+influenced by the actual savings achieved and by our ability to
+sustain them. In case of restructuring and outsourcing activities,
+there can be no assurance that there are no delays in product
+deliveries or we might even experience delivery failures. Further-
+more, a delay in critical R&D projects could lead to negative im-
+pacts in running projects. We constantly control and monitor the
+Operational failures and quality problems in our value
+chain processes: Our value chain comprises all steps, from re-
+search and development to supply chain management, produc-
+tion, marketing, sales and services. Operational failures in our
+value chain processes could result in quality problems or poten-
+tial product, labor safety, regulatory or environmental risks. Such
+risks are particularly present in our Industrial Business in relation
+to our production and manufacturing facilities, which are located
+all over the world and have a high degree of organizational and
+technological complexity. From time to time, some of the prod-
+ucts we sell might have quality issues resulting from the design
+or manufacture of these products or the commissioning of these
+products or the software integrated into them. Our Healthineers'
+business, for example, is subject to regulatory authorities includ-
+ing the U.S. Food and Drug Administration and the European
+Commission's Health and Consumer Policy Department, which
+require us to make specific efforts to safeguard our product
+safety. If we are not able to comply with these requirements, our
+business and reputation may be adversely affected. We have es-
+tablished multiple measures for quality improvement and claim
+prevention. The increased use of quality management tools is
+improving visibility and enables us to strengthen our root cause
+and prevention processes.
+through Cyber Security Operation Centers, and maintenance of
+backup and protective systems such as firewalls and virus scan-
+ners. Our contractual arrangements with service providers, aim
+to ensure that these risks are reduced. Nonetheless our systems,
+products, solutions and services, as well as those of our service
+providers, remain potentially vulnerable to attacks. Such attacks
+could potentially lead to the publication, manipulation or leakage
+information such as through industrial espionage, improper use
+of our systems, defective products, production downtimes and
+supply shortages, with potential adverse effects on our reputa-
+tion, our competitiveness and results of our operations.
+Cyber/Information security: Our business portfolio is depen-
+dent on digital technologies. We observe a global increase of IT
+security threats and higher levels of professionalism in computer
+crime, which pose a risk to the security of products, systems and
+networks and the confidentiality, availability and integrity of
+data. Like other large multinational companies we are facing ac-
+tive cyber threats from sophisticated adversaries that are sup-
+ported by organized crime and nation-states engaged in eco-
+nomic espionage or even sabotage. We attempt to mitigate these
+risks by employing a number of measures, including employee
+training, comprehensive monitoring of our networks and systems
+A.8.3.2 OPERATIONAL RISKS
+when integrating people, operations, technologies and products.
+There can be no assurance that any of the businesses we ac-
+quired can be integrated successfully and in a timely manner as
+originally planned, or that they will perform as anticipated once
+integrated. In addition, we may incur significant acquisition, ad-
+ministrative, tax and other expenditures in connection with these
+transactions, including costs related to integration of acquired
+businesses. Furthermore, portfolio measures may result in addi-
+tional financing needs and adversely affect our capital structure.
+Acquisitions lead to substantial additions to intangible assets,
+including goodwill in our statements of financial position. If we
+were to encounter continuing adverse business developments or
+if we were otherwise to perform worse than expected at acquisi-
+tion activities, then these intangible assets, including goodwill,
+might have to be impaired, which could adversely affect our busi-
+ness, financial conditions and results of operations. Our invest-
+ment portfolio consists of investments held for purposes other
+than trading. Furthermore, we hold other investments, for exam-
+ple, Atos SE. Any factors negatively influencing the financial con-
+dition and results of operations of our at-equity investments and
+other investments, could have an adverse effect on our equity
+pick-up related to these investments or may result in a related
+write-off. In addition, our business, financial condition and re-
+sults of operations could also be adversely affected in connection
+with loans, guarantees or non-compliance with financial cove-
+nants related to these at-equity investments and other invest-
+ments. Furthermore, such investments are inherently risky as we
+may not be able to sufficiently influence corporate governance
+processes or business decisions taken by our equity investments,
+other investments and strategic alliances that may have a nega-
+tive effect on our business. In addition, joint ventures bear the
+risk of difficulties that may arise when integrating people, oper-
+ations, technologies and products. Strategic alliances may also
+pose risks for us because we compete in some business areas
+with companies with which we have strategic alliances. Besides
+other measures, we handle these risks with standardized pro-
+cesses as well as dedicated roles and responsibilities in the areas
+of mergers, acquisitions, divestments and carve outs. This in-
+cludes post-closing actions as well as claim management and
+centrally managed portfolio activities.
+30
+29
+Combined Management Report
+Portfolio measures, at-equity investments, other invest-
+ments and strategic alliances: Our strategy includes divesting
+activities in some business areas and strengthening others
+through portfolio measures, including mergers and acquisitions.
+With respect to divestments, we may not be able to divest some
+of our activities as planned, and the divestitures we do carry out
+could have a negative impact on our business, financial condi-
+tion, results of operations and our reputation. Mergers and acqui-
+sitions are inherently risky because of difficulties that may arise
+Footprint: The risk is that we are not flexible enough in adjusting
+our organizational and manufacturing footprint in order to
+quickly respond to changing markets, resulting in a non-compet-
+itive cost position and consequent loss of business. To mitigate
+this risk, we continuously monitor and analyze competitive and
+market information. Furthermore, we closely monitor the imple-
+mentation of the planned measures, maintain strict cost man-
+agement, and conduct ongoing discussions with all concerned
+interest groups.
+Disruptive technologies: The markets in which our businesses
+operate experience rapid and significant changes due to the in-
+troduction of innovative and disruptive technologies. In the fields
+of digitalization (e.g. internet of things, web of systems, cloud
+offerings, Industry 4.0), there are risks of new competitors, sub-
+stitutions of existing products/solutions/services, niche players,
+new business models (e.g. in terms of pricing, financing, ex-
+tended scopes for project business or subscription models in soft-
+ware business) and finally the risk that our competitors may have
+faster time-to-market strategies and introduce their digital prod-
+ucts and solutions faster than Siemens. Our operating results
+depend to a significant extent on our technological leadership,
+our ability to anticipate and adapt to changes in our markets and
+to reduce the costs of producing our products. Introducing new
+products and technologies requires a significant commitment to
+research and development, which in return requires expenditure
+of considerable financial resources that may not always result in
+success. Our results of operations may suffer if we invest in tech-
+nologies that do not operate or may not be integrated as ex-
+pected, or that are not accepted in the marketplace as antici-
+pated, or if our products, solutions or systems are not introduced
+to the market in a timely manner, particularly compared to our
+competitors, or even become obsolete. We constantly apply for
+new patents and actively manage our intellectual property port-
+folio to secure our technological position. However, our patents
+and other intellectual property may not prevent competitors from
+independently developing or selling products and services that
+are similar to or duplicates of ours.
+economies, the wide variety of our offerings following different
+business cycles, and our varying business models (e.g. products,
+software, solutions, projects and services) help us to absorb the
+impact of an adverse development in a single market.
+In general, due to the significant proportion of long-cycle busi-
+nesses in our Industrial Business and the importance of long-term
+contracts for Siemens, there is usually a time lag between the
+development of macroeconomic conditions and their impact on
+our financial results. In contrast, short-cycle business activities of
+the Digital Factory Division and parts of Process Industries and
+Drives Division and of the Energy Management Division react
+quickly to volatility in market demand. If the moderate recovery
+of macroeconomic growth stalls again and if we are not success-
+ful in adapting our production and cost structure to subsequent
+changes in conditions in the markets in which we operate, there
+can be no assurance that we will not experience adverse effects.
+For example, it may become more difficult for our customers to
+obtain financing. As a result, they may modify, delay or cancel
+plans to purchase our products, solutions and services, or fail to
+follow through on purchases or contracts already executed. Fur-
+thermore, the prices for our products, solutions and services may
+decline, as a result of adverse market conditions, to a greater
+extent than we currently anticipate. In addition, contracted pay-
+ment terms, especially regarding the level of advance payments
+by our customers relating to long-term projects, may become less
+favorable, which could negatively impact our financial condi-
+tions. Siemens' global setup with operations in almost all relevant
+decisions and awarding of new orders would hit our businesses.
+We continuously monitor the exit process and established, for
+example, a task force coordinating our local and global mitiga-
+tion measures. Significant business risk stems from an abrupt
+weakening of Chinese economic growth. Both global and re-
+gional investment climates could collapse due to political up-
+heavals, further independence debates within countries in the
+EU (e.g. the Catalan endeavor for independence), or sustained
+success of protectionist, anti EU and anti-business parties and
+policy. A rapid tightening of monetary policy by the U.S. Federal
+Reserve could cause a depreciation spiral among emerging mar-
+ket currencies. This could lead to a renewed emerging market
+crisis because debt levels of emerging market enterprises have
+risen, making them dependent on favorable global financial con-
+ditions to service debts denominated in foreign currencies.
+Emerging market operations involve further various risks, includ-
+ing civil unrest, health concerns, cultural differences such as em-
+ployment and business practices, volatility in gross domestic
+product, economic and governmental instability, the potential
+for nationalization of private assets and the imposition of ex-
+change controls. A terrorist mega-attack or a significant cyber-
+crime incident, or a series of such attacks or incidents in major
+economies, could depress economic activity globally and under-
+mine consumer and business confidence. Further risks stem from
+geopolitical tensions (e.g. in Syria, Ukraine, Turkey, and North
+Korea), and from an increasing vulnerability of the connected
+global economy to natural disasters. In addition we are depend-
+ing on the economic momentum of specific industries, especially
+on the continued confidence in the automotive sector.
+Risks from pension obligations: The funded status of our pen-
+sion plans may be affected by change in actuarial assumptions,
+including the discount rate, as well as movements in financial
+markets or a change in the mix of assets in our investment port-
+folio. A significant increase in the underfunding may have a neg-
+ative effect on our capital structure and rating, and thus may
+tighten refinancing options and increase costs. In order to com-
+ply with local pension regulations in selected foreign countries,
+we may face a risk of increasing cash outflows to reduce an un-
+derfunding of our pension plans in these countries.
+For further information on post-employment benefits, derivative
+financial instruments, hedging activities, financial risk manage-
+ment and related measures, see → NOTES 16, 23 and 24 in B.6 NOTES
+TO CONSOLIDATED FINANCIAL STATEMENTS.
+Audits by tax authorities and changes in tax regulations:
+We operate in nearly all countries of the world and therefore are
+subject to many different tax regulations. Changes in tax laws in
+any of these jurisdictions could result in higher tax expense and
+payments. Furthermore, legislative changes could impact our tax
+receivables and liabilities as well as deferred tax assets and de-
+ferred tax liabilities. In addition, the uncertain tax environment in
+some regions could limit our ability to enforce our rights. As a
+globally operating organization, we conduct business in countries
+subject to complex tax rules, which may be interpreted in differ-
+ent ways. Future interpretations or developments of tax regimes
+may affect our business, financial condition and results of opera-
+tions. We are regularly audited by tax authorities in various juris-
+dictions and we continuously identify and assess resulting risks.
+Within our Enterprise Risk Management (ERM) we regularly iden-
+tify, evaluate and respond to opportunities that present them-
+selves in our various fields of activity. Below we describe our most
+significant opportunities. Unless otherwise stated, the opportu-
+nities described below relate to all of our segments. The order in
+which the opportunities are presented reflects the currently esti-
+mated relative exposure for Siemens associated with these op-
+portunities and thus provides an indication of the opportunities'
+current importance to us. The described opportunities are not
+necessarily the only ones we encounter. In addition, our assess-
+ment of opportunities is subject to change as the Company, our
+markets and technologies are constantly developing. It is also
+possible that opportunities we see today will never materialize.
+A.8.4 Opportunities
+34
+33
+Combined Management Report
+At present, no risks have been identified that either individually
+or in combination could endanger our ability to continue as a
+going concern.
+Even though the assessments of individual risk exposures have
+changed during fiscal 2017 due to developments in the external
+environment, effects of our own mitigation measures and the
+revision of our plans, the overall risk situation for Siemens did not
+change significantly as compared to the prior year.
+The most significant challenges have been mentioned first in
+each of the four categories strategic, operational, financial and
+compliance risks. The risks caused by highly competitive environ-
+ment continue to be the most significant, as in the prior year.
+THE OVERALL RISK SITUATION
+A.8.3.5 ASSESSMENT OF
+STATEMENTS.
+For additional information with respect to specific proceed-
+ings, see NOTE 21 in B.6 NOTES TO CONSOLIDATED FINANCIAL
+Siemens maintains liability insurance for certain legal risks at lev-
+els our management believes are appropriate and consistent with
+industry practice. The insurance policy, however, does not pro-
+tect Siemens against reputational damage. Moreover, Siemens
+may incur losses relating to legal proceedings beyond the limits,
+or outside the coverage, of such insurance or exceeding any pro-
+visions made for losses related to legal proceedings. Finally, there
+can be no assurance that Siemens will be able to maintain ade-
+quate insurance coverage on commercially reasonable terms in
+the future.
+(3,558)
+Some of these legal disputes and proceedings could result in ad-
+verse decisions for Siemens that may have material effects on our
+financial position, the results of operations and cash flows.
+may have an adverse effect on our business, financial condition
+and results of our operations.
+In addition, while we have procedures in place to ensure compli-
+ance with applicable governmental regulations in the conduct of
+our business operations, it cannot be excluded that violations of
+applicable governmental regulations may be caused either by us
+or by third parties that we contract with, including suppliers or
+service providers, whose activities may be attributed to us. Any
+such violations expose us to the risk of liability, reputational dam-
+age or loss of licenses or permits that are important to our busi-
+ness operations. In particular, we could also face liability for dam-
+age or remediation for environmental contamination at the
+facilities we design or operate. With regard to certain environ-
+mental risks, we maintain liability insurance at levels that our
+management believes are appropriate and consistent with indus-
+try practice. We may incur environmental losses beyond the lim-
+its, or outside the coverage, of such insurance, and such losses
+Environmental, health & safety and other governmental
+regulations: Some of the industries in which we operate are
+highly regulated. Current and future environmental, health & safety
+and other governmental regulations or changes thereto may re-
+quire us to change the way we run our operations and could re-
+sult in significant increases in our operating or production costs.
+Furthermore, we see the risk of potential environmental and
+health & safety incidents as well as potential non-compliance
+with environmental and health & safety regulations affecting
+Siemens and our contractors or sub-suppliers, resulting in e.g.
+serious injuries, penalties, loss of reputation and internal or ex-
+ternal investigations.
+Protectionism (incl. localization): Protectionist trade policies
+and changes in the political and regulatory environment in the
+markets in which we operate, such as import and export controls,
+tariffs and other trade barriers including debarment from certain
+markets and price or exchange controls, could affect our business
+in several national markets and could impact our business, finan-
+cial position and results of operations; and may expose us to pen-
+alties, other sanctions and reputational damage. In addition, the
+uncertainty of the legal environment in some regions could limit
+our ability to enforce our rights and subject us to increasing costs
+related to appropriate compliance programs.
+Changes of regulations, laws and policies: As a diversified
+company with global businesses we are exposed to various prod-
+uct- and country-related regulations, laws and policies influenc-
+ing our business activities and processes. We monitor the political
+and regulatory landscape in all our key markets to anticipate po-
+tential problem areas, with the aim to quickly adjust our business
+activities and processes to changed conditions. However, any
+changes of regulations, laws and policies can adversely affect our
+business activities and processes as well as our financial condi-
+tion and results of operations.
+32 Combined Management Report
+Regulatory risks and potential sanctions: As a globally oper-
+ating organization, we conduct business with customers in coun-
+tries which are subject to export control regulations, embargoes,
+economic sanctions or other forms of trade restrictions (hereafter
+referred to as "sanctions") imposed by the U.S., the European
+Union or other countries or organizations. New or expanded sanc-
+tions in countries in which we do business may result in a curtail-
+ment of our existing business in such countries or indirectly in
+other countries. We are also aware of initiatives by institutional
+investors, such as pension funds or insurance companies, to
+adopt or consider adopting policies prohibiting investment in and
+transactions with, or requiring divestment of interests in entities
+doing business with, countries identified as state sponsors of ter-
+rorism by the U.S. Department of State. It is possible that such
+initiatives may result in us being unable to gain or retain investors,
+customers or suppliers. In addition, the termination of our activi-
+ties in sanctioned countries may expose us to customer claims
+and other actions. Our reputation could also suffer due to our
+activities with counterparties in or affiliated with these countries.
+Besides other measures, Siemens established a global compli-
+ance organization that conducts among others compliance risk
+mitigation processes such as Compliance Risk Assessments, and
+which has been reviewed by external compliance experts.
+In addition, future developments in ongoing and potential future
+investigations, such as responding to the requests of governmen-
+tal authorities and cooperating with them, could divert manage-
+ment's attention and resources from other issues facing our busi-
+ness. Furthermore, we might be exposed to compliance risks in
+connection with recently acquired operations that are in the
+ongoing process of integration.
+A considerable part of our business activities involve govern-
+ments and companies with public shareholders. We also partici-
+pate in a number of projects funded by government agencies and
+intergovernmental and supranational organizations, such as mul-
+tilateral development banks. Ongoing or potential future investi-
+gations into allegations of corruption, of antitrust violations or of
+other violations of law could as well impair relationships with
+such business partners or could result in the exclusion of public
+contracts. Such investigations may also adversely affect existing
+private business relationships and our ability to pursue poten-
+tially important strategic projects and transactions, such as stra-
+tegic alliances, joint ventures or other business cooperations, or
+could result in the cancellation of certain of our existing con-
+tracts. Moreover, third parties, including our competitors, could
+initiate significant litigation.
+organizations. Monitors could again be appointed to review fu-
+ture business practices and we may otherwise be required to fur-
+ther modify our business practices and our compliance program.
+Current and future investigations regarding allegations of
+corruption, of antitrust violations and of other violations of
+law: Proceedings against us regarding allegations of corruption,
+of antitrust violations and of other violations of law may lead to
+criminal and civil fines as well as penalties, sanctions, injunctions
+against future conduct, profit disgorgements, disqualifications
+from directly and indirectly engaging in certain types of business,
+the loss of business licenses or permits or other restrictions and
+legal consequences. Accordingly, we may, among other things,
+be required to comply with potential obligations and liabilities
+arising in connection with such investigations and proceedings,
+including potential tax penalties. Moreover, any findings related
+to public corruption that are not covered by the 2008 and 2009
+corruption charge settlements, which we concluded with Ameri-
+can and German authorities, may endanger our business with
+government agencies and intergovernmental and supranational
+A.8.3.4 COMPLIANCE RISKS
+Current or future litigation: Siemens is and will be in the
+course of its normal business operations involved in numerous
+legal disputes and proceedings in various jurisdictions. These le-
+gal disputes and proceedings could result, in particular, in
+Siemens being subject to payment of damages and punitive dam-
+ages, equitable remedies or criminal or civil sanctions, fines or
+disgorgement of profit. In individual cases this may also lead to
+formal or informal exclusion from tenders or the revocation or
+loss of business licenses or permits. In addition, further legal dis-
+putes and proceedings may be commenced or the scope of pend-
+ing legal disputes and proceedings may be expanded. Asserted
+claims are generally subject to interest rates.
+(2)%
+Other operating income
+(expenses), net
+(3)%
+700
+681
+with an equity portion
+Special reserve
+9%
+19,368
+21,123
+Equity
+Liabilities and equity
+1%
+69,814
+70,239
+Total assets
+69%
+35
+60
+resulting from offsetting
+Active difference
+Deferred tax assets
+Prepaid expenses
+The increase in Equity was attributable to net income for the year
+of €4.1 billion, the settlement of exercised warrants of €1.1 bil-
+lion and issuance of treasury stock of €0.4 billion in conjunction
+with our share-based payments and employee share programs.
+These factors were partly offset by dividends paid in fiscal 2017
+(for fiscal 2016) of €2.9 billion. In addition, equity was reduced
+due to share buybacks during the year amounting to €0.9 billion.
+The equity ratios at September 30, 2017 and 2016 were 30% and
+28%, respectively. For explanations relating to treasury shares we
+refer to NOTE 15 in NOTES TO OUR ANNUAL FINANCIAL STATEMENTS
+OF SIEMENS AG.
+by the liquidity management of the Corporate Treasury of
+Siemens AG. The liquidity management is based on the financing
+policy of the Siemens Group, which is aimed towards a balanced
+financing portfolio, a diversified maturity profile and a comfort-
+able liquidity cushion. Therefore, the change in liquidity of
+Siemens AG was not only driven by business activities of
+Siemens AG.
+(76)%
+2%
+8%
+(4)%
+19%
+81
+2,256
+2,174
+Provisions
+87
+Pensions and similar
+Other provisions
+38
+The Corporate Governance statement pursuant to Sections 289 a
+and 315 para. 5 of the German Commercial Code is an integral
+part of the Combined Management Report and is presented in
+→ C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS
+289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
+A.9.3 Corporate Governance
+statement
+The decrease in Trade payables, liabilities to affiliated compa-
+nies and other liabilities was due primarily to lower liabilities to
+affiliated companies as a result of intra-group financing activities.
+Other provisions decreased due to several factors. The largest
+was a decrease of €0.5 billion in provisions for losses from deri-
+vative financial transactions. Additionally, provisions for post-
+closing guarantees decreased by €0.2 billion and provisions for a
+major asset retirement obligation decreased by €0.2 billion, due
+primarily to reduced inflation rate assumptions.
+The increase in Pension and similar commitments resulted
+mainly from a €0.7 billion increase related to interest and service
+costs and a €0.4 billion increase related to an adjustment of the
+discount rate from 4.08% in fiscal 2016 to 3.77% in fiscal 2017.
+This increase was partly offset by €0.6 billion for payments of
+pension obligations.
+The Increase in Receivables and other assets was due primarily
+to higher receivables from affiliated companies as a result of in-
+tra-group financing activities, including higher receivables from
+SFS companies and higher receivables resulting from profit trans-
+fer agreements.
+1%
+(4)%
+(3)%
+(6)%
+29,118
+29,752
+385
+69,814
+28,896
+361
+70,239
+Total liabilities and equity
+Deferred income
+28,065
+and other liabilities
+to affiliated companies
+Trade payables, liabilities
+>200%
+21%
+750
+Advance payments received
+81
+Liabilities to banks
+Liabilities
+5%
+(11)%
+(2)%
+11,250
+8,360
+19,610
+19,178
+11,761
+7,417
+commitments
+3,642
+20,359
+20,769
+The initial application of the Accounting Directive Implementa-
+tion Act (Bilanzrichtlinie-Umsetzungsgesetz, BilRUG) resulted in
+changes in presentation in the income statement in fiscal 2017.
+Prior periods are not reported on a comparable basis. Compara-
+ble amounts for fiscal 2016 are: revenue €27,043 million, cost of
+sales €20,920 million and other operating income (expenses),
+net €(44) million.
+3%
+41%
+(141)%
+36%
+(43)%
+>(200)%
+(195)
+3,060
+(1,077)
+3,145
+Unappropriated net income
+retained earnings
+Allocation to other
+256
+146
+Profit carried forward
+2,999
+4,076
+Net income
+(160)
+(385)
+Income taxes
+3,158
+4,462
+Income from business activity
+24%
+3,092
+3,828
+ments 3,798 (prior year 3,732)
+thereof Income from invest-
+Financial income, net
+n/a
+884
+134
+Increases in Revenue at Mobility and Power and Gas, of €1.0 bil-
+lion and €0.5 billion respectively, were more than offset by the
+effect of the above-mentioned carve-out of the Siemens Wind
+Power business. In fiscal 2016, we recorded revenue of €2.1 bil-
+lion at Wind Power and Renewables. On a geographical basis,
+75% of revenue was generated in the Europe, C.I.S., Africa, Mid-
+dle East region, 18% in the Asia, Australia region and 7% in the
+Americas region. Exports from Germany accounted for 71% of
+overall revenue. In fiscal 2017, orders for Siemens AG amounted
+to €25.6 billion. Within Siemens AG, the development of revenue
+depends strongly on the completion of contracts, primarily in
+connection with large orders.
+Despite an increase of €0.2 billion in Research and develop-
+ment (R&D) expenses year-over-year, the R&D intensity (R&D
+as a percentage of revenue) increased only slightly by 0.2 per-
+centage point year-over-year due to the above-mentioned
+changes in presentation according to BiIRUG. On an average ba-
+sis, we employed 9,600 people in R&D in fiscal 2017.
+securities
+Cash and cash equivalents,
+16,717
+19,884
+Receivables and other assets
+Current assets
+(5)%
+0%
+0%
+47,083
+47,150
+2,472
+44,611
+44,802
+Financial assets
+2,348
+Intangible and tangible assets
+Non-current assets
+Assets
+(in millions of €)
+% Change
+Sep 30,
+2016
+2017
+with German Commercial Code (condensed)
+Statement of Financial Position of Siemens AG in accordance
+A.9.2 Net assets and financial position Cash, cash equivalents and securities are significantly affected
+37
+Combined Management Report
+The change in Income taxes resulted from higher income tax
+expenses, corresponding to a higher taxable share of Income
+from business activity and increased burdens from withholding
+taxes. In addition, this item included deferred tax expenses and
+income resulting from the generation and reversal of temporary
+differences between the accounting and tax-based valuation and
+the use of loss carry-forwards.
+The increase in Financial income, net was primarily attributable
+to an improvement in other financial income (expenses), from a
+negative €0.9 billion in the prior-year period to a negative
+€0.3 billion. This was mainly due to a positive effect of €0.8 bil-
+lion from changes in provisions for risks in derivative financial
+instruments. This factor was partly offset by a negative effect of
+€0.4 billion from changes in provision for pensions and similar
+commitments related to changes in the discount rate assump-
+tions. Income from investments was slightly higher compared to
+the prior-year period, which included an increase in income from
+profit transfer agreements with affiliated companies by €1.0 bil-
+lion. However, positive results from investments were nearly off-
+set by impairments of investments, which included primarily an
+impairment of Siemens AG's investment at Siemens Gamesa
+Renewable Energy, S.A., Spain, of €1.2 billion.
+Gross profit was higher year-over-year due mainly to increases
+of €0.3 billion in Digital Factory, €0.2 billion in Mobility and
+€0.2 billion in Power and Gas.
+(30)
+48 Combined Management Report
+No loans or advances from the Company are provided to mem-
+bers of the Managing Board.
+This report is based on the recommendations of the German
+Corporate Governance Code (Code) and the requirements of the
+German Commercial Code (Handelsgesetzbuch), the German
+Accounting Standards (Deutsche Rechnungslegungs Standards)
+and the International Financial Reporting Standards (IFRS).
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their sur-
+viving dependents as of September 30, 2017, amounted to
+€191.5 million (2016: €216.3 million). This figure is included in
+NOTE 16 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+40
+1,051
+1,051 1,051
+40
+40
+39
+1,027
+1,117
+1,117
+1,117
+1,091
+1,043
+52
+52
+48
+1,011
+1,011 1,011
+989
+1,065
+1,065
+1,065
+1,043
+52
+1,065 1,065 1,065
+512
+512
+512
+1,577 1,577 1,577
+1,065
+1,043
+1,059
+0 3,300
+1,117 5,491
+621
+621
+1,738 6,112
+3,300 1,099 1,048
+1,577 5,491 3,233 3,230
+566 566
+602
+621
+2,143 6,057 3,835 3,851
+3,855 1,742 6,113 4,443 4,256
+0
+1,099 1,048
+3,868 3,690
+576 566
+0
+3,300
+3,240 3,233 1,120 5,491
+603 622
+622
+622
+3,843
+1,099 1,048
+2,556
+2,426
+1,011
+989
+2,556
+0
+1,065
+1,043
+2,556
+0
+1,065
+0
+(Max)
+2017 (Min)
+2016
+Managing Board member
+Klaus Helmrich
+Managing Board member
+Lisa Davis?
+Managing Board member
+Dr. Roland Busch
+7 Ms. Davis's compensation is paid out in Germany in euros. It
+has been agreed that any tax liability that arises due to tax rates
+that are higher in Germany than in the U.S. will be reimbursed.
+For base compensation of calendar years 2015 and 2016 as well
+as for the Bonus for fiscal years 2015 and 2016, a currency-ad-
+justment payment was granted.
+individual contractual caps for performance-based components.
+6 Total compensation reflects the current fair value of stock-based
+compensation components on the grant date. On the basis of
+the current monetary values of stock-based compensation
+components, total compensation amounted to €33,657,370
+(2016: €28,747,477).
+5 Total maximum compensation for fiscal 2017 represents the con-
+tractual maximum amount for overall compensation, excluding
+fringe benefits and pension benefit commitments. At 1.7 times
+target compensation (base compensation, target amount for the
+Bonus and the target amount for long-term stock-based compen-
+sation), the maximum amount is less than the total of the
+Janina Kugel
+€8,560,190). The amounts for individual Managing Board mem-
+bers were as follows: Joe Kaeser €2,200,081 (2016: 2,120,051),
+Dr. Roland Busch €1,100,041 (2016: €1,080,022), Lisa Davis
+€1,100,041 (2016: €1,080,022), Klaus Helmrich €1,100,041 (2016:
+€1,080,022), Janina Kugel €1,055,020 (2016: €1,040,029),
+Cedrike Neike €3,700,065 (2016: €0), Michael Sen €1,025,067
+(2016: €0), Dr. Ralf P. Thomas €1,100,041 (2016: €1,080,022) and
+for former Managing Board member Prof. Dr. Siegfried Russwurm
+€550,020 (2016: €1,080,022).
+(2016: €698,432), Klaus Helmrich €1,784,593 (2016: €1,284,349),
+Janina Kugel €1,278,363 (2016: €704,026), Cedrik Neike
+€2,978,584 (2016: €0), Michael Sen €135,659 (2016: €0) and
+Dr. Ralf P. Thomas €1,393,673 (2016: €872,394). The correspond-
+ing expense, determined in the same way, for former Managing
+Board members was as follows: Brigitte Ederer €218,614 (2016:
+- €42,052), Barbara Kux €218,614 (2016: - €42,052), Peter
+Löscher €538,356 (2016: - €103,403), Prof. Dr. Hermann Requardt
+€32,566 (2016: - €5,624), Prof. Dr. Siegfried Russwurm
+€3,303,141 (2016: €1,302,593), Peter Y. Solmssen €692,506
+(2016: €35,857), and Dr. Michael Süß €29,604 (2016: - €248).
+3 The expenses recognized for stock-based compensation for members of the
+Managing Board in accordance with the IFRS in fiscal 2017 and fiscal 2016 amounted
+to €19,031,892 and €8,294,921, respectively. The following amounts pertained
+the members of the Managing Board in fiscal 2017: Joe Kaeser €3,344,690 (2016:
+€2,378,584), Dr. Roland Busch €1,781,634 (2016: €1,283,779), Lisa Davis €1,301,296
+2 The figures for individual maximums for multi-year variable compensation reflect the
+possible maximum value in accordance with the maximum amount agreed upon for
+fiscal 2017 - that is, 300% of the applicable target amount.
+in the amount of €746,537 (2016: €765,327).
+1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
+and other perquisites, such as the provision of company cars in the amount of
+€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
+of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
+advice, accommodation and moving expenses, including any taxes due in this regard,
+currency adjustment payments and costs relating preventive medical examinations
+6,969
+2,773 2,639
+7,066
+0 6,600
+6,328 6,460 2,234 10,982
+1,101 1,193 1,193 1,193
+7,428 7,653 3,427 12,175
+One-year variable compensation
+(Bonus) Payout amount
+4 Of the Stock Awards granted in fiscal 2017, most are contingent
+upon attaining the prospective performance-based target for
+Siemens stock relative to five competitors. The monetary values
+relating to 100% target achievement were €12,930,417 (2016:
+Managing Board member
+2016
+2017
+(Max)
+(Min)
+2017
+2016
+2017
+2017
+2017
+2017
+2017
+2017
+(Min) (Max)
+2017
+2016
+1,043
+683
+1,726
+1,120 1,120
+1,120
+55
+55
+55
+55
+1,098
+1,065 1,065
+1,065
+1,043
+2017
+2017
+(Min) (Max)
+1,005
+0
+3,165
+3,075
+530
+3,604 3,659
+1,065
+1,065
+69
+1,134
+61
+1,104
+648
+648
+648
+548
+548
+548
+1,065
+115
+115
+15
+15
+15
+1,043
+533
+533
+533
+533
+115
+1,043
+533
+69
+1,134
+5,159 548 2,746
+1,214 1,214 1,214
+6,373 1,762 3,959
+1,347
+1,650
+0
+4,079
+533
+1,043
+0 2,556
+1,065
+1,043
+1,278
+0
+533
+0 1,278
+533
+572
+1,121
+1,134
+39
+78
+69
+533
+without long-term incentive effect,
+non-stock-based
+533
+2016
+Managing Board member
+Cedrik Neike 8,9
+1,151
+3,207
+1,282
+3,368
+1,284
+3,448
+3,560
+1,370
+1,248
+3,873
+4,212
+Michael Sen 10
+3,452
+1,387
+1,387 1,284
+1,643 5,823
+593
+593
+593
+5,231
+1,051
+3,067
+3,584
+Dr. Ralf P. Thomas
+Managing Board member
+since April 1, 2017
+(Max)
+2017
+2017
+(Min)
+2017
+2016
+(Max)
+(Min)
+2017
+2016
+(Max)
+(Min)
+2017
+2016
+2017
+2017
+2017
+2017
+until March 31, 2017
+CFO
+since April 1, 2017
+Prof. Dr. Siegfried Russwurm¹¹
+Managing Board member
+2017
+Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
+standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
+instead of the target value according to the Code for one-year variable compensation. Service costs for pension
+benefits are not included.
+Total (Code)6
+Service Cost
+Variable
+component
+Remuneration
+Variable compensation (Bonus) and long-term stock-based compensation
+With regard to the further terms of the Stock Awards, the same
+principles apply in general to the Managing Board and to senior
+managers. These principles are discussed in more detail in
+NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+If an employment contract begins during the fiscal year, an equiv-
+alent number of Siemens Phantom Stock Awards will be granted
+instead of Stock Awards. In lieu of a transfer of shares, only a cash
+equivalent is given at the end of the restriction period for Siemens
+Phantom Stock Awards. Beyond that, the same provisions agreed
+upon for Siemens Stock Awards apply.
+discretion to revoke without replacement all or some of the
+Siemens Stock Awards, depending on the gravity of the compli-
+ance violation.
+If a member of the Managing Board violates compliance regu-
+lations, the Supervisory Board is entitled at its duty-bound
+If significant changes occur among the relevant competitors
+during the period under consideration, the Supervisory Board
+may take these changes into account, as appropriate, in deter-
+mining the values for comparison and/or calculating the relevant
+stock prices of those competitors. In the event of extraordinary
+unforeseen developments that impact the share price, the Super-
+visory Board may decide to reduce the number of committed
+Stock Awards retroactively, or it may decide that in lieu of a trans-
+fer of Siemens stock only a cash settlement in a defined and lim-
+ited amount will be paid, or it may decide to postpone transfers
+of Siemens stock for payable Stock Awards until the develop-
+ments have ceased to impact the share price.
+Share of target
+compensation
+Combined Management Report
+-
+Beneficiaries receive one free share of Siemens stock per Stock
+Award after an approximately four-year restriction period and
+subject to target attainment. The value of the Siemens shares
+to be transferred for Stock Awards after the end of the restric-
+tion period depends on the price of the Siemens share at the
+time of transfer and on target attainment as defined by the
+underlying target system. If target attainment is above 100%,
+the members of the Managing Board will receive - in addition
+to the Siemens shares committed - a cash payment correspond-
+ing to the outperformance. If target attainment is less than
+100%, a number of stock commitments equivalent to the short-
+fall from the target will be forfeited without replacement. The
+total value of the Siemens stock and of the cash payment is
+subject to a ceiling of 300% of the relevant target amount. If
+this maximum amount of compensation is exceeded, the corre-
+sponding entitlement to stock commitments will be forfeited
+without replacement.
+Long-term stock-based compensation consists of a grant of for-
+feitable stock commitments (Stock Awards) at the beginning of
+the fiscal year. In the event of 100% target achievement, the an-
+nual target amount for the monetary value of the Stock Awards
+commitment is €2,200,000 for the President and CEO (effective
+October 1, 2016). For the CFO and for those members of the Man-
+aging Board who are responsible for Divisions and for Health-
+ineers it is €1,100,000. For the other member of the Managing
+Board, it is €1,055,000. Since fiscal 2015, the Supervisory Board
+has had the option of increasing the target amount for each
+member of the Managing Board, on an individual basis, by as
+much as 75% for one fiscal year at a time. This option enables the
+Supervisory Board to take account of each Managing Board mem-
+ber's individual accomplishments and experience as well as the
+scope and demands of his or her function.
+Long-term stock-based compensation
+At its duty-bound discretion, the Supervisory Board may revise
+the amount resulting from target achievement downward or up-
+ward by as much as 20%; the adjusted amount of the Bonus paid
+can thus be as much as 240% of the target amount. In choosing
+the factors to be considered in deciding on possible revisions of
+the Bonus payouts (±20%), the Supervisory Board takes account
+of incentives for sustainable corporate management. Decisions
+to make discretionary adjustments may take factors such as the
+results of an employee survey or a customer satisfaction survey
+into account as well as the Company's economic situation. The
+revision option may also be exercised in recognition of Managing
+Board members' individual achievements. The Bonus is paid en-
+tirely in cash.
+For 100% target achievement (target amount), the amount of the
+Bonus equals the amount of base compensation. The Bonus is
+subject to a ceiling (cap) of 200%. If targets are substantially
+missed, variable compensation may not be paid at all (0%).
+Variable compensation (Bonus) is based on the Company's busi-
+ness performance in the past fiscal year. The Bonus depends on
+an equal one-third weighting of target achievement of the target
+parameters return on capital employed, earnings per share and
+individual targets. To achieve a consistent target system Compa-
+ny-wide, corresponding targets - in addition to other factors -
+also apply to senior managers.
+Performance-based components
+Variable compensation (Bonus)
+Fringe benefits include the costs, or the cash equivalent, of non-
+monetary benefits and other perquisites, such as the provision
+of a company car, contributions toward the cost of insurance,
+the reimbursement of expenses for legal advice and tax advice,
+accommodation and moving expenses, including a gross-up for
+any taxes due in this regard, currency adjustment payments and
+costs relating to preventive medical examinations.
+Target attainment relating to long-term stock-based compensa-
+tion is linked to the performance of Siemens stock compared to its
+competitors. At the beginning of the fiscal year, the Supervisory
+Board decides on a target system (target value for 100% and target
+line) for the performance of Siemens stock relative to the stock
+of – at present – five competitors (ABB, General Electric, Mitsu-
+bishi Heavy Industries, Rockwell and Schneider Electric). Changes
+in the share price are measured on the basis of a twelve-month
+reference period (compensation year) over three years (perfor-
+mance period), while Stock Awards are restricted for a period of
+four years. When this restriction period expires, the Supervisory
+Board determines how much better or worse Siemens stock has
+performed relative to the stock of its competitors. This determina-
+tion yields a target attainment of between 0% and 200% (cap).
+compensation ~ 33%
+(Bonus)
+Long-term
+stock-based
+compensation
+~ 34%
+300% of the
+respective
+target amount
+0-200%
+on target
+achievement
+Dependent
+240% of the
+respective
+target amount
+add. +/- 20%
+adjustment
+0-200
+Value at allo-
+cation/transfer
+Maximum
+amounts of
+compensation
+Target
+achievement
+a twelve-month reference
+period (compensation
+year) over three years
+(performance period)
+Change in share price
+measured on the basis of
+Annual
+basis
+0 3 years
+Annual
+basis
+Basis for
+assessment
+Performance of
+Siemens stock
+compared to
+5 competitors
+per share, basic EPS
+1/3 Individual
+targets
+1/3 Earnings
+1/3 Return on capital
+employed (ROCE)
+Target
+parameter
+Fringe benefits
+Dependent on
+Base compensation is paid as a monthly salary. Since October 1,
+2016, the base compensation of President and CEO Joe Kaeser
+has amounted to €2,130,000 per year. The base compensation of
+the CFO and of those members of the Managing Board who are
+responsible for Divisions or for Healthineers has been €1,065,000
+per year. For the other member of the Managing Board, it has
+been €1,011,000 per year.
+In fiscal 2017, the Managing Board's remuneration system had
+the following components:
+1/3 Long-term
+stock-based compensation
+Siemens Stock Awards
+> Variability of target
+achievement:
+0-200%
+Base compensation
+100%
+Maximum amounts of compensation
+Managing Board
+member
+and CEO
+President
+base
+compensation
+2 times
+Target parameter
+base
+compensation
+1/3 Base compensation
+Structure of target compensation
+Requirement to hold Siemens stock
+as a multiple of base compensation
+throughout the terms of office
+Share Ownership Guidelines
+Remuneration system for Managing Board members
+The system and levels for the Managing Board's remuneration are
+determined and regularly reviewed by the full Supervisory Board,
+based on proposals by the Compensation Committee. The Super-
+visory Board reviews remuneration levels annually to ensure that
+they are appropriate. In this process, the Company's economic
+situation, performance and outlook as well as the tasks and per-
+formance of the individual Managing Board members are taken
+into account. In addition, the Supervisory Board considers the
+common level of remuneration in comparison with peer compa-
+nies and with the compensation structure in place in other areas
+of the Company. It also takes due account of the relationship
+between the Managing Board's remuneration and that of senior
+management and staff, both overall and with regard to its devel-
+opment over time. For this purpose, the Supervisory Board has
+also determined how senior management and the relevant staff
+are to be differentiated. The remuneration system that has been
+in place for Managing Board members since fiscal 2015 was ap-
+proved at the Annual Shareholders' Meeting on January 27, 2015.
+The individual components of compensation - base compensa-
+tion, variable compensation (Bonus) and long-term stock-based
+compensation - are weighted equally, and each comprises about
+one-third of target compensation. This equal weighting is also
+applied to the three target parameters of variable compensation
+(Bonus).
+The remuneration system for the Siemens Managing Board is in-
+tended to provide an incentive for successful corporate manage-
+ment with an emphasis on sustainability. Managing Board mem-
+bers are expected to make a long-term commitment to and on
+behalf of the Company and may benefit from any sustained in-
+crease in the Company's value. For this reason, a substantial
+portion of their total remuneration is linked to the long-term
+performance of Siemens stock. Their remuneration is to be com-
+mensurate with the Company's size and economic position.
+Exceptional achievements are to be rewarded adequately, while
+falling short of targets is to result in an appreciable reduction in
+remuneration. Their compensation is also structured so as to be
+attractive in comparison to that of competitors, with a view to
+attracting outstanding managers to the Company and retaining
+them for the long term.
+A.10.1.1 REMUNERATION SYSTEM
+A.10.1 Remuneration of Managing
+Board members
+3 times
+> Performance of Siemens stock
+compared to five competitors
+Restriction period
+four years
+2/3
+1/3 Variable compensation (Bonus)
+> Variability of target achievement:
+0-200% add. ±20% adjustment
+40
+39
+Combined Management Report
+Compensation
+overall
+stock-based compensation
+Long-term
+Variable
+compensation (Bonus)
+300%
+target compensation¹
+1.7 times
+240%
+as a percentage of the respective target amount
+1 Plus fringe benefits and pension benefit commitments.
+Individual
+targets
+1/3
+Earnings
+per share
+1/3
+1/3 ROCE
+Target parameter:
+compensation
+Performance-
+based
+Non-performance-based components
+Base compensation
+2,528
+- Target
+achievement
+at transfer
+with long-term incentive effect,
+stock-based
+without long-term incentive effect,
+non-stock-based
+Total
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total compensation
+components
+Performance-based
+components
+Performance-based
+Joe Kaeser
+(Amounts in thousands of €)
+Non-performance-
+based components
+44
+Managing Board members serving as of September 30, 2017
+Total compensation
+Performance-based
+components
+components
+Performance-based
+(Amounts in thousands of €)
+Non-performance-
+based components
+Managing Board members serving as of September 30, 2017
+The compensation presented on the following pages was
+granted to the members of the Managing Board for fiscal
+2017 (individual disclosure).
+Combined Management Report
+President and CEO
+2016
+2017
+Total5
+Multi-year variable compensation 2.3
+Siemens Stock Awards4
+(restriction period: four years)
+One-year variable compensation
+(Bonus) Target amount
+with long-term incentive effect,
+stock-based
+without long-term incentive effect,
+non-stock-based
+Total
+Fixed compensation (base compensation)
+Fringe benefits'
+One-year variable compensation
+(Bonus) Payout amount
+without long-term incentive effect,
+non-stock-based
+Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
+standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
+instead of the target value according to the Code for one-year variable compensation. Service costs for pension
+benefits are not included.
+Total (Code) 6
+Service Cost
+Total5
+2,158 2,096
+Multi-year variable compensation 2.3
+Siemens Stock Awards4
+(restriction period: four years)
+One-year variable compensation
+(Bonus) Target amount
+5,112
+0
+2,130
+2,034
+2017
+2017
+(Min) (Max)
+2,034 2,130 2,130 2,130
+102
+104 104 104
+2,136 2,234 2,234 2,234
+On the basis of the Supervisory Board's decisions described
+above, Managing Board compensation for fiscal 2017 totaled
+€33.97 million (2016: €28.90 million), an increase of 17.5%.
+Of this total amount, €20.73 million (2016: €20.19 million)
+was attributable to cash compensation and €13.24 million
+(2016: €8.71 million) to stock-based compensation.
+- Stock price
+Total compensation
+Since beneficiaries are not entitled to receive dividends, the
+number of stock commitments granted was based on the
+closing price of Siemens stock in Xetra trading on the date
+of award less the present value of dividends expected during
+the restriction period. The share price used to determine the
+number of stock commitments was €91.32 (2016: €75.60).
+Combined Management Report
+In the event of a change of control that results in a substantial
+change in a Managing Board member's position - for example,
+due to a change in corporate strategy or a change in the Manag-
+ing Board member's duties and responsibilities – the Managing
+Board member has the right to terminate his or her contract with
+the Company. A change of control exists if one or more share-
+holders acting jointly or in concert acquire a majority of the vot-
+ing rights in Siemens AG and exercise a controlling influence or
+if Siemens AG becomes a dependent enterprise as a result of
+entering into an intercompany agreement within the meaning of
+Section 291 of the German Stock Corporation Act (Aktiengesetz)
+or if Siemens AG is to be merged into an existing corporation or
+other entity. If this right of termination is exercised, the Manag-
+ing Board member is entitled to a severance payment in the
+amount of not more than two years' compensation. The calcula-
+tion of the annual compensation will include not only the base
+compensation and the target amount for the Bonus, but also the
+target amount for Stock Awards, in each case based on the most
+recent fiscal year completed prior to the termination of the mem-
+ber's contract. The stock-based components for which a firm
+commitment already exists will remain unaffected. There is no
+Managing Board employment contracts provide for a compensa-
+tory payment if membership on the Managing Board is termi-
+nated prematurely by mutual agreement and without serious
+cause. The amount of this payment must not exceed the value of
+two years' compensation and must compensate no more than
+the remaining term of the contract (cap). The amount of the
+compensatory payment is calculated on the basis of base com-
+pensation, together with the variable compensation and the
+long-term stock-based compensation actually received during
+the last fiscal year before termination. The compensatory pay-
+ment is payable in the month when the member leaves the Man-
+aging Board. In addition, a one-time special contribution is made
+to the BSAV. The amount of this contribution is based on the
+BSAV contribution that the Managing Board member received in
+the previous year and on the remaining term of his or her ap-
+pointment, but is limited to not more than two years' contribu-
+tions (cap). The above benefits are not paid if an amicable termi-
+nation of the member's activity on the Managing Board is agreed
+upon at the member's request, or if there is serious cause for the
+Company to terminate the employment relationship.
+Commitments in connection with the termination
+of Managing Board membership
+September 30, 1983, are entitled to receive transition payments
+for the first six months after retirement, equal to the difference
+between their final base compensation and the retirement ben-
+efits payable under the corporate pension plan if they retire im-
+mediately after the termination of their Managing Board mem-
+bership. The provisions of the German Company Pensions Act
+(Betriebsrentengesetz) do not apply to this benefit.
+Like other eligible employees of Siemens AG, Managing Board
+members who were employed by the Company on or before
+Benefits from the retirement benefit system that was in place
+before the BSAV was established are normally granted as pension
+benefits with a surviving dependent's pension. In this case also,
+payout in installments or a lump-sum payment may be chosen
+instead of pension payments.
+Managing Board members are eligible to receive benefits under
+the BSAV at the age of 60 or - in the case of benefit commit-
+ments made on or after January 1, 2012 – the age of 62. As a rule,
+the accrued pension benefit balance is paid out to Managing
+Board members in twelve annual installments. A Managing Board
+member or his or her surviving dependents may also request that
+his or her pension benefit balance will be paid out in fewer in-
+stallments or as a lump sum, subject to the Company's consent.
+The accrued pension benefit balance may also be paid out as a
+pension. Furthermore, Managing Board members may choose a
+combination of lump sum payments, installment payments (two
+to twelve) and pension payments. If the pension option is chosen,
+a decision must be made as to whether the payout should include
+pensions for surviving dependents. If a member of the Managing
+Board dies while receiving a pension, benefits will be paid to his
+or her surviving dependents if the member has chosen such
+benefits. The Company will then provide a limited-term pension
+to surviving children until they reach the age of 27 or, in the case
+of benefit commitments made on or after January 1, 2007, until
+they reach the age of 25.
+Like employees of Siemens AG, the members of the Managing
+Board are included in the Siemens Defined Contribution Benefit
+Plan (BSAV). Under the BSAV, Managing Board members receive
+contributions that are credited to their personal pension ac-
+counts. The amount of these annual contributions is based on a
+predetermined percentage related to their base compensation
+and the target amount for their Bonuses. This percentage is de-
+cided upon annually by the Supervisory Board. Most recently it
+was set at 28%. In making its decisions, the Supervisory Board
+takes account of the intended level of provision for each individ-
+ual and the length of time he or she has been a Managing Board
+member as well as the annual and long-term expense to the
+Company resulting from that provision. The non-forfeitability of
+pension benefit commitments is determined in compliance with
+the provisions of the German Company Pensions Act (Betriebsren-
+tengesetz). Special contributions may be granted to Managing
+Board members on the basis of individual decisions by the Super-
+visory Board. If a member of the Managing Board earned a pen-
+sion benefit entitlement from the Company before the BSAV was
+introduced, a portion of his or her contributions went toward
+financing that prior commitment.
+entitlement to a severance payment if the Managing Board mem-
+ber receives benefits from third parties in connection with a
+change of control. Moreover, there is no right to terminate if the
+change of control occurs within a period of twelve months prior
+to a Managing Board member's retirement.
+Pension benefit commitments
+41
+Combined Management Report
+Compliance with these guidelines must be proven for the first
+time after a four-year buildup phase. Thereafter, it must be
+proven annually. If the value of a Managing Board member's
+accrued holdings declines below the required minimum due to
+fluctuations in the market price of Siemens stock, he or she must
+acquire additional shares.
+worth a multiple of their base compensation 300% for the
+President and CEO, 200% for the other members of the Managing
+Board - throughout their terms of office on the Managing Board.
+The determining figure in this context is the average base com-
+pensation that a member of the Managing Board has received
+over the four years before the applicable dates of proof of com-
+pliance. Hence, changes that have been made to base compensa-
+tion in the meantime are included. Non-forfeitable stock commit-
+ments (Bonus Awards) which were granted until fiscal 2014 are
+taken into account in determining compliance with the Share
+Ownership Guidelines.
+buildup phase Managing Board members hold Siemens stock
+-
+The Siemens Share Ownership Guidelines are an integral part of
+the remuneration system for the Managing Board and senior
+executives. These guidelines require that after a specified
+Share Ownership Guidelines
+Maximum amount for compensation overall
+In addition to the maximum amounts of compensation for vari-
+able compensation and long-term stock-based compensation,
+a maximum amount for compensation overall has been defined.
+Since fiscal 2014, this amount cannot be more than 1.7 times
+higher than target compensation. Target compensation com-
+prises base compensation, the target amount for variable com-
+pensation and the target amount for long-term stock-based com-
+pensation, excluding fringe benefits and pension benefit
+commitments. When fringe benefits and pension benefit commit-
+ments for a given fiscal year are included, the maximum amount
+of compensation overall for that year will increase accordingly.
+42
+Compensatory or severance payments also cover non-monetary
+benefits by including an amount of 5% of the total compensation
+or severance amount. Compensatory or severance payments will
+be reduced by 10% as a lump-sum allowance for discounted val-
+ues and for income earned elsewhere. However, this reduction
+will apply only to the portion of the compensatory or severance
+payment that was calculated without taking into account the first
+six months of the remaining term of the Managing Board mem-
+ber's employment contract.
+Stock commitments that were made as long-term stock-based
+compensation and for which the restriction period is still in effect
+will be forfeited without replacement if the employment contract
+is not extended after the end of an appointment period, either at
+the Managing Board member's request or because there is seri-
+ous cause that would have entitled the Company to revoke the
+appointment or terminate the contract. However, once granted,
+Stock Awards are not forfeited if the employment contract is ter-
+minated by mutual agreement at the Company's request, or be-
+cause of retirement, disability or death or in connection with a
+spinoff, the transfer of an operation, or a change of activity
+within the corporate group. In these cases, the Stock Awards will
+remain in effect upon termination of the employment contract
+and will be honored on expiration of the restriction period.
+Secondary activities of Managing Board members
+Members of the Managing Board may take on secondary activi-
+ties – in particular, supervisory board positions outside the
+Company - only with the approval of the Chairman's Committee
+of the Supervisory Board. The full Supervisory Board remains
+responsible for decisions regarding any adjustments to Manag-
+ing Board compensation necessary to take account of possible
+Long-term stock-based compensation
+43
+Combined Management Report
+assessment, the Supervisory Board decided not to make any dis-
+cretionary adjustments to the Bonus payout amounts.
+100-130%
+In fiscal 2017, Bonus-related target attainment by Managing
+Board members was between 113.89% and 123.89%. In its overall
+2 Calculative target achievement for ROCE was 51.33%. The Supervisory Board adjusted this figure to reflect the acquisition of
+Mentor Graphics and the merger of Siemens' wind power business with Gamesa Corporación Tecnológica S.A. (Gamesa).
+Focus topics 2017: Growth, Innovation,
+Digitalization and Excellence
+Target achievement²
+118.33%
+123.33%
+Actual FY 2017 figure
+13.54%
+€7.67
+100% of target
+15.00%
+€7.32
+1 Continuing and discontinued operations.
+Individual targets
+Earnings per share, basic EPS1 (02015-2017)
+Return on capital employed, ROCE¹
+Target parameter
+The following targets were set and attained with respect to the
+target parameters for variable compensation:
+Variable compensation (Bonus)
+At the beginning of the fiscal year, the Supervisory Board set the
+target parameters return on capital employed (ROCE) and earn-
+ings per share (EPS) for the variable compensation (Bonus) for all
+members of the Managing Board, in each case on the basis of
+continuing and discontinued operations. The target values for
+the EPS component were defined on a multi-year basis. In defin-
+ing the target for variable compensation, the Supervisory Board
+also defined individual targets so as to take fuller account of the
+individual performance of each Managing Board member. As a
+rule, up to five individual targets were defined for this purpose.
+An internal review of the appropriateness of Managing Board
+compensation for fiscal 2017 has confirmed that the remunera-
+tion of the Managing Board resulting from target achievement
+for fiscal 2017 is to be considered appropriate. In light of this re-
+view and following a review of the achievement of the targets
+defined at the beginning of the fiscal year, the Supervisory Board
+has decided to define the amounts of variable compensation,
+stock commitments and pension benefit contributions as follows:
+A.10.1.2 REMUNERATION OF MANAGING BOARD
+MEMBERS FOR FISCAL 2017
+compensation for secondary activities. The holding of positions
+in Siemens companies is considered to be covered by contractual
+Managing Board remuneration. As a rule, Managing Board mem-
+bers are obligated to waive any compensation that may be due
+to them in connection with such positions. Should a waiver not
+be possible under the legal or tax regulations applicable to a
+Siemens company, the compensation paid to a Managing Board
+member in connection with such a position will be set off against
+the remuneration due to him or her in connection with his or her
+Managing Board activities. Memberships in supervisory boards
+whose establishment is required by law or in comparable domes-
+tic or foreign controlling bodies of business enterprises are listed
+in Section c.4.1 in c.4 CORPORATE GOVERNANCE.
+Commitments in connection with the
+termination of Managing Board membership
+Because Prof. Dr. Russwurm left the Managing Board at the
+end of his term of office on March 31, 2017, no commit-
+ments were agreed upon in connection with the termina-
+tion of his Managing Board membership. In accordance with
+his contract with the Company, the previously granted Stock
+Awards, for which the restriction period is still in effect, will
+be absolutely maintained.
+Other
+703
+0 3,075
+648 2,746
+703 703
+1,351 3,449
+1,370
+1,284
+624
+606
+1,121
+572
+1,104
+1,134
+648
+1,317
+548
+39
+61
+69
+115
+15
+1,043
+533
+1,043
+1,065
+78
+533
+0
+891
+1,028
+0
+0
+0
+0
+903
+0
+397
+0
+0
+0
+0
+2,024
+0
+891
+0
+0
+2,310
+3,052
+465
+0
+533
+2016
+2017
+6,104
+603
+622
+2,309
+2,202
+3,816
+5,586
+3,113
+2,825
+4,399
+A.10 Compensation Report
+0
+0
+55
+133
+0
+0
+53
+129
+0
+5,482
+566
+3,391
+576
+3,688
+2016
+2017
+2016
+2017
+2016
+2017
+until March 31, 2017
+CFO
+since April 1, 2017
+since April 1, 2017
+Prof. Dr. Siegfried Russwurm 10
+Managing Board member
+Managing Board member
+Managing Board member
+Dr. Ralf P. Thomas
+Michael Sen⁹
+Cedrik Neike7,8
+2,839
+530
+593
+2,795
+602
+4,418
+621
+6,207
+0
+0
+0
+0
+566,160
+Cedrik Neike4
+Janina Kugel
+4,607,800
+5,007,306
+583,968
+596,400
+Klaus Helmrich
+3,817,196
+553,728
+4,532,350
+596,400
+Lisa Davis
+4,342,427
+4,742,811
+583,968
+596,400
+Dr. Roland Busch
+10,391,542
+11,195,488
+583,968
+1,628,418
+1,084,971
+298,200
+In fiscal 2017, former members of the Managing Board and their
+surviving dependents received emoluments within the meaning
+of Section 314 para. 1 No. 6 b of the German Commercial Code
+totaling €34.1 million (2016: €52.3 million). The previous year's
+figure includes the lump-sum payments of the former Managing
+Board members Prof. Dr. Requardt and Mr. Solmssen.
+6 Prof. Dr. Russwurm left the Managing Board effective the
+end of March 31, 2017.
+5 Mr. Sen was appointed a full member of the Managing
+Board effective April 1, 2017.
+4 Mr. Neike was appointed a full member of the Managing
+Board effective April 1, 2017.
+3 Deferred compensation totals €4,001,386 (2016: €3,829,397),
+including €3,590,178 for Joe Kaeser (2016: €3,428,243),
+€354,801 for Klaus Helmrich (2016: €343,953) and €56,407
+for Dr. Ralf P. Thomas (2016: €57,201).
+2 The defined benefit obligations reflect one-time special
+contributions to the BSAV for new appointments from out-
+side the Company, amounting to €1,525,000 (2016: €0).
+1 The expenses (service cost) recognized in accordance with
+the IFRS in fiscal 2017 for Managing Board members' entitle-
+ments under the BSAV in fiscal 2017 amounted to
+€6,754,665 (2016: €4,615,543).
+6,083,534
+34,624,669
+6,317,937
+40,069,078
+583,968
+4,612,608
+298,200
+5,039,160
+Former members of the Managing Board
+Prof. Dr. Siegfried Russwurm 6
+Total
+4,297,199
+4,727,702
+583,968
+596,400
+703,169
+298,200
+Dr. Ralf P. Thomas
+Michael Sen 5
+1,213,897
+1,139,040
+0
+1,192,800
+serving as of September 30, 2017
+4,363
+2,958
+3,347
+1,272
+2,556
+97
+133
+20
+39
+4,845
+0
+0
+0
+67
+0
+0
+0
+1,407
+0
+0
+1,402
+1,214
+3,770
+703
+1,975
+622
+3,969
+2016
+2017
+Defined benefit obligation² for all pension
+commitments excluding deferred compensation³
+Total
+contributions' for
+2016
+2017
+Managing Board members
+(Amounts in €)
+The following table shows individualized details of the contribu-
+tions (allocations) under the BSAV for fiscal 2017 as well as the
+defined benefit obligations for pension commitments.
+The contributions under the BSAV are added to the personal pen-
+sion accounts each January, following the close of the fiscal year.
+Until a beneficiary's date of retirement, his or her pension account
+is credited with an annual interest payment (guaranteed interest)
+on January 1 of each year. The interest rate is currently 0.90%.
+For fiscal 2017, the members of the Managing Board were
+granted contributions under the BSAV totaling €5.0 million
+(2016: €4.6 million), based on a resolution of the Supervisory
+Board dated November 8, 2017. Of this amount, €0.1 million
+(2016: €0.1 million) related to the funding of pension commit-
+ments earned prior to transfer to the BSAV.
+Pension benefit commitments
+47
+Combined Management Report
+10 Prof. Dr. Russwurm left the Managing Board effective the end
+of March 31, 2017.
+9 To compensate for the forfeiture of stock and pension contri-
+butions at his previous employer, the Supervisory Board has
+granted Mr. Sen a one-time sum of €950,000. Half of this
+amount was awarded in the form of Siemens Phantom Stock
+Awards and the other half as a special pension benefit contri-
+bution.
+fringe benefits reported here, an amount of €7,778 was granted
+and paid by Siemens Ltd. China. In addition, it has been agreed
+that Siemens AG will offset, as a net amount, any personal tax
+burden that, due to Mr. Neike's two employment relationships,
+exceeds the burden that he would incur if he paid tax solely
+on the benefits granted to him in his employment contract
+with Siemens AG in Germany. Siemens AG will also offset any
+burdens due to charges and contributions to social insurance
+or comparable statutory systems in China additional to those
+he incurs in Germany.
+8 Mr. Neike was appointed Executive Chairman of the Board of
+Directors of Siemens Ltd. China, effective May 1, 2017. Of the
+fixed compensation and one-year variable compensation (pay-
+out amount) reported here, an amount of €222,802 was granted
+and paid by Siemens Ltd. China and set off against the remune-
+ration for his Managing Board activities at Siemens AG. Of the
+Stock Awards fell due and was honored in September 2017. The
+other half will fall due and be honored in September 2018. The
+value of these Siemens Phantom Stock Awards depends solely
+on the performance of Siemens stock.
+602
+5,447
+621
+4,984
+603
+3,561
+Joe Kaeser
+0
+0
+0
+0
+0
+1,407
+0
+0
+1,028
+Bonus Awards (waiting period: 2012-2016)5
+Bonus Awards (waiting period: 2011-2015)5
+Share Matching Plan (vesting period: 2013-2015)
+903
+0
+Other6
+0
+Siemens Stock Awards (restriction period: 2012-2016)³
+Siemens Stock Awards (restriction period: 2011-2015)4
+2,310
+4,570
+Multi-year variable compensation
+with long-term incentive effect, stock-based
+2,773
+2,639
+(Bonus) Payout amount²
+One-year variable compensation
+3,542
+Total
+200
+97
+2 The payout amount of one-year variable compensation (Bonus) presented above
+in the amount of €746,537 (2016: €765,327).
+1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
+and other perquisites, such as the provision of company cars in the amount of
+€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
+of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
+advice, accommodation and moving expenses, including any taxes due in this regard,
+currency adjustment payments and costs relating preventive medical examinations
+Total (Code)
+Service Cost
+Total
+Other6
+Siemens Stock Awards (restriction period: 2012-2016)³
+Siemens Stock Awards (restriction period: 2011-2015)4
+Bonus Awards (waiting period: 2012-2016)5
+Bonus Awards (waiting period: 2011-2015)5
+Share Matching Plan (vesting period: 2013-2015)
+Multi-year variable compensation
+One-year variable compensation
+(Bonus) - Payout amount²
+with long-term incentive effect, stock-based
+without long-term incentive effect,
+non-stock-based
+Total
+Fringe benefits¹
+Fixed compensation (base compensation)
+8,416
+1,101
+1,193
+10,835
+Service Cost
+Total (Code)
+7,316
+9,643
+2,136
+therefore represents the amount awarded for fiscal 2017, which will be paid out in
+January 2018.
+2,234
+104
+10 To compensate for the forfeiture of stock and pension contri-
+butions at his previous employer, the Supervisory Board has
+granted Mr. Sen a one-time sum of €950,000. One half of this
+amount was awarded in the form of Siemens Phantom Stock
+Awards and the other half as a special pension benefit contri-
+bution.
+to social insurance or comparable statutory systems in China
+additional to those he incurs in Germany.
+9 Mr. Neike was appointed Executive Chairman of the Board of
+Directors of Siemens Ltd. China, effective May 1, 2017. Of the
+fixed compensation and one-year (payout amount) and multi-
+year variable compensation reported here, an amount of
+€359,769 was granted and paid by Siemens Ltd. China and set
+off against the remuneration for his Managing Board activities at
+Siemens AG. Of the fringe benefits reported here, an amount of
+€7,778 was granted and paid by Siemens Ltd. China. In addition,
+it has been agreed that Siemens AG will offset, as a net amount,
+any personal tax burden that, due to Mr. Neike's two employ-
+ment relationships, exceeds the burden that he would incur
+if he paid tax solely on the benefits granted to him under his
+employment contract with Siemens AG in Germany. Siemens AG
+will also offset any burdens due to charges and contributions
+8 To compensate for the forfeiture of stock at his previous em-
+ployer, the Supervisory Board has granted Mr. Neike a one-time
+sum of €4,200,000. Seventy-five percent of this amount was
+awarded in the form of Siemens Phantom Stock Awards and the
+remaining 25% as a special pension benefit contribution. One
+half of the total amount of these granted Siemens Phantom
+Stock Awards fell due and was honored in September 2017. The
+other half will fall due and be honored in September 2018. The
+value of these Siemens Phantom Stock Awards depends solely
+on the performance of Siemens stock. As compensation for
+the forfeiture of stock at his previous employer, these Siemens
+Phantom Stock Awards are not taken into account when deter-
+mining target compensation and hence are not included in
+the individual minimum and maximum amounts specified.
+606
+1,702
+1,317
+3,538
+1,370 1,284
+3,573 3,466
+624
+2,619
+606
+5,233
+11 Prof. Dr. Russwurm left the Managing Board effective the end
+of March 31, 2017.
+2,249
+6,113
+621
+602
+1,628
+3,263
+524
+1,099
+0
+1,099 1,048
+3,300
+3,246 3,247 1,134 5,491
+603
+622
+622 622
+3,849 3,869 1,756
+3,865
+Combined Management Report
+45
+46
+2,034
+2,130
+2016
+2017
+President and CEO
+Joe Kaeser
+without long-term incentive effect,
+non-stock-based
+Total
+Fringe benefits¹
+Fixed compensation (base compensation)
+Performance-based
+components
+based components
+Non-performance-
+(Amounts in thousands of €)
+Managing Board members serving as of September 30, 2017
+Combined Management Report
+Performance-based
+components
+(Amounts in thousands of €)
+Non-performance-
+based components
+Managing Board members serving as of September 30, 2017
+The following table shows allocations for fiscal 2017 for
+fixed compensation, fringe benefits, one-year variable
+compensation and multi-year variable compensation - by
+reference year - as well as the expense of pension benefits.
+In deviation from the multi-year variable compensation
+granted for fiscal 2017 and shown above, this table in-
+cludes the actual figure for multi-year variable compensa-
+tion granted in previous years and allocated in fiscal 2017.
+Allocations
+102
+3,231
+3 For one half of the Siemens Stock Awards 2012, target attain-
+ment depended on the EPS for the last three years and
+amounted to 154%. For the other half, target attainment was
+linked to the performance of Siemens stock compared to defined
+competitors during the four-year restriction period. It amounted
+to 87%. Of the Siemens Stock Awards 2012, which were granted
+on the basis of 100% target attainment, a number equivalent to
+the shortfall from that target expired without replacement in
+accordance with plan rules.
+to 114%. For the other half, target attainment was linked to the
+performance of Siemens stock compared to defined competitors
+during the four-year vesting period. It amounted to 0%. There-
+fore, Siemens Stock Awards 2011 that had already been granted
+were forfeited without replacement in accordance with the plan
+rules.
+555
+0
+0
+0
+0
+2,024
+0
+0
+0
+0
+2,024
+0
+1,301
+3,052
+0
+0
+1,259
+2,949
+1,282
+1,151
+0
+0
+0
+598
+0
+0
+0
+0
+0
+703
+0
+0
+0
+703
+0
+0
+0
+0
+1,028
+0
+0
+0
+925
+0
+0
+1,370
+4 For one half of the Siemens Stock Awards 2011 target attainment
+depended on the EPS for the past three fiscal years and amounted
+1,284
+1,248
+1,065
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+1,043
+Managing Board member
+Managing Board member
+Klaus Helmrich
+Managing Board member
+Lisa Davis
+Managing Board member
+Dr. Roland Busch
+7 To compensate for the forfeiture of stock at his previous em-
+ployer, the Supervisory Board has granted Mr. Neike a one-time
+sum of €4,200,000. Seventy-five percent of this amount was
+awarded in the form of Siemens Phantom Stock Awards and the
+remaining 25% as a special pension benefit contribution. One
+half of the total amount of these granted Siemens Phantom
+6 "Other" includes the adjustment of the Siemens Stock Awards
+2011 and 2012 and Bonus Awards 2011 and 2012 (transfer in
+November 2015 and 2016, respectively) in accordance with
+Section 23 and Section 125 of the German Transformation Act
+(Umwandlungsgesetz) due to the spin-off of OSRAM.
+5 One half of the Bonus for fiscal 2011 and fiscal 2012 was granted
+in the form of non-forfeitable awards of Siemens stock (Bonus
+Awards).After the expiration of the four-year waiting period in
+November 2015 and November 2016, respectively, the beneficia-
+ries received one share of Siemens stock for each Bonus Award.
+Janina Kugel
+1,065
+1,043
+1,065
+1,387
+1,284
+1,027
+1,051
+1,091
+1,117
+1,726
+1,577
+1,098
+1,120
+39
+40
+48
+52
+683
+512
+55
+55
+989
+1,011
+1,043
+1,387
+3,797
+606
+Revenue
+16,500
+478,500
+40,000
+1,638,095
+140,000
+3,060,000
+Total
+Sibylle Wankel¹
+291,500
+31,500
+140,000
+279,119
+31,500
+114,286
+133,333
+Jim Hagemann Snabe
+150,500
+10,500
+140,000
+150,500
+10,500
+140,000
+Michael Sigmund
+150,500
+10,500
+140,000
+150,500
+10,500
+140,000
+Dr. Nathalie von Siemens
+196,500
+140,000
+40,000
+16,500
+The Managing Board is authorized to increase, with the approval
+of the Supervisory Board, the capital stock until January 25, 2021
+by up to €90 million through the issuance of up to 30 million reg-
+istered shares of no par value against contributions in cash
+(Authorized Capital 2016). Subscription rights of existing share-
+holders are excluded. The new shares shall be issued under the
+condition that they are offered exclusively to employees of
+Siemens AG and any of its affiliated companies. To the extent per-
+mitted by law, employee shares may also be issued in such a man-
+ner that the contribution to be paid on such shares is covered by
+that part of the annual net income which the Managing Board and
+A.11.4 Powers of the Managing Board
+to issue and repurchase shares
+Resolutions of the Shareholders' Meeting require a simple major-
+ity vote, unless a greater majority is required by law. Pursuant to
+Section 179 para. 2 of the German Stock Corporation Act, amend-
+ments to the Articles of Association require a majority of at least
+three-quarters of the capital stock represented at the time of the
+casting of the votes, unless another capital majority is prescribed
+by the Articles of Association.
+According to Section 179 of the German Stock Corporation Act,
+any amendment to the Articles of Association requires a resolu-
+tion of the Shareholders' Meeting. The authority to adopt purely
+formal amendments to the Articles of Association was trans-
+ferred to the Supervisory Board under Section 13 para. 2 of the
+Articles of Association. In addition, by resolutions of the Share-
+holders' Meetings the Supervisory Board has been authorized to
+amend Section 4 of the Articles of Association in accordance with
+the utilization of the Authorized and Conditional Capitals, and
+after expiration of the then-applicable authorization and utiliza-
+tion period.
+The appointment and removal of members of the Managing
+Board is subject to the provisions of Sections 84 and 85 of the
+German Stock Corporation Act and Section 31 of the German Co-
+determination Act (Mitbestimmungsgesetz). According to Sec-
+tion 8 para. 1 of the Articles of Association, the Managing Board
+is comprised of several members, the number of which is deter-
+mined by the Supervisory Board.
+A.11.3 Legislation and provisions of
+the Articles of Association applicable
+to the appointment and removal
+of members of the Managing Board
+and governing amendment to the
+Articles of Association
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
+sustained basis, powers of attorney allowing it to exercise the
+voting rights for 10,814,609 shares (as of September 30, 2017) on
+behalf of members of the Siemens family. These shares are part
+of the total number of shares held by the family's members. The
+powers of attorney are based on an agreement between the VSV
+and, among others, members of the Siemens family. The shares
+are voted together by VSV, taking into account the proposals of a
+family partnership established by the family's members or of one
+of this partnership's governing bodies.
+Shares issued to employees worldwide under the employee share
+program implemented since the beginning of fiscal 2009, in par-
+ticular the Share Matching Plan, are freely transferable unless
+applicable local laws provide otherwise. Under the rules of the
+program, however, in order to receive one matching share free
+of charge for each three shares purchased, participants are re-
+quired to hold the shares purchased by them for a vesting period
+of several years, during which the participants have to be contin-
+uously employed by Siemens AG or another Siemens company.
+The right to receive matching shares is forfeited if the purchased
+shares are sold, transferred, hedged on, pledged or hypothecated
+in any way during the vesting period.
+At the Shareholders' Meeting, each share of stock has one vote
+and accounts for the shareholders' proportionate share in the
+Company's net income. An exception to this rule applies with
+regard to treasury shares held by the Company, which do not
+entitle the Company to any rights. Under Section 136 of the Ger-
+man Stock Corporation Act the voting right of the affected shares
+is excluded by law.
+A.11.2 Restrictions on voting rights
+or transfer of shares
+As of September 30, 2017, the Company's common stock totaled
+€2.550 billion. The capital stock is divided into 850 million regis-
+tered shares with no par value. The shares are fully paid in. All
+shares confer the same rights and obligations. The shareholders'
+rights and obligations are governed in detail by the provisions of
+the German Stock Corporation Act, in particular by Sections 12, 53 a
+et seq., 118 et seq. and 186 of the German Stock Corporation Act.
+A.11.1 Composition of common stock
+(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
+and explanatory report
+150,500
+A.11 Takeover-relevant information
+52
+62
+of the Company. The insurance policy for fiscal 2017 includes a
+deductible for the members of the Managing Board and the
+Supervisory Board that complies with the requirements of the
+German Stock Corporation Act and the Code.
+in cases of financial loss associated with their activities on behalf
+The Company provides a group insurance policy for Supervisory
+and Managing Board members and certain other employees of
+the Siemens Group. The policy is taken out for one year at a time
+or renewed annually. It covers the personal liability of the insured
+A.10.3 Other
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have declared their willingness to transfer their compensation to the
+Hans Boeckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions (DGB).
+5,150,905
+429,000
+1,655,238
+3,066,667
+5,176,595
+196,500
+Combined Management Report
+10,500
+140,000
+150,500
+380,500
+40,500
+200,000
+140,000
+Jürgen Kerner¹
+242,500
+22,500
+80,000
+140,000
+229,024
+19,500
+76,190
+133,333
+140,000
+Harald Kern¹
+30,000
+180,000
+140,000
+351,500
+31,500
+180,000
+140,000
+Robert Kensbock¹
+150,500
+10,500
+140,000
+150,500
+10,500
+350,000
+Combined Management Report
+200,000
+373,000
+10,500
+140,000
+Güler Sabancı
+186,429
+15,000
+38,095
+133,333
+187,929
+16,500
+38,095
+133,333
+Dr. Norbert Reithofer
+134,167
+33,000
+7,500
+150,500
+10,500
+140,000
+Gérard Mestrallet
+247,000
+27,000
+80,000
+140,000
+242,524
+33,000
+76,190
+133,333
+Dr. Nicola Leibinger-Kammüller
+126,667
+53
+54
+the Supervisory Board may allocate to other retained earnings
+under Section 58 para. 2 of the German Stock Corporation Act.
+188
+53
+5,396
+6,126
+(2,008)
+(2,180)
+7
+Income tax expenses
+7,404
+8,306
+Income from continuing operations before income taxes
+(373)
+135
+6,179
+Other financial income (expenses), net
+(1,051)
+Interest expenses
+1,314
+1,487
+Interest income
+134
+43
+4
+Income (loss) from investments accounted for using the equity method, net
+(427)
+(595)
+6
+Other operating expenses
+(989)
+328
+5,584
+Income from discontinued operations, net of income taxes
+6.65
+7.29
+0.23
+0.06
+6.42
+7.23
+27
+6.74
+7.44
+0.23
+0.07
+6.51
+7.38
+Income from continuing operations
+2
+5,450
+134
+133
+6,046
+58 Consolidated Financial Statements
+Income from continuing operations
+Income from discontinued operations
+Net income
+Diluted earnings per share
+Income from discontinued operations
+Net income
+Income from continuing operations
+Basic earnings per share
+Shareholders of Siemens AG
+Non-controlling interests
+Attributable to:
+Net income
+27
+140,000
+647
+Other operating income
+Combined Management Report
+Framework agreements concluded by Siemens AG under Inter-
+national Swaps and Derivatives Association Inc. documentation
+(ISDA Agreements) grant the counterparty a right of termination
+when Siemens AG consolidates with, merges into, or transfers sub-
+stantially all its assets to a third party. However, this right of termi-
+nation exists only, if (1) the resulting entity's creditworthiness is
+materially weaker than Siemens AG's immediately prior to such
+event or (2) the resulting entity fails to simultaneously assume
+Siemens AG's obligations under the ISDA Agreement. Additionally,
+some ISDA Agreements grant the counterparty a right of termina-
+tion if a third party acquires beneficial ownership of equity securi-
+ties that enable it to elect a majority of Siemens AG's Supervisory
+Board or otherwise acquire the power to control Siemens AG's
+material policy-making decisions and if the creditworthiness of
+Siemens AG is materially weaker than it was immediately prior to
+In addition, in March 2013, a consolidated subsidiary as borrower
+and Siemens AG as guarantor entered into two bilateral loan
+agreements, each of which has been drawn in the full amount of
+US$500 million. Each agreement provides its respective lender
+with a right of termination in the event that (1) Siemens AG be-
+comes a subsidiary of another company or (2) a person or a group
+of persons acting in concert acquires effective control over
+Siemens AG by being able to exercise decisive influence over its
+activities (Art. 3(2) of Council Regulation (EC) 139/2004).
+Siemens AG maintains two lines of credit in an amount of €4 bil-
+lion and an amount of US$3 billion, respectively, which provide
+its lenders with a right of termination in the event that (1)
+Siemens AG becomes a subsidiary of another company or (2) a
+person or a group of persons acting in concert acquires effective
+control over Siemens AG by being able to exercise decisive influ-
+ence over its activities (Art. 3(2) of Council Regulation (EC)
+139/2004).
+A.11.5 Significant agreements which
+take effect, alter or terminate upon
+a change of control of the Company
+following a takeover bid
+For details on the authorizations referred to above, especially
+with the restrictions to exclude subscription rights and the
+terms to include shares when calculating such restrictions, please
+refer to the relevant resolution and to Section 4 of the Articles of
+Association.
+ing/securing the obligations or rights to acquire Siemens shares
+arising particularly from or in connection with convertible bonds
+and warrant bonds. As of September 30, 2017, the Company held
+34,481,120 shares of stock in treasury.
+In November 2015, the Company announced that it would carry
+out a share buyback of up to €3 billion in volume within the fol-
+lowing up to 36 months. The buyback commenced on Febru-
+ary 2, 2016 using the authorizations given by the Annual Share-
+holders' Meeting on January 27, 2015. Under this share buyback
+Siemens repurchased 10,439,856 shares by September 30, 2017.
+The total consideration paid for these shares amounted to about
+€1.163 billion (excluding incidental transaction charges). The
+buyback has the exclusive purposes of retirement, of issuing
+shares to employees, board members of affiliated companies and
+members of the Managing Board of Siemens AG, and of servic-
+Furthermore, the Supervisory Board is authorized to use shares
+acquired on the basis of this or any previously given authoriza-
+tion to meet obligations or rights to acquire Siemens shares that
+were or will be agreed with members of the Managing Board
+within the framework of rules governing Managing Board com-
+pensation.
+> used to service or secure obligations or rights to acquire
+Siemens shares arising particularly from or in connection with
+convertible bonds or warrant bonds issued by the Company or
+any of its consolidated subsidiaries (exclusion of subscription
+rights, limited to 10% of the capital stock, by mutatis mutandis
+application of Section 186 para. 3 sentence 4 German Stock
+Corporation Act).
+> sold, with the approval of the Supervisory Board, to third
+parties against payment in cash if the price at which such
+Siemens shares are sold is not significantly lower than the
+market price of Siemens stock (exclusion of subscription
+rights, limited to 10% of the capital stock, by mutatis mutan-
+dis application of Section 186 para. 3 sentence 4 German
+Stock Corporation Act) or
+> offered and transferred, with the approval of the Supervisory
+Board, to third parties against non-cash contributions
+> used in connection with share-based compensation programs
+and/or employee share programs of the Company or any of its
+affiliated companies and issued to individuals currently or for-
+merly employed by the Company or any of its affiliated com-
+panies as well as to board members of any of the Company's
+affiliated companies
+55
+retired
+shares upon exercise of the derivative will take place no later
+than January 26, 2020.
+Combined Management Report
+The Company may not repurchase its own shares unless so au-
+thorized by a resolution duly adopted by the shareholders at a
+general meeting or in other very limited circumstances set forth
+in the German Stock Corporation Act. On January 27, 2015, the
+Shareholders' Meeting authorized the Company to acquire until
+January 26, 2020 up to 10% of its capital stock existing at the date
+of adopting the resolution or if this value is lower - as of the
+date on which the authorization is exercised. The aggregate of
+shares of stock of Siemens AG repurchased under this authoriza-
+tion and any other Siemens shares previously acquired and still
+held in treasury by the Company or attributable to the Company
+pursuant to Sections 71 d and 71e of the German Stock Corpora-
+tion Act may at no time exceed 10% of the then existing capital
+stock. Any repurchase of Siemens shares shall be accomplished
+at the discretion of the Managing Board either (1) by acquisition
+over the stock exchange or (2) through a public share repurchase
+offer. The Managing Board is additionally authorized to complete
+the repurchase of Siemens shares in accordance with the autho-
+rization described above by using certain derivatives (put and
+call options, forward purchases and any combination of these
+derivatives). In exercising this authorization, all stock repur-
+chases based on the derivatives are limited to a maximum vol-
+ume of 5% of Siemens' capital stock existing at the date of adopt-
+ing the resolution at the Shareholders' Meeting. A derivative's
+term of maturity may not, in any case, exceed 18 months and
+must be chosen in such a way that the repurchase of Siemens
+In February 2012, Siemens issued bonds with warrant units with
+a volume of US$3 billion. Siemens exchanged the major part of
+the warrants issued in 2012 against new warrants in Septem-
+ber 2015; for this purpose, Siemens issued new bonds with war-
+rants. After redemption of the first tranche with a volume of
+US$1.5 billion at maturity in August 2017, the remaining war-
+rants correspond to option rights entitling their holders to receive
+approximately 11.5 million Siemens shares. The terms and condi-
+tions of the warrants enable Siemens to service exercised option
+rights using either conditional capital or treasury stock, and also
+enable Siemens to buy back the warrants.
+The total amount of new shares issued or to be issued under
+Authorized Capitals or in accordance with the bonds mentioned
+above, in exchange for contributions in cash and in kind and with
+shareholders' subscription rights excluded, may in certain cases
+be subject to further restrictions, such as the restriction that they
+may not exceed 20% of the capital stock. The details of those
+restrictions are described in the relevant authorization.
+> The exclusion is necessary in order to grant holders of conver-
+sion or option rights or conversion or option obligations on
+Siemens shares a compensation for the effects of dilution.
+> The exclusion is necessary with regard to fractional amounts
+resulting from the subscription ratio.
+> The issue price of the new shares/bonds is not significantly
+lower than the stock market price of the Siemens shares al-
+ready listed or the theoretical market price of the bonds com-
+puted in accordance with generally accepted actuarial meth-
+ods (exclusion of subscription rights, limited to 10% of the
+capital stock, in accordance with or by mutatis mutandis ap-
+plication of Section 186 para. 3 sentence 4 German Stock Cor-
+poration Act).
+cases:
+The new shares under Authorized Capital 2014 and the bonds
+under the aforementioned authorizations are to be issued against
+cash or non-cash contributions. They are, as a matter of principle,
+to be offered to shareholders for subscription. The Managing
+Board is authorized to exclude, with the approval of the Super-
+visory Board, subscription rights of shareholders in the event of
+capital increases against contributions in kind. In the event of
+capital increases against contributions in cash, the Managing
+Board is authorized to exclude shareholders' subscription rights
+with the approval of the Supervisory Board in the following
+By resolutions of the Shareholders' Meetings of January 28, 2014
+and January 27, 2015, the Managing Board is authorized to issue
+bonds with conversion rights or with warrants attached, or a
+combination of these instruments, each entitling the holders to
+subscribe to up to 80 million registered shares of Siemens AG of
+no par value. Based on these two authorizations, the Company
+or consolidated subsidiaries of the Company may issue bonds
+until January 27, 2019 and January 26, 2020, respectively, each
+in an aggregate principal amount of up to €15 billion. In order to
+grant shares of stock to holders/creditors of such convertible
+bonds or warrant bonds, the capital stock was conditionally in-
+creased by resolutions of the Shareholders' Meetings 2014 and
+2015, each by up to 80 million registered shares of no par value
+(Conditional Capitals 2014 and 2015), i.e. in total by up to
+€480 million through the issuance of up to 160 million shares of
+no par value.
+As of September 30, 2017, the total unissued authorized capital
+of Siemens AG therefore consisted of €618.6 million nominal
+that may be issued, with varying terms by issuance, in install-
+ments of up to 206.2 million registered shares of no par value.
+Furthermore, the Managing Board is authorized to increase,
+with the approval of the Supervisory Board, the capital stock
+until January 27, 2019 by up to €528.6 million through the issu-
+ance of up to 176.2 million registered shares of no par value
+against cash contributions and/or contributions in kind (Autho-
+rized Capital 2014).
+In addition to selling them over the stock exchange or through a
+public sales offer to all shareholders, the Managing Board is au-
+thorized by resolution of the Shareholders' Meeting on Janu-
+ary 27, 2015 to also use Siemens shares repurchased on the basis
+of this or any previously given authorization for every permissible
+purpose, in particular as follows: Such Siemens shares may be
+5
+such an event. In either situation, ISDA Agreements are designed
+such that upon termination all outstanding payment claims docu-
+mented under them are to be netted.
+A.11.6 Compensation agreements
+with members of the Managing
+Board or employees in the event
+of a takeover bid
+(11,669)
+(12,225)
+Selling and general administrative expenses
+(4,732)
+(5,164)
+Research and development expenses
+23,819
+25,029
+(55,826)
+(58,021)
+79,644
+83,049
+2016
+In case of a change of control, the terms and conditions of the
+remaining warrants issued with the bonds with warrant units in
+February 2012 enable their holders to receive a higher number of
+Siemens shares in accordance with an adjusted strike price if they
+exercise their option rights within a certain period of time after
+the change of control. This period of time shall end either (1) not
+less than 30 days and no more than 60 days after publication of
+the notice of the issuer regarding the change of control, as deter-
+mined by the issuer or (2) 30 days after the change of control first
+becomes publicly known. The strike price adjustment decreases
+depending on the remaining term of the warrants and is deter-
+mined in detail in the terms and conditions of the warrants. In
+this context, a change of control occurs if control of Siemens AG
+is acquired by a person or by persons acting in concert.
+2017
+Gross profit
+Cost of sales
+(in millions of €, per share amounts in €)
+Fiscal year
+B.1 Consolidated Statements of Income
+Financial Statements
+Consolidated
+B.
+56 Combined Management Report
+We are not aware of, nor have we during the last fiscal year been
+notified of, any shareholder directly or indirectly holding 10% or
+more of the voting rights. There are no shares with special rights
+conferring powers of control. Shares of stock issued by
+Siemens AG to employees under its employee share program
+and/or as share-based compensation are transferred directly to
+the employees. The beneficiary employees who hold shares of
+employee stock may exercise their control rights in the same way
+as any other shareholder directly in accordance with applicable
+laws and the Articles of Association.
+A.11.7 Other takeover-relevant
+information
+the severance payment that was calculated without taking ac-
+count of the first six months of the remaining term of the Man-
+aging Board member's contract. There is no entitlement to a
+severance payment if the Managing Board member receives ben-
+efits from third parties in connection with a change of control.
+A right to terminate the contract does not exist if the change of
+control occurs within a period of twelve months prior to a Man-
+aging Board member's retirement.
+In the event of a change of control that results in a substantial
+change in the position of a Managing Board member (for exam-
+ple, due to a change in corporate strategy or a change in the
+Managing Board member's duties and responsibilities), the
+member of the Managing Board has the right to terminate his or
+her contract with the Company for good cause. A change of con-
+trol exists if one or several shareholders acting jointly or in con-
+cert acquire a majority of the voting rights in Siemens AG and
+exercise a controlling influence, or if Siemens AG becomes a de-
+pendent enterprise as a result of entering into an intercompany
+agreement within the meaning of Section 291 of the German
+Stock Corporation Act, or if Siemens AG is to be merged into an
+existing corporation or other entity. If this right of termination is
+exercised, the Managing Board member is entitled to a severance
+payment in the amount of no more than two years' compensa-
+tion. The calculation of the annual compensation includes not
+only the base compensation and the target amount for the bo-
+nus, but also the target amount for the stock awards, in each case
+based on the most recent completed fiscal year prior to termina-
+tion of the contract. The stock-based compensation components
+for which a firm commitment already exists will remain unaf-
+fected. Additionally, the severance payments cover non-mone-
+tary benefits by including an amount of 5% of the total severance
+amount. Severance payments will be reduced by 10% as a lump-
+sum allowance for discounted values and for income earned else-
+where. However, this reduction will apply only to the portion of
+Note
+Hans-Jürgen Hartung
+120,000
+25,500
+78,633
+508,005
+20,043
+90,241
+Total
+Prof. Dr. Siegfried Russwurm⁹
+Managing Board
+Former members of the
+60,690
+5,030
+440
+8,166
+12,046
+57,250
+5,030
+6,023
+132,831
+Dr. Ralf P. Thomas
+0
+0
+0
+11,225
+Michael Sen 5,8
+19,099
+0
+0
+40,965
+0
+0
+0
+12,6557
+31,7547
+11,225
+Cedrik Neike 4, 5, 6
+27,984
+145,735
+10,618
+53,483
+Proven
+Required
+Obligations under Share Ownership Guidelines
+Total
+Klaus Helmrich
+Dr. Roland Busch
+Joe Kaeser
+as of September 30, 2017, and required
+to show proof as of March 10, 2017
+Managing Board members serving
+(Amounts in number of units or €)
+The deadlines by which the individual Managing Board mem-
+bers must provide first-time proof of compliance with the
+Siemens Share Ownership Guidelines vary from member to
+member, depending on when he or she was appointed to the
+Managing Board. The following table shows the number of
+Siemens shares that were held by Managing Board members in
+office at September 30, 2017, as of the March 2017 deadline for
+proving compliance with the Share Ownership Guidelines as
+well as the number that are to be held permanently with a view
+to future deadlines.
+Share Ownership Guidelines
+are forfeited. Entitlements to matching shares at the end of fiscal
+2017 show the following balance: Janina Kugel, three shares with
+a fair value of €174.
+1,001
+5,196
+Fiscal 2011 was the last year in which Managing Board members
+were entitled to participate in the Siemens Share Matching Plan.
+Under the plan, they were entitled to invest up to 50% of the
+annual gross amount of their variable cash compensation, as de-
+termined for fiscal 2010, in Siemens shares. After the expiration
+of a vesting period of approximately three years, plan partici-
+pants are entitled to receive one free matching share of Siemens
+stock for every three Siemens shares acquired and continuously
+held under the plan, provided the participants were employed
+without interruption at Siemens AG or a Siemens company until
+the end of the vesting period. At the beginning of fiscal 2017,
+Janina Kugel had three entitlements to matching shares, which
+she had acquired before joining the Managing Board. In fiscal
+2017, no entitlements to matching shares were acquired, due or
+49
+Combined Management Report
+9 Prof. Dr. Siegfried Russwurm left the Managing Board
+effective the end of March 31, 2017.
+8 Mr. Sen was appointed a full member of the Managing
+Board effective April 1, 2017.
+7 Amounts also include the non-forfeitable Stock Awards,
+which Mr. Neike received as forfeiture of stock at his previous
+employer. One half of the total amount of these granted
+Siemens Phantom Stock Awards fell due and was honored in
+September 2017. The other half will fall due and be honored
+in September 2018. The value of these Siemens Phantom
+Stock Awards depends solely on the performance of Siemens
+stock.
+6 The amounts shown include the Stock Awards granted to
+Mr. Neike by Siemens Ltd. China in his capacity as Executive
+Chairman of the Board of Directors of Siemens Ltd. China.
+5 Since Mr. Neike und Mr. Sen were appointed full members
+of the Managing Board during the fiscal year, the target
+amount for their stock-based compensation was prorated
+and, instead of Stock Awards, they received an equivalent
+amount of Siemens Phantom Stock Awards. In lieu of a trans-
+fer of shares, only a cash equivalent is given for these awards
+at the end of the restriction period. Otherwise, the same
+provisions agreed upon for Siemens Stock Awards apply.
+4 Mr. Neike was appointed a full member of the Managing
+Board effective April 1, 2017.
+pensation by the relevant Managing Board member before
+joining the Managing Board.
+3 Amounts also include stock commitments (Stock Awards)
+granted in November 2016 for fiscal 2017. These amounts
+may further include stock commitments received as com-
+2 For one half of the Siemens Stock Awards 2012, target
+attainment depended on the EPS value for the past three
+fiscal years and amounted to 154%. For the other half, target
+attainment was linked to the performance of Siemens stock
+compared to defined competitors during the four-year
+restriction period. It amounted to 87%. Of the Siemens Stock
+Awards 2012, which were granted on the basis of 100%
+target attainment, a number equivalent to the shortfall from
+that target expired, accordingly, without replacement in
+accordance with plan rules
+1 The weighted average fair value as of the grant date for
+fiscal 2017 was €99.70 per granted share.
+65,096
+526,664
+Shares from the Share Matching Plan
+Percentage
+of base
+compensation'
+11,553
+Janina Kugel
+Managing Board members
+(Amounts in number of units)
+of Stock
+Awards
+Forfeitable
+commitments
+Balance at end of
+fiscal 20173
+of Bonus
+Awards
+Non-forfeitable
+commitments
+Commitments
+of Stock
+Awards
+of Bonus
+Awards and
+Stock Awards
+Forfeited
+during
+fiscal year²
+Commitments
+fiscal year
+Vested and
+fulfilled
+during
+serving as of September 30, 2017
+of Stock
+Awards
+fiscal year¹
+Granted
+during
+of Stock
+Awards
+of Bonus
+Awards
+Forfeitable
+commitments
+commitments
+Non-forfeitable
+Balance at beginning of
+fiscal 2017
+The following table shows the changes in the balance of the stock
+commitments held by Managing Board members in fiscal 2017:
+Stock commitments
+IN FISCAL 2017
+STOCK-BASED COMPENSATION INSTRUMENTS
+A.10.1.3 ADDITIONAL INFORMATION ON
+Forfeitable
+commitments
+29,412
+Joe Kaeser
+138,923
+67,749
+10,111
+1,001
+27,984
+12,046
+75,263
+19,536
+Klaus Helmrich
+65,307
+576
+0
+0
+12,046
+25,631
+53,261
+Lisa Davis
+67,749
+128,784
+245,500
+1,001
+27,042
+12,046
+75,263
+19,425
+Dr. Roland Busch
+1,752
+41,904
+24,092
+576
+Value¹
+16,206
+10,942
+Percentage
+of base
+compensation¹
+142,333
+9,000
+133,333
+150,500
+10,500
+140,000
+Olaf Bolduan¹
+390,000
+30,000
+140,000
+220,000
+402,000
+42,000
+Michael Diekmann
+140,000
+463,500
+43,500
+200,000
+220,000
+468,000
+48,000
+200,000
+220,000
+Werner Wenning
+Birgit Steinborn¹
+605,000
+45,000
+280,000
+220,000
+280,000
+133,333
+13,500
+Number
+of shares2
+80,000
+140,000
+230,524
+21,000
+76,190
+133,333
+Bettina Haller¹
+150,500
+10,500
+140,000
+150,500
+10,500
+57,143
+140,000
+327,000
+27,000
+160,000
+140,000
+334,500
+34,500
+160,000
+Dr. Hans Michael Gaul
+203,976
+13,500
+57,143
+133,333
+203,976
+Reinhard Hahn¹
+617,000
+140,000
+280,000
+the Compensation Committee); the Chairman of the Innovation
+and Finance Committee receives €80,000, and each of the other
+members of the Committee receives €40,000; the Chairman of
+the Compliance Committee receives €80,000, and each of the
+other members of the Committee receives €40,000. However, no
+additional compensation is paid for work on the Compliance
+Committee if a member of that Committee is already entitled to
+compensation for work on the Audit Committee.
+The members of the Supervisory Board committees receive the
+following additional fixed compensation for their committee
+work: the Chairman of the Audit Committee receives €160,000,
+and each of the other members of the Committee receives
+€80,000; the Chairman of the Chairman's Committee receives
+€120,000, and each of the other members of the Committee re-
+ceives €80,000; the Chairman of the Compensation Committee
+receives €100,000, and each of the other members of the Com-
+mittee receives €60,000 (compensation for any work on the
+Chairman's Committee counts toward compensation for work on
+Under current rules, the members of the Supervisory Board re-
+ceive an annual base compensation of €140,000; the Chairman
+of the Supervisory Board receives a base compensation of
+€280,000, and each of the Deputy Chairmen receives €220,000.
+The current remuneration policies for the Supervisory Board
+were authorized at the Annual Shareholders' Meeting held on
+January 28, 2014, and are effective as of fiscal 2014. Details are
+set out in Section 17 of the Articles of Association of Siemens AG.
+The remuneration of the Supervisory Board consists entirely of
+fixed compensation; it reflects the responsibilities and scope of
+the work of the Supervisory Board members. The Chairman and
+Deputy Chairmen of the Supervisory Board as well as the Chair-
+men and members of the Audit Committee, the Chairman's Com-
+mittee, the Compensation Committee, the Compliance Commit-
+tee and the Innovation and Finance Committee receive additional
+compensation.
+A.10.2 Remuneration of Supervisory
+Board members
+3 As of March 10, 2017 (date of proof), including Bonus
+Awards.
+50 Combined Management Report
+2 Based on the average Xetra opening price of €108.08 for the
+fourth quarter of 2016 (October-December).
+1 The amount of the obligation is based on the average base
+compensation for the four years prior to the respective dates
+of proof.
+152,392
+28,619
+3,093,142
+16,470,527
+88,419
+If a Supervisory Board member does not attend a meeting of the
+Supervisory Board, one-third of the aggregate compensation due
+to that member is reduced by the percentage of Supervisory Board
+meetings not attended by the member in relation to the total
+number of Supervisory Board meetings held during the fiscal year.
+In the event of changes in the composition of the Supervisory
+Board and/or its committees, compensation is paid on a pro rata
+basis, rounding up to the next full month.
+308%
+27,323
+2,953,070
+96,450
+10,424,316
+567%
+291%
+18,781
+51,039
+5,516,344
+2,029,863
+200%
+200%
+300%
+Number
+of shares 3
+57,000
+Value²
+18,599
+In addition, the members of the Supervisory Board are entitled
+to receive a fee of €1,500 for each meeting of the Supervisory
+Board and its committees that they attend.
+2,010,175
+9,556,381
+No loans or advances from the Company are provided to mem-
+bers of the Supervisory Board.
+280,000
+Total
+The members of the Supervisory Board are reimbursed for out-
+of-pocket expenses incurred in connection with their duties and
+for any value-added taxes to be paid on their remuneration. For
+the performance of his duties, the Chairman of the Supervisory
+Board is also entitled to an office with secretarial support and the
+use of a carpool service.
+fee
+attendance
+Meeting
+compen-
+sation for
+committee
+work
+compen-
+sation
+Total
+Base
+Meeting
+attendance
+compen-
+sation for
+committee
+work
+sation
+compen-
+Base
+fee
+Additional
+2016
+51
+(Amounts in €)
+Supervisory Board members
+serving as of
+The compensation shown below was determined for each of the
+members of the Supervisory Board for fiscal 2017 (individualized
+disclosure).
+September 30, 2017
+Combined Management Report
+Dr. Gerhard Cromme
+Additional
+2017
+(329)
+552
+(325)
+400
+(436)
+(373)
+2,008
+(188)
+2,764
+3,211
+(53)
+Interest (income) expenses, net
+5,584
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+Income from discontinued operations, net of income taxes
+(Income) loss related to investing activities
+Amortization, depreciation and impairments
+Income tax expenses
+2,180
+Other non-cash (income) expenses
+(482)
+Inventories
+Income taxes paid
+Dividends received
+(2,039)
+6,179
+(281)
+(1,719)
+Change in other assets and liabilities
+(484)
+Change in operating net working capital
+20
+Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
+Additions to assets leased to others in operating leases
+327
+306
+Trade payables
+(1,009)
+(579)
+148
+Trade and other receivables
+(1,250)
+(799)
+Net income
+Retained earnings
+2016
+6,368
+2,550
+2,550
+Treasury shares, at cost
+Other components of equity
+Capital reserve
+Issued capital
+18
+5,890
+90,901
+47,986
+45,884
+2,471
+2,445
+1,142
+(1,718)
+Equity
+902
+89,278
+Cash flows from operating activities
+35,696
+1,671
+2017
+Fiscal year
+(in millions of €)
+B.4 Consolidated Statements of Cash Flows
+60 Consolidated Financial Statements
+34,816
+125,717
+44,527
+133,804
+605
+27,454
+1,438
+Total equity
+Non-controlling interests
+34,211
+43,089
+Total equity attributable to shareholders of Siemens AG
+(3,605)
+(3,196)
+1,921
+Total liabilities and equity
+381
+(1,408)
+Interest received
+(1,000)
+Interest paid
+260
+Change in short-term debt and other financing activities
+(2,253)
+(4,868)
+Repayment of long-term debt (including current maturities of long-term debt)
+5,300
+(809)
+6,958
+(13)
+1,123
+Re-issuance of treasury shares and other transactions with owners
+(463)
+(931)
+Purchase of treasury shares
+Cash flows from financing activities
+(4,144)
+Issuance of long-term debt
+(7,457)
+Dividends paid to shareholders of Siemens AG
+(2,827)
+Total liabilities
+Cash and cash equivalents at beginning of period
+660
+(2,228)
+Change in cash and cash equivalents
+(98)
+(387)
+Effect of changes in exchange rates on cash and cash equivalents
+(2,914)
+(2,710)
+Cash flows from financing activities - continuing and discontinued operations
+Cash flows from financing activities - discontinued operations
+(2,710)
+(1,560)
+Cash flows from financing activities - continuing operations
+(236)
+(187)
+Dividends attributable to non-controlling interests
+(1,560)
+302
+Cash flows from investing activities - continuing and discontinued operations
+(1)
+Purchase of current available-for-sale financial assets
+Purchase of investments
+Acquisitions of businesses, net of cash acquired
+(2,135)
+(2,406)
+Additions to intangible assets and property, plant and equipment
+Cash flows from investing activities
+7,611
+Change in receivables from financing activities
+7,176
+(57)
+(50)
+Cash flows from operating activities - discontinued operations
+7,668
+7,225
+Cash flows from operating activities - continuing operations
+1,219
+1,375
+Cash flows from operating activities - continuing and discontinued operations
+262
+Disposal of businesses, net of cash disposed
+(922)
+Cash flows from investing activities – discontinued operations
+(4,406)
+(7,456)
+Cash flows from investing activities - continuing operations
+1,031
+931
+Disposal of current available-for-sale financial assets
+9
+(4,385)
+(69)
+542
+Disposal of investments, intangibles and property, plant and equipment
+(1,356)
+(686)
+(1,139)
+(882)
+(271)
+(500)
+377
+Total non-current liabilities
+Other financial assets
+Other financial liabilities
+Assets
+(in millions of €)
+B.3 Consolidated Statements of Financial Position
+Consolidated Financial Statements 59
+134
+2,571
+8,533
+55
+Shareholders of Siemens AG
+Non-controlling interests
+Attributable to:
+Total comprehensive income
+2,705
+8,588
+(2,879)
+2,409
+Other comprehensive income, net of income taxes
+(244)
+Cash and cash equivalents
+September 30,
+Note
+2017
+10
+Other current assets
+Current income tax assets
+Inventories
+6,800
+7,664
+9
+Other current financial assets
+(326)
+16,287
+8
+Trade and other receivables
+1,293
+1,242
+Available-for-sale financial assets
+10,604
+8,375
+2016
+17,160
+Items that may be reclassified subsequently to profit or loss
+(141)
+(30)
+16
+Derivative financial instruments
+therein: Income tax effects
+Available-for-sale financial assets
+Currency translation differences
+Items that will not be reclassified to profit or loss
+therein: Income tax effects
+Remeasurements of defined benefit plans
+16
+5,584
+Net income
+2016
+2017
+Note
+(in millions of €)
+Fiscal year
+B.2 Consolidated Statements of Comprehensive Income
+Cash and cash equivalents at end of period
+6,179
+19,942
+2,734
+(1,070)
+Income (loss) from investments accounted for using the equity method, net
+(89)
+(63)
+therein: Income tax effects
+256
+136
+22, 23
+4
+(2,636)
+(7)
+687
+22
+22
+(796)
+(1,118)
+(2,636)
+2,735
+1,065
+436
+18,160
+1,098
+790
+20,049
+14
+Other current liabilities
+2,085
+2,355
+Current income tax liabilities
+4,166
+4,247
+20,437
+17
+1,933
+1,444
+Other current financial liabilities
+8,048
+9,755
+Trade payables
+6,206
+15
+Current provisions
+Short-term debt and current maturities of long-term debt
+Liabilities associated with assets classified as held for disposal
+97
+5,087
+4,579
+829
+1,599
+13,695
+42,916
+24,761
+26,777
+9,582
+5677
+3
+17
+Deferred tax liabilities
+16
+Provisions for pensions and similar obligations
+15
+Long-term debt
+43,394
+Total current liabilities
+40
+Provisions
+Other liabilities
+Liabilities and equity
+133,804
+12
+24,159
+27,906
+11
+WANNE
+Investments accounted for using the equity method
+Property, plant and equipment
+55,329
+10,926
+58,429
+Goodwill
+Total current assets
+190
+1,482
+3,22
+Assets classified as held for disposal
+1,204
+1,467
+Other intangible assets
+125,717
+7,742
+10,977
+70,388
+75,375
+1,279
+1,498
+3,431
+2,297
+7
+Total assets
+12
+Total non-current assets
+Deferred tax assets
+20,610
+19,044
+13
+3,012
+2,727
+4
+10,157
+Other assets
+10,618
+8,389
+5,447
+10,618
+3,393
+(11)
+(8)
+(20)
+(3)
+51
+48
+(175)
+1,845
+1
+(3,196)
+919
+43,089
+44,527
+Consolidated Financial Statements 63
+B.6 Notes to Consolidated Financial Statements
+NOTE 1 Basis of presentation
+The accompanying Consolidated Financial Statements present
+the operations of Siemens Aktiengesellschaft with registered of-
+fices in Berlin (registry number HRB 12300) and Munich (registry
+number HRB 6684), Germany, and its subsidiaries (the Company
+or Siemens). They have been prepared in accordance with Inter-
+national Financial Reporting Standards (IFRS), as adopted by the
+European Union as well as with the additional requirements set
+forth in Section 315 a (1) of the German Commercial Code (HGB).
+The financial statements are in accordance with IFRS as issued by
+the International Accounting Standards Board (IASB). The Consol-
+idated Financial Statements were authorized for issue by the
+Managing Board on November 27, 2017.
+Siemens prepares and reports its Consolidated Financial State-
+ments in euros (€). Due to rounding, numbers presented may not
+add up precisely to totals provided.
+Siemens is a German based multinational technology company
+with core activities in the fields of electrification, automation and
+digitalization.
+NOTE 2 Significant accounting policies
+and critical accounting estimates
+Certain of these accounting policies require critical accounting
+estimates that involve complex and subjective judgments and
+the use of assumptions, some of which may be for matters that
+are inherently uncertain and susceptible to change. Such critical
+accounting estimates could change from period to period and
+have a material impact on the Company's results of operations,
+financial positions and cash flows. Critical accounting estimates
+could also involve estimates where Siemens reasonably could
+have used a different estimate in the current accounting period.
+Siemens cautions that future events often vary from forecasts
+and that estimates routinely require adjustment.
+Basis of consolidation - The Consolidated Financial Statements
+include the accounts of Siemens AG and its subsidiaries over
+which the Company has control. Siemens controls an investee if
+it has power over the investee. In addition, Siemens is exposed
+to, or has rights to, variable returns from the involvement with
+the investee and Siemens has the ability to use its power over the
+investee to affect the amount of Siemens' return.
+Business combinations - Cost of an acquisition is measured at
+the fair value of the assets given and liabilities incurred or as-
+sumed at the date of exchange. Identifiable assets acquired and
+liabilities assumed in a business combination (including contin-
+gent liabilities) are measured initially at their fair values at the
+acquisition date, irrespective of the extent of any non-controlling
+1,438
+interest. Non-controlling interests are measured at the propor-
+tional fair value of assets acquired and liabilities assumed (partial
+goodwill method). If there is no loss of control, transactions with
+non-controlling interests are accounted for as equity transactions
+not affecting profit and loss. At the date control is lost, any re-
+tained equity interests are remeasured to fair value. In case of a
+written put option on non-controlling interests the Company as-
+sesses whether the prerequisites for the transfer of present own-
+ership interest are fulfilled at the balance sheet date. If the Com-
+pany is not the beneficial owner of the shares underlying the put
+option, the exercise of the put option will be assumed at each
+balance sheet date and treated as equity transaction between
+shareholders with the recognition of a purchase liability at the
+respective exercise price. The non-controlling interests partici-
+pate in profits and losses during the reporting period.
+2,473
+1,541
+1,160
+(148)
+(3,605)
+34,211
+605
+34,816
+6,046
+133
+6,179
+(1,084)
+685
+1,541
+149
+(78)
+2,409
+(2,914)
+(184)
+(3,098)
+193
+193
+(934)
+(934)
+(934)
+1,342
+2,487
+909
+Associates - Associates are companies over which Siemens has
+the ability to exercise significant influence over operating and
+financial policies (generally through direct or indirect ownership
+of 20% to 50% of the voting rights). These are recorded in the
+Consolidated Financial Statements using the equity method and
+are initially recognized at cost. Siemens' share of its associate's
+post-acquisition profits or losses is recognized in the Consoli-
+dated Statements of Income, and its share of post-acquisition
+changes in equity that have not been recognized in the associ-
+ate's profit or loss is recognized directly in equity. The cumula-
+tive post-acquisition changes are adjusted against the carrying
+amount of the investment in the associate. When Siemens'
+share of losses in an associate equals or exceeds its interest in
+the associate, Siemens does not recognize further losses, unless
+it incurs obligations or makes payments on behalf of the associ-
+ate. The interest in an associate is the carrying amount of the
+investment in the associate together with any long-term inter-
+ests that, in substance, form part of Siemens' net investment in
+the associate.
+Foreign currency translation - Assets and liabilities of foreign
+subsidiaries, where the functional currency is other than the
+euro, are translated using the spot exchange rate at the end of
+the reporting period, while the Consolidated Statements of In-
+come are translated using average exchange rates during the
+period. Differences arising from such translations are recognized
+within equity and reclassified to net income when the gain or loss
+on disposal of the foreign subsidiary is recognized. The Consoli-
+dated Statements of Cash Flow are translated at average ex-
+change rates during the period, whereas cash and cash equiva-
+lents are translated at the spot exchange rate at the end of the
+reporting period.
+Impairment of property, plant and equipment and other
+intangible assets - The Company reviews property, plant and
+equipment and other intangible assets for impairment whenever
+events or changes in circumstances indicate that the carrying
+amount of an asset may not be recoverable. In addition, intangi-
+ble assets not yet available for use are subject to an annual im-
+pairment test. Impairment testing of property, plant and equip-
+ment and other intangible assets involves the use of estimates in
+determining the assets' recoverable amount which can have a
+material impact on the respective values and ultimately the
+amount of any impairment.
+Discontinued operations and non-current assets held for
+disposal - Discontinued operations are reported when a compo-
+nent of an entity is classified as held for disposal or has been
+disposed of, if the component represents a separate major line of
+business or geographical area of operations and is part of a single
+coordinated plan to disposal. A non-current asset or a disposal
+group is held for disposal if its carrying amount will be recovered
+principally through a sale transaction rather than through con-
+tinuing use.
+66 Consolidated Financial Statements
+Income taxes - Tax positions under respective local tax laws and
+tax authorities' views can be complex and subject to different
+interpretations of tax payers and local tax authorities. Different
+interpretations of tax laws may result in additional tax payments
+for prior years and are taken into account based on manage-
+ment's considerations. Under the liability method, deferred tax
+assets and liabilities are recognized for future tax consequences
+attributable to differences between the financial statement car-
+rying amounts of existing assets and liabilities and their respec-
+tive tax bases. Deferred tax assets are recognized if sufficient
+future taxable profit is available, including income from fore-
+casted operating earnings, the reversal of existing taxable tem-
+porary differences and established tax planning opportunities.
+As of each period-end, Siemens evaluates the recoverability of
+deferred tax assets, based on projected future taxable profits.
+Based upon the level of historical taxable income and projections
+for future taxable income over the periods in which the deferred
+tax assets are deductible, Siemens believes it is probable the
+Company will realize the benefits of these deductible differences.
+As future developments are uncertain and partly beyond
+Siemens's control, assumptions are necessary to estimate future
+taxable profits as well as the period in which deferred tax assets
+will recover. Estimates are revised in the period in which there is
+sufficient evidence to revise the assumption.
+Inventories - Inventories are valued at the lower of acquisition
+or production costs and net realizable value, costs being gener-
+ally determined on the basis of an average or first-in, first-out
+method.
+-
+Defined benefit plans – Siemens measures the entitlements by
+applying the projected unit credit method. The approach reflects
+an actuarially calculated net present value of the future benefit
+entitlement for services already rendered. In determining the net
+present value of the future benefit entitlement for service al-
+ready rendered (Defined Benefit Obligation (DBO)), the expected
+rates of future salary increase and expected rates of future pen-
+sion progression are considered. The assumptions used for the
+calculation of the DBO as of the period-end of the preceding fis-
+cal I year are used to determine the calculation of service cost and
+interest income and expense of the following year. The net inter-
+est income or expense for the fiscal year will be based on the
+discount rates for the respective year multiplied by the net de-
+fined benefit liability (asset) at the preceding fiscal year's peri-
+od-end date.
+Service cost, past service cost and settlement gains (losses) for
+pensions and similar obligations as well as administration costs
+unrelated to the management of plan assets are allocated among
+functional costs. Past service cost and settlement gains (losses)
+are recognized immediately in profit or loss. For unfunded plans,
+the amount of the line item Provisions for pensions and similar
+obligations equals the DBO. For funded plans, Siemens offsets
+the fair value of the plan assets with the DBO. Siemens recog-
+nizes the net amount, after adjustments for effects relating to
+any asset ceiling.
+Remeasurements comprise actuarial gains and losses as well as
+the difference between the return on plan assets and the amounts
+included in net interest on the net defined benefit liability (asset).
+They are recognized in Other comprehensive income, net of in-
+come taxes.
+Actuarial valuations rely on key assumptions including discount
+rates, expected compensation increases, rate of pension progres-
+sion and mortality rates. Discount rates used are determined by
+reference to yields on high-quality corporate bonds of appropri-
+ate duration and currency at the end of the reporting period. In
+case such yields are not available, discount rates are based on
+government bond yields. Due to changing market, economic and
+social conditions, the underlying key assumptions may differ
+from actual developments.
+5 to 10 years
+generally 5 years
+generally 3 to 5 years
+Provisions - A provision is recognized in the Statement of Finan-
+cial Position when it is probable that the Company has a present
+legal or constructive obligation as a result of a past event, it is
+probable that an outflow of economic benefits will be required
+to settle the obligation and a reliable estimate can be made of
+the amount of the obligation. If the effect is material, provisions
+are recognized at present value by discounting the expected fu-
+ture cash flows at a pretax rate that reflects current market as-
+sessments of the time value of money. When a contract becomes
+onerous, the present obligation under the contract is recognized
+as a provision.
+Consolidated Financial Statements 67
+Legal Proceedings often involve complex legal issues and are sub-
+ject to substantial uncertainties. Accordingly, considerable judg-
+ment is part of determining whether it is probable that there is a
+present obligation as a result of a past event at the end of the
+reporting period, whether it is probable that such a Legal Pro-
+ceeding will result in an outflow of resources and whether the
+amount of the obligation can be reliably estimated. Internal and
+external counsels are generally part of the determination process.
+Due to new developments, it may be necessary, to record a pro-
+vision for an ongoing Legal Proceeding or to adjust the amount
+of a previously recognized provision. Upon resolution of a Legal
+Proceeding, Siemens may incur charges in excess of the recorded
+provisions for such matters. The outcome of Legal Proceedings
+may have a material effect on Siemens' financial position, its re-
+sults of operations and/or its cash flows.
+Termination benefits - Termination benefits are provided as a
+result of an entity's offer made in order to encourage voluntary
+redundancy before the normal retirement date or from an enti-
+ty's decision to terminate the employment. Termination benefits
+in accordance with IAS 19, Employee Benefits, are recognized as
+a liability and an expense when the entity can no longer with-
+draw the offer of those benefits.
+Financial instruments - A financial instrument is any contract
+that gives rise to a financial asset of one entity and a financial
+liability or equity instrument of another entity. Siemens does
+not use the category held to maturity and does not use the op-
+tion to designate financial assets or financial liabilities at fair
+value through profit or loss at inception (Fair Value Option).
+Based on their nature, financial instruments are classified as fi-
+nancial assets and financial liabilities measured at cost or amor-
+tized cost and financial assets and financial liabilities measured
+at fair value and as receivables from finance leases. Regular way
+purchases or sales of financial assets are accounted for at the
+trade date. Initially, financial instruments are recognized at their
+fair value. Transaction costs are only included in determining
+the carrying amount, if the financial instruments are not mea-
+sured at fair value through profit or loss. Receivables from fi-
+nance leases are recognized at an amount equal to the net in-
+vestment in the lease. Subsequently, financial assets and
+liabilities are measured according to the category to which they
+are assigned cash and cash equivalents, available-for-sale fi-
+nancial assets, loans and receivables, financial liabilities mea-
+sured at amortized cost or financial assets and liabilities classi-
+fied as held for trading.
+Cash and cash equivalents - The Company considers all highly
+liquid investments with less than three months maturity from the
+date of acquisition to be cash equivalents. Cash and cash equiv-
+alents are measured at cost.
+Available-for-sale financial assets - Investments in equity in-
+struments, debt instruments and fund shares are measured at
+fair value, if reliably measurable. Unrealized gains and losses, net
+of applicable deferred income tax expenses, are recognized in
+line item Other comprehensive income, net of income taxes. Pro-
+vided that fair value cannot be reliably determined, Siemens
+measures available-for-sale financial assets at cost. This applies
+to equity instruments that do not have a quoted market price in
+an active market, and decisive parameters cannot be reliably es-
+timated to be used in valuation models for the determination of
+fair value. Siemens considers all available evidence such as mar-
+ket conditions and prices, investee-specific factors and the dura-
+tion as well as the extent to which fair value is less than acquisi-
+tion cost in evaluating potential impairment of its available-for-sale
+financial assets. The Company considers a decline in fair value as
+objective evidence of impairment, if the decline exceeds 20% of
+costs or continues for more than six months.
+Loans and receivables - Financial assets classified as loans and
+receivables are measured at amortized cost using the effective
+interest method less any impairment losses. Impairment losses
+on trade and other receivables are recognized using separate al-
+lowance accounts. The allowance for doubtful accounts involves
+significant management judgment and review of individual re-
+ceivables based on individual customer creditworthiness, current
+economic trends and analysis of historical bad debts on a portfo-
+lio basis. For the determination of the country-specific compo-
+nent of the individual allowance, Siemens also considers country
+credit ratings, which are centrally determined based on informa-
+tion from external rating agencies. Regarding the determination
+of the valuation allowance derived from a portfolio-based analy-
+sis of historical bad debts, a decline of receivables in volume re-
+sults in a corresponding reduction of such provisions and vice
+versa. As of September 30, 2017 and 2016, Siemens recorded a
+valuation allowance for trade and other receivables (including
+leases) of €1,388 million and €1,211 million, respectively.
+Financial liabilities - Siemens measures financial liabilities, ex-
+cept for derivative financial instruments, at amortized cost using
+the effective interest method.
+Derivative financial instruments - Derivative financial instru-
+ments, such as foreign currency exchange contracts and interest
+rate swap contracts are measured at fair value and classified as
+held for trading unless they are designated as hedging instru-
+ments, for which hedge accounting is applied. Changes in the fair
+value of derivative financial instruments are recognized either in
+net income or, in the case of a cash flow hedge, in line item Other
+comprehensive income, net of income taxes (applicable deferred
+income tax). Certain derivative instruments embedded in host
+contracts are also accounted for separately as derivatives.
+68 Consolidated Financial Statements
+9,958
+Significant estimates are involved in the determination of provi-
+sions related to onerous contracts, warranty costs, asset retire-
+ment obligations, legal and regulatory proceedings as well as
+governmental investigations (Legal Proceedings). Siemens re-
+cords a provision for onerous sales contracts when current esti-
+mates of total contract costs exceed expected contract revenue.
+Onerous sales contracts are identified by monitoring the prog-
+ress of the project and updating the estimate of total contract
+costs which also requires significant judgment relating to
+achieving certain performance standards as well as estimates
+involving warranty costs and estimates regarding project delays
+including the assessment of responsibility splits between the
+contract partners for these delays. Uncertainties regarding asset
+retirement obligations include the estimated costs of decommis-
+sioning and final waste storage because of the long time frame
+over which future cash outflows are expected to occur including
+the respective interest accretion. The estimated cash outflows
+could be impacted significantly by changes of the regulatory
+environment.
+Joint ventures - Joint ventures are entities over which Siemens
+and one or more parties have joint control. Joint control requires
+unanimous consent of the parties sharing control in decision
+making on relevant activities.
+5 to 10 years
+Technical machinery & equipment
+Furniture & office equipment
+Equipment leased to others
+64 Consolidated Financial Statements
+Foreign currency transaction - Transactions that are denom-
+inated in a currency other than the functional currency of an
+entity, are recorded at that functional currency applying the spot
+exchange rate at the date when the underlying transactions are
+initially recognized. At the end of the reporting period, foreign
+currency-denominated monetary assets and liabilities are reval-
+ued to functional currency applying the spot exchange rate pre-
+vailing at that date. Gains and losses arising from these foreign
+currency revaluations are recognized in net income. Those for-
+eign currency-denominated transactions which are classified
+as non-monetary are remeasured using the historical spot ex-
+change rate.
+Sale of goods: Revenue is recognized when the significant risks
+and rewards of ownership of the goods have passed to the buyer,
+usually on delivery of the goods.
+Sales from construction contracts: When the outcome of a con-
+struction contract can be estimated reliably, revenues from con-
+struction-type projects are recognized under the percent-
+age-of-completion method, based on the percentage of costs
+incurred to date compared to the total estimated contract costs.
+An expected loss on the construction contract is recognized as an
+expense immediately. Siemens applies the requirements of IAS 11
+regarding contract variations to contract terminations, since con-
+tract terminations are also changes to the agreed delivery and
+service scope.
+The percentage-of-completion method places considerable im-
+portance on accurate estimates of the extent of progress to-
+wards completion and may involve estimates on the scope of
+deliveries and services required for fulfilling the contractually
+defined obligations. These significant estimates include total
+contract costs, total contract revenues, contract risks, including
+technical, political and regulatory risks, and other judgments.
+Under the percentage-of-completion method, changes in esti-
+mates may lead to an increase or decrease of revenue. The cred-
+itworthiness of our customers is taken into account in estimating
+the probability that economic benefits associated with a contract
+will flow to the Company. In addition, we need to assess whether
+the contract is expected to continue or to be terminated. In de-
+termining whether the continuation or termination of a contract
+is expected to be the most likely scenario, all relevant facts and
+circumstances relating to the contract are considered on an in-
+dividual basis.
+Rendering of services: For long-term service contracts, revenues
+are recognized on a straight-line basis over the term of the con-
+tract or, if the performance pattern is other than straight-line, as
+the services are provided, i.e. under the percentage-of-comple-
+tion method as described above.
+Sales from multiple element arrangements: Sales of goods and
+services as well as software arrangements sometimes involve the
+provision of multiple elements. In these cases, the Company de-
+termines whether the contract or arrangement contains more
+than one unit of accounting. If certain criteria are met, foremost
+if the delivered element(s) has (have) value to the customer on
+a stand-alone basis, the arrangement is separated and the appro-
+priate revenue recognition convention is then applied to each
+separate unit of accounting. Generally, the total arrangement
+consideration is allocated to the separate units of accounting
+based on their relative fair values. If the criteria for the separation
+of units of accounting are not met, revenue is deferred until such
+criteria are met or until the period in which the last undelivered
+element is delivered.
+Income from interest: Interest is recognized using the effective
+interest method.
+Income from royalties: Royalties are recognized on an accrual
+basis in accordance with the substance of the relevant agree-
+ment.
+Income from operating leases: Operating lease income for equip-
+ment rentals is recognized on a straight-line basis over the lease
+20 to 50 years
+term.
+Product-related expenses - Provisions for estimated costs re-
+lated to product warranties are recorded in line item Cost of sales
+at the time the related sale is recognized.
+Research and development costs - Costs of research activities
+are expensed as incurred. Costs of development activities are
+capitalized when the recognition criteria in IAS 38 are met. Capi-
+talized development costs are stated at cost less accumulated
+amortization and impairment losses with an amortization period
+of generally three to ten years.
+Consolidated Financial Statements 65
+Earnings per share - Basic earnings per share are computed by
+dividing income from continuing operations, income from dis-
+continued operations and net income, all attributable to ordinary
+shareholders of Siemens AG by the weighted average number of
+shares outstanding during the year. Diluted earnings per share
+are calculated by assuming conversion or exercise of all poten-
+tially dilutive securities and share-based payment plans.
+Goodwill - Goodwill is not amortized, instead, goodwill is tested
+for impairment annually, as well as whenever there are events or
+changes in circumstances (triggering events) which suggest that
+the carrying amount may not be recoverable. Goodwill is carried
+at cost less accumulated impairment losses. The goodwill impair-
+ment test is performed at the level of a cash-generating unit or a
+group of cash-generating units, generally represented by a seg-
+ment and for Siemens Gamesa Renewable Energy one level be-
+low the segment. This is the lowest level at which goodwill is
+monitored for internal management purposes.
+For the purpose of impairment testing, goodwill acquired in a
+business combination is allocated to the cash-generating unit or
+the group of cash-generating units that is expected to benefit
+from the synergies of the business combination. If the carrying
+amount of the cash-generating unit or the group of cash-gen-
+erating units, to which the goodwill is allocated, exceeds its re-
+coverable amount, an impairment loss on goodwill allocated to
+this cash-generating unit or this group of cash-generating units
+is recognized. The recoverable amount is the higher of the
+cash-generating unit's or the group of cash-generating units' fair
+value less costs to sell and its value in use. If either of these val-
+ues exceeds the carrying amount, it is not always necessary to
+determine both values. These values are generally determined
+based on discounted cash flow calculations. Impairment losses
+on goodwill are not reversed in future periods.
+The determination of the recoverable amount of a cash-generat-
+ing unit or a group of cash-generating units to which goodwill is
+allocated involves the use of estimates by management. The out-
+come predicted by these estimates is influenced e.g. by the suc-
+cessful integration of acquired entities, volatility of capital mar-
+kets, interest rate developments, foreign exchange rate
+fluctuations and the outlook on economic trends. In determining
+recoverable amounts, discounted cash flow calculations use five-
+year projections that are based on financial forecasts. Cash flow
+projections take into account past experience and represent
+management's best estimate about future developments. Cash
+flows after the planning period are extrapolated using individual
+growth rates. Key assumptions on which management has based
+its determination of fair value less costs to sell and value in use
+include estimated growth rates and weighted average cost of
+capital. These estimates, including the methodology used, can
+have a material impact on the respective values and ultimately
+the amount of any goodwill impairment.
+Other intangible assets - The Company amortizes intangible
+assets with finite useful lives on a straight-line basis over their
+respective estimated useful lives. Estimated useful lives for pat-
+ents, licenses and other similar rights generally range from
+three to five years, except for intangible assets with finite useful
+lives acquired in business combinations. Intangible assets ac-
+quired in business combinations primarily consist of customer
+relationships and trademarks as well as technology. Useful lives
+in specific acquisitions ranged from four to 20 years for cus-
+tomer relationships and trademarks and from five to 25 years for
+technology.
+Property, plant and equipment - Property, plant and equip-
+ment, is valued at cost less accumulated depreciation and impair-
+ment losses. Depreciation expense is recognized using the
+straight-line method. The following useful lives are assumed:
+Factory and office buildings
+Other buildings
+Functional costs - In general, operating expenses by types are
+assigned to the functions following the functional area of the
+corresponding profit and cost centers. Amortization, deprecia-
+tion and impairment of intangible assets and property, plant and
+equipment are included in functional costs depending on the use
+of the assets.
+34,816
+Revenue recognition - Under the condition that persuasive
+evidence of an arrangement exists, revenue is recognized to the
+extent that it is probable that the economic benefits will flow to
+the Company and the revenue can be reliably measured, regard-
+less of when the payment is being made. In cases where the in-
+flow of economic benefits is not probable due to customer re-
+lated credit risks, the revenue recognized is subject to the amount
+of payments irrevocably received.
+34,211
+(1)
+(93)
+(2,575)
+(42)
+2,550
+5,890
+27,454
+Balance as of October 1, 2016
+2,550
+5,890
+27,454
+Net income
+(67)
+6,046
+2,737
+Dividends
+(2,914)
+Share-based payment
+279
+(86)
+Purchase of treasury shares
+Re-issuance of treasury shares
+Changes in equity resulting from major portfolio transactions
+Other transactions with non-controlling interests
+Other changes in equity
+Other comprehensive income, net of income taxes
+Balance as of September 30, 2017
+(2,827)
+5,450
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
+operations at end of period
+605
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+15
+8,375
+13
+10,604
+Consolidated Financial Statements 61
+B.5 Consolidated Statements of Changes in Equity
+(in millions of €)
+Balance as of October 1, 2015
+Net income
+(2,637)
+Other comprehensive income, net of income taxes
+Share-based payment
+Purchase of treasury shares
+Re-issuance of treasury shares
+Cancellation of treasury shares
+Transactions with non-controlling interests
+Other changes in equity
+Balance as of September 30, 2016
+Issued capital
+2,643
+Capital reserve
+5,733
+Retained earnings
+30,152
+Dividends
+62
+158
+199
+434
+208
+(2,879)
+(2,879)
+(2,827)
+(239)
+(3,066)
+91
+91
+(446)
+(446)
+391
+390
+390
+2,668
+(42)
+92
+51
+37
+36
+909
+1,160
+Consolidated Financial Statements
+(148)
+(3,605)
+(885)
+5,584
+(446)
+134
+(11)
+(3)
+2,550
+6,368
+35,696
+Currency trans-
+lation differences
+Available-for-sale
+financial assets
+instruments
+1,794
+726
+(357)
+Derivative financial
+2,473
+Treasury
+shares at cost
+Total equity
+attributable to
+shareholders
+of Siemens AG
+Non controlling
+interests
+Total equity
+(6,218)
+34,474
+581
+35,056
+5,450
+893
+904
+566
+564
+of Income in the current period
+Write-offs charged against the allowance
+Recoveries of amounts previously written-off
+Foreign exchange translation differences
+Reclassifications to line item Assets held for
+disposal and dispositions of those entities
+Valuation allowance as of fiscal year-end
+284
+6,732
+5,457
+5,500
+2,940
+404
+6,706
+2017
+3,405
+3,481
+1,952
+1,924
+2,397
+2,358
+2016
+2017
+recorded in the Consolidated Statements
+2016
+(in millions of €)
+Within one year
+One to five years
+Thereafter
+(155)
+35
+3,010
+(181)
+350
+(80)
+2.00%/2016/September 2023/US$-fixed-rate-instruments
+US$
+Increase in valuation allowances
+750
+296 US$
+930 US$
+929 US$
+630 US$
+308
+1,100
+984
+1,100
+983
+750
+666
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+9
+US$
+2017
+2,955
+Raw materials and supplies
+(in millions of €)
+Cost of sales include inventories recognized as expense amount-
+ing to €57,171 million and €54,706 million, respectively, in fiscal
+2017 and 2016. Compared to prior year, write-downs increased
+(decreased) by €15 million and €(3) million as of September 30,
+2017 and 2016.
+NOTE 10 Inventories
+As of September 30, 2017 and 2016, Other current financial assets
+include loans receivables of €5,985 million and €4,910 million,
+respectively, and derivative financial instruments of €530 million
+and €758 million, respectively.
+NOTE 9 Other current financial assets
+Consolidated Financial Statements 73
+Investments in finance leases primarily relate to industrial ma-
+chinery, medical equipment, transportation systems, equipment
+for information technology and office machines. Actual cash
+flows will vary from contractual maturities due to future sales of
+finance receivables, prepayments and write-offs.
+1,013
+1,208
+(9)
+(33)
+1,700
+933
+Trade and other receivables
+beginning of fiscal year
+6,706
+6,732
+Gross investment in leases
+14,280
+15,242
+219
+222
+Plus: Unguaranteed residual values
+Trade receivables from the sale
+of goods and services
+6,488
+6,510
+Minimum future lease payments
+2016
+Receivables from finance leases
+2017
+Sep 30,
+2016
+2017
+(in millions of €)
+Sep 30,
+The following table shows a reconciliation of minimum future
+lease payments to the gross and net investment in leases and
+to the present value of the minimum future lease payments
+receivable:
+NOTE 8
+1,010
+3,269
+(996)
+1,084
+Income and expenses recognized
+directly in equity
+6,488
+1,100
+(in millions of €)
+1,013
+1,919
+Less: Unearned finance income
+Valuation allowance as of
+Sep 30,
+Sep 30,
+Fiscal year
+2016
+2017
+(in millions of €)
+Present value of
+minimum future lease
+payments receivable
+in leases
+Gross investment
+The gross investment in leases and the present value of minimum
+future lease payments receivable are due as follows:
+Changes to the valuation allowance of current and long-term re-
+ceivables which belong to the class of financial assets measured
+at (amortized) cost are as follows (excluding receivables from
+finance leases):
+In fiscal 2017 and 2016, the long-term portion of receivables from
+finance leases is reported in Other financial assets and amounts
+to €3,699 million and €3,557 million, respectively.
+5,457
+2,007
+5,500
+(108)
+(118)
+Less: Present value of unguaranteed
+residual value
+(198)
+(180)
+Less: Allowance for doubtful accounts
+5,762
+5,798
+Net investment in leases
+16,287
+17,160
+(944)
+(934)
+Present value of minimum future
+lease payments receivable
+US$
+395
+1,100
+1,285
+€
+1,000
+997
+€
+1,000
+996
+US$
+500
+423
+US$
+500
+447
+US$
+100
+83
+US$
+100
+87
+US$
+400
+338
+US$
+400
+358
+US$
+300
+1,250
+€
+1,274
+1,250
+339
+US$
+400
+358
+1.5%/2012/March 2020/EUR fixed-rate instruments
+€
+1,000
+998
+€
+1,000
+997
+2.75%/2012/September 2025/GBP fixed-rate instruments
+£
+254
+350
+£
+350
+405
+3.75%/2012/September 2042/GBP fixed-rate instruments
+£
+650
+723
+£
+650
+740
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+1.5%/2013/March 2018/US$ fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+2013/June 2020/US$ floating-rate instruments
+2014/March 2019/US$ floating-rate instruments
+2014/September 2021/US$ floating-rate instruments
+Total Debt Issuance Program
+€
+6,510
+1.70%/2016/September 2021/US$-fixed-rate-instruments
+US$
+268
+1,000
+845 US$
+1,000
+893
+2.90%/2015/May 2022/US$-fixed-rate-instruments
+US$
+1,750
+1,479 US$
+1,750
+1,564
+3.25%/2015/May 2025/US$-fixed-rate-instruments
+US$
+1,500
+1,264 US$
+1,500
+1,336
+4.40%/2015/May 2045/US$-fixed-rate-instruments
+US$
+1,750
+1,461 US$
+1,750
+1,546
+US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
+US$
+350
+1.30%/2016/September 2019/US$-fixed-rate-instruments
+US$
+US$
+2.15%/2015/May 2020/US$-fixed-rate-instruments
+1,119
+1,250
+US$
+400
+339
+US$
+400
+358
+7,812
+10,048
+5.75%/2006/October 2016/US$ fixed-rate instruments
+US$
+1,750
+1,570
+6.125%/2006/August 2026/US$ fixed-rate instruments
+300
+US$
+1,830 US$
+1,750
+1,982
+US$3 m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
+US$
+500
+423 US$
+500
+448
+1.45%/2015/May 2018/US$-fixed-rate-instruments
+US$
+1,250
+1,058 US$
+1,750
+(2)
+Assets
+Discontinued operations
+In December 2016, Siemens contributed its eCar powertrain sys-
+tems business - formerly included in the Digital Factory Division -
+into a newly formed joint venture, Valeo Siemens eAutomotive
+GmbH. Siemens recognized a pre-tax gain on disposal of €173 mil-
+lion in Other operating income, thereof €159 million relating
+to measuring Siemens' stake in the joint venture at fair value.
+Siemens' 50% stake in the joint venture is disclosed in Centrally
+managed portfolio activities.
+-
+Dispositions not qualifying for discontinued
+operations closed transactions
+DISPOSITIONS
+Consolidated Financial Statements
+70
+Revenue and net income of the combined entity in fiscal 2017
+Iwould have been €86,761 million and €5,774 million, respec-
+tively, had both acquired businesses been included as of Octo-
+ber 1, 2016.
+In March 2017, Siemens acquired all shares of Mentor Graphics
+Corporation, U.S., a design automation and industrial software
+provider. The acquired business is integrated in the Digital Fac-
+tory Division. The purchase price paid in cash amounts to
+€4,063 million as of the acquisition date. The preliminary pur-
+chase price allocation as of the acquisition date resulted in: Other
+intangible assets €1,878 million, Property, plant and equipment
+€252 million, Trade and other receivables €657 million, Cash and
+cash equivalents €369 million, Deferred tax assets €86 million,
+Current liabilities €809 million and Deferred tax liabilities
+€318 million. Other intangible assets mainly relate to technology
+of €1,482 million and customer-related intangible assets of
+€362 million. Goodwill of €1,865 million comprises intangible
+assets that are not separable such as employee know-how and
+expected synergy effects from expanding our software business
+and from expanding our role in the digital sector. The purchase
+price allocation is preliminary as a detailed analysis of the assets
+and liabilities has not been finalized. Compared to the status of
+the purchase price allocation as of the end of the second quarter
+of fiscal year 2017, the fair value of the acquired technology in-
+creased at the amount of €472 million based on further analysis
+on the underlying useful life and royalty rate. Including earnings
+effects from purchase price allocation and integration costs, the
+acquired business contributed revenue of €404 million and a net
+income of €(239) million to Siemens for the period from acquisi-
+tion to September 30, 2017.
+trade and other receivables acquired is €1,137 million. Goodwill
+amounts to €2,625 million and comprises intangible assets that
+are not separable such as employee know-how and expected syn-
+ergy effects from highly complementary businesses entailing an
+enhanced market position (including anticipated cost savings
+mainly in R&D, procurement and administration as well as reve-
+nue synergies). The purchase price allocation is preliminary as a
+detailed analysis of the assets and liabilities has not been final-
+ized. Goodwill is allocated within the segment SGRE to the units
+Wind Turbines as well as Operation and Maintenance. Effects on
+equity resulting from this transaction are included in line Changes
+in equity resulting from major portfolio transactions. Including
+earnings effects from purchase price allocation and integration
+costs, the acquired business contributed revenue of €1,659 mil-
+lion and a net income of €(209) million to Siemens for the period
+from acquisition to September 30, 2017. The non-controlling in-
+terests of 41% amount to €721 million at the acquisition date and
+are measured at the proportionate share in the recognized
+amounts of the acquired net assets (excluding goodwill).
+In April 2017, Siemens contributed its wind power business, in-
+cluding service, into the publicly listed company Gamesa Corpo-
+ración Tecnológica, S.A., Spain (Gamesa), and in return received
+newly issued shares of the combined entity Siemens Gamesa
+Renewable Energy, S.A., Spain (SGRE). The two businesses are
+highly complementary regarding global footprint, existing prod-
+uct portfolios and technologies. Siemens as majority share-
+holder holds 59% of the shares of the combined entity. As part of
+the merger, Siemens paid €999 million in cash which was distrib-
+uted to the Gamesa shareholders (without Siemens) following
+the completion of the merger. The consideration transferred by
+Siemens equals 59% of Gamesa's market capitalization at closing
+of the merger and amounts to €3,669 million. The preliminary
+purchase price allocation as of the acquisition date resulted in:
+Other intangible assets €2,533 million, Property, plant and equip-
+ment €628 million, Trade and other receivables €1,073 million,
+Cash and cash equivalents €1,003 million, Inventories €1,116 mil-
+lion, Other financial assets €413 million (current and non-cur-
+rent), Other current assets €206 million, Current income tax as-
+sets €179 million, Deferred tax assets €432 million, Long-term
+debt €656 million, Provisions €1,229 million (current and non-cur-
+rent), Other financial liabilities €217 million, Short-term debt and
+current maturities of long-term debt €363 million, Trade payables
+€1,745 million, Current income tax liabilities €118 million, Other
+current liabilities €662 million and Deferred tax liabilities
+€824 million. Intangible assets mainly relate to technology of
+€1,147 million, customer relationships of €958 million and order
+backlog of €429 million. The gross contractual amount of the
+ACQUISITIONS
+Acquisitions and dispositions
+NOTE 3
+In May 2017, the IASB issued IFRIC 23, Uncertainty over Income
+Tax Treatments. The interpretation clarifies the recognition and
+measurement requirements when there is uncertainty over in-
+come tax treatments. In assessing the uncertainty, an entity shall
+consider whether it is probable that a taxation authority will ac-
+cept the uncertain tax treatment. IFRIC23 is effective for annual
+reporting periods beginning on or after January 1, 2019, while
+earlier application is permitted. The Company is currently assess-
+ing the impacts of adopting the interpretation on the Company's
+Consolidated Financial Statements.
+periods beginning on or after January 1, 2019. Siemens will adopt
+the standard for the fiscal year beginning as of October 1, 2019,
+presumably by applying the modified retrospective approach, i.e.
+comparative figures for the preceding year would not be ad-
+justed. Currently, it is expected that the majority of the transition
+effect relates to real estate leased by Siemens. The Company is
+currently assessing the impact of adopting IFRS 16 on the Consol-
+idated Financial Statements.
+Consolidated Financial Statements 69
+In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
+nates the current classification model for lessee's lease contracts
+as either operating or finance leases and, instead, introduces a
+single lessee accounting model requiring lessees to recognize
+right-of-use assets and lease liabilities for leases with a term of
+more than twelve months. This brings the previous off-balance
+leases on the balance sheet in a manner largely comparable to
+current finance lease accounting. IFRS 16 is effective for annual
+In May 2014, the IASB issued IFRS 15, Revenue from Contracts
+with Customers. According to the new standard, revenue is rec-
+ognized to depict the transfer of promised goods or services to a
+customer in an amount that reflects the consideration to which
+the Company expects to be entitled in exchange for those goods
+or services. Revenue is recognized when, or as, the customer ob-
+tains control of the goods or services. IFRS 15 supersedes IAS 11,
+Construction Contracts and IAS 18, Revenue as well as related
+interpretations. The standard is effective for annual periods be-
+ginning on or after January 1, 2018; early application is permit-
+ted. The Company will adopt the standard for the fiscal year be-
+ginning as of October 1, 2017 retrospectively, i.e. the comparable
+period will be presented in accordance with IFRS 15. Further as-
+sessments resulting from the implementation of IFRS 15 con-
+firmed that there will be no significant impacts on Siemens' Con-
+solidated Financial Statements. Retained earnings as of October 1,
+2016 will increase by €0.18 billion. The increase mainly results
+from a change in the timing of recognizing revenue for certain
+types of contracts, in particular, revenue may be recognized ear-
+lier if variable consideration components exist, re-allocations of
+the transaction price between performance obligations take
+place or licenses are transferred to the customer. In the compa-
+rable period fiscal 2017, changes in the total amount of revenue
+to be recognized for a customer contract are very limited. The
+vast majority of construction-type contracts currently accounted
+for under the percentage-of-completion method fulfills the re-
+quirements for revenue recognition over time. Besides, there will
+be changes to the Statement of Financial Position, e.g. separate
+line items for contract assets and contract liabilities are required,
+and quantitative and qualitative disclosures are added.
+the effects of the adoption of IFRS 9 and expects only limited
+impact on the Consolidated Financial Statements: Debt instru-
+ments that would not be eligible to be carried at amortized cost
+are expected to occur only to an insignificant extent. The impact
+of the new impairment model of IFRS 9 on the valuation allow-
+ances on debt instruments is currently under evaluation. Based
+on the analyses so far, Siemens does not expect the valuation
+allowances to change significantly. Siemens will adopt the IFRS 9
+hedge accounting rules prospectively from October 1, 2018. It is
+expected that all existing hedge accounting relationships will
+also meet the hedge accounting requirements under IFRS 9.
+In July 2014, the IASB issued IFRS 9, Financial Instruments. IFRS 9
+introduces a single approach for the classification and measure-
+ment of financial assets according to their cash flow characteris-
+tics and the business model they are managed in, and provides a
+new impairment model based on expected credit losses. IFRS 9
+also includes new regulations regarding the application of hedge
+accounting to better reflect an entity's risk management activi-
+ties especially with regard to managing non-financial risks. The
+new standard is effective for annual reporting periods beginning
+on or after January 1, 2018. The Company will adopt IFRS 9 for the
+fiscal year beginning as of October 1, 2018 and will not adjust
+comparative figures for the preceding fiscal year, in accordance
+with IFRS 9 transitional provisions. Siemens is currently assessing
+The following pronouncements, issued by the IASB, are not yet
+effective and have not yet been adopted by the Company:
+RECENT ACCOUNTING PRONOUNCEMENTS,
+NOT YET ADOPTED
+Prior-year information - The presentation of certain prior-year
+information has been reclassified to conform to the current year
+presentation.
+Share-based payment Share-based payment awards at
+Siemens are predominately designed as equity-settled. Fair value
+is measured at grant date and is expensed over the vesting pe-
+riod. Fair value is determined as the market price of Siemens
+shares, considering dividends during the vesting period the
+grantees are not entitled to and market conditions and non-vest-
+ing conditions, if applicable.
+Cash flow hedges: The effective portion of changes in the fair
+value of derivative instruments designated as cash flow hedges
+are recognized in line item Other comprehensive income, net of
+income taxes (applicable deferred income tax), and any ineffec-
+tive portion is recognized immediately in net income. Amounts
+accumulated in equity are reclassified into net income in the
+same periods in which the hedged item affects net income.
+Fair value hedges: The carrying amount of the hedged item is
+adjusted by the gain or loss attributable to the hedged risk.
+Where an unrecognized firm commitment is designated as
+hedged item, the subsequent cumulative change in its fair value
+is recognized as a separate financial asset or liability with corre-
+sponding gain or loss recognized in net income. For hedged
+items carried at amortized cost, the adjustment is amortized un-
+til maturity of the hedged item. For hedged firm commitments
+the initial carrying amount of the assets or liabilities that result
+from meeting the firm commitments are adjusted to include the
+cumulative changes in the fair value that were previously recog-
+nized as separate financial assets or liabilities.
+Consolidated Financial Statements
+NOTE 4 Interests in other entities
+Investments accounted for using the equity method
+(in millions of €)
+Fiscal year
+2016
+316
+NOTE 5 Other operating income
+As of September 30, 2017, non-controlling interests of 41%
+amounting to €788 million relate to SGRE, registered in Zamudio,
+Spain. Net income attributable to non-controlling interests
+for the six month period from acquisition to September 30, 2017
+was €(39) million. Dividends paid to non-controlling interests
+amounted to €31 million. Summarized financial information in
+accordance with IFRS before inter-company eliminations are: As
+of September 30, 2017 current assets €6,963 million, non-cur-
+rent assets €9,504 million, current liabilities €6,891 million,
+non-current liabilities €3,126 million and equity €6,450 million;
+for the six month period from acquisition to September 30, 2017
+revenue €5,022 million, income from continuing operations
+€(135) million, other comprehensive income, net of income
+taxes €(75) million, total comprehensive income €(210) million
+and total cash flows €(1,611) million (including €999 million in
+cash distribution to the Gamesa shareholders (without Siemens)
+as part of the merger).
+257
+235
+(31)
+8
+288
+227
+2016
+2017
+Fiscal year
+SUBSIDIARIES WITH MATERIAL
+NON-CONTROLLING INTERESTS
+Income (loss) from continuing operations
+Other comprehensive income,
+net of income taxes
+Total comprehensive income
+78
+(in millions of €)
+134
+43
+using the equity method, net
+investments accounted for
+Income (loss) from
+(53)
+(129)
+(243)
+Impairment and reversals of impairment
+63
+Gains (losses) on sales, net
+224
+Share of profit (loss), net
+2017
+Income from investments accounted for using the equity method
+includes an impairment loss of €230 million in fiscal 2017 relat-
+ing to Siemens' investment in Primetals Technologies Ltd., which
+is disclosed within Centrally managed portfolio activities. The
+continuing adverse conditions in the market environment trig-
+gered an impairment test on the investment. The recoverable
+amount of €204 million was determined based on a discounted
+cash flow calculation (level 3 of the fair value hierarchy). To de-
+termine the recoverable amount, cash flow projections were
+used that take into account past experience and represent man-
+agement's best estimate about future developments. The calcu-
+lation is based on a terminal value growth rate of 1.5% and an
+after-tax discount rate of 7.4%.
+In fiscal 2017 and 2016, Other operating income includes gains
+related to the sale of businesses of €172 million and €1 million
+and gains on sales of property, plant and equipment of €176 mil-
+lion and €177 million, respectively. Fiscal 2017 includes gains of
+��171 million from reversals of provisions for guarantees related
+to a previous divestment.
+1 Includes adjustments for fair value hedge accounting.
+28,797
+US$
+3.125%/2017/March 2024/US$-fixed-rate-instruments
+718
+850
+US$
+US$3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
+843
+1,000
+US$
+2.70%/2017/March 2022/US$-fixed-rate-instruments
+930
+1,100
+US$
+2.20%/2017/March 2020/US$-fixed-rate-instruments
+677
+800
+US$
+US$3m LIBOR+0.34%/2017/March 2020/US$ floating-rate instruments
+887
+1,000
+838 US$
+1,000
+US$
+3.30%/2016/September 2046/US$-fixed-rate-instruments
+1,517
+1,700
+1,431 US$
+1,000
+843
+3.40%/2017/March 2027/US$-fixed-rate-instruments
+US$
+2,705
+1,249
+31
+31
+€
+33
+33
+€
+3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
+3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
+Total Bonds with Warrant Units
+1,309
+1,500
+1,249 US$
+1,500
+28,554
+US$
+1,332
+1,500
+US$
+1.05%/2012/August 2017/US$ fixed-rate instruments
+15,801
+19,737
+Total US$ Bonds
+1,257
+1,500
+US$
+4.20%/2017/March 2047/US$-fixed-rate-instruments
+1,054
+1,250
+1.65%/2012/August 2019/US$ fixed-rate instruments
+As of September 30, 2017 and 2016, the carrying amount of all
+individually not material associates amounts to €1,836 million
+and €2,242 million, respectively. Summarized financial informa-
+tion for all individually not material associates adjusted for the
+percentage of ownership held by Siemens, is presented below.
+Items included in the Statements of Comprehensive Income are
+presented for the twelve month period applied under the equity
+method.
+NOTE 6 Other operating expenses
+Other operating expenses in fiscal 2017 and 2016 include losses
+on sales of property, plant and equipment, losses from the sale
+of businesses, transaction costs and effects from insurance, legal
+and regulatory matters.
+(44)
+(15)
+(280)
+(371)
+Foreign tax rate differential
+(9)
+Change in tax rates
+(197)
+deferred tax assets and tax credits
+Change in realizability of
+(223)
+(8)
+Taxes for prior years
+600
+(227)
+(309)
+Tax-free income
+558
+Non-deductible losses and expenses
+income taxes resulting from:
+Increase (decrease) in
+Expected income tax expenses
+Siemens has not recognized deferred tax liabilities for income
+taxes or foreign withholding taxes on the cumulative earnings of
+subsidiaries of €36,157 million and €26,585 million, respectively
+in fiscal 2017 and 2016 because the earnings are intended to be
+permanently reinvested in the subsidiaries.
+As of September 30, 2017 and 2016, €1,361 million and €953 mil-
+lion of the unrecognized tax loss carryforwards expire over the
+periods to 2031.
+2,295
+2,575
+2,201
+4,416
+Fiscal year
+2016
+2017
+Tax effect of investments accounted
+for using the equity method
+(62)
+Other, net
+752
+734
+3,358
+3,436
+After one year but not more than five years
+More than five years
+2,008
+2,180
+Continuing operations
+2016
+2017
+(in millions of €)
+2,378
+2,340
+2,013
+Within one year
+2016
+2017
+(in millions of €)
+Sep 30,
+Minimum future lease payments to be received are as follows:
+Including items charged or credited directly to equity and the
+expense (benefit) from continuing and discontinued operations,
+the income tax expense (benefit) consists of the following:
+Consolidated Financial Statements
+22
+72
+(92)
+(6)
+2,008
+2,180
+Actual income tax expenses
+3
+Fiscal year
+3,673
+188
+743
+288
+Other
+8,742
+6,799
+Liabilities and Post-employment benefits
+235
+2,008
+138
+2,180
+1,836
+1,829
+Non-current and current assets
+1,773
+2,042
+400
+114
+2016
+2016
+2017
+Sep 30,
+(in millions of €)
+Fiscal year
+Income tax expenses
+Deferred tax
+Current tax
+(in millions of €)
+Deferred income tax assets and liabilities on a gross basis are
+summarized as follows:
+Income tax expense (benefit) consists of the following:
+NOTE 7 Income taxes
+Consolidated Financial Statements 71
+2017
+5
+Tax loss and credit carryforward
+547
+Deductible temporary differences
+Tax loss carryforward
+2016
+2017
+(in millions of €)
+Sep 30,
+(in millions of €)
+Deferred tax assets have not been recognized with respect of the
+following items (gross amounts):
+As of September 30, 2017, the Company has certain tax losses
+subject to significant limitations. For those losses deferred tax
+assets are not recognized, as it is not probable that gains will be
+generated to offset those losses.
+Deferred tax liabilities
+Total deferred tax assets, net
+Other
+Income tax expense (current and deferred) differs from the
+amounts computed by applying a combined statutory German
+income tax rate of 31% as follows:
+In Germany, the calculation of current tax is based on a combined
+tax rate of 31%, consisting of a corporate tax rate of 15%, a solidar-
+ity surcharge thereon of 5.5% and an average trade tax rate of
+15%. For foreign subsidiaries, current taxes are calculated based
+on the local tax laws and applicable tax rates in the individual for-
+eign countries. Deferred tax assets and liabilities in Germany and
+abroad are measured at the tax rates that are expected to apply to
+the period when the asset is realized or the liability is settled.
+The current income tax expenses in fiscal 2017 and 2016 include
+adjustments recognized for current tax of prior years in the
+amount of €100 million and €(29) million, respectively. The de-
+ferred tax expense (benefit) in fiscal 2017 and 2016 includes tax
+effects of the origination and reversal of temporary differences
+of €172 million and €54 million, respectively.
+788
+2,602
+8,638
+9,006
+120
+218
+930
+874
+7,588
+7,914
+Non-current and current assets
+Liabilities
+Liabilities
+11,240
+9,704
+Deferred tax assets
+698
+US$
+101
+2,028
+(3,754)
+8,129
+(247)
+205
+188
+308
+(184)
+7,859
+Land and bulidings
+(1,281)
+10,926
+(8,487)
+19,413
+(250)
+451
+4,542
+(799)
+15,469
+Other intangible assets
+(624)
+5,240
+(3,629)
+8,870
+(39)
+1,825
+(447)
+7,532
+4,374
+and trademarks
+(272)
+and equipment
+10
+443
+(92)
+3,015
+Equipment leased to others
+(729)
+1,537
+(4,898)
+6,435
+(532)
+157
+672
+183
+(136)
+6,092
+equipment
+Furniture and office
+(588)
+2,724
+(5,685)
+8,410
+(235)
+207
+334
+323
+(170)
+7,950
+Technical machinery
+Customer relationships
+(454)
+4,056
+(in millions of €)
+diffe-
+amount
+ciation/
+amortiza-
+lated depre-
+Accumu-
+Gross
+carrying
+through
+business
+Trans-
+lation
+carrying
+Gross
+Additions
+NOTE 12 Other intangible assets and
+property, plant and equipment
+Consolidated Financial Statements 75
+in the terminal value growth rate by one percentage point.
+Siemens concluded that no impairment loss would need to be
+recognized on goodwill in any of the groups of cash-generating
+units.
+The sensitivity analysis for the groups of cash-generating units to
+which a significant amount of goodwill is allocated was based on
+a reduction in after-tax future cash flows by 10% or an increase
+in after-tax discount rates by one percentage point or a reduction
+8.0%
+1.7%
+3,158
+8.0%
+1.7%
+3,552
+8.0%
+1.7%
+3,933
+6.5%
+1.7%
+10/01/2016
+rences
+US$3 m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
+Reclassi-
+fications
+(3,264)
+7,320
+(73)
+77
+2,717
+(272)
+4,870
+and similar rights
+including patents, licenses
+Acquired technology
+(203)
+1,630
+(1,594)
+(378)
+3,224
+374
+(79)
+3,067
+technology
+Internally generated
+ment in
+fiscal 2017
+and impair-
+tization
+Deprecia-
+tion/amor-
+amount
+09/30/2017
+Carrying
+tion and
+impairment
+Retire-
+amount
+ments¹ 09/30/2017
+(138)
+2,998
+(1,703)
+1,295
+20
+(65)
+7,745
+Land and bulidings
+(932)
+7,742
+(7,727)
+15,469
+(395)
+388
+328
+(115)
+15,262
+Other intangible assets
+(490)
+4,341
+(3,191)
+7,532
+68
+(77)
+7,542
+and trademarks
+Customer relationships
+(253)
+1,896
+(2,974)
+4,870
+274
+218
+(333)
+7,859
+(4,764)
+1,328
+Equipment leased to others
+(690)
+6,092
+(448)
+85
+632
+22
+(29)
+5,829
+equipment
+Furniture and office
+(143)
+(542)
+(5,412)
+7,950
+(271)
+270
+288
+(39)
+(67)
+7,770
+and equipment
+Technical machinery
+(253)
+4,186
+(3,673)
+2,539
+8,301
+64
+(37)
+through
+Trans-
+Gross
+carrying
+amount
+Additions
+1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
+(1,930)
+10,977
+(16,041)
+(1,416) 27,017
+2,432
+891
+(607)
+25,717
+and equipment
+Property, plant
+(3)
+1,047
+1,046
+(23)
+(580)
+796
+78
+(25)
+801
+construction in progress
+Advances to suppliers and
+(338)
+lation
+business
+Gross
+carrying
+Accumu-
+lated depre-
+ciation/
+amortiza-
+4,725
+and similar rights
+including patents, licenses
+Acquired technology
+(189)
+1,505
+(1,562)
+3,067
+(252)
+324
+2,995
+technology
+Internally generated
+260
+fiscal 2016
+amount
+09/30/2016
+tion and
+impairment
+ments' 09/30/2016
+nations Additions fications
+amount
+Retire-
+Reclassi-
+combi-
+diffe-
+rences
+10/01/2015
+(in millions of €)
+Carrying and impair-
+Deprecia-
+tion/amor-
+tization
+ment in
+Sep 30, 2016
+After-tax
+discount rate
+combi-
+nations Additions
+Goodwill
+finance leases
+After one year but not more than five years
+679
+689
+Total debt
+27
+5,447
+15
+6,206
+88
+123
+26,777
+24,761
+More than five years
+85
+1,124
+1,099
+NOTE 13 Other financial assets
+(in millions of €)
+2017
+Sep 30,
+2016
+Loans receivable
+11,062
+11,838
+Receivables from finance leases
+3,699
+Derivative financial instruments
+1,784
+326
+344
+growth rate
+Obligations under
+Current debt
+Sep 30,
+Non-current debt
+Sep 30,
+2017
+2016
+2017
+2016
+(maturing until 2047)
+3,554
+4,994
+25,243
+23,560
+Loans from banks
+Available-for-sale financial assets
+(maturing until 2027)
+380
+1,334
+992
+Other financial indebted-
+Sep 30,
+ness (maturing until 2029)
+675
+817
+111
+87
+(in millions of €)
+2017
+2016
+1,191
+(in millions of €)
+Notes and bonds
+2,290
+Other
+77
+NOTES AND BONDS
+(interest/issued/maturity)
+Currency
+Notional
+amount
+(in millions)
+Sep 30, 2017
+Carrying
+amount
+in millions
+Notional
+Currency
+Sep 30, 2016
+Carrying
+amount
+amount
+in millions
+of €1
+(in millions)
+of €1
+5.625%/2008/June 2018/EUR fixed-rate instruments
+€
+1,600
+1,649
+€
+1,600
+1,719
+5.125%/2009/February 2017/EUR fixed-rate instruments
+€
+2,000
+Consolidated Financial Statements
+As of September 30, 2017 and 2016, €7.0 billion and €7.1 billion
+of lines of credit are unused. The facilities are for general corpo-
+rate purposes. The €4.0 billion syndicated credit facility matures
+on June 25, 2021. The US$3.0 billion syndicated credit facility ma-
+tures on September 27, 2020. The €450 million revolving bilateral
+credit facility is unused and was extended from September 2017
+to September 2018. As of September 30, 2017, a subsidiary has an
+additional unused credit line of €750 million maturing in 2022.
+CREDIT FACILITIES
+Interest rates in this Note are per annum. In fiscal 2017 and 2016,
+weighted-average interest rates for loans from banks, other fi-
+nancial indebtedness and obligations under finance leases were
+2.9% (2016: 3.9%), 1.0% (2016: 0.5%) and 5.8% (2016: 4.8%),
+respectively.
+208
+19,044
+260
+20,610
+Item Loans receivable primarily relate to long-term loan transac-
+tions of SFS.
+NOTE 14 Other current liabilities
+(in millions of €)
+Sep 30,
+2017
+2016
+Billings in excess of costs and
+estimated earnings on uncompleted
+contracts and related advances
+10,259
+3,557
+2,293
+2,662
+10,892
+5,505
+5,401
+Deferred Income
+1,470
+1,292
+Accruals for pending invoices
+1,116
+1,175
+Other
+1,698
+1,676
+20,049
+20,437
+Liabilities to personnel
+NOTE 15 Debt
+Within one year
+The gross carrying amount of Advances to suppliers and con-
+struction in progress includes €908 million and €677 million, re-
+spectively of property, plant and equipment under construction
+in fiscal 2017 and 2016. As of September 30, 2017 and 2016, con-
+tractual commitments for purchases of property, plant and
+equipment are €665 million and €643 million, respectively.
+Balance at beginning of year
+Carrying amount
+1,909
+1,847
+1
+(1)
+Dispositions and reclassifications to assets classified as held for disposal
+Balance at year-end
+1
+Impairment losses recognized during the period
+2
+(61)
+Translation differences and other
+1,905
+1,909
+Balance at beginning of year
+Accumulated impairment losses and other changes
+26,068
+29,754
+Balance at year-end
+(20)
+(46)
+Dispositions and reclassifications to assets classified as held for disposal
+1,144
+4,757
+Acquisitions and purchase accounting adjustments
+(127)
+25,071
+Balance at year-end
+24,159
+Minimum future lease payments under operating leases are:
+27,906
+Terminal value
+Power and Gas (without part of Power Generation Services)
+Power Generation Services (part of Power and Gas)
+Digital Factory
+Healthineers
+(in millions of €)
+allocated include average revenue growth rates (excluding portfolio
+effects) of between 0.1% and 9.1% (0.3% and 5.3% in fiscal 2016).
+Revenue figures in the five-year planning period of the groups of
+cash-generating units to which a significant amount of goodwill is
+8.5%
+1.7%
+5,575
+8.5%
+1.7%
+6,440
+26,068
+(1,025)
+7.0%
+7,992
+Sep 30, 2017
+After-tax
+discount rate
+Terminal value
+growth rate
+Goodwill
+(in millions of €)
+Healthineers
+Power and Gas
+Digital Factory
+The following table presents key assumptions used to determine
+fair value less costs to sell for impairment test purposes for the
+groups of cash-generating units to which a significant amount of
+goodwill is allocated:
+tions on the terminal value growth rate and discount rate. Both
+assumptions are determined individually for each cash-gener-
+ating unit or group of cash-generating units. Discount rates are
+based on the weighted average cost of capital (WACC) for the
+cash-generating units or groups of cash-generating units (for
+SFS the discount rate represents cost of equity). The discount
+rates are calculated based on a risk-free rate of interest and a
+market risk premium. In addition, the discount rates reflect the
+current market assessment of the risks specific to each
+cash-generating unit or group of cash-generating units by tak-
+ing into account specific peer group information on beta fac-
+tors, leverage and cost of debt. The parameters for calculating
+the discount rates are based on external sources of information.
+The peer group is subject to an annual review and adjusted, if
+necessary. Terminal value growth rates take into consideration
+external macroeconomic sources of data and industry specific
+trends.
+The fair value less costs to sell is mainly driven by the terminal
+value which is particularly sensitive to changes in the assump-
+For the purpose of estimating the fair value less costs to sell of
+the cash-generating units or groups of cash-generating units,
+cash flows were projected for the next five years based on past
+experience, actual operating results and management's best es-
+timate about future developments as well as market assump-
+tions. The determined fair value of the cash-generating units or
+groups of cash-generating units is assigned to level 3 of the fair
+value hierarchy.
+Siemens performs the mandatory annual impairment test in the
+three months ended September 30. The recoverable amounts for
+the annual impairment test 2017 for Siemens' cash-generating
+units or groups of cash-generating units were estimated to be
+higher than the carrying amounts. Key assumptions on which
+Siemens based its determinations of the fair value less costs to
+sell for the cash-generating units or groups of cash-generating
+units include terminal value growth rates up to 1.7% in fiscal 2017
+and 1.7% in fiscal 2016, respectively and after-tax discount rates
+of 6.0% to 8.5% in fiscal 2017 and 5.0% to 9.0% in fiscal 2016.
+Consolidated Financial Statements
+74
+24,159
+1.7%
+Translation differences and other
+23,166
+2016
+1,305
+(348)
+Advances to suppliers and
+construction in progress
+856
+(16)
+(40)
+595
+(582)
+(12)
+801
+799
+2
+Property, plant
+and equipment
+25,234
+(260)
+(14)
+2,273
+(1,516) 25,717
+(15,560)
+10,157
+(1,831)
+1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
+76
+Consolidated Financial Statements
+Balance at beginning of year
+(1,710)
+3,015
+(2)
+10
+2017
+(452)
+Construction contracts, here and as follows, include service con-
+tracts accounted for under the percentage of completion method.
+The aggregate amount of costs incurred and recognized profits
+less recognized losses for construction contracts in progress, as
+of September 30, 2017 and 2016 amounted to €88,571 million
+and €83,789 million, respectively. Revenue from construction
+contracts amounted to €34,280 million and €32,695 million, re-
+spectively, for fiscal 2017 and 2016. Advance payments received
+on construction contracts in progress were €7,791 million and
+€8,749 million as of September 30, 2017 and 2016. Retentions in
+connection with construction contracts were €217 million and
+€288 million in fiscal 2017 and 2016, respectively.
+Cost
+(in millions of €)
+NOTE 11 Goodwill
+18,160
+19,942
+(2,506)
+(2,966)
+Advance payments received
+20,666
+22,907
+10,046
+3,261
+591
+790
+Fiscal year
+3,033
+3,951
+Finished goods and products held for resale
+10,970
+of billings on uncompleted contracts
+Costs and earnings in excess
+Sep 30,
+2016
+2,487
+4,281
+4,242
+Work in progress
+Advances to suppliers
+(83)
+23
+484
+7
+4
+2,473
+444
+818
+693
+Effects of asset ceiling
+Return on plan assets excluding
+amounts included in net interest
+income and net interest expenses
+Actuarial (gains) losses
+1,605
+(174)
+795
+1,133
+(38)
+costs recognized in the
+Components of defined benefit
+(4)
+(112)
+8
+5
+(150)
+Other¹
+(809)
+(482)
+809
+Interest income
+482
+Consolidated Statements of income
+174
+144
+(3,919)
+Benefits paid
+1,085
+130
+144
+130
+Plan participants' contributions
+(618)
+(861)
+618
+861
+Employer contributions
+3,703
+(3,805)
+(109)
+(60)
+2,473
+(174)
+6,284
+(3,919)
+of Comprehensive Income
+in the Consolidated Statements
+Remeasurements recognized
+(109)
+(60)
+(109)
+(60)
+6,284
+(3,919)
+6,284
+(2,473)
+675
+Ratings
+Services
+4
+Net defined
+benefit balance
+Effects of
+asset ceiling
+plan assets
+Fair value of
+Defined benefit
+obligation (DBO)
+Development of the defined benefit plans
+ployees. Accordingly, Siemens in Switzerland sponsors several
+cash balance plans. These plans are administered by foundations.
+The board of the main foundation is composed of equally many
+employer and employee representatives. The board of the foun-
+dation is responsible for investment policy and the asset manage-
+ment, as well as for any changes in the plan rules and the deter-
+mination of contributions to finance the benefits. The Company
+is required to make total contributions at least as high as the sum
+of the employee contributions set out in the plan rules. In case of
+an underfunded plan the Company together with the employees
+may be asked to pay supplementary contributions according to a
+well-defined framework of recovery measures.
+Following the Swiss law of occupational benefits (BVG) each em-
+ployer has to grant post-employment benefits for qualifying em-
+Switzerland:
+on legal requirements. Due to deviating guidelines for the determi-
+nation of the discount rates, the technical funding deficit is usually
+larger than the IFRS funding deficit. To reduce the deficit Siemens
+entered into an agreement with the trustees to provide annual pay-
+ments of GB£31 (€34) million until fiscal 2033. The agreement also
+provides for a cumulative advance payment by Siemens AG com-
+pensating the remaining annual payments at the date of early ter-
+mination of the agreement due to cancellation or insolvency.
+Consolidated Financial Statements 79
+Siemens plc offers benefits through the Siemens Benefit Scheme for
+which, until the start of retirement, an inflation increase of the ma-
+jority of accrued benefits is mandatory. The required funding is de-
+termined by a funding valuation carried out every third year based
+U.K.:
+Siemens Corporation sponsors the Siemens Pension Plans, which
+for the most part have been frozen to new entrants and to future
+benefit accruals, except for interest credits on cash balance ac-
+counts. Siemens Corporation has appointed the Investment Com-
+mittee as the named fiduciary for the management of the assets
+of the Plans. The Plans' assets are held in a Master Trust and the
+trustee of the Master Trust is responsible for the administration of
+the assets of the trust, taking directions from the Investment Com-
+mittee. The Plans are subject to the funding requirements under
+the Employee Retirement Income Security Act of 1974 as amended,
+(ERISA). There is a regulatory requirement to maintain a minimum
+funding level of 80% in the defined benefit plans in order to avoid
+benefit restrictions. At its discretion, Siemens Corporation may
+contribute in excess of this regulatory requirement. Annual contri-
+butions are calculated by independent actuaries.
+U.S.:
+In Germany, Siemens AG provides pension benefits through the
+plan BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
+zen legacy plans and deferred compensation plans. The majority
+of Siemens' active employees participate in the BSAV. Those ben-
+efits are predominantly based on contributions made by the
+Company and returns earned on such contributions, subject to a
+minimum return guaranteed by the Company. In connection with
+the implementation of the BSAV, benefits provided under the
+frozen legacy plans were modified to substantially eliminate the
+effects of compensation increases. However, these frozen plans
+still expose the Company to investment risk, interest rate risk and
+longevity risk. The pension plans are funded via contractual trust
+arrangements (CTA). In Germany no legal or regulatory minimum
+funding requirements apply.
+Germany:
+The defined benefit plans open to new entrants are based pre-
+dominantly on contributions made by the Company. Only to a
+certain extent, those plans are affected by longevity, inflation
+and compensation increases and take into account country spe-
+cific differences. The Company's major plans are funded with
+assets in segregated entities. In accordance with local laws and
+bilateral agreements with benefit trusts (trust agreement) those
+plans are managed in the interest of the beneficiaries. The de-
+fined benefit plans cover 506,000 participants, including 217,000
+active employees, 89,000 former employees with vested benefits
+and 200,000 retirees and surviving dependents.
+DEFINED BENEFIT PLANS
+NOTE 16 Post-employment benefits
+Siemens has a US$9.0 billion (€7.6 billion as of September 30,
+2017) commercial paper program in place including US$ extend-
+ible notes capabilities. As of September 30, 2017 and 2016,
+US$720 million (€610 million) and US$700 million (€627 mil-
+lion), respectively, were outstanding. Siemens' commercial pa-
+pers have a maturity of generally less than 90 days. Interest rates
+ranged from 0.37% to 1.47% in fiscal 2017 and from 0.13% to
+0.74% in fiscal 2016.
+COMMERCIAL PAPER PROGRAM
+As of September 30, 2017, a subsidiary has loans of €424 million
+outstanding maturing in 2018 and 2019 which were subject to
+covenants, all of which were complied with.
+As of September 30, 2017 and 2016, two bilateral US$500 million
+term loan facilities (in aggregate €847 million and €896 million
+respectively) are outstanding until March 26, 2020.
+ASSIGNABLE AND TERM LOANS
+Bond with Warrant Units - Each of the US$1.5 billion instru-
+ments were issued with 6,000 detachable warrants exercisable
+until August 1, 2017 (Warrants 2017) and August 1, 2019 (Warrants
+2019). As of September 30, 2017, almost all Warrants 2017 and no
+Warrants 2019 were exercised. As of September 30, 2017 and
+2016, terms for 5,236 Warrants 2019 and 10,661 Warrants, respec-
+tively, entitle the holder to receive 1,924.1160 and 1,914.0511
+Siemens AG shares per warrant at an exercise price of €97.6255
+and €98.1389 per share, respectively; terms for 764 Warrants
+2019 and 1,339 warrants, respectively entitle the holder to receive
+1,833.0013 and 1,823.4130 Siemens AG shares per warrant as well
+as 146.0092 and 151.5630 OSRAM shares, respectively, at an ex-
+ercise price of €187,842.81. The number of shares may be ad-
+justed under the terms of the warrants. As of September 30, 2017
+and 2016, the Warrants 2019 offer option rights to 11.5 million
+and the Warrants 2017 and 2019 to 22.8 million Siemens AG
+shares, respectively. Siemens redeemed the 1.05% US$1.5 billion
+fixed-rate instrument at face value as due. The 3 m EURIBOR+0.2%
+€33 million and the 3m EURIBOR+0.2% €31 million floating-rate
+instruments were redeemed at face value as due.
+US$ Bonds - In March 2017, Siemens issued instruments totaling
+US$7.5 billion (€6.4 billion as of September 30, 2017) in seven
+tranches. Siemens redeemed the 5.75% US$1.75 billion fixed-rate
+instrument at face value as due.
+Debt Issuance Program - The Company has a program for the
+issuance of debt instruments in place under which instruments
+up to €15.0 billion can be issued as of September 30, 2017 and
+2016, respectively. As of September 30, 2017 and 2016 €7.8 bil-
+lion and €9.9 billion in notional amounts were issued and are
+outstanding. Siemens redeemed the 5.125% €2.0 billion fixed-
+rate instrument at face value as due.
+(2,045)
+(1)
+7
+(11)
+Fiscal year
+1,078
+672
+Interest expenses
+523
+612
+523
+612
+Current service cost
+9,737
+13,486
+214
+119
+27,296
+28,809
+36,818
+42,176
+Balance at begin of fiscal year
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+(in millions of €)
+(1 - 11 +111)
+Fiscal year
+Fiscal year
+Fiscal year
+(III)
+(1,854)
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED BREACHES OF CONTRACT
+(1,694)
+(643)
+(421)
+799
+13,695
+9,582
+639
+(22,418)
+19,071
+22,607
+(22,531)
+(1,293)
+(1,242)
+Less: Current available-for-sale financial assets
+Net debt
+(8,375) (10,604)
+9,876
+Less: Cash and cash equivalents
+5,447
+26,777
+Plus: Long-term debt
+Short-term debt and current maturities
+of long-term debt
+Dividends paid per share were €3.60 and €3.50, respectively, in fis-
+cal 2017 and 2016. The Managing Board and the Supervisory Board
+propose to distribute a dividend of €3.70 per share entitled to the
+As of September 30, 2017 and 2016, total authorized capital of
+Siemens AG is €618.6 million nominal, issuable in installments
+based on various time-limited authorizations, by issuance of up
+to 206.2 million registered shares of no par value. In addition, as
+of September 30, 2017 and 2016, Siemens AG's conditional capi-
+tal is €1,080.6 million nominal or 360.2 million shares. It can
+primarily be used for serving convertible bonds or warrants un-
+der warrant bonds that could or can be issued based on various
+time-limited authorizations approved by the respective Share-
+holders' Meeting.
+In fiscal 2017 and 2016, Siemens repurchased 7,922,129 shares
+and 4,888,596 shares, respectively. In fiscal 2017 and 2016,
+Siemens transferred 15,162,691 and 4,543,673 treasury shares,
+respectively. As of September 30, 2017 and 2016, the Company
+has treasury shares of 34,481,120 and 41,721,682, respectively.
+Siemens' issued capital is divided into 850 million registered shares
+with no par value and a notional value of €3.00 per share as of
+September 30, 2017 and 2016, respectively. The shares are fully
+paid in. At the Shareholders' Meeting, each share has one vote and
+accounts for the shareholders' proportionate share in the Compa-
+ny's net income. All shares confer the same rights and obligations.
+Equity
+NOTE 18
+Sep 30,
+2016
+2017
+(in millions of €)
+6,206
+24,761
+10,505
+Less: SFS Debt¹
+Plus: Provisions for pensions
+and similar obligations
+ness.
+Equity allocated to SFS differs from the carrying amount of equity
+as it is mainly allocated based on the risks of the underlying busi-
+2,623
+22,418
+8.55
+2016
+Sep 30,
+2017
+2,607
+22,531
+8.64
+Debt to equity ratio
+SFS debt
+Allocated equity
+(in millions of €)
+The SFS business is capital intensive and operates a larger
+amount of debt to finance its operations compared to the indus-
+trial business.
+84 Consolidated Financial Statements
+2 Debt is generally reported with a value representing approximately the amount to be repaid.
+However, for debt designated in a hedging relationship (fair value hedges), this amount is
+adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
+Siemens deducts these changes in market value in order to end up with an amount of debt
+that approximately will be repaid.
+1 The adjustment considers that both Moody's and S&P view SFS as a captive finance company.
+These rating agencies generally recognize and accept higher levels of debt attributable to
+captive finance subsidiaries in determining credit ratings. Following this concept, Siemens
+excludes SFS Debt in order to derive an industrial net debt which is not affected by SFS's
+financing activities.
+1.0
+0.9
+2,764
+10,216
+3,211
+10,946
+48
+(571)
+7,404
+8,306
+Industrial net debt/EBITDA
+Plus/Less: Interest income, interest expenses
+and other financial income (expenses), net
+Plus: Amortization,
+depreciation and impairments
+EBITDA
+Income from continuing operations
+before income taxes
+Less: Fair value hedge accounting adjustment²
+Industrial net debt
+Plus: Credit guarantees
+A key consideration of our capital structure management is to
+maintain ready access to capital markets through various debt
+instruments and to sustain our ability to repay and service our
+debt obligations over time. In order to achieve this, Siemens in-
+tends to maintain an Industrial net debt divided by EBITDA (con-
+tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
+proximate number of years that would be needed to cover the
+Industrial net debt through continuing income, without taking
+into account interest, taxes, depreciation and amortization.
+Siemens' current corporate credit ratings are:
+NOTE 19 Additional capital disclosures
+Other includes transaction-related and post-closing provisions in
+connection with portfolio activities as well as provisions for Legal
+Proceedings, as far as the risks that are subject to such Legal
+Proceedings are not already covered by project accounting. Pro-
+visions for Legal Proceedings amounted to €437 million and
+€430 million as of September 30, 2017 and 2016, respectively.
+(3)
+(33)
+(77)
+Translation differences
+(2,020)
+(532)
+(316)
+(200)
+(972)
+Reversals
+(2,049)
+(486)
+(24)
+(10)
+(1,160)
+Usage
+3,069
+585
+6
+658
+1,820
+Additions
+5,087
+796
+1,593
+675
+(393)
+(137)
+Accretion expense and effect of changes in discount rates
+(6)
+present value discount of €359 million and €206 million, respec-
+tively, reflecting the assumed continuous outflow of the total
+expected payments until the 2060's (2070's in fiscal 2016). In-
+creased discount rates decreased the carrying amount of the
+provision by €543 million as of September 30, 2017, mainly due
+to a change of the applied yield curve in order to more specifically
+reflect interest rate expectations, particularly regarding long-
+term interest rates; declined discount rates increased the carry-
+ing amount by €355 million as of September 30, 2016. The pro-
+vision was decreased by €312 million as of September 30, 2017,
+mainly due to reduced assumed inflation rates, and €170 million
+as of September 30, 2016, due to reduced cost estimates.
+Consolidated Financial Statements 83
+As of September 30, 2017 and 2016, the provision totals €697 mil-
+lion and €1,551 million, respectively, and is recorded net of a
+storage, transport to and final storage of the radioactive waste.
+This
+process will be supported by continuing engineering studies
+and radioactive sampling under the supervision of German fed-
+eral and state authorities. The decontamination and disassembly
+are planned to continue until 2018, whereas final waste condi-
+tioning and packaging is planned to continue until the 2020's.
+Thereafter, the Company is responsible for intermediate storage
+of the radioactive materials until they are transported and
+handed over to a final storage facility. With respect to the Hanau
+facility, the asset retirement has been completed and inter-
+mediate storage has been set up. On September 21, 2006, the
+Company received official notification from the authorities that
+the Hanau facility has been released from the scope of applica-
+tion of the German Atomic Energy Act and that its further use is
+unrestricted. The ultimate costs of the remediation are contin-
+gent on the decision of the federal government on the location
+of the final storage facilities and the date of their availability.
+Several parameters relating to the development of a final storage
+facility for radioactive waste are based on the assumptions for
+the so called Schacht Konrad final storage. Parameters related to
+the life-span of the German nuclear reactors assume a phase-out
+until 2022. The valuation uses assumptions to reflect the current
+and detailed cost estimates, price inflation and discount rates as
+well as a continuous outflow until the 2060's related to the costs
+for dismantling as well as intermediate and final storage. The
+estimated cash outflows related to the asset retirement obliga-
+tion could alter significantly if political developments affect the
+government's timeline to finalize the so called Schacht Konrad.
+For discounting the cash outflows, the Company uses current
+interest rates as of the balance sheet date.
+Environmental clean-up costs relate to remediation and environ-
+mental protection liabilities which have been accrued based on
+the estimated costs of decommissioning facilities for the produc-
+tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
+many (Hanau facilities), as well as a nuclear research and service
+center in Karlstein, Germany (Karlstein facilities). Whilst in fiscal
+2017, parts of the regulation for nuclear waste disposal were
+amended by way of law ("Gesetz zur Neuordnung der Verantwor-
+tung in der kerntechnischen Entsorgung"), Siemens is not covered
+by these regulations and consequently continues to adhere to the
+German Atomic Energy Act ("deutsches Atomgesetz"), which
+states that when a nuclear facility is closed, the resulting radioac-
+tive waste must be collected and delivered to a government-de-
+veloped final storage facility. In this regard, the Company has
+developed a plan to decommission the Hanau and Karlstein facil-
+ities in the following steps: asset retirement (including clean-out,
+decontamination and disassembly of equipment and installa-
+tions, decontamination of the facilities and buildings), waste con-
+ditioning and packaging of nuclear waste, as well as intermediate
+The Company is subject to asset retirement obligations related to
+certain items of property, plant and equipment. Such asset retire-
+ment obligations are primarily attributable to environmental
+clean-up costs and to costs primarily associated with the removal
+of leasehold improvements at the end of the lease term.
+Warranties mainly relate to products sold. Order related losses
+and risks are provided for anticipated losses and risks on uncom-
+pleted construction, sales and leasing contracts.
+Except for asset retirement obligations, the majority of the Com-
+pany's provisions are generally expected to result in cash out-
+flows during the next one to 15 years.
+4,579
+8,826
+1,603
+664
+743
+759
+1,832
+750
+4,631
+2,422
+Thereof non-current
+Balance as of September 30, 2017
+1,252
+186
+5
+285
+777
+Other changes
+(542)
+(1)
+(533)
+(1)
+dividend, in total representing approximately €3.0 billion in ex-
+pected payments. Payment of the proposed dividend is contingent
+upon approval at the Shareholders' Meeting on January 31, 2018.
+2,022
+Sep 30, 2017
+Poor's
+Derivatives designated in a hedge accounting relationship4
+Financial liabilities
+Financial liabilities held for trading4
+Financial liabilities measured at amortized cost³
+Financial assets
+Available-for-sale financial assets²
+Financial assets held for trading
+Derivatives designated in a hedge accounting relationship
+Cash and cash equivalents
+Loans and receivables¹
+(in millions of €)
+The following table discloses the carrying amounts of each cate-
+gory of financial assets and financial liabilities:
+on financial instruments
+Sep 30,
+NOTE 22 Additional disclosures
+Some of these Legal Proceedings could result in adverse decisions
+for Siemens that may have material effects on its financial position,
+the results of its operations and/or its cash flows in the respective
+reporting period. At present, Siemens does not expect any matters
+not described in this Note to have material effects on its financial
+position, the results of its operations and/or its cash flows.
+Siemens is in the course of its normal business operations in-
+volved in numerous Legal Proceedings in various jurisdictions.
+These Legal Proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages,
+equitable remedies or criminal or civil sanctions, fines or dis-
+gorgement of profit. In individual cases this may also lead to
+formal or informal exclusion from tenders or the revocation or
+loss of business licenses or permits. In addition, further Legal
+Proceedings may be commenced or the scope of pending Legal
+Proceedings may be expanded. Asserted claims are generally
+subject to interest rates.
+88
+Consolidated Financial Statements 87
+Siemens has received credible information that four gas turbines
+intended for a project in Taman, Russia, which were delivered by
+000 Siemens Gas Turbines Technologies (SGTT) to its customer
+OAO VO TechnoPromExport in summer of 2016 had been al-
+legedly brought to Crimea against contractual agreements with
+SGTT. Allegedly, these four gas turbines had been sold by OAO
+VO TechnoPromExport to OOO VO TechnoProm Export, had then
+been locally modified and moved to Crimea, a location under
+sanctions. Siemens AG together with SGTT and SGTT separately
+have filed lawsuits before the Commercial State Court of Moscow
+against OAO VO TechnoProm Export and OOO VO TechnoProm-
+Export for the return of the gas turbines. The proceedings are
+ongoing.
+As previously reported, the Vienna public prosecutor in Austria
+conducted an investigation into payments between calendar
+1999 and calendar 2006 relating to Siemens Aktiengesellschaft
+Österreich, Austria, for which adequate services rendered could
+not be identified. In September 2011, the Vienna public prosecu-
+tor extended the investigations to include a tax evasion matter
+for which Siemens Aktiengesellschaft Österreich is potentially
+liable. In November 2016, the proceedings against Siemens
+Aktiengesellschaft Österreich were stopped.
+As previously reported, in June 2015, Siemens Ltda. once again
+appealed to the Supreme Court against a decision confirming
+the decision of the previous court to suspend Siemens Ltda.
+from participating in public tenders and signing contracts with
+public administrations in Brazil for a five year term based on
+alleged irregularities in calendar 1999 and 2004 public tenders
+with the Brazilian Postal authorities. In July 2015, the court sus-
+pended enforcement of the debarment decision pending the
+appeal.
+As previously reported, CADE conducted - unrelated to the above
+mentioned proceedings - two further investigations into possible
+antitrust behavior in the field of gas-insulated and air-insulated
+switchgear from the 1990's to 2006. Siemens cooperated with
+the authorities. In February 2017, Siemens AG entered into a set-
+tlement agreement with CADE relating to alleged antitrust viola-
+tions in the field of gas-insulated switchgear for an amount in a
+low single-digit euro million range. In October 2017, Siemens
+Ltda. entered into a settlement agreement with CADE relating to
+alleged antitrust violations in the field of air-insulated switchgear
+for an amount in a mid double-digit euro million range.
+lion as of September 2017) plus adjustments for inflation and
+related interest in relation to train maintenance contracts
+entered into in 2006 and 2007. Siemens will defend itself against
+these actions. It cannot be excluded that further significant
+damage claims will be brought by customers or the state against
+Siemens.
+As previously reported, in May 2014, the Public Affairs Office
+(Ministério Público) São Paulo initiated a lawsuit against Siemens
+Ltda. as well as other companies and several individuals claiming,
+inter alia, damages in an amount of BRL2.5 billion (approximately
+€665 million as of September 2017) plus adjustments for infla-
+tion and related interest in relation to train refurbishment con-
+tracts entered into between 2008 and 2011. A technical note is-
+sued by the Brazilian cartel authority CADE earlier in 2014 had not
+identified evidence suggesting Siemens Ltda.'s involvement in
+anticompetitive conduct in relation to these refurbishment con-
+tracts. In January 2015 the district court of São Paulo admitted a
+lawsuit of the State of São Paulo and two customers against
+Siemens Ltda., Siemens AG and other companies and individuals
+claiming damages in an unspecified amount. In March 2015, the
+district court of São Paulo admitted a lawsuit of the Public Affairs
+Office (Ministério Público) São Paulo against Siemens Ltda. and
+other companies claiming, inter alia, damages in an amount of
+BRL487 million (approximately €130 million as of September 2017)
+plus adjustments for inflation and related interest in relation to
+train maintenance contracts entered into in 2000 and 2002. In
+September 2015, the district court of São Paulo admitted another
+lawsuit of the Public Affairs Office (Ministério Público) São Paulo
+against Siemens Ltda. and other companies claiming, inter alia,
+damages in an amount of BRL918 million (approximately €244 mil-
+As previously reported, in March 2014, Siemens was informed
+that in connection with the above mentioned metro and urban
+train projects the Public Prosecutor's Office São Paulo has re-
+quested criminal proceedings at court into alleged violations of
+Brazilian antitrust law against a number of individuals including
+current and former Siemens employees. The proceedings con-
+tinue; the Public Prosecutor's Office São Paulo has, in the mean-
+time, appealed all decisions where the courts denied opening
+criminal trials.
+As previously reported, in May 2013, Siemens Ltda., Brazil
+(Siemens Ltda.) entered into a leniency agreement with the Ad-
+ministrative Council for Economic Defense (CADE) and other rel-
+evant Brazilian authorities relating to possible antitrust violations
+in connection with alleged anticompetitive irregularities in metro
+and urban train projects, in which Siemens Ltda. and partially
+Siemens AG, as well as a number of other companies participated
+as contractor. In March 2014, CADE commenced administrative
+proceedings, confirming Siemens Ltda.'s immunity from admin-
+istrative fines for the reported potential misconduct. In connec-
+tion with the above mentioned metro and urban train projects,
+several Brazilian authorities initiated investigations relating to
+alleged criminal acts (corruptive payments, anti-competitive con-
+duct, undue influence on public tenders).
+For Legal Proceedings information required under IAS 37, Provi-
+sions, Contingent Liabilities and Contingent Assets is not dis-
+closed if the Company concludes that disclosure can be expected
+to seriously prejudice the outcome of the matter.
+2017
+2016
+39,264
+(1,924)
+Consolidated Financial Statements
+The following table presents the fair values and carrying amounts
+of financial assets and financial liabilities measured at cost or
+amortized cost for which the carrying amounts do not approxi-
+Imate fair value:
+Cash and cash equivalents includes €266 million and €330 mil-
+lion as of September 30, 2017 and 2016, respectively, which are
+not available for use by Siemens mainly due to minimum reserve
+requirements with banks. As of September 30, 2017 and 2016, the
+carrying amount of financial assets Siemens has pledged as col-
+lateral amounted to €182 million and €214 million, respectively.
+4 Reported in line items Other current financial liabilities and
+Other financial liabilities.
+liabilities, Long-term debt and Other financial liabilities,
+except for separately disclosed derivative financial instru-
+ments of €823 million and €1,500 million, respectively,
+as of September 30, 2017 and 2016.
+3 Reported in the following line items of the Statements of
+Financial Position: Short-term debt and current maturities of
+long-term debt, Trade payables, Other current financial
+2 Includes equity instruments classified as available-for-sale,
+for which a fair value could not be reliably measured and
+which are therefore recognized at cost.
+1 Reported in the following line items of the Statements
+of Financial Position: Trade and other receivables, Other
+current financial assets and Other financial assets, except
+for separately disclosed €2,290 million and €2,662 million
+available-for-sale financial assets and €2,314 million and
+€3,051 million derivative financial instruments as of
+September 30, 2017 and 2016, respectively. Includes
+€15,242 million and €14,280 million trade receivables from
+the sale of goods and services in fiscal 2017 and 2016,
+310
+42,091
+44,325
+140
+1,190
+682
+40,591
+43,502
+55,594
+54,710
+3,955
+4,758
+2,518
+1,935
+534
+379
+10,604
+8,375
+37,984
+misconduct of its former management and agreed to pay a fine
+in a low double-digit euro million range.
+Standard &
+Consolidated Financial Statements
+Based on the above mentioned conclusion of the Israeli Antitrust
+Authority, two electricity consumer groups filed motions to cer-
+tify a class action for cartel damages against a number of compa-
+nies including Siemens AG with an Israeli State Court in Septem-
+ber 2013. One of the class actions has been dismissed by the
+court in fiscal year 2015. The remaining class action seeks com-
+pensation for alleged damages amounting to ILS2.8 billion (ap-
+proximately €673 million as of September 2017). In addition, the
+Israel Electric Corporation (IEC) filed at the end of December 2013
+with an Israeli State Court a separate ILS3.8 billion (approxi-
+mately €909 million as of September 2017) claim for damages
+against Siemens AG and other companies that allegedly formed
+a cartel in the Israeli gas-insulated switchgear market. Siemens AG
+is defending itself against the actions.
+Credit guarantees
+2017
+Sep 30,
+Future payment obligations under non-cancellable operating
+leases are:
+In addition to guarantees disclosed in the table above, the Com-
+pany issued other guarantees. To the extent future claims are not
+considered remote, maximum future payments from these obli-
+gations amount to €611 million and €853 million as of Septem-
+ber 30, 2017 and 2016, respectively. These commitments include
+indemnifications issued in connection with dispositions of busi-
+nesses. Such indemnifications may protect the buyer from
+potential tax, legal and other risks in conjunction with the
+purchased business. As of September 30, 2017 and 2016, the ac-
+crued amount for such other commitments is €243 million and
+€456 million, respectively.
+Furthermore, Siemens issues guarantees of third-party perfor-
+mance, which mainly include performance bonds and guaran-
+tees of advanced payments in a consortium. In the event of
+non-fulfillment of contractual obligations by the consortium
+partner(s), Siemens will be required to pay up to an agreed-upon
+maximum amount. These agreements typically have terms of up
+to ten years. Generally, consortium agreements provide for fall-
+back guarantees as a recourse provision among the consortium
+partners. As of September 30, 2017 and 2016, the Company ac-
+crued €3 million and €4 million, respectively, relating to perfor-
+mance guarantees.
+business. Credit guarantees generally provide that in the event of
+default or non-payment by the primary debtor, Siemens will be
+required to settle such financial obligations. The maximum
+amount of these guarantees is equal to the outstanding balance
+of the credit or, in case where a credit line is subject to variable
+utilization, the nominal amount of the credit line. These guaran-
+tees have residual terms of up to 14 years and 15 years, respec-
+tively, in fiscal 2017 and 2016. For credit guarantees amounting
+to €189 million and €270 million, respectively, as of Septem-
+ber 30, 2017 and 2016, the Company held collateral mainly in the
+form of inventories and trade receivables. The Company accrued
+€33 million and €73 million relating to credit guarantees as of
+September 30, 2017 and 2016, respectively.
+(in millions of €)
+The following table presents the undiscounted amount of maxi-
+mum potential future payments for major groups of guarantees:
+NOTE 20 Commitments and
+contingencies
+A+
+A-1+
+P-1
+639
+A-1+
+Short-term debt
+A1
+A+
+A1
+Long-term debt
+Service
+Moody's
+Investors
+Service
+Investors
+Moody's
+Ratings
+Services
+Sep 30, 2016
+Standard &
+Poor's
+P-1
+Guarantees of third-party performance
+Miscellaneous guarantees
+2,283
+2016
+799
+2,319
+As previously reported, in September 2011, the Israeli Antitrust
+Authority requested that Siemens present its legal position re-
+garding an alleged anti-competitive arrangement between
+April 1988 and April 2004 in the field of gas-insulated switchgear.
+In September 2013, the Israeli Antitrust Authority concluded that
+Siemens AG was a party to an illegal restrictive arrangement re-
+garding the Israeli gas-insulated switchgear market between
+1988 and 2004, with an interruption from October 1999 to Feb-
+ruary 2002. The Company appealed against this decision in
+May 2014.
+Siemens AG to disclose the outcome of its internal investigations
+with respect to OTE. OTE seeks to obtain information with respect
+to allegations of undue influence and/or acts of bribery in con-
+nection with contracts concluded between Siemens AG and OTE
+from calendar 1992 to 2006. At the end of July 2010, OTE ex-
+panded its claim and requested payment of damages by
+Siemens AG of at least €57 million to OTE for alleged bribery pay-
+ments to OTE employees. In October 2014 OTE increased its dam-
+age claim to the amount of at least €68 million. Siemens AG
+continues to defend itself against the expanded claim.
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED COMPLIANCE VIOLATIONS
+As previously reported, in July 2008, Hellenic Telecommunica-
+tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
+with the district court of Munich, Germany, seeking to compel
+As previously reported, Siemens AG is a member of a supplier
+consortium that has been contracted to construct the nuclear
+power plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj
+(TVO) on a turnkey basis. The agreed completion date for the
+nuclear power plant was April 30, 2009. Siemens AG's share of
+the contract value is approximately 27%. The other member of
+the supplier consortium is a further consortium consisting of
+Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
+Completion of the power plant has been delayed for reasons
+which are in dispute. In December 2008, the supplier consortium
+filed a request for arbitration against TVO demanding an exten-
+sion of the construction time, additional compensation, mile-
+stone payments, damages and interest. TVO rejected the claims
+and asserted counterclaims against the supplier consortium con-
+sisting primarily of damages due to the delay. In August 2015,
+TVO updated its counterclaims to approximately €2.3 billion. The
+supplier consortium's monetary claims as last updated amount
+to approximately €3.6 billion. The amounts claimed by the par-
+ties do not cover the total period of delay and may be updated
+further. In November 2016 a partial award on certain preliminary
+questions identified for early treatment was issued. A further par-
+tial award on document handling issues was rendered in
+July 2017. In this further partial award certain key facts underly-
+ing the claims regarding delay and disruption that occurred
+during project execution were decided in favor of TVO. Another
+partial award on project management issues and the use of ad-
+vanced construction methods was rendered in November 2017.
+While the Tribunal granted some of TVO's requests, most of TVO's
+material allegations in this respect were dismissed or their deci-
+sion was deferred to a later stage. None of the partial awards have
+dealt with the amounts claimed by the parties. A final arbitration
+award on the merits of the claims and counterclaims is expected
+during the first half of calendar year 2018.
+NOTE 21 Legal proceedings
+The Company is jointly and severally liable and has capital contri-
+bution obligations as a partner in commercial partnerships and
+as a participant in various consortiums.
+Total operating rental expenses for the years ended Septem-
+ber 30, 2017 and 2016 were €1,242 million and €1,158 million,
+respectively.
+86
+Consolidated Financial Statements 85
+3,458
+3,341
+870
+832
+1,707
+1,684
+After one year but not more than five years
+More than five years
+Item Credit guarantees covers the financial obligations of third
+parties generally in cases where Siemens is the vendor and (or)
+contractual partner or Siemens is liable for obligations of associ-
+ated companies accounted for using the equity method. Addi-
+tionally, credit guarantees are issued in the course of the SFS
+882
+825
+Within one year
+2016
+2017
+(in millions of €)
+Sep 30,
+600
+3,718
+3,121
+200
+As previously reported, the Israeli Exchange Supervisory Author-
+ity (ISA) concluded its investigation regarding potentially illegal
+payments that were allegedly paid to Israeli Electric Compa-
+ny-representatives in the early 2000's, and transferred the inves-
+tigation files to the Israeli District Attorney (DA) in August 2015,
+in order to decide whether or not to take any legal steps against
+any of the suspects named in the ISA investigation. Siemens fully
+cooperated with the Israeli authorities. In May 2016, the DA filed
+criminal charges versus Siemens Israel Ltd. Siemens AG was not
+indicted, as it was possible for Siemens AG to conclude a non-
+prosecution agreement with the DA that obliged Siemens AG to
+pay an amount in the mid double-digit euro million range.
+In November 2017, the Israeli Criminal court approved a plea
+agreement proposed by the DA and Siemens Israel Ltd. Based on
+the plea agreement, Siemens Israel Ltd. was convicted for the
+9,253
+thereof €918 million and €665 million with a term of more
+than twelve months.
+1,611
+831
+42
+32
+62
+28,809
+27,668
+42,176
+Total
+43
+1,075
+1,126
+1,997
+964
+1,914
+130
+68
+6
+3,064
+3,007
+3,671
+3,131
+151
+(219)
+9
+14
+6,047
+675
+119
+9,265
+13,486
+(129)
+(112)
+Changes in demographic assumptions
+Fiscal year
+2016
+2017
+(121)
+(in millions of €)
+BVG 2015 G
+Heubeck Richttafeln 2005G (modified)
+RP-2016 with generational projection from
+the US Social Security Administration's
+Long Range Demographic Assumptions
+SAPS S2 (Standard mortality tables
+for Self Administered Pension Schemes
+with allowance for future mortality
+improvements)
+CH
+U.K.
+Germany
+U.S.
+Applied mortality tables are:
+The remeasurements comprise actuarial (gains) and losses result-
+ing from:
+Fiscal 2017 includes a gain of €138 million (€137 million due to
+plan amendments in the position "other") in connection with ad-
+justed benefit levels for plan participants in Switzerland.
+Net interest expenses related to provisions for pensions and sim-
+ilar obligations amounted to €198 million and €282 million, re-
+spectively, in fiscal 2017 and 2016. The DBO is attributable to ac-
+tive employees 31% and 33%, to former employees with vested
+rights 14% and 15%, to retirees and surviving dependents 54%
+and 52%, respectively, in fiscal 2017 and 2016.
+209
+317
+Consolidated Financial Statements
+80
+1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
+(presented in Other assets)
+thereof net defined benefit assets
+13,695
+9,582
+and similar obligations
+thereof provisions for pensions
+5,883
+Changes in financial assumptions
+6,188
+1,512
+(2,520)
+Other reconciling items
+40
+(134)
+7
+(1)
+(792)
+(488)
+(758)
+(620)
+Foreign currency translation effects
+(2)
+(2,531) (1,411)
+6
+15
+(10)
+22
+Business combinations, disposals and other
+(8)
+(45)
+(6)
+(53)
+(6)
+Settlement payments
+(160)
+1,877
+(9)
+(1,777)
+(1)
+7
+1,158
+3,347
+3,031
+4,859
+4,189
+Other countries
+CH
+U.K.
+U.S.
+10,184
+7,364
+15,275
+14,622
+25,460
+21,986
+Germany
+13,486
+9,265
+119
+62
+28,809
+27,668
+42,176
+36,871
+Balance at fiscal year-end
+(749)
+(1,109)
+5,650
+(3,714)
+36,871
+Experience (gains) losses
+290
+Derivatives
+1,696
+2,028
+Multi strategy funds
+3,622
+4,016
+Alternative investments
+10,899
+9,823
+Corporate bonds
+5,496
+5,407
+Government bonds
+16,395
+15,230
+Fixed income securities
+5,206
+4,716
+Equity securities
+2017
+(in millions of €)
+Sep 30,
+2016
+Disaggregation of plan assets
+As a significant risk, the Company considers a decline in the
+plans' funded status due to adverse developments of plan assets
+and/or defined benefit obligations resulting from changing pa-
+rameters. Accordingly, Siemens implemented a risk management
+concept aligned with the defined benefit obligations (Asset Lia-
+bility Matching). Risk management is based on a worldwide de-
+fined risk threshold (value-at-risk). The concept, the value at risk
+and the asset development including the investment strategy are
+monitored and adjusted on an ongoing basis under consultation
+of senior external experts. Independent asset managers are se-
+lected based on quantitative and qualitative analysis, which in-
+cludes their performance and risk evaluation. Derivatives are
+used to reduce risks as part of risk management.
+Asset Liability Matching Strategies
+Consolidated Financial Statements 81
+497
+As in prior year, sensitivity determinations apply the same meth-
+odology as applied for the determination of the post-employ-
+ment benefit obligation. Sensitivities reflect changes in the DBO
+solely for the assumption changed.
+Cash and cash equivalents
+465
+1,517
+4,249
+Total
+Other
+obligations
+losses and risks
+Warranties
+Thereof non-current
+Balance as of October 1, 2016
+(in millions of €)
+retirement
+Order related
+Asset
+NOTE 17 Provisions
+Consolidated Financial Statements
+82
+62
+DEFINED CONTRIBUTION PLANS AND STATE PLANS
+The amount recognized as expense for defined contribution plans
+amounts to €686 million and €676 million in fiscal 2017 and 2016,
+respectively. Contributions to state plans amount to €1,450 mil-
+lion and €1,423 million in fiscal 2017 and 2016, respectively.
+Employer contributions expected to be paid to defined benefit
+plans in fiscal 2018 are €826 million. Over the next ten fiscal
+years, average annual benefit payments of €1,843 million and
+€1,908 million, respectively, are expected as of September 30,
+2017 and 2016. The weighted average duration of the DBO for
+Siemens defined benefit plans was 13 years as of September 30,
+2017 and 14 years as of September 30, 2016.
+Future cash flows
+6,506
+28,809
+27,668
+Total
+928
+811
+Other assets
+578
+The DBO effect of a 10% reduction in mortality rates for all ben-
+eficiaries would be an increase of €1,103 million and €1,395 mil-
+lion, respectively, as of September 30, 2017 and 2016.
+Virtually all equity securities have quoted prices in active markets.
+The fair value of fixed income securities is based on prices pro-
+vided by price service agencies. The fixed income securities are
+traded in highly liquid markets and almost all fixed income securi-
+ties are investment grade. Alternative investments mostly include
+hedge funds; additionally, private equity and real estate invest-
+ments are included. Multi strategy funds mainly comprise abso-
+lute return funds and diversified growth funds that invest in vari-
+ous asset classes within a single fund and aim to stabilize return
+and reduce volatility. Derivatives predominantly consist of finan-
+cial instruments for hedging interest rate risk and inflation risk.
+2,107
+Sep 30,
+The rates of compensation increase and pension progression for
+countries with significant effects are shown in the following table.
+Inflation effects, if applicable, are included in the assumptions below.
+0.4%
+0.8%
+2.4%
+2.8%
+3.6%
+3.8%
+1.0%
+2.1%
+1.7%
+2.4%
+2016
+2017
+Sep 30,
+GBP
+USD
+EUR
+Discount rate
+tion of the DBO at period-end was as follows:
+The weighted-average discount rate used for the actuarial valua-
+Actuarial assumptions
+6,284
+(93)
+(93)
+(3,919)
+(1,858)
+Total
+2017
+2016
+CHF
+3.7%
+1,620
+Compensation increase
+U.K.
+CH
+(1,433)
+(105)
+113
+(96)
+102
+Sep 30, 2016
+decrease
+3,174
+increase
+Sep 30, 2017
+decrease
+2,472
+increase
+(2,227)
+(in millions of €)
+Discount rate
+Rate of compen-
+sation increase
+Rate of pension
+progression
+The discount rate was derived from high-quality corporate bonds
+with an issuing volume of more than 100 million units in the re-
+spective currency zones, which have been awarded an AA rating
+(or equivalent) by at least one of the three rating agencies
+Moody's Investor Service, Standard & Poor's Rating Services or
+Fitch Ratings.
+(2,774)
+A one-half-percentage-point change of the above assumptions
+would result in the following increase (decrease) of the DBO:
+1.5%
+Effect on DBO due to a one-half percentage-point
+Pension progression
+3.6%
+Germany
+U.K.
+1.5%
+1.4%
+3.0%
+2.9%
+Sensitivity analysis
+1.4%
+Overall assessment
+of the economic position
+Consolidated Statements
+p 62
+of Changes in Equity
+B.5
+p22
+p 147
+of Cash Flows
+Consolidated Statements
+C.5
+p 61
+A.7
+B.4
+A.5
+P 18
+A.6
+p 23
+A.11
+A.8
+Financial Statements
+of Financial Position
+Notes to Consolidated
+Report of the Supervisory Board
+p 64
+B.6
+Takeover-relevant information
+p 53
+Compensation Report
+P 39
+A.10
+Siemens AG
+p 36
+A.9
+and associated material opportunities
+and risks
+Report on expected developments
+p24
+Non-financial matters
+Net assets position
+Independent Auditor's Report
+C.4
+p 58
+B.1
+p2
+A.1
+Responsibility Statement
+P 126
+Additional Information
+Consolidated Financial Statements
+C.
+B.
+Combined Management Report
+A.
+Table of contents
+siemens.com
+Annual Report
+2017
+Corporate Governance
+SIEMENS
+Ingenuity for life
+C.1
+Business and economic environment
+Consolidated Statements
+of Income
+A.2
+Consolidated Statements
+p 17
+A.4
+p 60
+B.3
+Results of operations
+p 133
+C.3
+p 137
+of Comprehensive Income
+A.3
+Consolidated Statements
+p 59
+B.2
+Financial performance system
+p 127
+C.2
+p9
+p 11
+Notes and forward-looking
+statements
+Financial position
+Combined
+to outcome-focused care. A major step forward is the Digital Eco-
+system platform to link healthcare providers and solution provid-
+ers with one another as well as to bring together their data, ap-
+plications and services. Users gain new insights through data
+analytics and use it to network with their peers.
+Combined Management Report
+6
+Healthineers' R&D activities are strongly focused on the devel-
+opment of innovative product lines which use new technologies
+such as artificial intelligence. This will, amongst other results,
+enable faster handling of medical information and can lead to
+more precise and personalized clinical decisions. It also promises
+added value: New computer algorithms can detect hidden pat-
+terns in the data and give physicians valuable support for diagno-
+sis and therapy decisions. Besides constantly innovating its port-
+folio, Healthineers continuously extends existing products and
+solutions. Diagnostics performance for customers improves with
+systems such as the recently launched Atellica. This laboratory
+diagnostics platform transports samples ten times faster than pre-
+vious systems and it is also more flexible. Expanding the innova-
+tion map beyond the established portfolio, and investing in new
+ideas, strengthen the ability to tap opportunities in new fields.
+The services business is expanding beyond product related ser-
+vices by adding a digital services portfolio and increasing enter-
+prise transformation services to help customers in their transition
+The R & D activities in the Process Industries and Drives Division
+are continuously concentrating on the digital transformation of
+products, solutions and services, especially via focused integra-
+tion of information and communication technologies. The digital
+enhancement of automation and drives platforms is a key en-
+abler for additional customer value for all verticals in the process
+industry, such as oil & gas, chemicals and pharmaceuticals. Exam-
+ples are connecting motors to MindSphere and Digital Enterprise
+for process industries. Increased operational efficiency and digi-
+tal services such as condition monitoring or predictive mainte-
+nance are examples for benefits in process plant operation. The
+digitalization of our process automation and industrial commu-
+nication portfolio includes a holistic industrial security concept.
+Another central objective of our R&D activities is to further in-
+crease energy efficiency while reducing the consumption of raw
+materials and cutting emissions.
+tion of Mentor Graphics further extends the possibilities of the
+digital twin: In addition to designing and testing the mechanics
+and software of new products, it is now also possible to develop
+and simulate electrical and electronic systems in an integrated
+way. A further core area of development is MindSphere, the
+open, cloud-based operating system for the Industrial Internet of
+Things (IoT). MindSphere is used as a basis for innovative appli-
+cations (MindApps) and new digital services based on these
+apps, such as predictive maintenance. Open application pro-
+gramming interfaces (APIs) enable MindSphere users to easily
+and efficiently develop and sell their own apps. MindSphere
+therefore makes it possible for customers to clearly expand their
+portfolios and tap into the additional business potential offered
+by their installed base. A network of partners in the fields of app
+development, connectivity and technology further enriches the
+open ecosystem.
+R&D activities at the Digital Factory Division are aimed at fur-
+ther enhancing speed, flexibility, quality and efficiency within
+companies of the discrete manufacturing industry. The key lever
+is to automate and digitalize the entire value-added process -
+from product development through production design to actual
+production - with the highest possible IT security. The focus of
+research lies on further developing the Digital Enterprise portfo-
+lio. This involves preparing an integrated digital twin for physical
+products, production processes and production facilities and
+then implementing these facilities and efficiently manufacturing
+the products in the real world. This close dovetailing between the
+virtual and real worlds enables customers to simulate and opti-
+mize their products, their machinery and facilities at an early
+stage, while assuring high-performance production. The acquisi-
+The R&D efforts of Siemens Gamesa Renewable Energy are
+focused on innovative products and solutions that allow it to take
+the lead in wind power performance, improve competitiveness,
+and build a stronger business case for its customers. Using digi-
+talization, among other efforts, includes more intelligent moni-
+toring and analysis of turbine conditions as well as smart diag-
+nostic services.
+The Mobility Division's R&D strategy aims to fulfill customers'
+demand for maximum availability, high throughput and en-
+hanced
+passenger experience. Although there is a growing need
+for mobility worldwide, possibilities for building new roads and
+railways are limited. Meeting the demand for mobility requires
+intelligent solutions that make transport more efficient, safe and
+environmentally friendly. Decarbonization and seamlessly con-
+nected intermodal (e)mobility are key factors for the future of
+transportation. Reflecting this, Mobility's R&D activities empha-
+size digitalization in developing state-of-the art mobility solu-
+tions for rail and road combined with new business models such
+as availability-as-a-service (AaaS) via our data analytics platform
+Railigent and other MindSphere based applications. Together
+with next47, Mobility invests in the future mobility landscape
+together with other partners in areas such as sensor technolo-
+gies, connectivity/loT solutions, software for intermodal trans-
+port and additive manufacturing.
+of new technologies, e.g. Process Bus communication for appli-
+cations in energy management or NCITS (Non-Conventional
+Instrument Transformer), enables a cost-effective investment
+and economic operation of digital substations as well as a secure
+and reliable grid operation.
+5
+Combined Management Report
+The R&D activities of our Energy Management Division focus on
+preparing our portfolio for changes on all voltage levels in the
+world of electricity. The increasing infeed of renewable energy to
+power grids requires that those grids become more flexible and
+efficient, particularly with distributed generation on the rise. The
+digitalization of future grids will enable intelligent grid operation
+and data-driven services. Our innovations are centered on power
+electronics, digitalization and grid stabilization. The development
+Research and Development in our Businesses
+R&D at the Power and Gas Division concentrates on developing
+products and solutions for enhancing efficiency, flexibility and
+economy in power generation as well as in the oil and gas indus-
+try. These products and solutions include turbomachinery – pri-
+marily high-performance, low-emission gas turbines for single
+operation or for combined cycle power plants - and compressor
+solutions for various process industries. The Division's current
+technology initiative, which started in fiscal 2015, is aimed at
+intensifying R & D in innovative materials, advanced manufactur-
+ing methods and plant optimization. In fiscal 2017, Siemens
+introduced a new 44-megawatt aeroderivative gas turbine for
+mobile power generation which currently is the most powerful
+mobile unit on the market. The Division announced that it
+will test and validate its largest gas turbine (HL-class) under re-
+al-world conditions. This will pave the way for achieving the next
+level of efficiency; we aim for 63 percent efficiency near-term,
+with a mid-term goal to reach 65 percent.
+In fiscal 2017, we reported research and development expenses
+of €5.2 billion, compared to €4.7 billion in fiscal 2016. The result-
+ing R&D intensity, defined as the ratio of R&D expenses and
+revenue, was 6.2%, thus above the R & D intensity of 5.9% in fiscal
+2016. Additions to capitalized development expenses amounted
+to €0.4 billion in fiscal 2017, compared to €0.3 billion in fiscal
+2016. As of September 30, 2017, Siemens held approximately
+63,000 granted patents worldwide in its continuing operations.
+As of September 30, 2016, we held approximately 59,800 granted
+patents. On average, we had 37,800 R&D employees in fiscal
+2017.
+Siemens' unit for partnership with start-ups, next47, is focusing
+on three pillars: Capital, Catalyst and Create. The unit provides
+capital to help start-ups expand and scale. As a catalyst, next47
+can accelerate growth for start-ups by making it easy to access
+and use the powerful Siemens ecosystem. And next47 serves as
+the creator of next-generation businesses for Siemens by build-
+ing, buying and partnering with start-ups at any stage. The
+next47 unit is focused on anticipating how technologies includ-
+ing 3D printing, robotics and drones, artificial intelligence and
+virtual reality will impact and potentially disrupt our end markets.
+This intelligence enables Siemens and Siemens' customers to
+grow and thrive in the age of digitalization.
+R&D work at the Building Technologies Division focuses on op-
+timizing comfort and operational and energy efficiency in build-
+ings and infrastructures, protecting against fire and security
+hazards, and minimizing related risks. We drive the digital trans-
+formation of the building industry by creating open-standards-
+based Building Information Modeling (BIM)-ready products and
+services. Digitalization improves productivity across the entire
+building life cycle, enabling new product ordering and configu-
+ration options through our online store Siemens Industry Mall.
+New mobile device apps close the feedback loop to building oc-
+cupants, enabling increased comfort and safety with lower en-
+ergy consumption. The digitalization portfolio will expand on the
+basis of Siemens MindSphere.
+A.1.2 Economic environment
+A.1.2.1 WORLDWIDE ECONOMIC ENVIRONMENT
+The global economy started to accelerate at the beginning of
+fiscal 2017 and gained further momentum in the subsequent
+quarters. Expansion of world gross domestic product (GDP),
+which in 2016 was the weakest since the global financial crisis at
+2.5%, is projected to rise to 3.1% in 2017 (based on market ex-
+change rates).
+The global upswing was broad-based on a regional and structural
+basis. In both emerging markets and advanced countries, eco-
+nomic activity gained strength. Growth forecasts for 2017 im-
+proved in particular for Europe from 1.5% at the beginning of
+fiscal 2017 to 2.3% and for China from 6.3% to 6.8%. The only
+negative surprise was the Middle East region. The 2017 growth
+projection decreased to 1.4% after starting at 2.8% at the begin-
+ning of fiscal 2017. Lower oil prices and oil production cuts had
+bigger impact than anticipated.
+A.
+8 Combined Management Report
+Following a decline in market volume in fiscal 2016, the market
+served by SGRE grew in fiscal 2017 due to higher demand in both
+the onshore and the offshore markets, with the latter growing
+faster. On a regional basis, growth was driven by the U.S. Market
+growth in the region Asia, Australia, was held back by lower de-
+mand in China, where the largest national wind market in the
+world remains largely closed to foreign manufacturers, as well as
+by a halt in the Indian market during the fiscal year following the
+introduction of an auction system for new power generation con-
+tracts. Market volume in the region Europe, C.I.S., Africa, Middle
+East came in slightly lower year-over-year. The competitive situ-
+ation in wind power differs in the two major market segments.
+In the markets for onshore wind farms, competition is widely
+dispersed without any one company holding a dominant share of
+the market, while markets for offshore wind farms continue to be
+served by a few experienced players. Consolidation is moving
+forward in both on- and offshore segments, including exits of
+smaller players. The key drivers of consolidation are increasing
+price pressure as well as technology challenges and market ac-
+cess challenges, which increase development costs and the im-
+portance of risk-sharing in offshore wind power. Market develop-
+ment continues to depend strongly on energy policy, including
+tax incentives in the U.S. and regulatory frameworks in Germany
+and the U.K. With continued technological progress and cost re-
+duction, dependency on subsidy schemes is expected to decrease
+even further.
+market expertise. Most major competitors have established
+global bases for their businesses. In addition, the competition has
+become increasingly focused on technological improvements
+and cost position.
+Market volume for the markets addressed by the Process Indus-
+tries and Drives Division grew moderately in fiscal 2017. This
+was due mainly to improved market conditions in global manu-
+facturing production, particularly in China. Consumer-related
+industries, such as food and beverage and pharmaceuticals, con-
+tinued on their growth path. Growth in the Division's markets
+overall continued to be held back by weakness in commodity-re-
+lated industries such as oil and gas, metals and mining. Following
+a recovery in raw materials prices at low levels in the first half of
+fiscal 2017 and stable price development thereafter, the environ-
+ment for capital expenditures began to improve towards the end
+of the fiscal year in mining, oil and gas and, to a lesser extent, the
+metals industry. The Division's competitors can be grouped into
+two categories: multinational companies that offer a relatively
+broad portfolio and companies that are active only in certain geo-
+graphic or product markets. Consolidation is taking place mostly
+in particular market segments and not across the broad base of
+the Division's portfolio. In particular, consolidation in solu-
+tion-driven markets is going in the direction of in-depth niche
+Markets served by the Digital Factory Division returned to growth
+in fiscal 2017. Within its main markets, global manufacturing pro-
+duction grew moderately in real terms, driven mainly by consum-
+er-related industries such as electronics and automotive and by
+demand from infrastructure-related production industries.
+Growth in the machine-building and equipment industries bene-
+fited from a growing investment propensity. On a geographic
+basis, the Division's markets grew in all three reporting regions,
+with the highest growth rates in the region Asia, Australia, par-
+ticularly including China, where strong market growth also ben-
+efited from governmental investment programs. The competition
+for Digital Factory's business activities can be grouped into two
+categories: multinational companies that offer a relatively broad
+portfolio and companies that are active only in certain geo-
+graphic or product markets.
+and Africa was held back by ongoing uncertainties related to
+budget constraints and political climates. In the Americas region,
+stable investment activities were driven by demand for urban
+transport, especially in the U.S. Within the Asia, Australia region,
+Chinese markets saw ongoing investments in high-speed trains,
+urban transport and rail infrastructure, while India continues to
+invest in modernizing the country's transportation infrastruc-
+ture. The Division's principal competitors are multinational com-
+panies. Consolidation among Mobility's competitors is continu-
+ing. This has already led to the formation of a strong market
+leader in China, which is changing global market dynamics.
+Combined Management Report 7
+Overall, markets for the Mobility Division remained strong in fis-
+cal 2017, with different dynamics among the regions. Market
+development in the Europe, C.I.S., Africa, Middle East region was
+characterized by continuing awards of mid-size and large orders,
+particularly in Germany and the U.K. Demand in the Middle East
+Markets for the Building Technologies Division grew solidly in
+fiscal 2017. Growth was driven by solid demand from the U.S. and
+Asia. Within the Europe, C.I.S., Africa, Middle East region, mar-
+kets in the Middle East grew more strongly than the region over-
+all. The recovery of the European market was weaker than ex-
+pected but included stable growth in Germany. The Division's
+principal competitors are multinational companies. Its solutions
+and services business also competes with system integrators and
+small local companies. The Division faces continuing price pres-
+sure, particularly in its solutions business, due to strong compe-
+tition from system houses and some larger competitors.
+Global markets addressed by the Energy Management Division
+grew slightly in fiscal 2017. Weaknesses in the Middle East and
+global commodity markets including oil and gas, metals and min-
+ing were offset by growth in transmission interconnections, in-
+telligent energy and storage solutions and critical infrastructure
+such as data centers. North America and Asia were key growth
+contributors. Markets in Europe showed stable development,
+with pockets of growth such as integration of renewable energy
+sources into the grid. Competitors of the Energy Management
+Division consist mainly of a small number of large multinational
+companies. International competition is increasing from manu-
+facturers in emerging countries including China, India and Korea.
+In a highly competitive market environment, markets served by
+the Power and Gas Division declined significantly in fiscal 2017.
+This development was again particularly evident in the market for
+steam turbines where volume shrank substantially year-over-year
+due to an ongoing shift from coal-fired to gas-fired and renew-
+able power generation and due to emission regulation such as in
+China. Volume in the market segment for large gas turbines also
+declined substantially due mainly to delays of large projects in
+the Middle East and customer restraint due to ongoing uncer-
+tainty regarding changes in the market design and weak power
+demand growth. Volume in compression markets remained on
+a low level as customers continued to hold back investments.
+The Division's competition consists mainly of two groups: a rela-
+tively small number of equipment manufacturers, some with
+very strong positions in their domestic markets, and on the other
+hand a large number of engineering, procurement and construc-
+tion contractors. The gas turbine market is experiencing overca-
+pacity among OEMs and engineering, procurement and con-
+struction contractors, which is leading to market consolidation.
+A.1.2.2 MARKET DEVELOPMENT
+The partly estimated figures presented here for GDP and fixed
+investments are based on an IHS Markit report dated Octo-
+ber 15, 2017.
+Uncertainties mainly stemming from (geo) political risks had very
+limited effects on the global economy: International tensions
+with North Korea and Iran increased; negotiations regarding the
+U.K. leaving the European Union are complicated and separatist
+tensions in Spain added significant uncertainty. These develop-
+ments potentially weigh on investment decisions but this barely
+materialized in fiscal 2017.
+From a structural perspective, all components of GDP – private
+consumption, fixed investment, trade and to a lesser extent
+government expenditure - contributed to growth, giving the
+acceleration of the global economy a solid and well balanced
+foundation.
+-
+Both within and beyond these focus areas, R&D activities are
+carried out by cross-functional teams involving both our busi-
+nesses and our central R&D department Corporate Technology
+(CT). In addition, we work closely with scholars from leading
+universities and research institutions. These partnerships, along
+with close collaborations with start-up companies and the use of
+crowd innovation methods, are an important part of Siemens'
+open innovation concept.
+> We also invest in industrial cyber security - a key enabler for
+the digitalization of industries as well as a growing source of
+competitive advantage - and test the emerging blockchain
+technology in various application scenarios.
+Markets served by Healthineers grew moderately in fiscal 2017
+driven by growth in Latin America and Asia, Australia, including
+further stabilization in China. In contrast, market volume in Eu-
+rope and the U.S. remained near prior-year levels. The diagnostic
+imaging market segment grew moderately. While demand for
+imaging procedures continued to grow, this trend was partly off-
+set by price pressure on new purchases and increased utilization
+rates for installed systems. The markets for ultrasound and in-vi-
+tro diagnostics grew even more strongly. The development in the
+ultrasound market segment benefits from a wider range of appli-
+cations and increasing patient access to diagnostic imaging tech-
+nology. The market for in-vitro diagnostics is expanding due to
+population and income growth in emerging markets and the
+rising importance of diagnostics in improving healthcare quality.
+Growth in the area of molecular diagnostics was particularly
+strong, driven by technological advances and a broader spectrum
+of applications. For the healthcare industry as a whole, the trend
+towards consolidation continues. Competition among the lead-
+ing companies is strong, including with respect to price.
+> We are continuously adopting and developing foundational
+digital technologies, such as data analytics and artificial intel-
+ligence or modeling and simulation technologies. The former
+are essential to generate value and impact out of the growing
+amount of data generated in the field; the latter enable the
+creation of a digital twin for physical products, systems and
+infrastructures, e.g. for the purpose of virtually testing and
+commissioning a system prior to building it.
+The Mobility Division combines all Siemens businesses in the
+area of passenger and freight transportation, including rail vehi-
+cles, rail automation systems, rail electrification systems, road
+traffic technology, digital solutions and related services. The Di-
+vision also provides its customers with consulting, planning, fi-
+nancing, construction, service and operation of turnkey mobility
+systems. Moreover, Mobility offers integrated mobility solutions
+for networking of different types of traffic systems. The principal
+customers of the Mobility Division are public and state-owned
+companies in the transportation and logistics sectors. Markets
+served by Mobility are driven primarily by public spending. Cus-
+tomers usually have multi-year planning and implementation
+horizons, and their contract tenders therefore tend to be inde-
+pendent of short-term economic trends.
+The Building Technologies Division is a leading provider of au-
+tomation technologies and digital services for safe, secure and
+efficient buildings and infrastructures throughout their lifecycles.
+The Division offers products, solutions, services and software for
+fire safety, security, building automation, heating, ventilation, air
+conditioning and energy management. The large customer base
+is widely dispersed. It includes owners, operators and tenants for
+both public and commercial buildings; building construction gen-
+eral contractors; and system houses. Changes in the overall eco-
+nomic environment generally have a delayed effect on the Divi-
+sion's business activities. Particularly in the solutions and service
+businesses, Building Technologies is affected by changes in the
+non-residential construction markets with a time lag of two to
+four quarters.
+storage and other intermittent or distributed energy resources
+into highly efficient and reliable power networks. The digitaliza-
+tion trend involves providing intelligent solutions for connectiv-
+ity, the management of complex energy networks, and services
+that are enabled by digital technologies.
+Combined Management Report
+2
+The Energy Management Division offers a wide spectrum of
+software, products, systems, solutions, and services for transmit-
+ting, distributing and managing electrical power and for provid-
+ing intelligent power infrastructure. The Division's customers
+encompass a wide range of direct customers and channel part-
+ners including power providers, transmission and distribution
+system operators, industrial companies, infrastructure develop-
+ers, construction companies, distributors and OEMs. Its activities
+across many regional and vertical markets as well as its participa-
+tion in long-cycle and short-cycle businesses provide a balanced
+and resilient business mix. The Division's revenue and portfolio
+mix may vary across reporting periods. In particular, orders, rev-
+enue and profit development can be influenced by the relative
+contribution from its transmission solutions business. End cus-
+tomers and OEMs use the Division's offerings to process, transmit
+and manage electrical power from the source down to various
+load points along multiple voltage levels. The Division's distrib-
+uted, intelligent solutions for smart grids enable a bidirectional
+flow of energy and information, which, among other things, is
+required for integrating fluctuating renewable energy sources,
+electrical storage or manageable loads. Energy Management
+generally benefits from major trends and changes in global elec-
+trical power systems, in particular decarbonization, decentraliza-
+tion and digitalization. Decarbonization involves the buildup of
+generation capacities from renewable sources and the electrifi-
+cation of heat and transport sectors. Another trend is decentral-
+ization - the integration of wind power, photovoltaics, biomass,
+The Power Generation Services Division offers a comprehensive
+set of services for products, solutions and technologies of the
+Power and Gas Division, covering performance enhancements,
+maintenance services, customer training and professional con-
+sulting. Financial results of the Power and Gas Division include
+the financial results of the Power Generation Services Division,
+which itself is not a reportable segment. Based on this business
+model, all discussions of the services business for Power and Gas
+concern the Power Generation Services Division.
+In September 2017, Siemens and Alstom SA, France (Alstom)
+signed a memorandum of understanding to combine Siemens'
+mobility business including the rail traction drives business,
+which is included in the Process Industries and Drives Division,
+with the publicly listed company Alstom. The two businesses are
+largely complementary in terms of activities and geographies.
+The combined entity is expected to offer a significantly increased
+range of diversified product and solution offerings to meet
+multi-facetted, customer-specific needs. According to the mem-
+orandum, Siemens will receive newly issued shares in the com-
+bined company representing 50% of Alstom's share capital as-
+suming full dilution through exercise of all potentially dilutive
+securities and share-based payment plans. Further, Siemens will
+receive warrants allowing it to acquire Alstom shares represent-
+ing 2% of its share capital, which can be exercised earliest four
+years after closing of the transaction. The transaction will be sub-
+execution of large projects increasingly requires financing by the
+original equipment manufacturer (OEM), including equity partic-
+ipation, particularly in Latin America, the Middle East and Africa.
+For the Division, this role is fulfilled by Financial Services, which
+can offer customers a range of financing and equity options
+backed by domain know-how. In addition, the markets of the
+Division are strongly affected by changes in national energy reg-
+ulations, such as support of renewable energy, the security of
+supply through capacity markets or strategic reserve capacity,
+carbon pricing and climate change targets, and energy and elec-
+tricity market design. After years of strong public sector support
+for renewable energy, the cost of energy and electricity as a com-
+petitive factor is gaining more relevance in investment decisions
+involving choices between renewable and fossil generation.
+A.1.1.2 BUSINESS DESCRIPTION
+Our reportable segments may do business with each other, lead-
+ing to corresponding orders and revenue. Such orders and reve-
+nue are eliminated on the Group level.
+Siemens has the following reportable segments: the Divisions
+Power and Gas; Energy Management; Building Technologies;
+Mobility; Digital Factory and Process Industries and Drives;
+as well as the Strategic Units Healthineers and Siemens Gamesa
+Renewable Energy, which together form our Industrial Business.
+The Division Financial Services (SFS) supports the activities of
+our Industrial Business and also conducts its own business with
+external customers. As "global entrepreneurs” our Divisions and
+Strategic Units carry business responsibility worldwide, including
+with regard to their operating results.
+We are a technology company with core activities in the fields of
+electrification, automation and digitalization, and activities in
+nearly all countries of the world. Siemens comprises Siemens AG,
+a stock corporation under the Federal laws of Germany, as the
+parent company and its subsidiaries. Our Company is incorpo-
+rated in Germany, with our corporate headquarters situated in
+Munich. As of September 30, 2017, Siemens had around 372,000
+employees (part time employees are included proportionally).
+A.1.1.1 ORGANIZATION AND BASIS
+OF PRESENTATION
+A.1 Business and economic environment
+> The growing connectivity of field devices gives rise to the In-
+dustrial Internet of Things (IoT), and hence to the potential
+for massively distributed industrial systems. With MindSphere,
+we have introduced an open, cloud-based operating system
+for this IIoT. MindSphere allows our businesses, customers
+and partners to develop and deploy applications and digital
+services based on data gathered from assets, such as a prod-
+uct or in the field, e.g. to predict equipment failure, increase
+asset availability, improve product designs or increase product
+or plant performances.
+The Power and Gas Division offers a broad spectrum of products
+and solutions for generating electricity from fossil fuels and for
+producing and transporting oil and gas. The portfolio includes
+gas turbines, steam turbines, generators to be applied to gas or
+steam power plants, compressor trains, integrated power plant
+solutions, and instrumentation and control systems for power
+generation. Customers include public utilities and independent
+power producers; companies in engineering, procurement and
+construction that serve utilities and power producers; sovereign
+and multinational oil companies; and industrial customers that
+generate power for their own consumption (prosumers). Due to
+the broad range of its offerings, the Division's revenue mix may
+vary from reporting period to reporting period depending on the
+share of revenue attributable to products, solutions and services.
+Because typical profitability levels differ among these three rev-
+enue sources, the revenue mix in a reporting period accordingly
+affects Division profit for that period. Several trends are affecting
+the Division's businesses. The ongoing strong growth in demand
+for renewable power generation and the associated volatility in
+power generation shift market demand from fossil baseload
+generation to highly flexible, highly efficient and affordable
+gas power plants with low emissions, in particularly in Europe,
+China, and the U.S. A second trend is that the development and
+ject to Alstom's shareholders' approval, anticipated in the second
+quarter of calendar 2018. The transaction is also subject to clear-
+ance from relevant antitrust and regulatory authorities. Closing
+of the transaction is expected at the end of calendar 2018.
+A.1.1 The Siemens Group
+The Process Industries and Drives Division offers a comprehen-
+sive product, software, solution and service portfolio for moving,
+measuring, controlling and optimizing all kinds of mass flows.
+With its know-how in vertical industries including oil and gas,
+shipbuilding, mining, cement, fiber, chemicals, food and bever-
+age, and pharmaceuticals, the Division increases productivity,
+reliability and flexibility of machinery and installations along their
+entire life cycle jointly with its customers. Based on data models
+and analysis methods, Process Industries and Drives paves the
+way together with its customers to create a "Digital Enterprise,"
+from process simulation via plant design and documentation
+through to asset and performance management. The Division's
+offerings include an integrated portfolio with products, compo-
+nents and systems such as couplings, gears, motors and convert-
+ers, process instrumentation systems, process analytics devices,
+wired and wireless communication, industrial identification and
+power supplies up to systems level with decentralized control sys-
+tems, industrial software as well as customized, application-spe-
+cific systems and solutions. It also sells gears, couplings and drive
+solutions to other Siemens Divisions and Strategic Units, which
+use them in rail transport and wind turbines. Demand within the
+> An example of a disruptive development is electrically pow-
+ered flight. In cooperation with Airbus, Siemens intends to
+demonstrate by 2020 that electricity can be used to power
+large planes.
+The Digital Factory Division offers a comprehensive product
+portfolio and system solutions used in manufacturing industries,
+complemented by product lifecycle and data-driven services.
+These offerings enable customers to optimize entire value chains
+from product design and development to production and ser-
+vices. This is supplemented by the MindSphere platform that
+connects machines and physical infrastructure to the digital
+world. With its comprehensive offering, the Division supports
+manufacturing companies with their transformation towards the
+"Digital Enterprise," resulting in increased flexibility and effi-
+ciency of production processes and reduced time to market for
+new products. The Division supplies customers mainly in discrete
+and hybrid manufacturing industries. Changes in the level of cus-
+tomer demand are strongly driven by macroeconomic cycles, and
+can lead to significant short-term variation in the Division's prof-
+itability. In the second quarter of fiscal 2017, Digital Factory fur-
+ther strengthened and expanded its industrial software business
+by acquiring Mentor Graphics Corporation (Mentor Graphics),
+a U.S.-based provider of electronic design automation software.
+For more information on the acquisition of Mentor Graphics, see
+→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. In
+the first quarter of fiscal 2017, Digital Factory contributed its eCar
+business to a newly formed joint venture, Valeo Siemens eAuto-
+motive; Siemens' share in the joint venture is reported within
+Centrally managed portfolio activities (CMPA).
+> Future mobility systems will be increasingly electrified and
+connected. Amongst others, our R&D efforts are aiming for
+ubiquitous electric charging as well as the digitally supported
+integration and management of multi-modal transportation
+systems.
+> Automation technologies continue to evolve. Our R & D activ-
+ities aim to reduce engineering efforts, enhance flexibility and
+increase our customers' productivity.
+> Turbo machinery, switching gear and other power equipment
+stand to benefit from novel materials enabling higher gener-
+ation efficiency and fewer losses in power transmission and
+distribution. In particular, the ability to print parts with novel
+topologies using 3D printers embedded in an integrated, dig-
+ital tool chain is a key innovation driver.
+units. These are also key ingredients for distributed energy
+systems, which combine onsite generation with local con-
+sumption to offer secure power supply at lower cost.
+4 Combined Management Report
+The stable operating of power grids in the presence of inter-
+mittent, renewable power generation depends, amongst
+other factors, on further advances in power electronics as well
+as the availability of economically viable large energy storage
+Our research and development (R&D) activities are ultimately
+geared to developing innovative, sustainable solutions for our
+customers - and the Siemens businesses - and simultaneously
+safeguarding our competitiveness. To this end, we are focusing
+our R&D activities on a number of selected technologies and in-
+novation fields. Examples include the following:
+Management Report
+The Financial Services (SFS) Division supports its customers'
+investments with leasing solutions and equipment, project and
+structured financing in the form of debt and equity investments.
+Based on its comprehensive financing know-how and specialist
+technology expertise in the areas of Siemens businesses, SFS
+provides financial solutions for Siemens customers as well as
+other companies, and also manages financial risks of Siemens.
+SFS operates the Corporate Treasury of the Siemens Group,
+which includes managing liquidity, cash and interest risks as well
+as certain foreign exchange, credit and commodities risks. Busi-
+ness activities and tasks of Corporate Treasury are reported in
+the segment information within Reconciliation to Consolidated
+Financial Statements.
+A.1.1.3 RESEARCH AND DEVELOPMENT
+industries served by the Division generally shows a delayed re-
+sponse to changes in the overall economic environment. Even so,
+the Division is strongly dependent on investment cycles in its key
+industries. In commodity-based process industries such as oil and
+gas or mining, these cycles are driven mainly by commodity price
+fluctuations rather than changes in produced volumes.
+As part of the above-mentioned memorandum of understanding
+to combine Siemens' mobility businesses with Alstom, Process
+Industries and Drives will transfer its rail traction drives business
+to the combined company.
+Combined Management Report 3
+of the combined entity. For more information on the merger, see
+→ NOTE 3 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. The
+merged businesses are highly complementary regarding global
+footprint, existing product portfolios and technologies. SGRE of-
+fers wind turbines utilizing various pitch and speed technologies,
+and is active in the development, construction and sale of wind
+farms. The current product offering comprises geared as well as
+direct drive turbines, both for onshore and offshore application.
+In addition, SGRE provides services for the management, opera-
+tion and maintenance of wind farms. Its primary customers are
+large utilities and independent power producers. SGRE's revenue
+mix may vary from reporting period to reporting period depend-
+ing on the mix of onshore and offshore projects in the respective
+periods. The share of renewable energy in the global energy mix
+will continue to increase, but the trend toward evaluating com-
+peting power sources using life-cycle costs will continue to put
+pressure on the prices of wind power providers. To address this
+trend, SGRE focuses on improving its supply chain and signifi-
+cantly decreasing costs by leveraging synergies in the manufac-
+turing footprint subsequent to the merger. A higher share of re-
+newable energy in electrical grids also increases the demand for
+predictability of the energy supply and increased capability for
+integrating it into the overall energy mix, which SGRE addresses
+by pursuing innovation areas such as digitalization.
+Healthineers is one of the world's largest suppliers of technol-
+ogy to the healthcare industry and a leader in diagnostic imaging
+and laboratory diagnostics. It provides medical technology and
+software solutions as well as clinical consulting services, sup-
+ported by a complete set of training and service offerings. This
+comprehensive portfolio supports customers along the contin-
+uum of care from prevention and early detection to diagnosis,
+treatment and follow-up care. Its business activities are to a cer-
+tain extent resilient to short-term economic trends as large por-
+tions of its revenue stem from recurring business. They are, how-
+ever, dependent on regulatory and public policy developments
+around the world. The global healthcare market served by
+Healthineers is transforming, putting healthcare providers under
+pressure for better outcomes at lower cost. Drivers of this trans-
+formation include increasing societal resistance to healthcare
+costs, payers becoming more professional, a shift to value-based
+reimbursement, chronic disease burdens, and rapid scientific
+progress. As a result, healthcare providers are consolidating into
+networked structures, resulting in larger clinic and laboratory
+chains often internationally - which act increasingly like large
+enterprises. Applying this industrial logic to the healthcare mar-
+ket can lead to systematic improvements in quality, while at the
+same time reducing costs. To capture these benefits, regulatory
+schemes around the world increasingly seek to shift healthcare
+incentive systems away from a basis in number of procedures to
+a basis in outcomes achieved. In fiscal 2017, Healthineers was
+organized into six business areas: Diagnostic Imaging, Laboratory
+Diagnostics, Advanced Therapies, Ultrasound, Point of Care Diag-
+nostics and Services. During fiscal 2017, the Managing Board of
+Siemens AG announced that it intends to publicly list a minority
+stake in the Healthineers business in the first half of calendar
+2018, depending on market conditions.
+Siemens Gamesa Renewable Energy (SGRE) - In April 2017,
+Siemens contributed its wind power business, including service,
+into the publicly listed company Gamesa Corporación Tecnológica,
+S.A., Spain (Gamesa), and in return received newly issued shares
+of the combined entity Siemens Gamesa Renewable Energy, S.A.,
+Spain. Siemens as majority shareholder holds 59% of the shares
+-
+653
+156
+1,350
+and combined interest
+and currency swaps
+Other (embedded
+Interest rate swaps
+exchange contracts
+Asset
+Sep 30, 2017
+Liability
+1,885
+(in millions of €)
+880
+Sep 30, 2016
+Liability
+570
+475
+Foreign currency
+Asset
+192
+derivatives, options,
+commodity swaps)
+2018
+Fair values of each type of derivative financial instruments recorded
+as financial assets or financial liabilities are:
+(in millions of €)
+Periods in which the hedged forecast transactions or the firm
+commitments denominated in foreign currency are expected to
+impact profit or loss:
+The Company's operating units apply hedge accounting for cer-
+tain significant forecast transactions and firm commitments de-
+nominated in foreign currencies. Particularly, the Company has
+entered into foreign currency exchange contracts to reduce the
+risk of variability of future cash flows resulting from forecast sales
+and purchases as well as firm commitments. This risk results
+mainly from contracts denominated in US$ both from Siemens'
+operating units entering into long-term contracts e.g. project
+business and from standard product business.
+Cash flow hedges
+Consolidated Financial Statements 91
+491
+contracts.
+Derivative financial instruments not designated
+in a hedging relationship
+FOREIGN CURRENCY EXCHANGE RATE
+129
+1,500
+596
+3,051
+823
+2,314
+311
+The Company manages its risks associated with fluctuations in
+foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a
+Company-wide portfolio approach. Under this approach the
+Company-wide risks are aggregated centrally, and various deriv-
+ative financial instruments, primarily foreign currency exchange
+contracts, foreign currency swaps and options, are utilized to
+minimize such risks. Such a strategy does not qualify for hedge
+accounting treatment. The Company also accounts for foreign
+currency derivatives, which are embedded in sale and purchase
+RISK MANAGEMENT
+Financial
+Position
+NOTE 23 Derivative financial
+Amounts set
+Sep 30, 2016
+153
+538
+691
+5
+697
+1,383
+647
+2,030
+5
+2,035
+Net
+amounts
+Related
+amounts not
+set off in the
+Statement of
+Financial
+Position
+2019
+off in the
+Statement of
+(in millions of €)
+Financial assets
+Gross
+amounts
+595
+838
+1,433
+6
+1,440
+Financial liabilities - Derivative financial liabilities
+1,640
+instruments and hedging activities
+994
+7
+2,641
+Net
+amounts
+Financial
+Position
+amounts not
+set off in the
+Statement of
+Related
+Net amounts
+in the
+Statement of
+Financial
+Position
+2,634
+2020
+to
+2022
+Siemens' investment portfolio consists of direct and indirect in-
+vestments in publicly traded companies held for purposes other
+than trading. The direct participations result mainly from strate-
+gic partnerships, strengthening Siemens' focus on its core busi-
+ness activities or compensation from merger and acquisitions
+transactions; indirect investments in fund shares are mainly
+transacted for financial reasons.
+Other comprehensive income,
+net of income taxes into
+4,328
+Notes and bonds
+Non-derivative financial
+liabilities
+there-
+after
+to
+2022
+2019
+2018
+and
+2020
+2023
+Fiscal year
+(in millions of €)
+The following table reflects the contractually fixed pay-offs for
+settlement, repayments and interest. The disclosed expected un-
+discounted net cash outflows from derivative financial liabilities
+are determined based on each particular settlement date of an
+instrument and based on the earliest date on which Siemens
+could be required to pay. Cash outflows for financial liabilities
+(including interest) without fixed amount or timing are based on
+the conditions existing at September 30, 2017.
+In addition, Siemens constantly monitors funding options avail-
+able in the capital markets, as well as trends in the availability
+and costs of such funding, with a view to maintaining financial
+flexibility and limiting repayment risks.
+Liquidity risk results from the Company's inability to meet its fi-
+nancial liabilities. Siemens follows a deliberated financing policy
+that is aimed towards a balanced financing portfolio, a diversified
+maturity profile and a comfortable liquidity cushion. Siemens
+mitigates liquidity risk by the implementation of an effective
+working capital and cash management, arranged credit facilities
+with highly rated financial institutions, via a debt issuance pro-
+gram and via a global multi-currency commercial paper program.
+Liquidity risk may also be mitigated by the Siemens Bank GmbH,
+which increases the flexibility of depositing cash or refinancing.
+3,790
+11,102
+Loans from banks
+1,303
+3
+3
+19
+9,730
+112
+36
+18
+LIQUIDITY RISK
+35
+61
+23
+27
+677
+Other financial
+indebtedness
+Obligations under
+finance leases
+17,659
+3
+328 1,037
+Trade payables
+These investments are monitored based on their current market
+value, affected primarily by fluctuations in the volatile technolo-
+gy-related markets worldwide. As of September 30, 2017 and
+2016 the market value of Siemens' portfolio in publicly traded
+companies was €2,875 million compared to €2,169 million in the
+prior year. As of September 30, 2017 and 2016, the VaR relating
+to the equity price was €208 and €227 million. The increase in
+the market values, due mainly to our stakes in Atos and OSRAM,
+was more than offset by a decline in the volatilities of these
+stakes, resulting in an overall decrease of the VaR. The major part
+of our stake in OSRAM has been sold in October 2017.
+in the
+Statement of
+Financial
+Position
+EQUITY PRICE RISK
+Increasing market fluctuations may result in significant earnings
+and cash flow volatility risk for Siemens. The Company's operat-
+ing business as well as its investment and financing activities are
+affected particularly by changes in foreign exchange rates, inter-
+est rates and equity prices. In order to optimize the allocation of
+the financial resources across the Siemens segments and entities,
+as well as to achieve its aims, Siemens identifies, analyzes and
+manages the associated market risks. The Company seeks to man-
+age and control these risks primarily through its regular operating
+and financing activities, and uses derivative financial instruments
+when deemed appropriate.
+NOTE 24 Financial risk management
+The Company had interest rate swap contracts to pay variable
+rates of interest of an average of (0.3)% and (0.2)% as of Septem-
+ber 30, 2017 and 2016, respectively and received fixed rates of
+interest (average rate of 1.1% and 3.3%, as of September 30, 2017
+and 2016, respectively). The notional amount of indebtedness
+hedged as of September 30, 2017 and 2016 was €1,650 million
+and €3,650 million, respectively. This changed 7% and 14% of the
+Company's underlying notes and bonds from fixed interest rates
+into variable interest rates as of September 30, 2017 and 2016,
+respectively. The notional amounts of these contracts mature at
+varying dates based on the maturity of the underlying hedged
+items. The net fair value of interest rate swap contracts (excluding
+accrued interest) used to hedge indebtedness as of September 30,
+2017 and 2016 was €37 million and €93 million, respectively.
+Fair value hedges of fixed-rate debt obligations
+Under the interest rate swap agreements outstanding during the
+years ended September 30, 2017 and 2016, the Company has
+agreed to pay a variable rate of interest multiplied by a notional
+principal amount, and to receive in return an amount equal to a
+specified fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements offset an
+impact of future changes in interest rates designated as the
+hedged risk on the fair value of the underlying fixed-rate debt
+obligations. Carrying amount adjustments to debt for fair value
+changes attributable to the respective interest rate risk being
+hedged are included in Other financial income (expenses), net
+and resulted in a gain (loss) of €57 million and €149 million, re-
+spectively, in fiscal 2017 and 2016; the related swap agreements
+resulted in a gain (loss) of €(57) million and €(152) million, re-
+spectively. Net cash receipts and payments relating to such inter-
+est rate swap agreements are recorded as interest expenses.
+Since fiscal 2015, Siemens applies cash flow hedge accounting
+to a revolving portfolio of floating-rate commercial papers of
+nominal US$700 million. To benefit from low interest rates in the
+USA, Siemens pays a fixed rate of interest and receives a variable
+rate of interest, offsetting future changes in interest payments of
+the underlying floating-rate commercial papers. Net cash receipts
+and payments are recorded as interest expenses.
+Cash flow hedges of floating-rate
+commercial papers
+Interest rate risk management relating to the Group, excluding
+SFS' business, uses derivative financial instruments under a port-
+folio-based approach to manage interest risk actively relative to
+a benchmark. The interest rate management relating to the SFS
+business remains to be managed separately, considering the
+term structure of SFS' financial assets and liabilities on a portfolio
+basis. Neither approach qualifies for hedge accounting treat-
+ment. Net cash receipts and payments in connection with inter-
+est rate swap agreements are recorded as interest expense in
+Other financial income (expenses), net.
+In order to quantify market risks Siemens has implemented a sys-
+tem based on parametric variance-covariance Value at Risk (VaR),
+which is also used for internal management of the Corporate Trea-
+sury activities. The VaR figures are calculated based on historical
+Derivative financial instruments not designated
+in a hedging relationship
+38
+87
+15
+80
+2023
+and
+there-
+after
+Fiscal year
+revenue or cost of sales
+INTEREST RATE RISK MANAGEMENT
+Expected gain (loss) to be
+reclassified from line item
+92
+Consolidated Financial Statements
+Consolidated Financial Statements 93
+As of September 30, 2017 and 2016 the VaR relating to the inter-
+est rate was €479 million and €485 million.
+If there are no conflicting country-specific regulations, all Siemens
+operating units generally obtain any required financing through
+Corporate Treasury in the form of loans or intercompany clearing
+accounts. The same concept is adopted for deposits of cash gen-
+erated by the units.
+Interest rate risk is the risk that the fair value or future cash flows
+of a financial instrument will fluctuate because of changes in
+market interest rates. This risk arises whenever interest terms of
+financial assets and liabilities are different. In order to manage
+the Company's position with regard to interest rate risk, interest
+income and interest expenses, Corporate Treasury performs a
+comprehensive corporate interest rate risk management by using
+fixed or variable interest rates from bond issuances and deriva-
+tive financial instruments when appropriate. The interest rate risk
+relating to the Group, excluding SFS' and SGRE' businesses, is
+mitigated by managing interest rate risk actively relatively to a
+benchmark. The interest rate risk relating to the SFS's and SGRE's
+businesses is managed separately, considering the term structure
+of financial assets and liabilities. The Company's interest rate risk
+results primarily from the funding in U.S. dollar, British pound
+and euro.
+INTEREST RATE RISK
+Many Siemens units are located outside the euro zone. Since the
+financial reporting currency of Siemens is the euro, the financial
+statements of these subsidiaries are translated into euro for the
+preparation of the Consolidated Financial Statements. To con-
+sider the effects of foreign currency translation in the risk man-
+agement, the general assumption is that investments in for-
+eign-based operations are permanent and that reinvestment is
+continuous. Effects from foreign currency exchange rate fluctu-
+ations on the translation of net asset amounts into euro are re-
+flected in the Company's consolidated equity position.
+Translation risk
+22
+As of September 30, 2017 and 2016 the VaR relating to foreign
+currency exchange rates was €87 million and €86 million. This
+VaR was calculated under consideration of items of the Consoli-
+dated Statement of Financial Position in addition to firm commit-
+ments which are denominated in foreign currencies, as well as
+foreign currency denominated cash flows from forecast transac-
+tions for the following twelve months.
+According to the company policy Siemens units are responsible
+for recording, assessing and monitoring its foreign currency trans-
+action exposure. The net foreign currency position of Siemens
+units serves as a central performance measure and has to be
+hedged within a band of at least 75% but no more than 100%.
+Operating units (Industrial business and SFS) are prohibited from
+borrowing or investing in foreign currencies on a speculative basis.
+Intercompany financing or investments of operating units are pref-
+erably carried out in their functional currency or on a hedged basis.
+Each Siemens unit conducting businesses with international
+counterparties leading to future cash flows denominated in a
+currency other than its functional currency is exposed to risks
+from changes in foreign currency exchange rates. In the ordinary
+course of business Siemens units are exposed to foreign currency
+exchange rate fluctuations, particularly between the U.S. dollar
+and the euro. Foreign currency exchange rate exposure is partly
+balanced by purchasing of goods, commodities and services in
+the respective currencies as well as production activities and
+other contributions along the value chain in the local markets.
+FOREIGN CURRENCY EXCHANGE RATE RISK
+Transaction risk
+Any market sensitive instruments, including equity and interest
+bearing investments, that our Company's pension plans hold are not
+included in the following quantitative and qualitative disclosures.
+Actual results that are included in the Consolidated Statements
+of Income or Consolidated Statements of Comprehensive Income
+may differ substantially from VaR figures due to fundamental
+conceptual differences. While the Consolidated Statements of
+Income and Consolidated Statements of Comprehensive Income
+are prepared in accordance with IFRS, the VaR figures are the
+output of a model with a purely financial perspective and repre-
+sent the potential financial loss which will not be exceeded
+within ten days with a probability of 99.5%. Although VaR is an
+important tool for measuring market risk, the assumptions on
+which the model is based give rise to some limitations including
+the following. A ten day holding period assumes that it is possible
+to dispose of the underlying positions within this period. This
+may not be valid during continuing periods of illiquid markets. A
+99.5% confidence level means, that there is a 0.5% statistical
+probability that losses could exceed the calculated VaR. The use
+of historical data as a basis for estimating the statistic behavior
+of the relevant markets and finally determining the possible
+range of the future outcomes on the basis of this statistic behav-
+ior may not always cover all possible scenarios, especially those
+of an exceptional nature.
+volatilities and correlations of various risk factors, a ten day hold-
+ing period, and a 99.5% confidence level.
+Generally, the operating units conclude their hedging activities
+internally with Corporate Treasury. By applying a cost-optimiz-
+ing portfolio approach Corporate Treasury itself hedges foreign
+currency exchange rate risks with external counterparties and
+limits them.
+Net amounts
+2017
+Amounts set
+In connection with cash flow hedges
+In connection with fair value hedges
+(including embedded derivatives)
+Not designated in a hedge accounting relationship
+Derivative financial instruments
+Available-for-sale financial assets: debt instruments
+333
+333
+46
+46
+1,935
+54
+1,882
+2,314
+54
+Financial liabilities measured at fair value - Derivative financial instruments
+823
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+Level 1
+Sep 30, 2016
+In connection with cash flow hedges
+In connection with fair value hedges
+(including embedded derivatives)
+Not designated in a hedge accounting relationship
+Available-for-sale financial assets: debt instruments
+Derivative financial instruments
+2,261
+Available-for-sale financial assets: equity instruments
+(in millions of €)
+140
+140
+682
+682
+823
+In connection with cash flow hedges
+Financial assets measured at fair value
+Level 2
+1,243
+1,232
+2,270
+203
+3,312
+115
+28,554
+30,235
+28,797
+32,303
+3,299
+178
+Carrying
+amount
+Sep 30, 2016
+Fair value
+Carrying
+amount
+Fair value
+Sep 30, 2017
+Loans from banks and other financial indebtedness
+Obligations under finance leases
+Notes and bonds
+Other financial liabilities
+Derivative financial liabilities
+Credit guarantees¹
+2,276
+138
+Fixed-rate and variable-rate receivables with a remaining term of
+more than twelve months, including receivables from finance leases,
+are evaluated by the Company based on parameters such as interest
+rates, specific country risk factors, individual creditworthiness of the
+customer, and the risk characteristics of the financed project. Based
+on this evaluation, allowances for these receivables are recognized.
+The fair value of notes and bonds is based on prices provided by price
+service agencies at the period-end date (Level 2). The fair value of
+loans from banks and other financial indebtedness, obligations
+under finance leases as well as other non-current financial liabil-
+ities is estimated by discounting future cash flows using rates
+currently available for debt of similar terms and remaining ma-
+turities (Level 2).
+3,253
+(in millions of €)
+281
+95
+2,877
+6,810
+346
+11
+Total
+Level 2
+3,587
+Level 1
+2,877
+Sep 30, 2017
+Available-for-sale financial assets: equity instruments
+Financial assets measured at fair value
+(in millions of €)
+The following table allocates financial assets and financial liabil-
+ities measured at fair value to the three levels of the fair value
+hierarchy:
+Level 3
+off in the
+Statement of
+Level 3
+2,191
+Interest income (expense) includes interest from financial assets
+and financial liabilities not at fair value through profit or loss:
+Amounts presented include foreign currency gains and losses
+from realizing and measuring financial assets and liabilities; in
+particular, fiscal 2017 includes net gains from financial liabilities
+measured at amortized cost due to foreign currency changes on
+issued bonds denominated in US$ due to an appreciation of the
+EUR as well as an increase in nominal amounts outstanding due
+to newly issued US$ bonds, which are offset in the income state-
+ment by compensating measurement effects on the correspond-
+ing internal foreign currency financing transactions. Net gains
+(losses) in fiscal 2017 and 2016 on financial assets and financial
+liabilities held for trading consist of changes in the fair value of
+derivative financial instruments, including interest income and
+expense, for which hedge accounting is not applied.
+(211)
+(163)
+Financial assets and financial
+liabilities held for trading
+168
+1,662
+at amortized cost
+Financial liabilities measured
+(442)
+(174)
+70
+(4)
+(19)
+(5)
+(in millions of €)
+Total interest income on financial assets
+Total interest expenses on financial liabilities
+Fiscal year
+2017
+Financial
+Position
+amounts
+Gross
+Sep 30, 2017
+Financial liabilities - Derivative financial liabilities
+Financial assets
+(in millions of €)
+Cash and cash equivalents
+Available-for-sale financial assets
+Loans and receivables
+Siemens enters into master netting agreements and similar
+agreements for derivative financial instruments. The require-
+ments to offset recognized financial instruments are usually not
+met. The following table reflects financial assets and financial
+liabilities that are subject to netting agreements and similar
+agreements:
+90 Consolidated Financial Statements
+In fiscal 2017 and 2016, gains (losses) reclassified from Other
+comprehensive income to the Consolidated Statements of In-
+come relating to cash flow hedges were €54 million and €(61)
+million, respectively; unrealized gains (losses) recognized in
+Other comprehensive income amounted to €232 million and
+€149 million, respectively.
+(874)
+(901)
+1,291
+1,467
+2016
+OFFSETTING
+Total
+2016
+(in millions of €)
+163
+163
+2,518
+2,518
+3,051
+3,051
+1,269
+10
+1,259
+2,492
+301
+2,191
+6,812
+310
+4,311
+371
+371
+Financial liabilities measured at fair value - Derivative financial instruments
+1,500
+Net gains (losses) of financial instruments are:
+generally subject to future market developments and thus price
+volatility. Since a long-term power purchase agreement is in
+place that mitigates price volatility, significant changes to the
+cash flow forecast are unlikely and thus, no significant effects on
+Other comprehensive income, net of income taxes, are expected.
+The unquoted equity instrument allocated to level 3 of the fair
+value hierarchy relates to an investment in an offshore wind
+farm. The fair value is determined based on discounted cash flow
+calculations. The most significant unobservable input used to
+determine the fair value is the cash flow forecast which is mainly
+based on the future power generation income. This income is
+The Company limits default risks resulting from derivative finan-
+cial instruments by generally transacting with financial institu-
+tions with a minimum credit rating of investment grade. Based
+on Siemens' net risk exposure towards the counterparty, the re-
+sulting credit risk is taken into account via a credit valuation ad-
+justment.
+Siemens determines the fair values of derivative financial instru-
+ments depending on the specific type of instrument. Fair values
+of derivative interest rate contracts are estimated by discounting
+expected future cash flows using current market interest rates
+and yield curves over the remaining term of the instrument. In-
+terest rate futures are valued on the basis of quoted market
+prices, if available. Fair values of foreign currency derivatives are
+based on forward exchange rates. Options are generally valued
+based on quoted market prices or based on option pricing mod-
+els. In determining the fair values of the derivative financial in-
+struments, no compensating effects from underlying transac-
+tions (e.g. firm commitments and forecast transactions) are
+taken into consideration.
+Available-for-sale financial assets measured at fair value include
+interests in Atos SE (Atos) and OSRAM Licht AG (Osram) of
+€2,871 million and €2,156 million, respectively, as of Septem-
+ber 30, 2017 and 2016. Unrealized pre-tax gains (losses) in fiscal
+2017 and 2016 resulting from non-current available-for-sale fi-
+nancial assets measured at fair value are €700 million and
+€445 million, respectively. In September 2017, 18.155 million
+shares in Osram representing a 17.34% stake in Osram met the
+criteria for asset held for disposal classification. Those Osram
+shares were previously reported as non-current available-for-sale
+equity instruments and are held in Centrally managed portfolio
+activities. Upon the sale of the shares for €1.2 billion in cash in
+October 2017, €649 million accumulated fair value changes rec-
+ognized in equity will be reclassified through Other comprehen-
+sive income, net of income taxes to Net income. Siemens retains
+108,414 shares in Osram to service the warrants relating to
+Siemens and Osram shares.
+The fair value of available-for-sale financial equity instruments
+quoted in an active market is based on price quotations at the
+period-end date. The fair value of debt instruments is either based
+on prices provided by price service agencies or estimated by dis-
+counting future cash flows using current market interest rates.
+Fiscal year
+Consolidated Financial Statements 89
+305
+In connection with cash flow hedges
+1,190
+1,190
+(including embedded derivatives)
+Not designated in a hedge accounting relationship
+1,500
+305
+1,079
+154
+290
+11,940
+12,277
+702
+638
+11,238
+11,639
+12,963
+13,628
+129
+16,471
+15,467
+58
+53
+16,412
+15,413
+Building Technologies
+19,454
+6,913
+6,356
+Digital Factory
+7,825
+8,099
+31
+18
+7,794
+8,081
+7,875
+8,963
+Mobility
+6,156
+6,523
+174
+166
+5,982
+6,435
+13,422
+Power and Gas
+2016
+1,218
+1,214
+post-employment benefits
+Expenses relating to
+3,562
+3,766
+and expenses for optional support
+Statutory social welfare contributions
+23,431
+24,632
+Wages and salaries
+2016
+2017
+(in millions of €)
+Fiscal year
+29,613
+28,210
+40
+Consolidated Financial Statements 97
+2017
+Fiscal year
+Fiscal year
+2016
+2017
+Fiscal year
+2016
+2017
+2016
+11,532
+2017
+Fiscal year
+Total revenue
+Intersegment Revenue
+External revenue
+Orders¹
+Segment information
+NOTE 28
+(in millions of €)
+10,332
+10,658
+9,390
+1,247
+79,644
+1,266
+83,049
+(2,300)
+86,480
+85,669
+Siemens (continuing operations)
+(1,730)
+Consolidated Financial Statements
+Reconciliation to
+979
+81,112
+84,331
+921
+147
+3,539
+3,321
+77,573
+824
+(3,468)
+(3,694)
+(2,202)
+83,049
+(2,447)
+79,644
+98 Consolidated Financial Statements
+Siemens Real Estate (SRE) - except for SGRE, SRE manages the
+Group's entire real estate business portfolio, operates the prop-
+erties, and is responsible for building projects and the purchase
+and sale of real estate.
+CONSOLIDATED FINANCIAL STATEMENTS
+Centrally managed portfolio activities (CMPA) – in general,
+comprises equity stakes held by Siemens that are accounted for
+by the equity method or as available-for-sale financial assets and
+that for strategic reasons are not allocated to a segment, Siemens
+Real Estate (SRE), Corporate items or Corporate Treasury. CMPA
+also includes activities generally intended for divestment or clo-
+sure as well as activities remaining from divestments and discon-
+tinued operations.
+RECONCILIATION TO
+> Financial Services (SFS) supports its customers' investments
+with leasing solutions and equipment, project and structured
+financing in the form of debt and equity investments.
+> Siemens Gamesa Renewable Energy offers wind turbines uti-
+lizing various pitch and speed technologies, and is active in
+the development, construction and sale of wind farms; it pro-
+vides services including management, operation and mainte-
+nance of wind farms,
+> Healthineers, a supplier of technology to the healthcare in-
+dustry and a leader in diagnostic imaging and laboratory di-
+agnostics,
+774
+> Process Industries and Drives offers a comprehensive product,
+software, solution and service portfolio for moving, measur-
+ing, controlling and optimizing all kinds of mass flows,
+> Mobility combines all Siemens businesses in the area of pas-
+senger and freight transportation, including rail vehicles, rail
+automation systems, rail electrification systems, road traffic
+technology, digital solutions and related services,
+> Building Technologies is a provider of automation technolo-
+gies and digital services for safe, secure and efficient build-
+ings and infrastructures throughout their lifecycles,
+> Energy Management offers a wide spectrum of software,
+products, systems, solutions, and services for transmitting,
+distributing and managing electrical power and for providing
+intelligent power infrastructure,
+> Power and Gas, which offers a broad spectrum of products,
+solutions and services for generating electricity from fossil
+fuels and for producing and transporting oil and gas,
+DESCRIPTION OF REPORTABLE SEGMENTS
+Siemens has nine reportable segments, being:
+It is not part of the Consolidated Financial Statements subject to the audit opinion.
+1 This supplemental information on Orders is provided on a voluntary basis.
+> Digital Factory offers a comprehensive product portfolio and
+system solutions used in manufacturing industries, comple-
+mented by product lifecycle and data-driven services,
+6.42
+979
+Financial Services (SFS)
+14,218
+Healthineers
+9,038
+8,876
+1,753
+1,681
+7,285
+7,195
+8,939
+9,034
+Process Industries and Drives
+10,172
+11,378
+781
+720
+13,830
+13,748
+13,497
+42
+81,009
+87,802
+86,477
+Industrial Business
+5,976
+7,922
+2
+921
+3
+7,919
+7,973
+8,768
+Siemens Gamesa Renewable Energy
+13,535
+13,789
+38
+5,974
+7.23
+Energy Management
+Basic earnings per share
+2,078,828
+Granted
+6,171,430
+Non-vested, beginning of period
+2017
+Under the Base Share Program employees of Siemens AG and
+participating domestic Siemens companies may invest a fixed
+amount of their compensation in Siemens shares, sponsored by
+Siemens. The shares are bought at market price at a predeter-
+mined date in the second quarter and grant the right to receive
+matching shares under the same conditions applying to the
+Share Matching Plan described above. The fair value of the Base
+Share Program amounted to €36 million and €35 million in fiscal
+2017 and 2016, respectively.
+Base Share Program
+Under the Monthly Investment Plan employees other than senior
+managers may invest a specified part of their compensation in
+Siemens shares on a monthly basis over a period of twelve
+months. Shares are purchased at market price at a predetermined
+date once a month. If the Managing Board decides that shares
+acquired under the Monthly Investment Plan are transferred to
+the Share Matching Plan, plan participants will receive the right
+to matching shares under the same conditions applying to the
+Share Matching Plan described above with a vesting period of
+about two years since fiscal 2016 (previously about three years).
+The Managing Board decided that shares acquired under the
+tranches issued in fiscal 2016 and 2015 are transferred to the
+Share Matching Plan as of February 2017 and February 2016, re-
+spectively.
+Monthly Investment Plan
+Under the Share Matching Plan senior managers may invest a
+specified part of their variable compensation in Siemens shares
+(investment shares). The shares are purchased at the market
+price at a predetermined date in the second quarter. Plan partic-
+ipants receive the right to one Siemens share without payment
+of consideration (matching share) for every three investment
+shares continuously held over a period of about three years (vest-
+ing period) provided the plan participant has been continuously
+employed by Siemens until the end of the vesting period.
+Share Matching Plan
+In fiscal 2017, Siemens issued a new tranche under each of the
+plans of the Share Matching Program.
+AND ITS UNDERLYING PLANS
+SHARE MATCHING PROGRAM
+Fiscal year
+2016
+6,049,250
+2,044,213
+Vested and fulfilled
+(724,504)
+(834,605)
+Severance charges amount to €466 million and €598 million in
+fiscal 2017 and 2016, respectively. Item Expenses relating to
+post-employment benefits includes service costs for the period.
+Personnel costs for continuing and discontinued operations
+amount to €29,622 million and €28,232 million, respectively, in
+fiscal 2017 and 2016.
+2016
+Fiscal year
+Resulting Matching Shares
+96 Consolidated Financial Statements
+6,171,430
+6,416,946
+Changes in the stock awards held by members of the senior man-
+agement and other eligible employees are:
+Non-vested, end of period
+(27,501)
+Settled
+(856,355)
+to cash-settled
+Modified from equity-settled
+(224,952) (1,029,991)
+Forfeited
+(57,437)
+Employees were engaged in (averages; part time employees are
+included proportionally):
+In fiscal 2017 and 2016, 2,078,828 and 2,044,213 stock awards,
+respectively, were granted contingent upon attaining the pro-
+spective performance-based target of Siemens stock relative to
+five competitors. The fair value of equity-settled stock awards
+amounted to €138 million and €117 million, respectively, in fiscal
+2017 and 2016; fair value was calculated by applying a valuation
+model. In fiscal 2017 and 2016 inputs to that model include an
+expected weighted volatility of Siemens shares of 22.79% and
+22%, respectively, and a market price of €107.95 and €92.86 per
+Siemens share. Expected volatility was determined by reference
+to historic volatilities. The model applies a risk-free interest rate
+of up to 0.03% in fiscal 2017 and up to 0.1% in fiscal 2016 and an
+expected dividend yield of 3.33% and 3.8% in fiscal 2017 and
+2016, respectively. Assumptions concerning share price correla-
+tions were determined by reference to historic correlations.
+In fiscal 2017 and 2016, agreements were entered into which en-
+title members of the Managing Board to stock awards most of
+which are contingent upon attaining the prospective perfor-
+mance-based target of Siemens stock relative to five competitors.
+The fair value of these entitlements amounting to €13 million
+and €9 million, respectively, in fiscal 2017 and 2016, was calcu-
+lated by applying a valuation model. In fiscal 2017 and 2016, in-
+puts to that model include for the majority of the stock awards
+granted an expected weighted volatility of Siemens shares of
+22.72% and 22%, respectively, and a market price of €106.40 and
+€92.86 per Siemens share. Expected volatility was determined by
+reference to historic volatilities. The model applies a risk-free in-
+terest rate of up to (0.02)% and 0.1% in fiscal 2017 and 2016, re-
+spectively and an expected dividend yield of 3.38% in fiscal 2017
+and 3.8% in fiscal 2016. Assumptions concerning share price cor-
+relations were determined by reference to historic correlations.
+Credit risk is defined as an unexpected loss in financial instru-
+ments if the contractual partner is failing to discharge its obliga-
+tions in full and on time or if the value of collateral declines.
+CREDIT RISK
+2 A considerable portion result from asset-based lending transactions meaning that the respective
+loans can only be drawn after sufficient collateral has been provided by the borrower.
+1 Based on the maximum amounts Siemens could be required to settle in the event of default
+by the primary debtor.
+2
+177
+303
+2,875
+Irrevocable loan commitments²
+639
+61
+176
+205
+420
+13
+Siemens provides its customers with various forms of direct and
+indirect financing particularly in connection with large projects.
+Hence, credit risks are determined by the solvency of the debtors,
+the recoverability of the collaterals, the success of projects we
+invested in and the global economic development.
+The effective monitoring and controlling of credit risk through
+credit evaluations and ratings is a core competency of our risk
+management system. In this context, Siemens has implemented
+a binding credit policy.
+Ratings, defined and analyzed by SFS, and individually defined
+credit limits are based on generally accepted rating methodolo-
+gies, with the input consisting of information obtained from the
+customer, external rating agencies, data service providers and
+Siemens' credit default experiences. Ratings and credit limits for
+financial institutions as well as Siemens' public and private cus-
+tomers, which are determined by internal risk assessment spe-
+cialists, are continuously updated and considered by investments
+in cash and cash equivalents, and in determining the conditions
+under which direct or indirect financing will be offered to cus-
+tomers.
+Commitments to members of the Managing Board
+Consolidated Financial Statements 95
+Since related taxation is not yet entirely certain, Stock Awards of
+Siemens AG that vested in November 2016 were settled in cash
+rather than in equity instruments. The fair value of €107 million
+at modification date was reclassified from equity to liabilities.
+Until fiscal 2014, additionally one portion of the variable compen-
+sation component (bonus) for members of the Managing Board
+was granted in the form of non-forfeitable awards of Siemens
+stock (Bonus Awards) subject to a vesting period of one year.
+Beneficiaries will receive one Siemens share without payment of
+consideration for each Bonus Award, following an additional
+waiting period of four years.
+Stock awards are tied to performance criteria. The annual target
+amount for stock awards can be bound to the average of earnings
+per share (EPS, basic) of the past three fiscal years and/or to the
+share price performance of Siemens relative to the share price
+performance of five important competitors during the four-year
+restriction period. The target attainment for the performance
+criteria ranges between 0% and 200%. If the target attainment
+of the prospective performance-based target of Siemens stock
+relative to five competitors exceeds 100%, an additional cash pay-
+ment results corresponding to the outperformance. The vesting
+period is four years and five years for stock awards granted to
+members of the Managing Board until fiscal 2014.
+The Company grants stock awards to members of the Managing
+Board, members of the senior management and other eligible em-
+ployees. Stock awards are subject to a restriction period of about
+four years and entitle the beneficiary to Siemens shares without
+payment of consideration following the restriction period.
+Diluted earnings per share
+(from continuing operations)
+Commitments to members of the senior
+management and other eligible employees
+Share-based payment awards may be settled in newly issued
+shares of capital stock of Siemens AG, in treasury shares or in
+cash. Share-based payment awards may forfeit if the employ-
+ment of the beneficiary terminates prior to the expiration of the
+vesting period. Total pretax expense for share-based payment
+amounted to €512 million and €332 million for the years ended
+September 30, 2017 and 2016, respectively, €416 million and
+€287 million relate to equity-settled awards in fiscal 2017 and
+2016. The carrying amount of liabilities from share-based pay-
+ment transactions is €124 million and €65 million as of Septem-
+ber 30, 2017 and 2016.
+Concerning trade receivables and other receivables, as well as
+loans or receivables included in line item Other financial assets
+that are neither impaired nor past due, there were no indications
+that defaults in payment obligations will occur, which lead to a
+decrease in the net assets of Siemens. Overdue financial instru-
+ments are generally impaired on a portfolio basis in order to re-
+flect losses incurred within the respective portfolios. When sub-
+stantial expected payment delays become evident, overdue
+financial instruments are assessed individually for additional
+impairment and are further allowed for as appropriate.
+The maximum exposure to credit risk of financial assets, without
+taking account of any collateral, is represented by their carrying
+amount. As of September 30, 2017 and 2016 the collateral for fi-
+nancial instruments classified as financial assets measured at fair
+value in the form of netting agreements for derivatives in the
+event of insolvency of the respective counterparty amounted to
+€647 million and €994 million, respectively. As of September 30,
+2017 and 2016 the collateral held for financial instruments classi-
+fied as receivables from finance leases amounted to €1,967 mil-
+lion and €1,949 million, respectively, mainly in the form of the
+leased equipment. As of September 30, 2017 and 2016 the collat-
+eral held for financial instruments classified as financial assets
+measured at cost or amortized cost amounted to €3,347 million
+and €3,590 million, respectively. The collateral mainly consisted
+of property, plant and equipment. Credit risks arising from irre-
+vocable loan commitments are equal to the expected future pay-
+offs resulting from these commitments. As of September 30,
+2017 and 2016 the collateral held for these commitments
+amounted to €843 million and €1,177 million, respectively,
+mainly in the form of inventories and receivables.
+Corporate Treasury has established the Siemens Credit Ware-
+house to which numerous operating units from the Siemens
+Group regularly transfer business partner data as a basis for a
+centralized rating and credit limit recommendation process. Fur-
+thermore, the Siemens Credit Warehouse purchases trade receiv-
+ables from numerous operating units with a remaining term up
+to one year. Due to the identification, quantification and active
+management of the credit risk the Siemens Credit Warehouse
+increases the transparency with regard to credit risk. In addition,
+the Siemens Credit Warehouse may provide Siemens with an ad-
+ditional source of liquidity and strengthens Siemens' funding
+flexibility.
+For analysis and monitoring of the credit risk the Company ap-
+plies different systems and processes. A central IT application
+processes data from operating units together with rating and
+default information and calculates an estimate which may be
+used as a basis for individual bad debt provisions. In addition to
+this automated process, qualitative information is considered, in
+particular to incorporate the latest developments.
+Consolidated Financial Statements
+94
+94
+NOTE 25 Share-based payment
+2017
+STOCK AWARDS
+1,767,980
+Fiscal year
+(shares in thousands; earnings per share in €)
+Income from continuing operations
+Less: Portion attributable to
+non-controlling interest
+Earnings per share
+NOTE 27
+349
+363
+349
+363
+35
+36
+35
+36
+33
+38
+33
+2017
+2016
+6,126
+5,396
+Outstanding, beginning of period
+6.51
+7.38
+(from continuing operations)
+819,914
+829,164
+Weighted average shares outstanding - diluted
+38
+3,392
+13,591
+808,686
+812,180
+5,262
+5,993
+(134)
+(133)
+11,228
+Research and development
+Administration
+and general services
+Income from continuing operations
+attributable to shareholders of Siemens AG
+Weighted average shares outstanding - basic
+Effect of dilutive share-based payment
+Effect of dilutive warrants
+66
+For their 25th and 40th service anniversary eligible employees re-
+ceive jubilee shares. There were 4.26 million and 4.39 million
+entitlements to jubilee shares outstanding as of September 30,
+2017 and 2016, respectively.
+JUBILEE SHARE PROGRAM
+The Managing Board decides annually on the issuance of a new
+Siemens Profit Sharing tranche and determines the targets to be
+met for the current fiscal year. At fiscal year-end, based on the
+actual target achievement, the Managing Board decides in its
+discretion on the amount to be transferred to the Profit-Shar-
+ing-Pool; this transfer is limited to a maximum of €400 million
+annually. If the Pool amounts to a minimum of €400 million after
+one or more fiscal years, it will be transferred to eligible employ-
+ees below senior management in full or partially through the
+grant of free Siemens shares. As of September 30, 2017, €300 mil-
+lion are in the Profit-Sharing-Pool. Expense is recognized pro rata
+over the estimated vesting period. In November 2017, €100 mil-
+lion were transferred to the Profit-Sharing-Pool; it was decided
+that the Pool amounting to €400 million will be transferred to
+eligible employees in March 2018.
+SIEMENS PROFIT SHARING
+The weighted average fair value of matching shares granted in
+fiscal 2017 and 2016 amounting to €92.68 and €64.56 per share
+was determined as the market price of Siemens shares less the
+present value of expected dividends taking into account non-vest-
+ing conditions.
+(38,304)
+1,767,980
+1,850,052
+(95,658)
+1,655,780
+785,000
+710,356
+(473,113) (538,837)
+(106,160)
+(49,011)
+Settled
+Forfeited
+Vested and fulfilled
+65
+Granted
+NOTE 26 Personnel costs
+Continuing
+Outstanding, end of period
+Continuing and
+discontinued
+66
+operations
+Sales and marketing
+216
+223
+223
+Manufacturing and services
+2016
+216
+65
+2016
+2017
+(in thousands)
+Fiscal year
+2017
+Fiscal year
+operations
+100
+September 30, 2017
+in %
+100
+Saint-Priest/France
+Siemens Gamesa Renewable Energy France SAS,
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Romigny SARL,
+in %
+Societe d'Exploitation du Parc Eolien de Pringy SARL,
+100
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Equity interest
+Equity interest
+108
+107
+Consolidated Financial Statements
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+Saint-Priest/France
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+September 30, 2017
+100
+100
+100
+Exemption pursuant to Section 264b German Commercial Code.
+100
+Societe d'Exploitation du Parc Eolien de Saint-Lumier en
+Champagne SARL, Saint-Priest/France
+100
+Trench France SAS, Saint-Louis/France
+100
+100
+SIEMENS Postal Parcel Airport Logistics SAS, Paris/France
+Siemens SAS, Saint-Denis/France
+Societe d'Exploitation du Parc Eolien de Saint Loup de
+Saintonge SAS, Saint-Priest/France
+100
+Saint-Priest/France
+100
+Siemens Lease Services SAS, Saint-Denis/France
+Societe d'Exploitation du Parc Eolien de Saint Bon SARL,
+100
+Siemens Industry Software SAS, Châtillon/France
+100
+Saint-Priest/France
+100
+Siemens Healthcare SAS, Saint-Denis/France
+Societe d'Exploitation du Parc Eolien de Saint Amand SARL,
+Siemens Gamesa Renewable Energy S.A.S.,
+Saint-Denis Cedex/France
+9
+Societe d'Exploitation du Parc Eolien de Mantoche SARL,
+5 No significant influence due to contractual arrangements or legal circumstances.
+100
+Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Margny SARL,
+Societe d'Exploitation du Parc Eolien de Bonboillon SARL,
+100
+Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Bouclans SARL,
+PETNET Solutions SAS, Lisses/France
+100
+Societe d'Exploitation du Parc Eolien de Mailly-le-Camp
+SARL, Saint-Priest/France
+100
+not-Saint-Martin/France
+Mentor Graphics Development Crolles SARL, Monbon-
+100
+Societe d'Exploitation du Parc Eolien de Longueville sur
+Aube SARL, Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Sambourg SARL,
+100
+Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Moulins du Puits
+SAS, Saint-Priest/France
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Societe d'Exploitation du Parc Eolien de
+Pouilly-sur-Vingeanne SARL, Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Chaintrix Bierges
+SARL, Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Plancy l'Abbaye
+SARL, Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Cernon SARL,
+100
+Societe d'Exploitation du Parc Eolien de Orge et Ornain
+SARL, Saint-Priest/France
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Broyes SARL,
+100
+8 Not accounted for using the equity method due to immateriality.
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Souvans SARL,
+Societe d'Exploitation du Parc Eolien de Savoisy SARL,
+Mentor Graphics (Ireland) Limited,
+100
+Saint-Priest/France
+10012
+Shannon, County Clare/Ireland
+Societe d'Exploitation du Parc Eolien du Vireaux SAS,
+Mentor Graphics (Holdings) Unlimited Company,
+100
+Saint-Priest/France
+Siemens Financial Services SAS,
+100
+Societe d'Exploitation du Parc Eolien d'Orchamps SARL,
+97
+Teheran/Iran, Islamic Republic of
+100
+Siemens Sherkate Sahami (Khass),
+Societe d'Exploitation du Parc Eolien de Vernierfontaine
+SARL, Saint-Priest/France
+100
+Siemens Zrt., Budapest/Hungary
+100
+Gamesa Ireland Limited, Dublin/Ireland
+Shannon, County Clare/Ireland
+100
+Saint-Denis/France
+Mentor Graphics (France) SARL, Meudon La Forêt/France
+Mentor Graphics Development (France) SAS, Paris/France
+Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Mentor Graphics Development Services Limited,
+Shannon, County Clare/Ireland
+100
+Siemens France Holding SAS, Saint-Denis/France
+100
+Siemens Wind Power Kft., Budapest/Hungary
+100
+100
+100
+Societe d'Exploitation du Parc Eolien de Songy SARL,
+100
+86
+Eoliki Peloponnisou Lakka Energiaki S.A., Athens/Greece
+Siemens A.E., Elektrotechnische Projekte und Erzeugnisse,
+Athens/Greece
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Sommesous SARL,
+100
+Saint-Priest/France
+Saint-Priest/France
+100
+86
+86
+86
+86
+90
+Siemens Oil & Gas Equipment Limited, Accra/Ghana
+Elliniki Eoliki Attikis Energiaki S.A., Athens/Greece
+Elliniki Eoliki Energiaki Pirgos S.A., Athens/Greece
+Elliniki Eoliki Kopriseza S.A., Athens/Greece
+Elliniki Eoliki Kseropousi S.A., Athens/Greece
+Elliniki Eoliki Likourdi S.A., Athens/Greece
+Energiaki Arvanikou M.E.P.E., Athens/Greece
+Societe d'Exploitation du Parc Eolien de Sceaux SARL,
+100
+Saint-Priest/France
+86
+100
+Societe d'Exploitation du Parc Eolien de Soude SARL,
+Siemens Gamesa Renewable Energy AE, Athens/Greece
+Siemens Gamesa Renewable Energy Greece E.P.E.,
+Athens/Greece
+100
+100
+evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
+Mentor Graphics Magyarország Kft., Budapest/Hungary
+Siemens Gamesa Megújuló Energia Hungary Kft,
+Budapest/Hungary
+888
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Vaudrey SARL,
+100
+Saint-Priest/France
+Societe d'Exploitation du Parc Eolien de Trepot SARL,
+100
+Saint-Priest/France
+100
+100
+Anonyme, Athens/Greece
+Societe d'Exploitation du Parc Eolien de Source de Seves
+SARL, Saint-Priest/France
+Siemens Healthcare Industrial and Commercial Société
+100
+Saint-Priest/France
+100
+100
+Siemens Healthcare Kft., Budapest/Hungary
+100
+Meta Systems SARL, Meudon La Forêt/France
+100
+2017
+(in millions of €)
+Fiscal year
+Fees related to professional services rendered by the Company's
+principal accountant, EY, for fiscal 2017 and 2016 are:
+Principal accountant fees
+and services
+NOTE 31
+Some of our board members hold, or in the last year have held,
+positions of significant responsibility with other entities. We have
+relationships with almost all of these entities in the ordinary
+course of our business whereby we buy and sell a wide variety of
+products and services on arm's length terms.
+In fiscal 2017 and 2016, no other major transactions took place
+between the Company and the members of the Managing Board
+and the Supervisory Board.
+Information regarding the remuneration of the members of the
+Managing Board and Supervisory Board is disclosed on an indi-
+vidual basis in the Compensation Report, which is part of the
+combined management report.
+Compensation attributable to members of the Supervisory Board
+comprises in fiscal 2017 and 2016 of a base compensation and
+additional compensation for committee work and amounted
+€5.2 million (including meeting fees), which is unchanged com-
+pared to prior year.
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their sur-
+viving dependents as of September 30, 2017 and 2016 amounted
+to €191.5 million and €216.3 million, respectively.
+Former members of the Managing Board and their surviving
+dependents received emoluments within the meaning of Sec-
+tion 314 para. 1 No. 6 b of the German Commercial Code totaling
+€34.1 million and €52.3 million in fiscal 2017 and 2016, respec-
+tively.
+In fiscal 2017 and 2016, expense related to share-based payment
+and to the Share Matching Program amounted to €19.0 million
+and 8.3 million, respectively.
+Therefore in fiscal 2017 and 2016, compensation and benefits,
+attributable to members of the Managing Board amounted to
+€40.5 million and €33.5 million in total, respectively.
+In fiscal 2017 and 2016, members of the Managing Board received
+cash compensation of €20.7 million and €20.2 million. The fair
+value of stock-based compensation amounted to €13.2 million
+and €8.7 million for 132,831 and 113,230 Stock Awards, respec-
+tively, in fiscal 2017 and 2016. In fiscal 2017 and 2016, the Com-
+pany granted contributions (including one-time special contribu-
+tions) under the BSAV to members of the Managing Board
+totaling €6.6 million and €4.6 million, respectively.
+RELATED INDIVIDUALS
+Consolidated Financial Statements 101
+579
+392
+447
+320
+343
+266
+114
+43
+Associates
+236
+2016
+126
+Audit services
+45.9
+1007
+10010
+in %
+Equity interest
+Kyra 1 GmbH, Erlangen
+Kyros 52 GmbH, Hanover
+Kyros 53 GmbH, Munich
+September 30, 2017
+NOTE 34 List of subsidiaries and
+associated companies pursuant to
+Section 313 para. 2 of the German
+Commercial Code
+103
+Consolidated Financial Statements
+as well as the potential sale of locations.
+In November 2017, Siemens announced its plans for capacity
+adjustment measures at Power and Gas, SGRE and Process
+Industries and Drives, which are expected to result in significant
+severance charges and also include the closure, consolidation
+Subsequent events
+NOTE 33
+WWW.SIEMENS.
+COM/GCG-CODE
+The Managing Board and the Supervisory Board of Siemens Ak-
+tiengesellschaft provided the declaration required by Section 161
+of the German stock corporation law (AktG) as of October 1, 2017,
+which is available on the Company's website at:
+NOTE 32 Corporate Governance
+102 Consolidated Financial Statements
+Audit Services relate primarily to services provided by EY for au-
+diting Siemens' Consolidated Financial Statements and for audit-
+ing the statutory financial statements of Siemens AG and its sub-
+sidiaries. Other attestation services include primarily audits of
+financial statements in connection with M&A activities, comfort
+letters and other attestation services required under regulatory
+requirements, agreements or requested on a voluntary basis.
+In fiscal 2017 and 2016, 40% and 41%, respectively, of the total
+fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
+schaft, Germany.
+49.5
+56.5
+0.4
+0.2
+3.2
+3.7
+Other attestation services
+Tax services
+52.6
+333
+277
+Joint ventures
+NOTE 30 Related party transactions
+Non-current assets consist of property, plant and equipment,
+goodwill and other intangible assets.
+8,324
+49,809
+18,579
+79,644
+7,511
+34,546
+17,576
+18,108
+17,776
+17,934
+16,769
+16,976
+41,485
+61,065
+63,173
+68,905
+71,907
+19,876
+10,739
+11,142
+42,057
+79,644
+83,049
+3,132
+4,349
+15,118
+16,166
+JOINT VENTURES AND ASSOCIATES
+Siemens has relationships with many joint ventures and associ-
+ates in the ordinary course of business whereby Siemens buys
+and sells a wide variety of products and services generally on
+arm's length terms.
+Sales of goods
+and services and
+other income
+Purchases of goods
+and services
+and other expenses
+Fiscal year
+2016
+2016
+2017
+2016
+2017
+(in millions of €)
+Sep 30,
+Sep 30,
+Liabilities
+Receivables
+As of September 30, 2017 and 2016, guarantees to joint ventures
+and associates amounted to €726 million and €1,500 million, re-
+spectively. As of September 30, 2017 and 2016, guarantees to
+joint ventures amounted to €488 million and €553 million, re-
+spectively. As of September 30, 2017 and 2016, loans given to
+joint ventures and associates amounted to €222 million and
+€82 million, therein €218 million and €78 million related to joint
+ventures, respectively. As of September 30, 2017 and 2016, the
+Company had commitments to make capital contributions of
+€76 million and €48 million to its joint ventures and associates,
+therein €16 million and €39 million related to joint ventures, re-
+spectively. For a loan raised by a joint venture, which is secured
+by a Siemens guarantee, Siemens granted an additional collat-
+eral. As of September 30, 2017 and 2016 the outstanding amount
+totaled to €113 million and €116 million, respectively. As of Sep-
+tember 30, 2017 and 2016 there were loan commitments to joint
+ventures amounting to €147 million and €72 million, respectively.
+316
+336
+2,442
+1007
+2,632
+218
+1,379
+538
+Associates
+142
+119
+1,062
+2,094
+Joint ventures
+2017
+Fiscal year
+2016
+2017
+(in millions of €)
+174
+19,013
+Kyros 54 GmbH, Munich
+Lincas Electro Vertriebsgesellschaft mbH, Grünwald
+10010
+HSP Hochspannungsgeräte GmbH, Troisdorf
+100
+HaCon Ingenieurgesellschaft mbH, Hanover
+1009
+Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
+Grünwald
+100
+Gamesa Wind GmbH, Aschaffenburg
+100
+Gamesa Energie Deutschland GmbH, Oldenburg
+1009
+Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
+Grünwald
+1007
+Fluence Energy GmbH, Erlangen
+100
+Flowmaster GmbH, Frankfurt
+1009
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
+Grünwald
+100
+Flender GmbH, Bocholt
+1009
+1009,11
+Siemens Beteiligungsverwaltung GmbH & Co. OHG,
+Grünwald
+FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
+Munich
+10010
+evosoft GmbH, Nuremberg
+10010
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
+Grünwald
+1007
+1009
+59
+104 Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+1009
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
+Grünwald
+10010
+10010
+KompTime GmbH, Munich
+Jawa Power Holding GmbH, Erlangen
+1009
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
+Grünwald
+100
+IPGD Grundstücksverwaltungs-Gesellschaft mbH,
+Grünwald
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
+Grünwald
+85
+ILLIT Grundstücksverwaltungs-Management GmbH,
+Grünwald
+Siemens Beteiligungen Management GmbH, Grünwald
+Siemens Beteiligungen USA GmbH, Berlin
+100
+EBV Holding Verwaltung GmbH, Oldenburg
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
+Objekt Tübingen KG, Grünwald
+100
+Adwen Verwaltungs GmbH, Bremerhaven
+100
+Adwen GmbH, Bremerhaven
+51
+Omnetric GmbH, Munich
+100
+Adwen Blades GmbH, Stade
+10010
+next47 Services GmbH, Munich
+100
+10010
+next47 GmbH, Munich
+100
+NEO New Oncology GmbH, Cologne
+AD 8MW GmbH & Co. KG, Bremerhaven
+Germany (129 companies)
+SUBSIDIARIES
+100
+Mentor Graphics Development (Deutschland) GmbH,
+Villingen-Schwenningen
+in %
+September 30, 2017
+100
+Mentor Graphics (Deutschland) GmbH, Munich
+Equity interest
+100
+1009
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+10010
+Partikeltherapiezentrum Kiel Holding GmbH, Erlangen
+10010
+Dresser-Rand GmbH, Oberhausen
+10010
+Siemens Beteiligungen Inland GmbH, Munich
+100
+Dade Behring Grundstücks GmbH, Marburg
+100
+Siemens Bank GmbH, Munich
+100
+100
+RISICOM Rückversicherung AG, Grünwald
+Capta Grundstücks-Verwaltungsgesellschaft mbH,
+Grünwald
+10010
+1007
+REMECH Systemtechnik GmbH, Kamsdorf
+Berliner Vermögensverwaltung GmbH, Berlin
+100
+R&S Restaurant Services GmbH, Munich
+100
+AXIT GmbH, Frankenthal
+10010
+10010
+Project Ventures Butendiek Holding GmbH, Erlangen
+Projektbau-Arena-Berlin GmbH, Grünwald
+100
+Atecs Mannesmann GmbH, Erlangen
+10010
+Alpha Verteilertechnik GmbH, Cham
+10010
+10010
+22,707
+23,516
+41,819
+5,731
+1,963
+1,771
+195
+179
+450
+304
+440
+243
+2,002
+1,800
+373
+618
+164
+160
+213
+231
+2,490
+2,325
+10,973
+11,211
+2,153
+2,154
+427
+392
+538
+563
+9,217
+338
+1,690
+132
+4,178
+4,335
+1,002
+375
+198
+195
+213
+218
+784
+577
+1,241
+1,324
+820
+598
+47
+66
+89
+85
+743
+678
+2,734
+2,868
+1,046
+497
+105
+99
+135
+2,135
+464
+4,663
+(190)
+543
+597
+354
+357
+2,406
+2,135
+3,211
+2,764
+Corporate items - includes corporate costs, such as group man-
+aging costs, basic research of Corporate Technology, corporate
+projects and non-operating investments or results of corpo-
+rate-related derivative activities.
+Pension - includes the Company's pension related income (ex-
+pense) not allocated to the segments, SRE or CMPA.
+Eliminations, Corporate Treasury and other reconciling
+items - comprise consolidation of transactions within the seg-
+ments, certain reconciliation and reclassification items and the
+activities of the Company's Corporate Treasury. It also includes
+interest income and expense, such as, for example, interest not
+allocated to segments or CMPA (referred to as financing interest),
+interest related to Corporate Treasury activities or resulting con-
+solidation and reconciliation effects on interest.
+MEASUREMENT - SEGMENTS
+Accounting policies for Segment information are generally the
+same as those used for the Consolidated Financial Statements.
+Lease transactions, however, are classified as operating leases for
+internal and segment reporting purposes. Intersegment transac-
+tions are based on market prices.
+Profit
+Siemens' Managing Board is responsible for assessing the perfor-
+Imance of the segments (chief operating decision maker). The
+Company's profitability measure of the segments except for SFS
+is earnings before financing interest, certain pension costs,
+income taxes and amortization expenses of intangible assets
+acquired in business combinations as determined by the chief
+operating decision maker (Profit). The major categories of items
+excluded from Profit are presented below.
+Financing interest, excluded from Profit, is any interest income or
+expense other than interest income related to receivables from
+customers, from cash allocated to the segments and interest ex-
+penses on payables to suppliers. Financing interest is excluded
+from Profit because decision-making regarding financing is typi-
+cally made at the corporate level.
+Decisions on essential pension items are made centrally. Accord-
+ingly, Profit primarily includes amounts related to service cost of
+pension plans only, while all other regularly recurring pension
+related costs are included in reconciliations in line item Centrally
+carried pension expense.
+Consolidated Financial Statements 99
+Amortization expenses of intangible assets acquired in business
+combinations are not part of Profit. Furthermore, income taxes
+are excluded from Profit since income tax is subject to legal struc-
+tures, which typically do not correspond to the structure of the
+segments. The effect of certain litigation and compliance issues
+is excluded from Profit, if such items are not indicative of perfor-
+mance. This may also be the case for items that refer to more
+than one reportable segment, SRE and (or) CMPA or have a cor-
+porate or central character. Costs for support functions are pri-
+marily allocated to the segments.
+Profit of the segment SFS:
+Profit of the segment SFS is Income before income taxes. In con-
+trast to performance measurement principles applied to other
+segments, interest income and expenses is an important source
+of revenue and expense of SFS.
+Asset measurement principles:
+Management determined Assets (Net capital employed) as a
+measure to assess capital intensity of the segments except for
+SFS. Its definition corresponds to the Profit measure except for
+amortization expenses of intangible assets acquired in business
+combinations which are not part of Profit, however, the related
+intangible assets are included in the segments' Assets. Segment
+Assets is based on Total assets of the Consolidated Statements of
+Financial Position, primarily excluding intragroup financing re-
+ceivables, tax related assets and assets of discontinued opera-
+tions, since the corresponding positions are excluded from Profit.
+The remaining assets are reduced by non-interest-bearing liabili-
+ties other than tax related liabilities, e.g. trade payables, to derive
+Assets. In contrast, Assets of SFS is Total assets. Assets of Mobility
+include the project-specific intercompany financing of a long-
+term project. Assets of SGRE include real estate, while real estate
+of all other Siemens segments is carried at SRE.
+Orders:
+Orders are determined principally as estimated revenue of ac-
+cepted purchase orders and order value changes and adjust-
+ments, excluding letters of intent.
+Free cash flow definition:
+Free cash flow of the segments, except for SFS, constitutes cash
+flows from operating activities less additions to intangible assets
+and property, plant and equipment. It excludes financing inter-
+est, except for cases where interest on qualifying assets is capi-
+talized or classified as contract costs and it also excludes income
+tax as well as certain other payments and proceeds. Free cash
+flow of SFS includes related financing interest payments and pro-
+ceeds; income tax payments and proceeds of SFS are excluded.
+(2,640)
+5,533
+(3,386)
+4,819
+63,126
+125,717
+62,430
+133,804
+(279)
+330
+476
+223
+510
+137
+9,453
+8,744
+44,984
+36,145
+7,471
+7,493
+1,835
+895
+1,521
+2,191
+639
+653
+26,390
+26,446
+734
+680
+29
+18
+207
+216
+(1,785)
+8,306
+(1,994)
+7,404
+2,649
+932
+522
+501
+NOTE 29 Information about geographies
+Consolidated Financial Statements
+100
+63,126
+62,430
+Statements
+Reconciliation to Consolidated Financial
+(35,419)
+(36,100)
+Eliminations, Corporate Treasury, other items
+42,082
+43,161
+Liability-based adjustments
+4,089
+3,258
+Tax-related assets
+47,072
+45,475
+Intragroup financing receivables
+Asset-based adjustments:
+(1,474)
+(1,346)
+Assets Corporate items and pensions
+4,964
+4,533
+1,812
+3,448
+(in millions of €)
+Europe, C.I.S., Africa, Middle East
+Americas
+Asia, Australia
+19,912
+Sep 30,
+2016
+assets
+Non-current
+11,959
+83,049
+13,088
+111
+19,886
+25,574
+2017
+22,360
+45,325
+Assets Centrally managed portfolio activities
+Assets Siemens Real Estate
+2016
+22,607
+47,355
+2017
+2016
+Fiscal year
+43,367
+2017
+Revenue by location
+Revenue by location
+of customers
+therein U.S.
+thereof foreign countries
+thereof Germany
+Siemens
+of companies
+Fiscal year
+Equity interest
+Sep 30,
+2016
+(in millions of €)
+Profit
+Assets
+Free cash flow
+Additions to intangible assets
+and property, plant & equipment
+Amortization,
+depreciation & impairments
+Fiscal year
+Fiscal year
+Fiscal year
+Fiscal year
+2017
+2016
+Sep 30, 2017
+Sep 30, 2016
+2017
+2016
+2017
+2016
+2017
+2016
+1,591
+1,872
+9,976
+9,066
+392
+1,149
+222
+206
+Saint-Priest/France
+Amortization, depreciation and impairments:
+Amortization, depreciation and impairments includes deprecia-
+tion and impairments of property, plant and equipment as well
+as amortization and impairments of intangible assets each net of
+reversals of impairment.
+MEASUREMENT – CENTRALLY MANAGED
+-
+Assets
+In fiscal 2017 and 2016, Profit of SFS includes interest income of
+€1,241 million and €1,161 million, respectively and interest ex-
+penses of €442 million and €377 million, respectively. In fiscal
+2017, CMPA includes the following effects from asset retirement
+obligations for environmental clean-up costs: €543 million gains
+due to changes in interest rates, €312 million gains due to re-
+duced assumed inflation rates and a loss of €179 million from
+interest rate swaps not designated in a hedge relationship in con-
+nection with those asset retirement obligations.
+(1,994)
+(1,785)
+(349)
+(323)
+(674)
+(1,016)
+(439)
+(407)
+Centrally carried pension expense
+Amortization of intangible assets
+acquired in business combinations
+Eliminations, Corporate Treasury,
+and other reconciling items
+Reconciliation to
+Consolidated Financial Statements
+(449)
+(714)
+2017
+Corporate items
+187
+(215)
+488
+Centrally managed portfolio activities
+Siemens Real Estate
+2016
+2017
+(in millions of €)
+Fiscal year
+Profit
+CONSOLIDATED FINANCIAL STATEMENTS
+RECONCILIATION TO
+Centrally managed portfolio activities follow the measurement
+principles of the segments except for SFS. SRE applies the mea-
+surement principles of SFS.
+PORTFOLIO ACTIVITIES AND SRE
+132
+September 30, 2017
+1009
+September 30, 2017
+1007
+Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
+10010
+SIMOS Real Estate GmbH, Munich
+1009
+Siemens Insulation Center GmbH & Co. KG, Zwönitz
+10010
+SIMAR West Grundstücks-GmbH, Grünwald
+100
+Siemens Industry Software GmbH, Cologne
+10010
+10010
+10010
+10010
+100⁹
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+100
+Siemens Industriegetriebe GmbH, Penig
+1007
+Siemens Immobilien Management GmbH, Grünwald
+1009
+Siemens Immobilien GmbH & Co. KG, Grünwald
+1009
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+10010
+Siemens Liquidity One, Munich
+Siemens Healthcare GmbH, Erlangen
+100
+10010
+10010
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
+Munich
+10010
+gesellschaft mbH, Munich
+Siemens Private Finance Versicherungsvermittlungs-
+943
+VR-LEASING IKANA GmbH & Co. Immobilien KG, Eschborn
+10010
+100
+517
+VIB Verkehrsinformationsagentur Bayern GmbH, Munich
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+10010
+100
+100
+Verwaltung SeaRenergy Offshore Projects GmbH i.L.,
+Hamburg
+1007
+Siemens Middle East Management GmbH, Grünwald
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+Siemens Postal, Parcel & Airport Logistics GmbH, Constance
+Siemens Power Control GmbH, Langen
+1007
+Siemens Middle East Holding GmbH & Co. KG, Grünwald
+10010
+Trench Germany GmbH, Bamberg
+100
+100
+TASS International GmbH, Wiesbaden
+Siemens Medical Solutions Health Services GmbH,
+Grünwald
+SYKATEC Systeme, Komponenten, Anwendungstechnologie
+GmbH, Erlangen
+Siemens Project Ventures GmbH, Erlangen
+100
+100
+100
+1009
+100
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Technopark Nürnberg Verwaltungs GmbH,
+Grünwald
+10010
+Siemens Financial Services GmbH, Munich
+10010
+Siemens Finance & Leasing GmbH, Munich
+1007
+100
+1009
+10010
+Siemens Technology Accelerator GmbH, Munich
+Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
+Siemens Technopark Mülheim Verwaltungs GmbH,
+Grünwald
+Siemens Convergence Creators Management GmbH,
+Hamburg
+1009
+Siemens Convergence Creators GmbH & Co. KG, Hamburg
+10010
+1007
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+Siemens Compressor Systems GmbH, Leipzig
+Siemens Gamesa Renewable Energy d.o.o., Zagreb/Croatia
+Siemens Healthcare d.o.o., Zagreb/Croatia
+100
+100
+100
+Mentor Graphics (Netherlands Antilles) N.V.,
+Siemens Konzernbeteiligungen GmbH, Vienna/Austria
+Siemens Liegenschaftsverwaltung GmbH, Vienna/Austria
+Siemens Metals Technologies Vermögensverwaltungs
+GmbH, Vienna/Austria
+Siemens Fonds Invest GmbH, Munich
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+10010
+10010
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+100
+Siemens-Fonds S-8, Munich
+100
+Siemens Healthcare Diagnostics Holding GmbH, Eschborn
+100
+Siemens-Fonds S-7, Munich
+100
+Siemens Healthcare Diagnostics GmbH, Eschborn
+100
+Siemens-Fonds Principals, Munich
+1007
+100
+Siemens-Fonds Pension Captive, Munich
+Siemens Global Innovation Partners Management GmbH,
+Munich
+100
+1007
+Siemens Wind Power Management GmbH, Hamburg
+Siemens-Fonds C-1, Munich
+1007
+Siemens Fuel Gasification Technology Verwaltungs GmbH,
+Freiberg
+1009
+10010
+Siemens Turbomachinery Equipment GmbH, Frankenthal
+Siemens Wind Power GmbH & Co. KG, Hamburg
+1009
+Siemens Fuel Gasification Technology GmbH & Co. KG,
+Freiberg
+Siemens Treasury GmbH, Munich
+100
+10010
+100
+1007
+Antwerp/Belgium
+(519 companies)
+Dresser-Rand Machinery Repair Belgie N.V.,
+(C.I.S.), Africa, Middle East (without Germany)
+Europe, Commonwealth of Independent States
+100
+Minsk/Belarus
+Limited Liability Company Siemens Technologies,
+51
+Siemens W.L.L., Manama/Bahrain
+in %
+100
+KDAG Beteiligungen GmbH, Vienna/Austria
+Omnetric GmbH, Vienna/Austria
+100
+Siemens d.o.o. Sarajevo, Sarajevo/Bosnia and Herzegovina
+100
+100
+Siemens Medicina d.o.o., Sarajevo/Bosnia and Herzegovina
+100
+Priamos Grundstücksgesellschaft m.b.H., Vienna/Austria
+Siemens Aktiengesellschaft Österreich, Vienna/Austria
+Siemens Convergence Creators GmbH, Eisenstadt/Austria
+Siemens Convergence Creators GmbH, Vienna/Austria
+100
+Gamesa Wind Bulgaria, EOOD, Sofia/Bulgaria
+100
+100
+ESTEL Rail Automation SPA, Algiers/Algeria
+Siemens EOOD, Sofia/Bulgaria
+51
+1007
+Siemens Wind Power BVBA, Beersel/Belgium
+69
+100
+Siemens S.A./N.V., Beersel/Belgium
+ITH icoserve technology for healthcare GmbH,
+Innsbruck/Austria
+100
+Siemens Industry Software NV, Leuven/Belgium
+100
+Hochquellstrom-Vertriebs GmbH, Vienna/Austria
+100
+Siemens Healthcare SA/NV, Beersel/Belgium
+100
+ETM professional control GmbH, Eisenstadt/Austria
+100
+Siemens Gamesa Renewable Energy Belgium, SPRL,
+Brussels/Belgium
+100
+Mentor Graphics Development Services Closed Joint Stock
+Company, Yerevan/Armenia
+77
+Samtech SA, Angleur/Belgium
+51
+Siemens S.A., Luanda/Angola
+100
+Mentor Graphics (Belgium) BVBA, Brussels/Belgium
+100
+Siemens Spa, Algiers/Algeria
+Flender S.P.R.L., Beersel/Belgium
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+100
+100
+100
+52
+Steiermärkische Medizinarchiv GesmbH, Graz/Austria
+100
+in %
+September 30, 2017
+Equity interest
+Equity interest
+in %
+Windfarm 33 GmbH, Oldenburg
+Windfarm 35 GmbH, Oldenburg
+September 30, 2017
+105
+Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+Trench Austria GmbH, Leonding/Austria
+100
+100
+100
+Siemens Healthcare EOOD, Sofia/Bulgaria
+Siemens SARL, Abidjan/Côte d'Ivoire
+100
+100
+Siemens Convergence Creators Holding GmbH,
+Vienna/Austria
+Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
+51
+100
+Siemens Gebäudemanagement & -Services G.m.b.H.,
+Vienna/Austria
+Siemens Convergence Creators d.o.o., Zagreb/Croatia
+Siemens d.d., Zagreb/Croatia
+100
+100
+100
+Siemens Healthcare Diagnostics GmbH, Vienna/Austria
+Siemens Industry Software GmbH, Linz/Austria
+100
+Windfarm Ringstedt II GmbH, Oldenburg
+100
+Siemens Gamesa Renevable Energy Limited Liability
+Company, Baku/Azerbaijan
+100
+Windfarm Groß Haßlow GmbH, Oldenburg
+100
+Windfarm Ganderkesee-Lemwerder GmbH, Oldenburg
+100
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
+GmbH, Vienna/Austria
+100
+Windfarm 41 GmbH, Oldenburg
+Windfarm 40 GmbH, Oldenburg
+Willemstad/Curaçao
+SIMAR Nordost Grundstücks-GmbH, Grünwald
+SIMAR Nordwest Grundstücks-GmbH, Grünwald
+SIMAR Ost Grundstücks-GmbH, Grünwald
+SIMAR Süd Grundstücks-GmbH, Grünwald
+100
+100
+Siemens Gamesa Renewable Energy Oy, Helsinki/Finland
+Societe d'Exploitation du Parc Eolien de la Brie des Etangs
+SARL, Saint-Priest/France
+100
+Mentor Graphics Development (Finland) OY, Turku/Finland
+100
+Mentor Graphics (Finland) OY, Espoo/Finland
+100
+Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de Guerfand SARL,
+90
+100
+Saint-Priest/France
+100
+Siemens Technologies S.A.E., Cairo/Egypt
+Siemens Wind Power LLC, Cairo/Egypt
+Siemens Limited for Trading, Cairo/Egypt
+Societe d'Exploitation du Parc Eolien de Germainville SAS,
+100
+100
+Prudemanche SAS, Saint-Priest/France
+100
+NEM Energy Egypt LLC, Alexandria/Egypt
+Siemens Healthcare S.A.E., Cairo/Egypt
+Societe d'Exploitation du Parc Eolien de Dampierre
+100
+Company - Private Free Zone), Cairo/Egypt
+100
+Siemens Healthcare Oy, Espoo/Finland
+Saint-Priest/France
+100
+100
+100
+100
+1007
+1009
+in %
+Equity interest
+Siemens Real Estate GmbH & Co. KG, Grünwald
+Siemens Real Estate Management GmbH, Grünwald
+Siemens Spezial-Investmentaktiengesellschaft mit TGV,
+Munich
+1007
+Siemens Campus Erlangen Objektmanagement GmbH,
+Grünwald
+1009
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
+Grünwald
+Societe d'Exploitation du Parc Eolien de Landresse SARL,
+100
+100
+Societe d'Exploitation du Parc Eolien de la Tete des Boucs
+SARL, Saint-Priest/France
+100
+100
+100
+Saint-Priest/France
+100
+Societe d'Exploitation du Parc Eolien de la Loye SARL,
+100
+Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
+Gamesa Eolica France, S.A.R.L., Saint-Priest/France
+Dresser-Rand SAS, Le Havre/France
+D-R Holdings (France) SAS, Le Havre/France
+Adwen France SAS, Puteaux/France
+Siemens Osakeyhtiö, Espoo/Finland
+Societe d'Exploitation du Parc Eolien de la Côte du Cerisat
+SAS, Saint-Priest/France
+Mentor Graphics Egypt Company (A Limited Liability
+100
+100
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+100
+1 Control due to a majority of voting rights.
+100
+Siemens Electric Machines s.r.o., Drasov/Czech Republic
+Siemens AG is a shareholder with unlimited liability of this company.
+100
+100
+Prague/Czech Republic
+75
+Siemens Gamesa Renewable Energy Limited,
+Societe d'Exploitation du Parc Eolien de Coupetz SARL,
+Nicosia/Cyprus
+100
+100
+Siemens Convergence Creators, s.r.o.,
+100
+Polarion Software s.r.o., Prague/Czech Republic
+100
+Siemens Personaldienstleistungen GmbH, Vienna/Austria
+Siemens Urban Rail Technologies Holding GmbH,
+Vienna/Austria
+Siemens Wind Power GmbH, Vienna/Austria
+11
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+106 Consolidated Financial Statements
+Siemens Industry Software A/S, Ballerup/Denmark
+100
+Saint-Priest/France
+100
+Siemens Healthcare A/S, Ballerup/Denmark
+Societe d'Exploitation du Parc Eolien de Clamanges SARL,
+100
+Siemens Gamesa Renewable Energy A/S, Brande/Denmark
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+100
+Saint-Priest/France
+100
+Siemens A/S, Ballerup/Denmark
+Societe d'Exploitation du Parc Eolien de Chepniers SARL,
+OEZ s.r.o., Letohrad/Czech Republic
+100
+Siemens Healthcare, s.r.o., Prague/Czech Republic
+100
+100
+September 30, 2017
+in %
+September 30, 2017
+in %
+Equity interest
+Siemens Industry Software, s.r.o., Prague/Czech Republic
+Siemens, s.r.o., Prague/Czech Republic
+100
+Societe d'Exploitation du Parc Eolien de Champsevraine,
+SARL, Saint-Priest/France
+Equity interest
+100
+Sistemas Energéticos Monte Genaro, S.L.U.,
+28
+78
+Villarcayo de Merindad de Castilla la Vieja/Spain
+100
+systransis AG, Risch/Switzerland
+Sistemas Energéticos Mansilla, S.L.,
+100
+Siemens Schweiz AG, Zurich/Switzerland
+Sistemas Energéticos Ladera Negra, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+Siemens Healthcare Diagnostics GmbH, Zurich/Switzerland
+100
+100
+Siemens Industry Software AG, Zurich/Switzerland
+100
+100
+Sistemas Energéticos Loma del Reposo, S.L. Unipersonal,
+Zamudio/Spain
+100
+Zurich/Switzerland
+100
+Sistemas Energéticos Loma del Viento, S.A. Unipersonal,
+Sevilla/Spain
+Siemens Power Holding AG, Zug/Switzerland
+100
+Siemens Postal, Parcel & Airport Logistics AG,
+Siemens Healthcare AG, Zurich/Switzerland
+Sistemas Energéticos Sierra de Valdefuentes, S.L.U.,
+Siemens Tanzania Ltd., Dar es Salaam/Tanzania,
+United Republic of
+100
+90
+100
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul/Turkey
+Siemens Wind Power Rüzgar Enerjisi Anonim Sirketi,
+Kartal/Istanbul/Turkey
+100
+Sistemas Energéticos Sierra del Carazo, S.L.U.,
+Zamudio/Spain
+100
+Zamudio/Spain
+100
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
+100
+Company, Istanbul/Turkey
+100
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+S.A. Unipersonal, Sevilla/Spain
+Sistemas Energéticos Sierra de Las Estancias,
+Consolidated Financial Statements
+100
+Siemens Finansal Kiralama A.S., Istanbul/Turkey
+100
+100
+Siemens S.A., Tunis/Tunisia
+Sistemas Energéticos Serra de Lourenza, S.A. Unipersonal,
+Zamudio/Spain
+100
+Mentor Graphics Tunisia SARL, Tunis/Tunisia
+100
+Zamudio/Spain
+100
+Siemens Gamesa Turkey Renewable Energy Limited
+Villanueva de Gállego/Spain
+100
+11
+Sistemas Energéticos La Plana, S.A.,
+100
+Sistemas Energéticos La Cámara, S.L., Sevilla/Spain
+100
+Komykrieng AG, Zurich/Switzerland
+100
+Zamudio/Spain
+100
+Huba Control AG, Würenlos/Switzerland
+Sistemas Energéticos Jaralón, S.A. Unipersonal,
+100
+Dresser Rand Sales Company GmbH, Zurich/Switzerland
+100
+Las Palmas de Gran Canaria/Spain
+100
+Siemens Wind Power AB, Upplands Väsby/Sweden
+Sistemas Energeticos Islas Canarias, S.L.U.,
+1 Control due to a majority of voting rights.
+Siemens Industry Software AB, Kista/Sweden
+100
+San Cristóbal de La Laguna/Spain
+100
+Siemens Industrial Turbomachinery AB, Finspång/Sweden
+Sistemas Energéticos Fuerteventura, S.A. Unipersonal,
+100
+Siemens Healthcare AB, Stockholm/Sweden
+100
+Mentor Graphics (Schweiz) AG, Kilchberg/Switzerland
+Polarion AG, Zurich/Switzerland
+Siemens AG is a shareholder with unlimited liability of this company.
+100
+Omnetric B.V., The Hague/Netherlands
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+100
+Siemens D-R Holding B.V., The Hague/Netherlands
+100
+The Hague/Netherlands
+Siemens Gamesa Renewable Energy Limited,
+Nairobi/Kenya
+Siemens Diagnostics Holding II B.V.,
+100
+Siemens TOO, Almaty/Kazakhstan
+100
+100
+100
+100
+Pollux III B.V., Amsterdam/Netherlands
+100
+Almaty/Kazakhstan
+100
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+Equity interest
+4 No control due to contractual arrangements or legal circumstances.
+Siemens Industry Software B.V.,
+100
+Smardzewo Windfarm Sp. z o.o., Slawno/Poland
+100
+The Hague/Netherlands
+100
+Siemens Wind Power Sp. z o.o., Warsaw/Poland
+Siemens Healthineers Holding III B.V.,
+100
+Siemens Sp. z o.o., Warsaw/Poland
+100
+The Hague/Netherlands
+100
+Siemens Industry Software Sp. z o.o., Warsaw/Poland
+Siemens Healthcare Nederland B.V.,
+100
+Siemens Healthcare Sp. z o.o., Warsaw/Poland
+65
+65
+The Hague/Netherlands
+100
+Siemens Finance Sp. z o.o., Warsaw/Poland
+Siemens Gas Turbine Technologies Holding B.V.,
+100
+Osiek Sp. z o.o., Warsaw/Poland
+100
+The Hague/Netherlands
+100
+Mentor Graphics Polska Sp. z o.o., Poznan/Poland
+Ujazd Sp. z o.o., Warsaw/Poland
+Siemens Financieringsmaatschappij N.V.,
+100
+100
+Zamudio/Spain
+100
+Siemens S.A., Amadora/Portugal
+100
+Lisbon/Portugal
+888888
+100
+Helmond/Netherlands
+TASS International Mobility Center B.V.,
+100
+TASS International Homologations B.V.,
+Helmond/Netherlands
+100
+TASS International B.V., Rijswijk/Netherlands
+100
+Siemens Wind Power B.V., The Hague/Netherlands
+100
+Siemens Nederland N.V., The Hague/Netherlands
+100
+The Hague/Netherlands
+Siemens Postal, Parcel & Airport Logistics, Unipessoal Lda,
+Siemens Medical Solutions Diagnostics Holding | B.V.,
+100
+Siemens Healthcare, Lda., Amadora/Portugal
+100
+The Hague/Netherlands
+100
+Venda do Pinheiro/Portugal
+Siemens International Holding B.V.,
+Siemens Gamesa Renewable Energy, S.A.,
+'s-Hertogenbosch/Netherlands
+100
+100
+Gamesa Energia Polska Sp. z o.o., Warsaw/Poland
+Lichnowy Windfarm Sp. z o.o., Warsaw/Poland
+Frimley, Surrey/United Kingdom
+100
+Kiev/Ukraine
+Materials Solutions Limited,
+100% foreign owned subsidiary "Siemens Ukraine",
+100
+Materials Solutions Holdings Limited,
+Frimley, Surrey/United Kingdom
+100
+Ashgabat/Turkmenistan
+Dresser-Rand Turkmen Company,
+in %
+Equity interest
+September 30, 2017
+in %
+Equity interest
+September 30, 2017
+114
+113
+Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+Exemption pursuant to Section 264 (3) German Commercial Code.
+10
+9 Exemption pursuant to Section 264b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+100
+Gamesa Ukraine, LLC, Kiev/Ukraine
+100
+Mentor Graphics (UK) Limited,
+100
+Siemens Finance B.V., The Hague/Netherlands
+100
+Siemens D-R Holding II B.V., The Hague/Netherlands
+in %
+September 30, 2017
+in %
+September 30, 2017
+Equity interest
+109
+Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
+Siemens Healthcare L.L.C., Dubai/United Arab Emirates
+Siemens LLC, Abu Dhabi/United Arab Emirates
+100
+Frimley, Surrey/United Kingdom
+492
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+SD (Middle East) LLC, Dubai/United Arab Emirates
+100
+Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
+100
+MRX Technologies Limited, Frimley, Surrey/United Kingdom
+492
+100
+Frimley, Surrey/United Kingdom
+Dresser-Rand Field Operations Middle East LLC,
+Abu Dhabi/United Arab Emirates
+MRX Rail Services UK Limited,
+100
+Kiev/Ukraine
+100
+Newbury, Berkshire/United Kingdom
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
+Preactor International Limited,
+100
+100
+Sistemas Energéticos Fonseca, S.A. Unipersonal,
+International Wind Farm Development V, S.L.,
+Zamudio/Spain
+100
+Siemens Industry Software S.L., Barcelona/Spain
+SIEMENS POSTAL, PARCEL & AIRPORT LOGISTICS,
+S.L. Sociedad Unipersonal, Madrid/Spain
+Siemens Rail Automation S.A.U., Madrid/Spain
+Siemens Renting S.A., Madrid/Spain
+Siemens S.A., Madrid/Spain
+100
+100
+100
+100
+100
+International Wind Farm Development VI, S.L.,
+Zamudio/Spain
+Siemens Wind Power, S.L., Tres Cantos/Spain
+100
+100
+International Wind Farm Development VII, S.L.,
+Zamudio/Spain
+Sistema Eléctrico de Conexión Montes Orientales, S.L.,
+Granada/Spain
+83
+100
+International Wind Farm Developments II, S.L.,
+Sistemas Energéticos Alcohujate, S.A. Unipersonal,
+Toledo/Spain
+100
+Zamudio/Spain
+100
+100
+International Wind Farm Developments IX, S.L.,
+International Wind Farm Development IV, S.L.,
+Zamudio/Spain
+Guascor Wind, S. L., Vitoria-Gasteiz/Spain
+Guascor Isolux AIE, Vitoria-Gasteiz/Spain
+607,12
+Siemens Gamesa Renewable Energy S.A., Zamudio/Spain
+59
+Guascor Power Investigacion y Desarollo, S.A.,
+Vitoria-Gasteiz/Spain
+100
+Siemens Gamesa Renewable Energy Wind Farms, S.A.,
+Zamudio/Spain
+100
+Guascor Power, S.A., Zumaia/Spain
+100
+Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Gamesa Renewable Finance, S.A., Zamudio/Spain
+SIEMENS HEALTHCARE, S. L. U., Getafe/Spain
+100
+100
+Guascor Solar Corporation, S.A., Vitoria-Gasteiz/Spain
+Guascor Solar S.A., Vitoria-Gasteiz/Spain
+100
+Siemens Holding S.L., Madrid/Spain
+100
+100
+1007
+Sistemas Energéticos Alto da Croa, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+Zamudio/Spain
+100
+Siemens Gamesa Renewable Energy Eolica, S.L.,
+Sistemas Energéticos Cabezo Negro, S.A. Unipersonal,
+Sarriguren/Spain
+100
+Zaragoza/Spain
+100
+Siemens Gamesa Renewable Energy Europa S.L.,
+Sistemas Energéticos Campoliva, S.A. Unipersonal,
+Zamudio/Spain
+100
+Zaragoza/Spain
+100
+Siemens Gamesa Renewable Energy
+Sistemas Energéticos Carril, S.L. Unipersonal,
+Innovation & Technology, S.L., Sarriguren/Spain
+100
+Zamudio/Spain
+100
+Siemens Gamesa Renewable Energy
+International Wind Services, S.A., Zamudio/Spain
+Sistemas Energéticos Cabanelas, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+Sarriguren/Spain
+Siemens Gamesa Renewable Energy Apac, S.L.,
+100
+Mentor Graphics (Espana) SL, Madrid/Spain
+100
+Sistemas Energéticos Argañoso, S. L. Unipersonal,
+Zamudio/Spain
+100
+Microenergía 21, S.A., Zumaia/Spain
+1007
+Parque Eolico Dos Picos, S. L. U., Zamudio/Spain
+100
+Sistemas Energéticos Arinaga, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+100
+100
+100
+Sistemas Energéticos Balazote, S.A. Unipersonal,
+Zamudio/Spain
+100
+Siemens Gamesa Renewable Energy 9REN, S.L.,
+Sistemas Energéticos Barandon, S.A., Valladolid/Spain
+100
+Madrid/Spain
+100
+Sistemas Energéticos Boyal, S.L., Zaragoza/Spain
+60
+Samtech Iberica Engineering & Software Services S.L.,
+Barcelona/Spain
+Siemens Gamesa Renewable Energy Latam, S.L.,
+Sarriguren/Spain
+100
+Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
+Midrand/South Africa
+100
+Convertidor Solar Trescientos Veinte, S.L.U., Madrid/Spain
+Convertidor Solar Trescientos, S. L. U., Madrid/Spain
+Convertidor Solar Uno, S. L. U., Madrid/Spain
+100
+100
+100
+Dresser-Rand Southern Africa (Pty) Ltd.,
+Midrand/South Africa
+100
+Gamesa Wind South Africa (Proprietary) Limited,
+Cape Town/South Africa
+100
+Linacre Investments (Pty) Ltd., Kenilworth/South Africa
+03
+Desimpacto de Purines Altorricón S.A., Altorricón/Spain
+Desimpacto de Purines Turégano, S.A., Turégano/Spain
+Dresser-Rand Holdings Spain S.L.U., Vitoria-Gasteiz/Spain
+Empresa de Reciclajes de Residuos Ambientales, S.A.,
+Vitoria-Gasteiz/Spain
+70
+100
+100
+677
+Siemens Employee Share Ownership Trust,
+Johannesburg/South Africa
+Dresser-Rand Service Centre (Pty) Ltd.,
+1007
+Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
+100
+Bratislava/Slovakia
+100
+Convertidor Solar Trescientos Sesenta y Nueve, S.L.U.,
+San Cristóbal de La Laguna/Spain
+100
+Siemens Healthcare s.r.o., Bratislava/Slovakia
+100
+Siemens s.r.o., Bratislava/Slovakia
+100
+Convertidor Solar Trescientos Sesenta y Ocho, S.L.U.,
+San Cristóbal de La Laguna/Spain
+100
+03
+SIPRIN s.r.o., Bratislava/Slovakia
+Siemens d.o.o., Ljubljana/Slovenia
+100
+Convertidor Solar Trescientos Sesenta y Siete, S.L.U.,
+San Cristóbal de La Laguna/Spain
+100
+Siemens Healthcare d.o.o., Ljubljana/Slovenia
+100
+Convertidor Solar Trescientos Setenta, S.L.U.,
+Crabtree South Africa Pty. Limited, Midrand/South Africa
+1007
+San Cristóbal de La Laguna/Spain
+100
+100
+Estructuras Metalicas Singulares, S.A. Unipersonal,
+Tajonar/Spain
+Siemens Healthcare Proprietary Limited, Halfway
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+111
+Equity interest
+Equity interest
+September 30, 2017
+Guascor Borja AIE, Zumaia/Spain
+in %
+September 30, 2017
+in %
+707,12
+Guascor Explotaciones Energéticas, S.A.,
+Vitoria-Gasteiz/Spain
+Siemens Gamesa Renewable Energy Invest, S.A.,
+Zamudio/Spain
+100
+100
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+Fábrica Electrotécnica Josa, S.A., Barcelona/Spain
+100
+House/South Africa
+100
+Gamesa Electric, S.A. Unipersonal, Zamudio/Spain
+100
+Siemens Proprietary Limited, Midrand/South Africa
+70
+SIEMENS WIND POWER (PTY) LTD, Midrand/South Africa
+100
+100
+Gamesa Energy Transmission, S.A. Unipersonal,
+Zamudio/Spain
+Siemens Wind Power Employee Share Ownership Trust,
+Midrand/South Africa
+03
+Gerr Grupo Energético XXI, S.A. Unipersonal,
+Barcelona/Spain
+Adwen Offshore, S.L., Zamudio/Spain
+100
+Grupo Guascor, S.L., Vitoria-Gasteiz/Spain
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+100
+Sistemas Energéticos Cuerda Gitana, S.A. Unipersonal,
+Sevilla/Spain
+100
+1 Control due to a majority of voting rights.
+100
+000 Legion II, Moscow/Russian Federation
+100
+Siemens AS, Oslo/Norway
+100
+SIMEA SIBIU S.R.L., Sibiu/Romania
+100
+Dresser-Rand AS, Kongsberg/Norway
+100
+Siemens S.R.L., Bucharest/Romania
+100
+Siemens Ltd., Lagos/Nigeria
+100
+Siemens Industry Software S.R.L., Brasov/Romania
+Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
+100
+100
+Siemens Convergence Creators S.R.L., Brasov/Romania
+Siemens Healthcare S.R.L., Bucharest/Romania
+100
+TASS International Software B.V., Rijswijk/Netherlands
+100
+Siemens Healthcare AS, Oslo/Norway
+100
+000 Siemens, Moscow/Russian Federation
+100
+000 Siemens Transformers, Voronezh/Russian Federation
+Siemens Finance LLC, Vladivostok/Russian Federation
+100
+75
+100
+Moscow/Russian Federation
+100
+Siemens Healthcare (Private) Limited, Lahore/Pakistan
+Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
+AXIT Sp. z o.o., Wroclaw/Poland
+000 Siemens Industry Software,
+100
+100
+Rijswijk/Netherlands
+Leningrad Oblast/Russian Federation
+000 Siemens Gas Turbine Technologies,
+1007
+Gamesa Pakistan (Private) Limited, Karachi/Pakistan
+100
+St. Petersburg/Russian Federation
+51
+Siemens L.L.C., Muscat/Oman
+000 Siemens Elektroprivod,
+100
+Siemens Wind Power AS, Oslo/Norway
+Mentor Graphics Pakistan Development (Private) Limited,
+Lahore/Pakistan
+100
+100
+TASS International Software and Services B.V.,
+100
+Fanbyn2 Vindenergi AB, Solna/Sweden
+100
+Sistemas Energéticos Edreira, S.A. Unipersonal,
+Gamesa Wind Sweden AB, Stockholm/Sweden
+100
+Santiago de Compostela/Spain
+100
+Lindom Vindenergi AB, Solna/Sweden
+100
+Sistemas Energéticos El Valle, S.L., Sarriguren/Spain
+100
+Lingbo SPW AB, Solna/Sweden
+100
+Sistemas Energéticos Finca San Juan, S.L.U.,
+Mentor Graphics (Scandinavia) AB, Kista/Sweden
+100
+Las Palmas de Gran Canaria/Spain
+100
+Siemens AB, Upplands Väsby/Sweden
+100
+Santiago de Compostela/Spain
+100
+Telecomunicación, Electrónica y Conmutación S.A.,
+Madrid/Spain
+Sistemas Energéticos del Umia, S.A. Unipersonal,
+SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
+100
+Helmond/Netherlands
+100
+100
+GER Independenta, S.R.L., Bucharest/Romania
+Mentor Graphics Romania SRL, Bucharest/Romania
+TASS International Safety Center B.V.,
+100
+GER Baraganu, S.R.L, Bucharest/Romania
+100
+Bucharest/Romania
+GER Baneasa, S.R.L., Bucharest/Romania
+Gamesa Wind Romania, S.R.L., Bucharest/Romania
+100
+Gamesa Energy Romania, S.R.L., Bucharest/Romania
+402
+Siemens W.L.L., Doha/Qatar
+100
+Sistemas Energéticos Tomillo, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+100
+Sistemas Energéticos del Sur S.A., Sevilla/Spain
+70
+100
+Siemens Financial Services AB, Stockholm/Sweden
+100
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+Siemens Healthcare Limited Liability Partnership,
+Siemens Convergence Creators, s. r. o.,
+100
+Convertidor Solar Trescientos Diecisiete, S.L.U.,
+Madrid/Spain
+60
+60
+SAT Systémy automatizacnej techniky spol. s.r.o.,
+Bratislava/Slovakia
+100
+Madrid/Spain
+100
+OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
+Convertidor Solar Trescientos Dieciocho, S.L.U.,
+100
+Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
+100
+Madrid/Spain
+100
+Siemens d.o.o. Beograd, Belgrade/Serbia
+Convertidor Solar Trescientos Diecinueve, S.L.U.,
+51
+VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
+Zamudio/Spain
+Sistemas Energéticos de Tarifa, S.L. Unipersonal,
+100
+Sistemas Energéticos Tablero Tabordo, S.L.,
+Las Palmas de Gran Canaria/Spain
+6 Significant influence due to contractual arrangements or legal circumstances.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+100
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+112 Consolidated Financial Statements
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+Equity interest
+in %
+Sistemas Energéticos Cuntis, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+11
+1 Control due to a majority of voting rights.
+Convertidor Solar G.F. Uno S. L. U., Madrid/Spain
+Siemens Ltd., Riyadh/Saudi Arabia
+in %
+Equity interest
+Aljaraque Solar, S.L., Madrid/Spain
+Siemens Healthcare Limited Liability Company,
+Moscow/Russian Federation
+September 30, 2017
+in %
+September 30, 2017
+Equity interest
+110 Consolidated Financial Statements
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+100
+100
+Convertidor Solar Ciento Veintisiete, S.L.U.,
+Technologies of Rail Transport Limited Liability Company,
+Moscow/Russian Federation
+100
+Convertidor Solar G.F. Tres, S. L.U, Madrid/Spain
+51
+Siemens Healthcare Limited, Riyadh/Saudi Arabia
+100
+Convertidor Solar G.F. Dos, S.L.U., Madrid/Spain
+51
+Riyadh/Saudi Arabia
+100
+Madrid/Spain
+51
+ISCOSA Industries and Maintenance Ltd.,
+501
+Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
+100
+Madrid/Spain
+51
+Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
+Convertidor Solar Doscientos Noventa y Nueve, S.L.U.,
+1007
+100
+Madrid/Spain
+Convertidor Solar Doscientos Noventa y Siete, S.L.U.,
+NEM Energy B.V., Zoeterwoude/Netherlands
+Siemens Fossil Services, Inc., Wilmington, DE/United States
+Trench Italia S.r.I., Savona/Italy
+100
+Siemens Gamesa Renewable Pty Ltd, Bayswater/Australia
+Siemens Healthcare Pty. Ltd., Melbourne/Australia
+Siemens Ltd., Bayswater/Australia
+100
+Siemens Factory Automation Engineering Ltd.,
+Beijing/China
+100
+100
+Siemens Finance and Leasing Ltd., Beijing/China
+Siemens Financial Services Ltd., Beijing/China
+100
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+MRX Rail Services Pty Ltd, Bayswater/Australia
+85
+100
+100
+Siemens Business Information Consulting Co., Ltd,
+Beijing/China
+100
+Bayswater/Australia
+100
+Siemens Circuit Protection Systems Ltd.,
+Exemplar Health (SCUH) Holdings 4 Pty Limited,
+Shanghai, Shanghai/China
+15
+75
+Bayswater/Australia
+Siemens AG is a shareholder with unlimited liability of this company.
+100
+100
+Siemens Eco-City Innovation Technologies (Tianjin) Co.,
+Ltd., Tianjin/China
+60
+Exemplar Health (SCUH) Trust 4, Bayswater/Australia
+100
+Gamesa Australia Pty. Ltd., Melbourne/Australia
+100
+J.R.B. Engineering Pty Ltd, Bayswater/Australia
+100
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
+Siemens Electrical Drives Ltd., Tianjin/China
+Exemplar Health (SCUH) Trust 3, Bayswater/Australia
+Exemplar Health (SCUH) Holdings 3 Pty Limited,
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+6 Significant influence due to contractual arrangements or legal circumstances.
+Siemens Pension Funding (General) Limited,
+Cinco Rios Geracao de Energia Ltda., Manaus/Brazil
+Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
+Dresser-Rand Participações Ltda., Belém/Brazil
+1007
+100
+1007
+Frimley, Surrey/United Kingdom
+100
+Guascor do Brasil Ltda., São Paulo/Brazil
+100
+Siemens Pension Funding Limited,
+Frimley, Surrey/United Kingdom
+100
+Guascor Empreendimentos Energéticos, Ltda., Belém/Brazil
+Guascor Serviços Ltda., Taboão da Serra/Brazil
+100
+100
+Siemens plc, Frimley, Surrey/United Kingdom
+100
+Guascor Solar do Brasil Ltda., Manaus/Brazil
+907
+Siemens Postal, Parcel & Airport Logistics Limited,
+Guascor Wind do Brasil, Ltda., São Paulo/Brazil
+100
+Frimley, Surrey/United Kingdom
+Siemens Industry Software Simulation and Test Limited,
+100
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+Equity interest
+September 30, 2017
+118 Consolidated Financial Statements
+in %
+Equity interest
+in %
+Siemens Industry Software Computational Dynamics
+Limited, Frimley, Surrey/United Kingdom
+Siemens Soluciones Tecnologicas S.A.,
+100
+Siemens Industry Software Limited,
+Frimley, Surrey/United Kingdom
+100
+Santa Cruz de la Sierra/Bolivia, Plurinational State of
+Chemtech Servicos de Engenharia e Software Ltda.,
+Rio de Janeiro/Brazil
+100
+September 30, 2017
+1007
+1007
+70
+Siemens Healthcare Ltd., Dhaka/Bangladesh
+100
+Gamesa Uruguay S.R.L., Montevideo/Uruguay
+100
+Beijing Siemens Cerberus Electronics Ltd., Beijing/China
+100
+Siemens S.A., Montevideo/Uruguay
+100
+Siemens Uruguay S.A., Montevideo/Uruguay
+100
+Camstar Systems Software (Shanghai) Company Limited,
+Shanghai/China
+100
+Dresser-Rand de Venezuela, S.A.,
+Maracaibo/Venezuela, Bolivarian Republic of
+100
+CD-adapco Software Technology (Shanghai) Co.,Ltd.,
+Shanghai/China
+100
+Gamesa Eólica VE, C.A.,
+DPC (Tianjin) Co., Ltd., Tianjin/China
+100
+Caracas/Venezuela, Bolivarian Republic of
+1007
+Engines Rental, S.A., Montevideo/Uruguay
+100
+Siemens Bangladesh Ltd., Dhaka/Bangladesh
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+100
+Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+in %
+Winergy Drive Systems Corporation,
+Wilmington, DE/United States
+SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater/Australia
+100
+100
+117
+70
+Dresser-Rand Engineered Equipment (Shanghai) Ltd.,
+Shanghai/China
+100
+Australia Hospital Holding Pty Limited, Bayswater/Australia
+100
+CD-ADAPCO AUSTRALIA PTY LTD, Melbourne/Australia
+100
+Mentor Graphics Technology (Shenzhen) Co., Ltd.,
+Shenzhen/China
+100
+Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
+1007
+MWB (Shanghai) Co Ltd., Shanghai/China
+65
+Exemplar Health (NBH) Holdings 2 Pty Limited,
+Bayswater/Australia
+100
+Shuangpai Majiang Wuxingling Wind Power Co., Ltd,
+Yongzhou/China
+100
+Exemplar Health (NBH) Trust 2, Bayswater/Australia
+100
+Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
+Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
+1007
+Siemens Building Technologies (Tianjin) Ltd.,
+Tianjin/China
+Mentor Graphics (Shanghai) Electronic Technology Co.,
+Ltd., Shanghai/China
+Asia, Australia (218 companies)
+100
+100
+100
+Caracas/Venezuela, Bolivarian Republic of
+1007
+Siemens Healthcare S.A.,
+Gamesa (Beijing) Wind Energy System Development Co,
+Ltd, Beijing/China
+100
+Caracas/Venezuela, Bolivarian Republic of
+1007
+Gamesa Blade (Tianjin) Co., Ltd., Tianjin/China
+100
+Guascor Venezuela S.A.,
+Siemens Rail Automation, C.A.,
+100
+Caracas/Venezuela, Bolivarian Republic of
+100
+Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
+100
+IBS Industrial Business Software (Shanghai), Ltd.,
+Shanghai/China
+100
+Dade Behring Hong Kong Holdings Corporation,
+Tortola/Virgin Islands, British
+100
+Inner Mongolia Gamesa Wind Co., Ltd., Wulanchabu/China
+Jilin Gamesa Wind Co., Ltd., Da'an/China
+Gamesa Wind (Tianjin) Co., Ltd., Tianjin/China
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Frimley, Surrey/United Kingdom
+Siemens Protection Devices Limited,
+100
+Siemens S.A., Santiago de Chile/Chile
+100
+Indústria de Trabajos Eléctricos S.A. de C.V.,
+Ciudad Juárez/Mexico
+100
+Siemens Wind Power SpA, Santiago de Chile/Chile
+100
+Dresser-Rand Colombia S.A.S., Bogotá/Colombia
+100
+Servicios Eólicos Globales S. de R.L. de C.V.,
+Mexico City/Mexico
+100
+Siemens Healthcare S.A.S., Tenjo/Colombia
+100
+Siemens S.A., Tenjo/Colombia
+100
+Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
+Mexico City/Mexico
+100
+Gamesa Eólica Costa Rica, S.R.L., San Rafael/Costa Rica
+100
+Siemens Healthcare Servicios S. de R.L. de C.V.,
+Siemens Healthcare Diagnostics S.A., San José/Costa Rica
+Acciones, Santiago de Chile/Chile
+100
+Grupo Siemens S.A. de C.V., Mexico City/Mexico
+Siemens Healthcare Equipos Médicos Sociedad por
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+in %
+Wheelabrator Air Pollution Control (Canada) Inc.,
+Ontario/Canada
+100
+Gesa Oax II Sociedad de Responsabilidad Limitada de
+Capital Variable, Mexico City/Mexico
+100
+1007
+100
+Gesa Oax III Sociedad Anomima de Capital Variable,
+Mexico City/Mexico
+1007
+Gamesa Chile SpA, Santiago de Chile/Chile
+100
+Nimbic Chile S.p.A., Las Condes/Chile
+100
+Gesacisa Desarolladora, S.A. de C.V., Mexico City/Mexico
+Gesan I S.A.P.I de C.V., Mexico City/Mexico
+100
+100
+Siemens Healthcare Diagnostics Manufacturing Limited,
+Grand Cayman/Cayman Islands
+115
+Mexico City/Mexico
+Siemens S.A., San José/Costa Rica
+100
+Siemens Healthcare Diagnostics Panama, S.A.,
+Siemens-Healthcare Cia. Ltda., Quito/Ecuador
+100
+Panama City/Panama
+100
+Siemens Healthcare, Sociedad Anonima,
+Siemens S.A., Panama City/Panama
+100
+Antiguo Cuscatlán/El Salvador
+100
+Siemens Healthcare S.A.C., Surquillo/Peru
+100
+Siemens S.A., Antiguo Cuscatlán/El Salvador
+100
+Siemens S.A.C., Lima/Peru
+100
+SIEMENS GAMESA RENEWABLE ENERGY INSTALLATION &
+Siemens Wind Power Sociedad Anonima Cerrada, Lima/Peru
+100
+MAINTENANCE COMPAÑÍA LIMITADA, Guatemala/Guatemala
+Siemens S.A., Quito/Ecuador
+100
+Gamesa Eólica Nicaragua S.A., Managua/Nicaragua
+100
+100
+Siemens Industry Software, S.A. de C.V.,
+Gamesa Dominicana, S.A.S.,
+Mexico City/Mexico
+100
+Santo Domingo/Dominican Republic
+100
+Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
+100
+Parques Eólicos del Caribe, S.A.,
+100
+Santo Domingo/Dominican Republic
+Siemens Postal, Parcel & Airport Logistics S. de R.L. de C.V.,
+Mexico City/Mexico
+1007
+Siemens, S.R.L., Santo Domingo/Dominican Republic
+100
+Siemens Servicios S.A. de C.V., Mexico City/Mexico
+100
+Sociedad Energética Del Caribe, S.R.L.,
+Siemens, S.A. de C.V., Mexico City/Mexico
+100
+Higüey/Dominican Republic
+57
+100
+Consolidated Financial Statements
+Siemens AG is a shareholder with unlimited liability of this company.
+Siemens Transmission & Distribution Limited,
+Siemens Gamesa Energia Renovável Ltda., Camaçari/Brazil
+Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
+100
+100
+Frimley, Surrey/United Kingdom
+100
+The Preactor Group Limited,
+Siemens Industry Software Ltda., São Caetano do Sul/Brazil
+Siemens Ltda., São Paulo/Brazil
+100
+100
+Frimley, Surrey/United Kingdom
+100
+VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
+100
+Siemens Wind Power Energia Eólica Ltda., São Paulo/Brazil
+10367079 CANADA INC., Oakville/Canada
+100
+100
+VA Tech Reyrolle Distribution Ltd.,
+Dresser-Rand Canada, ULC, Vancouver/Canada
+10012
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Eletroeletronica Limitada, Manaus/Brazil
+Industrial Turbine Brasil Geracao de Energia Ltda.,
+São Luís/Brazil
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Rail Automation Holdings Limited,
+Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
+Canoas/Brazil
+100
+Frimley, Surrey/United Kingdom
+100
+Jaguarí Energética, S.A., Jaguari/Brazil
+100
+89
+Frimley, Surrey/United Kingdom
+100
+MINUANO PROMOÇÕES E PARTICIPAÇÕES EÓLICAS LTDA.,
+Belém/Brazil
+1007
+Siemens Rail Systems Project Holdings Limited,
+Frimley, Surrey/United Kingdom
+100
+OMNETRIC Group Tecnologia e Servicos de Consultoria
+Ltda., Belo Horizonte/Brazil
+100
+Siemens Rail Systems Project Limited,
+Siemens Rail Automation Limited,
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Gamesa Canada ULC, Halifax/Canada
+VA TECH T&D UK Ltd.,
+Québec/Canada
+100
+VA TECH International Argentina SA,
+Siemens Wind Power Limited, Oakville/Canada
+100
+Buenos Aires/Argentina
+100
+Trench Limited, Saint John/Canada
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+100
+Siemens S.A., Buenos Aires/Argentina
+Siemens Transformers Canada Inc., Trois-Rivières,
+100
+Mentor Graphics (Canada) Limited, Kanata/Canada
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Canada Limited, Oakville/Canada
+100
+Siemens Financial Ltd., Oakville/Canada
+100
+Americas (165 companies)
+Siemens Healthcare Limited, Oakville/Canada
+10012
+100
+100
+Siemens Industry Software Ltd., Oakville/Canada
+100
+Guascor Argentina, S.A., Buenos Aires/Argentina
+100
+Siemens Healthcare S.A., Buenos Aires/Argentina
+100
+Siemens Postal, Parcel & Airport Logistics Ltd.,
+Oakville/Canada
+100
+Siemens IT Services S.A., Buenos Aires/Argentina
+Artadi S.A., Buenos Aires/Argentina
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+100
+100
+Frimley, Surrey/United Kingdom
+100
+492
+Samtech UK Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Middle East Limited,
+SBS Pension Funding (Scotland) Limited Partnership,
+Masdar City/United Arab Emirates
+100
+Edinburgh/United Kingdom
+573
+Adwen UK Limited, London/United Kingdom
+100
+Sellafirth Renewable Energy Park Limited,
+Bargrennan Renewable Energy Park Limited,
+1 Control due to a majority of voting rights.
+100
+London/United Kingdom
+100
+Siemens Financial Services Holdings Ltd.,
+CD-adapco New Hampshire Co., Ltd.,
+492
+Project Ventures Rail Investments | Limited,
+100
+Equity interest
+Douglas/Isle of Man
+D-R Luxembourg Holding 3, SARL,
+Mentor Graphics International Unlimited,
+100
+Luxembourg/Luxembourg
+100
+Siemens Limited, Dublin/Ireland
+D-R Luxembourg Holding 2, SARL,
+100
+100
+Stoke Poges, Buckinghamshire/United Kingdom
+D-R Luxembourg Holding 1, SARL, Luxembourg/Luxembourg
+492
+Siemens Electrical & Electronic Services K.S.C.C.,
+Kuwait City/Kuwait
+100
+Dublin/Ireland
+Siemens Gamesa Renewable Energy Limited,
+in %
+September 30, 2017
+in %
+September 30, 2017
+Equity interest
+Siemens Healthcare Medical Solutions Limited,
+Swords, County Dublin/Ireland
+10012
+100
+100
+Siemens Gamesa Renewable Energy Wind Limited,
+London/United Kingdom
+100
+Flomerics Group Limited,
+Siemens Healthcare Diagnostics Ltd.,
+Hampton Court, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Flowmaster Limited,
+Siemens Healthcare Diagnostics Manufacturing Ltd,
+Alderton, Northamptonshire/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Glenouther Renewables Energy Park Limited,
+Siemens Healthcare Diagnostics Products Ltd,
+London/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+GYM Renewables Limited, Frimley, Surrey/United Kingdom
+100
+Electrium Sales Limited, Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+Siemens Financial Services Ltd.,
+Conworx Medical IT Ltd.,
+Stoke Poges, Buckinghamshire/United Kingdom
+100
+Marlow, Buckinghamshire/United Kingdom
+100
+D-R Dormant Ltd., Frimley, Surrey/United Kingdom
+1007
+Siemens Gamesa Renewable Energy B9 Limited,
+Larne/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
+Siemens Gamesa Renewable Energy Limited,
+Dresser-Rand (U.K.) Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Gamesa Renewable Energy UK Limited,
+Dresser-Rand Company Ltd.,
+London/United Kingdom
+100
+100
+100
+Luxembourg/Luxembourg
+9REN Israel Ltd., Tel Aviv/Israel
+D-R International Holdings (Netherlands) B.V.,
+100
+Siemens Gamesa Renewable Energy Wind S.R.L., Rome/Italy
+100
+Castor III B.V., Amsterdam/Netherlands
+100
+Siemens Gamesa Renewable Energy Italy, S.P.A., Rome/Italy
+100
+Siemens Wind Power Blades, SARL AU, Tangier/Morocco
+100
+Samtech Italia S.r.I., Milan/Italy
+100
+Siemens Wind Energy, SARL, Casablanca/Morocco
+100
+Parco Eolico Manca Vennarda S.r.I., Rome/Italy
+100
+100
+Siemens Plant Operations Tahaddart SARL, Tangier/Morocco
+Siemens S.A., Casablanca/Morocco
+100
+Parco Eolico Banzy S.r.I., Rome/Italy
+100
+Siemens Healthcare S.r.I., Milan/Italy
+100
+Spijkenisse/Netherlands
+100
+Eindhoven/Netherlands
+100
+Siemens Wind Power S.r.I., Milan/Italy
+Mentor Graphics (Netherlands) B.V.,
+100
+Siemens Transformers S. p.A., Trento/Italy
+100
+Flowmaster Group NV, Eindhoven/Netherlands
+100
+Siemens S.p.A., Milan/Italy
+Mentor Graphics Torino S.R.L., Turin/Italy
+100
+100
+Siemens Renting s.r.l. in Liquidazione, Milan/Italy
+100
+Dresser-Rand International B.V., Spijkenisse/Netherlands
+100
+Siemens Postal, Parcel & Airport Logistics S.r.I., Milan/Italy
+100
+Dresser-Rand B.V., Spijkenisse/Netherlands
+100
+Siemens Industry Software S.r.I., Milan/Italy
+Dresser-Rand Services B.V., Spijkenisse/Netherlands
+100
+100
+Mentor Graphics Morocco SARL, Sala Al Jadida/Morocco
+Siemens Healthcare SARL, Casablanca/Morocco
+100
+Siemens HealthCare Ltd., Rosh HaAyin/Israel
+100
+TFM International S.A. i.L., Luxembourg/Luxembourg
+100
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
+100
+Luxembourg/Luxembourg
+100
+Dresser-Rand Holding (Delaware) LLC, SARL,
+Mentor Graphics Development Services (Israel) Ltd.,
+Rehovot/Israel
+100
+D-R Luxembourg Partners 1 SCS, Luxembourg/Luxembourg
+100
+Mentor Graphics (Israel) Limited, Herzilya Pituah/Israel
+100
+Luxembourg/Luxembourg
+100
+Gamesa Israel, Ltd, Tel Aviv/Israel
+D-R Luxembourg International SARL,
+100
+Siemens Industry Software Ltd., Airport City/Israel
+100
+Siemens Gamesa Renewable Energy, SARL,
+Nouakchott/Mauritania
+100
+100
+Dresser-Rand Italia S.r.I., Tribogna/Italy
+100
+9REN Services Italia S.r.I., Milan/Italy
+1007
+Guascor Maroc, S.A.R.L., Agadir/Morocco
+100
+UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
+100
+Gamesa Morocco, SARL, Tangier/Morocco
+100
+100
+100
+Siemens d.o.o., Podgorica/Montenegro
+Siemens Product Lifecycle Management Software 2 (IL)
+100
+Cybercity/Mauritius
+1007
+Siemens Israel Projects Ltd., Rosh HaAyin/Israel
+Siemens Gamesa Renewable Energy, Ltd,
+100
+Siemens Israel Ltd., Rosh HaAyin/Israel
+Ltd., Airport City/Israel
+Siemens Healthcare Limited,
+London/United Kingdom
+Frimley, Surrey/United Kingdom
+100
+Navitas Energy Inc, Minneapolis, MN/United States
+97
+Siemens Healthcare Laboratory, LLC,
+NEM USA Corp., Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Nimbus Technologies, LLC, Bingham Farms,
+MI/United States
+Siemens Industry, Inc., Wilmington, DE/United States
+100
+100
+Siemens Medical Solutions USA, Inc.,
+Omnetric Corp., Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+P.E.T.NET Houston, LLC, Austin, TX/United States
+51
+Siemens Molecular Imaging, Inc.,
+PETNET Indiana LLC, Indianapolis, IN/United States
+Los Angeles, CA/United States
+100
+Wilmington, DE/United States
+Siemens Healthcare Diagnostics Inc.,
+Dresser-Rand LLC, Wilmington, DE/United States
+100
+Dover, DE/United States
+100
+EcoHarmony West Wind, LLC, Minneapolis, MN/United
+States
+Siemens Gamesa Renewable Energy Wind, LLC,
+100
+Dover, DE/United States
+100
+eMeter Corporation, Wilmington, DE/United States
+Mannesmann Corporation, New York, NY/United States
+501
+100
+100
+Wilmington, DE/United States
+100
+Mentor Graphics Corporation,
+Siemens Government Technologies, Inc.,
+Wilsonville, OR/United States
+100
+Wilmington, DE/United States
+100
+Mentor Graphics Global Holdings, LLC,
+Siemens Generation Services Company,
+Siemens Gamesa Renewable Energy USA, INC,
+Wilmington, DE/United States
+PETNET Solutions Cleveland, LLC,
+Siemens Corporation, Wilmington, DE/United States
+100
+SMI Holding LLC, Wilmington, DE/United States
+Synchrony, Inc., Salem, VA/United States
+100
+100
+Siemens Credit Warehouse, Inc.,
+TASS International Inc., Livonia, MI/United States
+100
+Wilmington, DE/United States
+100
+Wheelabrator Air Pollution Control Inc.,
+Siemens Demag Delaval Turbomachinery, Inc.,
+Baltimore, MD/United States
+100
+Wilmington, DE/United States
+100
+Whitehall Wind, LLC, Missoula, MT/United States
+100
+Siemens Electrical, LLC, Wilmington, DE/United States
+100
+Wind Portfolio Memberco, LLC, Dover, DE/United States
+100
+Wilmington, DE/United States
+100
+100
+Siemens Postal, Parcel & Airport Logistics LLC,
+Wilmington, DE/United States
+63
+Wilmington, DE/United States
+100
+GYM Renewables ONE Limited,
+100
+Siemens Power Generation Service Company, Ltd.,
+Pocahontas Prairie Wind, LLC, Wilmington, DE/United States
+100
+100
+Wilmington, DE/United States
+Pocahontas Wind, LLC, Dover, DE/United States
+100
+Siemens Product Lifecycle Management Software Inc.,
+Siemens Capital Company LLC,
+Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Siemens Convergence Creators Corp.,
+Siemens Public, Inc., Wilmington, DE/United States
+Siemens USA Holdings, Inc., Wilmington, DE/United States
+100
+100
+PETNET Solutions, Inc., Knoxville, TN/United States
+100
+Advanced Airfoil Components LLC,
+GESA Eólica Honduras, S.A., Tegucigalpa/Honduras
+Siemens S.A., Tegucigalpa/Honduras
+100
+Wilmington, DE/United States
+51
+100
+Central Eólica de México S.A. de C.V., Mexico City/Mexico
+Dresser-Rand de Mexico S.A. de C.V., Mexico City/Mexico
+Gesa Energia, S. de R.L. de C.V., Mexico City/Mexico
+Gesa Eólica Mexico, S.A. de C.V., Mexico City/Mexico
+Gesa Oax | Sociedad Anomima de Capital Variable,
+Mexico City/Mexico
+100
+CD-adapco Battery Design LLC, Dover, DE/United States
+Cedar Cap Wind, LLC, Dover, DE/United States
+502
+100
+1007
+100
+Dedicated2Imaging LLC, Wilmington, DE/United States
+Diversified Energy Transmissions, LLC,
+80
+100
+Salem, OR/United States
+100
+1007
+D-R International Sales Inc., Wilmington, DE/United States
+D-R Steam LLC, Wilmington, DE/United States
+100
+100
+Siemens S.A., Guatemala/Guatemala
+100
+Couva/Trinidad and Tobago
+Wilmington, DE/United States
+100
+Frimley, Surrey/United Kingdom
+100
+Industrial Turbine Company (UK) Limited,
+Siemens Holdings plc, Frimley, Surrey/United Kingdom
+Siemens Industrial Turbomachinery Ltd.,
+100
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+100
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+1007
+Gamesa Puerto Rico, CRL, San Juan/Puerto Rico
+100
+SIEMENS HEALTHCARE DIAGNOSTICS GUATEMALA, S.A.,
+Dresser-Rand Trinidad & Tobago Limited,
+100
+1 Control due to a majority of voting rights.
+1 Control due to a majority of voting rights.
+Guatemala/Guatemala
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Siemens Energy, Inc., Wilmington, DE/United States
+100
+Siemens Financial Services, Inc.,
+Dresser-Rand Holding (Luxembourg) LLC,
+Wilmington, DE/United States
+100
+888
+Wilmington, DE/United States
+100
+Siemens Financial, Inc., Wilmington, DE/United States
+100
+Siemens Gamesa Renewable Energy Inc.,
+Dresser-Rand International Holdings, LLC,
+Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Siemens Gamesa Renewable Energy PA, LLC,
+Dresser-Rand International Inc.,
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+Wilmington, DE/United States
+100
+in %
+100
+in %
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+September 30, 2017
+116 Consolidated Financial Statements
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+10
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Equity interest
+Equity interest
+Wilmington, DE/United States
+September 30, 2017
+Dresser-Rand Company, Bath, NY/United States
+Dresser-Rand Global Services, Inc.,
+Dresser-Rand Group Inc., Wilmington, DE/United States
+100
+100
+1007
+100
+Hangzhou, Hangzhou/China
+51
+Siemens Manufacturing and Engineering Centre Ltd.,
+Siemens Mechanical Drive Systems (Tianjin) Co., Ltd.,
+Tianjin/China
+100
+51
+100
+Asia Care Holding Limited, Hong Kong/Hong Kong
+Camstar Systems (Hong Kong) Limited,
+Hong Kong/Hong Kong
+Siemens Ltd., China, Beijing/China
+Shanghai/China
+Yangtze Delta Manufacturing Co. Ltd.,
+Trench High Voltage Products Ltd., Shenyang,
+100
+XS Embedded (Shanghai) Co., Ltd., Shanghai/China
+Siemens Logistics Automation Systems (Beijing) Co., Ltd,
+Beijing/China
+65
+Shenyang/China
+100
+Siemens Investment Consulting Co., Ltd., Beijing/China
+100
+Shanghai/China
+100
+Siemens Medium Voltage Switching Technologies (Wuxi)
+Ltd., Wuxi/China
+60
+100
+International Wind Farm Development | Limited,
+Hong Kong/Hong Kong
+International Wind Farm Development VII Limited,
+85
+TASS International Co. Ltd., Shanghai/China
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+1007
+Hong Kong/Hong Kong
+100
+100
+Siemens Sensors & Communication Ltd., Dalian/China
+Siemens Shanghai Medical Equipment Ltd., Shanghai/China
+1007
+Hong Kong/Hong Kong
+100
+Beijing/China
+1007
+International Wind Farm Development V Limited,
+1007
+Hong Kong/Hong Kong
+100
+Siemens Power Plant Automation Ltd., Nanjing/China
+International Wind Farm Development IV Limited,
+100
+Siemens Power Automation Ltd., Nanjing/China
+1007
+Hong Kong/Hong Kong
+80
+Siemens Numerical Control Ltd., Nanjing, Nanjing/China
+International Wind Farm Development II Limited,
+Siemens Real Estate Management (Beijing) Ltd., Co.,
+Siemens International Trading Ltd., Shanghai,
+100
+100
+Siemens Switchgear Ltd., Shanghai, Shanghai/China
+100
+Siemens Healthcare Ltd., Shanghai/China
+100
+100
+Siemens Standard Motors Ltd., Yizheng/China
+Siemens Surge Arresters Ltd., Wuxi/China
+1007
+Siemens Healthcare Diagnostics Manufacturing Ltd.,
+Shanghai, Shanghai/China
+77
+Changzhi/China
+100
+Siemens Special Electrical Machines Co. Ltd.,
+55
+70
+51
+Siemens Gas Turbine Parts Ltd., Shanghai, Shanghai/China
+Siemens Healthcare Diagnostics (Shanghai) Co. Ltd.,
+Shanghai/China
+Siemens Shenzhen Magnetic Resonance Ltd.,
+Shenzhen/China
+100
+in %
+September 30, 2017
+in %
+Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
+Yixing/China
+September 30, 2017
+Equity interest
+Equity interest
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Siemens Signalling Co. Ltd., Xi'an, Xi'an/China
+100
+Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
+Hangzhou/China
+Siemens Technology Development Co., Ltd. of Beijing,
+Beijing/China
+Siemens Wiring Accessories Shandong Ltd., Zibo/China
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
+Smart Metering Solutions (Changsha) Co. Ltd.,
+Changsha/China
+100
+Siemens Industry Software (Shanghai) Co., Ltd.,
+Shanghai/China
+100
+Beijing/China
+Siemens Industry Software (Beijing) Co., Ltd.,
+100
+Siemens Wind Power Blades (Shanghai) Co., Ltd.,
+Shanghai/China
+84
+Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
+Huludao/China
+100
+Siemens Venture Capital Co., Ltd., Beijing/China
+51
+100
+Siemens Transformer (Wuhan) Company Ltd.,
+Wuhan City/China
+Siemens Industrial Automation Products Ltd., Chengdu,
+Chengdu/China
+94
+94
+90
+Siemens Transformer (Jinan) Co., Ltd, Jinan/China
+Siemens High Voltage Switchgear Guangzhou Ltd.,
+Guangzhou/China
+63
+Siemens Transformer (Guangzhou) Co., Ltd.,
+Guangzhou/China
+51
+Siemens High Voltage Switchgear Co., Ltd., Shanghai,
+Shanghai/China
+90
+100
+4 No control due to contractual arrangements or legal circumstances.
+N/A
+6 Significant influence due to contractual arrangements or legal circumstances.
+Solucia Renovables 1, S.L., Lebrija/Spain
+50
+Tusso Energía, S.L., Sevilla/Spain
+508
+Windar Renovables, S.L., Avilés/Spain
+32
+Powerit Holdings, Inc., Seattle, WA/United States
+Rether networks, Inc., Berkeley, CA/United States
+USARAD Holdings, Inc., Fort Lauderdale, FL/United States
+Veo Robotics, Inc., Cambridge, MA/United States
+Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
+Caracas/Venezuela, Bolivarian Republic of
+218
+308
+308
+278
+408
+WS Tech Energy Global S.L., Viladecans/Spain
+49
+Certas AG, Zurich/Switzerland
+50
+Asia, Australia (21 companies)
+50
+Interessengemeinschaft TUS, Männedorf/Switzerland
+Soleval Renovables S.L., Sevilla/Spain
+Sistemes Electrics Espluga, S.A., Barcelona/Spain
+122 Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2017
+Nertus Mantenimiento Ferroviario y Servicios S.A.,
+in %
+September 30, 2017
+in %
+Barcelona/Spain
+514
+Panda Stonewall Intermediate Holdings I, LLC,
+Wilmington, DE/United States
+37
+Nuevas Estrategias de Mantenimiento, S.L.,
+PhSiTh LLC, New Castle, DE/United States
+33
+San Sebastián/Spain
+50
+50
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+5012
+Exemplar Health (NBH) Partnership, Melbourne/Australia
+Exemplar Health (SCUH) Partnership, Sydney/Australia
+Saitong Railway Electrification (Nanjing) Co., Ltd.,
+Nanjing/China
+508
+Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
+508
+Primetals Technologies, Limited,
+Shanghai Electric Power Generation Equipment Co., Ltd.,
+Shanghai/China
+40
+London/United Kingdom
+49
+RWG (Repair & Overhauls) Limited,
+Aberdeen/United Kingdom
+50
+Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
+Tianjin ZongXi Traction Motor Ltd., Tianjin/China
+Xi'An X-Ray Target Ltd., Xi'an/China
+50
+50
+43
+Joint Venture Service Center, Chirchik/Uzbekistan
+508
+Cross London Trains Holdco 2 Limited,
+Odos Imaging Limited, Edinburgh/United Kingdom
+London/United Kingdom
+50
+50
+London/United Kingdom
+33
+PHM Technology Pty Ltd, Melbourne/Australia
+298
+Ethos Energy Group Limited, Aberdeen/United Kingdom
+49
+Galloper Wind Farm Holding Company Limited,
+ChinaInvent (Shanghai) Instrument Co., Ltd,
+Shanghai/China
+308
+Swindon, Wiltshire/United Kingdom
+25
+Lincs Renewable Energy Holdings Limited,
+DBEST (Beijing) Facility Technology Management Co., Ltd.,
+Beijing/China
+25
+25
+50
+498
+11
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+208
+338
+50
+Europe, Commonwealth of Independent States
+(C.I.S.), Africa, Middle East (without Germany)
+(61 companies)
+Rousch (Pakistan) Power Ltd., Lahore/Pakistan
+000 Transconverter, Moscow/Russian Federation
+000 VIS Automation mit Zusatz „Ein Gemeinschafts-
+unternehmen von VIS und Siemens",
+Moscow/Russian Federation
+26
+358
+49
+Arelion GmbH in Liqu., Pasching b. Linz/Austria
+Aspern Smart City Research GmbH, Vienna/Austria
+258
+448
+Aspern Smart City Research GmbH & Co KG,
+Vienna/Austria
+44
+ZAO Interautomatika, Moscow/Russian Federation
+ZAO Systema-Service, St. Petersburg/Russian Federation
+Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
+Ardora, S.A., Vigo/Spain
+46
+ZeeEnergie Management B.V., Eemshaven/Netherlands
+Wirescan AS, Trollaasen/Norway
+26
+358
+206,12
+Energie Electrique de Tahaddart S.A., Tangier/Morocco
+Buitengaats C.V., Amsterdam/Netherlands
+20
+206,12
+508
+ubimake GmbH i.L., Berlin
+508
+Valeo Siemens eAutomotive GmbH, Erlangen
+50
+Veja Mate Offshore Project GmbH, Gadebusch
+41
+Buitengaats Management B.V., Eemshaven/Netherlands
+Infraspeed Maintainance B.V., Zoetermeer/Netherlands
+Ural Locomotives Holding Besloten Vennootschap,
+The Hague/Netherlands
+208
+50
+50
+Voith Hydro Holding GmbH & Co. KG, Heidenheim
+35
+ZeeEnergie C.V., Amsterdam/Netherlands
+Voith Hydro Holding Verwaltungs GmbH, Heidenheim
+Windkraft Trinwillershagen Entwicklungsgesellschaft mbH,
+Wiepkenhagen
+Siemens AG is a shareholder with unlimited liability of this company.
+31
+OIL AND GAS PROSERV LLC, Baku/Azerbaijan
+48
+Generación Eólica Extremeña, S.L., Plasencia/Spain
+308
+Parallel Graphics Ltd., Dublin/Ireland
+574,8
+Hydrophytic, S.L., Vitoria-Gasteiz/Spain
+508
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+508
+358
+Vitoria-Gasteiz/Spain
+Gate Solar Gestión, S.L. Unipersonal,
+258
+Desgasificación de Vertederos, S.A, Madrid/Spain
+508
+T-Power NV, Brussels/Belgium
+20
+Meomed s.r.o., Prerov/Czech Republic
+478
+Energías Renovables San Adrián de Juarros, S.A.,
+San Adrián de Juarros/Spain
+45
+BioMensio Oy, Tampere/Finland
+238
+Compagnie Electrique de Bretagne SAS, Paris/France
+40
+Explotaciones y Mantenimientos Integrales, S.L.,
+Getxo/Spain
+508
+TRIXELL SAS, Moirans/France
+25
+Eviop-Tempo A.E. Electrical Equipment Manufacturers,
+Vassiliko/Greece
+Transrapid International Verwaltungsgesellschaft mbH i.L.,
+Berlin
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
+Yangzhong/China
+Americas (17 companies)
+Values according to the latest available local GAAP financial statements; the underlying
+fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13
+A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+N/A = No financial data available.
+124 Consolidated Financial Statements
+C.
+Additional Information
+C.1 Responsibility Statement
+To the best of our knowledge, and in accordance with the appli-
+cable reporting principles, the Consolidated Financial Statements
+give a true and fair view of the assets, liabilities, financial posi-
+tion and profit or loss of the Group, and the Group Management
+Report, which has been combined with the Management Report
+Munich, November 27, 2017
+Siemens Aktiengesellschaft
+The Managing Board
+Ни
+Joe Kaeser
+27
+? 
+Pul
+Dr. Roland Busch
+5 No significant influence due to contractual arrangements or legal circumstances.
+11
+Janina Kugel
+이 의
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+455
+4
+101
+19
+0
+0
+10
+N/A
+7
+80
+(5)
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+4,835
+Momen
+Lisa Davis
+Merger of the Siemens wind power business
+with Gamesa
+Reasons why the matter was determined to be a key audit
+matter: On April 3, 2017, the merger of the Siemens wind power
+business with Gamesa Corporación Tecnológica S.A., Spain
+("Gamesa") was completed. The Siemens Group holds 59% of the
+shares while Gamesa's former shareholders hold 41% of the
+shares in the combined entity. Siemens accounts for the business
+combination in accordance with IFRS 3, Business Combinations.
+Due to the complexity of the transaction and the associated
+significant risk of material misstatement, and considering the
+assumptions and estimates required to be made by management
+as part of the purchase price allocation, the accounting for this
+business combination was a key audit matter.
+Additional Information
+127
+128
+Audit approach: As part of our group audit, among other pro-
+cedures, we analyzed management's assertion that Siemens has
+control over the combined entity based on agreements under
+corporate law and the criteria defined in IFRS 10, Consolidated
+Financial Statements.
+Our audit procedures in relation to the preliminary purchase price
+allocation included, in addition to assessing the consideration
+transferred by Siemens, the evaluation of the methodological
+approach of the external expert engaged by management with
+respect to the identification of assets acquired as well as the con-
+ceptual evaluation of valuation models considering the require-
+ments of IFRS 3. With the assistance of our internal valuation
+specialists, we examined the valuation methods applied in terms
+of the requirements defined in IFRS 13, Fair Value Measurement.
+Furthermore, we analyzed whether assumptions and estimates
+(such as growth rates, cost of capital, royalty rates or remaining
+useful lives) used in determining the fair value of identifiable
+assets acquired and liabilities assumed (including contingent
+liabilities) as of the acquisition date correspond to general and
+industry-specific market expectations. Additionally, we reper-
+formed the calculations in the models and reconciled the expected
+future cash flows underlying the measurements with, inter alia,
+internal business plans.
+An area of focus was the determination of the fair values of tech-
+nologies and the measurement of warranty obligations associ-
+ated with projects. In this regard, among other procedures, we
+assessed the appropriateness as audit evidence of the valuation
+report as well as the reports of the external experts in the wind
+power sector engaged by management through inquiries of the
+experts, and evaluated whether the assumptions used reflect
+the perspective of an external market participant as of the acqui-
+sition date.
+Furthermore, we analyzed the application of uniform accounting
+policies of the entities of the wind power business, the tax effects
+of the merger, and the processing of the initial consolidation of
+the Gamesa entities, including non-controlling interests, in the
+Siemens consolidation system. In addition, we evaluated the dis-
+closures in the notes to the consolidated financial statements
+regarding the merger of the Siemens wind power business with
+Gamesa in terms of their compliance with the requirements
+defined in IFRS 3.
+Our audit procedures did not lead to any reservations relating to
+the accounting for the merger of the Siemens wind power busi-
+ness with Gamesa.
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in connection with
+the merger of the Siemens wind power business with Gamesa,
+refer to NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL
+ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED FINANCIAL
+STATEMENTS. Explanations of the transaction as well as disclosures
+on the preliminary purchase price allocation are included in
+→ NOTE 3 ACQUISITIONS AND DISPOSITIONS in the NOTES TO THE
+CONSOLIDATED FINANCIAL STATEMENTS.
+Revenue recognition on construction contracts
+Reasons why the matter was determined to be a key audit
+matter: The Group conducts a significant portion of its business
+under construction contracts, particularly in the Divisions Power
+and Gas, Energy Management and Mobility as well as in the Stra-
+tegic Unit Siemens Gamesa Renewable Energy. Revenue from
+long-term construction contracts is recognized in accordance
+with IAS 11, Construction Contracts, based on the extent of prog-
+ress towards completion. We consider the accounting for con-
+struction contracts to be an area posing a significant risk of ma-
+terial misstatement (including the potential risk of management
+override of internal controls) and accordingly a key audit matter,
+because management's assessments significantly impact the de-
+termination of the extent of progress towards completion. These
+assessments include, in particular, the scope of deliveries and
+services required to fulfill contractually defined obligations, total
+contract costs, remaining costs to completion and total contract
+revenues, as well as contract risks including technical, political,
+regulatory and legal risks. Revenues, contract costs and profit
+recognition may deviate significantly from original estimates
+based on new knowledge about cost overruns and changes in
+project scope over the term of a construction contract.
+Audit approach: As part of our audit, we obtained an under-
+standing of the Group's internally established methods, pro-
+cesses and control mechanisms for project management in the
+bid and execution phase of construction contracts. We also as-
+sessed the design and operating effectiveness of the account-
+ing-related internal controls by examining business transactions
+specific to construction contracts, from the initiation of the trans-
+action through recognition in the consolidated financial state-
+ments, and testing internal controls over these processes.
+As part of our substantive audit procedures, we evaluated man-
+agement's estimates and assumptions based on a risk-based se-
+lection of a sample of contracts. Our sample particularly included
+projects that are subject to significant future uncertainties and
+risks, such as fixed-price or turnkey projects, projects with com-
+plex technical requirements or with a large portion of materials
+and services to be provided by suppliers, subcontractors or con-
+sortium partners, cross-border projects, and projects with
+changes in cost estimates, delays and/or low or negative mar-
+gins. Our audit procedures included, among others, review of
+the sample contracts and their terms and conditions including
+contractually agreed partial deliveries and services, termination
+Additional Information
+Below, we describe what we consider to be the key audit matters:
+Dr. Ralf P. Thomas
+Key audit matters are those matters that, in our professional
+judgment, were of most significance in our audit of the consoli-
+dated financial statements for the fiscal year from October 1,
+2016 to September 30, 2017. These matters were addressed in
+the context of our audit of the consolidated financial statements
+as a whole, and in forming our auditor's opinion thereon, and we
+do not provide a separate opinion on these matters.
+We conducted our audit of the consolidated financial statements
+and the group management report in accordance with Sec. 317
+HGB and Regulation (EU) No 537/2014 (EU Audit Regulation)
+as well as German generally accepted standards on auditing
+promulgated by the Institut der Wirtschaftsprüfer [Institute of
+Public Auditors in Germany] (IDW). We conducted the audit of
+the consolidated financial statements in supplementary compli-
+ance with International Standards on Auditing (ISA). Our respon-
+sibilities under those laws, rules and standards are further
+described in the "Auditor's responsibilities for the audit of the
+consolidated financial statements and the group management
+report" section of our report. We are independent of the group
+companies in accordance with European and German commer-
+cial law and professional provisions, and we have fulfilled our
+other German ethical responsibilities in accordance with these
+requirements. Furthermore, in accordance with Art. 10 (2) f) of
+the EU Audit Regulation, we declare that we have not provided
+any prohibited non-audit services referred to in Art. 5 (1) of the
+EU Audit Regulation. We believe that the audit evidence we have
+obtained is sufficient and appropriate to provide a basis for our
+opinions on the consolidated financial statements and on the
+group management report.
+Cedrik Neike
+for Siemens Aktiengesellschaft, includes a fair review of the
+development and performance of the business and the position
+of the Group, together with a description of the material oppor-
+tunities and risks associated with the expected development
+of the Group.
+Mans Muril
+Klaus Helmrich
+بایستیار
+Michael Sen
+126 Additional Information
+C.2 Independent Auditor's Report
+To Siemens Aktiengesellschaft, Berlin and Munich
+Report on the audit of the Consoli-
+dated Financial Statements and
+the Group Management Report
+OPINIONS
+We have audited the consolidated financial statements of Siemens
+Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the
+Group), which comprise the consolidated statements of income
+and comprehensive income for the fiscal year from October 1,
+2016 to September 30, 2017, the consolidated statements of
+financial position as of September 30, 2017, the consolidated
+statements of cash flows and changes in equity for the fiscal year
+then ended, and the notes to the consolidated financial state-
+ments, including a summary of significant accounting policies.
+We have also audited the group management report of Siemens
+Aktiengesellschaft, which is combined with the management
+report of Siemens Aktiengesellschaft, for the fiscal year from
+October 1, 2016 to September 30, 2017.
+In our opinion, based on the findings of our audit,
+> the accompanying consolidated financial statements comply,
+in all material respects, with International Financial Reporting
+Standards (IFRS) as adopted by the European Union (EU) and
+the supplementary provisions of German law pursuant to
+Sec. 315 a (1) HGB ["Handelsgesetzbuch": German Commercial
+Code] and full IFRS as issued by the International Accounting
+Standards Board (IASB), and give a true and fair view of the
+net assets and financial position of the Group as of Septem-
+ber 30, 2017 and its results of operations for the fiscal year
+from October 1, 2016 to September 30, 2017 in accordance
+with these requirements, and
+➤ the accompanying group management report as a whole pro-
+vides a suitable view of the Group's position. In all material
+respects, this group management report is consistent with the
+consolidated financial statements, complies with the provi-
+sions of German law and suitably presents the opportunities
+and risks of future development.
+In accordance with Sec. 322 (3) Sentence 1 HGB, we hereby state
+that our audit has not led to any reservations regarding the com-
+pliance of the consolidated financial statements and the group
+management report.
+BASIS FOR OPINIONS
+KEY AUDIT MATTERS IN THE AUDIT OF THE
+CONSOLIDATED FINANCIAL STATEMENTS
+50
+632
+1
+Yaskawa Siemens Automation & Drives Corp., Tokyo/Japan
+50
+318
+218
+Advance Gas Turbine Solutions SDN. BHD.,
+Kuala Lumpur/Malaysia
+43
+Hickory Run Holdings, LLC, Wilmington, DE/United States
+206
+Power Automation Pte. Ltd., Singapore/Singapore
+49
+Panda Hummel Station Intermediate Holdings I LLC,
+Wilmington, DE/United States
+32
+Modern Engineering and Consultants Co. Ltd.,
+Bangkok/Thailand
+408
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+32
+4 No control due to contractual arrangements or legal circumstances.
+40
+328
+Zhi Dao Railway Equipment Ltd., Taiyuan/China
+50
+Energia Eólica de Mexico S.A. de C.V., Mexico City/Mexico
+50
+Bangalore International Airport Ltd., Bangalore/India
+26
+Baja Wind US LLC, Wilmington, DE/United States
+508
+Bytemark Inc., New York, NY/United States
+46
+CEF-L Holding, LLC, Wilmington, DE/United States
+27
+Kintech Santalpur Wind Park Private Limited, Chennai/India
+Transparent Energy Systems Private Limited, Pune/India
+P.T. Jawa Power, Jakarta/Indonesia
+49
+258
+50
+Cyclos Semiconductor, Inc., Wilmington, DE/United States
+Echogen Power Systems, Inc., Wilmington, DE/United States
+First State Marine Wind LLC, Newark, DE/United States
+Frustum, Inc., New York, NY/United States
+PT Asia Care Indonesia, Jakarta/Indonesia
+12
+5 No significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+Americas (1 company)
+Bentley Systems, Incorporated, Wilmington, DE/United States
+Equity interest
+in %
+Net income
+Equity
+in millions of €
+in millions of €
+1004,5
+1004,5
+7
+167
+33
+485
+17
+315
+2,473
+1913
+0
+Unincorporated Joint Venture Gwynt y Mor, Swindon, Wiltshire/United Kingdom
+6 Significant influence due to contractual arrangements or legal circumstances.
+Automotive Facilities Brainport Holding N.V., Helmond/Netherlands
+ATOS SE, Bezons/France
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+123
+September 30, 2017
+OTHER INVESTMENTS11
+Germany (3 companies)
+BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
+Kyros Beteiligungsverwaltung GmbH, Grünwald
+OSRAM Licht AG, Munich
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (5 companies)
+Uhre Vindmollelaug I/S, Brande/Denmark
+Medical Systems S.p.A., Genoa/Italy
+29
+Hel
+33
+100
+Latur Renewable Private Limited, Chennai/India
+100
+Mathak Wind Farms Private Limited, Chennai/India
+Mentor Graphics (India) Private Limited, New Delhi/India
+Mentor Graphics (Sales and Services) Private Limited,
+Bangalore/India
+100
+100
+100
+Kutch Renewable Pvt Ltd, Chennai/India
+Siemens Wind Power Private Limited, Navi Mumbai/India
+Thoothukudi Renewable Private Limited, Chennai/India
+Tirupur Renewable Private Limited, Chennai/India
+Tuljapur Wind Farms Private Limited, Chennai/India
+Umrani Renewable Private Limited, Chennai/India
+Uppal Renewable Private Limited, Chennai/India
+VIRALIPATTI RENEWABLE Pvt. Ltd., Chennai/India
+100
+100
+100
+1007
+100
+100
+1 Control due to a majority of voting rights.
+100
+100
+100
+Mumbai/India
+1007
+Siemens Industry Software Computational Dynamics India
+Pvt. Ltd., Bangalore/India
+100
+1007
+Siemens Ltd., Mumbai/India
+75
+100
+100
+Siemens Postal Parcel & Airport Logistics Private Limited,
+Navi Mumbai/India
+100
+100
+Siemens Rail Automation Pvt. Ltd., Navi Mumbai/India
+100
+100
+Siemens Technology and Services Private Limited,
+Koppal Renewable Private Limited, Chennai/India
+Kurnool Wind Farms Private Limited, Chennai/India
+100
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+100
+100
+PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
+PT. Siemens Industrial Power, Kota Bandung/Indonesia
+100
+Siemens Industry Software Pte. Ltd., Singapore/Singapore
+100
+60
+Acrorad Co., Ltd., Okinawa/Japan
+63
+Siemens Postal, Parcel & Airport Logistics PTE. LTD.,
+Singapore/Singapore
+100
+Dresser Rand Japan K.K., Tokyo/Japan
+1007
+Siemens Pte. Ltd., Singapore/Singapore
+100
+Gamesa Japan K.K., Kanagawa/Japan
+100
+Mentor Graphics Asia Pte Ltd, Singapore/Singapore
+Siemens Healthcare Pte. Ltd., Singapore/Singapore
+1007
+100
+1007
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Siemens AG is a shareholder with unlimited liability of this company.
+11
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+120 Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+in %
+Zalki Renewable Private Limited, Chennai/India
+P.T. Siemens Indonesia, Jakarta/Indonesia
+100
+Siemens Industry Software (India) Private Limited,
+New Delhi/India
+100
+Neelagund Renewable Private Limited, Chennai/India
+Nellore Renewable Pvt Ltd, Chennai/India
+1007
+100
+Siemens Ltd., Hong Kong/Hong Kong
+100
+Siemens Postal, Parcel & Airport Logistics Limited,
+Nirlooti Renewable Private Limited, Chennai/India
+Osmanabad Renewable Private Limited, Chennai/India
+1007
+100
+Hong Kong/Hong Kong
+100
+Anantapur Wind Farms Private Limited, Chennai/India
+100
+PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
+New Delhi/India
+100
+Bapuram Renewable Private Limited, Chennai/India
+100
+100
+Poovani Wind Farms Pvt. Ltd., Chennai/India
+Siemens Industry Software Limited, Hong Kong/Hong Kong
+Siemens Healthcare Limited, Hong Kong/Hong Kong
+thinkstep AG, Leinfelden-Echterdingen
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements
+119
+Equity interest
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+in %
+100
+Siemens Gamesa Renewable Energy Lanka Pvt. Ltd.,,
+100
+100
+Sanchore Renewable Private Limited, Chennai/India
+Sankanur Renewable Private Limited, Chennai/India
+Saunshi Renewable Private Limited, Chennai/India
+Siemens Convergence Creators Private Limited,
+Navi Mumbai/India
+100
+100
+1007
+100
+100
+SIEMENS FACTORING PRIVATE LIMITED, Mumbai/India
+100
+Gadag Renewable Private Limited, Chennai/India
+Gagodar Renewable Energy Pvt. Ltd., Chennai/India
+Ghatpimpri Renewable Pvt. Ltd., Chennai/India
+100
+100
+100
+Siemens Financial Services Private Limited, Mumbai/India
+Siemens Gamesa Renewable Private Limited, Chennai/India
+Siemens Healthcare Private Limited, Mumbai/India
+100
+100
+100
+GM Navarra Wind Energy Private Limited, Chennai/India
+Gudadanal Renewable Private Limited, Chennai/India
+Hattarwat Renewable Private Limited, Chennai/India
+Haveri Renewable Private Limited, Chennai/India
+Hungund Renewable Private Limited, Chennai/India
+Jalore Wind Park Private Limited, Chennai/India
+Jodhpur Wind Farms Private Limited, Chennai/India
+Kadapa Wind Farms Private Limited, Chennai/India
+Kod Renewable Pvt. Ltd., Chennai/India
+100
+Beed Renewable Energy Private Limited, Chennai/India
+Berkely Design Automation India Private Limited,
+New Delhi/India
+100
+1007
+Powerplant Performance Improvement Ltd.,
+New Delhi/India
+501
+100
+Preactor Software India Private Limited, Bangalore/India
+100
+Bhuj Renewable Private Limited, Chennai/India
+Bidwal Renewable Private Limited, Chennai/India
+CALYPTO DESIGN SYSTEMS INDIA PRIVATE LIMITED,
+New Delhi/India
+100
+Pugalur Renewable Private Limited, Chennai/India
+100
+100
+100
+Rajgarh Wind Park Private Limited, Chennai/India
+Rangareddy Renewable Pvt Ltd, Chennai/India
+RSR Power Private Limited, Chennai/India
+99
+100
+100
+Channapura Renewable Private Limited, Chennai/India
+Chikkodi Renewable Private Limited, Chennai/India
+Devarabanda Renewable Energy Pvt. Ltd., Chennai/India
+Dhone Renewable Private Limited, Chennai/India
+Dresser-Rand India Private Limited, Mumbai/India
+Flomerics India Private Limited, Mumbai/India
+100
+100
+Mentor Graphics Japan Co., Ltd., Tokyo/Japan
+1007
+Colombo/Sri Lanka
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9
+Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11
+Siemens AG is a shareholder with unlimited liability of this company.
+12 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability
+of this company.
+Consolidated Financial Statements 121
+Equity interest
+September 30, 2017
+in %
+September 30, 2017
+Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
+408
+Equity interest
+5 No significant influence due to contractual arrangements or legal circumstances.
+in %
+4 No control due to contractual arrangements or legal circumstances.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+EOS Uptrade GmbH, Hamburg
+624
+Siemens Wind Power, Inc., Manila/Philippines
+100
+Siemens, Inc., Manila/Philippines
+100
+FEAG Fertigungscenter für Elektrische Anlagen GmbH,
+Erlangen
+498
+CD-adapco S.E.A. Pte. Ltd., Singapore/Singapore
+100
+IFTEC GmbH & Co. KG, Leipzig
+50
+Gamesa Singapore Private Limited, Singapore/Singapore
+100
+Infineon Technologies Bipolar GmbH & Co. KG, Warstein
+40
+1 Control due to a majority of voting rights.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+100
+508
+508
+428,12
+Siemens EuroCash, Munich
+66
+Transfima S.p.A., Milan/Italy
+498
+Siemens Venture Capital Fund 1 GmbH, Munich
+1004,8
+VAL 208 Torino GEIE, Milan/Italy
+864,8,11,12
+Sternico GmbH, Wendeburg
+328
+Temir Zhol Electrification LLP, Astana/Kazakhstan
+49
+Symeo GmbH, Neubiberg
+554,8
+100
+Electrogas Malta Limited, Marsaskala/Malta
+Transfima GEIE, Milan/Italy
+LIB Verwaltungs-GmbH, Leipzig
+23
+50
+Ludwig Bölkow Campus GmbH, Taufkirchen
+258
+Frontline P.C.B. Solutions Limited Partnership,
+Rehovot/Israel
+50
+Magazino GmbH, Munich
+50
+Maschinenfabrik Reinhausen GmbH, Regensburg
+26
+Metropolitan Transportation Solutions Ltd.,
+Rosh HaAyin/Israel
+20
+MeVis BreastCare GmbH & Co. KG, Bremen
+49
+Reindeer Energy Ltd., Kokhav Ya'ir-Tzur Yigal/Israel
+33
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+498
+Trickster Howell LTD, Ramat/Israel
+OWP Butendiek GmbH & Co. KG, Bremen
+Siemens Power Operations, Inc., Manila/Philippines
+Frontline P.C.B. Solutions (1998) Ltd, Rehovot/Israel
+egrid applications & consulting GmbH, Kempten
+100
+TASS International K.K., Yokohama/Japan
+Mentor Graphics (Korea) Co., Limited, Bundang-gu,
+Seongnam-si, Gyeonggi-do/Korea, Republic of
+100
+Gamesa (Thailand) Co. Ltd., Bangkok/Thailand
+Siemens Healthcare Limited, Bangkok/Thailand
+Siemens Limited, Bangkok/Thailand
+100
+100
+99
+Siemens Healthcare Limited, Seoul/Korea, Republic of
+100
+Siemens Wind Power Limited, Bangkok/Thailand
+100
+Siemens Industry Software Ltd., Seoul/Korea, Republic of
+Siemens Ltd. Seoul, Seoul/Korea, Republic of
+100
+Siemens Gamesa Renewable Energy LLC, Ho Chi Minh
+100
+Dresser-Rand (Thailand) Limited, Rayong/Thailand
+100
+Yokohama/Japan
+100
+100
+Siemens Healthcare Diagnostics K.K., Tokyo/Japan
+498
+100
+Siemens Healthcare Limited,
+Siemens Healthcare K.K., Tokyo/Japan
+100
+Taipei/Taiwan, Province of China
+City/Viet Nam
+100
+100
+Siemens Industry Software (TW) Co., Ltd.,
+Siemens K.K., Tokyo/Japan
+100
+Taipei/Taiwan, Province of China
+100
+Siemens PLM Software Computational Dynamics K.K.,
+Siemens Ltd., Taipei/Taiwan, Province of China
+Siemens Japan Holding K.K., Tokyo/Japan
+1007
+100
+100
+100
+Blitz F17-813 GmbH, Frankfurt
+338
+VA TECH Malaysia Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens (N.Z.) Limited, Auckland/New Zealand
+100
+Caterva GmbH, Pullach i. Isartal
+50
+100
+33
+Siemens Gamesa Renewable Energy New Zealand Limited,
+Auckland/New Zealand
+498
+100
+Siemens Healthcare Limited, Auckland/New Zealand
+100
+EBV Windpark Almstedt-Breinum GmbH & Co. Betriebs-KG,
+Bremen
+644,8
+Siemens Wind Power Limited, Seoul/Korea, Republic of
+100
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
+des Stadt- und Regionalverkehrs mbH, Cologne
+Blitz F17-814 GmbH & Co. KG, Frankfurt
+Siemens Healthcare Inc., Manila/Philippines
+498
+100
+100
+Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
+Siemens Ltd., Ho Chi Minh City/Viet Nam
+100
+100
+492,7
+ASSOCIATED COMPANIES AND JOINT VENTURES
+Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur/Malaysia
+Reyrolle (Malaysia) Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
+Siemens Industry Software Sdn. Bhd., Penang/Malaysia
+Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
+TASS International Co. Ltd., Seoul/Korea, Republic of
+Dresser-Rand & Enserv Services Sdn. Bhd.,
+Kuala Lumpur/Malaysia
+Germany (32 companies)
+100
+ATS Projekt Grevenbroich GmbH, Schüttorf
+258
+100
+BELLIS GmbH, Braunschweig
+100
+Additional Information
+including portfolio measures, as well as the preparation and ap-
+proval of investment and divestment projects. For example, the
+Committee prepared proposals for the Supervisory Board regard-
+ing the acquisition of Mentor Graphics Corporation, regarding
+the preparation of the public listing of the strategic unit Health-
+ineers and regarding actions relating to the strategic orientation
+of the Mobility Division. At its meeting on September 19, 2017,
+the Committee also approved the Managing Board decision con-
+cerning an investment in a combined cycle power plant project
+in the United Arab Emirates and prepared the proposal for the
+Supervisory Board regarding Managing Board decisions relating
+to financial measures. In addition, the Innovation and Finance
+Committee intensively discussed the Company's strategic orien-
+tation and its innovation and technology focuses. In particular,
+it discussed the activities and recommendations of the Siemens
+Technology & Innovation Council.
+The Audit Committee met six times. In the presence of the inde-
+pendent auditors as well as the President and Chief Executive
+Officer and the Chief Financial Officer, the Committee dealt with
+the financial statements and the Combined Management Report
+for Siemens AG and the Siemens Group. The Audit Committee
+discussed the Half-year Financial Report and the quarterly state-
+ments with the Managing Board and the independent auditors.
+In the presence of the independent auditors, it also discussed the
+report on the auditors' review of the Company's Half-year Con-
+solidated Financial Statements and of its Interim Group Manage-
+ment Report. The Committee recommended that the Supervisory
+Board propose to the Annual Shareholders' Meeting the election
+of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft (Stutt-
+gart, Germany) as the independent auditors. The Committee
+appointed the independent auditors for fiscal 2017, defined the
+audit focal points and determined the auditors' fee. The Commit-
+tee monitored the selection, independence, qualification, rota-
+tion and efficiency of the independent auditors. Furthermore,
+the Audit Committee dealt with the Company's accounting and
+accounting process, the effectiveness of its internal control sys-
+tem, its risk management system and the effectiveness, re-
+sources and findings of the internal audit as well as with reports
+concerning potential and pending legal disputes.
+DETAILED DISCUSSION OF THE AUDIT
+OF THE FINANCIAL STATEMENTS
+The independent auditors, Ernst & Young GmbH Wirtschaftsprü-
+fungsgesellschaft (Stuttgart, Germany), audited the Annual Finan-
+cial Statements of Siemens AG, the Consolidated Financial State-
+ments of the Siemens Group and the Combined Management
+Report for Siemens AG and the Siemens Group for fiscal 2017 and
+issued an unqualified opinion. Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft (Stuttgart, Germany) has served as inde-
+pendent auditors of Siemens AG and the Siemens Group since
+fiscal 2009. Katharina Breitsameter has signed as auditor since
+fiscal 2016, and Thomas Spannagl has signed as auditor respon-
+sible for the audit since fiscal 2014. The Annual Financial State-
+ments of Siemens AG and the Combined Management Report for
+Siemens AG and the Siemens Group were prepared in accordance
+with the requirements of German law. The Consolidated Financial
+Statements of the Siemens Group were prepared in accordance
+with the International Financial Reporting Standards (IFRS) as
+adopted by the EU and with the additional requirements of Ger-
+man law set out in Section 315 a (1) of the German Commercial
+Code (Handelsgesetzbuch). The Consolidated Financial State-
+ments of the Siemens Group also comply with the IFRS as issued
+by the International Accounting Standards Board (IASB). The in-
+dependent auditors conducted their audit in accordance with
+Section 317 of the German Commercial Code, the EU Audit Regu-
+lation (Regulation (EU) No. 537/2014 of the European Parliament
+and of the Council of 16 April 2014 on specific requirements re-
+garding statutory audit of public-interest entities and repealing
+Commission Decision 2005/909/EC, "EU Audit Regulation") and
+German generally accepted standards for the audit of financial
+statements promulgated by the Institut der Wirtschaftsprüfer
+(IDW) as well as in supplementary compliance with the Interna-
+tional Standards on Auditing (ISA). The abovementioned docu-
+ments as well as the Managing Board's proposal for the appropri-
+ation of net income were submitted to us by the Managing Board
+in advance. The Audit Committee discussed the dividend proposal
+in detail at its meeting on November 7, 2017. It discussed the
+Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Combined
+Management Report in detail at its meeting on November 28,
+2017. In this context, the Audit Committee concerned itself, in
+particular, with key audit matters, including the audit procedures
+implemented. The audit reports prepared by the independent au-
+ditors were distributed to all members of the Supervisory Board
+and comprehensively reviewed at the Supervisory Board's meet-
+ing on November 29, 2017, in the presence of the independent
+auditors, who reported on the scope, focal points and main find-
+ings of their audit, addressing, in particular, key audit matters and
+the audit procedures implemented. No major weaknesses in the
+Company's internal control or risk management systems were
+reported. At this meeting, the Managing Board explained the
+financial statements of Siemens AG and the Siemens Group as
+well as the Company's risk management system. At its meeting
+on November 29, 2017, the Supervisory Board also approved the
+proposal to the Annual Shareholders' Meeting, taking into ac-
+count the Audit Committee's recommendation regarding the
+election of the independent auditors. This proposal was based on
+the Audit Committee's declaration that its recommendation was
+free of undue influence by third parties and that it had not en-
+tered into any contractual clause that could restrict the choice
+within the meaning of Art. 16, para. 6 of the EU Audit Regulation.
+Additional Information
+135
+Prof. Dr. Siegfried Russwurm left the Managing Board, effective
+March 31, 2017. The Supervisory Board appointed Michael Sen
+and Cedrik Neike full members of the Managing Board, effective
+April 1, 2017. There were no changes in the composition of the
+Supervisory Board during the year under review. Effective at the
+end of the day on September 30, 2017, Hans-Jürgen Hartung left
+the Supervisory Board. Dorothea Simon was appointed a mem-
+ber of the Supervisory Board by order of the district court of Char-
+lottenburg, Germany, effective from October 1, 2017 until the end
+of the Annual Shareholders' Meeting on January 31, 2018.
+CHANGES IN THE COMPOSITION OF THE
+SUPERVISORY AND MANAGING BOARDS
+On behalf of the Supervisory Board, I would like to thank the
+members of the Managing Board as well as the employees and
+employee representatives of Siemens AG and all Group compa-
+nies for their outstanding commitment and constructive cooper-
+ation in fiscal 2017.
+For the Supervisory Board
+Gerhard Comme
+Dr. Gerhard Cromme
+Chairman
+134
+-
+не
+The Supervisory Board concurs with the results of the audit.
+Following the definitive findings of the Audit Committee's exam-
+ination and our own examination, we have no objections. The
+Managing Board prepared the Annual Financial Statements of
+Siemens AG and the Consolidated Financial Statements of the
+Siemens Group. We approved the Annual Financial Statements
+and the Consolidated Financial Statements. In view of our ap-
+proval, the Annual Financial Statements of Siemens AG are
+adopted as submitted. We endorsed the Managing Board's pro-
+posal that the net income available for distribution be used to pay
+out a dividend of €3.70 per share entitled to a dividend and that
+the amount of net income attributable to shares of stock not
+entitled to receive a dividend for fiscal 2017 be carried forward.
+The Innovation and Finance Committee held three ordinary
+and two extraordinary meetings. The focuses of its meetings
+included the Committee's recommendation regarding the bud-
+get for fiscal 2017 and the discussion of the Company's strategy,
+SECTIONS 289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
+The Mediation Committee had no need to meet.
+136 Additional Information
+NANCE STATEMENT PURSUANT TO SECTIONS 289 A AND 315 PARA. 5 OF THE
+At our meeting on August 2, 2017, the Managing Board reported
+to us on the Company's business and financial position following
+the conclusion of the third quarter. On the recommendation of
+the Chairman's Committee, we extended Joe Kaeser's term of
+office as a member of the Managing Board and as President and
+CEO, effective from August 1, 2018, until the end of the Annual
+Shareholders' Meeting that will decide on the ratification of
+the acts of the members of the Managing Board for fiscal 2020.
+GERMAN COMMERCIAL CODE. As part of a strategy focus, we con-
+cerned ourselves comprehensively and in detail with the Compa-
+ny's strategic orientation, taking into account current technology
+and innovation topics and the status of the implementation of
+the "Vision 2020" strategy.
+Additional Information
+133
+The Supervisory Board considered in detail the strategic setup of
+the Mobility Division and discussed the further actions planned
+regarding the preparation of the public listing of the strategic
+unit Healthineers. In addition, the Supervisory Board concerned
+itself with the recommendations of the Siemens Technology &
+Innovation Council and, in a continuation of the strategy focus
+of May 3, 2017, discussed the Company's strategic orientation.
+At our meeting on September 20, 2017, the Managing Board
+reported to us on the state of the Company and on the business
+position of the Process Industries and Drives Division and on the
+business position of next47, the separate unit for startups. On the
+recommendation of the Chairman's Committee, we extended
+Dr. Ralf Thomas's term of office as a member of the Managing
+Board, effective from September 18, 2018, until September 17,
+2023. In addition, we discussed the Mobility Division's strategic
+orientation. As part of our regular review, we adjusted - follow-
+ing preparation and a recommendation by the Compensation
+Committee the amount of Managing Board compensation for
+fiscal 2018. In a further continuation of the strategy focus of
+May 3, 2017, the Supervisory Board also concerned itself with the
+Company's strategic orientation. Finally, we discussed the effi-
+ciency review of our activities.
+-
+At an extraordinary meeting on September 26, 2017, the Super-
+visory Board approved the planned merger of Siemens' mobility
+business with the publicly listed company Alstom SA (France).
+CORPORATE GOVERNANCE CODE
+At our meeting on September 20, 2017, we approved an unqual-
+ified Declaration of Conformity in accordance with Section 161 of
+the German Stock Corporation Act (Aktiengesetz). Information
+on corporate governance at Siemens is available in chapter
+→ C.4 CORPORATE GOVERNANCE. Our Declaration of Conformity has
+been made permanently available to our shareholders on our
+website. The current Declaration of Conformity is also available
+in chapter c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO
+WORK IN THE SUPERVISORY BOARD COMMITTEES
+The Supervisory Board has established seven standing commit-
+tees, which prepare proposals and issues to be dealt with at its
+plenary meetings. Some of the Supervisory Board's decision-mak-
+ing powers have also been delegated to these committees within
+the permissible legal framework. The committee chairpersons
+report to the Supervisory Board on their committees' work at the
+subsequent Board meetings. A list of the members and a detailed
+explanation of the tasks of the individual Supervisory Board
+committees are contained in chapter c.4.1 MANAGEMENT AND
+CONTROL STRUCTURE.
+The Chairman's Committee met seven times. It also made one
+decision by written circulation. Between meetings, I discussed
+topics of major importance with the members of the Chairman's
+Committee. The Committee concerned itself, in particular, with
+personnel topics and corporate governance issues, including the
+assumption by Managing Board members of positions at other
+companies and institutions.
+The Nominating Committee met six times. Outside these
+meetings, it also concerned itself intensively with the long-term
+succession planning for the Supervisory Board and, in particu-
+lar, with succession to the Chairmanship of the Supervisory
+Board and to the Chairmanship of the Audit Committee. At its
+meeting on January 31, 2017, the Nominating Committee ap-
+proved the nomination of Jim Hagemann Snabe as a candidate
+for election by the Supervisory Board to the position of Super-
+visory Board Chairman, with the election to take place at the
+Supervisory Board's constituent meeting after the elections to
+the Supervisory Board at the Annual Shareholders' Meeting on
+January 31, 2018. The Nominating Committee prepared the Su-
+pervisory Board's proposal to the Annual Shareholders' Meeting
+on January 31, 2018, regarding the upcoming regular election
+of seven shareholder representatives on the Supervisory Board.
+When searching for and evaluating candidates, the Nominating
+Committee took into consideration - in addition to the require-
+ments of the German Stock Corporation Act, the German Cor-
+porate Governance Code and the Bylaws for the Supervisory
+Board - the targets established by the Supervisory Board for its
+composition and the profile of skills and expertise defined by
+the Supervisory Board for its composition. The Nominating
+Committee was supported in its activities by an external person-
+nel consultant.
+The Compliance Committee met four times. It primarily dis-
+cussed the quarterly reports and the annual report of the Chief
+Compliance Officer.
+The Compensation Committee met three times. It also made
+one decision by written circulation. The Compensation Commit-
+tee prepared, in particular, proposals for the Supervisory Board
+regarding the determination of targets for variable compensa-
+tion, the determination and review of the appropriateness of
+Managing Board compensation and the approval of the Compen-
+sation Report.
+C.4 Corporate Governance
+March 31,
+2021
+and control structure
+Term expires
+At the
+end of the
+2021 Annual
+Sharehold-
+ers' Meeting
+Roland Busch,
+November 22, April 1,
+Dr. rer. nat.
+1964
+2011
+March 31,
+2021
+Lisa Davis
+First
+appointed
+May 1,
+2006
+October 15,
+1963
+July 31,
+2019
+Klaus Helmrich
+May 24,
+1958
+April 1,
+2011
+At our meeting on May 3, 2017, the Managing Board reported to
+us on the Company's current business and financial position fol-
+lowing the conclusion of the second quarter. The Supervisory
+Board defined the target – effective from July 1, 2017 - for the
+proportion of women on the Managing Board by June 30, 2022,
+as explained in greater detail in chapter c.4.2 CORPORATE GOVER-
+January 12,
+1970
+Janina Kugel
+August 1,
+2014
+C.4.1 Management
+June 23,
+1957
+President and
+Siemens AG is subject to German corporate law. Therefore, it has
+a two-tier board structure, consisting of a Managing Board and a
+Supervisory Board.
+C.4.1.1 MANAGING BOARD
+As the Company's top management body, the Managing Board
+is committed to serving the interests of the Company and achiev-
+ing sustainable growth in company value. The members of the
+Managing Board are jointly responsible for the entire manage-
+ment of the Company and decide on the basic issues of business
+policy and corporate strategy as well as on the Company's annual
+and multi-year plans.
+The Managing Board prepares the Company's Quarterly State-
+ments and Half-year Financial Report, the Annual Financial
+Statements of Siemens AG, the Consolidated Financial State-
+ments of the Siemens Group and the Combined Management
+Report of Siemens AG and the Siemens Group. In addition, the
+Managing Board ensures that the Company adheres to statutory
+requirements, official regulations and internal Company policies
+and works to achieve compliance with these provisions and pol-
+icies within the Siemens Group. The Managing Board has estab-
+lished a comprehensive compliance management system. De-
+tails are available on the Siemens Global Website at www.
+SIEMENS.COM/SUSTAINABILITY-FIGURES
+The Managing Board and the Supervisory Board cooperate
+closely for the benefit of the Company. The Managing Board in-
+forms the Supervisory Board regularly, comprehensively and
+without delay on all issues of importance to the Company with
+regard to strategy, planning, business development, financial
+position, earnings, compliance and risks. When filling managerial
+positions at the Company, the Managing Board takes diversity
+into consideration and, in particular, aims for an appropriate con-
+sideration of women and internationality.
+The Supervisory Board has defined for a second time a target for
+the proportion of women in the Managing Board of Siemens AG
+and has set a deadline for its attainment. The Managing Board
+has defined again targets for the proportion of women at the
+two management levels below the Managing Board and has set
+a deadline for their attainment. Details are set out in chapter
+→ C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN ON THE MANAGING BOARD
+AND AT THE TWO MANAGEMENT LEVELS IMMEDIATELY BELOW THE MANAGING
+BOARD.
+Chief Executive Officer
+The Managing Board has one committee, the Equity and Com-
+pensation Committee. This committee, to which the former
+Equity and Employee Stock Committee has been transferred,
+comprises the President and CEO, the Chief Financial Officer,
+the Chief Human Resources Officer and, as a consultative mem-
+ber, the Chief of Staff of Siemens AG. It is responsible for the
+duties assigned to it by decision of the Managing Board and has
+assumed the duties previously assigned to the Equity and Em-
+ployee Stock Committee - including, in particular, duties in con-
+nection with capital measures and equity-linked financial instru-
+ments, relating to the compensation of the employees and
+managers of the Siemens Group (except for the compensation
+of the members of the Managing Board and Top Management)
+and relating to share-based compensation components and em-
+ployee share plans.
+Information on the areas of responsibility and the curricula vitae of
+the members of the Managing Board are available on the Siemens
+Global Website at www.SIEMENS.COM/COMPANY-STRUCTURE. Infor-
+mation on the compensation paid to the members of the Managing
+Board is provided in chapter → A.10 COMPENSATION REPORT.
+Additional Information
+137
+Members of the Managing Board and positions
+held by Managing Board members
+In fiscal 2017, the Managing Board comprised the following
+members:
+Name
+Date of birth
+Joe Kaeser
+The Equity and Compensation Committee comprises Joe Kaeser
+(Chairman), Dr. Ralf P. Thomas, Janina Kugel and, as a consultative
+member, Mariel von Schumann (as of September 30, 2017).
+At our meeting on January 31, 2017, the Managing Board reported
+to us on the Company's business and financial position following
+the conclusion of the first quarter. The Supervisory Board ap-
+proved Managing Board decisions regarding financing measures.
+In addition, the Supervisory Board was informed about the Nom-
+inating Committee's decision that Jim Hagemann Snabe be nom-
+inated as a candidate for election by the Supervisory Board to the
+position of Supervisory Board Chairman on January 31, 2018.
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in accounting for con-
+structing contracts, refer to → NOTE 2 SIGNIFICANT ACCOUNTING
+POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the NOTES TO THE
+CONSOLIDATED FINANCIAL STATEMENTS. With respect to provisions for
+order related losses and risks, refer to NOTE 17 PROVISIONS in
+the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
+-
+Other information
+Management is responsible for the following other information:
+➤ the Responsibility Statement in chapter → c.1 of the Annual
+Report 2017, and
+> Corporate Governance in chapter c.4 of the Annual Report
+2017.
+The Supervisory Board is responsible for the following other
+information:
+> the Report of the Supervisory Board in chapter
+Annual Report 2017.
+C.3 of the
+130
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in accounting for uncer-
+tain tax positions and deferred taxes, refer to → NOTE 2 SIGNIFI-
+CANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in
+the NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS. With respect
+to disclosures for deferred tax assets and liabilities, refer to
+→ NOTE 7 INCOME TAXES in the NOTES TO THE CONSOLIDATED FINANCIAL
+STATEMENTS.
+Additional Information
+In connection with our audit, our responsibility is to read the
+other information, and, in doing so, consider whether the other
+information
+> is materially inconsistent with the consolidated financial
+statements, the group management report or our knowledge
+obtained in the audit, or
+> otherwise appears to be materially misstated.
+If, based on the work we have performed, we conclude that there
+is a material misstatement of this other information, we are re-
+quired to report that fact. We have nothing to report in this regard.
+RESPONSIBILITIES OF MANAGEMENT AND THE
+SUPERVISORY BOARD FOR THE CONSOLIDATED
+FINANCIAL STATEMENTS AND THE GROUP
+MANAGEMENT REPORT
+Management is responsible for the preparation of consolidated
+financial statements that comply, in all material respects, with
+IFRSS as adopted by the EU and the supplementary provisions of
+German law pursuant to Sec. 315 a (1) HGB and full IFRS as issued
+by the IASB, for the preparation of consolidated financial state-
+ments that give a true and fair view of the net assets, financial
+position and results of operations of the Group in accordance
+with these requirements and for such internal control as manage-
+ment determines is necessary to enable the preparation of con-
+solidated financial statements that are free from material mis-
+statement, whether due to fraud or error.
+In preparing the consolidated financial statements, management
+is responsible for assessing the Group's ability to continue as a
+going concern, disclosing, as applicable, matters related to going
+concern and using the going concern basis of accounting unless
+management either intends to liquidate the Group or to cease
+operations, or has no realistic alternative but to do so.
+In addition, management is responsible for the preparation of
+the group management report that as a whole provides a suitable
+view of the Group's position and, in all material respects, is con-
+sistent with the consolidated financial statements, complies with
+the provisions of German law and suitably presents the opportu-
+nities and risks of future development and for such arrangements
+and measures (systems) as management deems necessary to
+enable the preparation of a group management report in accor-
+dance with the applicable provisions of German law and to fur-
+nish sufficient appropriate evidence for the statements in the
+group management report.
+Our opinions on the consolidated financial statements and the
+group management report do not cover the other information
+and we do not express an opinion or any other form of assurance
+conclusion thereon.
+The Supervisory Board is responsible for overseeing the Group's
+financial reporting process for the preparation of the consoli-
+dated financial statements and the group management report.
+Our audit procedures did not lead to any reservations relating to
+the accounting for uncertain tax positions and deferred taxes.
+management's processes and tested internal controls imple-
+mented for the identification, recognition and measurement of
+tax positions. As part of our audit procedures for uncertain tax
+positions, we evaluated whether management's assessment of
+the tax effects of significant business transactions and events in
+fiscal year 2017, which could result in uncertain tax positions or
+impact the measurement of existing uncertain tax positions,
+comply with applicable tax law. This includes, in particular, tax
+effects from the acquisition or disposal of businesses, corporate
+(intragroup) restructuring activities, results of examinations by
+tax authorities, and cross-border transactions including the de-
+termination of transfer prices. In order to assess measurement
+and completeness, we also obtained confirmations from external
+tax advisors and inspected expert tax reports commissioned by
+Siemens for individual matters. Further, we evaluated manage-
+ment's assessments with respect to the prospects of success of
+appeal and tax court proceedings by inquiring of the Siemens tax
+department and by considering current tax case law.
+rights, penalties for delay and breach of contract as well as liqui-
+dated damages. In order to evaluate whether revenues were rec-
+ognized on an accrual basis for the selected projects, we ana-
+lyzed billable revenues and corresponding cost of sales to be
+recognized in the statement of income in the reporting period
+considering the extent of progress towards completion, and ex-
+amined the accounting for the associated positions in the state-
+ment of financial position. Considering the requirements of
+IAS 11, we also assessed the accounting for contract amendments
+or contractually agreed options. We further performed inquiries
+of project management (both commercial and technical project
+managers) with respect to the development of the projects, the
+reasons for deviations between planned and actual costs, the
+current estimated costs to complete the projects, and manage-
+ment's assessments on probabilities that contract risks will mate-
+rialize. In designing our audit procedures, we also considered
+results from project audits conducted by the internal audit func-
+tion. Furthermore, we obtained evidence from third parties for
+selected projects (e.g. project acceptance documentation, con-
+tractual terms and conditions, and legal confirmations regarding
+alleged breaches of contract and asserted claims) and inspected
+plant and project locations. To identify anomalies in margin de-
+velopment throughout the projects' execution, we also applied
+data analysis procedures.
+February 1,
+2015
+Due to the large contract volume and risk profile, our audit pro-
+cedures especially focused on large contracts for the construc-
+tion of power plants on a turnkey basis, high-voltage-direct-cur-
+rent solutions, the delivery of high-speed and commuter trains,
+and the construction of offshore wind farms.
+Our audit procedures did not lead to any reservations relating to
+revenue recognition on construction contracts.
+Provisions for proceedings out of or in connection
+with alleged breaches of contract and compliance
+violations as well as provisions for asset retirement
+obligations
+Reasons why the matter was determined to be a key audit
+matter: We considered the accounting for provisions for pro-
+ceedings out of or in connection with alleged breaches of contract
+and compliance violations, including allegations of corruption
+and antitrust violations, and for asset retirement obligations to
+be a key audit matter. These matters are subject to inherent un-
+certainties and require estimates that could have a significant
+impact on the recognition and measurement of the respective
+provision and, accordingly, on net assets and results of opera-
+tions. Proceedings out of or in connection with alleged breaches
+of contract and compliance violations are subject to uncertain-
+ties because they frequently involve complex legal issues and
+accordingly, considerable management judgment, in particular
+when determining whether and in what amount a provision is
+required to account for the risks. The uncertainties and estimates
+with respect to asset retirement obligations pertain especially to
+the estimated costs of decommissioning, the estimated time
+frame over which cash outflows are expected, and the relevant
+discount rates.
+Audit approach: During our audit of the financial reporting of
+proceedings out of or in connection with alleged breaches of
+contract and compliance violations, we analyzed the processes
+and internal controls implemented by Siemens for the identifica-
+tion, assessment and accounting of legal and regulatory proceed-
+ings. To determine what potentially significant pending legal
+proceedings or claims asserted are known and whether manage-
+ment's estimates of the expected cash outflows are reasonable,
+our audit procedures included inquiries of management and
+other persons within the Group entrusted with these matters,
+obtaining written statements from in-house legal counsels with
+respect to the assessment of estimated cash outflows and their
+probability, obtaining confirmations from external legal advisors
+and evaluating internal statements concerning the accounting in
+the consolidated financial statements. Furthermore, we exam-
+ined legal consulting expense accounts for any indications of
+legal matters not yet considered, and inspected additional appro-
+priate evidence.
+In assessing the recoverability of deferred tax assets, we particu-
+larly analyzed management's assumptions with respect to pro-
+jected future taxable income and compared them to internal
+business plans. As part of our audit procedures for deferred tax
+liabilities, we especially assessed management's assumptions
+regarding the permanent reinvestment of undistributed earnings
+of subsidiaries considering the dividend plans.
+We further considered alleged or substantiated non-compliance
+with statutory provisions, official regulations and internal com-
+pany policies (compliance violations) by inspecting internal and
+external statements on specific matters, obtaining written state-
+ments from external legal advisors, and by inquiring of the com-
+pliance organization. In this regard, we, among other procedures,
+evaluated the conduct and results of internal investigations by
+inspecting internal reports and the measures taken to remediate
+identified weaknesses, and assessed whether any risks are to be
+reflected in the consolidated financial statements.
+Additional Information
+129
+management, evaluating the valuation methods used by drawing
+on the expertise of our valuation specialists, and assessing the
+significant estimates resulting from the long-term nature.
+Through inquiries of persons entrusted with the matter and in-
+spections of internal and external documents, we evaluated man-
+agement's assessment that Siemens is, as of September 30, 2017,
+not covered by the regulations for nuclear waste disposal which
+were partly amended in fiscal year 2017 ("Gesetz zur Neuordnung
+der Verantwortung in der kerntechnischen Entsorgung"), and
+therefore continues to adhere to the German Atomic Energy Act
+("deutsches Atomgesetz"), whereby radioactive waste resulting
+from the closure of the nuclear facility must be collected and de-
+livered to a government-developed final storage facility. In addi-
+tion, we assessed the adjustments to the assumed inflation rates
+and the changes to the applied interest yield curve in fiscal year
+2017 by inquiring of management and, with the assistance of our
+internal valuation specialists, by comparing the above-mentioned
+changes to publicly available market data.
+Furthermore, we evaluated the disclosures on proceedings out of
+or in connection with alleged breaches of contract and compli-
+ance violations as well as on asset retirement obligations in the
+notes to the consolidated financial statements.
+Our audit procedures did not lead to any reservations relating
+to the accounting for proceedings out of or in connection with
+alleged breaches of contract and compliance violations as well as
+for asset retirement obligations.
+Reference to related disclosures: With regard to the account-
+ing and measurement policies applied in accounting for provi-
+sions, refer to → NOTE 2 SIGNIFICANT ACCOUNTING POLICIES AND CRIT-
+ICAL ACCOUNTING ESTIMATES in the NOTES TO THE CONSOLIDATED
+FINANCIAL STATEMENTS. With respect to proceedings out of or in
+connection with alleged breaches of contract and compliance
+violations, refer to → NOTE 21 LEGAL PROCEEDINGS. With respect to
+the uncertainties and estimates relating to asset retirement obli-
+gations, refer to → NOTE 17 PROVISIONS.
+Uncertain tax positions and deferred taxes
+Reasons why the matter was determined to be a key audit
+matter: Siemens operates in numerous countries and is subject
+to different local tax regulations. The accounting for uncertain
+tax positions as well as deferred taxes requires management to
+exercise considerable judgment and make estimates and assump-
+tions, and was therefore a key audit matter. This particularly per-
+tains to the measurement and completeness of uncertain tax
+positions, the recoverability of deferred tax assets and the mea-
+surement and completeness of deferred tax liabilities.
+Audit approach: With the assistance of internal tax specialists
+who have knowledge of relevant tax regulations, we assessed
+Based on the above described uncertainties, our audit proce-
+dures with respect to asset retirement obligations focused on the
+remediation and environmental protection liabilities for the de-
+commissioning of the facilities in Hanau, Germany (Hanau facil-
+ities), as well as for the nuclear research and service center in
+Karlstein, Germany (Karlstein facilities). Our audit procedures
+included, among others, assessing the appropriateness as audit
+evidence of an independent expert's report commissioned by
+On November 30, 2016, we discussed the financial statements
+and the Combined Management Report for Siemens AG and the
+Siemens Group as of September 30, 2016, the Annual Report for
+2016 (including the Report of the Supervisory Board, the Corpo-
+rate Governance Report and the Compensation Report) and the
+agenda for the Annual Shareholders' Meeting on February 1,
+2017. The Managing Board informed us about the current status
+of acquisitions and divestments in particular, the planned
+merger of Siemens' wind power business with the publicly listed
+company Gamesa Corporación Tecnológica S.A. (Spain) and the
+status of the integration of the two previously acquired compa-
+nies Dresser Rand Group Inc. and CD-adapco Ltd. In addition, the
+Managing Board reported on the status of the implementation of
+the "Vision 2020" strategy. We also discussed the annual report
+of the Chief Compliance Officer and the pension system. In addi-
+tion, the Managing Board informed us about the Mobility Divi-
+sion's business position and business development. Finally, at
+this meeting, the Supervisory Board approved the recommenda-
+tion of the Chairman's Committee that Michael Sen and Cedrik
+Neike be appointed full members of the Managing Board, effec-
+tive April 1, 2017.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT
+OF THE CONSOLIDATED FINANCIAL STATEMENTS
+AND THE GROUP MANAGEMENT REPORT
+Our objectives are to obtain reasonable assurance about whether
+the consolidated financial statements as a whole are free from
+material misstatement, whether due to fraud or error, and
+whether the group management report as a whole provides a
+suitable view of the Group's position and, in all material respects,
+is consistent with the consolidated financial statements and our
+audit findings, complies with the provisions of German law and
+suitably presents the opportunities and risks of future develop-
+ment, and to issue an independent auditor's report that includes
+our opinions on the consolidated financial statements and the
+group management report.
+We exercise professional judgment and maintain professional
+skepticism throughout the audit. We also:
+The auditor responsible for the audit is Thomas Spannagl.
+Munich, November 27, 2017
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+дения
+Spannagl
+Wirtschaftsprüfer
+[German Public Auditor]
+Buits an
+Breitsameter
+We provide those charged with governance with a statement that
+we have complied with relevant ethical requirements regarding
+independence and communicate with them all relationships and
+Wirtschaftsprüferin
+Additional Information
+C.3 Report of the Supervisory Board
+Berlin and Munich, November 29, 2017
+In fiscal 2017, the Supervisory Board performed, in accordance
+with its obligations, the duties assigned to it by law, the Siemens
+Articles of Association and the Bylaws for the Supervisory Board.
+We regularly advised the Managing Board on the management
+of the Company and monitored the Managing Board's activities.
+We were directly involved at an early stage in all major decisions
+regarding the Company. In written and oral reports, the Managing
+Board regularly provided us with timely and comprehensive
+information on Company planning and business operations as
+well as on the strategic development and current state of the
+Company. On the basis of reports submitted by the Managing
+Board, we considered in detail business development and all de-
+cisions and transactions of major significance to the Company.
+Deviations from business plans were explained to us in detail and
+intensively discussed. The Managing Board coordinated the Com-
+pany's strategic orientation with us. The proposals made by the
+Managing Board were approved by the Supervisory Board and/or
+the relevant Supervisory Board committees after in-depth exam-
+ination and consultation. In my capacity as Chairman of the Super-
+visory Board, I was also in regular contact with the Managing
+Board and, in particular, with the President and Chief Executive
+Officer and was kept up-to-date on current developments in the
+Company's business situation and on key business transactions.
+TOPICS AT THE PLENARY MEETINGS
+OF THE SUPERVISORY BOARD
+We held a total of six regular plenary meetings and one extraor-
+dinary meeting in fiscal 2017. Topics of discussion at our regular
+plenary meetings were revenue, profit and employment develop-
+ment at Siemens AG, the Company's operating units and the
+Siemens Group as well as the Company's financial position and
+the results of its operations. We also concerned ourselves as re-
+quired with major investment and divestment projects and with
+certain risks to the Company.
+At our meeting on November 9, 2016, we discussed the Compa-
+ny's key financial figures for fiscal 2016 and approved the budget
+for 2017. On the basis of reported target achievement, we also
+defined the compensation of the Managing Board members for
+fiscal 2016. The appropriateness of this compensation was con-
+firmed by an internal review. On the recommendation of the
+Compensation Committee, we also approved the targets for
+Managing Board compensation for fiscal 2017. The remuneration
+system for the Managing Board members for fiscal 2017 is un-
+changed vis-à-vis the remuneration system for fiscal 2015, which
+the Annual Shareholders' Meeting approved by a majority of
+more than 92% on January 27, 2015. At our meeting on Novem-
+ber 9, 2016, we also approved the preparation of the public list-
+ing of the strategic unit Healthineers as well as the acquisition of
+Mentor Graphics Corporation.
+[German Public Auditor]
+Reasonable assurance is a high level of assurance, but is not a
+guarantee that an audit conducted in accordance with Sec. 317
+HGB and the EU Audit Regulation as well as generally accepted
+standards on auditing promulgated by the IDW and in supple-
+mentary compliance with ISA will always detect a material mis-
+statement when it exists. Misstatements can arise from fraud or
+error and are considered material if, individually or in the aggre-
+gate, they could reasonably be expected to influence the eco-
+nomic decisions of users taken on the basis of these consolidated
+financial statements and the group management report.
+We communicate with those charged with governance regard-
+ing, among other matters, the planned scope and timing of the
+audit and significant audit findings, including any significant de-
+ficiencies in internal control that we identify during our audit.
+legal provisions and the view it gives of the Group's position;
+> identify and assess the risks of material misstatement of the
+consolidated financial statements and the group manage-
+ment report, whether due to fraud or error, design and per-
+form audit procedures responsive to those risks, and obtain
+audit evidence that is sufficient and appropriate to provide a
+basis for our opinions. The risk of not detecting a material
+misstatement resulting from fraud is higher than for one re-
+sulting from error, as fraud may involve collusion, forgery,
+intentional omissions, misrepresentations, or the override of
+internal control;
+> obtain an understanding of internal control relevant to the au-
+dit of the consolidated financial statements and the arrange-
+ments and measures relevant to the audit of the group man-
+agement report in order to design audit procedures that are
+appropriate in the circumstances, but not for the purpose of
+expressing an opinion on the effectiveness of these systems;
+> evaluate the appropriateness of accounting policies used and
+the reasonableness of accounting estimates and related dis-
+closures made by management;
+Additional Information
+131
+132
+> conclude on the appropriateness of management's use of the
+going concern basis of accounting and, based on the audit evi-
+dence obtained, whether a material uncertainty exists related
+to events or conditions that may cast significant doubt on the
+Group's ability to continue as a going concern. If we conclude
+that a material uncertainty exists, we are required to draw
+attention in our auditor's report to the related disclosures in
+the consolidated financial statements and the group manage-
+ment report or, if such disclosures are inadequate, to modify
+our respective opinion. Our conclusions are based on the
+audit evidence obtained up to the date of our auditor's report.
+other matters that may reasonably be thought to bear on our
+independence, and related safeguards.
+From the matters communicated with those charged with gover-
+nance, we determine those matters that were of most signi-
+ficance in the audit of the consolidated financial statements of
+the current period and are therefore the key audit matters. We
+describe each key audit matter in our auditor's report unless laws
+or regulations preclude public disclosure about the matter.
+> perform procedures on the forward-looking statements made
+by management in the group management report. In partic-
+ular, on the basis of sufficient appropriate audit evidence, we
+walk through the significant assumptions underlying manage-
+ment's forward-looking statements and assess whether the
+forward-looking statements were appropriately derived from
+these assumptions. We do not provide a separate opinion on
+the forward-looking statements and underlying assumptions.
+There is a significant unavoidable risk that future events will
+differ materially from the forward-looking statements.
+However, future events or conditions may cause the Group to Report on other legal and regulatory
+> evaluate the overall presentation, structure and content of the
+consolidated financial statements, including the disclosures,
+and whether the consolidated financial statements represent
+the underlying transactions and events in a manner that
+achieves a true and fair view of the net assets, financial posi-
+tion and results of operations of the Group in accordance with
+IFRS as adopted by the EU and the supplemental provisions of
+German law applicable pursuant to Sec. 315 a (1) HGB and full
+IFRS as issued by the IASB;
+> obtain sufficient appropriate audit evidence regarding the
+financial information of the entities or business activities
+within the Group to express opinions on the consolidated
+financial statements and the group management report.
+We are responsible for the direction, supervision and perfor-
+mance of the group audit. We remain solely responsible for
+our audit opinions;
+> evaluate the group management report's consistency with the
+requirements
+OTHER REPORTING ITEMS IN ACCORDANCE WITH
+ART. 10 OF THE EU AUDIT REGULATION
+We were elected as auditor of the consolidated financial state-
+ments by the Annual Shareholders' Meeting on February 1, 2017.
+We were engaged by the Supervisory Board on February 1, 2017.
+We have been the auditor of Siemens Aktiengesellschaft for an
+uninterrupted period since the audit of the consolidated financial
+statements for the fiscal year from October 1, 2008 to Septem-
+ber 30, 2009.
+We confirm that the audit opinions included in this auditor's
+report are consistent with the additional report to the Audit
+Committee in accordance with Art. 11 of the EU Audit Regulation
+(audit report).
+consolidated financial statements, its compliance with the Responsible auditor
+cease to continue as a going concern;
+January 31,
+2020
+> ISCOSA Industries and Maintenance
+March 7,
+1973
+Österreich, Austria (Chairman)
+> Siemens Aktiengesellschaft
+> Siemens AB, Sweden (Chairman)
+Positions outside Germany:
+> Siemens Gamesa Renewable Energy
+S.A., Spain
+> Siemens Corp., USA
+(Chairwoman and CEO)
+Positions outside Germany:
+> Siemens Proprietary Ltd.,
+> VA TECH T&D Co. Ltd., Saudi Arabia
+> Siemens Ltd., Saudi Arabia
+Ltd., Saudi Arabia (Deputy Chairman)
+>Arabia Electric Ltd. (Equipment),
+Saudi Arabia
+Logistics GmbH, Constance
+Positions outside Germany:
+> Siemens Postal, Parcel & Airport
+German positions:
+> Siemens Ltd., India
+> Siemens W.L.L., Qatar
+Positions outside Germany:
+Siemens Schweiz AG, Switzerland
+(Chairman)
+> Siemens Healthcare GmbH, Munich
+Cedrik Neike
+S.A., Spain
+> Siemens Corp., USA (Deputy Chairman)
+> Siemens Gamesa Renewable Energy
+Österreich, Austria
+> Siemens Aktiengesellschaft
+Positions outside Germany:
+> Siemens Healthcare GmbH, Munich
+German positions:
+German positions:
+> Siemens Healthcare GmbH, Munich
+Positions outside Germany:
+German positions:
+2023
+September 18, September 17,
+2013
+> Siemens Ltd., India
+> Siemens Ltd., China (Chairman)
+Positions outside Germany:
+> Siemens Gamesa Renewable Energy
+S.A., Spain
+Group company positions
+(as of September 30, 2017)
+South Africa (Chairman)
+> Pensions-Sicherungs-Verein
+Versicherungsverein auf Gegen-
+seitigkeit, Cologne
+Positions outside Germany:
+Memberships in supervisory boards whose establishment is required by law
+138 Additional Information
+March 7,
+1961
+Ralf P. Thomas,
+Dr. rer. pol.
+March 31,
+2022
+November
+17, 1968
+Michael Sen
+or in comparable domestic or foreign controlling bodies of business enterprises
+(until March 31, 2017)
+January 1,
+2008
+June 27,
+1963
+Prof. Dr.-Ing.
+Siegfried Russwurm,
+May 31,
+2020
+April 1,
+2017
+> Konecranes Plc., Finland
+March 31,
+2017
+External positions
+April 1,
+2017
+> Deutsche Messe AG, Hanover
+> EOS Holding AG, Krailling
+>inpro Innovationsgesellschaft für
+fortgeschrittene Produktions-
+systeme in der Fahrzeugindustrie
+mbH, Berlin
+German positions:
+(as of September 30, 2017)
+German positions:
+> Penske Automotive Group Inc., USA
+Positions outside Germany:
+> Atos SE, France
+(Deputy Chairman)
+> OSRAM GmbH, Munich
+Positions outside Germany:
+> OSRAM Licht AG, Munich
+German positions:
+> NXP Semiconductors B.V., Netherlands
+Positions outside Germany:
+> Daimler AG, Stuttgart
+> Allianz Deutschland AG, Munich
+German positions:
+(Deputy Chairman)
+Robert Kensbock
+14
+100%
+7
+7
+Hans-Jürgen Hartung
+82%
+17
+23
+100%
+7
+7
+Reinhard Hahn
+100%
+23
+21
+Bettina Haller
+21
+Norbert Reithofer, Dr.-Ing. Dr.-Ing. E.h.
+Harald Kern
+Hans Michael Gaul, Dr. iur.
+12
+100%
+7
+7
+Gérard Mestrallet
+96%
+22
+23
+Nicola Leibinger-Kammüller, Dr. phil.
+96%
+27
+28
+Jürgen Kerner
+81%
+13
+16
+100%
+90%
+In fiscal 2017, the Audit Committee comprised Dr. Hans Michael
+Gaul (Chairman), Dr. Gerhard Cromme, Bettina Haller, Robert
+Kensbock, Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim
+Hagemann Snabe and Birgit Steinborn. The members of the Audit
+Committee are, as a group, familiar with the sector in which the
+Company operates. Pursuant to the German Stock Corporation
+Act, the Audit Committee must include at least one Supervisory
+Board member with knowledge and experience in the areas of
+accounting or the auditing of financial statements. Pursuant to
+the Code, the chairman or chairwoman of the Audit Committee
+shall have specialist knowledge and experience in the application
+of accounting principles and internal control processes, shall be
+independent and may not be a former Managing Board member
+whose appointment ended less than two years ago. The Chair-
+man of the Audit Committee, Dr. Hans Michael Gaul, fulfills these
+requirements.
+10
+Birgit Steinborn
+Gerhard Cromme, Dr. iur
+(Chairman)
+Supervisory Board Members
+Disclosure of participation by individual
+Supervisory Board members in meetings
+of the Supervisory Board of Siemens AG
+and its committees in fiscal 2017
+143
+Additional Information
+In fiscal 2017, the Innovation and Finance Committee comprised
+Dr. Gerhard Cromme (Chairman), Robert Kensbock, Harald Kern,
+Jürgen Kerner, Dr. Norbert Reithofer, Jim Hagemann Snabe, Birgit
+Steinborn and Werner Wenning.
+The Innovation and Finance Committee discusses, in particular,
+based on the Company's overall strategy, the Company's fo-
+cuses of innovation and prepares the Supervisory Board's discus-
+sions and resolutions regarding questions relating to the Com-
+pany's financial situation and structure including annual
+planning (budget) - as well as the Company's fixed asset invest-
+ments and its financial measures. In addition, the Innovation
+and Finance Committee has been authorized by the Supervisory
+Board to decide on the approval of transactions and measures
+that require Supervisory Board approval and have a value of less
+than €600 million.
+In fiscal 2017, the Mediation Committee comprised Dr. Gerhard
+Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
+Wenning.
+The Mediation Committee submits proposals to the Supervisory
+Board in the event that the Supervisory Board cannot reach the
+two-thirds majority required for the appointment or dismissal of
+a Managing Board member on the first ballot.
+In fiscal 2017, the Nominating Committee comprised Dr. Gerhard
+Cromme (Chairman), Dr. Hans Michael Gaul, Dr. Nicola Leibin-
+ger-Kammüller and Werner Wenning.
+The Nominating Committee is responsible for making recom-
+mendations to the Supervisory Board on suitable candidates for
+election by the Annual Shareholders' Meeting as shareholder
+representatives on the Supervisory Board. In preparing these rec-
+ommendations, the objectives defined by the Supervisory Board
+for its composition – in particular, independence and diversity -
+are to be appropriately considered, as are the proposed candi-
+dates' required knowledge, abilities and professional experience.
+Fulfillment of the required profile of skills and expertise is also to
+be aimed at. Attention shall be paid to an appropriate participa-
+tion of women and men in accordance with the legal require-
+ments relating to the gender quota as well as to ensuring that the
+members of the Supervisory Board are, as a group, familiar with
+the sector in which the Company operates.
+In fiscal 2017, the Compliance Committee comprised Dr. Gerhard
+Cromme (Chairman), Dr. Hans Michael Gaul, Bettina Haller, Har-
+ald Kern, Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
+Birgit Steinborn and Sibylle Wankel.
+The Compliance Committee concerns itself, in particular, with
+monitoring the Company's adherence to statutory provisions,
+official regulations and internal Company policies (compliance).
+11
+auditors and submits the corresponding proposal to the Super-
+visory Board. It awards the audit contract to the independent
+auditors elected by the Annual Shareholders' Meeting and moni-
+tors the independent audit of the financial statements as well as
+the auditors' selection, independence, qualification, rotation and
+efficiency.
+142 Additional Information
+(First Deputy Chairwoman)
+9
+Werner Wenning
+and Committee meetings
+Michael Diekmann
+100%
+7
+7
+Olaf Bolduan
+100%
+28
+28
+(Second Deputy Chairman)
+100%
+32
+32
+100%
+38
+38
+Presence
+Participation
+Supervisory Board
+92%
+Since making its last Declaration of Conformity dated Octo-
+ber 1, 2016, Siemens AG has complied with the recommen-
+dations of the Code.
+7
+Siemens AG
+Werner-von-Siemens-Str. 1
+80333 Munich
+Germany
+WWW.SIEMENS.COM
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
++49 89 636-1332474 (Investor Relations)
+press@siemens.com
+investorrelations@siemens.com
+© 2017 by Siemens AG, Berlin and Munich
+A general description of the functions and operation of the
+Managing Board and the Supervisory Board can be found in chapter
+→ C.4.1 MANAGEMENT AND CONTROL STRUCTURE. Further details can
+be derived from the bylaws for the corporate bodies concerned.
+C.4.2.3 OPERATION OF THE MANAGING BOARD
+AND THE SUPERVISORY BOARD, AND COMPOSITION
+AND OPERATION OF THEIR COMMITTEES
+The Business Conduct Guidelines provide the ethical and legal
+framework within which we want to maintain our successful ac-
+tivities. They contain the basic principles and rules for our con-
+duct within our Company and in relation to our external partners
+and the general public. They set out how we meet our ethical and
+legal responsibility as a Company and give expression to our cor-
+porate values of being "Responsible" - "Excellent" - "Innovative".
+In the 170 years of its existence, our Company has built an excel-
+lent reputation around the world. Technical performance, inno-
+vation, quality, reliability, and international engagement have
+made Siemens one of the leading companies in electronics and
+electrical engineering. It is top performance with the highest eth-
+ics that has made Siemens strong. This is what the Company
+should continue to stand for in the future.
+Our Company's values and
+Business Conduct Guidelines
+145
+Additional Information
+Further corporate governance practices applied beyond legal
+requirements are contained in our Business Conduct Guidelines.
+Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
+over offer, a management board should convene an extraordinary
+general meeting at which shareholders discuss the takeover offer
+and may decide on corporate actions. The convening of a share-
+holders' meeting - even taking into account the shortened time
+limits stipulated in the German Securities Acquisition and Take-
+over Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
+organizational challenge for large publicly listed companies. It
+appears doubtful whether the associated effort is justified in
+cases where no relevant decisions by the shareholders' meeting
+are intended. Therefore, extraordinary shareholders' meetings
+shall be convened only in appropriate cases.
+E-mail
+Siemens voluntarily complies with the Code's non-binding sug-
+gestions, with the following exception:
+Fax
+Internet
+C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
+ON THE MANAGING BOARD AND AT THE
+TWO MANAGEMENT LEVELS IMMEDIATELY
+BELOW THE MANAGING BOARD; INFORMATION
+ON SUPERVISORY BOARD COMPLIANCE WITH
+MINIMUM GENDER QUOTA REQUIREMENTS
+At Siemens AG, the target for the share of women on the Managing
+Board has been set at a minimum of 2/8, and the corresponding
+target for each of the two management levels immediately
+below the Managing Board has been set at 20%, applicable in
+each case until June 30, 2022. Due to the appointment of
+Mr. Neike and Mr. Sen to the expanded Managing Board, which
+now has eight members, the target for the Managing Board of
+2/7 until June 30, 2017 has been missed since April 1, 2017. The
+target for the share of women for each of the two management
+levels immediately below the Managing Board at 10% was ful-
+filled until June 30, 2017. Until June 30, 2017, assignments to
+those two management levels were based on a global system of
+position levels. At the end of the reporting period, the company
+completely abolished this global system of position levels. As a
+result, the management levels on which the new targets are
+based have been redefined, and the new targets are not compa-
+rable to those in effect up to June 30, 2017.
+The composition of the Supervisory Board fulfilled the legal re-
+quirements regarding the minimum gender quota in the report-
+ing period.
+146
+Additional Information
+C.5 Notes and forward-looking statements
+This document contains statements related to our future business
+and financial performance and future events or developments
+involving Siemens that may constitute forward-looking state-
+ments. These statements may be identified by words such as "ex-
+pect," "look forward to," "anticipate,” “intend," "plan," "believe,"
+"seek," "estimate," "will," "project" or words of similar meaning.
+We may also make forward-looking statements in other reports,
+in presentations, in material delivered to shareholders and in
+press releases. In addition, our representatives may from time to
+time make oral forward-looking statements. Such statements are
+based on the current expectations and certain assumptions of
+Siemens' management, of which many are beyond Siemens' con-
+trol. These are subject to a number of risks, uncertainties and
+factors, including, but not limited to those described in disclo-
+sures, in particular in the chapter Risks in this Annual Report.
+Should one or more of these risks or uncertainties materialize, or
+should underlying expectations not occur or assumptions prove
+incorrect, actual results, performance or achievements of Siemens
+may (negatively or positively) vary materially from those de-
+scribed explicitly or implicitly in the relevant forward-looking
+statement. Siemens neither intends, nor assumes any obligation,
+to update or revise these forward-looking statements in light of
+developments which differ from those anticipated.
+-
+This document includes - in the applicable financial reporting
+framework not clearly defined – supplemental financial mea-
+sures that are or may be alternative performance measures
+(non-GAAP-measures). These supplemental financial measures
+should not be viewed in isolation or as alternatives to measures
+of Siemens' net assets and financial positions or results of opera-
+tions as presented in accordance with the applicable financial
+reporting framework in its Consolidated Financial Statements.
+Other companies that report or describe similarly titled alterna-
+tive performance measures may calculate them differently.
+Due to rounding, numbers presented throughout this and other
+documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This document is an English language translation of the German
+document. In case of discrepancies, the German language docu-
+ment is the sole authoritative and universally valid version.
+For technical reasons, there may be differences between the
+accounting records appearing in this document and those pub-
+lished pursuant to legal requirements.
+The "Sustainability Information 2017" which reports on Sustain-
+ability and Citizenship at Siemens is available at:
+COM/INVESTOR/EN/
+WWW.SIEMENS.
+Additional Information
+147
+Address
+Phone
+Suggestions of the Code
+C.4.2.2 INFORMATION ON
+CORPORATE GOVERNANCE PRACTICES
+The Managing Board The Supervisory Board"
+11
+11
+95%
+21
+22
+Sibylle Wankel
+Jim Hagemann Snabe
+100%
+7
+7
+Michael Sigmund
+100%
+7
+7
+Nathalie von Siemens, Dr. phil.
+100%
+7
+100%
+C.4.1.3 SHARE TRANSACTIONS BY MEMBERS
+OF THE MANAGING AND SUPERVISORY BOARDS
+Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
+pean Parliament and Council on market abuse (Market Abuse
+Regulation), members of the Managing Board and the Super-
+visory Board are legally required to disclose all transactions con-
+ducted on their own account relating to the shares or debt instru-
+ments of Siemens AG or to derivatives or financial instruments
+linked thereto, if the total value of such transactions entered into
+by a board member or any closely associated person reaches or
+exceeds €5,000 in any calendar year. All transactions reported
+to Siemens AG in accordance with this requirement have been
+duly published and are available on the Company's website at:
+WWW.SIEMENS.COM/DIRECTORS-DEALINGS
+C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
+AND INVESTOR RELATIONS
+Siemens Aktiengesellschaft
+Berlin and Munich, October 1, 2017
+The Audit Committee oversees, in particular, the accounting
+and the accounting process and conducts a preliminary review of
+the Annual Financial Statements of Siemens AG, the Consoli-
+dated Financial Statements of the Siemens Group and the Com-
+bined Management Report of Siemens AG and the Siemens
+Group. On the basis of the independent auditors' report on their
+audit of the annual financial statements, the Audit Committee
+makes, after its preliminary review, recommendations regarding
+Supervisory Board approval of the Annual Financial Statements
+of Siemens AG and the Consolidated Financial Statements of the
+Siemens Group. The Audit Committee discusses the Quarterly
+Statements and Half-year Financial Report with the Managing
+Board and the independent auditors and deals with the auditors'
+report on the review of the Half-year Consolidated Financial
+Statements and Interim Group Management Report. It concerns
+itself with the Company's risk monitoring system and oversees
+the effectiveness of the internal control, risk management and
+the internal audit systems. The Audit Committee receives regular
+reports from the Internal Audit Department. It prepares the
+Supervisory Board's recommendation to the Annual Share-
+holders' Meeting concerning the election of the independent
+Siemens AG fully complies and will continue to comply with
+the recommendations of the German Corporate Governance
+Code ("Code") in the version of February 7, 2017, published
+by the Federal Ministry of Justice in the official section of the
+Federal Gazette ("Bundesanzeiger").
+"Declaration of Conformity by the Managing Board and the
+Supervisory Board of Siemens Aktiengesellschaft with the
+German Corporate Governance Code
+THE GERMAN CORPORATE GOVERNANCE CODE
+The Managing Board and the Supervisory Board of Siemens AG
+approved the following Declaration of Conformity pursuant to
+Section 161 of the German Stock Corporation Act as of October 1,
+2017:
+C.4.2.1 DECLARATION OF CONFORMITY WITH
+The Corporate Governance statement pursuant to Sections 289 a
+and 315 para. 5 of the German Commercial Code (Handelsgesetz-
+buch) is an integral part of the Combined Management Report.
+In accordance with Section 317 para. 2 sentence 4 of the German
+Commercial Code, the disclosures made within the scope of Sec-
+tions 289 a and 315 para. 5 of the German Commercial Code are
+not subject to the audit by the auditors.
+Güler Sabancı
+the German Commercial Code
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE
+Our Articles of Association, the Bylaws for the Supervisory Board,
+the Bylaws for the most important Supervisory Board commit-
+tees, the Bylaws for the Managing Board, all our Declarations of
+Conformity with the Code and a variety of other corporate-
+governance-related documents are posted on our website at:
+WWW.SIEMENS.COM/INVESTORS
+As part of our investor relations activities, we inform our investors
+comprehensively about developments within the Company. For
+communication purposes, Siemens makes extensive use of the
+Internet. We publish Quarterly Statements, Half-year Financial
+and Annual Reports, earnings releases, ad hoc announcements,
+analyst presentations, letters to shareholders and press releases
+as well as the financial calendar for the current year, which con-
+tains the publication dates of significant financial communica-
+tions and the date of the Annual Shareholders' Meeting, at:
+without the need to be present at the venue and without a proxy
+and to exercise some or all of their rights fully or partially by
+means of electronic communications. Shareholders may submit
+proposals regarding the proposals of the Managing and Supervi-
+sory Boards and may contest decisions of the Annual Sharehold-
+ers' Meeting. Shareholders owning Siemens stock with an aggre-
+gate notional value of €100,000 or more may also demand the
+judicial appointment of special auditors to examine specific is-
+sues. The reports, documents and information required by law for
+the Annual Shareholders' Meeting, including the Annual Report,
+may be downloaded from our website. The same applies to the
+agenda for the Annual Shareholders' Meeting and to any counter-
+proposals or shareholders' nominations that require disclosure.
+Additional Information
+144
+Shareholders exercise their rights in the Annual Shareholders'
+Meeting. An ordinary Annual Shareholders' Meeting normally
+takes place within the first four months of each fiscal year. The
+Annual Shareholders' Meeting decides, among other things, on
+the appropriation of unappropriated net income, the ratification
+of the acts of the Managing and Supervisory Boards, and the
+appointment of the independent auditors. Amendments to the
+Articles of Association and measures that change the Company's
+capital stock are approved at the Annual Shareholders' Meeting
+and are implemented by the Managing Board. The Managing
+Board facilitates shareholder participation in this meeting
+through electronic communications – in particular, via the Inter-
+net and enables shareholders who are unable to attend the
+meeting to vote by proxy. Furthermore, shareholders may exer-
+cise their right to vote in writing or by means of electronic com-
+munications (absentee voting). The Managing Board may enable
+shareholders to participate in the Annual Shareholders' Meeting
+C.4.2 Corporate Governance
+statement pursuant to Sections
+289 a and 315 para. 5 of
+In fiscal 2017, the Compensation Committee comprised Werner
+Wenning (Chairman), Dr. Gerhard Cromme, Michael Diekmann,
+Robert Kensbock, Jürgen Kerner and Birgit Steinborn.
+April 1,
+2009
+In fiscal 2017, the Chairman's Committee comprised Dr. Gerhard
+Cromme (Chairman), Jürgen Kerner, Birgit Steinborn and Werner
+Wenning.
+January 24,
+2008
+Member since
+Treasurer and full-time member
+of the Executive Committee of
+IG Metall
+Chairman of the Siemens Europe
+Committee
+Member of the Works Council of
+Siemens Erlangen Süd, Germany
+Deputy Chairman of the Central
+Works Council of Siemens AG
+Chairwoman of the Combine Works
+Council of Siemens AG
+Trade Union Secretary of
+the Managing Board of IG Metall
+Supervisory Board Member
+Occupation
+Jürgen Kerner*
+Harald Kern*
+Hans-Jürgen Hartung*
+(until September 30, 2017)
+Robert Kensbock*
+Bettina Haller*
+Reinhard Hahn*
+Hans Michael Gaul, Dr. iur.
+Name
+139
+Memberships in supervisory boards whose establish-
+ment is required by law or in comparable domestic
+or foreign controlling bodies of business enterprises
+(as of September 30, 2017)
+Additional Information
+German positions:
+> Siemens Healthcare GmbH, Munich
+Gérard Mestrallet
+Nicola Leibinger-
+Kammüller, Dr. phil.
+January 25,
+2012
+1969
+January 22,
+January 24,
+2008
+March 16,
+1960
+January 23,
+2013
+March 13,
+1971
+January 27,
+2009
+March 10,
+1952
+April 1,
+2007
+March 14,
+1959
+January 27,
+2015
+June 24,
+1956
+March 2,
+1942
+Date of birth
+> HSBC Trinkaus & Burkhardt AG, Düsseldorf
+German positions:
+Norbert Reithofer, Dr.-Ing.
+Dr.-Ing. E.h.
+(Deputy Chairman)
+> Fresenius Management SE, Bad Homburg
+January 24,
+2008
+March 26,
+1960
+Chairman of the Supervisory Board
+of Bayer AG
+Chairwoman of the Central Works
+Council of Siemens AG
+Birgit Steinborn*
+First Deputy Chairwoman
+Werner Wenning
+Second Deputy Chairman
+Member since
+January 23,
+2003
+Date of birth
+February 25,
+1943
+Chairman of the Supervisory Board
+of Siemens AG
+Gerhard Cromme, Dr. iur.
+Chairman
+Occupation
+Name
+In fiscal 2017, the Supervisory Board comprised the following
+members:
+Members of the Supervisory Board and positions
+held by Supervisory Board members
+The Supervisory Board of Siemens AG has 20 members. As stipu-
+lated by the German Codetermination Act (Mitbestimmungs-
+gesetz), half of the members represent Company shareholders, and
+half represent Company employees. The employee representatives'
+names are marked below with an asterisk (*). In general, the terms
+of office of the current Supervisory Board members will expire at
+the conclusion of the Annual Shareholders' Meeting in 2018. The
+terms of office of Dr. Nicola Leibinger-Kammüller, Jim Hagemann
+Snabe and Werner Wenning will expire at the conclusion of the
+Annual Shareholders' Meeting in 2021. Effective from October 1,
+2017, until the end of the ordinary Annual Shareholders' Meeting
+on January 31, 2018, Dorothea Simon has been appointed by court
+order as employee representative on the Supervisory Board. She
+succeeds Hans-Jürgen Hartung, who left the Supervisory Board at
+the end of September 30, 2017. The future Supervisory Board's em-
+ployee representatives were newly elected on October 5, 2017, in
+accordance with the provisions of the German Codetermination Act
+(Mitbestimmungsgesetz). Their election will take effect at the end
+of the ordinary Annual Shareholders' Meeting on January 31, 2018.
+Information on the work of the Supervisory Board is provided in
+chapter c.3 REPORT OF THE SUPERVISORY BOARD. The curricula vitae
+of the members of the Supervisory Board are available on the
+Siemens Global Website at www.SIEMENS.COM/SUPERVISORY-
+BOARD. The compensation paid to the members of the Supervi-
+sory Board is provided in chapter → A.10 COMPENSATION REPORT.
+The Supervisory Board oversees and advises the Managing Board
+in its management of the Company's business. At regular inter-
+vals, the Supervisory Board discusses business development,
+planning, strategy and strategy implementation. It reviews the
+Annual Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Combined
+Management Report of Siemens AG and the Siemens Group, and
+the proposal for the appropriation of net income. It approves the
+Annual Financial Statements of Siemens AG as well as the Consol-
+idated Financial Statements of the Siemens Group, based on the
+results of the preliminary review conducted by the Audit Commit-
+tee and taking into account the reports of the independent audi-
+tors. The Supervisory Board decides on the Managing Board's
+proposal for the appropriation of net income and the Report of
+the Supervisory Board to the Annual Shareholders' Meeting. In
+addition, the Supervisory Board or the Compliance Committee,
+which is described in more detail below, concern themselves with
+monitoring the Company's adherence to statutory provisions, of-
+ficial regulations and internal Company policies (compliance). The
+Supervisory Board also appoints the members of the Managing
+Board and determines each member's portfolios. Important
+Managing Board decisions – such as those regarding major acqui-
+sitions, divestments, fixed asset investments or financial meas-
+ures - require Supervisory Board approval, unless the Bylaws for
+the Supervisory Board specify that such authority be delegated to
+the Innovation and Finance Committee of the Supervisory Board.
+In the Bylaws for the Managing Board, the Supervisory Board has
+established the rules that govern the Managing Board's work.
+C.4.1.2 SUPERVISORY BOARD
+October 21,
+1946
+> Fresenius SE & Co. KGaA, Bad Homburg
+January 23,
+2013
+Chairman of the Works Council
+of Siemens Dynamowerk, Berlin,
+Germany
+(Deputy Chairman)
+> BASF SE, Ludwigshafen am Rhein
+> Allianz SE, Munich (Chairman)
+German positions:
+December 23, January 24,
+1954
+2008
+> Henkel Management AG, Düsseldorf
+➤ Bayer AG, Leverkusen (Chairman)
+> Henkel AG & Co. KGaA, Düsseldorf¹
+German positions:
+> ODDO BHF SCA, France (Co-Chairman)
+> AUTO1 N.V., Netherlands (Chairman)
+Positions outside Germany:
+Memberships in supervisory boards whose establish-
+ment is required by law or in comparable domestic
+or foreign controlling bodies of business enterprises
+(as of September 30, 2017)
+1 Shareholders' Committee.
+Chairman of the Supervisory Board
+of Allianz SE
+Michael Diekmann
+July 11,
+2014
+July 24,
+1952
+Olaf Bolduan*
+The Compensation Committee prepares, in particular, the pro-
+posals for decisions by the Supervisory Board's plenary meetings
+regarding the system of Managing Board compensation, includ-
+ing the implementation of this system in Managing Board con-
+tracts, the definition of the targets for variable Managing Board
+compensation, the determination and review of the appropriate-
+ness of the total compensation of individual Managing Board
+members and the approval of the annual Compensation Report.
+Güler Sabancı
+President and Chairwoman of the
+Managing Board of TRUMPF GmbH
++ Co. KG
+The candidates proposed for election to the Supervisory Board
+shall have the knowledge, skills and experience necessary to
+carry out the functions of a Supervisory Board member in a mul-
+tinational company and safeguard the reputation of Siemens in
+public. In particular, care shall be taken in regard to the person-
+ality, integrity, commitment and professionalism of the individu-
+als proposed for election.
+Profile of required skills and expertise
+On September 20, 2017, the Supervisory Board - taking into ac-
+count the recommendations of the German Corporate Gover-
+nance Code (Code) - newly approved the objectives of its com-
+position, including a profile of the skills and expertise that the
+Supervisory Board should possess. The composition of the Super-
+visory Board of Siemens AG shall be such that qualified control
+and advice for the Managing Board is ensured.
+Objectives of the Supervisory Board's
+composition and profile of required skills
+and expertise of the Supervisory Board
+> Daimler AG, Stuttgart
+German positions:
+> A.P. Møller-Mærsk A/S, Denmark (Chairman)
+Positions outside Germany:
+> Allianz SE, Munich
+German positions:
+> Siemens Healthcare GmbH, Munich
+German positions:
+> Siemens Healthcare GmbH, Munich
+140 Additional Information
+1 Shareholders' Committee.
+March 3,
+1964
+General Counsel, Managing Board
+of IG Metall
+The goal is to ensure that, in the Supervisory Board, as a group,
+all knowhow and experience is available that is considered essen-
+tial in view of Siemens' activities. This includes, for instance,
+knowledge and experience in the areas of technology (including
+information technology and digitalization), procurement, manu-
+facturing and sales, finance, law (including compliance) and hu-
+man resources. In addition, the members of the Supervisory
+Board shall collectively have knowledge and experience in the
+business areas that are important for Siemens, in particular in the
+areas of industry, energy, healthcare and infrastructure. As a
+group, the members of the Supervisory Board are to be familiar
+with the sector in which the Company operates. At least one in-
+dependent member of the Supervisory Board shall have knowl-
+edge and expertise in the areas of accounting or the auditing of
+financial statements and specific knowledge and experience in
+applying accounting principles and internal control processes.
+In particular, the Supervisory Board shall also include members
+who have leadership experience as senior executives or members
+of a supervisory board (or comparable body) at a major company
+with international operations.
+Sibylle Wankel*
+When a new member is to be appointed, a review shall be per-
+formed to determine which of the areas of expertise deemed
+desirable for the Supervisory Board are to be strengthened.
+Taking the Company's international orientation into account,
+care shall be taken to ensure that the Supervisory Board has an
+adequate number of members with extensive international expe-
+rience. The goal is to make sure that the present considerable
+share of Supervisory Board members with extensive international
+experience is maintained.
+of women on the Managing Board specified by the Supervisory
+Board. The Chairman's Committee concerns itself with questions
+regarding the Company's corporate governance and prepares the
+resolutions to be approved by the Supervisory Board regarding
+the Declaration of Conformity with the Code - including the ex-
+planation of deviations from the Code - and regarding the ap-
+proval of the Corporate Governance Report as well as the Report
+of the Supervisory Board to the Annual Shareholders' Meeting.
+Furthermore, the Chairman's Committee submits recommenda-
+tions to the Supervisory Board regarding the composition of the
+Supervisory Board committees and decides whether to approve
+contracts and business transactions with Managing Board mem-
+bers and parties related to them.
+The Chairman's Committee makes proposals, in particular, re-
+garding the appointment and dismissal of Managing Board mem-
+bers and handles contracts with members of the Managing
+Board. When making recommendations for first-time appoint-
+ments, it takes into account that the terms of these appoint-
+ments shall not, as a rule, exceed three years. In preparing rec-
+ommendations on the appointment of Managing Board
+members, the Chairman's Committee takes into account the
+candidates' professional qualifications, international experience
+and leadership qualities, the age limit specified for Managing
+Board members, the long-range plans for succession as well as
+diversity. It also takes into account the targets for the proportion
+The Supervisory Board has seven committees, whose duties,
+responsibilities and procedures fulfill the requirements of the
+German Stock Corporation Act (Aktiengesetz) and the Code. The
+chairmen of these committees provide the Supervisory Board
+with regular reports on their committees' activities.
+Supervisory Board Committees
+The Supervisory Board also has an adequate number of indepen-
+dent members. In the opinion of the Supervisory Board, there are
+currently at least 17 Supervisory Board members who are indepen-
+dent in the meaning of Section 5.4.2 of the Code. Of these inde-
+pendent members, at least seven - namely, Michael Diekmann,
+Dr. Hans Michael Gaul, Gérard Mestrallet, Dr. Norbert Reithofer,
+Güler Sabancı, Jim Hagemann Snabe and Werner Wenning - are
+shareholder representatives. The regulations establishing limits
+on age and limiting membership in the Supervisory Board to three
+full terms of office (15 years) are complied with.
+With its current membership, the Supervisory Board meets all the
+above-mentioned objectives for its composition and fulfills the
+profile of required skills and expertise. The Supervisory Board
+members have the specialist and personal qualifications consid-
+ered necessary. As a group, they are familiar with the sector in
+which the Company operates and have the knowledge, skills and
+experience essential for Siemens. A considerable number of Super-
+visory Board members are engaged in international activities
+and/or have many years of international experience. Appropriate
+consideration has been given to diversity in the Supervisory
+Board. In fiscal 2017, the Supervisory Board had six female mem-
+bers. Since October 1, 2017, it has had seven female members,
+of whom three are shareholder representatives and four are em-
+ployee representatives. The mandatory minimum quota stipu-
+lated in Section 96, para. 2, sent. 1 of the German Stock Corpo-
+ration Act (Aktiengesetz) has therefore been met. Dr. Nicola
+Leibinger-Kammüller is a member of the Nominating Committee.
+Status of implementation of the objectives of the
+Supervisory Board's composition and profile of
+required skills and expertise; independent Super-
+visory Board members
+Additional Information 141
+In compliance with the age limit stipulated by the Supervisory
+Board in its Bylaws, only individuals who are no older than
+70 years of age shall, as a rule, be nominated for election to the
+Supervisory Board. Nominations shall take into account the reg-
+ular limit established by the Supervisory Board, which restricts
+membership on the Supervisory Board to a maximum of three
+full terms of office (15 years). The aim is to ensure that the
+Supervisory Board has an appropriate age structure and range of
+experience.
+Limits on age and on length of membership
+The Supervisory Board members shall have sufficient time to be
+able to exercise their mandates with the necessary regularity and
+diligence.
+No more than two former members of the Managing Board of
+Siemens AG shall belong to the Supervisory Board.
+An adequate number of independent members shall belong to
+the Supervisory Board. Material and not merely temporary con-
+flicts of interest, such as governing or advisory body functions at
+major competitors of the Company shall be avoided. Under the
+presumption that the mere exercise of Supervisory Board duties
+as an employee representative gives no cause to doubt compli-
+ance with the independence criteria pursuant to Section 5.4.2 of
+the Code, the Supervisory Board shall have a minimum of sixteen
+members who are independent in the meaning of the Code. In
+any case, the Supervisory Board shall be composed in such a way
+that a number of at least six independent shareholder represen-
+tatives in the meaning of Section 5.4.2 of the Code is achieved.
+Independence
+In accordance with the German Law for Equal Participation of
+Women and Men in Management Positions in the Private and
+Public Sectors (Gesetz für die gleichberechtigte Teilhabe von
+Frauen und Männern an Führungspositionen in der Privatwirt-
+schaft und im öffentlichen Dienst), the Supervisory Board is com-
+posed of at least 30 percent women and at least 30 percent men.
+The Nominating Committee shall continue to include at least one
+female member.
+With regard to the composition of the Supervisory Board, atten-
+tion shall be paid to achieving sufficient diversity. Not only is
+appropriate consideration to be given to women. Diversity of
+cultural heritage, religion and ethnic background and a wide
+range of different professional backgrounds, experiences and
+ways of thinking are also to be promoted. When considering pos-
+sible candidates for new elections or for filling Supervisory Board
+positions that have become vacant, the Supervisory Board shall
+give appropriate consideration to diversity at an early stage in the
+selection process.
+Diversity
+Internationality
+Nathalie von Siemens,
+Dr. phil.
+October 1,
+2013
+Chairman of the Board of Directors
+of A.P. Møller-Mærsk A/S
+> Axel Springer SE, Berlin
+German positions:
+> Premium Aerotec GmbH, Augsburg
+(Deputy Chairman)
+> MAN SE, Munich (Deputy Chairman)
+> Airbus Operations GmbH, Hamburg
+> MAN Diesel & Turbo SE, Augsburg
+SIEMENS.COM/289A
+German positions:
+October 27,
+1965
+January 27,
+2015
+Chairwoman and Managing Director
+of Hacı Ömer Sabancı Holding A.Ş.
+Managing Director and Spokesperson
+of Siemens Stiftung
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+January 23,
+2013
+April 1,
+1949
+Chairman of the Board of Directors
+of ENGIE S.A.
+2008
+December 15, January 24,
+1959
+May 29,
+1956
+> ENGIE S.A., France (Chairman)
+> Société Générale S.A., France
+> Voith GmbH, Heidenheim
+Positions outside Germany:
+➤ Bayerische Motoren Werke
+October 1,
+2017
+August 3,
+1969
+Chairwoman of the Central Works
+Council of Siemens Healthcare GmbH
+September 13, March 1,
+1957
+2014
+Jim Hagemann Snabe
+Dorothea Simon*
+(since October 1, 2017)
+Chairman of the Committee
+of Spokespersons of the Siemens
+Group; Chairman of the Central
+Committee of Spokespersons
+of Siemens AG
+Michael Sigmund*
+> Suez S.A., France (Chairman)
+German positions:
+> Messer Group GmbH, Sulzbach
+January 27,
+2015
+July 14,
+1971
+January 23,
+2013
+August 14,
+1955
+> Henkel AG & Co. KGaA, Düsseldorf¹
+Aktiengesellschaft, Munich (Chairman)
+German positions:
+This information and these documents, including the Code and
+the Business Conduct Guidelines, are available at: www.
+Order no. CGXX-C10029-00-7600
+siemens.com
+1,591
+Profit margin
+Industrial Business
+Siemens Gamesa Renewable Energy
+Healthineers
+Process Industries and Drives
+Digital Factory
+Mobility
+Building Technologies
+Energy Management
+(15)%
+1,872
+1,591
+Power and Gas
+% Change
+2016
+2017
+(in millions of €, earnings per share in €)
+Fiscal year
+932
+A.3.3 Income
+895
+784
+(27)%
+464
+338
+7%
+2,325
+2,490
+81%
+243
+440
+26%
+1,690
+2,135
+10%
+678
+743
+36%
+577
+4%
+15
+Combined Management Report
+The positive swing at Centrally managed portfolio activities
+(CMPA) related primarily to the measurement of a major asset
+retirement obligation, including a net gain of €364 million result-
+ing from interest rate effects and €312 million attributable mainly
+to a reduced expected inflation rate. These positive effects were
+partly offset by higher losses from at-equity investments includ-
+ing a €230 million impairment of Siemens' stake in Primetals
+Technologies Ltd. in fiscal 2017, related to continuing adverse
+conditions in the market environment. Additionally in the current
+Fiscal year
+Profit
+The increase of Amortization of intangible assets acquired in
+business combinations related mainly to the merger with
+Gamesa and the acquisition of Mentor Graphics.
+Corporate items were influenced by a number of factors, includ-
+ing severance charges of €71 million (€43 million in fiscal 2016)
+for corporate reorganization of support functions as well as ex-
+penses in connection with creation of next47 beginning in Octo-
+ber 2016.
+period we recorded gains from reversals of provisions for guaran-
+tees related to a previous divestment. Effective with the begin-
+ning of fiscal 2018, CMPA includes the Olkiluoto project in Finland
+which was formerly part of Power and Gas.
+CONSOLIDATED FINANCIAL STATEMENTS
+A.3.2.10 RECONCILIATION TO
+Financial Services (SFS) again delivered strong earnings includ-
+ing lower credit hits. Within the equity business, the current year
+included a gain from the sale of SFS's stake in an offshore wind-
+farm project, while the prior year included a larger positive ef-
+fect, €92 million, resulting from an at-equity investment. Despite
+growth in new business, total assets were on the level of the end
+of fiscal 2016, due mainly to substantial early terminations of fi-
+nancings along with negative currency translation effects.
+26,446
+26,390
+2017
+Sep 30,
+2016
+Total assets
+(in millions of €)
+653
+21.6%
+19.9%
+ROE (after taxes)
+(in millions of €)
+2017
+2016
+Centrally managed portfolio activities
+(1,994)
+(1,785)
+(349)
+(323)
+(674)
+(1,016)
+Amortization of intangible assets
+acquired in business combinations
+Eliminations, Corporate Treasury
+and other reconciling items
+Reconciliation to Consolidated
+Financial Statements
+(439)
+9,453
+(407)
+(449)
+(714)
+Corporate items
+132
+187
+Siemens Real Estate
+(215)
+488
+Centrally carried pension expense
+8,744
+8%
+Profit margin Industrial Business
+13%
+6,800
+7,664
+Other current financial assets
+5%
+16,287
+17,160
+Trade and other receivables
+(4)%
+1,293
+1,242
+Available-for-sale financial assets
+(21)%
+10,604
+8,375
+Cash and cash equivalents
+% Change
+Inventories
+Current income tax assets
+Other current assets
+Assets classified as held for disposal
+27,906
+6%
+55,329
+58,429
+> 200%
+190
+1,482
+22%
+Sep 30,
+2016
+1,204
+39%
+790
+1,098
+10%
+18,160
+19,942
+Goodwill
+Total current assets
+1,467
+639
+2017
+A.4 Net assets position
+(2,008)
+(2,180)
+Income tax expenses
+12%
+7,404
+8,306
+Income from continuing operations before income taxes
+10%
+(1,994)
+(1,785)
+Reconciliation to Consolidated Financial Statements
+(2)%
+653
+639
+Financial Services (SFS)
+10.8%
+11.2%
+(9)%
+Income from continuing operations
+6,126
+5,396
+Combined Management Report
+16
+The increase in Basic earnings per share reflects the higher net
+income compared to fiscal 2016, while the weighted average
+number of shares outstanding increased slightly year-over-year.
+At 13.5%, ROCE was below the range established in our One
+Siemens financial framework, as expected. The decline year-over-
+year was due primarily to the merger with Gamesa and the acqui-
+sition of Mentor Graphics, which led to a significant increase in
+average capital employed (the denominator for ROCE). Net in-
+come, the main component for the numerator, was also nega-
+tively affected by burdens related to these transactions.
+Income from discontinued operations, net of income taxes
+was sharply lower compared to the prior year. In fiscal 2016, it
+primarily included a gain of €102 million from the sale of the re-
+maining assets in the hearing aid business and €76 million re-
+lated to the former Siemens IT Solutions and Services activities.
+The tax rate for fiscal 2017 was 26%, positively influenced by uti-
+lization of previously impaired tax loss carryforwards and by de-
+cisions arising from tax audits. The tax rate 27% in the prior year
+was positively influenced by successful appeals of tax decisions
+for prior years. As a result, Income from continuing operations
+increased 14%.
+As a result of the development described for the segments,
+Income from continuing operations before income taxes
+increased 12%. This amount also included higher expenses - as
+planned - for selling and R&D, primarily at Digital Factory and
+Healthineers, as we continued targeted investments aimed at
+organic volume growth and strengthening our capacities for in-
+novation, such as for MindSphere at Digital Factory and Atellica
+at Healthineers. Severance charges for continuing operations
+were €466 million, of which €385 million were in the Industrial
+Business. In fiscal 2016, severance charges for continuing opera-
+tions were €598 million, of which €541 million were in the Indus-
+trial Business.
+10%
+6.74
+14.3%
+(in millions of €)
+7.44
+13.5%
+11%
+5,584
+6,179
+(72)%
+188
+53
+Income from discontinued operations, net of income taxes
+Net income
+14%
+Basic earnings per share
+ROCE
+Income before income taxes
+2017
+(in millions of €)
+9.2%
+Profit margin
+Actual
+14%
+4%
+10%
+678
+743
+Profit
+7,825
+8,099
+Revenue
+7,875
+8,963
+Orders
+Fiscal year
+2016
+2017
+(in millions of €)
+A.3.2.4 MOBILITY
+Successfully executing its growth initiatives in both the regions
+and across its businesses, Building Technologies increased orders
+and revenue and grew faster than its market and major compet-
+itors. On a geographic basis, orders and revenue were up in all
+three reporting regions with the strongest growth contribution
+coming from the U.S. Profit and profitability increased due mainly
+to higher revenue and improvements in productivity. Profit devel-
+opment in fiscal 2017 benefited from a €94 million gain related
+to pension plan amendments. Severance charges were similar in
+both periods, at €18 million in fiscal 2017 and €16 million a year
+earlier.
+8.7%
+% Change
+Comp.
+16%
+6%
+Order growth at Mobility was driven primarily by the rolling stock
+business and supported by a higher volume from large orders.
+The current period included a number of significant contract
+wins in all three reporting regions, most notably in the region
+Europe, C.I.S. Africa, Middle East region, including an order for
+commuter rail and an order for a driverless metro, both in Austria,
+and large orders for the Division's new commuter rail platform
+Mireo in Germany. In the Asia, Australia region, the Division won
+a large turnkey project for the extension of a rapid transit system
+in Thailand. The largest contract wins in fiscal 2016 included an
+order for light rail vehicles in the U.S., a commuter rail contract
+in Germany and a rail automation order in Algeria. While revenue
+in the rolling stock business declined in the first half of the fiscal
+year due mainly to timing factors related to large rail projects,
+Mobility successfully executed on its large rolling stock and loco-
+motive orders, resulting in double-digit revenue growth in the
+rolling stock business in the second half. The Division's rail infra-
+structure business also contributed to revenue growth for the
+whole fiscal year. On a geographic basis, revenue increases in
+Europe, C.I.S., Africa, Middle East and the Americas more than
+offset a decline in Asia, Australia, which reported a sharp drop in
+China. Profit improved in the majority of the businesses, driven
+by higher revenue and successful project execution. The increase
+in severance charges, which were €46 million in the current pe-
+riod up from €16 million a year earlier, was largely offset by a
+€28 million gain related to pension plan amendments.
+1,690
+2,135
+Profit
+Profit margin
+9%
+12%
+10,172
+11,378
+Revenue
+7%
+8%
+10,332
+11,532
+% Change
+Comp.
+Actual
+Fiscal year
+2016
+2017
+(in millions of €)
+Orders
+A.3.2.5 DIGITAL FACTORY
+12%
+26%
+19,454
+(30)%
+2016
+Actual
+Orders
+6,913
+6,435
+7%
+Revenue
+6,523
+6,156
+Profit
+784
+577
+6%
+36%
+Profit margin
+12.0%
+9.4%
+% Change
+2017
+(in millions of €)
+Fiscal year
+A.3.2.3 BUILDING TECHNOLOGIES
+Revenue
+15,467
+16,471
+Profit
+1,872
+(6)%
+(15)%
+(5)%
+Profit
+Profit margin
+(31)%
+932
+895
+7.5%
+4%
+Profit margin
+10.3%
+11.4%
+Orders declined substantially year-over-year, due mainly to a
+sharply lower volume from large orders in the solutions business,
+which had recorded large orders for power plants, including ser-
+vice, from Egypt totaling €4.7 billion in fiscal 2016. In contracting
+markets for the Division's offerings, order intake was down in all
+businesses and in all three reporting regions. As a result of this
+continuing market weakness, revenue declined clearly and in all
+reporting regions, as a decrease in the new-unit business was
+only partly offset by an increase in the service business. Profit
+was significantly lower year-over-year despite a continuing
+strong contribution from the service business, on reduced capac-
+ity utilization following the weaker order intake, price declines,
+and higher net charges related to project execution and comple-
+tion year-over-year. In addition, profit in fiscal 2016 benefited
+from positive effects totaling €130 million from revised estimates
+related to resumption of long-term construction and service con-
+tracts in Iran following the ending or easing of EU and U.S. sanc-
+tions and €118 million from the measurement of inventories.
+Costs for the integration of Dresser-Rand were €33 million in
+fiscal 2017 compared to €59 million in fiscal 2016. Finally, sever-
+ance charges were lower in fiscal 2017, at €19 million compared
+to €69 million in fiscal 2016. Global energy trends continue to
+structurally reduce overall demand in markets for the Division's
+offerings, resulting in declining new-unit business and corre-
+sponding price pressure due to current overcapacities.
+Orders grew moderately year-over-year, due mainly to a higher
+volume from large orders in the solutions business, including an
+order totaling €0.8 billion for an offshore grid connection project
+in Germany, an order totaling €0.6 billion for substations in Qatar
+and a high-voltage direct current (HVDC) order totaling €0.4 bil-
+lion in India. The medium voltage and systems business and the
+low voltage and products business also posted higher orders
+year-over-year. These increases were partly offset by declines in
+the Division's other businesses. On a regional basis, orders were
+up in all three reporting regions, predominantly in Europe, C.I.S.,
+Africa, Middle East. Revenue was also up moderately with most
+of the Division's businesses recording moderate to clear in-
+creases. On a regional basis, revenue increased in all three re-
+porting regions, with significant growth in Asia, Australia. All of
+the Division's businesses delivered a positive contribution to
+profit, benefiting from lower severance charges that were
+€39 million and €71 million in fiscal 2017 and fiscal 2016, respec-
+tively. The high voltage products and transformer businesses
+showed significant improvement year-over-year.
+12 Combined Management Report
+7.6%
+24,159
+18.8%
+In a more favorable market environment, Digital Factory in-
+creased order intake and revenue in all its businesses year-over-
+year. Improvements in the market conditions were most notable
+in the automotive and the machine building industries, support-
+ing an excellent performance by the Division's short-cycle busi-
+nesses, which expanded their leading market positions during
+the fiscal year. Orders and revenue in the product lifecycle man-
+agement software (PLM) business grew substantially due to
+strong demand combined with new volume resulting from the
+acquisition of Mentor Graphics at the end of the second quarter
+of fiscal 2017. On a geographic basis, orders and revenue were up
+in all reporting regions, with the strongest increase from Asia,
+Australia, particularly including China. The Division's profit im-
+provement was driven by the short-cycle businesses. Profit in the
+PLM business was held back by ongoing expenses related to fur-
+ther advancing Siemens' MindSphere platform. Furthermore, the
+business' profitability was impacted by deferred revenue adjust-
+ments and transaction and integration costs related to the acqui-
+sition of Mentor Graphics, totaling €104 million. In fiscal 2016,
+deferred revenue adjustments and transaction and integration
+costs related to the acquisition of CD-adapco totaled €43 million.
+Profit for the Division benefited from a gain of €175 million re-
+lated to the eCar business, which Digital Factory contributed to
+the joint venture Valeo Siemens eAutomotive. This positive effect
+was partly offset by higher severance charges, which increased
+to €134 million in fiscal 2017, up from €49 million in fiscal 2016.
+Comp.
+Actual
+% Change
+Fiscal year
+2016
+2017
+(in millions of €)
+Portfolio effects from the merger added 13 percentage points
+to order growth and 28 percentage points to revenue growth.
+Reported orders were up year-over-year on growth in Asia,
+Australia, while orders in Europe, C.I.S., Africa, Middle East and
+the Americas were close to the prior-year level. Order intake in
+the major onshore market India was impacted by the introduc-
+tion of an auction system for new wind-farm tenders. Reported
+revenue was up in all three reporting regions. Lower profit year-
+over-year included burdens of €134 million, primarily from in-
+ventory write-downs, and €103 million for integration costs and
+capacity adjustments including severance. Profitability was held
+back by sharp price declines in India and the U.S.
+7.8%
+4.3%
+(27)%
+464
+338
+7%
+33%
+5,976
+7,922
+Revenue
+Profit
+Profit margin
+Orders
+14,218
+13,830
+3%
+2016
+Fiscal year
+A.3.2.9 FINANCIAL SERVICES
+Combined Management Report
+Order intake grew moderately on increases in a majority of the
+businesses, led by the diagnostic imaging business. On a re-
+gional basis, Europe, C.I.S., Africa and Middle East posted the
+highest increase, followed by growth in Asia, Australia, driven by
+China. Revenue was also up in a majority of the businesses,
+again led by the diagnostic imaging business. On a geographic
+basis, China accounted for more than half of the revenue in-
+crease year-over-year. Profit growth was driven by the diagnostic
+17.2%
+18.1%
+Profit margin
+(2)%
+7%
+2,490
+Profit
+3%
+2%
+13,535
+13,789
+Revenue
+4%
+2,325
+16.6%
+10%
+8,768
+1%
+8,939
+9,034
+Orders
+Comp.
+Actual
+2016
+2017
+(in millions of €)
+Fiscal year
+A.3.2.8 SIEMENS GAMESA RENEWABLE ENERGY
+imaging business, which continued to account for the largest
+share of Healthineers profit overall, and by the advanced thera-
+pies business. Profit benefited from currency tailwinds in both
+periods. Severance charges were €57 million in fiscal 2017 and
+€61 million in fiscal 2016.
+% Change
+A.3.2.6 PROCESS INDUSTRIES AND DRIVES
+14
+13
+Combined Management Report
+2%
+Revenue
+8,876
+9,038
+Comp.
+Actual
+2016
+2017
+(in millions of €)
+Orders
+% Change
+Fiscal year
+A.3.2.7 HEALTHINEERS
+7,973
+Orders for Process Industries and Drives increased slightly, as
+growth in the process automation and solution businesses and
+stabilization in demand for the Division's offerings in oil and gas
+and other commodity-related markets towards the end of the
+fiscal year more than offset a decline in demand for wind power
+components during the course of fiscal 2017. A decline in reve-
+nue in the solutions and the large drives businesses more than
+offset revenue growth in the process automation business. On a
+geographic basis, order growth came mainly from China, while
+the decline in revenue was due to the Americas region. Profit for
+the Division increased due primarily to sharply lower severance
+charges year-over-year, which were €48 million in fiscal 2017,
+down from €254 million in fiscal 2016. Within the Division's busi-
+nesses, the process automation business showed a strong oper-
+ating performance. Overall, profit and profitability for the Divi-
+sion were held back by ongoing operational challenges,
+particularly in the large drives business, and by charges related
+to capacity adjustments.
+5.0%
+13,422
+81%
+243
+440
+Profit
+(1)%
+(2)%
+2.7%
+Comp.
+16%
+10,926
+4%
+10,739
+4%
+2%
+4%
+(1)%
+therein: Germany
+Americas
+13,943
+22,921 24,794
+10,525
+32%
+32%
+therein: U.S.
+16,976
+16,769
+1%
+(1)%
+4%
+(8)%
+41,819
+Americas
+2016
+Actual
+Comp.
+(in millions of €)
+2017
+Fiscal year
+2016
+% Change
+Europe, C.I.S., Africa,
+Middle East
+Actual
+Comp.
+Europe, C.I.S., Africa,
+therein: Germany
+Middle East
+45,048
+46,185
+(2)%
+(2)%
+43,367
+11,142
+23,516 22,707
+(10)%
+Asia, Australia
+16,166
+Siemens
+7,484
+85,669
+6,850
+86,480
+9%
+10%
+therein: emerging
+markets¹
+28,464
+27,195
+5%
+3%
+(1)%
+(2)%
+therein: emerging
+markets¹
+27,239 30,448 (11)%
+(11)%
+1 As defined by the International Monetary Fund.
+therein: China
+3%
+4%
+79,644
+15,118
+7%
+6%
+therein: U.S.
+Asia, Australia
+16,905
+17,700 15,501
+18,162
+(7)%
+2017
+(9)%
+7,209
+6,439
+12%
+13%
+14%
+13%
+Siemens
+83,049
+therein: China
+% Change
+Fiscal year
+(in millions of €)
+5-8%
+15-20%
+In line with common practice in the financial services business,
+our financial indicator for measuring capital efficiency at the Fi-
+nancial Services Division (SFS) is return on equity after tax, or
+ROE after tax. ROE is defined as SFS' profit after tax, divided by
+the Division's average allocated equity.
+For purposes of managing and controlling profitability at the
+Group level, we use net income as our primary measure. This mea-
+sure is the main driver of basic earnings per share (EPS) from net
+income, which we use in communication to the capital markets.
+To emphasize and evaluate our continuous efforts to improve
+productivity, we incorporated a measure called total cost produc-
+tivity into our One Siemens framework. We define this measure
+as the ratio of cost savings from defined productivity improve-
+ment measures to the aggregate of functional costs for the
+Siemens Group. We aim to achieve an annual value of 3% to 5%
+for total cost productivity.
+Within the framework of One Siemens, we seek to work profit-
+ably and as efficiently as possible with the capital provided by our
+shareholders and lenders. For purposes of managing and con-
+trolling our capital efficiency, we use return on capital employed,
+or ROCE, as our primary measure. We aim to achieve ROCE within
+a range of 15% to 20%.
+Combined Management Report 9
+A.2.4 Capital structure
+Sustainable revenue and profit development is supported by a
+healthy capital structure. Accordingly, a key consideration within
+the framework of One Siemens is to maintain ready access to the
+capital markets through various debt products and preserve our
+ability to repay and service our debt obligations over time. Our
+primary measure for managing and controlling our capital struc-
+ture is the ratio of industrial net debt to EBITDA. This financial
+measure indicates the approximate amount of time in years that
+would be needed to cover industrial net debt through income
+from continuing operations, without taking into account inter-
+est, taxes, depreciation and amortization. We aim to achieve a
+ratio of up to 1.0.
+A.2.6 Calculation of return
+on capital employed
+Calculation of ROCE
+(in millions of €)
+Net income
+Less: Other interest expenses/income, net'
+Plus: SFS Other interest expenses/income
+Plus: Net interest expenses from
+post-employment benefits
+Less: Interest adjustments
+(discontinued operations)
+Fiscal year
+2017
+2016
+15-19%
+8-12%
+14-20%
+6-9%
+A.2 Financial performance system
+A.2.1 Overview
+Within One Siemens, we have established a financial frame-
+work - for revenue growth, for profitability and capital efficiency,
+for our capital structure, and for our dividend policy.
+A.2.2 Revenue growth
+Within the framework of One Siemens, we aim to grow our rev-
+enue faster than the average weighted revenue growth of our
+most relevant competitors. Our primary measure for managing
+and controlling our revenue growth is comparable growth, be-
+cause it shows the development in our business net of currency
+translation effects, which arise from the external environment
+outside of our control, and portfolio effects, which involve busi-
+ness activities which are either new to or no longer a part of our
+business.
+Currency translation effects are the difference between revenue
+for the current period calculated using the exchange rates of the
+current period and revenue for the current period calculated us-
+ing the exchange rates of the comparison period. For calculating
+the percentage change year-over-year, this absolute difference is
+divided by revenue for the comparison period. A portfolio effect
+arises in the case of an acquisition or a disposition and is calcu-
+lated as the change year-over-year in revenue of the relevant
+business resulting specifically from the acquisition or disposition.
+For calculating the percentage change, this absolute change is
+divided by revenue for the comparison period. For orders, we
+apply the same calculations for currency translation and portfolio
+effects as described above.
+A.2.3 Profitability and capital
+efficiency
+Within the framework of One Siemens, we aim to achieve mar-
+gins through the entire business cycle that are comparable to
+those of our relevant competitors. Therefore, we have defined
+profit margin ranges for our industrial businesses, which are
+based on the profit margins of the respective relevant competi-
+tors. Profit margin is defined as profit of the respective business
+divided by its revenue.
+6,179
+Profit margin ranges
+Energy Management
+Building Technologies
+Mobility
+Digital Factory
+Process Industries and Drives
+Healthineers
+Siemens Gamesa Renewable Energy
+SFS (ROE after tax)
+Margin range
+11-15%
+7-10%
+8-11%
+Power and Gas
+1 As defined by the International Monetary Fund.
+5,584
+(544)
+Calculation of capital employed
+Total equity
+Plus: Long-term debt
+Plus: Short-term debt and current maturities of long-term debt
+Less: Cash and cash equivalents
+Less: Current available-for-sale financial assets
+Plus: Post-employment benefits
+Less: SFS Debt
+Less: Fair value hedge accounting adjustment
+Plus: Adjustments from assets classified as held for disposal and
+liabilities associated with assets classified as held for disposal
+Less: Adjustment for deferred taxes on net accumulated
+actuarial gains/losses on post-employment benefits
+Capital employed (continuing and discontinued operations)
+10
+Combined Management Report
+A.3 Results of operations
+A.3.1 Orders and revenue by region
+Negative currency translation effects took one percentage point
+each from order development and revenue growth; portfolio
+transactions, primarily the merger of the wind power business
+with Gamesa and the acquisition of Mentor Graphics, added two
+percentage points to order development and three percentage
+points to revenue growth. The resulting ratio of orders to revenue
+(book-to-bill) for Siemens in fiscal 2017 was 1.03.
+Orders were up significantly in the Asia, Australia region due to
+growth in all industrial businesses other than Power and Gas, with
+SGRE and Digital Factory recording the largest increases. A num-
+ber of countries within the region posted significant growth.
+China posted the largest increase, with order growth at Digital
+Factory, SGRE and Process Industries and Drives partly offset by a
+substantial decline in Energy Management.
+Revenue (location of customer)
+Orders (location of customer)
+For purposes of calculating ROCE in interim periods, income be-
+fore interest after tax is annualized. Average capital employed is
+determined using the average of the respective balances as of
+the quarterly reporting dates in the period under review.
+1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
+debt, and related hedging activities, as well as interest income on corporate assets.
+(II) Average capital employed
+(1)/(II) ROCE
+14.3%
+799
+784
+198
+282
+A.2.5 Dividend
+We intend to continue providing an attractive return to our share-
+holders. Therefore, we intend to propose a dividend whose dis-
+tribution volume is within a dividend payout range of 40% to
+60% of net income, which we may adjust for this purpose to ex-
+clude selected exceptional non-cash effects. As in the past, we
+intend to fund the dividend payout from Free cash flow.
+At the Annual Shareholders' Meeting, the Managing Board, in
+agreement with the Supervisory Board, will submit the follow-
+ing proposal to allocate the unappropriated net income of
+Siemens AG for fiscal 2017: to distribute a dividend of €3.70 on
+each share of no par value entitled to the dividend for fiscal year
+2017 existing at the date of the Annual Shareholders' Meeting,
+with the remaining amount to be carried forward. Payment of the
+proposed dividend is contingent upon approval by Siemens
+shareholders at the Annual Shareholders' Meeting on January 31,
+2018. The prior-year dividend was €3.60 per share.
+The proposed dividend of €3.70 per share for fiscal 2017 repre-
+sents a total payout of €3.0 billion based on the estimated
+number of shares entitled to dividend at the date of the Annual
+Shareholders' Meeting. Based on net income of €6.2 billion for
+fiscal 2017, the dividend payout percentage is 49%.
+(568)
+Less: Taxes on interest adjustments
+(129)
+(156)
+(I) Income before interest after tax
+6,479
+5,949
+47,836
+41,573
+13.5%
+(tax rate (flat) 30%)
+Orders related to external customers came in only slightly below
+the high level a year ago despite substantial, ongoing contraction
+in markets for Power and Gas. The Division reported a sharply
+lower volume from large orders compared to the prior year, when
+it had won large contracts totaling €4.7 billion in Egypt. This fac-
+tor also influenced the decline in emerging markets. All other
+industrial businesses took in higher orders year-over-year. Digital
+Factory and Mobility recorded double-digit order growth, while
+higher orders at SGRE benefited from significant portfolio effects.
+In the Europe, C.I.S., Africa, Middle East region, with the excep-
+tion of Power and Gas, all industrial businesses posted order
+growth, including double-digit growth in Mobility and Energy
+Management. Orders came in substantially higher in Germany,
+due to higher levels of large orders in SGRE, Energy Management
+and Mobility compared to fiscal 2016.
+Orders in the Americas region were down clearly year-over-year
+on a substantial decline in Power and Gas. In addition, order intake
+at Mobility declined significantly, while Building Technologies and
+Digital Factory posted double-digit growth, the latter primarily due
+to portfolio effects from the acquisition of Mentor Graphics. The
+pattern of order development in the U.S. was roughly the same as
+in the Americas region, with double-digit growth at Building Tech-
+nologies and Digital Factory more than offset by substantial de-
+clines in Power and Gas, Mobility and SGRE.
+2%
+4,166
+4,247
+Current provisions
+(25)%
+1,933
+1,444
+Other current financial liabilities
+21%
+8,048
+9,755
+Trade payables
+(12)%
+6,206
+5,447
+Short-term debt and current maturities of long-term debt
+% Change
+Current income tax liabilities
+2,355
+2,085
+13%
+9,582
+Provisions for pensions and similar obligations
+8%
+24,761
+26,777
+Long-term debt
+1%
+42,916
+2016
+43,394
+139%
+40
+97
+Liabilities associated with assets classified as held for disposal
+(2)%
+20,437
+20,049
+Other current liabilities
+Total current liabilities
+13,695
+2017
+Sep 30,
+Total non-current assets
+Other assets
+Deferred tax assets
+(8)%
+20,610
+19,044
+Other financial assets
+(9)%
+3,012
+2,727
+Investments accounted for using the equity method
+8%
+10,157
+10,977
+Property, plant and equipment
+41%
+7,742
+Total assets
+2,297
+3,431
+(33)%
+Our capital structure developed as follows:
+A.5.1 Capital structure
+A.5 Financial position
+17
+Combined Management Report
+Deferred tax assets decreased mainly due to income tax effects
+related to remeasurement of defined benefits plans.
+Assets classified as held for disposal increased mainly due to
+reclassification of shares in OSRAM Licht AG (OSRAM) in an
+amount of €1.2 billion from other financial assets.
+The increase in other current financial assets was driven by
+higher loans receivable at SFS, which were mainly due to new
+business and reclassification of non-current loans receivable.
+(in millions of €)
+In fiscal 2017, the acquisition of Mentor Graphics and the merger
+with Gamesa were the major factors related to the increase in
+trade and other receivables, partly offset by the Power and Gas
+Division due to declining business volume. While these transac-
+tions were also the largest factors for the increased goodwill and
+other intangible assets, the increase in inventories was mainly
+driven by the merger with Gamesa.
+6%
+125,717
+133,804
+17%
+7%
+70,388
+75,375
+1,279
+1,498
+Our total assets in fiscal 2017 were influenced by negative cur-
+rency translation effects of €4.7 billion, led by the U.S. dollar.
+Other intangible assets
+(30)%
+1,599
+5%
+(in millions of €)
+2017
+2016
+Actual
+Comp.
+Revenue
+12,277
+11,940
+3%
+3%
+Orders
+Combined Management Report
+18
+The increase in non-controlling interests was due mainly to
+the merger with Gamesa.
+The main factors for the change in total equity attributable to
+shareholders of Siemens AG were €6.0 billion in net income
+attributable to shareholders of Siemens AG, €2.5 billion in other
+comprehensive income, net of income taxes, mainly due to
+remeasurements of defined benefit plans, and €2.5 billion in
+changes in equity resulting from the merger with Gamesa. This
+increase was partly offset by dividend payments of €2.9 billion
+(for fiscal 2016).
+-
+5%
+12,963
+13,628
+Orders
+Revenue related to external customers went up moderately year-
+over-year and increased in the majority of industrial businesses,
+offsetting declines in Power and Gas and Process Industries and
+Drives. Higher revenue at SGRE benefited from substantial port-
+folio effects following the merger.
+Growth drivers in Europe, C.I.S., Africa, Middle East included
+SGRE, Digital Factory and Mobility. These increases were partly
+offset by a clear revenue decline in Power and Gas. In Germany,
+revenue was up with increases in the majority of industrial busi-
+nesses partly offset by declines at Energy Management and
+Power and Gas.
+In the Americas, revenue came in higher year-over-year, driven
+primarily by the merger with Gamesa, which brought new vol-
+ume in Latin America, and revenue growth in Digital Factory and
+Building Technologies. In the U.S., increases in Digital Factory,
+Building Technologies and Mobility were offset by declines in
+Power and Gas and in Process Industries and Drives.
+Revenue in Asia, Australia was up clearly year-over-year,
+as growth in Digital Factory, SGRE, Energy Management and
+Healthineers was partly offset by declines in Power and Gas and
+Mobility. China's growth outpaced the region overall, as all in-
+dustrial businesses except Mobility recorded higher revenue,
+with Digital Factory, SGRE and Energy Management posting the
+highest increases.
+Combined Management Report
+11
+A.3.2 Segment information analysis
+A.3.2.1 POWER AND GAS
+The merger with Gamesa and the acquisition of Mentor Graphics
+were the primary factors in the increase in deferred tax liabili-
+ties. While the merger with Gamesa also brought substantial
+new provisions, this effect was more than offset by positive
+factors mainly related to a major asset retirement obligation -
+resulting in a net decrease.
+A.3.2.2 ENERGY MANAGEMENT
+% Change
+(in millions of €)
+2017
+2016
+Actual
+Comp.
+Fiscal year
+% Change
+Fiscal year
+Deferred tax liabilities
+Provisions for pensions and similar obligations fell on a reduc-
+tion of Siemens' defined benefit obligation (DBO) mainly due to
+increased discount rate assumptions.
+The increase in trade payables was due mainly to the merger
+with Gamesa.
+(1)%
+2,471
+2,445
+(21)%
+1,142
+902
+Debt ratio
+Total liabilities
+Total non-current liabilities
+Other liabilities
+Other financial liabilities
+(10)%
+5,087
+4,579
+Provisions
+93%
+829
+45,884
+47,986
+(4)%
+89,278
+The decrease in short-term debt and current maturities of
+long-term debt was due mainly to the repayment of fixed-rate
+instruments totaling €4.9 billion. This was partly offset by reclas-
+sifications of long-term fixed-/floating-rate instruments totaling
+€3.7 billion.
+6%
+125,717
+138%
+605
+1,438
+133,804
+28%
+33%
+Long-term debt increased mainly due to the issuance of fixed-/
+floating-rate instruments totaling US$7.5 billion (€7.0 billion)
+in seven tranches with different maturities of up to 30 years.
+This was partly offset by the above mentioned reclassifications to
+short-term debt and current maturities of long-term debt.
+26%
+43,089
+Total liabilities and equity
+Non-controlling interests
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+72%
+67%
+(2)%
+90,901
+34,211
+8%
+Our capital structure ratio as of September 30, 2017 decreased to
+0.9 from 1.0 a year earlier, both results being in line with the
+target established in our One Siemens financial framework. The
+change was due primarily to the above-mentioned decrease of
+provisions for pensions and similar obligations.
+With regard to capital expenditures for continuing operations, we
+expect a significant spending increase in fiscal 2018. In addition,
+we plan to invest significant amounts in coming years in attrac-
+tive innovation fields in connection with next47.
+The profit margin of our Industrial Business increased to 11.2%,
+up from 10.8% in the prior fiscal year. We thus reached our fore-
+cast as of the end of the first quarter of fiscal 2017, which was
+raised from a range of between 10.5% and 11.5% to a range of
+between 11.0% and 12.0%. Six of our eight industrial businesses
+improved their margins year-over-year, and five reached or
+exceeded their margin ranges. In challenging market environ-
+ments, Power and Gas, SGRE and Process Industries and Drives
+missed their target ranges in fiscal 2017. With a return on equity
+after tax of 19.9%, SFS, which is reported outside our Industrial
+Business, reached the upper end of its margin range.
+The loss outside the Industrial Business came in lower year-over-
+year. This was due mainly to positive effects related to the mea-
+surement of a major asset retirement. These effects were partly
+offset by higher amortization of intangible assets acquired in
+business combinations, mainly related to the merger with
+Gamesa and to the Mentor Graphics acquisition.
+Net income in fiscal 2017 rose 11% to €6.2 billion, and basic EPS
+from net income was up 10% to €7.44. We thus reached our
+raised forecast, which was for an increase in basic EPS from net
+income in the range of €7.20 to €7.70, up from the range of
+€6.80 to €7.20 that was forecast in our Annual Report for fiscal
+2016. Net income development benefited from our continuous
+efforts to increase productivity. In fiscal 2017, total cost produc-
+tivity improved 5%, reaching the upper end of our fiscal 2017
+target of 3% to 5%.
+22
+72
+Combined Management Report
+A.7 Non-financial matters
+ROCE for fiscal 2017 was 13.5%, down from 14.3% in fiscal 2016.
+This decline was due primarily to burdens related to the merger
+with Gamesa and the acquisition of Mentor Graphics, which we
+had excluded from our ROCE forecast for fiscal 2017. Excluding
+these burdens, ROCE reached the lower end of the 15% to 20%
+range that we generally aim to achieve. We thus reached our
+forecast, which was to come close to or reach the lower end of
+our target range.
+We evaluate our capital structure using the ratio of industrial net
+debt to EBITDA. For fiscal 2017, this ratio was 0.9, compared to
+1.0 in fiscal 2016. We thus reached our forecast, which was to
+achieve a ratio of up to 1.0.
+Free cash flow from continuing and discontinued operations for
+fiscal 2017 was €4.8 billion, down 13% compared to the prior
+fiscal year.
+Industrial Business profit rose 8% to €9.5 billion. All industrial
+businesses except Power and Gas and SGRE increased their profit
+year-over-year. The strongest increases came from Digital Factory
+and Building Technologies, which together with Healthineers and
+Mobility achieved excellent results for the fiscal year. Energy
+Management continued its solid improvement. While profit at
+Process Industries and Drives grew, this increase was due pri-
+marily to lower severance charges year-over-year. As planned, we
+increased R&D and selling expenses in our industrial businesses,
+with a strong emphasis on digitalization, including the further
+advancement of our MindSphere platform.
+We intend to continue providing an attractive return to share-
+holders. As in the past, we intend to fund our dividend payout
+from Free cash flow. The Siemens Managing Board, in agreement
+with the Supervisory Board, proposes a dividend of €3.70 per
+share, up from €3.60 a year earlier.
+TEMBER 30, 2017. These disclosures are - contrary to the disclo-
+sures in our separately available "Sustainability Information 2017"
+document - not subject to a specific framework to inform the
+users of the financial reports in a focused manner.
+Combined Management Report
+23
+24
+A.8 Report on expected developments
+and associated material opportunities and risks
+A.8.1 Report on expected
+developments
+A.8.1.1 WORLDWIDE ECONOMY
+In fiscal 2018, the world economy is expected to grow slightly
+faster than in fiscal 2017. Global GDP is projected to expand by
+3.2% in calendar 2018, the highest growth rate since 2010. Fixed
+investments are anticipated to grow by 3.6%, with a higher rate
+in emerging countries than in advanced economies. Emerging
+markets are forecast to benefit from stronger global growth and
+rising commodity prices.
+The U.S. economy is anticipated to see moderate growth of 2.4%
+even without stimulus in the form of substantial tax cuts or a big
+infrastructure program. GDP growth is driven by consumer spending,
+which is supported by declining unemployment, rising incomes and
+household wealth. Fixed investments are expected to increase by
+2.7% and should benefit from firming global markets. Interest rates
+are anticipated to continue to gradually rise led by central bank rates.
+The expansion in Europe is expected to continue, with GDP fore-
+cast to grow 2.5%; especially the Eurozone should proceed with
+its recovery after a prolonged period of stagnation and recession.
+Supportive factors include continued monetary stimulus, re-
+duced headwinds from fiscal policy and improving confidence of
+companies and households.
+Siemens has policies for environmental, employee and social
+matters, for the respect of human rights, and anti-corruption and
+bribery matters, among others. Reportable information which
+also relates to these non-financial matters is included in the
+→ COMBINED MANAGEMENT REPORT, in → NOTES 16, 17, 21, 25, and 26
+OF B.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS, and in
+NOTES 16, 17, 20, 21, and 25 OF THE NOTES TO THE FINANCIAL STATE-
+MENTS in the ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG AS OF SEP-
+GDP growth in China is expected to moderate further in calendar
+2018 to 6.5%, down from 6.8% in 2017. However, the near-term
+strength masks longer-term fragilities, especially very high debt
+levels. Also, the government has made only slow progress in re-
+ducing overcapacities.
+Revenue rose to €83.0 billion, up 4% year-over-year. Except for
+Power and Gas and Process Industries and Drives, all industrial
+businesses contributed to revenue growth. Revenue growth was
+led by substantial growth at SGRE, due mainly to new volume
+from the merger with Gamesa, and by significant growth at
+Digital Factory due to the strength of the Division's short-cycle
+businesses and to the Mentor Graphics acquisition. Excluding
+currency translation and portfolio effects, overall revenue grew
+3%. For fiscal 2017, we had forecast modest growth in revenue,
+net of currency translation and portfolio effects.
+Also with regard to executing our financial target system, fiscal
+2017 was another very successful year for Siemens and for most
+of our industrial businesses and SFS. We raised our guidance for
+basic earnings per share (EPS) from net income after the first
+quarter. After the second quarter, we confirmed this raised fore-
+cast and included in the EPS guidance previously excluded bur-
+dens resulting from portfolio changes. We reached or exceeded
+all the targets set for our primary measures for fiscal 2017. We
+achieved revenue growth of 3% net of currency translation and
+portfolio effects. Net income and basic EPS from net income rose
+11% and 10%, respectively. Excluding burdens related to the
+acquisition of Mentor Graphics and the merger with Gamesa,
+Return on capital employed (ROCE) was slightly above the lower
+end of our target range of 15% to 20%. Our capital structure ratio
+came in slightly below 1.
+Continuing and
+discontinued operations
+7,176
+(2,406)
+4,769
+With our ability to generate positive operating cash flows, our
+total liquidity (defined as cash and cash equivalents as well as
+available-for-sale financial assets) of €9.6 billion, our €7.8 billion
+in unused lines of credit, and our credit ratings at year-end, we
+believe that we have sufficient flexibility to fund our capital re-
+quirements. Also in our opinion, our operating net working cap-
+ital is sufficient for our present requirements.
+Investing activities
+Additions to intangible assets and property, plant and equipment
+from continuing operations totaled €2.4 billion in fiscal 2017.
+Within the Industrial Business, ongoing investments related
+mainly to technological innovations; extending our capacities for
+designing, manufacturing and marketing new solutions; improv-
+ing productivity; and replacements of fixed assets. These invest-
+ments amounted to €1.8 billion in fiscal 2017. The remaining
+portion in fiscal 2017 related mainly to SRE, including significant
+amounts related to office projects such as new office buildings in
+Germany. SRE is responsible for uniform and comprehensive
+management of Company real estate worldwide (except for
+SGRE), and supports the Industrial Business and corporate activ-
+ities with customer-specific real estate solutions.
+Risk management at Siemens builds on a comprehensive, interac-
+tive and management-oriented Enterprise Risk Management
+(ERM) approach that is integrated into the organization and that
+addresses both risks and opportunities. Our ERM approach is based
+on the globally accepted COSO (Committee of Sponsoring Organi-
+zations of the Treadway Commission) 'Enterprise Risk Manage-
+ment - Integrated Framework' (2004) and is adapted to Siemens
+requirements. It additionally conforms to ISO (International Orga-
+nization for Standardization) Standard 31000 (2009). The frame-
+work connects the ERM process with our financial reporting pro-
+cess and our internal control system. It considers a company's
+strategy, the efficiency and effectiveness of its business opera-
+tions, the reliability of its financial reporting as well as compliance
+with relevant laws and regulations to be equally important.
+Focus areas of ongoing investing activities of the Industrial Busi-
+ness are:
+Orders for fiscal 2017 were €85.7 billion, down 1% year-over-year.
+The decline was due to contracting markets for Power and Gas,
+which in the prior fiscal year had recorded large orders for power
+plants in Egypt. All other industrial businesses recorded increases.
+Orders grew at double-digit rates at Mobility and Digital Factory,
+the latter on the particular strength of its short-cycle businesses
+and supported by new volume from the Mentor Graphics acqui-
+sition. Order growth at SGRE was due to new volume from the
+merger with Gamesa. At 1.03, our book-to-bill ratio fulfilled our
+expectation of a ratio above 1.0.
+The investments of Power and Gas are focused on the enhance-
+ment of productivity and selective strategic localization. Invest-
+ing activities mainly relate to our gas turbines and turbine com-
+ponents.
+The investments of Building Technologies relate mainly to the
+products and systems business, particularly innovation projects
+such as control and digital platforms.
+Mobility's investments focus mainly on meeting project de-
+mands and maintaining or enhancing its production facilities.
+Major spending of Digital Factory in fiscal 2017 related to the
+factory automation, motion control systems, software and con-
+trol products businesses, including investments in production
+facilities in China. The portion of capital expenditures associated
+with software is expected to increase considerably in fiscal 2018.
+Process Industries and Drives makes most of its capital expen-
+ditures for the purpose of rationalization, replacement, and ad-
+justment of innovative new or successor products, particularly
+in Europe.
+Healthineers' investments are driven mainly by enhancing com-
+petitiveness and innovation notably in the diagnostics busi-
+nesses, including large amounts relating to intangible assets,
+particularly capitalized development expenses for new platforms.
+Healthineers is also spending for factories, especially in China
+and the United States.
+The investments of Siemens Gamesa Renewable Energy con-
+tinue to focus on the expansion of production capacity in Germany
+for offshore wind turbines as well as in Morocco for onshore
+blades, while in parallel the production capacities in other regions
+are reduced to address changing market conditions. Further
+investments relate to the emerging markets India and China to
+allow for the production of the next turbine generation.
+Combined Management Report
+21
+A.6 Overall assessment of the economic position
+In fiscal 2017, we continued to stringently execute on our "Vision
+2020" concept. We reached significant milestones for the stra-
+tegic development of Siemens and initiated important measures
+to further strengthen our portfolio. At the beginning of fiscal
+2017, we founded next47, which pools our existing startup activ-
+ities to foster disruptive ideas more vigorously and accelerate the
+development of new technologies. In the second quarter, we
+acquired Mentor Graphics, an electronic design automation soft-
+ware provider, to further strengthen and expand our industrial
+software portfolio. At the beginning of the third quarter we
+closed the merger of our wind power business with Gamesa to
+form SGRE, a leading global wind power player in the onshore
+and offshore markets. In the fourth quarter, we announced our
+plans to publicly list a minority stake in the Healthineers business
+in the first half of calendar year 2018, depending on market
+conditions, in order to strengthen this Strategic Unit within
+Siemens by increasing the entrepreneurial and capital flexibility
+it needs to drive its strategic growth plans. Also in the fourth
+quarter, we signed a memorandum of understanding to combine
+our mobility business, including the rail traction drives business,
+with Alstom SA, France, in order to provide our customers around
+the world with an even more innovative and competitive product
+and solution portfolio. This transaction is expected to close at the
+end of calendar year 2018.
+Energy Management is spending the larger portion of its capital
+expenditures for innovation, particularly in digital and low-volt-
+age grid edge products and solutions. Further investments are
+primarily related to the replacement of fixed assets, the expan-
+sion or relocation of factories and technical equipment.
+Fiscal year 2017
+The forecasts presented here for GDP and fixed investments are
+based on a report from IHS Markit dated October 15, 2017.
+In fiscal 2018, market volume measured in Euro is expected to be
+held back by negative currency translation effects.
+We anticipate that orders in fiscal 2018 will exceed revenue for a
+book-to-bill ratio above 1.
+Profitability
+For fiscal 2018, we expect net income to result in basic EPS from
+net income in the range of €7.20 to €7.70. Net income and basic
+EPS from net income for fiscal 2017 were €6.1 billion and €7.34,
+respectively, taking into account the retrospective adoption of
+IFRS 15 as mentioned above.
+Our forecast for net income and corresponding basic EPS is based
+on a number of additional assumptions: As part of our One
+Siemens framework, we target a total cost productivity improve-
+ment of 3% to 5% in fiscal 2018. Also, we assume continued solid
+project execution. Furthermore, we anticipate clear currency-re-
+lated impacts on net income. Along with these assumptions, we
+anticipate pricing pressure on our offerings of around 2.5% over-
+all in fiscal 2018, with SGRE and the Power and Gas Division
+clearly above this average. Furthermore, we expect wage infla-
+tion of around 3% to 4%. Also, we plan to increase R&D expenses
+aimed at strengthening our capacities for innovation.
+For fiscal 2018, taking into account the above-mentioned as-
+sumptions and exclusions, we expect all but two of our industrial
+businesses to be in or above their ranges for profit margin as
+defined in our financial performance system (see → A.2 FINAN-
+CIAL PERFORMANCE system). The exceptions are Power and Gas and
+Process Industries and Drives. Overall, we expect a profit margin
+for our Industrial Business of 11.0% to 12.0%. Taking into account
+the retrospective adoption of IFRS 15 as mentioned above, Indus-
+trial Business profit margin was 11.1% in fiscal 2017. We expect
+SFS, which is reported outside Industrial Business, to achieve a
+return on equity (ROE) within its margin range in fiscal 2018 and
+to keep its profit near the prior-year level.
+Within our Reconciliation to Consolidated Financial Statements, we
+expect expenses for Corporate items to be approximately €0.6 bil-
+lion and to include significant centrally carried expenses related to
+innovation and digitalization. Despite burdens such as carve-out
+related expenses stemming from portfolio measures, particularly
+including the planned public listing of a minority share in Healthi-
+neers in the first half of calendar 2018 and the planned merger of
+our mobility business with Alstom by the end of calendar 2018, we
+expect results related to CMPA to be positive due among other fac-
+tors to a €0.6 billion (after-tax) gain from the sale of our shares in
+OSRAM Licht AG at the beginning of fiscal 2018. Results related to
+CMPA are also expected to be highly volatile from quarter to quar-
+ter during the fiscal year. We anticipate that SRE will continue with
+real estate disposals depending on market conditions and generate
+results near the prior-year level. Centrally carried pension expenses
+are expected to total approximately €0.4 billion in fiscal 2018.
+Amortization of intangible assets acquired in business combina-
+tions are expected to rise to approximately €1.2 billion in fiscal 2018
+due primarily to the merger with Gamesa and the acquisition of
+Mentor Graphics. Eliminations, Corporate Treasury and other rec-
+onciling items, which were a negative €0.3 billion in fiscal 2017, are
+expected to increase by approximately €0.1 billion in fiscal 2018
+due mainly to higher interest expenses.
+We do not expect material influence on financial results from
+discontinued operations in fiscal 2018. We anticipate our tax rate
+for fiscal 2018 to be in the range of 27% to 33%, up from 26% in
+fiscal 2017. We expect the increase in the tax rate to be driven by
+tax burdens related to the preparations of the initial public offer-
+ing of a minority stake in Healthineers and the merger of our
+mobility business with Alstom.
+Capital efficiency
+Within our One Siemens financial framework, we aim in general
+to achieve a ROCE in the range of 15% to 20%. Due mainly to
+burdens on net income and average capital employed resulting
+from the acquisition of Mentor Graphics and the merger with
+As of September 30, 2017, our order backlog totaled €126 billion.
+Thereof Power and Gas had an order backlog of €40 billion, Mo-
+bility of €26 billion, SGRE of €21 billion, Healthineers of €15 bil-
+lion, Energy Management of €13 billion, Process Industries and
+Drives and Building Technologies of €5 billion each and Digital
+Factory of €3 billion. We expect revenue growth in fiscal 2018 to
+benefit from conversion of our order backlog. From Siemens' back-
+log, we expect to convert approximately €44 billion of past orders
+into current revenue in fiscal 2018. Within this amount, we expect
+our segments involved in large long-term project business to con-
+tribute the following conversions of backlog into revenue for fiscal
+2018: For Power and Gas we expect approximately a €9 billion in
+revenue conversion, for Mobility, Energy Management and SGRE
+approximately €7 billion in revenue conversion each.
+26
+Combined Management Report
+Gamesa, we expect ROCE to show a double-digit result in fiscal
+2018 but to come in below the lower end of our target range.
+Capital structure
+We aim in general for a capital structure, defined as the ratio of
+industrial net debt to EBITDA, of up to 1.0, and expect to achieve
+this in fiscal 2018.
+A.8.1.4 OVERALL ASSESSMENT
+We expect a mixed picture in our market environment in fiscal
+2018, ranging from strong markets for our short-cycle businesses
+to unfavorable dynamics in our energy generation markets, as
+well as geopolitical uncertainties that may restrict investment
+sentiment. For fiscal 2018 we expect modest growth in revenue,
+net of effects from currency translation and portfolio transac-
+tions, and anticipate that orders will exceed revenue for a book-
+to-bill ratio above 1. We expect a profit margin of 11.0% to 12.0%
+for our Industrial Business and basic EPS from net income in the
+range of €7.20 to €7.70, both excluding severance charges.
+This outlook excludes charges related to legal and regulatory
+matters, effects on EPS associated with minorities holding shares
+in Healthineers following the planned IPO, and potential effects
+which may follow the introduction of a new strategic program.
+Overall, the actual development for Siemens and its Segments
+may vary, positively or negatively, from our outlook due to the
+risks and opportunities described below or if our expectations
+and assumptions do not materialize.
+A.8.2 Risk management
+A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
+Our risk management policy stems from a philosophy of pursuing
+sustainable growth and creating economic value while managing
+appropriate risks and opportunities and avoiding inappropriate
+risks. As risk management is an integral part of how we plan and
+execute our business strategies, our risk management policy is
+set by the Managing Board. Our organizational and accountabil-
+ity structure requires each of the respective managements of
+our Industrial Business, Financial Services (SFS), regions and
+Corporate Units to implement risk management programs that
+are tailored to their specific industries and responsibilities, while
+being consistent with the overall policy.
+26
+A.8.1.2 MARKET DEVELOPMENT
+In fiscal 2017, most of our industrial businesses contributed to or-
+ganic revenue growth, and we expect a similar development in fis-
+cal 2018. The principal exceptions are Power and Gas and SGRE,
+which continue to be impacted by market headwinds.
+Revenue growth
+For fiscal 2018, we expect the markets served by our Power and
+Gas Division to remain challenging with market volume poten-
+tially declining again, even below the low level of fiscal 2017.
+However, the need for small and medium gas turbines, particu-
+larly in countries with a less developed energy infrastructure,
+is anticipated to continue. Volume in the compression market
+is expected to remain on a low level but we expect to see growing
+signs of a recovery during fiscal 2018 as some customers in the
+oil and gas industry revive investment plans. The steam turbine
+market is expected to continue to be impacted by the shift from
+coal to gas and renewable sources for power generation.
+In fiscal 2018, markets served by the Energy Management Division
+are expected to provide moderate, low single-digit growth excluding
+currency translation effects. We expect negative currency trans-
+lation effects from a weaker US$ and related currencies. Customers
+are expected to continue their effort to strengthen transmission and
+distribution grids to integrate the growing amount of decentralized
+renewable energy. We expect first signs of stabilization in the oil and
+gas and the metals and mining markets, though from low levels.
+For the markets served by the Building Technologies Division, we
+expect solid growth again in fiscal 2018. Highest growth dynamics
+are forecast for Asia, with above-average growth in China and
+India. Markets in the Middle East are also expected to grow faster
+than the Division's markets overall. The U.S. is expected to grow in
+line with the global average and the majority of European coun-
+tries are anticipated to continue their recovery, led by Spain and
+some Eastern European countries.
+For fiscal 2018, we expect markets served by the Mobility Divi-
+sion to grow moderately. We anticipate that rail operators in
+Europe, particularly in Germany and the U.K., will continue to
+make significant investments. Markets in the Americas region are
+expected to remain strong, especially due to ongoing invest-
+ments in urban transport and infrastructure in the U.S. as well as
+demand for commuter transport in Argentina. In the Middle East
+and Africa, we expect tenders of further rolling stock and turnkey
+projects. In China, we expect investments in high-speed trains,
+urban transport and rail infrastructure to continue to drive
+growth. In India, market growth should continue from projects
+for commuter and urban transport as well as high-speed passen-
+ger lines, freight rail, and related infrastructure as part of the
+country's transportation infrastructure modernization. Overall,
+local rail transport and intermodal mobility solutions are ex-
+pected to gain importance as urbanization continues to progress
+around the world. In emerging countries, rising incomes are ex-
+pected to result in greater demand for public transport solutions.
+For fiscal 2018, markets addressed by the Digital Factory Division
+are expected to continue to grow. Global manufacturing produc-
+tion is forecast to grow moderately again, although growth rates
+in the automotive industries are expected to slow following
+strong growth in prior years. The machine-building industry is
+also forecast to grow as customers upgrade and modernize pro-
+duction facilities in an increasingly dynamic market environment.
+The trend towards digitalization is expected to continue to drive
+growth in the industrial software market. On a geographic basis,
+the strong growth rates experienced in China in fiscal 2017 are
+not expected to continue in fiscal 2018.
+In fiscal 2018, nominal volume for the markets served by the
+Process Industries and Drives Division is expected to decline
+slightly due to currency translation effects. Excluding this effect,
+market volume is anticipated to grow slightly. Within commodity-
+related markets (e.g. oil and gas, mining, minerals), a gradual re-
+covery in capital expenditures is expected to continue on a low
+level. Chemicals market is expected to further stabilize, whereas
+Combined Management Report
+we expect challenging market conditions for our wind-related
+components due to higher pricing pressure resulting from the on-
+going transition towards mature, fully competitive wind energy
+markets. On a geographic basis, the market growth momentum
+in China is expected to moderate in fiscal 2018 year-over-year,
+while markets in Europe and in the U.S. are expected to improve.
+For fiscal 2018, markets for Healthineers are expected to stay on
+a moderate growth path. Healthineers' markets continue to ben-
+efit from long-term trends such as growing and aging populations
+and from broader access to healthcare, but are restricted by pub-
+lic spending constraints and by consolidation of healthcare pro-
+viders. On a geographic basis, we expect slight growth in the U.S.,
+held back by continued pressure to increase utilization of existing
+equipment, reduced reimbursement rates and policy uncertainty.
+For Europe, we also expect slight growth, with equipment re-
+placement and business with large customers such as hospital
+chains gaining further importance. For China, we expect moder-
+ate growth due to continuously growing government spending on
+healthcare, promoting the private segment and expanding access
+on county level, pronounced effects of aging and growing inci-
+dence of chronic disease, partly held back by governmental re-
+strictions such as centralized tendering and regulatory oversight
+of large-scale equipment allocation and use. Governments in a
+number of countries show the intention to establish protectionist
+initiatives and policies which support local suppliers.
+We expect a mixed picture in our market environment in fiscal 2018,
+ranging from strong markets for our short-cycle businesses to un-
+favorable dynamics in our energy generation markets, as well as
+geopolitical uncertainties that may restrict investment sentiment.
+Therefore, for fiscal 2018 we expect modest growth in revenue, net
+of effects from currency translation and portfolio transactions.
+For SGRE, we expect global wind installations to grow in fiscal
+2018, with growth driven by higher demand for onshore installa-
+tions, while offshore installations are expected to remain near
+the prior-year level. Some of the SGRE more relevant onshore
+markets like India and the U.S. will continue to experience higher
+than normal levels of volatility driven by the transition to fully
+competitive wind markets. This transition is expected to result in
+a low double-digit price decline in the onshore markets in fiscal
+2018. As a result volume for SGRE's markets measured in Euro is
+expected to decline year-over-year.
+A.8.1.3 SIEMENS GROUP
+We are basing our outlook for fiscal 2018 for the Siemens Group and
+its segments on the above-mentioned expectations and assump-
+tions regarding the overall economic situation and specific market
+conditions for the next fiscal year. We plan to publicly list a minority
+stake in Healthineers in the first half of calendar 2018, depending
+on market conditions, to further strengthen Healthineers in Siemens
+for the future. The public listing of a minority stake in Healthineers
+will among others result in an increase in non-controlling interests,
+which reduces net income attributable to Siemens AG's sharehold-
+ers and corresponding EPS. Effects on EPS associated with minori-
+ties holding shares in Healthineers following the planned IPO are
+excluded from this outlook. Furthermore, charges related to legal
+and regulatory matters are excluded from this outlook.
+For fiscal 2018, we expect market-driven headwinds to continue
+to significantly impact volume development and profitability of
+Power and Gas, SGRE and Process Industries and Drives. These
+units are in the process of preparing capacity adjustment mea-
+sures, which we expect to result in significant severance charges.
+There are high uncertainties regarding the extent of the financial
+burdens for fiscal 2018, as these depend on the results of consul-
+tations with the relevant employee representatives and the im-
+plementation of the planned measures is expected to take seve-
+ral years. Therefore, we exclude all severance charges from this
+outlook. Severance charges in fiscal 2017 were €385 million for
+our Industrial Business and €466 million (pre-tax) for Siemens.
+We assume that severance charges in fiscal 2018 will be higher
+than in fiscal 2017. Furthermore, this outlook excludes potential
+effects which may follow the introduction of a new strategic pro-
+gram, which we expect to announce during fiscal 2018.
+We are exposed to currency translation effects, particularly involv-
+ing the US$, the British £ and currencies of emerging markets,
+particularly the Chinese yuan. While we expect volatility in global
+currency markets to continue in fiscal 2018, we have improved our
+natural hedge on a global basis through geographic distribution
+of our production facilities during the past. Nevertheless, Siemens
+is still a net exporter from the Euro zone to the rest of the world,
+so a weak Euro is principally favorable for our business and a
+strong Euro is principally unfavorable. In addition to the natural
+hedging strategy just mentioned, we also hedge currency risk in
+our export business using derivative financial instruments. We
+expect these steps to help us limit effects on income related to
+currency in fiscal 2018. Based on currency exchange rates as of
+beginning of November 2017, we nevertheless expect negative
+currency effects to significantly influence nominal order and
+revenue development, and to adversely affect Industrial Business
+profit with an impact in the mid-triple-digit millions of Euros.
+We are basing this outlook on our preliminary numbers under
+IFRS 15, Revenue from Contracts with Customers, which we will
+adopt beginning with fiscal 2018 retrospectively, i.e. results for fis-
+cal 2017 will be presented on a comparable basis. We do not expect
+the adoption of IFRS 15 to have a significant effect on Siemens'
+Consolidated Financial Statements. On a preliminary basis, the
+adoption of IFRS 15 is expected to reduce reported revenue for fiscal
+2017 by approximately €0.2 billion and reported basic EPS for fiscal
+2017 by approximately €0.10, resulting mainly from Profit Industrial
+Business. Reported Industrial Business profit margin for fiscal 2017
+is expected to decline by approximately 0.1 percentage points. As
+a result of the IFRS 15 adoption, below we report the backlog of the
+Siemens Group which, compared to the previous definition, now
+also includes the order backlog in businesses outside the Industrial
+Combined Management Report
+25
+Business, eliminations for transactions between the businesses,
+and changes arising from the adoption of IFRS 15.
+Based on these assumptions and exclusions, our outlook is as
+follows:
+Our SFS Division is geared to Siemens' Industrial Business and its
+markets. As such SFS is influenced by the business development
+of the markets served by our Industrial Business, among other
+factors. SFS will continue to focus its business scope on areas of
+intense domain know-how.
+A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
+We have implemented and coordinated a set of risk management
+and control systems which support us in the early recognition of
+developments that could jeopardize the continuity of our busi-
+ness. The most important of these systems include our enter-
+prise-wide processes for strategic planning and management
+reporting. Strategic planning is intended to support us in consid-
+ering potential risks well in advance of major business decisions,
+(50)
+(2,406)
+Combined Management Report
+19
+A.5.2 Cash flows
+(in millions of €)
+Cash flows from operating activities
+Net income
+Change in operating net working capital
+Other reconciling items to cash flows from operating activities – continuing operations
+Cash flows from operating activities – continuing operations
+Cash flows from operating activities - discontinued operations
+Cash flows from operating activities - continuing and discontinued operations
+Cash flows from investing activities
+Additions to intangible assets and property, plant and equipment
+Acquisitions of businesses, net of cash acquired
+Change in receivables from financing activities of SFS
+Fiscal year
+2017
+6,179
+(1,595)
+2,641
+7,225
+(50)
+Irrevocable loan commitments amounted to €3.4 billion (Sep-
+tember 30, 2016: €3.4 billion). A considerable portion of these
+commitments resulted from asset-based lending transactions,
+meaning that the respective loans can be drawn only after the
+borrower has provided sufficient collateral.
+Future payment obligations under non-cancellable operating
+leases amounted to €3.3 billion (September 30, 2016: €3.5 bil-
+lion).
+In addition to these commitments, we issued other guarantees.
+To the extent future claims are not considered remote, maximum
+future payments from these commitments amount to €0.6 bil-
+lion (September 30, 2016: €0.9 billion). The decrease in other
+guarantees is related to indemnifications issued in connection
+with dispositions of businesses.
+As of September 30, 2017 the undiscounted amount of maximum
+potential future payments related primarily to credit guarantees
+and guarantees of third-party performance amounted to €3.1 bil-
+lion (September 30, 2016: €3.7 billion).
+Capital structure ratio
+Combined Management Report
+28
+Economic, political and geopolitical conditions (macroeco-
+nomic environment): We see a high level of uncertainty regard-
+ing the global economic outlook. Significant downside risks stem
+e.g. from an increasing trend towards populism and from the
+consequences of the Brexit negotiations. The U.K. exit process
+could heighten business and consumer uncertainty, reduce in-
+vestment in the U.K., pose risks to financial markets and may
+increase the uncertainties about the future of the European
+Union (EU) in general. A further and massive loss of economic
+confidence and a prolonged period of reluctance in investment
+Competitive environment: The worldwide markets for our
+products, solutions and services are highly competitive in terms
+of pricing, product and service quality, product development and
+introduction time, customer service, financing terms and shifts
+in market demands. We face strong existing competitors and also
+competitors from emerging markets, which may have a better
+cost structure. Some industries in which we operate are under-
+going consolidation, which may result in stronger competition,
+a change in our relative market position, or unexpected price
+erosion. Furthermore, there is a risk of take-overs of crucial sup-
+pliers by competitors and a risk that competitors are increasingly
+offering services for our installed base. We address these risks
+with various measures, for example benchmarking, strategic
+initiatives, sales push initiatives, executing productivity measures
+and target cost projects, rightsizing of our footprint, outsourc-
+ings, mergers and joint ventures, exporting from low-cost
+countries to price-sensitive markets, and optimizing our product
+portfolio. We continuously monitor and analyze competitive and
+market information in order to be able to anticipate unfavorable
+changes in the competitive environment rather than merely
+reacting to such changes.
+A.8.3.1 STRATEGIC RISKS
+Below we describe the risks that could have a material adverse
+effect on our business, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and repu-
+tation. The order in which the risks are presented in each of the
+four categories reflects the currently estimated relative exposure
+for Siemens associated with these risks and thus provides an in-
+dication of the risks' current importance to us. Additional risks
+not known to us or that we currently consider immaterial may
+also negatively impact our business objectives and operations.
+Unless otherwise stated, the risks described below relate to all of
+our segments.
+A.8.3 Risks
+Audit Committee of the Supervisory Board. The CRIC is composed
+of the Chief Risk & Internal Control Officer, as the chairperson,
+members of the Managing Board and selected heads of Corpo-
+rate Units.
+To oversee the ERM process and to further drive the integration
+and harmonization of existing control activities to align with legal
+and operational requirements, the Managing Board established
+a Risk Management and Internal Control Organization, headed by
+the Chief Risk & Internal Control Officer, and a Corporate Risk and
+Internal Control Committee (CRIC). The CRIC obtains risk and op-
+portunity information from the Risk Committees established at
+the Industrial Business, SFS, regions and Corporate Units. In order
+to allow for a meaningful discussion on Siemens group level in-
+dividual risk and opportunities of similar cause-and-effect nature
+are aggregated into risk and opportunity themes. This aggrega-
+tion naturally results in a mixture of risks, including those with
+a primarily qualitative assessment and those with a primarily
+quantitative risk assessment. Accordingly, we do not foresee a
+purely quantitative assessment of risk themes. This information
+then forms the basis for the evaluation of the company-wide risk
+and opportunity situation. The CRIC reports to and supports the
+Managing Board on matters relating to the implementation,
+operation and oversight of the risk and internal control system
+and assists the Managing Board for example in reporting to the
+7,176
+A.8.2.3 RISK MANAGEMENT ORGANIZATION
+AND RESPONSIBILITIES
+27
+Combined Management Report
+Our ERM process aims for early identification and evaluation of,
+and response regarding, risks and opportunities that could mate-
+rially affect the achievement of our strategic, operational, financial
+and compliance objectives. The time horizon covered by ERM is
+typically three years. Our ERM is based on a net risk approach,
+addressing risks and opportunities remaining after the execution
+of existing control measures. If risks have already been considered
+in plans, budgets, forecasts or the financial statements (e.g. as a
+provision or risk contingency), they are supposed to be incorpo-
+rated with their financial impact in the entity's business objectives.
+As a consequence, only additional risks arising from the same sub-
+ject (e.g. deviations from business objectives, different impact
+perspectives) should be considered for the ERM. In order to pro-
+vide a comprehensive view on our business activities, risks and
+opportunities are identified in a structured way combining ele-
+ments of both top-down and bottom-up approaches. Reporting
+generally follows a quarterly cycle while this regular reporting
+process is complemented by an ad-hoc reporting process that aims
+to escalate critical issues in a timely manner. Relevant risks and
+opportunities are prioritized in terms of impact and likelihood,
+considering different perspectives, including business objectives,
+reputation and regulatory matters. The bottom-up identification
+and prioritization process is supplemented by workshops with the
+respective managements of the Industrial Business, SFS, regions
+and Corporate Units. This top-down element ensures that poten-
+tial new risks and opportunities are discussed at the management
+level and are included in the subsequent reporting process, if
+found to be relevant. Reported risks and opportunities are ana-
+lyzed regarding potential cumulative effects and are aggregated
+within and for each of the organizations mentioned above.
+In November 2015, we announced a share buyback of up to
+€3 billion ending at the latest on November 15, 2018. The buy-
+backs will be made under the current authorization granted at
+the Annual Shareholders' Meeting on January 27, 2015. Shares
+repurchased may be used solely for retirement; for issuing shares
+to employees, to members of the Managing Board and board
+members of affiliated companies; and for servicing/securing the
+obligations or rights from or in connection with convertible
+bonds or warrant bonds. In fiscal 2017 we repurchased 7,922,129
+treasury shares under the program at an average cost per share
+of €117.85, totaling €0.9 billion (including incidental transaction
+charges).
+Debt and credit facilities
+As of September 30, 2017 we recorded, in total, €28.8 billion in
+notes and bonds (maturing until 2047), €2.5 billion in loans from
+banks (maturing until 2027), €0.8 billion in other financial in-
+debtedness (maturing until 2029) and €0.1 billion in obligations
+under finance leases. Notes, bonds and loans from banks were
+issued mainly in U.S. dollar and euro, and to a lower extent in the
+British pound.
+We have credit facilities totaling €7.8 billion which were unused
+as of September 30, 2017.
+For further information about our debt see NOTE 15 in B.6
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
+tion about the functions and objectives of our financial risk man-
+agement see NOTE 24 in B.6 NOTES TO CONSOLIDATED FINANCIAL
+STATEMENTS.
+Off-balance-sheet commitments
+Responsibilities are assigned for all relevant risks and opportuni-
+ties, with the hierarchical level of responsibility depending on the
+significance of the respective risk or opportunity. In a first step,
+assuming responsibility for a specific risk or opportunity involves
+choosing one of our general response strategies. Our general re-
+sponse strategies with respect to risks are avoidance, transfer,
+reduction or acceptance of the relevant risk. Our general response
+strategy with respect to opportunities is to 'seize' the relevant
+opportunity. In a second step, responsibility for a risk or opportu-
+nity also involves the development, initiation and monitoring of
+appropriate response measures corresponding to the chosen re-
+sponse strategy. These response measures have to be specifically
+tailored to allow for effective risk management. Accordingly, we
+have developed a variety of response measures with different
+characteristics. For example, we mitigate the risk of fluctuations
+in currency and interest rates by engaging in hedging activities.
+Regarding our long-term projects, systematic and comprehensive
+project management with standardized project milestones, in-
+cluding provisional acceptances during project execution and
+complemented by clearly defined approval processes, assists us
+in identifying and responding to project risks at an early stage,
+even before the bidding phase. Furthermore, we maintain appro-
+priate insurance levels for potential cases of damage and liability
+risks in order to reduce our exposure to such risks and to avoid
+or minimize potential losses. Among others, we address the risk
+of fluctuation in economic activity and customer demand by
+closely monitoring the macroeconomic conditions and develop-
+ments in relevant industries, and by adjusting capacity and im-
+plementing cost-reduction measures in a timely and consistent
+manner, if deemed necessary.
+4,819
+(2,406)
+(686)
+(1,000)
+(2,914)
+(187)
+(1,560)
+(1,560)
+The conversion of profit into cash inflows from operating activ-
+ities was mainly driven by Healthineers and the Digital Factory
+Division. This conversion was held back by a build-up of operat-
+ing net working capital primarily due to an increase in invento-
+ries at SGRE and a decrease in billings in excess of costs and esti-
+mated earnings on uncompleted contracts and related advances
+at the Power and Gas Division.
+The cash outflows for acquisitions of businesses, net of cash
+acquired, primarily included payments totaling €4.1 billion re-
+lated to the acquisition of Mentor Graphics.
+The cash outflows for other purchases of assets primarily in-
+cluded additions of assets eligible as central bank collateral and
+to payments related to several investments such as in connection
+with our Bentley Systems strategic alliance and the Valeo Siemens
+eAutomotive joint venture.
+The cash inflows from other disposals of assets primarily in-
+cluded disposals from above-mentioned eligible collateral, pro-
+ceeds from real estate disposals at SRE and from the sale of invest-
+ments such as the stake in an offshore windfarm project at SFS.
+The cash inflows from the re-issuance of treasury shares and
+other transactions with owners resulted from the exercise of
+warrants in connection with the redemption of the US$1.5 billion
+bonds with warrant units.
+Cash flows from financing activities - continuing and discontinued operations
+20
+Combined Management Report
+We report Free cash flow as a supplemental liquidity measure:
+Free cash flow
+(in millions of €)
+Cash flows from operating activities
+Additions to intangible assets and property, plant and equipment
+Free cash flow
+Continuing
+operations
+Discontinued
+operations
+7,225
+(50)
+20
+(4,385)
+Cash flows from financing activities - discontinued operations
+Dividends attributable to non-controlling interests
+Other purchases of assets
+Other disposals of assets
+Cash flows from investing activities - continuing operations
+(1,382)
+1,404
+(7,456)
+Cash flows from investing activities – discontinued operations
+(1)
+Cash flows from investing activities - continuing and discontinued operations
+(7,457)
+Cash flows from financing activities
+Cash flows from financing activities - continuing operations
+Purchase of treasury shares
+Issuance of long-term debt
+Repayment of long-term debt (including current maturities of long-term debt)
+(931)
+1,123
+6,958
+(4,868)
+Change in short-term debt and other financing activities
+260
+Interest paid
+Dividends paid to shareholders of Siemens AG
+Re-issuance of treasury shares and other transactions with owners
+while management reporting is intended to enable us to monitor
+such risks more closely as our business progresses. Our internal
+auditors regularly review the adequacy and effectiveness of our
+risk management system. Accordingly, if deficits are detected,
+it is possible to adopt appropriate measures for their elimination.
+This coordination of processes and procedures is intended to help
+ensure that the Managing Board and the Supervisory Board are
+fully informed about significant risks in a timely manner.
+decisions and awarding of new orders would hit our businesses.
+We continuously monitor the exit process and established, for
+example, a task force coordinating our local and global mitiga-
+tion measures. Significant business risk stems from an abrupt
+weakening of Chinese economic growth. Both global and re-
+gional investment climates could collapse due to political up-
+heavals, further independence debates within countries in the
+EU (e.g. the Catalan endeavor for independence), or sustained
+success of protectionist, anti EU and anti-business parties and
+policy. A rapid tightening of monetary policy by the U.S. Federal
+Reserve could cause a depreciation spiral among emerging mar-
+ket currencies. This could lead to a renewed emerging market
+crisis because debt levels of emerging market enterprises have
+risen, making them dependent on favorable global financial con-
+ditions to service debts denominated in foreign currencies.
+Emerging market operations involve further various risks, includ-
+ing civil unrest, health concerns, cultural differences such as em-
+ployment and business practices, volatility in gross domestic
+product, economic and governmental instability, the potential
+for nationalization of private assets and the imposition of ex-
+change controls. A terrorist mega-attack or a significant cyber-
+crime incident, or a series of such attacks or incidents in major
+economies, could depress economic activity globally and under-
+mine consumer and business confidence. Further risks stem from
+geopolitical tensions (e.g. in Syria, Ukraine, Turkey, and North
+Korea), and from an increasing vulnerability of the connected
+global economy to natural disasters. In addition we are depend-
+ing on the economic momentum of specific industries, especially
+on the continued confidence in the automotive sector.
+Some of these legal disputes and proceedings could result in ad-
+verse decisions for Siemens that may have material effects on our
+financial position, the results of operations and cash flows.
+Trade payables, liabilities
+The Corporate Governance statement pursuant to Sections 289 a
+and 315 para. 5 of the German Commercial Code is an integral
+part of the Combined Management Report and is presented in
+→ C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS
+289 A AND 315 PARA. 5 OF THE GERMAN COMMERCIAL CODE.
+A.9.3 Corporate Governance
+statement
+The decrease in Trade payables, liabilities to affiliated compa-
+nies and other liabilities was due primarily to lower liabilities to
+affiliated companies as a result of intra-group financing activities.
+Other provisions decreased due to several factors. The largest
+was a decrease of €0.5 billion in provisions for losses from deri-
+vative financial transactions. Additionally, provisions for post-
+closing guarantees decreased by €0.2 billion and provisions for a
+major asset retirement obligation decreased by €0.2 billion, due
+primarily to reduced inflation rate assumptions.
+The increase in Pension and similar commitments resulted
+mainly from a €0.7 billion increase related to interest and service
+costs and a €0.4 billion increase related to an adjustment of the
+discount rate from 4.08% in fiscal 2016 to 3.77% in fiscal 2017.
+This increase was partly offset by €0.6 billion for payments of
+pension obligations.
+The Increase in Receivables and other assets was due primarily
+to higher receivables from affiliated companies as a result of in-
+tra-group financing activities, including higher receivables from
+SFS companies and higher receivables resulting from profit trans-
+fer agreements.
+1%
+(4)%
+(3)%
+(6)%
+29,118
+29,752
+385
+69,814
+28,896
+361
+70,239
+Total liabilities and equity
+Deferred income
+28,065
+and other liabilities
+to affiliated companies
+In general, due to the significant proportion of long-cycle busi-
+nesses in our Industrial Business and the importance of long-term
+contracts for Siemens, there is usually a time lag between the
+development of macroeconomic conditions and their impact on
+our financial results. In contrast, short-cycle business activities of
+the Digital Factory Division and parts of Process Industries and
+Drives Division and of the Energy Management Division react
+quickly to volatility in market demand. If the moderate recovery
+of macroeconomic growth stalls again and if we are not success-
+ful in adapting our production and cost structure to subsequent
+changes in conditions in the markets in which we operate, there
+can be no assurance that we will not experience adverse effects.
+For example, it may become more difficult for our customers to
+obtain financing. As a result, they may modify, delay or cancel
+plans to purchase our products, solutions and services, or fail to
+follow through on purchases or contracts already executed. Fur-
+thermore, the prices for our products, solutions and services may
+decline, as a result of adverse market conditions, to a greater
+extent than we currently anticipate. In addition, contracted pay-
+ment terms, especially regarding the level of advance payments
+by our customers relating to long-term projects, may become less
+favorable, which could negatively impact our financial condi-
+tions. Siemens' global setup with operations in almost all relevant
+economies, the wide variety of our offerings following different
+business cycles, and our varying business models (e.g. products,
+software, solutions, projects and services) help us to absorb the
+impact of an adverse development in a single market.
+Disruptive technologies: The markets in which our businesses
+operate experience rapid and significant changes due to the in-
+troduction of innovative and disruptive technologies. In the fields
+of digitalization (e.g. internet of things, web of systems, cloud
+offerings, Industry 4.0), there are risks of new competitors, sub-
+stitutions of existing products/solutions/services, niche players,
+new business models (e.g. in terms of pricing, financing, ex-
+tended scopes for project business or subscription models in soft-
+ware business) and finally the risk that our competitors may have
+faster time-to-market strategies and introduce their digital prod-
+ucts and solutions faster than Siemens. Our operating results
+depend to a significant extent on our technological leadership,
+our ability to anticipate and adapt to changes in our markets and
+to reduce the costs of producing our products. Introducing new
+products and technologies requires a significant commitment to
+research and development, which in return requires expenditure
+of considerable financial resources that may not always result in
+success. Our results of operations may suffer if we invest in tech-
+nologies that do not operate or may not be integrated as ex-
+pected, or that are not accepted in the marketplace as antici-
+pated, or if our products, solutions or systems are not introduced
+to the market in a timely manner, particularly compared to our
+competitors, or even become obsolete. We constantly apply for
+new patents and actively manage our intellectual property port-
+folio to secure our technological position. However, our patents
+and other intellectual property may not prevent competitors from
+independently developing or selling products and services that
+are similar to or duplicates of ours.
+Footprint: The risk is that we are not flexible enough in adjusting
+our organizational and manufacturing footprint in order to
+quickly respond to changing markets, resulting in a non-compet-
+itive cost position and consequent loss of business. To mitigate
+this risk, we continuously monitor and analyze competitive and
+market information. Furthermore, we closely monitor the imple-
+mentation of the planned measures, maintain strict cost man-
+agement, and conduct ongoing discussions with all concerned
+interest groups.
+n/a
+134
+(30)
+(expenses), net
+Other operating income
+(2)%
+(3,558)
+(3,627)
+administrative expenses
+Selling and general
+(7)%
+Financial income, net
+(2,454)
+development expenses
+Research and
+26%
+as percentage of revenue
+16%
+5,945
+6,909
+Gross profit
+4%
+(1)%
+(19,979) (19,818)
+Cost of Sales
+(2,619)
+thereof Income from invest-
+ments 3,798 (prior year 3,732)
+3,828
+Gross profit was higher year-over-year due mainly to increases
+of €0.3 billion in Digital Factory, €0.2 billion in Mobility and
+€0.2 billion in Power and Gas.
+Increases in Revenue at Mobility and Power and Gas, of €1.0 bil-
+lion and €0.5 billion respectively, were more than offset by the
+effect of the above-mentioned carve-out of the Siemens Wind
+Power business. In fiscal 2016, we recorded revenue of €2.1 bil-
+lion at Wind Power and Renewables. On a geographical basis,
+75% of revenue was generated in the Europe, C.I.S., Africa, Mid-
+dle East region, 18% in the Asia, Australia region and 7% in the
+Americas region. Exports from Germany accounted for 71% of
+overall revenue. In fiscal 2017, orders for Siemens AG amounted
+to €25.6 billion. Within Siemens AG, the development of revenue
+depends strongly on the completion of contracts, primarily in
+connection with large orders.
+The initial application of the Accounting Directive Implementa-
+tion Act (Bilanzrichtlinie-Umsetzungsgesetz, BilRUG) resulted in
+changes in presentation in the income statement in fiscal 2017.
+Prior periods are not reported on a comparable basis. Compara-
+ble amounts for fiscal 2016 are: revenue €27,043 million, cost of
+sales €20,920 million and other operating income (expenses),
+net €(44) million.
+3%
+41%
+(141)%
+36%
+(43)%
+>(200)%
+(195)
+3,060
+(1,077)
+3,145
+Unappropriated net income
+retained earnings
+Allocation to other
+256
+146
+Profit carried forward
+2,999
+4,076
+Net income
+(160)
+(385)
+Income taxes
+3,158
+4,462
+Income from business activity
+24%
+3,092
+25,763
+Despite an increase of €0.2 billion in Research and develop-
+ment (R&D) expenses year-over-year, the R&D intensity (R&D
+as a percentage of revenue) increased only slightly by 0.2 per-
+centage point year-over-year due to the above-mentioned
+changes in presentation according to BiIRUG. On an average ba-
+sis, we employed 9,600 people in R&D in fiscal 2017.
+26,888
+% Change
+Localizing value chain activities: Localizing certain value
+chain activities, such as procurement, manufacturing, mainte-
+nance and service in emerging markets could enable us to reduce
+costs and strengthen our global competitive position, in particu-
+lar compared to competitors based in countries where they can
+operate with more favorable cost structures. Moreover, our local
+footprint in many countries might help us to take advantage of a
+possible growth of markets and leverage a shift in markets, result-
+ing in increased market penetration and market share.
+an opportunity to continuously reduce non-conformance costs
+and ensure on-time delivery of our projects and solutions. Fur-
+thermore, stringent project risk and opportunity management,
+time schedule management, performance bonuses and highly
+professional management of consortium partners and suppliers
+all help us to avoid liquidated damages and ultimately improve
+our profit position. In addition, improvements of our claim man-
+agement processes enable us to reduce costs incurred as a result
+of customer claims by finding a consensus with customers while
+also improving customer relationship management. At the same
+time, we reduce quality problems by proactively addressing sup-
+plier issues up front.
+Combined Management Report
+Excellent project execution: By expanding project manage-
+ment efforts as well as learning from our mistakes in project ex-
+ecution through a formalized lessons learned approach, we see
+Continuously developing and implementing initiatives to
+reduce costs, boost sales efforts, adjust capacities, improve
+our processes, realize synergies: In an increasingly competi-
+tive market environment, a competitive cost structure comple-
+ments the competitive advantage of being innovative. We be-
+lieve that further improvements in our cost position can
+strengthen our global competitive position and secure our mar-
+ket presence against emerging and incumbent competitors. For
+example, we expect to create sustainable value from productivity
+measures in connection with our "Vision 2020" concept. More-
+over, in course of the digital transformation, we seek to standard-
+ize, automate and digitize our processes and make them leaner
+and more efficient.
+Economic/political stabilization of certain (critical) coun-
+tries and resilience of worldwide economic environment:
+We see an opportunity that political stabilization of certain criti-
+cal countries and (further) lifting of sanctions may lead to higher
+revenue volume that was unavailable in past years. Furthermore,
+a return to more robust macroeconomic growth could also lead
+to additional volume and profit for the company.
+Favorable political and regulatory environment: Govern-
+ment initiatives and subsidies (including tax benefits etc.) may
+lead to more government spending (investments in new projects,
+modernization of projects etc.) and ultimately result in an in-
+crease of revenue and profit for the company.
+Increased market penetration: Through divisional sales initia-
+tives and masterplans, we continuously strive to grow and ex-
+pand our business in established markets, open up new markets
+for existing portfolio elements and strengthen our installed base
+in order to gain a higher market share and increased profits.
+Mergers, acquisitions, equity investments, partnerships,
+divestments and streamlining our portfolio: We constantly
+monitor our current and future markets for opportunities for stra-
+tegic mergers and acquisitions, equity investments or partner-
+ships to complement our organic growth. Such activities may help
+us to strengthen our position in our existing markets, provide
+access to new or underserved markets or complement our tech-
+nological portfolio in selected areas. Opportunities might also
+arise from well executed divestments, carve outs and joint ven-
+tures which further optimize our portfolio while generating gains.
+applications for an optimization of energy consumption, opera-
+tion of highly efficient energy grids as well as scalable solutions
+for distributed and renewable energy generation.
+Success from innovation along electrification, automation
+and digitalization: Innovation is a central part of our "Vision
+2020," an entrepreneurial concept leading Siemens into the future
+in three stages: first we "drive performance," then we "strengthen
+core," and finally we "scale up" to attain our Vision 2020 goals.
+We do this by investing significantly in R&D in order to develop
+innovative, sustainable solutions for our customers and to simul-
+taneously safeguard our competitiveness. We are an innovative
+company and invent new technologies that we expect will meet
+future demands arising from the megatrends of demographic
+change, urbanization, climate change and globalization. We are
+granted thousands of new patents every year and continuously
+develop new concepts and convincing business models. We open
+up access to new markets and customers through new marketing
+and sales strategies as well as Divisional master plans. In 2016
+we established next47, an independent unit designed to found,
+partner with and invest in start-ups with innovative ideas for
+shaping the future of electrification, automation and digitaliza-
+tion, and thereby turn those ideas into viable businesses. This will
+help Siemens create the next generation of path-breaking inno-
+vations in such fields as artificial intelligence, decentralized elec-
+trification, autonomous machines, block chain applications and
+connected e-mobility. Siemens is positioned along the value
+chains of electrification, automation and digitalization in order to
+increase future market penetration. Along these value chains,
+we have identified several growth fields in which we see our
+greatest long-term potential. We are orienting our resource allo-
+cation toward these growth fields and have announced concrete
+measures in this direction. Across all Divisions, Siemens is profit-
+ing from its undisputed strength in the digital enterprise. For
+example, the Company's cloud based MindSphere platform en-
+hances the availability of customers' digital products and systems
+and improves their productivity and efficiency. In addition, we try
+to generate additional volume and profit from new and innova-
+tive digital products, services and solutions, including cyber secu-
+rity for our customers, preventive maintenance, data analytics,
+Climate change: While climate change is widely considered a
+risk, we consider climate change mitigation an opportunity for
+Siemens. In line with the global agreement in Paris (COP21) that
+entered into force in November 2016, Siemens strives to support
+a trend towards reducing CO2 emissions both in own operations
+as well as for our customers based on technologies from our en-
+vironmental portfolio, such as low-carbon power generation
+from renewable energy sources.
+Within our Enterprise Risk Management (ERM) we regularly iden-
+tify, evaluate and respond to opportunities that present them-
+selves in our various fields of activity. Below we describe our most
+significant opportunities. Unless otherwise stated, the opportu-
+nities described below relate to all of our segments. The order in
+which the opportunities are presented reflects the currently esti-
+mated relative exposure for Siemens associated with these op-
+portunities and thus provides an indication of the opportunities'
+current importance to us. The described opportunities are not
+necessarily the only ones we encounter. In addition, our assess-
+ment of opportunities is subject to change as the Company, our
+markets and technologies are constantly developing. It is also
+possible that opportunities we see today will never materialize.
+34
+33
+Combined Management Report
+At present, no risks have been identified that either individually
+or in combination could endanger our ability to continue as a
+going concern.
+Even though the assessments of individual risk exposures have
+changed during fiscal 2017 due to developments in the external
+environment, effects of our own mitigation measures and the
+revision of our plans, the overall risk situation for Siemens did not
+change significantly as compared to the prior year.
+The most significant challenges have been mentioned first in
+each of the four categories strategic, operational, financial and
+compliance risks. The risks caused by highly competitive environ-
+ment continue to be the most significant, as in the prior year.
+THE OVERALL RISK SITUATION
+A.8.3.5 ASSESSMENT OF
+STATEMENTS.
+For additional information with respect to specific proceed-
+ings, see NOTE 21 in B.6 NOTES TO CONSOLIDATED FINANCIAL
+Siemens maintains liability insurance for certain legal risks at lev-
+els our management believes are appropriate and consistent with
+industry practice. The insurance policy, however, does not pro-
+tect Siemens against reputational damage. Moreover, Siemens
+may incur losses relating to legal proceedings beyond the limits,
+or outside the coverage, of such insurance or exceeding any pro-
+visions made for losses related to legal proceedings. Finally, there
+can be no assurance that Siemens will be able to maintain ade-
+quate insurance coverage on commercially reasonable terms in
+the future.
+A.8.4 Opportunities
+Assessment of the overall opportunities situation: The most
+significant opportunity for Siemens continues to be success from
+innovation along electrification, automation and digitalization as
+disclosed in our prior year reporting. Even though our assess-
+ment of individual opportunities has changed during fiscal year
+2017 due to developments in the external environment, our en-
+deavors to profit from them and the revision of our plans, the
+overall opportunity situation did not change significantly com-
+pared to the prior year.
+A.8.5 Significant characteristics of
+the accounting-related internal
+control and risk management system
+The overarching objective of our accounting-related internal con-
+trol and risk management system is to ensure that financial
+reporting is conducted in a proper manner, such that the Consol-
+idated Financial Statements and the Combined Management
+2016
+2017
+(in millions of €)
+Fiscal year
+Statement of Income of Siemens AG in accordance
+with German Commercial Code (condensed)
+A.9.1 Results of operations
+Combined Management Report
+As of September 30, 2017, the number of employees was 92,300.
+In the first quarter of fiscal 2017, as part of the merger with
+Gamesa, Siemens AG transferred its Siemens wind power busi-
+ness to entities held by Siemens AG.
+We intend to continue providing an attractive return to share-
+holders. Therefore, we intend to propose a dividend whose dis-
+tribution volume is within a dividend payout range of 40% to
+60% of net income of the Siemens Group, which we may adjust
+for this purpose to exclude selected exceptional non-cash effects.
+For fiscal 2018, we expect a net income of Siemens AG sufficient
+to fund the distribution of a corresponding dividend.
+Siemens AG is the parent company of the Siemens Group. Results
+for Siemens AG comprise the fields of business activities mainly of
+Power and Gas, Energy Management, Building Technologies, Mo-
+bility, Digital Factory, Process Industries and Drives as well as the
+activities of Siemens Real Estate and are significantly influenced
+by directly or indirectly owned subsidiaries and investments. The
+business development of Siemens AG is fundamentally subject to
+the same risks and opportunities as the Siemens Group. Due to
+the interrelations between Siemens AG and its subsidiaries and
+the relative size of Siemens AG within the Group, the outlook of
+the Group also largely reflects our expectations for Siemens AG.
+Therefore, the foregoing explanations for the Siemens Group ap-
+ply also for Siemens AG. We expect that income from investments
+will significantly influence the profit of Siemens AG.
+The Annual Financial Statements of Siemens AG have been pre-
+pared in accordance with the rules set out in the German Com-
+mercial Code (Handelsgesetzbuch).
+Our internal audit function systematically evaluates our financial
+reporting integrity, the effectiveness of the control system and
+the risk management system, and the adherence to our compli-
+ance policies. In addition, the Audit Committee is integrated into
+our control system. In particular, it oversees the accounting and
+the accounting process and the effectiveness of the internal con-
+trol system, the risk management system and the internal audit
+system. Furthermore, we have set up a Disclosure Committee
+which is responsible for reviewing certain financial and non-
+financial information prior to publication. Moreover, we have
+rules for accounting-related complaints.
+On a quarterly basis, an internal certification process is executed.
+Management of different levels of our organization, supported
+by confirmations of management of entities under their respon-
+sibility, confirms the accuracy of the financial data that has been
+reported to Siemens' corporate headquarters and reports on the
+effectiveness of the related control systems.
+Qualification of employees involved in the accounting process is
+ensured through appropriate selection processes and regular
+training. As a fundamental principle, based on materiality con-
+siderations, the "four eyes" principle applies and specific proce-
+dures must be adhered to for data authorization. Additional con-
+trol mechanisms include target-performance comparisons and
+analyses of the composition of and changes in individual line
+items, both in the closing data submitted by reporting units and
+in the Consolidated Financial Statements. In line with our infor-
+mation security requirements, accounting-related IT systems
+contain defined access rules protecting them from unauthorized
+access. The manual and system-based control mechanisms re-
+ferred to above generally also apply when reconciling the IFRS
+closing data to the Annual Financial Statements of Siemens AG.
+A.9 Siemens AG
+36
+35
+Combined Management Report
+The base data used in preparing our financial statements consists
+of the closing data reported by the operations of Siemens AG and
+its subsidiaries. The preparation of the closing data of most of our
+entities is supported by an internal shared services organization.
+Furthermore, other accounting activities, such as governance
+and monitoring related activities, are usually bundled on regional
+level. In particular cases, such as valuations relating to post-em-
+ployment benefits, external experts are used. The reported clos-
+ing data is used to prepare the financial statements in the con-
+solidation system. The steps necessary to prepare the financial
+statements are subject to both manual and automated controls.
+Our Consolidated Financial Statements are prepared on the basis
+of a centrally issued conceptual framework which primarily con-
+sists of uniform Financial Reporting Guidelines and a chart of
+accounts. For Siemens AG and other companies within the
+Siemens group required to prepare financial statements in accor-
+dance with German Commercial Code, this conceptual frame-
+work is complemented by mandatory regulations specific to the
+German Commercial Code. The need for adjustments in the con-
+ceptual framework due to regulatory changes is analyzed on an
+ongoing basis. Accounting departments are informed quarterly
+about current topics and deadlines from an accounting and clos-
+ing process perspective.
+After the merger of the Siemens wind power business with
+Gamesa, we have commenced to integrate the former Gamesa
+entities into our accounting-related internal control and risk
+management system. These integration efforts will continue in
+fiscal 2018.
+At the end of each fiscal year, our management performs an eval-
+uation of the effectiveness of the implemented control system,
+both in design and operating effectiveness. We have a standard-
+ized procedure under which necessary controls are defined, doc-
+umented in accordance with uniform standards, and tested reg-
+ularly on their effectiveness. Nevertheless, there are inherent
+limitations on the effectiveness of any control system, and no
+system, including one determined to be effective, may prevent
+or detect all misstatements.
+Our ERM approach is based on COSO's "Enterprise Risk Manage-
+ment - Integrated Framework". As one of the objectives of this
+framework is reliability of a company's financial reporting, it in-
+cludes an accounting-related perspective. Our accounting-related
+internal control system (control system) is based on the interna-
+tionally recognized "Internal Control - Integrated Framework"
+also developed by COSO. The two systems are complementary.
+Report of Siemens group as well as the Annual Financial State-
+ments of Siemens AG as the parent company are prepared in
+accordance with all relevant regulations.
+Revenue
+Current or future litigation: Siemens is and will be in the
+course of its normal business operations involved in numerous
+legal disputes and proceedings in various jurisdictions. These le-
+gal disputes and proceedings could result, in particular, in
+Siemens being subject to payment of damages and punitive dam-
+ages, equitable remedies or criminal or civil sanctions, fines or
+disgorgement of profit. In individual cases this may also lead to
+formal or informal exclusion from tenders or the revocation or
+loss of business licenses or permits. In addition, further legal dis-
+putes and proceedings may be commenced or the scope of pend-
+ing legal disputes and proceedings may be expanded. Asserted
+claims are generally subject to interest rates.
+The increase in Financial income, net was primarily attributable
+to an improvement in other financial income (expenses), from a
+negative €0.9 billion in the prior-year period to a negative
+€0.3 billion. This was mainly due to a positive effect of €0.8 bil-
+lion from changes in provisions for risks in derivative financial
+instruments. This factor was partly offset by a negative effect of
+€0.4 billion from changes in provision for pensions and similar
+commitments related to changes in the discount rate assump-
+tions. Income from investments was slightly higher compared to
+the prior-year period, which included an increase in income from
+profit transfer agreements with affiliated companies by €1.0 bil-
+lion. However, positive results from investments were nearly off-
+set by impairments of investments, which included primarily an
+impairment of Siemens AG's investment at Siemens Gamesa
+Renewable Energy, S.A., Spain, of €1.2 billion.
+Combined Management Report
+organizations. Monitors could again be appointed to review fu-
+ture business practices and we may otherwise be required to fur-
+ther modify our business practices and our compliance program.
+A considerable part of our business activities involve govern-
+ments and companies with public shareholders. We also partici-
+pate in a number of projects funded by government agencies and
+intergovernmental and supranational organizations, such as mul-
+tilateral development banks. Ongoing or potential future investi-
+gations into allegations of corruption, of antitrust violations or of
+other violations of law could as well impair relationships with
+such business partners or could result in the exclusion of public
+contracts. Such investigations may also adversely affect existing
+private business relationships and our ability to pursue poten-
+tially important strategic projects and transactions, such as stra-
+tegic alliances, joint ventures or other business cooperations, or
+could result in the cancellation of certain of our existing con-
+tracts. Moreover, third parties, including our competitors, could
+initiate significant litigation.
+In addition, future developments in ongoing and potential future
+investigations, such as responding to the requests of governmen-
+tal authorities and cooperating with them, could divert manage-
+ment's attention and resources from other issues facing our busi-
+ness. Furthermore, we might be exposed to compliance risks in
+connection with recently acquired operations that are in the
+ongoing process of integration.
+Besides other measures, Siemens established a global compli-
+ance organization that conducts among others compliance risk
+mitigation processes such as Compliance Risk Assessments, and
+which has been reviewed by external compliance experts.
+Regulatory risks and potential sanctions: As a globally oper-
+ating organization, we conduct business with customers in coun-
+tries which are subject to export control regulations, embargoes,
+economic sanctions or other forms of trade restrictions (hereafter
+referred to as "sanctions") imposed by the U.S., the European
+Union or other countries or organizations. New or expanded sanc-
+tions in countries in which we do business may result in a curtail-
+ment of our existing business in such countries or indirectly in
+other countries. We are also aware of initiatives by institutional
+investors, such as pension funds or insurance companies, to
+adopt or consider adopting policies prohibiting investment in and
+transactions with, or requiring divestment of interests in entities
+doing business with, countries identified as state sponsors of ter-
+rorism by the U.S. Department of State. It is possible that such
+initiatives may result in us being unable to gain or retain investors,
+customers or suppliers. In addition, the termination of our activi-
+ties in sanctioned countries may expose us to customer claims
+and other actions. Our reputation could also suffer due to our
+activities with counterparties in or affiliated with these countries.
+32 Combined Management Report
+Changes of regulations, laws and policies: As a diversified
+company with global businesses we are exposed to various prod-
+uct- and country-related regulations, laws and policies influenc-
+ing our business activities and processes. We monitor the political
+and regulatory landscape in all our key markets to anticipate po-
+tential problem areas, with the aim to quickly adjust our business
+activities and processes to changed conditions. However, any
+changes of regulations, laws and policies can adversely affect our
+business activities and processes as well as our financial condi-
+tion and results of operations.
+Protectionism (incl. localization): Protectionist trade policies
+and changes in the political and regulatory environment in the
+markets in which we operate, such as import and export controls,
+tariffs and other trade barriers including debarment from certain
+markets and price or exchange controls, could affect our business
+in several national markets and could impact our business, finan-
+cial position and results of operations; and may expose us to pen-
+alties, other sanctions and reputational damage. In addition, the
+uncertainty of the legal environment in some regions could limit
+our ability to enforce our rights and subject us to increasing costs
+related to appropriate compliance programs.
+Environmental, health & safety and other governmental
+regulations: Some of the industries in which we operate are
+highly regulated. Current and future environmental, health & safety
+and other governmental regulations or changes thereto may re-
+quire us to change the way we run our operations and could re-
+sult in significant increases in our operating or production costs.
+Furthermore, we see the risk of potential environmental and
+health & safety incidents as well as potential non-compliance
+with environmental and health & safety regulations affecting
+Siemens and our contractors or sub-suppliers, resulting in e.g.
+serious injuries, penalties, loss of reputation and internal or ex-
+ternal investigations.
+In addition, while we have procedures in place to ensure compli-
+ance with applicable governmental regulations in the conduct of
+our business operations, it cannot be excluded that violations of
+applicable governmental regulations may be caused either by us
+or by third parties that we contract with, including suppliers or
+service providers, whose activities may be attributed to us. Any
+such violations expose us to the risk of liability, reputational dam-
+age or loss of licenses or permits that are important to our busi-
+ness operations. In particular, we could also face liability for dam-
+age or remediation for environmental contamination at the
+facilities we design or operate. With regard to certain environ-
+mental risks, we maintain liability insurance at levels that our
+management believes are appropriate and consistent with indus-
+try practice. We may incur environmental losses beyond the lim-
+its, or outside the coverage, of such insurance, and such losses
+may have an adverse effect on our business, financial condition
+and results of our operations.
+Current and future investigations regarding allegations of
+corruption, of antitrust violations and of other violations of
+law: Proceedings against us regarding allegations of corruption,
+of antitrust violations and of other violations of law may lead to
+criminal and civil fines as well as penalties, sanctions, injunctions
+against future conduct, profit disgorgements, disqualifications
+from directly and indirectly engaging in certain types of business,
+the loss of business licenses or permits or other restrictions and
+legal consequences. Accordingly, we may, among other things,
+be required to comply with potential obligations and liabilities
+arising in connection with such investigations and proceedings,
+including potential tax penalties. Moreover, any findings related
+to public corruption that are not covered by the 2008 and 2009
+corruption charge settlements, which we concluded with Ameri-
+can and German authorities, may endanger our business with
+government agencies and intergovernmental and supranational
+>200%
+21%
+750
+Advance payments received
+81
+Liabilities to banks
+Liabilities
+5%
+(11)%
+(2)%
+11,250
+8,360
+19,610
+19,178
+11,761
+7,417
+Other provisions
+commitments
+14
+619
+A.8.3.4 COMPLIANCE RISKS
+Audits by tax authorities and changes in tax regulations:
+We operate in nearly all countries of the world and therefore are
+subject to many different tax regulations. Changes in tax laws in
+any of these jurisdictions could result in higher tax expense and
+payments. Furthermore, legislative changes could impact our tax
+receivables and liabilities as well as deferred tax assets and de-
+ferred tax liabilities. In addition, the uncertain tax environment in
+some regions could limit our ability to enforce our rights. As a
+globally operating organization, we conduct business in countries
+subject to complex tax rules, which may be interpreted in differ-
+ent ways. Future interpretations or developments of tax regimes
+may affect our business, financial condition and results of opera-
+tions. We are regularly audited by tax authorities in various juris-
+dictions and we continuously identify and assess resulting risks.
+TO CONSOLIDATED FINANCIAL STATEMENTS.
+Portfolio measures, at-equity investments, other invest-
+ments and strategic alliances: Our strategy includes divesting
+activities in some business areas and strengthening others
+through portfolio measures, including mergers and acquisitions.
+With respect to divestments, we may not be able to divest some
+of our activities as planned, and the divestitures we do carry out
+could have a negative impact on our business, financial condi-
+tion, results of operations and our reputation. Mergers and acqui-
+sitions are inherently risky because of difficulties that may arise
+Combined Management Report
+38
+29
+30
+when integrating people, operations, technologies and products.
+There can be no assurance that any of the businesses we ac-
+quired can be integrated successfully and in a timely manner as
+originally planned, or that they will perform as anticipated once
+integrated. In addition, we may incur significant acquisition, ad-
+ministrative, tax and other expenditures in connection with these
+transactions, including costs related to integration of acquired
+businesses. Furthermore, portfolio measures may result in addi-
+tional financing needs and adversely affect our capital structure.
+Acquisitions lead to substantial additions to intangible assets,
+including goodwill in our statements of financial position. If we
+were to encounter continuing adverse business developments or
+if we were otherwise to perform worse than expected at acquisi-
+tion activities, then these intangible assets, including goodwill,
+might have to be impaired, which could adversely affect our busi-
+ness, financial conditions and results of operations. Our invest-
+ment portfolio consists of investments held for purposes other
+than trading. Furthermore, we hold other investments, for exam-
+ple, Atos SE. Any factors negatively influencing the financial con-
+dition and results of operations of our at-equity investments and
+other investments, could have an adverse effect on our equity
+pick-up related to these investments or may result in a related
+write-off. In addition, our business, financial condition and re-
+sults of operations could also be adversely affected in connection
+with loans, guarantees or non-compliance with financial cove-
+nants related to these at-equity investments and other invest-
+ments. Furthermore, such investments are inherently risky as we
+may not be able to sufficiently influence corporate governance
+processes or business decisions taken by our equity investments,
+other investments and strategic alliances that may have a nega-
+tive effect on our business. In addition, joint ventures bear the
+risk of difficulties that may arise when integrating people, oper-
+ations, technologies and products. Strategic alliances may also
+pose risks for us because we compete in some business areas
+with companies with which we have strategic alliances. Besides
+other measures, we handle these risks with standardized pro-
+cesses as well as dedicated roles and responsibilities in the areas
+of mergers, acquisitions, divestments and carve outs. This in-
+cludes post-closing actions as well as claim management and
+centrally managed portfolio activities.
+A.8.3.2 OPERATIONAL RISKS
+Cyber/Information security: Our business portfolio is depen-
+dent on digital technologies. We observe a global increase of IT
+security threats and higher levels of professionalism in computer
+crime, which pose a risk to the security of products, systems and
+networks and the confidentiality, availability and integrity of
+data. Like other large multinational companies we are facing ac-
+tive cyber threats from sophisticated adversaries that are sup-
+ported by organized crime and nation-states engaged in eco-
+nomic espionage or even sabotage. We attempt to mitigate these
+risks by employing a number of measures, including employee
+training, comprehensive monitoring of our networks and systems
+through Cyber Security Operation Centers, and maintenance of
+backup and protective systems such as firewalls and virus scan-
+ners. Our contractual arrangements with service providers, aim
+to ensure that these risks are reduced. Nonetheless our systems,
+products, solutions and services, as well as those of our service
+providers, remain potentially vulnerable to attacks. Such attacks
+could potentially lead to the publication, manipulation or leakage
+information such as through industrial espionage, improper use
+of our systems, defective products, production downtimes and
+supply shortages, with potential adverse effects on our reputa-
+tion, our competitiveness and results of our operations.
+Operational failures and quality problems in our value
+chain processes: Our value chain comprises all steps, from re-
+search and development to supply chain management, produc-
+tion, marketing, sales and services. Operational failures in our
+value chain processes could result in quality problems or poten-
+tial product, labor safety, regulatory or environmental risks. Such
+risks are particularly present in our Industrial Business in relation
+to our production and manufacturing facilities, which are located
+all over the world and have a high degree of organizational and
+technological complexity. From time to time, some of the prod-
+ucts we sell might have quality issues resulting from the design
+or manufacture of these products or the commissioning of these
+products or the software integrated into them. Our Healthineers'
+business, for example, is subject to regulatory authorities includ-
+ing the U.S. Food and Drug Administration and the European
+Commission's Health and Consumer Policy Department, which
+require us to make specific efforts to safeguard our product
+safety. If we are not able to comply with these requirements, our
+business and reputation may be adversely affected. We have es-
+tablished multiple measures for quality improvement and claim
+prevention. The increased use of quality management tools is
+improving visibility and enables us to strengthen our root cause
+and prevention processes.
+Operational optimization and cost reduction initiatives:
+We are in a continuous process of operational optimization and
+constantly engage in cost-reduction initiatives, including ongo-
+ing capacity adjustment measures and structural initiatives. Con-
+solidation of business activities and manufacturing facilities,
+outsourcings/carve outs, joint ventures and the streamlining of
+product portfolios are all part of these cost-reduction efforts.
+These measures may not be implemented as planned, may turn
+out to be less effective than anticipated, may become effective
+later than estimated or may not become effective at all. Any fu-
+ture contribution of these measures to our profitability will be
+influenced by the actual savings achieved and by our ability to
+sustain them. In case of restructuring and outsourcing activities,
+there can be no assurance that there are no delays in product
+deliveries or we might even experience delivery failures. Further-
+more, a delay in critical R&D projects could lead to negative im-
+pacts in running projects. We constantly control and monitor the
+Combined Management Report
+progress of these projects and initiatives using standardized con-
+trolling and milestone tracking approaches.
+Cost overruns or additional payment obligations related to
+the management of our long-term, fixed-price or turnkey
+and service projects: A number of our Industrial Businesses
+conduct activities, especially large projects, under long-term con-
+tracts that are awarded on a competitive bidding basis. Such con-
+tracts typically arise in Power and Gas, Siemens Gamesa Renew-
+able Energy, Mobility, and in various activities of Energy
+Management and Process Industries and Drives. Some of these
+contracts are inherently risky because we may assume substan-
+tially all of the risks associated with completing a project and
+meeting post-completion warranty obligations. For example, we
+may face the risk that we must satisfy technical requirements of
+a project even though we have not gained experience with those
+requirements before we win the project. The profit margins real-
+ized on fixed-priced contracts may vary from original estimates
+as a result of changes in costs and productivity over the contract's
+term. We sometimes bear the risk of unanticipated project mod-
+ifications, shortage of key personnel, quality problems, financial
+difficulties of our customers and/or significant partners, cost
+overruns or contractual penalties caused by unexpected techno-
+logical problems, unforeseen developments at the project sites,
+unforeseen changes or difficulties in the regulatory or political
+environment, performance problems with our suppliers, subcon-
+tractors and consortium partners or other logistical difficulties.
+Some of our multi-year contracts also contain demanding instal-
+lation and maintenance requirements in addition to other perfor-
+mance criteria relating to timing, unit cost and compliance with
+government regulations, which, if not satisfied, could subject us
+to substantial contractual penalties, damages, non-payment and
+contract termination. There can be no assurance that contracts
+and projects, in particular those with long-term duration and
+fixed-price calculation, can be completed profitably. To tackle
+those risks we implemented a global project management orga-
+nization to systematically improve the know-how of our project
+management personnel. For very complex projects we conduct
+dedicated risk assessments in very early stages of the sales phase
+before we decide to hand over a binding offer to our customer.
+Interruption of the supply chain: The financial performance of
+our Industrial Business depends on reliable and effective supply
+chain management for components, sub-assemblies and materi-
+als. Capacity constraints and supply shortages resulting from
+ineffective supply chain management may lead to delays and
+additional cost. We rely on third parties to supply us with parts,
+components and services. Using third parties to manufacture,
+assemble and test our products reduces our control over manu-
+facturing yields, quality assurance, product delivery schedules
+and costs. Although we work closely with our suppliers to avoid
+supply-related problems, there can be no assurance that we will
+not encounter supply problems in the future, especially if we use
+single-source suppliers for critical components. Shortages and de-
+lays could materially harm our business. Unanticipated increases
+in the price of components or raw materials due to market short-
+ages or other reasons could also adversely affect performance.
+Furthermore, we may be exposed to the risk of delays and inter-
+ruptions in the supply chain as a consequence of catastrophic
+events or suppliers' financial difficulties, particularly if we are
+unable to identify alternative sources of supply or means of trans-
+portation in a timely manner or at all. Besides other measures,
+we mitigate fluctuation in the global raw material markets with
+various hedging instruments.
+Shortage of skilled personnel: Competition for highly quali-
+fied personnel (e.g. specialists, experts, "digital" talents) remains
+intense in the industries and regions in which our businesses
+operate. We have ongoing demand for highly skilled employees.
+Our future success depends in part on our continued ability to
+hire, integrate, develop and retain engineers and other qualified
+personnel. We address this risk for example with structured suc-
+cession planning, employer branding, retention and career man-
+agement. Furthermore, the company is strengthening the capa-
+bilities and skills of our talent acquisition teams and has defined
+a strategy of pro-active search for people with the required skills
+in our respective industries and markets. A strong focus on im-
+plementing a technology for talent acquisition helps us to sup-
+port efficient processes and effective search for key talent.
+A.8.3.3 FINANCIAL RISKS
+Market price risks: We are exposed to fluctuations in exchange
+rates, especially between the U.S. dollar and the euro, because a
+high percentage of our business volume is conducted as exports
+from Europe to areas using the U.S. dollar. In addition, we are
+exposed to currency effects involving the currencies of emerging
+markets, in particular the Chinese yuan. A strengthening of the
+euro may change our competitive position. We are also exposed
+to fluctuations in interest rates. Negative developments in the
+financial markets and changes in the central bank policies may
+negatively impact our results. Depending on the development of
+foreign currency exchange and interest rates, hedging activities
+could have significant effects on our business, financial condition
+and results of operations.
+Liquidity and financing risks: Our treasury and financing activ-
+ities could face adverse deposit and/or financing conditions from
+negative developments related to financial markets, such as (1)
+limited availability of funds (particularly U.S. dollar funds) and
+hedging instruments; (2) an updated evaluation of our solvency,
+particularly from rating agencies; (3) negative interest rates; and
+(4) impacts arising from more restrictive regulation of the finan-
+cial sector, central bank policy, or financial instruments. Widening
+credit spreads due to uncertainty and risk aversion in the financial
+markets might lead to adverse changes of fair market values of our
+financial assets, in particular our derivative financial instruments.
+Combined Management Report
+31
+Credit Risks: We provide our customers with various forms of
+direct and indirect financing of orders and projects. SFS in partic-
+ular bears credit risks due to its financing activities.
+Risks from pension obligations: The funded status of our pen-
+sion plans may be affected by change in actuarial assumptions,
+including the discount rate, as well as movements in financial
+markets or a change in the mix of assets in our investment port-
+folio. A significant increase in the underfunding may have a neg-
+ative effect on our capital structure and rating, and thus may
+tighten refinancing options and increase costs. In order to com-
+ply with local pension regulations in selected foreign countries,
+we may face a risk of increasing cash outflows to reduce an un-
+derfunding of our pension plans in these countries.
+For further information on post-employment benefits, derivative
+financial instruments, hedging activities, financial risk manage-
+ment and related measures, see → NOTES 16, 23 and 24 in B.6 NOTES
+Pensions and similar
+The change in Income taxes resulted from higher income tax
+expenses, corresponding to a higher taxable share of Income
+from business activity and increased burdens from withholding
+taxes. In addition, this item included deferred tax expenses and
+income resulting from the generation and reversal of temporary
+differences between the accounting and tax-based valuation and
+the use of loss carry-forwards.
+Provisions
+700
+securities
+Cash and cash equivalents,
+16,717
+19,884
+Receivables and other assets
+Current assets
+(5)%
+0%
+0%
+47,083
+47,150
+2,472
+44,611
+44,802
+884
+Financial assets
+Intangible and tangible assets
+Non-current assets
+Assets
+(in millions of €)
+% Change
+Sep 30,
+2016
+2017
+with German Commercial Code (condensed)
+Statement of Financial Position of Siemens AG in accordance
+A.9.2 Net assets and financial position Cash, cash equivalents and securities are significantly affected
+37
+2,348
+20,769
+3,642
+20,359
+87
+681
+with an equity portion
+Special reserve
+9%
+19,368
+21,123
+Equity
+Liabilities and equity
+1%
+69,814
+70,239
+Total assets
+69%
+35
+60
+resulting from offsetting
+Active difference
+Deferred tax assets
+Prepaid expenses
+The increase in Equity was attributable to net income for the year
+of €4.1 billion, the settlement of exercised warrants of €1.1 bil-
+lion and issuance of treasury stock of €0.4 billion in conjunction
+with our share-based payments and employee share programs.
+These factors were partly offset by dividends paid in fiscal 2017
+(for fiscal 2016) of €2.9 billion. In addition, equity was reduced
+due to share buybacks during the year amounting to €0.9 billion.
+The equity ratios at September 30, 2017 and 2016 were 30% and
+28%, respectively. For explanations relating to treasury shares we
+refer to NOTE 15 in NOTES TO OUR ANNUAL FINANCIAL STATEMENTS
+OF SIEMENS AG.
+by the liquidity management of the Corporate Treasury of
+Siemens AG. The liquidity management is based on the financing
+policy of the Siemens Group, which is aimed towards a balanced
+financing portfolio, a diversified maturity profile and a comfort-
+able liquidity cushion. Therefore, the change in liquidity of
+Siemens AG was not only driven by business activities of
+Siemens AG.
+(76)%
+2%
+8%
+(4)%
+19%
+81
+2,256
+2,174
+(3)%
+Combined Management Report
+23%
+Secondary activities of Managing Board members
+Members of the Managing Board may take on secondary activi-
+ties – in particular, supervisory board positions outside the
+Company - only with the approval of the Chairman's Committee
+of the Supervisory Board. The full Supervisory Board remains
+responsible for decisions regarding any adjustments to Manag-
+ing Board compensation necessary to take account of possible
+55
+512
+683
+52
+48
+40
+39
+1,120
+1,098
+55
+1,577
+1,117
+1,091
+1,051
+1,027
+1,284
+1,387
+1,248
+1,387
+1,284
+1,726
+989
+1,011
+1,043
+Dr. Roland Busch
+Managing Board member
+Lisa Davis
+Managing Board member
+Klaus Helmrich
+Managing Board member
+Janina Kugel
+Managing Board member
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+1,065
+1,043
+1,065
+1,043
+1,065
+1,370
+7 To compensate for the forfeiture of stock at his previous em-
+ployer, the Supervisory Board has granted Mr. Neike a one-time
+sum of €4,200,000. Seventy-five percent of this amount was
+awarded in the form of Siemens Phantom Stock Awards and the
+remaining 25% as a special pension benefit contribution. One
+half of the total amount of these granted Siemens Phantom
+1,151
+2,949
+0
+0
+1,028
+0
+0
+0
+0
+703
+0
+0
+0
+703
+0
+0
+0
+0
+0
+0
+0
+0
+0
+925
+0
+0
+1,259
+0
+0
+3,052
+1,301
+0
+0
+2,024
+0
+0
+0
+2,024
+0
+0
+0
+0
+555
+0
+0
+0
+598
+1,282
+6 "Other" includes the adjustment of the Siemens Stock Awards
+2011 and 2012 and Bonus Awards 2011 and 2012 (transfer in
+November 2015 and 2016, respectively) in accordance with
+Section 23 and Section 125 of the German Transformation Act
+(Umwandlungsgesetz) due to the spin-off of OSRAM.
+5 One half of the Bonus for fiscal 2011 and fiscal 2012 was granted
+in the form of non-forfeitable awards of Siemens stock (Bonus
+Awards).After the expiration of the four-year waiting period in
+November 2015 and November 2016, respectively, the beneficia-
+ries received one share of Siemens stock for each Bonus Award.
+to 114%. For the other half, target attainment was linked to the
+performance of Siemens stock compared to defined competitors
+during the four-year vesting period. It amounted to 0%. There-
+fore, Siemens Stock Awards 2011 that had already been granted
+were forfeited without replacement in accordance with the plan
+rules.
+(Amounts in thousands of €)
+Non-performance-
+based components
+Performance-based
+components
+Combined Management Report
+Managing Board members serving as of September 30, 2017
+(Amounts in thousands of €)
+Non-performance-
+based components
+Performance-based
+components
+Fixed compensation (base compensation)
+Managing Board members serving as of September 30, 2017
+Fringe benefits¹
+without long-term incentive effect,
+non-stock-based
+Joe Kaeser
+President and CEO
+2017
+2016
+2,130
+2,034
+104
+102
+Total
+The following table shows allocations for fiscal 2017 for
+fixed compensation, fringe benefits, one-year variable
+compensation and multi-year variable compensation - by
+reference year - as well as the expense of pension benefits.
+In deviation from the multi-year variable compensation
+granted for fiscal 2017 and shown above, this table in-
+cludes the actual figure for multi-year variable compensa-
+tion granted in previous years and allocated in fiscal 2017.
+Allocations
+46
+0
+1,099
+524
+3,263
+1,628
+602
+6,113
+3,865
+2,249
+606
+5,233
+624
+2,619
+1,370 1,284
+3,573 3,466
+1,317
+3,538
+606
+1,702
+8 To compensate for the forfeiture of stock at his previous em-
+ployer, the Supervisory Board has granted Mr. Neike a one-time
+sum of €4,200,000. Seventy-five percent of this amount was
+awarded in the form of Siemens Phantom Stock Awards and the
+remaining 25% as a special pension benefit contribution. One
+half of the total amount of these granted Siemens Phantom
+Stock Awards fell due and was honored in September 2017. The
+other half will fall due and be honored in September 2018. The
+value of these Siemens Phantom Stock Awards depends solely
+on the performance of Siemens stock. As compensation for
+the forfeiture of stock at his previous employer, these Siemens
+Phantom Stock Awards are not taken into account when deter-
+mining target compensation and hence are not included in
+the individual minimum and maximum amounts specified.
+9 Mr. Neike was appointed Executive Chairman of the Board of
+Directors of Siemens Ltd. China, effective May 1, 2017. Of the
+fixed compensation and one-year (payout amount) and multi-
+year variable compensation reported here, an amount of
+€359,769 was granted and paid by Siemens Ltd. China and set
+off against the remuneration for his Managing Board activities at
+Siemens AG. Of the fringe benefits reported here, an amount of
+€7,778 was granted and paid by Siemens Ltd. China. In addition,
+it has been agreed that Siemens AG will offset, as a net amount,
+any personal tax burden that, due to Mr. Neike's two employ-
+ment relationships, exceeds the burden that he would incur
+if he paid tax solely on the benefits granted to him under his
+employment contract with Siemens AG in Germany. Siemens AG
+will also offset any burdens due to charges and contributions
+to social insurance or comparable statutory systems in China
+additional to those he incurs in Germany.
+10 To compensate for the forfeiture of stock and pension contri-
+butions at his previous employer, the Supervisory Board has
+granted Mr. Sen a one-time sum of €950,000. One half of this
+amount was awarded in the form of Siemens Phantom Stock
+Awards and the other half as a special pension benefit contri-
+bution.
+11 Prof. Dr. Russwurm left the Managing Board effective the end
+of March 31, 2017.
+Combined Management Report
+45
+2,234
+2,136
+One-year variable compensation
+(Bonus) Payout amount²
+1,193
+10,835
+1,101
+8,416
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total
+without long-term incentive effect,
+non-stock-based
+with long-term incentive effect, stock-based
+One-year variable compensation
+(Bonus) - Payout amount²
+Multi-year variable compensation
+Siemens Stock Awards (restriction period: 2012-2016)³
+Siemens Stock Awards (restriction period: 2011-2015)4
+Bonus Awards (waiting period: 2012-2016)5
+Bonus Awards (waiting period: 2011-2015)5
+Share Matching Plan (vesting period: 2013-2015)
+Other6
+Total
+Service Cost
+Total (Code)
+1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
+and other perquisites, such as the provision of company cars in the amount of
+€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
+of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
+advice, accommodation and moving expenses, including any taxes due in this regard,
+currency adjustment payments and costs relating preventive medical examinations
+in the amount of €746,537 (2016: €765,327).
+2 The payout amount of one-year variable compensation (Bonus) presented above
+therefore represents the amount awarded for fiscal 2017, which will be paid out in
+January 2018.
+3 For one half of the Siemens Stock Awards 2012, target attain-
+ment depended on the EPS for the last three years and
+amounted to 154%. For the other half, target attainment was
+linked to the performance of Siemens stock compared to defined
+competitors during the four-year restriction period. It amounted
+to 87%. Of the Siemens Stock Awards 2012, which were granted
+on the basis of 100% target attainment, a number equivalent to
+the shortfall from that target expired without replacement in
+accordance with plan rules.
+4 For one half of the Siemens Stock Awards 2011 target attainment
+depended on the EPS for the past three fiscal years and amounted
+Service Cost
+Total (Code)
+0
+7,316
+97
+2,639
+2,773
+with long-term incentive effect, stock-based
+Multi-year variable compensation
+4,570
+2,310
+Siemens Stock Awards (restriction period: 2012-2016)³
+Siemens Stock Awards (restriction period: 2011-2015)4
+3,542
+0
+0
+903
+Bonus Awards (waiting period: 2012-2016)5
+Bonus Awards (waiting period: 2011-2015)5
+Share Matching Plan (vesting period: 2013-2015)
+1,028
+0
+0
+1,407
+0
+0
+Other6
+Total
+200
+9,643
+1,099 1,048
+3,300
+3,246 3,247 1,134 5,491
+603
+622
+622 622
+3,849 3,869 1,756
+0
+53
+fringe benefits reported here, an amount of €7,778 was granted
+and paid by Siemens Ltd. China. In addition, it has been agreed
+that Siemens AG will offset, as a net amount, any personal tax
+burden that, due to Mr. Neike's two employment relationships,
+exceeds the burden that he would incur if he paid tax solely
+on the benefits granted to him in his employment contract
+with Siemens AG in Germany. Siemens AG will also offset any
+burdens due to charges and contributions to social insurance
+or comparable statutory systems in China additional to those
+he incurs in Germany.
+9 To compensate for the forfeiture of stock and pension contri-
+butions at his previous employer, the Supervisory Board has
+granted Mr. Sen a one-time sum of €950,000. Half of this
+amount was awarded in the form of Siemens Phantom Stock
+Awards and the other half as a special pension benefit contri-
+bution.
+10 Prof. Dr. Russwurm left the Managing Board effective the end
+of March 31, 2017.
+Combined Management Report
+47
+Pension benefit commitments
+For fiscal 2017, the members of the Managing Board were
+granted contributions under the BSAV totaling €5.0 million
+(2016: €4.6 million), based on a resolution of the Supervisory
+Board dated November 8, 2017. Of this amount, €0.1 million
+(2016: €0.1 million) related to the funding of pension commit-
+ments earned prior to transfer to the BSAV.
+The contributions under the BSAV are added to the personal pen-
+sion accounts each January, following the close of the fiscal year.
+Until a beneficiary's date of retirement, his or her pension account
+is credited with an annual interest payment (guaranteed interest)
+on January 1 of each year. The interest rate is currently 0.90%.
+The following table shows individualized details of the contribu-
+tions (allocations) under the BSAV for fiscal 2017 as well as the
+defined benefit obligations for pension commitments.
+8 Mr. Neike was appointed Executive Chairman of the Board of
+Directors of Siemens Ltd. China, effective May 1, 2017. Of the
+fixed compensation and one-year variable compensation (pay-
+out amount) reported here, an amount of €222,802 was granted
+and paid by Siemens Ltd. China and set off against the remune-
+ration for his Managing Board activities at Siemens AG. Of the
+(Amounts in €)
+2017
+Total
+contributions' for
+2016
+Defined benefit obligation² for all pension
+commitments excluding deferred compensation³
+2017
+2016
+serving as of September 30, 2017
+Joe Kaeser
+1,192,800
+1,139,040
+Managing Board members
+Stock Awards fell due and was honored in September 2017. The
+other half will fall due and be honored in September 2018. The
+value of these Siemens Phantom Stock Awards depends solely
+on the performance of Siemens stock.
+602
+5,447
+621
+4,984
+0
+0
+67
+0
+0
+1,402
+0
+39
+20
+133
+97
+2,556
+1,272
+3,347
+2,958
+4,363
+4,845
+1,214
+3,770
+703
+1,975
+622
+3,969
+603
+3,561
+11,195,488
+0
+10,391,542
+596,400
+596,400
+583,968
+4,727,702
+4,297,199
+Former members of the Managing Board
+Prof. Dr. Siegfried Russwurm 6
+Total
+298,200
+5,039,160
+583,968
+4,612,608
+6,317,937
+40,069,078
+6,083,534
+34,624,669
+703,169
+1 The expenses (service cost) recognized in accordance with
+the IFRS in fiscal 2017 for Managing Board members' entitle-
+ments under the BSAV in fiscal 2017 amounted to
+€6,754,665 (2016: €4,615,543).
+3 Deferred compensation totals €4,001,386 (2016: €3,829,397),
+including €3,590,178 for Joe Kaeser (2016: €3,428,243),
+€354,801 for Klaus Helmrich (2016: €343,953) and €56,407
+for Dr. Ralf P. Thomas (2016: €57,201).
+4 Mr. Neike was appointed a full member of the Managing
+Board effective April 1, 2017.
+5 Mr. Sen was appointed a full member of the Managing
+Board effective April 1, 2017.
+6 Prof. Dr. Russwurm left the Managing Board effective the
+end of March 31, 2017.
+In fiscal 2017, former members of the Managing Board and their
+surviving dependents received emoluments within the meaning
+of Section 314 para. 1 No. 6 b of the German Commercial Code
+totaling €34.1 million (2016: €52.3 million). The previous year's
+figure includes the lump-sum payments of the former Managing
+Board members Prof. Dr. Requardt and Mr. Solmssen.
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their sur-
+viving dependents as of September 30, 2017, amounted to
+€191.5 million (2016: €216.3 million). This figure is included in
+NOTE 16 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Other
+No loans or advances from the Company are provided to mem-
+bers of the Managing Board.
+48 Combined Management Report
+2 The defined benefit obligations reflect one-time special
+contributions to the BSAV for new appointments from out-
+side the Company, amounting to €1,525,000 (2016: €0).
+298,200
+Dr. Ralf P. Thomas
+Michael Sen 5
+583,968
+4,742,811
+4,342,427
+Lisa Davis
+596,400
+583,968
+4,532,350
+3,817,196
+Klaus Helmrich
+596,400
+583,968
+5,007,306
+4,607,800
+Janina Kugel
+Cedrik Neike4
+566,160
+553,728
+1,628,418
+1,084,971
+298,200
+1,213,897
+Dr. Roland Busch
+1,407
+0
+0
+2,839
+Cedrik Neike7,8
+Michael Sen⁹
+Dr. Ralf P. Thomas
+Managing Board member
+Managing Board member
+Prof. Dr. Siegfried Russwurm 10
+Managing Board member
+since April 1, 2017
+since April 1, 2017
+530
+CFO
+2017
+2016
+2017
+2016
+2017
+2016
+2017
+2016
+533
+until March 31, 2017
+593
+2,795
+602
+4,418
+621
+6,207
+0
+0
+133
+55
+0
+0
+5,482
+3,797
+2,825
+3,113
+5,586
+3,816
+2,202
+2,309
+622
+603
+6,104
+4,399
+566
+3,391
+576
+3,688
+533
+1,065
+1,043
+533
+0
+0
+891
+0
+2,024
+0
+0
+0
+0
+397
+0
+903
+0
+0
+0
+0
+1,028
+0
+0
+0
+0
+2,310
+129
+3,052
+891
+1,043
+15
+115
+69
+61
+39
+78
+548
+648
+1,134
+1,104
+572
+1,121
+606
+624
+1,284
+1,370
+606
+1,317
+0
+0
+465
+0 3,075
+648 2,746
+703 703
+1,351 3,449
+621
+703
+A.10.1.2 REMUNERATION OF MANAGING BOARD
+MEMBERS FOR FISCAL 2017
+At the beginning of the fiscal year, the Supervisory Board set the
+target parameters return on capital employed (ROCE) and earn-
+ings per share (EPS) for the variable compensation (Bonus) for all
+members of the Managing Board, in each case on the basis of
+continuing and discontinued operations. The target values for
+the EPS component were defined on a multi-year basis. In defin-
+ing the target for variable compensation, the Supervisory Board
+also defined individual targets so as to take fuller account of the
+individual performance of each Managing Board member. As a
+rule, up to five individual targets were defined for this purpose.
+An internal review of the appropriateness of Managing Board
+compensation for fiscal 2017 has confirmed that the remunera-
+tion of the Managing Board resulting from target achievement
+for fiscal 2017 is to be considered appropriate. In light of this re-
+view and following a review of the achievement of the targets
+defined at the beginning of the fiscal year, the Supervisory Board
+has decided to define the amounts of variable compensation,
+stock commitments and pension benefit contributions as follows:
+Variable compensation (Bonus)
+The following targets were set and attained with respect to the
+target parameters for variable compensation:
+Target parameter
+Return on capital employed, ROCE¹
+Earnings per share, basic EPS1 (02015-2017)
+Individual targets
+1 Continuing and discontinued operations.
+compensation for secondary activities. The holding of positions
+in Siemens companies is considered to be covered by contractual
+Managing Board remuneration. As a rule, Managing Board mem-
+bers are obligated to waive any compensation that may be due
+to them in connection with such positions. Should a waiver not
+be possible under the legal or tax regulations applicable to a
+Siemens company, the compensation paid to a Managing Board
+member in connection with such a position will be set off against
+the remuneration due to him or her in connection with his or her
+Managing Board activities. Memberships in supervisory boards
+whose establishment is required by law or in comparable domes-
+tic or foreign controlling bodies of business enterprises are listed
+in Section c.4.1 in c.4 CORPORATE GOVERNANCE.
+100% of target
+15.00%
+€7.32
+Target achievement²
+118.33%
+123.33%
+Focus topics 2017: Growth, Innovation,
+Digitalization and Excellence
+2 Calculative target achievement for ROCE was 51.33%. The Supervisory Board adjusted this figure to reflect the acquisition of
+Mentor Graphics and the merger of Siemens' wind power business with Gamesa Corporación Tecnológica S.A. (Gamesa).
+In fiscal 2017, Bonus-related target attainment by Managing
+Board members was between 113.89% and 123.89%. In its overall
+100-130%
+assessment, the Supervisory Board decided not to make any dis-
+cretionary adjustments to the Bonus payout amounts.
+Combined Management Report
+43
+Long-term stock-based compensation
+Actual FY 2017 figure
+13.54%
+€7.67
+Stock commitments that were made as long-term stock-based
+compensation and for which the restriction period is still in effect
+will be forfeited without replacement if the employment contract
+is not extended after the end of an appointment period, either at
+the Managing Board member's request or because there is seri-
+ous cause that would have entitled the Company to revoke the
+appointment or terminate the contract. However, once granted,
+Stock Awards are not forfeited if the employment contract is ter-
+minated by mutual agreement at the Company's request, or be-
+cause of retirement, disability or death or in connection with a
+spinoff, the transfer of an operation, or a change of activity
+within the corporate group. In these cases, the Stock Awards will
+remain in effect upon termination of the employment contract
+and will be honored on expiration of the restriction period.
+Compensatory or severance payments also cover non-monetary
+benefits by including an amount of 5% of the total compensation
+or severance amount. Compensatory or severance payments will
+be reduced by 10% as a lump-sum allowance for discounted val-
+ues and for income earned elsewhere. However, this reduction
+will apply only to the portion of the compensatory or severance
+payment that was calculated without taking into account the first
+six months of the remaining term of the Managing Board mem-
+ber's employment contract.
+entitlement to a severance payment if the Managing Board mem-
+ber receives benefits from third parties in connection with a
+change of control. Moreover, there is no right to terminate if the
+change of control occurs within a period of twelve months prior
+to a Managing Board member's retirement.
+at transfer
+Maximum amount for compensation overall
+In addition to the maximum amounts of compensation for vari-
+able compensation and long-term stock-based compensation,
+a maximum amount for compensation overall has been defined.
+Since fiscal 2014, this amount cannot be more than 1.7 times
+higher than target compensation. Target compensation com-
+prises base compensation, the target amount for variable com-
+pensation and the target amount for long-term stock-based com-
+pensation, excluding fringe benefits and pension benefit
+commitments. When fringe benefits and pension benefit commit-
+ments for a given fiscal year are included, the maximum amount
+of compensation overall for that year will increase accordingly.
+Share Ownership Guidelines
+The Siemens Share Ownership Guidelines are an integral part of
+the remuneration system for the Managing Board and senior
+executives. These guidelines require that after a specified
+-
+buildup phase Managing Board members hold Siemens stock
+worth a multiple of their base compensation 300% for the
+President and CEO, 200% for the other members of the Managing
+Board - throughout their terms of office on the Managing Board.
+The determining figure in this context is the average base com-
+pensation that a member of the Managing Board has received
+over the four years before the applicable dates of proof of com-
+pliance. Hence, changes that have been made to base compensa-
+tion in the meantime are included. Non-forfeitable stock commit-
+ments (Bonus Awards) which were granted until fiscal 2014 are
+taken into account in determining compliance with the Share
+Ownership Guidelines.
+Compliance with these guidelines must be proven for the first
+time after a four-year buildup phase. Thereafter, it must be
+proven annually. If the value of a Managing Board member's
+accrued holdings declines below the required minimum due to
+fluctuations in the market price of Siemens stock, he or she must
+acquire additional shares.
+Combined Management Report
+41
+42
+Pension benefit commitments
+Like employees of Siemens AG, the members of the Managing
+Board are included in the Siemens Defined Contribution Benefit
+Plan (BSAV). Under the BSAV, Managing Board members receive
+contributions that are credited to their personal pension ac-
+counts. The amount of these annual contributions is based on a
+predetermined percentage related to their base compensation
+and the target amount for their Bonuses. This percentage is de-
+cided upon annually by the Supervisory Board. Most recently it
+was set at 28%. In making its decisions, the Supervisory Board
+takes account of the intended level of provision for each individ-
+ual and the length of time he or she has been a Managing Board
+member as well as the annual and long-term expense to the
+Company resulting from that provision. The non-forfeitability of
+pension benefit commitments is determined in compliance with
+the provisions of the German Company Pensions Act (Betriebsren-
+tengesetz). Special contributions may be granted to Managing
+Board members on the basis of individual decisions by the Super-
+visory Board. If a member of the Managing Board earned a pen-
+sion benefit entitlement from the Company before the BSAV was
+introduced, a portion of his or her contributions went toward
+financing that prior commitment.
+Managing Board members are eligible to receive benefits under
+the BSAV at the age of 60 or - in the case of benefit commit-
+ments made on or after January 1, 2012 – the age of 62. As a rule,
+the accrued pension benefit balance is paid out to Managing
+Board members in twelve annual installments. A Managing Board
+member or his or her surviving dependents may also request that
+his or her pension benefit balance will be paid out in fewer in-
+stallments or as a lump sum, subject to the Company's consent.
+The accrued pension benefit balance may also be paid out as a
+pension. Furthermore, Managing Board members may choose a
+combination of lump sum payments, installment payments (two
+to twelve) and pension payments. If the pension option is chosen,
+a decision must be made as to whether the payout should include
+pensions for surviving dependents. If a member of the Managing
+Board dies while receiving a pension, benefits will be paid to his
+or her surviving dependents if the member has chosen such
+benefits. The Company will then provide a limited-term pension
+to surviving children until they reach the age of 27 or, in the case
+of benefit commitments made on or after January 1, 2007, until
+they reach the age of 25.
+Benefits from the retirement benefit system that was in place
+before the BSAV was established are normally granted as pension
+benefits with a surviving dependent's pension. In this case also,
+payout in installments or a lump-sum payment may be chosen
+instead of pension payments.
+Like other eligible employees of Siemens AG, Managing Board
+members who were employed by the Company on or before
+September 30, 1983, are entitled to receive transition payments
+for the first six months after retirement, equal to the difference
+between their final base compensation and the retirement ben-
+efits payable under the corporate pension plan if they retire im-
+mediately after the termination of their Managing Board mem-
+bership. The provisions of the German Company Pensions Act
+(Betriebsrentengesetz) do not apply to this benefit.
+Commitments in connection with the termination
+of Managing Board membership
+Managing Board employment contracts provide for a compensa-
+tory payment if membership on the Managing Board is termi-
+nated prematurely by mutual agreement and without serious
+cause. The amount of this payment must not exceed the value of
+two years' compensation and must compensate no more than
+the remaining term of the contract (cap). The amount of the
+compensatory payment is calculated on the basis of base com-
+pensation, together with the variable compensation and the
+long-term stock-based compensation actually received during
+the last fiscal year before termination. The compensatory pay-
+ment is payable in the month when the member leaves the Man-
+aging Board. In addition, a one-time special contribution is made
+to the BSAV. The amount of this contribution is based on the
+BSAV contribution that the Managing Board member received in
+the previous year and on the remaining term of his or her ap-
+pointment, but is limited to not more than two years' contribu-
+tions (cap). The above benefits are not paid if an amicable termi-
+nation of the member's activity on the Managing Board is agreed
+upon at the member's request, or if there is serious cause for the
+Company to terminate the employment relationship.
+In the event of a change of control that results in a substantial
+change in a Managing Board member's position - for example,
+due to a change in corporate strategy or a change in the Manag-
+ing Board member's duties and responsibilities – the Managing
+Board member has the right to terminate his or her contract with
+the Company. A change of control exists if one or more share-
+holders acting jointly or in concert acquire a majority of the vot-
+ing rights in Siemens AG and exercise a controlling influence or
+if Siemens AG becomes a dependent enterprise as a result of
+entering into an intercompany agreement within the meaning of
+Section 291 of the German Stock Corporation Act (Aktiengesetz)
+or if Siemens AG is to be merged into an existing corporation or
+other entity. If this right of termination is exercised, the Manag-
+ing Board member is entitled to a severance payment in the
+amount of not more than two years' compensation. The calcula-
+tion of the annual compensation will include not only the base
+compensation and the target amount for the Bonus, but also the
+target amount for Stock Awards, in each case based on the most
+recent fiscal year completed prior to the termination of the mem-
+ber's contract. The stock-based components for which a firm
+commitment already exists will remain unaffected. There is no
+Combined Management Report
+Since beneficiaries are not entitled to receive dividends, the
+number of stock commitments granted was based on the
+closing price of Siemens stock in Xetra trading on the date
+of award less the present value of dividends expected during
+the restriction period. The share price used to determine the
+number of stock commitments was €91.32 (2016: €75.60).
+- Stock price
+Commitments in connection with the
+termination of Managing Board membership
+Because Prof. Dr. Russwurm left the Managing Board at the
+end of his term of office on March 31, 2017, no commit-
+ments were agreed upon in connection with the termina-
+tion of his Managing Board membership. In accordance with
+his contract with the Company, the previously granted Stock
+Awards, for which the restriction period is still in effect, will
+be absolutely maintained.
+On the basis of the Supervisory Board's decisions described
+above, Managing Board compensation for fiscal 2017 totaled
+€33.97 million (2016: €28.90 million), an increase of 17.5%.
+Of this total amount, €20.73 million (2016: €20.19 million)
+was attributable to cash compensation and €13.24 million
+(2016: €8.71 million) to stock-based compensation.
+2,034
+2,130
+0
+5,112
+One-year variable compensation
+(Bonus) Target amount
+Multi-year variable compensation 2.3
+Siemens Stock Awards4
+(restriction period: four years)
+2,158 2,096
+Total5
+Service Cost
+2017
+2017
+(Min) (Max)
+2,034 2,130 2,130 2,130
+102
+104 104 104
+2,136 2,234 2,234 2,234
+Total (Code) 6
+without long-term incentive effect,
+non-stock-based
+One-year variable compensation
+(Bonus) Payout amount
+3,231
+Total
+without long-term incentive effect,
+non-stock-based
+with long-term incentive effect,
+stock-based
+One-year variable compensation
+(Bonus) Target amount
+Multi-year variable compensation 2.3
+Siemens Stock Awards4
+(restriction period: four years)
+Total5
+Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
+standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
+instead of the target value according to the Code for one-year variable compensation. Service costs for pension
+benefits are not included.
+2017
+2016
+President and CEO
+The compensation presented on the following pages was
+granted to the members of the Managing Board for fiscal
+2017 (individual disclosure).
+Managing Board members serving as of September 30, 2017
+(Amounts in thousands of €)
+Non-performance-
+based components
+Performance-based
+components
+Performance-based
+components
+Total compensation
+Managing Board members serving as of September 30, 2017
+44
+Combined Management Report
+(Amounts in thousands of €)
+Non-performance-
+based components
+Performance-based
+components
+Performance-based
+components
+Total compensation
+Fixed compensation (base compensation)
+Fringe benefits¹
+Total
+without long-term incentive effect,
+non-stock-based
+with long-term incentive effect,
+stock-based
+Joe Kaeser
+Total compensation
+- Target
+achievement
+Dependent on
+300% of the
+respective
+target amount
+1/3 Variable compensation (Bonus)
+> Variability of target achievement:
+0-200% add. ±20% adjustment
+Performance-
+based
+compensation
+Target parameter:
+1/3 ROCE
+1/3
+Earnings
+per share
+1/3
+Individual
+targets
+2/3
+1 Plus fringe benefits and pension benefit commitments.
+240%
+1.7 times
+target compensation¹
+300%
+Variable
+compensation (Bonus)
+Long-term
+stock-based compensation
+Compensation
+overall
+Combined Management Report
+as a percentage of the respective target amount
+> Performance of Siemens stock
+compared to five competitors
+Restriction period
+four years
+Target parameter
+1/3 Long-term
+stock-based compensation
+Siemens Stock Awards
+> Variability of target
+achievement:
+0-200%
+A.10 Compensation Report
+This report is based on the recommendations of the German
+Corporate Governance Code (Code) and the requirements of the
+German Commercial Code (Handelsgesetzbuch), the German
+Accounting Standards (Deutsche Rechnungslegungs Standards)
+and the International Financial Reporting Standards (IFRS).
+A.10.1 Remuneration of Managing
+Board members
+A.10.1.1 REMUNERATION SYSTEM
+The remuneration system for the Siemens Managing Board is in-
+tended to provide an incentive for successful corporate manage-
+ment with an emphasis on sustainability. Managing Board mem-
+bers are expected to make a long-term commitment to and on
+behalf of the Company and may benefit from any sustained in-
+crease in the Company's value. For this reason, a substantial
+portion of their total remuneration is linked to the long-term
+performance of Siemens stock. Their remuneration is to be com-
+mensurate with the Company's size and economic position.
+Exceptional achievements are to be rewarded adequately, while
+falling short of targets is to result in an appreciable reduction in
+remuneration. Their compensation is also structured so as to be
+attractive in comparison to that of competitors, with a view to
+attracting outstanding managers to the Company and retaining
+them for the long term.
+The system and levels for the Managing Board's remuneration are
+determined and regularly reviewed by the full Supervisory Board,
+based on proposals by the Compensation Committee. The Super-
+visory Board reviews remuneration levels annually to ensure that
+they are appropriate. In this process, the Company's economic
+situation, performance and outlook as well as the tasks and per-
+formance of the individual Managing Board members are taken
+into account. In addition, the Supervisory Board considers the
+common level of remuneration in comparison with peer compa-
+nies and with the compensation structure in place in other areas
+of the Company. It also takes due account of the relationship
+between the Managing Board's remuneration and that of senior
+management and staff, both overall and with regard to its devel-
+opment over time. For this purpose, the Supervisory Board has
+also determined how senior management and the relevant staff
+are to be differentiated. The remuneration system that has been
+in place for Managing Board members since fiscal 2015 was ap-
+proved at the Annual Shareholders' Meeting on January 27, 2015.
+The individual components of compensation - base compensa-
+tion, variable compensation (Bonus) and long-term stock-based
+compensation - are weighted equally, and each comprises about
+one-third of target compensation. This equal weighting is also
+applied to the three target parameters of variable compensation
+(Bonus).
+Remuneration system for Managing Board members
+Share Ownership Guidelines
+Requirement to hold Siemens stock
+as a multiple of base compensation
+throughout the terms of office
+Structure of target compensation
+1/3 Base compensation
+3 times
+base
+compensation
+2 times
+base
+compensation
+President
+and CEO
+Managing Board
+member
+Maximum amounts of compensation
+100%
+Base compensation
+39
+40
+In fiscal 2017, the Managing Board's remuneration system had
+the following components:
+Non-performance-based components
+Base compensation
+~ 34%
+Target
+parameter
+1/3 Return on capital
+employed (ROCE)
+1/3 Earnings
+per share, basic EPS
+1/3 Individual
+targets
+Performance of
+Siemens stock
+compared to
+5 competitors
+Basis for
+assessment
+Annual
+basis
+0 3 years
+Annual
+basis
+Change in share price
+measured on the basis of
+a twelve-month reference
+period (compensation
+year) over three years
+(performance period)
+Target
+achievement
+Maximum
+amounts of
+compensation
+Value at allo-
+cation/transfer
+0-200
+add. +/- 20%
+adjustment
+240% of the
+respective
+target amount
+Dependent
+on target
+achievement
+0-200%
+Long-term
+stock-based
+compensation
+Service Cost
+compensation ~ 33%
+(Bonus)
+Variable
+Base compensation is paid as a monthly salary. Since October 1,
+2016, the base compensation of President and CEO Joe Kaeser
+has amounted to €2,130,000 per year. The base compensation of
+the CFO and of those members of the Managing Board who are
+responsible for Divisions or for Healthineers has been €1,065,000
+per year. For the other member of the Managing Board, it has
+been €1,011,000 per year.
+Fringe benefits
+Fringe benefits include the costs, or the cash equivalent, of non-
+monetary benefits and other perquisites, such as the provision
+of a company car, contributions toward the cost of insurance,
+the reimbursement of expenses for legal advice and tax advice,
+accommodation and moving expenses, including a gross-up for
+any taxes due in this regard, currency adjustment payments and
+costs relating to preventive medical examinations.
+Performance-based components
+Variable compensation (Bonus)
+Variable compensation (Bonus) is based on the Company's busi-
+ness performance in the past fiscal year. The Bonus depends on
+an equal one-third weighting of target achievement of the target
+parameters return on capital employed, earnings per share and
+individual targets. To achieve a consistent target system Compa-
+ny-wide, corresponding targets - in addition to other factors -
+also apply to senior managers.
+For 100% target achievement (target amount), the amount of the
+Bonus equals the amount of base compensation. The Bonus is
+subject to a ceiling (cap) of 200%. If targets are substantially
+missed, variable compensation may not be paid at all (0%).
+At its duty-bound discretion, the Supervisory Board may revise
+the amount resulting from target achievement downward or up-
+ward by as much as 20%; the adjusted amount of the Bonus paid
+can thus be as much as 240% of the target amount. In choosing
+the factors to be considered in deciding on possible revisions of
+the Bonus payouts (±20%), the Supervisory Board takes account
+of incentives for sustainable corporate management. Decisions
+to make discretionary adjustments may take factors such as the
+results of an employee survey or a customer satisfaction survey
+into account as well as the Company's economic situation. The
+revision option may also be exercised in recognition of Managing
+Board members' individual achievements. The Bonus is paid en-
+tirely in cash.
+Long-term stock-based compensation
+Long-term stock-based compensation consists of a grant of for-
+feitable stock commitments (Stock Awards) at the beginning of
+the fiscal year. In the event of 100% target achievement, the an-
+nual target amount for the monetary value of the Stock Awards
+commitment is €2,200,000 for the President and CEO (effective
+October 1, 2016). For the CFO and for those members of the Man-
+aging Board who are responsible for Divisions and for Health-
+ineers it is €1,100,000. For the other member of the Managing
+Board, it is €1,055,000. Since fiscal 2015, the Supervisory Board
+has had the option of increasing the target amount for each
+member of the Managing Board, on an individual basis, by as
+much as 75% for one fiscal year at a time. This option enables the
+Supervisory Board to take account of each Managing Board mem-
+ber's individual accomplishments and experience as well as the
+scope and demands of his or her function.
+Beneficiaries receive one free share of Siemens stock per Stock
+Award after an approximately four-year restriction period and
+subject to target attainment. The value of the Siemens shares
+to be transferred for Stock Awards after the end of the restric-
+tion period depends on the price of the Siemens share at the
+time of transfer and on target attainment as defined by the
+underlying target system. If target attainment is above 100%,
+the members of the Managing Board will receive - in addition
+to the Siemens shares committed - a cash payment correspond-
+ing to the outperformance. If target attainment is less than
+100%, a number of stock commitments equivalent to the short-
+fall from the target will be forfeited without replacement. The
+total value of the Siemens stock and of the cash payment is
+subject to a ceiling of 300% of the relevant target amount. If
+this maximum amount of compensation is exceeded, the corre-
+sponding entitlement to stock commitments will be forfeited
+without replacement.
+-
+Target attainment relating to long-term stock-based compensa-
+tion is linked to the performance of Siemens stock compared to its
+competitors. At the beginning of the fiscal year, the Supervisory
+Board decides on a target system (target value for 100% and target
+line) for the performance of Siemens stock relative to the stock
+of – at present – five competitors (ABB, General Electric, Mitsu-
+bishi Heavy Industries, Rockwell and Schneider Electric). Changes
+in the share price are measured on the basis of a twelve-month
+reference period (compensation year) over three years (perfor-
+mance period), while Stock Awards are restricted for a period of
+four years. When this restriction period expires, the Supervisory
+Board determines how much better or worse Siemens stock has
+performed relative to the stock of its competitors. This determina-
+tion yields a target attainment of between 0% and 200% (cap).
+Combined Management Report
+If significant changes occur among the relevant competitors
+during the period under consideration, the Supervisory Board
+may take these changes into account, as appropriate, in deter-
+mining the values for comparison and/or calculating the relevant
+stock prices of those competitors. In the event of extraordinary
+unforeseen developments that impact the share price, the Super-
+visory Board may decide to reduce the number of committed
+Stock Awards retroactively, or it may decide that in lieu of a trans-
+fer of Siemens stock only a cash settlement in a defined and lim-
+ited amount will be paid, or it may decide to postpone transfers
+of Siemens stock for payable Stock Awards until the develop-
+ments have ceased to impact the share price.
+If a member of the Managing Board violates compliance regu-
+lations, the Supervisory Board is entitled at its duty-bound
+discretion to revoke without replacement all or some of the
+Siemens Stock Awards, depending on the gravity of the compli-
+ance violation.
+If an employment contract begins during the fiscal year, an equiv-
+alent number of Siemens Phantom Stock Awards will be granted
+instead of Stock Awards. In lieu of a transfer of shares, only a cash
+equivalent is given at the end of the restriction period for Siemens
+Phantom Stock Awards. Beyond that, the same provisions agreed
+upon for Siemens Stock Awards apply.
+With regard to the further terms of the Stock Awards, the same
+principles apply in general to the Managing Board and to senior
+managers. These principles are discussed in more detail in
+NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Variable compensation (Bonus) and long-term stock-based compensation
+Remuneration
+component
+Share of target
+compensation
+Total (Code)6
+Fixed compensation (base compensation)
+Fringe benefits'
+without long-term incentive effect,
+non-stock-based
+CFO
+until March 31, 2017
+2017
+2017
+2017
+2017
+2016
+2017
+(Min)
+since April 1, 2017
+(Max)
+2017
+(Min)
+(Max)
+2016
+2017
+2017
+(Min)
+2017
+(Max)
+2016
+2016
+Prof. Dr. Siegfried Russwurm¹¹
+Managing Board member
+since April 1, 2017
+Managing Board member
+1,051
+5,231
+593
+593
+593
+1,643 5,823
+1,387 1,284
+Total compensation of all Managing Board members for fiscal 2017, in accordance with the applicable reporting
+standards, amounted to €33,97 million (2016: €28.90 million). The payout amount presented below is to be used
+instead of the target value according to the Code for one-year variable compensation. Service costs for pension
+benefits are not included.
+3,584
+3,452
+4,212
+1,248
+3,873
+1,370
+3,560
+1,284
+3,448
+1,282
+3,368
+1,151
+3,207
+Cedrik Neike 8,9
+Managing Board member
+Michael Sen 10
+Dr. Ralf P. Thomas
+2017
+3,067
+533
+533
+39
+1,134
+1,121
+572
+533
+0 1,278
+533
+0
+1,278
+78
+1,043
+0 2,556
+1,043
+533
+4,079
+0
+1,650
+1,347
+5,159 548 2,746
+1,214 1,214 1,214
+6,373 1,762 3,959
+2,528
+1,065
+69
+69
+1,134
+533
+533
+533
+533
+1,043
+15
+15
+15
+115
+115
+115
+548
+548
+548
+648
+648
+648
+61
+1,104
+1,065
+69
+1,134
+1,065
+1,065
+1,043
+533
+3,075
+530
+3,604 3,659
+1,387
+0
+1,043
+1,065
+1,065 1,065
+55
+1,098
+55
+55
+55
+1,120
+1,120 1,120
+2017
+2017
+(Min) (Max)
+2016
+1,043
+683
+1,726
+2017
+2017
+(Min) (Max)
+3,165
+2017
+2017
+2017
+2016
+2017
+(Min)
+(Max)
+2017
+2017
+2016
+Managing Board member
+One-year variable compensation
+(Bonus) Payout amount
+0 6,600
+6,328 6,460 2,234 10,982
+1,101 1,193 1,193 1,193
+7,428 7,653 3,427 12,175
+2,773 2,639
+7,066
+6,969
+1 Fringe benefits include the costs, or the cash equivalent, of non-monetary benefits
+and other perquisites, such as the provision of company cars in the amount of
+€159,957 (2016: €159,687), contributions toward the cost of insurance in the amount
+of €94,581 (2016: €139,795), the reimbursement of expenses for legal advice and tax
+advice, accommodation and moving expenses, including any taxes due in this regard,
+currency adjustment payments and costs relating preventive medical examinations
+in the amount of €746,537 (2016: €765,327).
+2 The figures for individual maximums for multi-year variable compensation reflect the
+possible maximum value in accordance with the maximum amount agreed upon for
+fiscal 2017 - that is, 300% of the applicable target amount.
+3 The expenses recognized for stock-based compensation for members of the
+Managing Board in accordance with the IFRS in fiscal 2017 and fiscal 2016 amounted
+to €19,031,892 and €8,294,921, respectively. The following amounts pertained
+the members of the Managing Board in fiscal 2017: Joe Kaeser €3,344,690 (2016:
+€2,378,584), Dr. Roland Busch €1,781,634 (2016: €1,283,779), Lisa Davis €1,301,296
+(2016: €698,432), Klaus Helmrich €1,784,593 (2016: €1,284,349),
+Janina Kugel €1,278,363 (2016: €704,026), Cedrik Neike
+€2,978,584 (2016: €0), Michael Sen €135,659 (2016: €0) and
+Dr. Ralf P. Thomas €1,393,673 (2016: €872,394). The correspond-
+ing expense, determined in the same way, for former Managing
+Board members was as follows: Brigitte Ederer €218,614 (2016:
+- €42,052), Barbara Kux €218,614 (2016: - €42,052), Peter
+Löscher €538,356 (2016: - €103,403), Prof. Dr. Hermann Requardt
+€32,566 (2016: - €5,624), Prof. Dr. Siegfried Russwurm
+€3,303,141 (2016: €1,302,593), Peter Y. Solmssen €692,506
+(2016: €35,857), and Dr. Michael Süß €29,604 (2016: - €248).
+4 Of the Stock Awards granted in fiscal 2017, most are contingent
+upon attaining the prospective performance-based target for
+Siemens stock relative to five competitors. The monetary values
+relating to 100% target achievement were €12,930,417 (2016:
+€8,560,190). The amounts for individual Managing Board mem-
+bers were as follows: Joe Kaeser €2,200,081 (2016: 2,120,051),
+Dr. Roland Busch €1,100,041 (2016: €1,080,022), Lisa Davis
+€1,100,041 (2016: €1,080,022), Klaus Helmrich €1,100,041 (2016:
+€1,080,022), Janina Kugel €1,055,020 (2016: €1,040,029),
+Cedrike Neike €3,700,065 (2016: €0), Michael Sen €1,025,067
+(2016: €0), Dr. Ralf P. Thomas €1,100,041 (2016: €1,080,022) and
+for former Managing Board member Prof. Dr. Siegfried Russwurm
+€550,020 (2016: €1,080,022).
+5 Total maximum compensation for fiscal 2017 represents the con-
+tractual maximum amount for overall compensation, excluding
+fringe benefits and pension benefit commitments. At 1.7 times
+target compensation (base compensation, target amount for the
+Bonus and the target amount for long-term stock-based compen-
+sation), the maximum amount is less than the total of the
+individual contractual caps for performance-based components.
+6 Total compensation reflects the current fair value of stock-based
+compensation components on the grant date. On the basis of
+the current monetary values of stock-based compensation
+components, total compensation amounted to €33,657,370
+(2016: €28,747,477).
+7 Ms. Davis's compensation is paid out in Germany in euros. It
+has been agreed that any tax liability that arises due to tax rates
+that are higher in Germany than in the U.S. will be reimbursed.
+For base compensation of calendar years 2015 and 2016 as well
+as for the Bonus for fiscal years 2015 and 2016, a currency-ad-
+justment payment was granted.
+Dr. Roland Busch
+Managing Board member
+Lisa Davis?
+Managing Board member
+Klaus Helmrich
+Managing Board member
+Janina Kugel
+2016
+2017 (Min)
+2017
+1,065 1,065 1,065
+512
+512
+512
+1,577 1,577 1,577
+0
+2,556
+1,043
+1,065
+0
+2,556
+(Max)
+1,011
+0
+1,065
+2,426
+3,300
+3,240 3,233 1,120 5,491
+603 622
+622
+622
+3,843
+0
+1,099 1,048
+3,868 3,690
+576 566
+0
+3,855 1,742 6,113 4,443 4,256
+3,300 1,099 1,048
+1,577 5,491 3,233 3,230
+566 566
+602
+621
+2,143 6,057 3,835 3,851
+0 3,300
+1,117 5,491
+621
+621
+1,738 6,112
+1,059
+1,005
+1,099 1,048
+1,043
+989
+1,065
+1,043
+1,065
+2,556
+1,065
+989
+1,011 1,011
+1,011
+48
+52
+52
+1,065
+1,091
+52
+1,043
+1,051 1,051
+40
+40
+40
+1,051
+1,117
+1,117
+1,117
+39
+1,027
+5,450
+0.23
+27
+2
+7.38
+6.51
+0.07
+7.44
+0.23
+27
+7.23
+6.42
+0.06
+7.29
+6.65
+58 Consolidated Financial Statements
+134
+6.74
+133
+6,046
+Income from continuing operations
+Income from discontinued operations
+Net income
+5,030
+The members of the Supervisory Board committees receive the
+following additional fixed compensation for their committee
+work: the Chairman of the Audit Committee receives €160,000,
+and each of the other members of the Committee receives
+€80,000; the Chairman of the Chairman's Committee receives
+€120,000, and each of the other members of the Committee re-
+ceives €80,000; the Chairman of the Compensation Committee
+receives €100,000, and each of the other members of the Com-
+mittee receives €60,000 (compensation for any work on the
+Chairman's Committee counts toward compensation for work on
+the Compensation Committee); the Chairman of the Innovation
+and Finance Committee receives €80,000, and each of the other
+members of the Committee receives €40,000; the Chairman of
+the Compliance Committee receives €80,000, and each of the
+other members of the Committee receives €40,000. However, no
+additional compensation is paid for work on the Compliance
+Committee if a member of that Committee is already entitled to
+compensation for work on the Audit Committee.
+If a Supervisory Board member does not attend a meeting of the
+Supervisory Board, one-third of the aggregate compensation due
+to that member is reduced by the percentage of Supervisory Board
+meetings not attended by the member in relation to the total
+number of Supervisory Board meetings held during the fiscal year.
+In the event of changes in the composition of the Supervisory
+Board and/or its committees, compensation is paid on a pro rata
+basis, rounding up to the next full month.
+In addition, the members of the Supervisory Board are entitled
+to receive a fee of €1,500 for each meeting of the Supervisory
+Board and its committees that they attend.
+The members of the Supervisory Board are reimbursed for out-
+of-pocket expenses incurred in connection with their duties and
+for any value-added taxes to be paid on their remuneration. For
+the performance of his duties, the Chairman of the Supervisory
+Board is also entitled to an office with secretarial support and the
+use of a carpool service.
+No loans or advances from the Company are provided to mem-
+bers of the Supervisory Board.
+Combined Management Report
+51
+The compensation shown below was determined for each of the
+members of the Supervisory Board for fiscal 2017 (individualized
+disclosure).
+(Amounts in €)
+Supervisory Board members
+September 30, 2017
+Under current rules, the members of the Supervisory Board re-
+ceive an annual base compensation of €140,000; the Chairman
+of the Supervisory Board receives a base compensation of
+€280,000, and each of the Deputy Chairmen receives €220,000.
+Dr. Gerhard Cromme
+2017
+Additional
+2016
+Base
+compen-
+sation
+compen-
+sation for
+committee
+work
+Meeting
+attendance
+Base
+fee
+Total
+compen-
+sation
+Additional
+The current remuneration policies for the Supervisory Board
+were authorized at the Annual Shareholders' Meeting held on
+January 28, 2014, and are effective as of fiscal 2014. Details are
+set out in Section 17 of the Articles of Association of Siemens AG.
+The remuneration of the Supervisory Board consists entirely of
+fixed compensation; it reflects the responsibilities and scope of
+the work of the Supervisory Board members. The Chairman and
+Deputy Chairmen of the Supervisory Board as well as the Chair-
+men and members of the Audit Committee, the Chairman's Com-
+mittee, the Compensation Committee, the Compliance Commit-
+tee and the Innovation and Finance Committee receive additional
+compensation.
+A.10.2 Remuneration of Supervisory
+Board members
+3 As of March 10, 2017 (date of proof), including Bonus
+Awards.
+Proven
+Percentage
+of base
+compensation'
+Value¹
+Number
+of shares2
+Percentage
+of base
+compensation¹
+Value²
+Number
+of shares 3
+300%
+200%
+200%
+5,516,344
+2,029,863
+51,039
+18,781
+567%
+291%
+10,424,316
+96,450
+2,953,070
+27,323
+2,010,175
+9,556,381
+18,599
+308%
+88,419
+3,093,142
+16,470,527
+28,619
+152,392
+1 The amount of the obligation is based on the average base
+compensation for the four years prior to the respective dates
+of proof.
+2 Based on the average Xetra opening price of €108.08 for the
+fourth quarter of 2016 (October-December).
+50 Combined Management Report
+compen-
+sation for
+committee
+work
+Meeting
+attendance
+fee
+133,333
+9,000
+142,333
+Michael Diekmann
+133,333
+57,143
+13,500
+203,976
+133,333
+57,143
+13,500
+203,976
+Dr. Hans Michael Gaul
+140,000
+160,000
+34,500
+334,500
+140,000
+160,000
+27,000
+327,000
+Reinhard Hahn¹
+140,000
+10,500
+150,500
+140,000
+10,500
+150,500
+Required
+10,500
+Olaf Bolduan¹
+Total
+280,000
+280,000
+57,000
+617,000
+280,000
+280,000
+45,000
+605,000
+Birgit Steinborn¹
+Werner Wenning
+220,000
+200,000
+48,000
+468,000
+220,000
+200,000
+43,500
+463,500
+220,000
+140,000
+42,000
+402,000
+220,000
+140,000
+30,000
+390,000
+140,000
+150,500
+Obligations under Share Ownership Guidelines
+Klaus Helmrich
+138,923
+24,092
+41,904
+1,752
+16,206
+128,784
+Dr. Roland Busch
+19,425
+75,263
+12,046
+27,042
+1,001
+25,631
+10,942
+Lisa Davis
+576
+53,261
+12,046
+0
+0
+576
+65,307
+Klaus Helmrich
+19,536
+75,263
+12,046
+67,749
+Joe Kaeser
+serving as of September 30, 2017
+Managing Board members
+A.10.1.3 ADDITIONAL INFORMATION ON
+STOCK-BASED COMPENSATION INSTRUMENTS
+IN FISCAL 2017
+Stock commitments
+The following table shows the changes in the balance of the stock
+commitments held by Managing Board members in fiscal 2017:
+Balance at beginning of
+fiscal 2017
+Non-forfeitable
+commitments
+Forfeitable
+commitments
+of Bonus
+Awards
+of Stock
+Awards
+Granted
+during
+fiscal year¹
+Forfeitable
+commitments
+of Stock
+Awards
+Vested and
+fulfilled
+during
+fiscal year
+Commitments
+Forfeited
+during
+fiscal year²
+of Bonus
+Awards and
+Stock Awards
+Commitments
+of Stock
+Awards
+Non-forfeitable
+commitments
+of Bonus
+Awards
+Balance at end of
+fiscal 20173
+Forfeitable
+commitments
+of Stock
+Awards
+(Amounts in number of units)
+27,984
+1,001
+10,111
+67,749
+6,023
+132,831
+27,984
+145,735
+1,001
+5,196
+10,618
+53,483
+65,096
+526,664
+1 The weighted average fair value as of the grant date for
+fiscal 2017 was €99.70 per granted share.
+2 For one half of the Siemens Stock Awards 2012, target
+attainment depended on the EPS value for the past three
+fiscal years and amounted to 154%. For the other half, target
+attainment was linked to the performance of Siemens stock
+compared to defined competitors during the four-year
+restriction period. It amounted to 87%. Of the Siemens Stock
+Awards 2012, which were granted on the basis of 100%
+target attainment, a number equivalent to the shortfall from
+that target expired, accordingly, without replacement in
+accordance with plan rules
+3 Amounts also include stock commitments (Stock Awards)
+granted in November 2016 for fiscal 2017. These amounts
+may further include stock commitments received as com-
+pensation by the relevant Managing Board member before
+joining the Managing Board.
+4 Mr. Neike was appointed a full member of the Managing
+Board effective April 1, 2017.
+5 Since Mr. Neike und Mr. Sen were appointed full members
+of the Managing Board during the fiscal year, the target
+amount for their stock-based compensation was prorated
+and, instead of Stock Awards, they received an equivalent
+amount of Siemens Phantom Stock Awards. In lieu of a trans-
+fer of shares, only a cash equivalent is given for these awards
+at the end of the restriction period. Otherwise, the same
+provisions agreed upon for Siemens Stock Awards apply.
+6 The amounts shown include the Stock Awards granted to
+Mr. Neike by Siemens Ltd. China in his capacity as Executive
+Chairman of the Board of Directors of Siemens Ltd. China.
+7 Amounts also include the non-forfeitable Stock Awards,
+which Mr. Neike received as forfeiture of stock at his previous
+employer. One half of the total amount of these granted
+Siemens Phantom Stock Awards fell due and was honored in
+September 2017. The other half will fall due and be honored
+in September 2018. The value of these Siemens Phantom
+Stock Awards depends solely on the performance of Siemens
+stock.
+8 Mr. Sen was appointed a full member of the Managing
+Board effective April 1, 2017.
+9 Prof. Dr. Siegfried Russwurm left the Managing Board
+effective the end of March 31, 2017.
+Combined Management Report
+49
+Shares from the Share Matching Plan
+Fiscal 2011 was the last year in which Managing Board members
+were entitled to participate in the Siemens Share Matching Plan.
+Under the plan, they were entitled to invest up to 50% of the
+annual gross amount of their variable cash compensation, as de-
+termined for fiscal 2010, in Siemens shares. After the expiration
+of a vesting period of approximately three years, plan partici-
+pants are entitled to receive one free matching share of Siemens
+stock for every three Siemens shares acquired and continuously
+held under the plan, provided the participants were employed
+without interruption at Siemens AG or a Siemens company until
+the end of the vesting period. At the beginning of fiscal 2017,
+Janina Kugel had three entitlements to matching shares, which
+she had acquired before joining the Managing Board. In fiscal
+2017, no entitlements to matching shares were acquired, due or
+are forfeited. Entitlements to matching shares at the end of fiscal
+2017 show the following balance: Janina Kugel, three shares with
+a fair value of €174.
+Share Ownership Guidelines
+The deadlines by which the individual Managing Board mem-
+bers must provide first-time proof of compliance with the
+Siemens Share Ownership Guidelines vary from member to
+member, depending on when he or she was appointed to the
+Managing Board. The following table shows the number of
+Siemens shares that were held by Managing Board members in
+office at September 30, 2017, as of the March 2017 deadline for
+proving compliance with the Share Ownership Guidelines as
+well as the number that are to be held permanently with a view
+to future deadlines.
+(Amounts in number of units or €)
+Managing Board members serving
+as of September 30, 2017, and required
+to show proof as of March 10, 2017
+Joe Kaeser
+Dr. Roland Busch
+78,633
+508,005
+Total
+20,043
+90,241
+Prof. Dr. Siegfried Russwurm⁹
+Janina Kugel
+29,412
+11,553
+Cedrik Neike 4, 5, 6
+31,7547
+0
+12,6557
+0
+0
+40,965
+0
+0
+19,099
+Michael Sen 5,8
+11,225
+0
+0
+0
+11,225
+Dr. Ralf P. Thomas
+5,030
+57,250
+12,046
+8,166
+440
+60,690
+Former members of the
+Managing Board
+Total
+Bettina Haller¹
+serving as of
+76,190
+> sold, with the approval of the Supervisory Board, to third
+parties against payment in cash if the price at which such
+Siemens shares are sold is not significantly lower than the
+market price of Siemens stock (exclusion of subscription
+rights, limited to 10% of the capital stock, by mutatis mutan-
+dis application of Section 186 para. 3 sentence 4 German
+Stock Corporation Act) or
+> used to service or secure obligations or rights to acquire
+Siemens shares arising particularly from or in connection with
+convertible bonds or warrant bonds issued by the Company or
+any of its consolidated subsidiaries (exclusion of subscription
+rights, limited to 10% of the capital stock, by mutatis mutandis
+application of Section 186 para. 3 sentence 4 German Stock
+Corporation Act).
+Furthermore, the Supervisory Board is authorized to use shares
+acquired on the basis of this or any previously given authoriza-
+tion to meet obligations or rights to acquire Siemens shares that
+were or will be agreed with members of the Managing Board
+within the framework of rules governing Managing Board com-
+pensation.
+In November 2015, the Company announced that it would carry
+out a share buyback of up to €3 billion in volume within the fol-
+lowing up to 36 months. The buyback commenced on Febru-
+ary 2, 2016 using the authorizations given by the Annual Share-
+holders' Meeting on January 27, 2015. Under this share buyback
+Siemens repurchased 10,439,856 shares by September 30, 2017.
+The total consideration paid for these shares amounted to about
+€1.163 billion (excluding incidental transaction charges). The
+buyback has the exclusive purposes of retirement, of issuing
+shares to employees, board members of affiliated companies and
+members of the Managing Board of Siemens AG, and of servic-
+ing/securing the obligations or rights to acquire Siemens shares
+arising particularly from or in connection with convertible bonds
+and warrant bonds. As of September 30, 2017, the Company held
+34,481,120 shares of stock in treasury.
+For details on the authorizations referred to above, especially
+with the restrictions to exclude subscription rights and the
+terms to include shares when calculating such restrictions, please
+refer to the relevant resolution and to Section 4 of the Articles of
+Association.
+A.11.5 Significant agreements which
+take effect, alter or terminate upon
+a change of control of the Company
+following a takeover bid
+Siemens AG maintains two lines of credit in an amount of €4 bil-
+lion and an amount of US$3 billion, respectively, which provide
+its lenders with a right of termination in the event that (1)
+Siemens AG becomes a subsidiary of another company or (2) a
+person or a group of persons acting in concert acquires effective
+control over Siemens AG by being able to exercise decisive influ-
+ence over its activities (Art. 3(2) of Council Regulation (EC)
+139/2004).
+In addition, in March 2013, a consolidated subsidiary as borrower
+and Siemens AG as guarantor entered into two bilateral loan
+agreements, each of which has been drawn in the full amount of
+US$500 million. Each agreement provides its respective lender
+with a right of termination in the event that (1) Siemens AG be-
+comes a subsidiary of another company or (2) a person or a group
+of persons acting in concert acquires effective control over
+Siemens AG by being able to exercise decisive influence over its
+activities (Art. 3(2) of Council Regulation (EC) 139/2004).
+Framework agreements concluded by Siemens AG under Inter-
+national Swaps and Derivatives Association Inc. documentation
+(ISDA Agreements) grant the counterparty a right of termination
+when Siemens AG consolidates with, merges into, or transfers sub-
+stantially all its assets to a third party. However, this right of termi-
+nation exists only, if (1) the resulting entity's creditworthiness is
+materially weaker than Siemens AG's immediately prior to such
+event or (2) the resulting entity fails to simultaneously assume
+Siemens AG's obligations under the ISDA Agreement. Additionally,
+some ISDA Agreements grant the counterparty a right of termina-
+tion if a third party acquires beneficial ownership of equity securi-
+ties that enable it to elect a majority of Siemens AG's Supervisory
+Board or otherwise acquire the power to control Siemens AG's
+material policy-making decisions and if the creditworthiness of
+Siemens AG is materially weaker than it was immediately prior to
+Combined Management Report
+55
+> offered and transferred, with the approval of the Supervisory
+Board, to third parties against non-cash contributions
+such an event. In either situation, ISDA Agreements are designed
+such that upon termination all outstanding payment claims docu-
+mented under them are to be netted.
+A.11.6 Compensation agreements
+with members of the Managing
+Board or employees in the event
+of a takeover bid
+In the event of a change of control that results in a substantial
+change in the position of a Managing Board member (for exam-
+ple, due to a change in corporate strategy or a change in the
+Managing Board member's duties and responsibilities), the
+member of the Managing Board has the right to terminate his or
+her contract with the Company for good cause. A change of con-
+trol exists if one or several shareholders acting jointly or in con-
+cert acquire a majority of the voting rights in Siemens AG and
+exercise a controlling influence, or if Siemens AG becomes a de-
+pendent enterprise as a result of entering into an intercompany
+agreement within the meaning of Section 291 of the German
+Stock Corporation Act, or if Siemens AG is to be merged into an
+existing corporation or other entity. If this right of termination is
+exercised, the Managing Board member is entitled to a severance
+payment in the amount of no more than two years' compensa-
+tion. The calculation of the annual compensation includes not
+only the base compensation and the target amount for the bo-
+nus, but also the target amount for the stock awards, in each case
+based on the most recent completed fiscal year prior to termina-
+tion of the contract. The stock-based compensation components
+for which a firm commitment already exists will remain unaf-
+fected. Additionally, the severance payments cover non-mone-
+tary benefits by including an amount of 5% of the total severance
+amount. Severance payments will be reduced by 10% as a lump-
+sum allowance for discounted values and for income earned else-
+where. However, this reduction will apply only to the portion of
+the severance payment that was calculated without taking ac-
+count of the first six months of the remaining term of the Man-
+aging Board member's contract. There is no entitlement to a
+severance payment if the Managing Board member receives ben-
+efits from third parties in connection with a change of control.
+A right to terminate the contract does not exist if the change of
+control occurs within a period of twelve months prior to a Man-
+aging Board member's retirement.
+A.11.7 Other takeover-relevant
+information
+We are not aware of, nor have we during the last fiscal year been
+notified of, any shareholder directly or indirectly holding 10% or
+more of the voting rights. There are no shares with special rights
+conferring powers of control. Shares of stock issued by
+Siemens AG to employees under its employee share program
+and/or as share-based compensation are transferred directly to
+the employees. The beneficiary employees who hold shares of
+employee stock may exercise their control rights in the same way
+as any other shareholder directly in accordance with applicable
+laws and the Articles of Association.
+56 Combined Management Report
+B.
+Consolidated
+Financial Statements
+B.1 Consolidated Statements of Income
+Fiscal year
+(in millions of €, per share amounts in €)
+In case of a change of control, the terms and conditions of the
+remaining warrants issued with the bonds with warrant units in
+February 2012 enable their holders to receive a higher number of
+Siemens shares in accordance with an adjusted strike price if they
+exercise their option rights within a certain period of time after
+the change of control. This period of time shall end either (1) not
+less than 30 days and no more than 60 days after publication of
+the notice of the issuer regarding the change of control, as deter-
+mined by the issuer or (2) 30 days after the change of control first
+becomes publicly known. The strike price adjustment decreases
+depending on the remaining term of the warrants and is deter-
+mined in detail in the terms and conditions of the warrants. In
+this context, a change of control occurs if control of Siemens AG
+is acquired by a person or by persons acting in concert.
+> used in connection with share-based compensation programs
+and/or employee share programs of the Company or any of its
+affiliated companies and issued to individuals currently or for-
+merly employed by the Company or any of its affiliated com-
+panies as well as to board members of any of the Company's
+affiliated companies
+retired
+In addition to selling them over the stock exchange or through a
+public sales offer to all shareholders, the Managing Board is au-
+thorized by resolution of the Shareholders' Meeting on Janu-
+ary 27, 2015 to also use Siemens shares repurchased on the basis
+of this or any previously given authorization for every permissible
+purpose, in particular as follows: Such Siemens shares may be
+A.11.2 Restrictions on voting rights
+or transfer of shares
+At the Shareholders' Meeting, each share of stock has one vote
+and accounts for the shareholders' proportionate share in the
+Company's net income. An exception to this rule applies with
+regard to treasury shares held by the Company, which do not
+entitle the Company to any rights. Under Section 136 of the Ger-
+man Stock Corporation Act the voting right of the affected shares
+is excluded by law.
+Shares issued to employees worldwide under the employee share
+program implemented since the beginning of fiscal 2009, in par-
+ticular the Share Matching Plan, are freely transferable unless
+applicable local laws provide otherwise. Under the rules of the
+program, however, in order to receive one matching share free
+of charge for each three shares purchased, participants are re-
+quired to hold the shares purchased by them for a vesting period
+of several years, during which the participants have to be contin-
+uously employed by Siemens AG or another Siemens company.
+The right to receive matching shares is forfeited if the purchased
+shares are sold, transferred, hedged on, pledged or hypothecated
+in any way during the vesting period.
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
+sustained basis, powers of attorney allowing it to exercise the
+voting rights for 10,814,609 shares (as of September 30, 2017) on
+behalf of members of the Siemens family. These shares are part
+of the total number of shares held by the family's members. The
+powers of attorney are based on an agreement between the VSV
+and, among others, members of the Siemens family. The shares
+are voted together by VSV, taking into account the proposals of a
+family partnership established by the family's members or of one
+of this partnership's governing bodies.
+A.11.3 Legislation and provisions of
+the Articles of Association applicable
+to the appointment and removal
+of members of the Managing Board
+and governing amendment to the
+Articles of Association
+The appointment and removal of members of the Managing
+Board is subject to the provisions of Sections 84 and 85 of the
+German Stock Corporation Act and Section 31 of the German Co-
+determination Act (Mitbestimmungsgesetz). According to Sec-
+tion 8 para. 1 of the Articles of Association, the Managing Board
+is comprised of several members, the number of which is deter-
+mined by the Supervisory Board.
+According to Section 179 of the German Stock Corporation Act,
+any amendment to the Articles of Association requires a resolu-
+tion of the Shareholders' Meeting. The authority to adopt purely
+formal amendments to the Articles of Association was trans-
+ferred to the Supervisory Board under Section 13 para. 2 of the
+Articles of Association. In addition, by resolutions of the Share-
+holders' Meetings the Supervisory Board has been authorized to
+amend Section 4 of the Articles of Association in accordance with
+the utilization of the Authorized and Conditional Capitals, and
+after expiration of the then-applicable authorization and utiliza-
+tion period.
+Resolutions of the Shareholders' Meeting require a simple major-
+ity vote, unless a greater majority is required by law. Pursuant to
+Section 179 para. 2 of the German Stock Corporation Act, amend-
+ments to the Articles of Association require a majority of at least
+three-quarters of the capital stock represented at the time of the
+casting of the votes, unless another capital majority is prescribed
+by the Articles of Association.
+A.11.4 Powers of the Managing Board
+to issue and repurchase shares
+The Managing Board is authorized to increase, with the approval
+of the Supervisory Board, the capital stock until January 25, 2021
+by up to €90 million through the issuance of up to 30 million reg-
+istered shares of no par value against contributions in cash
+(Authorized Capital 2016). Subscription rights of existing share-
+holders are excluded. The new shares shall be issued under the
+condition that they are offered exclusively to employees of
+Siemens AG and any of its affiliated companies. To the extent per-
+mitted by law, employee shares may also be issued in such a man-
+ner that the contribution to be paid on such shares is covered by
+that part of the annual net income which the Managing Board and
+Combined Management Report
+53
+54
+the Supervisory Board may allocate to other retained earnings
+under Section 58 para. 2 of the German Stock Corporation Act.
+Furthermore, the Managing Board is authorized to increase,
+with the approval of the Supervisory Board, the capital stock
+until January 27, 2019 by up to €528.6 million through the issu-
+ance of up to 176.2 million registered shares of no par value
+against cash contributions and/or contributions in kind (Autho-
+rized Capital 2014).
+As of September 30, 2017, the total unissued authorized capital
+of Siemens AG therefore consisted of €618.6 million nominal
+that may be issued, with varying terms by issuance, in install-
+ments of up to 206.2 million registered shares of no par value.
+By resolutions of the Shareholders' Meetings of January 28, 2014
+and January 27, 2015, the Managing Board is authorized to issue
+bonds with conversion rights or with warrants attached, or a
+combination of these instruments, each entitling the holders to
+subscribe to up to 80 million registered shares of Siemens AG of
+no par value. Based on these two authorizations, the Company
+or consolidated subsidiaries of the Company may issue bonds
+until January 27, 2019 and January 26, 2020, respectively, each
+in an aggregate principal amount of up to €15 billion. In order to
+grant shares of stock to holders/creditors of such convertible
+bonds or warrant bonds, the capital stock was conditionally in-
+creased by resolutions of the Shareholders' Meetings 2014 and
+2015, each by up to 80 million registered shares of no par value
+(Conditional Capitals 2014 and 2015), i.e. in total by up to
+€480 million through the issuance of up to 160 million shares of
+no par value.
+The new shares under Authorized Capital 2014 and the bonds
+under the aforementioned authorizations are to be issued against
+cash or non-cash contributions. They are, as a matter of principle,
+to be offered to shareholders for subscription. The Managing
+Board is authorized to exclude, with the approval of the Super-
+visory Board, subscription rights of shareholders in the event of
+capital increases against contributions in kind. In the event of
+capital increases against contributions in cash, the Managing
+Board is authorized to exclude shareholders' subscription rights
+with the approval of the Supervisory Board in the following
+cases:
+> The issue price of the new shares/bonds is not significantly
+lower than the stock market price of the Siemens shares al-
+ready listed or the theoretical market price of the bonds com-
+puted in accordance with generally accepted actuarial meth-
+ods (exclusion of subscription rights, limited to 10% of the
+capital stock, in accordance with or by mutatis mutandis ap-
+plication of Section 186 para. 3 sentence 4 German Stock Cor-
+poration Act).
+> The exclusion is necessary with regard to fractional amounts
+resulting from the subscription ratio.
+> The exclusion is necessary in order to grant holders of conver-
+sion or option rights or conversion or option obligations on
+Siemens shares a compensation for the effects of dilution.
+The total amount of new shares issued or to be issued under
+Authorized Capitals or in accordance with the bonds mentioned
+above, in exchange for contributions in cash and in kind and with
+shareholders' subscription rights excluded, may in certain cases
+be subject to further restrictions, such as the restriction that they
+may not exceed 20% of the capital stock. The details of those
+restrictions are described in the relevant authorization.
+In February 2012, Siemens issued bonds with warrant units with
+a volume of US$3 billion. Siemens exchanged the major part of
+the warrants issued in 2012 against new warrants in Septem-
+ber 2015; for this purpose, Siemens issued new bonds with war-
+rants. After redemption of the first tranche with a volume of
+US$1.5 billion at maturity in August 2017, the remaining war-
+rants correspond to option rights entitling their holders to receive
+approximately 11.5 million Siemens shares. The terms and condi-
+tions of the warrants enable Siemens to service exercised option
+rights using either conditional capital or treasury stock, and also
+enable Siemens to buy back the warrants.
+The Company may not repurchase its own shares unless so au-
+thorized by a resolution duly adopted by the shareholders at a
+general meeting or in other very limited circumstances set forth
+in the German Stock Corporation Act. On January 27, 2015, the
+Shareholders' Meeting authorized the Company to acquire until
+January 26, 2020 up to 10% of its capital stock existing at the date
+of adopting the resolution or if this value is lower - as of the
+date on which the authorization is exercised. The aggregate of
+shares of stock of Siemens AG repurchased under this authoriza-
+tion and any other Siemens shares previously acquired and still
+held in treasury by the Company or attributable to the Company
+pursuant to Sections 71 d and 71e of the German Stock Corpora-
+tion Act may at no time exceed 10% of the then existing capital
+stock. Any repurchase of Siemens shares shall be accomplished
+at the discretion of the Managing Board either (1) by acquisition
+over the stock exchange or (2) through a public share repurchase
+offer. The Managing Board is additionally authorized to complete
+the repurchase of Siemens shares in accordance with the autho-
+rization described above by using certain derivatives (put and
+call options, forward purchases and any combination of these
+derivatives). In exercising this authorization, all stock repur-
+chases based on the derivatives are limited to a maximum vol-
+ume of 5% of Siemens' capital stock existing at the date of adopt-
+ing the resolution at the Shareholders' Meeting. A derivative's
+term of maturity may not, in any case, exceed 18 months and
+must be chosen in such a way that the repurchase of Siemens
+Combined Management Report
+shares upon exercise of the derivative will take place no later
+than January 26, 2020.
+Revenue
+Cost of sales
+Gross profit
+Note
+(989)
+Other financial income (expenses), net
+135
+(373)
+Income from continuing operations before income taxes
+8,306
+7,404
+Income tax expenses
+7
+(2,180)
+(2,008)
+6,126
+5,396
+53
+188
+6,179
+5,584
+Income from continuing operations
+Income from discontinued operations, net of income taxes
+Net income
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+Basic earnings per share
+Income from continuing operations
+Income from discontinued operations
+Net income
+Diluted earnings per share
+(1,051)
+As of September 30, 2017, the Company's common stock totaled
+€2.550 billion. The capital stock is divided into 850 million regis-
+tered shares with no par value. The shares are fully paid in. All
+shares confer the same rights and obligations. The shareholders'
+rights and obligations are governed in detail by the provisions of
+the German Stock Corporation Act, in particular by Sections 12, 53 a
+et seq., 118 et seq. and 186 of the German Stock Corporation Act.
+Interest expenses
+1,487
+2017
+2016
+83,049
+79,644
+(58,021)
+(55,826)
+25,029
+23,819
+Research and development expenses
+(5,164)
+(4,732)
+Selling and general administrative expenses
+(12,225)
+(11,669)
+Other operating income
+133,333
+647
+328
+Other operating expenses
+6
+(595)
+(427)
+Income (loss) from investments accounted for using the equity method, net
+4
+43
+134
+Interest income
+1,314
+A.11.1 Composition of common stock
+5
+A.11 Takeover-relevant information
+Jürgen Kerner¹
+140,000
+200,000
+40,500
+380,500
+140,000
+200,000
+33,000
+373,000
+Dr. Nicola Leibinger-Kammüller
+133,333
+76,190
+33,000
+242,524
+140,000
+80,000
+27,000
+247,000
+Gérard Mestrallet
+140,000
+10,500
+150,500
+126,667
+7,500
+134,167
+Dr. Norbert Reithofer
+133,333
+242,500
+38,095
+22,500
+140,000
+(pursuant to Sections 289 para. 4 and 315 para. 4 of the German Commercial Code)
+and explanatory report
+21,000
+230,524
+140,000
+80,000
+25,500
+245,500
+Hans-Jürgen Hartung
+140,000
+10,500
+150,500
+140,000
+10,500
+150,500
+Robert Kensbock¹
+140,000
+180,000
+31,500
+351,500
+140,000
+180,000
+30,000
+Harald Kern¹
+133,333
+76,190
+19,500
+229,024
+80,000
+16,500
+350,000
+133,333
+140,000
+120,000
+31,500
+291,500
+Sibylle Wankel¹
+Total
+140,000
+3,060,000
+40,000
+1,638,095
+16,500
+478,500
+196,500
+140,000
+40,000
+16,500
+196,500
+3,066,667
+1,655,238
+429,000
+5,150,905
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have declared their willingness to transfer their compensation to the
+Hans Boeckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions (DGB).
+A.10.3 Other
+The Company provides a group insurance policy for Supervisory
+and Managing Board members and certain other employees of
+the Siemens Group. The policy is taken out for one year at a time
+or renewed annually. It covers the personal liability of the insured
+in cases of financial loss associated with their activities on behalf
+of the Company. The insurance policy for fiscal 2017 includes a
+deductible for the members of the Managing Board and the
+Supervisory Board that complies with the requirements of the
+German Stock Corporation Act and the Code.
+62
+52
+187,929
+Combined Management Report
+279,119
+31,500
+5,176,595
+133,333
+15,000
+114,286
+186,429
+Güler Sabancı
+140,000
+10,500
+150,500
+140,000
+38,095
+150,500
+Dr. Nathalie von Siemens
+140,000
+10,500
+150,500
+10,500
+10,500
+150,500
+Michael Sigmund
+140,000
+10,500
+150,500
+150,500
+Jim Hagemann Snabe
+140,000
+10,500
+140,000
+5,584
+B.4 Consolidated Statements of Cash Flows
+44,527
+133,804
+34,816
+125,717
+605
+60 Consolidated Financial Statements
+(in millions of €)
+Net income
+2017
+2016
+Cash flows from operating activities
+6,179
+Income tax expenses
+Amortization, depreciation and impairments
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+Income from discontinued operations, net of income taxes
+Fiscal year
+1,438
+35,696
+Total equity
+Other components of equity
+Treasury shares, at cost
+Retained earnings
+Interest (income) expenses, net
+2,550
+2,550
+6,368
+5,890
+27,454
+1,671
+1,921
+(3,196)
+(3,605)
+Total equity attributable to shareholders of Siemens AG
+43,089
+34,211
+Non-controlling interests
+Total liabilities and equity
+(53)
+Change in other assets and liabilities
+3,211
+(799)
+20
+(482)
+(484)
+(1,719)
+(281)
+Income taxes paid
+Billings in excess of costs and estimated earnings on uncompleted contracts and related advances
+Additions to assets leased to others in operating leases
+Dividends received
+(1,718)
+381
+302
+Interest received
+Capital reserve
+1,219
+1,375
+(2,039)
+327
+306
+Trade payables
+2,764
+2,180
+2,008
+(436)
+(325)
+(329)
+(373)
+552
+400
+(Income) loss related to investing activities
+Other non-cash (income) expenses
+Change in operating net working capital
+Inventories
+(1,250)
+Trade and other receivables
+148
+(1,009)
+(579)
+(188)
+Issued capital
+70,388
+90,901
+133,804
+125,717
+Liabilities and equity
+Short-term debt and current maturities of long-term debt
+15
+5,447
+6,206
+75,375
+Trade payables
+8,048
+Other current financial liabilities
+1,444
+1,933
+Current provisions
+17
+4,247
+9,755
+4,166
+1,279
+3,431
+10,157
+Cash flows from operating activities - continuing operations
+10,977
+4
+2,727
+3,012
+13
+1,498
+19,044
+Deferred tax assets
+Other assets
+35,056
+Total non-current assets
+Total assets
+7
+2,297
+20,610
+Current income tax liabilities
+2,355
+2,085
+1,599
+829
+4,579
+5,087
+Other financial liabilities
+Other liabilities
+Total non-current liabilities
+13,695
+Total liabilities
+902
+1,142
+2,445
+2,471
+45,884
+47,986
+89,278
+Equity
+42,916
+24,761
+26,777
+9,582
+5677
+Other current liabilities
+14
+20,049
+20,437
+Liabilities associated with assets classified as held for disposal
+3
+97
+40
+Total current liabilities
+43,394
+Long-term debt
+15
+Provisions for pensions and similar obligations
+16
+Deferred tax liabilities
+Provisions
+17
+18
+7,225
+Financial liabilities - Siemens measures financial liabilities, ex-
+cept for derivative financial instruments, at amortized cost using
+the effective interest method.
+Cash flows from operating activities - discontinued operations
+Capital reserve
+5,733
+Retained earnings
+30,152
+5,450
+(2,637)
+(2,827)
+158
+Issued capital
+2,643
+(67)
+(93)
+(2,575)
+(42)
+2,550
+5,890
+27,454
+Balance as of October 1, 2016
+2,550
+(1)
+5,890
+Balance as of September 30, 2016
+Transactions with non-controlling interests
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
+operations at end of period
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+15
+8,375
+13
+10,604
+Consolidated Financial Statements 61
+B.5 Consolidated Statements of Changes in Equity
+Other changes in equity
+(in millions of €)
+Net income
+Other comprehensive income, net of income taxes
+Dividends
+Share-based payment
+Purchase of treasury shares
+Re-issuance of treasury shares
+Cancellation of treasury shares
+Balance as of October 1, 2015
+27,454
+Net income
+6,046
+35,696
+Currency trans-
+lation differences
+Available-for-sale
+Derivative financial
+financial assets
+instruments
+1,794
+6,368
+726
+Treasury
+shares at cost
+Total equity
+attributable to
+shareholders
+of Siemens AG
+Non controlling
+interests
+Total equity
+12
+(6,218)
+(357)
+2,550
+(3)
+(11)
+Other comprehensive income, net of income taxes
+2,737
+Dividends
+(2,914)
+Share-based payment
+279
+(86)
+Purchase of treasury shares
+Re-issuance of treasury shares
+Changes in equity resulting from major portfolio transactions
+Other transactions with non-controlling interests
+Other changes in equity
+Balance as of September 30, 2017
+62
+Consolidated Financial Statements
+199
+2,473
+10,618
+9,958
+10,618
+8,389
+Cash and cash equivalents at end of period
+(1,356)
+Disposal of investments, intangibles and property, plant and equipment
+542
+377
+(69)
+9
+Disposal of current available-for-sale financial assets
+(686)
+931
+Cash flows from investing activities - continuing operations
+(7,456)
+(4,406)
+Cash flows from investing activities – discontinued operations
+(1)
+262
+Cash flows from investing activities - continuing and discontinued operations
+1,031
+(1,139)
+(882)
+(271)
+(50)
+(57)
+Cash flows from operating activities - continuing and discontinued operations
+7,176
+7,611
+Cash flows from investing activities
+Additions to intangible assets and property, plant and equipment
+(2,406)
+(2,135)
+Acquisitions of businesses, net of cash acquired
+Purchase of investments
+Purchase of current available-for-sale financial assets
+Change in receivables from financing activities
+Disposal of businesses, net of cash disposed
+(4,385)
+(922)
+(500)
+(7,457)
+7,668
+(4,144)
+Purchase of treasury shares
+(187)
+(236)
+Cash flows from financing activities - continuing operations
+(1,560)
+(2,710)
+Cash flows from financing activities - discontinued operations
+Cash flows from financing activities - continuing and discontinued operations
+Dividends attributable to non-controlling interests
+(1,560)
+Effect of changes in exchange rates on cash and cash equivalents
+(387)
+(98)
+Change in cash and cash equivalents
+(2,228)
+660
+Cash and cash equivalents at beginning of period
+(2,710)
+(2,827)
+(2,914)
+Dividends paid to shareholders of Siemens AG
+(931)
+(463)
+Re-issuance of treasury shares and other transactions with owners
+1,123
+(13)
+Issuance of long-term debt
+6,958
+5,300
+Repayment of long-term debt (including current maturities of long-term debt)
+(4,868)
+(2,253)
+Change in short-term debt and other financing activities
+260
+(1,408)
+Interest paid
+(1,000)
+(809)
+Cash flows from financing activities
+7,742
+581
+12
+193
+(934)
+(934)
+(934)
+10,926
+1,541
+1,541
+2,473
+919
+3,393
+(11)
+(8)
+(20)
+(3)
+51
+48
+(175)
+1,845
+1
+(3,196)
+43,089
+1,438
+44,527
+Consolidated Financial Statements 63
+B.6 Notes to Consolidated Financial Statements
+NOTE 1 Basis of presentation
+The accompanying Consolidated Financial Statements present
+the operations of Siemens Aktiengesellschaft with registered of-
+fices in Berlin (registry number HRB 12300) and Munich (registry
+number HRB 6684), Germany, and its subsidiaries (the Company
+or Siemens). They have been prepared in accordance with Inter-
+national Financial Reporting Standards (IFRS), as adopted by the
+European Union as well as with the additional requirements set
+forth in Section 315 a (1) of the German Commercial Code (HGB).
+The financial statements are in accordance with IFRS as issued by
+the International Accounting Standards Board (IASB). The Consol-
+idated Financial Statements were authorized for issue by the
+Managing Board on November 27, 2017.
+193
+Siemens prepares and reports its Consolidated Financial State-
+ments in euros (€). Due to rounding, numbers presented may not
+add up precisely to totals provided.
+(3,098)
+(2,914)
+92
+51
+37
+36
+909
+1,160
+(148)
+(3,605)
+34,211
+605
+34,816
+909
+1,160
+(148)
+(3,605)
+34,211
+605
+34,816
+6,046
+133
+6,179
+(1,084)
+685
+149
+2,487
+(78)
+2,409
+(184)
+(42)
+Siemens is a German based multinational technology company
+with core activities in the fields of electrification, automation and
+digitalization.
+Certain of these accounting policies require critical accounting
+estimates that involve complex and subjective judgments and
+the use of assumptions, some of which may be for matters that
+are inherently uncertain and susceptible to change. Such critical
+accounting estimates could change from period to period and
+have a material impact on the Company's results of operations,
+financial positions and cash flows. Critical accounting estimates
+could also involve estimates where Siemens reasonably could
+have used a different estimate in the current accounting period.
+Siemens cautions that future events often vary from forecasts
+and that estimates routinely require adjustment.
+Technical machinery & equipment
+Furniture & office equipment
+Equipment leased to others
+20 to 50 years
+5 to 10 years
+5 to 10 years
+generally 5 years
+generally 3 to 5 years
+Impairment of property, plant and equipment and other
+intangible assets - The Company reviews property, plant and
+equipment and other intangible assets for impairment whenever
+events or changes in circumstances indicate that the carrying
+amount of an asset may not be recoverable. In addition, intangi-
+ble assets not yet available for use are subject to an annual im-
+pairment test. Impairment testing of property, plant and equip-
+ment and other intangible assets involves the use of estimates in
+determining the assets' recoverable amount which can have a
+material impact on the respective values and ultimately the
+amount of any impairment.
+Discontinued operations and non-current assets held for
+disposal - Discontinued operations are reported when a compo-
+nent of an entity is classified as held for disposal or has been
+disposed of, if the component represents a separate major line of
+business or geographical area of operations and is part of a single
+coordinated plan to disposal. A non-current asset or a disposal
+group is held for disposal if its carrying amount will be recovered
+principally through a sale transaction rather than through con-
+tinuing use.
+66 Consolidated Financial Statements
+Income taxes - Tax positions under respective local tax laws and
+tax authorities' views can be complex and subject to different
+interpretations of tax payers and local tax authorities. Different
+interpretations of tax laws may result in additional tax payments
+for prior years and are taken into account based on manage-
+ment's considerations. Under the liability method, deferred tax
+assets and liabilities are recognized for future tax consequences
+attributable to differences between the financial statement car-
+rying amounts of existing assets and liabilities and their respec-
+tive tax bases. Deferred tax assets are recognized if sufficient
+future taxable profit is available, including income from fore-
+casted operating earnings, the reversal of existing taxable tem-
+porary differences and established tax planning opportunities.
+As of each period-end, Siemens evaluates the recoverability of
+deferred tax assets, based on projected future taxable profits.
+Based upon the level of historical taxable income and projections
+for future taxable income over the periods in which the deferred
+tax assets are deductible, Siemens believes it is probable the
+Company will realize the benefits of these deductible differences.
+As future developments are uncertain and partly beyond
+Siemens's control, assumptions are necessary to estimate future
+taxable profits as well as the period in which deferred tax assets
+will recover. Estimates are revised in the period in which there is
+sufficient evidence to revise the assumption.
+Inventories - Inventories are valued at the lower of acquisition
+or production costs and net realizable value, costs being gener-
+ally determined on the basis of an average or first-in, first-out
+method.
+-
+Defined benefit plans – Siemens measures the entitlements by
+applying the projected unit credit method. The approach reflects
+an actuarially calculated net present value of the future benefit
+entitlement for services already rendered. In determining the net
+present value of the future benefit entitlement for service al-
+ready rendered (Defined Benefit Obligation (DBO)), the expected
+rates of future salary increase and expected rates of future pen-
+sion progression are considered. The assumptions used for the
+calculation of the DBO as of the period-end of the preceding fis-
+cal I year are used to determine the calculation of service cost and
+interest income and expense of the following year. The net inter-
+est income or expense for the fiscal year will be based on the
+discount rates for the respective year multiplied by the net de-
+fined benefit liability (asset) at the preceding fiscal year's peri-
+od-end date.
+Service cost, past service cost and settlement gains (losses) for
+pensions and similar obligations as well as administration costs
+unrelated to the management of plan assets are allocated among
+functional costs. Past service cost and settlement gains (losses)
+are recognized immediately in profit or loss. For unfunded plans,
+the amount of the line item Provisions for pensions and similar
+obligations equals the DBO. For funded plans, Siemens offsets
+the fair value of the plan assets with the DBO. Siemens recog-
+nizes the net amount, after adjustments for effects relating to
+any asset ceiling.
+Remeasurements comprise actuarial gains and losses as well as
+the difference between the return on plan assets and the amounts
+included in net interest on the net defined benefit liability (asset).
+They are recognized in Other comprehensive income, net of in-
+come taxes.
+Actuarial valuations rely on key assumptions including discount
+rates, expected compensation increases, rate of pension progres-
+sion and mortality rates. Discount rates used are determined by
+reference to yields on high-quality corporate bonds of appropri-
+ate duration and currency at the end of the reporting period. In
+case such yields are not available, discount rates are based on
+government bond yields. Due to changing market, economic and
+social conditions, the underlying key assumptions may differ
+from actual developments.
+Provisions - A provision is recognized in the Statement of Finan-
+cial Position when it is probable that the Company has a present
+legal or constructive obligation as a result of a past event, it is
+probable that an outflow of economic benefits will be required
+to settle the obligation and a reliable estimate can be made of
+the amount of the obligation. If the effect is material, provisions
+are recognized at present value by discounting the expected fu-
+ture cash flows at a pretax rate that reflects current market as-
+sessments of the time value of money. When a contract becomes
+onerous, the present obligation under the contract is recognized
+as a provision.
+Significant estimates are involved in the determination of provi-
+sions related to onerous contracts, warranty costs, asset retire-
+ment obligations, legal and regulatory proceedings as well as
+governmental investigations (Legal Proceedings). Siemens re-
+cords a provision for onerous sales contracts when current esti-
+mates of total contract costs exceed expected contract revenue.
+Onerous sales contracts are identified by monitoring the prog-
+ress of the project and updating the estimate of total contract
+costs which also requires significant judgment relating to
+achieving certain performance standards as well as estimates
+involving warranty costs and estimates regarding project delays
+including the assessment of responsibility splits between the
+contract partners for these delays. Uncertainties regarding asset
+retirement obligations include the estimated costs of decommis-
+sioning and final waste storage because of the long time frame
+over which future cash outflows are expected to occur including
+the respective interest accretion. The estimated cash outflows
+could be impacted significantly by changes of the regulatory
+environment.
+Consolidated Financial Statements 67
+Legal Proceedings often involve complex legal issues and are sub-
+ject to substantial uncertainties. Accordingly, considerable judg-
+ment is part of determining whether it is probable that there is a
+present obligation as a result of a past event at the end of the
+reporting period, whether it is probable that such a Legal Pro-
+ceeding will result in an outflow of resources and whether the
+amount of the obligation can be reliably estimated. Internal and
+external counsels are generally part of the determination process.
+Due to new developments, it may be necessary, to record a pro-
+vision for an ongoing Legal Proceeding or to adjust the amount
+of a previously recognized provision. Upon resolution of a Legal
+Proceeding, Siemens may incur charges in excess of the recorded
+provisions for such matters. The outcome of Legal Proceedings
+may have a material effect on Siemens' financial position, its re-
+sults of operations and/or its cash flows.
+Termination benefits - Termination benefits are provided as a
+result of an entity's offer made in order to encourage voluntary
+redundancy before the normal retirement date or from an enti-
+ty's decision to terminate the employment. Termination benefits
+in accordance with IAS 19, Employee Benefits, are recognized as
+a liability and an expense when the entity can no longer with-
+draw the offer of those benefits.
+Financial instruments - A financial instrument is any contract
+that gives rise to a financial asset of one entity and a financial
+liability or equity instrument of another entity. Siemens does
+not use the category held to maturity and does not use the op-
+tion to designate financial assets or financial liabilities at fair
+value through profit or loss at inception (Fair Value Option).
+Based on their nature, financial instruments are classified as fi-
+nancial assets and financial liabilities measured at cost or amor-
+tized cost and financial assets and financial liabilities measured
+at fair value and as receivables from finance leases. Regular way
+purchases or sales of financial assets are accounted for at the
+trade date. Initially, financial instruments are recognized at their
+fair value. Transaction costs are only included in determining
+the carrying amount, if the financial instruments are not mea-
+sured at fair value through profit or loss. Receivables from fi-
+nance leases are recognized at an amount equal to the net in-
+vestment in the lease. Subsequently, financial assets and
+liabilities are measured according to the category to which they
+are assigned cash and cash equivalents, available-for-sale fi-
+nancial assets, loans and receivables, financial liabilities mea-
+sured at amortized cost or financial assets and liabilities classi-
+fied as held for trading.
+Cash and cash equivalents - The Company considers all highly
+liquid investments with less than three months maturity from the
+date of acquisition to be cash equivalents. Cash and cash equiv-
+alents are measured at cost.
+Available-for-sale financial assets - Investments in equity in-
+struments, debt instruments and fund shares are measured at
+fair value, if reliably measurable. Unrealized gains and losses, net
+of applicable deferred income tax expenses, are recognized in
+line item Other comprehensive income, net of income taxes. Pro-
+vided that fair value cannot be reliably determined, Siemens
+measures available-for-sale financial assets at cost. This applies
+to equity instruments that do not have a quoted market price in
+an active market, and decisive parameters cannot be reliably es-
+timated to be used in valuation models for the determination of
+fair value. Siemens considers all available evidence such as mar-
+ket conditions and prices, investee-specific factors and the dura-
+tion as well as the extent to which fair value is less than acquisi-
+tion cost in evaluating potential impairment of its available-for-sale
+financial assets. The Company considers a decline in fair value as
+objective evidence of impairment, if the decline exceeds 20% of
+costs or continues for more than six months.
+Loans and receivables - Financial assets classified as loans and
+receivables are measured at amortized cost using the effective
+interest method less any impairment losses. Impairment losses
+on trade and other receivables are recognized using separate al-
+lowance accounts. The allowance for doubtful accounts involves
+significant management judgment and review of individual re-
+ceivables based on individual customer creditworthiness, current
+economic trends and analysis of historical bad debts on a portfo-
+lio basis. For the determination of the country-specific compo-
+nent of the individual allowance, Siemens also considers country
+credit ratings, which are centrally determined based on informa-
+tion from external rating agencies. Regarding the determination
+of the valuation allowance derived from a portfolio-based analy-
+sis of historical bad debts, a decline of receivables in volume re-
+sults in a corresponding reduction of such provisions and vice
+versa. As of September 30, 2017 and 2016, Siemens recorded a
+valuation allowance for trade and other receivables (including
+leases) of €1,388 million and €1,211 million, respectively.
+34,474
+Derivative financial instruments - Derivative financial instru-
+ments, such as foreign currency exchange contracts and interest
+rate swap contracts are measured at fair value and classified as
+held for trading unless they are designated as hedging instru-
+ments, for which hedge accounting is applied. Changes in the fair
+value of derivative financial instruments are recognized either in
+net income or, in the case of a cash flow hedge, in line item Other
+comprehensive income, net of income taxes (applicable deferred
+income tax). Certain derivative instruments embedded in host
+contracts are also accounted for separately as derivatives.
+68 Consolidated Financial Statements
+Factory and office buildings
+Other buildings
+NOTE 2 Significant accounting policies
+and critical accounting estimates
+Property, plant and equipment - Property, plant and equip-
+ment, is valued at cost less accumulated depreciation and impair-
+ment losses. Depreciation expense is recognized using the
+straight-line method. The following useful lives are assumed:
+have a material impact on the respective values and ultimately
+the amount of any goodwill impairment.
+Basis of consolidation - The Consolidated Financial Statements
+include the accounts of Siemens AG and its subsidiaries over
+which the Company has control. Siemens controls an investee if
+it has power over the investee. In addition, Siemens is exposed
+to, or has rights to, variable returns from the involvement with
+the investee and Siemens has the ability to use its power over the
+investee to affect the amount of Siemens' return.
+Business combinations - Cost of an acquisition is measured at
+the fair value of the assets given and liabilities incurred or as-
+sumed at the date of exchange. Identifiable assets acquired and
+liabilities assumed in a business combination (including contin-
+gent liabilities) are measured initially at their fair values at the
+acquisition date, irrespective of the extent of any non-controlling
+interest. Non-controlling interests are measured at the propor-
+tional fair value of assets acquired and liabilities assumed (partial
+goodwill method). If there is no loss of control, transactions with
+non-controlling interests are accounted for as equity transactions
+not affecting profit and loss. At the date control is lost, any re-
+tained equity interests are remeasured to fair value. In case of a
+written put option on non-controlling interests the Company as-
+sesses whether the prerequisites for the transfer of present own-
+ership interest are fulfilled at the balance sheet date. If the Com-
+pany is not the beneficial owner of the shares underlying the put
+option, the exercise of the put option will be assumed at each
+balance sheet date and treated as equity transaction between
+shareholders with the recognition of a purchase liability at the
+respective exercise price. The non-controlling interests partici-
+pate in profits and losses during the reporting period.
+Associates - Associates are companies over which Siemens has
+the ability to exercise significant influence over operating and
+financial policies (generally through direct or indirect ownership
+of 20% to 50% of the voting rights). These are recorded in the
+Consolidated Financial Statements using the equity method and
+are initially recognized at cost. Siemens' share of its associate's
+post-acquisition profits or losses is recognized in the Consoli-
+dated Statements of Income, and its share of post-acquisition
+changes in equity that have not been recognized in the associ-
+ate's profit or loss is recognized directly in equity. The cumula-
+tive post-acquisition changes are adjusted against the carrying
+amount of the investment in the associate. When Siemens'
+share of losses in an associate equals or exceeds its interest in
+the associate, Siemens does not recognize further losses, unless
+it incurs obligations or makes payments on behalf of the associ-
+ate. The interest in an associate is the carrying amount of the
+investment in the associate together with any long-term inter-
+ests that, in substance, form part of Siemens' net investment in
+the associate.
+Joint ventures - Joint ventures are entities over which Siemens
+and one or more parties have joint control. Joint control requires
+unanimous consent of the parties sharing control in decision
+making on relevant activities.
+Foreign currency translation - Assets and liabilities of foreign
+subsidiaries, where the functional currency is other than the
+euro, are translated using the spot exchange rate at the end of
+the reporting period, while the Consolidated Statements of In-
+come are translated using average exchange rates during the
+period. Differences arising from such translations are recognized
+within equity and reclassified to net income when the gain or loss
+on disposal of the foreign subsidiary is recognized. The Consoli-
+dated Statements of Cash Flow are translated at average ex-
+change rates during the period, whereas cash and cash equiva-
+lents are translated at the spot exchange rate at the end of the
+reporting period.
+64 Consolidated Financial Statements
+Foreign currency transaction - Transactions that are denom-
+inated in a currency other than the functional currency of an
+entity, are recorded at that functional currency applying the spot
+exchange rate at the date when the underlying transactions are
+initially recognized. At the end of the reporting period, foreign
+currency-denominated monetary assets and liabilities are reval-
+ued to functional currency applying the spot exchange rate pre-
+vailing at that date. Gains and losses arising from these foreign
+currency revaluations are recognized in net income. Those for-
+eign currency-denominated transactions which are classified
+as non-monetary are remeasured using the historical spot ex-
+change rate.
+Revenue recognition - Under the condition that persuasive
+evidence of an arrangement exists, revenue is recognized to the
+extent that it is probable that the economic benefits will flow to
+the Company and the revenue can be reliably measured, regard-
+less of when the payment is being made. In cases where the in-
+flow of economic benefits is not probable due to customer re-
+lated credit risks, the revenue recognized is subject to the amount
+of payments irrevocably received.
+Sale of goods: Revenue is recognized when the significant risks
+and rewards of ownership of the goods have passed to the buyer,
+usually on delivery of the goods.
+Sales from construction contracts: When the outcome of a con-
+struction contract can be estimated reliably, revenues from con-
+struction-type projects are recognized under the percent-
+age-of-completion method, based on the percentage of costs
+incurred to date compared to the total estimated contract costs.
+An expected loss on the construction contract is recognized as an
+expense immediately. Siemens applies the requirements of IAS 11
+regarding contract variations to contract terminations, since con-
+tract terminations are also changes to the agreed delivery and
+service scope.
+The percentage-of-completion method places considerable im-
+portance on accurate estimates of the extent of progress to-
+wards completion and may involve estimates on the scope of
+deliveries and services required for fulfilling the contractually
+defined obligations. These significant estimates include total
+contract costs, total contract revenues, contract risks, including
+technical, political and regulatory risks, and other judgments.
+Under the percentage-of-completion method, changes in esti-
+mates may lead to an increase or decrease of revenue. The cred-
+itworthiness of our customers is taken into account in estimating
+the probability that economic benefits associated with a contract
+will flow to the Company. In addition, we need to assess whether
+the contract is expected to continue or to be terminated. In de-
+termining whether the continuation or termination of a contract
+is expected to be the most likely scenario, all relevant facts and
+circumstances relating to the contract are considered on an in-
+dividual basis.
+Rendering of services: For long-term service contracts, revenues
+are recognized on a straight-line basis over the term of the con-
+tract or, if the performance pattern is other than straight-line, as
+the services are provided, i.e. under the percentage-of-comple-
+tion method as described above.
+Sales from multiple element arrangements: Sales of goods and
+services as well as software arrangements sometimes involve the
+provision of multiple elements. In these cases, the Company de-
+termines whether the contract or arrangement contains more
+than one unit of accounting. If certain criteria are met, foremost
+if the delivered element(s) has (have) value to the customer on
+a stand-alone basis, the arrangement is separated and the appro-
+priate revenue recognition convention is then applied to each
+separate unit of accounting. Generally, the total arrangement
+consideration is allocated to the separate units of accounting
+based on their relative fair values. If the criteria for the separation
+of units of accounting are not met, revenue is deferred until such
+criteria are met or until the period in which the last undelivered
+element is delivered.
+Income from interest: Interest is recognized using the effective
+interest method.
+Income from royalties: Royalties are recognized on an accrual
+basis in accordance with the substance of the relevant agree-
+ment.
+Income from operating leases: Operating lease income for equip-
+ment rentals is recognized on a straight-line basis over the lease
+term.
+Functional costs - In general, operating expenses by types are
+assigned to the functions following the functional area of the
+corresponding profit and cost centers. Amortization, deprecia-
+tion and impairment of intangible assets and property, plant and
+equipment are included in functional costs depending on the use
+of the assets.
+Product-related expenses - Provisions for estimated costs re-
+lated to product warranties are recorded in line item Cost of sales
+at the time the related sale is recognized.
+Research and development costs - Costs of research activities
+are expensed as incurred. Costs of development activities are
+capitalized when the recognition criteria in IAS 38 are met. Capi-
+talized development costs are stated at cost less accumulated
+amortization and impairment losses with an amortization period
+of generally three to ten years.
+Consolidated Financial Statements 65
+Earnings per share - Basic earnings per share are computed by
+dividing income from continuing operations, income from dis-
+continued operations and net income, all attributable to ordinary
+shareholders of Siemens AG by the weighted average number of
+shares outstanding during the year. Diluted earnings per share
+are calculated by assuming conversion or exercise of all poten-
+tially dilutive securities and share-based payment plans.
+Goodwill - Goodwill is not amortized, instead, goodwill is tested
+for impairment annually, as well as whenever there are events or
+changes in circumstances (triggering events) which suggest that
+the carrying amount may not be recoverable. Goodwill is carried
+at cost less accumulated impairment losses. The goodwill impair-
+ment test is performed at the level of a cash-generating unit or a
+group of cash-generating units, generally represented by a seg-
+ment and for Siemens Gamesa Renewable Energy one level be-
+low the segment. This is the lowest level at which goodwill is
+monitored for internal management purposes.
+For the purpose of impairment testing, goodwill acquired in a
+business combination is allocated to the cash-generating unit or
+the group of cash-generating units that is expected to benefit
+from the synergies of the business combination. If the carrying
+amount of the cash-generating unit or the group of cash-gen-
+erating units, to which the goodwill is allocated, exceeds its re-
+coverable amount, an impairment loss on goodwill allocated to
+this cash-generating unit or this group of cash-generating units
+is recognized. The recoverable amount is the higher of the
+cash-generating unit's or the group of cash-generating units' fair
+value less costs to sell and its value in use. If either of these val-
+ues exceeds the carrying amount, it is not always necessary to
+determine both values. These values are generally determined
+based on discounted cash flow calculations. Impairment losses
+on goodwill are not reversed in future periods.
+The determination of the recoverable amount of a cash-generat-
+ing unit or a group of cash-generating units to which goodwill is
+allocated involves the use of estimates by management. The out-
+come predicted by these estimates is influenced e.g. by the suc-
+cessful integration of acquired entities, volatility of capital mar-
+kets, interest rate developments, foreign exchange rate
+fluctuations and the outlook on economic trends. In determining
+recoverable amounts, discounted cash flow calculations use five-
+year projections that are based on financial forecasts. Cash flow
+projections take into account past experience and represent
+management's best estimate about future developments. Cash
+flows after the planning period are extrapolated using individual
+growth rates. Key assumptions on which management has based
+its determination of fair value less costs to sell and value in use
+include estimated growth rates and weighted average cost of
+capital. These estimates, including the methodology used, can
+Other intangible assets - The Company amortizes intangible
+assets with finite useful lives on a straight-line basis over their
+respective estimated useful lives. Estimated useful lives for pat-
+ents, licenses and other similar rights generally range from
+three to five years, except for intangible assets with finite useful
+lives acquired in business combinations. Intangible assets ac-
+quired in business combinations primarily consist of customer
+relationships and trademarks as well as technology. Useful lives
+in specific acquisitions ranged from four to 20 years for cus-
+tomer relationships and trademarks and from five to 25 years for
+technology.
+2,668
+1,342
+390
+17,160
+8
+Trade and other receivables
+1,293
+1,242
+Available-for-sale financial assets
+10,604
+8,375
+2016
+2017
+Note
+September 30,
+Cash and cash equivalents
+Assets
+(in millions of €)
+B.3 Consolidated Statements of Financial Position
+Consolidated Financial Statements 59
+134
+2,571
+8,533
+55
+Shareholders of Siemens AG
+Non-controlling interests
+Attributable to:
+Total comprehensive income
+2,705
+8,588
+(2,879)
+16,287
+2,409
+Other current financial assets
+7,664
+24,159
+27,906
+11
+WANNE
+Other financial assets
+Investments accounted for using the equity method
+Property, plant and equipment
+55,329
+58,429
+Other intangible assets
+Goodwill
+Total current assets
+190
+1,482
+3,22
+Assets classified as held for disposal
+1,204
+1,467
+790
+1,098
+18,160
+19,942
+390
+Other current assets
+Current income tax assets
+Inventories
+6,800
+9
+Other comprehensive income, net of income taxes
+10
+(326)
+Remeasurements of defined benefit plans
+5,584
+6,179
+Net income
+2016
+2017
+Note
+(in millions of €)
+Fiscal year
+B.2 Consolidated Statements of Comprehensive Income
+5,450
+134
+5,584
+(885)
+434
+(2,879)
+(2,879)
+(2,827)
+(239)
+(3,066)
+91
+91
+(446)
+(446)
+(446)
+391
+(244)
+therein: Income tax effects
+Items that will not be reclassified to profit or loss
+208
+Available-for-sale financial assets
+Items that may be reclassified subsequently to profit or loss
+Currency translation differences
+(141)
+(30)
+Income (loss) from investments accounted for using the equity method, net
+(89)
+(63)
+256
+136
+22, 23
+4
+(7)
+436
+687
+therein: Income tax effects
+22
+Derivative financial instruments
+22
+16
+16
+(2,636)
+(1,070)
+2,734
+1,065
+2,735
+(2,636)
+(1,118)
+(796)
+therein: Income tax effects
+Other
+1,784
+Available-for-sale financial assets
+2,290
+3,699
+3,557
+2,293
+2,662
+Derivative financial instruments
+NOTE 14 Other current liabilities
+19,044
+260
+20,610
+Item Loans receivable primarily relate to long-term loan transac-
+tions of SFS.
+(in millions of €)
+Sep 30,
+Receivables from finance leases
+2017
+208
+11,838
+123
+Loans receivable
+2016
+27
+5,447
+15
+6,206
+88
+26,777
+24,761
+11,062
+More than five years
+85
+1,124
+1,099
+NOTE 13 Other financial assets
+(in millions of €)
+2017
+Sep 30,
+2016
+101
+Billings in excess of costs and
+Notional
+contracts and related advances
+77
+NOTES AND BONDS
+(interest/issued/maturity)
+Currency
+Notional
+amount
+(in millions)
+Sep 30, 2017
+Carrying
+amount
+Consolidated Financial Statements
+in millions
+Sep 30, 2016
+Carrying
+amount
+amount
+in millions
+of €1
+(in millions)
+of €1
+Currency
+estimated earnings on uncompleted
+As of September 30, 2017 and 2016, €7.0 billion and €7.1 billion
+of lines of credit are unused. The facilities are for general corpo-
+rate purposes. The €4.0 billion syndicated credit facility matures
+on June 25, 2021. The US$3.0 billion syndicated credit facility ma-
+tures on September 27, 2020. The €450 million revolving bilateral
+credit facility is unused and was extended from September 2017
+to September 2018. As of September 30, 2017, a subsidiary has an
+additional unused credit line of €750 million maturing in 2022.
+Interest rates in this Note are per annum. In fiscal 2017 and 2016,
+weighted-average interest rates for loans from banks, other fi-
+nancial indebtedness and obligations under finance leases were
+2.9% (2016: 3.9%), 1.0% (2016: 0.5%) and 5.8% (2016: 4.8%),
+respectively.
+10,259
+10,892
+Liabilities to personnel
+5,505
+5,401
+Deferred Income
+1,470
+CREDIT FACILITIES
+1,292
+1,116
+1,175
+Other
+1,698
+1,676
+20,049
+20,437
+Accruals for pending invoices
+380
+£
+€
+US$
+750
+296 US$
+930 US$
+929 US$
+630 US$
+350
+308
+1,100
+984
+1,100
+983
+750
+666
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+US$
+1,700
+1,431 US$
+1,700
+1,517
+3.30%/2016/September 2046/US$-fixed-rate-instruments
+US$
+1,000
+838 US$
+1,000
+887
+2.00%/2016/September 2023/US$-fixed-rate-instruments
+1,100
+US$
+1.70%/2016/September 2021/US$-fixed-rate-instruments
+893
+2.90%/2015/May 2022/US$-fixed-rate-instruments
+US$
+1,750
+1,479 US$
+1,750
+1,564
+3.25%/2015/May 2025/US$-fixed-rate-instruments
+US$
+1,500
+1,264 US$
+US$3m LIBOR+0.34%/2017/March 2020/US$ floating-rate instruments
+1,500
+4.40%/2015/May 2045/US$-fixed-rate-instruments
+US$
+1,750
+1,461 US$
+1,750
+US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
+US$
+350
+1.30%/2016/September 2019/US$-fixed-rate-instruments
+US$
+1,100
+1,336
+1,000
+US$
+677
+US$
+1,500
+1,332
+US$
+1,500
+1,249 US$
+1,500
+1,309
+3m EURIBOR+0.2% /2015/September 2017/EUR floating-rate instruments
+3m EURIBOR+0.2%/2015/September 2017/EUR floating-rate instruments
+Total Bonds with Warrant Units
+€
+33
+33
+€
+31
+31
+1,249
+2,705
+28,797
+28,554
+1 Includes adjustments for fair value hedge accounting.
+78
+Consolidated Financial Statements
+1,334
+1.05%/2012/August 2017/US$ fixed-rate instruments
+1.65%/2012/August 2019/US$ fixed-rate instruments
+15,801
+19,737
+Total US$ Bonds
+2.20%/2017/March 2020/US$-fixed-rate-instruments
+US$
+1,100
+930
+2.70%/2017/March 2022/US$-fixed-rate-instruments
+US$
+1,000
+843
+US$3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
+US$
+850
+800
+718
+US$
+1,000
+843
+3.40%/2017/March 2027/US$-fixed-rate-instruments
+US$
+1,250
+1,054
+4.20%/2017/March 2047/US$-fixed-rate-instruments
+US$
+1,500
+1,257
+3.125%/2017/March 2024/US$-fixed-rate-instruments
+5.625%/2008/June 2018/EUR fixed-rate instruments
+845 US$
+US$
+350
+405
+3.75%/2012/September 2042/GBP fixed-rate instruments
+£
+650
+723
+£
+650
+740
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+1.5%/2013/March 2018/US$ fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+2013/June 2020/US$ floating-rate instruments
+2014/March 2019/US$ floating-rate instruments
+2014/September 2021/US$ floating-rate instruments
+Total Debt Issuance Program
+€
+1,250
+1,274
+€
+1,250
+1,285
+€
+1,000
+997
+€
+1,000
+996
+Total debt
+395
+350
+£
+1,600
+1,649
+€
+1,600
+1,719
+5.125%/2009/February 2017/EUR fixed-rate instruments
+€
+2,000
+2,028
+US$3 m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
+US$
+US$
+400
+US$
+400
+358
+1.5%/2012/March 2020/EUR fixed-rate instruments
+€
+1,000
+998
+€
+1,000
+997
+2.75%/2012/September 2025/GBP fixed-rate instruments
+339
+1,000
+500
+US$
+5.75%/2006/October 2016/US$ fixed-rate instruments
+US$
+1,750
+1,570
+6.125%/2006/August 2026/US$ fixed-rate instruments
+US$
+1,750
+1,830 US$
+1,750
+1,982
+US$3 m LIBOR+0.28%/2015/May 2018/US$ floating-rate instruments
+US$
+500
+423 US$
+500
+448
+1.45%/2015/May 2018/US$-fixed-rate-instruments
+US$
+1,250
+1,058 US$
+1,250
+1,119
+2.15%/2015/May 2020/US$-fixed-rate-instruments
+10,048
+7,812
+358
+400
+500
+447
+US$
+100
+83
+US$
+100
+87
+US$
+400
+338
+423
+US$
+358
+US$
+300
+254
+US$
+300
+268
+US$
+400
+339
+US$
+400
+689
+1,546
+(8,487)
+Customer relationships
+and trademarks
+7,532
+(447)
+1,825
+(39)
+8,870
+(3,629)
+(454)
+5,240
+Other intangible assets
+15,469
+(799)
+4,542
+451
+(250)
+19,413
+10,926
+(624)
+(1,281)
+4,056
+7,320
+Internally generated
+technology
+3,067
+(79)
+374
+(138)
+3,224
+(1,594)
+(3,264)
+1,630
+Acquired technology
+including patents, licenses
+and similar rights
+4,870
+(272)
+2,717
+77
+(73)
+(203)
+ment in
+fiscal 2017
+Land and bulidings
+(184)
+6,092
+(136)
+183
+672
+157
+(532)
+6,435
+(4,898)
+equipment
+1,537
+Equipment leased to others
+3,015
+(92)
+443
+10
+(378)
+2,998
+(1,703)
+(729)
+7,859
+Furniture and office
+2,724
+308
+188
+205
+(247)
+8,129
+(3,754)
+4,374
+(272)
+(588)
+Technical machinery
+7,950
+(170)
+323
+334
+207
+(235)
+8,410
+(5,685)
+and equipment
+and impair-
+tization
+Deprecia-
+tion/amor-
+For the purpose of estimating the fair value less costs to sell of
+the cash-generating units or groups of cash-generating units,
+cash flows were projected for the next five years based on past
+experience, actual operating results and management's best es-
+timate about future developments as well as market assump-
+tions. The determined fair value of the cash-generating units or
+groups of cash-generating units is assigned to level 3 of the fair
+value hierarchy.
+The fair value less costs to sell is mainly driven by the terminal
+value which is particularly sensitive to changes in the assump-
+tions on the terminal value growth rate and discount rate. Both
+assumptions are determined individually for each cash-gener-
+ating unit or group of cash-generating units. Discount rates are
+based on the weighted average cost of capital (WACC) for the
+cash-generating units or groups of cash-generating units (for
+SFS the discount rate represents cost of equity). The discount
+rates are calculated based on a risk-free rate of interest and a
+market risk premium. In addition, the discount rates reflect the
+current market assessment of the risks specific to each
+cash-generating unit or group of cash-generating units by tak-
+ing into account specific peer group information on beta fac-
+tors, leverage and cost of debt. The parameters for calculating
+the discount rates are based on external sources of information.
+The peer group is subject to an annual review and adjusted, if
+necessary. Terminal value growth rates take into consideration
+external macroeconomic sources of data and industry specific
+trends.
+The following table presents key assumptions used to determine
+fair value less costs to sell for impairment test purposes for the
+groups of cash-generating units to which a significant amount of
+goodwill is allocated:
+(in millions of €)
+Healthineers
+Power and Gas
+Digital Factory
+Goodwill
+Terminal value
+growth rate
+Sep 30, 2017
+After-tax
+discount rate
+Siemens performs the mandatory annual impairment test in the
+three months ended September 30. The recoverable amounts for
+the annual impairment test 2017 for Siemens' cash-generating
+units or groups of cash-generating units were estimated to be
+higher than the carrying amounts. Key assumptions on which
+Siemens based its determinations of the fair value less costs to
+sell for the cash-generating units or groups of cash-generating
+units include terminal value growth rates up to 1.7% in fiscal 2017
+and 1.7% in fiscal 2016, respectively and after-tax discount rates
+of 6.0% to 8.5% in fiscal 2017 and 5.0% to 9.0% in fiscal 2016.
+7,992
+7.0%
+6,440
+1.7%
+8.5%
+5,575
+1.7%
+8.5%
+Revenue figures in the five-year planning period of the groups of
+cash-generating units to which a significant amount of goodwill is
+1.7%
+allocated include average revenue growth rates (excluding portfolio
+effects) of between 0.1% and 9.1% (0.3% and 5.3% in fiscal 2016).
+Consolidated Financial Statements
+24,159
+Balance at beginning of year
+1,909
+1,905
+Translation differences and other
+(61)
+2
+Impairment losses recognized during the period
+Dispositions and reclassifications to assets classified as held for disposal
+Balance at year-end
+74
+(1)
+1,847
+1,909
+Carrying amount
+Balance at beginning of year
+Balance at year-end
+24,159
+23,166
+27,906
+1
+(in millions of €)
+Healthineers
+Digital Factory
+carrying
+Trans-
+lation
+through
+business
+Gross
+carrying
+amount
+diffe-
+(in millions of €)
+10/01/2016
+Gross
+rences
+Reclassi-
+fications
+Retire-
+amount
+ments¹ 09/30/2017
+tion and
+impairment
+Accumu-
+lated depre-
+ciation/
+amortiza-
+Carrying
+amount
+09/30/2017
+combi-
+nations Additions
+Additions
+NOTE 12 Other intangible assets and
+property, plant and equipment
+Consolidated Financial Statements 75
+Power and Gas (without part of Power Generation Services)
+Power Generation Services (part of Power and Gas)
+Terminal value
+Goodwill
+growth rate
+Sep 30, 2016
+After-tax
+discount rate
+8,301
+1.7%
+6.5%
+3,933
+1.7%
+8.0%
+3,552
+1.7%
+8.0%
+3,158
+1.7%
+8.0%
+The sensitivity analysis for the groups of cash-generating units to
+which a significant amount of goodwill is allocated was based on
+a reduction in after-tax future cash flows by 10% or an increase
+in after-tax discount rates by one percentage point or a reduction
+in the terminal value growth rate by one percentage point.
+Siemens concluded that no impairment loss would need to be
+recognized on goodwill in any of the groups of cash-generating
+units.
+1,295
+Accumulated impairment losses and other changes
+(338)
+construction in progress
+632
+85
+(448)
+6,092
+(4,764)
+1,328
+(690)
+Equipment leased to others
+22
+3,033
+23
+484
+10
+(452)
+3,015
+(1,710)
+1,305
+(348)
+(83)
+Advances to suppliers and
+(29)
+equipment
+(333)
+7,859
+(3,673)
+4,186
+(253)
+Technical machinery
+and equipment
+7,770
+5,829
+(67)
+288
+270
+(271)
+7,950
+(5,412)
+2,539
+(542)
+Furniture and office
+(39)
+218
+construction in progress
+(16)
+Minimum future lease payments under operating leases are:
+NOTE 15 Debt
+(in millions of €)
+Notes and bonds
+Current debt
+Sep 30,
+Non-current debt
+Sep 30,
+2017
+2016
+The gross carrying amount of Advances to suppliers and con-
+struction in progress includes €908 million and €677 million, re-
+spectively of property, plant and equipment under construction
+in fiscal 2017 and 2016. As of September 30, 2017 and 2016, con-
+tractual commitments for purchases of property, plant and
+equipment are €665 million and €643 million, respectively.
+2017
+(maturing until 2047)
+3,554
+4,994
+25,243
+23,560
+Loans from banks
+(maturing until 2027)
+1,191
+2016
+856
+Consolidated Financial Statements
+1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
+(40)
+595
+(582)
+(12)
+801
+(2)
+799
+2
+76
+Property, plant
+25,234
+(260)
+(14)
+2,273
+(1,516) 25,717
+(15,560)
+10,157
+(1,831)
+and equipment
+274
+20
+(65)
+Trans-
+through
+lation
+business
+Gross
+carrying
+Accumu-
+lated depre-
+ciation/
+amortiza-
+Deprecia-
+tion/amor-
+tization
+Carrying and impair-
+Gross
+carrying
+amount
+(in millions of €)
+diffe-
+rences
+combi-
+Reclassi-
+Retire-
+amount
+nations Additions fications
+ments' 09/30/2016
+tion and
+impairment
+10/01/2015
+amount
+09/30/2016
+Additions
+(1,930)
+801
+(25)
+78
+796
+(580)
+(23)
+1,046
+1,047
+1 Included assets reclassified to Assets classifed as held for disposal and dispositions of those entites.
+(3)
+and equipment
+25,717
+(607)
+891
+2,432
+(1,416) 27,017
+(16,041)
+10,977
+Property, plant
+ment in
+fiscal 2016
+Internally generated
+(77)
+68
+7,532
+(3,191)
+4,341
+(490)
+Other intangible assets
+15,262
+7,542
+(115)
+388
+(395)
+15,469
+(7,727)
+7,742
+(932)
+Land and bulidings
+7,745
+328
+and trademarks
+Customer relationships
+(253)
+technology
+2,995
+324
+(252)
+3,067
+(1,562)
+1,505
+(189)
+Acquired technology
+including patents, licenses
+and similar rights
+4,725
+(37)
+260
+64
+(143)
+4,870
+(2,974)
+1,896
+Advances to suppliers and
+26,068
+1
+Balance at year-end
+547
+Deferred tax assets
+9,704
+11,240
+Liabilities
+Non-current and current assets
+Liabilities
+7,914
+7,588
+788
+874
+218
+120
+9,006
+8,638
+698
+2,602
+The current income tax expenses in fiscal 2017 and 2016 include
+adjustments recognized for current tax of prior years in the
+amount of €100 million and €(29) million, respectively. The de-
+ferred tax expense (benefit) in fiscal 2017 and 2016 includes tax
+effects of the origination and reversal of temporary differences
+of €172 million and €54 million, respectively.
+In Germany, the calculation of current tax is based on a combined
+tax rate of 31%, consisting of a corporate tax rate of 15%, a solidar-
+ity surcharge thereon of 5.5% and an average trade tax rate of
+15%. For foreign subsidiaries, current taxes are calculated based
+on the local tax laws and applicable tax rates in the individual for-
+eign countries. Deferred tax assets and liabilities in Germany and
+abroad are measured at the tax rates that are expected to apply to
+the period when the asset is realized or the liability is settled.
+930
+Income tax expense (current and deferred) differs from the
+amounts computed by applying a combined statutory German
+income tax rate of 31% as follows:
+Tax loss and credit carryforward
+288
+(in millions of €)
+Sep 30,
+2017
+2016
+2017
+2016
+Assets
+2,042
+114
+1,773
+1,829
+1,836
+138
+2,180
+235
+2,008
+Liabilities and Post-employment benefits
+6,799
+8,742
+Other
+Non-current and current assets
+Fiscal year
+Other
+As of September 30, 2017, the Company has certain tax losses
+subject to significant limitations. For those losses deferred tax
+assets are not recognized, as it is not probable that gains will be
+generated to offset those losses.
+Non-deductible losses and expenses
+558
+Tax-free income
+(309)
+600
+(227)
+Taxes for prior years
+(8)
+(223)
+income taxes resulting from:
+Change in realizability of
+29,754
+Change in tax rates
+(9)
+Foreign tax rate differential
+(371)
+(44)
+(15)
+(280)
+Tax effect of investments accounted
+for using the equity method
+deferred tax assets and tax credits
+Deferred tax liabilities
+Total deferred tax assets, net
+Increase (decrease) in
+Siemens has not recognized deferred tax liabilities for income
+taxes or foreign withholding taxes on the cumulative earnings of
+subsidiaries of €36,157 million and €26,585 million, respectively
+in fiscal 2017 and 2016 because the earnings are intended to be
+permanently reinvested in the subsidiaries.
+Deferred tax assets have not been recognized with respect of the
+following items (gross amounts):
+(in millions of €)
+Sep 30,
+(in millions of €)
+2017
+2016
+Deductible temporary differences
+Tax loss carryforward
+743
+Expected income tax expenses
+188
+2,013
+2017
+Fiscal year
+2016
+4,416
+2,201
+2,575
+2,295
+As of September 30, 2017 and 2016, €1,361 million and €953 mil-
+lion of the unrecognized tax loss carryforwards expire over the
+periods to 2031.
+3,673
+Income tax expenses
+Deferred tax
+Current tax
+RECENT ACCOUNTING PRONOUNCEMENTS,
+NOT YET ADOPTED
+The following pronouncements, issued by the IASB, are not yet
+effective and have not yet been adopted by the Company:
+In July 2014, the IASB issued IFRS 9, Financial Instruments. IFRS 9
+introduces a single approach for the classification and measure-
+ment of financial assets according to their cash flow characteris-
+tics and the business model they are managed in, and provides a
+new impairment model based on expected credit losses. IFRS 9
+also includes new regulations regarding the application of hedge
+accounting to better reflect an entity's risk management activi-
+ties especially with regard to managing non-financial risks. The
+new standard is effective for annual reporting periods beginning
+on or after January 1, 2018. The Company will adopt IFRS 9 for the
+fiscal year beginning as of October 1, 2018 and will not adjust
+comparative figures for the preceding fiscal year, in accordance
+with IFRS 9 transitional provisions. Siemens is currently assessing
+the effects of the adoption of IFRS 9 and expects only limited
+impact on the Consolidated Financial Statements: Debt instru-
+ments that would not be eligible to be carried at amortized cost
+are expected to occur only to an insignificant extent. The impact
+of the new impairment model of IFRS 9 on the valuation allow-
+ances on debt instruments is currently under evaluation. Based
+on the analyses so far, Siemens does not expect the valuation
+allowances to change significantly. Siemens will adopt the IFRS 9
+hedge accounting rules prospectively from October 1, 2018. It is
+expected that all existing hedge accounting relationships will
+also meet the hedge accounting requirements under IFRS 9.
+In May 2014, the IASB issued IFRS 15, Revenue from Contracts
+with Customers. According to the new standard, revenue is rec-
+ognized to depict the transfer of promised goods or services to a
+customer in an amount that reflects the consideration to which
+the Company expects to be entitled in exchange for those goods
+or services. Revenue is recognized when, or as, the customer ob-
+tains control of the goods or services. IFRS 15 supersedes IAS 11,
+Construction Contracts and IAS 18, Revenue as well as related
+interpretations. The standard is effective for annual periods be-
+ginning on or after January 1, 2018; early application is permit-
+ted. The Company will adopt the standard for the fiscal year be-
+ginning as of October 1, 2017 retrospectively, i.e. the comparable
+period will be presented in accordance with IFRS 15. Further as-
+sessments resulting from the implementation of IFRS 15 con-
+firmed that there will be no significant impacts on Siemens' Con-
+solidated Financial Statements. Retained earnings as of October 1,
+2016 will increase by €0.18 billion. The increase mainly results
+from a change in the timing of recognizing revenue for certain
+types of contracts, in particular, revenue may be recognized ear-
+lier if variable consideration components exist, re-allocations of
+the transaction price between performance obligations take
+place or licenses are transferred to the customer. In the compa-
+rable period fiscal 2017, changes in the total amount of revenue
+to be recognized for a customer contract are very limited. The
+vast majority of construction-type contracts currently accounted
+for under the percentage-of-completion method fulfills the re-
+quirements for revenue recognition over time. Besides, there will
+be changes to the Statement of Financial Position, e.g. separate
+line items for contract assets and contract liabilities are required,
+and quantitative and qualitative disclosures are added.
+In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
+nates the current classification model for lessee's lease contracts
+as either operating or finance leases and, instead, introduces a
+single lessee accounting model requiring lessees to recognize
+right-of-use assets and lease liabilities for leases with a term of
+more than twelve months. This brings the previous off-balance
+leases on the balance sheet in a manner largely comparable to
+current finance lease accounting. IFRS 16 is effective for annual
+Consolidated Financial Statements 69
+periods beginning on or after January 1, 2019. Siemens will adopt
+the standard for the fiscal year beginning as of October 1, 2019,
+presumably by applying the modified retrospective approach, i.e.
+comparative figures for the preceding year would not be ad-
+justed. Currently, it is expected that the majority of the transition
+effect relates to real estate leased by Siemens. The Company is
+currently assessing the impact of adopting IFRS 16 on the Consol-
+idated Financial Statements.
+Prior-year information - The presentation of certain prior-year
+information has been reclassified to conform to the current year
+presentation.
+In May 2017, the IASB issued IFRIC 23, Uncertainty over Income
+Tax Treatments. The interpretation clarifies the recognition and
+measurement requirements when there is uncertainty over in-
+come tax treatments. In assessing the uncertainty, an entity shall
+consider whether it is probable that a taxation authority will ac-
+cept the uncertain tax treatment. IFRIC23 is effective for annual
+reporting periods beginning on or after January 1, 2019, while
+earlier application is permitted. The Company is currently assess-
+ing the impacts of adopting the interpretation on the Company's
+Consolidated Financial Statements.
+Acquisitions and dispositions
+ACQUISITIONS
+In April 2017, Siemens contributed its wind power business, in-
+cluding service, into the publicly listed company Gamesa Corpo-
+ración Tecnológica, S.A., Spain (Gamesa), and in return received
+newly issued shares of the combined entity Siemens Gamesa
+Renewable Energy, S.A., Spain (SGRE). The two businesses are
+highly complementary regarding global footprint, existing prod-
+uct portfolios and technologies. Siemens as majority share-
+holder holds 59% of the shares of the combined entity. As part of
+the merger, Siemens paid €999 million in cash which was distrib-
+uted to the Gamesa shareholders (without Siemens) following
+the completion of the merger. The consideration transferred by
+Siemens equals 59% of Gamesa's market capitalization at closing
+of the merger and amounts to €3,669 million. The preliminary
+purchase price allocation as of the acquisition date resulted in:
+Other intangible assets €2,533 million, Property, plant and equip-
+ment €628 million, Trade and other receivables €1,073 million,
+Cash and cash equivalents €1,003 million, Inventories €1,116 mil-
+lion, Other financial assets €413 million (current and non-cur-
+rent), Other current assets €206 million, Current income tax as-
+sets €179 million, Deferred tax assets €432 million, Long-term
+debt €656 million, Provisions €1,229 million (current and non-cur-
+rent), Other financial liabilities €217 million, Short-term debt and
+current maturities of long-term debt €363 million, Trade payables
+€1,745 million, Current income tax liabilities €118 million, Other
+current liabilities €662 million and Deferred tax liabilities
+€824 million. Intangible assets mainly relate to technology of
+€1,147 million, customer relationships of €958 million and order
+backlog of €429 million. The gross contractual amount of the
+trade and other receivables acquired is €1,137 million. Goodwill
+amounts to €2,625 million and comprises intangible assets that
+are not separable such as employee know-how and expected syn-
+ergy effects from highly complementary businesses entailing an
+enhanced market position (including anticipated cost savings
+mainly in R&D, procurement and administration as well as reve-
+nue synergies). The purchase price allocation is preliminary as a
+detailed analysis of the assets and liabilities has not been final-
+ized. Goodwill is allocated within the segment SGRE to the units
+Wind Turbines as well as Operation and Maintenance. Effects on
+equity resulting from this transaction are included in line Changes
+in equity resulting from major portfolio transactions. Including
+earnings effects from purchase price allocation and integration
+costs, the acquired business contributed revenue of €1,659 mil-
+lion and a net income of €(209) million to Siemens for the period
+from acquisition to September 30, 2017. The non-controlling in-
+terests of 41% amount to €721 million at the acquisition date and
+are measured at the proportionate share in the recognized
+amounts of the acquired net assets (excluding goodwill).
+In March 2017, Siemens acquired all shares of Mentor Graphics
+Corporation, U.S., a design automation and industrial software
+provider. The acquired business is integrated in the Digital Fac-
+tory Division. The purchase price paid in cash amounts to
+€4,063 million as of the acquisition date. The preliminary pur-
+chase price allocation as of the acquisition date resulted in: Other
+intangible assets €1,878 million, Property, plant and equipment
+€252 million, Trade and other receivables €657 million, Cash and
+cash equivalents €369 million, Deferred tax assets €86 million,
+Current liabilities €809 million and Deferred tax liabilities
+€318 million. Other intangible assets mainly relate to technology
+of €1,482 million and customer-related intangible assets of
+€362 million. Goodwill of €1,865 million comprises intangible
+assets that are not separable such as employee know-how and
+expected synergy effects from expanding our software business
+and from expanding our role in the digital sector. The purchase
+price allocation is preliminary as a detailed analysis of the assets
+and liabilities has not been finalized. Compared to the status of
+the purchase price allocation as of the end of the second quarter
+of fiscal year 2017, the fair value of the acquired technology in-
+creased at the amount of €472 million based on further analysis
+on the underlying useful life and royalty rate. Including earnings
+effects from purchase price allocation and integration costs, the
+acquired business contributed revenue of €404 million and a net
+income of €(239) million to Siemens for the period from acquisi-
+tion to September 30, 2017.
+Revenue and net income of the combined entity in fiscal 2017
+Iwould have been €86,761 million and €5,774 million, respec-
+tively, had both acquired businesses been included as of Octo-
+ber 1, 2016.
+70
+Consolidated Financial Statements
+NOTE 3
+DISPOSITIONS
+Share-based payment Share-based payment awards at
+Siemens are predominately designed as equity-settled. Fair value
+is measured at grant date and is expensed over the vesting pe-
+riod. Fair value is determined as the market price of Siemens
+shares, considering dividends during the vesting period the
+grantees are not entitled to and market conditions and non-vest-
+ing conditions, if applicable.
+Fair value hedges: The carrying amount of the hedged item is
+adjusted by the gain or loss attributable to the hedged risk.
+Where an unrecognized firm commitment is designated as
+hedged item, the subsequent cumulative change in its fair value
+is recognized as a separate financial asset or liability with corre-
+sponding gain or loss recognized in net income. For hedged
+items carried at amortized cost, the adjustment is amortized un-
+til maturity of the hedged item. For hedged firm commitments
+the initial carrying amount of the assets or liabilities that result
+from meeting the firm commitments are adjusted to include the
+cumulative changes in the fair value that were previously recog-
+nized as separate financial assets or liabilities.
+679
+After one year but not more than five years
+finance leases
+326
+344
+Within one year
+Obligations under
+2016
+Cash flow hedges: The effective portion of changes in the fair
+value of derivative instruments designated as cash flow hedges
+are recognized in line item Other comprehensive income, net of
+income taxes (applicable deferred income tax), and any ineffec-
+tive portion is recognized immediately in net income. Amounts
+accumulated in equity are reclassified into net income in the
+same periods in which the hedged item affects net income.
+2017
+87
+111
+817
+675
+ness (maturing until 2029)
+Sep 30,
+Other financial indebted-
+992
+(in millions of €)
+Dispositions not qualifying for discontinued
+operations closed transactions
+-
+In December 2016, Siemens contributed its eCar powertrain sys-
+tems business - formerly included in the Digital Factory Division -
+into a newly formed joint venture, Valeo Siemens eAutomotive
+GmbH. Siemens recognized a pre-tax gain on disposal of €173 mil-
+lion in Other operating income, thereof €159 million relating
+to measuring Siemens' stake in the joint venture at fair value.
+Siemens' 50% stake in the joint venture is disclosed in Centrally
+managed portfolio activities.
+2016
+227
+288
+8
+(31)
+235
+257
+As of September 30, 2017, non-controlling interests of 41%
+amounting to €788 million relate to SGRE, registered in Zamudio,
+Spain. Net income attributable to non-controlling interests
+for the six month period from acquisition to September 30, 2017
+was €(39) million. Dividends paid to non-controlling interests
+amounted to €31 million. Summarized financial information in
+accordance with IFRS before inter-company eliminations are: As
+of September 30, 2017 current assets €6,963 million, non-cur-
+rent assets €9,504 million, current liabilities €6,891 million,
+non-current liabilities €3,126 million and equity €6,450 million;
+for the six month period from acquisition to September 30, 2017
+revenue €5,022 million, income from continuing operations
+€(135) million, other comprehensive income, net of income
+taxes €(75) million, total comprehensive income €(210) million
+and total cash flows ��(1,611) million (including €999 million in
+cash distribution to the Gamesa shareholders (without Siemens)
+as part of the merger).
+2017
+NOTE 5 Other operating income
+As of September 30, 2017 and 2016, the carrying amount of all
+individually not material associates amounts to €1,836 million
+and €2,242 million, respectively. Summarized financial informa-
+tion for all individually not material associates adjusted for the
+percentage of ownership held by Siemens, is presented below.
+Items included in the Statements of Comprehensive Income are
+presented for the twelve month period applied under the equity
+method.
+NOTE 6 Other operating expenses
+Other operating expenses in fiscal 2017 and 2016 include losses
+on sales of property, plant and equipment, losses from the sale
+of businesses, transaction costs and effects from insurance, legal
+and regulatory matters.
+Consolidated Financial Statements 71
+NOTE 7 Income taxes
+Income tax expense (benefit) consists of the following:
+Deferred income tax assets and liabilities on a gross basis are
+summarized as follows:
+(in millions of €)
+In fiscal 2017 and 2016, Other operating income includes gains
+related to the sale of businesses of €172 million and €1 million
+and gains on sales of property, plant and equipment of €176 mil-
+lion and €177 million, respectively. Fiscal 2017 includes gains of
+€171 million from reversals of provisions for guarantees related
+to a previous divestment.
+Fiscal year
+SUBSIDIARIES WITH MATERIAL
+NON-CONTROLLING INTERESTS
+Income (loss) from continuing operations
+Other comprehensive income,
+net of income taxes
+Total comprehensive income
+NOTE 4 Interests in other entities
+Investments accounted for using the equity method
+(in millions of €)
+Fiscal year
+2016
+316
+2017
+Share of profit (loss), net
+224
+Gains (losses) on sales, net
+63
+Impairment and reversals of impairment
+(243)
+(53)
+(129)
+Income (loss) from
+investments accounted for
+using the equity method, net
+43
+134
+Income from investments accounted for using the equity method
+includes an impairment loss of €230 million in fiscal 2017 relat-
+ing to Siemens' investment in Primetals Technologies Ltd., which
+is disclosed within Centrally managed portfolio activities. The
+continuing adverse conditions in the market environment trig-
+gered an impairment test on the investment. The recoverable
+amount of €204 million was determined based on a discounted
+cash flow calculation (level 3 of the fair value hierarchy). To de-
+termine the recoverable amount, cash flow projections were
+used that take into account past experience and represent man-
+agement's best estimate about future developments. The calcu-
+lation is based on a terminal value growth rate of 1.5% and an
+after-tax discount rate of 7.4%.
+(in millions of €)
+(62)
+Other, net
+(197)
+Actual income tax expenses
+564
+of Income in the current period
+404
+284
+6,732
+6,706
+5,500
+5,457
+566
+Write-offs charged against the allowance
+Recoveries of amounts previously written-off
+Foreign exchange translation differences
+Reclassifications to line item Assets held for
+disposal and dispositions of those entities
+Valuation allowance as of fiscal year-end
+(181)
+9
+(80)
+(33)
+(9)
+1,208
+1,013
+Investments in finance leases primarily relate to industrial ma-
+chinery, medical equipment, transportation systems, equipment
+for information technology and office machines. Actual cash
+flows will vary from contractual maturities due to future sales of
+finance receivables, prepayments and write-offs.
+(155)
+35
+Consolidated Financial Statements 73
+904
+2,940
+Valuation allowance as of
+beginning of fiscal year
+1,013
+933
+Increase in valuation allowances
+recorded in the Consolidated Statements
+(in millions of €)
+Within one year
+One to five years
+Thereafter
+3
+893
+2016
+2016
+2,358
+2,397
+1,924
+1,952
+3,481
+3,405
+3,010
+2017
+Sep 30,
+NOTE 9 Other current financial assets
+NOTE 10 Inventories
+NOTE 11 Goodwill
+(in millions of €)
+Cost
+Construction contracts, here and as follows, include service con-
+tracts accounted for under the percentage of completion method.
+The aggregate amount of costs incurred and recognized profits
+less recognized losses for construction contracts in progress, as
+of September 30, 2017 and 2016 amounted to €88,571 million
+and €83,789 million, respectively. Revenue from construction
+contracts amounted to €34,280 million and €32,695 million, re-
+spectively, for fiscal 2017 and 2016. Advance payments received
+on construction contracts in progress were €7,791 million and
+€8,749 million as of September 30, 2017 and 2016. Retentions in
+connection with construction contracts were €217 million and
+€288 million in fiscal 2017 and 2016, respectively.
+Fiscal year
+2017
+2016
+Balance at beginning of year
+18,160
+Translation differences and other
+25,071
+(127)
+Acquisitions and purchase accounting adjustments
+4,757
+1,144
+Dispositions and reclassifications to assets classified as held for disposal
+(46)
+(20)
+26,068
+(1,025)
+As of September 30, 2017 and 2016, Other current financial assets
+include loans receivables of €5,985 million and €4,910 million,
+respectively, and derivative financial instruments of €530 million
+and €758 million, respectively.
+19,942
+(2,966)
+Cost of sales include inventories recognized as expense amount-
+ing to €57,171 million and €54,706 million, respectively, in fiscal
+2017 and 2016. Compared to prior year, write-downs increased
+(decreased) by €15 million and €(3) million as of September 30,
+2017 and 2016.
+(in millions of €)
+Raw materials and supplies
+2017
+2,955
+Work in progress
+4,242
+Sep 30,
+2016
+2,487
+4,281
+Costs and earnings in excess
+(2,506)
+of billings on uncompleted contracts
+Finished goods and products held for resale
+3,951
+Advances to suppliers
+790
+10,046
+3,261
+591
+22,907
+20,666
+Advance payments received
+10,970
+Sep 30,
+2017
+2017
+3,436
+3,358
+734
+752
+Discontinued operations
+5
+(2)
+6,510
+After one year but not more than five years
+More than five years
+6,488
+Fiscal year
+2016
+(996)
+3,269
+1,010
+NOTE 8
+Trade and other receivables
+The following table shows a reconciliation of minimum future
+lease payments to the gross and net investment in leases and
+to the present value of the minimum future lease payments
+receivable:
+Sep 30,
+Income and expenses recognized
+directly in equity
+(in millions of €)
+2,008
+Continuing operations
+2,180
+(92)
+(6)
+2,008
+72
+22
+Consolidated Financial Statements
+Including items charged or credited directly to equity and the
+expense (benefit) from continuing and discontinued operations,
+the income tax expense (benefit) consists of the following:
+Minimum future lease payments to be received are as follows:
+Sep 30,
+2,180
+(in millions of €)
+2016
+Fiscal year
+Within one year
+2,340
+2,378
+(in millions of €)
+2017
+2016
+2017
+2017
+1,084
+(in millions of €)
+5,798
+5,762
+Less: Allowance for doubtful accounts
+(180)
+(198)
+Less: Present value of unguaranteed
+residual value
+(118)
+Sep 30,
+2016
+Net investment in leases
+Present value of minimum future
+lease payments receivable
+5,457
+In fiscal 2017 and 2016, the long-term portion of receivables from
+finance leases is reported in Other financial assets and amounts
+to €3,699 million and €3,557 million, respectively.
+Changes to the valuation allowance of current and long-term re-
+ceivables which belong to the class of financial assets measured
+at (amortized) cost are as follows (excluding receivables from
+finance leases):
+The gross investment in leases and the present value of minimum
+future lease payments receivable are due as follows:
+Gross investment
+in leases
+Present value of
+minimum future lease
+payments receivable
+(in millions of €)
+5,500
+16,287
+(108)
+(944)
+17,160
+2016
+Minimum future lease payments
+6,510
+6,488
+Trade receivables from the sale
+of goods and services
+Plus: Unguaranteed residual values
+222
+219
+2017
+14,280
+15,242
+Less: Unearned finance income
+2,007
+1,919
+(934)
+6,706
+6,732
+Gross investment in leases
+Receivables from finance leases
+The defined benefit plans open to new entrants are based pre-
+dominantly on contributions made by the Company. Only to a
+certain extent, those plans are affected by longevity, inflation
+and compensation increases and take into account country spe-
+cific differences. The Company's major plans are funded with
+assets in segregated entities. In accordance with local laws and
+bilateral agreements with benefit trusts (trust agreement) those
+plans are managed in the interest of the beneficiaries. The de-
+fined benefit plans cover 506,000 participants, including 217,000
+active employees, 89,000 former employees with vested benefits
+and 200,000 retirees and surviving dependents.
+Siemens plc offers benefits through the Siemens Benefit Scheme for
+which, until the start of retirement, an inflation increase of the ma-
+jority of accrued benefits is mandatory. The required funding is de-
+termined by a funding valuation carried out every third year based
+U.K.:
+Siemens Corporation sponsors the Siemens Pension Plans, which
+for the most part have been frozen to new entrants and to future
+benefit accruals, except for interest credits on cash balance ac-
+counts. Siemens Corporation has appointed the Investment Com-
+mittee as the named fiduciary for the management of the assets
+of the Plans. The Plans' assets are held in a Master Trust and the
+trustee of the Master Trust is responsible for the administration of
+the assets of the trust, taking directions from the Investment Com-
+mittee. The Plans are subject to the funding requirements under
+the Employee Retirement Income Security Act of 1974 as amended,
+(ERISA). There is a regulatory requirement to maintain a minimum
+funding level of 80% in the defined benefit plans in order to avoid
+benefit restrictions. At its discretion, Siemens Corporation may
+contribute in excess of this regulatory requirement. Annual contri-
+butions are calculated by independent actuaries.
+U.S.:
+In Germany, Siemens AG provides pension benefits through the
+plan BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
+zen legacy plans and deferred compensation plans. The majority
+of Siemens' active employees participate in the BSAV. Those ben-
+efits are predominantly based on contributions made by the
+Company and returns earned on such contributions, subject to a
+minimum return guaranteed by the Company. In connection with
+the implementation of the BSAV, benefits provided under the
+frozen legacy plans were modified to substantially eliminate the
+effects of compensation increases. However, these frozen plans
+still expose the Company to investment risk, interest rate risk and
+longevity risk. The pension plans are funded via contractual trust
+arrangements (CTA). In Germany no legal or regulatory minimum
+funding requirements apply.
+Consolidated Financial Statements 79
+Germany:
+DEFINED BENEFIT PLANS
+As of September 30, 2017 and 2016, two bilateral US$500 million
+term loan facilities (in aggregate €847 million and €896 million
+respectively) are outstanding until March 26, 2020.
+Siemens has a US$9.0 billion (€7.6 billion as of September 30,
+2017) commercial paper program in place including US$ extend-
+ible notes capabilities. As of September 30, 2017 and 2016,
+US$720 million (€610 million) and US$700 million (€627 mil-
+lion), respectively, were outstanding. Siemens' commercial pa-
+pers have a maturity of generally less than 90 days. Interest rates
+ranged from 0.37% to 1.47% in fiscal 2017 and from 0.13% to
+0.74% in fiscal 2016.
+COMMERCIAL PAPER PROGRAM
+As of September 30, 2017, a subsidiary has loans of €424 million
+outstanding maturing in 2018 and 2019 which were subject to
+covenants, all of which were complied with.
+ASSIGNABLE AND TERM LOANS
+Bond with Warrant Units - Each of the US$1.5 billion instru-
+ments were issued with 6,000 detachable warrants exercisable
+until August 1, 2017 (Warrants 2017) and August 1, 2019 (Warrants
+2019). As of September 30, 2017, almost all Warrants 2017 and no
+Warrants 2019 were exercised. As of September 30, 2017 and
+2016, terms for 5,236 Warrants 2019 and 10,661 Warrants, respec-
+tively, entitle the holder to receive 1,924.1160 and 1,914.0511
+Siemens AG shares per warrant at an exercise price of €97.6255
+and €98.1389 per share, respectively; terms for 764 Warrants
+2019 and 1,339 warrants, respectively entitle the holder to receive
+1,833.0013 and 1,823.4130 Siemens AG shares per warrant as well
+as 146.0092 and 151.5630 OSRAM shares, respectively, at an ex-
+ercise price of €187,842.81. The number of shares may be ad-
+justed under the terms of the warrants. As of September 30, 2017
+and 2016, the Warrants 2019 offer option rights to 11.5 million
+and the Warrants 2017 and 2019 to 22.8 million Siemens AG
+shares, respectively. Siemens redeemed the 1.05% US$1.5 billion
+fixed-rate instrument at face value as due. The 3 m EURIBOR+0.2%
+€33 million and the 3m EURIBOR+0.2% €31 million floating-rate
+instruments were redeemed at face value as due.
+US$ Bonds - In March 2017, Siemens issued instruments totaling
+US$7.5 billion (€6.4 billion as of September 30, 2017) in seven
+tranches. Siemens redeemed the 5.75% US$1.75 billion fixed-rate
+instrument at face value as due.
+Debt Issuance Program - The Company has a program for the
+issuance of debt instruments in place under which instruments
+up to €15.0 billion can be issued as of September 30, 2017 and
+2016, respectively. As of September 30, 2017 and 2016 €7.8 bil-
+lion and €9.9 billion in notional amounts were issued and are
+outstanding. Siemens redeemed the 5.125% €2.0 billion fixed-
+rate instrument at face value as due.
+3,347
+on legal requirements. Due to deviating guidelines for the determi-
+nation of the discount rates, the technical funding deficit is usually
+larger than the IFRS funding deficit. To reduce the deficit Siemens
+entered into an agreement with the trustees to provide annual pay-
+ments of GB£31 (€34) million until fiscal 2033. The agreement also
+provides for a cumulative advance payment by Siemens AG com-
+pensating the remaining annual payments at the date of early ter-
+mination of the agreement due to cancellation or insolvency.
+NOTE 16 Post-employment benefits
+Switzerland:
+3,031
+ployees. Accordingly, Siemens in Switzerland sponsors several
+cash balance plans. These plans are administered by foundations.
+The board of the main foundation is composed of equally many
+employer and employee representatives. The board of the foun-
+dation is responsible for investment policy and the asset manage-
+ment, as well as for any changes in the plan rules and the deter-
+mination of contributions to finance the benefits. The Company
+is required to make total contributions at least as high as the sum
+of the employee contributions set out in the plan rules. In case of
+an underfunded plan the Company together with the employees
+may be asked to pay supplementary contributions according to a
+well-defined framework of recovery measures.
+Other includes transaction-related and post-closing provisions in
+connection with portfolio activities as well as provisions for Legal
+Proceedings, as far as the risks that are subject to such Legal
+Proceedings are not already covered by project accounting. Pro-
+visions for Legal Proceedings amounted to €437 million and
+€430 million as of September 30, 2017 and 2016, respectively.
+present value discount of €359 million and €206 million, respec-
+tively, reflecting the assumed continuous outflow of the total
+expected payments until the 2060's (2070's in fiscal 2016). In-
+creased discount rates decreased the carrying amount of the
+provision by €543 million as of September 30, 2017, mainly due
+to a change of the applied yield curve in order to more specifically
+reflect interest rate expectations, particularly regarding long-
+term interest rates; declined discount rates increased the carry-
+ing amount by €355 million as of September 30, 2016. The pro-
+vision was decreased by €312 million as of September 30, 2017,
+mainly due to reduced assumed inflation rates, and €170 million
+as of September 30, 2016, due to reduced cost estimates.
+Consolidated Financial Statements 83
+As of September 30, 2017 and 2016, the provision totals €697 mil-
+lion and €1,551 million, respectively, and is recorded net of a
+storage, transport to and final storage of the radioactive waste.
+This
+process will be supported by continuing engineering studies
+and radioactive sampling under the supervision of German fed-
+eral and state authorities. The decontamination and disassembly
+are planned to continue until 2018, whereas final waste condi-
+tioning and packaging is planned to continue until the 2020's.
+Thereafter, the Company is responsible for intermediate storage
+of the radioactive materials until they are transported and
+handed over to a final storage facility. With respect to the Hanau
+facility, the asset retirement has been completed and inter-
+mediate storage has been set up. On September 21, 2006, the
+Company received official notification from the authorities that
+the Hanau facility has been released from the scope of applica-
+tion of the German Atomic Energy Act and that its further use is
+unrestricted. The ultimate costs of the remediation are contin-
+gent on the decision of the federal government on the location
+of the final storage facilities and the date of their availability.
+Several parameters relating to the development of a final storage
+facility for radioactive waste are based on the assumptions for
+the so called Schacht Konrad final storage. Parameters related to
+the life-span of the German nuclear reactors assume a phase-out
+until 2022. The valuation uses assumptions to reflect the current
+and detailed cost estimates, price inflation and discount rates as
+well as a continuous outflow until the 2060's related to the costs
+for dismantling as well as intermediate and final storage. The
+estimated cash outflows related to the asset retirement obliga-
+tion could alter significantly if political developments affect the
+government's timeline to finalize the so called Schacht Konrad.
+For discounting the cash outflows, the Company uses current
+interest rates as of the balance sheet date.
+Environmental clean-up costs relate to remediation and environ-
+mental protection liabilities which have been accrued based on
+the estimated costs of decommissioning facilities for the produc-
+tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
+many (Hanau facilities), as well as a nuclear research and service
+center in Karlstein, Germany (Karlstein facilities). Whilst in fiscal
+2017, parts of the regulation for nuclear waste disposal were
+amended by way of law ("Gesetz zur Neuordnung der Verantwor-
+tung in der kerntechnischen Entsorgung"), Siemens is not covered
+by these regulations and consequently continues to adhere to the
+German Atomic Energy Act ("deutsches Atomgesetz"), which
+states that when a nuclear facility is closed, the resulting radioac-
+tive waste must be collected and delivered to a government-de-
+veloped final storage facility. In this regard, the Company has
+developed a plan to decommission the Hanau and Karlstein facil-
+ities in the following steps: asset retirement (including clean-out,
+decontamination and disassembly of equipment and installa-
+tions, decontamination of the facilities and buildings), waste con-
+ditioning and packaging of nuclear waste, as well as intermediate
+The Company is subject to asset retirement obligations related to
+certain items of property, plant and equipment. Such asset retire-
+ment obligations are primarily attributable to environmental
+clean-up costs and to costs primarily associated with the removal
+of leasehold improvements at the end of the lease term.
+Warranties mainly relate to products sold. Order related losses
+and risks are provided for anticipated losses and risks on uncom-
+pleted construction, sales and leasing contracts.
+dividend, in total representing approximately €3.0 billion in ex-
+pected payments. Payment of the proposed dividend is contingent
+upon approval at the Shareholders' Meeting on January 31, 2018.
+Except for asset retirement obligations, the majority of the Com-
+pany's provisions are generally expected to result in cash out-
+flows during the next one to 15 years.
+8,826
+1,603
+664
+743
+759
+1,832
+750
+4,631
+2,422
+Thereof non-current
+Balance as of September 30, 2017
+4,579
+NOTE 19 Additional capital disclosures
+A key consideration of our capital structure management is to
+maintain ready access to capital markets through various debt
+instruments and to sustain our ability to repay and service our
+debt obligations over time. In order to achieve this, Siemens in-
+tends to maintain an Industrial net debt divided by EBITDA (con-
+tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
+proximate number of years that would be needed to cover the
+Industrial net debt through continuing income, without taking
+into account interest, taxes, depreciation and amortization.
+(in millions of €)
+19,071
+22,607
+(22,531)
+(1,293)
+(1,242)
+Less: Current available-for-sale financial assets
+Net debt
+(8,375) (10,604)
+Less: Cash and cash equivalents
+6,206
+24,761
+5,447
+26,777
+Plus: Long-term debt
+Short-term debt and current maturities
+of long-term debt
+Dividends paid per share were €3.60 and €3.50, respectively, in fis-
+cal 2017 and 2016. The Managing Board and the Supervisory Board
+propose to distribute a dividend of €3.70 per share entitled to the
+As of September 30, 2017 and 2016, total authorized capital of
+Siemens AG is €618.6 million nominal, issuable in installments
+based on various time-limited authorizations, by issuance of up
+to 206.2 million registered shares of no par value. In addition, as
+of September 30, 2017 and 2016, Siemens AG's conditional capi-
+tal is €1,080.6 million nominal or 360.2 million shares. It can
+primarily be used for serving convertible bonds or warrants un-
+der warrant bonds that could or can be issued based on various
+time-limited authorizations approved by the respective Share-
+holders' Meeting.
+In fiscal 2017 and 2016, Siemens repurchased 7,922,129 shares
+and 4,888,596 shares, respectively. In fiscal 2017 and 2016,
+Siemens transferred 15,162,691 and 4,543,673 treasury shares,
+respectively. As of September 30, 2017 and 2016, the Company
+has treasury shares of 34,481,120 and 41,721,682, respectively.
+Siemens' issued capital is divided into 850 million registered shares
+with no par value and a notional value of €3.00 per share as of
+September 30, 2017 and 2016, respectively. The shares are fully
+paid in. At the Shareholders' Meeting, each share has one vote and
+accounts for the shareholders' proportionate share in the Compa-
+ny's net income. All shares confer the same rights and obligations.
+Equity
+NOTE 18
+Sep 30,
+2016
+2017
+1,252
+186
+5
+285
+(393)
+(1,160)
+Usage
+3,069
+585
+6
+658
+1,820
+Additions
+5,087
+796
+1,593
+675
+2,022
+9,253
+1,877
+1,611
+1,517
+4,249
+(10)
+(22,418)
+(486)
+Reversals
+777
+Other changes
+(542)
+(1)
+(533)
+(1)
+(6)
+Accretion expense and effect of changes in discount rates
+(137)
+(24)
+(3)
+(33)
+(77)
+Translation differences
+(2,020)
+(532)
+(316)
+(200)
+(972)
+(2,049)
+Total
+9,582
+639
+799
+Credit guarantees
+2017
+Sep 30,
+Future payment obligations under non-cancellable operating
+leases are:
+In addition to guarantees disclosed in the table above, the Com-
+pany issued other guarantees. To the extent future claims are not
+considered remote, maximum future payments from these obli-
+gations amount to €611 million and €853 million as of Septem-
+ber 30, 2017 and 2016, respectively. These commitments include
+indemnifications issued in connection with dispositions of busi-
+nesses. Such indemnifications may protect the buyer from
+potential tax, legal and other risks in conjunction with the
+purchased business. As of September 30, 2017 and 2016, the ac-
+crued amount for such other commitments is €243 million and
+€456 million, respectively.
+Furthermore, Siemens issues guarantees of third-party perfor-
+mance, which mainly include performance bonds and guaran-
+tees of advanced payments in a consortium. In the event of
+non-fulfillment of contractual obligations by the consortium
+partner(s), Siemens will be required to pay up to an agreed-upon
+maximum amount. These agreements typically have terms of up
+to ten years. Generally, consortium agreements provide for fall-
+back guarantees as a recourse provision among the consortium
+partners. As of September 30, 2017 and 2016, the Company ac-
+crued €3 million and €4 million, respectively, relating to perfor-
+mance guarantees.
+business. Credit guarantees generally provide that in the event of
+default or non-payment by the primary debtor, Siemens will be
+required to settle such financial obligations. The maximum
+amount of these guarantees is equal to the outstanding balance
+of the credit or, in case where a credit line is subject to variable
+utilization, the nominal amount of the credit line. These guaran-
+tees have residual terms of up to 14 years and 15 years, respec-
+tively, in fiscal 2017 and 2016. For credit guarantees amounting
+to €189 million and €270 million, respectively, as of Septem-
+ber 30, 2017 and 2016, the Company held collateral mainly in the
+form of inventories and trade receivables. The Company accrued
+€33 million and €73 million relating to credit guarantees as of
+September 30, 2017 and 2016, respectively.
+(in millions of €)
+639
+The following table presents the undiscounted amount of maxi-
+mum potential future payments for major groups of guarantees:
+A+
+A-1+
+P-1
+A-1+
+P-1
+Short-term debt
+A1
+A+
+A1
+NOTE 20 Commitments and
+contingencies
+Guarantees of third-party performance
+Miscellaneous guarantees
+2,283
+2016
+799
+2,319
+Consolidated Financial Statements 85
+3,458
+3,341
+870
+832
+1,707
+1,684
+After one year but not more than five years
+More than five years
+Item Credit guarantees covers the financial obligations of third
+parties generally in cases where Siemens is the vendor and (or)
+contractual partner or Siemens is liable for obligations of associ-
+ated companies accounted for using the equity method. Addi-
+tionally, credit guarantees are issued in the course of the SFS
+882
+825
+Within one year
+2016
+2017
+(in millions of €)
+Sep 30,
+600
+3,718
+3,121
+200
+Long-term debt
+Service
+Moody's
+Investors
+Ratings
+Services
+1.0
+0.9
+2,764
+10,216
+3,211
+10,946
+48
+(571)
+7,404
+8,306
+Industrial net debt/EBITDA
+Plus/Less: Interest income, interest expenses
+and other financial income (expenses), net
+Plus: Amortization,
+depreciation and impairments
+EBITDA
+Income from continuing operations
+before income taxes
+Less: Fair value hedge accounting adjustment²
+Industrial net debt
+Plus: Credit guarantees
+Plus: Provisions for pensions
+and similar obligations
+Less: SFS Debt¹
+10,505
+9,876
+(643)
+(421)
+1 The adjustment considers that both Moody's and S&P view SFS as a captive finance company.
+These rating agencies generally recognize and accept higher levels of debt attributable to
+captive finance subsidiaries in determining credit ratings. Following this concept, Siemens
+excludes SFS Debt in order to derive an industrial net debt which is not affected by SFS's
+financing activities.
+13,695
+2 Debt is generally reported with a value representing approximately the amount to be repaid.
+However, for debt designated in a hedging relationship (fair value hedges), this amount is
+adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
+Siemens deducts these changes in market value in order to end up with an amount of debt
+that approximately will be repaid.
+The SFS business is capital intensive and operates a larger
+amount of debt to finance its operations compared to the indus-
+trial business.
+Service
+Investors
+Moody's
+Ratings
+Services
+Sep 30, 2016
+Standard &
+Poor's
+Poor's
+Standard &
+Sep 30, 2017
+Siemens' current corporate credit ratings are:
+ness.
+Equity allocated to SFS differs from the carrying amount of equity
+as it is mainly allocated based on the risks of the underlying busi-
+2,623
+22,418
+8.55
+2016
+Sep 30,
+2017
+2,607
+22,531
+8.64
+Debt to equity ratio
+SFS debt
+Allocated equity
+(in millions of €)
+84 Consolidated Financial Statements
+Other
+obligations
+losses and risks
+(3,714)
+Changes in financial assumptions
+(129)
+(112)
+Changes in demographic assumptions
+Fiscal year
+2016
+2017
+(in millions of €)
+6,506
+BVG 2015 G
+CH
+U.K.
+Germany
+U.S.
+Applied mortality tables are:
+The remeasurements comprise actuarial (gains) and losses result-
+ing from:
+Fiscal 2017 includes a gain of €138 million (€137 million due to
+plan amendments in the position "other") in connection with ad-
+justed benefit levels for plan participants in Switzerland.
+Net interest expenses related to provisions for pensions and sim-
+ilar obligations amounted to €198 million and €282 million, re-
+spectively, in fiscal 2017 and 2016. The DBO is attributable to ac-
+tive employees 31% and 33%, to former employees with vested
+rights 14% and 15%, to retirees and surviving dependents 54%
+and 52%, respectively, in fiscal 2017 and 2016.
+209
+Heubeck Richttafeln 2005G (modified)
+RP-2016 with generational projection from
+the US Social Security Administration's
+Long Range Demographic Assumptions
+SAPS S2 (Standard mortality tables
+for Self Administered Pension Schemes
+with allowance for future mortality
+improvements)
+Experience (gains) losses
+Total
+(93)
+(3,919)
+3.6%
+3.8%
+1.0%
+2.1%
+1.7%
+2.4%
+2016
+2017
+Sep 30,
+CHF
+GBP
+USD
+EUR
+Discount rate
+tion of the DBO at period-end was as follows:
+The weighted-average discount rate used for the actuarial valua-
+Actuarial assumptions
+6,284
+(93)
+317
+Consolidated Financial Statements
+80
+1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
+1,914
+675
+130
+68
+6
+3,064
+3,007
+3,671
+3,131
+151
+(219)
+9
+14
+6,047
+5,883
+6,188
+5,650
+1,512
+1,158
+1,997
+2.8%
+1,126
+43
+(presented in Other assets)
+thereof net defined benefit assets
+13,695
+9,582
+and similar obligations
+thereof provisions for pensions
+13,486
+9,265
+119
+964
+831
+42
+32
+62
+28,809
+27,668
+42,176
+36,871
+Total
+1,075
+2.4%
+0.8%
+0.4%
+Cash and cash equivalents
+497
+290
+Derivatives
+1,696
+2,028
+Multi strategy funds
+3,622
+4,016
+Alternative investments
+10,899
+9,823
+Corporate bonds
+5,496
+5,407
+Government bonds
+16,395
+15,230
+Fixed income securities
+578
+5,206
+465
+811
+Warranties
+Thereof non-current
+Balance as of October 1, 2016
+(in millions of €)
+retirement
+Order related
+Asset
+NOTE 17 Provisions
+Consolidated Financial Statements
+82
+62
+DEFINED CONTRIBUTION PLANS AND STATE PLANS
+The amount recognized as expense for defined contribution plans
+amounts to €686 million and €676 million in fiscal 2017 and 2016,
+respectively. Contributions to state plans amount to €1,450 mil-
+lion and €1,423 million in fiscal 2017 and 2016, respectively.
+Employer contributions expected to be paid to defined benefit
+plans in fiscal 2018 are €826 million. Over the next ten fiscal
+years, average annual benefit payments of €1,843 million and
+€1,908 million, respectively, are expected as of September 30,
+2017 and 2016. The weighted average duration of the DBO for
+Siemens defined benefit plans was 13 years as of September 30,
+2017 and 14 years as of September 30, 2016.
+Future cash flows
+Virtually all equity securities have quoted prices in active markets.
+The fair value of fixed income securities is based on prices pro-
+vided by price service agencies. The fixed income securities are
+traded in highly liquid markets and almost all fixed income securi-
+ties are investment grade. Alternative investments mostly include
+hedge funds; additionally, private equity and real estate invest-
+ments are included. Multi strategy funds mainly comprise abso-
+lute return funds and diversified growth funds that invest in vari-
+ous asset classes within a single fund and aim to stabilize return
+and reduce volatility. Derivatives predominantly consist of finan-
+cial instruments for hedging interest rate risk and inflation risk.
+28,809
+27,668
+Total
+928
+Other assets
+86
+4,716
+2017
+Effect on DBO due to a one-half percentage-point
+A one-half-percentage-point change of the above assumptions
+would result in the following increase (decrease) of the DBO:
+Sensitivity analysis
+2.9%
+3.0%
+1.4%
+1.4%
+U.K.
+Germany
+Pension progression
+1.5%
+1.5%
+3.6%
+3.7%
+Compensation increase
+U.K.
+CH
+2016
+2017
+Sep 30,
+The rates of compensation increase and pension progression for
+countries with significant effects are shown in the following table.
+Inflation effects, if applicable, are included in the assumptions below.
+The discount rate was derived from high-quality corporate bonds
+with an issuing volume of more than 100 million units in the re-
+spective currency zones, which have been awarded an AA rating
+(or equivalent) by at least one of the three rating agencies
+Moody's Investor Service, Standard & Poor's Rating Services or
+Fitch Ratings.
+Equity securities
+(in millions of €)
+Discount rate
+Rate of compen-
+sation increase
+Rate of pension
+progression
+Sep 30, 2017
+decrease
+2,472
+(in millions of €)
+Sep 30,
+2016
+Disaggregation of plan assets
+As a significant risk, the Company considers a decline in the
+plans' funded status due to adverse developments of plan assets
+and/or defined benefit obligations resulting from changing pa-
+rameters. Accordingly, Siemens implemented a risk management
+concept aligned with the defined benefit obligations (Asset Lia-
+bility Matching). Risk management is based on a worldwide de-
+fined risk threshold (value-at-risk). The concept, the value at risk
+and the asset development including the investment strategy are
+monitored and adjusted on an ongoing basis under consultation
+of senior external experts. Independent asset managers are se-
+lected based on quantitative and qualitative analysis, which in-
+cludes their performance and risk evaluation. Derivatives are
+used to reduce risks as part of risk management.
+Asset Liability Matching Strategies
+Consolidated Financial Statements 81
+As in prior year, sensitivity determinations apply the same meth-
+odology as applied for the determination of the post-employ-
+ment benefit obligation. Sensitivities reflect changes in the DBO
+solely for the assumption changed.
+The DBO effect of a 10% reduction in mortality rates for all ben-
+eficiaries would be an increase of €1,103 million and €1,395 mil-
+lion, respectively, as of September 30, 2017 and 2016.
+(1,858)
+2,107
+(1,433)
+Following the Swiss law of occupational benefits (BVG) each em-
+ployer has to grant post-employment benefits for qualifying em-
+(105)
+113
+(96)
+102
+Sep 30, 2016
+decrease
+3,174
+(2,774)
+increase
+increase
+(2,227)
+Total operating rental expenses for the years ended Septem-
+ber 30, 2017 and 2016 were €1,242 million and €1,158 million,
+respectively.
+1,620
+534
+Siemens is in the course of its normal business operations in-
+volved in numerous Legal Proceedings in various jurisdictions.
+These Legal Proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages,
+equitable remedies or criminal or civil sanctions, fines or dis-
+gorgement of profit. In individual cases this may also lead to
+formal or informal exclusion from tenders or the revocation or
+loss of business licenses or permits. In addition, further Legal
+Proceedings may be commenced or the scope of pending Legal
+Proceedings may be expanded. Asserted claims are generally
+subject to interest rates.
+Some of these Legal Proceedings could result in adverse decisions
+for Siemens that may have material effects on its financial position,
+the results of its operations and/or its cash flows in the respective
+reporting period. At present, Siemens does not expect any matters
+not described in this Note to have material effects on its financial
+position, the results of its operations and/or its cash flows.
+For Legal Proceedings information required under IAS 37, Provi-
+sions, Contingent Liabilities and Contingent Assets is not dis-
+closed if the Company concludes that disclosure can be expected
+to seriously prejudice the outcome of the matter.
+NOTE 22 Additional disclosures
+on financial instruments
+The following table discloses the carrying amounts of each cate-
+gory of financial assets and financial liabilities:
+(in millions of €)
+Loans and receivables¹
+Cash and cash equivalents
+Derivatives designated in a hedge accounting relationship
+Financial assets held for trading
+Available-for-sale financial assets²
+88
+Financial assets
+Financial liabilities held for trading4
+Derivatives designated in a hedge accounting relationship4
+Financial liabilities
+Sep 30,
+2017
+2016
+39,264
+37,984
+8,375
+10,604
+379
+15
+1,935
+Financial liabilities measured at amortized cost³
+2,518
+Consolidated Financial Statements 87
+As previously reported, the Vienna public prosecutor in Austria
+conducted an investigation into payments between calendar
+1999 and calendar 2006 relating to Siemens Aktiengesellschaft
+Österreich, Austria, for which adequate services rendered could
+not be identified. In September 2011, the Vienna public prosecu-
+tor extended the investigations to include a tax evasion matter
+for which Siemens Aktiengesellschaft Österreich is potentially
+liable. In November 2016, the proceedings against Siemens
+Aktiengesellschaft Österreich were stopped.
+Settlement payments
+(6)
+(53)
+(6)
+(45)
+(8)
+Business combinations, disposals and other
+22
+(10)
+The Company is jointly and severally liable and has capital contri-
+bution obligations as a partner in commercial partnerships and
+as a participant in various consortiums.
+NOTE 21 Legal proceedings
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED BREACHES OF CONTRACT
+Siemens has received credible information that four gas turbines
+intended for a project in Taman, Russia, which were delivered by
+000 Siemens Gas Turbines Technologies (SGTT) to its customer
+OAO VO TechnoPromExport in summer of 2016 had been al-
+legedly brought to Crimea against contractual agreements with
+SGTT. Allegedly, these four gas turbines had been sold by OAO
+VO TechnoPromExport to OOO VO TechnoProm Export, had then
+been locally modified and moved to Crimea, a location under
+sanctions. Siemens AG together with SGTT and SGTT separately
+have filed lawsuits before the Commercial State Court of Moscow
+against OAO VO TechnoProm Export and OOO VO TechnoProm-
+Export for the return of the gas turbines. The proceedings are
+ongoing.
+As previously reported, Siemens AG is a member of a supplier
+consortium that has been contracted to construct the nuclear
+power plant "Olkiluoto 3" in Finland for Teollisuuden Voima Oyj
+(TVO) on a turnkey basis. The agreed completion date for the
+nuclear power plant was April 30, 2009. Siemens AG's share of
+the contract value is approximately 27%. The other member of
+the supplier consortium is a further consortium consisting of
+Areva NP S.A.S. and its wholly-owned subsidiary, Areva GmbH.
+Completion of the power plant has been delayed for reasons
+which are in dispute. In December 2008, the supplier consortium
+filed a request for arbitration against TVO demanding an exten-
+sion of the construction time, additional compensation, mile-
+stone payments, damages and interest. TVO rejected the claims
+and asserted counterclaims against the supplier consortium con-
+sisting primarily of damages due to the delay. In August 2015,
+TVO updated its counterclaims to approximately €2.3 billion. The
+supplier consortium's monetary claims as last updated amount
+to approximately €3.6 billion. The amounts claimed by the par-
+ties do not cover the total period of delay and may be updated
+further. In November 2016 a partial award on certain preliminary
+questions identified for early treatment was issued. A further par-
+tial award on document handling issues was rendered in
+July 2017. In this further partial award certain key facts underly-
+ing the claims regarding delay and disruption that occurred
+during project execution were decided in favor of TVO. Another
+partial award on project management issues and the use of ad-
+vanced construction methods was rendered in November 2017.
+While the Tribunal granted some of TVO's requests, most of TVO's
+material allegations in this respect were dismissed or their deci-
+sion was deferred to a later stage. None of the partial awards have
+dealt with the amounts claimed by the parties. A final arbitration
+award on the merits of the claims and counterclaims is expected
+during the first half of calendar year 2018.
+Siemens AG to disclose the outcome of its internal investigations
+with respect to OTE. OTE seeks to obtain information with respect
+to allegations of undue influence and/or acts of bribery in con-
+nection with contracts concluded between Siemens AG and OTE
+from calendar 1992 to 2006. At the end of July 2010, OTE ex-
+panded its claim and requested payment of damages by
+Siemens AG of at least €57 million to OTE for alleged bribery pay-
+ments to OTE employees. In October 2014 OTE increased its dam-
+age claim to the amount of at least €68 million. Siemens AG
+continues to defend itself against the expanded claim.
+As previously reported, in September 2011, the Israeli Antitrust
+Authority requested that Siemens present its legal position re-
+garding an alleged anti-competitive arrangement between
+April 1988 and April 2004 in the field of gas-insulated switchgear.
+In September 2013, the Israeli Antitrust Authority concluded that
+Siemens AG was a party to an illegal restrictive arrangement re-
+garding the Israeli gas-insulated switchgear market between
+1988 and 2004, with an interruption from October 1999 to Feb-
+ruary 2002. The Company appealed against this decision in
+May 2014.
+Based on the above mentioned conclusion of the Israeli Antitrust
+Authority, two electricity consumer groups filed motions to cer-
+tify a class action for cartel damages against a number of compa-
+nies including Siemens AG with an Israeli State Court in Septem-
+ber 2013. One of the class actions has been dismissed by the
+court in fiscal year 2015. The remaining class action seeks com-
+pensation for alleged damages amounting to ILS2.8 billion (ap-
+proximately €673 million as of September 2017). In addition, the
+Israel Electric Corporation (IEC) filed at the end of December 2013
+with an Israeli State Court a separate ILS3.8 billion (approxi-
+mately €909 million as of September 2017) claim for damages
+against Siemens AG and other companies that allegedly formed
+a cartel in the Israeli gas-insulated switchgear market. Siemens AG
+is defending itself against the actions.
+As previously reported, the Israeli Exchange Supervisory Author-
+ity (ISA) concluded its investigation regarding potentially illegal
+payments that were allegedly paid to Israeli Electric Compa-
+ny-representatives in the early 2000's, and transferred the inves-
+tigation files to the Israeli District Attorney (DA) in August 2015,
+in order to decide whether or not to take any legal steps against
+any of the suspects named in the ISA investigation. Siemens fully
+cooperated with the Israeli authorities. In May 2016, the DA filed
+criminal charges versus Siemens Israel Ltd. Siemens AG was not
+indicted, as it was possible for Siemens AG to conclude a non-
+prosecution agreement with the DA that obliged Siemens AG to
+pay an amount in the mid double-digit euro million range.
+In November 2017, the Israeli Criminal court approved a plea
+agreement proposed by the DA and Siemens Israel Ltd. Based on
+the plea agreement, Siemens Israel Ltd. was convicted for the
+Consolidated Financial Statements
+misconduct of its former management and agreed to pay a fine
+in a low double-digit euro million range.
+As previously reported, in May 2013, Siemens Ltda., Brazil
+(Siemens Ltda.) entered into a leniency agreement with the Ad-
+ministrative Council for Economic Defense (CADE) and other rel-
+evant Brazilian authorities relating to possible antitrust violations
+in connection with alleged anticompetitive irregularities in metro
+and urban train projects, in which Siemens Ltda. and partially
+Siemens AG, as well as a number of other companies participated
+as contractor. In March 2014, CADE commenced administrative
+proceedings, confirming Siemens Ltda.'s immunity from admin-
+istrative fines for the reported potential misconduct. In connec-
+tion with the above mentioned metro and urban train projects,
+several Brazilian authorities initiated investigations relating to
+alleged criminal acts (corruptive payments, anti-competitive con-
+duct, undue influence on public tenders).
+As previously reported, in March 2014, Siemens was informed
+that in connection with the above mentioned metro and urban
+train projects the Public Prosecutor's Office São Paulo has re-
+quested criminal proceedings at court into alleged violations of
+Brazilian antitrust law against a number of individuals including
+current and former Siemens employees. The proceedings con-
+tinue; the Public Prosecutor's Office São Paulo has, in the mean-
+time, appealed all decisions where the courts denied opening
+criminal trials.
+As previously reported, in May 2014, the Public Affairs Office
+(Ministério Público) São Paulo initiated a lawsuit against Siemens
+Ltda. as well as other companies and several individuals claiming,
+inter alia, damages in an amount of BRL2.5 billion (approximately
+€665 million as of September 2017) plus adjustments for infla-
+tion and related interest in relation to train refurbishment con-
+tracts entered into between 2008 and 2011. A technical note is-
+sued by the Brazilian cartel authority CADE earlier in 2014 had not
+identified evidence suggesting Siemens Ltda.'s involvement in
+anticompetitive conduct in relation to these refurbishment con-
+tracts. In January 2015 the district court of São Paulo admitted a
+lawsuit of the State of São Paulo and two customers against
+Siemens Ltda., Siemens AG and other companies and individuals
+claiming damages in an unspecified amount. In March 2015, the
+district court of São Paulo admitted a lawsuit of the Public Affairs
+Office (Ministério Público) São Paulo against Siemens Ltda. and
+other companies claiming, inter alia, damages in an amount of
+BRL487 million (approximately €130 million as of September 2017)
+plus adjustments for inflation and related interest in relation to
+train maintenance contracts entered into in 2000 and 2002. In
+September 2015, the district court of São Paulo admitted another
+lawsuit of the Public Affairs Office (Ministério Público) São Paulo
+against Siemens Ltda. and other companies claiming, inter alia,
+damages in an amount of BRL918 million (approximately €244 mil-
+lion as of September 2017) plus adjustments for inflation and
+related interest in relation to train maintenance contracts
+entered into in 2006 and 2007. Siemens will defend itself against
+these actions. It cannot be excluded that further significant
+damage claims will be brought by customers or the state against
+Siemens.
+As previously reported, CADE conducted - unrelated to the above
+mentioned proceedings - two further investigations into possible
+antitrust behavior in the field of gas-insulated and air-insulated
+switchgear from the 1990's to 2006. Siemens cooperated with
+the authorities. In February 2017, Siemens AG entered into a set-
+tlement agreement with CADE relating to alleged antitrust viola-
+tions in the field of gas-insulated switchgear for an amount in a
+low single-digit euro million range. In October 2017, Siemens
+Ltda. entered into a settlement agreement with CADE relating to
+alleged antitrust violations in the field of air-insulated switchgear
+for an amount in a mid double-digit euro million range.
+As previously reported, in June 2015, Siemens Ltda. once again
+appealed to the Supreme Court against a decision confirming
+the decision of the previous court to suspend Siemens Ltda.
+from participating in public tenders and signing contracts with
+public administrations in Brazil for a five year term based on
+alleged irregularities in calendar 1999 and 2004 public tenders
+with the Brazilian Postal authorities. In July 2015, the court sus-
+pended enforcement of the debarment decision pending the
+appeal.
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED COMPLIANCE VIOLATIONS
+As previously reported, in July 2008, Hellenic Telecommunica-
+tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
+with the district court of Munich, Germany, seeking to compel
+4,758
+3,955
+54,710
+9,265
+119
+62
+28,809
+27,668
+(9)
+42,176
+36,871
+Balance at fiscal year-end
+(749)
+(1,109)
+7
+13,486
+(1)
+(2,531) (1,411)
+(2,520)
+Other reconciling items
+40
+(134)
+7
+(1)
+(792)
+(488)
+(758)
+(620)
+Foreign currency translation effects
+(1,777)
+Germany
+21,986
+25,460
+55,594
+43,502
+40,591
+682
+1,190
+140
+44,325
+310
+42,091
+1 Reported in the following line items of the Statements
+of Financial Position: Trade and other receivables, Other
+current financial assets and Other financial assets, except
+for separately disclosed €2,290 million and €2,662 million
+available-for-sale financial assets and €2,314 million and
+€3,051 million derivative financial instruments as of
+September 30, 2017 and 2016, respectively. Includes
+€15,242 million and €14,280 million trade receivables from
+the sale of goods and services in fiscal 2017 and 2016,
+thereof €918 million and €665 million with a term of more
+than twelve months.
+2 Includes equity instruments classified as available-for-sale,
+for which a fair value could not be reliably measured and
+which are therefore recognized at cost.
+3 Reported in the following line items of the Statements of
+Financial Position: Short-term debt and current maturities of
+long-term debt, Trade payables, Other current financial
+liabilities, Long-term debt and Other financial liabilities,
+except for separately disclosed derivative financial instru-
+ments of €823 million and €1,500 million, respectively,
+as of September 30, 2017 and 2016.
+4 Reported in line items Other current financial liabilities and
+Other financial liabilities.
+Cash and cash equivalents includes €266 million and €330 mil-
+lion as of September 30, 2017 and 2016, respectively, which are
+not available for use by Siemens mainly due to minimum reserve
+requirements with banks. As of September 30, 2017 and 2016, the
+carrying amount of financial assets Siemens has pledged as col-
+lateral amounted to €182 million and €214 million, respectively.
+The following table presents the fair values and carrying amounts
+of financial assets and financial liabilities measured at cost or
+amortized cost for which the carrying amounts do not approxi-
+Imate fair value:
+Consolidated Financial Statements
+4,859
+4,189
+Other countries
+CH
+U.K.
+U.S.
+10,184
+7,364
+15,275
+14,622
+(160)
+(2)
+(121)
+(1,924)
+Other¹
+(150)
+5
+(38)
+8
+(112)
+(4)
+Components of defined benefit
+costs recognized in the
+Consolidated Statements of income
+1,133
+1,605
+444
+818
+4
+7
+693
+795
+Return on plan assets excluding
+amounts included in net interest
+(1,694)
+Actuarial (gains) losses
+Effects of asset ceiling
+(809)
+(482)
+809
+482
+Development of the defined benefit plans
+2016
+Balance at begin of fiscal year
+42,176
+36,818
+28,809
+27,296
+119
+214
+13,486
+9,737
+(174)
+Current service cost
+523
+612
+523
+Interest expenses
+672
+1,078
+4
+7
+675
+1,085
+Interest income
+612
+2,473
+income and net interest expenses
+(2,473)
+Remeasurements recognized
+in the Consolidated Statements
+174
+(3,919)
+6,284
+(174)
+2,473
+(60)
+(109)
+(3,805)
+3,703
+(109)
+Employer contributions
+618
+(861)
+(618)
+Plan participants' contributions
+130
+144
+130
+144
+Benefits paid
+(2,045)
+(1,854)
+861
+(60)
+of Comprehensive Income
+(60)
+(3,919)
+6,284
+Defined benefit
+obligation (DBO)
+Fair value of
+plan assets
+Effects of
+asset ceiling
+Net defined
+benefit balance
+(109)
+(11)
+(III)
+Fiscal year
+Fiscal year
+(1)
+(1 - 11 +111)
+Fiscal year
+6,284
+Fiscal year
+(3,919)
+2017
+2016
+2017
+6
+2017
+2016
+2017
+(in millions of €)
+2016
+6
+machine building industries. These declines were only partly off-
+set by clear growth in the process automation business and a
+moderate increase in the software business, which was due to
+positive currency translation effects and new volume from recent
+acquisitions, particularly including Mendix. The latter two busi-
+nesses were also the drivers for revenue growth, as year-over-
+year revenue growth for the short-cycle businesses in the first
+half of fiscal 2019 gave way to declines in the second half. On a
+geographic basis, orders declined in the regions Europe, C.I.S.,
+Africa, Middle East and in the Americas, only partly offset by an
+increase in the Asia, Australia region. Revenue rose in all three
+reporting regions. The software business strengthened its contri-
+bution to Adjusted EBITA with a double-digit increase. Higher
+expenses related to new cloud-based offerings were partly offset
+by a €50 million gain from the sale of an equity investment.
+The process automation business showed a moderate increase in
+Adjusted EBITA, due mainly to higher revenue. Nevertheless,
+Adjusted EBITA for Digital Industries overall came in slightly lower
+year-over-year due to clear declines in the short-cycle businesses.
+Severance charges were €92 million in fiscal 2019, up from
+€75 million a year earlier. Digital Industries' order backlog was
+€5 billion at the end of the fiscal year, of which €4 billion are
+expected to be converted into revenue in fiscal 2020.
+Orders for Digital Industries declined due to lower demand in the
+short-cycle factory automation and motion control businesses,
+which faced increasingly adverse market conditions during
+the course of the fiscal year, particularly in the automotive and
+18.6%
+17.9%
+Adjusted EBITA margin
+(1)%
+2,898
+2,880
+Digital Industries achieved its results in a market environment
+that lost momentum in the course of fiscal 2019. In particular,
+demand for investment goods eroded notably in the second half
+of the fiscal year. All regions were impacted by the slowdown,
+and countries with strong focus on investment goods and strong
+export ties to China suffered notably. While process industries
+still benefited from positive development of raw material prices,
+discrete industries faced headwinds from low demand including
+destocking effects. The automotive industry was hit by produc-
+tion cuts in Europe and weak demand in China. This, among
+other factors, also impacted the machine building industry, par-
+ticularly affecting customers in Germany and Japan. Production
+growth in the pharmaceutical and chemicals industries flattened
+during the course of fiscal 2019, due in part to spillover effects
+from the automotive industry on related chemicals segments.
+The food and beverage industry grew modestly and global elec-
+tronics and semiconductor production expanded but prices were
+under pressure. For fiscal 2020, the market environment for Dig-
+ital Industries is expected to weaken further. Manufacturing in-
+vestments are expected to decrease at least moderately but then
+begin to stabilize in the second half of fiscal 2020. An overall
+decline in investment sentiment caused by global trade tensions,
+among other factors, dampens short-term expectations and fuels
+increasing cautiousness for investments globally. A weakening of
+growth in China could lead to spillover effects in other Asian
+countries and also in Europe.
+p26
+Adjusted EBITA
+(115)
+(121)
+5,916
+6,401
+53,459
+50,715
+11.1%
+12.6%
+1 Item Other interest expenses/income, net primarily consists of interest relating to corporate
+debt, and related hedging activities, as well as interest income on corporate assets.
+For purposes of calculating ROCE in interim periods, income be-
+fore interest after tax is annualized. Average capital employed is
+determined using the average of the respective balances as of
+the quarterly reporting dates for the periods under review.
+Calculation of capital employed
+(I) Income before interest after tax
+(II) Average capital employed
+(1)/(II) ROCE
+Total equity
+Plus: Short-term debt and current maturities of long-term debt
+Less: Cash and cash equivalents
+Less: Current interest-bearing debt securities
+Plus: Provisions for pensions and similar obligations
+Less: Financial Services debt
+Less: Fair value hedge accounting adjustment
+Plus: Adjustments from assets classified as held for disposal and
+liabilities associated with assets classified as held for disposal
+Less: Adjustment for deferred taxes on net accumulated actuarial
+gains/losses on provisions for pensions and similar obligations
+Capital employed (continuing and discontinued operations)
+4
+Combined Management Report
+A.3 Segment information
+A.3.1 Overall economic conditions
+In fiscal 2019, global gross domestic product (GDP) growth lost
+its momentum. After GDP grew by 3.2% in calendar 2018, growth
+is expected to recede to 2.6% in calendar 2019. This cool-down
+was hardly expected at the beginning of fiscal 2019: in Octo-
+ber 2018, GDP growth for calendar 2019 was forecast at 3.1%.
+The main reason for this significant deceleration of the global
+economy was the escalating trade dispute between the U.S. and
+China. In addition, geopolitical tensions in the Middle East con-
+tributed to uncertainty, which weighed on capital investments.
+Global exchange of goods started to decline from October 2018,
+leading to near-stagnation of industrial production afterwards.
+Accordingly, the slowdown of the global economy was attribut-
+able in particular to regions and countries where trade and indus-
+try are of high importance. In Europe, this was especially true for
+Germany and Italy, where industrial production (excluding con-
+struction) had started to recede already in calendar 2018. In addi-
+tion, European economies suffered from continued uncertainties
+regarding the U.K. leaving the European Union (Brexit) and the
+budget clash between the European Commission and Italy's gov-
+ernment, both weighing especially on business investment envi-
+ronment. In the Americas, the slowdown was very pronounced in
+Mexico and Canada, and to a smaller extent in the more consump-
+tion-driven U.S. economy, where a fiscal boost helped the econ-
+omy. In Asia, China continued on its announced path to gradually
+rebalance its economy, which has resulted in decelerating overall
+GDP growth. Government stimulus programs have partly buffered
+the Chinese economy from trade dispute headwinds, but the con-
+flict is nevertheless taking a toll. Economic dynamics deteriorated
+markedly in India, where a decline in domestic consumption was
+the biggest drag on growth. Countries dependent on commodi-
+ties and raw material exporting, notably Chile, Brazil and Argen-
+tina, saw declines in commodity prices in addition to other ad-
+verse factors including domestic political and financial instability.
+Plus: Long-term debt
+In advanced countries, calendar 2019 GDP growth is estimated at
+1.6%, 0.7 percentage points lower than 2018. For emerging coun-
+tries, the GDP growth rate is estimated to recede from 4.6% in
+calendar 2018 to 4.1% in 2019.
+Less: Taxes on interest adjustments
+(tax rate (flat) 30%)
+164
+For purposes of managing and controlling profitability at the
+Group level, we use net income as our primary measure. This mea-
+sure is the main driver of basic earnings per share (EPS) from net
+income, which we use in communication to the capital markets.
+We seek to work profitably and as efficiently as possible with the
+capital provided by our shareholders and lenders. For purposes
+of managing and controlling our capital efficiency, we use return
+on capital employed, or ROCE, as our primary measure in our
+Siemens Financial Framework. Our long-term goal is to achieve
+ROCE within a range of 15% to 20%.
+Combined Management Report
+3
+A.9
+Sustainable revenue and profit development is supported by a
+healthy capital structure. Accordingly, a key consideration within
+the Siemens Financial Framework is to maintain ready access to
+the capital markets through various debt products and preserve
+our ability to repay and service our debt obligations over time.
+Our primary measure for managing and controlling our capital
+structure is the ratio of Industrial net debt to EBITDA (continuing
+operations). This financial measure indicates the approximate
+amount of time in years that would be needed to cover Industrial
+net debt through income from continuing operations, without
+taking into account interest, taxes, depreciation and amortiza-
+tion. We aim to achieve a ratio of up to 1.0.
+A.2.5 Liquidity and dividend
+We intend to continue providing an attractive return to our share-
+holders. Under the Siemens Financial Framework, our intention
+is to propose a dividend whose distribution volume is within a
+dividend payout range of 40% to 60% of Net income attributable
+to shareholders of Siemens AG, which we may adjust for this pur-
+pose to exclude selected exceptional non-cash effects. As in the
+past, we intend to fund the dividend payout from Free cash flow.
+To provide an assessment of our ability to generate cash, and
+ultimately to pay dividends, we use the cash conversion rate of
+Industrial Businesses, defined as the ratio of Free cash flow from
+Industrial Businesses to Adjusted EBITA Industrial Businesses. Be-
+cause growth requires investments, we aim to achieve a cash
+conversion rate of 1 minus the annual comparable revenue
+growth rate of Industrial Businesses.
+At the Annual Shareholders' Meeting, the Managing Board, in
+agreement with the Supervisory Board, will submit the following
+proposal to allocate the unappropriated net income of
+Siemens AG for fiscal 2019: to distribute a dividend of €3.90 on
+each share of no par value entitled to the dividend for fiscal year
+2019 existing at the date of the Annual Shareholders' Meeting; to
+allocate €2,069 million to retained earnings; the remaining
+amount is to be carried forward. Payment of the proposed divi-
+dend is contingent upon approval by Siemens shareholders at the
+Annual Shareholders' Meeting on February 5, 2020. The prior-
+year dividend was €3.80 per share.
+The proposed dividend of €3.90 per share for fiscal 2019 rep-
+resents a total payout of €3.2 billion based on the estimated
+number of shares entitled to dividend at the date of the Annual
+Shareholders' Meeting. Based on Net income attributable to
+Shareholders of Siemens AG of €5.2 billion for fiscal 2019, the
+dividend payout percentage is 61%.
+A.2.6 Calculation of return
+on capital employed
+Less: Interest adjustments
+(discontinued operations)
+Calculation of ROCE
+Fiscal year
+2019
+2018
+5,648
+6,120
+Less: Other interest expenses/income, net¹
+Plus: SFS Other interest expenses/income
+Plus: Net interest expenses related
+to provisions for pensions and similar
+obligations
+(529)
+(482)
+763
+721
+148
+(in millions of €)
+Net income
+The partly estimated figures presented here for GDP are based on
+an IHS Markit report dated October 15, 2019.
+A.3.2 Digital Industries
+The Operating Company Digital Industries was formed in fiscal
+2019, through a combination of the former Digital Factory Divi-
+sion (excluding the control products business) with the process
+2%
+4%
+5,302
+5,530
+therein: product
+business
+3%
+5%
+14,445
+15,225
+4%
+7%
+Adjusted EBITA
+15,198
+Comp.
+Actual
+% Change
+Fiscal year
+2018
+2019
+(in millions of €)
+Orders
+Revenue
+Smart Infrastructure's R&D activities on the one hand focus on
+addressing the trends of decentralization, decarbonization and
+digitalization of energy markets. On the other hand, R&D ex-
+penses strengthen Smart Infrastructure's capabilities to create
+comfortable, safe and energy-efficient buildings and infrastruc-
+tures and to support increased efficiency of occupants, equipment
+and the use of building space. The Operating Company is expand-
+ing its digital offerings in its existing businesses while integrating
+recent acquisitions in the critical power control systems, power
+electronics and building loT space. Furthermore, it develops tech-
+nologies for environmentally friendly and increasingly renewable
+energy systems, ranging from photovoltaic inverter technology to
+battery storage and charging solutions for e-mobility. In this re-
+gard, data from field devices is the basis to intelligently deliver grid
+flexibility and permanently match energy supply and demand
+while protecting grid assets. For electrical distribution systems and
+industrial plants, Smart Infrastructure continuously drives digitali-
+zation of its switching and control products with built-in intelli-
+gence, connectivity to the cloud, and increasingly remote diagnos-
+tics and edge computing capability. Its digital twins of products,
+building systems or grids deliver customer value with online con-
+figuration tools, maintenance and service management. Smart
+Infrastructure develops data-driven applications and digital
+services with the Mindsphere in various cloud environments. Its
+investments relate to a large extent to the products businesses
+and its factories, with a strong focus on innovation.
+coupling, such as electrification of heat and transportation to
+optimize energy efficiency. Decarbonization is changing the
+energy generation mix towards renewable energy sources, which
+fluctuate with time of day and weather conditions. As a result,
+the energy system is becoming increasingly decentralized, more
+strongly influenced by prosumers, and more dependent on inte-
+gration of intermittent/distributed energy sources including
+wind, photovoltaic and biomass, and increasing the need for
+smart storage and efficient and reliable power networks. Both
+smarter buildings and the integration of more distributed energy
+sources into conventional power networks result in increasing
+complexity with rising volumes of data, bi-directional energy and
+information flows. These can be reliably managed only through
+digitalization of buildings, transportation and energy systems.
+The markets served are experiencing shifts that offer opportuni-
+ties where building technologies and electrification markets
+come together. Key trends include rising population and urban-
+ization, increasing need for safe, secure and sustainable environ-
+ments with interactive, comfortable spaces and low energy, op-
+erating and maintenance costs. These trends lead to cross-sector
+The Operating Company Smart Infrastructure supplies and in-
+telligently connects energy systems and building technologies,
+to significantly improve efficiency and sustainability and support
+its customers to address major technology shifts. Smart Infra-
+structure was formed in fiscal 2019, through a combination of the
+former Building Technologies Division; the low- and medium-
+voltage products and systems and digital grid businesses of the
+former Energy Management Division; and the control products
+business of the former Digital Factory Division. Smart Infrastruc-
+ture brings together energy supply – from intelligent control
+across the grid and low- and medium-voltage electrification and
+control products - with building technology: from building auto-
+mation to fire safety and security to energy efficiency. At the grid
+edge, there are high growth markets in energy storage, distrib-
+uted energy systems and prosumption, electric vehicle infrastruc-
+ture and microgrids. The Operating Company serves its custom-
+ers through a broad variety of channels, including its global
+product and systems sales organization, distributors, panel build-
+ers, original equipment manufacturers (OEM), value added re-
+sellers and installers, as well as by direct sales through the branch
+offices of its regional solutions and services units worldwide.
+Smart Infrastructure's customer base is diverse. It encompasses
+infrastructure developers, construction companies and contrac-
+tors; owners, operators and tenants of both public and commer-
+cial buildings including hospitals, campuses, airports and data
+centers; utilities and power distribution network operators; com-
+panies in heavy industries such as oil and gas, mining and chem-
+icals; and companies in discrete manufacturing industries such
+as automotive and machine building. Smart Infrastructure's prin-
+cipal competitors consist mainly of large multinational compa-
+nies together with smaller manufacturers in emerging countries.
+Its solutions and services business also competes with local play-
+ers such as system integrators and with facility management
+firms. The degree to which Smart Infrastructure's businesses are
+impacted by changes in the overall economic environment differs
+by customer segments. While customer demand in discrete man-
+ufacturing industries changes quickly and strongly with macroeco-
+nomic cycles, demand in infrastructure, construction, heavy indus-
+tries and the utilities sector reacts more slowly to economic cycles.
+Overall, the Operating Company's regional and vertical markets
+diversification, its mix of products, systems, solutions and services
+businesses, and its participation in both long- and short-cycle mar-
+kets, all provide a balanced and resilient business mix.
+A.3.3 Smart Infrastructure
+16,244
+1,500
+1,574
+(5)%
+automation and large drives businesses (excluding the industrial
+applications and traction businesses) of the former Process
+Industries and Drives Division. It offers a comprehensive product
+portfolio and system solutions for automation used in discrete
+and process industries; these offerings include automation sys-
+tems and software for factories, numerical control systems, mo-
+tors, drives and inverters and integrated automation systems for
+machine tools and production machines. Digital Industries also
+provides process control systems, machine-to-machine commu-
+nication products, sensors (including sensors measuring pres-
+sure, temperature, level, flow rate, distance or shape) and radio
+frequency identification systems. Furthermore, the Operating
+Company offers product and production lifecycle software, and
+software for simulation and testing of mechatronic systems, sup-
+plemented by the electronic design automation software port-
+folio of Mentor Graphics (Mentor) and the open, cloud-based
+industrial internet of things (IoT) operating system MindSphere,
+which connects machines and physical infrastructure to the dig-
+ital world. To increase growth and accelerate adoption of Mind-
+Sphere, Digital Industries acquired Mendix group (Mendix) at the
+beginning of fiscal 2019. Mendix is a pioneer and leader in
+cloud-native low-code application development, which can sig-
+nificantly reduce app development times through visual repre-
+sentation of underlying code (for more information on the acqui-
+sition of Mendix, see → NOTE 3 in B.6 NOTES TO CONSOLIDATED
+FINANCIAL STATEMENTS). Digital Industries also provides customers
+with lifecycle and data-driven services. Taken together, the Oper-
+ating Company's offerings enable customers to optimize entire
+value chains from product design and development to produc-
+tion and post-sale services. With its advanced software solutions
+in particular, Digital Industries supports customers in the discrete
+manufacturing, hybrid and process industries in their evolution
+towards the "Digital Enterprise,” resulting in increased flexibility
+and efficiency of production processes and reduced time to mar-
+ket for new products. Among its most important customer seg-
+ments are the automotive industry, the machine building indus-
+try, the pharmaceutical and chemicals industry, the food and
+beverage industry and the electronics and semiconductor indus-
+try. Digital Industries serves its customers through a common
+regional sales organization, spanning all its businesses, using
+various sales channels depending on the type of customer and
+industry. Changes in customer demand, especially for standard
+products, are strongly driven by macroeconomic cycles, and can
+lead to significant short-term fluctuation in the Operating Com-
+pany's profitability. The competition for Digital Industries' busi-
+ness activities can be grouped into two categories: multinational
+companies that offer a relatively broad portfolio and companies
+that are active only in certain geographic or product markets.
+Digital Industries sees three basic trends influencing its business
+and providing long-term growth opportunities. Producers of in-
+vestment goods in today's increasingly digital environment must
+Combined Management Report
+5
+modernize their production capacity to remain competitive. This
+environment also spurs producers to complement their core
+products with vertical solutions and service offerings, which their
+customers either need or want in order to take full advantage of
+the investment goods. Further, there is a trend from globalization
+to regionalization to either protect local economies or to better
+adapt solutions to local needs.
+Research & Development (R&D) activities at Digital Industries
+are aimed at integrating technologies such as artificial intelli-
+gence (AI), edge computing, industrial 5G, autonomous handling
+systems and additive manufacturing into Digital Industries' exten-
+sive portfolio for industrial automation and digitalization. An ex-
+ample of this integrative approach is a new module with an inte-
+grated Al-capable chip for the Simatic S7-1500 programable logic
+controller, which enables the optimization of robot-based handling
+processes. Similarly, the latest version of Digital Industries' NX soft-
+ware has been enhanced with machine learning and Al capabili-
+ties, so it can predict next steps and help customers use the soft-
+ware more efficiently. In Digital Industries' own factories, Al has
+already been proven: The integration of edge computing, Al and
+MindSphere reduced the number of final inspection processes
+during X-ray inspection of printed circuit boards for Simatic prod-
+ucts. Digital Industries, along with other Siemens units, is also
+running research projects for industrial 5G and establishing sev-
+eral 5G interoperability test centers under actual operational tech-
+nology conditions. The Operating Company's latest machine tool
+controller, Sinumerik ONE, was developed entirely through virtu-
+alization of both the product's design and its manufacturing
+processes. The newly developed process control system, PCS neo,
+is designed for easy, efficient scaling from a small process module
+up to the largest process plants in the world. Major investments
+of Digital Industries in fiscal 2019 relate to the factory automation,
+motion control systems and process automation businesses,
+including capital expenditure in production facilities in China.
+% Change
+Comp.
+(4)%
+2%
+(in millions of €)
+Orders
+Combined Management Report
+In the transmission business, the portfolio includes products, sys-
+tems and solutions that enable multi-vendor and bidirectional
+flow of energy and information. These offerings are key building
+blocks of modernized energy grids, which must integrate renew-
+able sources with their fluctuating levels of power generation
+and also incorporate efficient electrical storage and sophisticated
+load management. The portfolio also includes power transform-
+ers, high voltage switchgear and components, high-voltage di-
+rect current (HVDC) products and HVDC and grid access solutions
+as well as relevant transmission services. The transmission busi-
+ness serves a broad range of customers including power produc-
+ers, transmission and distribution system operators, and indus-
+trial and infrastructure customers in industries such as oil and
+In the power generation and oil and gas businesses, the portfolio
+includes gas turbines, steam turbines, generators for gas or
+steam power plants, turbo and reciprocating compressor trains,
+reciprocating engines, modular power supply and integrated
+power plant solutions, and instrumentation and control systems
+for power generation. Customers include public utilities and in-
+dependent power producers; companies in engineering, procure-
+ment and construction (EPC) that serve utilities and power pro-
+ducers; sovereign and multinational oil companies; midstream
+operators; independent oil and gas, petrochemical and chemical
+companies, and industrial customers that generate power and
+heat for their own consumption (prosumers). The competition
+consists mainly of two groups: a relatively small number of orig-
+inal equipment manufacturers (OEM), some with very strong
+positions in their domestic markets, and on the other hand a
+large number of EPC contractors.
+The Operating Company Gas and Power offers a broad spectrum
+of products and solutions for generating electricity, for produc-
+tion, transport and downstream operations involving oil and gas,
+and for installing and operating transmission grids. In addition,
+it offers a comprehensive set of services related to these products
+and solutions such as performance enhancements, maintenance
+services, customer training and professional consulting. Finally,
+Gas and Power offers comprehensive turnkey solutions that inte-
+grate the products and systems from its businesses. Gas and
+Power was formed in fiscal 2019 through a combination of the
+former Power and Gas and Power Generation Services Divisions
+with the transmission products, systems and solutions busi-
+nesses of the former Energy Management Division. Due to the
+broad range of its offerings, the revenue mix for Gas and Power
+may vary from reporting period to reporting period depending
+on the share of revenue attributable to products, solutions and
+services. Because profitability levels typically differ among these
+three revenue sources, the revenue mix in a reporting period ac-
+cordingly affects Adjusted EBITA of Gas and Power for that period.
+A.3.4 Gas and Power
+Beginning with fiscal 2020, the distribution transformer business
+will be transferred to the Operating Company Gas and Power. If
+this organizational structure had already existed in fiscal 2019,
+Smart Infrastructure would have posted orders of €15.590 bil-
+lion, revenue of €14.597 billion, Adjusted EBITA of €1.465 billion
+and an Adjusted EBITA margin of 10.0%.
+Smart Infrastructure achieved its results in overall moderately
+growing markets in fiscal 2019. The grid markets benefited from
+the need for intelligent and flexible energy networks and for
+automation, particularly in Asia, Australia and the Americas.
+Heavy industries and the infrastructure industry also developed
+favorably during fiscal 2019, driven by investments in oil and gas
+markets, in data centers and in transportation infrastructure,
+such as for e-mobility. Discrete industries, which started strong
+in fiscal 2019, experienced a downturn in the second half of the
+fiscal year. Construction markets continued their stable growth
+during the fiscal year, particularly in the U.S. and China and in the
+non-residential construction market overall. Growth in the im-
+portant building electrification and automation market was
+driven by demand for building performance and sustainability
+offerings, including strong demand for energy efficiency and dig-
+ital services. In fiscal 2020, market growth overall is expected to
+be lower than in fiscal 2019, due to an expected continuation of
+the downturn in the short-cycle markets, economic uncertainty
+in a number of countries due to trade conflicts, and other factors.
+Orders and revenue for Smart Infrastructure rose in all three
+businesses solutions and services, systems and software, and
+the products business – and in all three reporting regions. Order
+growth was strongest in the solutions and services business on a
+sharply higher volume from large orders in the Americas and
+Europe, C.I.S., Africa, Middle East. Revenue rose most strongly in
+the systems and software and the solutions and services busi-
+nesses, particularly in the Americas. Revenue growth in the prod-
+uct business was due to low voltage products, while revenue in
+the other products businesses came in close to prior-year levels
+due partly to less favorable conditions in short-cycle markets.
+Adjusted EBITA declined due mainly to the systems and software
+business including negative effects related to grid control proj-
+ects early in the year. Adjusted EBITA also included higher
+expenses year-over-year related to expansion of smart building
+offerings and for grid edge activities. Severance charges were
+€48 million in fiscal 2019 compared to €34 million a year earlier.
+Smart Infrastructure's order backlog was €10 billion at the end of
+the fiscal year, of which €7 billion are expected to be converted
+into revenue in fiscal 2020.
+_
+8
+7
+Combined Management Report
+10.9%
+9.9%
+Adjusted EBITA margin
+Combined Management Report
+8%
+A.2.4 Capital structure
+3,560
+B.1
+p 76
+Consolidated Statements
+of Income
+C.1
+p 150
+and basis of presentation
+Responsibility Statement
+p 151
+A.2
+p3
+B.2
+p 77
+Financial performance system
+C.2
+Consolidated Statements
+Organization of the Siemens Group
+A.1
+and associated material opportunities
+and risks
+Report on expected developments
+SIEMENS
+Ingenuity for life
+Annual Report
+2019
+siemens.com
+Table of contents
+p2
+A
+Management Report
+B
+Consolidated
+Financial Statements
+C
+Additional Information
+Combined
+P 38
+of Comprehensive Income
+A.3
+A.6
+P 20
+p 80
+Financial position
+Consolidated Statements
+of Changes in Equity
+of Cash Flows
+A.7
+Overall assessment
+B.6
+p 82
+of the economic position
+A.8
+13%
+p24
+C.3
+Net assets position
+p 19
+p5
+Segment information
+B.3
+P 78
+Consolidated Statements
+C.4
+Consolidated Statements
+A.4
+of Financial Position
+Results of operations
+B.4
+p 79
+C.5
+A.5
+p 16
+Siemens AG
+B.5
+p 40
+In the Siemens Financial Framework we aim to achieve a revenue
+growth range of 4% to 5% per year on a comparable basis. Our
+primary measure for managing and controlling our revenue
+growth is comparable growth, because it shows the development
+in our business net of currency translation effects, which arise
+from the external environment outside of our control, and port-
+folio effects, which involve business activities which are either
+new to or no longer a part of the respective business.
+Currency translation effects are the difference between revenue
+for the current period calculated using the exchange rates of the
+current period and revenue for the current period calculated us-
+ing the exchange rates of the comparison period. For calculating
+the percentage change year-over-year, this absolute difference is
+divided by revenue for the comparison period. A portfolio effect
+arises in the case of an acquisition or a disposition and is calcu-
+lated as the change year-over-year in revenue of the relevant
+business resulting specifically from the acquisition or disposition.
+For calculating the percentage change, this absolute change is
+divided by revenue for the comparison period. For orders, we
+apply the same calculations for currency translation and portfolio
+effects as described above.
+A.2.3 Profitability
+and capital efficiency
+Within the Siemens Financial Framework, we aim to achieve mar-
+gins that are comparable to those of our relevant competitors.
+Therefore, we have defined profit margin ranges for our indus-
+trial businesses which are based on the profit margins of their
+respective relevant competitors. Profit margin is defined as profit
+of the respective business divided by its revenue. For our indus-
+trial businesses, profit represents EBITA adjusted for operating
+financial income (expenses), net, and amortization of intangible
+assets not acquired in business combinations (Adjusted EBITA).
+Digital Industries
+Smart Infrastructure
+Margin range
+17-23%
+10-15%
+8-12%
+9-12%
+Siemens Healthineers
+17-21%
+Siemens Gamesa Renewable Energy
+Industrial Businesses
+7-11%
+11-15%
+Gas and Power
+Mobility
+4,039
+therein: software
+business
+A.10
+Actual
+(2)%
+3%
+15,587
+16,087
+A.2.2 Revenue growth
+Revenue
+Fiscal year
+2018
+2019
+In line with common practice in the financial services business,
+our financial indicator for measuring capital efficiency at Finan-
+cial Services is return on equity after tax, or ROE after tax. ROE is
+defined as Financial Services' profit after tax, divided by its aver-
+age allocated equity.
+Margin ranges for Siemens Healthineers and Siemens Gamesa
+Renewable Energy reflect our expectations as a majority share-
+holder.
+17-22%
+Financial Services (ROE after tax)
+16,287
+Margin ranges
+15,944
+The Siemens Financial Framework includes targets that we aim
+to achieve over the cycle of the business activities.
+statements
+Notes and forward-looking
+p 174
+Corporate Governance
+P 162
+Report of the Supervisory Board
+Combined
+P 157
+Financial Statements
+Notes to Consolidated
+Takeover-relevant information
+Compensation Report
+We have set the following margin ranges in our Siemens Financial
+Framework:
+A.11
+p 71
+Management Report
+Independent Auditor's Report
+Λ
+Pages 1-74
+Combined Management Report
+2
+-
+Siemens has policies for environmental, employee and social
+matters, for the respect of human rights, and anti-corruption and
+bribery matters, among others. Our business model is described
+in chapters A.1 and A.3 of this Combined Management Report.
+Reportable information that is necessary for an understanding of
+the development, performance, position and the impact of our
+activities on these matters is included in this Combined Manage-
+ment Report, in particular in chapters → A.3 through A.7. For-
+ward-looking information, including risk disclosures, is presented
+in chapter A.8. Chapter →A.9 includes additional informa-
+tion that is required to be reported in the Combined Manage-
+ment Report related to the parent company Siemens AG. As sup-
+plementary information, amounts reported in the Consolidated
+Financial Statements and the Annual Financial Statements of
+Siemens AG related to such non-financial matters, and additional
+explanations thereto, are included in → B.6 NOTES TO CONSOLI-
+DATED FINANCIAL STATEMENTS, NOTES 17, 18, 22, 26 and 27, and in the
+7 NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF SIEMENS AG FOR
+THE FISCAL YEAR ENDED SEPTEMBER 30, 2019, NOTES 16, 17, 20, 21 and 25.
+These disclosures are not subject to a specific framework in
+order to inform the users of the financial reports in a focused
+in contrast to the disclosures in our separately
+available "Sustainability Information 2019" document, which are
+based on the standards developed by the Global Reporting
+Initiative (GRI).
+and Siemens AG
+A.2.1 Overview
+Non-financial matters of the Group
+manner
+Our reportable segments and Portfolio Companies may do busi-
+ness with each other, leading to corresponding orders and reve-
+nue. Such orders and revenue are eliminated on the Group level.
+A.1 Organization of the Siemens Group
+and basis of presentation
+Siemens is a technology company that is active in nearly all coun-
+tries of the world, focusing on the areas of automation and digi-
+talization in the process and manufacturing industries, intelligent
+infrastructure for buildings and distributed energy systems, con-
+ventional and renewable power generation and power distribu-
+tion, smart mobility solutions for rail and road and medical tech-
+nology and digital healthcare services.
+Siemens comprises Siemens AG, a stock corporation under the
+Federal laws of Germany, as the parent company and its subsid-
+iaries. Our Company is incorporated in Germany, with our corpo-
+rate headquarters situated in Munich. As of September 30, 2019,
+Siemens had around 385,000 employees.
+A.2 Financial performance system
+At the end of fiscal 2018, Siemens announced its “Vision 2020+"
+company strategy. The main aim of "Vision 2020+" is to give
+Siemens' individual businesses significantly more entrepreneurial
+freedom under the strong Siemens brand in order to sharpen
+their focus on their respective markets. As a result, we imple-
+mented a new organizational structure in fiscal 2019 consisting
+of the three Operating Companies Digital Industries, Smart In-
+frastructure and Gas and Power, and the three Strategic Com-
+panies Mobility, Siemens Healthineers and Siemens Gamesa
+Renewable Energy. These six industrial businesses are reportable
+segments, which together are reported as "Industrial Businesses".
+Financial Services (SFS), which supports the activities of our in-
+dustrial businesses and also conducts its own business with exter-
+nal customers, continues to be a reportable segment outside our
+Industrial Businesses. Furthermore, we report Portfolio Compa-
+nies, which comprises businesses that are managed separately to
+improve their performance. For further information on the reorga-
+nization of our businesses, see A.3 SEGMENT INFORMATION. In this
+Annual Report, we report financial results for fiscal 2019 according
+to the new company structure on a full year basis. Prior-period
+amounts are presented on a comparable basis.
+ciation/
+amortiza-
+tion and
+impairment
+Deprecia-
+tion/amor-
+Carrying
+amount
+09/30/2019
+and impair-
+ment in
+fiscal 2019
+Internally generated
+technology
+3,467
+85
+tization
+(254)
+(84)
+3,885
+(1,906)
+1,979
+Acquired technology
+including patents, licenses
+and similar rights
+7,573
+173
+97
+88
+(923)
+416
+lated depre-
+amount
+amount
+5,702
+1.7%
+6.5%
+7,008
+The sensitivity analysis for the groups of cash-generating units to
+which a significant amount of goodwill is allocated was based on
+a reduction in after-tax future cash flows by 10% or an increase
+in after-tax discount rates by one percentage point or a reduction
+in the terminal value growth rate by one percentage point.
+Siemens concluded that no impairment loss would need to be
+recognized on goodwill in any of these groups of cash-generat-
+ing units.
+94 Consolidated Financial Statements
+NOTE 13 Other intangible assets and
+property, plant and equipment
+Additions
+Gross
+Trans-
+through
+carrying
+lation
+business
+diffe-
+combi-
+Reclassi-
+(in millions of €)
+10/01/2018
+rences
+nations Additions
+fications
+Retire-
+ments¹
+09/30/2019
+Gross
+carrying
+Accumu-
+(3,702)
+(262)
+(652)
+and equipment
+8,716
+151
+8
+357
+327
+(355)
+9,205
+(6,495)
+2,710
+(609)
+Furniture and office
+equipment
+6,651
+121
+5
+754
+154
+(535)
+7,150
+(5,515)
+1,635
+(830)
+Equipment leased to others
+67
+8.5%
+3,097
+Technical machinery
+3,306
+4,619
+8,664
+Customer relationships
+and trademarks
+8,898
+405
+183
+(52)
+9,434
+(4,919)
+4,515
+(547)
+Other intangible assets
+19,938
+663
+279
+504
+(1,059)
+20,326
+(10,526)
+9,800
+(1,453)
+Land and buildings
+8,372
+171
+11
+158
+137
+(185)
+(4,046)
+1.7%
+30,213
+8.0%
+Raw materials and supplies
+Work in progress
+3,726
+3,165
+5,902
+6,024
+Finished goods and products held for resale
+Advances to suppliers
+4,258
+3,932
+921
+763
+14,806
+13,885
+2018
+NOTE 12 Goodwill
+Cost
+Balance at begin of fiscal year
+Cost of sales includes inventories recognized as expense amount-
+ing to €60,189 million and €57,029 million, respectively, in fiscal
+2019 and 2018. Compared to prior year, write-downs increased
+(decreased) by €70 million and €(19) million as of September 30,
+2019 and 2018.
+Fiscal year
+2019
+2018
+671
+29,754
+Translation differences and other
+1,152
+(140)
+Acquisitions and purchase accounting adjustments
+(in millions of €)
+2019
+Sep 30,
+(in millions of €)
+751
+738
+Sep 30,
+7,112
+6,608
+(in millions of €)
+2019
+2018
+Loans receivable
+7,893
+6,863
+Interest-bearing debt securities
+1,331
+1,271
+Derivative financial instruments
+775
+594
+Other
+669
+699
+10,669
+9,427
+92 Consolidated Financial Statements
+NOTE 10 Contract assets and liabilities
+As of September 30, 2019 and 2018, amounts expected to be set-
+tled after twelve months are €2,106 million and €1,954 million
+for contract assets and €3,626 million and €3,118 million for con-
+tract liabilities, respectively. In fiscal 2019 and 2018, €63 million
+and €21 million are included in revenue, relating to performance
+obligations satisfied in previous periods. In fiscal 2019 and 2018,
+revenue includes €9,449 million and €9,271 million, respectively,
+which was included in contract liabilities at the beginning of the
+fiscal year.
+NOTE 11 Inventories
+742
+629
+Dispositions and reclassifications to assets classified as held for disposal
+(9)
+The following table presents key assumptions used to determine
+fair value less costs to sell for impairment test purposes for the
+groups of cash-generating units to which a significant amount of
+goodwill is allocated:
+(in millions of €)
+Gas and Power
+Digital Industries
+Imaging of Siemens Healthineers
+Sep 30, 2019
+Goodwill
+Terminal value
+growth rate
+After-tax
+discount rate
+7,167
+1.7%
+8.0%
+6,807
+1.7%
+8.5%
+5,951
+1.7%
+6.5%
+Revenue figures in the five-year planning period of the groups of
+cash-generating units to which a significant amount of goodwill
+is allocated are based on average revenue growth rates (exclud-
+ing portfolio effects) of between 2.3% and 6.2% (0.3% and 8.9%
+in fiscal 2018). For Gas and Power, Siemens expects a stable con-
+tribution from the services business as well as a stable market
+share in the products and solutions businesses, while dealing
+with challenging structural global energy market trends, in par-
+ticular for large gas turbines.
+(in millions of €)
+Power and Gas
+Digital Factory
+Imaging of Siemens Healthineers
+Goodwill
+6,440
+Terminal value
+growth rate
+1.7%
+Sep 30, 2018
+After-tax
+discount rate
+ing unit or group of cash-generating units. Discount rates are
+based on the weighted average cost of capital (WACC). Financial
+Services' discount rate represents its specific cost of equity. The
+discount rates are calculated based on a risk-free rate of interest
+and a market risk premium. In addition, the discount rates reflect
+the current market assessment of the risks specific to each
+cash-generating unit or group of cash-generating units by taking
+into account specific peer group information on beta factors,
+leverage and cost of debt. The parameters for calculating the
+discount rates are based on external sources of information.
+The peer group is subject to an annual review and adjusted, if
+necessary. Terminal value growth rates take into consideration
+external macroeconomic sources of data and industry specific
+trends.
+5,753
+The fair value less costs to sell is mainly driven by the terminal
+value which is particularly sensitive to changes in the assump-
+tions on the terminal value growth rate and discount rate. Both
+assumptions are determined individually for each cash-generat-
+Siemens based its determinations of the fair value less costs to
+sell for the cash-generating units or groups of cash-generating
+units include terminal value growth rates up to 1.7% in fiscal 2019
+and 1.7% in fiscal 2018, respectively and after-tax discount rates
+of 5.5% to 8.5% in fiscal 2019 and 6.5% to 8.5% in fiscal 2018.
+(31)
+Balance at fiscal year-end
+32,098
+30,213
+Accumulated impairment losses and other changes
+Balance at begin of fiscal year
+Translation differences and other
+1,868
+1,847
+72
+17
+Impairment losses recognized during the period
+(including those relating to disposal groups)
+Dispositions and reclassifications to assets classified as held for disposal
+Balance at fiscal year-end
+Carrying amount
+Balance at begin of fiscal year
+Balance at fiscal year-end
+1
+4
+(3)
+1,938
+1,868
+28,344
+30,160
+27,906
+28,344
+As of April 1, 2019, Siemens adjusted its organizational and report-
+ing structure. Goodwill has been reallocated to the reorganized
+reporting structure generally based on relative values. The reallo-
+cation did not result in goodwill impairments. Fiscal 2018 disclo-
+sures are based on the reporting structure before reorganization.
+Siemens performs the mandatory annual impairment test in the
+three months ended September 30. The recoverable amounts for
+the annual impairment test 2019 for Siemens' cash-generating
+units or groups of cash-generating units were estimated to be
+higher than the carrying amounts. Key assumptions on which
+Consolidated Financial Statements 93
+For the purpose of estimating the fair value less costs to sell of
+the cash-generating units or groups of cash-generating units,
+cash flows were projected for the next five years based on past
+experience, actual operating results and management's best es-
+timate about future developments as well as market assump-
+tions. The determined fair value of the cash-generating units or
+groups of cash-generating units is assigned to level 3 of the fair
+value hierarchy.
+19
+(55)
+3,467
+Consolidated Financial Statements 95
+96
+96
+The gross carrying amount of Advances to suppliers and con-
+struction in progress includes €1,335 million and €1,074 million,
+respectively of property, plant and equipment under construc-
+tion in fiscal 2019 and 2018. As of September 30, 2019 and 2018,
+contractual commitments for purchases of property, plant and
+equipment are €676 million and €652 million, respectively.
+Minimum future lease payments to be received under operating
+leases are:
+NOTE 15 Other current liabilities
+(in millions of €)
+Sep 30,
+2019
+2018
+Liabilities to personnel
+5,839
+1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+5,867
+156
+174
+Accruals for pending invoices
+Other
+1,204
+1,162
+1,824
+1,914
+9,023
+9,118
+Sep 30,
+(in millions of €)
+2019
+Deferred Income
+(1,990)
+11,381
+(16,659)
+(21)
+597
+11
+(488)
+3,097
+(1,614)
+1,483
+(279)
+Advances to suppliers and
+construction in progress
+1,046
+(6)
+6
+853
+(680)
+(15)
+1,205
+(2)
+1,203
+(2)
+Property, plant
+and equipment
+27,017
+(176)
+37
+2,787
+(1,626) 28,040
+2018
+2,998
+Within one year
+352
+16
+Total debt
+3,867
+4,210
+Receivables from finance leases
+finance leases
+11,747
+12,304
+Loans receivable
+Obligations under
+2018
+2019
+6,034
+(in millions of €)
+72
+683
+803
+ness (maturing until 2029)
+Sep 30,
+Other financial indebted-
+1,717
+1,076
+1,218
+1,187
+More than five years
+Other
+98
+14
+5,057
+90
+95
+After one year but not more than five years
+705
+653
+NOTE 16 Debt
+More than five years
+164
+136
+1,204
+1,142
+Current debt
+Non-current debt
+2019
+Sep 30,
+2018
+2019
+Sep 30,
+2018
+(in millions of €)
+NOTE 14 Other financial assets
+Notes and bonds
+(maturing until 2047)
+4,029
+3,142 29,176
+25,210
+Loans from banks
+(maturing until 2037)
+Derivative financial instruments
+27,120
+30,414
+336
+Equipment leased to others
+(782)
+1,545
+lation
+business
+Gross
+carrying
+Accumu-
+lated depre-
+ciation/
+amortiza-
+amount
+diffe-
+combi-
+Reclassi-
+(in millions of €)
+10/01/2017
+rences
+nations Additions fications
+through
+Retire-
+amount
+ments¹ 09/30/2018
+Carrying
+amount
+09/30/2018
+Deprecia-
+tion/amor-
+tization
+and impair-
+ment in
+fiscal 2018
+Internally generated
+technology
+3,224
+20
+351
+(128)
+3,467
+tion and
+impairment
+Trans-
+Gross
+carrying
+Additions
+(1,704)
+1,763
+(336)
+Advances to suppliers and
+construction in progress
+1,205
+39
+1
+873
+(638)
+(18)
+1,461
+(4)
+1,457
+(3)
+Property, plant
+and equipment
+28,040
+549
+26
+2,812
+(1,480)
+29,948
+(17,765)
+12,183
+(2,041)
+1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+(1,693)
+1,774
+(193)
+Acquired technology
+326
+(270)
+8,372
+(3,833)
+4,538
+(246)
+Technical machinery
+and equipment
+8,410
+(62)
+15
+398
+229
+(274)
+8,716
+(6,104)
+2,612
+(683)
+Furniture and office
+equipment
+6,435
+(37)
+719
+114
+(579)
+6,651
+(5,106)
+221
+(387)
+16
+8,129
+including patents, licenses
+and similar rights
+7,320
+53
+178
+78
+7,573
+(3,883)
+3,690
+(639)
+Customer relationships
+and trademarks
+8,870
+5
+57
+(34)
+Other intangible assets
+19,413
+78
+235
+429
+(218)
+8,898
+19,938
+(4,231) 4,667
+(9,807) 10,131
+(593)
+(1,424)
+Land and buildings
+(50)
+3,563
+715
+After one year but not more than five years
+in millions
+of €1
+Notional
+Currency
+Sep 30, 2018
+Carrying
+amount
+amount
+in millions
+(in millions)
+of €1
+US$3 m LIBOR+1.4%/2012/February 2019/US$ floating-rate instruments
+1.5%/2012/March 2020/EUR fixed-rate instruments
+US$
+400
+346
+€
+1,000
+1,000
+€
+Carrying
+amount
+Sep 30, 2019
+(in millions)
+amount
+110
+Total debt
+32,224
+(471)
+1
+506
+(29)
+(53)
+1,000
+32,177
+Interest rates in this Note are per annum. In fiscal 2019 and 2018,
+weighted-average interest rates for loans from banks, other fi-
+nancial indebtedness and obligations under finance leases were
+4.4% (2018: 2.1%), 1.5% (2018: 1.8%) and 6.3% (2018: 6.6%), re-
+spectively.
+CREDIT FACILITIES
+As of September 30, 2019 and 2018, Siemens has €9.95 billion
+and €9.5 billion lines of credit, thereof unused €9.45 billion and
+€8.3 billion, respectively. The facilities are for general corporate
+purposes. In February 2019 the existing €4.0 billion unused syn-
+dicated credit facility and the US$3.0 billion unused syndicated
+credit facility were cancelled following the signing of a new and
+unused €7.0 billion syndicated credit facility maturing in 2024.
+The unused €450 million revolving bilateral credit facility was
+extended to September 2020. Included in lines of credit is a sub-
+sidiary's €2.5 billion syndicated multi-currency term and revolv-
+ing credit facility which contains a fully drawn term credit facility
+tranche of €500 million maturing in 2021 and an unused revolv-
+ing credit facility tranche of €2.0 billion maturing in 2023 with
+two one-year extension options; it may be used to refinance the
+subsidiary's outstanding debt.
+Consolidated Financial Statements 97
+NOTES AND BONDS
+(interest/issued/maturity)
+Currency
+Notional
+In addition, other financing activities resulted in €9 million cash
+flows in fiscal 2018.
+1
+999
+£
+€
+1,000
+997
+US$
+100
+90 US$
+100
+85
+2013/June 2020/US$ floating-rate instruments
+2014/March 2019/US$ floating-rate instruments
+2014/September 2021/US$ floating-rate instruments
+0.375%/2018/September 2023/EUR fixed-rate instruments
+US$
+400
+367
+US$
+400
+345
+US$
+300
+997
+1,000
+€
+1,267
+350
+394
+£
+350
+393
+3.75%/2012/September 2042/GBP fixed-rate instruments
+£
+650
+2.75%/2012/September 2025/GBP fixed-rate instruments
+721
+650
+719
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+€
+1,250
+1,263
+€
+1,250
+£
+(7)
+115
+(current and non-current)
+Other financial indebtness
+(current and non-current)
+781
+(72)
+(6)
+171
+875
+Obligations under finance leases
+(current and non-current)
+110
+(21)
+Total debt
+32,177
+2,436
+24
+1
+16
+2,262
+(30)
+80
+30
+changes
+09/30/2019
+25,210
+6,471
+1,044
+405
+(3,954)
+29,176
+106
+Current notes and bonds
+3,142
+(3,190)
+228
+3,850
+4,029
+(current and non-current)
+2,934
+(752)
+Loans from banks
+24
+1,524
+405
+19
+(12)
+3,083
+3,142
+Loans from banks
+(current and non-current)
+2,526
+438
+25,210
+(30)
+2,934
+Other financial indebtness
+(current and non-current)
+786
+(134)
+129
+781
+Obligations under finance leases
+1
+259
+(3,138)
+389
+(118)
+36,449
+In addition, other financing activities resulted in €77 million cash
+flows in fiscal 2019.
+Non-cash changes
+(in millions of €)
+10/01/2017
+Cash flows
+(Acquisitions)/
+Dispositions
+(17)
+Foreign
+currency
+translation
+Reclassi-
+fications
+and other
+changes
+09/30/2018
+Non-current notes and bonds
+25,243
+Current notes and bonds
+3,554
+2,734
+(3,502)
+Fair value
+changes
+US$
+400
+367
+1,700
+1,461
+3.30%/2016/September 2046/US$-fixed-rate-instruments
+US$
+1,000
+910 US$
+1,000
+856
+US$3m LIBOR+0.34%/2017/March 2020/US$ floating-rate instruments
+US$
+800
+2.20%/2017/March 2020/US$-fixed-rate-instruments
+US$
+1,100
+2.70%/2017/March 2022/US$-fixed-rate-instruments
+US$
+1,000
+US$
+1,554
+1,700
+US$
+US$
+1,100
+949
+1.70%/2016/September 2021/US$-fixed-rate-instruments
+US$
+1,100
+1,009
+US$
+US$3m LIBOR+ 0.61%/2017/March 2022/US$ floating-rate instruments
+1,100
+2.00%/2016/September 2023/US$-fixed-rate-instruments
+US$
+750
+685
+US$
+750
+644
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+948
+US$
+850
+734 US$
+1,010 US$
+940 US$
+780 US$
+1,500
+1,364 US$
+1,500
+1,282
+Total US$ Bonds
+18,511
+18,577
+1.65%/2012/August 2019/US$ fixed-rate instruments
+US$
+US$
+1,285
+Total Bonds with Warrant Units
+1,285
+33,205
+28,352
+1 Includes adjustments for fair value hedge accounting.
+98 Consolidated Financial Statements
+4,008
+1,500
+1.30%/2016/September 2019/US$-fixed-rate-instruments
+4.20%/2017/March 2047/US$-fixed-rate-instruments
+1,250
+800
+690
+1,100
+949
+1,000
+852
+850
+733
+1,075
+3.125%/2017/March 2024/US$-fixed-rate-instruments
+1,000
+946 US$
+1,000
+861
+3.40%/2017/March 2027/US$-fixed-rate-instruments
+US$
+1,250
+1,144 US$
+US$
+and other
+302
+US$
+€
+750
+767
+€
+650
+689
+€
+800
+875
+1.75%/2019/February 2039/EUR fixed-rate instruments
+€
+800
+938
+0%/2019/September 2021/EUR fixed-rate instruments
+0%/2019/September 2024/EUR fixed-rate instruments
+0.125%/2019/September 2029/EUR fixed-rate instruments
+€
+1,000
+1,005
+0.3%/2019/February 2024/EUR fixed-rate instruments
+0.9%/2019/February 2028/EUR fixed-rate instruments
+1.25%/2019/February 2031/EUR fixed-rate instruments
+993
+1,000
+€
+US$
+400
+345
+€
+1,000
+997
+€
+1,000
+€
+996
+€
+746
+€
+750
+745
+€
+1,000
+993
+1.0%/2018/September 2027/EUR fixed-rate instruments
+1.375%/2018/September 2030/EUR fixed-rate instruments
+500
+504
+€
+US$
+1,750
+1,605 US$
+1,750
+1,509
+3.25%/2015/May 2025/US$-fixed-rate-instruments
+US$
+1,500
+2.90%/2015/May 2022/US$-fixed-rate-instruments
+1,432 US$
+1,290
+4.40%/2015/May 2045/US$-fixed-rate-instruments
+US$
+1,750
+1,587 US$
+1,750
+1,491
+US$3m LIBOR+0.32%/2016/September 2019/US$ floating-rate instruments
+1,500
+350
+863
+918 US$
+1,000
+992
+0.5%/2019/September 2034/EUR fixed-rate instruments
+€
+1,000
+990
+Total Debt Issuance Program
+14,695
+1,000
+8,489
+US$
+1,750
+1,892 US$
+1,750
+1,823
+2.15%/2015/May 2020/US$-fixed-rate-instruments
+US$
+1,000
+6.125%/2006/August 2026/US$ fixed-rate instruments
+Fair value
+changes
+750
+Dispositions
+(2,496)
+Intangible assets
+Deferred taxes due to temporary differences
+2018
+2019
+(in millions of €)
+Sep 30,
+5,405
+5,586
+Deferred income tax assets and (liabilities) on a net basis are
+summarized as follows:
+4,165
+5,062
+1,240
+524
+Deductible temporary differences
+Tax loss carryforwards
+2018
+2019
+Pensions and similar obligations
+3,540
+(2,407)
+2,799
+Current assets and liabilities
+Income and expenses recognized
+directly in equity
+Discontinued operations
+Continuing operations
+(in millions of €)
+Minimum future lease payments reconcile to the gross and net
+investment in leases and to the present value of the minimum
+future lease payments receivable as follows:
+Including items charged or credited directly to equity and the
+expense (benefit) from continuing and discontinued operations,
+the income tax expense (benefit) consists of the following:
+Consolidated Financial Statements 91
+Siemens has not recognized deferred tax liabilities for income
+taxes or foreign withholding taxes on the cumulative earnings of
+subsidiaries of €34,075 million and €37,498 million, respectively
+in fiscal 2019 and 2018 because the earnings are intended to be
+permanently reinvested in the subsidiaries.
+(in millions of €)
+As of September 30, 2019 and 2018, €2,186 million and
+€1,931 million of the unrecognized tax loss carryforwards expire
+over the periods to 2031.
+1,869
+Total deferred taxes, net
+168
+(42)
+731
+1,138
+Tax loss carryforwards and tax credits
+(144)
+Non-current assets and liabilities
+(169)
+1,249
+Fiscal year
+Sep 30,
+1,872
+Taxes for prior years
+(330)
+Tax-free income
+962
+Non-deductible losses and expenses
+income taxes resulting from:
+Increase (decrease) in
+Expected income tax expenses
+2,496
+2,330
+(1,249)
+(1,869)
+Balance at end of fiscal year of
+deferred tax (assets) liabilities
+Fiscal year
+2018
+2019
+(1)
+12
+(400)
+2,041
+(715)
+(833)
+Change in realizability of
+As of September 30, 2019, the Company has certain tax losses
+subject to significant limitations. For those losses deferred tax
+assets are not recognized, as it is not probable that gains will be
+generated to offset those losses.
+Actual income tax expenses
+8
+(49)
+Other, net
+(34)
+9
+for using the equity method
+Tax effect of investments accounted
+2,054
+Deferred tax assets have not been recognized with respect of the
+following items (gross amounts):
+(540)
+Foreign tax rate differential
+(450)
+(26)
+Change in tax rates
+(20)
+(85)
+deferred tax assets and tax credits
+(438)
+2019
+2018
+(in millions of €)
+3,610
+4,064
+1,911
+1,930
+2,322
+2,368
+2018
+2019
+2018
+2019
+(in millions of €)
+Within one year
+One to five years
+Thereafter
+16,582
+1,874
+18,455
+18,894
+1,966
+Receivables from finance leases
+16,928
+Trade receivables from the sale
+of goods and services
+3,497
+3,129
+920
+899
+currency
+translation
+2,308
+2,354
+Within one year
+NOTE 9
+Sep 30,
+2018
+2019
+(in millions of €)
+Sep 30,
+Other current financial assets
+Minimum future lease payments to be received are as follows:
+In fiscal 2019 and 2018, the long-term portion of receivables from
+finance leases is reported in Other financial assets amounting to
+€4,210 million and €3,867 million, respectively.
+5,667
+6,084
+6,831
+7,352
+627
+657
+Investments in finance leases primarily relate to industrial ma-
+chinery, medical equipment, transportation systems, equipment
+for information technology and office machines. Actual cash
+flows will vary from contractual maturities due to future sales of
+finance receivables, prepayments and write-offs.
+Sep 30,
+Present value of
+minimum future lease
+payments receivable
+in leases
+(992)
+Less: Unearned finance income
+250
+(698)
+6,831
+7,352
+Gross investment in leases
+223
+(926)
+239
+(32)
+21
+6,608
+7,112
+Minimum future lease payments
+1,872
+Sep 30,
+2018
+2019
+Plus: Unguaranteed residual values
+21
+1,195
+Net investment in leases
+Gross investment
+Sep 30,
+2018
+2019
+(in millions of €)
+The gross investment in leases and the present value of minimum
+future lease payments receivable are due as follows:
+Present value of minimum future
+lease payments receivable
+NOTE 8 Trade and other receivables
+An uncertain tax regulation arising from a foreign tax reform may
+result in potential future tax payments amounting to a middle
+three-digit million Euro range. Due to the low probability and the
+character of a contingent liability, no tax liability was recognized.
+2,272
+5,667
+(73)
+(92)
+Less: Present value of unguaranteed
+residual value
+(164)
+(184)
+Less: Allowance for doubtful accounts
+5,904
+6,360
+6,084
+34
+2,054
+(696)
+NON-CONTROLLING INTERESTS
+SUBSIDIARIES WITH MATERIAL
+Consolidated Financial Statements 89
+172
+132
+Total comprehensive income
+(3)
+(34)
+net of income taxes
+Other comprehensive income,
+176
+166
+continuing operations
+Income (loss) from
+2018
+2019
+Fiscal year
+Summarized financial information, in accordance with IFRS and
+before inter-company eliminations, is presented below.
+(in millions of €)
+Ownership interests held by non-controlling interests
+Accumulated non-controlling interests
+7,779
+606
+668
+1,310
+1,469
+41%
+41%
+Sep 30, 2018
+(in millions of €)
+Sep 30, 2019
+Sep 30, 2019
+15%
+registered in
+Zamudio, Spain
+Siemens Gamesa Renewable Energy S.A.
+Siemens Healthineers AG
+registered in
+Munich, Germany
+Non-current liabilities
+Current liabilities
+Non-current assets
+Current assets
+Sep 30, 2018
+15%
+As of September 30, 2019 and 2018, the carrying amount of all
+individually not material associates amounts to €1,577 million
+and €1,867 million, respectively. Summarized financial informa-
+tion for all individually not material associates, adjusted for the
+percentage of ownership held by Siemens, is presented below.
+Items included in the Statements of Comprehensive Income are
+presented for the twelve-month period applied under the equity
+method.
+investments accounted for
+using the equity method, net
+Gains (losses) on sales, net
+890
+200
+157
+19,843
+17,774
+Item Loans receivable primarily relate to long-term loan trans-
+actions of SFS.
+Consolidated Financial Statements
+CHANGES IN LIABILITIES ARISING
+FROM FINANCING ACTIVITIES
+Equity instruments
+Non-cash changes
+Foreign
+fications
+(Acquisitions)/
+(in millions of €)
+Non-current notes and bonds
+10/01/2018
+(56)
+Cash flows
+Reclassi-
+7,199
+1,287
+NOTE 3
+Income (loss) from
+(202)
+(4)
+Impairment and reversals of impairment
+58
+186
+142
+17
+2,239
+2018
+Fiscal year
+(in millions of €)
+Share of profit (loss), net
+Investments accounted for using the equity method
+NOTE 4 Interests in other entities
+In addition, Siemens acquired several businesses in fiscal 2019
+and 2018 for a total purchase price of €429 million and €571 mil-
+lion, respectively, mainly paid in cash. The (preliminary) purchase
+price allocations resulted in Other intangible assets of €124 mil-
+lion and €215 million and Goodwill of €311 million and €350 mil-
+lion, respectively, which comprises intangible assets that are not
+separable such as employee know-how and expected synergy
+effects. The purchase price allocation for some of the acquired
+businesses is preliminary, as a detailed analysis of the assets and
+liabilities has not been finalized.
+In October 2018, Siemens acquired the Mendix group for a con-
+sideration transferred of €515 million in cash. The final purchase
+price allocation as of the acquisition date resulted in Other Intan-
+gible assets of €152 million mainly relating to customer relation-
+ships, and Goodwill of €448 million. Including earnings effects
+from purchase price allocation and integration costs, the ac-
+quired business contributed revenue of €57 million and a net
+income of €(109) million to Siemens for the period from acquisi-
+tion to September 30, 2019.
+ACQUISITIONS
+Acquisitions
+2019
+7,899
+199
+13,650
+2,619
+2018
+2019
+1,842
+Fiscal year
+Income tax expenses
+Deferred tax
+(in millions of €)
+Current tax
+Other operating expenses in fiscal 2019 and 2018 include losses
+on sales of property, plant and equipment, transaction costs as
+well as effects from insurance, legal and regulatory matters.
+(564)
+NOTE 6 Other operating expenses
+NOTE 5 Other operating income
+Income tax expense (benefit) consists of the following:
+NOTE 7 Income taxes
+Non-current assets of Siemens Gamesa Renewable Energy in-
+clude the full goodwill resulting from the merger in 2017.
+813
+(729)
+346
+367
+In fiscal 2019 and 2018, Other operating income includes gains
+related to the sale of businesses of €50 million and €171 million
+and gains on sales of property, plant and equipment of €146 mil-
+lion and €103 million, respectively.
+(159)
+1,872
+The current income tax expenses in fiscal 2019 and 2018 includes
+adjustments recognized for current tax of prior years in the
+amount of €(369) and €(980) million, respectively. The deferred
+tax expense (benefit) in fiscal 2019 and 2018 includes tax effects
+of the origination and reversal of temporary differences of
+€398 million and €(241) million, respectively.
+(564)
+30
+7,349
+(648)
+(1,249)
+2018
+2019
+Fiscal year
+2,054
+Additions from acquisitions
+not impacting net income
+Other
+(in millions of €)
+Deferred tax balances and expenses (benefits) developed as fol-
+lows in fiscal 2019 and 2018:
+(in millions of €)
+Current and deferred income tax expense differs from the
+amounts computed by applying a combined statutory German
+income tax rate of 31% as follows:
+In Germany, the calculation of current tax is based on a combined
+tax rate of 31%, consisting of a corporate tax rate of 15%, a soli-
+darity surcharge thereon of 5.5% and an average trade tax rate
+of 15%. For foreign subsidiaries, current taxes are calculated
+based on the local tax law and applicable tax rates in the individ-
+ual foreign countries. Deferred tax assets and liabilities in Ger-
+many and abroad are measured at the tax rates that are expected
+to apply to the period when the asset is realized or the liability
+is settled.
+Consolidated Financial Statements
+90
+00
+Balance at begin of fiscal year of
+deferred tax (assets) liabilities
+Income taxes presented in the
+Consolidated Statements of Income
+Changes in items of the
+Consolidated Statements of
+Comprehensive Income
+355
+30
+Fiscal year 2019
+57
+Fiscal year 2018
+8,790
+ended Sep 30, 2018
+130
+245
+Net income attributable to non-controlling interests
+Fiscal year 2019
+six months
+3,118
+2,449
+5,780
+6,043
+7,104
+7,968
+5,303
+12,559
+5,605
+22
+8,804
+Dividends paid to non-controlling interests
+118
+1,840
+Total comprehensive income, net of income taxes
+Total cash flows
+(229)
+214
+218
+254
+Other comprehensive income, net of income taxes
+70
+141
+884
+666
+1,586
+Income (loss) from continuing operations, net of income taxes
+9,122
+10,227
+7,004
+14,518
+Revenue
+7
+4,448
+(67)
+(37)
+39
+(65)
+1.4%
+Actuarial assumptions
+The weighted-average discount rate used for the actuarial valua-
+tion of the DBO was as follows:
+The mortality tables used in Germany (Siemens Bio 2017) are
+mainly derived from data of the German Siemens population and
+to a lesser extent from data of the Federal Statistical Office in
+Germany by applying formulas in accordance with recognized
+actuarial standards.
+52
+The rates of compensation increase and pension progression for
+countries with significant effects are shown in the following
+table. Inflation effects, if applicable, are included in the assump-
+tions below.
+Remeasurements in fiscal 2019 include an actuarial gain in the
+amount of €768 million due to a change in financial assumptions
+in connection with payment options at the start of retirement in
+Germany.
+Experience (gains) losses
+Total
+SAPS S2 (Standard mortality tables for
+Self Administered Pension Schemes with
+allowance for future mortality improvements)
+BVG 2015 G
+Changes in financial assumptions
+(173)
+Changes in demographic assumptions
+2018
+2019
+(in millions of €)
+Fiscal year
+Discount rate
+Siemens specific tables (Siemens Bio 2017)
+Pri-2012 with generational projection from the
+US Social Security Administration's Long Range
+Demographic Assumptions
+4,569
+EUR
+1.3%
+GBP
+CH
+U.K.
+1.4%
+2.4%
+Germany
+2018
+2019
+Pension progression
+Sep 30,
+1.3%
+1.4%
+CH
+3.7%
+3.5%
+Compensation increase
+U.K.
+2018
+2019
+Sep 30,
+CHF
+USD
+U.K.
+19
+Germany
+1,190
+1,834
+2,207
+(45)
+150
+32
+3,103
+3,424
+3,027
+3,574
+(356)
+(682)
+16
+5,786
+6,764
+5,413
+604
+2.8%
+6,064
+1,042
+14
+38
+1,031
+Applied mortality tables are:
+The remeasurements comprise actuarial (gains) and losses result-
+ing from:
+Net interest expenses related to provisions for pensions and sim-
+ilar obligations amounted to €148 million and €164 million, re-
+spectively, in fiscal 2019 and 2018. The DBO is attributable to
+actives 32% and 31%, to deferreds with vested benefits 14% and
+14% and to retirees and surviving dependents 54% and 55%, re-
+spectively, in fiscal 2019 and 2018.
+470
+854
+Consolidated Financial Statements
+100
+1 Includes past service benefit/costs, settlement gains/losses and administration costs related to liabilities.
+(presented in Other assets)
+U.S.
+7,684
+7,215
+9,042
+86
+33
+28,764
+31,307
+35,893
+40,317
+829
+9,896
+3.0%
+Balance as of September 30, 2019
+2.0%
+Other assets
+933
+749
+Cash and cash equivalents
+595
+577
+Derivatives
+2,853
+3,259
+Multi strategy funds
+3,985
+4,181
+Alternative investments
+9,463
+11,053
+Corporate bonds
+4,475
+5,239
+Government bonds
+2,340
+2,162
+Total
+31,307
+obligations
+732
+losses and risks
+Warranties
+retirement
+Order related
+Asset
+Thereof non-current
+Other changes
+13,938
+Accretion expense and effect of changes in discount rates
+Reversals
+Usage
+Additions
+Thereof non-current
+Balance as of October 1, 2018
+(in millions of €)
+NOTE 18 Provisions
+102 Consolidated Financial Statements
+28,764
+Translation differences
+0.8%
+16,292
+4,300
+(94)
+104
+2,307
+decrease
+increase
+(2,068)
+Sep 30, 2018
+Sep 30, 2019
+decrease
+2,740
+increase
+(2,410)
+(in millions of €)
+Discount rate
+Rate of compen-
+sation increase
+Rate of pension
+Effect on DBO due to a one-half percentage-point
+A one-half-percentage-point change of the above assumptions
+would result in the following increase (decrease) of the DBO:
+Sensitivity analysis
+The discount rate was derived from high-quality corporate bonds
+with an issuing volume of more than 100 million units in the re-
+spective currency zones, which have been awarded an AA rating
+(or equivalent) by at least one of the three rating agencies
+Moody's Investors Service, S&P Global Ratings or Fitch Ratings.
+1.1%
+0.2%
+2.9%
+2.0%
+4.2%
+3.1%
+91
+(85)
+progression
+1,826
+3,910
+Equity securities
+2018
+2019
+(in millions of €)
+DEFINED CONTRIBUTION PLANS AND STATE PLANS
+Amounts recognized as expense for defined contribution plans is
+€661 million and €643 million in fiscal 2019 and 2018, respec-
+tively. Contributions to state plans amount to €1,850 million and
+€1,748 million in fiscal 2019 and 2018, respectively.
+Employer contributions expected to be paid to defined benefit
+plans in fiscal 2020 are €1,013 million. Over the next ten fiscal
+years, average annual benefit payments of €1,862 million and
+€1,843 million, respectively, are expected as of September 30,
+2019 and 2018. The weighted average duration of the DBO for
+Siemens defined benefit plans was 13 years as of September 30,
+2019 and twelve years as of September 30, 2018.
+Future cash flows
+Virtually all equity securities have quoted prices in active mar-
+kets. The fair value of fixed income securities is based on prices
+provided by price service agencies. The fixed income securities
+are traded in active markets and almost all fixed income securi-
+ties are investment grade. Alternative investments include hedge
+funds, private equity and real estate investments. Multi strategy
+funds mainly comprise absolute return funds and diversified
+growth funds that invest in various asset classes within a single
+fund and aim to stabilize return and reduce volatility. Derivatives
+predominantly consist of financial instruments for hedging inter-
+est rate risk and inflation risk. Other assets include an insured
+annuity contract valued at €1,344 million and €1,269 million,
+respectively, as of September 30, 2019 and 2018.
+Fixed income securities
+Sep 30,
+As a significant risk, the Company considers a decline in the
+plans' funded status due to adverse developments of plan assets
+and/or defined benefit obligations resulting from changing
+parameters. Accordingly, Siemens implemented a risk manage-
+ment concept aligned with the defined benefit obligations (Asset
+Liability Matching). Risk management is based on a worldwide
+defined risk threshold (Value at risk). The concept, the Value at
+risk and the asset development including the investment strategy
+are monitored and adjusted on an ongoing basis under consulta-
+tion of senior external experts. Independent asset managers are
+selected based on quantitative and qualitative analyses, which
+include their performance and risk evaluation. Derivatives are
+used to reduce risks as part of risk management.
+Asset Liability Matching Strategies
+As in prior year, sensitivity determinations apply the same meth-
+odology as applied for the determination of the post-employ-
+ment benefit obligation. Sensitivities reflect changes in the DBO
+solely for the assumption changed.
+The DBO effect of a 10% reduction in mortality rates for all ben-
+eficiaries would be an increase of €1,318 million and €1,031 mil-
+lion, respectively, as of September 30, 2019 and 2018.
+101
+Consolidated Financial Statements
+(1,371)
+1,539
+(1,541)
+Disaggregation of plan assets
+2,949
+Germany
+3,553
+715
+4
+3
+675
+712
+Interest expenses
+534
+534
+534
+534
+Current service cost
+9,265
+7,215
+62
+86
+27,668
+28,764
+36,871
+35,893
+679
+Interest income
+580
+523
+851
+692
+4
+3
+493
+568
+1,340
+1,257
+Consolidated Statements of income
+Balance at begin of fiscal year
+costs recognized in the
+162
+24
+(30)
+(12)
+131
+12
+Other¹
+(523)
+(580)
+Components of defined benefit
+Return on plan assets excluding
+2018
+2018
+U.K.
+In the US, the Siemens Pension Plans are sponsored, which for
+the most part have been frozen to new entrants and to future
+benefit accruals, except for interest credits on cash balance ac-
+counts. Siemens has appointed the Investment Committee as the
+named fiduciary for the management of the assets of the Plans.
+The Plans' assets are held in Master Trusts and the trustees of the
+Master Trusts are responsible for the administration of the assets
+of the trust, taking directions from the Investment Committee.
+The Plans are subject to the funding requirements under the
+Employee Retirement Income Security Act of 1974 as amended
+(ERISA). There is a regulatory requirement to maintain a mini-
+mum funding level of 80% in the defined benefit plans in order
+to avoid benefit restrictions. At their discretion, sponsoring em-
+ployers may contribute in excess of this regulatory requirement.
+Annual contributions are calculated by independent actuaries.
+U.S.
+In Germany, pension benefits are provided through the following
+plans: BSAV (Beitragsorientierte Siemens Altersversorgung), fro-
+zen legacy plans as well as deferred compensation plans. The
+majority of active employees participate in the BSAV. Those ben-
+efits are predominantly based on notional contributions and their
+respective asset returns, subject to a minimum return guaranteed
+by the employer. At inception of the BSAV, benefits provided un-
+der the frozen legacy plans were modified to substantially elimi-
+nate the effects of compensation increases. However, the frozen
+plans still expose Siemens to investment risk, interest rate risk
+and longevity risk. The pension plans are funded via contractual
+trust arrangements (CTA). In Germany no legal or regulatory min-
+imum funding requirements apply.
+plans are managed in the interest of the beneficiaries by way of
+contractual trust agreements with each separate legal entity. The
+defined benefit plans cover 493,000 participants, including
+224,000 actives, 81,000 deferreds with vested benefits and
+188,000 retirees and surviving dependents.
+The defined benefit plans open to new entrants are based pre-
+dominantly on contributions made by the Company. Only to a
+certain extent, those plans are affected by longevity, inflation
+and compensation increases and take into account country spe-
+cific differences. The Company's major plans are funded with
+assets in segregated entities. In accordance with local laws these
+DEFINED BENEFIT PLANS
+Post-employment benefits
+NOTE 17
+Siemens has a US$9.0 billion (€8.3 billion as of September 30,
+2019) commercial paper program in place including US$ extend-
+ible notes capabilities. As of September 30, 2019 and 2018,
+US$700 million (€643 million) and US$700 million (€605 mil-
+lion), respectively, were outstanding. Siemens' commercial pa-
+pers have a maturity of generally less than 90 days. Interest rates
+ranged from 1.85% to 2.75% in fiscal 2019 and from 1.08% to
+2.33% in fiscal 2018.
+COMMERCIAL PAPER PROGRAM
+As of September 30, 2019, a subsidiary has outstanding loans of
+€346 million.
+As of September 30, 2019 and 2018, two bilateral US$500 million
+term loan facilities (in aggregate €918 million and €864 million
+respectively) are outstanding, one until March 26, 2020; the sec-
+ond term loan facility was extended to June 27, 2024.
+ASSIGNABLE AND TERM LOANS
+Bond with Warrant Units The US$1.5 billion instruments
+were issued with 6,000 detachable warrants exercisable until
+August 1, 2019. As of September 30, 2019, all warrants except 26
+were exercised. The holders received 11.6 million Siemens AG
+shares and 102 thousand OSRAM Licht AG shares for a total price
+of €1.1 billion. The 1.65% US$1.5 billion fixed-rate instruments
+were redeemed at face value as due.
+-
+US$ Bonds In fiscal 2019, Siemens redeemed the 3M-
+LIBOR+0.32% US$350 million floating-rate instruments and the
+1.3% US$1.1 billion fixed-rate instruments at face value as due.
+Debt Issuance Program - The Company has a program for the
+issuance of debt instruments in place under which instruments
+up to €15.0 billion can be issued as of September 30, 2019 and
+2018, respectively. As of September 30, 2019 and 2018, €14.5 bil-
+lion and €8.5 billion in notional amounts were issued and
+are outstanding. Siemens redeemed the 3m LIBOR+1.4%
+US$400 million floating-rate instrument and the US$300 million
+floating-rate instrument at face value as due. In February 2019,
+Siemens issued instruments totaling €3 billion in four tranches.
+In September 2019, Siemens issued instruments totaling €3.5 bil-
+lion in four tranches.
+Other
+Pension benefits are mainly offered through the Siemens Benefit
+Scheme for which, until the start of retirement, an inflation in-
+crease of the majority of accrued benefits is mandatory. The re-
+quired funding is determined by a funding valuation carried out
+every third year based on legal requirements. Due to deviating
+guidelines for the determination of the discount rates, the tech-
+nical funding deficit is usually larger than the IFRS funding defi-
+cit. To reduce the deficit Siemens entered into an agreement with
+the trustees to provide annual payments of GB£31 (€34) million
+until fiscal 2033. The agreement also provides for a cumulative
+advance payment by Siemens AG compensating the remaining
+annual payments at the date of early termination of the agree-
+ment due to cancellation or insolvency.
+Consolidated Financial Statements 99
+Switzerland
+Following the Swiss law of occupational benefits (BVG) each
+employer has to grant post-employment benefits for qualifying
+employees. Accordingly, Siemens in Switzerland sponsors several
+cash balance plans. These plans are administered by external
+foundations. The board of the main foundation is composed of
+equally many employer and employee representatives. The board
+of the foundation is responsible for investment policy and asset
+2019
+2018
+2019
+2018
+2019
+(in millions of €)
+Fiscal year
+Fiscal year
+Fiscal year
+2019
+Fiscal year
+(III)
+(11)
+(1)
+Net defined
+benefit balance
+Effects of
+asset ceiling
+Fair value of
+plan assets
+Defined benefit
+obligation (DBO)
+Development of the defined benefit plans
+management, as well as for any changes in the plan rules and the
+determination of contributions to finance the benefits. The
+Company is required to make total contributions at least as high
+as the sum of the employee contributions set out in the plan
+rules. In case of an underfunded plan the Company together with
+the employees may be asked to pay supplementary contributions
+according to a well-defined framework of recovery measures.
+(1 - 11 +111)
+3,341
+amounts included in net interest
+Actuarial (gains) losses
+(7)
+4
+710
+(626)
+(2,254)
+(1,281)
+Other reconciling items
+(15)
+56
+(7)
+4
+(27)
+383
+(36)
+436
+Foreign currency translation effects
+12
+(8)
+(8)
+(652)
+(2,970)
+Balance at fiscal year-end
+Germany
+4,073
+thereof net defined benefit assets
+and similar obligations
+thereof provisions for pensions
+Total
+Other countries
+CH
+U.K.
+U.S.
+56
+6,182
+15,885
+16,588
+7,215
+9,042
+86
+33
+28,764
+35,893 31,307
+22,067
+40,317
+24,398
+7,811
+income and net interest expenses
+4
+Business combinations, disposals and other
+2,601
+(65)
+4,448
+of Comprehensive Income
+in the Consolidated Statements
+Remeasurements recognized
+27
+(60)
+27
+(60)
+(65)
+4,448
+107
+(2,601)
+Effects of asset ceiling
+(65)
+4,448
+(107)
+2,601
+(107)
+(60)
+27
+1,787
+(529)
+(84)
+(143)
+(133)
+(1,674)
+(1,678)
+124
+130
+124
+(1,817)
+(529)
+48
+(84)
+(1,811)
+Benefits paid
+130
+Plan participants' contributions
+69
+(2,824)
+(568)
+2,824
+568
+Employer contributions
+Settlement payments
+Total
+Financial assets
+1,475
+Consolidated Financial Statements
+105
+to ten years. Generally, consortium agreements provide for fall-
+back guarantees as a recourse provision among the consortium
+partners. As of September 30, 2019 and 2018, the Company
+accrued €3 million and €3 million, respectively, relating to per-
+formance guarantees.
+In addition to guarantees disclosed in the table above, the
+Company issued other guarantees. To the extent future claims
+are not considered remote, maximum future payments from
+these obligations amount to €413 million and €492 million as of
+September 30, 2019 and 2018, respectively. These commitments
+include indemnifications issued in connection with dispositions
+of businesses. Such indemnifications may protect the buyer from
+potential tax, legal and other risks in conjunction with the pur-
+chased business. As of September 30, 2019 and 2018, the accrued
+amount for such other commitments is €146 million and
+€204 million, respectively.
+Future payment obligations under non-cancellable operating
+leases are:
+(in millions of €)
+Sep 30,
+2019
+Within one year
+887
+After one year but not more than five years
+More than five years
+1,767
+2018
+839
+1,588
+864
+3,518
+765
+3,193
+Total operating rental expenses for the years ended Septem-
+ber 30, 2019 and 2018 were €1,208 million and €1,249 million,
+respectively.
+The Company is jointly and severally liable and has capital contri-
+bution obligations as a partner in commercial partnerships and
+as a participant in various consortiums.
+NOTE 22 Legal proceedings
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED BREACHES OF CONTRACT
+In March 2019, a Brazilian company asserted claims to pay an
+amount in a higher three-digit million euro amount in local cur-
+rency against a consortium of contractors and each member of
+the consortium, including Siemens Ltda., Brazil (Siemens Ltda.)
+in a lawsuit relating to the construction of a power plant in Brazil
+that was completed in 2016. The members of the consortium
+are jointly and severally liable, Siemens Ltda.'s share in the con-
+sortium is below 3%. The consortium and its members defend
+themselves against the claim and for their part claim payment in
+a lower three-digit million euro amount in local currency.
+In June 2019, the City of Jackson, Mississippi, filed a lawsuit
+against Siemens Industry, Inc., and Siemens Corporation, USA,
+among others, in connection with a performance contract. The
+City amended its lawsuit in November 2019 and alleges more
+than US$450 million (approximately €409 million) in damages
+in addition to further substantial unspecified future losses, inter-
+est and punitive damages. Siemens is defending itself against
+the action.
+PROCEEDINGS OUT OF OR IN CONNECTION
+WITH ALLEGED COMPLIANCE VIOLATIONS
+As previously reported, in July 2008, Hellenic Telecommunica-
+tions Organization S.A. (OTE) filed a lawsuit against Siemens AG
+with the district court of Munich, Germany, seeking to compel
+Siemens AG to disclose the outcome of its internal investigations
+with respect to OTE. OTE seeks to obtain information with respect
+to allegations of undue influence and/or acts of bribery in con-
+nection with contracts concluded between Siemens AG and OTE
+from calendar year 1992 to 2006. At the end of July 2010, OTE
+expanded its claim and requested payment of damages by
+Siemens AG of at least €57 million to OTE for alleged bribery pay-
+ments to OTE employees. In October 2014, OTE increased its
+damage claim to the amount of at least €68 million. Siemens AG
+continues to defend itself against the expanded claim.
+As previously reported, in September 2011, the Israeli Antitrust
+Authority requested that Siemens present its legal position
+regarding an alleged anti-competitive arrangement between
+April 1988 and April 2004 in the field of gas-insulated switchgear.
+In September 2013, the Israeli Antitrust Authority concluded that
+Siemens AG was a party to an illegal restrictive arrangement re-
+garding the Israeli gas-insulated switchgear market between
+1988 and 2004, with an interruption from October 1999 to Feb-
+ruary 2002. The Company appealed against this decision in
+May 2014.
+Based on the above mentioned conclusion of the Israeli Antitrust
+Authority, two electricity consumer groups filed motions to
+certify a class action for cartel damages against a number of
+companies including Siemens AG with an Israeli State Court in
+September 2013. One of the class actions has been dismissed by
+the court in fiscal year 2015. The remaining class action seeks
+compensation for alleged damages amounting to ILS2.8 billion
+(approximately €739 million as of September 2019). In addition,
+the Israel Electric Corporation (IEC) filed at the end of Decem-
+ber 2013 with an Israeli State Court a separate ILS3.8 billion (ap-
+proximately €997 million as of September 2019) claim for dam-
+ages against Siemens AG and other companies that allegedly
+formed a cartel in the Israeli gas-insulated switchgear market.
+106 Consolidated Financial Statements
+A settlement agreement was concluded in those proceedings in
+December 2018 which is subject to approval.
+As previously reported, in May 2013, Siemens Ltda., Brazil
+(Siemens Ltda.) entered into a leniency agreement with the
+Administrative Council for Economic Defense (CADE) and other
+relevant Brazilian authorities relating to possible antitrust viola-
+tions in connection with alleged anticompetitive irregularities in
+metro and urban train projects, in which Siemens Ltda. and par-
+tially Siemens AG, as well as a number of other companies par-
+ticipated as contractor. In July 2019, CADE completed the admin-
+istrative proceedings, confirming the reported misconduct. Due
+to its cooperation, Siemens was granted full immunity from ad-
+ministrative fines for the misconduct. In connection with the
+above mentioned metro and urban train projects, several Brazil-
+ian authorities continue to investigate alleged criminal acts
+(corruptive payments, anti-competitive conduct, undue influ-
+ence on public tenders).
+Furthermore, Siemens issues guarantees of third-party perfor-
+mance, which mainly include performance bonds and guaran-
+tees of advanced payments in a consortium. In the event of
+non-fulfillment of contractual obligations by the consortium
+partner(s), Siemens will be required to pay up to an agreed-upon
+maximum amount. These agreements typically have terms of up
+As previously reported, in March 2014, Siemens was informed
+that in connection with the above mentioned metro and urban
+train projects the Public Prosecutor's Office São Paulo has re-
+quested criminal proceedings at court into alleged violations of
+Brazilian antitrust law against a number of individuals including
+current and former Siemens employees. The proceedings con-
+tinue; the Public Prosecutor's Office São Paulo has appealed all
+decisions where the courts denied opening criminal trials.
+Item Credit guarantees covers the financial obligations of third
+parties generally in cases where Siemens is the vendor and (or)
+contractual partner or Siemens is liable for obligations of associ-
+ated companies accounted for using the equity method. Addi-
+tionally, credit guarantees are issued in the course of the SFS
+business. Credit guarantees generally provide that in the event of
+default or non-payment by the primary debtor, Siemens will
+be required to settle such financial obligations. The maximum
+amount of these guarantees is equal to the outstanding balance
+of the credit or, in case a credit line is subject to variable utiliza-
+tion, the nominal amount of the credit line. These guarantees
+have residual terms of up to 6 years and 7 years, respectively, in
+fiscal 2019 and 2018. The Company held collateral mainly through
+inventories and trade receivables. Siemens accrued €35 million
+and €35 million relating to credit guarantees as of September 30,
+2019 and 2018, respectively.
+2,630
+24,047
+9.14
+10,582
+3,419
+9,602
+Sep 30,
+(in millions of €)
+2019
+2018
+Industrial net debt/EBITDA
+0.6
+0.4
+Credit guarantees
+447
+389
+Guarantees of third-party performance
+Miscellaneous guarantees
+2,644
+2,454
+200
+3,090
+3,043
+1 The adjustment considers that both Moody's and S&P view Financial Services as a captive
+finance company. These rating agencies generally recognize and accept higher levels of debt
+attributable to captive finance subsidiaries in determining credit ratings. Following this concept,
+Siemens excludes Financial Services debt in order to derive an industrial net debt which is not
+affected by Financial Services' financing activities.
+2 Debt is generally reported with a value representing approximately the amount to be repaid.
+However, for debt designated in a hedging relationship (fair value hedges), this amount is
+adjusted for changes in market value mainly due to changes in interest rates. Accordingly,
+Siemens deducts these changes in market value in order to end up with an amount of debt
+that approximately will be repaid.
+The SFS business is capital intensive and operates with a larger
+amount of debt to finance its operations compared to the indus-
+trial business.
+(in millions of €)
+2019
+Allocated equity
+2,864
+Financial Services debt
+Debt to equity ratio
+25,959
+9.06
+Sep 30,
+2018
+Equity allocated to SFS differs from the carrying amount of equity
+as it is mainly allocated based on the risks of the underlying
+business.
+EBITDA
+As previously reported, in May 2014, the Public Affairs Office
+(Ministério Público) São Paulo initiated a lawsuit against Siemens
+Ltda. as well as other companies and several individuals claiming,
+inter alia, damages in an amount of BRL2.5 billion (approximately
+€552 million as of September 2019) plus adjustments for in-
+flation and related interest in relation to train refurbishment
+contracts entered into between 2008 and 2011. In January 2015,
+the district court of São Paulo admitted a lawsuit of the State of
+São Paulo and two customers against Siemens Ltda., Siemens AG
+and other companies and individuals claiming damages in an
+unspecified amount. In March 2015, the district court of São
+Paulo admitted a lawsuit of the Public Affairs Office (Ministério
+Público) São Paulo against Siemens Ltda. and other companies
+claiming, inter alia, damages in an amount of BRL487 million
+(approximately €108 million as of September 2019) plus ad-
+justments for inflation and related interest in relation to train
+maintenance contracts entered into in 2000 and 2002. In Sep-
+tember 2015, the district court of São Paulo admitted another
+lawsuit of the Public Affairs Office (Ministério Público) São Paulo
+against Siemens Ltda. and other companies claiming, inter alia,
+damages in an amount of BRL918 million (approximately
+€203 million as of September 2019) plus adjustments for infla-
+tion and related interest in relation to train maintenance con-
+tracts entered into in 2006 and 2007. Siemens is defending itself
+As previously reported, in June 2015, Siemens Ltda. appealed to
+the Supreme Court against a decision of a previous court to
+suspend Siemens Ltda. from participating in public tenders and
+signing contracts with public administrations in Brazil for a five
+year term based on alleged irregularities in calendar year 1999
+and 2004 in public tenders with the Brazilian Postal authority. In
+February 2018, the appeal was rejected. Siemens Ltda. has
+introduced another remedy against the decision. In June 2018,
+the court accepted Siemens' appeal and declared the earlier in-
+stance decision as void. Siemens Ltda. is currently not excluded
+from participating in public tenders. In February 2018, the
+Ministério Público in Brasilia filed a lawsuit based on the same set
+of facts, mainly claiming the exclusion of Siemens Ltda. from
+public tenders for a ten year term. Siemens Ltda. is defending
+itself against the lawsuit.
+(in millions of €)
+Loans and receivables'
+Cash and cash equivalents
+Derivatives designated in a hedge accounting relationship
+Financial assets held for trading
+Available-for-sale financial assets²
+Financial assets
+Financial liabilities measured at amortized cost³
+Financial liabilities held for trading4
+Derivatives designated in a hedge accounting relationship4
+Financial liabilities
+1 Reported in the following line items of the Statements
+of Financial Position: Trade and other receivables, Other
+current financial assets and Other financial assets, except
+for separately disclosed €715 million available-for-sale
+financial assets and €1,882 million derivative financial
+instruments. Includes €16,044 million trade receivables
+from the sale of goods and services, thereof €810 million
+with a term of more than twelve months.
+2 Includes equity instruments classified as available-for-sale,
+for which a fair value could not be reliably measured and
+which are therefore recognized at cost.
+3 Reported in the following line items of the Statements of
+Financial Position: Short-term debt and current maturities
+of long-term debt, Trade payables, Other current financial
+liabilities, Long-term debt and Other financial liabilities,
+except for separately disclosed derivative financial instru-
+ments of €738 million.
+4 Reported in line items Other current financial liabilities
+and Other financial liabilities.
+108
+Consolidated Financial Statements
+Sep 30,
+2018
+41,773
+11,066
+267
+1,615
+2,001
+56,722
+44,325
+567
+171
+45,063
+4,575
+Fiscal 2018 amounts are not comparable, since those are under
+IAS 39:
+against these actions. It cannot be excluded that further signifi-
+cant damage claims will be brought by customers or the state
+against Siemens.
+4 Reported in line items Other current financial liabilities
+and Other financial liabilities.
+3 Reported in the following line items of the Statements of
+Financial Position: Short-term debt and current maturities
+As previously reported, four gas turbines intended for a project
+in Taman, Russia, which were delivered by OOO Siemens Gas Tur-
+bines Technologies (SGTT) to its customer OAO VO TechnoProm-
+Export in summer of 2016, had against contractual agreements
+with SGTT been allegedly brought to Crimea, a location under
+sanctions. The Hamburg public prosecutor initiated criminal pro-
+ceedings against Siemens employees in regard of alleged viola-
+tions of the German Foreign Trade and Payments Act. Siemens
+cooperates with the authorities.
+Siemens is involved in numerous Legal Proceedings in various
+jurisdictions. These Legal Proceedings could result, in particular,
+in Siemens being subject to payment of damages and punitive
+damages, equitable remedies or sanctions, fines or disgorgement
+of profit. In individual cases this may also lead to formal or infor-
+mal exclusion from tenders or the revocation or loss of business
+licenses or permits. In addition, further Legal Proceedings may be
+commenced or the scope of pending Legal Proceedings may be
+extended. Asserted claims are generally subject to interest rates.
+Some of these Legal Proceedings could result in adverse deci-
+sions for Siemens, which may have material effects on its busi-
+ness activities as well as its financial position, results of opera-
+tions and cash flows.
+For Legal Proceedings information required under IAS 37, Provi-
+sions, Contingent Liabilities and Contingent Assets is not dis-
+closed if the Company concludes that disclosure can be expected
+to seriously prejudice the outcome of the matter.
+Consolidated Financial Statements 107
+NOTE 23 Additional disclosures
+on financial instruments
+The following table discloses the carrying amounts of each cate-
+gory of financial assets and financial liabilities:
+(in millions of €)
+Loans receivables and other debt instruments measured at amortized cost¹
+Cash and cash equivalents
+Derivatives designated in a hedge accounting relationship
+Financial assets measured at FVTPL²
+Equity instruments measured at FVOCI¹
+Sep 30,
+2019
+45,467
+12,391
+798
+2,626
+513
+61,797
+Financial liabilities measured at amortized cost³
+Derivatives not designated in a hedge accounting relationship4
+Derivatives designated in a hedge accounting relationship4
+Financial liabilities
+49,315
+384
+50,587
+1 Reported in the following line items of the Statements of
+Financial Position: Trade and other receivables, Other
+current financial assets and Other financial assets, except
+for separately disclosed €890 million equity instruments
+in Other financial assets (thereof €513 at FVOCI) and
+€3,014 million derivative financial instruments (thereof in
+Other financial assets €2,239) as well as €34 million debt
+instruments measured at FVPL in Other financial assets.
+Includes €16,928 million trade receivables from the sale
+of goods and services, thereof €889 million with a term
+of more than twelve months.
+2 Reported in line items other current financial assets and
+other financial assets.
+of long-term debt, Trade payables, Other current financial
+liabilities, Long-term debt and Other financial liabilities,
+except for separately disclosed derivative financial instru-
+ments of €1,273 million.
+3,494
+889
+Plus: Amortization,
+206
+(180)
+2
+82
+110
+4,300
+2,107
+1,114
+425
+700
+687
+1,282
+494
+7,396
+3,714
+Except for asset retirement obligations, the majority of the
+Company's provisions are generally expected to result in cash
+outflows during the next one to 15 years.
+Warranties mainly relate to products sold. Order related losses
+and risks are provided for anticipated losses and risks on uncom-
+pleted construction, sales and leasing contracts.
+The Company is subject to asset retirement obligations related to
+certain items of property, plant and equipment. Such asset retire-
+ment obligations are primarily attributable to environmental
+clean-up costs (disclosed in Corporate items of the Segment in-
+formation) and to costs primarily associated with the removal of
+leasehold improvements at the end of the lease term.
+Environmental clean-up costs relate to remediation and environ-
+mental protection liabilities which have been accrued based on
+the estimated costs of decommissioning the site for the produc-
+tion of uranium and mixed-oxide fuel elements in Hanau, Ger-
+many (Hanau facilities), as well as a nuclear research and service
+center in Karlstein, Germany (Karlstein facilities). Whilst in fiscal
+2017, parts of the regulation for nuclear waste disposal were
+amended by way of law ("Gesetz zur Neuordnung der Verantwor-
+tung in der kerntechnischen Entsorgung"), Siemens is not cov-
+ered by these regulations and consequently continues to adhere
+to the German Atomic Energy Act ("deutsches Atomgesetz") ap-
+plicable as of September 30, 2019, which states that when a nu-
+clear facility is closed, the resulting radioactive waste from de-
+commissioning the nuclear facility must be reprocessed without
+causing damage and be delivered to a government-approved
+final storage facility. In this regard, the Company has devel-
+oped a plan to decommission the Hanau and Karlstein facilities
+in the following steps: asset retirement (including clean-out,
+decontamination and disassembly of equipment and installa-
+tions, decontamination of the facilities and buildings), waste
+conditioning and packaging of nuclear waste, as well as inter-
+mediate storage, transport to and final storage of the radioactive
+waste. This process will be supported by continuing engineering
+studies and radioactive sampling under the supervision of Ger-
+man federal and state authorities. The decontamination and dis-
+assembly at the Karlstein site were completed until the end of
+calendar year 2018, whereas final waste conditioning and pack-
+aging is planned to continue until 2025. Thereafter, the Company
+is responsible for intermediate storage of the radioactive materi-
+als until they are transported and handed over to a final storage
+facility. With respect to the Hanau facility, the asset retirement
+has been completed and intermediate storage has been set up.
+On September 21, 2006, the Company received official notifica-
+tion from the authorities that the Hanau facility has been re-
+leased from the scope of application of the German Atomic
+Energy Act and that its further use is unrestricted. The ultimate
+costs of the remediation are contingent on the decision of the
+federal government on the location of the final storage facilities
+and the date of their availability. Several parameters relating to
+the development of a final storage facility for radioactive waste
+are based on the assumptions for the so called Schacht Konrad
+final storage. The valuation uses assumptions to reflect the cur-
+rent and detailed cost estimates, price inflation and discount
+rates as well as a continuous outflow until the 2060's related to
+the costs for dismantling as well as intermediate and final stor-
+age. The estimated cash outflows related to the asset retirement
+obligation could alter significantly if political developments af-
+fect the government's timeline to finalize the so called Schacht
+Konrad. For discounting the cash outflows, the Company uses
+current interest rates as of the balance sheet date.
+Consolidated Financial Statements
+103
+As of September 30, 2019 and 2018, the provision totals €630 mil-
+lion and €710 million, respectively, including advance payments
+to the federal government for the construction of the final stor-
+age facility in the amount of €95 million and €85 million, respec-
+tively, which were capitalized. The decrease in the carrying
+amount is mainly due to new cost estimates of the federal gov-
+ernment and taking into account the current trend in the long-
+term inflation rate. The provision is recorded net of a present
+value discount of €103 million and €338 million, respectively,
+reflecting the assumed continuous outflow of the total expected
+payments until the 2060's.
+Other includes transaction-related provisions and post-closing
+provisions in connection with portfolio activities as well as provi-
+sions for Legal Proceedings, as far as the risks that are subject to
+such Legal Proceedings are not already covered by project ac-
+counting. Provisions for Legal Proceedings amounted to €407 mil-
+lion and €375 million as of September 30, 2019 and 2018,
+respectively.
+NOTE 19
+Equity
+Siemens' issued capital is divided into 850 million registered
+shares with no par value and a notional value of €3.00 per share
+as of September 30, 2019 and 2018, respectively. The shares are
+fully paid in. At the Shareholders' Meeting, each share has one
+vote and accounts for the shareholders' proportionate share in
+the Company's net income. All shares confer the same rights and
+obligations.
+In fiscal 2019 and 2018, Siemens repurchased 13,532,557 shares
+and 13,248,262 shares, respectively. In fiscal 2019 and 2018,
+Siemens transferred 16,251,968 and 7,777,923 treasury shares,
+respectively. As of September 30, 2019 and 2018, the Company
+has treasury shares of 37,232,048 and 39,951,459 respectively.
+Share based payment expenses increased Capital reserve by
+€294 million and €306 million (including non-controlling inter-
+ests), respectively in fiscal 2019 and 2018. In connection with the
+settlement of share based payment awards Siemens treasury
+shares (at cost) were transferred to employees of €188 million in
+fiscal 2019 and €506 million in fiscal 2018 which decreased Cap-
+ital reserve and Retained earnings by €132 million and €56 mil-
+lion, respectively in 2019 and by €468 million and €38 million
+in fiscal 2018.
+As of September 30, 2019 and 2018, total authorized capital of
+Siemens AG is €600 million and €618.6 million, respectively,
+nominal issuable in installments based on various time-limited
+authorizations, by issuance of up to 200 million and 206.2 million
+registered shares of no par value. In addition, as of September 30,
+2019 and 2018, Siemens AG's conditional capital is €1,080.6 mil-
+lion nominal or 360.2 million shares. It can primarily be used for
+serving convertible bonds or warrants under warrant bonds that
+could or can be issued based on various time-limited authoriza-
+tions approved by the respective Shareholders' Meeting.
+Dividends paid per share were €3.80 and €3.70, respectively, in
+fiscal 2019 and 2018. The Managing Board and the Supervisory
+Board propose to distribute a dividend of €3.90 per share entitled
+to the dividend, in total representing approximately €3.2 billion
+in expected payments. Payment of the proposed dividend is con-
+tingent upon approval at the Shareholders' Meeting on Febru-
+ary 5, 2020.
+In November 2018, Siemens announced a share-buyback pro-
+gram of up to €3 billion to be executed until November 15, 2021.
+202
+NOTE 20 Additional capital disclosures
+3
+2
+776
+depreciation and impairments
+1,320
+8,147
+2,390
+575
+762
+489
+4,216
+1,621
+449
+3
+468
+2,541
+(1,060)
+(502)
+(8)
+(346)
+(1,915)
+(1,131)
+(159)
+(262)
+(1,791)
+53
+29
+3
+16
+101
+35
+163
+A key consideration of our capital structure management is to
+maintain ready access to capital markets through various debt
+instruments and to sustain our ability to repay and service our
+debt obligations over time. In order to achieve this, Siemens in-
+tends to maintain an Industrial net debt divided by EBITDA (con-
+tinuing operations) ratio of up to 1.0. The ratio indicates the ap-
+proximate number of years that would be needed to cover the
+Industrial net debt through Income from continuing operations,
+without taking into account interest, taxes, depreciation and
+amortization.
+(239)
+Siemens' current corporate credit ratings are:
+P-1
+A-1+
+Net debt
+22,726
+19,840
+Less: Financial Services debt¹
+(25,959)
+(24,047)
+Plus: Provisions for pensions
+and similar obligations
+9,896
+7,684
+Plus: Credit guarantees
+447
+A-1+
+389
+(706)
+6,404
+(319)
+3,548
+Income from continuing operations
+before income taxes
+7,518
+8,050
+Plus/Less: Interest income, interest expenses
+NOTE 21 Commitments and
+contingencies
+The following table presents the undiscounted amount of maxi-
+mum potential future payments for major groups of guarantees:
+and other financial income (expenses), net
+104 Consolidated Financial Statements
+(430)
+(1,867)
+Less: Fair value hedge accounting adjustment²
+P-1
+Industrial net debt
+(1,271)
+2019
+(in millions of €)
+Short-term debt
+Sep 30,
+2018
+Short-term debt and current maturities
+Sep 30, 2019
+Sep 30, 2018
+of long-term debt
+5,057
+Plus: Long-term debt
+30,414
+27,120
+Moody's
+Investors
+Service
+6,034
+Moody's
+Investors
+Service
+A1
+S&P
+Global
+Ratings
+Less: Current interest bearing debt securities
+(1,331)
+A+
+A+
+Long-term debt
+A1
+(12,391)
+Less: Cash and cash equivalents
+S&P
+Global
+Ratings
+(11,066)
+Financial liabilities
+Sep 30,
+2018
+664
+2019
+1,056
+1,610
+Amounts offset in
+Financial assets
+Sep 30,
+2018
+the Statement of
+2019
+2,575
+Fair values of each type of derivative financial instruments re-
+ported as financial assets or financial liabilities in line items Other
+current financial assets (liabilities) or Other financial assets (lia-
+bilities) are:
+(in millions of €)
+fair value hedges
+therein: included in
+Siemens enters into master netting and similar agreements for
+derivative financial instruments. Potential offsetting effects are
+as follows:
+7,842
+(in millions of €)
+1,195
+OFFSETTING
+6,647
+Gross amounts
+Asset
+792
+Asset
+1,049
+1,606
+661
+8,248
+2,568
+Financial Position
+therein: included in
+the Statement of
+548
+Sep 30, 2019
+Liability
+717
+exchange contracts
+Net amounts in
+Foreign currency
+3
+7
+3
+7
+Financial Position
+Sep 30, 2018
+Liability
+942
+More than
+12 months
+198
+Up to
+111
+Consolidated Financial Statements
+Impairment losses on financial instruments are presented in line
+items Cost of sales, Selling and general administrative expenses
+and Other financial income (expenses), net. Net losses in fiscal
+2019 are €267 million, including €20 million on loan commit-
+ments and financial guarantees. Impairment losses of €113 mil-
+lion are mostly attributable to the SFS business and presented in
+Other financial income (expenses), net.
+184
+891
+68
+12
+54
+as of September 30, 2019
+In fiscal 2018, valuation allowances of current and long-term
+receivables under the IAS 39 incurred loss model developed as
+follows:
+Valuation allowance
+Reclassifications to line item
+7
+6
+(25)
+14
+(2)
+cash flow hedges
+(6)
+differences and other changes
+Assets held for disposal and dispositions of
+those entities
+12 months
+7,803
+(in millions of €)
+Fiscal year
+Sep 30, 2019
+cash flow hedges
+therein: included in
+Interest rate swaps
+Foreign currency exchange contracts
+1,012
+(in millions of €)
+(64)
+disposal and dispositions of those entities
+Valuation allowance as of fiscal year-end
+Valuation allowance as of beginning of fiscal year
+Increase in valuation allowances recorded in the
+Consolidated Statements of Income in the current period
+Write-offs charged against the allowance
+Reclassifications to line item Assets held for
+Foreign exchange translation differences
+25
+Recoveries of amounts previously written-off
+(217)
+To hedge foreign currency exchange and interest rate risks, de-
+rivatives are contracted to achieve a 1:1 hedge ratio so that the
+main characteristics match the underlying hedged items (e.g.
+nominal amount, maturity) in a critical term match, which en-
+sures an economic relationship between hedging instruments
+and hedged items suitable for hedge accounting. The nominal
+amounts of hedging instruments by maturity are:
+NOTE 24 Derivative financial instru-
+ments and hedging activities
+198
+1,210
+2018
+(141)
+341
+Balance as of
+213
+16
+thereof discontinued
+hedge accounting
+3
+(57)
+(10)
+September 30, 2019
+(16)
+94
+(4)
+to net income
+Cash and cash equivalents includes €142 million and €200 mil-
+lion as of September 30, 2019 and 2018, respectively, which are
+not available for use by Siemens mainly due to minimum reserve
+requirements with banks. As of September 30, 2019 and 2018,
+the carrying amount of financial assets Siemens pledged as col-
+lateral is €127 million and €126 million, respectively.
+Reclassification
+(223)
+(42)
+presented in OCI
+19
+reserve
+hedging
+Cost of
+Amounts reclassified to net income in connection with interest
+rate risk hedges and non-operative foreign currency hedges are
+presented in Other financial income (expenses), net. Reclassifi-
+cations of foreign currency risk hedges with operative business
+purposes are presented as functional costs. Costs of hedging re-
+serve is the forward element of forward contracts that are not
+designated as hedge accounting and which are amortized to in-
+terest expense on a straight-line basis as the hedged item is
+time-period related.
+FOREIGN CURRENCY EXCHANGE RATE RISK
+MANAGEMENT
+Derivative financial instruments not designated
+in a hedging relationship
+The Company manages its risks associated with fluctuations in
+foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a
+Company-wide portfolio approach. Under this approach the
+Company-wide risks are aggregated centrally, and various deriv-
+ative financial instruments, primarily foreign currency exchange
+contracts, foreign currency swaps and options, are utilized to
+minimize such risks. Such a strategy does not qualify for hedge
+accounting treatment. The Company also accounts for foreign
+currency derivatives, which are embedded in sale and purchase
+Consolidated Financial Statements
+Foreign exchange translation
+114
+Any market sensitive instruments, including equity and inter-
+est-bearing investments that our Company's pension plans hold
+are not included in the following quantitative and qualitative
+disclosures.
+Actual results that are included in the Consolidated Statements
+of Income or Consolidated Statements of Comprehensive Income
+may differ substantially from VaR figures due to fundamental
+conceptual differences. While the Consolidated Statements of
+Income and Consolidated Statements of Comprehensive Income
+are prepared in accordance with IFRS, the VaR figures are the
+output of a model with a purely financial perspective and repre-
+sent the potential financial loss, which will not be exceeded
+within ten days with a probability of 99.5%. Although VaR is an
+important tool for measuring market risk, the assumptions on
+which the model is based give rise to some limitations including
+the following. A ten day holding period assumes that it is possible
+to dispose of the underlying positions within this period. This
+may not be valid during continuing periods of illiquid markets.
+A 99.5% confidence level means that there is a 0.5% statistical
+probability that losses could exceed the calculated VaR. The use
+of historical data as a basis for estimating the statistic behavior
+of the relevant markets and finally determining the possible
+range of the future outcomes on the basis of this statistic behav-
+ior may not always cover all possible scenarios, especially those
+of an exceptional nature.
+In order to quantify market risks Siemens has implemented a sys-
+tem based on Value at Risk (VaR), which is also used for internal
+management of Corporate Treasury activities. The VaR figures are
+calculated based on historical volatilities and correlations of var-
+ious risk factors, a ten day holding period, and a 99.5% confi-
+dence level.
+Increasing market fluctuations may result in significant earnings
+and cash flow volatility risk for Siemens. The Company's operat-
+ing business as well as its investment and financing activities are
+affected particularly by changes in foreign exchange rates and
+interest rates. In order to optimize the allocation of financial re-
+sources across Siemens' segments and entities, as well as to
+achieve its aims, Siemens identifies, analyzes and manages the
+associated market risks. The Company seeks to manage and con-
+trol these risks primarily through its regular operating and financ-
+ing activities and uses derivative financial instruments when
+deemed appropriate.
+NOTE 25 Financial risk management
+The Company had interest rate swap contracts to pay variable
+rates of interest of an average of 0.825% and 1.4% as of Septem-
+ber 30, 2019 and 2018, respectively and received fixed rates of
+interest (average rate of 1.523% and 2.3%, as of September 30,
+2019 and 2018, respectively). The notional amount of indebted-
+ness hedged as of September 30, 2019 and 2018 was €6,664 mil-
+lion and €1,314 million, respectively. This changed 22% and 5%
+of the Company's underlying notes and bonds from fixed interest
+rates into variable interest rates as of September 30, 2019 and
+2018, respectively. The notional amounts of these contracts
+mature at varying dates based on the maturity of the underlying
+hedged items. The net fair value of interest rate swap contracts
+(excluding accrued interest) used to hedge indebtedness as of
+September 30, 2019 and 2018 was €428 million and €17 million,
+respectively.
+Foreign
+currency risk
+Fair value hedges of fixed-rate debt obligations
+Under interest rate swap agreements outstanding in fiscal 2019
+and 2018, the Company agreed to pay a variable rate of interest
+multiplied by a notional principal amount, and to receive in re-
+turn an amount equal to a specified fixed rate of interest multi-
+plied by the same notional principal amount. These interest rate
+swap agreements offset future changes in interest rates desig-
+nated as hedged risk on the fair value of the underlying fixed-rate
+debt obligations. As of September 30, 2019 and 2018, the carry-
+ing amounts of €7,050 million and €1,320 million, respectively,
+of fixed-rate debt obligations (presented in Long-term debt) are
+designated in fair value hedges, including €416 million and
+€10 million cumulative fair value hedge adjustments. Unamor-
+tized fair value hedge adjustments of €281 million and €307 mil-
+lion as of September 30, 2019 and 2018, respectively, relate to no
+longer applied hedge accounting. The amounts are amortized
+over the remaining term of the underlying debt, maturing until
+2042. Carrying amount adjustments to debt of €405 million and
+€29 million, respectively, in fiscal 2019 and 2018 are included in
+Other financial income (expenses); the related swap agreements
+resulted in gains (losses) of €(417) million and €(27) million, re-
+spectively, in fiscal 2019 and 2018. Net cash receipts and pay-
+ments relating to such interest rate swap agreements are re-
+corded as interest expenses.
+Consolidated Financial Statements
+Siemens applies cash flow hedge accounting to a revolving port-
+folio of floating-rate commercial papers of nominal US$700 mil-
+lion. Siemens pays a fixed rate of interest and receives a variable
+rate of interest, offsetting future changes in interest payments
+of the underlying floating-rate commercial papers. Net cash re-
+ceipts and payments are recorded as interest expenses. The Com-
+pany had interest rate swap contracts to receive variable rates of
+interest of an average of 2.11% and 2.37% as of September 30,
+2019 and 2018, respectively and paid fixed rates of interest (aver-
+age rate of 1.95% and 1.95%, as of September 30, 2019 and 2018,
+respectively).
+Cash flow hedges of floating-rate
+commercial papers
+Interest rate risk management relating to the Group, excluding
+SFS' and SGRE's businesses, uses derivative financial instruments
+under a portfolio-based approach to manage interest risk actively
+relative to a benchmark. Interest rate management of the SFS
+and SGRE businesses remains to be managed separately, consid-
+ering the term structure of SFS' and SGRE's financial assets and
+liabilities on a portfolio basis. Neither approach qualifies for
+hedge accounting treatment. Net cash receipts and payments in
+connection with interest rate swap agreements are recorded as
+interest expense in Other financial income (expenses), net.
+Derivative financial instruments not designated
+in a hedging relationship
+INTEREST RATE RISK MANAGEMENT
+The Company's operating units apply hedge accounting to cer-
+tain significant forecast transactions and firm commitments de-
+nominated in foreign currencies. Particularly, the Company en-
+tered into foreign currency exchange contracts to reduce the risk
+of variability of future cash flows resulting from forecast sales
+and purchases as well as firm commitments. The risk mainly re-
+sults from contracts denominated in US$ both from Siemens'
+operating units entering into long-term contracts e.g. from the
+project business and from the standard product business. The risk
+is hedged against the Euro at an average rate of 1.1972 EUR/US$
+(forward purchases of US$) and 1.2547 EUR/US$ (forward sales
+of US$). The hedging transactions have an average remaining
+maturity until 2020 (forward purchases of US$) as well as 2024
+(forward sales of US$).
+Cash flow hedges
+contracts.
+113
+72
+reserve
+35
+42
+therein: included in
+cash flow hedges
+204
+391
+1,057
+1,733
+Net amounts
+71
+888
+30
+248
+Interest rate swaps
+and combined interest
+and currency swaps
+457
+658
+550
+835
+of Financial Position
+offset in the Statement
+Related amounts not
+161
+1,639
+340
+therein: included in
+fair value hedges
+Other (embedded
+derivatives, options,
+commodity swaps)
+22
+reserve
+hedge
+hedge
+Cash flow
+Cash flow
+Interest
+rate risk
+Hedging gains (losses)
+Balance as of October 1, 2018
+(in millions of €)
+457
+Other components of equity, net of income taxes, relating to
+cash flow hedges reconciles as follows:
+738
+1,882
+1,273
+3,014
+119
+277
+233
+434
+6
+112 Consolidated Financial Statements
+2
+1,273
+2
+3,014
+3,014
+2,215
+2,215
+457
+457
+342
+342
+Financial liabilities measured at fair value - Derivative financial instruments
+1,273
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+In connection with cash flow hedges
+889
+889
+384
+384
+Consolidated Financial Statements
+109
+34
+34
+513
+511
+Derivative financial instruments
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+In connection with fair value hedges
+In connection with cash flow hedges
+Sep 30, 2019
+Level 1
+Level 2
+Level 3
+Sep 30, 2018
+Total
+3,221
+709
+3,938
+7
+206
+164
+377
+1
+1
+8
+Debt instruments measured at FVTPL
+(in millions of €)
+Level 2
+58
+1,882
+1,556
+58
+1,615
+22
+22
+245
+245
+738
+738
+567
+165
+567
+165
+Fair value of equity instruments quoted in an active market is
+based on price quotations at period-end date. Fair value of debt
+instruments is either based on prices provided by price service
+agencies or is estimated by discounting future cash flows using
+current market interest rates.
+Fair values of derivative financial instruments are determined in
+accordance with the specific type of instrument. Fair values of
+derivative interest rate contracts are estimated by discounting
+expected future cash flows using current market interest rates
+and yield curves over the remaining term of the instrument. In-
+terest rate futures are valued based on quoted market prices, if
+available. Fair values of foreign currency derivatives are based on
+forward exchange rates. Options are generally valued based on
+quoted market prices or based on option pricing models. No com-
+pensating effects from underlying transactions (e.g. firm com-
+mitments and forecast transactions) are considered.
+The Company limits default risks resulting from derivative finan-
+cial instruments by generally transacting with financial institu-
+tions with a minimum credit rating of investment grade. Based on
+Siemens' net risk exposure towards the counterparty, the resulting
+credit risk is taken into account via a credit valuation adjustment.
+Level 3 financial assets increased due to equity instruments pre-
+viously measured at cost which were reclassified to fair value
+measurement upon adopting IFRS 9 as of October 1, 2018. Fur-
+thermore, Level 3 financial assets include venture capital invest-
+ments of €291 million entered into by the Siemens venture capi-
+tal business Next47. In fiscal 2019, new investments and
+purchases of investments amounted to €153 million.
+FOREIGN CURRENCY EXCHANGE RATE RISK
+Transaction risk
+1,823
+In connection with cash flow hedges
+at fair value - Derivative financial instruments
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+Financial liabilities under IAS 39 measured
+Level 3
+Total
+Financial assets under IAS 39 measured at fair value
+6
+3,259
+327
+3,592
+Available-for-sale financial assets: equity instruments
+6
+Level 1
+165
+425
+Available-for-sale financial assets: debt instruments
+1,270
+15
+1,286
+Derivative financial instruments
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+In connection with fair value hedges
+In connection with cash flow hedges
+253
+Financial assets measured at fair value
+Equity instruments measured at FVTPL
+Equity instruments measured at FVOCI
+(in millions of €)
+The following table allocates financial assets and financial liabil-
+ities measured at fair value to the three levels of the fair value
+hierarchy:
+48
+as of October 1, 2018
+Valuation allowance
+Lease
+Receivables
+Contract
+Assets
+and other debt
+instruments
+under the simpli-
+fied approach
+Stage 3
+Stage 2
+Stage 1
+Trade receivables
+Loans and other debt instruments
+under the general approach
+Loans, receivables and other debt instruments measured at amortized cost
+(in millions of €)
+VALUATION ALLOWANCES FOR EXPECTED CREDIT
+LOSSES
+591
+Financial assets and financial liabilities held for trading
+(441)
+169
+(946)
+11
+64
+877
+160
+n/a
+n/a
+previously written off
+Recoveries of amounts
+(72)
+(105)
+(39)
+n/a
+n/a
+(973)
+Write-offs charged against the allowance
+32
+136
+26
+3
+13
+of Income in the current period
+recorded in the Consolidated Statements
+Change in valuation allowances
+211
+36
+1,454
+1,583
+Total interest income on financial assets
+Total interest expenses on financial liabilities
+Net gains (losses) of financial instruments are:
+Company chose to recognize fair value changes in Other compre-
+hensive income since that classification is considered more rele-
+vant due to the nature of the investment. The fair value of
+€228 million as of September 30, 2019 is determined based on
+discounted cash flow calculations. The most significant unob-
+servable input used to determine its fair value is the cash flow
+forecast, which is mainly based on the future power generation
+income. This income is generally subject to future market devel-
+opments and thus price volatility. Since a long-term power pur-
+chase agreement is in place that mitigates price volatility, signif-
+icant changes to the cash flow forecast are unlikely and thus, no
+significant effects on Other comprehensive income, net of in-
+come taxes, are expected.
+The largest equity instrument allocated to level 3 of the fair
+value hierarchy is an investment in an offshore wind farm. The
+The following table presents the fair values and carrying amounts
+of financial assets and financial liabilities measured at cost or
+amortized cost for which the carrying amounts do not approxi-
+Imate fair value:
+(in millions of €)
+Notes and bonds
+Loans from banks and other financial indebtedness
+Obligations under finance leases
+Sep 30, 2019
+Fair value
+(in millions of €)
+Carrying
+amount
+Sep 30, 2018
+Carrying
+amount
+34,758
+3,138
+176
+33,205
+3,137
+106
+28,383
+3,705
+166
+28,352
+3,716
+110
+Fixed-rate and variable-rate receivables with a remaining term of
+more than twelve months, including receivables from finance
+leases, are evaluated by the Company based on parameters such
+as interest rates, specific country risk factors, individual credit-
+worthiness of the customer, and the risk characteristics of the
+financed project. Based on this evaluation, allowances for these
+receivables are recognized.
+The fair value of notes and bonds is based on prices provided by
+price service agencies at the period-end date (Level 2). The fair
+value of loans from banks and other financial indebtedness, ob-
+ligations under finance leases as well as other non-current finan-
+cial liabilities is estimated by discounting future cash flows using
+rates currently available for debt of similar terms and remaining
+maturities (Level 2).
+Fair value
+7
+Cash and cash equivalents
+Financial liabilities measured at amortized cost
+Financial assets and financial liabilities at FVTPL
+(5)
+1,590
+2018
+2019
+(in millions of €)
+2018
+Financial liabilities measured at amortized cost
+Loans and receivables
+Available-for-sale financial assets
+Cash and cash equivalents
+Loans, receivables and other debt instruments
+measured at amortized cost
+(in millions of €)
+Fiscal year
+Interest income (expense) includes interest from financial assets
+and financial liabilities not at fair value through profit or loss:
+Fiscal 2018 net gains (losses) of financial instruments are not
+comparable since those are under IAS 39:
+110 Consolidated Financial Statements
+Amounts include foreign currency gains (losses) from recogniz-
+ing and measuring financial assets and liabilities. Net gains
+(losses) on financial assets and liabilities measured at FVTPL com-
+prise fair value changes of derivative financial instruments, in-
+cluding interest income and expense, for which hedge account-
+ing is not applied, as well as dividends on equity instruments
+measured at FVTPL.
+(97)
+(1,383)
+465
+33
+2019
+Fiscal year
+Fiscal year
+Each Siemens unit conducting businesses with international
+counterparties leading to future cash flows denominated in a
+currency other than its functional currency is exposed to risks
+from changes in foreign currency exchange rates. In the ordinary
+course of business, Siemens units are exposed to foreign cur-
+rency exchange rate fluctuations, particularly between the U.S.
+dollar and the euro. Foreign currency exchange rate exposure
+is partly balanced by purchasing of goods, commodities and
+services in the respective currencies as well as production activi-
+ties and other contributions along the value chain in the local
+markets.
+62
+According to the Company policy, Siemens units are responsible
+for recording, assessing and monitoring their foreign currency
+transaction exposure. The net foreign currency position of
+Siemens units serves as a central performance measure and has
+to be hedged within a band of at least 75% but no more
+than 100%.
+Consolidated Financial Statements
+Stock awards are tied to performance criteria. The annual target
+amount for stock awards can be bound to the average of earnings
+per share (EPS, basic) of the past three fiscal years and/or to the
+share price performance of Siemens relative to the share price
+performance of five important competitors during the four-year
+restriction period. The target attainment for the performance
+criteria ranges between 0% and 200%. For awards granted since
+fiscal 2019 settlement is in shares only corresponding to the ac-
+tual target attainment. Awards granted prior to fiscal 2019, target
+outperformances in excess of 100% are settled in cash. The vest-
+ing period is four years and for awards granted until fiscal 2014,
+five years.
+The Company grants stock awards to members of the Managing
+Board, members of the senior management and other eligible
+employees. Stock awards are subject to a restriction period of
+about four years and entitle the beneficiary to Siemens shares
+following the restriction period without payment of consideration.
+STOCK AWARDS
+Share-based payment awards may be settled in newly issued
+shares of capital stock of Siemens AG, in treasury shares or in
+cash. Share-based payment awards may forfeit if the employ-
+ment of the beneficiary terminates prior to the expiration of the
+vesting period. In fiscal 2019 and 2018 expense from equity-set-
+tled awards are €294 million and €306 million; cash-settled
+awards resulted in a gain of €28 million in fiscal 2019 and ex-
+pense of €80 million in fiscal 2018. The carrying amount of liabil-
+ities from share-based payment transactions is €88 million and
+€176 million, respectively, as of September 30, 2019 and 2018.
+NOTE 26 Share-based payment
+Amounts above do not represent economic credit risk, since they
+consider neither collateral held nor valuation allowances already
+recognized.
+Trade receivables of operating units are generally rated internally;
+approximately 42% have an investment grade rating and 58% have
+a non-investment grade rating. Contract assets generally show
+similar risk characteristics as trade receivables in operating units.
+2,051
+4,061
+n/a
+14
+Stage 3
+Stage 2
+n/a
+131
+Stage 1
+481
+2,125
+Stage 3
+n/a
+234
+647
+12,551
+Stage 2
+54
+An exposure is considered defaulted if the debtor is unwilling or
+unable to pay its credit obligations. A range of internally defined
+events trigger a default rating, including the opening of bank-
+ruptcy proceedings, receivables being more than 90 days past
+due, or a default rating by an external rating agency.
+116 Consolidated Financial Statements
+To analyze and monitor credit risks, the Company applies various
+systems and processes. A main element is a central IT application
+that processes data from operating units together with rating
+and default information and calculates an estimate, which may
+be used as a basis for individual bad debt provisions. Additionally,
+qualitative information is considered to particularly incorporate
+the latest developments.
+The carrying amount is the maximum exposure to a financial as-
+set's credit risk, without taking account of any collateral. Collat-
+eral reduces the valuation allowance to the extent it mitigates
+credit risk. Collateral needs to be specific, identifiable and legally
+enforceable to be taken into account. Those collaterals are mostly
+held in the portfolio of SFS.
+As of September 30, 2019 and 2018, collateral of €835 million
+and €550 million, respectively, relate to financial assets measured
+at fair value. Those collaterals are provided in connection with
+netting agreements for derivatives providing protection from the
+risk of a counterparty's insolvency. As of September 30, 2019,
+collateral held for credit-impaired receivables from finance leases
+amounted to €55 million. As of September 30, 2019 and 2018,
+collateral held for financial assets measured at amortized cost
+amounted to €3,948 million and €3,608 million, respectively,
+including €86 million for credit-impaired loans in SFS' asset
+finance business. Those collaterals mainly comprised property,
+plant and equipment. Credit risks arising from irrevocable loan
+commitments are equal to the expected future pay-offs resulting
+from these commitments.
+117
+SFS' external financing portfolio disaggregates into credit risk
+rating grades as of September 30, 2019 as follows (pre valuation
+allowances):
+Investment Grade Ratings
+Non-Investment Grade Ratings
+Loans and other debt instruments
+under the general approach
+Financial guarantees and
+loan commitments
+Lease
+Receivables
+Stage 1
+6,615
+(in millions of €)
+Ratings and individually defined credit limits are based on gener-
+ally accepted rating methodologies, with information obtained
+from customers, external rating agencies, data service providers
+and Siemens' credit default experiences. Internal ratings consider
+appropriate forward-looking information relevant to the specific
+financial instrument like expected changes in the debtor's finan-
+cial position, ownership, management or operational risks, as
+well as broader forward-looking information, such as expected
+macroeconomic, industry-related and competitive develop-
+ments. The ratings also consider a country-specific risk compo-
+nent derived from external country credit ratings. Ratings and
+credit limits for financial institutions as well as Siemens' public
+and private customers, which are determined by internal risk as-
+sessment specialists, are continuously updated and considered
+for investments in cash and cash equivalents and in determining
+the conditions under which direct or indirect financing will be
+offered to customers.
+Until fiscal 2014, additionally one portion of the variable compen-
+sation component (bonus) for members of the Managing Board
+was granted in the form of non-forfeitable awards of Siemens
+stock (Bonus Awards) subject to a vesting period of one year.
+Beneficiaries will receive one Siemens share without payment of
+consideration for each Bonus Award, following an additional
+waiting period of four years.
+Commitments to members of the Managing Board
+In fiscal 2019 and 2018, agreements were entered into which en-
+title members of the Managing Board to stock awards most of
+which are contingent upon attaining the prospective perfor-
+mance-based target of Siemens stock relative to five competitors.
+The fair value of these entitlements amounting to €11 million and
+€10 million, respectively, in fiscal 2019 and 2018, was calculated
+by applying a valuation model. In fiscal 2019 and 2018, inputs to
+that model include, for the majority of the stock awards granted,
+an expected weighted volatility of Siemens shares of 21.72% and
+22.12%, respectively, and a market price of €102.42 and €114.50
+per Siemens share. Expected volatility was determined by refer-
+ence to historic volatilities. The model applies a risk-free interest
+rate of up to 0.14% and 0.08% in fiscal 2019 and 2018, respec-
+tively, and an expected dividend yield of 3.71% in fiscal 2019 and
+3.24% in fiscal 2018. Assumptions concerning share price correla-
+tions were determined by reference to historic correlations.
+118 Consolidated Financial Statements
+Under the Monthly Investment Plan employees other than senior
+managers may invest a specified part of their compensation in
+Siemens shares on a monthly basis over a period of twelve
+months. Shares are purchased at market price at a predetermined
+date once a month. If the Managing Board decides that shares
+acquired under the Monthly Investment Plan are transferred to
+the Share Matching Plan, plan participants will receive the right
+to matching shares under the same conditions applying to the
+Share Matching Plan described above with a vesting period of
+about two years. The Managing Board decided that shares ac-
+quired under the tranches issued in fiscal 2018 and 2017 are
+transferred to the Share Matching Plan as of February 2019 and
+February 2018, respectively.
+Monthly Investment Plan
+Operating units are prohibited from borrowing or investing in
+foreign currencies on a speculative basis. Intercompany financing
+or investments of operating units are preferably carried out in
+their functional currency or on a hedged basis.
+Share Matching Plan
+In fiscal 2019, Siemens issued a new tranche under each of the
+plans of the Share Matching Program.
+SHARE MATCHING PROGRAM
+AND ITS UNDERLYING PLANS
+Settled
+Modified
+6,641,400
+(77,283)
+(17,505)
+8,742,219
+Non-vested, end of period
+(780,193)
+(643,619)
+(271,362)
+(386,041)
+Commitments to members of the senior
+management and other eligible employees
+In fiscal 2019 and 2018, 3,751,556 and 1,898,517 stock awards,
+respectively, were granted contingent upon attaining the pro-
+spective performance-based target of Siemens stock relative to
+five competitors. The fair value of equity-settled stock awards
+amounted to €168 million and €137 million, respectively, in fiscal
+2019 and 2018; fair value was calculated by applying a valuation
+model. In fiscal 2019 and 2018 inputs to that model include an
+expected weighted volatility of Siemens shares of 21.73% and
+22.17%, respectively, and a market price of €98.92 and €114.80
+per Siemens share. Expected volatility was determined by refer-
+ence to historic volatilities. The model applies a risk-free interest
+rate of up to 0.16% in fiscal 2019 and up to 0.05% in fiscal 2018
+and an expected dividend yield of 3.84% and 3.23% in fiscal 2019
+and 2018, respectively. Assumptions concerning share price cor-
+relations were determined by reference to historic correlations.
+Changes in the stock awards held by members of the senior man-
+agement and other eligible employees are:
+Fiscal year
+2019
+2018
+Since related taxation was not entirely certain until May 2019,
+Stock Awards of Siemens AG that vested in November 2018 and
+2017 were settled in cash rather than in equity instruments; the
+fair values at modification date of €96 million and €89 million,
+respectively, were reclassified from equity to liabilities.
+Non-vested, beginning of period
+Granted
+6,416,946
+3,751,556
+1,898,517
+Vested and fulfilled
+Forfeited
+(603,572)
+(545,225)
+6,641,400
+Siemens maintains a Credit Risk Intelligence Unit to which
+numerous operating units from the Siemens Group regularly
+transfer business partner data as a basis for a centralized internal
+rating and credit limit recommendation process. Due to the iden-
+tification, quantification and active management of credit risks,
+this increases credit risk transparency.
+Under the Share Matching Plan, senior managers may invest a
+specified part of their variable compensation in Siemens shares
+(investment shares). The shares are purchased at the market
+price at a predetermined date in the second quarter. Plan partic-
+ipants receive the right to one Siemens share without payment
+of consideration (matching share) for every three investment
+shares continuously held over a period of about three years (vest-
+ing period) provided the plan participant has been continuously
+employed by Siemens until the end of the vesting period.
+Translation risk
+806
+indebtedness
+Other financial
+22,799
+4,323 8,863
+99 1,019
+1,263
+Loans from banks
+4,789
+Notes and bonds
+liabilities
+Non-derivative financial
+2022
+to
+2024
+2021
+(in millions of €)
+3
+7
+2025
+and
+there-
+after
+Generally, the operating units conclude their hedging activities
+internally with Corporate Treasury. By applying a cost-optimizing
+portfolio approach, Corporate Treasury itself hedges foreign
+currency exchange rate risks with external counterparties and
+limits them.
+As of September 30, 2019 and 2018, the VaR relating to foreign
+currency exchange rates was €79 million and €103 million. This
+VaR was calculated under consideration of items of the Consoli-
+dated Statement of Financial Position in addition to firm commit-
+ments, which are denominated in foreign currencies, as well as
+foreign currency denominated cash flows from forecast transac-
+tions for the following twelve months. The decrease in the VaR
+resulted mainly from a lower net foreign currency position after
+hedging activities and a lower volatility between the U.S. dollar
+and the euro.
+Many Siemens units are located outside the Eurozone. Because
+the financial reporting currency of Siemens is the euro, the finan-
+cial statements of these subsidiaries are translated into euro for
+the preparation of the Consolidated Financial Statements. To
+consider the effects of foreign currency translation in the risk
+management, the general assumption is that investments in for-
+eign-based operations are permanent and that reinvestment is
+continuous. Effects from foreign currency exchange rate fluctu-
+ations on the translation of net asset amounts into euro are re-
+flected in the Company's consolidated equity position.
+INTEREST RATE RISK
+Interest rate risk is the risk that the fair value or future cash flows
+of a financial instrument will fluctuate because of changes in
+market interest rates. This risk arises whenever interest terms of
+financial assets and liabilities are different. In order to manage
+the Company's position with regard to interest rate risk, interest
+income and interest expenses, Corporate Treasury performs a
+comprehensive corporate interest rate risk management by using
+fixed or variable interest rates from bond issuances and deriva-
+tive financial instruments when appropriate. The interest rate risk
+relating to the Group, excluding SFS' and SGRE's businesses, is
+mitigated by managing interest rate risk actively relatively to a
+benchmark. The interest rate risk relating to SFS' and SGRE's busi-
+nesses is managed separately, considering the term structure of
+financial assets and liabilities. The Company's interest rate risk
+results primarily from funding in the U.S. dollar, British pound
+and euro.
+If there are no conflicting country-specific regulations, all
+Siemens operating units generally obtain any required financing
+through Corporate Treasury in the form of loans or intercompany
+clearing accounts. The same concept is adopted for deposits of
+cash generated by the units.
+8
+As of September 30, 2019 and 2018, the VaR relating to the inter-
+est rate was €722 million and €191 million. The increase was
+driven mainly by higher interest rate volatilities, in particular for
+the U.S. dollar, and an increase in interest rate sensitivity for the
+euro, related to the €3.5 billion instruments issued in Septem-
+ber 2019.
+115
+LIQUIDITY RISK
+Liquidity risk results from the Company's inability to meet its fi-
+nancial liabilities. Siemens follows a deliberated financing policy
+that is aimed towards a balanced financing portfolio, a diversified
+maturity profile and a comfortable liquidity cushion. Siemens
+mitigates liquidity risk by the implementation of effective work-
+ing capital and cash management, arranged credit facilities with
+highly rated financial institutions, via a debt issuance program
+and via a global multi-currency commercial paper program.
+Liquidity risk may also be mitigated by the Siemens Bank GmbH,
+which increases the flexibility of depositing cash or refinancing.
+In addition, Siemens constantly monitors funding options avail-
+able in the capital markets, as well as trends in the availability
+and costs of such funding, with a view to maintaining financial
+flexibility and limiting repayment risks.
+The following table reflects our contractually fixed pay-offs for
+settlement, repayments and interest. The disclosed expected un-
+discounted net cash outflows from derivative financial liabilities
+are determined based on each particular settlement date of an
+instrument and based on the earliest date on which Siemens
+could be required to pay. Cash outflows for financial liabilities
+(including interest) without fixed amount or timing are based on
+the conditions existing at September 30, 2019.
+Fiscal year
+Consolidated Financial Statements
+Obligations under
+2020
+23
+206
+Credit guarantees¹
+447
+Irrevocable loan commitments²
+2,747
+220
+207
+121
+1 Based on the maximum amounts Siemens could be required to settle in the event of default
+by the primary debtor.
+2 A considerable portion result from asset-based lending transactions meaning that the respective
+loans can only be drawn after sufficient collateral has been provided by the borrower.
+CREDIT RISK
+finance leases
+Credit risk is defined as an unexpected loss in financial instru-
+ments if the contractual partner is failing to discharge its obliga-
+tions in full and on time or if the value of collateral declines.
+Siemens provides its customers with various forms of direct and
+indirect financing particularly in connection with large projects.
+Hence, credit risks are determined by the solvency of the debtors,
+the recoverability of the collaterals, the success of projects we
+invested in and the global economic development.
+2
+180
+The effective monitoring and controlling of credit risk through
+credit evaluations and ratings is a core competency of our risk
+management system. In this context, Siemens has implemented
+a binding credit policy.
+Derivative financial liabilities
+741
+20
+103
+Trade payables
+11,388
+17
+3
+35
+Other financial liabilities
+1,047
+130
+183
+39
+2
+EBV Holding Verwaltung GmbH, Oldenburg
+10010
+10010
+Siemens Beteiligungen Europa GmbH, Munich
+Siemens Beteiligungen Inland GmbH, Munich
+100
+100
+100
+100
+RISICOM Rückversicherung AG, Grünwald
+Siemens Bank GmbH, Munich
+10010
+100
+Capta Grundstücks-Verwaltungsgesellschaft mbH,
+Grünwald
+Dade Behring Grundstücks GmbH, Kemnath
+eos.uptrade GmbH, Hamburg
+Siemens Beteiligungsverwaltung GmbH & Co. OHG,
+Kemnath
+Siemens Beteiligungen Management GmbH, Kemnath
+Siemens Beteiligungen USA GmbH, Berlin
+1007
+10010
+evosoft GmbH, Nuremberg
+100 10
+FACTA Grundstücks-Entwicklungsgesellschaft mbH & Co. KG,
+Munich
+1009,12
+1009
+Flender GmbH, Bocholt
+10010
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG,
+Grünwald
+1009
+10010
+Berliner Vermögensverwaltung GmbH, Berlin
+100
+Flender Industriegetriebe GmbH, Penig
+10010
+REMECH Systemtechnik GmbH, Unterwellenborn
+in %
+Gamesa Wind GmbH, Aschaffenburg
+Next47 GmbH, Munich
+10010
+Next47 Services GmbH, Munich
+10010
+SUBSIDIARIES
+Omnetric GmbH, Munich
+100
+Germany (136 companies)
+Adwen Blades GmbH, Stade
+100
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co.
+Objekt Tübingen KG, Grünwald
+1009
+Adwen GmbH, Bremerhaven
+100
+Partikeltherapiezentrum Kiel Holding GmbH i. L., Erlangen
+85
+Befund24 GmbH, Erlangen
+100
+R&S Restaurant Services GmbH, Munich
+100
+Atecs Mannesmann GmbH, Erlangen
+10010
+10010
+Project Ventures Butendiek Holding GmbH, Erlangen
+Projektbau-Arena-Berlin GmbH, Grünwald
+10010
+Alpha Verteilertechnik GmbH, Cham
+10010
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+100
+10010
+100
+1007
+1009
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+126 Consolidated Financial Statements
+Equity interest
+September 30, 2019
+in %
+September 30, 2019
+Siemens Campus Erlangen Objektmanagement GmbH,
+Grünwald
+Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
+Equity interest
+in %
+1009
+1007
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+1007
+Siemens Mobility Real Estate Management GmbH,
+Grünwald
+1007
+Siemens Compressor Systems GmbH, Leipzig
+Siemens Digital Logistics GmbH, Frankenthal
+1 Control due to a majority of voting rights.
+1009
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
+Grünwald
+Kyros 61 GmbH, Munich
+HaCon Ingenieurgesellschaft mbH, Hanover
+100
+HSP Hochspannungsgeräte GmbH, Troisdorf
+10010
+Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
+Grünwald
+1009
+ILLIT Grundstücksverwaltungs-Management GmbH,
+Grünwald
+85
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
+Grünwald
+1009
+IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
+100
+KACO new energy GmbH, Neckarsulm
+100
+Siemens Campus Erlangen Objekt 1 GmbH & Co. KG,
+Grünwald
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
+Grünwald
+KompTime GmbH, Munich
+10010
+Kyros 52 Aktiengesellschaft, Hanover
+1007
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
+Grünwald
+1009
+Kyros 54 GmbH, Munich
+1007
+Kyros 58 GmbH, Munich
+1007
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
+Grünwald
+1009
+Kyros 60 GmbH, Munich
+1007
+1009
+September 30, 2019
+175
+NEO New Oncology GmbH, Cologne
+JOINT VENTURES AND ASSOCIATES
+Siemens has relationships with many joint ventures and associ-
+ates in the ordinary course of business whereby Siemens buys
+and sells a wide variety of products and services generally on
+arm's length terms.
+Purchases of goods
+and services
+and other expenses
+Fiscal year
+2018
+Sales of goods
+and services and
+other income
+Fiscal year
+(in millions of €)
+2019
+2018
+2019
+Joint ventures
+629
+1,574
+121
+124
+NOTE 31 Related party transactions
+Associates
+264
+245
+244
+933
+1,838
+366
+368
+Liabilities
+Sep 30,
+2018
+Receivables
+Sep 30,
+(in millions of €)
+2019
+2018
+304
+2019
+123
+goodwill and other intangible assets.
+4,946
+Siemens
+86,849
+83,044
+86,849
+83,044
+52,143
+49,856
+thereof Germany
+12,282
+11,729
+18,332
+17,270
+8,701
+Consolidated Financial Statements
+8,343
+74,567
+71,315
+68,517
+65,773
+43,442
+41,513
+therein U.S.
+17,993
+16,012
+18,516
+16,470
+20,296
+18,767
+Non-current assets consist of property, plant and equipment,
+thereof countries outside of Germany
+100
+Joint ventures
+Associates
+116
+12.9
+0.1
+57.3
+0.2
+63.7
+In fiscal 2019 and 2018, 35% and 48%, respectively, of the total
+fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesell-
+schaft, Germany.
+Audit Services relate primarily to services provided by EY for au-
+diting Siemens' Consolidated Financial Statements, for auditing
+financial statements of Siemens AG and its subsidiaries, for re-
+views of interim financial statements being integrated into the
+audit, for project-accompanying IT audits as well as for audit ser-
+vices in connection with the implementation of new accounting
+standards. Other Attestation Services include primarily audits of
+financial statements as well as other attestation services in con-
+nection with M&A activities, attestation services related to the
+sustainability reporting, audits of employee benefit plans, com-
+fort letters and other attestation services required under regula-
+tory requirements, contractually agreed or requested on a volun-
+tary basis.
+NOTE 33 Corporate governance
+The Managing and Supervisory Boards of Siemens Aktiengesell-
+schaft and of Siemens Healthineers AG, a publicly listed subsidi-
+ary of Siemens, provided as of October 1, 2019, and Septem-
+ber 30, 2019, respectively, the declarations required under
+Section 161 of the German Stock Corporation Act (AktG) and
+made them publicly available on their company websites at
+WWW.SIEMENS.COM/GCG-CODE and at
+WWW.CORPORATE.SIEMENS-
+HEALTHINEERS.COM/INVESTOR-RELATIONS/CORPORATE-GOVERNANCE, re-
+spectively.
+NOTE 34 Subsequent events
+In October 2019, Siemens Healthineers acquired Corindus Vascu-
+lar Robotics, Inc., USA, which develops and provides robotic
+systems for minimally invasive endovascular procedures. The
+acquired business will be integrated into Siemens Healthineers.
+By combining Siemens Healthineers' cardiovascular and neuro-
+interventional therapy systems with Corindus' innovative tech-
+nology, Siemens Healthineers is able to drive procedure optimi-
+zation for image-based minimally invasive therapies. The
+purchase price paid in cash is €1.0 billion as of the acquisition
+date. The purchase price allocation as of the acquisition date is
+not yet available. It is expected that the major part of the pur-
+chase price will be allocated to Other intangible assets and Good-
+will. Resulting Other intangible assets will mainly relate to tech-
+nology for robotic systems. Goodwill will comprise intangible
+assets that are not separable such as employee know-how and
+synergy effects expected by combining Corindus' robotic systems
+with Siemens Healthineers' therapy systems as well as its digiti-
+zation and artificial intelligence solutions.
+In November 2019, Siemens Healthineers acquired 75% of the
+ownership interest of ECG Management Consultants (ECG), a
+leading consulting company based in the US specializing in
+healthcare and providing a comprehensive suite of advisory
+services around strategic, financial, operational and technology-
+related challenges facing healthcare providers today. The busi-
+ness will be integrated into Siemens Healthineers and will allow
+its global Enterprise Services business to tap into adjacent
+growth markets. The preliminary purchase price paid in cash
+amounted to US$261 million (€234 million as of the acquisition
+date). In addition, financial liabilities of ECG of US$143 million
+(€129 million as of the acquisition date) were redeemed by
+Siemens Healthineers. The purchase price allocation as of the
+acquisition date is not yet available. It is expected that the major
+part of the purchase price will be allocated to Goodwill, which
+comprises intangible assets that are not separable such as
+employee know-how. The non-controlling interests of 25% will
+be measured at the proportionate share in the amounts of the
+acquired net assets (excluding goodwill).
+6.1
+Consolidated Financial Statements
+NOTE 35 List of subsidiaries and
+associated companies pursuant to
+Section 313 para. 2 of the German
+Commercial Code
+Equity interest
+September 30, 2019
+in %
+Kyros 62 GmbH, Munich
+1007
+Kyros 63 GmbH, Munich
+1007
+Lincas Electro Vertriebsgesellschaft mbH, Grünwald
+10010
+Mentor Graphics (Deutschland) GmbH, Munich
+100
+Munipolis GmbH, Munich
+100
+125
+10010
+Other attestation services
+Tax services
+51.1
+171
+42
+40
+216
+243
+218
+156
+388
+421
+178
+As of September 30, 2019 and 2018, guarantees to joint ventures
+and associates amounted to €470 million and €438 million, re-
+spectively. As of September 30, 2019 and 2018, guarantees to
+joint ventures amounted to €328 million and €261 million, re-
+spectively. As of September 30, 2019 and 2018, loans given to
+joint ventures and associates amounted to €679 million and
+€485 million, therein €662 million and €469 million related to
+joint ventures, respectively. The related book values amounted
+to €481 million and €388 million, therein €477 million and
+€385 million related to joint ventures, respectively. Valuation
+adjustments recognized in fiscal 2019 and 2018 reduced book
+values by €100 million and €17 million, therein €100 million and
+€21 million related to joint ventures, respectively. As of Septem-
+ber 30, 2019 and 2018, the Company had commitments to make
+capital contributions of €145 million and €14 million to its joint
+ventures and associates, therein €127 million and €4 million re-
+lated to joint ventures, respectively. As of September 30, 2019
+and 2018, there were loan commitments to joint ventures
+amounting to €361 million and €178 million, respectively.
+RELATED INDIVIDUALS
+In fiscal 2019 and 2018, members of the Managing Board re-
+ceived cash compensation of €22.0 million and €21.9 million.
+The fair value of stock-based compensation amounted to
+€11.1 million and €9.8 million for 254,693 and 100,511 stock
+awards, respectively, in fiscal 2019 and 2018. For awards granted
+in fiscal 2019 settlement will be in shares only corresponding to
+the actual target attainment. Awards granted in fiscal 2018, tar-
+get outperformances in excess of 100% will be settled in cash. In
+fiscal 2019 and 2018, the Company granted contributions under
+the BSAV to members of the Managing Board totaling €5.6 mil-
+lion and €5.4 million, respectively.
+Therefore in fiscal 2019 and 2018, compensation and benefits,
+attributable to members of the Managing Board amounted to
+€38.6 million and €37.1 million in total, respectively.
+50.6
+In fiscal 2019 and 2018, expense related to share-based payment
+amounted to €4.7 million and €13.6 million, respectively.
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their sur-
+viving dependents as of September 30, 2019 and 2018 amounted
+to €175.7 million and €168.2 million, respectively.
+Compensation attributable to members of the Supervisory Board
+comprises in fiscal 2019 and 2018 of a base compensation and
+additional compensation for committee work and amounted to
+€5.1 and €5.4 million (including meeting fees), respectively.
+Information regarding the remuneration of the members of the
+Managing Board and Supervisory Board is disclosed on an indi-
+vidual basis in the Compensation Report, which is part of the
+Combined Management Report.
+In fiscal 2019 and 2018, no other major transactions took place
+between the Company and the members of the Managing Board
+and the Supervisory Board.
+Some of our board members hold, or in the last year have held,
+positions of significant responsibility with other entities. We have
+relationships with almost all of these entities in the ordinary
+course of our business whereby we buy and sell a wide variety of
+products and services on arm's length terms.
+124 Consolidated Financial Statements
+NOTE 32
+Principal accountant fees
+and services
+Fees related to professional services rendered by the Company's
+principal accountant, EY, for fiscal 2019 and 2018 are:
+Fiscal year
+2018
+(in millions of €)
+2019
+Audit services
+Former members of the Managing Board and their surviving
+dependents received emoluments within the meaning of Sec-
+tion 314 para. 1 No. 6 b of the German Commercial Code totaling
+€21.1 million and €39.9 million in fiscal 2019 and 2018, respec-
+tively.
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+Siemens OfficeCenter Frankfurt GmbH & Co. KG, Grünwald
+100
+1009
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+127
+Consolidated Financial Statements
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9 Exemption pursuant to Section 264b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+in %
+5 No significant influence due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+10010
+SYKATEC Systeme, Komponenten, Anwendungstechnologie
+GmbH, Erlangen
+100
+Siemens Mobility GmbH, Munich
+1007
+Siemens Middle East Management GmbH, Grünwald
+10010
+SIMOS Real Estate GmbH, Munich
+1007
+Siemens Middle East Holding GmbH & Co. KG, Grünwald
+10010
+4 No control due to contractual arrangements or legal circumstances.
+SIMAR West Grundstücks-GmbH, Grünwald
+Trench Germany GmbH, Bamberg
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+100
+Siemens Gamesa Renevable Energy Limited Liability
+Company, Baku/Azerbaijan
+100
+Windfarm Groß Haßlow GmbH, Oldenburg
+100
+Windfarm 41 GmbH, Oldenburg
+100
+GmbH, Vienna/Austria
+100
+Windfarm 40 GmbH, Oldenburg
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor
+100
+Windfarm 35 GmbH, Oldenburg
+100
+10010
+Trench Austria GmbH, Leonding/Austria
+Windfarm 33 GmbH, Oldenburg
+52
+Steiermärkische Medizinarchiv GesmbH, Graz/Austria
+100
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+100
+Siemens Personaldienstleistungen GmbH, Vienna/Austria
+10010
+100
+Siemens Mobility GmbH, Vienna/Austria
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH,
+Munich
+100
+Siemens Metals Technologies Vermögensverwaltungs
+GmbH, Vienna/Austria
+100
+100
+Windfarm Ringstedt II GmbH, Oldenburg
+100
+SIMAR Süd Grundstücks-GmbH, Grünwald
+Siemens Healthineers Beteiligungen Verwaltungs-GmbH,
+Kemnath
+100
+Siemens-Fonds C-1, Munich
+100
+1007
+Siemens Venture Capital Fund 1 GmbH, Munich
+Siemens Healthineers Beteiligungen GmbH & Co. KG,
+Kemnath
+10010
+Siemens Treasury GmbH, Munich
+85
+Siemens Healthineers AG, Munich
+1007
+Siemens Trademark Management GmbH, Kemnath
+100
+Siemens-Fonds Pension Captive, Munich
+Siemens Healthcare GmbH, Munich
+Siemens Trademark GmbH & Co. KG, Kemnath
+100
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+100
+Siemens Traction Gears GmbH, Penig
+1007
+100
+1009
+1009
+Siemens Technopark Mülheim GmbH & Co. KG, Grünwald
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Technopark Nürnberg Verwaltungs GmbH,
+Grünwald
+Siemens Global Innovation Partners Management GmbH,
+Munich
+1007
+Siemens Gas and Power Real Estate Management GmbH,
+Grünwald
+1007,9
+1009
+10010
+100
+Siemens-Fonds S-7, Munich
+Siemens Medical Solutions Health Services GmbH,
+Grünwald
+10010
+10010
+10010
+1009
+100
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+SIMAR Nordost Grundstücks-GmbH, Grünwald
+SIMAR Nordwest Grundstücks-GmbH, Grünwald
+SIMAR Ost Grundstücks-GmbH, Grünwald
+10010
+Siemens Logistics GmbH, Constance
+100
+Siemens Liquidity One, Munich
+1007
+Siemens Insulation Center Verwaltungs-GmbH, Zwönitz
+1009
+1007
+Siemens Insulation Center GmbH & Co. KG, Zwönitz
+Siemens Industry Software GmbH, Cologne
+1007
+Siemensstadt Management GmbH, Grünwald
+1009
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+1009
+Siemensstadt Grundstücks-GmbH & Co. KG, Grünwald
+1007
+Siemens Immobilien Management GmbH, Grünwald
+100
+Siemens-Fonds S-8, Munich
+1009
+Siemens Immobilien GmbH & Co. KG, Grünwald
+100
+100
+100
+Siemens W.L.L., Manama/Bahrain
+51
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9 Exemption pursuant to Section 264b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+1007
+100
+Siemens Healthcare d.o.o., Zagreb/Croatia
+100
+Siemens Konzernbeteiligungen GmbH, Vienna/Austria
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+Siemens Gas and Power d.o.o., Zagreb/Croatia
+100
+Siemens Gamesa Renewable Energy d.o.o., Zagreb/Croatia
+100
+Siemens Healthcare Diagnostics GmbH, Vienna/Austria
+Siemens Industry Software GmbH, Linz/Austria
+100
+51
+Koncar-Energetski Transformatori, d.o.o., Zagreb/Croatia
+Siemens d.d., Zagreb/Croatia
+100
+Siemens Gebäudemanagement & -Services G.m.b.H.,
+Vienna/Austria
+100
+Siemens SARL, Abidjan/Côte d'Ivoire
+1007
+100
+Siemens Mobility EOOD, Sofia/Bulgaria
+100
+100
+12 Siemens AG is a shareholder with unlimited liability of this company.
+128 Consolidated Financial Statements
+Siemens Finance & Leasing GmbH, Munich
+100 10
+Siemens Financial Services GmbH, Munich
+10010
+Siemens OfficeCenter Verwaltungs GmbH, Grünwald
+Siemens Power Control GmbH, Langen
+100
+10010
+Siemens Fonds Invest GmbH, Munich
+10010
+Siemens Gamesa Renewable Energy GmbH & Co. KG,
+Hamburg
+Siemens Private Finance Versicherungsvermittlungs-
+gesellschaft mbH, Munich
+10010
+100⁹
+Siemens Project Ventures GmbH, Erlangen
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+10010
+Siemens Real Estate GmbH & Co. KG, Kemnath
+100
+1007
+Siemens Real Estate Management GmbH, Kemnath
+1007
+Siemens Gas and Power GmbH & Co. KG, Munich
+1007
+Siemens Gas and Power Management GmbH, Munich
+1007
+Siemens Spezial-Investmentaktiengesellschaft mit TGV,
+Munich
+100
+Siemens Gas and Power Real Estate GmbH & Co. KG,
+Grünwald
+Siemens Technology Accelerator GmbH, Munich
+10010
+Siemens Gamesa Renewable Energy Management GmbH,
+Hamburg
+Siemens Gamesa Renewable Energy GmbH, Vienna/Austria
+Siemens Gas and Power GmbH, Vienna/Austria
+5,284
+Siemens Healthcare EOOD, Sofia/Bulgaria
+Siemens S.A., Luanda/Angola
+100
+Beersel/Belgium
+100
+Siemens Spa, Algiers/Algeria
+Siemens Gamesa Renewable Energy BVBA,
+51
+ESTEL Rail Automation SPA, Algiers/Algeria
+100
+Siemens Gamesa Renewable Energy Belgium BVBA,
+Beersel/Belgium
+(525 companies)
+(C.I.S.), Africa, Middle East (without Germany)
+100
+Samtech SA, Angleur/Belgium
+51
+Europe, Commonwealth of Independent States
+Flender S.P.R.L., Beersel/Belgium
+1007
+Antwerp/Belgium
+100
+Zeleni Real Estate GmbH & Co. KG, Kemnath
+Dresser-Rand Machinery Repair Belgie N.V.,
+100
+Zeleni Holding GmbH, Kemnath
+100
+Minsk/Belarus
+100
+Wiepkenhagen
+Limited Liability Company Siemens Technologies,
+Windkraft Trinwillershagen Entwicklungsgesellschaft mbH,
+100
+Siemens Healthcare NV, Beersel/Belgium
+100
+Mentor Graphics Development Services CJSC,
+Yerevan/Armenia
+100
+Siemens Aktiengesellschaft Österreich, Vienna/Austria
+1007
+Siemens Gas and Power EOOD, Sofia/Bulgaria
+100
+Omnetric GmbH, Vienna/Austria
+100
+Siemens Gamesa Renewable Energy EOOD, Sofia/Bulgaria
+100
+KDAG Beteiligungen GmbH, Vienna/Austria
+100
+Siemens EOOD, Sofia/Bulgaria
+69
+100
+Siemens Medicina d.o.o., Sarajevo/Bosnia and Herzegovina
+ITH icoserve technology for healthcare GmbH,
+Innsbruck/Austria
+100
+Siemens Industry Software NV, Leuven/Belgium
+100
+100
+Siemens Mobility S.A./N.V, Beersel/Belgium
+ETM professional control GmbH, Eisenstadt/Austria
+100
+100
+Siemens S.A./N.V., Beersel/Belgium
+Flender GmbH, Vienna/Austria
+100
+Siemens d.o.o. Sarajevo - U Likvidaciji,
+Hochquellstrom-Vertriebs GmbH, Vienna/Austria
+100
+Sarajevo/Bosnia and Herzegovina
+100
+14,909
+Equity interest
+18,147
+803
+819
+15,225
+14,445
+18,451
+17,473
+17,950
+190
+175
+17,663
+18,125
+11,025
+8,870
+8,770
+45
+51
+15,854
+8,916
+8,821
+14,506
+14,412
+13,315
+105
+110
+14,517
+13,627
+15,198
+16,087
+826
+16,244
+19,975
+12,894
+Orders
+Fiscal year
+2018
+16,287
+External revenue
+14,422
+Fiscal year
+2018
+14,761
+13,425
+Intersegment Revenue
+769
+Fiscal year
+2018
+2019
+Total revenue
+Fiscal year
+2018
+15,587
+1000
+15,853
+2019
+15,319
+2019
+12,749
+11,875
+10,225
+(2,237)
+83,044
+(2,298)
+97,999
+(2,438)
+91,296
+380
+86,849
+346
+83,044
+2
+825
+NEW ORGANIZATIONAL STRUCTURE
+In fiscal 2019, Siemens changed its organizational structure and
+adjusted the composition of its reportable segments. The previous
+Divisions were substituted by the Operating and Strategic Com-
+panies to give Siemens' individual businesses more entrepreneur-
+ial freedom under the strong Siemens brand in order to sharpen
+their focus on their respective markets. Prior year information was
+recast to conform to the fiscal 2019 segment reporting format.
+DESCRIPTION OF REPORTABLE SEGMENTS
+➤ Digital Industries, offers a comprehensive product portfolio
+and system solutions for automation used in discrete and pro-
+cess industries, complemented by product lifecycle and data-
+driven services,
+(2,144)
+86,849
+> Smart Infrastructure, supplies and intelligently connects en-
+ergy systems and building technologies, to significantly im-
+prove efficiency and sustainability and support its customers
+to address major technology shifts,
+> Mobility, combines all Siemens businesses in the area of pas-
+senger and freight transportation, including rail vehicles, rail
+automation systems, rail electrification systems, road traffic
+technology, digital solutions and related services,
+➤ Siemens Healthineers a supplier of technology to the health-
+care industry and a leader in diagnostic imaging and labora-
+tory diagnostics
+Siemens Gamesa Renewable Energy, designs, develops and
+manufactures wind turbines, and is active in the develop-
+ment, construction and sale of wind farms; it provides ser-
+vices including management, operation and maintenance of
+wind farms,
+> Financial Services (SFS) supports its customers' investments
+with leasing solutions and equipment, project and structured
+financing in the form of debt and equity investments.
+In May 2019, Siemens announced its plans to carve out Gas and
+Power into a separately managed company and to spin-off the
+new company in connection with a subsequent public listing of
+the new company while maintaining significant influence. Prior
+to the spin-off, Siemens plans to contribute its stake in Siemens
+Gamesa Renewable Energy S.A. to the new company. The public
+listing is planned before the end of fiscal 2020.
+PORTFOLIO COMPANIES (POC)
+consists of a broad range of businesses, which, at the end of
+fiscal 2019, mainly include the business types application specific
+solutions (process solutions), electric motors, converters and
+generators (large drive applications), gear units and couplings
+(mechanical drives) and sorting technology and solutions for
+mail, parcel, baggage and cargo handling (Siemens Logistics).
+POC also includes at-equity investments.
+120 Consolidated Financial Statements
+Profit
+Assets
+Free cash flow
+Fiscal year
+> Gas and Power, offers a broad spectrum of products, solutions
+and services for generating electricity, for producing and
+transporting oil and gas, as well as for downstream and oil
+and gas-related operations, and for installing and operating
+transmission grids,
+15,944
+(2,584)
+4,930
+9,119
+3
+10,227
+9,122
+93,659
+87,341
+80,720
+77,542
+1,915
+1,984
+82,635
+79,526
+(2,525)
+832
+777
+778
+55
+46
+832
+5,806
+5,569
+4,971
+4,377
+555
+554
+5,526
+825
+Sep 30,
+2019
+Consolidated Financial Statements
+Granted
+Vested and fulfilled
+Forfeited
+Settled
+1,850,052
+943,399
+739,238
+(702,125) (758,548)
+(99,487)
+(105,092)
+(43,178)
+Research and development
+45
+42
+45
+42
+Administration
+and general services
+37
+37
+37
+37
+383
+377
+383
+377
+(38,346)
+Outstanding, end of period
+1,785,913
+1,692,909
+NOTE 28
+1,692,909
+Outstanding, beginning of period
+67
+69
+Base Share Program
+Under the Base Share Program employees of Siemens AG and
+participating domestic Siemens companies may invest a fixed
+amount of their compensation in Siemens shares, sponsored by
+Siemens. The shares are bought at market price at a predeter-
+mined date in the second quarter and grant the right to receive
+matching shares under the same conditions applying to the
+Share Matching Plan described above. The fair value of the Base
+Share Program amounted to €33 million and €37 million in fiscal
+2019 and 2018, respectively.
+Resulting Matching Shares
+In fiscal 2019 and 2018, severance charges amount to €619 mil-
+lion and €923 million, respectively, thereof at Gas and Power
+€242 million and €374 million. Personnel costs for continuing
+and discontinued operations amount to €31,222 million and
+€30,497 million, respectively, in fiscal 2019 and 2018.
+Employees were engaged in (averages; based on headcount):
+Continuing
+Continuing and
+discontinued
+operations
+operations
+Fiscal year
+Fiscal year
+(in thousands)
+Earnings per share
+2019
+2019
+2018
+2019
+Fiscal year
+2018
+Manufacturing and services
+232
+231
+232
+231
+Sales and marketing
+69
+67
+2018
+The weighted average fair value of matching shares granted in
+fiscal 2019 and 2018 amounting to €76.76 and €89.75 per share
+was determined as the market price of Siemens shares less the
+present value of expected dividends taking into account non-vest-
+ing conditions.
+JUBILEE SHARE PROGRAM
+For their 25th and 40th service anniversary eligible employees re-
+ceive jubilee shares. There were 4.23 million and 4.24 million
+entitlements to jubilee shares outstanding as of September 30,
+2019 and 2018, respectively.
+25,316
+Statutory social welfare contributions
+and expenses for optional support
+3,984
+3,809
+Expenses relating to
+post-employment benefits
+1,263
+1,368
+31,219
+30,493
+Consolidated Financial Statements
+25,972
+119
+Segment information
+(in millions of €)
+Digital Industries
+Smart Infrastructure
+Gas and Power
+Mobility
+Siemens Healthineers
+Siemens Gamesa Renewable Energy
+Industrial Businesses
+Financial Services
+Portfolio Companies
+Reconciliation to
+NOTE 29
+Siemens (continuing operations)
+Wages and salaries
+2019
+NOTE 27 Personnel costs
+(shares in thousands; earnings per share in €)
+Income from continuing operations
+Less: Portion attributable to
+non-controlling interest
+Income from continuing operations
+attributable to shareholders of Siemens AG
+Weighted average shares outstanding - basic
+Effect of dilutive share-based payment
+Effect of dilutive warrants
+Fiscal year
+2019
+2018
+5,646
+5,996
+474
+313
+5,172
+807,273
+10,657
+380
+5,683
+815,063
+2018
+11,600
+818,309
+1,653
+828,316
+Basic earnings per share
+(from continuing operations)
+Diluted earnings per share
+6.41
+6.97
+6.32
+6.86
+(from continuing operations)
+Fiscal year
+(in millions of €)
+Weighted average shares outstanding - diluted
+Fiscal year
+100
+Amortization,
+depreciation & impairments
+Consolidated Financial Statements
+Siemens' Managing Board is responsible for assessing the perfor-
+mance of the segments (chief operating decision maker). The
+Company's profitability measure of the segments except for SFS
+is earnings before financing interest, certain pension costs, in-
+come taxes and amortization expenses of intangible assets ac-
+quired in business combinations as determined by the chief op-
+erating decision maker (Profit). The major categories of items
+excluded from Profit are presented below.
+Profit
+Revenue includes revenue from contracts with customers and
+revenue from leasing activities. In fiscal 2019 and 2018, lease rev-
+enue is generated mainly at Siemens Healthineers amounting
+to €233 million and €179 million, Financial Services €259 mil-
+lion and €247 million, and Siemens Real Estate €72 million and
+€77 million, respectively. In fiscal 2019 and 2018, Digital indus-
+tries recognized €4,039 million and €3,560 million revenue, re-
+spectively, from its software business, Smart Infrastructure rec-
+ognized €5,530 million and €5,302 million in its product business
+and Gas and Power recognized €8,025 million and €7,756 million
+in its service business. Revenues of Mobility are mainly derived
+from construction-type business.
+Revenue
+Accounting policies for Segment information are generally the
+same as those used for the Consolidated Financial Statements.
+Lease transactions, however, are classified as operating leases for
+internal and segment reporting purposes. Intersegment trans-
+actions are based on market prices.
+MEASUREMENT - SEGMENTS
+Eliminations, Corporate Treasury and other reconciling
+items - comprise consolidation of transactions within the seg-
+ments, certain reconciliation and reclassification items as well as
+central financing activities. It also includes interest income and
+expense, such as, for example, interest not allocated to segments
+or POC (referred to as financing interest), interest related to cen-
+tral financing activities or resulting consolidation and reconcilia-
+tion effects on interest.
+Centrally carried pension expense - includes the Company's
+pension related income (expense) not allocated to the segments,
+POC or Real Estate Services.
+Corporate items - includes corporate costs, such as group man-
+aging costs, basic research of Corporate Technology, IoT, Siemens
+Global Business services, corporate projects and results of corpo-
+rate-related derivative activities. Corporate items also include
+equity interests, activities generally intended for closure as well
+as activities remaining from divestments and discontinued oper-
+ations.
+Real Estate Services - manages the Group's real estate business
+portfolio, operates the properties, and is responsible for building
+projects and the purchase and sale of real estate; excluded are
+Siemens Gamesa Renewable Energy, the carved-out real estate
+of Mobility and since January 2018 Siemens Healthineers.
+CONSOLIDATED FINANCIAL STATEMENTS
+RECONCILIATION TO
+3,419
+3,494
+2,602
+2,610
+121
+267
+Financing interest, excluded from Profit, is any interest income or
+expense other than interest income related to receivables from
+customers, from cash allocated to the segments and interest ex-
+penses on payables to suppliers. Financing interest is excluded
+from Profit because decision-making regarding financing is typi-
+cally made at the corporate level.
+Amortization expenses of intangible assets acquired in business
+combinations are not part of Profit. Furthermore, income taxes
+are excluded from Profit since income tax is subject to legal struc-
+tures, which typically do not correspond to the structure of the
+segments. The effect of certain litigation and compliance issues
+is excluded from Profit, if such items are not indicative of perfor-
+mance. This may also be the case for items that refer to more
+than one reportable segment, SRE and (or) POC or have a corpo-
+rate or central character. Costs for support functions are primarily
+allocated to the segments.
+CONSOLIDATED FINANCIAL STATEMENTS
+RECONCILIATION TO
+Consolidated Financial Statements
+122
+POC AND REAL ESTATE SERVICES
+POC follows the measurement principles of the segments except
+for SFS. Real Estate Services applies the measurement principles
+of SFS.
+-
+MEASUREMENT
+Amortization, depreciation and impairments
+Amortization, depreciation and impairments includes deprecia-
+tion and impairments of property, plant and equipment as well
+as amortization and impairments of intangible assets each net of
+reversals of impairment.
+Free cash flow of the segments, except for SFS, constitutes cash
+flows from operating activities less additions to intangible assets
+and property, plant and equipment. It excludes financing inter-
+est, except for cases where interest on qualifying assets is capi-
+talized or classified as contract costs; it also excludes income tax
+as well as certain other payments and proceeds. Free cash flow
+of SFS includes related financing interest payments and pro-
+ceeds; income tax payments and proceeds of SFS are excluded.
+Free cash flow definition
+As of September 30, 2019 and 2018, order backlog totaled
+€146 billion and €132 billion; thereof Digital Industries €5 billion
+and €5 billion, Smart Infrastructure €10 billion and €9 billion,
+Gas and Power €51 billion and €47 billion, Mobility €33 billion
+and €29 billion, Siemens Healthineers €18 billion and €16 billion
+and Siemens Gamesa Renewable Energy €26 billion and €23 bil-
+lion. In fiscal 2020, Siemens expects to convert approximately
+€50 billion of the September 30, 2019 order backlog into reve-
+nue; thereof at Digital Industries approximately €4 billion, Smart
+Infrastructure approximately €7 billion, Gas and Power approxi-
+mately €13 billion, Mobility approximately €8 billion, Siemens
+Healthineers approximately €6 billion and Siemens Gamesa
+Renewable Energy approximately €9 billion.
+Orders are determined principally as estimated revenue of ac-
+cepted purchase orders for which enforceable rights and obliga-
+tions exist as well as subsequent order value changes and adjust-
+ments, excluding letters of intent. To determine orders, Siemens
+considers termination rights and customer's creditworthiness.
+Orders
+Management determined Assets (Net capital employed) as a
+measure to assess capital intensity of the segments except for
+SFS. Its definition corresponds to the Profit measure except for
+amortization expenses of intangible assets acquired in business
+combinations which are not part of Profit, however, the related
+intangible assets are included in the segments' Assets. Segment
+Assets is based on Total assets of the Consolidated Statements of
+Financial Position, primarily excluding intragroup financing re-
+ceivables, tax related assets and assets of discontinued opera-
+tions, since the corresponding positions are excluded from Profit.
+The remaining assets are reduced by non-interest-bearing liabili-
+ties other than tax related liabilities, e.g. trade payables, to derive
+Assets. In contrast, Assets of SFS is Total assets. Assets of Mobility
+include the project-specific intercompany financing of a long-
+term project. Assets of Siemens Gamesa Renewable Energy and
+Siemens Healthineers include real estate, while real estate of all
+other Siemens segments is carried at SRE, except for carved-out
+real estate of Mobility.
+Asset measurement principles
+In contrast to performance measurement principles applied to
+other segments, interest income and expenses are included, since
+interest is an important source of revenue and expense of SFS.
+Profit of the segment SFS
+Decisions on essential pension items are made centrally. Accord-
+ingly, Profit primarily includes amounts related to service cost of
+pension plans only, while all other regularly recurring pension
+related costs are included in reconciliations in line item Centrally
+carried pension expense.
+Profit
+240
+387
+27
+553
+621
+27,628
+29,901
+633
+632
+2,823
+2,924
+Additions to intangible assets
+and property, plant & equipment
+Fiscal year
+2,120
+7,084
+8,000
+45,949
+48,438
+8,857
+8,986
+35
+500
+220
+(71)
+(1,809)
+5,814
+(2,794)
+5,872
+63,653
+138,915
+150,248
+8,050
+69,995
+(1,135)
+(2,028)
+7,518
+121
+110
+88
+77
+(14)
+45
+1,685
+1,915
+(305)
+208
+645
+In fiscal 2019 and 2018, Profit of SFS includes interest income of
+€1,331 million and €1,220 million, respectively and interest ex-
+penses of €564 million and €495 million, respectively.
+Assets
+2019
+2018
+2019
+(in millions of €)
+Fiscal year
+Revenue by location
+of companies
+of customers
+Revenue by location
+NOTE 30 Information about geographies
+63,653
+69,995
+Consolidated Financial Statements
+(44,133)
+(39,702)
+Eliminations, Corporate Treasury, other items
+Reconciliation to
+46,850
+49,191
+Fiscal year
+2018
+Liability-based adjustments
+2019
+Sep 30,
+18,693
+Asia, Australia
+20,395
+21,795
+21,452
+22,992
+22,115
+23,796
+Americas
+24,514
+25,065
+46,682
+48,002
+42,782
+44,360
+Europe, C.I.S., Africa, Middle East
+2018
+Non-current
+assets
+Fiscal year
+(1,135)
+Consolidated Financial Statements
+Assets Real Estate Services
+(423)
+(264)
+Centrally carried pension expense
+2018
+2019
+(in millions of €)
+631
+(562)
+Corporate items
+Sep 30,
+140
+145
+Real Estate Services
+2018
+2019
+(in millions of €)
+3,678
+(2,028)
+3,625
+Assets Corporate items and pensions
+Reconciliation to
+3,236
+4,170
+Tax-related assets
+(318)
+(215)
+and other reconciling items
+55,352
+52,771
+Intragroup financing receivables
+Eliminations, Corporate Treasury,
+Asset-based adjustments:
+(1,164)
+(1,133)
+acquired in business combinations
+(1,277)
+(114)
+Amortization of intangible assets
+647
+1,977
+2018
+639
+1,500
+1,574
+4,702
+1,572
+1,128
+668
+247
+273
+241
+679
+722
+12,103
+12,107
+236
+341
+316
+2,610
+Fiscal year
+2019
+2018
+2019
+2018
+2019
+2019
+2018
+2019
+2018
+2,880
+2,898
+10,626
+9,993
+2,635
+863
+301
+5,071
+330
+3,823
+309
+483
+482
+519
+620
+512
+575
+1,673
+1,618
+12,392
+408
+375
+498
+415
+3,703
+2,221
+13,889
+533
+983
+958
+3,045
+2,933
+903
+604
+175
+143
+184
+174
+2,461
+998
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+100
+100
+Siemens Gamesa Turkey Yenilenebilir Enerji Limited Sirketi,
+Kartal/Istanbul/Turkey
+100
+Kartal/Istanbul/Turkey
+ByteToken, Ltd, Edinburgh/United Kingdom
+5 No significant influence due to contractual arrangements or legal circumstances.
+100
+D-R Holdings (UK) Ltd., Frimley, Surrey/United Kingdom
+Dresser-Rand (U.K.) Limited, Frimley,
+Surrey/United Kingdom
+6 Significant influence due to contractual arrangements or legal circumstances.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+136 Consolidated Financial Statements
+Equity interest
+September 30, 2019
+Dresser-Rand Company Ltd., Frimley,
+in %
+Equity interest
+September 30, 2019
+in %
+SIEMENS GAMESA RENEWABLE ENERJI ANONIM SIRKETI,
+7 Not consolidated due to immateriality.
+100
+100
+100
+100
+Siemens Healthcare L.L.C., Dubai/United Arab Emirates
+492
+Siemens Tanzania Ltd. i.L.,
+Sellafirth Renewable Energy Park Limited,
+Siemens LLC, Abu Dhabi/United Arab Emirates
+492
+Dar es Salaam/Tanzania, United Republic of
+100
+Siemens Middle East Limited,
+Mentor Graphics Tunisia SARL, Tunis/Tunisia
+100
+Masdar City/United Arab Emirates
+100
+Siemens Mobility S.A.R.L., Tunis/Tunisia
+100
+SIEMENS MOBILITY LLC, Dubai/United Arab Emirates
+Siemens Finansal Kiralama A.S., Istanbul/Turkey
+100
+KACO New Enerji Limited Sirketi, Pendik/Turkey
+100
+100
+AIMSUN LIMITED, London/United Kingdom
+Bargrennan Renewable Energy Park Limited,
+Frimley, Surrey/United Kingdom
+100
+Yorkshire/United Kingdom
+Flender Mekanik Güc Aktarma Sistemleri Sanayi ve Ticaret
+Adwen UK Limited, Kingston Upon Hull,
+100
+Siemens S.A., Tunis/Tunisia
+492
+Anonim Sirketi, Istanbul/Turkey
+Siemens Schweiz AG, Zurich/Switzerland
+Surrey/United Kingdom
+Frimley, Surrey/United Kingdom
+60
+Sistemas Energéticos Sierra de Valdefuentes, S.L.U.,
+Zamudio/Spain
+100
+Sistemas Energéticos Cabanelas, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+Sistemas Energéticos Tablero Tabordo, S.L.,
+Las Palmas de Gran Canaria/Spain
+100
+Sistemas Energéticos Cabezo Negro, S.A. Unipersonal,
+Zaragoza/Spain
+100
+Sistemas Energéticos Tomillo, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+100
+Sistemas Energéticos Carril, S.L. Unipersonal,
+Zamudio/Spain
+100
+Sistemas Energéticos Boyal, S.L., Zaragoza/Spain
+Telecomunicación, Electrónica y Conmutación S.A.,
+Madrid/Spain
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+Consolidated Financial Statements
+135
+100
+Equity interest
+100
+100
+100
+Sistemas Energéticos Ladera Negra, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+100
+Siemens Industry Software S.L., Barcelona/Spain
+100
+Siemens Logistics S. L. Unipersonal, Madrid/Spain
+SIEMENS MOBILITY, S. L. U., Tres Cantos/Spain
+100
+Sistemas Energéticos Loma del Reposo, S. L. Unipersonal,
+Zamudio/Spain
+100
+100
+Siemens Rail Automation S.A.U., Tres Cantos/Spain
+Siemens Renting S.A., Madrid/Spain
+100
+Sistemas Energéticos Loma del Viento, S.A. Unipersonal,
+Sevilla/Spain
+100
+Zamudio/Spain
+100
+Siemens S.A., Madrid/Spain
+100
+Villarcayo de Merindad de Castilla la Vieja/Spain
+78
+Sistemas Energéticos Argañoso, S. L. Unipersonal,
+Zamudio/Spain
+Sistemas Energéticos Monte Genaro, S.L.U., Zamudio/Spain
+100
+100
+Sistemas Energéticos Arinaga, S.A. Unipersonal,
+Las Palmas de Gran Canaria/Spain
+Sistemas Energéticos Serra de Lourenza, S.A. Unipersonal,
+Zamudio/Spain
+100
+100
+Sistemas Energéticos Balazote, S.A. Unipersonal,
+Sistemas Energéticos Sierra de Las Estancias, S.A.
+Unipersonal, Sevilla/Spain
+Sistemas Energéticos Mansilla, S.L.,
+Equity interest
+September 30, 2019
+in %
+100% foreign owned subsidiary "Siemens Ukraine",
+Kiev/Ukraine
+100
+Siemens Industry Software AB, Solna/Sweden
+100
+Siemens Mobility AB, Solna/Sweden
+100
+Siemens Gamesa Renewable Energy LLC, Kiev/Ukraine
+Siemens Gas and Power LLC, Kiev/Ukraine
+100
+1007
+Dresser Rand Sales Company GmbH, Zurich/Switzerland
+100
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
+Huba Control AG, Würenlos/Switzerland
+100
+100
+Kiev/Ukraine
+Komykrieng AG in Liquidation, Zurich/Switzerland
+100
+Mentor Graphics (Schweiz) AG, Kilchberg/Switzerland
+100
+Dresser-Rand Field Operations Middle East LLC,
+Abu Dhabi/United Arab Emirates
+492
+Polarion AG, Zurich/Switzerland
+100
+FAST TRACK DIAGNOSTICS RESEARCH LIMITED,
+Buckinghamshire/United Kingdom
+Siemens Financial Services Holdings Ltd., Stoke Poges,
+100
+Electrium Sales Limited, Frimley, Surrey/United Kingdom
+100
+100
+Siemens Industrial Turbomachinery AB, Finspång/Sweden
+100
+Siemens Healthcare AB, Solna/Sweden
+September 30, 2019
+in %
+Fanbyn2 Vindenergi AB, Stockholm/Sweden
+100
+Lindom Vindenergi AB, Solna/Sweden
+Lingbo SPW AB, Stockholm/Sweden
+100
+SIEMENS GAMESA YENILENEBILIR ENERJI IC VE DIS TICARET
+LIMITED SIRKETI, Menemen/Izmir/Turkey
+100
+100
+Siemens Gas and Power Enerji Anonim Sirketi,
+Mentor Graphics (Scandinavia) AB, Kista/Sweden
+100
+Istanbul/Turkey
+100
+Siemens AB, Solna/Sweden
+100
+100
+100
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul/Turkey
+Dresser-Rand Turkmen Company, Ashgabat/Turkmenistan
+100
+Stockholm/Sweden
+SIEMENS GAMESA RENEWABLE ENERGY SWEDEN AB,
+100
+100
+100
+Siemens Gamesa Renewable Energy AB, Stockholm/Sweden
+100
+Siemens Financial Services AB, Stockholm/Sweden
+100
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul/Turkey
+Siemens Mobility Ulasim Sistemleri Anonim Sirketi,
+Istanbul/Turkey
+100
+Siemens Power Holding AG, Zug/Switzerland
+100
+100
+Guascor Argentina, S.A., Buenos Aires/Argentina
+Siemens Gamesa Renewable Energy Limited,
+100
+Artadi S.A., Buenos Aires/Argentina
+10013
+Siemens Gamesa Renewable Energy Canada ULC,
+Halifax/Canada
+Americas (171 companies)
+100
+Siemens Financial Ltd., Oakville/Canada
+100
+VA TECH T&D UK Ltd., Frimley, Surrey/United Kingdom
+100
+10013
+Mentor Graphics (Canada) ULC, Vancouver/Canada
+Siemens Canada Limited, Oakville/Canada
+100
+VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+1007
+KACO NEW ENERGY CANADA INC., Guelph/Canada
+The Preactor Group Limited,
+100
+10013
+Dresser-Rand Canada, ULC, Vancouver/Canada
+EPOCAL INC., Toronto/Canada
+100
+Frimley, Surrey/United Kingdom
+Siemens Transmission & Distribution Limited,
+100
+Oakville/Canada
+100
+Siemens Healthcare S.A., Buenos Aires/Argentina
+100
+100
+Oakville/Canada
+Chemtech Servicos de Engenharia e Software Ltda.,
+Wheelabrator Air Pollution Control (Canada) Inc.,
+100
+Santa Cruz de la Sierra/Bolivia, Plurinational State of
+100
+Trench Limited, Saint John/Canada
+Siemens Soluciones Tecnologicas S.A.,
+100
+Québec/Canada
+100
+Buenos Aires/Argentina
+Siemens Transformers Canada Inc., Trois-Rivières,
+Siemens Industry Software Limited, Frimley,
+VA TECH International Argentina SA,
+SIEMENS MOBILITY LIMITED, Oakville/Canada
+100
+Siemens S.A., Buenos Aires/Argentina
+100
+10013
+Siemens Industry Software ULC, Vancouver/Canada
+Siemens Logistics Ltd., Oakville/Canada
+100
+Siemens Mobility S.A., Munro/Argentina
+100
+100
+1007
+Siemens Gas and Power Limited, Oakville/Canada
+Siemens Healthcare Limited, Oakville/Canada
+1007
+Siemens Industrial S.A., Buenos Aires/Argentina
+Siemens IT Services S.A., Buenos Aires/Argentina
+100
+100
+Frimley, Surrey/United Kingdom
+100
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+100
+Siemens plc, Frimley, Surrey/United Kingdom
+573
+Siemens Pension Funding Limited, Frimley,
+Surrey/United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership,
+Edinburgh/United Kingdom
+100
+8 Not accounted for using the equity method due to immateriality.
+Frimley, Surrey/United Kingdom
+100
+Siemens Mobility Limited, Frimley, Surrey/United Kingdom
+Siemens Pension Funding (General) Limited, Frimley,
+Surrey/United Kingdom
+Project Ventures Rail Investments | Limited,
+100
+Frimley, Surrey/United Kingdom
+Preactor International Limited,
+100
+Siemens Industry Software Simulation and Test Limited,
+Frimley, Surrey/United Kingdom
+100
+Next47 Fund 2020, L.P., London/United Kingdom
+100
+Next47 Fund 2019, L.P., London/United Kingdom
+100
+Surrey/United Kingdom
+100
+Rio de Janeiro/Brazil
+9 Exemption pursuant to Section 264b German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+Siemens Wind Power Energia Eólica Ltda., São Paulo/Brazil
+Siemens Rail Systems Project Limited,
+100
+Siemens Participações Ltda., São Paulo/Brazil
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Mobility Soluções de Mobilidade Ltda.,
+São Paulo/Brazil
+Siemens Rail Systems Project Holdings Limited,
+100
+Surrey/United Kingdom
+100
+Siemens Ltda., São Paulo/Brazil
+Siemens Rail Automation Limited, Frimley,
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+1007
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Industry Software Ltda., São Caetano do Sul/Brazil
+in %
+September 30, 2019
+in %
+Siemens Postal, Parcel & Airport Logistics Limited,
+September 30, 2019
+Equity interest
+Equity interest
+137
+Consolidated Financial Statements
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+Siemens Infraestrutura e Indústria Ltda., São Paulo/Brazil
+100
+Dresser-Rand do Brasil, Ltda., Santa Bárbara D'Oeste/Brazil
+100
+100
+Frimley, Surrey/United Kingdom
+100
+GYM Renewables ONE Limited,
+Siemens Gamesa Renewable Energy UK Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Industrial Turbine Company (UK) Limited,
+Siemens Gamesa Renewable Energy Wind Limited,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+GYM Renewables Limited, Frimley, Surrey/United Kingdom
+100
+100
+Siemens Healthcare Diagnostics Ltd.,
+LIGHTWORKS SOFTWARE LIMITED,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Materials Solutions Holdings Limited,
+Siemens Healthcare Diagnostics Manufacturing Ltd,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+Siemens Healthcare Diagnostics Products Ltd,
+Materials Solutions Limited,
+Lightwork Design Limited, Frimley, Surrey/United Kingdom
+Frimley, Surrey/United Kingdom
+Siemens Gamesa Renewable Energy Limited,
+Frimley, Surrey/United Kingdom
+next47 Fund 2018, L.P., London/United Kingdom
+100
+Abu Dhabi/United Arab Emirates
+100
+Siemens Mobility AG, Wallisellen/Switzerland
+Siemens Capital Middle East Ltd,
+100
+Siemens Logistics AG, Zurich/Switzerland
+492
+SD (Middle East) LLC, Dubai/United Arab Emirates
+100
+Siemens Industry Software GmbH, Zurich/Switzerland
+100
+100
+100
+Gulf Steam Generators L.L.C., Dubai/United Arab Emirates
+Samateq FZ LLC, UAE, Abu Dhabi/United Arab Emirates
+100
+Dunblane/United Kingdom
+100
+Siemens Financial Services Ltd.,
+Flender Limited, Frimley, Surrey/United Kingdom
+100
+Stoke Poges, Buckinghamshire/United Kingdom
+100
+Flomerics Group Limited, Frimley, Surrey/United Kingdom
+100
+Glenouther Renewables Energy Park Limited,
+Siemens Healthcare AG, Zurich/Switzerland
+Siemens Gamesa Renewable Energy B9 Limited,
+Frimley, Surrey/United Kingdom
+100
+100
+Siemens Healthcare FZ LLC, Dubai/United Arab Emirates
+Mendix Technology Limited,
+Frimley, Surrey/United Kingdom
+100
+7 Not consolidated due to immateriality.
+1 Control due to a majority of voting rights.
+100
+100
+Siemens Mobility S.p.A., Santiago de Chile/Chile
+Siemens S.A., Santiago de Chile/Chile
+100
+Siemens Healthcare Diagnósticos Ltda., São Paulo/Brazil
+100
+Siemens Gamesa Energia Renovável Ltda., Camaçari/Brazil
+100
+Siemens Healthcare Equipos Médicos Sociedad
+por Acciones, Santiago de Chile/Chile
+89
+Jaguarí Energética, S.A., Jaguari/Brazil
+100
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+Canoas/Brazil
+Santiago de Chile/Chile
+Iriel Indústria e Comercio de Sistemas Eléctricos Ltda.,
+Siemens Gamesa Renewable Energy Chile SpA,
+100
+Duque de Caxias/Brazil
+100
+Nimbic Chile S.p.A., Las Condes/Chile
+Industrial Turbine Brasil Geracao de Energia Ltda.,
+100
+Flender S.p.A., Santiago de Chile/Chile
+100
+Guascor do Brasil Ltda., São Paulo/Brazil
+100
+Siemens Healthcare Diagnostics Manufacturing Limited,
+Grand Cayman/Cayman Islands
+100
+Frimley, Surrey/United Kingdom
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+5 No significant influence due to contractual arrangements or legal circumstances.
+100
+Siemens Healthcare Limited, Frimley,
+Surrey/United Kingdom
+100
+100
+Siemens Holdings plc, Frimley, Surrey/United Kingdom
+100
+Mentor Graphics (UK) Limited,
+Siemens Industrial Turbomachinery Ltd.,
+Frimley, Surrey/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+MRX Rail Services UK Limited,
+4 No control due to contractual arrangements or legal circumstances.
+Siemens Industry Software Computational Dynamics
+1007
+Limited, Frimley, Surrey/United Kingdom
+100
+MRX Technologies Limited, Frimley, Surrey/United Kingdom
+100
+138 Consolidated Financial Statements
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8
+6 Significant influence due to contractual arrangements or legal circumstances.
+Frimley, Surrey/United Kingdom
+Bytemark Canada Inc., Saint John/Canada
+INVERSIONES SAMIAC 30, S. L. U., Vitoria-Gasteiz/Spain
+Mentor Graphics (España) SL, Madrid/Spain
+Parque Eolico Dos Picos, S. L. U., Zamudio/Spain
+SIEMENS ENGINES R&D, S.A.U., Vitoria-Gasteiz/Spain
+SIEMENS ENGINES SA, Zumaia/Spain
+100
+Société d'Exploitation du Parc Eolien du Vireaux SAS,
+Société d'Exploitation du Parc Eolien de
+100
+Saint-Priest/France
+100
+Société d'Exploitation du Parc Eolien d'Orchamps SARL,
+Société d'Exploitation du Parc Eolien de Plancy l'Abbaye
+SARL, Saint-Priest/France
+100
+Société d'Exploitation du Parc Eolien de Vernierfontaine
+SARL, Saint-Priest/France
+100
+SARL, Saint-Priest/France
+Pouilly-sur-Vingeanne SARL, Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Orge et Ornain
+Saint-Priest/France
+100
+Société d'Exploitation du Parc Eolien de Vaudrey SARL,
+Société d'Exploitation du Parc Eolien de Moulins du Puits
+SAS, Saint-Priest/France
+100
+Saint-Priest/France
+100
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Trépot SARL,
+Société d'Exploitation du Parc Eolien de Margny SARL,
+100
+100
+Saint-Priest/France
+100
+100
+Société d'Exploitation du Parc Eolien de Saint Loup de
+Saintonge SAS, Saint-Priest/France
+100
+Siemens Gamesa Renewable Energy Greece E.P.E.,
+Filothei-Psychiko/Greece
+100
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Saint Bon SARL,
+100
+Filothei-Psychiko/Greece
+100
+Saint-Priest/France
+Siemens Gamesa Renewable Energy AE,
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Saint Amand SARL,
+Siemens A.E., Electrotechnical Projects and Products,
+Athens/Greece
+100
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Romigny SARL,
+100
+Siemens Oil & Gas Equipment Limited, Accra/Ghana
+100
+Saint-Priest/France
+100
+Trench France SAS, Saint-Louis/France
+Société d'Exploitation du Parc Eolien de Pringy SARL,
+100
+100
+100
+Société d'Exploitation du Parc Eolien de Souvans SARL,
+Société d'Exploitation du Parc Eolien de la Loye SARL,
+100
+Saint-Priest/France
+100
+Société d'Exploitation du Parc Eolien de Savoisy SARL,
+Société d'Exploitation du Parc Eolien de la Brie des Etangs
+SARL, Saint-Priest/France
+100
+Saint-Priest/France
+100
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Sambourg SARL,
+Société d'Exploitation du Parc Eolien de Sceaux SARL,
+Société d'Exploitation du Parc Eolien de Guerfand SARL,
+Société d'Exploitation du Parc Eolien de Saint-Lumier en
+Champagne SARL, Saint-Priest/France
+100
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Germainville SAS,
+in %
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+129
+100
+Saint-Priest/France
+Saint-Priest/France
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Mantoche SARL,
+100
+Société d'Exploitation du Parc Eolien de Source de Sèves
+SARL, Saint-Priest/France
+100
+SARL, Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Mailly-le-Camp
+100
+Saint-Priest/France
+100
+Longueville-sur-Aube SARL, Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Soude SARL,
+100
+Société d'Exploitation du Parc Eolien de
+Saint-Priest/France
+100
+Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Songy SARL,
+Société d'Exploitation du Parc Eolien de Landresse SARL,
+100
+Saint-Priest/France
+100
+Société d'Exploitation du Parc Eolien de Sommesous SARL,
+Société d'Exploitation du Parc Eolien de la Tête des Boucs
+SARL, Saint-Priest/France
+100
+100
+Consolidated Financial Statements
+Siemens Healthcare Industrial and Commercial
+Société Anonyme, Chalandri/Greece
+1 Control due to a majority of voting rights.
+10013
+Shannon, County Clare/Ireland
+100
+Siemens Mobility S.r.I., Milan/Italy
+Mentor Graphics (Holdings) Unlimited Company,
+100
+Siemens Logistics S.r.I., Milan/Italy
+97
+Teheran/Iran, Islamic Republic of
+100
+Siemens Industry Software S.r.I., Milan/Italy
+Siemens Renting s.r.l. in Liquidazione, Milan/Italy
+Siemens Sherkate Sahami (Khass),
+Siemens Healthcare S.r.I., Milan/Italy
+100
+Teheran/Iran, Islamic Republic of
+1007
+Siemens Gas and Power S.r.I., Milan/Italy
+Siemens Gamesa Energy Tajdidpazir SSK,
+100
+Siemens Gamesa Renewable Energy Wind S.R.L., Rome/Italy
+100
+Siemens Zrt., Budapest/Hungary
+100
+100
+Siemens Gamesa Renewable Energy Italy, S.P.A., Rome/Italy
+100
+100
+100
+Swords, County Dublin/Ireland
+Siemens Electrical & Electronic Services K.S.C.C.,
+Siemens Healthcare Diagnostics Manufacturing Limited,
+100
+Siemens Gamesa Renewable Energy Limited, Nairobi/Kenya
+100
+Siemens Gamesa Renewable Energy Limited, Dublin/Ireland
+100
+Siemens TOO, Almaty/Kazakhstan
+100
+Mentor Graphics (Ireland) Limited,
+100
+Siemens Gamesa Renewable Energy Ireland Limited,
+Dublin/Ireland
+Siemens Healthcare Limited Liability Partnership,
+100
+Shannon, County Clare/Ireland
+100
+Trench Italia S.r.I., Savona/Italy
+Mentor Graphics Development Services Limited,
+100
+Siemens Transformers S.r.I., Trento/Italy
+100
+Shannon, County Clare/Ireland
+Almaty/Kazakhstan
+100
+Siemens Mobility Kft., Budapest/Hungary
+Siemens Gamesa Renewable Energy Italia S.r.I., Milan/Italy
+evosoft Hungary Szamitastechnikai Kft., Budapest/Hungary
+100
+100
+Siemens Israel Ltd., Rosh HaAyin/Israel
+Siemens Mobility Rail and Road Transportation Solutions
+Société Anonyme, Athens/Greece
+in %
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+100
+130 Consolidated Financial Statements
+12 Siemens AG is a shareholder with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+100
+Siemens Israel Projects Ltd., Rosh HaAyin/Israel
+Siemens Mobility Ltd., Rosh HaAyin/Israel
+100
+100
+Siemens Healthcare Kft., Budapest/Hungary
+100
+Parco Eolico Manca Vennarda S.r.I., Rome/Italy
+1007
+Siemens Gas and Power Kft., Budapest/Hungary
+100
+Parco Eolico Banzy S.r.I., Rome/Italy
+100
+Budapest/Hungary
+100
+1007
+Mentor Graphics Torino S.R.L., Turin/Italy
+100
+KACO new energy Italia S.r.I., Bracciano/Italy
+100
+Budapest/Hungary
+100
+Flender Italia S.r.I., Milan/Italy
+Siemens Gamesa Megújuló Energia Hungary Kft,
+100
+UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
+100
+Mentor Graphics Magyarország Kft., Budapest/Hungary
+Siemens Gamesa Renewable Energy Kft.,
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Equity interest
+Equity interest
+Siemens Holding S.L., Madrid/Spain
+100
+SIEMENS HEALTHCARE, S. L. U., Getafe/Spain
+90
+00
+Villanueva de Gállego/Spain
+100
+100
+Sistemas Energéticos La Cámara, S.L., Sevilla/Spain
+Sistemas Energéticos La Plana, S.A.,
+September 30, 2019
+Siemens Gamesa Renewable Energy Wind Farms, S.A.,
+Zamudio/Spain
+Siemens Gamesa Renewable Energy S.A., Zamudio/Spain
+100
+Sistemas Energéticos Jaralón, S.A. Unipersonal,
+Zamudio/Spain
+100
+Siemens Gamesa Renewable Energy Latam, S.L.,
+Sarriguren/Spain
+100
+Sistemas Energéticos Fonseca, S.A. Unipersonal,
+Zamudio/Spain
+100
+Zamudio/Spain
+Siemens Gamesa Renewable Energy Invest, S.A.,
+100
+59
+Sistemas Energéticos Finca San Juan, S.L.U.,
+Las Palmas de Gran Canaria/Spain
+in %
+in %
+100
+Siemens Mobility, s.r.o., Prague/Czech Republic
+100
+100
+Siemens Financial Services SAS, Saint-Denis/France
+Siemens France Holding SAS, Saint-Denis/France
+100
+Siemens Industry Software, s.r.o., Prague/Czech Republic
+100
+Siemens Healthcare, s.r.o., Prague/Czech Republic
+100
+PETNET Solutions SAS, Lisses/France
+September 30, 2019
+1007
+1007
+100
+Meta Systems SARL, Meudon La Forêt/France
+MG P&S France SAS, Grenoble/France
+100
+Siemens Electric Machines s.r.o., Drasov/Czech Republic
+100
+OEZ s.r.o., Letohrad/Czech Republic
+100
+Mentor Graphics Development Crolles SARL,
+Monbonnot-Saint-Martin/France
+100
+Siemens Gamesa Renewable Energy Limited,
+Nicosia/Cyprus
+Siemens Gas and Power, s.r.o., Prague/Czech Republic
+Siemens, s.r.o., Prague/Czech Republic
+100
+100
+12 Siemens AG is a shareholder with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+1 Control due to a majority of voting rights.
+Siemens Gamesa Renewable Energy Apac, S.L.,
+Sarriguren/Spain
+75
+Siemens Healthcare Proprietary Limited, Halfway
+House/South Africa
+100
+Siemens Gamesa Renewable Energy 9REN, S.L.,
+Madrid/Spain
+03
+Siemens Healthcare Employee Share Ownership Trust,
+Midrand/South Africa
+100
+100
+100
+100
+100
+Siemens Gamesa Renewable Energy International
+Wind Services, S.A., Zamudio/Spain
+134 Consolidated Financial Statements
+Equity interest
+Sistemas Energéticos El Valle, S.L., Sarriguren/Spain
+100
+Innovation & Technology, S.L., Sarriguren/Spain
+70
+Sistemas Energéticos del Sur S.A., Sevilla/Spain
+Siemens Gamesa Renewable Energy
+100
+Sistemas Energéticos de Tarifa, S. L. Unipersonal,
+Zamudio/Spain
+100
+Tres Cantos/Spain
+Siemens Gamesa Renewable Energy Iberica S.L.,
+Equity interest
+100
+100
+Zamudio/Spain
+Siemens Gamesa Renewable Energy Europa S.L.,
+100
+Sistemas Energéticos Cuerda Gitana, S.A. Unipersonal,
+Sevilla/Spain
+100
+Siemens Gamesa Renewable Energy Eolica, S.L.,
+Valle de Egues/Eguesibar/Spain
+in %
+September 30, 2019
+in %
+September 30, 2019
+Sistemas Energéticos Cuntis, S.A. Unipersonal,
+Santiago de Compostela/Spain
+100
+Siemens Gamesa Renewable Energy France SAS,
+Saint-Priest/France
+100
+100
+Saint-Priest/France
+100
+Aimsun SARL, Paris/France
+Société d'Exploitation du Parc Eolien de Chepniers SARL,
+100
+Adwen France SAS, Puteaux/France
+100
+Société d'Exploitation du Parc Eolien de Champsevraine,
+SARL, Saint-Priest/France
+1007
+VIBECO - Virtual Buildings Ecosystem Oy, Espoo/Finland
+D-R Holdings (France) SAS, Le Havre/France
+100
+100
+Société d'Exploitation du Parc Eolien de Chaintrix-Bierges
+SARL, Saint-Priest/France
+100
+Siemens Mobility Oy, Espoo/Finland
+100
+Siemens Healthcare Oy, Espoo/Finland
+100
+Saint-Priest/France
+100
+Siemens Gamesa Renewable Energy Oy, Helsinki/Finland
+Société d'Exploitation du Parc Eolien de Cernon SARL,
+Siemens Osakeyhtiö, Espoo/Finland
+100
+100
+Dresser-Rand SAS, Le Havre/France
+9 Exemption pursuant to Section 264b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Société d'Exploitation du Parc Eolien de Dampierre
+Prudemanche SAS, Saint-Priest/France
+Société d'Exploitation du Parc Eolien de Clamanges SARL,
+100
+100
+Mentor Graphics (France) SARL, Meudon La Forêt/France
+100
+Saint-Priest/France
+100
+Société d'Exploitation du Parc Eolien de Coupetz SARL,
+100
+Flender-Graffenstaden SAS, Illkirch-Graffenstaden/France
+KACO new energy SARL, Croissy-Beaubourg/France
+100
+Saint-Priest/France
+100
+Mentor Graphics Development (France) SAS, Paris/France
+Mentor Graphics (Finland) OY, Espoo/Finland
+100
+Saint-Priest/France
+Siemens Lease Services SAS, Saint-Denis/France
+100
+Siemens Mobility A/S, Ballerup/Denmark
+100
+Siemens Industry Software SAS, Châtillon/France
+100
+Siemens Industry Software A/S, Ballerup/Denmark
+100
+Siemens Healthcare SAS, Saint-Denis/France
+100
+Siemens Healthcare A/S, Ballerup/Denmark
+100
+100
+100
+Siemens Gas & Power A/S, Ballerup/Denmark
+Siemens Gamesa Renewable Energy Wind SARL,
+100
+Brande/Denmark
+100
+Saint-Denis Cedex/France
+Siemens Gamesa Renewable Energy A/S,
+Siemens Gamesa Renewable Energy S.A.S.,
+100
+Siemens A/S, Ballerup/Denmark
+Saint-Priest/France
+Mentor Graphics Egypt Company
+Siemens Logistics SAS, Paris/France
+100
+90
+Siemens Technologies S.A.E., Cairo/Egypt
+Société d'Exploitation du Parc Eolien de Broyes SARL,
+100
+Siemens Mobility Egypt LLC, Cairo/Egypt
+100
+Saint-Priest/France
+100
+1007
+Siemens Healthcare S.A.E., Cairo/Egypt
+Société d'Exploitation du Parc Eolien de Bouclans SARL,
+100
+Siemens Healthcare Logistics LLC, Cairo/Egypt
+100
+Saint-Priest/France
+100
+New Cairo City/Egypt
+Société d'Exploitation du Parc Eolien de Bonboillon SARL,
+Siemens Gamesa Renewable Energy Egypt LLC,
+100
+Siemens SAS, Saint-Denis/France
+100
+100
+Siemens Mobility SAS, Châtillon/France
+(A Limited Liability Company - Private Free Zone),
+Cairo/Egypt
+Kuwait City/Kuwait
+Siemens Healthcare Medical Solutions Limited,
+Siemens S.p.A., Milan/Italy
+492
+Siemens S.A., Amadora/Portugal
+100
+Unipessoal Lda, Lisbon/Portugal
+501
+51
+Arabia Electric Ltd. (Equipment), Jeddah/Saudi Arabia
+Dresser-Rand Arabia LLC, Al Khobar/Saudi Arabia
+Siemens Postal, Parcel & Airport Logistics,
+100
+SIEMENS MOBILITY, UNIPESSOAL LDA, Amadora/Portugal
+100
+Siemens Mobility LLC, Moscow/Russian Federation
+Siemens W.L.L., Doha/Qatar
+100
+100
+Moscow/Russian Federation
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA,
+Siemens Healthcare Limited Liability Company,
+100
+Venda do Pinheiro/Portugal
+100
+Leningrad region/Russian Federation
+Siemens Gamesa Renewable Energy, S.A.,
+Siemens Gamesa Renewable Energy LLC,
+100
+Amadora/Portugal
+Ujazd Sp. z o.o., Warsaw/Poland
+100
+51
+8 Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+51
+51
+ISCOSA Industries and Maintenance Ltd.,
+Dammam/Saudi Arabia
+Siemens Mobility Saudi Ltd, Al Khobar/Saudi Arabia
+VA TECH T&D Co. Ltd., Riyadh/Saudi Arabia
+Siemens d.o.o. Beograd, New Belgrade/Serbia
+J2 Innovative Concepts Europe SRL, Bucharest/Romania
+100
+GER Independenta, S.R.L., Bucharest/Romania
+100
+GER Baraganu, S.R.L, Bucharest/Romania
+51
+51
+Siemens Healthcare Limited, Riyadh/Saudi Arabia
+Siemens Ltd., Riyadh/Saudi Arabia
+100
+GER Baneasa, S.R.L., Bucharest/Romania
+402
+100
+9
+100
+100
+100
+St. Petersburg/Russian Federation
+Siemens Gamesa Renewable Energy Poland Sp. z o.o.,
+Warsaw/Poland
+LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD,
+100
+Siemens Finance Sp. z o.o., Warsaw/Poland
+100
+SIMEA SIBIU S.R.L., Sibiu/Romania
+100
+Siemens Digital Logistics Sp. z o.o., Wroclaw/Poland
+100
+Crabtree (Pty) Ltd, Maseru/Lesotho
+Siemens S.R.L., Bucharest/Romania
+Osiek Sp. z o.o. w Likwidacji, Warsaw/Poland
+100
+Siemens Mobility S.R.L., Bucharest/Romania
+100
+100
+Siemens Industry Software S.R.L., Brasov/Romania
+75
+100
+Siemens Healthcare S.R.L., Bucharest/Romania
+100
+Siemens Healthcare (Private) Limited, Lahore/Pakistan
+Siemens Pakistan Engineering Co. Ltd., Karachi/Pakistan
+Mentor Graphics Polska Sp. z o.o., Poznan/Poland
+100
+Vladivostok/Russian Federation
+000 Legion II, Moscow/Russian Federation
+Siemens Gamesa Renewable Energy Sp. z o.O.,
+Smardzewo Windfarm Sp. z o.o., Slawno/Poland
+Siemens Finance and Leasing LLC,
+100
+Siemens Sp. z o.o., Warsaw/Poland
+100
+000 Siemens Transformers, Voronezh/Russian Federation
+100
+Siemens Mobility Sp. z o.o., Warsaw/Poland
+100
+Moscow/Russian Federation
+100
+100
+Siemens Industry Software Sp. z o.o., Warsaw/Poland
+100
+Siemens Healthcare Sp. z o.o., Warsaw/Poland
+100
+Leningrad region/Russian Federation
+1007
+Siemens Gas and Power Sp. z o.o., Warsaw/Poland
+000 Siemens Gas Turbine Technologies,
+100
+Warsaw/Poland
+100
+000 Siemens, Moscow/Russian Federation
+000 Siemens Industry Software,
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+Gamesa Wind South Africa (Proprietary) Limited,
+100
+Vitoria-Gasteiz/Spain
+100
+Flender (Pty) Ltd, Johannesburg/South Africa
+Guascor Explotaciones Energéticas, S.A.,
+100
+100
+Gerr Grupo Energético XXI, S.A. Unipersonal,
+Barcelona/Spain
+Dresser-Rand Southern Africa (Pty) Ltd., Midrand/South
+Africa
+100
+Guascor Ingenieria S.A., Vitoria-Gasteiz/Spain
+Midrand/South Africa
+Gamesa Energy Transmission, S.A. Unipersonal,
+Zamudio/Spain
+Dresser-Rand Service Centre (Pty) Ltd.,
+1007
+Dresser-Rand Property (Pty) Ltd., Midrand/South Africa
+100
+Gamesa Electric, S.A. Unipersonal, Zamudio/Spain
+100
+Crabtree South Africa Pty. Limited, Midrand/South Africa
+100
+FLOVEA SOLAR, S.L.U., Vitoria-Gasteiz/Spain
+100
+100
+Siemens Mobility d.o.o., Ljubljana/Slovenia
+100
+100
+1007
+Siemens Gas & Power (Pty) Ltd, Midrand/South Africa
+70
+Midrand/South Africa
+SIEMENS GAMESA RENEWABLE ENERGY (PTY) LTD,
+03
+Johannesburg/South Africa
+Siemens Employee Share Ownership Trust,
+100
+International Wind Farm Developments IX, S.L.,
+Zamudio/Spain
+03
+Cape Town/South Africa
+Johannesburg/South Africa
+100
+International Wind Farm Developments II, S.L.,
+Zamudio/Spain
+03
+Linacre Investments (Pty) Ltd., Kenilworth/South Africa
+100
+Midrand/South Africa
+100
+Guascor Promotora Solar, S.A., Vitoria-Gasteiz/Spain
+KACO NEW ENERGY AFRICA (PTY) LTD,
+607,13
+Guascor Isolux AIE, Vitoria-Gasteiz/Spain
+S'Mobility Employee Stock Ownership Trust,
+100
+FLENDER IBERICA SL, Tres Cantos/Spain
+100
+SAT Systémy automatizacnej techniky spol. s.r.o.,
+100
+OEZ Slovakia, spol. s r.o., Bratislava/Slovakia
+70
+Siemens Proprietary Limited, Midrand/South Africa
+100
+Siemens Mobility d.o.o. Cerovac, Kragujevac/Serbia
+100
+Siemens Mobility (Pty) Ltd, Randburg/South Africa
+100
+Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
+Siemens Wind Power Employee Share Ownership Trust,
+Midrand/South Africa
+100
+1007
+New Belgrade/Serbia
+Siemens Gas and Power d.o.o. Beograd,
+in %
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+133
+Consolidated Financial Statements
+SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD,
+Centurion/South Africa
+Bratislava/Slovakia
+60
+Adwen Offshore, S. L., Zamudio/Spain
+Siemens Healthcare d.o.o., Ljubljana/Slovenia
+100
+Fábrica Electrotécnica Josa, S.A.U., Tres Cantos/Spain
+1007
+Siemens Gas and Power d.o.o., Ljubljana/Slovenia
+100
+Tajonar/Spain
+100
+Estructuras Metalicas Singulares, S.A. Unipersonal,
+100
+100
+Vitoria-Gasteiz/Spain
+100
+Siemens d.o.o., Ljubljana/Slovenia
+SIPRIN s.r.o., Bratislava/Slovakia
+Siemens s.r.o., Bratislava/Slovakia
+Dresser-Rand Holdings Spain S.L.U.,
+100
+Siemens Mobility, s.r.o., Bratislava/Slovakia
+100
+100
+03
+Aimsun S.L., Barcelona/Spain
+100
+Siemens Healthcare s.r.o., Bratislava/Slovakia
+1007
+Siemens Gas and Power SRL, Bucharest/Romania
+100
+100
+Siemens Gamesa Renewable Energy, Ltd,
+Siemens Gas and Power Holding B.V.,
+100
+Nouakchott/Mauritania
+100
+The Hague/Netherlands
+Siemens Gamesa Renewable Energy, SARL,
+Siemens Gamesa Renewable Energy B.V.,
+100
+FTD Europe Ltd, Sliema/Malta
+100
+The Hague/Netherlands
+The Hague/Netherlands
+Fast Track Diagnostics Ltd, Sliema/Malta
+Siemens Financieringsmaatschappij N.V.,
+100
+100
+Siemens Finance B.V., The Hague/Netherlands
+100
+Siemens Mobility Holding SARL, Luxembourg/Luxembourg
+TFM International S.A. i.L., Luxembourg/Luxembourg
+100
+100
+Siemens D-R Holding II B.V., The Hague/Netherlands
+Siemens D-R Holding III B.V., The Hague/Netherlands
+100
+100
+Esch-sur-Alzette/Luxembourg
+100
+100
+100
+Zoeterwoude/Netherlands
+100
+Tangier/Morocco
+Siemens Heat Transfer Technology B.V.,
+Siemens Gamesa Renewable Energy Morocco SARL,
+100
+The Hague/Netherlands
+100
+Tangier/Morocco
+Siemens Healthineers Holding III B.V.,
+100
+Siemens Gamesa Renewable Energy Blades, SARL AU,
+The Hague/Netherlands
+100
+Mentor Graphics Morocco SARL, Sala Al Jadida/Morocco
+Siemens Healthcare Nederland B.V.,
+100
+Guascor Maroc, S.A.R.L., Agadir/Morocco
+65
+The Hague/Netherlands
+100
+Siemens d.o.o., Podgorica/Montenegro
+Siemens Gas Turbine Technologies Holding B.V.,
+100
+Siemens Gamesa Renewable Energy SARL,
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I.,
+September 30, 2019
+100
+Siemens HealthCare Ltd., Rosh HaAyin/Israel
+D-R Luxembourg International SARL,
+100
+Siemens Gamesa Renewable Energy Ltd, Tel Aviv/Israel
+100
+Luxembourg/Luxembourg
+100
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin/Israel
+D-R Luxembourg Holding 3, SARL,
+100
+Luxembourg/Luxembourg
+100
+Mentor Graphics Development Services (Israel) Ltd.,
+Rehovot/Israel
+100
+Mentor Graphics (Israel) Limited, Herzilya Pituah/Israel
+100
+Luxembourg/Luxembourg
+100
+Siemens Limited, Dublin/Ireland
+D-R Luxembourg Holding 1, SARL,
+100
+Swords, County Dublin/Ireland
+100
+D-R Luxembourg Holding 2, SARL,
+Luxembourg/Luxembourg
+in %
+100
+1007
+in %
+September 30, 2019
+Equity interest
+Equity interest
+132
+131
+Consolidated Financial Statements
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9
+Siemens Industrial Israel Ltd., Rosh HaAyin/Israel
+8 Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Luxembourg/Luxembourg
+100
+Siemens Industry Software Ltd., Airport City/Israel
+Dresser-Rand Holding (Delaware) LLC, SARL,
+7 Not consolidated due to immateriality.
+Siemens Industry Software and Services B.V.,
+Cybercity/Mauritius
+100
+Siemens Ltd., Lagos/Nigeria
+100
+100
+Dresser-Rand AS, Kongsberg/Norway
+100
+100
+Siemens AS, Oslo/Norway
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+Casablanca/Morocco
+4 No control due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+Consolidated Financial Statements
+Equity interest
+September 30, 2019
+5 No significant influence due to contractual arrangements or legal circumstances.
+in %
+100
+Flender B.V., Rotterdam/Netherlands
+Roos Holding B.V., The Hague/Netherlands
+Dresser-Rand (Nigeria) Limited, Lagos/Nigeria
+Pollux III B.V., Amsterdam/Netherlands
+Omnetric B.V., The Hague/Netherlands
+100
+Nouméa/New Caledonia
+100
+Minicare B.V., Amsterdam/Netherlands
+SIEMENS GAMESA RENEWABLE ENERGY SARL,
+100
+Eindhoven/Netherlands
+100
+100
+Mentor Graphics (Netherlands) B.V.,
+100
+TASS International B.V., Helmond/Netherlands
+100
+Mendix Technology B.V., Rotterdam/Netherlands
+100
+100
+Siemens Mobility Holding B.V., The Hague/Netherlands
+Siemens Nederland N.V., The Hague/Netherlands
+100
+Flowmaster Group NV, Eindhoven/Netherlands
+100
+TASS International Holding B.V., Helmond/Netherlands
+Siemens D-R Holding B.V., The Hague/Netherlands
+September 30, 2019
+100
+100
+Dresser-Rand International B.V., The Hague/Netherlands
+100
+The Hague/Netherlands
+100
+Dresser-Rand B.V., Spijkenisse/Netherlands
+Siemens International Holding B.V.,
+100
+Castor III B.V., Amsterdam/Netherlands
+100
+The Hague/Netherlands
+Dresser-Rand Services B.V., Spijkenisse/Netherlands
+100
+Siemens Industry Software Holding II B.V.,
+100
+Tangier/Morocco
+100
+'s-Hertogenbosch/Netherlands
+Siemens Plant Operations Tahaddart SARL,
+Siemens Industry Software B.V.,
+100
+Siemens Healthcare SARL, Casablanca/Morocco
+100
+Rijswijk/Netherlands
+Siemens S.A., Casablanca/Morocco
+100
+Siemens Medical Solutions Diagnostics Holding I B.V.,
+The Hague/Netherlands
+100
+Mentor Graphics Romania SRL, Bucharest/Romania
+Equity interest
+in %
+100
+Siemens Healthcare AS, Oslo/Norway
+100
+SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
+Siemens Mobility AS, Oslo/Norway
+100
+Bucharest/Romania
+100
+SIEMENS GAMESA RENEWABLE ENERGY AS, Oslo/Norway
+Siemens L.L.C., Muscat/Oman
+Mentor Graphics Pakistan Development (Private) Limited,
+Lahore/Pakistan
+Siemens Gamesa Renewable Energy Romania S.R.L.,
+Bucharest/Romania
+100
+100
+Siemens Gamesa Renewable Energy (Private) Limited,
+Karachi/Pakistan
+Siemens Gamesa Renewable Energy Wind Farms S.R.L.,
+Bucharest/Romania
+100
+Siemens Mobility B.V., The Hague/Netherlands
+100
+Enlighted International B.V., Amsterdam/Netherlands
+51
+100
+31
+358
+478
+46
+in %
+Equity interest
+September 30, 2019
+358
+35
+20
+in %
+Equity interest
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (62 companies)
+Armpower CJSC, Yerevan/Armenia
+Veja Mate Offshore Project GmbH, Oststeinbek
+Voith Hydro Holding GmbH & Co. KG, Heidenheim
+Voith Hydro Holding Verwaltungs GmbH, Heidenheim
+September 30, 2019
+Consolidated Financial Statements 145
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9 Exemption pursuant to Section 264b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+Ural Locomotives Holding Besloten Vennootschap,
+The Hague/Netherlands
+1 Control due to a majority of voting rights.
+50
+206,13
+ZAO Interautomatika, Moscow/Russian Federation
+Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
+Ardora, S.A., Vigo/Spain
+Meomed s.r.o., Prerov/Czech Republic
+258
+20
+49
+Moscow/Russian Federation
+208
+000 VIS Automation mit Zusatz,,Ein Gemeinschafts-
+unternehmen von VIS und Siemens",
+44
+OIL AND GAS PROSERV LLC, Baku/Azerbaijan
+SMATRICS GmbH & Co KG, Vienna/Austria
+E-Mobility Provider Austria GmbH, Vienna/Austria
+Aspern Smart City Research GmbH & Co KG, Vienna/Austria
+448
+Aspern Smart City Research GmbH, Vienna/Austria
+358
+26
+Rousch (Pakistan) Power Ltd., Islamabad/Pakistan
+000 Transconverter, Moscow/Russian Federation
+40
+368
+Wirescan AS, Trollaasen/Norway
+208
+ZeeEnergie Management B.V., Eemshaven/Netherlands
+ZeeEnergie C.V., Amsterdam/Netherlands
+BioMensio Oy, Tampere/Finland
+Siemens S.A., Tegucigalpa/Honduras
+Desgasificación de Vertederos, S.A, Madrid/Spain
+498
+Nuevas Estrategias de Mantenimiento, S.L.,
+VAL 208 Torino GEIE, Milan/Italy
+KACO New Energy Co., Amman/Jordan
+864,8,13
+San Sebastián/Spain
+50
+49
+SIGLO XXI SOLAR, SOCIEDAD ANONIMA, Ciudad Real/Spain
+258
+Temir Zhol Electrification LLP, Astana/Kazakhstan
+49
+SISTEMAS ENERGETICOS DE TENERIFE, S.A.,
+EGM Holding Limited, Marsaskala/Malta
+33
+SANTA CRUZ DE TENERIFE/Spain
+Energie Electrique de Tahaddart S.A., Tangier/Morocco
+20
+Sistemes Electrics Espluga, S.A., Barcelona/Spain
+Buitengaats C.V., Amsterdam/Netherlands
+206,13
+Tusso Energía, S.L., Sevilla/Spain
+Buitengaats Management B.V., Eemshaven/Netherlands
+208
+50
+Transfima S.p.A., Milan/Italy
+238
+514
+42 8,13
+508
+Padam Mobility S.A.S, Paris/France
+388
+TRIXELL SAS, Moirans/France
+25
+Energías Renovables San Adrián de Juarros, S.A.,
+San Adrián de Juarros/Spain
+45
+Eviop-Tempo A.E. Electrical Equipment Manufacturers,
+Vassiliko/Greece
+48
+EXPLOTACIONES Y MANTEMIENTOS INTEGRALES S.L.,
+Getxo/Spain
+508
+Parallel Graphics Ltd., Dublin/Ireland
+574,8
+Gate Solar Gestión, S.L. Unipersonal,
+Reindeer Energy Ltd., Bnei Berak/Israel
+33
+Vitoria-Gasteiz/Spain
+508
+COELME - Costruzioni Elettromeccaniche S.p.A.,
+Hydrophytic, S.L., Vitoria-Gasteiz/Spain
+508
+Santa Maria di Sala/Italy
+25
+Transfima GEIE, Milan/Italy
+Nertus Mantenimiento Ferroviario y Servicios S.A.,
+Madrid/Spain
+Valeo Siemens eAutomotive GmbH, Erlangen
+508
+458
+Maracaibo/Venezuela, Bolivarian Republic of
+100
+Siemens Industry Software Pty Ltd, Bayswater/Australia
+Dresser-Rand de Venezuela, S.A.,
+100
+Siemens Healthcare Pty. Ltd., Melbourne/Australia
+100
+Siemens Uruguay S.A., Montevideo/Uruguay
+100
+Bayswater/Australia
+100
+Siemens S.A., Montevideo/Uruguay
+Siemens Gamesa Renewable Energy Pty Ltd,
+100
+Montevideo/Uruguay
+100
+Siemens Gamesa Renewable Energy Australia Pty Ltd,
+Melbourne/Australia
+SIEMENS GAMESA RENEWABLE ENERGY S.R.L.,
+100
+Wind Portfolio Memberco, LLC, Dover, DE/United States
+100
+J.R.B. Engineering Pty Ltd, Bayswater/Australia
+100
+Baltimore, MD/United States
+100
+100
+100
+Siemens Ltd., Bayswater/Australia
+Gamesa Eólica VE, C.A.,
+100
+Tortola/Virgin Islands, British
+100
+Camstar Systems Software (Shanghai) Company Limited,
+Shanghai/China
+Dade Behring Hong Kong Holdings Corporation,
+100
+Siemens S.A., Caracas/Venezuela, Bolivarian Republic of
+100
+Beijing Siemens Cerberus Electronics Ltd., Beijing/China
+100
+Caracas/Venezuela, Bolivarian Republic of
+100
+Siemens Healthcare Ltd., Dhaka/Bangladesh
+Siemens Rail Automation, C.A.,
+100
+Siemens Bangladesh Ltd., Dhaka/Bangladesh
+1007
+Caracas/Venezuela, Bolivarian Republic of
+100
+SIEMENS RAIL AUTOMATION PTY. LTD.,
+Bayswater/Australia
+Siemens Healthcare S.A.,
+100
+Caracas/Venezuela, Bolivarian Republic of
+100
+Siemens Mobility Pty Ltd, Bayswater/Australia
+100
+Dresser-Rand Engineered Equipment (Shanghai) Co., Ltd.,
+Shanghai/China
+Exemplar Health (SCUH) Trust 4, Bayswater/Australia
+Flender Pty. Ltd., Bayswater/Australia
+100
+100
+100
+Siemens Gas and Power S.A.S., Tenjo/Colombia
+1007
+Siemens Gas and Power Servicios, S. de R.L. de C.V.,
+Mexico City/Mexico
+1007
+Siemens Healthcare S.A.S., Tenjo/Colombia
+100
+Siemens Gas and Power, S. de R.L. de C.V.,
+Siemens Mobility S.A.S., Tenjo/Colombia
+100
+Mexico City/Mexico
+1007
+Siemens S.A., Tenjo/Colombia
+100
+SIEMENS GAMESA RENEWABLE ENERGY, S.R.L.,
+Siemens Gesa Renewable Energy México, S. de R.L. de C.V.,
+Mexico City/Mexico
+100
+San José/Costa Rica
+100
+Siemens Gesa Renewable Energy, S.A. de C.V.,
+Siemens Healthcare Diagnostics S.A., San José/Costa Rica
+100
+Mexico City/Mexico
+100
+Indústria de Trabajos Eléctricos S.A. de C.V.,
+Ciudad Juárez/Mexico
+Wheelabrator Air Pollution Control Inc.,
+100
+12 Siemens AG is a shareholder with unlimited liability of this company.
+Synchrony, Inc., Glen Allen, VA/United States
+100
+Exemplar Health (SCUH) Trust 3, Bayswater/Australia
+100
+SMI Holding LLC, Wilmington, DE/United States
+100
+Bayswater/Australia
+100
+Siemens USA Holdings, Inc., Wilmington, DE/United States
+Exemplar Health (SCUH) Holdings 4 Pty Limited,
+100
+Siemens Public, Inc., Wilmington, DE/United States
+100
+Exemplar Health (SCUH) Holdings 3 Pty Limited,
+Bayswater/Australia
+100
+Siemens Product Lifecycle Management Software Inc.,
+Wilmington, DE/United States
+in %
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+Consolidated Financial Statements
+140
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+100
+Asia, Australia (234 companies)
+Flender Ltd., China, Tianjin/China
+Siemens Ltd., China, Beijing/China
+Siemens Eco-City Innovation Technologies (Tianjin) Co.,
+Ltd., Tianjin/China
+100
+Siemens Logistics Automation Systems (Beijing) Co., Ltd,
+Beijing/China
+100
+Siemens Computational Science (Shanghai) Co., Ltd,
+Shanghai/China
+100
+Siemens Investment Consulting Co., Ltd., Beijing/China
+75
+Shanghai, Shanghai/China
+100
+Shanghai/China
+Siemens Circuit Protection Systems Ltd.,
+Siemens International Trading Ltd., Shanghai,
+100
+100
+Siemens Industry Software (Shanghai) Co., Ltd.,
+Shanghai/China
+Siemens Business Information Consulting Co., Ltd,
+Beijing/China
+70
+70
+Tianjin/China
+100
+Siemens Industry Software (Beijing) Co., Ltd., Beijing/China
+Siemens Building Technologies (Tianjin) Ltd.,
+84
+100
+Siemens Industrial Turbomachinery (Huludao) Co. Ltd.,
+Huludao/China
+60
+100
+100
+Siemens Mobility Technologies (Beijing) Co., Ltd,
+Beijing/China
+100
+Siemens Gamesa Renewable Energy (Shanghai) Co., Ltd.,
+Shanghai/China
+100
+Tianjin/China
+100
+Siemens Mobility Rail Equipment (Tianjin) Ltd.,
+Siemens Gamesa Renewable Energy (Beijing) Co., Ltd.,
+Beijing/China
+100
+Siemens Mobility Equipment (China) Co., Ltd, Shanghai
+Pilot Free Trade Zone/China
+100
+Siemens Financial Services Ltd., Beijing/China
+100
+Siemens Finance and Leasing Ltd., Beijing/China
+517
+Siemens Mobility Electrification Equipment (Shanghai) Co.,
+Ltd., Shanghai/China
+100
+Siemens Factory Automation Engineering Ltd.,
+Beijing/China
+85
+Siemens Medium Voltage Switching Technologies (Wuxi)
+Ltd., Wuxi/China
+85
+100
+51
+Siemens Manufacturing and Engineering Centre Ltd.,
+Shanghai/China
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou/China
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai/China
+Siemens Electrical Drives Ltd., Tianjin/China
+100
+in %
+September 30, 2019
+100
+Exemplar Health (NBH) Holdings 2 Pty Limited,
+Bayswater/Australia
+100
+100
+Inner Mongolia Gamesa Wind Co., Ltd., Wulanchabu/China
+Jilin Gamesa Wind Co., Ltd., Da'an/China
+1007
+Exemplar Health (NBH) 2 Pty Limited, Bayswater/Australia
+100
+Bayswater/Australia
+100
+IBS Industrial Business Software (Shanghai), Ltd.,
+Shanghai/China
+CARMODY'S HILL INVESTMENT COMPANY PTY LTD,
+100
+Bytemark Australia Pty Ltd, Wayville/Australia
+100
+Yan'an City/China
+100
+Bayswater/Australia
+Ganquan Chaiguanshan Wind Power Co., Ltd.,
+Australia Hospital Holding Pty Limited,
+100
+Gamesa Blade (Tianjin) Co., Ltd., Tianjin/China
+100
+Aimsun Pty Ltd, Sydney/Australia
+100
+Mentor Graphics (Shanghai) Electronic Technology Co.,
+Ltd., Shanghai/China
+100
+Exemplar Health (NBH) Trust 2, Bayswater/Australia
+100
+in %
+Shuangpai Majiang Wuxingling Wind Power Co., Ltd,
+Yongzhou/China
+September 30, 2019
+Equity interest
+Equity interest
+141
+Consolidated Financial Statements
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9
+8 Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+Siemens S.A., San José/Costa Rica
+7 Not consolidated due to immateriality.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+65
+MWB (Shanghai) Co Ltd., Shanghai/China
+1007
+100
+Mentor Graphics Technology (Shenzhen) Co., Ltd.,
+Shenzhen/China
+1007
+Exemplar Health (SCUH) 3 Pty Limited, Bayswater/Australia
+Exemplar Health (SCUH) 4 Pty Limited, Bayswater/Australia
+6 Significant influence due to contractual arrangements or legal circumstances.
+Siemens Gamesa Renewable Energy Technology (China)
+Co., Ltd., Tianjin/China
+100
+Siemens Gesa Renewables Energy Services S. de R.L.
+de C.V., Mexico City/Mexico
+Siemens Electrical, LLC, Wilmington, DE/United States
+100
+Dresser-Rand Group Inc., Wilmington, DE/United States
+Dresser-Rand LLC, Wilmington, DE/United States
+EcoHarmony West Wind, LLC, Minneapolis, MN/United
+States
+100
+Hamilton, NJ/United States
+100
+Siemens Demag Delaval Turbomachinery, Inc.,
+Dresser-Rand Global Services, Inc., Wilmington,
+DE/United States
+100
+Wilmington, DE/United States
+100
+Siemens Credit Warehouse, Inc.,
+100
+D-R Steam LLC, Wilmington, DE/United States
+Dresser-Rand Company, Olean, NY/United States
+100
+Siemens Corporation, Wilmington, DE/United States
+100
+100
+Wilmington, DE/United States
+Diversified Energy Transmissions, LLC,
+Salem, OR/United States
+Siemens Capital Company LLC,
+80
+Dedicated2Imaging LLC, Wilmington, DE/United States
+100
+Russelectric Inc., Hingham, MA/United States
+100
+100
+100
+100
+Siemens Generation Services Company,
+Mentor Graphics Corporation, Wilsonville,
+100
+Wilmington, DE/United States
+100
+Mannesmann Corporation, New York, NY/United States
+Siemens Gamesa Renewable Energy, Inc.,
+100
+KACO New Energy, Inc., Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Siemens Gamesa Renewable Energy PA, LLC,
+100
+Flender Corporation, Wilmington, DE/United States
+J2 Innovations, Inc., Diamond Bar, CA/United States
+100
+Siemens Financial, Inc., Wilmington, DE/United States
+100
+100
+Wilmington, DE/United States
+100
+eMeter Corporation, Wilmington, DE/United States
+Enlighted, Inc., Wilmington, DE/United States
+100
+Siemens Field Staffing, Inc., Wilmington, DE/United States
+Siemens Financial Services, Inc.,
+100
+Siemens Energy, Inc., Wilmington, DE/United States
+OR/United States
+Corpus Merger, Inc., Wilmington, DE/United States
+Pocahontas Prairie Wind, LLC, Dover, DE/United States
+100
+Gesacisa Desarolladora, S.A. de C.V., Mexico City/Mexico
+Gesan I S.A.P.I de C.V., Mexico City/Mexico
+100
+100
+Aimsun Inc., Dover, DE/United States
+Gesa Oax III Sociedad Anomima de Capital Variable,
+Mexico City/Mexico
+51
+Wilmington, DE/United States
+100
+de Capital Variable, Mexico City/Mexico
+Advanced Airfoil Components LLC,
+Gesa Oax II Sociedad de Responsabilidad Limitada
+10013
+Couva/Trinidad and Tobago
+100
+Mexico City/Mexico
+Dresser-Rand Trinidad & Tobago Unlimited,
+Gesa Oax | Sociedad Anomima de Capital Variable,
+100
+Siemens S.A.C., Lima/Peru
+100
+Central Eólica de México S.A. de C.V., Mexico City/Mexico
+100
+Siemens Mobility S.A.C., Lima/Peru
+100
+Building Robotics Inc., Wilmington, DE/United States
+Bytemark Inc., New York, NY/United States
+100
+100
+100
+100
+Cedar Cap Wind, LLC, Dover, DE/United States
+in %
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+139
+Consolidated Financial Statements
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+8
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+502
+CD-adapco Battery Design LLC, Dover, DE/United States
+95
+100
+Wilmington, DE/United States
+100
+100
+INSTALLATION & MAINTENANCE COMPAÑÍA LIMITADA,
+Siemens, S.A. de C.V., Mexico City/Mexico
+100
+Guatemala/Guatemala
+100
+Gamesa Eólica Nicaragua S.A., Managua/Nicaragua
+100
+Siemens S.A., Guatemala/Guatemala
+100
+Siemens S.A., Panama City/Panama
+100
+SIEMENS GAMESA RENEWABLE ENERGY, S.A.,
+Tegucigalpa/Honduras
+100
+Siemens Gamesa Renewable Energy S.A.C., Lima/Peru
+Siemens Healthcare S.A.C., Surquillo/Peru
+100
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+Not accounted for using the equity method due to immateriality.
+8
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+100
+4 No control due to contractual arrangements or legal circumstances.
+100
+SIEMENS GAMESA RENEWABLE ENERGY
+100
+Santo Domingo/Dominican Republic
+100
+Siemens Mobility, S.R.L.,
+Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
+Mexico City/Mexico
+100
+Santo Domingo/Dominican Republic
+100
+Siemens, S.R.L., Santo Domingo/Dominican Republic
+100
+Siemens Healthcare Servicios S. de R.L. de C.V.,
+Mexico City/Mexico
+100
+Siemens S.A., Quito/Ecuador
+100
+Siemens-Healthcare Cia. Ltda., Quito/Ecuador
+100
+Siemens Industry Software, S.A. de C.V.,
+Mexico City/Mexico
+100
+Siemens Healthcare, Sociedad Anonima,
+Siemens Inmobiliaria S.A. de C.V., Mexico City/Mexico
+100
+Antiguo Cuscatlán/El Salvador
+100
+Siemens S.A., Antiguo Cuscatlán/El Salvador
+100
+Siemens Logistics S. de R.L. de C.V., Mexico City/Mexico
+Siemens Mobility S. de R.L. de C.V., Mexico City/Mexico
+Siemens Servicios S.A. de C.V., Mexico City/Mexico
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Wilmington, DE/United States
+Nimbus Technologies, LLC, Bingham Farms,
+MI/United States
+Siemens Heat Transfer Technology Corp.,
+100
+100
+Wilmington, DE/United States
+100
+Next47 Mid-Tier GP 2020, L.P., Wilmington, DE/United States
+next47 TTGP, L.L.C., Wilmington, DE/United States
+Siemens Healthcare Laboratory, LLC,
+100
+Next47 Mid-Tier GP 2019, L.P., Wilmington, DE/United States
+100
+Los Angeles, CA/United States
+100
+next47 Mid-Tier GP 2018, L.P., Wilmington, DE/United States
+Siemens Healthcare Diagnostics Inc.,
+100
+Next47 Inc., Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Wilmington, DE/United States
+Siemens Government Technologies, Inc.,
+Mentor Graphics Global Holdings, LLC,
+100
+Siemens Industry, Inc., Wilmington, DE/United States
+100
+Omnetric Corp., Wilmington, DE/United States
+100
+Wilmington, DE/United States
+100
+Wilmington, DE/United States
+Siemens Power Generation Service Company, Ltd.,
+Pocahontas Prairie Holdings, LLC,
+100
+Wilmington, DE/United States
+100
+PETNET Solutions, Inc., Knoxville, TN/United States
+Siemens Molecular Imaging, Inc.,
+63
+Gamesa Dominicana, S.A.S.,
+DE/United States
+Siemens Mobility, Inc, Wilmington, DE/United States
+PETNET Solutions Cleveland, LLC, Wilmington,
+100
+Wilmington, DE/United States
+501
+PETNET Indiana, LLC, Indianapolis, IN/United States
+Siemens Medical Solutions USA, Inc.,
+51
+P.E.T.NET Houston, LLC, Austin, TX/United States
+100
+Siemens Logistics LLC, Wilmington, DE/United States
+100
+100
+100
+100
+100
+September 30, 2019
+Siemens Wind Power SpA, Santiago de Chile/Chile
+Dresser-Rand Colombia S.A.S., Bogotá/Colombia
+SIEMENS GAMESA RENEWABLE ENERGY S.A.S.,
+Bogotá/Colombia
+in %
+September 30, 2019
+in %
+100
+Grupo Siemens S.A. de C.V., Mexico City/Mexico
+100
+9
+Not accounted for using the equity method due to immateriality.
+8
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Siemens Gamesa Renewable Energy New Zealand Limited,
+Auckland/New Zealand
+100
+Umrani Renewable Private Limited, Chennai/India
+100
+100
+Siemens (N.Z.) Limited, Auckland/New Zealand
+Equity interest
+100
+Equity interest
+Infraspeed EPC Consortium V.O.F., Zoetermeer/Netherlands
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+144 Consolidated Financial Statements
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+Zoetermeer/Netherlands
+Locomotive Workshop Rotterdam B.V.,
+5013
+50
+49
+32
+508
+50
+208
+Interessengemeinschaft TUS, Männedorf/Switzerland
+50
+Infraspeed Maintainance B.V., Dordrecht/Netherlands
+Certas AG, Zurich/Switzerland
+508,13
+WS Tech Energy Global S.L., Viladecans/Spain
+in %
+Tirupur Renewable Energy Private Limited, Chennai/India
+Tuljapur Wind Farms Private Limited, Chennai/India
+Siemens Mobility Sdn. Bhd., Kuala Lumpur/Malaysia
+100
+100
+Siemens Industry Software Ltd., Seoul/Korea, Republic of
+Siemens Industry Software Computational Dynamics India
+Pvt. Ltd., Bangalore/India
+100
+Siemens Healthineers Ltd., Seoul/Korea, Republic of
+100
+100
+Seoul/Korea, Republic of
+Siemens Industry Software (India) Private Limited,
+New Delhi/India
+Siemens Gamesa Renewable Energy Limited,
+100
+Siemens Healthcare Private Limited, Mumbai/India
+100
+Mentor Graphics (Korea) LLC, Bundang-gu, Seongnam-si,
+Gyeonggi-do/Korea, Republic of
+100
+Siemens Gamesa Renewable Power Private Limited,
+Chennai/India
+100
+Siemens PLM Software Computational Dynamics K.K.,
+Yokohama/Japan
+100
+SIEMENS GAMESA RENEWABLE ENERGY PROJECTS PRIVATE
+LIMITED, Chennai/India
+100
+Siemens K.K., Tokyo/Japan
+100
+100
+Siemens Ltd. Seoul, Seoul/Korea, Republic of
+100
+100
+100
+100
+100
+Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
+Thoothukudi Renewable Energy Private Limited,
+Chennai/India
+100
+George Town, Pulau Pinang/Malaysia
+100
+Chennai/India
+Siemens Industry Software Sdn. Bhd.,
+Sindhanur Renewable Energy Private Limited,
+100
+Siemens Healthcare Sdn. Bhd., Petaling Jaya/Malaysia
+100
+Navi Mumbai/India
+Siemens Gas and Power Sdn. Bhd., Petaling Jaya/Malaysia
+Siemens Technology and Services Private Limited,
+100
+Kuala Lumpur/Malaysia
+100
+Siemens Rail Automation Pvt. Ltd., Navi Mumbai/India
+Dresser-Rand Asia Pacific Sdn. Bhd.,
+75
+Siemens Ltd., Mumbai/India
+100
+Siemens Mobility Ltd., Seoul/Korea, Republic of
+Siemens Logistics India Private Limited, Navi Mumbai/India
+Siemens Healthcare Limited, Auckland/New Zealand
+100
+Siemens Mobility Limited, Bangkok/Thailand
+Siemens Limited, Taipei/Taiwan, Province of China
+28
+Magazino GmbH, Munich
+100
+Taipei/Taiwan, Province of China
+258
+Ludwig Bölkow Campus GmbH, Taufkirchen
+Siemens Industry Software (TW) Co., Ltd.,
+100
+LIB Verwaltungs-GmbH, Leipzig
+100
+Province of China
+258
+408
+40
+Infineon Technologies Bipolar GmbH & Co. KG, Warstein
+Infineon Technologies Bipolar Verwaltungs-GmbH, Warstein
+INPRO Innovationsgesellschaft für fortgeschrittene
+Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
+Siemens Healthcare Limited, Taipei/Taiwan,
+1007
+Province of China
+Siemens Gas and Power Limited, Taipei/Taiwan,
+100
+Taipei/Taiwan, Province of China
+50
+IFTEC GmbH & Co. KG, Leipzig
+Siemens Gamesa Renewable Energy Offshore Wind Limited,
+100
+50
+Maschinenfabrik Reinhausen GmbH, Regensburg
+Dresser-Rand (Thailand) Limited, Rayong/Thailand
+Sternico GmbH, Wendeburg
+Siemens Logistics Automation Systems Ltd.,
+Bangkok/Thailand
+56
+Siemens EuroCash, Munich
+99
+Siemens Limited, Bangkok/Thailand
+23
+OWP Butendiek GmbH & Co. KG, Bremen
+100
+Siemens Healthcare Limited, Bangkok/Thailand
+338
+Nordlicht Holding Verwaltung GmbH, Frankfurt
+100
+Bangkok/Thailand
+33
+498
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+Nordlicht Holding GmbH & Co. KG, Frankfurt
+Siemens Gamesa Renewable Energy Limited,
+100
+49
+MeVis BreastCare GmbH & Co. KG, Bremen
+Siemens Gamesa Renewable Energy (Thailand) Co., Ltd.,
+Bangkok/Thailand
+238
+Metis Motion GmbH, Munich
+100
+20
+GuD Herne GmbH, Essen
+100
+Limited, Colombo/Sri Lanka
+Alchemist Accelerator Europe Fund I GmbH & Co. KG,
+Grünwald
+Siemens Gamesa Renewable Energy Singapore Private
+Limited, Singapore/Singapore
+100
+Mentor Graphics Asia Pte Ltd, Singapore/Singapore
+Germany (29 companies)
+100
+Flender Pte. Ltd., Singapore/Singapore
+ASSOCIATED COMPANIES AND JOINT VENTURES
+100
+Aimsun Pte Ltd, Singapore/Singapore
+100
+Siemens, Inc., Manila/Philippines
+100
+100
+Siemens Healthcare Limited, Ho Chi Minh City/Viet Nam
+Siemens Ltd., Ho Chi Minh City/Viet Nam
+100
+Siemens Power Operations, Inc., Manila/Philippines
+100
+Siemens Healthcare Inc., Manila/Philippines
+100
+Siemens Gamesa Renewable Energy LLC, Ho Chi Minh
+City/Viet Nam
+100
+Makati City/Philippines
+Siemens Gamesa Renewable Energy, Inc.,
+100
+1004,8
+100
+ATS Projekt Grevenbroich GmbH, Schüttorf
+258
+498
+Windar Renovables, S.L., Avilés/Spain
+FEAG Fertigungscenter für Elektrische Anlagen GmbH,
+Erlangen
+Siemens Gamesa Renewable Energy Lanka (Private)
+100
+Siemens Pte. Ltd., Singapore/Singapore
+498
+egrid applications & consulting GmbH, Kempten
+100
+Siemens Mobility Pte. Ltd., Singapore/Singapore
+498
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen
+des Stadt- und Regionalverkehrs mbH, Cologne
+Siemens Healthcare K.K., Tokyo/Japan
+100
+30
+Curagita Holding GmbH, Heidelberg
+Siemens Logistics PTE. LTD., Singapore/Singapore
+Siemens Industry Software Pte. Ltd.,
+Singapore/Singapore
+50
+Caterva GmbH, Pullach i. Isartal
+100
+Siemens Healthcare Pte. Ltd., Singapore/Singapore
+498
+BELLIS GmbH, Braunschweig
+1007
+Siemens Gas and Power Pte. Ltd., Singapore/Singapore
+100
+Siemens Gas Turbine Components (Jiangsu) Co., Ltd.,
+Yixing/China
+100
+100
+Shenyang/China
+100
+Gadag Renewable Private Limited, Chennai/India
+Trench High Voltage Products Ltd., Shenyang,
+100
+100
+Fast Track Diagnostics Asia Private Limited, New Delhi/India
+Flomerics India Private Limited, Mumbai/India
+100
+TASS International Co. Ltd., Shanghai/China
+100
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi/China
+100
+Enlighted Energy Systems Pvt Ltd, Chennai/India
+100
+Siemens Wiring Accessories Shandong Ltd., Zibo/China
+100
+Dresser-Rand India Private Limited, Navi Mumbai/India
+100
+Siemens Venture Capital Co., Ltd., Beijing/China
+100
+Dhone Renewable Private Limited, Chennai/India
+100
+100
+Devarabanda Renewable Energy Private Limited,
+Chennai/India
+Siemens Transformer (Wuhan) Company Ltd., Wuhan
+City/China
+65
+90
+Yangtze Delta Manufacturing Co. Ltd.,
+51
+100
+100
+100
+100
+Gagodar Renewable Energy Private Limited, Chennai/India
+Gangavathi Renewable Private Limited, Chennai/India
+Ghatpimpri Renewable Private Limited, Chennai/India
+Gudadanal Renewable Private Limited, Chennai/India
+Hattarwat Renewable Private Limited, Chennai/India
+Haveri Renewable Power Private Limited, Chennai/India
+Hungund Renewable Energy Private Limited, Chennai/India
+Jalore Wind Park Private Limited, Chennai/India
+Jamkhandi Renewable Private Limited, Chennai/India
+Kadapa Wind Farms Private Limited, Chennai/India
+Kanigiri Renewable Private Limited, Chennai/India
+Kod Renewable Private Limited, Chennai/India
+Kollapur Renewable Private Limited, Chennai/India
+Koppal Renewable Private Limited, Chennai/India
+Kurnool Wind Farms Private Limited, Chennai/India
+Kutch Renewable Private Limited, Chennai/India
+1007
+Siemens Gas and Power Limited, Hong Kong/Hong Kong
+100
+Hong Kong/Hong Kong
+International Wind Farm Development VII Limited,
+100
+Hong Kong/Hong Kong
+International Wind Farm Development IV Limited,
+100
+Hong Kong/Hong Kong
+International Wind Farm Development II Limited,
+100
+Hong Kong/Hong Kong
+International Wind Farm Development I Limited,
+100
+Hong Kong/Hong Kong
+Camstar Systems (Hong Kong) Limited,
+100
+Longbo town, Yongzhou city/China
+Yongzhou Shuangpai Daguping Wind Power Co., Ltd.,
+Hangzhou, Hangzhou/China
+100
+Siemens Transformer (Jinan) Co., Ltd, Jinan/China
+September 30, 2019
+55
+Siemens Switchgear Ltd., Shanghai, Shanghai/China
+51
+100
+Siemens Surge Arresters Ltd., Wuxi/China
+Siemens High Voltage Circuit Breaker Co., Ltd., Hangzhou,
+Hangzhou/China
+100
+Siemens Standard Motors Ltd., Yizheng/China
+100
+Siemens Healthineers Ltd., Shanghai/China
+70
+Siemens Signalling Co., Ltd., Xi'an/China
+100
+100
+Shenzhen/China
+Siemens Healthineers Diagnostics (Shanghai) Co., Ltd.,
+Shanghai/China
+100
+100
+100
+100
+80
+Siemens Numerical Control Ltd., Nanjing, Nanjing/China
+Siemens Power Automation Ltd., Nanjing/China
+Siemens Power Plant Automation Ltd., Nanjing/China
+Siemens Sensors & Communication Ltd., Dalian/China
+Siemens Shanghai Medical Equipment Ltd., Shanghai/China
+Siemens Shenzhen Magnetic Resonance Ltd.,
+100
+Shanghai, Shanghai/China
+Siemens Healthcare Diagnostics Manufacturing Ltd.,
+Siemens High Voltage Switchgear Co., Ltd., Shanghai,
+Shanghai/China
+in %
+51
+90
+Equity interest
+Equity interest
+in %
+September 30, 2019
+Consolidated Financial Statements
+142
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+Exemption pursuant to Section 264b German Commercial Code.
+9
+Not accounted for using the equity method due to immateriality.
+8
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+63
+83
+Siemens Transformer (Guangzhou) Co., Ltd.,
+Guangzhou/China
+100
+Siemens Industrial Automation Products Ltd., Chengdu,
+Chengdu/China
+Siemens Technology Development Co., Ltd. of Beijing,
+Beijing/China
+100
+100
+100
+100
+P.T. Siemens Indonesia, Jakarta/Indonesia
+100
+Rangareddy Renewable Private Limited, Chennai/India
+100
+Zalki Renewable Private Limited, Chennai/India
+99
+100
+100
+Vempalli Renewable Energy Private Limited, Chennai/India
+Viralipatti Renewable Private Limited, Chennai/India
+100
+Preactor Software India Private Limited, Bangalore/India
+Rajgarh Windpark Private Limited, Chennai/India
+501
+New Delhi/India
+100
+Uppal Renewable Private Limited, Chennai/India
+Powerplant Performance Improvement Ltd.,
+in %
+September 30, 2019
+in %
+September 30, 2019
+Equity interest
+Equity interest
+143
+Consolidated Financial Statements
+Rayachoty Renewable Private Limited, Chennai/India
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+100
+100
+100
+Kanagawa/Japan
+100
+Siemens Factoring Private Limited, Navi Mumbai/India
+Siemens Financial Services Private Limited, Mumbai/India
+Siemens Gamesa Renewable Energy Engineering Centre
+Private Limited, Navi Mumbai/India
+Siemens Gamesa Renewable Energy Japan K.K.,
+100
+100
+Mentor Graphics Japan Co., Ltd., Tokyo/Japan
+Shivamogga Renewable Energy Private Limited,
+Chennai/India
+96
+100
+PT. Siemens Industrial Power, Kota Bandung/Indonesia
+Acrorad Co., Ltd., Okinawa/Japan
+100
+Saunshi Renewable Energy Private Limited, Chennai/India
+99
+Gujarat/India
+100
+95
+PT Siemens Gamesa Renewable Energy, Jakarta/Indonesia
+PT Siemens Mobility Indonesia, Jakarta/Indonesia
+SANTALPUR RENEWABLE POWER PRIVATE LIMITED,
+100
+Sankanur Renewable Energy Private Limited, Chennai/India
+100
+100
+PT Dresser-Rand Services Indonesia, Cilegon/Indonesia
+PT SAMUDIA BAHTERA, Jakarta/Indonesia
+RSR Power Private Limited, Chennai/India
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9
+100
+Mentor Graphics (Sales and Services) Private Limited,
+New Delhi/India
+100
+Siemens Mobility Limited, Hong Kong/Hong Kong
+100
+Siemens Logistics Limited, Hong Kong/Hong Kong
+100
+Mentor Graphics (India) Private Limited, New Delhi/India
+100
+Siemens Limited, Hong Kong/Hong Kong
+100
+100
+Maski Renewable Energy Private Limited, Chennai/India
+Mathak Wind Farms Private Limited, Chennai/India
+100
+Siemens Industry Software Limited, Hong Kong/Hong Kong
+100
+Siemens Healthcare Limited, Hong Kong/Hong Kong
+100
+100
+100
+100
+100
+100
+100
+100
+Anantapur Wind Farms Private Limited, Chennai/India
+Bapuram Renewable Private Limited, Chennai/India
+Beed Renewable Energy Private Limited, Chennai/India
+Bhuj Renewable Private Limited, Chennai/India
+Bytemark India LLP, Bangalore/India
+100
+100
+Nandikeshwar Renewable Energy Private Limited,
+Chennai/India
+8 Not accounted for using the equity method due to immateriality.
+Exemption pursuant to Section 264b German Commercial Code.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+1 Control due to a majority of voting rights.
+100
+Poovani Wind Farms Private Limited, Chennai/India
+100
+Chikkodi Renewable Power Private Limited, Chennai/India
+Siemens Healthcare Diagnostics K.K., Tokyo/Japan
+100
+100
+100
+100
+Neelagund Renewable Private Limited, Chennai/India
+Nellore Renewable Private Limited, Chennai/India
+Nirlooti Renewable Private Limited, Chennai/India
+Osmanabad Renewable Private Limited, Chennai/India
+PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
+Mumbai/India
+100
+Channapura Renewable Private Limited, Chennai/India
+100
+Bytemark Technology Solutions India Pvt Ltd,
+Bangalore/India
+100
+100
+100
+100
+100
+1007
+40 8,13
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+50
+20
+32
+32
+Panda Stonewall Intermediate Holdings I, LLC,
+Wilmington, DE/United States
+Orange Sironj Wind Power Private Limited, New Delhi/India
+Pune IT City Metro Rail Limited, Pune/India
+Zhi Dao Railway Equipment Ltd., Taiyuan/China
+Bangalore International Airport Ltd., Bangalore/India
+46
+37
+PhSiTh LLC, New Castle, DE/United States
+33
+Transparent Energy Systems Private Limited, Pune/India
+P.T. Jawa Power, Jakarta/Indonesia
+258
+50
+Powerit Holdings, Inc., Seattle, WA/United States
+26
+218
+Panda Hummel Station Intermediate Holdings | LLC,
+Wilmington, DE/United States
+50
+Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou/China
+Smart Metering Solutions (Changsha) Co. Ltd.,
+50
+Baja Wind US LLC, Wilmington, DE/United States
+508
+Changsha/China
+49
+CEF-L Holding, LLC, Wilmington, DE/United States
+DeepHow Corp., Princeton, NJ/United States
+206
+27
+Tianjin ZongXi Traction Motor Ltd., Tianjin/China
+Xi'An X-Ray Target Ltd., Xi'an/China
+50
+438
+First State Marine Wind, LLC, Newark, DE/United States
+Fluence Energy, LLC, Wilmington, DE/United States
+Hickory Run Holdings, LLC, Wilmington, DE/United States
+318
+50
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd.,
+Yangzhong/China
+238
+50
+PT Asia Care Indonesia, Jakarta/Indonesia
+PTG Holdings Company LLC, Dover, DE/United States
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+Consolidated Financial Statements
+147
+September 30, 2019
+OTHER INVESTMENTS11
+Germany (2 companies)
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
+Kyros Beteiligungsverwaltung GmbH, Grünwald
+in %
+Net income
+in millions of €
+Equity
+in millions of €
+1004,5
+18
+1004,5
+Equity interest
+40
+9 Exemption pursuant to Section 264b German Commercial Code.
+7 Not consolidated due to immateriality.
+26
+PT Trafoindo Power Indonesia, Jakarta/Indonesia
+49
+Rether networks, Inc., Berkeley, CA/United States
+308
+USARAD Holdings, Inc., Fort Lauderdale, FL/United States
+Wi-Tronix Group Inc., Dover, DE/United States
+308
+8 Not accounted for using the equity method due to immateriality.
+Advance Gas Turbine Solutions SDN. BHD.,
+Kuala Lumpur/Malaysia
+Power Automation Pte. Ltd., Singapore/Singapore
+43
+49
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+30
+62
+Energia Eólica de Mexico S.A. de C.V., Mexico City/Mexico
+Santo Domingo/Dominican Republic
+146 Consolidated Financial Statements
+Equity interest
+Equity interest
+September 30, 2019
+Galloper Wind Farm Holding Company Limited, Swindon,
+Wiltshire/United Kingdom
+in %
+September 30, 2019
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+in %
+Empresa Nacional De Maquinas Eléctricas ENME, S.A.,
+Caracas/Venezuela, Bolivarian Republic of
+408
+Lincs Renewable Energy Holdings Limited,
+London/United Kingdom
+50
+Asia, Australia (24 companies)
+Plessey Holdings Ltd., Frimley, Surrey/United Kingdom
+25
+508
+12 Siemens AG is a shareholder with unlimited liability of this company.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+50
+Cross London Trains Holdco 2 Limited,
+London/United Kingdom
+33
+Screenpoint Medical B.V., Nijmegen/Netherlands
+218
+Ethos Energy Group Limited, Aberdeen/United Kingdom
+49
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+1 Control due to a majority of voting rights.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+6 Significant influence due to contractual arrangements or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+33
+Primetals Technologies, Limited, London/United Kingdom
+RWG (Repair & Overhauls) Limited,
+Gas Natural Acu Infraestructura S.A, Rio de Janeiro/Brazil
+GNA 1 Geração de Energia S.A., São João da Barra/Brazil
+Micropower Comerc Energia S.A., São Paulo/Brazil
+56
+Saitong Railway Electrification (Nanjing) Co., Ltd.,
+33
+Nanjing/China
+508
+20
+35
+Union Temporal Recaudo y Tecnologia,
+40
+10
+Santiago de Cali/Colombia
+2013
+Akuo Energy Dominicana, S.R.L,
+Shanghai Meiling Medical Imaging Diagnosis Center Co.,
+Ltd., Shanghai/China
+49
+Shanghai Electric Power Generation Equipment Co., Ltd.,
+Shanghai/China
+49
+Guangzhou/China
+Guangzhou Suikai Smart Energy Co., Ltd.,
+Exemplar Health (NBH) Partnership, Melbourne/Australia
+Exemplar Health (SCUH) Partnership, Sydney/Australia
+PHM Technology Pty Ltd, Melbourne/Australia
+50
+50
+378
+Aberdeen/United Kingdom
+50
+Beijing Jingneng International Energy Technology Co., Ltd.,
+Americas (21 companies)
+Studio Novitas Ltd., Berkhamsted,
+45
+Hertfordshire/United Kingdom
+218
+Joint Venture Service Center, Chirchik/Uzbekistan
+498
+DBEST (Beijing) Facility Technology Management Co., Ltd.,
+Beijing/China
+25
+Beijing/China
+519
+268
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+N/A
+N/A
+5
+(95)
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+12
+11
+12
+22
+Siemens AG is a shareholder with unlimited liability of this company.
+N/A = No financial data available.
+148 Consolidated Financial Statements
+GLT-PLUS V.O.F, Sappemeer/Netherlands
+Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+7 Not consolidated due to immateriality.
+150
+5 No significant influence due to contractual arrangements or legal circumstances.
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (2 companies)
+Uhre Vindmollelaug I/S, Brande/Denmark
+6 Significant influence due to contractual arrangements or legal circumstances.
+0
+1
+Unincorporated Joint Venture Gwynt y Mor, Swindon, Wiltshire/United Kingdom
+10
+N/A
+1913
+Americas (2 companies)
+Bentley Systems, Incorporated, Wilmington, DE/United States
+ChargePoint, Inc., Campbell, CA/United States
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the
+key management personnel.
+3 Control due to contractual arrangements to determine the direction of the
+relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+N/A
+> Perform audit procedures on the prospective information pre-
+sented by management in the group management report. On
+the basis of sufficient appropriate audit evidence we evaluate,
+in particular, the significant assumptions used by manage-
+ment as a basis for the prospective information, and evaluate
+the proper derivation of the prospective information from
+these assumptions. We do not express a separate opinion on
+the prospective information and on the assumptions used as
+a basis. There is a substantial unavoidable risk that future
+events will differ materially from the prospective information.
+We communicate with those charged with governance regard-
+ing, among other matters, the planned scope and timing of the
+audit and significant audit findings, including any significant
+deficiencies in internal control that we identify during our audit.
+Revenue recognition on construction contracts
+Reasons why the matter was determined to be a key audit
+matter: The Group conducts a significant portion of its business
+under construction contracts, particularly in the Operating Com-
+pany Gas and Power and in the Strategic Companies Mobility and
+Siemens Gamesa Renewable Energy. Revenue from long-term
+construction contracts is recognized in accordance with IFRS 15,
+Revenue from Contracts with Customers, generally over time under
+the percentage-of-completion method. We consider the account-
+ing for construction contracts to be an area posing a significant
+Munich, December 3, 2019
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+Junul
+Breitsameter
+Brisan
+Wirtschaftsprüferin
+[German Public Auditor]
+156 Additional Information
+with German law, and the view of the Group's position it
+provides.
+Spannagl
+Wirtschaftsprüfer
+[German Public Auditor]
+with the consolidated financial statements, its conformity
+Below, we describe what we consider to be the key audit matters:
+German Public Auditor
+We declare that the opinions expressed in this auditor's report are
+consistent with the additional report to the Audit Committee pur-
+suant to Art. 11 of the EU Audit Regulation (long-form audit report).
+We were elected as group auditor by the Annual Shareholders'
+Meeting on January 30, 2019. We were engaged by the Supervisory
+Board on January 30, 2019. We have been the group auditor of
+Siemens Aktiengesellschaft without interruption since the fiscal
+year from October 1, 2008 to September 30, 2009.
+FURTHER INFORMATION PURSUANT TO ART. 10
+OF THE EU AUDIT REGULATION
+> Obtain sufficient appropriate audit evidence regarding the
+financial information of the entities or business activities
+within the Group to express opinions on the consolidated
+financial statements and on the group management report.
+We are responsible for the direction, supervision and perfor-
+mance of the group audit. We remain solely responsible for
+our opinions.
+sures, and whether the consolidated financial statements
+present the underlying transactions and events in a manner
+that the consolidated financial statements give a true and fair
+view of the assets, liabilities, financial position and financial
+performance of the Group in compliance with IFRSS as ad-
+opted by the EU and the additional requirements of German
+commercial law pursuant to Sec. 315e (1) HGB as well as with
+full IFRSS as issued by the IASB.
+the consolidated financial statements, including the disclo- requirements
+Other legal and regulatory
+From the matters communicated with those charged with gover-
+nance, we determine those matters that were of most significance
+in the audit of the consolidated financial statements of the current
+period and are therefore the key audit matters. We describe these
+matters in our auditor's report unless law or regulation precludes
+public disclosure about the matter.
+We also provide those charged with governance with a statement
+that we have complied with the relevant independence require-
+ments, and communicate with them all relationships and other
+matters that may reasonably be thought to bear on our indepen-
+dence and where applicable, the related safeguards.
+> Evaluate the overall presentation, structure and content of
+> Conclude on the appropriateness of management's use of
+the going concern basis of accounting and, based on the au-
+dit evidence obtained, whether a material uncertainty exists
+related to events or conditions that may cast significant
+doubt on the Group's ability to continue as a going concern.
+If we conclude that a material uncertainty exists, we are re-
+quired to draw attention in the auditor's report to the related
+disclosures in the consolidated financial statements and in
+the group management report or, if such disclosures are in-
+adequate, to modify our respective opinions. Our conclu-
+sions are based on the audit evidence obtained up to the date
+of our auditor's report. However, future events or conditions
+may cause the Group to cease to be able to continue as a
+going concern.
+C.3 Report of the Supervisory Board
+> Evaluate the consistency of the group management report responsible for the engagement
+Berlin and Munich, December 4, 2019
+-
+Siemens is positioning itself for the future. With its Vision 2020+
+strategy, the Company is giving its businesses greater entrepre-
+neurial freedom and focus. Management and employees are driv-
+ing this major transformation of the Company with great resolve.
+In fiscal 2019, the Supervisory Board closely advised the Managing
+Board throughout the implementation of "Vision 2020+". We sup-
+port the landmark decision to publicly list an independent Siemens
+energy company that will shape the global energy transition.
+Additional Information
+158
+-
+The Chairman's Committee met 11 times. Between meetings,
+some of which were in the form of conference calls, I also dis-
+cussed topics of major importance with the members of the
+Chairman's Committee. The Committee concerned itself, in par-
+ticular, with personnel-related matters, long-term succession
+planning for the composition of the Managing Board, corporate
+governance issues and the acceptance by Managing Board mem-
+bers of positions at other companies and institutions. At a work-
+shop, the Chairman's Committee dealt in depth with long-term
+succession planning for the Managing Board – and, in particular,
+with succession planning for the position of President and CEO.
+CONTROL STRUCTURE.
+WORK IN THE SUPERVISORY BOARD COMMITTEES
+The Supervisory Board has established seven standing commit-
+tees, which prepare proposals and issues to be dealt with at its
+plenary meetings. Some of the Supervisory Board's decision-mak-
+ing powers have also been delegated to these committees within
+the permissible legal framework. The committee chairpersons
+report to the Supervisory Board on their committees' work at the
+subsequent Board meetings. A list of the members and a detailed
+explanation of the tasks of the individual Supervisory Board
+committees are contained in chapter C.4.1 MANAGEMENT AND
+At our meeting on September 18, 2019, we approved a Declara-
+tion of Conformity in accordance with Section 161 of the German
+Stock Corporation Act. Information on corporate governance at
+Siemens is available in chapter c.4 CORPORATE GOVERNANCE.
+The Company's Declaration of Conformity has been made perma-
+nently available to shareholders on the Siemens Global Website.
+The current Declaration of Conformity is also available in chapter
+→ C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS
+289 F AND 315D OF THE GERMAN COMMERCIAL CODE.
+CORPORATE GOVERNANCE CODE
+performance criteria for the Managing Board's variable com-
+pensation for fiscal 2020. Personnel-related decisions and
+succession planning for the Managing Board were a further
+focus of the meeting. On the recommendation of the Chair-
+man's Committee, the Supervisory Board decided to appoint
+Roland Busch Deputy CEO, effective October 1, 2019, and succes-
+sor to Janina Kugel as Labor Director of Siemens AG, effective
+December 1, 2019. In addition, we were informed of a decision
+by the Chairman's Committee to approve the appointment of
+Michael Sen as Chief Executive Officer (CEO) of the Gas and Power
+Operating Company, effective October 1, 2019, whereby he and
+Lisa Davis will serve as Co-CEOs of the Operating Company until
+the Annual Shareholders' Meeting in 2020. Matters relating to
+corporate governance and, in particular, the preparation of
+the Declaration of Conformity with the German Corporate
+Governance Code were also discussed at this meeting.
+-
+Our meeting on September 18, 2019, was held in Zug, Switzer-
+land, the global headquarters of Siemens' Smart Infrastructure
+Operating Company. During a tour of the facility and its Inspira-
+tion Center, we learned, among other things, about products and
+solutions for distributed energy systems and intelligent buildings.
+At this meeting, the Managing Board reported to us on the state
+of the Company, provided us with an overview of Siemens' indus-
+trial core and reported on the business situation, development
+and strategic orientation of the Smart Infrastructure Operating
+Company. As part of our regular review, we adjusted - after
+preparation by and on a recommendation of the Compensation
+Committee the amount of Managing Board compensation at
+the start of fiscal 2020. Against the backdrop of changing regu-
+latory conditions and the new Group structure based on the
+Vision 2020+ strategy, we approved – after preparation by and on
+the recommendation of the Compensation Committee - an ad-
+justment of the Managing Board's compensation system, effec-
+tive the start of fiscal 2020. After preparation by and on a recom-
+mendation of the Compensation Committee, we also defined the
+155
+-
+At our meeting on July 31, 2019, the Managing Board reported to
+us on the Company's current business and financial position fol-
+lowing the conclusion of the third quarter. We also discussed in
+detail the status of the planned spin-off of the Gas and Power
+Operating Company and approved the contribution of additional
+businesses to the future unit. As part of an innovation focus, we
+discussed technology trends having an impact on the Company's
+future business and future priorities. Key topics of consideration
+were the industrial Internet of Things (IoT) – and, in particular,
+so-called loT platforms – as well as critical and potentially disrup-
+tive fields of technology and innovation. In addition, we con-
+cerned ourselves again with succession planning for the Manag-
+ing Board and decided to extend the appointment of Managing
+Board member Cedrik Neike for five years until May 31, 2025.
+In mutual agreement with Janina Kugel, we also decided not
+to extend her appointment as Managing Board member and
+Labor Director, which will expire on January 31, 2020.
+Digital Industries Operating Company in the structure imple-
+mented as of April 1, 2019, and reported on the Operating Com-
+pany's business situation, development and strategic orientation.
+As part of a strategy focus, we dealt extensively and in detail with
+the status of the implementation of the Vision 2020+ strategy,
+Siemens' further strategic orientation and the strategic develop-
+ment of the Gas and Power Operating Company. We approved
+the Managing Board's proposal regarding the carve-out of the
+Gas and Power Operating Company and its public listing via a
+spin-off, including the contribution of Siemens' majority stake in
+Siemens Gamesa Renewable Energy (SGRE). We also concerned
+ourselves with succession planning for the Managing Board and
+with the efficiency review of Supervisory Board activities.
+157
+Additional Information
+At our meeting on May 7, 2019, the Managing Board reported to
+us on the Company's current business and financial position fol-
+lowing the conclusion of the second quarter. It presented the
+At our meeting on January 29, 2019, the Managing Board re-
+ported to us on the Company's current business and financial
+position following the conclusion of the first quarter and on stra-
+tegic options for the Power and Gas Division.
+On November 28, 2018, we discussed the financial statements
+and the Combined Management Report for Siemens AG and the
+Siemens Group as of September 30, 2018, the Annual Report
+for 2018 - including the Report of the Supervisory Board,
+the Corporate Governance Report and the Compensation Re-
+port and the agenda for the Annual Shareholders' Meeting on
+January 30, 2019. The Managing Board informed us about the
+current status of acquisitions and divestments and about the
+business situation and business development of the Financial
+Services Division. In addition, we concerned ourselves with the
+annual report of the Chief Compliance Officer and the report of
+the Cybersecurity Officer. At this meeting, we also approved the
+Managing Board's decisions regarding investments in two gas-
+fired power plants in Brazil.
+At our meeting on November 7, 2018, we discussed the Compa-
+ny's key financial figures for fiscal 2018 and approved the budget
+for fiscal 2019. On a recommendation of the Compensation Com-
+mittee and on the basis of reported target achievement, we also
+defined the compensation of the Managing Board members for
+fiscal 2018. The appropriateness of this compensation was con-
+firmed by an internal review. On the recommendation of the
+Compensation Committee, we also approved the targets for Man-
+aging Board compensation for fiscal 2019. At this meeting, we
+approved, in addition, a share buyback program, with a volume
+of up to €3 billion, to run until November 2021 as well as Manag-
+ing Board decisions on financing measures.
+the results of its operations. In addition, we concerned our-
+selves, as occasion required, with acquisition and divestment
+projects and with risks to the Company. Further topics of discus-
+sion were portfolio measures – in particular, the planned carve-
+out and subsequent public listing of the Gas and Power Operating
+Company. We received regular updates on the status of the anti-
+trust approval process in connection with the planned combi-
+nation of Siemens' Mobility business with the publicly listed
+company Alstom SA, France. At our meeting on May 7, 2019,
+we acknowledged and discussed the results of this process.
+We also met regularly for short periods without the Managing
+Board in attendance. On these occasions, we dealt with agenda
+items that concerned either the Managing Board itself or inter-
+nal Supervisory Board matters.
+We held a total of six regular plenary meetings in fiscal 2019.
+We also made one decision by written circulation. Topics of
+discussion at our regular plenary meetings were revenue and
+profit and employment development at Siemens AG and the
+Siemens Group as well as the Company's financial position and
+-
+OF THE SUPERVISORY BOARD
+TOPICS AT THE PLENARY MEETINGS
+In fiscal 2019, the Supervisory Board performed in full the duties
+assigned to it by law, the Siemens Articles of Association and the
+Bylaws for the Supervisory Board. On the basis of detailed written
+and oral reports provided by the Managing Board, we monitored
+the Managing Board and advised it on the management of the
+Company. In addition, I regularly exchanged information with the
+President and CEO and the other Managing Board members. As
+a result, the Supervisory Board was always kept up to date on
+projected business policies, Company planning – including finan-
+cial, investment and personnel planning - and the Company's
+profitability and business operations as well as on the state of
+Siemens AG and the Siemens Group. We were directly involved
+at an early stage in all decisions of fundamental importance to
+the Company and discussed these decisions with the Managing
+Board intensively and in detail. To the extent that Supervisory
+Board approval of the decisions and measures of Company man-
+agement was required by law, the Siemens Articles of Association
+or our Bylaws, the members of the Supervisory Board - prepared
+in some cases by the Supervisory Board's committees issued
+such approval after intensive review and discussion. The relevant
+Managing Board members informed us - within the limits set by
+the applicable legal framework - about measures and decisions
+of fundamental importance at the Strategic Companies. A partic-
+ular focus of our activities in fiscal 2019 was the Company's stra-
+tegic realignment, which we dealt with in detail at several of our
+meetings. We support the measures necessary for this realign-
+ment. A further focus of our activities was succession planning
+for the Managing Board. Taking the Company's new alignment
+into account, we began setting its future course in personnel-
+related matters.
+Dear Shareholders,
+Additional Information
+The German Public Auditor responsible for the engagement is
+Thomas Spannagl.
+> Obtain an understanding of internal control relevant to the
+audit of the consolidated financial statements and of arrange-
+ments and measures (systems) relevant to the audit of the
+group management report in order to design audit procedures
+that are appropriate in the circumstances, but not for the pur-
+pose of expressing an opinion on the effectiveness of these
+systems.
+for Siemens Aktiengesellschaft, includes a fair review of the
+development and performance of the business and the position
+of the Group, together with a description of the material oppor-
+tunities and risks associated with the expected development
+of the Group.
+Siemens Aktiengesellschaft
+The Managing Board
+> Evaluate the appropriateness of accounting policies used by
+management and the reasonableness of estimates made by
+management and related disclosures.
+To the best of our knowledge, and in accordance with the appli-
+cable reporting principles, the Consolidated Financial Statements
+give a true and fair view of the assets, liabilities, financial posi-
+tion and profit or loss of the Group, and the Group Management
+Report, which has been combined with the Management Report
+C.1 Responsibility Statement
+Ը
+Pages 149–174
+Additional
+Information
+Additional Information 151
+Joe Kaeser
+risk of material misstatement (including the potential risk of
+management override of internal controls) and accordingly a key
+audit matter, because management's assessments significantly
+impact the determination of the extent of progress towards com-
+pletion. These assessments include, in particular, the scope of
+deliveries and services required to fulfill contractually defined
+obligations, total estimated contract costs, remaining costs to
+completion and total estimated contract revenues, as well as con-
+tract risks including technical, political, regulatory and legal risks.
+Revenues, total estimated contract costs and profit recognition
+may deviate significantly from original estimates based on new
+knowledge about cost overruns and changes in project scope
+over the term of a construction contract.
+As part of our substantive audit procedures, we evaluated man-
+agement's estimates and assumptions based on a risk-based se-
+lection of a sample of contracts. Our sample particularly included
+projects that are subject to significant future uncertainties and
+risks, such as fixed-price or turnkey projects, projects with com-
+plex technical requirements or with a large portion of materials
+and services to be provided by suppliers, subcontractors or
+consortium partners, cross-border projects, and projects with
+changes in cost estimates, delays and/or low or negative mar-
+gins. Our audit procedures included, among others, review of the
+contracts and their terms and conditions including contractually
+agreed partial deliveries and services, termination rights, penal-
+ties for delay and breach of contract as well as liquidated dam-
+ages. In order to evaluate whether revenues were recognized on
+an accrual basis for the selected projects, we analyzed billable
+revenues and corresponding cost of sales to be recognized in the
+statement of income in the reporting period considering the ex-
+tent of progress towards completion, and examined the account-
+ing for the associated items in the statement of financial position.
+Considering the requirements of IFRS 15, we also assessed the
+accounting for contract amendments or contractually agreed op-
+tions. We further performed inquiries of project management
+(both commercial and technical project managers) with respect
+to the development of the projects, the reasons for deviations
+between planned and actual costs, the current estimated costs
+to complete the projects, and management's assessments
+on probabilities that contract risks will materialize. To identify
+anomalies in the development of margins throughout the proj-
+ects' execution, we also applied data analysis procedures. In
+designing our audit procedures, we also considered results from
+project audits conducted by the internal audit function. Further-
+more, we obtained evidence from third parties for selected proj-
+ects (e.g., project acceptance documentation, contractual terms
+and conditions, and lawyers' confirmations regarding alleged
+breaches of contract and asserted claims) and inspected plant
+and project locations.
+Due to the large contract volume and risk profile, in particular
+with respect to the developments of the power generation mar-
+kets, our audit procedures especially focused on large contracts
+for the turnkey construction of power plants, high-voltage-direct-
+current solutions, the delivery of high-speed and commuter
+trains, and the construction of offshore wind farms.
+Our audit procedures did not lead to any reservations relating to
+revenue recognition on construction contracts.
+Reference to related disclosures: With regard to the recog-
+nition and measurement policies applied in accounting for con-
+struction contracts, refer to NOTE 2 MATERIAL ACCOUNTING
+POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the notes to the
+consolidated financial statements. With respect to contract assets
+and liabilities as well as provisions for order related losses and
+risks, refer to → NOTE 10 CONTRACT ASSETS AND LIABILITIES and
+→ NOTE 18 PROVISIONS in the notes to the consolidated financial
+statements.
+Provisions for proceedings out of or in connection
+with alleged compliance violations as well
+as provisions for asset retirement obligations
+Reasons why the matter was determined to be a key audit
+matter: We considered the accounting for provisions for proceed-
+ings out of or in connection with alleged compliance violations,
+including allegations of corruption and antitrust violations, and
+for asset retirement obligations to be a key audit matter. These
+matters are subject to inherent uncertainties and require esti-
+mates that could have a significant impact on the recognition and
+measurement of the respective provision and, accordingly, on
+assets, liabilities and financial performance. Proceedings out of
+or in connection with alleged compliance violations are subject
+to uncertainties because they frequently involve complex legal
+issues and accordingly, considerable management judgment, in
+particular when determining whether and in what amount a pro-
+vision is required to account for the risks. The uncertainties and
+estimates with respect to asset retirement obligations pertain es-
+pecially to the estimated costs of decommissioning and final
+waste storage, the estimated time frame over which cash out-
+flows are expected, and the relevant discount rates.
+152
+Additional Information
+Auditor's response: During our audit of the financial reporting
+of proceedings out of or in connection with alleged compliance
+violations, we examined the processes implemented by Siemens
+for identifying, assessing and accounting for legal and regulatory
+proceedings. To determine what potentially significant pending
+legal proceedings or claims asserted are known and to assess
+management's estimates of the expected cash outflows, our
+audit procedures included inquiring of management and other
+persons within the Group entrusted with these matters, obtain-
+ing written statements from in-house legal counsels with respect
+to the assessment of estimated cash outflows and their probabil-
+ity, obtaining confirmations from external legal advisors and
+evaluating internal statements concerning the accounting treat-
+ment in the consolidated financial statements. Furthermore, we
+examined legal consulting expense accounts for any indications
+of legal matters not yet considered.
+Auditor's response: As part of our audit, we obtained an under-
+standing of the Group's internally established methods, pro-
+cesses and control mechanisms for project management in the
+bid and execution phase of construction contracts. In this regard,
+we assessed the design and operating effectiveness of the
+accounting-related internal controls in the project business by
+obtaining an understanding of business transactions specific to
+construction contracts, from the initiation of the transaction
+through presentation in the consolidated financial statements.
+We also tested internal controls on management level including
+project reviews and controls addressing the timely assessment of
+changes in cost estimates and the timely and complete recog-
+nition of such changes in the project calculation.
+We further considered alleged or substantiated non-compliance
+with legal provisions, official regulations and internal company
+policies (compliance violations) by inspecting internal and exter-
+nal statements on specific matters, obtaining written statements
+from external legal advisors, and by inquiring of the compliance
+organization. In this regard, among other procedures, we evalu-
+ated the conduct and results of internal investigations by inspect-
+ing internal reports and the measures taken to remediate identi-
+fied weaknesses, and assessed whether any risks have to be
+accounted for in the consolidated financial statements.
+Ru क
+Lisa Davis
+Key audit matters are those matters that, in our professional
+judgment, were of most significance in our audit of the consoli-
+dated financial statements for the fiscal year from October 1,
+2018 to September 30, 2019. These matters were addressed in
+the context of our audit of the consolidated financial statements
+as a whole, and in forming our opinion thereon; we do not pro-
+vide a separate opinion on these matters.
+KEY AUDIT MATTERS IN THE AUDIT OF THE
+CONSOLIDATED FINANCIAL STATEMENTS
+We conducted our audit of the consolidated financial statements
+and of the group management report in accordance with Sec. 317
+HGB and the EU Audit Regulation (No 537/2014, referred to sub-
+sequently as "EU Audit Regulation") and in compliance with
+German Generally Accepted Standards for Financial Statement
+Audits promulgated by the Institut der Wirtschaftsprüfer [Insti-
+tute of Public Auditors in Germany] (IDW). In conducting the au-
+dit of the consolidated financial statements we also complied
+with International Standards on Auditing (ISA). Our responsibili-
+ties under those requirements, principles and standards are fur-
+ther described in the "Auditor's responsibilities for the audit of
+the consolidated financial statements and of the group manage-
+ment report" section of our auditor's report. We are independent
+of the group entities in accordance with the requirements of
+European law and German commercial and professional law, and
+we have fulfilled our other German professional responsibilities
+in accordance with these requirements. In addition, in accor-
+dance with Art. 10 (2) f) of the EU Audit Regulation, we declare
+that we have not provided non-audit services prohibited under
+Art. 5 (1) of the EU Audit Regulation. We believe that the audit
+evidence we have obtained is sufficient and appropriate to pro-
+vide a basis for our opinions on the consolidated financial state-
+ments and on the group management report.
+BASIS FOR THE OPINIONS
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our
+audit has not led to any reservations relating to the legal compli-
+ance of the consolidated financial statements and of the group
+management report.
+> the accompanying consolidated financial statements comply,
+in all material respects, with the International Financial Report-
+ing Standards (IFRSs) as adopted by the European Union (EU),
+and the additional requirements of German commercial law
+pursuant to Sec. 315e (1) HGB ["Handelsgesetzbuch": German
+Commercial Code] as well as with full IFRSS as issued by the
+International Accounting Standards Board (IASB), and, in com-
+pliance with these requirements, give a true and fair view of
+the assets, liabilities and financial position of the Group as of
+September 30, 2019 and of its financial performance for the
+fiscal year from October 1, 2018 to September 30, 2019, and
+> the accompanying group management report as a whole pro-
+vides an appropriate view of the Group's position. In all mate-
+rial respects, this group management report is consistent with
+the consolidated financial statements, complies with German
+legal requirements and appropriately presents the opportuni-
+ties and risks of future development. Our opinion on the
+group management report does not cover the content of the
+Corporate Governance statement referred to above.
+In our opinion, on the basis of the knowledge obtained in the
+audit,
+We have audited the consolidated financial statements of Siemens
+Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the
+Group), which comprise the consolidated statements of income
+and comprehensive income for the fiscal year from October 1,
+2018 to September 30, 2019, the consolidated statements of
+financial position as of September 30, 2019, the consolidated
+statements of cash flows and changes in equity for the fiscal year
+from October 1, 2018 to September 30, 2019, and notes to the
+consolidated financial statements, including a summary of signif-
+icant accounting policies. In addition, we have audited the group
+management report of Siemens Aktiengesellschaft, which is
+combined with the management report of Siemens Aktienge-
+sellschaft, for the fiscal year from October 1, 2018 to Septem-
+ber 30, 2019. In accordance with the German legal requirements
+we have not audited the content of chapter A.9.3 CORPORATE
+GOVERNANCE STATEMENT of the Combined Management Report,
+including chapter → c.4.2 of the Annual Report 2019 referred to
+in chapter A.9.3.
+OPINIONS
+Dr. Roland Busch
+Report on the audit of the Consoli-
+dated Financial Statements and
+of the Group Management Report
+C.2 Independent Auditor's Report
+Michael Sen
+Cedrik Neike
+Klaus Helmrich
+Klaus Hebraid
+150 Additional Information
+Jomas
+Janina Kugel
+fifel
+To Siemens Aktiengesellschaft, Berlin and Munich
+Based on the aforementioned uncertainties, our audit procedures
+with respect to asset retirement obligations focused on the reme-
+diation and environmental protection liabilities in connection
+with the decommissioning of the facilities in Hanau, Germany
+(Hanau facilities), as well as for the nuclear research and service
+center in Karlstein, Germany (Karlstein facilities). Our audit
+procedures included, among others, assessing the estimated
+costs for the development, operation and decommissioning of
+the final storage facility, the appropriateness as audit evidence
+of an independent expert's report commissioned by manage-
+ment with regard to the estimated price inflation, evaluating the
+valuation methods used by drawing on the expertise of our val-
+uation specialists, and assessing the significant estimates result-
+ing from the long-term nature of the related obligations. Through
+inquiries of persons entrusted with the matter and inspections
+of internal and external documents, we evaluated manage-
+ment's assessment whether, as of September 30, 2019, Siemens
+continues to be subject to the German Atomic Energy Act
+("Atomgesetz"), whereby radioactive waste resulting from
+decommissioning a nuclear facility must be reprocessed without
+causing damage and be delivered to a government-approved
+final storage facility.
+Munich, December 3, 2019
+on asset retirement obligations in the notes to the consolidated
+financial statements.
+C.3 of the
+Corporate Governance in chapter c.4 of the Annual Report
+2019, and
+> Notes and forward-looking statements in chapter
+the Annual Report 2019.
+C.5 of
+Our opinions on the consolidated financial statements and on
+the group management report do not cover the other informa-
+tion, and consequently we do not express an opinion or any other
+form of assurance conclusion thereon.
+154
+Additional Information
+In connection with our audit, our responsibility is to read the
+other information and, in so doing, to consider whether the other
+information
+> is materially inconsistent with the consolidated financial
+statements, with the group management report or our knowl-
+edge obtained in the audit, or
+> otherwise appears to be materially misstated.
+If, based on the work we have performed, we conclude that
+there is a material misstatement of this other information, we
+are required to report that fact. We have nothing to report in
+this regard.
+RESPONSIBILITIES OF MANAGEMENT AND THE
+SUPERVISORY BOARD FOR THE CONSOLIDATED
+FINANCIAL STATEMENTS AND THE GROUP
+MANAGEMENT REPORT
+Management is responsible for the preparation of the consoli-
+dated financial statements that comply, in all material respects,
+with IFRSS as adopted by the EU and the additional requirements
+of German commercial law pursuant to Sec. 315e (1) HGB as well
+as with full IFRSS as issued by the IASB, and that the consolidated
+financial statements, in compliance with these requirements,
+give a true and fair view of the assets, liabilities, financial position
+and financial performance of the Group. In addition, manage-
+ment is responsible for such internal control as management has
+determined necessary to enable the preparation of consolidated
+financial statements that are free from material misstatement,
+whether due to fraud or error.
+In preparing the consolidated financial statements, management
+is responsible for assessing the Group's ability to continue as a
+going concern. It also has the responsibility for disclosing, as ap-
+plicable, matters related to going concern. In addition, manage-
+ment is responsible for financial reporting based on the going
+concern basis of accounting, unless there is an intention to liqui-
+date the Group or to cease operations, or there is no realistic
+alternative but to do so.
+Furthermore, management is responsible for the preparation
+of the group management report that, as a whole, provides an
+appropriate view of the Group's position and is, in all material
+respects, consistent with the consolidated financial statements,
+complies with German legal requirements and appropriately
+presents the opportunities and risks of future development.
+In addition, management is responsible for such arrangements
+and measures (systems) as management has considered neces-
+sary to enable the preparation of a group management report
+that is in accordance with the applicable German legal require-
+ments, and to be able to provide sufficient appropriate evidence
+for the assertions in the group management report.
+The Supervisory Board is responsible for overseeing the Group's
+financial reporting process for the preparation of the consoli-
+dated financial statements and of the group management report.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF
+THE CONSOLIDATED FINANCIAL STATEMENTS AND
+OF THE GROUP MANAGEMENT REPORT
+Furthermore, we evaluated the disclosures on proceedings out
+of or in connection with alleged compliance violations as well as
+Reasonable assurance is a high level of assurance, but is not a
+guarantee that an audit conducted in accordance with Sec. 317
+HGB and the EU Audit Regulation as well as in compliance with
+German Generally Accepted Standards for Financial Statement
+Audits promulgated by the IDW and in supplementary com-
+pliance with ISA will always detect a material misstatement.
+Misstatements can arise from fraud or error and are considered
+material if, individually or in the aggregate, they could reason-
+ably be expected to influence the economic decisions of users
+taken on the basis of these consolidated financial statements and
+this group management report.
+We exercise professional judgment and maintain professional
+skepticism throughout the audit. We also:
+Identify and assess the risks of material misstatement of the
+consolidated financial statements and of the group manage-
+ment report, whether due to fraud or error, design and perform
+audit procedures responsive to those risks, and obtain audit
+evidence that is sufficient and appropriate to provide a basis for
+our opinions. The risk of not detecting a material misstatement
+resulting from fraud is higher than for one resulting from error,
+as fraud may involve collusion, forgery, intentional omissions,
+misrepresentations, or the override of internal control.
+> the Report of the Supervisory Board in chapter
+Annual Report 2019,
+the Responsibility Statement in chapter c.1 of the Annual
+Report 2019,
+Our objectives are to obtain reasonable assurance about whether
+the consolidated financial statements as a whole are free from
+material misstatement, whether due to fraud or error, and
+whether the group management report as a whole provides an
+appropriate view of the Group's position and, in all material re-
+spects, is consistent with the consolidated financial statements
+and the knowledge obtained in the audit, complies with the
+German legal requirements and appropriately presents the op-
+portunities and risks of future development, as well as to issue an
+auditor's report that includes our opinions on the consolidated
+financial statements and on the group management report.
+Uncertain tax positions and deferred taxes
+Reasons why the matter was determined to be a key audit
+matter: Siemens operates in numerous countries with different
+local tax legislation. The accounting for uncertain tax positions
+as well as deferred taxes requires management to exercise con-
+siderable judgment and make estimates and assumptions, and
+was therefore a key audit matter. In particular, this affects the
+measurement and completeness of uncertain tax positions, the
+recoverability of deferred tax assets as well as the measurement
+and completeness of deferred tax liabilities. In addition, manage-
+ment's assessment of the accounting implications of changes in
+US tax legislation as well as related administrative regulations
+published in this context was of relevance for our audit.
+Our audit procedures did not lead to any reservations relating
+to the accounting for proceedings out of or in connection with
+alleged compliance violations as well as for asset retirement
+obligations.
+Reference to related disclosures: With regard to the recognition
+and measurement policies applied in accounting for provisions,
+refer to NOTE 2 MATERIAL ACCOUNTING POLICIES AND CRITICAL
+ACCOUNTING ESTIMATES in the notes to the consolidated financial
+statements. With respect to proceedings out of or in connection
+with alleged compliance violations, refer to → NOTE 22 LEGAL PRO-
+CEEDINGS. With respect to the uncertainties and estimates relating
+to asset retirement obligations, refer to → NOTE 18 PROVISIONS.
+Auditor's response: With the assistance of internal tax special-
+ists who have knowledge of relevant local tax law, we examined
+the processes installed by management and obtained an under-
+standing of internal controls for the identification, recognition
+and measurement of tax positions. In the course of our audit
+procedures relating to uncertain tax positions, we evaluated
+whether management's assessment of the tax implications of
+significant business transactions or events in fiscal year 2019,
+which could result in uncertain tax positions or influence the
+measurement of existing uncertain tax positions, was in compli-
+ance with tax law. In particular, this includes the tax implications
+arising from the acquisition or disposal of company shares, cor-
+porate (intragroup) restructuring activities, the intragroup trans-
+fer of trademark rights, results of examinations by tax authorities,
+and cross-border matters, such as determining transfer prices.
+In order to assess measurement and completeness, we also ob-
+tained confirmations from external tax advisors and inspected
+expert legal or tax opinions and assessments commissioned by
+management. Further, we evaluated management's assessments
+with respect to the prospects of success of appeal and tax court
+proceedings by inquiring of the employees of the Siemens tax
+department and by considering current tax case law.
+Additional Information
+153
+In assessing the recoverability of deferred tax assets, we particu-
+larly analyzed management's assumptions with respect to tax
+planning strategies and projected future taxable income and
+compared them to internal business plans. In the course of our
+audit procedures regarding deferred tax liabilities, we examined
+in particular the assumptions regarding reinvestment of subsid-
+iaries' retained profits for an indefinite period and assessed these
+taking into account dividend planning.
+We also evaluated management's assessment of the accounting
+implications of the changes in US tax legislation and the related
+administrative regulations published in this context, consulting
+US tax specialists to do so.
+The other information, of which we received a version prior to
+issuing this auditor's report, includes:
+Our audit procedures did not lead to any reservations relating to
+the accounting for uncertain tax positions and deferred taxes.
+In addition, we assessed the disclosures for income taxes in the
+notes to the consolidated financial statements including dis-
+closures about the expected impact of the adoption of IFRIC 23,
+Uncertainty over Income Tax Treatments, for the fiscal year be-
+ginning October 1, 2019.
+Changes in segment reporting
+Reasons why the matter was determined to be a key audit
+matter: As part of the implementation of the company strategy
+"Vision 2020+", the management of Siemens AG changed the
+internal organizational structure as of April 1, 2019. As part of the
+new group structure, Siemens bundled its industrial businesses
+in three Operating Companies and three Strategic Companies.
+Financial Services will continue to be a reportable segment outside
+the Industrial Businesses. We considered the change in the report-
+able segments to be a key audit matter due to the importance of
+the segment reporting as part of capital markets communication,
+the high complexity of the reporting structure transition process
+and the associated judgments made by management with respect
+to the determination of the reportable segments as well as of the
+amounts of goodwill and their allocation to the new goodwill-
+carrying units.
+Auditor's response: As part of our audit, we obtained an under-
+standing of management's process for determining the report-
+able segments. In this regard, we evaluated whether the seg-
+ment definition is consistent with the internal reporting, the full
+Managing Board's assessment of performance as well as the al-
+location of resources as part of the budgeting process, in partic-
+ular by inspecting the minutes of the meetings of the Managing
+Board. We further assessed the determination of the good-
+will-carrying units and evaluated the consistency with the in-
+ternal monitoring of goodwill. With the assistance of our inter-
+nal valuation specialists, we also examined the conceptual
+approach as well as the valuation methods applied in reallocat-
+ing goodwill and evaluated the assumptions and estimates
+used (such as growth rates and cost of capital).
+By drawing on the expertise of IT-specialists, we verified the im-
+plementation of the new reporting structure in the IT-systems,
+including changes to the consolidation entries, and evaluated the
+presentation of the prior-year segment information on a compa-
+rable basis as well as the presentation of the segment informa-
+tion in the notes to the consolidated financial statements and the
+combined management report.
+Our audit procedures did not lead to any reservations relating to
+the changes in segment reporting.
+Reference to related disclosures: With regard to the disclo-
+sures for segment reporting, refer to → NOTE 29 SEGMENT INFOR-
+MATION. For information regarding goodwill, refer to → NOTE 12
+GOODWILL. Additional disclosures regarding the segments are in-
+cluded in the combined management report in chapter → A.1
+ORGANIZATION OF THE SIEMENS GROUP AND BASIS OF PRESENTATION and
+chapter A.3 SEGMENT INFORMATION.
+Reference to related disclosures: With regard to the recogni-
+tion and measurement policies applied in accounting for in-
+come taxes, refer to → NOTE 2 MATERIAL ACCOUNTING POLICIES AND
+CRITICAL ACCOUNTING ESTIMATES in the notes to the consolidated
+financial statements. With respect to disclosures for deferred
+tax assets and liabilities, refer to NOTE 7 INCOME TAXES in the
+notes to the consolidated financial statements.
+OTHER INFORMATION
+The Supervisory Board is responsible for the Report of the Super-
+visory Board in chapter c.3 of the Annual Report 2019. In
+all other respects, management is responsible for the other in-
+formation.
+100 11/11
+100
+4/4
+100
+6/6
+4/4
+100
+100
+6/6
+4/4
+Birgit Steinborn
+100
+1/1
+100
+3/3
+100
+3/3
+4/4
+100
+First Deputy Chairwoman
+100
+100
+Second Deputy Chairman
+6/6
+100
+6/6
+Michael Diekmann
+4/4 100
+100
+6/6
+100
+Werner Wenning
+6/6
+1/1
+100
+3/3
+100
+4/4
+100
+100 11/11
+6/6
+Werner Brandt (Dr. rer. pol.)
+100
+> Siemens Healthcare GmbH, Munich
+100
+Compensation
+Committee
+Chairman's
+Committee
+Supervisory
+Board (plenary
+meetings)
+DISCLOSURE OF PARTICIPATION BY INDIVIDUAL
+SUPERVISORY BOARD MEMBERS IN MEETINGS
+The average rate of participation by members in the meetings of
+the Supervisory Board and its committees was 99.77%. The partic-
+ipation rate of individual members in the meetings of the Super-
+visory Board and its committees is set out in the following chart:
+159
+Additional Information
+The Supervisory Board members take part, on their own respon-
+sibility, in the educational and training measures necessary in
+order to perform their duties – measures relating, for example,
+to changes in the legal framework and new, groundbreaking
+technologies. They are supported in this regard by the Company.
+Internal informational events are offered when necessary to sup-
+port targeted educational measures. New Supervisory Board
+members can meet with Managing Board members and other
+managers with specialist expertise to exchange views on current
+topics and topics of fundamental importance and thus gain an
+overview of Company-relevant matters (onboarding).
+The Audit Committee met six times. In the presence of the inde-
+pendent auditors as well as the President and CEO and the Chief
+Financial Officer, the Committee dealt with the financial state-
+ments and the Combined Management Report for Siemens AG
+and the Siemens Group. The Audit Committee discussed the
+Half-year Financial Report and the quarterly statements with the
+Managing Board and the independent auditors. In the presence
+of the independent auditors, it also discussed the report on the
+auditors' review of the Company's Half-year Consolidated Finan-
+cial Statements and of its Interim Group Management Report. It
+awarded the audit contract to the independent auditors for fis-
+cal 2019, who had been elected by the Annual Shareholders'
+Meeting, defined the audit focal points and determined the au-
+ditors' fee. The Committee monitored the selection, indepen-
+dence, qualification, rotation and efficiency of the independent
+auditors as well as the services they provided. It also dealt with
+the Company's accounting and accounting process, the effec-
+tiveness of its internal control system, its risk management sys-
+tem and the effectiveness, resources and findings of its internal
+audit as well as with reports concerning potential and pending
+legal disputes.
+Audit
+Committee
+decision regarding the Siemens Campus Erlangen investment
+project. The relevant Managing Board members informed the
+Innovation and Finance Committee - within the limits set by the
+applicable regulatory framework - about measures and decisions
+of fundamental importance at the Strategic Companies.
+The Compensation Committee met four times. It also made one
+decision by written circulation. The Committee prepared, in par-
+ticular, proposals for the Supervisory Board regarding the defini-
+tion of targets for variable compensation, the determination and
+review of the appropriateness of Managing Board compensation
+and the approval of the Compensation Report. Against the back-
+drop of changing regulatory conditions and the new Company
+structure based on Siemens' Vision 2020+ strategy, one focus of
+the work of the Compensation Committee was the preparation
+of a proposal to the Supervisory Board regarding the adjustment
+of the compensation system for the Managing Board as of fiscal
+2020. Independent external consultants were involved in the
+preparation of this proposal.
+The Mediation Committee had no need to meet.
+The Compliance Committee met four times. It dealt primarily
+with the Company's quarterly reports and the annual report of
+the Chief Compliance Officer.
+-
+The Nominating Committee met once. It concerned itself with
+long-term succession planning for the Supervisory Board. With a
+view to the regular Supervisory Board elections scheduled for
+2021 and 2023, the Nominating Committee defined the topics for
+its work over the next few years. The Committee also considered
+the regulatory framework for the composition of the Supervisory
+Board and, in particular, the objectives that the Supervisory
+Board had previously approved for its composition, including the
+profile of required skills and expertise and the diversity concept
+for the Supervisory Board.
+The personnel-related matters dealt with by the Chairman's Com-
+mittee included the approval of the appointment of the CEOs and
+Chief Operating Officers (COOS) of the Operating Companies in
+connection with the Company's strategic realignment. In partic-
+ular, the Chairman's Committee approved the appointment of
+Michael Sen as CEO of the Gas and Power Operating Company,
+effective October 1, 2019, whereby he and Lisa Davis will serve as
+Co-CEOs of the Operating Company until the Annual Sharehold-
+ers' Meeting in 2020.
+100
+German positions:
+The Innovation and Finance Committee met three times. The
+focuses of its meetings included the Committee's recommenda-
+tion regarding the budget for fiscal 2019, the discussion of the
+pension system and the Company's strategy, including portfolio
+measures as well as the preparation and approval of investment
+and divestment projects and/or financial measures. For example,
+the Committee prepared proposals for the Supervisory Board re-
+garding an investment in two gas-fired power plants in Brazil and
+a share buyback program, with a volume of up to €3 billion, to
+run until November 2021. It also approved the Managing Board's
+Compliance
+Committee
+and Finance
+Committee
+Nomination
+Committee
+100 11/11
+6/6
+Chairman
+Jim Hagemann Snabe
+in %
+No.
+in %
+No.
+in %
+No.
+in %
+No.
+in %
+No.
+in %
+No.
+in %
+No.
+(Number of meetings/
+participation in %)
+4/4
+Andrea Fehrmann (Dr. phil.)
+Innovation
+100
+2023
+January 24,
+2008
+March 16,
+1960
+2023
+January 23,
+2013
+March 13,
+1971
+2023
+6/6
+March 14,
+1959
+2019
+January 27,
+2015
+June 24,
+1956
+2023
+January 31,
+2018
+June 21,
+1970
+2008
+2023
+December 23, January 24,
+1954
+2023
+January 31,
+2018
+January 3,
+1954
+4 Group company position.
+3 As of January 30, 2019.
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2019)
+German positions:
+> Allianz SE, Munich
+(Deputy Chairman)
+Chief Treasurer and Executive Member
+of the Managing Board of IG Metall
+Date of birth
+Occupation
+Jürgen Kerner*
+Name
+165
+Additional Information
+> Siemens Mobility GmbH, Munich
+(Deputy Chairwoman)
+> Siemens Healthcare GmbH, Munich
+German positions:
+German positions:³
+Bad Homburg (Deputy Chairman)
+2 Shareholders' Committee.
+> Fresenius SE & Co. KGaA,
+> Fresenius Management SE,
+> Allianz SE, Munich (Chairman)
+German positions:
+> RWE AG, Essen (Chairman)
+> ProSiebenSat.1 Media SE, Munich
+(Chairman)
+> Henkel Management AG, Düsseldorf
+German positions:
+> Henkel AG & Co. KGaA, Düsseldorf²
+➤ Bayer AG, Leverkusen (Chairman)
+German positions:
+> A.P. Møller-Mærsk A/S, Denmark
+(Chairman)
+Positions outside Germany:
+Bad Homburg
+January 22,
+1969
+1 As a rule, the term of office ends upon completion of the
+(relevant) ordinary Annual Shareholders' Meeting.
+Harald Kern*
+Jim Hagemann Snabe
+Chairman
+Name
+In fiscal 2019, the Supervisory Board had the following members:
+Members of the Supervisory Board and positions
+held by Supervisory Board members
+Details regarding the work of the Supervisory Board are provided
+in chapter c.3 REPORT OF THE SUPERVISORY BOARD. The curricula
+vitae of the members of the Supervisory Board are published on
+the Siemens Global Website at: www.SIEMENS.COM/SUPERVISORY-
+BOARD and are updated annually. Information on the compensa-
+tion paid to the members of the Supervisory Board is provided in
+chapter → A.10 COMPENSATION REPORT.
+Additional Information
+The Supervisory Board of Siemens AG has 20 members. As stipu-
+lated by the German Codetermination Act, half of its members
+represent Company shareholders, and half represent Company
+employees. The employee representatives' names are marked
+below with an asterisk (*). The shareholder representatives on
+the Supervisory Board are elected at the Annual Shareholders'
+Meeting by a simple majority vote. Elections to the Supervisory
+Board are conducted, as a rule, on an individual basis. The Super-
+visory Board's employee representatives are elected in accor-
+dance with the provisions of the German Codetermination Act.
+Separate preparatory meetings of the shareholder representatives
+and of the employee representatives are held regularly in order to
+prepare the Supervisory Board meetings. The Supervisory Board
+also meets regularly without the Managing Board in attendance.
+Every Supervisory Board member must disclose to the Super-
+visory Board conflicts of interest - in particular, those that could
+arise through the performance of advisory or governing-body
+functions at customers, suppliers, lenders or other third parties.
+Information regarding any conflicts of interest that have arisen
+and their handling is provided in the Report of the Supervisory
+Board. Special informational (onboarding) events are held in or-
+der to familiarize new Supervisory Board members with the Com-
+pany's business model and the structures of the Siemens Group.
+Shareholders' Meeting in February 2020 for approval. Important
+Managing Board decisions – such as those regarding major acqui-
+sitions, divestments, fixed asset investments or financial mea-
+sures - require Supervisory Board approval unless the Bylaws for
+the Supervisory Board specify that such authority be delegated to
+the Innovation and Finance Committee of the Supervisory Board.
+The Supervisory Board oversees and advises the Managing Board
+in its management of the Company's business. At regular intervals,
+the Supervisory Board discusses business development, planning,
+strategy and strategy implementation. It reviews the Annual Finan-
+cial Statements of Siemens AG, the Consolidated Financial State-
+ments of the Siemens Group, the Combined Management Report
+of Siemens AG and the Siemens Group, and the proposal for the
+appropriation of net income. It approves the Annual Financial
+Statements of Siemens AG as well as the Consolidated Financial
+Statements of the Siemens Group, based on the results of the pre-
+liminary review conducted by the Audit Committee and taking into
+account the reports of the independent auditors. The Supervisory
+Board decides on the Managing Board's proposal for the appropri-
+ation of net income and the Report of the Supervisory Board to the
+Annual Shareholders' Meeting. In addition, the Supervisory Board
+and the Compliance Committee of the Supervisory Board monitor
+the Company's adherence to statutory provisions, official regula-
+tions and internal Company policies (compliance). The Supervisory
+Board also appoints the members of the Managing Board and de-
+termines each member's portfolios. The Supervisory Board ap-
+proves - on the basis of a proposal by the Compensation Commit-
+tee - the compensation system for Managing Board members and
+defines their concrete compensation in accordance with this sys-
+tem. It sets the individual targets for the variable compensation
+and the total compensation of each individual Managing Board
+member, reviews the appropriateness of total compensation and
+regularly reviews the Managing Board compensation system.
+Effective October 1, 2019, the Supervisory Board approved - on the
+basis of a proposal by the Compensation Committee - an adjusted
+compensation system, which is to be submitted to the Annual
+C.4.1.2 SUPERVISORY BOARD
+> Siemens Gamesa Renewable Energy,
+S.A., Spain
+Österreich, Austria
+> Siemens Aktiengesellschaft
+Positions outside Germany:
+> Siemens Healthineers AG, Munich
+> Siemens Healthcare GmbH, Munich
+German positions:
+> Siemens Gamesa Renewable Energy,
+S.A., Spain
+Positions outside Germany:
+> Siemens Healthineers AG, Munich
+(Chairman)
+> Siemens Healthcare GmbH, Munich
+(Chairman)
+German positions:
+Occupation
+Chairman of the Supervisory Board
+of Siemens AG and of the Board of
+Directors of A. P. Møller-Mærsk A/S
+Date of birth
+October 27,
+1965
+Term
+Member since expires¹
+October 1, 2021
+2013
+Robert Kensbock*
+Chairwoman of the Combine
+Works Council of Siemens AG
+Trade Union Secretary of the
+Managing Board of IG Metall
+IG Metall Regional Office for Bavaria
+Trade Union Secretary,
+Reinhard Hahn*
+(until January 30, 2019)
+Bettina Haller*
+Andrea Fehrmann
+(Dr. phil.)*
+Chairman of the Supervisory Board
+of Allianz SE
+Michael Diekmann
+and of ProSiebenSat.1 Media SE
+Supervisory Board of RWE AG
+Deputy Chairman of the Central
+Works Council of Siemens AG
+Chairman of the Siemens Europe
+Committee
+Chairman of the
+2021
+January 23,
+2013
+October 21,
+1946
+Chairman of the Supervisory Board
+of Bayer AG
+2008
+2023
+January 24,
+March 26,
+1960
+Chairwoman of the Central Works
+Council of Siemens AG
+Werner Wenning
+Second Deputy Chairman
+Birgit Steinborn*
+First Deputy Chairwoman
+Werner Brandt
+(Dr. rer. pol.)
+January 25,
+2012
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+Member since expires¹ (as of September 30, 2019)
+2023 German positions:
+Term
+Shareholders exercise their rights at the Annual Shareholders'
+Meeting. An ordinary Annual Shareholders' Meeting normally
+takes place within the first four months of each fiscal year. The
+Annual Shareholders' Meeting decides, among other things, on
+the appropriation of net income, the ratification of the acts of the
+Managing and Supervisory Boards, and the appointment of the
+independent auditors. Amendments to the Articles of Association
+and measures that change the Company's capital stock are ap-
+proved at the Annual Shareholders' Meeting and implemented by
+the Managing Board. The Managing Board facilitates shareholder
+participation in this meeting through electronic communications -
+in particular, via the Internet - and enables shareholders who are
+168 Additional Information
+> Siemens Healthineers AG, Munich
+> Siemens Healthcare GmbH, Munich
+> Messer Group GmbH, Sulzbach
+German positions:
+> Henkel AG & Co. KGaA, Düsseldorf²
+Bayerische Motoren Werke Aktien-
+gesellschaft, Munich (Chairman)
+German positions:
+166 Additional Information
+4 Group company position.
+3 As of January 30, 2019.
+2 Shareholders' Committee.
+(relevant) ordinary Annual Shareholders' Meeting.
+1 As a rule, the term of office ends upon completion of the
+2023
+January 31,
+2018
+June 21,
+1965
+Deputy Chairman of the Central
+Works Council of Siemens Industry
+Software GmbH
+2023
+November 8, January 31,
+1967
+2018
+Chairman of the Board of
+Management of LANXESS AG
+2023
+C.4.1.4 ANNUAL SHAREHOLDERS' MEETING
+AND INVESTOR RELATIONS
+Details regarding transactions with members of the Managing
+and Supervisory Boards as related individuals are available in
+→ NOTE 31 in B. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+WWW.SIEMENS.COM/DIRECTORS-DEALINGS
+C.4.1.3 SHARE TRANSACTIONS BY MEMBERS OF
+THE MANAGING AND SUPERVISORY BOARDS
+Pursuant to Article 19 of EU Regulation No. 596/2014 of the Euro-
+pean Parliament and Council of April 16, 2014, on market abuse
+(Market Abuse Regulation), members of the Managing Board and
+the Supervisory Board are legally required to disclose all transac-
+tions conducted on their own account relating to the shares or
+debt instruments of Siemens AG or to the derivatives or financial
+instruments linked thereto if the total value of such transactions
+entered into by a board member or any closely associated person
+reaches or exceeds €5,000 in any calendar year. All transactions
+reported to Siemens AG in accordance with this requirement
+have been duly published and are available on the Siemens
+Global Website at:
+German positions:
+> Siemens Industry Software GmbH,
+Cologne
+Supervisory Board Committees
+The Supervisory Board has seven committees, whose duties,
+responsibilities and procedures fulfill the requirements of the
+German Stock Corporation Act (Aktiengesetz) and the German
+Corporate Governance Code (Code). The chairmen of these com-
+mittees provide the Supervisory Board with regular reports on
+their committees' activities.
+The Chairman's Committee makes proposals, in particular,
+regarding the appointment and dismissal of Managing Board
+members and is responsible for concluding, amending, extend-
+ing and terminating employment contracts with members of the
+Managing Board. When making recommendations for first-time
+appointments, it takes into account that the terms of these ap-
+pointments shall not, as a rule, exceed three years. In preparing
+recommendations regarding the appointment of Managing
+Board members, the Chairman's Committee takes into account
+the candidates' professional qualifications, international experi-
+ence and leadership qualities, the age limit specified for Manag-
+ing Board members and the long-range plans for succession as
+well as diversity. It also takes into account the targets for the
+proportion of women on the Managing Board that have been
+defined by the Supervisory Board and the diversity concept for
+the Managing Board that has been approved by the Supervisory
+Board. The Chairman's Committee concerns itself with questions
+regarding the Company's corporate governance and prepares the
+resolutions to be approved by the Supervisory Board regarding
+the Declaration of Conformity with the Code – including the ex-
+planation of deviations from the Code - and regarding the ap-
+proval of the Corporate Governance Report as well as the Report
+of the Supervisory Board to the Annual Shareholders' Meeting.
+Furthermore, the Chairman's Committee submits recommenda-
+tions to the Supervisory Board regarding the composition of the
+Supervisory Board committees and decides whether to approve
+contracts and business transactions with Managing Board mem-
+bers and parties related to them.
+As of September 30, 2019, the Chairman's Committee comprised
+Jim Hagemann Snabe (Chairman), Jürgen Kerner, Birgit Steinborn
+and Werner Wenning.
+The Compensation Committee prepares, in particular, the pro-
+posals for decisions at the Supervisory Board's plenary meetings
+regarding the system of Managing Board compensation, includ-
+ing the implementation of this system in Managing Board con-
+tracts, the definition of the targets for variable Managing Board
+compensation, the determination and review of the appropriate-
+ness of the total compensation of individual Managing Board
+members and the approval of the annual Compensation Report.
+As of September 30, 2019, the Compensation Committee
+comprised Werner Wenning (Chairman), Michael Diekmann,
+Robert Kensbock, Jürgen Kerner, Jim Hagemann Snabe and
+Birgit Steinborn.
+The Audit Committee oversees, in particular, the accounting
+and the accounting process and conducts a preliminary review of
+the Annual Financial Statements of Siemens AG, the Consoli-
+dated Financial Statements of the Siemens Group and the Com-
+bined Management Report of Siemens AG and the Siemens
+Group. On the basis of the independent auditors' report on their
+audit of the annual financial statements, the Audit Committee
+makes, after its preliminary review, recommendations regarding
+Supervisory Board approval of the Annual Financial Statements
+of Siemens AG and the Consolidated Financial Statements of the
+Siemens Group. The Audit Committee discusses the Quarterly
+Statements and Half-year Financial Report with the Managing
+Board and the independent auditors and deals with the auditors'
+reports on the review of the Half-year Consolidated Financial
+Statements and Interim Group Management Report. It concerns
+itself with the Company's risk monitoring system and oversees
+the effectiveness of its internal control, risk management and
+internal audit systems. The Audit Committee receives regular re-
+ports from the Internal Audit Department. It prepares the Super-
+visory Board's recommendation to the Annual Shareholders'
+Meeting concerning the election of the independent auditors
+and submits the corresponding proposal to the Supervisory
+Board. Prior to submitting this proposal, the Audit Committee
+obtains a statement from the prospective independent auditors
+affirming that their independence is not in question. It awards
+the audit contract to the independent auditors elected by the
+Annual Shareholders' Meeting and monitors the independent
+audit of the financial statements as well as the auditors' selec-
+tion, independence, qualification, rotation and efficiency and the
+services rendered by the auditors. Outside its meetings, the Super-
+visory Board is also in regular communication with the indepen-
+dent auditors via the Chairman of the Audit Committee.
+As of September 30, 2019, the Audit Committee comprised
+Dr. Werner Brandt (Chairman), Bettina Haller, Robert Kensbock,
+Jürgen Kerner, Dr. Nicola Leibinger-Kammüller, Jim Hagemann
+Snabe, Birgit Steinborn and Matthias Zachert. The members of
+the Audit Committee are, as a group, familiar with the sector in
+which the Company operates. Pursuant to the German Stock
+Corporation Act, the Audit Committee must include at least one
+Supervisory Board member with knowledge and experience in
+the areas of accounting or the auditing of financial statements.
+Pursuant to the Code, the chairman or chairwoman of the Audit
+Committee shall have specialist knowledge and experience in the
+application of accounting principles and internal control pro-
+cesses, shall be independent and may not be a former Managing
+Board member whose appointment ended less than two years
+ago. The Chairman of the Audit Committee, Dr. Werner Brandt,
+fulfills these requirements.
+October 1,
+2017
+Additional Information
+The Compliance Committee concerns itself, in particular, with
+monitoring the Company's adherence to statutory provisions,
+official regulations and internal Company policies (compliance).
+As of September 30, 2019, the Compliance Committee com-
+prised Jim Hagemann Snabe (Chairman), Dr. Werner Brandt,
+Bettina Haller, Harald Kern, Jürgen Kerner, Dr. Nicola Leibinger-
+Kammüller, Birgit Steinborn and Matthias Zachert.
+The Nominating Committee is responsible for making recom-
+mendations to the Supervisory Board on suitable candidates for
+election by the Annual Shareholders' Meeting as shareholder
+representatives on the Supervisory Board. In preparing these rec-
+ommendations, the objectives defined by the Supervisory Board
+for its composition and the approved diversity concept - in par-
+ticular, independence and diversity – are to be appropriately con-
+sidered, as are the proposed candidates' required knowledge,
+abilities and professional experience. Fulfillment of the required
+profile of skills and expertise is also to be aimed at. Attention
+shall be paid to an appropriate participation of women and men
+in accordance with the legal requirements relating to the gender
+quota as well as to ensuring that the members of the Supervisory
+Board are, as a group, familiar with the sector in which the Com-
+pany operates.
+As of September 30, 2019, the Nominating Committee com-
+prised Jim Hagemann Snabe (Chairman), Dr. Nicola Leibinger-
+Kammüller, Benoît Potier and Werner Wenning.
+The Mediation Committee submits proposals to the Supervisory
+Board in the event that the Supervisory Board cannot reach the
+two-thirds majority required for the appointment or dismissal of
+a Managing Board member on the first ballot.
+As of September 30, 2019, the Mediation Committee comprised
+Jim Hagemann Snabe (Chairman), Jürgen Kerner, Birgit Steinborn
+and Werner Wenning.
+Based on the Company's overall strategy, the Innovation and
+Finance Committee discusses, in particular, the Company's in-
+novation focuses and prepares the Supervisory Board's discus-
+sions and resolutions regarding questions relating to the Compa-
+ny's financial situation and structure - including annual planning
+(budget) - as well as the Company's fixed asset investments and
+its financial measures. In addition, the Innovation and Finance
+Committee has been authorized by the Supervisory Board to de-
+cide on the approval of transactions and measures that require
+Supervisory Board approval and have a value of less than
+€600 million.
+As of September 30, 2019, the Innovation and Finance Committee
+comprised Jim Hagemann Snabe (Chairman), Robert Kensbock,
+Harald Kern, Jürgen Kerner, Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer,
+Dr. Nathalie von Siemens, Birgit Steinborn and Werner Wenning.
+Supervisory Board efficiency review
+The Supervisory Board and its committees regularly conduct
+reviews - either internally or with the involvement of external
+consultants in order to determine how efficiently they perform
+their duties. In fiscal 2019, the Supervisory Board conducted an
+internal efficiency review. At its meeting on May 7, 2019, the
+Supervisory Board concerned itself intensively with the results of
+this review. These results confirm that cooperation within the
+Supervisory Board and with the Managing Board is professional,
+constructive and characterized by a high degree of trust and
+openness. The results also confirm that meetings are organized
+and conducted efficiently and that the participants receive suffi-
+cient information. The review did not reveal a need for any fun-
+damental changes. Individual suggestions for improvement are
+also discussed and implemented during the year.
+167
+August 3,
+1969
+Chairwoman of the Central Works
+Council of Siemens Healthcare GmbH
+2023
+2023
+Chairman and Chief Executive Officer September 3, January 31,
+of Air Liquide S.A.
+Benoît Potier
+2021
+December 15, January 24,
+1959
+2008
+President and Chairwoman of the
+Group Management of TRUMPF
+GmbH + Co. KG
+Chief Executive Officer (CEO) -
+Nicola Leibinger-
+Kammüller (Dr. phil.)
+The Hydrogen Company S.A., France 4
+> Danone S.A., France
+> American Air Liquide Holdings, Inc.,
+USA 4
+1957
+> Air Liquide International Corporation
+(ALIC), USA (Chairman) 4
+> TRUMPF Schweiz AG, Switzerland4
+Positions outside Germany:
+Positions outside Germany:
+> Axel Springer SE, Berlin
+German positions:
+Traton SE, Munich
+(Deputy Chairman)
+> Premium Aerotec GmbH, Augsburg
+> MAN Truck & Bus SE, Munich
+> MAN SE, Munich (Deputy Chairman)
+> MAN Energy Solutions SE, Augsburg
+> Airbus Operations GmbH, Hamburg
+> Flender GmbH, Bocholt
+> Air Liquide International S.A., France
+(Chairman and Chief Executive Officer) 4
+(as of September 30, 2019)
+2018
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+September 13, March 1,
+1957
+2014
+Chairman of the Committee of
+Spokespersons of the Siemens Group
+and Chairman of the Central
+Committee of Spokespersons of
+Siemens AG
+2023
+2023
+January 31,
+2018
+January 27,
+2015
+1971
+Managing Director and Spokesperson July 14,
+of Siemens Stiftung
+August 13,
+1962
+of Economics
+Director of the London School
+2023
+Hagen Reimer*
+January 27,
+2015
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+2023
+January 30,
+2019
+April 26,
+1967
+Trade Union Secretary of the
+Managing Board of IG Metall
+Gunnar Zukunft*
+Matthias Zachert
+Dorothea Simon*
+Michael Sigmund*
+Nathalie von Siemens
+(Dr. phil.)
+Dame Nemat Shafik
+(DPhil)
+May 29,
+1956
+Group company positions
+April 1, 2007
+March 7,
+1961
+100
+4/4
+100
+6/6
+100
+6/6
+Matthias Zachert
+100
+6/6
+Dorothea Simon
+100
+6/6
+Michael Sigmund
+100
+3/3
+100
+6/6
+Nathalie von Siemens (Dr. phil.)
+83
+5/6
+Dame Nemat Shafik (DPhil)
+3/3 100
+83
+Gunnar Zukunft
+6/6
+100
+98
+Siemens AG is subject to German corporate law. Therefore, it has
+a two-tier board structure, consisting of a Managing Board and a
+Supervisory Board.
+and control structure
+C.4.1 Management
+C.4 Corporate Governance
+161
+Additional Information
+Jim Hagemann Snabe
+Chairman
+For the Supervisory Board
+On behalf of the Supervisory Board, I would like to thank the
+members of the Managing Board and all the employees and em-
+ployee representatives of Siemens AG and all Group companies
+for their outstanding commitment and constructive cooperation
+in fiscal 2019.
+Reinhard Hahn left the Supervisory Board, effective the end of
+the Annual Shareholders' Meeting on January 30, 2019. He
+was succeeded by Hagen Reimer, who was appointed to the
+Supervisory Board by a decision of the Charlottenburg District
+Court, effective the end of the Annual Shareholders' Meeting on
+January 30, 2019.
+-
+5/6
+CHANGES IN THE COMPOSITION OF THE
+SUPERVISORY AND MANAGING BOARDS
+There were no changes in the composition of the Managing
+Board in fiscal 2019. At our meeting on July 31, 2019, we de-
+cided - in mutual agreement with Janina Kugel – not to extend
+her appointment as Managing Board member and Labor Director,
+which will expire on January 31, 2020.
+the Managing Board explained the financial statements of
+Siemens AG and the Siemens Group as well as the Company's
+risk management system.
+The independent auditors, Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft (Stuttgart, Germany), audited the Annual
+Financial Statements of Siemens AG, the Consolidated Financial
+Statements of the Siemens Group and the Combined Manage-
+ment Report for Siemens AG and the Siemens Group for fiscal
+2019 and issued unqualified opinions for each. Ernst & Young
+GmbH Wirtschaftsprüfungsgesellschaft (Stuttgart, Germany)
+has served as independent auditors of Siemens AG and the
+Siemens Group since fiscal 2009. Katharina Breitsameter has
+signed as auditor since fiscal 2016, and Thomas Spannagl has
+signed as auditor responsible for the audit since fiscal 2014. The
+Annual Financial Statements of Siemens AG and the Combined
+Management Report for Siemens AG and the Siemens Group
+were prepared in accordance with the requirements of German
+law. The Consolidated Financial Statements of the Siemens Group
+were prepared in accordance with the International Financial
+Reporting Standards (IFRS) as adopted by the EU and with the
+additional requirements of German law set out in Section 315e (1)
+of the German Commercial Code (Handelsgesetzbuch). The Con-
+solidated Financial Statements of the Siemens Group also comply
+with the IFRS as issued by the International Accounting Standards
+Board (IASB). The independent auditors conducted their audit
+in accordance with Section 317 of the German Commercial Code
+and the EU Audit Regulation and German generally accepted
+standards for the audit of financial statements as promulgated by
+the Institut der Wirtschaftsprüfer (IDW) as well as in supplemen-
+tary compliance with the International Standards on Auditing
+(ISA). The abovementioned documents as well as the Managing
+Board's proposal for the appropriation of net income were sub-
+mitted to us by the Managing Board in advance. The Audit Com-
+mittee discussed the dividend proposal in detail at its meeting on
+November 5, 2019. It discussed the Annual Financial Statements
+of Siemens AG, the Consolidated Financial Statements of the
+Siemens Group and the Combined Management Report in detail
+at its meeting on December 3, 2019. In this context, the Audit
+Committee concerned itself, in particular, with the key audit
+matters described in the independent auditors' respective opin-
+ions, including the audit procedures implemented. The Audit
+Committee's review also covered the nonfinancial information
+for Siemens AG and the Siemens Group that is included in the
+Combined Management Report. The audit reports prepared by
+the independent auditors were distributed to all members of
+the Supervisory Board and comprehensively reviewed at the
+Supervisory Board meeting on December 4, 2019, in the pres-
+ence of the independent auditors, who reported on the scope,
+focal points and main findings of their audit, addressing, in par-
+ticular, key audit matters and the audit procedures imple-
+mented. No major weaknesses in the Company's internal con-
+trol or risk management systems were reported. At this meeting,
+OF THE FINANCIAL STATEMENTS
+DETAILED DISCUSSION OF THE AUDIT
+160 Additional Information
+100
+100
+100
+100
+100
+100
+The Supervisory Board concurs with the results of the audit.
+Following the definitive findings of the Audit Committee's exam-
+ination and our own examination, we have no objections. The
+Managing Board prepared the Annual Financial Statements of
+Siemens AG and the Consolidated Financial Statements of the
+Siemens Group. We approved the Annual Financial Statements and
+the Consolidated Financial Statements. In view of our approval,
+the financial statements are accepted as submitted. We endorsed
+the Managing Board's proposal that the net income available for
+distribution be used to pay out a dividend of €3.90 per share enti-
+tled to a dividend and that the amount of net income attributable
+to shares of stock not entitled to receive a dividend for fiscal 2019
+be carried forward.
+C.4.1.1 MANAGING BOARD
+(Dr.-Ing. Dr.-Ing. E.h.)
+100
+3/3
+100
+4/4
+6/6 100
+Harald Kern
+100
+3/3
+100
+6/6
+100
+4/4
+100
+6/6
+Robert Kensbock
+4/4 100
+6/6 100
+100
+6/6
+Bettina Haller
+100
+3/3
+(until January 30, 2019)
+Reinhard Hahn
+100
+Jürgen Kerner
+6/6 100 11/11
+100
+3/3
+(since January 30, 2019)
+Hagen Reimer
+100
+1/1
+100
+1/1
+83
+5/6
+Benoît Potier
+100
+Norbert Reithofer
+4/4
+6/6 100
+(Dr. phil.)
+September 18, September 17,
+2013
+2023
+100
+3/3
+100
+4/4
+100
+6/6
+100
+4/4
+6/6 100
+As the top management body, the Managing Board is committed
+to serving the interests of the Company and achieving sustain-
+able growth in company value. The members of the Managing
+Board are jointly responsible for the entire management of the
+Company and decide on the basic issues of business policy and
+corporate strategy as well as on the Company's annual and
+multi-year plans.
+Nicola Leibinger-Kammüller
+WWW.SIEMENS.COM/SUSTAINABILITYINFORMATION
+January 12,
+1970
+Janina Kugel
+March 31,
+2021
+April 1,
+2011
+May 24,
+1958
+Klaus Helmrich
+October 31,
+2020
+August 1,
+2014
+October 15,
+1963
+Lisa Davis
+> Siemens Healthcare GmbH, Munich
+German positions:
+> Siemens Aktiengesellschaft
+Österreich, Austria (Chairman)
+> Siemens AB, Sweden (Chairman)
+Positions outside Germany:
+> Siemens Proprietary Ltd.,
+South Africa (Chairwoman)
+> Siemens Gamesa Renewable
+Energy, S.A., Spain
+Positions outside Germany:
+> VA TECH T&D Co. Ltd., Saudi Arabia
+> Siemens W.L.L., Qatar
+> Siemens Ltd., Saudi Arabia
+➤ISCOSA Industries and Maintenance
+Ltd., Saudi Arabia (Deputy Chairman)
+Logistics GmbH, Constance
+Positions outside Germany:
+>Arabia Electric Ltd. (Equipment),
+Saudi Arabia
+February 1,
+2015
+Cedrik Neike
+March 7,
+1973
+April 1,
+2017
+The Managing Board prepares the Company's Quarterly State-
+ments and Half-year Financial Report, the Annual Financial State-
+ments of Siemens AG, the Consolidated Financial Statements of
+the Siemens Group and the Combined Management Report of
+Siemens AG and the Siemens Group. In addition, the Managing
+Board ensures that the Company adheres to statutory require-
+ments, official regulations and internal Company policies and
+works to achieve compliance with these provisions and policies
+within the Siemens Group. The Managing Board has established
+a comprehensive compliance management system. Protection is
+offered to employees and third parties who provide information
+on unlawful behavior within the Company. Details on the compli-
+ance management system are available on the Siemens Global
+Website at:
+(Prof. Dr. rer. pol.)
+Ralf P. Thomas
+March 31,
+2022
+2017
+November 17, April 1,
+1968
+Michael Sen
+(as of September 30, 2019)
+Term expires
+First
+appointed
+Date of birth
+> Siemens Postal, Parcel & Airport
+Name
+or in comparable domestic or foreign controlling bodies of business enterprises
+Memberships in supervisory boards whose establishment is required by law
+164
+163
+Additional Information
+> Siemens Schweiz AG, Switzerland
+(Chairman)
+> Siemens Pte. Ltd., Singapore
+> Siemens Ltd., India
+> Siemens France Holding S.A.,
+France
+Positions outside Germany:
+May 31,
+2025
+External positions
+> Siemens Mobility GmbH, Munich
+(Chairman)
+January 31,
+2020
+> Siemens Ltd., India
+2011
+1964
+November 22, April 1,
+First
+appointed
+May 1,
+2006
+June 23,
+1957
+Date of birth
+Roland Busch
+(Dr. rer. nat.)
+Chief Executive Officer
+President and
+Name
+In fiscal 2019, the Managing Board had the following members:
+Term expires
+At the
+end of the
+2021 Annual
+Shareholders'
+Meeting
+Members of the Managing Board and positions
+held by Managing Board members
+162 Additional Information
+The Managing Board has one committee, the Equity and Com-
+pensation Committee. This committee is responsible for the
+duties assigned to it by decision of the Managing Board - includ-
+ing, in particular, duties in connection with capital measures
+and equity-linked financial instruments relating to the compen-
+sation of all employees and managers of the Siemens Group
+except the members of the Managing Board and of Top Man-
+agement and relating to share-based compensation compo-
+nents and employee share plans. The Equity and Compensation
+Committee comprises the President and CEO, the Chief Human
+Resources Officer, the Chief Financial Officer and, as a consulta-
+tive member, the Chief of Staff of Siemens AG (position cur-
+rently vacant). Its members (as of September 30, 2019) are
+Joe Kaeser (Chairman), Janina Kugel and Prof. Dr. Ralf P. Thomas.
+Equity and Compensation Committee
+of the Managing Board
+-
+The members of the Managing Board are subject to a compre-
+hensive prohibition on competitive activity for the period of their
+employment at Siemens AG. They are committed to serving the
+interest of the Company. When making their decisions, they may
+not be guided by personal interests nor may they exploit for their
+own advantage business opportunities offered to the Company.
+Managing Board members may engage in secondary activities -
+in particular, supervisory board positions outside the Siemens
+Group only with the approval of the Chairman's Committee of
+the Supervisory Board. The Supervisory Board is responsible for
+decisions regarding any adjustments to Managing Board com-
+pensation that are necessary in order to take account of possible
+compensation for secondary activities. Every Managing Board
+member is under an obligation to disclose conflicts of interest
+without delay to the Chairman or Chairwoman of the Super-
+visory Board and to inform the other members of the Managing
+Board thereof.
+The Managing Board and the Supervisory Board cooperate
+closely for the benefit of the Company. The Managing Board
+informs the Supervisory Board regularly, comprehensively and
+without delay on all issues of importance to the entire Company
+with regard to strategy, planning, business development, finan-
+cial position, profit, compliance and entrepreneurial risks. At reg-
+ular intervals, the Managing Board also discusses the status of
+strategy implementation with the Supervisory Board.
+WWW.SIEMENS.COM/BYLAWS-MANAGINGBOARD
+economic risk require the prior consent of the full Managing
+Board. The same applies to activities and transactions for which
+the President and CEO or another member of the Managing Board
+demands a prior decision by the Managing Board. The President
+and CEO is responsible for the coordination of all Managing Board
+portfolios. Further details are available in the Bylaws for the Man-
+aging Board at:
+As a rule, a portfolio assigned to an individual member is that mem-
+ber's own responsibility. Activities and transactions in a particular
+Managing Board portfolio that are considered to be extraordinarily
+important for the Company or associated with an extraordinary
+German positions:
+The Supervisory Board has issued Bylaws for the Managing Board
+that contain the assignment of different portfolios and the rules
+for cooperation both within the Managing Board and between
+the Managing Board and the Supervisory Board. In accordance
+with these Bylaws, the Managing Board is divided into the port-
+folio of the President and CEO and a variety of Managing Board
+portfolios. The Managing Board members responsible for the
+individual Managing Board portfolios are defined in a business
+assignment plan as approved by the Supervisory Board. As the
+Managing Board member with responsibility for the Human Re-
+sources portfolio, the Labor Director (Arbeitsdirektor) is ap-
+pointed in accordance with the requirements of Section 33 of the
+German Codetermination Act (Mitbestimmungsgesetz). As a
+rule, first-time appointments to the Managing Board do not ex-
+ceed three years.
+Information on the areas of responsibility and the curricula vitae of
+the members of the Managing Board are available on the Siemens
+Global Website at: www.SIEMENS.COM/MANAGEMENT. Information
+on the compensation paid to the members of the Managing Board
+is provided in chapter → A.10 COMPENSATION REPORT.
+March 31,
+2021
+Joe Kaeser
+German positions:
+Group company positions
+(as of September 30, 2019)
+Memberships in supervisory boards whose establishment is required by law
+> Konecranes Plc., Finland
+> Pensions-Sicherungs-Verein
+Versicherungsverein auf
+Gegenseitigkeit, Cologne
+Positions outside Germany:
+German positions:
+in der Fahrzeugindustrie mbH,
+Berlin
+> inpro Innovationsgesellschaft für
+fortgeschrittene Produktionssysteme
+> EOS Holding AG, Krailling
+> Penske Automotive Group, Inc.,
+USA
+Positions outside Germany:
+Positions outside Germany:
+> Atos SE, France
+> OSRAM Licht AG, Munich
+(Deputy Chairman)
+> OSRAM GmbH, Munich
+(Deputy Chairman)
+German positions:
+Netherlands
+Positions outside Germany:
+> NXP Semiconductors N.V.,
+Mercedes-Benz AG, Stuttgart
+> Allianz Deutschland AG, Munich
+> Daimler AG, Stuttgart
+German positions:
+(as of September 30, 2019)
+External positions
+or in comparable domestic or foreign controlling bodies of business enterprises
+> European School of Management
+and Technology GmbH, Berlin
+Positions outside Germany:
+account the regular limit established by the Supervisory
+Board, which restricts membership on the Supervisory Board
+to a maximum of three full terms of office (15 years). It is
+considered helpful if different age groups are represented on
+the Supervisory Board."
+172
+Limits on age and on length of membership
+In compliance with the age limit stipulated by the Super-
+visory Board in its Bylaws, only individuals who are no older
+than 70 years of age shall, as a rule, be nominated for elec-
+tion to the Supervisory Board. Nominations shall take into
+Additional Information
+C.4.2.6 OBJECTIVES REGARDING THE SUPERVISORY
+BOARD'S COMPOSITION AS WELL AS THE PROFILE
+OF REQUIRED SKILLS AND EXPERTISE AND THE
+DIVERSITY CONCEPT FOR THE SUPERVISORY BOARD
+The diversity concept for the Supervisory Board, together with the
+objectives regarding the Supervisory Board's composition and the
+profile of required skills and expertise for the Supervisory Board,
+were approved by the Supervisory Board in September 2018:
+Within the framework of the selection process and the nomina-
+tion of candidates for the Supervisory Board, the Supervisory
+Board as well as the Nominating Committee of the Supervisory
+Board take into account the objectives regarding the Super-
+visory Board's composition and the requirements defined in its
+diversity concept. Most recently, the Supervisory Board took into
+account these objectives and requirements, including those re-
+lating to the profile of required skills and expertise, when pro-
+posing candidates for election as shareholder representatives to
+the Annual Shareholders' Meeting in 2018.
+The Supervisory Board is of the opinion that, with its current
+composition, it meets the objectives for its composition and
+fulfills the profile of required skills and expertise as well as the
+diversity concept. The Supervisory Board members have the spe-
+cialist and personal qualifications considered necessary. As a
+group, they are familiar with the sector in which the Company
+operates and have the knowledge, skills and experience essential
+for Siemens. A considerable number of Supervisory Board mem-
+bers are engaged in international activities and/or have many
+years of international experience. Appropriate consideration has
+been given to diversity in the Supervisory Board. In fiscal 2019,
+the Supervisory Board had seven female members, of whom
+three are shareholder representatives and four are employee rep-
+resentatives. As a result, 35% of the Supervisory Board members
+are women. Dr. Nicola Leibinger-Kammüller is a member of the
+Nominating Committee.
+The Supervisory Board members shall have sufficient time to
+exercise their mandates with the necessary regularity and
+diligence.
+The Supervisory Board is of the opinion that it also has an ade-
+quate number of independent members. In its estimation, there
+are currently at least 18 Supervisory Board members who are
+independent in the meaning of Section 5.4.2 of the Code. Of these
+independent members, at least eight - namely, Dr. Werner Brandt,
+Michael Diekmann, Benoît Potier, Dr.-Ing. Dr.-Ing. E.h. Norbert
+Reithofer, Dame Nemat Shafik (DPhil), Jim Hagemann Snabe,
+Werner Wenning and Matthias Zachert - are shareholder repre-
+sentatives. The regulations establishing limits on age and re-
+stricting membership in the Supervisory Board to three full terms
+of office (15 years) are complied with.
+Additional Information
+Implementation of the objectives regarding
+the Supervisory Board's composition as well as
+the profile of required skills and expertise and
+the diversity concept for the Supervisory Board;
+independent Supervisory Board members
+No more than two former members of the Managing Board
+of Siemens AG shall belong to the Supervisory Board.
+"The composition of the Supervisory Board of Siemens AG
+shall be such that the Supervisory Board's ability to effectively
+monitor and advise the Managing Board is ensured. In this
+connection, mutually complementary collaboration among
+members with a wide range of personal and professional
+backgrounds and diversity with regard to internationality, age
+and gender are considered helpful.
+Independence
+In accordance with the German Stock Corporation Act, the
+Supervisory Board is composed of at least 30% women and
+at least 30% men. The Nominating Committee shall continue
+to include at least one female member.
+With regard to the composition of the Supervisory Board,
+attention shall be paid to achieving sufficient diversity. Not
+only is appropriate consideration to be given to women.
+Diversity of cultural heritage and a wide range of different
+educational and professional backgrounds, experiences and
+ways of thinking are also to be promoted. When considering
+possible candidates for new elections or for filling Super-
+visory Board positions that have become vacant, the Super-
+visory Board shall give appropriate consideration to diversity
+at an early stage in the selection process.
+Diversity
+Taking the Company's international orientation into account,
+care shall be taken to ensure that the Supervisory Board has
+an adequate number of members with extensive interna-
+tional experience. The goal is to make sure that the present
+considerable share of Supervisory Board members with ex-
+tensive international experience is maintained.
+Internationality
+When a new member is to be appointed, a review shall be per-
+formed to determine which of the areas of expertise deemed
+desirable for the Supervisory Board are to be strengthened.
+The goal is to ensure that, in the Supervisory Board, as a
+group, all knowhow and experience is available that is con-
+sidered essential in view of Siemens' activities. This includes,
+for instance, knowledge and experience in the areas of tech-
+nology (including information technology and digitaliza-
+tion), procurement, manufacturing and sales, finance, law
+(including compliance) and human resources. In addition,
+the members of the Supervisory Board shall collectively have
+knowledge and experience in the business areas that are im-
+portant for Siemens, in particular, in the areas of industry,
+energy, healthcare and infrastructure. As a group, the mem-
+bers of the Supervisory Board are to be familiar with the sec-
+tor in which the Company operates. At least one independent
+member of the Supervisory Board shall have knowledge and
+expertise in the areas of accounting or the auditing of finan-
+cial statements and specific knowledge and experience in
+applying accounting principles and internal control pro-
+cesses. In particular, the Supervisory Board shall also include
+members who have leadership experience as senior execu-
+tives or members of a supervisory board (or comparable
+body) at a major company with international operations.
+The candidates proposed for election to the Supervisory
+Board shall have the knowledge, skills and experience neces-
+sary to carry out the functions of a Supervisory Board mem-
+ber in a multinational company oriented toward the capital
+markets and to safeguard the reputation of Siemens in pub-
+lic. In particular, care shall be taken in regard to the person-
+ality, integrity, commitment and professionalism of the indi-
+viduals proposed for election.
+Profile of required skills and expertise
+173
+171
+An adequate number of independent members shall belong
+to the Supervisory Board. Material and not merely temporary
+conflicts of interest, such as advisory or governing-body
+functions at major competitors of the Company, shall be
+avoided. Under the presumption that the mere exercise of
+Supervisory Board duties as an employee representative
+gives no cause to doubt compliance with the independence
+criteria pursuant to Section 5.4.2 of the Code, the Supervisory
+Board shall have a minimum of 16 members who are inde-
+pendent in the meaning of the Code. In any case, the Super-
+visory Board shall be composed in such a way that a number
+of at least six independent shareholder representatives in the
+meaning of Section 5.4.2 of the Code is achieved.
+C.5 Notes and forward-looking statements
+© 2019 by Siemens AG, Berlin and Munich
+-
+Order no. CMXX-C10003-00-7600
+Additional Information
+siemens.com
+investorrelations@siemens.com
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
++49 89 636-1332474 (Investor Relations)
+press@siemens.com
+E-mail
+Fax
+Phone
+WWW.SIEMENS.COM
+Germany
+80333 Munich
+Werner-von-Siemens-Str. 1
+Siemens AG
+Internet
+Address
+Additional Information
+14
+174
+WWW.SIEMENS.
+COM/INVESTOR/EN/
+The "Sustainability Information 2019" which reports on Sustain-
+ability and Citizenship at Siemens is available at:
+For technical reasons, there may be differences between the ac-
+counting records appearing in this document and those pub-
+lished pursuant to legal requirements.
+This document is an English language translation of the German
+document. In case of discrepancies, the German language docu-
+ment is the sole authoritative and universally valid version.
+Due to rounding, numbers presented throughout this and other
+documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This document includes - in the applicable financial reporting
+framework not clearly defined – supplemental financial mea-
+sures that are or may be alternative performance measures
+(non-GAAP-measures). These supplemental financial measures
+should not be viewed in isolation or as alternatives to measures
+of Siemens' net assets and financial positions or results of opera-
+tions as presented in accordance with the applicable financial
+reporting framework in its Consolidated Financial Statements.
+Other companies that report or describe similarly titled alterna-
+tive performance measures may calculate them differently.
+This document contains statements related to our future business
+and financial performance and future events or developments
+involving Siemens that may constitute forward-looking state-
+ments. These statements may be identified by words such as
+"expect," "look forward to," "anticipate," "intend," "plan," "believe,"
+"seek," "estimate," "will," "project" or words of similar meaning.
+We may also make forward-looking statements in other reports,
+prospectuses, in presentations, in material delivered to share-
+holders and in press releases. In addition, our representatives
+may from time to time make oral forward-looking statements.
+Such statements are based on the current expectations and cer-
+tain assumptions of Siemens' management, of which many are
+beyond Siemens' control. These are subject to a number of risks,
+uncertainties and factors, including, but not limited to, those
+described in disclosures, in particular in the chapter Report on
+expected developments and associated material opportunities
+and risks in the Annual Report. Should one or more of these
+risks or uncertainties materialize, or should underlying expec-
+tations including future events occur at a later date or not at all
+or assumptions prove incorrect, actual results, performance or
+achievements of Siemens may (negatively or positively) vary
+materially from those described explicitly or implicitly in the
+relevant forward-looking statement. Siemens neither intends,
+nor assumes any obligation, to update or revise these forward-
+looking statements in light of developments which differ from
+those anticipated.
+Jointly with the Managing Board and with the support of the
+Chairman's Committee, the Supervisory Board conducts long-
+term succession planning for the Managing Board. In its long-
+term succession planning, the Supervisory Board considers the
+target it has defined for the proportion of women on the Manag-
+ing Board and the criteria set out in the diversity concept it has
+approved for the Managing Board's composition as well as the
+requirements of the German Stock Corporation Act (Aktienge-
+setz), the Code and the Bylaws for the Chairman's Committee.
+Considering the concrete qualification requirements and the
+above-mentioned criteria, the Chairman's Committee prepares
+an ideal profile, on the basis of which it compiles a shortlist of the
+available candidates. Structured interviews are then conducted
+with these candidates. After the interviews, a proposal is submit-
+ted to the Supervisory Board for approval. When developing the
+profile of requirements and selecting candidates, the Supervisory
+Board and the Chairman's Committee are supported, if necessary,
+by external consultants.
+Siemens Aktiengesellschaft
+Long-term succession planning
+Suggestions of the Code
+CORPORATE GOVERNANCE PRACTICES
+C.4.2.2 INFORMATION ON
+This Declaration of Conformity is available on the Siemens Global
+Website at: wWW.SIEMENS.COM/DECLARATION OF CONFORMITY. The
+website also provides access to the Declarations of Conformity
+for the last five years.
+The Managing Board The Supervisory Board"
+Berlin and Munich, October 1, 2019
+mandates accepted by a Managing Board member is deemed
+appropriate within the meaning of Section 5.4.5 para. 1
+sent. 2 of the Code. This assessment is to consider the ex-
+pected personal workload caused by the accepted mandates,
+which can differ depending on the specific mandates.
+169
+Additional Information
+Instead of regarding the recommended maximum number of
+mandates as a rigid upper limit, it is to be possible to perform
+a case-by-case assessment to determine if the number of
+Since September 24, 2019, Siemens AG has not complied
+with the recommendation in Section 5.4.5 para. 1 sent. 2 of
+the Code. According to this recommendation, members of
+the Managing Board of a listed corporation shall not accept
+more than a total of three Supervisory Board mandates in
+non-group listed corporations or on supervisory bodies of
+non-group entities that make similar requirements.
+Siemens AG voluntarily complies with the Code's suggestions,
+with only one exception:
+Since making its last Declaration of Conformity dated Octo-
+ber 1, 2018, Siemens AG has complied, and will continue to
+comply, with all recommendations of the Government Com-
+mission on the German Corporate Governance Code ('Code')
+in the version of February 7, 2017, published by the Federal
+Ministry of Justice and Consumer Protection in the official
+section of the Federal Gazette (Bundesanzeiger), with the
+following exception:
+The Managing Board and the Supervisory Board of Siemens AG
+approved the following Declaration of Conformity pursuant to
+Section 161 of the German Stock Corporation Act as of Octo-
+ber 1, 2019:
+for the Managing Board
+WWW.SIEMENS.COM/289F
+The information and documents referred to in this chapter – in-
+cluding the Bylaws for the Managing Board, the Bylaws for the
+Supervisory Board, the bylaws for Supervisory Board committees,
+the Code and the Business Conduct Guidelines - are publicly
+available at:
+-
+The Corporate Governance statement pursuant to Sections 289f
+and 315d of the German Commercial Code (Handelsgesetzbuch)
+is an integral part of the Combined Management Report. In ac-
+cordance with Section 317 para. 2 sent. 6 of the German Commer-
+cial Code, the audit of the disclosures made within the scope of
+Sections 289f and 315d of the German Commercial Code is to be
+limited to determining whether disclosures have been made.
+Sections 289f and 315d of the
+German Commercial Code
+C.4.2 Corporate Governance
+statement pursuant to
+The Articles of Association of Siemens AG, the Bylaws for the Super-
+visory Board, the bylaws for the most important Supervisory
+Board committees, the Bylaws for the Managing Board, our Dec-
+larations of Conformity with the Code and a variety of other cor-
+porate-governance-related documents are posted on the Siemens
+Global Website at: www.SIEMENS.COM/CORPORATE-GOVERNANCE
+As part of our investor relations activities, we inform our inves-
+tors comprehensively about developments within the Company.
+For communication purposes, Siemens makes extensive use of
+the Internet. We publish Quarterly Statements, Half-year Finan-
+cial and Annual Reports, earnings releases, ad hoc announce-
+ments, analyst presentations, letters to shareholders and press
+releases as well as the financial calendar for the current year,
+which contains the publication dates of significant financial
+communications and the date of the Annual Shareholders'
+Meeting, at: WWW.SIEMENS.COM/INVESTORS. When required,
+the Chairman of the Supervisory Board discusses Supervisory-
+Board-specific topics with investors.
+unable to attend the meeting to vote by proxy. Proxies can also
+be reached during the Annual Shareholders' Meeting. Further-
+more, shareholders may exercise their right to vote in writing or
+by means of electronic communications (absentee voting). The
+Managing Board may enable shareholders to participate in the
+Annual Shareholders' Meeting without the need to be present at
+the venue and without a proxy and to exercise some or all of their
+rights fully or partially by means of electronic communications.
+The Company enables shareholders to follow the entire Annual
+Shareholders' Meeting via the Internet. Shareholders may
+submit
+proposals regarding the proposals of the Managing and Supervi-
+sory Boards and may contest decisions of the Annual Sharehold-
+ers' Meeting. Shareholders owning Siemens stock with an aggre-
+gate notional value of €100,000 or more may also demand the
+judicial appointment of special auditors to examine specific is-
+sues. The reports, documents and information required by law
+for the Annual Shareholders' Meeting, including the Annual Re-
+port, can be downloaded from the Siemens Global Website. The
+same applies to the agenda for the Annual Shareholders' Meet-
+ing and to any counterproposals or shareholders' nominations
+that may require disclosure. For the election of shareholder rep-
+resentatives on the Supervisory Board, a detailed curriculum vi-
+tae of every candidate is published.
+"Declaration by the Managing Board and the Supervisory
+Board of Siemens Aktiengesellschaft with the German Corpo-
+rate Governance Code pursuant to Section 161 of the German
+Stock Corporation Act
+Pursuant to Section 3.7 para. 3 of the Code, in the case of a take-
+over offer, the Managing Board should convene an Extraordinary
+General Meeting at which shareholders discuss the takeover offer
+and may decide on corporate actions. The convening of a share-
+holders' meeting - even taking into account the shortened time
+limits stipulated in the German Securities Acquisition and Take-
+over Act (Wertpapiererwerbs- und Übernahmegesetz) - is an
+organizational challenge for large publicly listed companies. It
+appears doubtful whether the associated effort is justified in
+cases where no relevant decisions by the shareholders' meeting
+are intended. Therefore, extraordinary shareholders' meetings
+shall be convened only in appropriate cases.
+C.4.2.1 DECLARATION OF CONFORMITY WITH THE
+GERMAN CORPORATE GOVERNANCE CODE
+Our Company's values and
+Business Conduct Guidelines
+Further corporate governance practices applied beyond legal
+requirements are contained in our Business Conduct Guidelines.
+In fiscal 2019, the Managing Board comprised two women and
+six men. In fiscal 2019, the proportion of women on the Manag-
+ing Board therefore met the target that has been set by the
+Supervisory Board and will apply until June 30, 2022. Different
+age groups are represented on the Managing Board. No Manag-
+ing Board member is currently older than 63 years of age.
+With its current composition, the Managing Board meets all the
+requirements of its diversity concept. The Managing Board
+members have a broad range of knowledge, experience and
+educational and professional backgrounds as well as interna-
+tional experience. The Managing Board has all the knowledge
+and experience that is considered essential in view of Siemens'
+activities. As a group, the Managing Board has experience in the
+business areas that are important for Siemens - in particular, in
+the industry, energy, healthcare and infrastructure sectors - as
+well as many years of experience in technology (including infor-
+mation technology and digitalization), research and develop-
+ment, procurement, manufacturing and sales, finance, law
+(including compliance) and human resources.
+The diversity concept for the Managing Board is implemented as
+part of the process for making appointments to the Managing
+Board. When selecting candidates and/or making proposals for
+the appointment of Managing Board members, the Supervisory
+Board and the Chairman's Committee of the Supervisory Board
+take into account the requirements defined in the diversity con-
+cept for the Managing Board.
+Status of implementation of the
+diversity concept for the Managing Board
+> It is considered helpful if different age groups are repre-
+sented on the Managing Board. In accordance with the
+recommendation of the Code, the Supervisory Board
+has defined an age limit for the members of the Manag-
+ing Board. In keeping with this limit, the members of
+the Managing Board are, as a rule, to be not older than
+63 years of age.
+➤ When selecting individuals for Managing Board positions,
+the targets set by the Supervisory Board for the proportion
+of women on the Managing Board shall be taken into ac-
+count. The Supervisory Board has established as a target
+that – until June 30, 2022 - 25% (2/8) of the Managing
+Board positions are to be held by women.
+> As a group, the Managing Board shall have many years of
+experience in technology (including information technol-
+ogy and digitalization), research and development, pro-
+curement, manufacturing and sales, finance, law (includ-
+ing compliance) and human resources.
+> As a group, the Managing Board shall have experience in
+the business areas that are important for Siemens - in
+particular, in the industry, energy, healthcare and infra-
+structure sectors.
+> Taking the Company's international orientation into ac-
+count, the composition of the Managing Board shall reflect
+internationality with respect to different cultural back-
+grounds and international experience (such as extensive
+professional experience in foreign countries and responsi-
+bility for business activities in foreign countries in areas
+that are relevant for Siemens).
+> In addition to the expertise and management and leader-
+ship experience required for their specific tasks, the Man-
+aging Board members shall have the broadest possible
+range of knowledge and experience and the widest possi-
+ble educational and professional backgrounds.
+international experience, expertise in their prospective
+areas of responsibility, achievements to date and knowl-
+edge of the Company as well as their ability to adjust busi-
+ness models and processes in a changing world. Diversity
+with respect to such characteristics as age and gender as
+well as professional and educational background is an im-
+portant selection criterion for appointments to Managing
+Board positions. When selecting members of the Managing
+Board, the Supervisory Board also gives special consider-
+ation to the following factors:
+When making an appointment to a specific Managing Board
+position, the decisive factor is always the Company's best in-
+terest, taking into consideration all circumstances in the indi-
+vidual case."
+When selecting members of the Managing Board, the Super-
+visory Board pays close attention to candidates' per-
+sonal suitability, integrity, convincing leadership qualities,
+In the 172 years of its existence, our Company has built an excel-
+lent reputation around the world. Technical performance, inno-
+vation, quality, reliability, and international engagement have
+made Siemens a leading company in electrification, automation
+and digitalization. It is top performance with the highest ethics
+that has made Siemens strong. This is what the Company will
+continue to stand for in the future.
+170 Additional Information
+The Business Conduct Guidelines provide the ethical and legal
+framework within which we want to conduct our activities and
+remain on course for success. They contain the basic principles
+and rules for our conduct within our Company and in relation
+to our external partners and the general public. They set out
+how we meet our ethical and legal responsibility as a Company
+and give expression to our Company values: "Responsible" -
+"Excellent" - "Innovative."
+A general description of the composition and operation of the Man-
+aging Board and the Supervisory Board and their committees can
+be found in chapter c.4.1 MANAGEMENT AND CONTROL STRUCTURE.
+Further details can be derived from the bylaws for the corporate
+bodies concerned.
+C.4.2.3 OPERATION OF THE MANAGING BOARD
+AND THE SUPERVISORY BOARD, AND COMPOSITION
+AND OPERATION OF THEIR COMMITTEES
+At Siemens AG, the target for the proportion of women on
+the Managing Board has been set at a minimum of 2/8 until
+June 30, 2022.
+When filling managerial positions at the Company, the Managing
+Board takes diversity into account and, in particular, aims for an
+appropriate consideration of women and internationality. In
+2017, the Managing Board set the target for the percentage of
+women at each of the two management levels below the Man-
+aging Board at 20%, applicable in each case until June 30, 2022.
+The composition of the Supervisory Board fulfilled the legal re-
+quirements regarding the minimum gender quota in the report-
+ing period.
+C.4.2.5 DIVERSITY CONCEPT FOR THE MANAGING
+BOARD AND LONG-TERM SUCCESSION PLANNING
+In September 2018, the Supervisory Board approved the follow-
+ing diversity concept for the composition of the Managing Board:
+"The goal is to achieve a composition that is as diverse as pos-
+sible and comprises individuals who complement one an-
+other in a Managing Board that provides strong leadership as
+well as to ensure that, as a group, the members of the Man-
+aging Board have all the knowhow and skills that are consid-
+ered essential in view of Siemens' activities.
+C.4.2.4 TARGETS FOR THE QUOTA OF WOMEN
+ON THE MANAGING BOARD AND AT THE TWO
+MANAGEMENT LEVELS BELOW THE MANAGING
+BOARD; INFORMATION ON SUPERVISORY BOARD
+COMPLIANCE WITH MINIMUM GENDER QUOTA
+REQUIREMENTS
+therein: service
+679
+3.8%
+business
+8,025
+7,756
+Adjusted EBITA
+Adjusted EBITA margin
+722
+Combined Management Report
+2%
+4.0%
+Orders were up clearly year-over-year, due mainly to higher
+orders in the new-unit business. Volume from large orders
+increased significantly year-over-year; among the contract wins
+9
+was a €0.4 billion order for a combined-cycle power plant, in-
+cluding service in France; a HVDC order worth €0.4 billion in
+Germany; a €0.3 billion order for a large offshore grid connec-
+tion project in the U.K.; and a €0.3 billion order in the solutions
+business in Brazil. Order intake increased in all three reporting
+regions, with the Americas posting double-digit growth. Gas and
+Power's revenue decreased moderately year-over-year in a con-
+tinuing difficult market environment as the new-unit businesses
+recorded lower revenue compared to fiscal 2018 following weak
+order entry in prior years. On a geographic basis, revenue de-
+creased in the regions Europe, C.I.S., Africa, Middle East and
+Asia, Australia, partly offset by growth in the Americas. Despite
+a continuing strong contribution from the service business
+and positive effects from project execution and completion,
+Adjusted EBITA was down year-over-year on lower revenue,
+price declines and reduced capacity utilization. In addition,
+Adjusted EBITA in fiscal 2018 benefited from gains totaling
+€166 million from two divestments. Severance charges were
+€242 million in fiscal 2019 compared to €374 million in fiscal
+2018. Gas and Power's order backlog was €51 billion at the end
+of the fiscal year, of which €13 billion are expected to be con-
+verted into revenue in fiscal 2020.
+(4)%
+3%
+(6)%
+(3)%
+-
+17,663
+These results reflected a highly competitive market environ-
+ment. We expect the power generation market overall to remain
+challenging with market volume stabilizing at the current level.
+After years of continuous decline, the volume of the gas turbine
+market in fiscal 2019 remained on the prior-year level, again
+being impacted by customer delays of large projects in Asia,
+Australia, particularly in China, and strong price pressure result-
+ing from intense competition. Customers also showed restraint
+due to ongoing weak growth in demand for power, combined
+with uncertainty regarding regulatory developments. The gas
+turbine market is experiencing overcapacity among OEMs and
+EPC contractors, which is fostering market consolidation. In the
+market for large steam turbines for power generation, volume
+shrank further year-over-year from an already low basis of com-
+parison due to an ongoing shift from coal-fired to gas-fired and
+renewable power generation, as well as to carbon emission reg-
+ulation. We expect these developments to continue in fiscal
+2020. In contrast, markets for industrial steam turbines were
+stable in fiscal 2019, and the market segment is expected to be
+flat in fiscal 2020.
+gas, chemicals, mining, data centers, airports, and rail compa-
+nies. Competitors in the transmission business consist mainly of
+a small number of large multinational companies, increasingly
+joined by smaller, fast-growing manufacturers in emerging coun-
+tries including China, India and Korea.
+Several trends are affecting the businesses of the Operating Com-
+pany. In the power generation business, the ongoing strong
+growth in demand for power from renewable sources -
+which
+come with associated short-term fluctuations in power genera-
+tion levels - is shifting market demand from fossil baseload gen-
+eration to more flexible, highly efficient and affordable gas power
+plants with low emissions, in particular in Europe, Latin America
+and Asia. A second trend is that the development and execution
+of large projects increasingly requires financing by the OEM, in-
+cluding equity participation. For Gas and Power, this role is ful-
+filled by Financial Services, which can offer customers a range of
+financing and equity options backed by domain know-how. In
+general, the markets for the Operating Company are strongly af-
+fected by changes in national energy regulations, such as support
+of renewable energy, the security of supply through capacity mar-
+kets or strategic reserve capacity, carbon pricing and climate
+change targets, and modernization of energy and electricity mar-
+kets. Fuel efficiency standards in the U.S. and the European Union
+are expected to weigh on future demand for fossil transportation
+fuels in these regions, contrasting with strong growth in transpor-
+tation-related fuel use in other world regions, particularly in Asia.
+In Oil and Gas, the role of natural gas compared to other fossil
+fuels is growing from the mid- to long-term perspective, facili-
+tated by its lower carbon footprint. Furthermore, declining pro-
+duction from maturing oil and gas fields, or depletion, requires
+improved recovery technologies as well as additional mechanical
+and electrical power, necessitating continuous investments. At
+the same time, oil and gas companies increasingly focus on asset
+economics and emission footprint, requiring products and solu-
+tions offering an improved balance of high asset productivity
+with safety and environmental performance. Generally, our oil
+and gas business benefits from these major market trends. At the
+same time, our diversified and global presence across the oil and
+gas value chain and other industries – each following their own
+business cycles - offers stable opportunities for our business.
+The transmission business generally benefits from major trends
+and changes in global electrical power systems, in particular
+decarbonization, digitalization and global electrification. Decar-
+bonization is shifting the focus of generation to both central and
+decentral renewables. This shift increases demand for offshore
+connectivity and grid stability, requiring environmentally friendly
+products and systems. The integration of wind power, photo-
+voltaics, biomass, storage and other intermittent or distributed
+energy resources into efficient and reliable power networks
+increases grid complexity. Holistic asset transparency to increase
+efficiency of existing grid assets and performance, enabled by
+digitalization, is becoming increasingly important. Digitalization
+involves increased product and system connectivity and provid-
+ing intelligent solutions for the management of complex energy
+networks. Connected assets provide value potential for additional
+services and enhanced asset operation. The continuously grow-
+ing demand for electricity worldwide requires stable transporta-
+tion of greener bulk power with minimal losses from the location
+of generation to different demand load centers, some of which
+may even be located in other countries.
+- and
+R&D activities of the power generation and oil and gas busi-
+nesses concentrate on developing products and solutions for
+enhancing efficiency and flexibility, and for reducing greenhouse
+gas emissions in power generation and in the oil and gas indus-
+try. These products and solutions include turbomachinery
+primarily high-performance, low-emission gas turbines for sim-
+ple-cycle operation or for combined-cycle power plants
+compressor solutions combining electrical, automation, and
+digitalization offerings for oil and gas as well as process indus-
+tries. A field of activity is using hydrogen as a renewable fuel in
+gas turbines. Gas and Power is also intensifying R&D in innova-
+tive materials, advanced manufacturing methods and plant opti-
+mization. In the transmission business, R&D activities focus on
+preparing the portfolio for a deregulated environment in which
+total cost of ownership is decisive. Innovations accordingly focus
+on product digitalization, power electronics, software-driven
+power control, environmentally friendly products and systems,
+and grid stabilization. The increasing infeed of renewable energy
+to power grids, with distributed generation on the rise, requires
+those grids to become more flexible and efficient. The invest-
+ments of Gas and Power are focused on enhancing productivity
+through automation and increasing customer proximity via stra-
+tegic localization of capacity. Investing activities mainly relate to
+gas turbines and turbine components.
+(in millions of €)
+Orders
+Revenue
+2019
+Fiscal year
+2018
+19,975
+18,451
+Actual
+8%
+% Change
+Comp.
+7%
+18,125
+Oil and gas markets developed positively in fiscal 2019, driven
+by a recovery in liquefied natural gas. They are expected to grow
+again in fiscal 2020, driven by the liquefied natural gas and up-
+stream markets. Both markets for offshore and onshore explo-
+ration are anticipated to recover further based on a growing
+number of expected project approvals. Pipelines, downstream,
+and oil and gas-related markets are expected to remain stable
+in fiscal 2020.
+7%
+Effective with the beginning of fiscal 2020, several businesses
+will be transferred to Gas and Power: certain businesses previ-
+ously included in Portfolio Companies; the distribution trans-
+formers business previously included in Smart Infrastructure; and
+the hydrogen solution unit and research activities within the
+technology field Power 2X and storage previously included in
+Corporate Items. If this organizational structure had already ex-
+isted in fiscal 2019, Gas and Power would have posted orders of
+€21.711 billion, revenue of €19.304 billion, Adjusted EBITA of
+€732 million and an Adjusted EBITA margin of 3.8%.
+10.9%
+11.1%
+632
+633
+0%
+Portfolio Companies
+(71)
+(305)
+77%
+Reconciliation to Consolidated Financial Statements
+(2,028)
+(1,135)
+(79)%
+Income from continuing operations before income taxes
+7,518
+8,050
+(7)%
+1%
+Income tax expenses
+8,857
+0%
+2,880
+2,898
+(1)%
+1,500
+1,574
+(5)%
+679
+722
+(6)%
+983
+958
+3%
+2,461
+2,221
+11%
+482
+483
+8,986
+(2,054)
+9%
+Income from continuing operations
+17
+A.4.3 Research and development
+In fiscal 2019, we reported research and development (R&D)
+expenses of €5.7 billion, compared to €5.6 billion in fiscal 2018.
+The resulting R&D intensity, defined as the ratio of R&D expenses
+and revenue, was 6.5% (fiscal 2018: 6.7%). Additions to capital-
+ized development expenses amounted to €0.4 billion in fiscal
+2019, compared to €0.3 billion in fiscal 2018. As of September 30,
+2019, Siemens held approximately 68,300 granted patents world-
+wide in its continuing operations. As of September 30, 2018, we
+held approximately 65,000 granted patents. On average, we had
+45,100 R&D employees in fiscal 2019.
+Our research and development activities are ultimately geared to
+developing innovative, sustainable solutions for our customers -
+and the Siemens businesses - while also strengthening our own
+competitiveness. Joint implementation by the operating units
+and Corporate Technology, our central R&D department, en-
+sures that research activities and business strategies are closely
+aligned with one another, and that all units benefit equally and
+quickly from technological developments. As in fiscal 2018 the
+following technologies were the focus in fiscal 2019: additive
+manufacturing, autonomous robotics, blockchain applications,
+connected (e-)mobility, connectivity and edge devices, cyber
+security, data analytics and artificial intelligence, distributed en-
+ergy systems, energy storage, future of automation, materials,
+power electronics, simulation and digital twins, and software
+systems and processes.
+We further develop technologies through our "open innovation"
+concept. We are working closely with scholars from leading uni-
+versities and research institutions, not only under bilateral coop-
+eration agreements but also in publicly funded collective proj-
+ects. Our focus here is on our strategic research partners, and
+especially the eight Centers of Knowledge Interchange that we
+maintain at leading universities worldwide.
+Siemens' global venture capital unit, Next47, provides capital to
+help start-ups expand and scale. It serves as the creator of
+next-generation businesses for Siemens by building, buying and
+partnering with innovative companies at any stage. Next47 is
+focused on anticipating how emerging technologies will influ-
+ence our end markets. This fore-knowledge enables Siemens and
+our customers to grow and thrive in the age of digitalization.
+18
+Combined Management Report
+therein: U.S.
+% Change
+Comp.
+Actual
+Fiscal year
+2018
+2019
+(in millions of €)
+14%
+19%
+29,812 25,060
+Combined Management Report
+was due both to lower income before interest after tax and to
+higher average capital employed.
+As expected, ROCE at 11.1% was below the target range set in our
+Siemens Financial Framework, reflecting in particular the effects
+from portfolio transactions in recent years, including the acqui-
+sitions of Mentor and Mendix at Digital Industries and the merger
+of Siemens' wind power business with Gamesa Corporación
+Tecnológica, S.A. that created SGRE. The decline year-over-year
+The decline in basic earnings per share reflects the decrease of
+Net income attributable to Shareholders of Siemens AG, which
+was €5,174 million in fiscal 2019 compared to €5,807 million in
+fiscal 2018, partially offset by a lower number of weighted aver-
+age shares outstanding. Basic earnings per share excluding sev-
+erance charges was €6.93.
+5,646
+5,996
+(6)%
+Income from discontinued operations, net of income taxes
+3
+124
+(98)%
+Net income
+% Change
+Basic earnings per share
+ROCE
+6,120
+(8)%
+6.41
+11.1%
+7.12
+12.6%
+(10)%
+As a result of the development described for the segments,
+Income from continuing operations before income taxes
+declined 7%. Severance charges for continuing operations were
+€619 million, of which €492 million were in Industrial Businesses.
+Accordingly, Adjusted EBITA margin Industrial Businesses exclud-
+ing severance charges was 11.5% in fiscal 2019. In fiscal 2018,
+severance charges for continuing operations were €923 million,
+of which €669 million were in Industrial Businesses.
+The tax rate of 25% for fiscal 2019 was below the tax rate of 26%
+for the prior year, benefiting mainly from the reversal of income
+tax provisions outside Germany. As a result, Income from con-
+tinuing operations declined 6%.
+Income from discontinued operations, net of income taxes
+in the prior year included positive effects from the release of a
+provision related to former Communications activities.
+5,648
+Americas
+2018
+Financial Services
+12,282 11,729
+5%
+4%
+Siemens
+97,999
+91,296
+7%
+6%
+Americas
+23,796 22,115
+8%
+3%
+therein: emerging
+therein: U.S.
+17,993 16,012
+12%
+6%
+therein: Germany
+markets¹
+6%
+8,459
+21,166
+Markets served by our transmission businesses grew slightly in
+fiscal 2019, recovering from the weakness a year earlier as cus-
+tomers continued their effort to strengthen transmission and dis-
+tribution grids to integrate the growing amount of decentralized
+energy. We expect this growth to continue in fiscal 2020, with
+markets in Asia anticipated to show the highest growth rates. The
+Middle East is expected to benefit from a price recovery in the oil
+and gas markets and investments in large infrastructure projects.
+Tighter decarbonization goals and grid extensions are expected to
+drive growth in Europe, while utilities in North America are ex-
+pected to strongly invest in grid modernization and optimization.
+18,106
+17%
+10%
+Europe, C.I.S., Africa,
+Asia, Australia
+22,101 19,742
+12%
+11%
+Middle East
+44,360
+42,782
+4%
+4%
+therein: China
+8,989
+6%
+31,720
+30,564
+4%
+Revenue related to external customers went up moderately year-
+over-year on growth in nearly all industrial businesses. SGRE and
+Siemens Healthineers posted the highest growth rates, while
+revenue at Gas and Power declined moderately in a difficult mar-
+ket environment. The revenue decline in emerging markets was
+due mainly to lower revenue in Egypt, where in fiscal 2018 Gas
+and Power recorded sharply higher revenue from large orders.
+Revenue in Europe, C.I.S., Africa, Middle East increased mod-
+erately on growth in a majority of industrial businesses, driven by
+substantial growth at SGRE. Gas and Power posted a clear decline
+in a difficult market environment. In Germany, revenue was up
+moderately with significant growth in Mobility and Gas and
+Power, partly offset by a decline in SGRE.
+In the Americas, revenue came in clearly higher year-over-year,
+benefiting from positive currency translation effects. Siemens
+Healthineers, Smart Infrastructure and Gas and Power recorded
+the largest increases, while SGRE posted clearly lower revenue in
+the region. In the U.S., all industrial businesses posted higher
+revenues year-over-year, with SGRE and Smart Infrastructure re-
+cording the strongest growth rates.
+16
+Combined Management Report
+Revenue in Asia, Australia rose moderately year-over-year on
+growth in the majority of industrial businesses, led by Siemens
+Healthineers and Digital Industries. Gas and Power and SGRE
+posted lower revenue year-over-year. In China, revenue was also
+up in the majority of industrial businesses, led by Siemens
+Healthineers. In contrast, SGRE posted substantially lower reve-
+nue year-over-year in that country.
+A.4.2 Income
+Fiscal year
+(in millions of €, earnings per share in €)
+Digital Industries
+Smart Infrastructure
+Gas and Power
+Mobility
+Siemens Healthineers
+Siemens Gamesa Renewable Energy
+Industrial Businesses
+Adjusted EBITA margin Industrial Businesses
+1 As defined by the International Monetary Fund.
+Orders in the Americas region were up significantly year-over-year,
+benefiting from positive currency translation effects. Double-digit
+Order development was mixed in the Europe, C.I.S., Africa,
+Middle East region. The majority of industrial businesses posted
+order growth, led by double-digit growth in Mobility, which won
+several large contracts in the year under review. This increase
+was more than offset by a substantial decline in SGRE due mainly
+to a lower volume from large orders and a decrease in Digital
+Industries. In contrast to the region overall, orders were up
+clearly in Germany, driven by sharp growth in Gas and Power
+which recorded, among others, a large high voltage direct cur-
+rent (HVDC) order. Mobility recorded a significant increase in
+order intake in Germany, while the other industrial businesses
+posted declines.
+Orders related to external customers were clearly up year-over-
+year on growth in nearly all industrial businesses, led by Mobility.
+Gas and Power, Siemens Healthineers, Smart Infrastructure and
+SGRE all posted clear growth, while orders declined slightly in
+Digital Industries. Volume from large orders for Industrial Busi-
+nesses overall was up substantially due to a sharp increase at
+Mobility, but also due to a significant increase in SGRE and Gas
+and Power. Growth in emerging markets was driven by orders
+from China, and from Russia where Mobility won a €1.2 billion
+contract for high-speed trains including maintenance.
+4%
+Asia, Australia
+18,693 18,147
+3%
+2%
+therein: China
+1 As defined by the International Monetary Fund.
+Siemens
+2019
+8,405
+86,849
+4%
+3%
+5%
+3%
+therein: emerging
+markets¹
+27,607 28,272
+(2)%
+(2)%
+8,102
+83,044
+7%
+(1,872)
+(1)%
+Orders
+% Change
+Comp.
+Actual
+Fiscal year
+2018
+2019
+(in millions of €)
+clearly in fiscal 2020, driven by growth in the U.S. and India. Global
+offshore wind power markets are expected to grow in fiscal 2020.
+The driver of this growth is China which offsets a slight decline in
+European markets. Market volume in euros is expected to be sub-
+ject to adverse price development in the offshore business, reflect-
+ing the trends discussed above, and currency translation effects.
+and analysis of turbine conditions as well as smart diagnostic
+services. The investments of SGRE in fiscal 2019 focused on pro-
+duction equipment for new blade types and capacity expansion
+in its factories. Other investments were related to logistic and
+construction tools in the onshore business, and special equip-
+ment for testing and installation of newly launched products in
+the offshore business.
+13
+Combined Management Report
+SGRE's R&D efforts focus on developing the next generation of
+technology that leads to improved and more cost-effective prod-
+ucts, solutions and services, including becoming a leading com-
+pany in mastering the balance between power generation and
+power demand for the renewable sector. To accomplish that goal,
+SGRE is developing cost-effective energy storage solutions, and
+solutions for hybridization that are designed to help utility cus-
+tomers optimize utilization of renewable energy and thereby in-
+crease profitability. Another focus area is digitalization: advances
+in this field are expected to enable more intelligent monitoring
+The share of renewable energy in the global energy mix is widely
+expected to increase, but the trend toward evaluating competing
+power sources using life-cycle costs continues to put pressure on
+the prices offered by wind power providers. In addition, price
+pressure arises from the introduction of auctions as a mechanism
+for allocating renewable energy capacity or production in elec-
+tricity markets and the resulting increase in competition among
+wind turbine manufacturers. To address this trend, SGRE focuses
+on improving its supply chain and significantly decreasing costs
+by optimizing production within its manufacturing footprint, in-
+cluding the streamlining of its product portfolio. A higher share
+of renewable energy in electrical grids also increases the demand
+for predictability of the energy supply and increased capability
+for integrating it into the overall energy mix. Market develop-
+ment has in the past depended strongly on energy policy, includ-
+ing tax incentives in the U.S. and regulatory frameworks in the
+European Union. However, with continued technological prog-
+ress and cost reduction, dependency on subsidy schemes is ex-
+pected to continue to decrease.
+Siemens as majority shareholder holds 59% of the shares of the
+publicly listed Siemens Gamesa Renewable Energy, S.A., Spain
+(SGRE). SGRE designs, develops and manufactures wind turbines
+for various wind conditions, and is active in the development,
+construction and sale of wind farms. In addition, SGRE provides
+services for the management, operation and maintenance of
+wind farms. Its primary customers are large utilities and indepen-
+dent power producers. The competitive situation in wind power
+differs in the two major market segments. In the markets for on-
+shore wind farms, competition is rather dispersed without any
+one company holding a dominant share of the market, while
+markets for offshore wind farms continue to be served by a few
+experienced players. Consolidation is moving forward in both on-
+and offshore markets. The key drivers of consolidation are scale
+as well as technology and market access challenges. SGRE's rev-
+enue mix may vary from reporting period to reporting period
+depending on the mix of onshore and offshore projects in the
+respective periods.
+A.3.7 Siemens Gamesa
+Renewable Energy
+While demand in the markets served by Siemens Healthineers
+continued to grow in fiscal 2019, these markets also showed price
+pressure on new purchases and increased utilization rates for in-
+stalled systems. All major served markets were in a healthy state,
+which contributed to a slightly higher market growth in Europe,
+C.I.S., Africa, Middle East and the Americas, most notably in the
+imaging and advanced therapies markets. The markets in Asia,
+Australia grew moderately. Markets in the U.S. showed slight
+growth in the imaging and clear growth in the advanced thera-
+pies business, with continued moderate market growth in diag-
+nostics. Still, the U.S. market environment remained challenging
+as pressure on reimbursement systems and the focus on more
+extended utilization of equipment at customers' sites persist.
+Government initiatives and programs, together with a growing
+private market segment contributed to the re-stabilization and
+growth of markets in China. For the healthcare industry as a
+whole, the trend towards consolidation continued in fiscal 2019,
+leading to higher utilization rates at customers' sites, which are
+counterbalancing procedure volume growth in developed mar-
+kets. Competition among the leading healthcare companies re-
+mained at a high level. For fiscal 2020, Siemens Healthineers
+expects the imaging and advanced therapies equipment markets
+to stay on a moderate growth path, while the diagnostics market
+is expected to grow clearly. Siemens Healthineers' markets will
+continue to benefit from the long-term trends mentioned above,
+but are restricted by public spending constraints and by consoli-
+dation among healthcare providers. On a geographic basis,
+Siemens Healthineers expects markets in the region Asia, Australia
+to be the major growth driver. For China, Siemens Healthineers
+expects continuing strong growth due to rising government
+spending on healthcare, promotion of the private segment and
+wider access to healthcare services nationwide, pronounced ef-
+fects of an aging population, and a growing incidence of chronic
+diseases. Growth in the U.S. is expected to be held back by con-
+tinued pressure to increase utilization of existing equipment,
+reduced reimbursement rates and uncertainty about policies. For
+Europe, Siemens Healthineers expects slight growth, with a likely
+increased emphasis on equipment replacement and business
+with large customers such as hospital chains.
+increases in costs related to its Atellica Solution platform. Sev-
+erance charges were €57 million in fiscal 2019 and €96 million
+in fiscal 2018. The order backlog for Siemens Healthineers was
+€18 billion at the end of the fiscal year, of which €6 billion are
+expected to be converted into revenue in fiscal 2020.
+12 Combined Management Report
+12,749
+11,875
+Revenue
+10,227
+Earnings before taxes (EBT)
+ROE (after taxes)
+2018
+2019
+(in millions of €)
+Fiscal year
+These results were achieved in markets that grew substantially
+in fiscal 2019 in terms of installed capacity due to higher demand
+in both the onshore and offshore markets, with the latter grow-
+ing faster. Market volume in euros was subject to adverse price
+development. On a regional basis, growth in the onshore busi-
+ness was again driven primarily by China where the largest na-
+tional wind market in the world for onshore generation remains
+largely closed to foreign manufacturers, and secondarily by the
+U.S. In contrast, the onshore market in Germany declined signifi-
+cantly. In the offshore market, growth was driven by the U.K. and
+China. SGRE expects global onshore wind installations to grow
+Order intake increased in all businesses year-over-year due to a
+higher volume from large orders. Sharp order growth in Asia,
+Australia included two large orders for offshore wind-farms in-
+cluding service in Taiwan totaling €2.3 billion. SGRE also re-
+corded sharply higher orders in the Americas region, driven by
+several large orders in the onshore business mainly in the U.S. In
+contrast, orders came in substantially lower in the region Europe,
+C.I.S., Africa, Middle East which in the prior year had included an
+order for an offshore wind-farm, including service, in the U.K.
+worth €1.3 billion. Revenue was up significantly year-over-year,
+with substantial growth in the offshore and service businesses
+and clear growth in the onshore business. On a geographic basis,
+revenue rose substantially in Europe, C.I.S., Africa, Middle East,
+while it declined clearly in the other two reporting regions.
+Adjusted EBITA was on the prior-year level as positive effects
+from productivity improvements and higher revenue were offset
+by price declines, a less favorable project mix and higher ex-
+penses for integration costs and capacity adjustments including
+severance. Severance charges were €32 million in fiscal 2019 and
+€77 million in fiscal 2018. SGRE's order backlog was €26 billion at
+end of the fiscal year, of which €9 billion are expected to be con-
+verted into revenue in fiscal 2020.
+Financial Services supports its customers' investments with leas-
+ing solutions and equipment, project and structured financing in
+the form of debt and equity investments. Based on its comprehen-
+sive financing know-how and specialist technology expertise in
+the areas of Siemens businesses, Financial Services provides finan-
+cial solutions for Siemens customers as well as other companies.
+Orders and revenue showed strong and similar development in
+fiscal 2019: clear growth; increases in all businesses led by the
+imaging business, and growth in all three reporting regions,
+notably including in China and in the U.S. which benefited from
+positive currency translation effects. Adjusted EBITA was
+clearly up compared to fiscal 2018, with increases in the imag-
+ing and advance therapies businesses. The diagnostics business
+recorded lower Adjusted EBITA year-over-year due mainly to
+A.3.8 Financial Services
+4.7%
+Adjusted EBITA margin
+7%
+12%
+7%
+12%
+0%
+483
+482
+Adjusted EBITA
+9,122
+5.3%
+632
+Revenue
+Adjusted EBITA
+Adjusted EBITA margin
+Revenue (location of customer)
+Actual
+17%
+1%
+3%
+958
+10.9%
+11,025
+8,821
+12,894
+8,916
+983
+11.0%
+Adjusted EBITA
+Adjusted EBITA margin
+Revenue
+Orders
+Fiscal year
+2018
+2019
+(in millions of €)
+Mobility's R&D strategy is focused on providing maximum avail-
+ability of trains and infrastructures, thereby increasing its cus-
+tomers' return on investment and improving passenger experi-
+ence. Decarbonization and seamlessly connected (e-)mobility
+are key factors for the future of transportation. Mobility's major
+R&D areas include the development of efficient vehicle plat-
+forms with optimized lifecycle cost and maximum customization
+flexibility; eco-friendly, alternative power supplies for trains
+(batteries, fuel cells, dual mode) and trucks (eHighway); digital
+services for railways via its Railigent application suite powered
+by MindSphere; "signaling in the cloud", a new system architec-
+ture for rail infrastructure and loT/cloud-based concepts; solu-
+tions for higher automated and autonomous driving for rail and
+road; and digital technologies and solutions like cyber security,
+connectivity, digital twin, Al, additive manufacturing or inter-
+modal apps and platforms. Mobility's investments focus mainly
+on maintaining or enhancing its production facilities and on
+meeting project demands.
+Trends in Mobility's markets are characterized by the need for
+solutions that make daily mobility simpler, faster, and more flex-
+ible, reliable and affordable. Cities and national economies face
+the challenge of reducing the costs, space requirements, noise
+and CO2 emissions of transportation. The pressure on mobility
+providers and policymakers to meet these mobility and transpor-
+tation needs is growing as urban populations are expected to
+continuously rise.
+Combined Management Report
+10
+10
+The Strategic Company Mobility combines all Siemens businesses
+in the area of passenger and freight transportation, including rail
+vehicles, rail automation systems, rail electrification systems,
+road traffic technology, digital solutions and related services. It
+also provides its customers with consulting, planning, financing,
+construction, service and operation of turnkey mobility systems.
+Moreover, Mobility offers integrated mobility solutions for net-
+working of different types of traffic systems. It sells its products,
+systems and solutions through its worldwide network of sales
+units. The principal customers of Mobility are public and state-
+owned companies in the transportation and logistics sectors, so
+its markets are driven primarily by public spending. Customers
+usually have multi-year planning and implementation horizons,
+and their contract tenders therefore tend to be independent of
+short-term economic trends. Mobility's principal competitors are
+multinational companies. Consolidation among Mobility's com-
+petitors is continuing. In February 2019, the European Commis-
+sion announced its decision to prohibit the proposed combination
+of Alstom SA, France (Alstom) with Siemens' mobility businesses.
+In August 2019, a large Chinese competitor signed a contract to
+acquire a locomotives business in Germany, enabling the Chinese
+competitor to gain a foothold in Europe, in line with its ambitious
+growth and internationalization strategy. If this transaction were
+to be carried out, the above described sequence of events would
+probably lead to significantly increased competitive pressure for
+all European rail transport businesses, including those of Mobility.
+A.3.5 Mobility
+% Change
+Comp.
+16%
+0%
+business. Revenue in the rolling stock business remained close to
+the prior-year level due to unfavorable timing effects related to
+the execution of large rail projects, which the business began to
+ramp up late in the fiscal year. On a geographic basis, revenue
+growth in the Asia, Australia region was held back by slight de-
+clines in Europe, C.I.S., Africa, Middle East and the Americas.
+Mobility continued to operate with high profitability in fiscal
+2019, including a strong contribution to Adjusted EBITA from the
+services business. Severance charges were €20 million, up from
+€14 million in fiscal 2018. Mobility's order backlog was €33 bil-
+lion at the end of the fiscal year, of which €8 billion are expected
+to be converted into revenue in fiscal 2020.
+Order growth reflected overall strong markets for Mobility in
+fiscal 2019, with different dynamics among the regions. Market
+development in Europe was characterized by continuing awards
+of mid-size and large orders, particularly in the U.K., Germany
+and Austria. Within the C.I.S., large projects for high-speed trains
+and services were awarded in Russia. Demand in the Middle East
+and Africa was held back by ongoing uncertainties related to
+budget constraints and political climates. In the Americas region,
+stable investment activities were driven by demand for mainline
+and urban transport, especially in the U.S. and Canada. Within
+the Asia, Australia region, Chinese markets saw ongoing invest-
+ments in high-speed trains, urban transport, freight logistics and
+rail infrastructure, while India continues to invest in modernizing
+the country's transportation infrastructure. For fiscal 2020, we
+expect markets served by Mobility to grow moderately with in-
+creasing demand for digital solutions. Overall, rail transport and
+intermodal mobility solutions are expected to remain a focus as
+urbanization continues to progress around the world. In emerg-
+ing countries, rising incomes are expected to result in greater
+demand for public transport solutions.
+Orders at Mobility grew to a record high on a sharp increase in
+volume from large orders, which the Strategic Company won
+across the businesses, most notably in the rolling stock and the
+customer services businesses. Among the major contract wins
+were a €1.6 billion order for metro trains in the U.K., a €1.2 bil-
+lion contract for high-speed trains including maintenance in
+Russia, a €0.8 billion order for trainsets including service in
+Canada, a €0.7 billion contract for diesel-electric locomotives
+including a service agreement in the U.S. and two orders in
+Germany worth €0.4 billion and €0.3 billion, respectively, for
+regional multiple-unit trainsets. In fiscal 2018, Mobility also gained
+a number of significant contracts across the regions. Revenue
+grew slightly as double-digit growth in the customer services
+business was largely offset by a decline in the rail infrastructure
+2,221
+16.5%
+2,461
+17.0%
+13,425
+14,517
+Actual
+9%
+14,506
+15,853
+Fiscal year
+2018
+% Change
+Comp.
+7%
+6%
+2019
+R&D activities at Siemens Healthineers are ultimately geared to-
+wards delivering innovative, sustainable solutions to its custom-
+ers while safeguarding its competitiveness. Particularly in the
+field of artificial intelligence, it has further expanded its activities
+and has more than 40 products and applications on the market
+that further improve its customers' productivity, while enabling
+clinical decisions to be more precise and tailored to the individual
+patient. Artificial intelligence-based technology is also used in
+sample handling and classification in its Atellica Solution labora-
+tory system. As part of growing its portfolio of digital services,
+the systematic expansion of the cloud-based Teamplay collabo-
+ration platform is a major step to support customers in their tran-
+sition to outcome-focused care. In the future, it will cover clinical,
+operational and financial activities and functions in the health-
+care field, and connect healthcare providers and solution pro-
+viders as well as bringing together their data, applications
+and services. In addition to continually updating its portfolio,
+Siemens Healthineers also improves existing products and solu-
+tions. Siemens Healthineers focuses its investments mainly on
+enhancing competitiveness and innovation. The main capital
+expenditures were for spending for factories to expand manu-
+facturing and technical capabilities, in particular in China and
+the U.S., and for additions to intangible assets, including capi-
+talized development expenses for further products related to
+Atellica Solution.
+to deliver better outcomes at lower costs, regulatory schemes
+around the world increasingly seek to introduce new remunera-
+tion models for healthcare services, leading to a shift of health-
+care reimbursement systems away from a pay-per-procedure
+model towards an outcome-based model. Most developed coun-
+tries are currently considering regulatory changes within their
+healthcare systems.
+The addressable markets of Siemens Healthineers are shaped by
+several major trends. The first is demographic, in particular the
+growing and aging global population. This development poses
+major challenges for global healthcare systems and, at the same
+time, offers opportunities as the demand for cost-efficient
+healthcare solutions continues to intensify. The second trend is
+the economic development in emerging countries, which opens
+up improved access to healthcare for many people. As the middle
+class continues to grow, significant investment in the expansion
+of private and public healthcare systems will persist, driving over-
+all demand for healthcare products and services and hence mar-
+ket growth. The third trend is the increase in chronic diseases as
+a consequence of an aging population as well as environmental
+and lifestyle-related changes. This development creates addi-
+tional pressure on health systems and leads to increased costs to
+address these challenges. The fourth global trend, the transfor-
+mation of healthcare providers, is resulting from a combination
+of societal and market forces. These are driving healthcare pro-
+viders to operate and organize their businesses differently.
+Increasing cost pressure on the healthcare sector is prompting the
+introduction of new remuneration models for healthcare ser-
+vices, such as value-based rather than treatment-based reim-
+bursement. Digitalization and artificial intelligence are likely to be
+key enablers for healthcare providers as they increasingly focus
+on enhancing the overall patient experience, with better out-
+comes and overall reduction in cost of care. This development is
+driven partly by society's increasing resistance to healthcare
+costs, payers' increasing professionalization, burdens from
+chronic disease and rapid scientific progress. As a result, health-
+care providers are consolidating into networked structures, result-
+ing in larger clinic and laboratory chains, often operating interna-
+tionally, which act increasingly like large corporations. Applying
+this industrial logic to the healthcare market can lead to system-
+atic improvements in quality, while at the same time reducing
+costs. Driven by the need of healthcare systems worldwide
+continuum, from prevention and early detection to diagnosis,
+treatment and follow-up care. Customers range from public and
+private healthcare providers to pharmaceutical companies and
+clinical research institutes. Competition in the imaging and
+advanced therapies businesses consists mainly of a small number
+of large multinational companies, while the diagnostics market
+is fragmented with a variety of global players that compete inter-
+nationally across market segments, but that also face competi-
+tion from several regional players and specialized companies in
+niche technologies. The business activities of Siemens Health-
+ineers are to a certain extent resilient to short-term economic
+trends as large portions of its revenue stem from recurring busi-
+ness. They are, however, directly and indirectly dependent on
+trends in healthcare markets and on developments in health pol-
+icy, including reimbursement, and on geopolitical developments,
+including regulatory topics, around the world.
+11
+Combined Management Report
+Siemens as majority shareholder holds 85% of the shares of the
+publicly listed Siemens Healthineers AG, Germany (Siemens
+Healthineers). Siemens Healthineers is a global provider of tech-
+nology to the healthcare industry. It provides medical technology
+and software solutions as well as clinical consulting services,
+supported by an extensive set of training and service offerings.
+In its imaging business, the most important products are equip-
+ment for magnetic resonance, computed tomography, X-ray sys-
+tems, molecular imaging and ultrasound. Its diagnostics business
+offers in-vitro diagnostic products and services to healthcare
+providers in laboratory, molecular and point-of-care diagnostics.
+The products in its advanced therapies business facilitate image-
+guided minimally invasive treatments, in areas such as cardiol-
+ogy, interventional radiology, surgery and radiation oncology.
+This comprehensive portfolio supports customers along the care
+A.3.6 Siemens Healthineers
+(in millions of €)
+Orders
+19.1%
+8%
+11%
+Sep 30,
+(1,135)
+(2,028)
+(318)
+(215)
+Eliminations, Corporate Treasury
+and other reconciling items
+Reconciliation to Consolidated
+Financial Statements
+(6.2)%
+(1,164)
+(1,133)
+(423)
+(264)
+Centrally carried pension expense
+Amortization of intangible assets
+acquired in business combinations
+77%
+(305)
+(71)
+(1.3)%
+Adjusted EBITA margin
+Adjusted EBITA
+11%
+Supported by a recovery in commodity-related markets, orders
+and revenue showed broad-based growth year-over-year with
+strongest increases in the mechanical drives business. Overall,
+Portfolio Companies businesses made good progress in achieving
+their targets. Adjusted EBITA improved in all fully consolidated
+units and turned positive in total, mainly driven by the large
+drives applications business. The result from equity investments
+in total also improved slightly, though it was negative in both
+periods under review. Severance charges decreased to €14 mil-
+lion, from €86 million in fiscal 2018. Portfolio Companies' order
+backlog was €5 billion at the end of the fiscal year, of which
+12%
+-
+15
+(1)%
+633
+19.7%
+46,086 46,495
+12,021 11,254
+therein: Germany
+Middle East
+Europe, C.I.S., Africa,
+(in millions of €)
+In the Asia, Australia region, orders also rose significantly due to
+growth in nearly all industrial businesses. The primary growth
+driver was SGRE, which recorded a sharply higher volume from
+large orders, including two large orders for offshore wind-farms
+including service in Taiwan totaling €2.3 billion. Orders for Mo-
+bility dropped substantially compared to the prior year. Clear
+growth in China included a majority of industrial businesses.
+growth in nearly all industrial businesses was led by SGRE and
+Mobility with particularly sharp increases. The pattern of order
+development in the U.S. was largely the same as in the Americas
+region.
+% Change
+Comp.
+Actual
+Fiscal year
+2018
+2019
+Orders (location of customer)
+Positive currency translation effects added one percentage point
+each to order and revenue growth; portfolio transactions had
+only minimal effects on volume growth year-over-year. The re-
+sulting ratio of orders to revenue (book-to-bill) for Siemens in
+fiscal 2019 was a strong 1.13, again well above 1. The order back-
+log was €146 billion as of September 30, 2019, a new high.
+A.4.1 Orders and revenue by region
+A.4 Results of operations
+Combined Management Report
+4,930
+The negative swing in Corporate items was mainly due to large
+positive effects in fiscal 2018 – the gain of €900 million resulting
+from the transfer of Siemens' shares in Atos SE to Siemens Pen-
+sion-Trust e. V. and the gain of €655 million from the sale of
+OSRAM Licht AG shares. These effects substantially outweighed
+a positive result in fiscal 2019 from the measurement of a major
+asset retirement obligation, which was previously reported in
+Centrally managed portfolio activities. Severance charges within
+Corporate items were €99 million (€159 million in fiscal 2018).
+Revenue
+A.3.10 Reconciliation to
+Consolidated Financial Statements
+Mitsubishi-Hitachi Metals Machinery (MHMM) and Siemens AG
+reached an agreement in September 2019, that MHMM will ac-
+quire Siemens' stake in Primetals Technologies. Closing of the
+transaction is subject to customary conditions and is expected by
+the beginning of calendar 2020.
+Beginning with fiscal 2020, the equity investments Ethos Energy
+Group Limited and Voith Hydro Holding GmbH & Co. KG, the sub-
+sea business, and the majority of the process solutions business
+will be transferred to the Operating Company Gas and Power. If
+this organizational structure had already existed in fiscal 2019,
+Portfolio Companies would have posted orders of €4.746 billion,
+revenue of €4.558 billion and Adjusted EBITA of €(115) million.
+Markets for Portfolio Companies are generally impacted by rising
+uncertainties regarding geopolitical and economic develop-
+ments, which weaken investment sentiment. Although the broad
+range of businesses are operating in diverse markets, overall,
+moderate growth is expected in the coming years for the main
+markets served by the Portfolio Companies.
+€3 billion are expected to be converted into revenue in fiscal
+2020. Regarding Portfolio Companies' at-equity investments, vol-
+atile results are expected in coming quarters.
+Portfolio Companies consists of a broad range of businesses,
+which at the end of fiscal 2019 mainly included the following fully
+consolidated units: application specific solutions (process solu-
+tions), electric motors, converters and generators (large drive appli-
+cations), gear units and couplings (mechanical drives) and sorting
+technology and solutions for mail, parcel, baggage and cargo han-
+dling (Siemens Logistics). Within the industries served by fully con-
+solidated units, customer demand generally shows a delayed re-
+sponse to changes in the overall economic environment. The results
+of fully consolidated units are strongly dependent, however, on
+customer investment cycles in their key industries. In commodi-
+ty-based industries such as oil and gas or mining, these cycles are
+driven mainly by commodity price fluctuations. The broad range of
+fully consolidated units and their heterogenous industrial customer
+base is reflected in its sales and marketing channels. While the me-
+chanical drives business and Siemens Logistics require a dedicated
+sales approach based on in-depth understanding of specific indus-
+tries and customer requirements, the large drives applications busi-
+ness and the process solutions business leverage the shared regional
+sales organization employed by the Siemens Operating Companies.
+Voith Hydro Holding GmbH & Co. KG). Unrealized potential within
+these businesses, which are managed separately, requires adjust-
+ment in their approach with defined measures including internal
+re-organization, digitalization, cost improvements, and optimiz-
+ing procurement, production and service activities. After achiev-
+ing certain threshold performance targets, businesses may trans-
+fer to Siemens industrial businesses, combine with external
+business from the same industry or enter into an external private
+equity partnership.
+Combined Management Report
+14
+Portfolio Companies was formed in fiscal 2019 and consists
+largely of businesses formerly included in the Divisions Process
+Industries and Drives (mechanical drives, process solutions, large
+drives applications) and Energy Management (subsea), along
+with certain other activities that were formerly reported in Cen-
+trally managed portfolio activities (Siemens Logistics business and
+the at-equity investments: Valeo Siemens eAutomotive GmbH,
+Primetals Technologies Limited, Ethos Energy Group Limited and
+A.3.9 Portfolio Companies
+Financial Services is geared to Siemens' industrial businesses and
+its markets. As such Financial Services is influenced by the busi-
+ness development of the markets served by our industrial busi-
+nesses, among other factors. Financial Services will continue to
+focus its business scope on areas of intense domain know-how.
+Financial Services again delivered strong earnings before taxes.
+While the equity business recorded higher results, the result from
+the debt business declined, amongst others due to higher credit
+hits. Total assets increased along with a growth in debt business
+and in part due to positive currency translation effects.
+(in millions of €)
+Total assets
+5,526
+2018
+2019
+29,901
+Profit
+Fiscal year
+27,628
+631
+3%
+5,569
+5,806
+Orders
+(562)
+Corporate items
+140
+145
+(in millions of €)
+% Change
+Comp.
+Actual
+Fiscal year
+2018
+2019
+(in millions of €)
+2018
+2019
+Real Estate Services
+4%
+Additions to intangible assets and property, plant and equipment
+from continuing operations totaled €2.6 billion in fiscal 2019.
+Within the industrial Businesses, ongoing investments related
+mainly to technological innovations; maintaining and extending
+our capacities for designing, manufacturing and marketing new
+solutions including strategic localization; improving productivity;
+and replacements of fixed assets. These investments amounted
+to €2.1 billion in fiscal 2019. The remaining portion related mainly
+to Real Estate Services, including significant amounts for projects
+such as new office buildings in Germany. Real Estate Services
+is responsible for uniform and comprehensive management of
+With regard to capital expenditures for continuing operations, we
+expect a significant increase in fiscal 2020. In the coming years,
+up to €0.6 billion are to be invested in "Siemensstadt 2.0". This
+new project aims to transform Siemens' existing industrial area
+in Berlin into a modern urban district supporting a diverse range
+of purposes, including strengthening key technologies. Further
+investments are planned in relation to the Siemens Campus Er-
+langen. In addition, we plan to invest significant amounts in com-
+ing years in attractive innovation fields through Siemens' global
+venture capital unit Next47.
+Company real estate worldwide and supports the Industrial Busi-
+nesses and corporate activities with customer-specific real estate
+solutions; excluded are Siemens Healthineers, SGRE and the
+carved-out real estate of Mobility.
+The loss outside the Industrial Businesses came in substantially
+higher year-over-year despite a number of positive develop-
+ments, including a positive effect related to the measurement of
+a major asset retirement obligation, a lower loss at Portfolio Com-
+panies, lower Centrally carried pension expenses and higher in-
+come from Corporate Treasury activities. However, the positive
+factors were substantially larger in fiscal 2018, most notably a
+€0.9 billion gain related to the transfer of Siemens' shares in
+Atos SE to Siemens Pension-Trust e. V. and a €0.7 billion gain from
+the sale of shares in OSRAM Licht AG.
+With our ability to generate positive operating cash flows, our
+total liquidity (defined as cash and cash equivalents plus current
+interest-bearing debt securities) of €13.7 billion, our unused lines
+of credit, and our credit ratings at year-end, we believe that we
+have sufficient flexibility to fund our capital requirements. Also
+in our opinion, our operating net working capital is sufficient for
+our present requirements.
+Beginning with fiscal 2020, Siemens adopts IFRS 16, Leases,
+applying the modified retrospective approach as described in
+more detail in NOTE 2 in B.6 NOTES TO CONSOLIDATED FINANCIAL
+STATEMENTS. As a result, the shift of lease payments from cash
+flows from operating activities to cash flows from financing ac-
+tivities will have a positive effect on Free cash flow.
+Combined Management Report
+The Free cash flow for the Industrial Businesses amounted to
+€8,000 millions, resulting in a cash conversation rate of 0.89.
+Investing activities
+23
+Adjusted EBITA Industrial Businesses rose slightly to €9.0 bil-
+lion, due mainly to double-digit growth in Siemens Healthineers
+on the strength of its imaging and advanced therapies busi-
+nesses and to a lesser extent to a moderate increase in Mobility.
+These increases were partly offset by declines in Gas and Power,
+due mainly to lower capacity utilization and price declines, and
+in Smart Infrastructure, due mainly to negative effects related
+to grid control projects at the beginning of fiscal 2019. Adjusted
+EBITA in Digital Industries came in close to the strong prior-year-
+level, despite increasing headwinds in the markets for its
+short-cycle businesses in the course of the fiscal year. Overall,
+Adjusted EBITA Industrial Businesses was burdened by severance
+charges of €0.5 billion, substantially lower than a year earlier.
+Approximately half of these severance charges were booked at
+Gas and Power. As planned, we further increased R&D expenses
+in our industrial businesses, in order to strengthen our capacity
+for innovation.
+In fiscal 2019, as part of our new "Vision 2020+" company strat-
+egy, we set Siemens' future course by introducing a new organi-
+zational structure consisting of three Operating Companies
+Digital Industries, Smart Infrastructure and Gas and Power - and
+three Strategic Companies: Mobility, Siemens Healthineers and
+SGRE. With this new setup, we are deepening our ownership cul-
+ture and giving our businesses considerably more entrepreneur-
+ial freedom and responsibility under the strong Siemens brand.
+"Vision 2020+" is primarily a strategic growth concept aimed at
+further improving the profitability of Siemens' Companies through
+innovation and efficiency gains. As part of "Vision 2020+," we
+have set ourselves even more ambitious targets for revenue
+growth and the Adjusted EBITA margin ranges of our Companies.
+With "Vision 2020+," we also intend to further strengthen our
+portfolio through investments in new growth fields such as loT
+integration services, distributed energy management and solu-
+tions for electric mobility infrastructure. As part of this strategy,
+we made several acquisitions during the fiscal year, the most im-
+portant being Mendix, a pioneer and leader in cloud-native low-
+code application development. The acquisition of Mendix and
+our entry into the loT integration services business is enabling us
+to further expand our market leadership in industrial digitaliza-
+tion. As a next step of "Vision 2020+," we announced our plan to
+carve out Gas and Power and to publicly list the business under
+the name Siemens Energy by the end of fiscal 2020, to give it
+even more independence and entrepreneurial freedom in a rap-
+idly changing market environment. As part of this transaction,
+Siemens plans to contribute its stake in SGRE to Siemens Energy.
+As a result, the next generation of Siemens will be made up of
+three Siemens companies: the industrial Siemens, comprising
+Digital Industries, Smart Infrastructure and Mobility; Siemens
+Healthineers, which we successfully listed publicly in fiscal 2018;
+and Siemens Energy.
+Despite increasing macroeconomic headwinds in the course of
+the fiscal year, particularly for our short-cycle businesses, we
+again achieved strong results - also in most of our industrial busi-
+nesses and in Financial Services - and reached all the targets set
+for our primary measures for fiscal 2019. We achieved revenue
+growth of 3% net of currency translation and portfolio effects.
+We delivered basic EPS from net income of €6.41, which included
+impacts from severance charges amounting to (€0.52) per share.
+At 11.1%, return on capital employed (ROCE) was in the double-
+digit range; and our capital structure ratio came in at 0.6.
+Orders rose 7% year-over-year to €98.0 billion, for a book-to-bill-
+ratio of 1.13, thus fulfilling our expectation of a ratio above 1.
+Five of our six industrial businesses increased orders year-over-
+year. These increases were led by double-digit growth at Mobil-
+ity, which again won significant contracts, such as for the new
+generation of trains for the London Tube and for Velaro RUS
+high-speed trains, including services, in Russia, and recorded its
+highest order intake ever. Order growth in Gas and Power was
+driven by the new-unit business and included significantly higher
+volume from large orders year-over-year. Siemens Healthineers
+and Smart Infrastructure achieved broad-based order growth, the
+former including particularly strong demand for its imaging solu-
+tions, the latter including large contract wins in its solutions and
+services business. Orders in Digital Industries came in slightly
+lower year-over-year due mainly to increasingly adverse market
+conditions in key manufacturing industries. Excluding currency
+translation and portfolio effects, orders for Siemens rose 6%.
+Revenue also was higher in five of our industrial businesses and
+rose to €86.8 billion, up 5% year-over-year. The strongest
+increase came from SGRE, which posted double-digit growth,
+driven by its offshore and service businesses. Siemens
+Healthineers achieved clear revenue growth on increases in all
+businesses, particularly in its imaging business. Following weak
+order intake in prior years, revenue at Gas and Power came in
+moderately lower. Excluding currency translation and portfolio
+effects, revenue for Siemens grew 3%. For fiscal 2019, we had
+forecast moderate growth in revenue, net of currency translation
+and portfolio effects.
+5,845
+The Adjusted EBITA margin of our Industrial Businesses was 10.9%,
+down from 11.1% in fiscal 2018. Four of our six industrial busi-
+nesses were within their margin range or – as in the case of Smart
+Infrastructure close to it. Excluding severance charges, Adjusted
+EBITA margin Industrial Businesses was 11.5%, clearly in the range
+of 11% to 12%, which we had expected it to reach. Financial Ser-
+vices, which is reported outside our Industrial Businesses, con-
+cluded another strong fiscal year with a return on equity after tax
+of 19.1%, which was within its margin range.
+24
+Combined Management Report
+A.7 Overall assessment of the economic position
+(27)
+(2,610)
+8,456
+The change in receivables from financing activities of SFS
+resulted from growth in SFS' debt business.
+Cash inflows from other disposals of assets mainly included
+disposals of above-mentioned eligible collateral and to a minor
+extent proceeds from real estate disposals, from the sale of busi-
+nesses or from other investments.
+22 Combined Management Report
+Cash inflows from the re-issuance of treasury shares and other
+transactions with owners mainly included €1.1 billion from the
+exercise of warrants in connection with US$1.5 billion bonds
+with warrant units.
+Cash outflows from the change in short-term debt and other
+financing activities mainly included repayments of loans from
+banks.
+We report Free cash flow as a supplemental liquidity measure:
+Free cash flow
+(in millions of €)
+Cash flows from operating activities
+Additions to intangible assets and property, plant and equipment
+Free cash flow
+Continuing
+operations
+8,482
+5,872
+Fiscal year 2019
+Discontinued
+operations
+Continuing and
+discontinued operations
+Cash outflows for purchase of investments and financial assets
+for investment purposes primarily included additions of assets
+eligible as central bank collateral and payments related to invest-
+ments such as debt or equity investments related to certain projects.
+(27)
+(2,610)
+Net income was €5.6 billion, down 8% year-over-year, and basic
+EPS from net income declined by €0.71 to €6.41. These declines
+were due mainly to the aforementioned largely tax-free portfolio
+gains, which contributed €1.87 per share to basic EPS from net
+income in fiscal 2018. Basic EPS from net income in fiscal 2019 was
+burdened by severance charges amounting to €0.52 per share.
+With basic EPS from net income excluding severance charges of
+€6.93, we thus met our forecast, which was to achieve basic EPS
+from net income excluding severance charges in the range of
+€6.30 to €7.00.
+In addition to the above-mentioned expectations for our seg-
+ments, we expect our fully-consolidated units within Portfolio
+Companies to be profitable, while its equity investments are ex-
+pected to be volatile and to continue to generate losses. We an-
+ticipate that Real Estate Services will continue with real estate
+disposals depending on market conditions. Expenses for Corpo-
+rate items and Centrally carried pension expenses are estimated
+to be in a range of approximately €1.2 billion to €1.4 billion in
+fiscal 2020, including significant costs associated with the carve-
+out of Gas and Power. Amortization of intangible assets acquired
+in business combinations, which was €1.1 billion in fiscal 2019,
+and Eliminations, Corporate Treasury and other reconciling
+items, which were a negative €0.2 billion in fiscal 2019, are
+expected to remain on similar levels, respectively, in fiscal 2020.
+We anticipate that net income and corresponding basic EPS will
+be impacted by sharply higher tax expenses due largely to the
+planned carve-out of Gas and Power.
+We evaluate our capital structure using the ratio of industrial net
+debt to EBITDA. For fiscal 2019, this ratio was 0.6, compared to
+0.4 in fiscal 2018. We thus reached our forecast, which was to
+achieve a ratio of up to 1.0.
+Smart Infrastructure expects to achieve moderate comparable
+revenue growth in fiscal 2020, driven by its longer-cycle solutions
+and service business, even as its short-cycle industrial products
+business faces headwinds from a market slowdown. Adjusted
+EBITA margin is expected at 10% to 11%.
+Economic cycles have limited impact on the markets for Mobility,
+which anticipates mid-single-digit comparable revenue growth in
+fiscal 2020 driven by its rolling stock business, which ramped up
+several large rail projects towards the end of fiscal 2019. Adjusted
+EBITA margin is expected at 10% to 11%.
+Siemens Healthineers expects to achieve comparable revenue
+growth in a mid-single-digit range in fiscal 2020, led by its imag-
+ing and advanced therapies businesses. Adjusted EBITA margin
+Combined Management Report
+for Healthineers excluding severance charges and acquisition-
+related transaction costs is expected at 17% to 18% in fiscal 2020.
+While energy markets are assumed to remain challenging with
+some signs of stabilization, Gas and Power expects a moderate
+comparable revenue growth particularly including execution
+on its large order backlog. Adjusted EBITA margin is expected
+at 2% to 5%.
+SGRE expects comparable revenue growth in the low-single-digit
+range in fiscal 2020, driven mainly by the onshore business.
+Adjusted EBITA is expected to be impacted by €200 million in
+integration and restructuring costs. As a result, Adjusted EBITA
+margin is expected to come in below its target margin range of
+7% to 11% in fiscal 2020.
+Financial Services is expected to achieve a return on equity (ROE)
+(after tax) in its margin range of 17% to 22% in fiscal 2020.
+Revenue growth
+We expect the Siemens Group to again achieve moderate growth
+in comparable revenue, net of currency translation and portfolio
+effects, and a book-to-bill ratio above 1 in fiscal 2020.
+As of September 30, 2019, our order backlog totaled €146 bil-
+lion, and we expect conversion from the backlog to strongly
+support revenue growth in fiscal 2020. From Siemens' backlog,
+we expect to convert approximately €50 billion of past orders
+into current revenue in fiscal 2020. For conversion of order
+backlog to revenue for our respective segments, see → A.3 SEG-
+MENT INFORMATION.
+Profitability
+As previously announced, we plan to carve out Gas and Power
+and to contribute our 59% stake in SGRE to create a new entity,
+Siemens Energy. For this entity, we plan a spin-off and public
+listing before the end of fiscal 2020, with Siemens Energy becom-
+ing part of discontinued operations prior to the spin-off. We ex-
+pect this to result in substantial positive effects within discontin-
+ued operations, including a substantial gain at spin-off, which
+cannot yet be reliably quantified.
+For our EPS guidance we assume these positive effects will offset
+carve-out costs and tax expenses related to the spin-off and
+Group-wide severance charges for the fiscal year. Taken together
+with our previously mentioned expectations for fiscal 2020, we
+expect this to result in basic EPS from net income in the range
+from €6.30 to €7.00 compared to €6.41 in fiscal 2019.
+Our forecast for net income and corresponding basic EPS takes into
+account a number of additional factors. We expect the solid proj-
+ect execution to continue in fiscal 2020, and we plan to slightly
+increase R&D expenses year-over-year to strengthen our capacity
+for innovation. Severance charges, which were €619 million in fis-
+cal 2019, are expected to be on a similar level in fiscal 2020.
+Capital efficiency
+Our long-term goal is to achieve a ROCE in the range of 15% to
+20%. Due mainly to factors currently influencing net income and
+average capital employed, particularly recent acquisitions, we
+expect ROCE to continue to show a double-digit result in fiscal
+2020 but to come in below our target range. In addition, we ex-
+pect effects on ROCE related to the above-mentioned planned
+spin-off and public listing of Siemens Energy, which cannot yet
+be reliably quantified.
+Cash outflows from acquisitions of businesses, net of cash
+acquired, mainly included payments of €0.5 billion related to the
+acquisition of Mendix.
+Digital Industries expects fiscal 2020 comparable revenue to
+remain level compared to the prior year, outperforming the
+broader market, despite continued weakness in its most import-
+ant short-cycle markets, particularly the automotive and ma-
+chine building industries. Adjusted EBITA margin is expected at
+17% to 18%.
+Segments
+Based on these assumptions and exclusions, our outlook is as
+follows:
+We are exposed to currency translation effects, mainly involving
+the U.S. dollar, the British pound and currencies of emerging
+markets, particularly the Chinese yuan. While we expect volatil-
+ity in global currency markets to continue in fiscal 2020, we have
+improved our natural hedge on a global basis through geo-
+graphic distribution of our production facilities in the past. Nev-
+ertheless, Siemens is still a net exporter from the Eurozone to the
+rest of the world, so a weak euro is principally favorable for our
+business and a strong euro is principally unfavorable. In addition
+to the natural hedging strategy just mentioned, we also hedge
+currency risk in our export business using derivative financial
+instruments. We expect these steps to help us limit effects on
+income related to currency in fiscal 2020. Based on currency ex-
+change rates as of the beginning of November 2019, we expect
+negative currency translation effects, reducing nominal order
+and revenue growth slightly in fiscal 2020. We anticipate even
+smaller currency-related impacts on the Adjusted EBITA margin
+for our Industrial Businesses in fiscal 2020.
+Free cash flow from continuing and discontinued operations for
+fiscal 2019 was €5.8 billion, level with the prior year.
+We intend to continue providing an attractive return to share-
+holders. The Siemens Managing Board, in agreement with the
+Supervisory Board, proposes a dividend of €3.90 per share, up
+from €3.80 a year earlier.
+Combined Management Report
+25
+26
+A.8 Report on expected developments
+and associated material opportunities and risks
+A.8.1 Report on
+expected developments
+ROCE for fiscal 2019 was 11.1%, down from 12.6% in fiscal 2018.
+This decline was due to a combination of lower net income and
+an increase in average capital employed, with the latter being im-
+pacted by recent acquisitions, among them Mendix. We thus met
+our forecast, which was to achieve a double-digit result but to
+come in below the lower end of our long-term goal of 15% to 20%.
+A.8.1.1 WORLDWIDE ECONOMY
+The main strains on the global economy are expected to be the
+continued U.S.-China trade conflict and remaining uncerta-
+inties from Brexit. Yet fears of a global recession, fueled in part
+by yield curve inversions in the U.S. in calendar 2019, seem
+overdone. In most countries domestic demand should remain
+sound with unemployment on a low level, inflation modest and
+wages increasing while monetary policy has again taken a more
+supportive stance.
+Despite some moderation, the U.S. economy is expected to be
+solid and a main pillar of global growth, with GDP expanding 2%
+supported by strong domestic demand, low unemployment and
+increasing disposable incomes. China's economy is expected to
+decelerate markedly, with GDP growth going down from 6.2% in
+calendar 2019 to 5.7% in calendar 2020. The room for monetary
+easing is constrained by high debt levels in the economy. GDP
+growth in Europe is expected to further slow also, to 1.0% in
+calendar 2020, after 1.2% in calendar 2019. The industrial reces-
+sion in Europe is expected to end during calendar 2020.
+GDP in advanced countries should increase by 1.4% in calendar
+2020, after 1.6% in calendar 2019, and for emerging countries by
+4.2% in calendar 2020, after 4.1% in calendar 2019, assuming
+that risk factors (e.g. further escalation of the trade conflict or
+Brexit, financial crisis in emerging markets or in Eurozone coun-
+tries, geopolitical conflicts) do not materialize and the industrial
+recession does not spill over to the rest of the economy.
+The forecasts presented here for GDP and fixed investments are
+based on a report from IHS Markit dated October 15, 2019.
+A.8.1.2 SIEMENS GROUP
+We are basing our outlook for fiscal 2020 for the Siemens Group
+and its reportable segments on the above-mentioned expecta-
+tions and assumptions regarding the overall economic situation
+as well as the specific market conditions we expect for our re-
+spective industrial businesses, as described in → A.3 SEGMENT
+INFORMATION. Overall, we expect global macroeconomic develop-
+ment to remain subdued in fiscal 2020, with risks particularly
+related to geopolitical and geoeconomic uncertainties. We as-
+sume a moderate decline in market volume for our short-cycle
+businesses. Also, we assume that a public listing of Siemens
+Energy will be finalized according to plan by the end of fiscal 2020.
+This outlook excludes charges related to legal and regulatory
+matters.
+The outlook for the world economy in fiscal 2020 was subdued
+at the outset of the fiscal year. Global GDP is projected to expand
+by 2.5% in calendar 2020, the lowest growth rate since the global
+financial crisis in 2008/09. Fixed investments should grow by
+2.9%, level with 2019.
+The main contributors to Cash flows from operating activities
+were Digital Industries, followed by Siemens Healthineers and
+Smart Infrastructure, in line with their contributions to Adjusted
+EBITA. Regarding cash inflows associated with operating net
+working capital, a decline in operating net working capital was
+driven mainly by an increase in contract liabilities. This factor was
+partly offset by cash outflows related to a buildup of contract
+assets and inventories, most evidently at SGRE.
+13%
+(2,277)
+2019
+(in millions of €)
+Sep 30,
+A.6.1 Capital structure
+A.6 Financial position
+20
+19
+Combined Management Report
+The increase in other assets was driven mainly by higher net
+defined benefit assets from actuarial gains.
+Deferred tax assets increased mainly due to income tax effects
+related to remeasurement of defined benefits plans.
+The increase in goodwill included the acquisition of Mendix.
+Assets classified as held for disposal increased mainly due to
+reclassification of two investments from investments accounted
+for using the equity method.
+Inventories increased in several industrial businesses, with
+the build-up most evident at SGRE, Mobility and Siemens
+Healthineers.
+The increase in other current financial assets was driven by
+higher loans receivable at SFS, which were mainly due to new
+business and reclassification of non-current loans receivable
+from other financial assets. While higher loans receivable and
+receivables from finance leases from new business at SFS contrib-
+uted also to growth in other financial assets, a large extent of
+the overall increase resulted from increased fair values of deriva-
+tive financial instruments.
+Our total assets at the end of fiscal 2019 were influenced by
+positive currency translation effects of €4.0 billion (mainly good-
+will), primarily involving the U.S. dollar.
+8%
+138,915
+7%
+74,359
+79,878
+150,248
+37%
+1,810
+2,475
+36%
+2,341
+3,174
+Total assets
+2018
+% Change
+Short-term debt and current maturities of long-term debt
+6,034
+2
+Liabilities associated with assets classified as held for disposal
+(1)%
+9,118
+9,023
+Other current liabilities
+(23)%
+3,102
+2,378
+Current income tax liabilities
+(6)%
+3,931
+3,682
+Total non-current assets
+Current provisions
+14,464
+16,452
+Contract liabilities
+17%
+1,485
+1,743
+Other current financial liabilities
+6%
+10,716
+11,409
+Trade payables
+19%
+5,057
+14%
+1
+Other assets
+12%
+16%
+8,912
+10,309
+13%
+9,427
+10,669
+2%
+18,455
+18,894
+12%
+11,066
+12,391
+% Change
+2018
+2019
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Current income tax assets
+Inventories
+Contract assets
+Other current financial assets
+Cash and cash equivalents
+Trade and other receivables
+(in millions of €)
+Sep 30,
+A.5 Net assets position
+14,806
+13,885
+7%
+1,103
+17,774
+19,843
+Other financial assets
+(13)%
+2,579
+2,244
+Investments accounted for using the equity method
+7%
+11,381
+12,183
+Property, plant and equipment
+(3)%
+9,800
+Deferred tax assets
+Other intangible assets
+28,344
+30,160
+9%
+64,556
+70,370
+154%
+94
+238
+15%
+1,707
+1,960
+9%
+1,010
+6%
+(2,277)
+54%
+50,723
+Purchase of investments and financial assets for investment purposes
+Acquisitions of businesses, net of cash acquired
+(2,610)
+Additions to intangible assets and property, plant and equipment
+Cash flows from investing activities
+8,456
+Cash flows from operating activities - continuing and discontinued operations
+(27)
+Cash flows from operating activities - discontinued operations
+8,482
+2,198
+Other reconciling items to cash flows from operating activities – continuing operations
+Cash flows from operating activities – continuing operations
+636
+5,648
+Change in operating net working capital
+2019
+Fiscal year
+Net income
+Cash flows from operating activities
+(in millions of €)
+A.6.2 Cash flows
+21
+Combined Management Report
+Irrevocable loan commitments amounted to €3.1 billion. A con-
+siderable portion of these commitments resulted from as-
+set-based lending transactions, meaning that the respective
+loans can be drawn only after the borrower has provided suffi-
+cient collateral.
+Future payment obligations under non-cancellable operating
+leases amounted to €3.5 billion.
+In addition to these commitments, we issued other guarantees.
+To the extent future claims are not considered remote, maxi-
+mum future payments from these commitments amounted to
+€0.4 billion.
+As of September 30, 2019, the undiscounted amount of maxi-
+mum potential future payments related primarily to credit guar-
+antees and guarantees of third-party performance amounted to
+€3.1 billion.
+Change in receivables from financing activities of SFS
+Other disposals of assets
+(958)
+(1,971)
+(246)
+(3,060)
+(1,123)
+(753)
+(3,205)
+6,471
+1,044
+(1,407)
+Cash flows from financing activities - continuing and discontinued operations
+Cash flows from financing activities - discontinued operations
+Cash flows from financing activities - continuing operations
+Dividends attributable to non-controlling interests
+Dividends paid to shareholders of Siemens AG
+Off-balance-sheet commitments
+Interest paid
+Repayment of long-term debt (including current maturities of long-term debt)
+Issuance of long-term debt
+Re-issuance of treasury shares and other transactions with owners
+Purchase of treasury shares
+Cash flows from financing activities
+(5,011)
+Cash flows from investing activities - continuing and discontinued operations
+1
+Cash flows from investing activities – discontinued operations
+(5,012)
+Cash flows from investing activities - continuing operations
+1,689
+(1,161)
+Change in short-term debt and other financing activities
+Total current liabilities
+Out of the above-mentioned treasury shares repurchased in fiscal
+2019, 3,343,479 treasury shares were repurchased under the
+share buyback initiated in November 2015, which was thus com-
+pleted with a total volume of €3.0 billion. The amount of
+10,189,078 treasury shares were repurchased under the share
+buyback announced in November 2018 of up to €3.0 billion in
+volume until November 15, 2021 at the latest.
+STATEMENTS.
+986
+(12)%
+4,216
+3,714
+Total liabilities and equity
+Non-controlling interests
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+Debt ratio
+Total liabilities
+Total non-current liabilities
+Other liabilities
+Other financial liabilities
+Provisions
+19%
+1,092
+1,305
+Deferred tax liabilities
+29%
+7,684
+9,896
+Provisions for pensions and similar obligations
+12%
+27,120
+30,414
+Long-term debt
+6%
+47,874
+685
+44%
+2,226
+2,198
+For further information about our debt see
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For further informa-
+tion about the functions and objectives of our financial risk man-
+agement see NOTE 25 in B.6 NOTES TO CONSOLIDATED FINANCIAL
+NOTE 16 in B.6
+We have credit facilities totaling €10.0 billion, thereof €9.5 bil-
+lion unused as of September 30, 2019.
+As of September 30, 2019, we recorded, in total, €33.2 billion in
+notes and bonds (maturing until 2047), €2.3 billion in loans from
+banks (maturing until 2037), €0.9 billion in other financial in-
+debtedness (maturing until 2029) and €0.1 billion in obligations
+under finance leases. Notes and bonds were issued mainly in the
+U.S. dollar and euro, and to a lower extent in the British pound.
+Debt and credit facilities
+Our capital structure ratio as of September 30, 2019 increased
+to 0.6 from 0.4 a year earlier, both results being in line with the
+target established in our Siemens Financial Framework. The
+change was due primarily to the above-mentioned increases
+in long-term debt and in provisions for pensions and similar ob-
+ligations.
+Capital structure ratio
+Combined Management Report
+The main factors for the increase in total equity attributable
+to shareholders of Siemens AG were €5.2 billion in net in-
+come attributable to shareholders of Siemens AG; the re-issu-
+ance of treasury shares of €1.6 billion; and positive other com-
+prehensive income, net of income taxes of €0.4 billion, resulting
+mainly from positive currency translation effects of €1.8 billion,
+partly offset by negative effects from remeasurements of de-
+fined benefit plans of €1.1 billion. This increase was partly offset
+by dividend payments of €3.1 billion (for fiscal 2018) and the
+repurchase of 13,532,557 treasury shares at an average cost per
+share of €99.78, totaling €1.4 billion (including incidental trans-
+action charges).
+The increase in provisions for pensions and similar obligations
+was due mainly to a lower discount rate. This effect was partly
+offset by a positive return on plan assets, among other factors.
+Long-term debt increased due primarily to the issuance of euro
+instruments totaling €6.5 billion and currency translation ef-
+fects for bonds issued in the U.S. dollar. This was partly offset
+by the above-mentioned reclassifications of euro and U.S. dollar
+instruments.
+The decrease in current income tax liabilities was driven mainly
+by the reversal of income tax provisions outside Germany and tax
+payments in the context of the carve-out activities related to
+Siemens Healthineers.
+The increase in short-term debt and current maturities of
+long-term debt was due mainly to reclassifications of long-term
+euro and U.S. dollar instruments totaling €3.9 billion from long-
+term debt. This was partly offset by €3.3 billion resulting from
+the repayment of U.S. dollar instruments.
+Share buyback
+11%
+8%
+2,858
+150,248
+35%
+6%
+45,474
+48,125
+34%
+65%
+66%
+9%
+90,869
+99,265
+42,995
+48,541
+1%
+2,573
+138,915
+10,131
+We aim in general for a capital structure, defined as the ratio of
+industrial net debt to EBITDA (continuing operations), of up to 1.0,
+and expect to achieve this in fiscal 2020. Effects from adoption of
+IFRS 16, Leases, beginning with fiscal 2020, result in an increase
+in the ratio as described in more detail in NOTE 2 in B.6 NOTES TO
+CONSOLIDATED FINANCIAL STATEMENTS. In addition, we expect effects
+on capital structure related to the above-mentioned planned spin-
+off and public listing of Siemens Energy, which cannot yet be re-
+liably quantified.
+We expect global macroeconomic development to remain sub-
+dued in fiscal 2020, with risks particularly related to geopolitical
+and geoeconomic uncertainties. We assume a moderate decline
+in market volume for our short-cycle businesses. Given the fore-
+going, we expect the Siemens Group to again achieve moderate
+growth in comparable revenue, net of currency translation and
+portfolio effects, and a book-to-bill ratio above 1.
+Capital structure
+A.8.1.3 OVERALL ASSESSMENT
+28 Combined Management Report
+Our ERM process aims for early identification and evaluation of,
+and response regarding, risks and opportunities that could mate-
+rially affect the achievement of our strategic, operational, finan-
+cial and compliance objectives. The time horizon is typically three
+years, and we take a net risk approach, addressing risks and op-
+portunities remaining after the execution of existing control mea-
+sures. If risks have already been considered in plans, budgets,
+forecasts or the consolidated financial statements (e.g. as a provi-
+sion or risk contingency), they are supposed to be incorporated
+with their financial impact in the entity's business objectives. As a
+consequence, only additional risks arising from the same subject
+(e.g. deviations from business objectives, different impact per-
+spectives) should be considered. In order to provide a comprehen-
+sive view of our business activities, risks and opportunities are
+identified in a structured way combining elements of both top-
+down and bottom-up approaches. Reporting generally follows a
+quarterly cycle; we complement this periodic reporting with an
+ad-hoc reporting process that aims to escalate critical issues in a
+timely manner. Relevant risks and opportunities are prioritized in
+terms of impact and likelihood, considering different perspectives,
+including business objectives, reputation and regulatory require-
+ments. The bottom-up identification and prioritization process is
+supplemented by workshops with the respective managements of
+our organizational units. This top-down element ensures that po-
+tential new risks and opportunities are discussed at the manage-
+ment level and are included in the subsequent reporting process,
+if found to be relevant. Reported risks and opportunities are ana-
+lyzed regarding potential cumulative effects and are aggregated
+within and for each of the organizations mentioned above.
+such risks more closely as our business progresses. Our internal
+auditors regularly review the adequacy and effectiveness of our
+risk management. Accordingly, if deficits are detected, it is possi-
+ble to adopt appropriate measures for their elimination. This
+coordination of processes and procedures is intended to help
+ensure that the Managing Board and the Supervisory Board are
+fully informed about significant risks in a timely manner.
+A.8.2.2 ENTERPRISE RISK MANAGEMENT PROCESS
+We have implemented and coordinated a set of risk management
+and control systems which support us in the early recognition of
+developments that could jeopardize the continuity of our busi-
+ness. The most important of these systems include our enter-
+prise-wide processes for strategic planning and management
+reporting. Strategic planning is intended to support us in consid-
+ering potential risks well in advance of major business decisions,
+while management reporting is intended to enable us to monitor
+A.8.2.1 BASIC PRINCIPLES OF RISK MANAGEMENT
+Our risk management policy stems from a philosophy of pursu-
+ing sustainable growth and creating economic value while man-
+aging appropriate risks and opportunities and avoiding inappro-
+priate risks. As risk management is an integral part of how we
+plan and execute our business strategies, our risk management
+policy is set by the Managing Board. Our organizational and ac-
+countability structure requires each of the respective manage-
+ments of our organizational units to implement risk manage-
+ment programs that are tailored to their specific industries and
+responsibilities, while being consistent with the overall policy.
+This includes our listed Strategic Companies Siemens Healthineers
+and SGRE, which are also subject to our group-wide principles for
+risk management and individually responsible for adhering to
+those principles.
+Risk management at Siemens builds on a comprehensive, interac-
+tive and management-oriented Enterprise Risk Management
+(ERM) approach that is integrated into the organization and that
+addresses both risks and opportunities. Our ERM approach is based
+on the globally accepted COSO Standard (Committee of Sponsor-
+ing Organizations of the Treadway Commission) "Enterprise Risk
+Management - Integrating with Strategy and Performance" (2017)
+and the ISO (International Organization for Standardization) Stan-
+dard 31000 (2018) and is adapted to Siemens requirements. The
+frameworks connect the ERM process with our financial reporting
+process and our internal control system. They consider a compa-
+ny's strategy, the efficiency and effectiveness of its business oper-
+ations, the reliability of its financial reporting and compliance with
+relevant laws and regulations to be equally important.
+Overall, the actual development for Siemens and its segments
+may vary, positively or negatively, from our outlook due to the
+risks and opportunities described below or if our expectations
+and assumptions do not materialize.
+matters.
+This outlook excludes charges related to legal and regulatory
+For our EPS guidance we assume these positive effects will offset
+carve-out costs and tax expenses related to the spin-off and
+Group-wide severance charges for the fiscal year. Taken together
+with our previously mentioned expectations for fiscal 2020, we
+expect this to result in basic EPS from net income in the range
+from €6.30 to €7.00 compared to €6.41 in fiscal 2019.
+As previously announced, we plan to carve out Gas and Power
+and to contribute our 59% stake in SGRE to create a new entity,
+Siemens Energy. For this entity, we plan a spin-off and public
+listing before the end of fiscal 2020, with Siemens Energy becom-
+ing part of discontinued operations prior to the spin-off. We ex-
+pect this to result in substantial positive effects within discontin-
+ued operations, including a substantial gain at spin-off, which
+cannot yet be reliably quantified.
+27
+Combined Management Report
+A.8.2 Risk management
+Along with other measures, Siemens has established a global
+compliance organization that conducts among others compli-
+ance risk mitigation processes such as Compliance Risk Assess-
+ments or internal audit activities.
+34
+Current or future litigation and legal and regulatory pro-
+ceedings: Siemens is and potentially will be involved in numerous
+legal disputes and proceedings in various jurisdictions. These legal
+disputes and proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages,
+In addition, while we have procedures in place to ensure compli-
+ance with applicable governmental regulations in the conduct of
+our business operations, it cannot be excluded that violations of
+applicable governmental regulations may be caused either by us
+or by third parties that we contract with, including suppliers or
+service providers whose activities may be attributed to us. Any
+such violations particularly expose us to the risk of liability, pen-
+alties, fines, reputational damage or loss of licenses or permits
+that are important to our business operations. In particular, we
+could also face liability for damage or remediation for environ-
+mental contamination at the facilities we design or operate. With
+regard to certain environmental risks, we maintain liability insur-
+ance at levels that our management believes are appropriate and
+consistent with industry practice. We may incur environmental
+losses beyond the limits, or outside the coverage, of such insur-
+ance, and such losses may have an adverse effect on our business
+situation, financial condition and results of operations.
+restrictions (hereafter referred to as "sanctions") imposed by the
+U.S., the EU or other countries or organizations. New or expanded
+sanctions in countries in which we do business may result in a
+curtailment of our existing business in such countries or indi-
+rectly in other countries. We are also aware of policies of national
+authorities and institutional investors, such as pension funds or
+insurance companies, requiring divestment of interests in, pro-
+hibiting investment in and transactions with entities doing busi-
+ness with countries identified by the U.S. Department of State as
+state sponsors of terrorism. Therefore, it is possible that such
+policies may result in our being unable to gain or retain certain
+investors or customers. In addition, the termination of our activ-
+ities in sanctioned countries may expose us to customer claims
+and other actions. Our reputation could also suffer due to our
+activities with counterparties in or affiliated with these countries.
+Environmental, health & safety and other governmental
+regulations: Some of the industries in which we operate are
+highly regulated. Current and future environmental, health and
+safety and other governmental regulations or changes thereto
+may require us to change the way we run our operations and
+could result in significant increases in our operating or produc-
+tion costs. Furthermore, we see the risk of potential environmen-
+tal and health and safety incidents as well as potential non-com-
+pliance with environmental and health and safety regulations
+affecting Siemens and our contractors or sub-suppliers, resulting
+for example in serious injuries, penalties, loss of reputation and
+internal or external investigations.
+Regulatory risks and potential sanctions: As a globally oper-
+ating organization, we conduct business with customers in coun-
+tries which are subject to export control regulations, embargoes,
+economic sanctions, debarment policies or other forms of trade
+Protectionism (including localization): Protectionist trade
+policies and changes in the political and regulatory environ-
+ment in the markets in which we operate, such as import and
+export controls, tariffs and other trade barriers including debar-
+ment from certain markets and price or exchange controls,
+could affect our business in national markets and could impact
+our business situation, financial position and results of opera-
+tions; and may expose us to penalties, other sanctions and rep-
+utational damage. In addition, the uncertainty of the legal en-
+vironment in some regions could limit our ability to enforce our
+rights and subject us to increasing costs related to appropriate
+compliance programs.
+In addition, future developments in ongoing and potential future
+investigations, such as responding to the requests of governmen-
+tal authorities and cooperating with them, could divert manage-
+ment's attention and resources from other issues facing our busi-
+ness. Furthermore, we might be exposed to compliance risks in
+connection with recently acquired operations that are in the
+ongoing process of integration.
+TO CONSOLIDATED FINANCIAL STATEMENTS.
+and German authorities, may endanger our business with gov-
+ernment agencies and intergovernmental and supranational or-
+ganizations. Monitors could again be appointed to review future
+business practices and we may otherwise be required to further
+modify our business practices and our compliance program.
+33
+Combined Management Report
+Current and future investigations regarding allegations of
+corruption, of antitrust violations and of other violations of
+law: Proceedings against us or our business partners regarding
+allegations of corruption, of antitrust violations and of other vio-
+lations of law may lead to fines as well as penalties, sanctions,
+injunctions against future conduct, profit disgorgements, dis-
+qualifications from directly and indirectly engaging in certain
+types of business, the loss of business licenses or permits, other
+restrictions and legal consequences as well as negative public
+media coverage. Accordingly, we may, among other things, be
+required to comply with potential obligations and liabilities aris-
+ing in connection with such investigations and proceedings, in-
+cluding potential tax penalties. Moreover, any findings related to
+public corruption that are not covered by the 2008 and 2009 cor-
+ruption charge settlements, which we concluded with American
+A.8.3.4 COMPLIANCE RISKS
+Changes of regulations, laws and policies: As a diversified
+company with global businesses we are exposed to various prod-
+uct- and country-related regulations, laws and policies influenc-
+ing our business activities and processes. We monitor the political
+and regulatory landscape in all our key markets to anticipate po-
+tential problem areas, with the aim of quickly adjusting our busi-
+ness activities and processes to changed conditions. However,
+any changes in regulations, laws and policies could adversely
+affect our business activities and processes as well as our finan-
+cial condition and results of operations.
+Audits by tax authorities and changes in tax regulations:
+We operate in nearly all countries of the world and therefore are
+subject to many different tax regulations. Changes in tax laws in
+any of these jurisdictions could result in higher tax expenses and
+increased tax payments. Furthermore, legislative changes could
+impact our tax receivables and liabilities as well as deferred tax
+assets and deferred tax liabilities. In addition, the uncertain legal
+environment in some regions could limit our ability to enforce
+our rights. As a globally operating organization, we conduct busi-
+ness in countries subject to complex tax rules, which may be in-
+terpreted in different ways. Future interpretations or develop-
+ments of tax regimes may affect our business situation, financial
+condition and results of operations. We are regularly audited by
+tax authorities in various jurisdictions and we continuously iden-
+tify and assess relevant risks.
+Combined Management Report
+Siemens conducts a large share of its business with govern-
+ments and government-owned enterprises. We also participate
+in a number of projects funded by government agencies and
+intergovernmental and supranational organizations, such as
+multilateral development banks. Ongoing or potential future
+investigations into allegations of corruption, antitrust violations
+or other violations of law could as well impair relationships with
+such parties or could result in our exclusion from public con-
+tracts. Such investigations may also adversely affect existing
+private business relationships and our ability to pursue poten-
+tially important strategic projects and transactions, such as stra-
+tegic alliances, joint ventures or other business alliances, or
+could result in the cancellation of certain of our existing con-
+tracts. Moreover, third parties, including our competitors, could
+initiate significant litigation.
+equitable remedies or sanctions, fines or disgorgement of profit.
+In individual cases this may also lead to formal or informal exclu-
+sion from tenders or the revocation or loss of business licenses or
+permits. Asserted claims are generally subject to interest rates.
+At present, no risks have been identified that either individually
+or in combination could endanger our ability to continue as a
+going concern.
+Siemens maintains liability insurance for certain legal risks at lev-
+els our management believes are appropriate and consistent with
+industry practice. The insurance policy, however, does not protect
+Siemens against reputational damage. Moreover, Siemens may
+incur losses relating to legal proceedings beyond the limits, or out-
+side the coverage, of such insurance or exceeding any provisions
+made for losses related to legal proceedings. Finally, there can be
+no assurance that Siemens will be able to maintain adequate in-
+surance coverage on commercially reasonable terms in the future.
+A.8.5 Significant characteristics of
+reforms among others) may lead to more government spending
+35
+Combined Management Report
+Favorable political and regulatory environment: We see
+opportunities for improvement in the geopolitical policy environ-
+ment, which could quickly restore a more positive industrial
+investment sentiment that supports the growth of our markets.
+In addition, government initiatives and subsidies (including tax
+Leveraging market potential: Through sales initiatives and
+masterplans in our operating units, we continuously strive to
+grow and extend our businesses in established markets, open up
+new markets for existing portfolio elements and strengthen our
+installed base in order to gain a higher market share and in-
+creased profits. Furthermore, we aim to increase our sales via
+improved account management and new distribution channels.
+Value creation by innovation (e.g. automation and digita-
+lization): We drive innovation by investing significantly in R&D in
+order to develop sustainable solutions for our customers while
+also strengthening our own competitiveness. Being an innovative
+company and constantly inventing new technologies that we ex-
+pect will meet future demands arising from the megatrends of
+demographic change, urbanization, climate change and global-
+ization is one of our core purposes. We are granted thousands of
+new patents every year and continuously develop new concepts
+and convincing new digital and data-driven business models.
+This helps us create the next generation of ground-breaking in-
+novations in such fields as digitalization, artificial intelligence,
+autonomous machines and edge computing. Across our operat-
+ing units, we are profiting from our undisputed strength in the
+"Digital Enterprise". Foremost, our cloud-based MindSphere plat-
+form enhances the availability of our customers' digital products
+and systems and improves their productivity and efficiency. We
+see also significant opportunities to generate additional volume
+and profit from innovative digital products, services and solu-
+tions, including cyber security, applications for optimized energy
+consumption and operation of highly efficient energy grids and
+scalable solutions for distributed and renewable energy genera-
+tion. We see growth opportunities in opening up access to new
+markets and customers through new marketing and sales strate-
+gies, which we implement in our operating units and share with
+our Strategic Companies. Our position along the value chains of
+automation and digitalization allows us to further increase mar-
+ket penetration. Along these value chains, we have identified
+several concrete growth fields in which we see our greatest long-
+term potential. Hence, we are bundling and developing our re-
+sources and capabilities for these growth fields.
+Some of these legal disputes and proceedings could result in
+adverse decisions for Siemens or decisions, assessments or re-
+quirements of regulatory authorities could deviate from our
+expectations, which may have material effects on our business
+activities as well as our financial position, results of operations
+and cash flows.
+an indication of the opportunities' current importance to us. The
+described opportunities are not necessarily the only ones we en-
+counter. In addition, our assessment of opportunities is subject
+to change because the Company, our markets and technologies
+are constantly advancing. It is also possible that opportunities we
+see today will never materialize.
+A.8.4 Opportunities
+risk of increasing cash outflows due to change in funding level
+according to local regulations of our pension plans in these coun-
+tries and the change of the regulations themselves.
+While our assessments of individual risks have changed during
+fiscal 2019 due to developments in the external environment,
+effects of our own mitigation measures and the revision of our
+plans for assessing risk, the overall risk situation for Siemens did
+not change significantly as compared to the prior year.
+The most significant challenges have been mentioned first in
+each of the four risk categories - strategic, operational, financial
+and compliance. Risks arising from Cyber/Information Security
+are the most significant challenge for us.
+THE OVERALL RISK SITUATION
+A.8.3.5 ASSESSMENT OF
+For additional information with respect to specific proceedings,
+see → NOTE 22 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Within our ERM we regularly identify, evaluate and respond to
+opportunities that present themselves in our various fields of ac-
+tivity. Below we describe our most significant opportunities. Un-
+less otherwise stated, the opportunities described relate to all
+organizational units. The order in which the opportunities are
+presented reflects the currently estimated relative exposure for
+Siemens associated with these opportunities and thus provides
+Risks from pension obligations: The provisions for pensions
+and similar obligations may be affected by changes in actuarial
+assumptions, including the discount rate, as well as by move-
+ments in financial markets or a change in the mix of assets in our
+investment portfolio. Additionally, they are subject to legal risks
+with regard to plan design among other factors. A significant in-
+crease in the underfunding may have a negative effect on our cap-
+ital structure and rating, and thus may tighten refinancing op-
+tions and increase costs. In order to comply with local pension
+regulations in selected foreign countries, we may face an economic
+Cost overruns or additional payment obligations related to
+the management of our long-term, fixed-priced or turnkey
+projects and service contracts: A number of our segments
+conduct activities, especially large projects, under long-term
+contracts that are awarded on a competitive bidding basis. Such
+contracts typically arise at Gas and Power, SGRE, Mobility, and in
+various activities of Smart Infrastructure. Some of these con-
+tracts are inherently risky because we may assume substantially
+all of the risks associated with completing a project and meeting
+post-completion warranty obligations. For example, we may
+face the risk that we must satisfy technical requirements of a
+project even though we have not gained experience with those
+requirements before winning the project. The profit margins re-
+alized on fixed-priced contracts may vary from original estimates
+as a result of changes in costs and productivity over the con-
+tract's term. We sometimes bear the risk of unanticipated project
+modifications, shortage of key personnel, quality problems, fi-
+nancial difficulties of our customers and/or significant partners,
+cost overruns or contractual penalties caused by unexpected
+technological problems, unforeseen developments at the proj-
+ect sites, unforeseen changes or difficulties in the regulatory or
+political environment, performance problems with our suppli-
+ers, subcontractors and consortium partners or other logistical
+difficulties. Some of our multi-year contracts also contain de-
+manding installation and maintenance requirements in addition
+to other performance criteria relating to timing, unit cost and
+compliance with government regulations, which, if not satisfied,
+could subject us to substantial contractual penalties, damages,
+non-payment and contract termination. There can be no assur-
+ance that contracts and projects, in particular those with long-
+term duration and fixed-priced calculation, can be completed
+profitably. To tackle those risks, we established a global project
+management organization to systematically improve the capa-
+bilities of our project management personnel. For very complex
+projects we conduct dedicated risk assessments in very early
+stages of the sales phase before we decide to hand over a bind-
+ing offer to our customer.
+Liquidity and financing risks: Our treasury and financing activ-
+ities could face adverse deposit and/or financing conditions from
+negative developments related to financial markets, such as lim-
+ited availability of funds (particularly U.S. dollar) and hedging
+instruments; an updated evaluation of our solvency, particularly
+from rating agencies; negative interest rates; and impacts arising
+from more restrictive regulation of the financial sector, central
+bank policy, or financial instruments. Widening credit spreads
+due to uncertainty and risk aversion in the financial markets
+might lead to adverse changes in the market values of our finan-
+cial assets, in particular our derivative financial instruments.
+Restructuring: We see risks that we may not be flexible enough
+in adjusting our organizational and manufacturing footprint
+in order to quickly respond to changing markets. The necessary
+restructuring might not be executed to the extent or in the time-
+frame planned (e.g. due to local co-determination regulations),
+limiting our improvements of our cost position with negative
+profit impacts and the loss of key personnel. Strikes and disputes
+Disruptive technologies: The markets in which our businesses
+operate experience rapid and significant changes due to the in-
+troduction of innovative and disruptive technologies. In the fields
+of digitalization (e.g. IoT, artificial intelligence, cloud computing,
+Industry 4.0), there are risks associated with new competitors,
+substitutions of existing products/solutions/services, new busi-
+ness models (e.g. in terms of pricing, financing, extended scopes
+for project business or subscription models in the software busi-
+ness) and finally the risk that our competitors may have more
+advanced time-to-market strategies and introduce their disrup-
+tive products and solutions faster than Siemens. Our operating
+results depend to a significant extent on our technological lead-
+ership, our ability to anticipate and adapt to changes in our mar-
+kets and to optimize our cost base accordingly. Introducing new
+products and technologies requires a significant commitment to
+research and development, which in return requires expenditure
+of considerable financial resources that may not always result in
+success. Our results of operations may suffer if we invest in tech-
+nologies that do not operate or may not be integrated as ex-
+pected, or that are not accepted in the marketplace as antici-
+pated, or if our products, solutions or systems are not introduced
+to the market in a timely manner, particularly compared to our
+competitors, or even become obsolete. We constantly apply for
+new patents and actively manage our intellectual property port-
+folio to secure our technological position. However, our patents
+and other intellectual property may not prevent competitors from
+independently developing or selling products and services that
+are similar to or duplicates of ours.
+Company transformation: There are risks in substantially
+changing company structures, policies or management in the
+interest of enhancing our speed, agility or company culture.
+These risks include increased costs, missed financial or perfor-
+mance targets, loss of key personnel, loss of (cost) synergies, and
+reduced customer and investor confidence. This particularly
+applies to Gas and Power, for which a spin-off is planned for fiscal
+2020. We have set up a team within "Vision 2020+" which closely
+monitors the transformation process. This includes, for example,
+the active monitoring of employee attrition rates and execution
+of adequate counter measures as well as increased management
+involvement in maintaining an active dialogue with employees.
+Furthermore, we implemented a continuous quality monitoring
+process for critical IT solutions (infrastructure, applications and
+platforms) and projects.
+In general, due to the significant proportion of long-cycle busi-
+nesses in our operating units and the importance of long-term
+contracts for Siemens, there is usually a time lag between
+changes in macroeconomic conditions and their impact on our
+financial results. In contrast, short-cycle business activities of
+Digital Industries react quickly to volatility in market demand. If
+the moderate growth of certain markets stalls again and if we are
+not successful in adapting our production and cost structure to
+subsequent changes in conditions in the markets in which we
+operate, there can be no assurance that we will not experience
+adverse effects. For example, our customers may modify, delay
+or cancel plans to purchase our products, solutions and services,
+or fail to follow through on purchases or contracts already exe-
+cuted. Furthermore, the prices for our products, solutions and
+services may decline to a greater extent than we currently antic-
+ipate. In addition, it may become more difficult for our customers
+to obtain financing. Contracted payment terms, especially re-
+garding the level of advance payments by our customers relating
+to long-term projects, may become less favorable, which could
+negatively impact our financial condition. Siemens' global setup
+with operations in almost all relevant economies, our wide range
+of offerings with varied exposures to business cycles, and our
+balanced mix of business models (e.g. equipment, components,
+systems, software, services and solutions) help us to absorb im-
+pacts from adverse developments in any single market.
+recent agreement between the U.K. and the European Union on
+a revised Withdrawal Agreement lowered risk of a "No-Deal"
+Brexit. However, the renewed Article 50 extension of the Euro-
+pean Union Treaty is spilling over damaging impact on economic
+activity into fiscal 2020. If the risk of a "No-Deal" Brexit heightens
+again, increasing business and consumer uncertainty, particu-
+larly in the European Union and the U.K., this would reduce in-
+vestment activity, and pose risks to financial markets. A further
+and massive loss of economic confidence and a prolonged period
+of reluctance in investment decisions and awarding of new or-
+ders would negatively impact our businesses. We have estab-
+lished a task force continuously monitoring the exit process and
+coordinating our local and global mitigation measures. We are
+depending on the economic momentum of specific industries,
+especially on continued weakness in the automotive sector,
+caused by both, cyclical and structural forces. Further business
+risk results from an abrupt weakening of Chinese economic
+growth. A terrorist mega-attack or a significant cybercrime inci-
+dent, or a series of such attacks or incidents in major economies,
+could depress economic activity globally and undermine con-
+sumer and business confidence. Further significant risks stem
+from geopolitical tensions (in particular in the Middle East, but
+also Hong Kong), the economic vulnerability of several emerging
+economies (among others Argentina, Turkey, Venezuela), politi-
+cal upheavals, and from an increasing vulnerability of the con-
+nected global economy to natural disasters.
+30
+29
+Combined Management Report
+Combined Management Report
+Competitive environment: The worldwide markets for our
+products, solutions and services are highly competitive in terms
+of pricing, product and service quality, product development and
+introduction time, customer service, financing terms and shifts
+in market demands. We face strong established competitors and
+rising competitors from emerging markets and new industries,
+which may have a better cost structure. Some industries in which
+we operate are undergoing consolidation, which may result in
+stronger competition, a change in our relative market position,
+increase in inventory of finished or work-in-progress goods or
+unexpected price erosion. We see a risk, especially in the energy
+market, that long-term customer contracts are becoming subject
+to renegotiation, which might result in less favorable conditions
+for Siemens. Furthermore, there is a risk that critical suppliers are
+taken over by competitors and a risk that competitors are increas-
+ingly offering services to our installed base. We address these
+risks with various measures, for example benchmarking, strate-
+gic initiatives, sales push initiatives, executing productivity mea-
+sures and target cost projects, rightsizing of our footprint, out-
+sourcings, mergers and joint ventures, exporting from low-cost
+countries to price-sensitive markets, and optimizing our product
+and service portfolio. We continuously monitor and analyze com-
+petitive, market and industry information in order to be able to
+anticipate unfavorable changes in the competitive environment
+rather than merely reacting to such changes.
+A.8.3.1 STRATEGIC RISKS
+Below we describe the risks that could have a material adverse
+effect on our business situation, financial condition (including
+effects on assets, liabilities and cash flows), results of operations
+and reputation. The order in which the risks are presented in
+each of the four categories reflects the currently estimated rela-
+tive exposure for Siemens associated with these risks and thus
+provides an indication of the risks' current importance to us.
+Additional risks not known to us or that we currently consider
+immaterial may also negatively impact our business objectives
+and operations. Unless otherwise stated, the risks described be-
+low relate to all our organizational units.
+A.8.3 Risks
+To oversee the ERM process and to further drive the integration
+and harmonization of existing control activities to align with legal
+and operational requirements, the Managing Board established
+a Risk Management and Internal Control Organization, headed by
+the Head of Assurance. In order to allow for a meaningful discus-
+sion of risk at the Siemens group level, this organization aggre-
+gates individual risks and opportunities of similar cause-and-
+effect nature into broader risk and opportunity themes. This
+aggregation naturally results in a mixture of risks, including
+those with a primarily qualitative assessment and those with a
+primarily quantitative risk assessment. Accordingly, we do not
+adopt a purely quantitative assessment of risk themes. Thematic
+risk and opportunity assessments then form the basis for the
+evaluation of the company-wide risk and opportunity situation.
+The Head of Assurance reports quarterly to the Managing Board
+on matters relating to the implementation, operation and over-
+sight of the risk and internal control system and assists the Man-
+aging Board, for example in reporting to the Audit Committee of
+the Supervisory Board.
+A.8.2.3 RISK MANAGEMENT ORGANIZATION
+AND RESPONSIBILITIES
+Responsibilities are assigned for all relevant risks and opportuni-
+ties, with the hierarchical level of responsibility depending on the
+significance of the respective risk or opportunity. In a first step,
+assuming responsibility for a specific risk or opportunity involves
+choosing one of our general response strategies. Our general
+response strategies with respect to risks are avoidance, transfer,
+reduction or acceptance of the relevant risk. Our general re-
+sponse strategy with respect to opportunities is to "seize" the
+relevant opportunity. In a second step, responsibility for a risk or
+opportunity also involves the development, initiation and moni-
+toring of appropriate response measures corresponding to the
+chosen response strategy. These response measures have to be
+specifically tailored to allow for effective risk management. Ac-
+cordingly, we have developed a variety of response measures
+with different characteristics. For example, we mitigate the risk
+of fluctuations in currency and interest rates by engaging in
+hedging activities. Regarding our long-term projects, systematic
+and comprehensive project management with standardized proj-
+ect milestones, including provisional acceptances during project
+execution and complemented by clearly defined approval pro-
+cesses, assists us in identifying and responding to project risks at
+an early stage, even before the bidding phase. Furthermore, we
+maintain appropriate insurance levels for potential cases of dam-
+age and liability risks in order to reduce our exposure to such risks
+and to avoid or minimize potential losses. Among others, we ad-
+dress the risk of fluctuation in economic activity and customer
+demand by closely monitoring macroeconomic conditions and
+developments in relevant industries, and by adjusting capacity
+and implementing cost-reduction measures in a timely and con-
+sistent manner if they are deemed necessary.
+Economic, political and geopolitical conditions (macroeco-
+nomic environment): We see increasing uncertainty regard-
+ing the global economic outlook. Despite recent relaxation in the
+U.S.-Chinese trade conflict, the key risk for the global economic
+cycle is a further escalation to a full-fledged global trade war,
+with a significant deterioration of global growth. In particular,
+protectionist measures taken so far have already caused im-
+mense economic damage on global growth. Adverse effects to
+confidence and investment activity would severely hit Siemens
+business. Increasing trade barriers would negatively impact pro-
+duction costs and productivity along our many value chains. The
+Credit risks: We provide our customers with various forms of
+direct and indirect financing of orders and projects, including
+guarantees. Financial Services in particular bears credit risks due
+to such financing activities if, for example, customers are unable
+to repay such financing.
+with unions and workers councils might result in negative media
+coverage and delivery problems. Additionally, public criticism
+related to restructuring might negatively impact Siemens' repu-
+tation. We mitigate these risks by closely monitoring the imple-
+mentation of the planned measures, maintaining strict cost man-
+agement, and conducting ongoing discussions with all concerned
+interest groups.
+with standardized processes as well as dedicated roles and re-
+sponsibilities in the areas of mergers, acquisitions, divestments
+and carve-outs. This includes the systematic treatment of all con-
+tractual obligations and post-closing claims.
+Market price risks: We are exposed to fluctuations in exchange
+rates, especially between the U.S. dollar and the euro, because a
+high percentage of our business volume is conducted as exports
+from Europe to areas using the U.S. dollar. In addition, we are
+exposed to effects involving the currencies of emerging markets,
+in particular the Chinese yuan. Appreciable changes in euro
+exchange rates could materially change our competitive position.
+We are also exposed to fluctuations in interest rates. Even hedg-
+ing activities to mitigate such risks may result in a reverse effect.
+Fluctuations in exchange or interest rates, negative develop-
+ments in the financial markets and changes in central bank poli-
+cies could therefore negatively impact our financial results.
+A.8.3.3 FINANCIAL RISKS
+digital talent and other qualified personnel. We address this risk
+for example by strengthening the capabilities and skills of our
+talent-acquisition teams and have defined a strategy of proactive
+search for people with the required skills in our respective indus-
+tries and markets. Technology and digitalization help us to be
+more effective in attracting and selecting diverse talent as well
+as improving the efficiency of our processes. Furthermore, we
+have a focus on structured succession planning, gender diversity,
+retention and career management.
+Combined Management Report
+Shortage of skilled personnel: Competition for diverse and
+highly qualified personnel (e.g. specialists, experts, digital tal-
+ent) remains intense in the industries and regions in which our
+businesses operate. We have ongoing demand for highly skilled
+employees and a need to enhance the diversity of our work-
+force. Our future success depends in part on our continued ability
+to identify, assess, hire, integrate, develop and retain engineers,
+(e.g. infrastructure or digitalization investments) and ultimately the accounting-related internal
+product safety. If any of our units are not able to comply with
+regulatory requirements, our business and reputation may be
+adversely affected. We have established multiple measures for
+quality improvement and claim prevention. The increased use of
+quality management tools is improving visibility and enables us
+to strengthen our root cause and prevention processes.
+Portfolio measures, at-equity investments, other invest-
+ments and strategic alliances: Our strategy includes divesting
+our activities in some business areas and strengthening others
+through portfolio measures, including mergers and acquisitions.
+With respect to divestments, we may not be able to divest some
+of our activities as planned, and the divestitures we do carry out
+could have a negative impact on our business situation, financial
+condition, results of operations and reputation. Mergers and ac-
+quisitions are inherently risky because of difficulties that may
+arise when integrating people, operations, technologies and
+products. There can be no assurance that any of the businesses
+we acquire can be integrated successfully and in a timely manner
+as originally planned, or that they will perform as anticipated
+once integrated. In addition, we may incur significant acquisi-
+tion, administrative, tax and other expenditures in connection
+with these transactions, including costs related to integration of
+acquired businesses. Furthermore, portfolio measures may result
+in additional financing needs and adversely affect our capital
+structure. Acquisitions can lead to substantial additions to intan-
+gible assets, including goodwill, in our statements of financial
+position. If we were to encounter continuing adverse business
+developments or if we were otherwise to perform worse than
+expected at acquisition activities, then these intangible assets,
+including goodwill, might have to be impaired, which could
+adversely affect our business situation, financial condition and
+results of operations. Our investment portfolio includes invest-
+ments held for purposes other than trading and other invest-
+ments. Any factors negatively influencing the financial condition
+and results of operations of our at-equity investments and other
+investments could have an adverse effect on our equity pick-up
+related to these investments, or may result in a related write-off.
+In addition, our business situation, financial condition and results
+of operations could also be adversely affected in connection with
+loans, guarantees or non-compliance with financial covenants
+related to these investments. Furthermore, such investments are
+inherently risky as we may not be able to sufficiently influence
+corporate governance processes or business decisions taken by
+our equity investments, other investments and strategic alli-
+ances, which may have a negative effect on our business. In ad-
+dition, joint ventures bear the risk of difficulties that may arise
+when integrating people, operations, technologies and products.
+Strategic alliances may also pose risks for us because we compete
+in some business areas with companies with which we have stra-
+tegic alliances. Besides other measures, we handle these risks
+Operational failures and quality problems in our value
+chain processes: Our value chains comprise all steps in the
+product life-cycle, from research and development to supply
+chain management, production, marketing, sales and services.
+Operational failures in our value chain processes could result in
+quality problems or potential product safety, labor safety, regula-
+tory or environmental risks. Such risks are particularly present in
+our operating units in relation to our production and manufac-
+turing facilities, which are located all over the world and have a
+high degree of organizational and technological complexity.
+From time to time products we sell could have quality issues re-
+sulting from the design or manufacture of these products or the
+commissioning of these products or the software integrated into
+them. In addition, we may not be able to fully meet regulatory
+requirements. Siemens Healthineers, for example, is subject to
+regulatory authorities including the U.S. Food and Drug Admin-
+istration and the European Commission's Health and Consumer
+Policy Department, which require specific efforts to safeguard
+of these measures to our profitability will be influenced by the
+actual savings achieved and by our ability to sustain them. In case
+of restructuring and outsourcing activities, there could be delays
+in product deliveries or we might even experience delivery fail-
+ures. Furthermore, delays in critical R&D projects could lead to
+negative impacts in running projects. We constantly control and
+monitor the progress of these projects and initiatives using stan-
+dardized controlling and milestone tracking approaches.
+32
+31
+Combined Management Report
+Operational optimization and cost reduction initiatives:
+We are in a continuous process of operational optimization and
+constantly engage in cost-reduction initiatives, including ongoing
+capacity adjustment measures and structural initiatives. Consoli-
+dation of business activities and manufacturing facilities, out-
+sourcings, joint ventures and the streamlining of product portfo-
+lios are all part of these cost-reduction efforts. These measures
+may not be implemented as planned, may turn out to be less ef-
+fective than anticipated, may become effective later than esti-
+mated or may not become effective at all. Any future contribution
+Cyber/Information security: Digital technologies are deeply
+integrated into our business portfolio. We observe a global in-
+crease of cyber security threats and higher levels of professional-
+ism in computer crime, which pose a risk to the security of prod-
+ucts, systems and networks and the confidentiality, availability
+and integrity of data. There can be no assurance that the mea-
+sures aimed at protecting our Intellectual Property (IP) and port-
+folio will address these threats under all circumstances. There is
+a risk that confidential information may be stolen or that the in-
+tegrity of our portfolio may be compromised, e.g. by attacks on
+our networks, social engineering, data manipulations in critical
+applications and a loss of critical resources, resulting in financial
+damages. Cyber security covers the IT of our entire enterprise
+including office IT, systems and applications, special purpose net-
+works, and our operating environments such as manufacturing
+and research and development (R&D). Like other large multi-
+national companies we are facing active cyber threats from so-
+phisticated adversaries that are supported by organized crime
+and nation-states engaged in economic espionage or even sabo-
+tage. We attempt to mitigate these risks by employing a number
+of measures, including employee training, comprehensive mon-
+itoring of our networks and systems through Cyber Security
+Defense Centers, and maintenance of backup and protective
+systems such as firewalls and virus scanners. We initiated the
+industrial "Charter of Trust", signed by a growing group of global
+companies, which sets out principles for building trust in digital
+technologies and creating a more secure digital world. Nonethe-
+less our systems, products, solutions and services, as well as
+those of our service providers, remain potentially vulnerable to
+attacks. Such attacks could potentially lead to the publication,
+manipulation or leakage of information such as through indus-
+trial espionage. They could also result in deliberate improper use
+of our systems, vulnerable products, production downtimes and
+supply shortages, with potential adverse effects on our reputa-
+tion, our competitiveness and results of operations.
+A.8.3.2 OPERATIONAL RISKS
+Interruption of the supply chain: The financial performance of
+our operating units depends on reliable and effective supply
+chain management for components, sub-assemblies and materi-
+als. Capacity constraints and supply shortages resulting from
+ineffective supply chain management may lead to production
+bottlenecks, delivery delays and additional costs. We also rely on
+third parties to supply us with parts, components and services.
+Using third parties to manufacture, assemble and test our prod-
+ucts may reduce our control over manufacturing yields, quality
+assurance, product delivery schedules and costs. Although we
+work closely with our suppliers to avoid supply-related problems,
+there can be no assurance that we will not encounter supply
+problems in the future, especially if we use single-source suppli-
+ers for critical components. Shortages and delays could materi-
+ally harm our businesses. Unanticipated increases in the price of
+components or raw materials due to market shortages or other
+reasons could also adversely affect performance. Furthermore,
+we may be exposed to the risk of delays and interruptions in the
+supply chain as a consequence of catastrophic events, cyber in-
+cidents or suppliers' financial difficulties, particularly if we are
+unable to identify alternative sources of supply or means of trans-
+portation in a timely manner or at all. Besides other measures,
+we mitigate price fluctuation in global raw material markets with
+various hedging instruments.
+result in an opportunity for us to participate in ways that increase
+our revenue and profit.
+For further information on post-employment benefits, derivative
+financial instruments, hedging activities, financial risk manage-
+ment and related measures, see → NOTES 17, 24 and 25 in B.6 NOTES
+Climate change: In line with the global agreement in Paris
+(COP21) that entered into force in November 2016, Siemens
+strives to support a trend towards reducing CO2 emissions both
+in our own operations and for our customers, based on technol-
+ogies from our environmental portfolio such as low-carbon
+power generation from renewable energy sources. As such the
+transition to a low-carbon economy represents an opportunity
+for Siemens.
+12,596
+Income from business activity
+Income taxes
+(31)%
+4,643
+3,188
+n/a
+1
+9,469
+(6)%
+(3,767)
+(3,979)
+15%
+(2,788)
+(2,362)
+25%
+28%
+(12)%
+5,199
+7,111
+142%
+(111)%
+Mergers, acquisitions, equity investments, partnerships,
+divestments and streamlining our portfolio: We constantly
+monitor our current and potential markets to identify opportuni-
+ties for strategic mergers, acquisitions, equity investments and
+partnerships, which may complement our organic growth. Such
+activities may help us to strengthen our position in our existing
+markets, provide access to new or underserved markets, or com-
+plement our technological portfolio in strategic areas. Opportu-
+nities might also arise when portfolio optimization measures
+generate gains, which enable us to further pursue our other
+strategies for growth and profitability.
+38 Combined Management Report
+The decrease in Financial income, net was primarily attributable
+to lower income from investments, net. The main factor for this
+decrease was a significant income from the profit transfer agree-
+ment with Siemens Beteiligungen Inland GmbH, Germany, in
+fiscal 2018.
+The R&D intensity (R&D as a percentage of revenue) increased by
+0.8 percentage points year-over-year. The research and development
+activities of Siemens AG are fundamentally the same as for its fields
+of business activities within the Siemens Group, respectively. On an
+average basis, we employed 9,000 people in R&D in fiscal 2019.
+On a geographical basis, 75% of revenue was generated in the
+Europe, C.I.S., Africa, Middle East region, 18% in the Asia, Austra-
+lia region and 7% in the Americas region. Exports from Germany
+accounted for 62% of overall revenue. In fiscal 2019, orders for
+Siemens AG amounted to €21.6 billion. Within Siemens AG, the
+development of revenue depends strongly on the completion of
+contracts, primarily in connection with large orders.
+Beginning of August 2018, Siemens AG carved out its mobility
+business to Siemens Mobility GmbH by way of singular succes-
+sion. The decreases in revenue, cost of sales, gross profit and
+research and development (R&D) expenses were mainly driven
+by this carve-out.
+> (200)%
+67%
+(1,451)
+3,230
+(6,005)
+5,384
+Profit carried forward
+Allocation to other
+retained earnings
+Unappropriated net income
+Net income
+27%
+134
+170
+147%
+4,547
+11,219
+(653)
+6,279
+(1,377)
+(15,825) (21,074)
+Combined Management Report
+first have to be mandated by the listed Strategic Company's Man-
+aging Board/Board of Directors and Audit Committee and subse-
+quently be mandated by our Managing Board and Audit Commit-
+tee. The audit procedures for these topics will be generally
+executed in joint teams of our and the respective Strategic Com-
+pany's internal audit function; thus reflecting the interest of both
+Siemens AG and the respective listed Strategic Company. In addi-
+tion, the Audit Committee is integrated into our control system.
+In particular, it oversees the accounting and accounting process
+and the effectiveness of the internal control system, the risk
+management system and the internal audit system. Moreover,
+we have rules for accounting-related complaints.
+Our internal audit function systematically evaluates our financial
+reporting integrity, the effectiveness of the control system and
+the risk management system, and adherence to our compliance
+policies. Our listed Strategic Companies have their own internal
+audit departments and annual audit plans. Topics from the re-
+spective annual audit plan of our listed Strategic Companies that
+are also relevant for our Managing Board and Audit Committee
+Our listed Strategic Companies Siemens Healthineers and SGRE
+are also subject to our group-wide principles for the account-
+ing-related internal control and risk management system and are
+individually responsible for adhering to those principles. The
+management of Siemens Healthineers and SGRE provide periodic
+sign-offs to the Managing Board of Siemens AG, certifying the
+effectiveness of their respective accounting-related internal con-
+trol systems as well as the completeness, accuracy, and reliability
+of the financial data reported to us.
+On a quarterly basis, we execute an internal certification process.
+Management at different levels of our organization, supported
+by confirmations by managements of entities under their respon-
+sibility, confirms the accuracy of the financial data that has been
+reported to Siemens' corporate headquarters and reports on the
+effectiveness of the related control systems.
+Qualification of employees involved in the accounting process is
+ensured through appropriate selection processes and training. As
+a fundamental principle, based on materiality considerations, the
+"four eyes" principle applies and specific procedures must be ad-
+hered to for data authorization. Additional control mechanisms
+include target-performance comparisons and analyses of the com-
+position of and changes in individual line items, both in the closing
+data submitted by reporting units and in the Consolidated Finan-
+cial Statements. In line with our information security requirements,
+accounting-related IT systems contain defined access rules protect-
+ing them from unauthorized access. The manual and system-based
+control mechanisms referred to above generally also apply when
+reconciling the International Financial Reporting Standards (IFRS)
+closing data to the Annual Financial Statements of Siemens AG.
+Combined Management Report
+36
+Our Consolidated Financial Statements are prepared on the basis
+of a centrally issued conceptual framework which primarily con-
+sists of uniform Financial Reporting Guidelines and a chart of
+accounts. For Siemens AG and other companies within the
+Siemens group required to prepare financial statements in accor-
+dance with German Commercial Code, this conceptual frame-
+work is complemented by mandatory regulations specific to the
+German Commercial Code. The need for adjustments in the con-
+ceptual framework due to regulatory changes is analyzed on an
+ongoing basis. Accounting departments are informed quarterly
+about current topics and deadlines from an accounting and clos-
+ing process perspective.
+At the end of each fiscal year, our management performs an eval-
+uation of the effectiveness of the implemented control system,
+both in design and operating effectiveness. We have a standard-
+ized procedure under which necessary controls are defined, doc-
+umented in accordance with uniform standards, and tested reg-
+ularly for their effectiveness. Nevertheless, there are inherent
+limitations on the effectiveness of any control system, and no
+system, including one determined to be effective, may prevent
+or detect all misstatements.
+Our ERM approach is based on the globally accepted COSO
+Standard (Committee of Sponsoring Organizations of the Tread-
+way Commission) "Enterprise Risk Management - Integrating
+with Strategy and Performance" (2017) and the ISO (Interna-
+tional Organization for Standardization) Standard 31000 (2018)
+and is adapted to Siemens requirements. The frameworks con-
+nect the ERM process with our financial reporting process and
+our internal control system. They consider a company's strat-
+egy, the efficiency and effectiveness of its business operations,
+the reliability of its financial reporting and compliance with
+relevant laws and regulations to be equally important. Our ac-
+counting-related internal control system is based on the inter-
+nationally recognized "Internal Control - Integrated Frame-
+work" (2013) also developed by COSO. The two systems are
+complementary.
+The overarching objective of our accounting-related internal con-
+trol and risk management system is to ensure that financial re-
+porting is conducted in a proper manner, such that the Consoli-
+dated Financial Statements and the Combined Management
+Report of Siemens group as well as the Annual Financial State-
+ments of Siemens AG as the parent company are prepared in
+accordance with all relevant regulations.
+control and risk management system
+While our assessments of individual opportunities have changed
+during fiscal 2019 due to developments in the external environ-
+ment, our endeavors to profit from them and revision of our stra-
+tegic plans, the overall opportunity situation for Siemens did not
+change significantly as compared to the prior year.
+(22)%
+25%
+Assessment of the overall opportunities situation: The most
+significant opportunity for Siemens continues to be value cre-
+ation through innovation (e.g. automation and digitalization) as
+described above.
+Localizing value chain activities: Localizing certain value
+chain activities, such as procurement, manufacturing, mainte-
+nance and service, in emerging markets could enable us to re-
+duce costs and strengthen our global competitive position, in
+particular compared to competitors based in countries where
+they can operate with more favorable cost structures. Moreover,
+our local footprint in many countries provides the opportunity to
+take advantage of growth markets and market shifts around the
+world, which could result in increased market penetration and
+market share.
+37
+A.9 Siemens AG
+The base data used in preparing our financial statements consists
+of the closing data reported by the operations of Siemens AG and
+its subsidiaries. The preparation of the closing data of most of our
+entities is supported by an internal shared services organization.
+Furthermore, other accounting activities, such as governance
+and monitoring activities, are usually bundled on a regional level.
+In particular cases, such as valuations relating to post-employ-
+ment benefits, we use external experts. The reported closing
+data is used to prepare the financial statements in the consolida-
+tion system. The steps necessary to prepare the financial state-
+ments are subject to both manual and automated controls.
+The Annual Financial Statements of Siemens AG have been pre-
+pared in accordance with the rules set out in the German Com-
+mercial Code (Handelsgesetzbuch).
+28,185
+22,104
+% Change
+Fiscal year
+2018
+2019
+Selling and general
+administrative expenses
+development expenses
+as percentage of revenue
+Research and
+Other operating income
+(expenses), net
+Financial income, net
+thereof Income from
+investments, net 3,754
+(prior year 5,381)
+(in millions of €)
+Revenue
+Statement of Income of Siemens AG in accordance
+with German Commercial Code (condensed)
+A.9.1 Results of operations
+As of September 30, 2019, the number of employees was 74,700.
+In January 2019, Siemens AG transferred the trademark "Siemens,"
+consisting of a portfolio of trademarks with the component
+"Siemens," by way of a contribution in kind, to the affiliated com-
+pany Siemens Trademark GmbH & Co. KG, Germany. Additions to
+shares in Siemens Trademark GmbH & Co. KG were measured at
+the fair value of the transferred trademark rights in the amount
+of €9.5 billion. The contribution resulted in other operating income
+in the same amount. This was partially offset by a related deferred
+tax expense of €1.5 billion. Siemens Trademark GmbH & Co. KG has
+granted Siemens AG a royalty-bearing right to use the trade-
+marks. Expenses of €0.6 billion related to the ongoing royalty for
+the use of the right are recognized in selling expenses. The con-
+tract has an indefinite duration.
+Cost of Sales
+Gross profit
+Siemens AG is the parent company of the Siemens Group. At the
+end of fiscal 2019, results for Siemens AG comprise the fields of
+business activities mainly of Digital Industries, Smart Infrastruc-
+ture, Gas and Power as well as the activities of Portfolio Compa-
+nies and are significantly influenced by directly or indirectly
+owned subsidiaries and investments. The business development
+of Siemens AG is fundamentally subject to the same risks and
+opportunities as the Siemens Group. Due to the interrelations
+between Siemens AG and its subsidiaries and the relative size of
+Siemens AG within the Group, the outlook of the Group also
+largely reflects our expectations for Siemens AG. Therefore, the
+foregoing explanations for the Siemens Group apply also for
+Siemens AG. We expect that income from investments or profit
+transfer agreements with affiliated companies will significantly
+influence the profit of Siemens AG.
+We intend to continue providing an attractive return to sharehold-
+ers. Therefore, we intend to propose a dividend whose distribution
+volume is within a dividend payout range of 40% to 60% of net
+income of the Siemens Group attributable to shareholders of
+Siemens AG, which we may adjust for this purpose to exclude se-
+lected exceptional non-cash effects. For fiscal 2020, we expect that
+net income of Siemens AG will be sufficient to fund the distribu-
+tion of a corresponding dividend. In connection with the planned
+listing of Siemens Energy, we expect a significant impact on the
+annual financial statements of Siemens AG: The carve-out of Gas
+and Power business activities is expected to result in an increase in
+financial assets and decreases in other assets positions and liabili-
+ties. Income and expenses, most notably revenue and cost of
+sales, are expected to decrease as well. Subject to the approval of
+the planned spin-off by an extraordinary Siemens shareholders'
+meeting we expect also a significant withdrawal from retained
+earnings of Siemens AG, offsetting the disposal of financial assets.
+. . .
+MMMMM
+Managing Board compensation is based on the following principles:
+The current system of Managing Board compensation was en-
+dorsed at the Annual Shareholders' Meeting on January 27, 2015,
+by a majority of about 93%.
+MM
+MM
+MM
+> Focus on successful, sustainable
+management of the Company
+Endorses the compensation system
+Managing Board members are expected to make a long-term
+commitment to and on behalf of the Company. As a result,
+they can benefit from any sustained increase in the Compa-
+ny's value. For this reason, a substantial portion of their total
+compensation is linked to the long-term performance of the
+Siemens share.
+Combined Management Report
+The Company's size and economic position is also to be re-
+flected in Managing Board compensation. Exceptional achieve-
+ments are to be adequately rewarded, while falling short of
+targets results in an appreciable reduction in compensation.
+> Ensuring competitiveness
+In order to attract outstanding candidates for the Managing
+Board of Siemens AG and to retain them for the long term,
+compensation should be attractive compared to that offered
+by competitors.
+40
+Company
+performance
+40
+Economic
+situation
+On the basis of these principles, the Supervisory Board deter-
+mines the structure, amount and weighting of the individual
+components of compensation. Regular review by the Supervisory
+Board ensures that the amount of compensation is appropriate.
+Several criteria are applied for this purpose:
+Criteria for review of appropriateness of compensation
+MMMMM
+Compensation linked to performance
+B• R• R• R• •
+This report describes the compensation system for the Managing
+Board members as well as the compensation of the Supervisory
+Board of Siemens AG for fiscal 2019. It provides detailed and in-
+dividualized explanations of the structure and amount of the
+B• R• R• R• B⚫
+39
+Future
+prospects
+A.10 Compensation Report
+This report is based on the recommendations of the German
+Corporate Governance Code ("Code") and the requirements of
+the German Commercial Code (Handelsgesetzbuch), German
+Accounting Standards (Deutsche Rechnungslegungsstandards)
+and International Financial Reporting Standards (IFRS). It also
+incorporates elements of the requirements that can be foreseen
+from the currently pending transposition of the European Share-
+holder Rights Directive into German law, on the basis of the
+regulations proposed in the German Act Implementing the Sec-
+ond Shareholder Rights Directive (ARUG II).
+A.10.1. Compensation of
+Managing Board members
+individual components of compensation paid to the members of
+these bodies.
+Chapter
+10.1.1 describes the system for remunerating Manag-
+ing Board members in general. Chapter 10.1.2 provides com-
+prehensive information about the compensation granted and
+paid to the Managing Board in fiscal 2019, together with an out-
+look for fiscal 2020. Chapter 10.2 describes Supervisory Board
+compensation.
+A.10.1.1 COMPENSATION SYSTEM
+Responsibilities and principles for establishing
+Managing Board compensation
+The compensation system for Siemens' Managing Board is estab-
+lished by the Supervisory Board, based on a proposal by the Com-
+pensation Committee. After approval by the Supervisory Board,
+the compensation system is submitted to the Annual Sharehold-
+ers' Meeting for endorsement ("say on pay").
+Process for establishing the compensation system
+Compensation Committee
+Supervisory Board
+Develops recommendations on the
+compensation system and submits
+these to the Supervisory Board
+Approves the compensation system
+Annual Shareholders' Meeting
+MMMM
+MM
+B• R• R• R• R⚫
+Alignment with
+market practice
+> As a rule, in 12 yearly installments; other
+payment options, on request: a smaller
+number of installments, a lump sum pay-
+ment or an annuitization with or without
+survivors' benefits as well as a combination
+of these options
+Managing Board
+member's
+responsibilities
+and achievements
+Fringe benefits include the provision of non-monetary benefits
+and other perquisites, such as the provision of a company car,
+contributions toward the cost of insurance, reimbursement of
+expenses for legal and tax advice and accommodation and mov-
+ing expenses, including a gross-up provided by the Company for
+any taxes due in this regard, as well as currency adjustment pay-
+ments and costs relating to preventive medical examinations.
+Pension benefit commitments
+Like the employees of Siemens AG in Germany, the members of
+the Managing Board are included in the Siemens Defined Contri-
+bution Pension Plan (BSAV). Under the BSAV, Managing Board
+members receive contributions that are credited to their individ-
+ual pension accounts. The level of these annual contributions is
+based on a predetermined percentage related to their base com-
+pensation and the target amount of their Bonuses. The Super-
+visory Board decides on this percentage annually (most recently
+28%). In making its decision, the Supervisory Board takes ac-
+count of the intended level of benefits for each individual and the
+length of time he or she has been a Managing Board member as
+well as the annual and long-term service cost to the Company
+resulting from those benefits.
+Special pension contributions may also be granted to Managing
+Board members on the basis of individual decisions by the Super-
+visory Board. Such contributions may be intended, for example,
+to compensate for forfeited pension entitlements from a previous
+employer. To the extent that a member of the Managing Board
+earned a pension benefit entitlement from the Company before
+the BSAV was introduced, a portion of his or her contributions
+goes toward financing that prior commitment.
+The following table summarizes further significant features of
+the BSAV for Managing Board members.
+Entitlement
+Disbursement
+Guaranteed
+interest
+Fringe benefits
+Disability/death
+> On request, on or after reaching the age
+of 60, for pension commitments made
+before January 1, 2012
+> As a rule, in accordance with the provisions
+of the German Company Pensions Act
+(Betriebsrentengesetz)
+> Annual guaranteed interest credited to
+pension accounts until benefits are first
+drawn (currently 0.90%)
+> The risk that benefits may have to be drawn
+before the age of 60 due to disability or
+death is mitigated by crediting contributions
+from the age at the time benefits are first
+drawn until the covered individual reaches
+or would have reached the age of 60.
+Due to Lisa Davis's tax status in the U.S., some of the details of
+her pension benefit commitment - particularly, those regarding
+funding differ from the standard provisions.
+-
+Like other eligible employees of Siemens AG, Managing Board
+members who were employed by the Company before Septem-
+ber 30, 1983, are entitled to receive transition payments for the
+first six months after retirement. These payments are equal to the
+difference between their final base compensation and the retire-
+ment benefits payable under the corporate pension plan.
+Performance-based components
+Combined Management Report
+> On request, on or after reaching the age
+of 62, for pension commitments made on
+or after January 1, 2012
+Managing Board
+compensation
+compared to exec-
+utive employees
+and the rest of
+workforce
+Each member of the Managing Board receives base compensa-
+tion for performing his or her Managing Board duties. This com-
+pensation is paid in 12 monthly installments.
+Non-performance-based compensation comprises base compen-
+sation as well as fringe benefits and pension benefit commitments.
+The review of appropriateness is generally based on a compar-
+ison with other German companies. The target compensation
+and the maximum compensation for the Managing Board are
+first compared to management compensation at the companies
+listed in the German blue-chip stock index, the DAX. To account
+for Siemens' international nature, size and complexity, the
+compensation paid to Managing Board members is also com-
+pared to management compensation at companies in the
+STOXX Europe 50 index. In addition, the Supervisory Board
+takes account of the evolution of Managing Board compensa-
+tion in relation to the compensation paid to Siemens' workforce
+in Germany. In this vertical comparison, the Supervisory Board
+determines the ratio of Managing Board compensation to the
+compensation paid to Siemens' executive employees and the
+rest of the workforce and performs a market comparison with
+other DAX companies. For this purpose, the Supervisory Board
+has defined Siemens' executive employees as the employees in
+the Senior Management and Top Management contract groups.
+The rest of the workforce comprises both Siemens employees
+who are and those who are not covered by collective bargain-
+ing agreements.
+Structure and components of
+Managing Board compensation
+Managing Board compensation comprises both non-perfor-
+mance-based and performance-based elements and is divided
+into three main, equally weighted components: base compen-
+sation, short-term variable compensation and long-term stock-
+based compensation. Fringe benefits and pension commitments
+are also part of the compensation system.
+The Share Ownership Guidelines, which are a further key com-
+ponent of the compensation system, obligate Managing Board
+members to continuously hold Siemens shares worth a defined
+multiple of their base compensation and to acquire additional
+shares if their holdings fall below the required figure.
+Components of the Managing Board compensation system
+Non-performance-based components
+Performance-based components
+Fringe benefits
+Base compensation
+Base
+compensation
+Short-term
+variable
+compensation
+Long-term
+stock-based
+compensation
+Share
+Ownership
+Guidelines
+commitments
+33%
+33%
+34%
+Combined Management Report 41
+Non-performance-based components
+Pension benefit
+The increase in receivables and other assets was mainly due to
+higher trade receivables from affiliated companies as a result of
+intra-group financing activities.
+% Change
+23%
+other securities
+4,489
+24,241
+Prepaid expenses
+147
+Deferred tax assets
+829
+3,177
+21,413
+163
+2,064
+41%
+13%
+(10)%
+(60)%
+Active difference
+resulting from offsetting
+68
+62
+9%
+Total assets
+100,328
+81,344
+23%
+Liabilities and equity
+Cash and cash equivalents,
+18,236
+19,752
+Receivables and other assets
+A.9.2 Net assets and
+financial position
+Statement of Financial Position of Siemens AG in accordance
+with German Commercial Code (condensed)
+2019
+Sep 30,
+2018
+In keeping with the abovementioned principles, Managing Board
+compensation is to be coupled with business performance and
+with sustainable management of the Company. To take due ac-
+count of both factors, the performance-based component of
+Managing Board compensation comprises both a short-term and
+a long-term element: a short-term variable component (Bonus)
+and a long-term stock-based component (Siemens Stock Awards).
+The final amount of these two components depends on the
+extent to which defined targets are attained. If these targets are
+not attained, the performance-based components may be reduced
+to zero. If, however, the targets are significantly exceeded, target
+attainment is subject to a ceiling or "cap."
+(in millions of €)
+Assets
+Non-current assets
+Equity
+Intangible and tangible assets
+1,894
+Financial assets
+73,158
+55,747
+75,043
+57,641
+(1)%
+31%
+30%
+8%
+Current assets
+1,884
+30,428
+22,049
+38%
+to affiliated companies
+and other liabilities
+Cash and cash equivalents, other securities are significantly
+affected by the liquidity management of the Corporate Treasury
+of Siemens AG. The liquidity management is based on the financ-
+ing policy of the Siemens Group, which is aimed towards a bal-
+anced financing portfolio, a diversified maturity profile and a
+comfortable liquidity cushion. Therefore, the change in liquidity
+of Siemens AG was not driven only by business activities of
+Siemens AG.
+The increase in equity was attributable to net income for the year
+of €11.2 billion, and the issuance of treasury stock related to the
+fulfillment of exercised warrants in the amount of €1.1 billion and
+our share-based payments and employee share programs in the
+amount of €0.4 billion. These factors were partly offset by divi-
+dends paid in fiscal 2019 (for fiscal 2018) of €3.1 billion. In addi-
+tion, equity was reduced due to share buybacks during the year
+amounting to €1.4 billion. The equity ratio as of September 30,
+2019 and 2018 was 30% and 27%, respectively. For the disclosures
+in accordance with Section 160 para. 1 no. 2 of the German Stock
+Corporation Act (Aktiengesetz) about treasury shares we refer to
+NOTE 15 of our Annual Financial Statements of Siemens AG for
+the fiscal year ended September 30, 2019.
+The increase in trade payables, liabilities to affiliated compa-
+nies and other liabilities was due primarily to higher liabilities
+to affiliated companies mainly as a result of a contribution to an
+affiliated company in connection with the reorganization of in-
+tra-group financing activities.
+A.9.3 Corporate Governance
+statement
+The Corporate Governance statement pursuant to Sections 289f
+and 315d of the German Commercial Code is an integral part of
+the Combined Management Report and is presented in → c.4.2
+CORPORATE GOVERNANCE STATEMENT PURSUANT TO SECTIONS 289 F AND
+315D OF THE GERMAN COMMERCIAL CODE.
+49,079
+Trade payables, liabilities
+38,863
+Deferred income
+50,947
+326
+40,420
+26%
+308
+6%
+Total liabilities and equity
+100,328
+81,344
+26%
+The increase in financial assets was mainly due to additions to
+shares in affiliated companies driven by the above-mentioned
+trademark transfer and by contributions to affiliated companies in
+connection with reorganization of intra-group financing activities.
+(49)%
+22%
+27
+1,841
+Special reserve
+with an equity portion
+668
+671
+0%
+Provisions
+Provisions for pensions
+and similar commitments
+12,343
+53
+1,504
+11,885
+Provisions for taxes
+and other provisions
+5,616
+17,959
+6,011
+17,896
+(7)%
+0%
+Liabilities
+Liabilities to banks
+Advance payments received
+4%
+42
+Adherence to these guidelines must be proven for the first time
+after the four-year build-up phase and thereafter annually. If the
+value of a Managing Board member's accrued holdings falls be-
+low the required minimum due to fluctuations in Siemens' share
+price, he or she must acquire additional shares.
+Combined Management Report
+Limit (severance cap)
+Payment
+Increase/discount
+> Base compensation plus the target amount
+for the Bonus and the Stock Awards, each
+based on the last fiscal year before the end
+of employment (annual compensation)
+> Two years' annual compensation
+>In the month of departure
+> Benefits are forfeited if the Managing Board
+member receives benefits from third parties
+due to or in connection with a change of
+control.
+> 10% reduction and 5% increase, as in the
+terms for termination of membership by
+mutual agreement (see Item 2 "Termination
+by mutual agreement")
+Combined Management Report
+47
+The compensation system at a glance
+The following chart provides an overview of the individual com-
+ponents of the compensation system:
+The compensation system for Managing Board members at a glance
+Percentage of target
+compensation¹
+Fixed
+Variable
+Stock Awards
+Cash
+33%
+Base compensation
+Basis for
+calculation
+In the event of a change of control that results in a substantial
+change in a Managing Board member's position, the Managing
+Board member has the right to terminate his or her employment
+contract with the Company. A change of control exists if one
+shareholder or multiple shareholders acting in concert acquire a
+majority of the voting rights in Siemens AG and exercise a con-
+trolling influence or if Siemens AG becomes a dependent enter-
+prise as a result of entering into an intercompany agreement
+within the meaning of Section 291 of the German Stock Corpora-
+tion Act (Aktiengesetz) or if Siemens AG is to be merged into
+another entity. There is no right of termination if the change of
+control takes place within 12 months before the member retires.
+If this right of termination is exercised, the Managing Board
+member is entitled to a severance payment for the remainder of
+his or her term of office:
+4. Change of control
+3. Early termination by mutual agreement at the request
+of the Managing Board member or if there is serious cause
+that entitles the Company to terminate the appointment
+No severance payments or special BSAV contributions are made.
+> When a Managing Board member leaves the Company, any
+existing Stock Awards will only be transferred at their due date.
+46
+Combined Management Report
+The following rules also apply when a Managing Board member
+leaves office and vary depending on the reason for contract ter-
+mination:
+1. Termination due to regular expiration of
+the term of office
+No severance payments or special BSAV contributions are made.
+2. Termination by mutual agreement
+In the event of an early termination of membership on the
+Managing Board by mutual agreement and without serious
+cause, Managing Board members' employment contracts provide
+for a severance payment:
+Basis for
+calculation
+Short-term variable
+Limit (severance cap)
+Increase/discount
+> Base compensation plus Bonus(es) actually
+received in the last fiscal year prior to the
+end of employment, and granted long-term
+stock-based compensation (annual com-
+pensation)
+> Not more than two years' annual compen-
+sation and not more than the member
+would receive for the remaining term of his
+or her employment contract
+> In the month of departure
+> Based on the BSAV contribution that the
+Managing Board member received in the
+prior year and on the remaining term of
+his or her appointment
+> Limited to not more than the contributions
+for two years (cap)
+> Severance payment will be reduced by
+10% if the term of office still has more than
+six months to run (a lump sum allowance
+for discounting and for amounts earned
+elsewhere).
+> Reduction affects only the portion of the
+severance payment calculated excluding
+the first six months of the remaining term
+of office.
+> Non-monetary benefits are compensated
+for by a payment of 5% of the severance
+amount.
+Payment
+Special BSAV
+contribution;
+one-time
+33%
+compensation
+(Bonus)
+Extra-
+ordinary
+develop-
+ments
+Claw-
+back
+Performance of Siemens share price
+compared to relevant competitors
+300%
+up to +75% adjustment of target amount
+170%¹
+Severance cap
+1 Excluding fringe benefits and pension benefit commitments
+2 Basis: target amount (based on 100% target attainment)
+up to ±20% adjustment
+A.10.1.2 MANAGING BOARD COMPENSATION
+FOR FISCAL 2019
+Total compensation
+In accordance with the applicable accounting principles, Manag-
+ing Board compensation for fiscal 2019 totaled €33.04 million.
+This amount was 4.2% more than the year before (2018:
+€31.72 million). Of the total for fiscal 2019, €21.97 million (2018:
+€21.93 million) was attributable to cash compensation and
+€11.07 million (2018: €9.79 million) to stock-based compensation.
+For fiscal 2019, each Managing Board member's base compensa-
+tion and the target amount for his or her Bonus and Stock Awards
+underwent a regular adjustment of +2.0%. This increase was
+oriented in part on adjustments made to the compensation of
+other employee groups within Siemens.
+Base compensation
+Since October 1, 2018, base compensation has been as follows:
+> €2,205,000 per year for President and CEO Joe Kaeser
+€1,101,600 per year for the other Managing Board members.
+Fringe benefits
+Managing Board members were granted fringe benefits for fiscal
+2019. Depending on the Managing Board member, these benefits
+totaled between €16,732 and €751,054.
+48 Combined Management Report
+The following section provides detailed information and back-
+ground regarding total Managing Board compensation and in-
+dividualized disclosures regarding the compensation of each
+Managing Board member for fiscal 2019.
+> Stock Awards granted at the beginning of the fiscal year in
+which the Managing Board member leaves office will be cal-
+culated and reduced on a pro rata basis.
+240%
+(EPS)
+33.34%
+Capital efficiency
+(ROCE)
+34%
+Long-term stock-based
+compensation
+(Siemens Stock Awards)
+100%
+Structure of
+Cap
+33.33%
+Individual
+targets
+compensation components
+Fixed compensation
+Other components of com-
+pensation/contract terms
+Fringe benefits
+100%
+Pension benefit commitments
+Share Ownership Guidelines
+33.33%
+Profit
+in %²
+> Stock Awards will not be forfeited, however, if the employment
+contract is terminated by mutual agreement at the Company's
+request or in the event of retirement, disability or death or in
+connection with a spin-off, a transfer to a different company
+or a change of activity within the Group. Likewise, Stock
+Awards will not be forfeited if the Managing Board member
+terminates his or her employment contract for good cause in
+connection with a change of control at the Company.
+> Stock Awards for which the vesting period has not yet ended
+will be forfeited without refund or replacement if the employ-
+ment contract is not renewed at the end of a term of office at
+the Managing Board member's request or if there is serious
+cause that entitles the Company to revoke the member's ap-
+pointment or terminate his or her employment contract.
+If an employment contract is terminated, Stock Awards are gov-
+erned by the following rules:
+The number of Stock Awards actually granted to a Managing
+Board member at the beginning of a fiscal year is determined by
+extrapolating the target amount to 200% target attainment
+("maximum grant value”). This maximum grant value is then
+converted to a maximum number of Stock Awards by dividing it
+by the grant price. These awards are then granted to the Man-
+aging Board member. A roughly four-year vesting period begins
+on the grant date. The grant price is defined as the closing price
+of the Siemens share in Xetra trading on the grant date, less the
+discounted estimated dividends during the roughly four-year
+vesting period.
+Combined Management Report
+43
+Since fiscal 2015, the Supervisory Board has had the option of
+increasing the target amount for each Managing Board member,
+on an individual basis, by as much as 75% for one fiscal year at a
+time. This option is intended to take account of each Managing
+Board member's individual accomplishments and experience as
+well as the scope and demands of his or her function.
+Performance criterion
+The number of shares that are actually transferred after the vest-
+ing period ends depends on one performance criterion: the per-
+formance of the Siemens share compared to the performance of
+the shares of relevant competitors. Following an initial 12-month
+"reference" period, stock performance is measured over a subse-
+quent 36-month "performance" period.
+More specifically, a starting price, the "reference" price, is first
+determined for each competitor during the reference period,
+which is the first 12 months of the vesting period. The 12 end-of-
+month prices are averaged for Siemens and for each competitor.
+During the subsequent three-year performance period, an aver-
+age price is again calculated from the 36 end-of-month prices for
+Siemens and each competitor; this is the "performance" price.
+Determination of target attainment
+The annual target amount for a grant of Stock Awards, on the
+basis of 100% target attainment, is contractually agreed upon
+with each individual Managing Board member.
+At the end of the vesting period, the Supervisory Board deter-
+mines the extent to which the performance of the Siemens share
+price has surpassed or lagged behind that of the share prices of
+relevant competitors. It then derives target attainment for the
+relevant Stock Awards tranche on this basis. For this purpose, the
+reference prices for Siemens and for each competitor are com-
+pared to the respective performance prices, and a relative devia-
+tion is calculated for each company. In a further step, these devi-
+ations are averaged for all competitors. To determine target
+attainment, the average relative change in the competitors' share
+prices is then compared to the relative change in the Siemens
+share price, and the difference is calculated.
+> If, during the vesting period, the Siemens share performs
+≥20 percentage points better than the share price of the
+relevant competitors, target attainment is 200%.
+> If, during the vesting period, the Siemens share performs the
+same as the share price of the relevant competitors, target
+attainment is 100%.
+If, during the vesting period, the Siemens share performs
+≥20 percentage points worse than the share price of the
+relevant competitors, target attainment is 0%.
+If the Siemens share performs somewhere between the percent-
+age points cited above, target attainment is determined by a lin-
+ear interpolation.
+Linear curve for determining Stock Award target attainment
+Target attainment
+200%
+100%
+0%
+-20%
+Target attainment may vary between 0% and 200% (cap).
+0%
+Granting of Stock Awards
+The Managing Board is expected to make a long-term commit-
+ment to and on behalf of the Company. For this reason, a sub-
+stantial portion of each member's total compensation is tied to
+the long-term performance of the Siemens share.
+Short-term variable compensation (Bonus)
+-
+The target amount for the short-term variable component of com-
+pensation (Bonus) – that is, the amount paid for 100% target at-
+tainment – is currently equal to the amount of a Managing Board
+member's base compensation. The payout amount of the Bonus
+depends on the Company's business performance during the past
+fiscal year, as measured in terms of the attainment of three
+equally weighted target parameters.
+Two of these target parameters are financial parameters that
+reflect the Company's capital efficiency, measured in terms of
+return on capital employed (ROCE), and profit, measured in terms
+of earnings per share (EPS). These parameters constitute opera-
+tional steering parameters based on the Company's strategic fo-
+cus and are included in external financial reporting, see Chapter
+→ A.2 FINANCIAL PERFORMANCE SYSTEM.
+Based on a proposal by the Compensation Committee, the
+Supervisory Board also sets a minimum of two and a maximum
+of five individual, qualitative targets for each member of the
+Managing Board.
+The range of target attainment for these target parameters is 0%
+to 200% (cap). The Supervisory Board may also adjust the Bonus
+payout amount upward or downward by as much as 20%, so that
+the maximum payout for the Bonus is 240% of the target amount.
+The decision on an adjustment may take account not only of the
+Company's economic situation but also of such factors as the re-
+sults of employee or customer satisfaction surveys as well as the
+Managing Board members' individual achievements.
+Determination of Bonus payout amount
+Weighted average of target
+attainment (0%-200%)
+33.34% ROCE¹
+At the start of each fiscal year, Siemens grants "Stock Awards" as
+long-term stock-based compensation. Each Stock Award rep-
+resents the right to one share of Siemens stock. Stock Awards are
+settled by the transfer of shares at the end of a defined vesting
+period of about four years. Subject to target attainment, Manag-
+ing Board members receive one Siemens share per Stock Award.
+33.33% EPS²
+Target
+amount
+X
+Adjustment
+(up to ±20%)
+33.33% individual targets
+1 Return on capital employeed
+2 Earnings per share
+Bonus payout
+amount
+(cap: 240%)
+The Supervisory Board can review and, if appropriate, reduce
+Bonus payout amounts in the event of a breach of duty or a vio-
+lation of compliance regulations (clawback).
+Long-term stock-based compensation
+(Siemens Stock Awards)
+X
+42
+Performance of
+Siemens share
+vs. competitors
+Target attainment is used to determine whether, and to what
+extent, the maximum number of Stock Awards is to be reduced.
+For a target attainment of less than 200%, a number of Siemens
+Stock Awards equivalent to the shortfall are forfeited without
+refund or replacement.
+Further provisions for long-term stock-based compensation
+If the relevant competitors undergo significant changes during
+the period under consideration, the Supervisory Board may take
+these changes into account when compiling the comparison val-
+ues for those competitors and/or calculating their relevant share
+prices. In the event of extraordinary, unforeseen developments
+that impact the Siemens share price, the Supervisory Board may
+decide to reduce the number of granted Stock Awards retro-
+actively or to pay cash compensation for a defined, limited
+amount in lieu of a transfer of Siemens shares or to postpone the
+transfer of Siemens shares for payable Stock Awards until the
+developments have ceased to impact the share price.
+If a Managing Board member violates compliance regulations,
+the Supervisory Board is entitled, at its duty-bound discretion, to
+revoke without refund or replacement some or all of his or her
+Siemens Stock Awards, depending on the gravity of the compli-
+ance violation (clawback).
+If a Managing Board member's employment contract begins
+during a fiscal year, an equivalent number of Siemens Phantom
+Stock Awards will be granted instead of Stock Awards, and only a
+cash equivalent will be paid at the end of the vesting period.
+Apart from this exception, the same provisions agreed upon for
+Stock Awards will apply.
+With regard to the further terms of the Stock Awards, the same
+principles apply in general to the Managing Board and to senior
+managers. These principles are explained in → NOTE 26 in
+B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Combined Management Report
+45
+Maximum amount of total compensation
+In addition to the caps for the Bonus and the Siemens Stock Awards,
+a maximum amount of total compensation has been agreed upon.
+This maximum amount is 1.7 times target compensation - which
+comprises base compensation, the target amount for the Bonus and
+the target amount for long-term stock-based compensation – plus
+the maximum expected value of fringe benefits and pension bene-
+fit commitments. This latter value corresponds to the fringe benefits
+and pension benefit commitments from the previous fiscal year
+multiplied by a factor of 2.0.
+Stock Awards based on target
+attainment is reduced by amount
+by which cap is exceeded
+If compensation exceeds this maximum, a number of Siemens Stock
+Awards equivalent in value to the amount by which the maximum
+was exceeded will be forfeited without refund or replacement.
+The Siemens Share Ownership Guidelines are an integral part of
+the compensation system for the Managing Board and senior ex-
+ecutives. These guidelines oblige the Managing Board mem-
+bers - after a four-year build-up phase - to continuously hold
+Siemens shares worth a multiple of their base compensation
+-300% for the President and CEO, 200% for the other members
+of the Managing Board – throughout their terms of office. The
+decisive figure in this context is the average base compensation
+that a member of the Managing Board has received over the four
+years before the applicable date of proof of adherence. Hence,
+changes that have been made to base compensation in the
+meantime are included.
+-
+Secondary activities of Managing Board members
+Members of the Managing Board may take on secondary activi-
+ties – for example, supervisory board positions outside the Com-
+pany only with the approval of the Chairman's Committee of
+the Supervisory Board.
+-
+If a Managing Board member holds a position in another Siemens
+company, no separate compensation is paid since holding such
+positions is considered to be covered by contractual Managing
+Board compensation. As a rule, Managing Board members are
+obligated to waive any compensation that may be due to them
+in connection with such positions. Should a waiver not be possi-
+ble, for example, owing to the legal or tax regulations applicable
+to a Siemens company, the compensation paid to a Managing
+Board member in connection with such a position will be de-
+ducted from the compensation due to him or her in connection
+with his or her Managing Board activities.
+Memberships on supervisory boards whose establishment is
+required by law or on comparable domestic or foreign con-
+trolling bodies of business enterprises are listed in Chapter
+→ C.4.1 MANAGEMENT AND CONTROL STRUCTURE in c.4 CORPORATE
+GOVERNANCE.
+Commitments in connection with the
+termination of Managing Board membership
+The compensation system also governs the amount of compen-
+sation paid to a Managing Board member when membership on
+the Managing Board is terminated early.
+When a member leaves office, his or her short-term variable com-
+pensation (Bonus) is calculated on a pro rata basis after the end
+of the fiscal year and is granted on the regular payout date.
+Share Ownership Guidelines
++20%
+>300% of target amount:
+number of
+Settlement by
+In addition, the total value (in euros) of the Siemens shares to be
+transferred is capped at 300% of the relevant target amount.
+If this cap is exceeded, a corresponding number of Stock Awards
+are forfeited without refund or replacement.
+44 Combined Management Report
+The remaining Stock Awards are settled by the transfer of Siemens
+shares to the relevant Managing Board member.
+Calculation of the number of Siemens shares
+Adjustment to
+actual target attainment
+Maximum number
+of Stock Awards
+based on 200%
+target attainment
+transfer of Siemens
+shares to Managing
+Board member
+Number of Stock
+based on target
+attainment
+(for example, 150%)
+X
+≤300% of target amount:
+number of
+Stock Awards based on
+target attainment
+= final number of Stock Awards
+Xetra closing
+price of
+Siemens share
+on transfer date
+Value of
+Stock Awards
+in euros
+(cap: 300%)
+Awards
+Non-forfeitability
+100%
+price
+55
+Share Ownership Guidelines
+The deadlines by which the individual Managing Board members
+must first verify compliance with the Siemens Share Ownership
+Guidelines vary from member to member, depending on when
+they were appointed to the Managing Board. For Managing Board
+members in office as of September 30, 2019, the following table
+shows the number of Siemens shares each held as of the March 2019
+deadline for verifying compliance with the Share Ownership Guide-
+lines. It also shows the number of shares to be held throughout
+their terms of office with a view toward future deadlines.
+Obligations under Share Ownership Guidelines
+Managing Board members in office
+as of September 30, 2019, and required
+to verify compliance as of March 8, 2019
+Joe Kaeser
+55
+Dr. Roland Busch
+Klaus Helmrich
+Janina Kugel
+Prof. Dr. Ralf P. Thomas
+Total
+Required
+Verified
+Percentage
+of base
+compensation¹
+Lisa Davis
+Value¹
+in €
+Combined Management Report
+95%
+Information about current target attainment
+for the 2016 to 2019 tranches
+As of October 2019, target attainment for the 2016 to 2019 tranches
+of the Siemens Stock Awards was as follows:
+fiscal 2015 (see table), Siemens Stock Awards in the amount of
+€51,300 were granted to her from the 2015 tranche for her
+position as a member of Top Management.
+Tranche
+Target attainment for the 2016 to 2019 Stock Awards tranches (as of October 2019)
+Vesting period
+83%
+Reference period
+2017
+2018
+2019
+Nov. 2015-Nov. 2019
+Nov. 2016-Nov. 2020
+Nov. 2017 - Nov. 2021
+Nov. 2018-Nov. 2022
+Nov. 2015-Oct. 2016
+Nov. 2016-Oct. 2017
+Nov. 2017-Oct. 2018
+Nov. 2018-Oct. 2019
+Performance period
+Nov. 2016-Oct. 2019
+Nov. 2017-Oct. 2020
+Nov. 2018-Oct. 2021
+Nov. 2019-Oct. 2022
+Target attainment
+131%
+2016
+2 Janina Kugel was appointed to the Managing Board effective
+February 1, 2015. In addition to the Siemens Phantom Stock
+Awards granted upon her appointment for a portion of
+Number of
+shares²
+Value²
+in €
+214%
+2,261,767
+22,301
+200%
+2,043,275
+20,147
+227%
+2,315,317
+20,884
+22,829
+2,118,100
+20,884
+203%
+2,154,262
+21,241
+16,770,488
+165,355
+18,780,956
+200%
+Percentage
+of base
+compensation¹
+2,118,100
+26,212
+Number of
+shares³
+300%
+6,254,813
+61,672
+340%
+7,092,605
+69,933
+200%
+200%
+2,118,100
+217%
+2,298,583
+22,664
+200%
+2,118,100
+20,884
+251%
+2,658,421
+20,884
+185,180
+1 SSA: Siemens Stock Awards
+€100.16 =
+€100.16 =
+€100.16 =
+Schneider
+Competitors (average)
+Siemens AG
+CHF18.58
+$26.04
+¥6,605.00
+$114.49
+€59.96
+CHF21.90
+$23.98
+¥4,243.35
+$150.47
+€63.21
+(7.88%)
+(37.22%)
+€93.62
+€108.95
+Target attainment: 172%
+MHI/Toshiba1
+Rockwell
+5.42%
+17.87%
+16.37%
+31.42%
+A = 14.45
+percentage
+points
+1 The reported relative deviation of (37.22%) also takes into account Toshiba's performance, which is factored into the reported deviation on a weighted basis for 19 months.
+Toshiba's reference price was ¥4,382.08, and its performance price was ¥2,694.00, yielding a relative deviation of (38.52%). MHI's relative deviation was (35.76%), with a weighting of 17 months.
+54
+Combined Management Report
+The following table provides a summary of the key parameters of
+the 2015 Siemens Stock Awards tranche, which was settled in cash:
+1.92%
+Overview of the 2015 Siemens Stock Awards tranche
+ABB
+GE
+Performance
+6,639
+=
+€72.30
+€100.16
+6,916
+100%
+6,916
+=
+price
+€664,962
+€692,707
+2 SSA: Siemens Stock Awards
+3 The target amount disclosed for Lisa Davis (at 100% target
+attainment) comprises an amount that was granted to her
+to compensate for the forfeiture of entitlements granted
+by her previous employer (€1,647,368.73) as well as a
+pro-rata grant of Siemens Stock Awards for fiscal 2014
+(€166,666.67) in accordance with her employment contract.
+Determination of target attainment for the 2015 tranche
+Starting with the 2015 tranche, the Siemens Stock Awards were
+subject to only one performance criterion - the performance of
+the Siemens share compared to the share performance of rele-
+vant competitors during the roughly four-year vesting period,
+which lasted from November 2014 through October 2018.
+Target attainment for the 2015 Siemens Stock Awards tranche
+100% share price performance
+Reference price vs.
+performance price
+Reference
+price
+1 SPP: share price performance
+€2,478,259
+€1,652,139
+€2,478,259
+Target
+amount
+100% target
+attainment)
+€1,040,000 /
+€72.30 =
+Janina Kugel²
+Prof. Dr. Ralf P. Thomas
+€1,040,000 /
+€693,333
+€1,040,000
+€72.30 =
+€72.30
+€72.30 =
+26,971 x
+14,385 x
+14,385 X
+14,385 X
+9,590
+14,385
+172% =
+172%
+172% =
+172%
+=
+=
+X
+172%
+46,391
+24,743
+24,743 x
+24,743 x
+16,495 x
+24,743
+X
+X
+€100.16 =
+€100.16 =
+€100.16 =
+€4,646,523
+€2,478,259
+€2,478,259
+X
+172%
+(based on
+€72.30
+€72.30 =
+€1,950,000 /
+Grant
+price
+Number of
+SSA¹
+granted
+Novem-
+ber 7, 2014
+Target
+attainment:
+share price
+performance
+Final
+number
+of SSA¹
+Xetra
+closing
+€1,040,000/
+Cash
+payment
+(in €)
+Managing Board
+members in office as of
+September 30, 2019
+Joe Kaeser
+Dr. Roland Busch
+Lisa Davis
+Klaus Helmrich
+Novem-
+ber 12, 2018
+1 The amount of the obligation is based on the average base
+compensation for the four years prior to the respective dates
+of verification.
+2 Based on the average Xetra opening price of €101.42 for the 3 As of March 8, 2019 (date of verification)
+fourth quarter of 2018 (October-December)
+Other
+57
+57
+57
+55
+57
+55
+1,159
+1,159
+Fringe benefits
+Total
+1,159
+1,159
+1,135
+One-year variable compensation
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+Bonus
+1,102
+0
+2,644
+1,135
+1,080
+1,080
+1,080
+Dr. Roland Busch
+Appointed: April 2011
+Deputy CEO since October 2019
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+Performance-based
+compensation
+Benefits granted
+Benefits received
+2019
+1,102
+2019
+2019
+(Max)
+2018
+2019
+2018
+Fixed compensation (base compensation)
+1,102
+1,102
+1,102
+(Min)
+57
+1,176
+1,166
+566
+593
+1,725
+7,004
+3,896
+7,296
+5,149
+Compensation according to applicable reporting standards
+593
+Performance-based
+compensation
+Bonus (payout amount)
+Total compensation
+1,176
+1,216
+3,501
+3,439
+58
+Combined Management Report
+TA: 92.67%
+One-year variable compensation
+1,216
+566
+566
+3,992
+0
+3,420
+1,088
+2,478
+1,358
+1,577
+559
+628
+566
+Other
+3,426
+1,159
+5,683
+3,303
+6,730
+4,556
+Pension service cost
+Total compensation (Code)
+Total non-performance/performance-based compensation
+40
+Combined Management Report
+6,956
+2019
+2018
+Fixed compensation (base compensation)
+2,205
+2,205
+2,205
+2,162
+2,205
+2018
+2,162
+115
+115
+115
+115
+2,320
+2,320
+2,320
+2,277
+Fringe benefits
+Total
+115
+2,320 2,277
+2019
+(Max)
+2019
+No loans or advances from the Company are provided to mem-
+bers of the Managing Board.
+Benefits granted and payments
+made in fiscal 2019
+The following tables show individually for each Managing
+Board member the benefits granted in fiscal 2019 and fiscal
+2018. The actual amounts paid out are reported under "Benefits
+received."
+The amounts of base compensation, the Bonus and fringe bene-
+fits relate to fiscal 2019 and fiscal 2018.
+Target compensation for one-year variable compensation
+(Bonus), including floors and caps, is reported under "Benefits
+granted." The amounts for multi-year variable compensation
+(Siemens Stock Awards) granted in fiscal 2019 reflect the fair
+value on the grant date. The figures for individual maximums
+for one-year variable compensation (Bonus) and multi-year vari-
+able compensation (Siemens Stock Awards) reflect the possible
+maximum value in accordance with the maximum amounts
+agreed upon for fiscal 2019 - that is, 240% and 300% of the
+applicable target amounts. Total maximum compensation for
+fiscal 2019, which is reported as "Total compensation (Code),"
+represents the contractual maximum amount of total com-
+pensation. The maximum amount of total compensation was
+1.7 times target compensation for fiscal 2019 plus two times the
+value of the fringe benefits and pension commitments in fiscal
+2018. The figure of 1.7 times target compensation is reported
+separately as maximum compensation under "Total non-perfor-
+mance-based/performance-based compensation." Target com-
+pensation equals the total of base compensation, the target
+amount for the one-year variable compensation (Bonus) and
+the target amount for multi-year variable compensation
+(Siemens Stock Awards).
+Total compensation in accordance with the applicable account-
+ing standards is also reported under "Benefits granted." Instead
+of the target amount for one-year variable compensation (Bonus)
+specified by the Code, this figure includes the actual Bonus paid
+out and excludes the pension service cost.
+(Min)
+The payments made in 2019 and 2018 are reported under "Bene-
+fits received." The payouts for stock-based compensation refer to
+grants for fiscal 2015, 2014 and 2013. The benefits received for
+2019 are significantly higher because in fiscal 2019 there was a
+one-time transfer of two tranches of the Siemens Stock Awards
+(for details, see "Information about the transfer of the 2014 and
+2015 tranches").
+Combined Management Report
+Joe Kaeser
+Appointed: May 2006
+President and CEO since August 2013
+Benefits granted
+Benefits received
+2019
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+56
+115
+Performance-based
+compensation
+One-year variable compensation
+11,370
+6,613
+12,978
+8,391
+1,207
+1,271
+1,207
+7,820
+2,320
+1,271 1,271
+3,590 14,021
+14,249
+Compensation according to applicable reporting standards
+Performance-based
+compensation
+One-year variable compensation
+Bonus (payout amount)
+2,502
+2,505
+Total compensation
+7,151
+9,597
+6,854
+1,271
+8,125
+Total compensation (Code)
+Pension service cost
+Bonus
+2,205
+0
+5,292
+2,162
+2,502
+2,505
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+2,330
+0
+6,834
+2,175
+4,647
+2,580
+2,800
+931
+809
+Other
+Total non-performance/performance-based compensation
+6,639
+€480,000
+€500,000
+50%
+Maximum grant value
+(based on 200% target attainment)
+age
+EPS
+Cap
+€8.60
++
+Target parameter
+Target value
+(based on 100% target attainment)
+Actual value
+Aver-
+Target attainment
+33.34% Return on capital employed (ROCE)1
+33.33% Earnings per share (EPS), 1,2 basic
+10.84%
+€7.10
+33.33% Individual targets
+11.07%
+€6.99
+92.67%
+Total target attainment
+110% -140%
+Performance range
+(+ €1.50)
+The target setting and target attainment for the Bonus target
+parameters for fiscal 2019 are summarized in the following table.
+Determination of target attainment
+To determine EPS target attainment for fiscal 2019, the EPS target
+of €7.10 - which is the average of the EPS values for 2016, 2017 and
+2018 was compared to the average of the EPS values for fiscal
+2017, 2018 and 2019, which amounted to €6.99. This comparison
+yielded target attainment of 92.67% for the financial target EPS.
+The two averages take account of the Company's long-term perfor-
+mance and provide incentives for a sustainable increase in profit.
+50
+Combined Management Report
+Determining target attainment for EPS
+FY Average EPS
+Target attainment (TA)
+200%
+Target attainment for short-term variable compensation (Bonus)
+2016
+2017
+2018
+2019
+€7.44
+€7.12
+€6.41
+Average 2016-2018
+€7.10 (100% target)
+€6.99 (actual value)
+Average 2017-2019
+Actual value: €6.99
+0%
+Floor
+€5.60
+100% target
+€7.10
+Performance range
+(-€1.50)
+€6.74
+would yield target attainment of 0%, and an EPS of €8.60 would
+yield target attainment of 200%.
+107.67%
+Dr. Roland Busch
+Combined Management Report
+51
+Long-term stock-based compensation
+(Siemens Stock Awards)
+Information about the grant of the 2019 tranche
+Since October 1, 2018, the target amounts for long-term stock-
+based compensation have been as follows:
+> €2,278,000 per year for President and CEO Joe Kaeser
+> €1,140,000 per year for the other Managing Board members.
+In fiscal 2019, the Supervisory Board exercised its option to increase
+the target amount for the Stock Awards on an individual basis by
+as much as 75%. The target amounts for Michael Sen and Prof. Dr.
+Ralf P. Thomas for fiscal 2019 were increased by 25% on a one-time
+basis in recognition of their individual accomplishments and experi-
+ence as well as the scope and demands of their functions, including
+appointments to positions at Siemens companies that are not entailed
+by the Managing Board responsibilities directly assigned to them.
+The grant price applicable for the 2019 tranche was €85.03. The
+Supervisory Board set the grant date at November 9, 2018. The
+target amounts, the maximum grant values and the maximum
+number of Stock Awards granted to each Managing Board mem-
+ber were, accordingly, as follows:
+In fiscal 2019, the Supervisory Board did not exercise its option to
+adjust target attainment upward or downward by up to 20%.
+Information on grant of the 2019 Stock Awards tranche
+Dr. Roland Busch
+Lisa Davis
+Klaus Helmrich
+Janina Kugel
+Cedrik Neike
+Michael Sen
+Prof. Dr. Ralf P. Thomas
+Target amount
+(based on 100% target attainment)
+Joe Kaeser
+Joe Kaeser
+2 The target value equals the average EPS value for fiscal
+2016, 2017 and 2018. The actual value results from the
+average EPS values for fiscal 2017, 2018 and 2019.
+Michael Sen
+Lisa Davis
+113%
+107%
+103%
+110%
+103%
+110%
+107%
+1 Continuing and discontinued operations
+Prof. Dr. Ralf P. Thomas
+Focus topics 2019:
+> Implementation of "Vision 2020+"
+> Market coverage
+› Business performance
+> Optimization/efficiency enhancement
+Klaus Helmrich
+Janina Kugel
+Cedrik Neike
+113%
+€1,000,000 x
+The EPS value that would result in target attainment of 100%
+(EPS target value) corresponds to the average of the EPS values
+for the prior three fiscal years (2016, 2017 and 2018) and
+amounted to €7.10. The EPS values for target attainment of 0%
+and 200% were set for fiscal 2019 as follows: an EPS of €5.60
+The target setting and target attainment for fiscal 2019 for the
+target parameter "profit," measured in terms of earnings per share
+(EPS), were as follows:
+616,896
+604,800
+5,701,811
+5,322,537
+Klaus Helmrich
+616,896
+604,800
+6,473,904
+Lisa Davis²
+5,714,522
+Cedrik Neike
+616,896
+604,800
+2,674,432
+2,157,427
+616,896
+604,800
+2,349,895
+Janina Kugel
+1,757,258
+5,121,226
+604,800
+The expense recognized in fiscal 2019 as a service cost under IFRS
+for Managing Board members' entitlements under the BSAV in
+fiscal 2019 totaled €5.4 million (2018: €5.3 million).
+Contributions under the BSAV are added to the individual pension
+accounts in the January following each fiscal year. Until pension
+payments begin, members' pension accounts are credited with
+an annual interest payment (guaranteed interest) on January 1 of
+each year. The interest rate is currently 0.90%.
+The following table shows the individualized contributions (allo-
+cations) under the BSAV for fiscal 2019 as well as the defined
+benefit obligations for pension commitments:
+(in €)
+Managing Board members
+2019
+Total contribu-
+tions for
+2018
+Defined benefit obligation for all pension
+commitments excluding deferred compensation¹
+6,071,233
+2019
+in office as of September 30, 2019
+Joe Kaeser
+1,234,800
+1,210,440
+14,299,267
+12,970,960
+Dr. Roland Busch
+616,896
+2018
+100% target, floor and cap
+Michael Sen
+604,800
+The target setting and target attainment for fiscal 2019 for the
+target parameter "capital efficiency," which is measured in terms
+of return on capital employed (ROCE), were as follows:
+100% target, floor and cap
+For fiscal 2019, the ROCE value that would result in 100% target
+attainment (ROCE target value) was set by the Supervisory Board
+at 10.84%. The ROCE values that would result in 0% target attain-
+ment and 200% target attainment were set for fiscal 2019 at
+7.84% and 13.84%, respectively.
+Determination of target attainment
+ROCE for fiscal 2019 amounted to 11.07%, resulting in target attain-
+ment of 107.67%.
+Determining target attainment for ROCE
+Target attainment (TA)
+200%
+Target parameter "capital efficiency"
+TA: 107.67%
+ROCE: 11.07%
+0%
+Floor
+7.84%
+100% target
+10.84%
+Performance range
+(-3 percentage points)
+Performance range
+(+3 percentage points)
+➤ ROCE
+Cap
+13.84%
+Target parameter "profit"
+100%
+616,896
+> €1,101,600 per year for the other Managing Board members.
+Since October 1, 2018, the Bonus target amounts have been as
+follows:
+1,862,660
+1,239,785
+Prof. Dr. Ralf P. Thomas
+Total
+616,896
+5,553,072
+604,800
+5,444,040
+6,184,498
+5,235,121
+> €2,205,000 per year for President and CEO Joe Kaeser
+45,617,700
+1 Deferred compensation totals €4,125,612 (2018: €4,115,237),
+including €3,703,123 for Joe Kaeser (2018: €3,694,439),
+€361,494 for Klaus Helmrich (2018: €362,606) and €60,995
+for Prof. Dr. Ralf P. Thomas (2018: €58,192).
+2 In accordance with the provisions of the BSAV, benefits to
+be paid to Lisa Davis are not in any way secured or funded
+through the trust associated with the Company's BSAV plan
+or with any other trust. They represent only an unsecured,
+unfunded legal obligation on the part of the Company to
+pay such benefits in the future under certain conditions,
+and the payout will only be made from the Company's
+general assets.
+In fiscal 2019, former members of the Managing Board and their
+surviving dependents received emoluments within the meaning
+of Section 314 para. 1 No. 6b of the German Commercial Code
+totaling €21.09 million (2018: €39.9 million).
+The defined benefit obligation (DBO) of all pension commit-
+ments to former members of the Managing Board and their sur-
+viving dependents as of September 30, 2019, amounted to
+€175.7 million (2018: €168.2 million). This figure is included in
+→ NOTE 17 in B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+Combined Management Report
+49
+Short-term variable compensation (Bonus)
+39,518,836
+Maximum number of Stock Awards
+(based on 200% target attainment)
+€2,278,000
+€4,556,000
+Joe Kaeser
+€1,900,000 x
+50%
+50%
+96%
+€912,000
+€950,000
+€72.30
+=
+50% 96%
+as of September 30,
+2019
+€480,000
+€1,000,000 ×
+€72.30 =
+50%
+€500,000
+50% 96%
+€870,737
+Lisa Davis³
+€1,814,035 x
+Dr. Roland Busch
+€72.30 =
+(in €)
+Novem-
+ber 7, 2014
+Overview of the 2014 Siemens Stock Awards tranche
+Managing Board
+members in office
+Target
+amount
+(based on
+100% target
+attainment)
+EPS Target
+SPP1 attain-
+ment:
+EPS
+Target
+amount
+per
+compo-
+nent
+Grant
+price
+Novem-
+ber 12, 2018
+Number
+of SSA²
+granted
+attain-
+ment:
+SPP1
+Final
+number
+of SSA²
+Xetra
+closing
+Cash
+payment
+price
+Target
+The following table provides a summary of the key parameters of
+the 2014 Siemens Stock Awards tranche, which was settled in cash:
+50%
+12,615
+13,140
+6,639
+6,916 100%
+12,044
+12,546 100%
+Klaus Helmrich
+€1,000,000 x
+50%
++
+€480,000
+€500,000
+6,639
+6,639
+=
+96%
+€664,962
+x €100.16
+6,916 100%
+6,916
+=
+€692,707
+50%
+96%
+Prof. Dr. Ralf P. Thomas
+€72.30 =
+€907,018
+50%
+=
+100%
+12,615
+13,140
+6,639
+6,916
+=
+€1,263,518
+x
+€100.16
+=
+€1,316,102
+€1,206,327
+€1,256,607
+=
+x
+€100.16
+=
+€692,707
+12,044
+=
+x €100.16
+12,546
+€664,962
+53
+53
+Combined Management Report
+For the 2019 tranche, the Supervisory Board decided to use the
+stock listings of the following competitors for its comparison of
+share performance:
+> ABB Ltd. (Swiss Exchange, Zürich)
+> Eaton Corporation plc. (New York Stock Exchange)
+> General Electric Co. (New York Stock Exchange)
+>
+Mitsubishi Heavy Industries Ltd. (Tokyo Stock Exchange)
+➤ Schneider Electric S.A. (Euronext, Paris).
+This list of competitors is unchanged from fiscal 2018.
+Timetable for the 2019 Stock Awards tranche
+33,518
+Grant and beginning of the vesting period of about four years
+Performance period
+Nov. 2018
+Oct. 2019
+Nov. 2019
+2020
+2021
+Oct. 2022
+Nov. 2022
+Reference period
+62
+€2,850,000
+33,518
+53,582
+€1,140,000
+€2,280,000
+26,815
+€1,140,000
+€2,280,000
+26,815
+€1,140,000
+€1,425,000
+€2,280,000
+€1,140,000
+€2,280,000
+26,815
+€1,140,000
+€2,280,000
+26,815
+€1,425,000
+€2,850,000
+26,815
+52
+Combined Management Report
+Settlement
+through
+transfer
+Rockwell
+$117.49
+$141.48
+20.41%
+Schneider
+€60.66
+€62.40
+Competitors (average)
+Siemens AG
+(6.29%)
+€95.49
+2.87%
+7.67%
+10.08%
+EPS target
+attainment: 96%
+Share price target attainment:1 100%
+Total target attainment: 98%
+1 Up to and including the 2014 tranche of the Siemens Stock Awards, the following target attainment
+curve applied: a deviation (A) of +/-7.5 percentage points yielded target attainment of 100%.
+A = 2.41
+percentage
+points
+105.11
+15.43%
+5.92%
+CHF21.07
+€29.60
+$24.50
+of Siemens
+shares
+Information about the transfer
+of the 2014 and 2015 tranches
+In past years, Managing Board members received Siemens Stock
+Awards for every fiscal year. Starting with the 2015 tranche, the
+plan duration of Siemens Stock Awards was reduced to four years,
+in alignment with prevailing market practices. This reduction re-
+sulted in a one-time transfer of two tranches - the 2014 and the
+2015 tranches in November 2018. The increase in paid compen-
+sation in fiscal 2019 is primarily attributable to this transfer.
+Determination of target attainment for the 2014 tranche
+Up to and including the 2014 tranche, the grant of one-half
+of the Siemens Stock Awards was linked to basic (undiluted)
+earnings per share (EPS). In November 2014, 50% of the Stock
+Awards' target amount was adjusted in accordance with the at-
+tainment of the EPS target and thereafter converted into a corre-
+sponding number of Stock Awards. The remaining 50% of the
+target amount depended on the performance of the Siemens
+share compared to the share performance of relevant competi-
+tors during the roughly four-year vesting period, which lasted
+from November 2014 through October 2018.
+Target attainment for the 2014 Siemens Stock Awards tranche
+50% EPS
+50% share price performance
+Reference
+price
+Performance
+price
+Reference price vs.
+performance price
+EPS target attainment was
+calculated in November
+2014 using the average
+EPS values for fiscal 2012,
+2013 and 2014.
+ABB
+CHF 19.89
+Alstom
+€25.64
+GE
+$26.14
+For fiscal 2019, Managing Board members were granted contribu-
+tions under the BSAV totaling €5.6 million (2018: €5.4 million),
+based on a Supervisory Board decision from November 7, 2019.
+Of this amount, €0.02 million (2018: €0.03 million) relates to the
+funding of pension commitments earned prior to the transfer to
+the BSAV.
+Pension benefit commitments
+Appointed: August 2014
+Lisa Davis¹
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+€40,000
+Benefits granted
+6,740
+3,143
+Pension service cost
+586
+586
+586
+Total compensation (Code)
+3,319
+4,315
+7,521
+596
+3,915
+586
+7,325
+596
+3,738
+Compensation according to applicable reporting standards
+Performance-based
+compensation
+1,756
+One-year variable compensation
+6,168
+3,730
+0
+2,644
+1,080
+1,250
+1,216
+1,457
+0
+1,171
+4,275
+2,478
+1,358
+751
+483
+24
+Other
+Total non-performance/performance-based compensation
+1,088
+1,102
+Bonus (payout amount)
+Total compensation
+1,216
+Non-forfeit-
+Forfeitable
+able Bonus
+Awards
+grants
+Stock
+Awards
+Forfeitable
+Stock
+Awards
+Awards and
+Bonus
+Non-forfeit-
+Awards
+Stock
+Awards
+grants
+grants
+grants
+grants
+able Bonus
+Awards
+grants
+Stock
+1,250
+Expenses for stock-based
+compensation (in €)
+Forfeited
+during
+fiscal year
+3,878
+3,455
+64
+Combined Management Report
+A.10.1.3 ADDITIONAL DISCLOSURES ON
+STOCK-BASED COMPENSATION INSTRUMENTS
+IN FISCAL 2019
+Balance at end of
+fiscal 20192
+The following table shows changes in the balance of the Stock
+Awards held by Managing Board members in fiscal 2019. The table
+also includes the expenses for each individual Managing Board
+member arising from stock-based compensation recognized in
+accordance with IFRS in fiscal 2019 and fiscal 2018.
+Vested and
+Balance at beginning of
+fiscal 2019
+Granted
+during
+fiscal year¹
+settled
+during
+fiscal year
+(Amounts in number of units)
+Bonus
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+One-year variable compensation
+6,168
+Pension service cost
+Total compensation (Code)
+562
+4,393
+562
+562
+1,834
+1,272
+8,397
+2,448
+2,841
+562
+3,010
+559
+3,400
+Compensation according to applicable reporting standards
+Performance-based
+compensation
+3,757
+559
+4,316
+One-year variable compensation
+3,831
+Other
+170
+510
+1,272
+1,590
+One-year variable compensation
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+Bonus
+Total non-performance/performance-based compensation
+1,102
+2,644
+1,080
+1,176
+1,252
+1,457
+0 4,275
+1,088
+0
+Bonus (payout amount)
+Total compensation
+1,176
+1,252
+1,102
+1,080
+Fringe benefits
+69
+69
+69
+72
+1,080
+69
+Total
+1,171
+1,171
+1,171
+1,152
+1,171
+1,152
+72
+1,102
+1,102
+1,102
+3,906
+3,929
+Combined Management Report
+63
+Prof. Dr. Ralf P. Thomas
+Appointed: September 2013
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+Performance-based
+compensation
+Benefits granted
+Benefits received
+2019
+2019
+(Min)
+2019
+(Max)
+2018
+2019
+2018
+Fixed compensation (base compensation)
+Forfeitable
+Stock
+Awards
+grants
+2019
+2018
+Managing Board
+66
+Combined Management Report
+In addition, the following key changes will be made to the system:
+> The short-term variable component (Bonus) will continue to
+be based on two key financial figures, each of which will have
+a one-third weighting. For Managing Board members with
+responsibilities for an individual business one of these two key
+figures will be measured at the level of that business in order
+to take due account of the operational implementation of the
+Company strategy. For Managing Board members with primar-
+ily functional responsibilities (for example, finance), both key
+financial figures will continue to be measured at the Group
+level. Individual targets will still have a one-third weighting.
+> For long-term stock-based compensation (Stock Awards), the
+performance of Siemens AG on the capital market will be
+compared to a broad sector index (MSCI World Industrials) on
+the basis of total shareholder return (TSR). In view of the
+planned and announced changes in the business portfolio of
+Siemens AG, MSCI World Industrials offers a stable, strategi-
+cally relevant metric over the term of a tranche. By taking ac-
+count of share price performance and dividends paid, TSR
+reflects the overall performance of the Siemens share.
+> To anchor environmental, social & governance (ESG) factors
+and sustainability in the Managing Board compensation sys-
+tem, a second performance criterion will be introduced for the
+Stock Awards in the form of a Siemens-internal ESG/Sustain-
+ability Index, which is based on three equally weighted met-
+rics. The ESG metrics will reflect relevant strategic and socio-
+political topics.
+Compensation caps/contract provisions
+The Managing Board compensation system is intended to comply
+with regulatory requirements as well as to be appropriate and in
+line with prevailing market practice. As a result, the following
+adjustments to the design of the compensation system have
+been or will be implemented as of fiscal 2020:
+profitable development as a whole. As an important step in the
+move to tie compensation more closely to long-term Company
+development, the proportion of Stock Awards in target total com-
+pensation will be increased for all Managing Board members.
+In addition, the Share Ownership Guidelines, which are already
+ambitious, will be retained.
+> The current caps of 200% of the target amount for the Bonus
+and 300% of the target amount for Stock Awards will be
+retained. In addition, the Supervisory Board of Siemens AG
+has defined maximum Managing Board compensation for
+fiscal 2020.
+> A maximum amount of fringe benefits has been defined rela-
+tive to base salary. This amount caps the benefits that can be
+paid to a Managing Board member.
+In the future, the pension benefit contribution will be set as a
+fixed amount rather than in relation to base compensation
+plus the Bonus target amount. Furthermore, in lieu of a de-
+fined contribution to pension benefits, the Supervisory Board
+may grant newly appointed Managing Board members an
+amount to be used at the member's discretion.
+> Newly appointed Managing Board members and members
+whose employment contracts are renewed are not entitled to
+a severance payment if they terminate their employment in
+the event of a change of control.
+The existing scope of the clawback and malus regulations will
+be expanded for both the Bonus and the Stock Awards.
+Transparency
+With its revised compensation system for the Managing Board
+and in line with regulatory requirements and feedback from
+various stakeholders, Siemens has further enhanced its level of
+transparency. Shareholders and other stakeholders should al-
+ways be able to understand clearly how the system for compen-
+sating Managing Board members helps implement the Compa-
+ny's strategy and fosters its sustainable development.
+In the future, the Compensation Report will include the relevant
+performance criteria for the following fiscal year's Bonus, to-
+gether with the corresponding key figures. The key figures for the
+Siemens ESG/Sustainability Index that have been selected for the
+new tranche of Stock Awards will also be published.
+> The Supervisory Board's option to adjust the Bonus payout
+amount upwards or downwards by as much as 20% at its duty-
+bound discretion has been eliminated. As a result, the maxi-
+mum Bonus payout amount has been reduced from 240% to
+200% of the target amount.
+The target values, target ranges and target attainment for the
+Bonus-related key financial figures in a reporting year will be pub-
+lished retroactively in the Compensation Report. The target values,
+target ranges and target attainment measured in terms of capital
+market performance and of the Siemens ESG/Sustainability Index
+will be published for the relevant Stock Awards tranches after the
+expiration of the vesting period.
+"Vision 2020+"/sustainable company development
+With "Vision 2020+,” Siemens has set the course for sustainable
+value creation through accelerated growth and stronger profit-
+ability. The aim of "Vision 2020+" is to give the Company's individ-
+ual businesses considerably more entrepreneurial freedom and
+more responsibility for their results. This realignment requires
+a Managing Board compensation system that takes greater ac-
+count of Managing Board members' individual achievements and
+responsibilities and provides incentives for Siemens' sustainable,
+Expense reimbursement up to an amount
+defined by the Supervisory Board
+> Supervisory Board can differentiate compensation structure
+by function as long as long-term focus is guaranteed
+Functional responsibilities
+■33.34% Group (generally EPS)
+33.33% Group (generally
+ROCE)
+33.33% individual targets
+No adjustment option
+Payout cap: 200%
+Defined BSAV contribution in euros; option for new appointees
+to receive amount for use at their discretion
+Business responsibilities
+■33.34% Group (generally EPS)
+■33.33% business (generally
+profit margin)
+80% based on TSR vs. MSCI World Industrials
+20% based on a Siemens-internal ESG/Sustainability Index
+comprising three key performance indicators, such as CO2 emissions
+Bonus and Stock Awards, expanded scope
+Expense reimbursement
+BSAV contribution as percentage of target cash compensation
+Fringe benefits
+Pension benefit
+commitments
+■33.33% individual targets
+Combined Management Report
+67
+Targets for fiscal 2020
+Committee
+Finance Committee
+Chair
+€160,000
+Chair
+€120,000
+Chair
+€100,000
+Chair
+€80,000
+Chair
+€80,000
+Compliance Committee
+Member
+Member
+Member
+Member
+€80,000
+€80,000
+€60,000
+€40,000
+Member
+Innovation and
+Compensation
+Chairman's Committee
+A.10.2 Compensation of
+On September 18, 2019, the Supervisory Board of Siemens AG Supervisory Board members
+approved the following performance criteria for the short-term
+variable compensation component (Bonus) for fiscal 2020:
+> for "Siemens Group," the performance criterion "profit," meas-
+ured in terms of basic earnings per share (EPS)
+> for "Managing Board portfolio," the performance criterion
+"profitability/capital efficiency," measured in terms of return
+on capital employed (ROCE) for Managing Board members
+with primarily functional responsibility, and in terms of the
+profit margin of the relevant business for Managing Board
+members with business responsibility.
+The Supervisory Board also approved the following performance
+criteria for the 2020 Siemens Stock Awards tranche (vesting pe-
+riod: November 2019 to November 2023):
+> "long-term value creation," measured in terms of total share-
+holder return (TSR) relative to the MSCI World Industrials index
+> "sustainability," measured in terms of the Siemens ESG/Sus-
+tainability Index and taking into account the following three
+equally weighted key factors: CO2 emissions (environmental),
+learning hours per employee (social) and Net Promoter Score
+(governance).
+The current compensation policies for the Supervisory Board
+were authorized at the Annual Shareholders' Meeting on Janu-
+ary 28, 2014, and have been in effect since fiscal 2014. Details
+are set out in Section 17 of the Articles of Association of
+Siemens AG. Supervisory Board compensation consists entirely
+of fixed compensation; it reflects the responsibilities and scope
+of the work of the Supervisory Board members. The Chairman
+and Deputy Chairs of the Supervisory Board, as well as the chairs
+and members of the Audit Committee, the Chairman's Commit-
+tee, the Compensation Committee, the Compliance Committee
+and the Innovation and Finance Committee receive additional
+compensation.
+Under the current rules, the members of the Supervisory Board
+receive an annual base compensation, and the members of the
+Supervisory Board committees receive additional compensation
+for their committee work.
+Compensation of members of the Supervisory Board and its committees
+Performance-based
+compensation
+€280,000
+Base compensation of Supervisory Board
+Deputy Chairs
+€220,000
+Additional compensation for committee work
+Member
+€140,000
+Audit Committee
+> Reinforcement of long-term focus by increasing percentage
+of Stock Awards
+510
+Compensation system starting in fiscal 2020
+Bonus and Stock Awards
+26,815
+32,764
+64,316
+Janina Kugel
+48,135
+26,815
+11,656
+65,441
+63,294
+Cedrik Neike³
+Michael Sen
+Prof. Dr. Ralf P. Thomas
+Total
+17,192
+26,815
+44,007
+128,045 1,231,410 3,474,486
+64,316 606,684 1,785,096
+64,316 605,764 1,701,198
+606,940 1,785,401
+578,552 1,566,652
+557,575
+4,824
+39,551
+members in office as
+of September 30, 2019
+Joe Kaeser
+9,296
+127,189
+53,582
+62,022
+Klaus Helmrich
+Dr. Roland Busch
+65,441
+26,815
+33,518
+Lisa Davis
+576
+76,476
+26,815
+5,578
+419,403
+22,394
+33,518
+Uniform allocation of target direct compensation:
+Base compensation
+33%
+Bonus
+33%
+Compensation
+structure
+Stock Awards
+Aspect
+34%
+33.34% ROCE
+33.33% individual targets
+Adjustment option up to ±20%
+Payout cap: 240%
+Bonus
+100% share price performance vs. comparison
+group of five competitors
+Stock Awards
+33.33% EPS
+Compensation system until fiscal 2019
+Overview of changes in Managing Board compensation
+The key changes in the compensation system for Managing Board
+members are explained below.
+4,824
+25,098
+65,441
+487,709
+33,518
+254,693
+32,764
+212,275
+55,912 716,334
+71,019 679,797 1,855,216
+555,225 5,583,058 13,240,953
+653,500
+1 The resulting fair value per awarded share at grant date in
+fiscal 2019 was €43.48.
+2 The figures take into account the Stock Awards granted
+in November 2018 for fiscal 2019.
+In fiscal 2019, a gain from stock-based compensation for former
+members of the Managing Board amounting to €928,067 was
+recognized in accordance with IFRS. The gain was due to the re-
+versal of accrued provisions, which were recognized as income.
+These provisions exceeded the payout for the Stock Awards and
+Bonus Awards that were transferred in fiscal 2019 or exceeded
+the provisions required for the portions of the 2016 and 2017
+tranches to be settled in cash. Settlement of Stock Awards for
+former Managing Board members via the transfer of Siemens
+shares typically takes place after the expiration of the relevant
+vesting period.
+3 The reported figures include the Stock Awards granted to
+Cedrik Neike for his position as Executive Chairman of the
+Board of Directors of Siemens Ltd. China.
+Combined Management Report
+65
+A.10.1.4 OUTLOOK FOR FISCAL 2020
+Due to the strategic realignment of the Siemens Group under
+"Vision 2020+," the draft version of the German Corporate Gover-
+nance Code of May 9, 2019, and the draft of the act transposing
+the second European Shareholder Rights Directive into German
+law (ARUG II), the compensation system for Managing Board
+members was thoroughly reviewed and further developed in fis-
+cal 2019. The Compensation Committee prepared a recommenda-
+tion for a revision of the compensation system that was submitted
+to the Supervisory Board and approved by that body on Septem-
+ber 18, 2019. The revised compensation system applies to all
+members of the Managing Board in office as of October 1, 2019,
+and to all new appointments and reappointments thereafter.
+Plans call for submitting the revised compensation system to the
+Annual Shareholders' Meeting for endorsement in February 2020.
+Malus/clawback
+170
+1,272 1,590
+Chairman
+1,272
+1,124
+One-year variable compensation
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+Bonus
+1,102
+0
+2,644
+1,147
+1,080
+1,288
+1,166
+0
+3,420
+1,088
+2,478
+1,358
+1,213
+1,577
+1,124
+1,147
+2018
+Fixed compensation (base compensation)
+Fringe benefits
+Total
+1,102
+1,102
+1,102
+1,080
+2019
+1,102
+1,147
+2018
+45
+45
+45
+44
+45
+44
+1,147
+1,080
+2019
+(Max)
+483
+Other
+1,213
+1,288
+3,526
+3,499
+60
+Combined Management Report
+Janina Kugel
+Bonus (payout amount)
+Total compensation
+Appointed: February 2015
+Performance-based
+compensation
+Benefits granted
+Benefits received
+2019
+2019
+(Min)
+2019
+(Max)
+2018
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+619
+One-year variable compensation
+Compensation according to applicable reporting standards
+Total non-performance/performance-based compensation
+3,415
+1,147
+5,683
+3,291
+6,679
+4,608
+Performance-based
+compensation
+Pension service cost
+618
+4,033
+618
+1,765
+618
+6,980
+593
+3,884
+618
+7,297
+593
+5,201
+Total compensation (Code)
+2019
+(Min)
+2019
+Benefits received
+401
+729
+401
+Total
+1,853
+1,853
+1,853
+751
+1,481
+1,481
+One-year variable compensation
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)³
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+Bonus
+1,102
+0
+2,644
+1,830
+1,080
+751
+Fringe benefits²
+1,272
+Benefits received
+2019
+2019
+(Min)
+2019
+(Max)
+2018
+751
+2019
+Fixed compensation (base compensation)
+1,102
+1,102
+1,102
+1,080
+1,102
+1,080
+2018
+1,140
+1,180
+1,166
+Compensation according to applicable reporting standards
+Performance-based
+One-year variable compensation
+compensation
+Bonus (payout amount)
+Total compensation
+1,140
+4,158
+1,180
+3,749
+581
+3,242
+1 Lisa Davis's compensation is paid out in Germany in euros.
+It has been agreed that any tax liability that arises due to tax
+rates that are higher in Germany than in the U. S. will be
+reimbursed. In addition, a currency adjustment payment was
+granted for base compensation in calendar years 2017 and
+2018 as well as for the Bonus for fiscal years 2017 and 2018.
+3 The amount reported under "Benefits received" includes
+€2,236,573 from the settlement of Siemens Stock Awards
+that were granted to Lisa Davis in fiscal 2014 as com-
+pensation for the forfeiture of entitlements granted by her
+previous employer.
+Combined Management Report
+59
+Klaus Helmrich
+Appointed: April 2011
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+Performance-based
+compensation
+Benefits granted
+2 The fringe benefits reported under "Benefits granted"
+(fiscal 2019) also include fringe benefits of €22,288, which
+will be paid out in October 2019 (fiscal 2020).
+8,580
+4,230
+611
+0 3,420
+1,088
+2,478
+2,463
+58
+Other
+Total non-performance/performance-based compensation
+4,120
+Pension service cost
+Total compensation (Code)
+611
+4,731
+1,853
+611
+2,464
+5,683
+611
+7,696
+3,649
+7,969
+2,661
+581
+Fixed compensation (base compensation)
+1,102
+68 Combined Management Report
+1,102
+1,088
+Other
+1,457
+Total non-performance/performance-based compensation
+Pension service cost
+3,386
+1,118
+5,683
+3,420
+3,277
+568
+3,954
+568
+1,686
+568
+6,951
+553
+2,331
+568
+3,710
+3,830
+Total compensation (Code)
+2,899
+0
+1,144
+17
+29
+1,118
+1,118
+1,118
+1,109
+1,118
+1,166
+1,109
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+Bonus
+1,102
+0
+2,644
+1,080
+1,213
+One-year variable compensation
+29
+4,263
+Performance-based
+(Min)
+2019
+(Max)
+2018
+170
+170
+Fringe benefits
+1,080
+2019
+1,102
+1,102
+1,102
+1,102
+Fixed compensation (base compensation)
+2018
+2019
+1,102
+1,080
+Compensation according to applicable reporting standards
+2019
+Benefits granted
+compensation
+Total
+One-year variable compensation
+Bonus (payout amount)
+Total compensation
+1,213
+3,497
+1,144
+3,341
+1 In addition to his role as a member of the Managing Board of
+Siemens AG, Cedrik Neike served as Executive Chairman of
+the Board of Directors of Siemens Ltd. China until March 31,
+2019. Of the fixed compensation and payout amount for
+one-year variable compensation reported here (see "Benefits
+received"), an amount of €262,260 (2018: €514,725) was
+granted and paid by Siemens Ltd. China and deducted from
+the compensation for his Managing Board activities at
+Siemens AG. Of the multi-year variable compensation
+and fringe benefits reported here (see "Benefits granted"),
+amounts of €131,359 (2018: €261,625) and €10,842
+(2018: €13,409), respectively, were granted and paid by
+Siemens Ltd. China. In addition, it has been agreed that
+Siemens AG will offset, as a net amount, any personal tax
+burden that, due to Cedrik Neike's two employment relation-
+ships, exceeds the burden that he would incur if he paid
+tax solely on the benefits granted to him under his employ-
+ment contract with Siemens AG in Germany. Siemens AG
+will also offset, as a net amount, any burdens due to charges
+and contributions to social insurance or comparable statutory
+systems in China additional to those he incurs in Germany.
+To date, no such offset payments have been made.
+Benefits received
+2 To compensate for the forfeiture of stock at his previous
+employer, the Supervisory Board granted Cedrik Neike a
+one-time amount of €4,200,000 in fiscal 2017. Of this
+amount, 75% was granted in the form of non-forfeitable
+Siemens Phantom Stock Awards and the remaining 25% as
+a special pension benefit contribution. One half of these
+Siemens Phantom Stock Awards fell due and was settled in
+September 2017. The other half fell due and was settled
+62
+62
+Combined Management Report
+Michael Sen
+Appointed: April 2017
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+Performance-based
+compensation
+in September 2018. The value of these Siemens Phantom
+Stock Awards depended solely on the performance of the
+Siemens share.
+17
+553
+17
+Total compensation (Code)
+17
+1,120
+1,142
+1,142
+1,142
+1,080
+40
+Pension service cost
+20181
+40
+41
+41
+41
+Fringe benefits
+Total
+584
+3,994
+1,142
+584
+1,727
+2019
+1,102
+41
+5,683
+3,410
+Other 2,3
+1,142
+1,120
+One-year variable compensation
+Multi-year variable compensation
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2018 (Vesting period: 2017-21)
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2014 (Vesting period: 2014-18)
+Stock Awards 2013 (Vesting period: 2013-17)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Bonus Awards 2013 (Waiting period: 2013-17)
+Bonus
+1,102
+0
+Total non-performance/performance-based compensation
+2,644
+1,140
+1,144
+1,166
+0
+3,420
+1,088
+1,652
+1,080
+3,288
+1,080
+453
+1,144
+3,352
+258
+4,192
+2 To compensate for the forfeiture of stock at her previous
+employer, Janina Kugel was granted a special allocation of
+3,999 Siemens Stock Awards in February 2014. This commit-
+ment arose out of an entitlement that Janina Kugel had
+acquired when she was an employee of Siemens AG before
+she became a member of the Managing Board. In Febru-
+ary 2018, after expiration of the four-year vesting period,
+the Siemens Stock Awards were settled in cash. The value
+of these Siemens Stock Awards is reported under "Other"
+(see "Benefits received," fiscal 2018).
+3 Janina Kugel was appointed to the Managing Board, effec-
+tive February 1, 2015. The value of Siemens Phantom Stock
+Awards granted to Janina Kugel upon her appointment for
+fiscal 2015 on a pro rata basis and settled in November 2018
+following the expiration of the four-year vesting period is
+reported under "Stock Awards 2015 (Vesting period 2014-18)."
+Furthermore, Janina Kugel was entitled to Siemens Stock
+Awards from the 2014 and 2015 tranches acquired when
+she was an employee of Siemens AG, before she became
+a member of the Managing Board. These Stock Awards were
+also settled in November 2018, and their value is reported
+under "Other" (see "Benefits received," fiscal 2019).
+Combined Management Report
+61
+Cedrik Neike¹
+Appointed: April 2017
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+Performance-based
+compensation
+Benefits granted
+Benefits received²
+1,140
+3,448
+2019
+2019
+(Max)
+2018
+2019
+2018
+Fixed compensation (base compensation)
+Fringe benefits
+Total
+1,102
+1,102
+1,102
+1,080
+1,102
+1,080
+2019
+(Min)
+Bonus (payout amount)
+Total compensation
+1 At the beginning of fiscal 2018, Janina Kugel was also
+entitled to 2.501 matching shares from the Share Matching
+Program (see → NOTE 26 in B.6 NOTES TO CONSOLIDATED
+FINANCIAL STATEMENTS). She had acquired this entitlement
+when she was an employee of Siemens AG before she
+became a member of the Managing Board. The entitlement
+fell due and was settled in February 2018. At the time of
+transfer, the shares had a value equivalent to €291.37.
+One-year variable compensation
+Performance-based
+compensation
+Compensation according to applicable reporting standards
+577
+3,295
+2,718
+584
+4,777
+584
+6,974
+577
+3,865
+72 Combined Management Report
+In addition to selling them over the stock exchange or through a
+public sales offer to all shareholders, the Managing Board is autho-
+rized by resolution of the Shareholders' Meeting on January 27, 2015
+to also use Siemens shares repurchased on the basis of this or any
+previously given authorization for every permissible purpose, in
+particular as follows: Such Siemens shares may be
+> retired
+used in connection with share-based compensation programs
+and/or employee share programs of the Company or any of its
+affiliated companies and issued to individuals currently or for-
+merly employed by the Company or any of its affiliated com-
+panies as well as to board members of any of the Company's
+affiliated companies
+> sold, with the approval of the Supervisory Board, to third parties
+against payment in cash if the price at which such Siemens
+shares are sold is not significantly lower than the market price
+of Siemens stock (exclusion of subscription rights, limited to
+10% of the capital stock, by mutatis mutandis application of Sec-
+tion 186 para. 3 sentence 4 German Stock Corporation Act) or
+> used to service or secure obligations or rights to acquire
+Siemens shares arising particularly from or in connection with
+convertible bonds or warrant bonds issued by the Company or
+any of its consolidated subsidiaries (exclusion of subscription
+rights, limited to 10% of the capital stock, by mutatis mutandis
+application of Section 186 para. 3 sentence 4 German Stock
+Corporation Act).
+According to Section 179 of the German Stock Corporation Act,
+any amendment to the Articles of Association requires a resolu-
+tion of the Shareholders' Meeting. The authority to adopt purely
+formal amendments to the Articles of Association was trans-
+ferred to the Supervisory Board under Section 13 para. 2 of the
+Articles of Association. In addition, by resolutions of the Share-
+holders' Meetings, the Supervisory Board has been authorized to
+amend Section 4 of the Articles of Association in accordance with
+the utilization of the Authorized and Conditional Capitals, and
+after expiration of the then-applicable authorization and utiliza-
+tion period.
+Furthermore, the Supervisory Board is authorized to use shares
+acquired on the basis of this or any previously given authoriza-
+tion to meet obligations or rights to acquire Siemens shares that
+were or will be agreed with members of the Managing Board
+within the framework of rules governing Managing Board com-
+pensation.
+In November 2018, the Company announced that it would carry
+out a share buyback of up to €3 billion in volume until Novem-
+ber 15, 2021 at the latest. The buyback commenced on Decem-
+ber 3, 2018 using the authorizations given by the Annual Share-
+holders' Meeting on January 27, 2015. Under this share buyback
+Siemens repurchased 10,189,078 shares by September 30, 2019.
+The total consideration paid for these shares amounted to about
+€982 million (excluding incidental transaction charges). The buy-
+back has the exclusive purposes of retirement, of issuing shares
+to employees, board members of affiliated companies and mem-
+bers of the Managing Board of Siemens AG, and of servicing/se-
+curing the obligations or rights to acquire Siemens shares arising
+particularly from or in connection with convertible bonds and
+warrant bonds. As of September 30, 2019, the Company held
+37,232,048 shares of stock in treasury.
+For details on the authorizations referred to above, especially
+with the restrictions to exclude subscription rights and the
+terms to include shares when calculating such restrictions,
+please refer to the relevant resolution and to Section 4 of the
+Articles of Association.
+The appointment and removal of members of the Managing
+Board is subject to the provisions of Sections 84 and 85 of the
+German Stock Corporation Act and Section 31 of the German Co-
+determination Act (Mitbestimmungsgesetz). According to Sec-
+tion 8 para. 1 of the Articles of Association, the Managing Board
+is comprised of several members, the number of which is deter-
+mined by the Supervisory Board.
+Articles of Association
+> offered and transferred, with the approval of the Supervisory
+Board, to third parties against non-cash contributions
+The Company may not repurchase its own shares unless so au-
+thorized by a resolution duly adopted by the shareholders at a
+general meeting or in other very limited circumstances set forth
+in the German Stock Corporation Act. On January 27, 2015, the
+Shareholders' Meeting authorized the Company to acquire until
+January 26, 2020 up to 10% of its capital stock existing at the
+date of adopting the resolution or - if this value is lower - as of
+the date on which the authorization is exercised. The aggregate
+of shares of stock of Siemens AG repurchased under this autho-
+rization and any other Siemens shares previously acquired and
+still held in treasury by the Company or attributable to the Com-
+pany pursuant to Sections 71d and 71e of the German Stock Cor-
+poration Act may at no time exceed 10% of the then existing
+capital stock. Any repurchase of Siemens shares shall be accom-
+plished at the discretion of the Managing Board either (1) by ac-
+quisition over the stock exchange or (2) through a public share
+repurchase offer. The Managing Board is additionally authorized
+to complete the repurchase of Siemens shares in accordance
+with the authorization described above by using certain deriva-
+tives (put and call options, forward purchases and any combina-
+tion of these derivatives). In exercising this authorization, all
+stock repurchases based on the derivatives are limited to a max-
+imum volume of 5% of Siemens' capital stock existing at the date
+of adopting the resolution at the Shareholders' Meeting. A deriv-
+ative's term of maturity may not, in any case, exceed 18 months
+and must be chosen in such a way that the repurchase of Siemens
+shares upon exercise of the derivative will take place no later
+than January 26, 2020.
+> The exclusion is used to grant holders of conversion or option
+rights or conversion or option obligations on Siemens shares
+The new shares issued or to be issued in exchange for contribu-
+tions in cash and in kind and with shareholders' subscription
+rights excluded, may in certain cases be subject to further restric-
+tions. The details of those restrictions are described in the rele-
+vant authorization. In addition, the Managing Board has issued
+the commitment not to increase the capital stock from the
+Authorized Capital 2019 and the Conditional Capital 2019 by a
+total of more than 10% of the capital stock existing at the time of
+the Shareholders' Meeting on January 30, 2019, to the extent
+that capital increases with shareholders' subscription rights ex-
+cluded are made from the Authorized Capital 2019 against con-
+tributions in cash or in kind or to service convertible bonds and/
+or warrant bonds issued under the authorization approved on
+January 30, 2019 with shareholders' subscription rights excluded.
+This commitment ends no later than January 29, 2024.
+a compensation for the effects of dilution.
+> The exclusion is necessary with regard to fractional amounts
+resulting from the subscription ratio.
+> The issue price of the new shares/bonds is not significantly
+lower than the stock market price of the Siemens shares al-
+ready listed or the theoretical market price of the bonds com-
+puted in accordance with generally accepted actuarial meth-
+ods (exclusion of subscription rights, limited to 10% of the
+capital stock, in accordance with or by mutatis mutandis ap-
+plication of Section 186 para. 3 sentence 4 German Stock Cor-
+poration Act).
+The new shares under Authorized Capital 2019 and the aforemen-
+tioned bonds are to be issued against cash or non-cash contribu-
+tions. They are, as a matter of principle, to be offered to share-
+holders for subscription. The Managing Board is authorized to
+exclude, with the approval of the Supervisory Board, subscription
+rights of shareholders in the event of capital increases against
+contributions in kind. In the event of capital increases against
+contributions in cash, the Managing Board is authorized to ex-
+clude shareholders' subscription rights with the approval of the
+Supervisory Board in the following cases:
+Resolutions of the Shareholders' Meeting require a simple major-
+ity vote, unless a greater majority is required by law. Pursuant to
+Section 179 para. 2 of the German Stock Corporation Act, amend-
+ments to the Articles of Association require a majority of at least
+three-quarters of the capital stock represented at the time of the
+casting of the votes, unless another capital majority is prescribed
+by the Articles of Association.
+A.11.4 Powers of the Managing Board
+to issue and repurchase shares
+The Managing Board is authorized to increase, with the approval
+of the Supervisory Board, the capital stock until January 25, 2021
+by up to €90 million through the issuance of up to 30 million
+registered shares of no par value against contributions in cash
+(Authorized Capital 2016). Subscription rights of existing share-
+holders are excluded. The new shares shall be issued under the
+condition that they are offered exclusively to employees of
+Siemens AG and any of its affiliated companies. To the extent
+permitted by law, employee shares may also be issued in such a
+manner that the contribution to be paid on such shares is covered
+by that part of the annual net income which the Managing Board
+Combined Management Report
+71
+and the Supervisory Board may allocate to other retained earnings
+under Section 58 para. 2 of the German Stock Corporation Act.
+Furthermore, the Managing Board is authorized to increase, with
+the approval of the Supervisory Board, the capital stock until Jan-
+uary 29, 2024 by up to €510 million through the issuance of up
+to 170 million registered shares of no par value against cash con-
+tributions and/or contributions in kind (Authorized Capital 2019).
+As of September 30, 2019, the total unissued authorized capital
+of Siemens AG therefore consisted of €600 million nominal that
+may be used, in installments with varying terms, by issuance of
+up to 200 million registered shares of no par value.
+By resolutions of the Shareholders' Meetings on January 27, 2015
+and January 30, 2019, the Managing Board is authorized to issue
+bonds with conversion, exchange or option rights or with war-
+rants attached, or a combination of these instruments, each en-
+titling the holders to subscribe to up to 80 million registered
+shares of Siemens AG of no par value. Based on these two autho-
+rizations, the Company or consolidated subsidiaries of the Com-
+pany may issue bonds until January 26, 2020 and January 29,
+2024, respectively, each in an aggregate principal amount of up
+to €15 billion. In order to grant shares of stock to holders/credi-
+tors of such convertible bonds or warrant bonds, the capital stock
+was conditionally increased by resolutions of the Shareholders'
+Meetings 2015 and 2019, each by up to 80 million registered
+shares of no par value (Conditional Capitals 2015 and 2019), i.e.
+in total by up to €480 million through the issuance of up to
+160 million registered shares of no par value.
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a
+sustained basis, powers of attorney allowing it to exercise the
+voting rights for 9,862,275 shares (as of September 30, 2019) on
+behalf of members of the Siemens family. These shares are part
+of the total number of shares held by the family's members. The
+powers of attorney are based on an agreement between the VSV
+and, among others, members of the Siemens family. The shares
+are voted together by VSV, taking into account the proposals of a
+family partnership established by the family's members or of one
+of this partnership's governing bodies.
+Shares issued to employees worldwide under the employee share
+programs implemented since the beginning of fiscal 2009, in par-
+ticular the Share Matching Plan, are freely transferable unless
+applicable local laws provide otherwise. Under the rules of the
+program, however, in order to receive one matching share free
+of charge for each three shares purchased, participants are re-
+quired to hold the shares purchased by them for a vesting period
+of several years, during which the participants have to be contin-
+uously employed by Siemens AG or another Siemens company.
+The right to receive matching shares is forfeited if the purchased
+shares are sold, transferred, hedged on, pledged or hypothecated
+in any way during the vesting period.
+A.10.3 Other
+A.11.2 Restrictions on voting rights
+or transfer of shares
+of the Supervisory Board
+Former members
+112,500
+7,500
+105,000
+149,000
+9,000
+140,000
+Reinhard Hahn 1,2
+Total³
+Gunnar Zukunft¹
+12,000
+60,000
+105,000
+244,000
+24,000
+80,000
+140,000
+A.11.5 Significant agreements which
+take effect, alter or terminate upon
+a change of control of the Company
+following a takeover bid
+177,000
+46,667
+3,088,333
+1,617,778
+and obligations are governed in detail by the provisions of the
+German Stock Corporation Act, in particular by Sections 12, 53a et
+seq., 118 et seq. and 186 of the German Stock Corporation Act.
+As of September 30, 2019, the Company's common stock totaled
+€2.550 billion. The capital stock is divided into 850 million regis-
+tered shares of no par value. The shares are fully paid in. All shares
+A.11.3 Legislation and provisions of
+the Articles of Association applicable
+to the appointment and removal
+of members of the Managing Board
+confer the same rights and obligations. The shareholders' rights and governing amendment to the
+A.11.1 Composition of common stock
+(pursuant to Sections 289a para. 1 and 315a para. 1 of the German Commercial Code)
+and explanatory report
+A.11 Takeover-relevant information
+70 Combined Management Report
+The Company provides a group insurance policy for Supervisory
+and Managing Board members and certain other employees of
+the Siemens Group. The policy is taken out for one year at a time
+or renewed annually. It covers the personal liability of the insured
+individuals in cases of financial loss associated with their activi-
+ties on behalf of the Company. The insurance policy for fiscal
+2019 includes a deductible for the members of the Managing
+Board and the Supervisory Board that complies with the require-
+ments of the German Stock Corporation Act and the Code.
+69
+Combined Management Report
+3 Compared to the amounts reported in the 2018 Compen-
+sation Report, this amount does not include compensation
+totaling €543,667 for former Supervisory Board members
+Olaf Bolduan, Dr. Gerhard Cromme, Dr. Hans Michael Gaul,
+Gérard Mestrallet, Güler Sabançi and Sibylle Wankel.
+2 Hagen Reimer was elected a member of the Supervisory
+Board, effective at the end of the Annual Shareholders'
+Meeting on January 30, 2019. He succeeded Reinhard Hahn,
+who left the Supervisory Board, effective the same date.
+1 These employee representatives on the Supervisory Board
+and the representatives of the trade unions on the Super-
+visory Board have declared their willingness to transfer
+their compensation to the Hans Boeckler Foundation, in
+accordance with the guidelines of the Confederation of
+German Trade Unions.
+152,000
+4,812,000
+12,000
+454,500
+1,508,333
+140,000
+2,849,167
+51,167
+5,145,611
+4,500
+439,500
+At the Shareholders' Meeting, each share of stock has one vote
+and accounts for the shareholders' proportionate share in the
+Company's net income. An exception to this rule applies with
+regard to treasury shares held by the Company, which do not
+entitle the Company to any rights. Under Section 136 of the Ger-
+man Stock Corporation Act the voting right of the affected shares
+is excluded by law.
+As of September 30, 2019, Siemens AG maintained a line of credit
+in an amount of €7 billion, which provides its lenders with a right
+of termination in the event that (1) Siemens AG becomes a sub-
+sidiary of another company or (2) a person or a group of persons
+acting in concert acquires effective control over Siemens AG by
+being able to exercise decisive influence over its activities
+(Art. 3(2) of Council Regulation (EC) 139/2004).
+Other financial income (expenses), net
+Framework agreements concluded by Siemens AG under Interna-
+tional Swaps and Derivatives Association Inc. documentation
+(ISDA Agreements) grant each counterparty a right of termina-
+tion, including in certain cases of (i) a transformation (for exam-
+ple mergers and changes of form), (ii) an asset transfer or (iii)
+acquisition of ownership interests that enables the acquirer to
+exercise control over Siemens AG or its controlling bodies. Par-
+tially this right of termination exists only, if (1) the resulting entity
+fails to simultaneously assume Siemens AG's obligations under
+the ISDA Agreements or (2) the resulting entity's creditworthi-
+ness is materially weaker than Siemens AG's immediately prior to
+such event. Generally, ISDA Agreements are designed such that
+upon termination all outstanding payment claims documented
+under them are to be netted.
+3
+5,996
+5,646
+Income from discontinued operations, net of income taxes
+Income from continuing operations
+(2,054)
+(1,872)
+7
+Net income
+Income tax expenses
+7,518
+Income from continuing operations before income taxes
+1,475
+(1,089)
+(1,129)
+(74)
+Matthias Zachert
+Interest expenses
+(3)
+1,481
+8,050
+5,648
+124
+6,120
+Attributable to:
+6.41
+0.15
+6.97
+6.41
+28
+5,807
+5,174
+313
+474
+Consolidated Financial Statements
+76
+Income from discontinued operations
+Net income
+Income from continuing operations
+Diluted earnings per share
+Income from discontinued operations
+Net income
+Income from continuing operations
+Basic earnings per share
+Shareholders of Siemens AG
+Non-controlling interests
+1,634
+In addition, in March 2013 and in June 2019 respectively, a con-
+solidated subsidiary as borrower and Siemens AG as guarantor
+entered into a bilateral loan agreement, each of which has been
+drawn in the full amount of US$500 million. Each agreement
+provides its respective lender with a right of termination in the
+event that (1) Siemens AG becomes a subsidiary of another com-
+pany or (2) a person or a group of persons acting in concert ac-
+quires effective control over Siemens AG by being able to exer-
+cise decisive influence over its activities (Art. 3(2) of Council
+Regulation (EC) 139/2004).
+Interest income
+4
+2019
+Note
+Gross profit
+Cost of sales
+Revenue
+(in millions of €, per share amounts in €)
+Fiscal year
+B.1 Consolidated Statements of Income
+2018
+R
+Consolidated
+Financial Statements
+74 Combined Management Report
+We are not aware of, nor have we during the last fiscal year been
+notified of, any shareholder directly or indirectly holding 10%
+or more of the voting rights. There are no shares with special
+rights conferring powers of control. Shares of stock issued by
+Siemens AG to employees under its employee share program
+and/or as share-based compensation are transferred to the em-
+ployees. The beneficiary employees who hold shares of employee
+stock may exercise their control rights in the same way as any
+other shareholder in accordance with applicable laws and the
+Articles of Association.
+A.11.7 Other takeover-relevant
+information
+As of September 30, 2019, the contracts with the members of the
+Managing Board contained the right of the member to terminate
+his or her contract with the Company for good cause in the event
+of a change of control that results in a substantial change in the
+position of a Managing Board member (for example, due to a
+change in corporate strategy or a change in the Managing Board
+member's duties and responsibilities). A change of control exists
+if one or several shareholders acting jointly or in concert acquire
+a majority of the voting rights in Siemens AG and exercise a con-
+trolling influence, or if Siemens AG becomes a dependent enter-
+prise as a result of entering into an intercompany agreement
+within the meaning of Section 291 of the German Stock Corpora-
+tion Act, or if Siemens AG is to be merged into an existing corpo-
+ration or other entity. If this right of termination is exercised, the
+Managing Board member is entitled to a severance payment in
+the amount of no more than two years' compensation. The cal-
+culation of the annual compensation includes not only the base
+compensation and the target amount for the bonus, but also the
+target amount for the stock awards, in each case based on the
+most recent completed fiscal year prior to termination of the con-
+tract. The stock-based compensation components for which a
+firm commitment already exists will remain unaffected. Addition-
+ally, the severance payments cover non-monetary benefits by
+including an amount of 5% of the total severance amount. Sev-
+erance payments will be reduced by 10% as a lump-sum allow-
+ance for discounted values and for income earned elsewhere.
+However, this reduction will apply only to the portion of the sev-
+erance payment that was calculated without taking account of
+the first six months of the remaining term of the Managing Board
+member's contract. There is no entitlement to a severance pay-
+ment if the Managing Board member receives benefits from third
+parties in connection with a change of control. A right to termi-
+nate the contract does not exist if the change of control occurs
+within a period of twelve months prior to a Managing Board
+member's retirement. On September 18, 2019, the Supervisory
+Board of Siemens AG resolved that the contracts with members
+of the Managing Board shall not contain such right of termina-
+tion in the future.
+A.11.6 Compensation agreements
+with members of the Managing
+Board or employees in the event
+of a takeover bid
+73
+Combined Management Report
+Pages 75-148
+2,30
+86,849
+83,044
+Income (loss) from investments accounted for using the equity method, net
+(678)
+(466)
+6
+Other operating expenses
+500
+442
+5
+Other operating income
+(12,941)
+(13,345)
+Selling and general administrative expenses
+(5,558)
+(5,670)
+Research and development expenses
+24,863
+25,927
+(58,181)
+(60,922)
+199
+152,000
+140,000
+140,000
+140,000
+Michael Diekmann
+240,000
+15,000
+120,000
+105,000
+324,000
+24,000
+160,000
+140,000
+Dr. Werner Brandt
+403,500
+43,500
+140,000
+220,000
+397,500
+37,500
+60,000
+140,000
+15,000
+140,000
+80,000
+140,000
+244,000
+24,000
+80,000
+140,000
+Bettina Haller¹
+112,500
+7,500
+105,000
+149,000
+9,000
+140,000
+Dr. Andrea Fehrmann¹
+216,500
+16,500
+60,000
+215,000
+24,000
+220,000
+477,000
+Total
+Meeting
+attendance
+fee
+Additional
+compen-
+sation for
+committee
+work
+Base
+compen-
+sation
+Total
+fee
+work
+sation
+Meeting
+attendance
+compen-
+sation for
+committee
+Base
+compen-
+Additional
+2018
+2019
+The members of the Supervisory Board are reimbursed for out-
+of-pocket expenses incurred in connection with their duties and
+for any value-added taxes to be paid on their compensation. For
+the performance of his duties, the Chairman of the Supervisory
+Board is also entitled to an office with secretarial support and
+the use of a car service. No loans or advances from the Com-
+pany are provided to members of the Supervisory Board. The
+compensation shown in the following table was determined for
+each Supervisory Board member for fiscal 2019 (individualized
+disclosure).
+In addition, the members of the Supervisory Board are entitled
+to receive a fee of €1,500 for each meeting of the Supervisory
+Board and/or its committees they attend.
+If a Supervisory Board member is absent from any Supervisory
+Board meetings, one-third of the aggregate compensation due to
+that member is reduced by the percentage of Supervisory Board
+meetings he or she does not attend in relation to the total num-
+ber of Supervisory Board meetings held during the fiscal year. In
+the event of changes in the composition of the Supervisory Board
+or its committees, compensation is paid on a pro rata basis,
+rounding up to the next full month.
+(Amounts in €)
+Werner Wenning
+Supervisory Board
+of September 30, 2019
+57,000
+200,000
+220,000
+471,000
+51,000
+200,000
+220,000
+Birgit Steinborn¹
+536,000
+51,000
+240,000
+245,000
+612,500
+52,500
+280,000
+280,000
+Jim Hagemann Snabe
+members in office as
+244,000
+Robert Kensbock¹
+140,000
+7,500
+105,000
+139,722
+7,500
+132,222
+Dame Nemat Shafik (DPhil)
+189,000
+16,500
+38,333
+134,167
+182,000
+12,000
+37,778
+132,222
+Dr. Norbert Reithofer
+109,500
+4,500
+112,500
+105,000
+Dr. Nathalie von Siemens
+40,000
+149,000
+9,000
+140,000
+Dorothea Simon¹
+152,000
+12,000
+140,000
+149,000
+9,000
+140,000
+Michael Sigmund
+185,000
+15,000
+30,000
+140,000
+193,500
+13,500
+140,000
+Hagen Reimer 1,2
+112,500
+7,500
+Jürgen Kerner¹
+244,000
+24,000
+80,000
+140,000
+239,500
+19,500
+80,000
+140,000
+Harald Kern¹
+351,500
+31,500
+180,000
+140,000
+348,500
+28,500
+180,000
+7.12
+200,000
+51,000
+391,000
+105,000
+141,222
+9,000
+132,222
+Benoît Potier
+248,500
+28,500
+80,000
+12,000
+140,000
+25,500
+80,000
+140,000
+Dr. Nicola Leibinger-Kammüller
+394,000
+54,000
+200,000
+140,000
+245,500
+28
+Property, plant and equipment
+6.86
+1,485
+Contract liabilities
+10
+16,452
+14,464
+Current provisions
+18
+3,682
+3,931
+Current income tax liabilities
+2,378
+1,743
+3,102
+9,023
+9,118
+Liabilities associated with assets classified as held for disposal
+2
+1
+Total current liabilities
+50,723
+47,874
+Long-term debt
+16
+6.32
+15
+Other current financial liabilities
+10,716
+11,409
+13
+12,183
+11,381
+Investments accounted for using the equity method
+4
+2,244
+2,579
+14,23
+19,843
+17,774
+7
+3,174
+2,341
+2,475
+1,810
+79,878
+74,359
+150,248
+138,915
+Liabilities and equity
+Short-term debt and current maturities of long-term debt
+16
+6,034
+5,057
+Trade payables
+27,120
+10,131
+Provisions for pensions and similar obligations
+9,896
+Treasury shares, at cost
+Total equity attributable to shareholders of Siemens AG
+Non-controlling interests
+Total equity
+Total liabilities and equity
+6,287
+6,184
+41,818
+41,014
+1,134
+(352)
+Other components of equity
+(3,663)
+48,125
+45,474
+2,858
+2,573
+50,984
+48,046
+150,248
+138,915
+78
+Consolidated Financial Statements
+Compensation for work on the Chairman's Committee counts
+toward compensation for work on the Compensation Committee.
+No additional compensation is paid for work on the Compliance
+Committee if a member of that committee is already entitled to
+compensation for work on the Audit Committee.
+(3,922)
+Retained earnings
+Capital reserve
+2,550
+7,684
+Deferred tax liabilities
+7
+1,305
+1,092
+Provisions
+18
+3,714
+4,216
+Other financial liabilities
+Other liabilities
+Total non-current liabilities
+Total liabilities
+Equity
+Issued capital
+986
+685
+2,226
+2,198
+48,541
+42,995
+99,265
+90,869
+19
+2,550
+17
+9,800
+30,414
+28,344
+Currency translation differences
+Available-for-sale financial assets
+therein: Income tax effects
+1,841
+(287)
+(1,819)
+24
+Derivative financial instruments
+(177)
+(63)
+therein: Income tax effects
+(360)
+69
+Income (loss) from investments accounted for using the equity method, net
+(8)
+(2)
+Items that may be reclassified subsequently to profit or loss
+1,656
+(2,170)
+Other comprehensive income, net of income taxes
+472
+(2,530)
+6,120
+3,590
+24
+(1,184)
+(6)
+3
+0.15
+13
+6.32
+7.01
+B.2 Consolidated Statements of Comprehensive Income
+Fiscal year
+(in millions of €)
+Note
+2019
+2018
+Net income
+5,648
+6,120
+Remeasurements of defined benefit plans
+therein: Income tax effects
+17
+(1,163)
+(360)
+624
+(305)
+Remeasurements of equity instruments
+therein: Income tax effects
+Income (loss) from investments accounted for using the equity method, net
+Items that will not be reclassified to profit or loss
+(15)
+Total comprehensive income
+Attributable to:
+Other current liabilities
+Shareholders of Siemens AG
+12,391
+11,066
+8
+18,894
+18,455
+9
+10,669
+9,427
+10
+10,309
+8,912
+11
+14,806
+13,885
+7
+1,103
+1,010
+1,960
+1,707
+238
+94
+70,370
+64,556
+Non-controlling interests
+30,160
+2018
+2019
+12
+Sep 30,
+Note
+259
+5,581
+3,330
+Consolidated Financial Statements
+77
+B.3 Consolidated Statements of Financial Position
+540
+Assets
+Cash and cash equivalents
+Trade and other receivables
+Other current financial assets
+(in millions of €)
+Inventories
+Total assets
+Contract assets
+Other assets
+Deferred tax assets
+Other financial assets
+Total non-current assets
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Current income tax assets
+Other intangible assets
+Trade and other receivables
+Inventories
+Contract assets
+Change in operating net working capital from
+Other non-cash (income) expenses
+(Income) loss related to investing activities
+Interest (income) expenses, net
+2018
+2019
+Fiscal year
+(2,589)
+B.4 Consolidated Statements of Cash Flows
+(1,432)
+465
+1,033
+1,684
+140
+(671)
+(599)
+(1,486)
+(309)
+(2,061)
+(in millions of €)
+Trade payables
+Amortization, depreciation and impairments
+Additions to assets leased to others in operating leases
+Dividends received
+(614)
+(171)
+(984)
+943
+605
+(1,792)
+(358)
+(392)
+(505)
+2,054
+Contract liabilities
+1,872
+3,419
+3,494
+(124)
+(3)
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+Income from discontinued operations, net of income taxes
+6,120
+5,648
+Net income
+Cash flows from operating activities
+Income taxes paid
+Change in other assets and liabilities
+Income tax expenses
+299
+(1,620)
+Interest received
+362
+Disposal of investments and financial assets for investment purposes
+1,484
+2,338
+Cash flows from investing activities - continuing operations
+(5,012)
+(3,741)
+Cash flows from investing activities – discontinued operations
+1
+(33)
+Cash flows from investing activities - continuing and discontinued operations
+(33)
+(5,011)
+Cash flows from financing activities
+Purchase of treasury shares
+(1,407)
+(1,409)
+Re-issuance of treasury shares and other transactions with owners
+1,044
+4,064
+Issuance of long-term debt
+6,471
+2,734
+(81)
+(3,774)
+270
+261
+(1,161)
+1,540
+1,396
+Cash flows from operating activities - continuing operations
+8,482
+8,415
+Cash flows from operating activities - discontinued operations
+(27)
+10
+Cash flows from operating activities - continuing and discontinued operations
+8,456
+8,425
+238
+Cash flows from investing activities
+Acquisitions of businesses, net of cash acquired
+Purchase of investments and financial assets for investment purposes
+(2,610)
+(2,602)
+(958)
+(525)
+(1,971)
+(1,958)
+Change in receivables from financing activities
+Disposal of intangibles and property, plant and equipment
+Disposal of businesses, net of cash disposed
+Additions to intangible assets and property, plant and equipment
+85
+(3,205)
+Balance as of September 30, 2019
+Share-based payment
+Dividends
+(114)
+99
+(3,060)
+(1,138)
+Other comprehensive income, net of income taxes
+5,174
+Net income
+41,007
+6,184
+2,550
+Balance as of October 1, 2018
+(7)
+Purchase of treasury shares
+Effect of retrospectively adopting IFRS 9
+6,184
+2,550
+Balance as of September 30, 2018 (as previously reported)
+41,014
+6,184
+2,550
+Balance as of September 30, 2018
+(5)
+Other changes in equity
+(11)
+Other transactions with non-controlling interests
+2,884
+Changes in equity resulting from major portfolio transactions
+38
+41,014
+Re-issuance of treasury shares
+Re-issuance of treasury shares
+Other transactions with non-controlling interests
+Property, plant and equipment - Property, plant and equip-
+ment, is valued at cost less accumulated depreciation and impair-
+ment losses. Depreciation expense is recognized using the
+straight-line method. The following useful lives are assumed:
+Factory and office buildings
+Other buildings
+Technical machinery & equipment
+Furniture & office equipment
+Equipment leased to others
+20 to 50 years
+5 to 10 years
+generally 10 years
+generally 5 years
+generally 3 to 7 years
+Impairment of property, plant and equipment and other
+intangible assets - The Company reviews property, plant and
+equipment and other intangible assets for impairment whenever
+events or changes in circumstances indicate that the carrying
+amount of an asset may not be recoverable. In addition, intangi-
+ble assets not yet available for use are subject to an annual impair-
+ment test. Impairment testing of property, plant and equipment
+and other intangible assets involves the use of estimates in deter-
+mining the assets' recoverable amount which can have a material
+impact on the respective values and ultimately the amount of any
+impairment.
+Discontinued operations and non-current assets held for
+disposal - Discontinued operations are reported when a compo-
+nent of an entity is classified as held for disposal or has been
+disposed of, if the component represents a separate major line of
+business or geographical area of operations and is part of a single
+coordinated plan to disposal. A non-current asset or a disposal
+group is held for disposal if its carrying amount will be recovered
+principally through a sale transaction rather than through con-
+tinuing use.
+84 Consolidated Financial Statements
+Income taxes - Tax positions under respective local tax laws and
+tax authorities' views can be complex and subject to different
+interpretations of tax payers and local tax authorities. Different
+interpretations of existing or new tax laws as a result of tax re-
+forms or other tax legislative procedures may result in additional
+tax payments for prior years and are taken into account based
+on management's considerations. Under the liability method,
+deferred tax assets and liabilities are recognized for future tax
+consequences attributable to differences between the financial
+statement carrying amounts of existing assets and liabilities and
+their respective tax bases. Deferred tax assets are recognized if
+sufficient future taxable profit is available, including income from
+forecasted operating earnings, the reversal of existing taxable
+temporary differences and established tax planning opportuni-
+ties. As of each period-end, Siemens evaluates the recoverability
+of deferred tax assets, based on projected future taxable profits.
+Based upon the level of historical taxable income and projections
+for future taxable income over the periods in which the deferred
+tax assets are deductible, Siemens believes it is probable the
+Company will realize the benefits of these deductible differ-
+ences. As future developments are uncertain and partly beyond
+Siemens's control, assumptions are necessary to estimate future
+taxable profits as well as the period in which deferred tax assets
+will recover. Estimates are revised in the period in which there is
+sufficient evidence to revise the assumption.
+Contract assets, contract liabilities, receivables - When ei-
+ther party to a contract with customers has performed, Siemens
+presents a contract asset, a contract liability or a receivable de-
+pending on the relationship between Siemens' performance and
+the customer's payment. Contract assets and liabilities are pre-
+sented as current since incurred in the normal operating cycle.
+Receivables are recognized when the right to consideration
+becomes unconditional. Valuation allowances for credit risks
+are made for contract assets and receivables in accordance with
+the accounting policy for financial assets measured at amor-
+tized cost.
+Inventories - Inventories are valued at the lower of acquisition
+or production costs and net realizable value, costs being gener-
+ally determined based on an average or first-in, first-out method.
+Defined benefit plans - Siemens measures the entitlements by
+applying the projected unit credit method. The approach reflects
+an actuarially calculated net present value of the future benefit
+entitlement for services already rendered. In determining the net
+present value of the future benefit entitlement for service al-
+ready rendered (Defined Benefit Obligation (DBO)), the expected
+rates of future salary increases and expected rates of future pen-
+sion progression are considered. The assumptions used for the
+calculation of the DBO as of the period-end of the preceding fis-
+cal year are used to determine the calculation of service cost and
+interest income and expense of the following year. Significant
+plans apply individual spot rates from full discount rate curves to
+determine service cost and interest expense. The net interest in-
+come or expense for the fiscal year will be based on the discount
+rate for the respective year multiplied by the net defined benefit
+liability (asset) at the preceding fiscal year's period-end date.
+Service cost, past service cost and settlement gains (losses) for
+pensions and similar obligations as well as administration costs
+unrelated to the management of plan assets are allocated among
+functional costs. Past service cost and settlement gains (losses)
+are recognized immediately in profit or loss. For unfunded plans,
+the amount of the line item Provisions for pensions and similar
+obligations equals the DBO. For funded plans, Siemens offsets
+the fair value of the plan assets with the DBO. Siemens recog-
+nizes the net amount, after adjustments for effects relating to
+any asset ceiling.
+Disposal of equity instruments
+Remeasurements comprise actuarial gains and losses as well
+as the difference between the return on plan assets and the
+amounts included in net interest on the net defined benefit lia-
+bility (asset). They are recognized in Other comprehensive in-
+come, net of income taxes.
+(prior year:
+available-for-sale
+financial assets)
+Equity instruments
+lation differences
+Currency trans-
+41,818
+6,287
+2,550
+(9)
+(3)
+(10)
+(30)
+4
+80 Consolidated Financial Statements
+Other changes in equity
+1,845
+Other intangible assets - The Company amortizes intangible
+assets with finite useful lives on a straight-line basis over their
+respective estimated useful lives. Estimated useful lives for pat-
+ents, licenses and other similar rights generally range from three
+to five years, except for intangible assets with finite useful lives
+acquired in business combinations. Intangible assets acquired in
+business combinations primarily consist of customer relation-
+ships and trademarks as well as technology. Useful lives in spe-
+cific acquisitions ranged from four to 20 years for customer rela-
+tionships and trademarks and from five to 25 years for technology.
+(79)
+(3,011)
+Cash flows from financing activities - continuing and discontinued operations
+Cash flows from financing activities - discontinued operations
+(1,946)
+(2,277)
+Cash flows from financing activities - continuing operations
+(126)
+(246)
+Dividends attributable to non-controlling interests
+(3,011)
+(3,060)
+Dividends paid to shareholders of Siemens AG
+(1,002)
+(1,123)
+Interest paid
+(2,277)
+333
+Change in short-term debt and other financing activities
+Repayment of long-term debt (including current maturities of long-term debt)
+(3,530)
+differ
+Entitlements resulting from plans based on asset returns from
+underlying assets are generally measured at the fair value of the
+underlying assets at period-end. If the performance of the under-
+lying assets is lower than a guaranteed return, the DBO is mea-
+sured by projecting forward the contributions at the guaranteed
+fixed return and discounting back to a present value.
+Provisions - A provision is recognized in the Statement of
+Financial Position when it is probable that the Company has a
+present legal or constructive obligation as a result of a past event,
+it is probable that an outflow of economic benefits will be re-
+quired to settle the obligation and a reliable estimate can be
+made of the amount of the obligation. If the effect is material,
+provisions are recognized at present value by discounting the
+expected future cash flows at a pretax rate that reflects current
+market assessments of the time value of money. When a contract
+becomes onerous, the present obligation under the contract is
+recognized as a provision.
+Consolidated Financial Statements 85
+86
+Significant estimates are involved in the determination of provi-
+sions related to onerous contracts, warranty costs, asset retire-
+ment obligations, legal and regulatory proceedings as well as
+governmental investigations (Legal Proceedings). Siemens re-
+cords a provision for onerous contracts with customers when
+current estimates of total estimated costs exceed estimated rev-
+enue. Onerous contracts with customers are identified by moni-
+toring the progress of the project and updating the estimates
+which requires significant judgment relating to achieving certain
+performance standards as well as estimates involving warranty
+costs and estimates regarding project delays including the assess-
+ment of responsibility splits between the contract partners for
+these delays. Uncertainties regarding asset retirement obliga-
+tions include the estimated costs of decommissioning and final
+waste storage because of the long time frame over which future
+cash outflows are expected to occur including the respective in-
+terest accretion. The estimated cash outflows could be impacted
+significantly by changes of the regulatory environment.
+Legal Proceedings often involve complex legal issues and are sub-
+ject to substantial uncertainties. Accordingly, considerable judg-
+ment is part of determining whether it is probable that there is a
+present obligation as a result of a past event at the end of the
+reporting period, whether it is probable that such a Legal Pro-
+ceeding will result in an outflow of resources and whether the
+amount of the obligation can be reliably estimated. Internal and
+external counsels are generally part of the determination pro-
+cess. Due to new developments, it may be necessary, to record a
+provision for an ongoing Legal Proceeding or to adjust the
+amount of a previously recognized provision. Upon resolution of
+a Legal Proceeding, Siemens may incur charges in excess of the
+recorded provisions for such matters. The outcome of Legal Pro-
+ceedings may have a material effect on Siemens' financial posi-
+tion, its results of operations and/or its cash flows.
+Termination benefits - Termination benefits are provided as a
+result of an entity's offer made in order to encourage voluntary
+redundancy before the regular retirement date or from an entity's
+decision to terminate the employment. Termination benefits in
+accordance with IAS 19, Employee Benefits, are recognized as a
+liability and an expense when the entity can no longer withdraw
+the offer of those benefits.
+Financial instruments - A financial instrument is any contract
+that gives rise to a financial asset of one entity and a financial
+liability or equity instrument of another entity. Based on their
+contractual cash flow characteristics and the business model they
+are held in, financial instruments are classified as financial assets
+and financial liabilities measured at cost or amortized cost, mea-
+sured at fair value, loan commitments and credit guarantees,
+contract assets and receivables from finance leases. Regular way
+purchases or sales of financial assets are accounted for at the
+trade date. Siemens does not use the option to designate finan-
+cial assets or financial liabilities at fair value through profit or loss
+at inception (Fair Value Option). Initially, financial instruments
+are recognized at fair value and net of transaction costs, if not
+categorized at FVTPL. Receivables from finance leases are recog-
+nized at an amount equal to the net investment in the lease.
+Subsequently, financial assets and liabilities are measured ac-
+cording to the category to which they are assigned to:
+Financial assets measured at fair value through profit and loss
+(FVTPL) – Debt financial assets are measured at FVTPL if the busi-
+ness model they are held in is not a hold-to-collect or a hold-and-
+sell business model, or if their contractual cash flows do not
+represent solely payments of principal and interest. Equity instru-
+ments are measured at FVTPL unless the FVOCI-option is elected.
+(753)
+(222)
+(1,946)
+157
+(366)
+5,807
+35,794
+Retained earnings
+Capital reserve
+6,368
+Issued capital
+2,550
+Purchase of treasury shares
+Share-based payment
+Dividends
+Other comprehensive income, net of income taxes
+Net income
+Balance as of October 1, 2017
+(in millions of €)
+B.5 Consolidated Statements of Changes in Equity
+Effect of changes in exchange rates on cash and cash equivalents
+Consolidated Financial Statements 79
+12,391
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
+operations at end of period
+11,066
+12,391
+Cash and cash equivalents at end of period
+8,389
+11,066
+Cash and cash equivalents at beginning of period
+2,677
+1,325
+Change in cash and cash equivalents
+(29)
+Actuarial valuations rely on key assumptions including discount
+rates, expected compensation increases, rate of pension progres-
+sion and mortality rates. Discount rates used are determined by
+reference to yields on high-quality corporate bonds of appropri-
+ate duration and currency at the end of the reporting period. In
+case such yields are not available, discount rates are based on
+government bonds yields. Due to changing market, economic
+and social conditions, the underlying key assumptions may
+from actual developments.
+11,066
+its determination of fair value less costs to sell and value in use
+include estimated growth rates and weighted average cost of
+capital. These estimates, including the methodology used, can
+have a material impact on the respective values and ultimately
+the amount of any goodwill impairment.
+The determination of the recoverable amount of a cash-generat-
+ing unit or a group of cash-generating units to which goodwill is
+allocated involves the use of estimates by management. The out-
+come predicted by these estimates is influenced e.g. by the
+successful integration of acquired entities, volatility of capital
+markets, interest rate developments, foreign exchange rate fluc-
+tuations and the outlook on economic trends. In determining
+recoverable amounts, discounted cash flow calculations use five-
+year projections that are based on financial forecasts. Cash flow
+projections take into account past experience and represent
+management's best estimate about future developments. Cash
+flows after the planning period are extrapolated using individual
+growth rates. Key assumptions on which management has based
+For the purpose of impairment testing, goodwill acquired in a
+business combination is allocated to the cash-generating unit or
+the group of cash-generating units that is expected to benefit
+from the synergies of the business combination. If the carrying
+amount of the cash-generating unit or the group of cash-gener-
+ating units, to which the goodwill is allocated, exceeds its recov-
+erable amount, an impairment loss on goodwill allocated to this
+cash-generating unit or this group of cash-generating units is
+recognized. The recoverable amount is the higher of the cash-
+generating unit's or the group of cash-generating units' fair value
+less costs to sell and its value in use. If either of these values ex-
+ceeds the carrying amount, it is not always necessary to deter-
+mine both values. These values are generally determined based
+on discounted cash flow calculations. Impairment losses on
+goodwill are not reversed in future periods.
+(11)
+5
+(6)
+(5)
+(2)
+(6)
+(350)
+24
+(26)
+(3,922)
+45,474
+2,573
+48,046
+(350)
+3,981
+24
+(3,922)
+45,474
+2,573
+48,046
+(57)
+(64)
+(1)
+(65)
+(351)
+(33)
+(26)
+(3,922)
+45,410
+2,571
+(26)
+47,981
+1,005
+92
+(181)
+(262)
+(1,821)
+(27)
+Derivative financial
+instruments
+Treasury
+shares at cost
+(3,196)
+Total equity
+attributable to
+shareholders
+of Siemens AG
+Non controlling
+interests
+Total equity
+43,181
+1,438
+44,619
+2,977
+5,807
+6,120
+(2,476)
+(53)
+(2,530)
+(3,011)
+(133)
+(3,144)
+(300)
+(300)
+(1,468)
+743
+(1,468)
+(1,468)
+781
+781
+313
+5,174
+474
+5,648
+The accompanying Consolidated Financial Statements present
+the operations of Siemens Aktiengesellschaft with registered of-
+fices in Berlin (registry number HRB 12300) and Munich (registry
+number HRB 6684), Germany, and its subsidiaries (the Company
+or Siemens). They have been prepared in accordance with Inter-
+national Financial Reporting Standards (IFRS), as adopted by the
+European Union as well as with the additional requirements set
+forth in Section 315e (1) of the German Commercial Code (HGB).
+The financial statements are in accordance with IFRS as issued by
+the International Accounting Standards Board (IASB). The Consol-
+idated Financial Statements were authorized for issue by the
+Managing Board on December 3, 2019.
+Siemens prepares and reports its Consolidated Financial State-
+ments in euros (€). Due to rounding, numbers presented may not
+add up precisely to totals provided.
+Siemens is a German based multinational technology company
+with core activities in the fields of electrification, automation and
+digitalization.
+NOTE 2 Material accounting policies
+and critical accounting estimates
+Certain of these accounting policies require critical accounting
+estimates that involve complex and subjective judgments and
+the use of assumptions, some of which may be for matters that
+are inherently uncertain and susceptible to change. Such critical
+accounting estimates could change from period to period and
+have a material impact on the Company's results of operations,
+financial positions and cash flows. Critical accounting estimates
+could also involve estimates where Siemens reasonably could
+have used a different estimate in the current accounting period.
+Siemens cautions that future events often vary from forecasts
+and that estimates routinely require adjustment.
+Basis of consolidation - The Consolidated Financial Statements
+include the accounts of Siemens AG and its subsidiaries over
+which the Company has control. Siemens controls an investee if
+it has power over the investee. In addition, Siemens is exposed
+to, or has rights to, variable returns from the involvement with
+the investee and Siemens is able to use its power over the in-
+vestee to affect the amount of Siemens' return.
+Business combinations - Cost of an acquisition is measured at
+the fair value of the assets given and liabilities incurred or as-
+sumed at the date of exchange. Identifiable assets acquired and
+liabilities assumed in a business combination (including contin-
+gent liabilities) are measured initially at their fair values at the
+acquisition date, irrespective of the extent of any non-controlling
+interest. Non-controlling interests are measured at the propor-
+tional fair value of assets acquired and liabilities assumed (partial
+goodwill method). If there is no loss of control, transactions with
+non-controlling interests are accounted for as equity transactions
+not affecting profit and loss. At the date control is lost, any re-
+tained equity interests are remeasured to fair value. In case of a
+written put option on non-controlling interests the Company
+assesses whether the prerequisites for the transfer of present
+ownership interest are fulfilled at the balance sheet date. If the
+Company is not the beneficial owner of the shares underlying the
+put option, the exercise of the put option will be assumed at each
+balance sheet date and treated as equity transaction between
+shareholders with the recognition of a purchase liability at the
+respective exercise price. The non-controlling interests partici-
+pate in profits and losses during the reporting period.
+Associates - Associates are companies over which Siemens has
+the ability to exercise significant influence over operating and
+financial policies (generally through direct or indirect ownership
+of 20% to 50% of the voting rights). These are recorded in the
+Consolidated Financial Statements using the equity method and
+are initially recognized at cost. Siemens' share of its associate's
+post-acquisition profits or losses is recognized in the Consolidated
+Statements of Income, and its share of post-acquisition changes
+in equity that have not been recognized in the associate's profit
+or loss is recognized directly in equity. The cumulative post-
+acquisition changes are adjusted against the carrying amount
+of the investment in the associate. When Siemens' share of
+losses in an associate equals or exceeds its interest in the as-
+sociate, Siemens does not recognize further losses, unless it in-
+curs obligations or makes payments on behalf of the associate.
+The interest in an associate is the carrying amount of the invest-
+ment in the associate together with any longterm interests
+that, in substance, form part of Siemens' net investment in the
+associate.
+Joint ventures - Joint ventures are entities over which Siemens
+and one or more parties have joint control. Joint control requires
+unanimous consent of the parties sharing control in decision
+making on relevant activities.
+Foreign currency translation - Assets and liabilities of foreign
+subsidiaries, where the functional currency is other than the
+euro, are translated using the spot exchange rate at the end of
+the reporting period, while the Consolidated Statements of In-
+come are translated using average exchange rates during the
+period. Differences arising from such translations are recognized
+within equity and reclassified to net income when the gain or
+loss on disposal of the foreign subsidiary is recognized. The
+Consolidated Statements of Cash Flow are translated at aver-
+age exchange rates during the period, whereas cash and cash
+82 Consolidated Financial Statements
+equivalents are translated at the spot exchange rate at the end
+of the reporting period.
+Foreign currency transaction - Transactions that are denomi-
+nated in a currency other than the functional currency of an en-
+tity, are recorded at that functional currency applying the spot
+exchange rate at the date when the underlying transactions are
+initially recognized. At the end of the reporting period, foreign
+currency-denominated monetary assets and liabilities are reval-
+ued to functional currency applying the spot exchange rate pre-
+vailing at that date. Gains and losses arising from these foreign
+currency revaluations are recognized in net income. Those for-
+eign currency-denominated transactions which are classified
+as non-monetary are remeasured using the historical spot ex-
+change rate.
+NOTE 1 Basis of presentation
+Revenue recognition - Siemens recognizes revenue, when or
+as control over distinct goods or services is transferred to the
+customer; i.e. when the customer is able to direct the use of the
+transferred goods or services and obtains substantially all of the
+remaining benefits, provided a contract with enforceable rights
+and obligations exists and amongst others collectability of con-
+sideration is probable taking into account our customer's credit-
+worthiness. Revenue is the transaction price Siemens expects
+to be entitled to. Variable consideration is included in the trans-
+action price if it is highly probable that a significant reversal of
+revenue will not occur once associated uncertainties are re-
+solved. The amount of variable consideration is calculated by
+either using the expected value or the most likely amount
+depending on which is expected to better predict the amount of
+variable consideration. Consideration is adjusted for the time
+value of money if the period between the transfer of goods or
+services and the receipt of payment exceeds twelve months and
+there is a significant financing benefit either to the customer or
+Siemens. If a contract contains more than one distinct good or
+service, the transaction price is allocated to each performance
+obligation based on relative stand-alone selling prices. If stand-
+alone selling prices are not observable, the Company reasonably
+estimates those. Revenue is recognized for each performance
+obligation either at a point in time or over time.
+The percentage-of-completion method places considerable im-
+portance on accurate estimates of the extent of progress towards
+completion and may involve estimates on the scope of deliver-
+ies and services required to fulfill the contractually defined
+obligations. These significant estimates include total estimated
+costs, total estimated revenues, contract risks, including techni-
+cal, political and regulatory risks, and other judgments. Under
+the percentage-of-completion method, changes in estimates
+may lead to an increase or decrease of revenue. In addition,
+Siemens needs to assess whether the contract is expected to con-
+tinue or whether it is terminated. In determining whether the
+continuation or termination of a contract is expected to be the
+most likely scenario, all relevant facts and circumstances relating
+to the contract are considered on an individual basis.
+Revenues from services: Revenues are recognized over time on a
+straight-line basis or, if the performance pattern is other than
+straight-line, as services are provided, i.e. under the percent-
+age-of-completion method as described above. Payment terms
+are usually 30 days from the date of invoice issued according to
+the contractual terms.
+Sale of goods: Revenues are recognized at a point in time when
+control of the goods passes to the buyer, usually upon delivery of
+the goods. Invoices are issued at that point in time and are usu-
+ally payable within 30 days. For licensing transactions granting
+the customer a right to use Siemens' intellectual property, pay-
+ment terms are usually 30 days from the date of invoice issued
+according to the contractual terms.
+Income from royalties: Royalties are recognized on an accrual
+basis in accordance with the substance of the relevant agree-
+ment.
+Income from operating leases: Operating lease income for
+equipment rentals is recognized on a straight-line basis over the
+lease term.
+Income from interest - Interest is recognized using the effec-
+tive interest method.
+Functional costs - In general, operating expenses by types are
+assigned to the functions following the functional area of the
+corresponding profit and cost centers. Amortization, deprecia-
+tion and impairment of intangible assets and property, plant and
+equipment are included in functional costs depending on the use
+of the assets.
+Product-related expenses - Provisions for estimated costs re-
+lated to product warranties are recorded in line item Cost of sales
+at the time the related sale is recognized.
+Research and development costs - Costs of research activities
+are expensed as incurred. Costs of development activities are
+capitalized when the recognition criteria in IAS 38 are met. Capi-
+talized development costs are stated at cost less accumulated
+Consolidated Financial Statements 83
+amortization and impairment losses with an amortization period
+of generally three to ten years.
+Earnings per share - Basic earnings per share are computed by
+dividing income from continuing operations, income from dis-
+continued operations and net income, all attributable to ordinary
+shareholders of Siemens AG by the weighted average number of
+shares outstanding during the year. Diluted earnings per share
+are calculated by assuming conversion or exercise of all poten-
+tially dilutive securities and share-based payment plans.
+Goodwill - Goodwill is not amortized, instead, goodwill is tested
+for impairment annually, as well as whenever there are events
+or changes in circumstances (triggering events) which suggest
+that the carrying amount may not be recoverable. Goodwill is
+carried at cost less accumulated impairment losses. The good-
+will impairment test is performed at the level of a cash-generat-
+ing unit or a group of cash-generating units, generally repre-
+sented by a segment. Siemens Gamesa Renewable Energy and
+Siemens Healthineers are tested one level below the segment.
+This is the lowest level at which goodwill is monitored for internal
+management purposes.
+Sales from construction-type contracts: Revenues are recognized
+over time under the percentage-of-completion method, based on
+the percentage of costs incurred to date compared to total esti-
+mated costs. An expected loss on the contract is recognized as an
+expense immediately. Payment terms are usually 30 days from
+the date of invoice issued according to the contractual terms.
+B.6 Notes to Consolidated Financial Statements
+Consolidated Financial Statements 81
+50,984
+1,760
+(16)
+(200)
+406
+66
+472
+(3,060)
+(255)
+(3,315)
+(16)
+6
+(10)
+(1,350)
+1,609
+(1,350)
+(1,350)
+1,583
+1,583
+2,858
+48,125
+(3,663)
+(226)
+(49)
+1,409
+Financial assets measured at fair value through other compre-
+hensive income (FVOCI) are equity instruments for which
+Siemens irrevocably elects to present subsequent fair value
+changes in OCI at initial recognition of the instrument. Unreal-
+ized gains and losses, net of deferred income tax expenses, as
+well as gains and losses on the subsequent sale of the instru-
+ments are recognized in line item Other comprehensive income,
+net of income taxes.
+7
+(9)
+(22)
+(19)
+(3)
+(10)
+(10)
+15
+Valuation allowances are set up for expected credit losses, repre-
+senting a forward-looking estimate of future credit losses involv-
+ing significant judgment. Expected credit loss is the gross carry-
+ing amount less collateral, multiplied by the probability of default
+and a factor reflecting the loss in the event of default. Valuation
+allowances are not recognized when the gross carrying amount
+is sufficiently collateralized. Probabilities of default are mainly
+derived from internal rating grades. A simplified approach is used
+to assess expected credit losses from trade receivables, lease re-
+ceivables and contract assets by applying their lifetime expected
+credit losses. The valuation allowance for loans and other long-
+term debt instruments primarily held at Financial Services (SFS)
+is measured according to a three-stage impairment approach:
+Financial assets measured at amortized cost – Loans, receivables
+and other debt instruments held in a hold-to-collect business
+model with contractual cash flows that represent solely pay-
+ments of principal and interest are measured at amortized cost
+using the effective interest method less valuation allowances for
+expected credit losses.
+Stage 2: If the credit risk of a financial asset increases significantly
+without being credit-impaired, lifetime expected credit losses are
+recognized based on a lifetime probability of default. A significant
+IAS 39
+and Financial Guarantees
+Loan Commitments
+through profit and loss
+Financial assets at fair value
+(measured through OCI)
+Available-for-sale financial assets
+Loans and receivables
+(in millions of €)
+IAS 39 measurement category
+impairment loss. Available-for-sale financial assets were mea-
+sured at fair value, if reliably measurable, and changes in fair
+value other than impairment losses were recognized in Other
+comprehensive income, net of income taxes; upon derecogni-
+tion, gains and losses accumulated in Equity were reclassified. If
+fair value was not reliably measurable, available-for-sale assets
+were measured at cost. Impairments were based on the incurred
+loss model.
+In fiscal 2018, under IAS 39, loans and receivables were measured
+at amortized cost using the effective interest method less any
+reclassified to amortized cost. Equity instruments were assessed
+on a case-by-case basis whether measurement at FVOCI or FVTPL
+applies. Debt instruments not satisfying the solely payments of
+principal and interest criterion were reclassified from loans and
+receivables and available-for-sale to FVTPL.
+Consolidated Financial Statements 87
+IFRS 9, Financial Instruments, was adopted retrospectively as of
+October 1, 2018. Fiscal 2018 information is measured under
+IAS 39; amounts are not adjusted in accordance with IFRS 9 tran-
+sitional provisions. The adoption had no material impact on the
+Consolidated Financial Statements. IFRS 9 changed the classifica-
+tion of financial instruments, mainly regarding the former avail-
+able-for-sale category: most debt instruments previously held in
+available-for-sale are notes and bonds meeting the solely pay-
+ments of principal and interest criterion, accordingly, those were
+PRONOUNCEMENTS
+RECENTLY ADOPTED ACCOUNTING
+Prior-year information - The presentation of certain prior-year
+information has been reclassified to conform to the current year
+presentation.
+Share-based payment awards at
+Siemens are predominately designed as equity-settled. Fair value
+is measured at grant date and is expensed over the vesting
+period. Fair value is determined as the market price of the under-
+lying shares, considering dividends during the vesting period the
+grantees are not entitled to as well as market conditions and
+non-vesting conditions, if applicable. Plans granting the rights to
+receive subsidiary shares constitute own shares and, accordingly,
+are accounted as equity-settled.
+-
+Share-based payment
+Cash flow hedges: The effective portion of changes in the fair
+value of derivative instruments designated as cash flow hedges
+are recognized in line item Other comprehensive income, net of
+income taxes, and any ineffective portion is recognized immedi-
+ately in net income. Amounts accumulated in equity are reclassi-
+fied into net income in the same periods in which the hedged
+item affects net income.
+Fair value hedges: The carrying amount of the hedged item is ad-
+justed by the gain or loss attributable to the hedged risk. Where
+an unrecognized firm commitment is designated as hedged item,
+the subsequent cumulative change in its fair value is recognized
+as a separate financial asset or liability with corresponding gain
+or loss recognized in net income. For hedged items carried at
+amortized cost, the adjustment is amortized until maturity of the
+hedged item. For hedged firm commitments the initial carrying
+amount of the assets or liabilities that result from meeting
+the firm commitments are adjusted to include the cumulative
+changes in the fair value that were previously recognized as sep-
+arate financial assets or liabilities.
+instruments are recognized either in net income or, in the case
+of a cash flow hedge, in line item Other comprehensive income,
+net of income taxes (applicable deferred income tax). Certain
+derivative instruments embedded in host contracts are also ac-
+counted for separately as derivatives.
+Derivative financial instruments - Derivative financial instru-
+ments, such as foreign currency exchange contracts and interest
+rate swap contracts are measured at fair value unless they are
+designated as hedging instruments, for which hedge account-
+ing is applied. Changes in the fair value of derivative financial
+except for derivative financial instru-
+ments, Siemens measures financial liabilities at amortized cost
+using the effective interest method.
+-
+Sep 30, 2018
+Reclassi-
+fications
+Remeasure-
+ments
+IFRS 9
+Consolidated Financial Statements
+88
+In May 2017, the IASB issued IFRIC 23, Uncertainty over Income
+Tax Treatments. The interpretation clarifies the recognition and
+measurement requirements when there is uncertainty over in-
+come tax treatments. In assessing the uncertainty, an entity shall
+consider whether it is probable that a taxation authority will ac-
+cept or revise the uncertain tax treatment. IFRIC 23 is effective for
+annual reporting periods beginning on or after January 1, 2019,
+while earlier application is permitted. Siemens expects an
+increase in current income tax assets and Equity in the middle
+three-digit million Euro range due to the adoption of IFRIC 23.
+of IFRS 16, Leases, Siemens expects an increase of approximately
+2% in Total assets as well as in Total liabilities and equity as of
+October 1, 2019 (opening balance sheet). In addition, straight-
+line operating lease expenses will be replaced by depreciation
+expenses on right-of-use assets and interest expenses on lease
+liabilities resulting in an increase of EBITDA. As the positive effect
+on EBITDA will be more than offset by the increase in industrial
+net debt the ratio of industrial net debt to EBITDA will increase.
+Furthermore, applying IFRS 16 results in a deterioration in cash
+flows from financing activities, an improvement in cash flows
+from operating activities and accordingly an increase in Free
+Cash Flow.
+In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 elimi-
+nates the current classification model for lessee's lease contracts
+as either operating or finance leases and, instead, introduces a
+single lessee accounting model requiring lessees to recognize
+right-of-use assets and lease liabilities for leases with a term of
+more than twelve months. This brings the previous off-balance
+leases on the balance sheet in a manner largely comparable to
+current finance lease accounting. IFRS 16 is effective for annual
+periods beginning on or after January 1, 2019. Siemens will adopt
+the standard for the fiscal year beginning as of October 1, 2019,
+by applying the modified retrospective approach, i.e. compara-
+tive figures for the preceding year will not be adjusted. It is in-
+tended to use most of the simplifications available under IFRS 16.
+Currently, it is expected that the majority of the transition effect
+relates to real estate leased by Siemens. Regarding the adoption
+The following pronouncements, issued by the IASB, are not yet
+effective and have not yet been adopted by the Company:
+RECENT ACCOUNTING PRONOUNCEMENTS,
+NOT YET ADOPTED
+Available-for-sale assets (IAS 39) reclassified to amortized cost
+(IFRS 9) that are still held have a fair value of €462 million as of
+September 30, 2019.
+Financial assets at FVTPL
+Loan Commitments and
+Financial Guarantees
+(61)
+(27)
+(34)
+2,220
+Financial liabilities
+(13)
+1,882
+Financial assets at FVOCI
+440
+6
+(1,567)
+2,001
+Stage 1: At inception, 12-month expected credit losses are recog-
+nized based on a twelve months probability of default.
+42,936
+(53)
+1,216
+41,773
+Oct 1, 2018
+IFRS 9 measurement category
+351
+Loan Commitments and credit guarantees - Expected credit
+losses for irrevocable loan commitments are determined using
+the three-stage impairment approach for financial assets mea-
+sured at amortized cost and recognized as a liability. Credit guar-
+antees are recognized at the higher of consideration received for
+granting the guarantee and expected credit losses determined.
+Financial assets at amortized cost
+increase in credit risk is determined for each individual financial
+instrument using internal credit ratings. A rating deterioration
+does not trigger a transfer into Stage 2, if the credit rating re-
+mains within the investment grade range. More than 30 days
+past due payments will not be transferred into Stage 2, if the
+delay is not credit-risk-related.
+A financial asset is derecognized when the rights to cash flows
+expire or the financial asset is transferred to another party. Sig-
+nificant modifications of contractual terms of a financial asset
+measured at amortized cost result in derecognition and recogni-
+tion of a new financial asset; for insignificant modifications, the
+carrying amount of the financial asset is adjusted without
+derecognition.
+Cash and cash equivalents - The Company considers all highly
+liquid investments with less than three months maturity from the
+date of acquisition to be cash equivalents. Cash and cash equiv-
+alents are measured at cost.
+Financial assets are written off as uncollectible if recovery ap-
+pears unlikely. Generally, if the limitation period expired, when a
+debtor's sworn statement of affairs is received, or when the re-
+ceivable is not pursued due to its minor value. Receivables are
+written off when bankruptcy proceedings close.
+Stage 3: If the financial asset is credit-impaired, valuation allow-
+ances equal lifetime expected credit losses. A financial asset is
+considered credit-impaired when there is observable information
+about significant financial difficulties and a high vulnerability
+to default, however, the definition of default is not yet met. Im-
+pairment triggers include liquidity problems, a request for debt
+restructuring or a breach of contract. A credit-risk driven con-
+tractual modification always results in a credit-impaired finan-
+cial asset.
+Consolidated Financial Statements
+Annual Report
+2020
+SIEMENS
+Table of
+contents
+A.
+Combined Management Report
+A.1 Organization of the Siemens Group
+and basis of presentation
+Less: Taxes on interest adjustments
+A.2 Financial performance system
+A.3 Segment information
+A.4 Results of operations
+A.5 Net assets position
+A.6 Financial position
+A.7 Overall assessment of the economic position
+27
+2360232
+18
+A.8 Report on expected developments
+and associated material opportunities
+and risks
+Siemens has policies for environmental, employee and
+social matters, for the respect of human rights, and anti-
+corruption and bribery matters, among others. Our busi-
+ness model is described in chapters > A.1 and 7 A.3 of this
+Combined Management Report. Reportable information
+that is necessary for an understanding of the develop-
+ment, performance, position and the impact of our ac-
+tivities on these matters is included in this Combined
+Management Report, in particular in chapters > A.3
+through > A.7. Forward-looking information, including risk
+disclosures, is presented in chapter 7 A.8. Chapter 7 A.9
+includes additional information that is required to be
+reported in the Combined Management Report related to
+the parent company Siemens AG. As supplementary infor-
+mation, amounts reported in the Consolidated Financial
+Statements and the Annual Financial Statements of
+Siemens AG related to such non-financial matters, and ad-
+ditional explanations thereto, are included in > B.6 NOTES TO
+CONSOLIDATED FINANCIAL STATEMENTS, NOTES 17, 18, 22, 26 and 27,
+and in the 7 NOTES TO THE ANNUAL FINANCIAL STATEMENTS OF
+SIEMENS AG FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2020, NOTES
+A.2
+ANNUAL REPORT 2020 2
+10-15%
+17-23%
+Margin range
+ANNUAL REPORT 2020 3
+The margin range for Siemens Healthineers reflects our
+expectation as a majority shareholder.
+Siemens Financial Services (ROE after tax)
+Siemens Healthineers
+Industrial Businesses
+Digital Industries
+Smart Infrastructure
+Mobility
+Margin ranges
+We have set the following margin ranges in our Siemens
+Financial Framework:
+Within the Siemens Financial Framework, we aim to
+achieve margins that are comparable to those of our rel-
+evant competitors. Therefore, we have defined profit
+margin ranges for our industrial businesses which are
+based on the profit margins of their respective relevant
+competitors. Profit margin is defined as profit of the re-
+spective business divided by its revenue. For our industrial
+businesses, profit represents EBITA adjusted for operating
+financial income (expenses), net, and amortization of
+intangible assets not acquired in business combinations
+(Adjusted EBITA).
+and capital efficiency
+A.2.3 Profitability
+Currency translation effects are the difference between
+revenue for the current period calculated using the ex-
+change rates of the current period and revenue for the
+current period calculated using the exchange rates of
+the comparison period. For calculating the percentage
+change year-over-year, this absolute difference is divided
+by revenue for the comparison period. A portfolio effect
+arises in the case of an acquisition or a disposition and is
+calculated as the change year-over-year in revenue result-
+ing specifically from the transaction. For calculating the
+percentage change, this absolute change is divided by
+revenue for the comparison period. For orders, we apply
+the same calculations for currency translation and port-
+folio effects as described above.
+In the Siemens Financial Framework we aim to achieve a
+revenue growth range of 4% to 5% per year on a compa-
+rable basis. Our primary measure for managing and con-
+trolling our revenue growth is comparable growth, be-
+cause it shows the development in our business net of
+currency translation effects, which arise from the exter-
+nal environment outside of our control, and portfolio
+effects, which involve business activities which are either
+new to or no longer a part of the respective business.
+A.2.2 Revenue growth
+The Siemens Financial Framework includes targets that
+we aim to achieve over the cycle of the business activities.
+A.2.1 Overview
+Financial performance system
+29
+Combined Management Report → A.2 Financial performance system
+16, 17, 20, 21 and 25. In order to inform the users of the finan-
+cial reports in a focused manner, these disclosures are not
+subject to a specific non-financial framework – in contrast to
+the disclosures in our separate "Sustainability Information
+2020" document, which are based on the standards devel-
+oped by the Global Reporting Initiative (GRI).
+9-12%
+A.9 Siemens AG
+A.10 Compensation Report
+C.2 Independent Auditor's Report
+167
+C.3 Report of the Supervisory Board
+176
+C.4 Corporate Governance
+184
+C.5
+Notes and forward-looking statements
+199
+PAGES 1-86
+A.
+Combined
+Management
+Report
+Combined Management Report → A.1 Organization of the Siemens Group and basis of presentation
+A.1
+Organization of the Siemens Group
+and basis of presentation
+Siemens is a technology company that is active in nearly all
+countries of the world, focusing on the areas of automation
+and digitalization in the process and manufacturing indus-
+tries, intelligent infrastructure for buildings and distributed
+energy systems, smart mobility solutions for rail and road
+and medical technology and digital healthcare services.
+Siemens comprises Siemens Aktiengesellschaft
+(Siemens AG), a stock corporation under the Federal laws
+of Germany, as the parent company and its subsidiaries.
+Our Company is incorporated in Germany, with our cor-
+porate headquarters situated in Munich. As of Septem-
+ber 30, 2020, Siemens had around 293,000 employees.
+-
+As of September 30, 2020, Siemens has the following re-
+portable segments: Digital Industries, Smart Infrastruc-
+ture, Mobility and Siemens Healthineers, which together
+form our "Industrial Businesses” and Siemens Financial
+Services (SFS), which supports the activities of our indus-
+trial businesses and also conducts its own business with
+external customers. Furthermore, we report results for
+Portfolio Companies, which comprises businesses that
+are managed separately to improve their performance.
+During fiscal 2020, the energy business, consisting of
+the former reportable segment Gas and Power and the
+approximately 67% stake held by Siemens in Siemens
+Gamesa Renewable Energy, S.A. (SGRE) – also a former
+reportable segment - was classified as held for disposal
+and discontinued operations. Siemens transferred the
+energy business into a new company, Siemens Energy AG,
+and in September 2020 listed it on the stock market via a
+spin-off. Siemens allocated 55.0% of its ownership inter-
+est in Siemens Energy AG to its shareholders and a further
+9.9% were transferred to Siemens Pension-Trust e. V. The
+remaining 35.1% of shares in Siemens Energy AG are held
+by Siemens and reported within Reconciliation to Consol-
+idated Financial Statements as Siemens Energy Invest-
+ment. For further information, see > NOTES 3 and 4 in 7 B.6
+NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. Also part of
+Reconciliation to Consolidated Financial Statements is
+Siemens Advanta, formerly Siemens IoT Services, a stra-
+tegic advisor and implementation partner in digital trans-
+formation and industrial internet of things (IoT).
+Our reportable segments and Portfolio Companies may
+do business with each other, leading to corresponding
+orders and revenue. Such orders and revenue are elimi-
+nated on the Group level.
+2,880
+166
+C.1 Responsibility Statement
+Additional Information
+C.
+50
+A.11 Takeover-relevant information
+82
+B.
+Consolidated Financial Statements
+B.1 Consolidated Statements of Income
+88
+B.2
+Consolidated Statements
+of Comprehensive Income
+89
+46
+B.3
+of Financial Position
+90
+B.4
+Consolidated Statements of Cash Flows
+92
+B.5 Consolidated Statements
+of Changes in Equity
+94
+B.6
+Notes to Consolidated Financial Statements
+96
+Consolidated Statements
+17-21%
+Combined Management Report → A.2 Financial performance system
+17-22%
+(in millions of €)
+Calculation of capital employed
+For purposes of calculating ROCE in interim periods, in-
+come before interest after tax is annualized. Average
+capital employed is determined using the average of the
+respective balances as of the quarterly reporting dates for
+the periods under review.
+Fiscal year
+Calculation of ROCE
+A.2.6 Calculation of return
+on capital employed
+Combined Management Report → A.2 Financial performance system
+(84)
+(115)
+Less: Fair value hedge accounting adjustment
+2020
+(I) Income before interest after tax
+5,916
+(II) Average capital employed
+56,190
+53,459
+3,252
+21.7%
+Less: Adjustment for deferred taxes on net accumulated actuarial gains/losses
+on provisions for pensions and similar obligations
+(1)/(II) ROCE
+7.8%
+11.1%
+1 Item Other interest expenses/income, net primarily consists of interest
+relating to corporate debt, and related hedging activities, as well as
+interest income on corporate assets.
+4,397
+ANNUAL REPORT 2020
+2019
+4,200
+Less: SFS debt
+Plus: Provisions for pensions and similar obligations
+Less: Current interest-bearing debt securities
+73
+100
+(discontinued operations)
+Less: Interest adjustments
+108
+66
+obligations
+Net income
+Plus: Short-term debt and current maturities of long-term debt
+Less: Cash and cash equivalents
+Plus: Net interest expenses related
+763
+806
+Plus: SFS Other interest expenses/income
+Plus: Long-term debt
+(562)
+(691)
+Less: Other interest expenses/income, net¹
+Total equity
+5,648
+to provisions for pensions and similar
+11-15%
+5
+Combined Management Report → A.3 Segment information
+15,896
+14,997 16,087
+15,944
+0%
+(7)%
+therein: software business
+4,144 4,039
+3%
+2%
+Adjusted EBITA
+Adjusted EBITA margin
+Revenue
+13%
+The proposed dividend of €3.50 per share for fiscal
+2020 represents a total payout of €2.8 billion based on
+the estimated number of shares entitled to dividend at
+the date of the Annual Shareholders' Meeting. Based on
+Net income attributable to shareholders of Siemens AG
+of €4.0 billion for fiscal 2020, the dividend payout
+percentage is 70%.
+At the Annual Shareholders' Meeting, the Managing
+Board, in agreement with the Supervisory Board, will
+submit the following proposal to allocate the unappro-
+priated net income of Siemens AG for fiscal 2020: to
+distribute a dividend of €3.50 on each share of no par
+value entitled to the dividend for fiscal 2020 existing at
+the date of the Annual Shareholders' Meeting; the re-
+maining amount is to be carried forward. The dividend of
+€3.50 consists of €3.00 at the upper end of our targeted
+dividend payout ratio, supplemented by an additional
+€0.50. Payment of the proposed dividend is contingent
+upon approval by Siemens shareholders at the Annual
+Shareholders' Meeting on February 3, 2021. The prior-
+year dividend was €3.90 per share.
+We intend to continue providing an attractive return to
+our shareholders. Under the Siemens Financial Frame-
+work, our intention is to propose a dividend whose distri-
+bution volume is within a dividend payout range of 40%
+to 60% of Net income attributable to shareholders of
+Siemens AG, which we may adjust for this purpose to
+exclude selected exceptional non-cash effects. As in the
+past, we intend to fund the dividend payout from Free
+cash flow. To provide an assessment of our ability to gen-
+erate cash, and ultimately to pay dividends, we use the
+cash conversion rate of Industrial Businesses, defined as
+the ratio of Free cash flow from Industrial Businesses to
+Adjusted EBITA Industrial Businesses. Because growth re-
+quires investments, we aim to achieve a cash conversion
+rate of 1 minus the annual comparable revenue growth
+rate of Industrial Businesses.
+A.2.5 Liquidity and dividend
+Sustainable revenue and profit development is supported
+by a healthy capital structure. Accordingly, a key consid-
+eration within the Siemens Financial Framework is to
+maintain ready access to the capital markets through
+various debt products and preserve our ability to repay
+and service our debt obligations over time. Our primary
+measure for managing and controlling our capital struc-
+ture is the ratio of Industrial net debt to EBITDA (continu-
+ing operations). This financial measure indicates the ap-
+proximate amount of time in years that would be needed
+to cover Industrial net debt through income from con-
+tinuing operations, without taking into account interest,
+taxes, depreciation and amortization. We aim to achieve
+a ratio of up to 1.0.
+A.2.4 Capital structure
+We seek to work profitably and as efficiently as possible
+with the capital provided by our shareholders and lend-
+ers. For purposes of managing and controlling our capital
+efficiency, we use return on capital employed, or ROCE,
+as our primary measure in our Siemens Financial Frame-
+work. Our long-term goal is to achieve ROCE within a
+range of 15% to 20%.
+For purposes of managing and controlling profitability at
+the Group level, we use net income as our primary mea-
+sure. This measure is the main driver of basic earnings
+per share (EPS) from net income, which we used in com-
+munication to the capital markets in fiscal 2020.
+In line with common practice in the financial services
+business, our financial indicator for measuring capital
+efficiency at Siemens Financial Services is return on
+equity after tax, or ROE after tax. ROE is defined as
+Siemens Financial Services' profit after tax, divided by its
+average allocated equity.
+(tax rate (flat) 30%)
+ANNUAL REPORT 2020 4
+Capital employed (continuing and discontinued operations)
+Orders
+Fiscal year
+2019
+A.3
+Segment information
+A.3.1 Overall economic conditions
+The macroeconomic development in fiscal 2020 was
+dominated by the coronavirus pandemic (COVID-19) and
+subsequent recession, which was the deepest since the
+Second World War. Global gross domestic product (GDP)
+is expected to contract by 4.5% in calendar 2020, after it
+grew by 2.6% in calendar 2019.
+Global economic activity was already decelerating in the
+first quarter of fiscal 2020 as the trade conflict between
+the U.S. and China increasingly took its toll. Shortly after
+economic sentiment indicators improved in response to
+calming of the conflict (due to the "phase one deal"), the
+novel coronavirus (SARS-CoV-2) emerged and started to
+spread globally. Voluntary and mandated social distanc-
+ing measures to contain the outbreak massively restricted
+economic activity, first in China, then in other Asian
+countries, the Middle East and Europe, and finally in the
+Americas and Africa. Sectors with high intensity of per-
+sonal contact had to substantially curtail or stop their
+operations. Many other industries were directly affected
+by supply chain problems or indirectly by insufficient
+demand and also stopped production.
+Globally, governments and central banks responded with
+unprecedented fiscal and monetary policy measures,
+first, to ensure short-term liquidity of firms and house-
+holds, later to stimulate their economies after the deep
+slump. According to the International Monetary Fund
+(IMF), these measures resulted in fiscal policy responses
+totaling US$12 trillion and balance sheet expansion of
+nearly US$7.5 trillion on the part of central banks in the
+G10. As a result, and after initial lockdown measures
+were lifted while the virus outbreak slowed, the global
+economy experienced a strong rebound in the sum-
+mer months of 2020. But a full recovery could not be
+achieved, due to renewed virus outbreaks and restric-
+tions on contact-intensive industries ("90% economy").
+The only notable exception was the Chinese economy
+where the recovery has been much faster than expected
+and positive GDP growth (+1.9%) is expected for calendar
+2020. All other major economies are expected to record
+reductions in GDP in calendar 2020: European Union (EU)
+(7.7)%, U.S. (3.5)%, Japan (5.6)%, India (10.8)%. For
+advanced countries in aggregate, calendar 2020 GDP is
+expected to decline by 5.5%. For emerging countries, the
+decline in 2020 GDP is estimated at 3.1%.
+The partly estimated figures presented here for GDP are
+based on an IHS Markit report dated October 15, 2020.
+These economic developments also influenced Siemens'
+business performance in fiscal 2020, in particularly with
+regard to effects related to COVID-19. These effects varied
+between Siemens' businesses, customer markets and
+geographic regions. While some of our key customer in-
+dustries such as automotive and machine building were
+heavily impacted by the steep drop in global GDP begin-
+ning in the second calendar quarter of 2020, other cus-
+tomer industries, such as semiconductors, electronics
+and data centers, accelerated in order to serve rapid
+global growth in online activity for work, leisure and
+retail consumption. While the pandemic significantly
+slowed our sales and service activities because of re-
+stricted access to customer sites, this also resulted in cost
+reductions such as lower travel and marketing expenses.
+Furthermore, we were able to keep our production
+largely stable due to the use of our own technology in
+our factories and our diversified value chain. On a geo-
+graphic basis, China was both the first country signifi-
+cantly affected by COVID-19 and the first major national
+economy to see a return to growth, which occurred to-
+wards the end of our fiscal year. In contrast, large parts of
+Europe and the Americas continue to be strongly im-
+pacted by COVID-19, following temporary relief during
+the summer months from the pandemic's first waves in
+the spring. All these market dynamics noticeably affected
+volume and income of Siemens' businesses in fiscal 2020
+as described below.
+ANNUAL REPORT 2020 6
+Actual
+Combined Management Report →A.3 Segment information
+Digital Industries offers a comprehensive product port-
+folio and system solutions for automation used in dis-
+crete and process industries; these offerings include
+automation systems and software for factories, numeri-
+cal control systems, motors, drives and inverters and
+integrated automation systems for machine tools and
+production machines. Digital Industries also provides
+process control systems, machine-to-machine commu-
+nication products, sensors (for measuring pressure, tem-
+perature, level, flow rate, distance or shape) and radio
+frequency identification systems. Furthermore, Digital
+Industries offers production and product lifecycle man-
+agement software, and software for simulation and
+testing of mechatronic systems. These leading software
+offerings are integrated with the electronic design auto-
+mation (EDA) software portfolio of Mentor Graphics
+(Mentor) and the open, cloud-based industrial internet of
+things (IoT) operating system MindSphere, which con-
+nects machines and physical infrastructure to the digital
+world. These offerings are complemented by Mendix'
+cloud-native low-code application development plat-
+form, which allows customers to significantly reduce app
+development times through visual representation of un-
+derlying code. Digital Industries also provides customers
+with lifecycle and data-driven services. Taken together,
+Digital Industries' offerings enable customers to optimize
+entire value chains from product design and develop-
+ment through production and post-sale services. With its
+advanced software solutions in particular, Digital Indus-
+tries supports customers in the discrete manufacturing,
+hybrid and process industries in their evolution towards
+the "Digital Enterprise," resulting in increased flexibility
+and efficiency of production processes and reduced time
+to market for new products. The most important markets
+include the automotive industry, the machine building
+industry, the pharmaceutical and chemicals industry, the
+food and beverage industry and the electronics and semi-
+conductor industry. Digital Industries serves its custom-
+ers through a common regional sales organization
+spanning all its businesses, using various sales chan-
+nels depending on the type of customer and industry.
+Changes in customer demand, especially for standard
+products, are driven strongly by macroeconomic cycles,
+and can lead to significant short-term fluctuation in
+Digital Industries' profitability. Volume from large con-
+tracts in the software business, particularly for Mentor,
+may also result in strong fluctuations in quarterly volume
+and profitability. Competition for Digital Industries' busi-
+ness activities comes primarily from multinational corpo-
+rations that offer a relatively broad portfolio and from
+smaller companies active only in certain geographic or
+product markets.
+Digital Industries sees three trends influencing its busi-
+ness and providing long-term growth opportunities. Pro-
+ducers of investment goods in today's increasingly digital
+environment must modernize their production capacity,
+particularly to increase production flexibility and reduce
+time to market. This environment also spurs producers to
+complement their core products with vertical solutions
+and service offerings, which their customers either need
+or want in order to take full advantage of the investment
+goods. Finally, there is a trend from globalization to re-
+gionalization, to support local economic development or
+to better adapt solutions to local needs.
+Research & Development (R&D) activities at Digital
+Industries are aimed at integrating technologies such as
+artificial intelligence (AI), edge computing, cloud tech-
+nologies, additive manufacturing and industrial 5G wire-
+less technology into Digital Industries' extensive portfolio
+for industrial automation and digitalization. Beyond its
+own R&D activities, Digital Industries collaborates closely
+with partners and customers. An example is PlantSight,
+jointly developed by Digital Industries and Bentley Sys-
+tems, Inc. (Bentley), which utilizes real-time analytics and
+Al to generate new insights and enable real-time collab-
+oration between engineering, operations and mainte-
+nance functions. With its new NX Sketch software tool for
+computer-aided design (CAD), Digital Industries has ad-
+vanced CAD sketching by using Al to infer relationships
+on the fly so that users can move away from a paper hand
+sketch and truly create conceptual designs in the NX en-
+vironment. In the field of Al-based services, Digital Indus-
+tries launched "Predictive Services for Foundry," which
+enables users to increase overall plant efficiency in the
+automotive sector. In fiscal 2020, Digital Industries also
+launched "Siemens Industrial Edge," which brings edge
+computing and intelligent analytics to manufacturing
+automation devices and introduced new software as
+ANNUAL REPORT 2020 7
+Combined Management Report → A.3 Segment information
+a service (SaaS) offerings such as Teamcenter X, Team-
+center Share or Simcenter on the Cloud that do not re-
+quire the IT investments typically needed for on-premise
+deployments. In addition to this, Digital Industries
+launched the SIMATIC IOT2050 gateway, which links
+cloud computing with in-company IT and production.
+Digital Industries further expanded its portfolio and part-
+nerships for industrialized additive manufacturing. With
+NX AM Path Optimizer, a new technology integrated in
+NX software, Digital Industries demonstrated how to lo-
+cally adapt and optimize the printing process during pro-
+duction planning. Together with Qualcomm Technolo-
+gies, Inc., Digital Industries implemented the first private
+5G standalone network in a real-world industrial environ-
+ment using the 3.7-3.8GHz band. By launching Xcelera-
+tor, Digital Industries is now offering an integrated port-
+folio of software, services and application development
+capabilities that can be adapted to fit customer and in-
+dustry-specific needs and thereby help companies of all
+sizes become digital enterprises. Major investments of
+Digital Industries in fiscal 2020 relate to its own factory
+automation, motion control and process automation
+businesses, to further automate and digitalize these
+facilities particularly in Germany, China and the Czech
+Republic.
+% Change
+Comp.
+0%
+(6)%
+(in millions of €)
+2020
+A.3.2 Digital Industries
+17.9%
+Plus: Adjustments from assets classified as held for disposal and liabilities
+associated with assets classified as held for disposal
+Global markets for Digital Industries' businesses showed
+a mix of influences from customer industry shifts and
+factors related to COVID-19. While the software business
+achieved significant order growth, including a number
+of large contract wins, most notably in its EDA software
+business, orders in the automation businesses declined
+due to lower demand from some of their most import-
+ant customer segments, particularly the automotive and
+the machine building industries. This latter development
+was a significant factor in lower orders for the region
+comprising Europe, Commonwealth of Independent
+States (C.I.S.), Africa, Middle East, including a double-
+digit decrease in Germany. In contrast, orders rose in the
+Americas and Asia, Australia regions, including signifi-
+cant growth in the U.S. and China. Revenue was similarly
+affected by declines in the automation businesses, par-
+ticularly in the short-cycle motion control and factory
+automation businesses. The software business achieved
+moderate revenue growth. On a geographic basis, the
+region Europe, C.I.S., Africa, Middle East posted a sig-
+nificant revenue decline while Asia, Australia and the
+Americas delivered revenue close to the prior-year levels.
+Adjusted EBITA rose due mainly to a €767 million posi-
+tive effect related to Digital Industries' stake in Bentley
+Systems, Inc. (Bentley), which was mostly from revalua-
+tion following that company's public listing in Septem-
+ber 2020 and included €48 million in dividend payments
+for the full year. Adjusted EBITA rose substantially in the
+software business. A year earlier, the software business
+benefited from a €50 million gain from the sale of an
+equity investment. Adjusted EBITA and profitability de-
+creased in the automation businesses, due largely to
+revenue declines associated with COVID-19; this develop-
+ment was only partially offset by cost savings from pan-
+demic restrictions such as lower travel and marketing
+expenses. Severance charges, primarily related to cost
+structure improvements, were €210 million in fiscal 2020,
+up from severance charges of €92 million a year earlier.
+Digital Industries' order backlog was €5 billion at the end
+of the fiscal year, of which €4 billion are expected to be
+converted into revenue in fiscal 2021.
+NON-FINANCIAL MATTERS
+OF THE GROUP AND SIEMENS AG
+ANNUAL REPORT 2020 8
+Digital Industries achieved its results in a market environ-
+ment which, beginning with the second quarter of fis-
+cal 2020, was strongly impacted by effects related to
+COVID-19, resulting in considerably lower demand for
+investment goods. The magnitude and duration of pan-
+demic impacts varied across regions and market seg-
+ments. Market volume in fiscal 2020 declined clearly in
+the region comprising Europe, C.I.S., Africa, Middle East
+and to a lesser extent in the Americas. In contrast, market
+volume in Asia, Australia slightly grew year-over-year.
+Within that region, China, which was hit first by the
+pandemic, was among the first countries that saw a re-
+covery towards the end of the fiscal year. Within the most
+important industries served by Digital Industries, the
+automotive industry, which already was in a downturn
+a year earlier, severely cut production in response to the
+769
+986
+1,808
+2,226
+49,957
+48,541
+84,074
+99,265
+2,3,19
+2,550
+2,550
+Capital reserve
+6,840
+6,287
+Retained earnings
+33,078
+41,818
+Other components of equity
+(1,449)
+1,134
+Treasury shares, at cost
+Issued capital
+Equity
+Total liabilities
+Total non-current liabilities
+2
+Total current liabilities
+34,117
+50,723
+Long-term debt
+2,16
+38,005
+30,414
+Provisions for pensions and similar obligations
+17
+(4,629)
+6,360
+Deferred tax liabilities
+7
+664
+1,305
+Provisions
+18
+2,352
+3,714
+Other financial liabilities
+Other liabilities
+9,896
+35
+2020
+36,390
+Income tax expenses
+Interest (income) expenses, net
+(Income) loss related to investing activities
+Other non-cash (income) expenses
+90
+(490)
+3,157
+2,280
+1,382
+1,775
+Amortization, depreciation and impairments
+(732)
+(642)
+(340)
+379
+540
+Change in operating net working capital from
+Contract assets
+Inventories
+(723)
+(455)
+(425)
+(569)
+Total equity attributable to shareholders of Siemens AG
+(Income) loss from discontinued operations, net of income taxes
+5,648
+48,125
+Non-controlling interests
+3
+3,433
+2,858
+Total equity
+39,823
+Total liabilities and equity
+123,897
+50,984
+150,248
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+ANNUAL REPORT 2020 91
+B.4
+Consolidated Statements
+of Cash Flows
+(in millions of €)
+Fiscal year
+2020
+2019
+Cash flows from operating activities
+Net income
+4,200
+Consolidated Financial Statements → B.4 Consolidated Statements of Cash Flows
+(3,663)
+Liabilities associated with assets classified as held for disposal
+9,023
+1,523
+1,103
+1,271
+1,960
+3
+338
+238
+52,968
+70,370
+3,12
+20,449
+30,160
+Other intangible assets
+3,13
+4,838
+9,800
+Property, plant and equipment
+2,13
+10,250
+12,183
+Investments accounted for using the equity method
+2,7
+14,806
+7,795
+11
+Sep 30,
+2019
+Cash and cash equivalents
+Trade and other receivables
+14,041
+12,391
+8
+14,074
+18,894
+Other current financial assets
+9
+236
+8,382
+Contract assets
+10
+5,545
+10,309
+Inventories
+Current income tax assets
+Other current assets
+Assets classified as held for disposal
+Total current assets
+Goodwill
+10,669
+4
+7,862
+2,244
+2,16
+6,562
+6,034
+Trade payables
+7,873
+11,409
+Other current financial liabilities
+1,958
+1,743
+Contract liabilities
+Short-term debt and current maturities of long-term debt
+10
+16,452
+Current provisions
+18
+1,674
+3,682
+Current income tax liabilities
+2,281
+2,378
+Other current liabilities
+15
+7,524
+3
+2019
+2020
+Other financial assets
+14, 23
+22,771
+19,843
+Deferred tax assets
+7
+2,988
+3,174
+Other assets
+Total non-current assets
+Sep 30,
+Total assets
+2,475
+70,928
+79,878
+123,897
+150,248
+ANNUAL REPORT 2020 90
+Consolidated Financial Statements → B.3 Consolidated Statements of Financial Position
+(in millions of €)
+Liabilities and equity
+Note
+1,769
+6,209
+(663)
+Functional costs - - In general, operating expenses by
+types are assigned to the functions following the func-
+tional area of the corresponding profit and cost centers.
+Amortization, depreciation and impairment of intangible
+Cash flows from investing activities - continuing and discontinued operations
+(5,184)
+(5,011)
+ANNUAL REPORT 2020 92
+Consolidated Financial Statements → B.4 Consolidated Statements of Cash Flows
+(in millions of €)
+Cash flows from financing activities
+Fiscal year
+2020
+2019
+Purchase of treasury shares
+(1,517)
+(1,407)
+Re-issuance of treasury shares and other transactions with owners
+2,624
+ANNUAL REPORT 2020 98
+Issuance of long-term debt
+10,255
+6,471
+Repayment of long-term debt (including current maturities of long-term debt)
+(4,472)
+(804)
+(3,205)
+(1,080)
+(4,207)
+1,261
+5,581
+Consolidated Financial Statements → B.3 Consolidated Statements of Financial Position
+B.3
+Consolidated Statements
+of Financial Position
+(in millions of €)
+Assets
+Note
+(330)
+Disposal of intangibles and property, plant and equipment
+47
+213
+Disposal of businesses, net of cash disposed
+218
+17
+Disposal of investments and financial assets for investment purposes
+1,174
+1,402
+Cash flows from investing activities - continuing operations
+(4,105)
+Cash flows from investing activities - discontinued operations
+540
+Change in short-term debt and other financing activities
+211
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued
+operations at end of period
+1,663
+1,325
+12,391
+11,066
+14,054
+12,391
+13
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+14,041
+12,391
+ANNUAL REPORT 2020 93
+Consolidated Financial Statements → B.5 Consolidated Statements of Changes in Equity
+B.5
+Consolidated Statements
+of Changes in Equity
+(in millions of €)
+Balance as of October 1, 2018
+Net income
+Other comprehensive income, net of income taxes
+Dividends
+Cash and cash equivalents at end of period
+1,588
+Cash and cash equivalents at beginning of period
+157
+Interest paid
+(833)
+(1,064)
+Dividends paid to shareholders of Siemens AG
+(3,174)
+(3,060)
+Dividends attributable to non-controlling interests
+(208)
+(205)
+Cash flows from financing activities - continuing operations
+4,263
+(1,214)
+Cash flows from financing activities – discontinued operations
+(1,091)
+(1,063)
+Cash flows from financing activities - continuing and discontinued operations
+3,172
+(2,277)
+Effect of deconsolidation of Siemens Energy on cash and cash equivalents
+Effect of changes in exchange rates on cash and cash equivalents
+(4,663)
+(525)
+Change in cash and cash equivalents
+(47)
+6,120
+1,214
+242
+293
+Dividends received
+(2,409)
+(1,650)
+Income taxes paid
+(250)
+1,192
+Change in other assets and liabilities
+(660)
+(500)
+Additions to assets leased to others in operating leases
+523
+433
+Contract liabilities
+139
+143
+Trade payables
+Consolidated Financial Statements → B.2 Consolidated Statements of Comprehensive Income
+B.2
+Consolidated Statements
+Interest received
+of Comprehensive Income
+1,347
+Cash flows from operating activities - continuing operations
+(1,160)
+(994)
+Change in receivables from financing activities
+(1,940)
+(1,269)
+(958)
+(1,727)
+(1,780)
+(1,554)
+Purchase of investments and financial assets for investment purposes
+Acquisitions of businesses, net of cash acquired
+Additions to intangible assets and property, plant and equipment
+Cash flows from investing activities
+8,456
+8,862
+Cash flows from operating activities - continuing and discontinued operations
+1,508
+684
+Cash flows from operating activities - discontinued operations
+6,947
+8,178
+1,510
+(in millions of €)
+Net income
+Remeasurements of defined benefit plans
+624
+5
+(15)
+(3)
+3
+17
+(6)
+(240)
+(1,184)
+(2,805)
+1,841
+148
+(177)
+(38)
+69
+(89)
+(8)
+(2,746)
+1,656
+(2,986)
+472
+33
+(1,163)
+(261)
+17
+therein: Income tax effects
+Remeasurements of equity instruments
+therein: Income tax effects
+Income (loss) from investments accounted for using the equity method, net
+Items that will not be reclassified to profit or loss
+Currency translation differences
+Derivative financial instruments
+therein: Income tax effects
+Income (loss) from investments accounted for using the equity method, net
+Items that may be reclassified subsequently to profit or loss
+Share-based payment
+Other comprehensive income, net of income taxes
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+ANNUAL REPORT 2020 89
+Fiscal year
+Note
+2020
+2019
+4,200
+5,648
+Total comprehensive income
+Purchase of treasury shares
+1,044
+Capital reserve
+51,508
+4,030
+170
+4,200
+(2,701)
+7
+111
+(2,769)
+(218)
+(2,986)
+(3,174)
+(318)
+(3,492)
+(147)
+(147)
+(1,511)
+545
+(1,511)
+(1,511)
+550
+550
+(2)
+2,858
+(2)
+48,650
+(226)
+(9)
+15
+7
+1,409
+(49)
+(226)
+(3,663)
+48,125
+2,858
+50,984
+1,409
+(49)
+(226)
+(3,663)
+48,125
+2,858
+50,984
+525
+525
+1,409
+(49)
+(3,663)
+(9,589)
+(9,589)
+366
+In addition, Siemens is exposed to, or has rights to, vari-
+able returns from the involvement with the investee and
+Siemens is able to use its power over the investee to af-
+fect the amount of Siemens' return.
+Business combinations - Cost of an acquisition is mea-
+sured at the fair value of the assets given and liabilities
+incurred or assumed at the date of exchange. Identifiable
+assets acquired and liabilities assumed in a business com-
+bination (including contingent liabilities) are initially
+measured at their fair values at the acquisition date, irre-
+spective of the extent of any non-controlling interest.
+Non-controlling interests are measured at the propor-
+tional fair value of assets acquired and liabilities assumed
+(partial goodwill method). If there is no loss of control,
+transactions with non-controlling interests are accounted
+for as equity transactions not affecting net income. At
+the date control is lost, any retained equity interests are
+remeasured to fair value. In case of a written put option
+on non-controlling interests the Company assesses
+whether the prerequisites for the transfer of present
+ownership interest are fulfilled at the balance sheet date.
+If the Company is not the beneficial owner of the shares
+underlying the put option, the exercise of the put option
+will be assumed at each balance sheet date and treated
+as equity transaction between shareholders with the rec-
+ognition of a purchase liability at the respective exercise
+price. The non-controlling interests participate in profits
+and losses during the reporting period.
+Associates and joint ventures - Associates are compa-
+nies over which Siemens has the ability to exercise sig-
+nificant influence over operating and financial policies
+(generally through direct or indirect ownership of 20%
+to 50% of the voting rights). Joint ventures are entities
+over which Siemens and one or more parties have joint
+control. Joint control requires unanimous consent of the
+parties sharing control in decision making on relevant
+activities.
+Associates and joint ventures are recorded in the Consol-
+idated Financial Statements using the equity method and
+are initially recognized at cost. If the investment was re-
+tained in a transaction in which Siemens lost control of a
+subsidiary, the fair value of the investment represents the
+cost on initial recognition. Siemens' share of its associate's
+or joint venture's post-acquisition profits or losses is rec-
+ognized in the Consolidated Statements of Income, and
+its share of post-acquisition changes in equity that have
+not been recognized in the associate's or joint venture's
+profit or loss is recognized directly in equity. The cumula-
+tive post-acquisition changes also include effects from
+fair value adjustments and are adjusted against the car-
+rying amount of the investment. When Siemens' share of
+losses in an associate or joint venture equals or exceeds
+its interest in the investment, Siemens does not recog-
+nize further losses, unless it incurs obligations or makes
+payments on behalf of the associate or joint venture. The
+interest in an associate or joint venture is the carrying
+amount of the investment together with any long term
+interests that, in substance, form part of Siemens' net
+investment in the associate or joint venture.
+Siemens reviews associates and joint ventures for impair-
+ment whenever there is objective evidence that its in-
+vestment is impaired, for example a significant or pro-
+longed decline in the fair value of the investment below
+its carrying amount. The determination of the recover-
+able amount includes the use of estimates and assump-
+tions that tend to be uncertain.
+Foreign currency translation - Assets and liabilities of
+foreign subsidiaries, where the functional currency is
+other than the euro, are translated using the spot ex-
+change rate at the end of the reporting period, while the
+Consolidated Statements of Income are translated using
+average exchange rates during the period. Differences
+arising from such translations are recognized within eq-
+uity and reclassified to net income when the gain or loss
+on disposal of the foreign subsidiary is recognized. The
+Consolidated Statements of Cash Flows are translated at
+average exchange rates during the period, whereas cash
+and cash equivalents are translated at the spot exchange
+rate at the end of the reporting period.
+-
+Foreign currency transaction Transactions that are
+denominated in a currency other than the functional
+currency of an entity, are recorded at that functional cur-
+rency applying the spot exchange rate at the date when
+the underlying transactions are initially recognized.
+At the end of the reporting period, foreign currency-
+denominated monetary assets and liabilities are revalued
+ANNUAL REPORT 2020 97
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+to functional currency applying the spot exchange rate
+prevailing at that date. Gains and losses arising from
+these foreign currency revaluations are recognized in net
+income. Those foreign currency-denominated transac-
+tions which are classified as non-monetary are remea-
+sured using the historical spot exchange rate.
+Revenue recognition
+Siemens recognizes revenue
+when, or as control over distinct goods or services is
+transferred to the customer; i.e. when the customer is
+able to direct the use of the transferred goods or ser-
+vices and obtains substantially all of the remaining ben-
+efits, provided a contract with enforceable rights and
+obligations exists and amongst others collectability of
+consideration is probable taking our customer's credit-
+worthiness into account. Revenue is the transaction
+price Siemens expects to be entitled to. Variable consid-
+eration is included in the transaction price if it is highly
+probable that a significant reversal of revenue will not
+occur once associated uncertainties are resolved. The
+amount of variable consideration is calculated by either
+using the expected value or the most likely amount de-
+pending on which is expected to better predict the
+amount of variable consideration. Consideration is ad-
+justed for the time value of money if the period between
+the transfer of goods or services and the receipt of pay-
+ment exceeds twelve months and there is a significant
+financing benefit either to the customer or Siemens. If a
+contract contains more than one distinct good or ser-
+vice, the transaction price is allocated to each perfor-
+mance obligation based on relative stand-alone selling
+prices. If stand-alone selling prices are not observable,
+the Company reasonably estimates those. Revenue is
+recognized for each performance obligation either at a
+point in time or over time.
+Sales from construction-type contracts: Revenues are
+recognized over time under the percentage-of-comple-
+tion method, based on the percentage of costs incurred
+to date compared to total estimated costs. An expected
+loss on the contract is recognized as an expense immedi-
+ately. Payment terms are usually 30 days from the date of
+invoice issued according to the contractual terms.
+The percentage-of-completion method places consider-
+able importance on accurate estimates of the extent of
+progress towards completion and may involve estimates
+on the scope of deliveries and services required to fulfill
+the contractually defined obligations. These significant
+estimates include total estimated costs, total estimated
+revenues, contract risks, including technical, political and
+regulatory risks, and other judgments. Under the per-
+centage-of-completion method, changes in estimates
+may lead to an increase or decrease of revenue. In addi-
+tion, Siemens needs to assess whether the contract is
+expected to continue or whether it is terminated. In de-
+termining whether the continuation or termination of a
+contract is expected to be the most likely scenario, all
+relevant facts and circumstances relating to the contract
+are considered on an individual basis.
+Revenues from services: Revenues are recognized over
+time on a straight-line basis or, if the performance pat-
+tern is other than straight-line, as services are provided,
+i.e. under the percentage-of-completion method as
+described above. Payment terms are usually 30 days
+from the date of invoice issued according to the con-
+tractual terms.
+Sale of goods: Revenues are recognized at a point in time
+when control of the goods passes to the buyer, usually
+upon delivery of the goods. Invoices are issued at that
+point in time and are usually payable within 30 days. For
+licensing transactions granting the customer a right to
+use Siemens' intellectual property, payment terms are
+usually 30 days from the date of invoice issued according
+to the contractual terms.
+Income from royalties: Royalties are recognized on an
+accrual basis in accordance with the substance of the rel-
+evant agreement.
+Income from interest - Interest is recognized using the
+effective interest method.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 96
+The Consolidated Financial
+Basis of consolidation
+Statements include the accounts of Siemens AG and its
+subsidiaries over which the Company has control. Siemens
+controls an investee if it has power over the investee.
+1,603
+1,969
+(15)
+(207)
+(677)
+Issued capital
+2,550
+(42)
+(115)
+(4,629)
+36,390
+(22)
+3,433
+ANNUAL REPORT 2020 95
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+B.6
+Notes to Consolidated Financial Statements
+NOTE 1 Basis of presentation
+The accompanying Consolidated Financial Statements
+present the operations of Siemens Aktiengesellschaft
+with registered offices in Berlin (registry number HRB
+12300) and Munich (registry number HRB 6684), Ger-
+many, and its subsidiaries (the Company or Siemens).
+They have been prepared in accordance with Interna-
+tional Financial Reporting Standards (IFRS), as adopted
+by the European Union as well as with the additional re-
+quirements set forth in Section 315e (1) of the German
+Commercial Code (HGB). The financial statements are in
+accordance with IFRS as issued by the International Ac-
+counting Standards Board (IASB). The Consolidated Fi-
+nancial Statements were authorized for issue by the Man-
+aging Board on November 27, 2020. Siemens prepares
+and reports its Consolidated Financial Statements in eu-
+ros (€). Due to rounding, numbers presented may not
+add up precisely to totals provided. Siemens is a German
+based multinational technology company.
+NOTE 2 Material accounting
+policies and critical accounting
+estimates
+Certain of these accounting policies require critical ac-
+counting estimates that involve complex and subjective
+judgments and the use of assumptions, some of which
+may be for matters that are inherently uncertain and sus-
+ceptible to change. Such critical accounting estimates
+could change from period to period and have a material
+impact on the Company's results of operations, financial
+positions and cash flows. Critical accounting estimates
+could also involve estimates where Siemens reasonably
+could have used a different estimate in the current ac-
+counting period. Siemens cautions that future events
+often vary from forecasts and that estimates routinely
+require adjustment. In fiscal 2020, Siemens' business and
+economic environment is adversely affected by the pan-
+demic coronavirus spread, though certain mitigating
+effects may arise due to the various measures taken either
+by the Company, or by Governments and States globally,
+including favorable financial support. Siemens' fiscal
+2020 orders, revenues and net income are negatively af-
+fected by COVID-19, particularly at our short-cyclic busi-
+nesses. Impacts from the pandemic vary considerably
+between regions and customer industries. As the out-
+break continues to evolve, it is challenging to predict its
+duration and its magnitude of impacts on assets, liabili-
+ties, results of operations and cash flows. In the fiscal
+2020 Consolidated Financial Statements, the Company
+based financial statement related estimates and assump-
+tions on existing knowledge and best information avail-
+able and applied a scenario assuming the current corona-
+virus situation is of no long-term duration. Consequently,
+the Company believes its effects on Siemens' Consoli-
+dated Financial Statements will not be of a severe, sub-
+stantial degree. Corona related impacts on Siemens' Con-
+solidated Financial Statements may result from declining
+and more volatile share prices, interest rate adjustments
+in various countries, increasing volatility in foreign cur-
+rency exchange rates, deteriorating creditworthiness,
+credit default or delayed payments, delays in order place-
+ments as well as in executing orders and contracts, termi-
+nation of contracts, adjusted or modified revenue and
+cost patterns, limited usage of assets, volatility in financial
+and commodity markets, limited or no access to customer
+facilities and hardship in preparing predictions and fore-
+casts due to uncertainties in amount and timing of cash
+flows. Those factors may impact fair value and carrying
+amounts of assets and liabilities, amount and timing of
+results of operations and cash flows. It is reasonably pos-
+sible, that adjustments to assumptions and carrying
+amounts are necessary within the next fiscal year. The
+Company believes assumptions applied appropriately re-
+flect the current situation. See also > NOTES 4 and 23.
+-
+39,823
+(19)
+(1,292)
+(10)
+553
+41,818
+(28)
+Balance as of October 1, 2019
+2,550
+6,839
+41,790
+Net income
+4,030
+Other comprehensive income, net of income taxes
+(185)
+Dividends
+(3,174)
+Share-based payment
+(6)
+(141)
+Purchase of treasury shares
+Re-issuance of treasury shares
+5
+Disposal of equity instruments
+Changes in equity resulting from major portfolio transactions
+Other transactions with non-controlling interests
+Effects of retrospectively adopting IFRS
+6,287
+2,550
+Balance as of September 30, 2019 (as previously reported)
+(3)
+Retained earnings
+6,184
+41,007
+5,174
+(1,138)
+(3,060)
+99
+(114)
+Re-issuance of treasury shares
+Other changes in equity
+Disposal of equity instruments
+Other changes in equity
+Balance as of September 30, 2019
+4
+(30)
+(10)
+(3)
+(9)
+2,550
+6,287
+41,818
+Transactions with non-controlling interests
+Balance as of September 30, 2020
+Trade and other receivables
+(2)
+(9,589)
+474
+5,648
+1,760
+(16)
+(200)
+406
+66
+472
+(3,060)
+(255)
+(16)
+6
+(10)
+(1,350)
+(1,350)
+(1,350)
+1,609
+1,583
+1,583
+(10)
+ANNUAL REPORT 2020 94
+5,174
+47,981
+(3,315)
+45,410
+365
+1
+2,571
+(15)
+2,550
+6,840
+33,078
+→ B.5 Consolidated Statements of Changes in Equity
+Currency
+translation
+differences
+Equity
+instruments
+Consolidated Financial Statements
+Derivative financial
+instruments
+Treasury
+shares at cost
+Total equity
+attributable to
+shareholders of
+Siemens AG
+Non controlling
+interests
+(3,922)
+Total equity
+(351)
+(33)
+(26)
+Share-based payment - Share-based payment awards at
+Siemens are predominately designed as equity-settled.
+Fair value is measured at grant date and is expensed over
+the vesting period. Fair value is determined as the market
+price of the underlying shares, considering dividends
+during the vesting period the grantees are not entitled to
+as well as market conditions and non-vesting conditions,
+if applicable. Plans granting the rights to receive subsidi-
+ary shares constitute own shares and, accordingly, are
+accounted as equity-settled.
+Prior-year information - The presentation of certain pri-
+or-year information has been reclassified to conform to
+the current year presentation.
+Recently adopted
+Accounting Pronouncements
+104
+ANNUAL REPORT 2020
+(in millions of €)
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Cash flow hedges: The effective portion of changes in the
+fair value of derivative instruments designated as cash
+flow hedges are recognized in line item Other compre-
+hensive income, net of income taxes, and any ineffec-
+tive portion is recognized immediately in net income.
+Amounts accumulated in equity are reclassified into net
+income in the same periods in which the hedged item
+affects net income.
+IFRS 16, Leases, was adopted as of October 1, 2019, by
+applying the modified retrospective approach (using
+practical and transitional expedients), i.e. comparative
+figures for the preceding year are not adjusted. IFRS 16
+introduced a single lessee accounting model requiring
+lessees to recognize right-of-use assets and lease liabili-
+ties for leases with a term of more than twelve months,
+unless the underlying asset is of low value. The initial ap-
+plication of IFRS 16 reduced Retained earnings by €28 mil-
+lion. Most of the transition effects relate to real estate
+leased by Siemens. As of October 1, 2019, additional
+right-of-use assets of €3,176 million were recognized in
+Property, plant and equipment, generally measured at
+the amount of the lease liability adjusted by any prepaid
+or accrued lease payments. Future payment obligations
+under operating leases as of September 30, 2019 recon-
+cile to the lease liability as of October 1, 2019, as follows:
+Fair value hedges: The carrying amount of the hedged
+item is adjusted by the gain or loss attributable to the
+hedged risk. Where an unrecognized firm commitment
+is designated as hedged item, the subsequent cumula-
+tive change in its fair value is recognized as a separate
+financial asset or liability with corresponding gain or loss
+recognized in net income. For hedged items carried at
+amortized cost, the adjustment is amortized until matu-
+rity of the hedged item. For hedged firm commitments
+the initial carrying amount of the assets or liabilities that
+result from meeting the firm commitments are adjusted
+to include the cumulative changes in the fair value that
+were previously recognized as separate financial assets
+or liabilities.
+Stage 3: If the financial asset is credit-impaired, valuation
+allowances equal lifetime expected credit losses. A finan-
+cial asset is considered credit-impaired when there is
+observable information about significant financial diffi-
+culties and a high vulnerability to default, however, the
+definition of default is not yet met. Impairment triggers
+include liquidity problems, a request for debt restructur-
+ing or a breach of contract. A credit-risk driven contrac-
+tual modification always results in a credit-impaired
+financial asset.
+-
+Financial liabilities except for derivative financial
+instruments, Siemens measures financial liabilities at
+amortized cost using the effective interest method.
+Loan Commitments and credit guarantees - Expected
+credit losses for irrevocable loan commitments are deter-
+mined using the three-stage impairment approach for
+financial assets measured at amortized cost and recog-
+nized as a liability. Credit guarantees are recognized at
+the higher of consideration received for granting the
+guarantee and expected credit losses determined.
+Cash and cash equivalents - The Company considers all
+highly liquid investments with less than three months
+maturity from the date of acquisition to be cash equiva-
+lents. Cash and cash equivalents are measured at cost.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+103
+ANNUAL REPORT 2020
+A financial asset is derecognized when the rights to cash
+flows expire or the financial asset is transferred to an-
+other party. Significant modifications of contractual
+terms of a financial asset measured at amortized cost
+result in derecognition and recognition of a new financial
+asset; for insignificant modifications, the carrying
+amount of the financial asset is adjusted without
+derecognition.
+Financial assets are written off as uncollectible if recovery
+appears unlikely. Generally, if the limitation period ex-
+pired, when a debtor's sworn statement of affairs is re-
+ceived, or when the receivable is not pursued due to its
+minor value. Receivables are written off when bank-
+ruptcy proceedings close.
+Stage 2: If the credit risk of a financial asset increases
+significantly without being credit-impaired, lifetime ex-
+pected credit losses are recognized based on a lifetime
+probability of default. A significant increase in credit risk
+is determined for each individual financial instrument
+using internal credit ratings. A rating deterioration does
+not trigger a transfer into Stage 2, if the credit rating re-
+mains within the investment grade range. More than
+30 days past due payments will not be transferred into
+Stage 2, if the delay is not credit-risk-related.
+Stage 1: At inception, twelve-month expected credit
+losses are recognized based on a twelve months proba-
+bility of default.
+Future minimum lease payments from operating leases as of September 30, 2019 (gross)
+Future minimum lease payments from finance leases as of September 30, 2019 (gross)
+Derivative financial instruments Derivative financial
+instruments, such as foreign currency exchange con-
+tracts and interest rate swap contracts are measured at
+fair value unless they are designated as hedging instru-
+ments, for which hedge accounting is applied. Changes
+in the fair value of derivative financial instruments are
+recognized either in net income or, in the case of a cash
+flow hedge, in line item Other comprehensive income,
+net of income taxes (applicable deferred income tax).
+Certain derivative instruments embedded in host con-
+tracts are also accounted for separately as derivatives.
+3,518
+In August 2020, Siemens Healthineers entered into an
+agreement to acquire all shares of Varian Medical Sys-
+tems, Inc., U.S., for a purchase price of US$16.4 billion
+(€ 14.0 billion as of September 30, 2020). Upon closing
+of the acquisition, Siemens Healthineers is obliged to re-
+pay all amounts outstanding under an existing credit
+agreement of Varian, which has a maximum volume of
+US$1.2 billion (€1.0 billion). The acquisition was ap-
+proved by Varian shareholders in October 2020. It is still
+subject to regulatory approvals and other customary clos-
+ing conditions and is expected to be completed in the
+first half of calendar year 2021.
+Change in future minimum lease payments relating to service components
+In September 2020, Siemens Healthineers AG placed
+75 million new shares to institutional investors, receiving
+gross proceeds of €2.7 billion and increasing its share cap-
+ital to €1.075 billion. Siemens did not participate in the
+placement, thus, Siemens' stake in Siemens Healthineers
+decreased from 85% to 79%. The dilution is accounted for
+as equity transaction, which increased Non-controlling
+interests by €1.1 billion and Total equity attributable to
+shareholders of Siemens AG by €1.6 billion (mainly due to
+an increase in Retained earnings of €1.5 billion).
+in Siemens Healthineers
+Dilution of the stake
+in Siemens Gamesa Renewable Energy
+In February 2020, Siemens purchased Iberdrola S.A.'s
+8.1% stake in Siemens Gamesa Renewable Energy for a
+purchase price of €1.1 billion. The transaction was ac-
+counted for as equity transaction, resulting in a decrease
+of non-controlling interests of €112 million and a de-
+crease of retained earnings attributable to shareholders
+of Siemens AG of €967 million.
+Acquisition of a further stake
+other long-term debt instruments primarily held at
+Financial Services (SFS) is measured according to a three-
+stage impairment approach:
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 105
+In addition, Siemens acquired several businesses in fiscal
+2020 and 2019 for a total purchase price of €551 million
+and €429 million, respectively, mainly paid in cash. The
+(preliminary) purchase price allocations resulted in Other
+intangible assets of €263 million and €124 million and
+Goodwill of €298 million and €311 million, respectively,
+which comprises intangible assets that are not separable
+such as employee know-how and expected synergy
+effects. The purchase price allocation for some of the ac-
+quired businesses is preliminary, as a detailed analysis of
+the assets and liabilities has not been finalized. Other
+intangible assets of €145 million and Goodwill of €35 mil-
+lion were reclassified to Assets classified as held for dis-
+posal subsequently.
+In November 2019, Siemens Healthineers acquired 75%
+of ownership interests in ECG Management Consultants
+(ECG). ECG is a leading consulting company based in the
+United States specialized in healthcare and providing a
+comprehensive suite of advisory services. The purchase
+price paid in cash including adjustments was US$219 mil-
+lion (€196 million). In addition, Siemens Healthineers
+redeemed financial liabilities of ECG amounting to
+US$143 million (€129 million). The purchase price alloca-
+tion as of the acquisition date mainly resulted in Other
+Intangible assets of €112 million, Goodwill of €200 mil-
+lion and current financial liabilities of €132 million. Good-
+will comprises intangible assets that are not separable,
+such as employee know-how and expected synergy ef-
+fects. Goodwill of €99 million is expected to be deduct-
+ible for tax purposes.
+been €57,140 million and €4,196 million, respectively, in
+fiscal year 2020.
+In October 2019, Siemens Healthineers acquired Corin-
+dus Vascular Robotics, Inc., USA, for US$1.1 billion
+(€1.0 billion) in cash. Corindus develops and provides a
+robotic-assisted platform for endo-vascular coronary and
+peripheral vascular interventions. The purchase price al-
+location as of the acquisition date resulted in Other Intan-
+gible assets of €306 million, mainly relating to acquired
+technology, and Goodwill of €751 million. Goodwill com-
+prises intangible assets that are not separable, such as
+employee know-how and expected synergy effects. Syn-
+ergies are expected mainly from offering Corindus' prod-
+ucts through the Siemens Healthineers' sales network,
+and also from the combination of Corindus' robotic sys-
+tems with Siemens Healthineers' therapy systems and
+solutions in the fields of digitalization and artificial intel-
+ligence. The acquired business contributed revenue of
+€8 million and a net loss of €48 million for the period
+from acquisition to September 30, 2020, including earn-
+ings effects from purchase price allocation and integra-
+tion costs. If Corindus had been included in the consoli-
+dated financial statements as of October 1, 2019, revenue
+and net income, including earnings effects from pur-
+chase price allocation and integration costs, would have
+158
+Acquisitions
+On October 1, 2019, Siemens retrospectively adopted
+IFRIC 23, Uncertainty over Income Tax Treatments. The
+adoption increased Current income tax assets and Equity
+by €553 million. Prior period amounts are not adjusted.
+3,127
+Lease liability recognized for the first time as of October 1, 2019 (thereof current: €751)
+106
+Lease liability from finance leases as of September 30, 2019
+3,233
+(306)
+Discounted using incremental borrowing rates (weighted average incremental borrowing rate as of October 1, 2019: 1.8%)
+Lease liability as of October 1, 2019
+3,538
+(37)
+Other (therein leases terminating before September 30, 2020 €(34), leases concluded not yet commenced €(23))
+Future minimum lease payments from leases under the right-of-use model as of October 1, 2019 (gross)
+(101)
+NOTE 3 Acquisitions, dispositions
+and discontinued operations
+Valuation allowances are set up for expected credit
+losses, representing a forward-looking estimate of
+future credit losses involving significant judgment.
+Expected credit loss is the gross carrying amount less
+collateral, multiplied by the probability of default and
+a factor reflecting the loss in the event of default. Valu-
+ation allowances are not recognized when the gross
+carrying amount is sufficiently collateralized. Probabili-
+ties of default are mainly derived from internal rating
+grades. A simplified approach is used to assess expected
+credit losses from trade receivables, lease receivables
+and contract assets by applying their lifetime expected
+credit losses. The valuation allowance for loans and
+Inventories Inventories are valued at the lower of ac-
+quisition or production costs and net realizable value,
+costs being generally determined based on an average or
+first-in, first-out method. Determining net realizable
+value of inventories involves accounting estimates for
+quantity, technical and price risks.
+taxes.
+Lessee - Under IFRS 16, Siemens recognizes right-of-use
+assets and lease liabilities for leases with a term of more
+than twelve months if the underlying asset is not of low
+value. Payments for short-term and low-value leases are
+expensed over the lease term. Extension options are
+included in the lease term if their exercise is reasonably
+certain. Right-of-use assets are measured at cost less
+accumulated depreciation and impairment losses ad-
+justed for any remeasurements. Right-of-use assets are
+depreciated under the straight-line method over the
+shorter of the lease term and the useful life of the under-
+lying assets. Lease liabilities are measured at the present
+value of the lease payments due over the lease term,
+generally discounted using the incremental borrowing
+rate. Lease liabilities are subsequently measured at
+amortized cost using the effective interest method. They
+are remeasured in case of modifications or reassess-
+ments of the lease.
+Lessor - Leases are classified as either finance or operat-
+ing leases, determined based on whether substantially all
+the risks and rewards incidental to ownership of an un-
+derlying asset are transferred. If this is the case, the lease
+is classified as a finance lease; if not, it is an operating
+lease. Receivables from finance leases are recognized at
+an amount equal to the net investment in the lease. The
+assets underlying the operating leases are presented in
+Property, plant and equipment and depreciated on a
+straight-line basis over their useful lives or to their esti-
+mated residual value. Operating lease income is recog-
+nized on a straight-line basis over the lease term.
+Leases - Under IFRS 16, a contract is or contains a lease if
+the contract conveys the right to control the use of an
+identified asset for a period of time in exchange for con-
+sideration. Further information on leases can be found in
+7 NOTES 8, 13 and 16.
+Impairment of property, plant and equipment and
+other intangible assets - The Company reviews prop-
+erty, plant and equipment and other intangible assets for
+impairment whenever events or changes in circum-
+stances indicate that the carrying amount of an asset
+may not be recoverable. In addition, intangible assets not
+yet available for use are subject to an annual impairment
+test. Impairment testing of property, plant and equip-
+ment and other intangible assets involves the use of esti-
+mates in determining the assets' recoverable amount,
+which can have a material impact on the respective val-
+ues and ultimately the amount of any impairment.
+5 to 10 years
+generally 10 years
+generally 5 years
+generally 3 to 7 years
+20 to 50 years
+Office & other equipment
+Equipment leased to others
+Technical machinery & equipment
+Other buildings
+Factory and office buildings
+Property, plant and equipment - Property, plant and
+equipment, is valued at cost less accumulated deprecia-
+tion and impairment losses. Depreciation expense is rec-
+ognized using the straight-line method. The following
+useful lives are assumed:
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 99
+Other intangible assets - The Company amortizes intan-
+gible assets with finite useful lives on a straight-line basis
+over their respective estimated useful lives. Estimated
+useful lives for patents, licenses and other similar rights
+generally range from three to five years, except for intan-
+gible assets with finite useful lives acquired in business
+combinations. Intangible assets acquired in business
+combinations primarily consist of customer relationships
+and trademarks as well as technology. Useful lives in spe-
+cific acquisitions ranged from four to 20 years for cus-
+tomer relationships and trademarks and for technology
+from five to 18 years.
+The determination of the recoverable amount of a cash-
+generating unit or a group of cash-generating units to
+which goodwill is allocated involves the use of estimates
+by management. The outcome predicted by these esti-
+mates is influenced e.g. by the successful integration of
+acquired entities, volatility of capital markets, interest
+rate developments, foreign exchange rate fluctuations
+and the outlook on economic trends. In determining re-
+coverable amounts, discounted cash flow calculations
+use five-year projections that are based on financial
+forecasts. Cash flow projections take into account past
+experience and represent management's best estimate
+about future developments. Cash flows after the plan-
+ning period are extrapolated using individual growth
+rates. Key assumptions on which management has
+based its determination of fair value less costs to sell
+and value in use include estimated growth rates and
+weighted average cost of capital. These estimates, in-
+cluding the methodology used, can have a material im-
+pact on the respective values and ultimately the amount
+of any goodwill impairment.
+an impairment loss on goodwill allocated to this cash-
+generating unit or this group of cash-generating units is
+recognized. The recoverable amount is the higher of the
+cash-generating unit's or the group of cash-generating
+units' fair value less costs to sell and its value in use. If
+either of these values exceeds the carrying amount, it is
+not always necessary to determine both values. These
+values are generally determined based on discounted
+cash flow calculations. Impairment losses on goodwill
+are not reversed in future periods.
+Goodwill - Goodwill is not amortized, instead, goodwill
+is tested for impairment annually, as well as whenever
+there are events or changes in circumstances (triggering
+events) which suggest that the carrying amount may not
+be recoverable. Goodwill is carried at cost less accumu-
+lated impairment losses. The goodwill impairment test is
+performed at the level of a cash-generating unit or a
+group o of cash-generating units, generally represented by
+a segment. Siemens Healthineers is tested one level be-
+low the segment. This is the lowest level at which good-
+will is monitored for internal management purposes.
+Earnings per share Basic earnings per share are com-
+puted by dividing income from continuing operations,
+income from discontinued operations and net income, all
+attributable to ordinary shareholders of Siemens AG by
+the weighted average number of shares outstanding
+during the year. Diluted earnings per share are calculated
+by assuming conversion or exercise of all potentially dilu-
+tive securities and share-based payment plans.
+-
+Research and development costs Costs of research
+activities are expensed as incurred. Costs of development
+activities are capitalized when the recognition criteria in
+IAS 38 are met. Capitalized development costs are stated
+at cost less accumulated amortization and impairment
+losses with an amortization period of generally three to
+ten years.
+-
+Product-related expenses - Provisions for estimated costs
+related to product warranties are recorded in line item
+Cost of sales at the time the related sale is recognized.
+assets and property, plant and equipment are included in
+functional costs depending on the use of the assets.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+In May 2019, Siemens announced to transfer the energy
+business into a new company, Siemens Energy AG
+(Siemens Energy), and list it on the stock market by a
+spin-off. The distribution group included the previous
+segment Gas and Power and the 67% stake in Siemens
+Gamesa Renewable Energy. In addition, Siemens trans-
+ferred a 24% stake in Siemens Ltd., India, into Siemens
+Energy. At the end of the second quarter in fiscal 2020,
+Prior-year lessee accounting: Until September 30, 2019,
+IAS 17 and IFRIC 4 were applied. Lessee accounting distin-
+guished between finance and operating leases. Finance
+leases were accounted for largely comparable to the
+right-of-use model currently applied for lease account-
+ing. Operating leases were recognized off-balance and
+expensed over the lease term.
+Discontinued operations and non-current assets held
+for disposal Discontinued operations are reported
+when a component of an entity is classified as held for
+disposal or has been disposed of, if the component rep-
+resents a separate major line of business or geographical
+area of operations and is part of a single coordinated plan
+to disposal. A non-current asset or a disposal group is
+held for disposal if its carrying amount will be recovered
+principally through a sale transaction or through a distri-
+bution to owners rather than through continuing use. In
+the Consolidated Statements of Income and of Cash
+Flows, discontinued operations is reported separately
+from continuing operations; prior periods are presented
+on a comparable basis. The disclosures in the > NOTES TO
+THE CONSOLIDATED FINANCIAL STATEMENTS outside NOTE 3 relate
+to continuing operations or assets and liabilities not held
+for disposal. The determination of the fair value less costs
+to sell includes the use of estimates and assumptions that
+tend to be uncertain.
+ANNUAL REPORT 2020 100
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Financial assets measured at fair value through other
+comprehensive income (FVOCI) – are equity instruments
+for which Siemens irrevocably elects to present subse-
+quent fair value changes in OCI at initial recognition of
+the instrument. Unrealized gains and losses, net of de-
+ferred income tax expenses, as well as gains and losses
+on the subsequent sale of the instruments are recognized
+in line item Other comprehensive income, net of income
+-
+Financial assets measured at fair value through profit and
+loss (FVTPL) - a) mandatorily measured at FVTPL: Debt
+financial assets are measured at FVTPL if the business
+model they are held in is not a hold-to-collect or a hold-
+and-sell business model, or if their contractual cash flows
+do not represent solely payments of principal and inter-
+est. Equity instruments are measured at FVTPL unless the
+FVOCI-option is elected. b) Financial assets designated as
+measured at FVTPL: are irrevocably designated at initial
+recognition if the designation significantly reduces ac-
+counting mismatches that would otherwise arise if assets
+and liabilities as well as recognizing gains (losses) were
+measured on different bases.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+102
+ANNUAL REPORT 2020
+A financial instrument is any
+Financial instruments
+contract that gives rise to a financial asset of one entity
+and a financial liability or equity instrument of another
+entity. Based on their contractual cash flow characteris-
+tics and the business model they are held in, financial
+instruments are classified as financial assets and financial
+liabilities measured at cost or amortized cost, measured
+at fair value, loan commitments and credit guarantees,
+contract assets and receivables from finance leases. Reg-
+ular way purchases or sales of financial assets are ac-
+counted for at the trade date. Initially, financial instru-
+ments are recognized at fair value and net of transaction
+costs, if not categorized at FVTPL. Subsequently, financial
+assets and liabilities are measured according to the cate-
+gory to which they are assigned to:
+Termination benefits are pro-
+Termination benefits
+vided as a result of an entity's offer made in order to en-
+courage voluntary redundancy before the regular retire-
+ment date or from an entity's decision to terminate the
+employment. Termination benefits in accordance with
+IAS 19, Employee Benefits, are recognized as a liability
+and an expense when the entity can no longer withdraw
+the offer of those benefits.
+-
+Legal Proceedings often involve complex legal issues and
+are subject to substantial uncertainties. Accordingly, con-
+siderable judgment is part of determining whether it is
+probable that there is a present obligation as a result of a
+past event at the end of the reporting period, whether it
+is probable that such a Legal Proceeding will result in an
+outflow of resources and whether the amount of the ob-
+ligation can be reliably estimated. Internal and external
+counsels are generally part of the determination process.
+Due to new developments, it may be necessary, to record
+a provision for an ongoing Legal Proceeding or to adjust
+the amount of a previously recognized provision. Upon
+resolution of a Legal Proceeding, Siemens may incur
+charges in excess of the recorded provisions for such mat-
+ters. The outcome of Legal Proceedings may have a ma-
+terial effect on Siemens' financial position, its results of
+operations and/or its cash flows.
+Financial assets measured at amortized cost - Loans,
+receivables and other debt instruments held in a hold-
+to-collect business model with contractual cash flows
+that represent solely payments of principal and interest
+are measured at amortized cost using the effective in-
+terest method less valuation allowances for expected
+credit losses.
+Significant estimates are involved in the determination of
+provisions related to onerous contracts, warranty costs,
+asset retirement obligations, legal and regulatory pro-
+ceedings as well as governmental investigations (Legal
+Proceedings). Siemens records a provision for onerous
+contracts with customers when current estimates of total
+estimated costs exceed estimated revenue. Onerous con-
+tracts with customers are identified by monitoring the
+progress of the project and updating the estimates which
+requires significant judgment relating to achieving cer-
+tain performance standards as well as estimates involv-
+ing warranty costs and estimates regarding project de-
+lays including the assessment of responsibility splits
+between the contract partners for these delays. Uncer-
+tainties regarding asset retirement obligations include
+the estimated costs of decommissioning and final waste
+storage because of the long time frame over which fu-
+ture cash outflows are expected to occur including the
+respective interest accretion. The estimated cash out-
+flows could be impacted significantly by changes of the
+regulatory environment.
+Entitlements resulting from plans based on asset returns
+from underlying assets are generally measured at the fair
+value of the underlying assets at period-end. If the per-
+formance of the underlying assets is lower than a guar-
+anteed return, the DBO is measured by projecting for-
+ward the contributions at the guaranteed fixed return
+and discounting back to a present value.
+social conditions, the underlying key assumptions may
+differ from actual developments.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 101
+Actuarial valuations rely on key assumptions including
+discount rates, expected compensation increases, rate of
+pension progression and mortality rates. Discount rates
+used are determined by reference to yields on high-qual-
+ity corporate bonds of appropriate duration and currency
+at the end of the reporting period. In case such yields are
+not available, discount rates are based on government
+bonds yields. Due to changing market, economic and
+Remeasurements comprise actuarial gains and losses as
+well as the difference between the return on plan assets
+and the amounts included in net interest on the net de-
+fined benefit liability (asset). They are recognized in
+Other comprehensive income, net of income taxes.
+Service cost, past service cost and settlement gains
+(losses) for pensions and similar obligations as well as
+administration costs unrelated to the management of
+plan assets are allocated among functional costs. Past
+service cost and settlement gains (losses) are recognized
+immediately in profit or loss. For unfunded plans, the
+amount of the line item Provisions for pensions and sim-
+ilar obligations equals the DBO. For funded plans,
+Siemens offsets the fair value of the plan assets with the
+DBO. Siemens recognizes the net amount, after adjust-
+ments for effects relating to any asset ceiling.
+Defined benefit plans - Siemens measures the entitle-
+ments by applying the projected unit credit method. The
+approach reflects an actuarially calculated net present
+value of the future benefit entitlement for services al-
+ready rendered. In determining the net present value of
+the future benefit entitlement for service already ren-
+dered (Defined Benefit Obligation (DBO)), the expected
+rates of future salary increases and expected rates of fu-
+ture pension progression are considered. The assump-
+tions used for the calculation of the DBO as of the peri-
+od-end of the preceding fiscal year are used to determine
+the calculation of service cost and interest income and
+expense of the following year. Significant plans apply in-
+dividual spot rates from full discount rate curves to deter-
+mine service cost and interest expense. The net interest
+income or expense for the fiscal year will be based on the
+discount rate for the respective year multiplied by the net
+defined benefit liability (asset) at the preceding fiscal
+year's period-end date.
+-
+Contract assets, contract liabilities, receivables - When
+either party to a contract with customers has performed,
+Siemens presents a contract asset, a contract liability or
+a receivable depending on the relationship between
+Siemens' performance and the customer's payment.
+Contract assets and liabilities are presented as current
+since incurred in the normal operating cycle. Receivables
+are recognized when the right to consideration becomes
+unconditional. Valuation allowances for credit risks are
+made for contract assets and receivables in accordance
+with the accounting policy for financial assets measured
+at amortized cost.
+Income taxes Tax positions under respective local tax
+laws, relevant court decisions and applicable tax author-
+ities' views can be complex and subject to different inter-
+pretations of tax payers and local tax authorities. Differ-
+ent interpretations of existing or new tax laws as a result
+of tax reforms or other tax legislative procedures may
+result in additional tax payments for prior years and are
+taken into account based on management's consider-
+ations. Under the liability method, deferred tax assets
+and liabilities are recognized for future tax consequences
+attributable to differences between the financial state-
+ment carrying amounts of assets and liabilities and their
+respective tax bases. Deferred tax assets are recognized
+if sufficient future taxable profit is available, including
+income from forecasted operating earnings, the reversal
+of existing taxable temporary differences and available
+tax planning opportunities that Siemens would execute.
+As of each period-end, Siemens evaluates the recover-
+ability of deferred tax assets, based on taxable income of
+past periods and projected future taxable profits. As fu-
+ture developments are uncertain and partly beyond Sie-
+mens's control, assumptions are necessary to estimate
+future taxable profits as well as the period in which de-
+ferred tax assets will recover. Estimates are revised in the
+period in which there is sufficient evidence to revise the
+assumption.
+_
+Provisions - A provision is recognized in the Statement
+of Financial Position when it is probable that the Com-
+pany has a present legal or constructive obligation as a
+result of a past event and it is probable that an outflow of
+economic benefits will be required to settle the obliga-
+tion and a reliable estimate can be made of the amount
+of the obligation. If the effect is material, provisions are
+recognized at present value by discounting the expected
+future cash flows at a pretax rate that reflects current
+market assessments of the time value of money. When a
+contract becomes onerous, the present obligation under
+the contract is recognized as a provision.
+For the purpose of impairment testing, goodwill acquired
+in a business combination is allocated to the cash-gener-
+ating unit or the group of cash-generating units that is
+expected to benefit from the synergies of the business
+combination. If the carrying amount of the cash-gener-
+ating unit or the group of cash-generating units, to which
+the goodwill is allocated, exceeds its recoverable amount,
+the distribution group met the criteria for a held for dis-
+posal and discontinued operation classification. Effective
+with Siemens classifying the distribution group as held
+for disposal, Siemens ceased depreciation and amortiza-
+tion of assets within the distribution group. In July 2020,
+the Siemens AG shareholders approved the spin-off plan
+in an extraordinary shareholder meeting.
+Discontinued operations:
+Siemens Energy spin-off
+Miscellaneous current liabilities
+2,805
+Other current liabilities
+1,621
+9,983
+Current provisions
+Contract liabilities
+As of September 30, 2020, Siemens' remaining invest-
+ment in Siemens Energy AG, active in the transmission
+and generation of electrical power, is a public listed asso-
+ciate accounted for using the equity method. Below sum-
+marized financial information of Siemens Energy AG is
+disclosed on a 100 per cent basis. It is adjusted to align
+with Siemens' accounting policies and to incorporate ef-
+fects from preliminary fair value adjustments at initial
+recognition.
+Income (loss) from investments accounted for using the
+equity method included an impairment loss of €453 mil-
+lion in connection with an investment that is part of Port-
+folio Companies. The business situation of the invest-
+ment, increased development costs of customer projects,
+combined with a corona-related deterioration of the mar-
+ket environment and contractual obligations triggered an
+impairment test. The recoverable amount was deter-
+mined as the investment's fair value less costs to sell us-
+ing a discounted cash flow approach (level 3 of the fair
+value hierarchy). In order to determine the recoverable
+amount, cash flow forecasts were used, taking into ac-
+count past experience and which represented the best
+estimate of future developments. The calculation was
+based on a discount rate (after taxes) of 8.0%.
+4,701
+670
+1,335
+1,756
+1,098
+Trade payables
+maturities of long-term debt
+Short-term debt and current
+42,922
+Assets classified as held for disposal
+Miscellaneous non-current assets
+Miscellaneous current assets
+Deferred tax assets
+9,338
+4,678
+4,988
+Property, plant and equipment
+Other intangible assets
+1,289
+Long-term debt
+1,423
+Provisions for pensions and similar obligations
+(in millions of €)
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+112
+(596)
+(5)
+(590)
+131
+108
+(14)
+(114)
+2019
+Goodwill
+2020
+ANNUAL REPORT 2020 107
+27,443
+assets classified as held for disposal
+Liabilities associated with
+595
+Miscellaneous non-current liabilities
+2,089
+Provisions
+1,139
+Deferred tax liabilities
+1,128
+Fiscal year
+6,647
+Inventories
+4,576
+Gains (losses) on sales, net
+(9)
+946
+less spin-off costs
+Share of profit (loss), net
+(in millions of €)
+(27,772)
+28,366
+26,259
+Investments accounted for using the equity method
+NOTE 4 Interests in other entities
+Income (loss) from discontinued
+operations before income taxes
+2019
+Gain on the spin-off
+Expenses
+Revenue
+(in millions of €)
+Fiscal year
+→ B.6 Notes to Consolidated Financial Statements
+Consolidated Financial Statements
+106
+ANNUAL REPORT 2020
+To determine the fair value of the spin-off liability and the
+remaining stake in Siemens Energy as of the spin-off
+date, Siemens referred to an opinion by an independent
+expert (level 3 of the fair value hierarchy). The fair value
+of the spin-off liability, which represents 55% of the share
+in Siemens Energy, amounted to €10.5 billion; the re-
+maining 35.1% investment in Siemens Energy amounted
+to €6.7 billion and the 9.9% interest contributed into the
+Siemens Pension-Trust e. V. amounted to €1.9 billion; the
+derecognised net assets, including the non-controlling
+interests, amounted to €16.0 billion; the reclassification
+of the amounts recognized in other comprehensive in-
+come resulted in an expense of €0.7 billion and the spin-
+off costs in fiscal year 2020 amounted to €0.2 billion. The
+transfer of 24% of Siemens Ltd., India, is classified as an
+equity transaction not impacting profit or loss at the
+amount of €1.2 billion; this component is not part of the
+spin-off gain. Subsequently, Siemens still holds 51% of
+the shares in Siemens Ltd., India, and continues to con-
+trol the investment. As a result of this equity transaction,
+Non-controlling interests and Retained earnings in-
+creased by €0.3 billion and €0.9 billion, respectively.
+Overall, in fiscal 2020, Siemens recorded a spin-off gain
+of €0.9 billion. The derecognition of the disposal group is
+presented as a non-cash transaction. The results of
+Siemens Energy are reported as discontinued operations
+in the Consolidated Statements of Income and Cash Flows
+for all periods presented:
+On September 25, 2020, the spin-off transaction became
+effective. Siemens transferred 55% of its ownership inter-
+est in Siemens Energy to its shareholders and since that
+point no longer controls Siemens Energy. Immediately
+after the effectiveness of the spin-off, Siemens contrib-
+uted a 9.9% interest in Siemens Energy to the Siemens
+Pension-Trust e. V. Thereafter, Siemens owns 35.1% in
+Siemens Energy and accounts for its investment using
+the equity method.
+2020
+Ownership interest
+297
+Impairment and reversals of impairment
+Contract assets
+3,843
+Trade and other receivables
+4,663
+Cash and cash equivalents
+(in millions of €)
+2020
+Sep 25,
+The carrying amounts of the major classes of assets and
+liabilities spun-off were as follows:
+1 Mainly includes income taxes relating to the legal carve-out
+of the distribution group.
+375
+585
+39
+thereof attributable to
+487
+(102)
+operations, net of income taxes
+Income (loss) from discontinued
+3
+(298)
+Income (loss) from investments accounted
+for using the equity method, net
+(100)
+(101)
+Income taxes on ordinary activities
+Other income taxes¹
+Siemens AG shareholders
+35.1%
+(26,908)
+23,136
+Fiscal year
+ANNUAL REPORT 2020 108
+6,043
+5,294
+Non-current liabilities
+5,605
+7,289
+Current liabilities
+6,645
+Siemens Energy AG at end of year
+13,650
+14,827
+Non-current assets
+Carrying amount of
+7,779
+10,268
+Current assets
+2,527
+including goodwill (preliminary)
+1,469
+2,623
+interests
+Consolidation adjustments
+Fiscal year
+2020
+2019
+Net income attributable to
+Current assets
+367
+(233)
+Total cash flows
+1,840
+825
+net of income taxes
+Total comprehensive income,
+254
+(598)
+Other comprehensive income,
+15%
+1,586
+Income (loss) from continuing
+operations, net of income taxes
+14,518
+14,460
+Revenue
+118
+132
+non-controlling interests
+Dividends paid to
+245
+241
+non-controlling interests
+1,423
+21%
+net of income taxes
+Ownership interests held by
+non-controlling interests
+27,457
+operations, net of income taxes
+Income (loss) from continuing
+Revenue
+(25)
+1
+net of income taxes
+154
+128
+Income (loss) from continuing operations
+Other comprehensive income,
+Fiscal year 2020
+Total comprehensive income
+2019
+(in millions of €)
+11,731
+Fiscal year
+attributable to shareholders
+of Siemens Energy AG
+Siemens Energy AG
+registered in
+Munich, Germany
+Sep 30, 2020
+18,792
+21,669
+8,080
+12,179
+Net assets
+Non-current liabilities
+Current liabilities
+Accumulated non-controlling
+Non-current assets excluding goodwill
+2020
+129
+As of September 30, 2020 and 2019, the carrying amount
+of all individually not material associates amounts to
+€779 million and €1,577 million, respectively. Summa-
+rized financial information for all individually not material
+associates, adjusted for the percentage of ownership
+held by Siemens, is presented below. Items included in
+the Statements of Comprehensive Income are presented
+for the twelve-month period applied under the equity
+method.
+(1,873)
+130
+4,118
+Sep 30, 2019
+Sep 30, 2020
+Munich, Germany
+Siemens interest in the net assets of
+Siemens Energy AG at end of year
+(24)
+(in millions of €)
+4,142
+Summarized financial information, in accordance with
+IFRS and before inter-company eliminations, is presented
+below.
+non-controlling interests
+Subsidiaries with material
+Siemens Healthineers AG
+registered in
+Siemens Energy AG at initial recognition
+Total comprehensive income, net
+of income taxes, attributable to
+Siemens since initial recognition
+net of income taxes
+(1,120)
+net of income taxes
+(2,993)
+attributable to shareholders
+Total comprehensive income (loss),
+of Siemens Energy AG
+(2,630)
+Siemens interest in the net assets of
+Other comprehensive income,
+amount
+0.375%/2020/June 2026/EUR fixed-rate instruments
+0.875%/2020/June 2023/GBP fixed-rate instruments
+Total Debt Issuance Program
+Sep 30, 2019
+in millions
+of €1
+Currency
+Notional
+in millions
+Sep 30, 2020
+Carrying
+amount
+Currency
+Notional
+Carrying
+1,000
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 117
+997
+€
+1,496
+1,500
+929
+€
+(interest/issued/maturity)
+amount
+6.125%/2006/August 2026/US$ fixed-rate instruments
+of €1
+918
+1,000
+850
+US$
+2.15%/2015/May 2020/US$-fixed-rate-instruments
+2.9%/2015/May 2022/US$-fixed-rate-instruments
+1,892
+1,750
+US$
+1,718
+(in millions)
+1,750
+14,695
+23,449
+491
+450
+£
+998
+1,000
+€
+amount
+(in millions)
+US$
+£
+€
+750
+992
+1,000
+€
+993
+1,000
+€
+0.125%/2019/September 2029/EUR fixed-rate instruments
+504
+500
+€
+503
+500
+€
+1,005
+1,000
+€
+1,002
+US$
+1,000
+0.5%/2019/September 2034/EUR fixed-rate instruments
+1,000
+991
+€
+€
+996
+1,000
+€
+1 Includes adjustments for fair value hedge accounting.
+0.25%/2020/February 2029/EUR fixed-rate instruments
+0.5%/2020/February 2032/EUR fixed-rate instruments
+1.0%/2020/February 2025/GBP fixed-rate instruments
+0.125%/2020/June 2022/EUR fixed-rate instruments
+0.25%/2020/June 2024/EUR fixed-rate instruments
+997
+1,000
+€
+747
+0.0%/2020/February 2026/EUR fixed-rate instruments
+1,250
+€
+0.0%/2020/February 2023/EUR fixed-rate instruments
+1,256
+1,250
+€
+3m EURIBOR+0.7%/2019/December 2021/EUR floating-rate instrument
+990
+1,000
+1,253
+1,750
+940
+US$
+946
+1,000
+US$
+915
+1,000
+US$
+3.125%/2017/March 2024/US$-fixed-rate-instruments
+780
+850
+US$
+725
+850
+US$
+US$3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
+1,000
+US$
+884
+1,000
+US$
+3.4%/2017/March 2027/US$-fixed-rate-instruments
+US$
+1,250
+1,064 US$
+€
+ANNUAL REPORT 2020 118
+As of September 30, 2020 and 2019, two bilateral
+US$500 million term loan facilities (in aggregate
+€854 million and €918 million respectively) are outstand-
+ing. In fiscal 2020, one bilateral US$500 million term
+loan facility was replaced cash neutral by a newly signed
+US$500 million term loan facility with a maturity until
+March 2023 with two one-year extension options. The
+second has a maturity until June 2024.
+Assignable and term loans
+US$ Bonds - In March 2020, Siemens redeemed the 3 m
+LIBOR+0.34% US$800 million floating-rate instruments
+and the 2.2% US$1.1 billion fixed-rate instruments at face
+value. In May 2020, the 2.15% US$1.0 billion fixed-rate
+instruments were redeemed at face value.
+33,205
+38,265
+Debt Issuance Program - The Company has a program
+for the issuance of debt instruments in place under
+which, as of September 30, 2020, up to €25.0 billion of
+instruments can be issued (€15.0 billion as of Septem-
+ber 30, 2019). As of September 30, 2020, €23.2 billion in
+notional amounts were issued and are outstanding
+(€14.5 billion as of September 30, 2019). In March 2020,
+the 1.5% €1.0 billion fixed-rate instruments were re-
+deemed at face value. In June 2020, the US$400 million
+floating rate instruments were redeemed at face value.
+In December 2019, Siemens issued €1.25 billion float-
+ing-rate instruments due December 2021. In Febru-
+ary 2020, Siemens issued instruments totaling €4.0 bil-
+lion in four € tranches as well as a £850 million tranche.
+In June 2020, Siemens issued instruments totaling
+€3.5 billion in three € tranches and, in addition, a
+£450 million tranche.
+1 Includes adjustments for fair value hedge accounting.
+2.7%/2017/March 2022/US$-fixed-rate-instruments
+Total
+14,816
+1,364
+1,500
+1,269 US$
+1,500
+US$
+4.2%/2017/March 2047/US$-fixed-rate-instruments
+Total US$ Bonds
+1,144
+1,250
+18,511
+1,493
+1,010
+US$
+1,100
+939 US$
+1,100
+US$
+1,587
+1,750
+1,476 US$
+1,750
+US$
+4.4%/2015/May 2045/US$-fixed-rate-instruments
+1.7%/2016/September 2021/US$-fixed-rate-instruments
+2.0%/2016/September 2023/US$-fixed-rate-instruments
+1,432
+1,500
+US$
+1,401
+1,500
+US$
+3.25%/2015/May 2025/US$-fixed-rate-instruments
+1,605
+1,750
+1,009
+US$
+750
+638 US$
+2.2%/2017/March 2020/US$-fixed-rate-instruments
+734
+800
+US$
+US$3 m LIBOR+ 0.34%/2017/March 2020/US$ floating-rate instruments
+910
+1,000
+846 US$
+1,000
+1,100
+US$
+1,554
+1,700
+US$
+1,446
+1,700
+US$
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+685
+750
+3.3%/2016/September 2046/US$-fixed-rate-instruments
+0.0%/2019/September 2021/EUR fixed-rate instruments
+0.0%/2019/September 2024/EUR fixed-rate instruments
+357
+800
+To estimate the fair value less costs to sell of the cash-
+generating units or groups of cash-generating units, cash
+flows were projected for the next five years based on past
+experience, actual operating results and management's
+best estimate about future developments as well as
+market assumptions. The determined fair value of the
+cash-generating units or groups of cash-generating units
+is assigned to level 3 of the fair value hierarchy.
+value growth rates up to 1.7% in fiscal 2020 and fiscal
+2019, respectively and after-tax discount rates of 5.5% to
+12.5% in fiscal 2020 and 5.5% to 8.5% in fiscal 2019.
+Siemens performs the mandatory annual impairment
+test in the three months ended September 30. Key as-
+sumptions on which Siemens based its determinations of
+the fair value less costs to sell for the cash-generating
+units or groups of cash-generating units include terminal
+As of March 31, 2020, Siemens adjusted its organizational
+and reporting structure regarding the local energy busi-
+ness in certain countries remaining within Siemens after
+the spin-off of Siemens Energy. Goodwill has been real-
+located based on relative values from the former group
+of cash-generating units Gas and Power to the newly es-
+tablished group of cash-generating units Siemens Energy
+Assets within Portfolio Companies.
+28,344
+30,160
+30,160
+20,449
+1 Impairment losses in fiscal 2020 relate to Portfolio Companies.
+Balance at fiscal year-end
+Balance at begin of fiscal year
+Carrying amount
+1,938
+ANNUAL REPORT 2020 112
+1,623
+(3)
+(314)
+1
+99
+Impairment losses recognized during the period (including those relating to disposal groups)1
+Dispositions and reclassifications to assets classified as held for disposal
+72
+(100)
+Translation differences and other
+1,868
+1,938
+Balance at begin of fiscal year
+Balance at fiscal year-end
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+The fair value less costs to sell is mainly driven by the
+terminal value, which is particularly sensitive to changes
+in the assumptions on the terminal value growth rate and
+discount rate. Both assumptions are determined individ-
+ually for each cash-generating unit or group of cash-gen-
+erating units. Discount rates are based on the weighted
+average cost of capital (WACC). Siemens Financial Ser-
+vices' discount rate represents its specific cost of equity.
+The discount rates are calculated based on a risk-free rate
+of interest and a market risk premium. In addition, the
+discount rates reflect the current market assessment of
+the risks specific to each cash-generating unit or group of
+cash-generating units by taking into account specific
+peer group information on beta factors, leverage and
+cost of debt as well as country specific premiums. The
+parameters for calculating the discount rates are based
+on external sources of information. The peer group is
+subject to an annual review and adjusted, if necessary.
+Terminal value growth rates take into consideration ex-
+ternal macroeconomic sources of data and industry spe-
+cific trends.
+Sep 30, 2019
+After-tax
+discount rate
+Terminal value
+growth rate
+Goodwill
+ANNUAL REPORT 2020 113
+The sensitivity analysis for the groups of cash-generating
+units to which a significant amount of goodwill is allo-
+cated was based on a reduction in after-tax future cash
+flows by 10% or an increase in after-tax discount rates by
+one percentage point or a reduction in the terminal value
+growth rate by one percentage point. Siemens concluded
+that no impairment loss would need to be recognized on
+goodwill in any of these groups of cash-generating units.
+Imaging of Siemens Healthineers
+Gas and Power
+Digital Industries
+(in millions of €)
+revenue growth rates (excluding portfolio effects) of
+between 3.1% and 6.1% (2.3% and 6.2% in fiscal 2019).
+Revenue figures in the five-year planning period of the
+groups of cash-generating units to which a significant
+amount of goodwill is allocated are based on average
+7.5%
+1.5%
+2,114
+7.0%
+1.7%
+5,827
+8.5%
+1.7%
+6,732
+Sep 30, 2020
+After-tax
+discount rate
+Terminal value
+growth rate
+Goodwill
+Imaging of Siemens Healthineers
+Smart Infrastructure
+(in millions of €)
+Digital Industries
+The following table presents key assumptions used to de-
+termine fair value less costs to sell for impairment test
+purposes for the groups of cash-generating units to
+which a significant amount of goodwill is allocated:
+Accumulated impairment losses and other changes
+32,098
+22,072
+Balance at fiscal year-end
+Gross
+investment
+Thereafter
+One to five years
+Within one year
+(in millions of €)
+In fiscal 2019, the gross investment in leases and the
+present value of future minimum lease payments were
+due as follows:
+14,806
+7,795
+921
+600
+4,258
+2,355
+Finished goods and products held for resale
+Advances to suppliers
+5,902
+3,043
+Work in progress
+6,084
+Present value of future minimum lease payments
+3,726
+1,796
+Raw materials and supplies
+(92)
+Less: Present value of unguaranteed residual value
+Sep 30,
+2019
+2020
+Sep 30, 2019
+Present value of
+future minimum
+lease payments
+7,167
+1,930
+3,497
+2,368
+(9)
+(9,632)
+Dispositions and reclassifications to assets classified as held for disposal
+742
+1,247
+Acquisitions and purchase accounting adjustments
+1,152
+30,213
+32,098
+(1,642)
+2019
+2020
+Translation differences and other
+Balance at begin of fiscal year
+Cost
+(in millions of €)
+Fiscal year
+NOTE 12 Goodwill
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 111
+Cost of sales includes inventories recognized as expense
+amounting to €36,406 million and €36,288 million,
+respectively, in fiscal 2020 and 2019. Compared to prior
+year, write-downs decreased (increased) by €17 million
+and €(64) million as of September 30, 2020 and 2019.
+6,084
+7,352
+657
+920
+4,064
+in leases
+1.7%
+8.0%
+6,807
+Technical machinery
+(695)
+5,067
+(3,589)
+8,656
+(3,902)
+396
+1,108
+40
+40
+(306)
+11,319
+Land and buildings
+(953)
+4,838
+13,124 (8,286)
+(7,772)
+495
+704
+(630)
+20,326
+Other intangible assets
+(315)
+1,395
+5,037 (3,642)
+and equipment
+(4,401)
+9,360
+7
+3,682 (1,826)
+(545)
+38
+656
+(168)
+3,700
+Equipment leased to others
+(584)
+1,171
+(4,078)
+5,249
+(2,523)
+124
+604
+10
+938
+7,239
+Office and other equipment
+(302)
+1,421
+(3,699)
+5,120
+(4,523)
+222
+288
+(233)
+(in millions of €)
+6
+(333)
+Retire-
+ments²
+fications
+nations Additions
+rences
+10/01/20191
+(in millions of €)
+Reclassi-
+combi-
+diffe-
+amount
+carrying
+business
+lation
+Gross
+Accumu-
+lated depre-
+Additions
+through
+Trans-
+Gross
+carrying
+NOTE 13 Other intangible assets and property, plant and equipment
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+6.5%
+1.7%
+5,951
+8.5%
+1.7%
+amount
+331
+09/30/2020
+Carrying
+9,434
+and trademarks
+Customer relationships
+(443)
+1,729
+4,631 (2,902)
+(2,618)
+70
+373
+(202)
+7,008
+patents, licenses and similar rights
+Acquired technology including
+(195)
+1,714
+3,456 (1,741)
+(753)
+419
+(95)
+3,885
+Internally generated technology
+ment in
+fiscal 2020
+09/30/2020
+amount
+Deprecia-
+tion/amor-
+tization
+and impair-
+ciation/
+amortiza-
+tion and
+impairment
+(184)
+Less: Allowance for doubtful accounts
+6,360
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+1,869
+2,324
+1,138
+760
+(144)
+(417)
+(169)
+362
+3,540
+2,921
+(2,496)
+(1,302)
+Sep 30,
+2019
+2020
+109
+ANNUAL REPORT 2020
+Tax loss carryforwards and tax credits
+Total deferred taxes, net
+Non-current assets and liabilities
+Pensions and similar obligations
+Current assets and liabilities
+In Germany, the calculation of current taxes is based on
+a combined tax rate of 31%, consisting of a corporate tax
+rate of 15%, a solidarity surcharge thereon of 5.5% and an
+average trade tax rate of 15%. For foreign subsidiaries,
+current taxes are calculated based on the local tax law
+and applicable tax rates in the individual foreign coun-
+tries. Deferred tax assets and liabilities in Germany and
+abroad are measured at the tax rates that are expected to
+apply to the period when the asset is realized or the lia-
+bility is settled.
+The current income tax expenses in fiscal 2020 and 2019
+include adjustments recognized for current taxes of prior
+years in the amount of €(63) and €(413) million, respec-
+tively. The deferred tax expenses (benefits) in fiscal 2020
+and 2019 include tax effects of the origination and re-
+versal of temporary differences of €(291) million and
+€179 million, respectively.
+Intangible assets
+Deferred taxes due to temporary differences
+1,775
+(in millions of €)
+1,382
+Deferred tax balances and expenses (benefits) developed
+(in millions of €)
+of deferred tax (assets) liabilities
+Balance at end of fiscal year
+Other
+Siemens Energy
+Changes due to
+34
+61
+not impacting net income
+Additions from acquisitions
+(696)
+8
+Consolidated Statements of Comprehensive Income
+Changes in items of the
+403
+(219)
+Consolidated Statements of Income
+Income taxes presented in the
+(1,249)
+(1,869)
+of deferred tax (assets) liabilities
+2019
+2020
+Fiscal year
+Continuing operations
+Balance at beginning of fiscal year
+as follows in fiscal 2020 and 2019:
+(in millions of €)
+(in millions of €)
+(219)
+(378)
+Tax-free income
+797
+658
+Non-deductible expenses
+Increase (decrease) in income taxes
+resulting from:
+2,149
+1,758
+2019
+2020
+Fiscal year
+Income tax expenses
+Deferred taxes
+Current taxes
+(in millions of €)
+Income tax expenses (benefits) consist of the following:
+NOTE 7 Income taxes
+Other operating expenses in fiscal 2020 and 2019 include
+losses on sales of property, plant and equipment, impair-
+ment expense as well as effects from insurance, person-
+nel, legal and regulatory matters.
+NOTE 6 Other operating expenses
+Expected income tax expenses
+(in millions of €)
+Current and deferred income tax expenses differ from
+the amounts computed by applying a combined statu-
+tory German income tax rate of 31% as follows:
+In fiscal 2020 and 2019, Other operating income includes
+gains related to the sale of businesses of €177 million and
+€49 million and gains on sales of property, plant and
+equipment of €308 million and €138 million, respec-
+tively, as well as gains from reversals of provisions.
+NOTE 5 Other operating income
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+(268)
+403
+Taxes for prior years
+(393)
+1,372
+1,601
+are summarized as follows:
+Fiscal year
+2019
+2020
+Deferred income tax assets and (liabilities) on a net basis
+1,775
+1,382
+(47)
+(109)
+Other, net (primarily German trade tax differentials)
+Actual income tax expenses
+16
+33
+for using the equity method
+Tax effect of investments accounted
+(400)
+(457)
+Foreign tax rate differential
+14
+7
+Change in tax rates
+(93)
+(75)
+tax assets and tax credits
+Change in realizability of deferred
+(55)
+1,856
+(301)
+(4)
+12
+798
+Derivative financial instruments
+(778)
+1,331
+1,256
+Interest-bearing debt securities
+7,893
+4,904
+Loans receivable
+7,153
+Sep 30,
+2019
+2020
+(in millions of €)
+Sep 30,
+2020
+NOTE 9 Other current
+financial assets
+Present value of future minimum lease payments
+to future minimum lease payments
+Less: Unearned finance income relating
+Future minimum lease payments
+(in millions of €)
+In fiscal 2020, future minimum lease payments reconcile
+to the net investment in the lease as follows:
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+7,112
+7,153
+751
+775
+717
+6,375
+1,424
+Net investment in leases
+(992)
+Less: Unearned finance income
+NOTE 11 Inventories
+7,352
+Gross investment in leases
+239
+Plus: Unguaranteed residual values
+7,112
+Future minimum lease payments
+2019
+(in millions of €)
+As of September 30, 2020 and 2019, amounts expected
+to be settled after twelve months are €960 million and
+€2,106 million for contract assets and €1,112 million and
+€3,626 million for contract liabilities, respectively. In fis-
+cal 2020, a decrease in contract assets of €4,576 million
+and in contract liabilities of €9,982 million resulted from
+the Siemens Energy spin-off. In fiscal 2020 and 2019, rev-
+enue includes €4,651 million and €4,799 million, respec-
+tively, which was included in contract liabilities at the
+beginning of the fiscal year.
+NOTE 10 Contract assets
+and liabilities
+Sep 30,
+Future minimum lease payments in fiscal 2019 reconcile to
+the gross and net investment in leases and to the present
+value of the future minimum lease payments as follows:
+In fiscal 2020, finance income on the net investment in
+the lease is €398 million.
+machines.
+Investments in finance leases primarily relate to indus-
+trial machinery, medical equipment, transportation sys-
+tems, equipment for information technology and office
+6,475
+100
+Plus: Present value of unguaranteed residual value
+Net investment in the lease
+10,669
+8,382
+669
+Other
+(373)
+More than five years
+After four years but not
+more than five years
+Trade receivables from the
+sale of goods and services
+Receivables from finance leases
+2019
+2020
+Sep 30,
+Sep 30,
+2019
+2020
+(in millions of €)
+Deductible temporary differences
+Tax loss carryforwards
+NOTE 8 Trade and
+other receivables
+Deferred tax assets have not been recognized with re-
+spect of the following items (gross amounts):
+An uncertain tax regulation arising from a foreign tax re-
+form may result in potential future tax payments amount-
+ing to a middle three-digit million euro range. Due to the
+low probability and the character of a contingent liability,
+no tax liability was recognized.
+1,195
+1,192
+(698)
+(588)
+118
+398
+1,775
+1,382
+2019
+2020
+Fiscal year
+Income and expenses
+recognized directly in equity
+(1,869)
+(2,324)
+12,071
+422
+16,928
+1,966
+732
+1,156
+ANNUAL REPORT 2020 110
+After two years but not
+more than three years
+After three years but not
+more than four years
+Including items charged or credited directly to equity and
+the expenses (benefits) from continuing and discontin-
+ued operations, the income tax expenses (benefits) con-
+sist of the following:
+4,008
+1,685
+than two years (fiscal 2019 after one
+year but not more than five years)
+2,354
+2,441
+Sep 30,
+2019
+2020
+After one year but not more
+Within one year
+(in millions of €)
+Future minimum lease payments to be received are as
+follows:
+In fiscal 2020 and 2019, the long-term portion of receiv-
+ables from finance leases is reported in Other financial
+assets amounting to €4,245 million and €4,210 million,
+respectively.
+Siemens has not recognized deferred tax liabilities for
+income taxes or foreign withholding taxes on the cumu-
+lative earnings of subsidiaries of €25,003 million and
+€34,075 million, respectively in fiscal 2020 and 2019 be-
+cause the earnings are intended to be permanently rein-
+vested in the subsidiaries.
+The decrease of tax loss carryforwards was mainly caused
+by the Siemens Energy spin-off. As of September 30,
+2020 and 2019, €221 million and €2,186 million respec-
+tively, expire over the periods to 2027.
+5,586
+5,062
+2,172
+2,364
+14,074 18,894
+524
+192
+2,003
+(524)
+(206)
+construction in progress
+3,142
+Current notes and bonds
+29,176
+(3,954)
+405
+1,044
+6,471
+25,210
+Non-current notes and bonds
+09/30/2019
+Reclassi-
+fications
+and other
+changes
+(3,190)
+Fair value
+changes
+Acquisitions/
+Dispositions
+Cash flows
+10/01/2018
+(in millions of €)
+Non-cash changes
+million cash flows in fiscal 2020.
+In addition, other financing activities resulted in €(99)
+1 Opening balance as of October 1, 2019, including effect of adopting IFRS 16 (see > NOTE 2).
+44,567
+1,191
+124
+Foreign
+currency
+translation
+228
+3,850
+4,029
+1,524
+24
+2,436
+32,177
+Total debt
+1
+(21)
+110
+(current and non-current)
+Lease liabilities
+875
+171
+(6)
+(72)
+781
+(current and non-current)
+Other financial indebtedness
+2,262
+(30)
+80
+30
+(752)
+2,934
+(current and non-current)
+Loans from banks
+(1,865)
+(2,123)
+7,664
+39,576
+(3,959)
+4,029
+Current notes and bonds
+34,728
+(3,549)
+120
+(1,276)
+10,256
+29,176
+Non-current notes and bonds
+Advances to suppliers and
+changes
+and other
+Fair value
+changes
+Foreign
+currency
+translation
+Acquisitions/
+Dispositions
+Cash flows
+10/01/20191
+(in millions of €)
+Reclassi-
+fications
+Non-cash changes
+Changes in liabilities arising from financing activities
+ing costs for buildings leased by Siemens, for which no
+significant fluctuations are expected in the future.
+extension options whose exercise is not yet reasonably
+certain totaling €2.6 billion and, in addition, to variable
+lease payments mainly relating to incidental and operat-
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+(46)
+405
+4
+3,537
+2,829
+1,351
+(108)
+(735)
+(911)
+3,233
+Total debt
+(current and non-current)
+Lease liabilities
+2,076
+24
+(209)
+(1)
+1,388
+875
+(current and non-current)
+Other financial indebtedness
+1,397
+(144)
+(225)
+(1,387)
+891
+2,262
+(current and non-current)
+Loans from banks
+3,509
+16
+(118)
+106
+36,449
+1,000
+€
+1.375%/2018/September 2030/EUR fixed-rate instruments
+746
+750
+€
+746
+750
+€
+997
+1,000
+€
+998
+1,000
+€
+367
+400
+US$
+342
+400
+US$
+367
+400
+US$
+2013/June 2020/US$ floating-rate instruments
+2014/September 2021/US$ floating-rate instruments
+0.375%/2018/September 2023/EUR fixed-rate instruments
+1.0%/2018/September 2027/EUR fixed-rate instruments
+994
+90
+€
+993
+€
+963
+800
+€
+1.75%/2019/February 2039/EUR fixed-rate instruments
+875
+800
+€
+882
+800
+€
+689
+650
+€
+690
+650
+€
+0.9%/2019/February 2028/EUR fixed-rate instruments
+1.25%/2019/February 2031/EUR fixed-rate instruments
+767
+750
+€
+764
+750
+€
+0.3%/2019/February 2024/EUR fixed-rate instruments
+1,000
+ANNUAL REPORT 2020 115
+100
+84
+-
+of €1
+(in millions)
+of €¹
+(in millions)
+2.75%/2012/September 2025/GBP fixed-rate instruments
+3.75%/2012/September 2042/GBP fixed-rate instruments
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+1.5%/2012/March 2020/EUR fixed-rate instruments
+(interest/issued/maturity)
+in millions
+Sep 30, 2019
+Carrying
+amount
+amount
+Currency
+Notional
+in millions
+Sep 30, 2020
+Carrying
+amount
+amount
+Notional
+Currency
+bridge facility to secure Siemens Healthineers AG's
+financing of the acquisition of Varian Medical Systems,
+Inc. was signed maturing in 2022 with two six-months
+extension options. The unused syndicated bridge facility
+was reduced to nearly €12.5 billion by net proceeds re-
+ceived from Siemens Healthineers AG's issuance of new
+shares in September 2020. In September 2020, the un-
+used €450 million revolving bilateral credit facility was
+extended to September 2021. The facilities are for gen-
+eral corporate purposes.
+Notes and bonds
+As of September 30, 2020 and 2019, Siemens has
+€22.95 billion and €9.95 billion lines of credit, thereof
+unused €22.95 billion and €9.45 billion, respectively. In
+February 2020 the unused €7.0 billion syndicated credit
+facility maturing in 2024 was extended to mature in 2025
+with one one-year extension option remaining. In
+March 2020, a new €3.0 billion unused syndicated credit
+facility was signed which matures in December 2020
+with one three-months extension option remaining.
+In August 2020, a new €15.2 billion unused syndicated
+Credit facilities
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 116
+lion cash flows in fiscal 2019.
+In addition, other financing activities resulted in €77 mil-
+€
+US$
+1,000
+£
+100
+US$
+997
+1,000
+€
+998
+1,000
+€
+1,263
+1,250
+€
+1,254
+1,250
+€
+721
+650
+£
+700
+650
+£
+394
+350
+£
+383
+350
+1,000
+In fiscal 2020, Siemens recognized interest expenses on
+lease liabilities of €39 million and expenses relating to
+variable lease payments not included in the measure-
+ment of lease liabilities of €100 million. In fiscal 2020,
+cash flows to which Siemens is potentially exposed and
+which are not reflected in the measurement of lease
+liabilities relate primarily to lease contracts entered
+into, however which are not yet commenced as well as to
+09/30/2020
+164
+1,204
+and equipment
+Technical machinery
+(203)
+4,619
+8,664 (4,046)
+(185)
+137
+158
+11
+171
+8,372
+Land and buildings
+(915)
+9,800
+20,326 (10,526)
+(1,059)
+504
+279
+663
+19,938
+Other intangible assets
+(277)
+4,515
+9,434 (4,919)
+(52)
+183
+405
+8,898
+and trademarks
+8,716
+Customer relationships
+151
+327
+1
+39
+1,205
+construction in progress
+Advances to suppliers and
+(327)
+1,763
+3,467 (1,704)
+(387)
+19
+671
+67
+3,097
+Equipment leased to others
+(588)
+1,635
+7,150 (5,515)
+(535)
+154
+754
+5
+UT
+121
+6,651
+Office and other equipment
+(309)
+2,710
+9,205 (6,495)
+(355)
+8
+(428)
+3,306
+7,008 (3,702)
+amortiza-
+Accumu-
+lated depre-
+ciation/
+carrying
+Gross
+business
+lation
+carrying
+through
+Trans-
+Gross
+Additions
+2 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+1 Opening balance as of October 1, 2019 including effect of adopting IFRS 16 (see > NOTE 2).
+(2,105)
+10,250
+(13,194)
+735
+(1)
+736
+23,443
+(11,911)
+3,168
+58
+(951)
+33,080
+Property, plant and equipment
+(780) (418)
+512
+(39)
+1,461
+amount
+diffe-
+combi-
+(in millions of €)
+(923)
+88
+97
+173
+7,573
+patents, licenses and similar rights
+Acquired technology including
+(211)
+1,979
+(1,906)
+3,885
+(84)
+416
+85
+873
+3,467
+fiscal 2019
+ment in
+and impair-
+tization
+Deprecia-
+tion/amor-
+Carrying
+amount
+09/30/2019
+tion and
+impairment
+09/30/2019
+amount
+Retire-
+ments'
+Reclassi-
+fications
+nations Additions
+rences
+10/01/2018
+Internally generated technology
+In fiscal 2020, income from operating leases is €529 mil-
+lion, thereof from variable lease payments €110 million.
+(638)
+28,040
+Other financial indebtedness
+336
+454
+321
+Loans from banks
+Within one year
+3,537
+Notes and bonds
+2019
+2020
+(in millions of €)
+Sep 30,
+Sep 30,
+2019
+2020
+Non-current debt
+Current debt
+Sep 30,
+2019
+2020
+(in millions of €)
+NOTE 16 Debt
+9,023
+6,209
+1,824
+1,280
+1,204
+518
+2,021
+Accruals for pending invoices
+Other
+4,029 34,728
+1,187 1,076
+803
+55
+1,586
+186
+More than five years
+129
+more than five years
+After four years but not
+188
+more than four years
+After three years but not
+261
+more than three years
+After two years but not
+30,414
+90
+16 2,146
+6,034 38,005
+6,562
+Total debt
+705
+369
+more than five years)
+683
+Lease liabilities
+years (fiscal 2019 after one year but not
+After one year but not more than two
+72
+29,176
+1,076
+Property, plant and equipment
+Discontinued operations
+Sep 30,
+2019
+4,245
+4,210
+2,044
+2,239
+1,670
+890
+623
+12,304
+200
+19,843
+156
+108
+5,839
+4,304
+Item Loans receivable primarily relate to long-term loan
+transactions of SFS.
+2020
+22,771
+14,189
+Sep 30,
+2019
+2020
+549
+26
+2,812
+(18)
+(1,480)
+1,461
+29,948
+(4)
+(17,765)
+1,457
+12,183 (1,427)
+1 Included assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+ANNUAL REPORT 2020 114
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+The gross carrying amount of Advances to suppliers and
+construction in progress includes €639 million and
+€1,335 million, respectively of property, plant and equip-
+ment under construction in fiscal 2020 and 2019. As of
+September 30, 2020 and 2019, contractual commitments
+for purchases of property, plant and equipment are
+€563 million and €676 million, respectively. Right-of-use
+assets are presented in Property, plant and equipment in
+accordance with their nature; right-of-use assets have a
+carrying amount of €2,474 million as of September 30,
+2020; additions are €1,273 million and depreciation ex-
+pense is €710 million in fiscal 2020. Right-of-use assets
+mainly relate to leases of land and buildings with a carry-
+ing amount of €2,187 million as of September 30, 2020
+and additions of €1,029 million and depreciation expense
+of €512 million in fiscal 2020. Equipment leased to others
+mainly relate to Technical machinery and equipment as
+well as to Office and other equipment owned by Siemens
+with a carrying amount of €1,223 million and €448 mil-
+lion, respectively, as of September 30, 2020.
+In fiscal 2020, expenses recognized for short-term and
+low-value leases not accounted for under the right-of-use
+model are €72 million and €24 million, respectively. For
+sale and leaseback transactions gains of €267 million are
+recognized in fiscal 2020.
+Future minimum lease payments to be received under
+operating leases are:
+NOTE 14 Other financial assets
+(in millions of €)
+Loans receivable
+Receivables from finance leases
+Derivative financial instruments
+Equity instruments
+Other
+(in millions of €)
+Liabilities to personnel
+Deferred Income
+NOTE 15 Other current liabilities
+funded plan the Company together with the employees
+may be asked to pay supplementary contributions ac-
+cording to a well-defined framework of recovery mea-
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+sures.
+DEVELOPMENT OF THE DEFINED BENEFIT PLANS¹
+Defined benefit
+obligation (DBO)
+Fair value of
+plan assets
+Effects of
+asset ceiling
+Net defined
+benefit balance
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+(11)
+(III)
+(1 - 11 +111)
+Fiscal year
+Fiscal year
+Fiscal year
+Fiscal year
+and the determination of contributions to finance the
+benefits. The Company is required to make total contri-
+butions at least as high as the sum of the employee con-
+tributions set out in the plan rules. In case of an under-
+(in millions of €)
+ANNUAL REPORT 2020 119
+Following the Swiss law of occupational benefits (BVG)
+each employer has to grant post-employment benefits
+for qualifying employees. Accordingly, Siemens in Swit-
+zerland sponsors several cash balance plans. These plans
+are administered by external foundations. The board of
+the main foundation is composed of equally many em-
+ployer and employee representatives. The board of the
+foundation is responsible for investment policy and asset
+management, as well as for any changes in the plan rules
+SWITZERLAND
+Pension benefits are mainly offered through the Siemens
+Benefit Scheme for which, until the start of retirement,
+an inflation increase of the majority of accrued benefits
+is mandatory. The required funding is determined by a
+funding valuation carried out every third year based on
+legal requirements. Due to deviating guidelines for the
+determination of the discount rates, the technical fund-
+ing deficit is usually larger than the IFRS funding deficit.
+To reduce the deficit Siemens entered into an agreement
+with the trustees to provide annual payments of GB£31
+(€34) million until fiscal 2033. The agreement also pro-
+vides for a cumulative advance payment by Siemens AG
+compensating the remaining annual payments at the
+date of early termination of the agreement due to cancel-
+lation or insolvency.
+U.K.
+In the US, the Siemens Pension Plans are sponsored,
+which for the most part have been frozen to new en-
+trants and to future benefit accruals, except for interest
+credits on cash balance accounts. Siemens has appointed
+the Investment Committee as the named fiduciary for the
+management of the assets of the Plans. The Plans' assets
+are held in Master Trusts and the trustees of the Master
+Trusts are responsible for the administration of the assets
+of the trust, taking directions from the Investment Com-
+mittee. The Plans are subject to the funding requirements
+under the Employee Retirement Income Security Act of
+1974 as amended (ERISA). There is a regulatory require-
+ment to maintain a minimum funding level of 80% in the
+defined benefit plans in order to avoid benefit restric-
+tions. At their discretion, sponsoring employers may con-
+tribute in excess of this regulatory requirement. Annual
+contributions are calculated by independent actuaries.
+U.S.
+In Germany, pension benefits are provided through the
+following plans: BSAV (Beitragsorientierte Siemens Al-
+tersversorgung), frozen legacy plans as well as deferred
+compensation plans. The majority of active employees
+participate in the BSAV. Those benefits are predominantly
+based on notional contributions and their respective as-
+set returns, subject to a minimum return guaranteed by
+the employer. At inception of the BSAV, benefits provided
+under the frozen legacy plans were modified to substan-
+tially eliminate the effects of compensation increases.
+However, the frozen plans still expose Siemens to invest-
+ment risk, interest rate risk and longevity risk. The pen-
+sion plans are funded via contractual trust arrangements
+(CTA). In Germany no legal or regulatory minimum fund-
+ing requirements apply.
+GERMANY
+The defined benefit plans open to new entrants are
+based predominantly on contributions made by the Com-
+pany. Only to a certain extent, those plans are affected by
+longevity, inflation and compensation increases and take
+into account country specific differences. The Company's
+major plans are funded with assets in segregated entities.
+In accordance with local laws these plans are managed in
+the interest of the beneficiaries by way of contractual
+trust agreements with each separate legal entity. The de-
+fined benefit plans cover 444,000 participants, including
+177,000 actives, 85,000 deferreds with vested benefits
+and 182,000 retirees and surviving dependents.
+Defined benefit plans
+NOTE 17 Post-employment
+benefits
+Siemens has a US$9.0 billion (€7.7 billion as of Septem-
+ber 30, 2020) commercial paper program in place includ-
+ing US$ extendible notes capabilities. As of Septem-
+ber 30, 2020 and 2019, US$2.3 billion (€2.0 billion) and
+US$700 million (€643 million), respectively, were out-
+standing. Siemens' commercial papers have a maturity of
+generally less than 90 days. Interest rates ranged from
+0.06% to 1.98% in fiscal 2020 and from 1.85% to 2.75% in
+fiscal 2019.
+Commercial paper program
+2020
+(I)
+2020
+2020
+(171)
+(5)
+(65)
+(258)
+(823)
+(311)
+(5)
+(112)
+(395)
+1,681
+846
+3
+200
+(499)
+633
+476
+689
+425
+2,107
+7,358
+1,243
+702
+1,114
+4,300
+Total
+Other
+obligations
+losses and risks
+3,697
+Warranties
+(33)
+(3)
+The Company is subject to asset retirement obligations
+related to certain items of property, plant and equip
+ment. Such asset retirement obligations are primarily
+attributable to environmental clean-up costs (disclosed
+in Corporate items of the Segment information) and to
+costs primarily associated with the removal of leasehold
+improvements at the end of the lease term.
+Warranties mainly relate to products sold. Order related
+losses and risks are provided for anticipated losses and
+risks on uncompleted construction, sales and leasing
+contracts.
+Except for asset retirement obligations, the majority of
+the Company's provisions are generally expected to re-
+sult in cash outflows during the next one to 15 years.
+2,352
+898
+690
+183
+581
+Thereof non-current
+4,026
+1,369
+702
+380
+(14)
+1,574
+(218)
+(5)
+(743)
+(2,673)
+Other changes including Siemens Energy spin-off
+Balance as of September 30, 2020
+21
+4
+17
+in discount rates
+Accretion expense and effect of changes
+Translation differences
+(74)
+(24)
+(3,639)
+retirement
+Order related
+Asset
+9,555 11,053
+Corporate bonds
+Alternative investments
+Multi strategy funds
+104
+2,740
+2,412 (2,410)
+(90)
+(94)
+(1,367) 1,826 (1,541)
+1,689
+95
+Rate of compensation increase
+Rate of pension progression
+(2,134)
+Discount rate
+5,239
+3,727
+Government bonds
+4,078
+Sep 30, 2019
+decrease
+decrease
+increase
+(in millions of €)
+Sep 30, 2020
+16,292
+13,281
+Effect on DBO due to a one-half percentage-point
+Fixed income securities
+3,910
+5,166
+Equity securities
+2019
+2020
+increase
+4,181
+3,154 3,259
+Derivatives
+Reversals
+Usage
+Additions
+Thereof non-current
+Balance as of October 1, 2019
+(in millions of €)
+NOTE 18 Provisions
+€215 million and €201 million. Contributions to state
+plans amount to €1,844 million and €1,850 million in fis-
+cal 2020 and 2019, respectively, thereof discontinued
+operations €450 million and €431 million.
+Amounts recognized as expense for defined contribution
+plans is €710 million and €661 million in fiscal 2020 and
+2019, respectively, thereof discontinued operations
+and state plans
+Defined contribution plans
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 122
+Employer contributions expected to be paid to defined
+benefit plans in fiscal 2021 are €1,790 million. Over the
+next ten fiscal years, average annual benefit payments of
+€1,730 million and €1,714 million, respectively, are ex-
+pected as of September 30, 2020 and 2019. The weighted
+average duration of the DBO for Siemens defined benefit
+plans was 13 years as of September 30, 2020 and 2019.
+FUTURE CASH FLOWS
+Virtually all equity securities have quoted prices in active
+markets. The fair value of fixed income securities is based
+on prices provided by price service agencies. The fixed
+income securities are traded in active markets and almost
+all fixed income securities are investment grade. Alterna-
+tive investments include hedge funds, private equity and
+real estate investments, thereof real estate used by the
+Company with a fair value of €527 million. Multi strategy
+funds mainly comprise absolute return funds and diversi-
+fied growth funds that invest in various asset classes
+within a single fund and aim to stabilize return and re-
+duce volatility. Derivatives predominantly consist of fi-
+nancial instruments for hedging interest rate risk and
+inflation risk. Other assets include insured annuity con-
+tracts valued at €1,766 million and €1,344 million, re-
+spectively, as of September 30, 2020 and 2019.
+As a significant risk, the Company considers a decline in
+the plans' funded status due to adverse developments of
+plan assets and/or defined benefit obligations resulting
+from changing parameters. Accordingly, Siemens imple-
+mented a risk management concept aligned with the
+defined benefit obligations (Asset Liability Matching).
+Risk management is based on a worldwide defined risk
+threshold (Value at Risk). The concept, the Value at Risk
+and the asset development including the investment
+strategy are monitored and adjusted on an ongoing basis
+under consultation of senior external experts. Indepen-
+dent asset managers are selected based on quantitative
+and qualitative analyses, which include their perfor-
+mance and risk evaluation. Derivatives are used to reduce
+risks as part of risk management.
+ASSET LIABILITY MATCHING STRATEGIES
+As in prior year, sensitivity determinations apply the
+same methodology as applied for the determination of
+the post-employment benefit obligation. Sensitivities re-
+flect changes in the DBO solely for the assumption
+changed.
+The DBO effect of a 10% reduction in mortality rates for
+all beneficiaries would be an increase of €1,285 million
+and €1,318 million, respectively, as of September 30,
+2020 and 2019.
+31,307
+29,970
+2,340
+2,843
+749
+813
+Cash and cash equivalents
+Other assets
+Total
+577
+635
+Environmental clean-up costs relate to remediation and
+environmental protection liabilities which have been ac-
+crued based on the estimated costs of decommissioning
+the site for the production of uranium and mixed-oxide
+fuel elements in Hanau, Germany (Hanau facilities), as
+well as a nuclear research and service center in Karlstein,
+Germany (Karlstein facilities). Whilst in fiscal 2017, parts
+of the regulation for nuclear waste disposal were
+amended by way of law ("Gesetz zur Neuordnung der
+Verantwortung in der kerntechnischen Entsorgung"),
+Siemens is not covered by these regulations and conse-
+quently continues to adhere to the German Atomic En-
+ergy Act ("deutsches Atomgesetz") applicable as of Sep-
+tember 30, 2020, which states that when a nuclear
+facility is closed, the resulting radioactive waste from
+decommissioning the nuclear facility must be repro-
+cessed without causing damage and be delivered to a
+government-approved final storage facility. In this re-
+gard, the Company has developed a plan to decommis-
+sion the Hanau and Karlstein facilities in the following
+steps: asset retirement (including clean-out, decontami-
+nation and disassembly of equipment and installations,
+decontamination of the facilities and buildings), waste
+conditioning and packaging of nuclear waste, as well as
+intermediate storage, transport to and final storage of
+ANNUAL REPORT 2020 123
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Credit guarantees
+Performance guarantees
+(in millions of €)
+The following table presents the undiscounted amount
+of maximum potential future payments for major groups
+of guarantees:
+NOTE 21 Commitments
+and contingencies
+A+
+A-1+
+P-1
+A-1+
+P-1
+A1
+A+
+A1
+Moody's
+Investors
+Service
+Ratings
+2020
+Service
+Investors
+S&P
+Moody's
+Sep 30, 2020
+Sep 30, 2019
+S&P
+Global
+Ratings
+Siemens' current corporate credit ratings are:
+Equity allocated to SFS differs from the carrying amount
+of equity as it is mainly allocated based on the risks of the
+underlying business.
+Short-term debt
+Long-term debt
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 125
+9.06
+9.46
+Global
+604
+27,917
+28,521
+Sep 30,
+2019
+2019
+2019
+128
+ANNUAL REPORT 2020
+For Legal Proceedings information required under IAS 37,
+Provisions, Contingent Liabilities and Contingent Assets
+is not disclosed if the Company concludes that disclosure
+can be expected to seriously prejudice the outcome of
+the matter.
+Some of these Legal Proceedings could result in adverse
+decisions for Siemens, which may have material effects
+on its business activities as well as its financial position,
+results of operations and cash flows.
+Siemens is involved in numerous Legal Proceedings in
+various jurisdictions. These Legal Proceedings could re-
+sult, in particular, in Siemens being subject to payment of
+damages and punitive damages, equitable remedies or
+sanctions, fines or disgorgement of profit. In individual
+cases this may also lead to formal or informal exclusion
+from tenders or the revocation or loss of business licenses
+or permits. In addition, further Legal Proceedings may be
+commenced or the scope of pending Legal Proceedings
+may be extended. Asserted claims are generally subject
+to interest rates.
+As previously reported, in June 2015, Siemens Ltda. ap-
+pealed to the Supreme Court against a decision of a pre-
+vious court to suspend Siemens Ltda. from participating
+in public tenders and signing contracts with public
+administrations in Brazil for a five year term based on
+alleged irregularities in calendar year 1999 and 2004
+in public tenders with the Brazilian Postal authority.
+In February 2018, the appeal was rejected. Siemens Ltda.
+has introduced another remedy against the decision. In
+June 2018, the court accepted Siemens' appeal and de-
+clared the earlier instance decision as void. Siemens Ltda.
+is currently not excluded from participating in public ten-
+ders. In February 2018, the Ministério Público in Brasilia
+filed a lawsuit based on the same set of facts, mainly
+claiming the exclusion of Siemens Ltda. from public ten-
+ders for a ten year term. Siemens Ltda. is defending itself
+against the lawsuit.
+a lawsuit of the Public Affairs Office (Ministério Público)
+São Paulo against Siemens Ltda. and other companies
+claiming, inter alia, damages in an amount of BRL487 mil-
+lion (approximately €74 million as of September 2020)
+plus adjustments for inflation and related interest in rela-
+tion to train maintenance contracts entered into in 2000
+and 2002. In September 2015, the district court of São
+Paulo admitted another lawsuit of the Public Affairs Of-
+fice (Ministério Público) São Paulo against Siemens Ltda.
+and other companies claiming, inter alia, damages in an
+amount of BRL918 million (approximately €139 million as
+of September 2020) plus adjustments for inflation and
+related interest in relation to train maintenance contracts
+entered into in 2006 and 2007. Siemens is defending it-
+self against these actions. It cannot be excluded that fur-
+ther significant damage claims will be brought by cus-
+tomers or the state against Siemens.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 127
+As previously reported, in May 2014, the Public Affairs
+Office (Ministério Público) São Paulo initiated a lawsuit
+against Siemens Ltda. as well as other companies and
+several individuals claiming, inter alia, damages in an
+amount of BRL2.5 billion (approximately €377 million as
+of September 2020) plus adjustments for inflation and
+related interest in relation to train refurbishment con-
+tracts entered into between 2008 and 2011. In Janu-
+ary 2015, the district court of São Paulo admitted a law-
+suit of the State of São Paulo and two customers against
+Siemens Ltda., Siemens AG and other companies and
+individuals claiming damages in an unspecified amount.
+In March 2015, the district court of São Paulo admitted
+Based on the above mentioned conclusion of the Israeli
+Antitrust Authority, two electricity consumer groups filed
+motions to certify a class action for cartel damages
+against a number of companies including Siemens AG
+with an Israeli State Court in September 2013. One of the
+class actions has been dismissed by the court in fiscal
+year 2015. The remaining class action seeked compensa-
+tion for alleged damages amounting to ILS2.8 billion.
+In addition, the Israel Electric Corporation (IEC) filed at
+the end of December 2013 with an Israeli State Court
+a separate ILS3.8 billion claim for damages against
+Siemens AG and other companies that allegedly formed
+a cartel in the Israeli gas-insulated switchgear market.
+A settlement agreement was concluded in those pro-
+ceedings in December 2018 and has been approved by
+the Israeli State Court in fiscal 2020. Following payment
+of a mid double-digit million euro figure in July 2020, the
+matter was finally settled.
+As previously reported, in September 2011, the Israeli
+Antitrust Authority requested that Siemens present its
+legal position regarding an alleged anti-competitive ar-
+rangement between April 1988 and April 2004 in the
+field of gas-insulated switchgear. In September 2013, the
+Israeli Antitrust Authority concluded that Siemens AG
+was a party to an illegal restrictive arrangement regard-
+ing the Israeli gas-insulated switchgear market between
+1988 and 2004, with an interruption from October 1999
+to February 2002. The Company appealed against this
+decision in May 2014.
+Proceedings out of or in connection
+with alleged compliance violations
+As previously reported, in July 2008, Hellenic Telecom-
+munications Organization S.A. (OTE) filed a lawsuit
+against Siemens AG with the district court of Munich,
+Germany, seeking to compel Siemens AG to disclose the
+outcome of its internal investigations with respect to
+OTE. OTE seeks to obtain information with respect to
+allegations of undue influence and/or acts of bribery
+in connection with contracts concluded between
+Siemens AG and OTE from calendar year 1992 to 2006. At
+the end of July 2010, OTE expanded its claim and re-
+quested payment of damages by Siemens AG of at least
+€57 million to OTE for alleged bribery payments to OTE
+employees. In October 2014, OTE increased its damage
+claim to the amount of at least €68 million. Siemens AG
+continues to defend itself against the expanded claim.
+As previously reported, in June 2019, the City of Jackson,
+Mississippi, filed a lawsuit against Siemens Industry, Inc.,
+and Siemens Corporation, USA, among others, in con-
+nection with a performance contract. In March 2020, the
+City of Jackson and the defendants settled the matter for
+approximately US$90 million. All claims in the case were
+subsequently dismissed in April 2020.
+As previously reported, in March 2019, a Brazilian com-
+pany asserted claims to pay an amount in a higher three-
+digit million euro amount in local currency against a
+consortium of contractors and each member of the
+consortium, including Siemens Ltda., Brazil (Siemens
+Ltda.) in a lawsuit relating to the construction of a power
+plant in Brazil that was completed in 2016. The members
+of the consortium are jointly and severally liable. Siemens
+Ltda.'s share in the consortium is below 3%. The consor-
+tium and its members defend themselves against the
+claim and for their part claim payment in a lower three-
+digit million euro amount in local currency. Following the
+Siemens Energy spin-off, the proceedings will no longer
+be disclosed by Siemens.
+Proceedings out of or in connection
+with alleged breaches of contract
+NOTE 22 Legal proceedings
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+126
+ANNUAL REPORT 2020
+Siemens is jointly and severally liable and has capital con-
+tribution obligations as a partner in commercial partner-
+ships and as a participant in various consortiums.
+In addition to guarantees disclosed in the table above,
+the Company issued other guarantees. To the extent fu-
+ture claims are not considered remote, maximum future
+payments from these obligations amount to €387 million
+and €413 million as of September 30, 2020 and 2019, re-
+spectively. These commitments include indemnifications
+issued in connection with dispositions of businesses.
+Such indemnifications may protect the buyer from poten-
+tial tax, legal and other risks in conjunction with the pur-
+chased business. As of September 30, 2020 and 2019, the
+accrued amount for such other commitments is €73 mil-
+lion and €146 million, respectively.
+Furthermore, Siemens issues performance guarantees,
+which mainly include performance bonds. In the event of
+non-fulfillment of contractual obligations by the primary
+obligor, Siemens will be required to pay up to an agreed-
+upon maximum amount. These agreements typically
+have terms of up to ten years. As of September 30, 2020,
+Performance guarantees include €27,687 million for
+Siemens Energy businesses which were not transferred;
+however, Siemens has reimbursement rights towards
+Siemens Energy. As of September 30, 2020 and 2019, the
+Company accrued €1 million and €3 million, respectively,
+relating to performance guarantees.
+however, Siemens holds reimbursement rights towards
+Siemens Energy. Siemens accrued €18 million and
+€35 million relating to credit guarantees as of Septem-
+ber 30, 2020 and 2019, respectively.
+Item Credit guarantees covers the financial obligations of
+third parties generally in cases where Siemens is the ven-
+dor and (or) contractual partner or Siemens is liable for
+obligations of associated companies accounted for using
+the equity method. Additionally, credit guarantees are
+issued in the course of the SFS business. Credit guaran-
+tees generally provide that in the event of default or
+non-payment by the primary debtor, Siemens will be re-
+quired to settle such financial obligations. The maximum
+amount of these guarantees is equal to the outstanding
+balance of the credit or, in case a credit line is subject
+to variable utilization, the nominal amount of the credit
+line. These guarantees have residual terms of up to
+6 years in fiscal 2020 and 2019. The Company held collat-
+eral mainly through inventories and trade receivables.
+As of September 30, 2020, Credit guarantees include
+€271 million relating to the Siemens Energy business for
+credit guarantees not transferred to Siemens Energy;
+2,644
+3,090
+447
+25,959
+(in millions of €)
+25,267
+2,864
+Plus: Provisions for pensions and similar obligations
+Plus: Credit guarantees
+Less: Siemens Financial Services debt¹
+Less: Current interest bearing debt securities
+Net debt
+Less: Cash and cash equivalents
+29,270 22,726
+(1,256) (1,331)
+(14,041) (12,391)
+6,034
+6,562
+38,005
+Short-term debt and current maturities
+of long-term debt
+2019
+Sep 30,
+2020
+Less: Fair value hedge accounting adjustment²
+Industrial net debt
+Plus: Long-term debt
+In November 2018, Siemens announced a share-buyback
+program of up to €3 billion to be executed until Novem-
+ber 15, 2021.
+Dividends paid per share were €3.90 and €3.80, respec-
+tively, in fiscal 2020 and 2019. The Managing Board and
+the Supervisory Board propose to distribute a dividend
+of €3.50 per share to holders entitled to dividends, in to-
+tal representing approximately €2.8 billion in expected
+payments. Payment of the proposed dividend is contin-
+gent upon approval at the Shareholders' Meeting on Feb-
+ruary 3, 2021.
+As of September 30, 2020 and 2019, total authorized cap-
+ital of Siemens AG is €600 million nominal issuable in
+installments based on various time-limited authoriza-
+tions, by issuance of up to 200 million registered shares
+of no par value. Siemens AG's conditional capital is
+€420.6 million or 140.2 million shares as of Septem-
+ber 30, 2020 and €1,080.6 million nominal or 360.2 mil-
+lion shares as of September 30, 2019. Primarily, it can be
+used to serve convertible bonds or warrants under war-
+rant bonds that could or can be issued based on various
+time-limited authorizations approved by the respective
+Shareholders' Meeting.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+124
+ANNUAL REPORT 2020
+Share based payment expenses increased Capital reserve
+by €298 million and €294 million (including non-con-
+trolling interests), respectively, in fiscal 2020 and 2019. In
+connection with the settlement of share based payment
+awards Siemens treasury shares (at cost) were trans-
+ferred to employees of €310 million in fiscal 2020 and
+€188 million in fiscal 2019 which decreased Capital
+reserve and Retained earnings by €218 million and
+€92 million, respectively in 2020 and by €132 million and
+€56 million in fiscal 2019.
+In fiscal 2020 and 2019, Siemens repurchased 19,071,746
+shares and 13,532,557 shares, respectively. In fiscal 2020
+and 2019, Siemens transferred 5,613,506 and 16,251,968
+treasury shares, respectively. As of September 30, 2020
+and 2019, the Company has treasury shares of
+50,690,288 and 37,232,048 respectively.
+Siemens' issued capital is divided into 850 million regis-
+tered shares with no par value and a notional value of
+€3.00 per share as of September 30, 2020 and 2019,
+respectively. The shares are paid in full. At the Share-
+holders' Meeting, each share has one vote and accounts
+for the shareholders' proportionate share in the Compa-
+ny's net income. All shares confer the same rights and
+obligations.
+NOTE 19 Equity
+Other includes transaction-related provisions and
+post-closing provisions in connection with portfolio activ-
+ities as well as provisions for Legal Proceedings, as far as
+the risks that are subject to such Legal Proceedings are
+not already covered by project accounting. Provisions for
+Legal Proceedings amounted to €248 million and
+€407 million as of September 30, 2020 and 2019, respec-
+tively. Other also includes provisions for insurance con-
+tracts in connection with the Siemens Energy business of
+€499 million as of September 30, 2020. The provisions
+are for incurred and reported insurance cases as well as
+for incurred, hence, not yet reported cases as of fiscal
+year-end. The provision is determined using actuarial
+standard valuation methodologies, which are parameter-
+ized based on historical data.
+As of September 30, 2020 and 2019, the provision totals
+€638 million and €630 million, respectively, including
+advance payments to the federal government for the
+construction of the final storage facility in the amount
+of €95 million, which are capitalized. The provision is
+recorded net of a present value discount of €75 million
+and €103 million, respectively, reflecting the assumed
+continuous outflow of the total expected payments until
+the 2060's.
+the radioactive waste. This process will be supported by
+continuing engineering studies and radioactive sampling
+under the supervision of German federal and state au-
+thorities. The decontamination and disassembly at the
+Karlstein site were completed until the end of calendar
+year 2018, whereas final waste conditioning and packag-
+ing is planned to continue until 2025. Thereafter, the
+Company is responsible for intermediate storage of the
+radioactive materials until they are transported and
+handed over to a final storage facility. With respect to the
+Hanau facility, asset retirement is completed and inter-
+mediate storage has been set up. On September 21,
+2006, the Company received official notification from
+authorities that the Hanau facility has been released from
+the scope of application of the German Atomic Energy
+Act and that its further use is unrestricted. The ultimate
+costs of the remediation are contingent on the decision
+of the federal government on the location of the final
+storage facilities and the date of their availability. Several
+parameters relating to the development of a final storage
+facility for radioactive waste are based on the assump-
+tions for the so called Schacht Konrad final storage. The
+valuation uses assumptions to reflect the current and de-
+tailed cost estimates, price inflation and discount rates as
+well as a continuous outflow until the 2060's related to
+the costs for dismantling as well as intermediate and final
+storage. The estimated cash outflows related to the asset
+retirement obligation could alter significantly if political
+developments affect the government's timeline to final-
+ize the so called Schacht Konrad. To discount cash out-
+flows, the Company uses current interest rates as of the
+balance sheet date.
+(in millions of €)
+Income from continuing operations
+before income taxes
+Plus/Less: Interest income, interest expenses
+and other financial income (expenses), net
+Plus: Amortization, depreciation and impairments
+EBITDA
+Industrial net debt/EBITDA
+2,672
+2019
+2020
+(in millions of €)
+Allocated equity
+Sep 30,
+The SFS business is capital intensive and operates with a
+larger amount of debt to finance its operations compared
+to the industrial business.
+A key consideration of our capital structure management
+is to maintain ready access to capital markets through
+various debt instruments and to sustain our ability to re-
+pay and service our debt obligations over time. In order
+to achieve this, Siemens intended to maintain an Indus-
+trial net debt divided by EBITDA (continuing operations)
+ratio of up to 1.0 as of September 30, 2020 and 2019, re-
+spectively. The ratio indicates the approximate number
+of years that would be needed to cover the Industrial net
+debt through Income from continuing operations, with-
+out taking into account interest, other financial income
+(expenses), taxes, depreciation, amortization and impair-
+ments. The fiscal 2019 ratio is disclosed as computed in
+the prior year, before fiscal 2020 retrospective discontin-
+ued operation classifications.
+NOTE 20 Additional
+capital disclosures
+0.6
+1.3
+10,582
+7,601
+3,494
+3,157
+(430)
+(1,228)
+7,518
+5,672
+2 Debt is generally reported at a value representing approximately the
+amount to be repaid. However, for debt designated in a hedging relation-
+ship (fair value hedges), this amount is adjusted for changes in market
+value mainly due to changes in interest rates. Accordingly, Siemens
+deducts these changes in market values in order to derive an amount of
+debt that, approximately, will be repaid.
+6,404
+10,189
+(706)
+(777)
+447
+604
+9,896
+6,360
+1 The adjustment considers that both Moody's and S&P view Siemens
+Financial Services as a captive finance company. These rating agencies
+generally recognize and accept higher levels of debt attributable to
+captive finance subsidiaries in determining credit ratings. Following this
+concept, Siemens excludes Siemens Financial Services debt in order to
+derive an industrial net debt which is not affected by Siemens Financial
+Services' financing activities.
+(25,267) (25,959)
+Siemens Financial Services debt
+Debt to equity ratio
+Sep 30,
+30,414
+A one-half-percentage-point change of the above as-
+sumptions would result in the following increase (de-
+crease) of the DBO:
+(84)
+(2)
+(133)
+(143)
+(1,678)
+(1,685)
+(1,811)
+(84)
+48
+(3,489)
+Business combinations, disposals and other
+(3)
+Settlement payments
+(1,828)
+Benefits paid
+(1)
+130
+130
+142
+Plan participants' contributions
+(568)
+(2,898)
+568
+2,898
+Employer contributions
+1,787
+358
+(60)
+(18)
+2,601
+142
+(2,394)
+56
+(2)
+16,588
+24,398 17,161
+22,223
+Germany
+9,042
+5,819
+33
+11
+31,307
+40,317 29,970
+35,777
+Balance at fiscal year-end
+(652)
+(4,240)
+4
+(4)
+(626)
+56
+(101)
+4
+(2)
+383
+(535)
+436
+(634)
+(5,812) (1,281) (1,576)
+Other reconciling items4
+Foreign currency translation effects
+(8)
+(1,097)
+(74)
+5,062
+4,448
+Statements of Comprehensive Income
+580
+333
+Interest income
+715
+407
+3
+2
+712
+406
+Interest expenses
+534
+595
+534
+(333)
+595
+7,215
+9,042
+86
+33
+28,764
+31,307
+35,893
+40,317
+Balance at begin of fiscal year
+2019
+2020
+2019
+DISAGGREGATION OF PLAN ASSETS
+Current service cost
+(580)
+Other²
+(31)
+Remeasurements recognized in the Consolidated
+(60)
+(18)
+(60)
+(18)
+Effects of asset ceiling
+4,448
+(2,601)
+74
+4,448
+303
+2,601
+(74)
+Actuarial (gains) losses
+Return on plan assets excluding amounts included
+in net interest income and net interest expenses
+692
+658
+3
+2
+568
+313
+1,257
+970
+Components of defined benefit costs recognized
+in the Consolidated Statements of income³
+24
+(11)
+(12)
+(20)
+12
+303
+7,811
+303
+U.K.
+Germany
+Pension progression
+ial valuation of the DBO was as follows:
+The weighted-average discount rate used for the actuar-
+ACTUARIAL ASSUMPTIONS
+CH
+U.K.
+1 Discloses figures including Siemens Energy. Accordingly, it comprises
+the total of continuing and discontinuing operations.
+Compensation increase
+4,448
+303
+Total
+52
+U.K.
+(97)
+4,569
+402
+Changes in financial assumptions
+(173)
+(3)
+Changes in demographic assumptions
+2020
+the following table. Inflation effects, if applicable, are
+included in the assumptions below.
+The rates of compensation increase and pension progres-
+sion for countries with significant effects are shown in
+The mortality tables used in Germany (Siemens Bio
+2017/2020) are mainly derived from data of the German
+Siemens population and to a lesser extent from data of
+the Federal Statistical Office in Germany by applying for-
+mulas in accordance with recognized actuarial standards.
+SAPS S2 (Standard mortality tables for
+Self Administered Pension Schemes with
+allowance for future mortality improvements)
+BVG 2015 G
+Pri-2012 with generational projection from
+the US Social Security Administration's
+Long Range Demographic Assumptions
+Siemens specific tables
+(Siemens Bio 2017/2020)
+Experience (gains) losses
+Discount rate
+EUR
+USD
+SENSITIVITY ANALYSIS
+U.S.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+2.8%
+2.7%
+1.4%
+1.5%
+1.4%
+1.4%
+3.5%
+2.6%
+Sep 30,
+2019
+2020
+ANNUAL REPORT 2020 121
+The discount rate was derived from high-quality corpo-
+rate bonds with an issuing volume of more than 100 mil-
+lion units in the respective currency zones, which have
+0.2%
+0.2%
+2.0%
+1.6%
+3.1%
+2.5%
+0.8%
+0.8%
+1.3%
+1.1%
+2019
+2020
+Sep 30,
+GBP
+CH
+U.K.
+CHF
+(in millions of €)1
+798
+14
+4
+1,190
+838
+2,207
+1,632
+Other countries
+150
+(27)
+3,424
+3,355
+3,574
+(682)
+(356)
+19
+8
+6,764
+6,000
+6,064
+5,637
+732
+341
+3,341
+2,617
+4,073
+Fiscal year
+2019
+2,958
+CH
+1,031
+Total
+3,328
+and similar obligations
+Net interest expenses related to provisions for pensions
+and similar obligations amounted to €66 million and
+€108 million, respectively, in fiscal 2020 and 2019. The
+DBO is attributable to actives 28% and 32%, to deferreds
+with vested benefits 14% and 14% and to retirees and sur-
+viving dependents 57% and 54%, respectively, in fiscal
+2020 and 2019.
+The remeasurements comprise actuarial (gains) and
+losses resulting from:
+U.S.
+thereof provisions for pensions
+Germany
+Applied mortality tables are:
+been awarded an AA rating (or equivalent) by at least one
+of the three rating agencies Moody's Investors Service,
+S&P Global Ratings or Fitch Ratings.
+Employer contributions in fiscal 2020 include fundings in
+Germany of €2,730 million, thereof a contribution of a
+9.9% interest in Siemens Energy AG amounting to €1,881
+million. It also includes real estate contributions from
+Siemens Real Estate.
+Line item Business combinations, disposals and other in-
+cludes the spin-off effects of Siemens Energy: DBO
+€3,416 million, Fair value of plan assets €2,319 million
+and Effects of asset ceiling €2 million.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+541
+120
+ANNUAL REPORT 2020
+3 Thereof relating to discontinued operations: Defined benefit obligation €155 million and €179 million; Fair value of plan assets €34 million and €38 million;
+Effects of asset ceiling €- million and €- million and Net defined benefit balance €121 million and €140 million, respectively, in fiscal 2020 and 2019.
+4 Thereof relating to discontinued operations: Defined benefit obligation €(249) million and €(28) million; Fair value of plan assets €101 million and €69 million;
+Effects of asset ceiling €- million and €- million and Net defined benefit balance €(350) million and €(97) million, respectively, in fiscal 2020 and 2019.
+2 Includes past service benefits/costs, settlement gains/losses and administration costs related to liabilities.
+854
+1 Discloses figures including Siemens Energy. Accordingly, it comprises the total of continuing and discontinuing operations.
+35,777
+40,317
+29,970
+31,307
+11
+5,819
+33
+9,042
+6,360
+9,896
+(presented in Other assets)
+thereof net defined benefit assets
+Trade receivables
+Loans, receivables and other debt instruments measured at amortized cost
+Stage 1
+under the general approach
+Loans and other debt instruments
+as of October 1, 2019
+for expected credit losses
+Valuation allowance
+(in millions of €)
+ANNUAL REPORT 2020 131
+Valuation allowances
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+(973)
+Stage 2
+(779)
+Stage 3
+11
+Contract
+Assets
+97
+9
+1,583
+Write-offs charged against the allowance
+175
+43
+67
+and other debt
+instruments under
+the simplified
+approach
+in the Consolidated Statements of Income
+in the current period
+184
+198
+891
+68
+12
+54
+Lease
+Receivables
+Change in valuation allowances recorded
+1,494
+Fair value of equity instruments quoted in an active Net gains (losses) resulting from financial instruments
+market is based on price quotations at period-end date.
+2019
+2019
+2020
+Fiscal year
+(in millions of €)
+are:
+terest rates.
+Fair value of debt instruments, is either based on prices
+provided by price service agencies or is estimated by
+discounting future cash flows using current market in-
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+130
+ANNUAL REPORT 2020
+384
+384
+889
+n/a
+889
+Cash and cash equivalents
+(168)
+33
+Loans, receivables and other debt instruments measured at
+amortized cost
+2020
+Fiscal year
+465
+554
+(in millions of €)
+Interest income (expense) includes interest from finan-
+cial assets and financial liabilities not at fair value through
+profit or loss:
+Amounts include foreign currency gains (losses) from rec-
+ognizing and measuring financial assets and liabilities.
+Net gains (losses) on financial assets and liabilities mea-
+sured at FVTPL resulted from those mandatorily measured
+at FVTPL and comprise fair value changes of derivative
+financial instruments for which hedge accounting is not
+applied including interest income (expense), as well as
+dividends from and fair value changes of equity instru-
+ments measured at FVTPL.
+Total interest income
+on financial assets
+Total interest expenses
+on financial liabilities
+Financial assets and financial
+liabilities at FVTPL
+The Company limits default risks resulting from deriva-
+tive financial instruments by generally transacting with
+financial institutions with a minimum credit rating of
+investment grade. Based on Siemens' net risk exposure
+towards the counterparty, the resulting credit risk is taken
+into account via a credit valuation adjustment.
+Fair values of derivative financial instruments are deter-
+mined in accordance with the specific type of instru-
+ment. Fair values of derivative interest rate contracts are
+estimated by discounting expected future cash flows
+using current market interest rates and yield curves over
+the remaining term of the instrument. Interest rate fu-
+tures are valued based on quoted market prices, if avail-
+able. Fair values of foreign currency derivatives are based
+on forward exchange rates. Options are generally valued
+based on quoted market prices or based on option pricing
+models. No compensating effects from underlying trans-
+actions (e.g. firm commitments and forecast transac-
+tions) are considered.
+(1,383)
+1,291
+Financial liabilities measured
+at amortized cost
+(97)
+(527)
+As of September 30, 2020 and 2019, Level 3 financial as-
+sets include venture capital investments of €386 million
+and €291 million (Next47 investments). In fiscal 2020 and
+2019, new level 3 investments and purchases amounted
+to €249 million and €153 million, respectively. Sales
+amounted to €327 million in fiscal 2020, thereof €248 mil-
+lion related to a divestment of shareholding in an off-
+shore wind farm, which was measured at FVOCI.
+n/a
+7
+(60)
+(39)
+n/a
+n/a
+Write-offs charged against the allowance
+36
+32
+136
+26
+3
+13
+Consolidated Statements of Income in the current period
+Change in valuation allowances recorded in the
+211
+160
+877
+(105)
+64
+(72)
+n/a
+54
+In connection with cash flow hedges
+as of September 30, 2019
+for disposal and dispositions of those entities
+Valuation allowance
+Reclassifications to line item Assets held
+7
+6
+(25)
+(2)
+(6)
+and other changes
+Foreign exchange translation differences
+2
+2
+n/a
+Recoveries of amounts previously written off
+11
+48
+as of October 1, 2018
+(2)
+(17)
+35
+4
+(48)
+as of September 30, 2020
+Valuation allowance
+Reclassifications to line item Assets held
+for disposal and dispositions of those entities
+Foreign exchange translation differences
+and other changes
+2
+6
+n/a
+n/a
+Recoveries of amounts previously written off
+(46)
+(11)
+(458)
+(169)
+73
+Valuation allowance
+(in millions of €)
+Lease
+Receivables
+Contract
+Assets
+and other debt
+instruments under
+the simplified
+approach
+Stage 3
+Stage 2
+(35)
+Stage 1
+Loans, receivables and other debt instruments measured at amortized cost
+Loans and other debt instruments
+under the general approach
+227
+36
+537
+111
+27
+Trade receivables
+(including embedded derivatives)
+59,268
+1,273
+38,264
+40,868
+amount
+Sep 30, 2019
+Carrying
+Fair value
+Carrying
+amount
+Sep 30, 2020
+Fair value
+ANNUAL REPORT 2020 129
+Loans from banks and other financial indebtedness
+Notes and bonds
+(in millions of €)
+The following table presents the fair values and carrying
+amounts of financial assets and financial liabilities mea-
+sured at cost or amortized cost for which the carrying
+amounts do not approximate fair value:
+Cash and cash equivalents include €126 million and
+€142 million as of September 30, 2020 and 2019, respec-
+tively, which are not available for use by Siemens mainly
+due to minimum reserve requirements with banks. As of
+September 30, 2020 and 2019, the carrying amount of
+financial assets Siemens pledged as collateral is €115 mil-
+lion and €127 million, respectively.
+50,587
+34,758
+55,167
+33,205
+3,473
+In connection with cash flow hedges
+In connection with fair value hedges
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+Derivative financial instruments
+Debt instruments measured at FVTPL
+Equity instruments measured at FVOCI
+Equity instruments measured at FVTPL
+Financial assets measured at fair value
+(in millions of €)
+The following table allocates financial assets and finan-
+cial liabilities measured at fair value to the three levels of
+the fair value hierarchy:
+The fair value of notes and bonds is based on prices pro-
+vided by price service agencies at the period-end date
+(Level 2). The fair value of loans from banks and other
+financial indebtedness as well as other non-current finan-
+cial liabilities are estimated by discounting future cash
+flows using rates currently available for debt of similar
+terms and remaining maturities (Level 2).
+Fixed-rate and variable-rate receivables with a remain-
+ing term of more than twelve months, including receiv-
+ables from finance leases, are evaluated by the Com-
+pany based on parameters such as interest rates, specific
+country risk factors, individual creditworthiness of the
+customer, and the risk characteristics of the financed
+project. Based on this evaluation, allowances for these
+receivables are recognized.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+3,137
+3,138
+3,483
+384
+213
+889
+798
+790
+Derivatives designated in a hedge accounting relationship
+12,391
+14,041
+Cash and cash equivalents
+45,467
+2019
+Sep 30,
+2020
+40,304
+Loans, receivables and other debt instruments measured at amortized cost¹
+(in millions of €)
+The following table discloses the carrying amounts of
+each category of financial assets and financial liabilities:
+12
+Financial assets mandatorily measured at FVTPL²
+3,422
+2,626
+Financial assets designated as measured at FVTPL³
+765
+49,315
+54,189
+4 Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term
+debt, Trade payables, Other current financial liabilities, Long-term debt and Other financial liabilities, except for separately
+disclosed derivative financial instruments of €978 million and €1,273 million as of September 30, 2020 and 2019, respectively.
+5 Reported in line items Other current financial liabilities and Other financial liabilities.
+3 Reported in Other financial assets.
+2
+1 Reported in the following line items of the Statements of Financial Position as of September 30, 2020 and 2019, respectively: Trade
+and other receivables, Other current financial assets and Other financial assets, except for separately disclosed €1,843 million and
+€890 million equity instruments in Other financial assets (thereof €491 million and €513 million at FVOCI), €220 million and €-
+million financial assets designated as measured at FVTPL and €2,842 million and €3,014 million derivative financial instruments
+(thereof in Other financial assets €2,044 million and €2,239 million) as well as €18 million and €34 million debt instruments
+measured at FVTPL in Other financial assets. Includes €12,071 million and €16,928 million trade receivables from the sale of goods
+and services, thereof €694 million and €889 million with a term of more than twelve months as of September 30, 2020 and 2019.
+Reported in line items other current financial assets and other financial assets.
+Financial liabilities measured at fair
+Derivatives designated in a hedge accounting relationships
+Financial liabilities
+Financial liabilities measured at amortized cost4
+61,797
+513
+491
+Financial assets
+Equity instruments measured at FVOCI¹
+220
+Derivatives not designated in a hedge accounting relationships
+Not designated in a hedge accounting relationship
+value - Derivative financial instruments
+In connection with cash flow hedges
+513
+511
+1
+1
+377
+164
+206
+7
+Equity instruments measured at FVTPL
+Equity instruments measured at FVOCI
+3,938
+709
+3,221
+8
+Financial assets measured at fair value
+Total
+Debt instruments measured at FVTPL
+Level 3
+34
+Derivative financial instruments
+1,273
+value - Derivative financial instruments
+Financial liabilities measured at fair
+342
+342
+457
+457
+2,215
+2,215
+In connection with cash flow hedges
+In connection with fair value hedges
+(including embedded derivatives)
+Not designated in a hedge accounting relationship
+3,014
+3,014
+34
+Level 2
+Level 1
+(in millions of €)
+104
+1
+1,353
+209
+77
+1,067
+4,923
+612
+3,023
+1,288
+Total
+Level 3
+Level 2
+Level 1
+Sep 30, 2020
+385
+491
+220
+18
+Sep 30, 2019
+213
+213
+765
+765
+978
+978
+Not designated in a hedge accounting relationship
+(including embedded derivatives)
+236
+554
+554
+2,052
+2,052
+2,842
+2,842
+238
+236
+68
+229
+198
+6
+Fiscal year
+2026
+and
+there-
+after
+The following table reflects our contractually fixed pay-
+offs for settlement, repayments and interest. The dis-
+closed expected undiscounted net cash outflows from
+derivative financial liabilities are determined based on
+each particular settlement date of an instrument and
+based on the earliest date on which Siemens could be
+required to pay. Cash outflows for financial liabilities (in-
+cluding interest) without fixed amount or timing are
+based on the conditions existing at September 30, 2020.
+In addition, Siemens constantly monitors funding op-
+tions available in the capital markets, as well as trends
+in the availability and costs of such funding, with a view
+to maintaining financial flexibility and limiting repay-
+ment risks.
+via a global multi-currency commercial paper program.
+Liquidity risk may also be mitigated by the Siemens Bank
+GmbH, which increases the flexibility of depositing cash
+or refinancing.
+→ B.6 Notes to Consolidated Financial Statements
+Consolidated Financial Statements
+136
+ANNUAL REPORT 2020
+Liquidity risk results from the Company's inability to meet
+its financial liabilities. Siemens follows a deliberated fi-
+nancing policy that is aimed towards a balanced financ-
+ing portfolio, a diversified maturity profile and a comfort-
+able liquidity cushion. Siemens mitigates liquidity risk by
+the implementation of effective working capital and cash
+management, arranged credit facilities with highly rated
+financial institutions, via a debt issuance program and
+Liquidity risk
+As of September 30, 2020 and 2019, the VaR relating to
+the interest rate was €424 million and €722 million. The
+decrease was driven mainly by lower interest rate volatil-
+ities, in particular for the U.S. dollar and the euro.
+If there are no conflicting country-specific regulations, all
+Siemens operating units generally obtain any required
+financing through Corporate Treasury in the form of
+loans or intercompany clearing accounts. The same con-
+cept is adopted for deposits of cash generated by the
+units.
+Interest rate risk is the risk that the fair value or future
+cash flows of a financial instrument will fluctuate be-
+cause of changes in market interest rates. This risk arises
+whenever interest terms of financial assets and liabilities
+are different. In order to manage the Company's position
+with regard to interest rate risk, interest income and in-
+terest expenses, Corporate Treasury performs a compre-
+hensive corporate interest rate risk management by us-
+ing fixed or variable interest rates from bond issuances
+and derivative financial instruments when appropriate.
+The interest rate risk relating to the Group, excluding SFS'
+business, is mitigated by managing interest rate risk
+actively relatively to a benchmark. The interest rate risk
+relating to SFS' business is managed separately, consider-
+ing the term structure of financial assets and liabilities.
+The Company's interest rate risk results primarily from
+funding in the U.S. dollar, British pound and euro.
+Interest rate risk
+46
+operations are permanent and that reinvestment is con-
+tinuous. Effects from foreign currency exchange rate
+fluctuations on the translation of net asset amounts into
+euro are reflected in the Company's consolidated equity
+position.
+(in millions of €)
+2022
+8
+2
+2,023
+indebtedness
+Other financial
+885
+198
+347
+Loans from banks
+10,647 23,436
+6,435
+4,199
+Notes and bonds
+Non-derivative
+financial liabilities
+2023
+to
+2025
+2021
+Many Siemens units are located outside the Eurozone.
+Because the financial reporting currency of Siemens is
+the euro, the financial statements of these subsidiaries
+are translated into euro for the preparation of the Consol-
+idated Financial Statements. To consider the effects of
+foreign currency translation in the risk management, the
+general assumption is that investments in foreign-based
+TRANSLATION RISK
+As of September 30, 2020 and 2019, the VaR relating to
+foreign currency exchange rates was €90 million and
+€79 million. This VaR was calculated under consideration
+of items of the Consolidated Statements of Financial
+Position in addition to firm commitments, which are de-
+nominated in foreign currencies, as well as foreign cur-
+rency denominated cash flows from forecast transactions
+for the following twelve months. The increase in the VaR
+resulted mainly from a higher net foreign currency posi-
+tion after hedging activities.
+FAIR VALUE HEDGES OF
+FLOATING-RATE COMMERCIAL PAPERS
+Siemens applies cash flow hedge accounting to a revolv-
+ing portfolio of floating-rate commercial papers of nom-
+inal US$700 million. Siemens pays a fixed rate of interest
+and receives a variable rate of interest, offsetting future
+changes in interest payments of the underlying float-
+ing-rate commercial papers. Net cash receipts and pay-
+ments are recorded as interest expenses. The Company
+had interest rate swap contracts to receive variable rates
+of interest of an average of 0.23% and 2.11% as of Sep-
+tember 30, 2020 and 2019, respectively, and paid fixed
+rates of interest (average rate of 1.95% and 1.95%, as of
+September 30, 2020 and 2019, respectively).
+CASH FLOW HEDGES OF
+NOT DESIGNATED IN A HEDGING RELATIONSHIP
+Interest rate risk management relating to the Group,
+excluding SFS' businesses, uses derivative financial in-
+struments under a portfolio-based approach to manage
+interest risk actively relative to a benchmark. Interest rate
+management of the SFS and businesses remains to be
+managed separately, considering the term structure of
+SFS' financial assets and liabilities on a portfolio basis.
+Neither approach qualifies for hedge accounting treat-
+ment. Net cash receipts and payments in connection with
+interest rate swap agreements are recorded as interest
+expense in Other financial income (expenses), net.
+Interest rate risk management
+DERIVATIVE FINANCIAL INSTRUMENTS
+of US$). As of September 30, 2020 and 2019, the hedg-
+ing transactions have an average remaining maturity
+until 2022 and 2020 (forward purchases of US$) as well
+as 2021 and 2024 (forward sales of US$).
+The Company's operating units apply hedge accounting
+to certain significant forecast transactions and firm com-
+mitments denominated in foreign currencies. Particu-
+larly, the Company entered into foreign currency ex-
+change contracts to reduce the risk of variability of
+future cash flows resulting from forecast sales and pur-
+chases as well as firm commitments. The risk mainly re-
+sults from contracts denominated in US$ both from
+Siemens' operating units entering into long-term con-
+tracts e.g. from the project business, from the standard
+product business and, additionally, Siemens AG entered
+into a deal contingent forward with a nominal amount of
+€7,500 million to hedge exchange risks arising from a
+part of the purchase price obligation for the planned
+Siemens Healthineers acquisition of Varian Medical Sys-
+tems Inc. In fiscal 2020 and 2019, the risk is hedged
+against the euro at an average rate of 1.2013 €/US$
+and 1.1972 €/US$ (forward purchases of US$), respec-
+tively and 1.1950 €/US$ and 1.2547 €/US$ (forward sales
+CASH FLOW HEDGES
+NOT DESIGNATED IN A HEDGING RELATIONSHIP
+The Company manages its risks associated with fluctua-
+tions in foreign currency denominated receivables,
+payables, debt, firm commitments and forecast transac-
+tions primarily through a Company-wide portfolio ap-
+proach. Under this approach the Company-wide risks are
+aggregated centrally, and various derivative financial in-
+struments, primarily foreign currency exchange con-
+tracts, foreign currency swaps and options, are utilized to
+minimize such risks. Such a strategy does not qualify
+for hedge accounting treatment. The Company also ac-
+counts for foreign currency derivatives, which are em-
+bedded in sale and purchase contracts.
+DERIVATIVE FINANCIAL INSTRUMENTS
+Foreign currency exchange rate
+risk management
+Amounts reclassified to net income in connection with in-
+terest rate risk hedges and non-operative foreign currency
+hedges are presented in Other financial income (expenses),
+net. Reclassifications of foreign currency risk hedges with
+operative business purposes are presented as functional
+costs. Costs of hedging reserve is the forward element of
+forward contracts that are not designated as hedge ac-
+counting and which are amortized to interest expense on a
+straight-line basis as the hedged item is time-period related.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 133
+16
+FIXED-RATE DEBT OBLIGATIONS
+Under interest rate swap agreements outstanding in fis-
+cal 2020 and 2019, the Company agreed to pay a variable
+rate of interest multiplied by a notional principal amount,
+and to receive in return an amount equal to a specified
+fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements
+offset future changes in interest rates designated as
+hedged risk on the fair value of the underlying fixed-rate
+debt obligations. As of September 30, 2020 and 2019, the
+carrying amounts of €6,938 million and €7,050 million,
+ANNUAL REPORT 2020 134
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+respectively, of fixed-rate debt obligations are designated
+in fair value hedges, including €540 million and €416 mil-
+lion cumulative fair value hedge adjustments. Unamor-
+tized fair value hedge adjustments of €220 million and
+€281 million as of September 30, 2020 and 2019, respec-
+tively, relate to no longer applied hedge accounting. The
+amounts are amortized over the remaining term of the
+underlying debt, maturing until 2042. Carrying amount
+adjustments to debt of €(123) million and €405 million,
+respectively, in fiscal 2020 and 2019 are included in Other
+financial income (expenses), net; the related swap agree-
+ments resulted in gains (losses) of €91 million and €(417)
+million, respectively, in fiscal 2020 and 2019. Net cash
+receipts and payments relating to such interest rate swap
+agreements are recorded as interest expenses.
+Generally, the operating units conclude their hedging
+activities internally with Corporate Treasury. By applying
+a cost-optimizing portfolio approach, Corporate Treasury
+itself hedges foreign currency exchange rate risks with
+external counterparties and limits them.
+According to the Company policy, Siemens units are re-
+sponsible for recording, assessing and monitoring their
+foreign currency transaction exposure. The net foreign
+currency position of Siemens units serves as a central
+performance measure and has to be hedged within a
+band of at least 75% but no more than 100%.
+Operating units are prohibited from borrowing or invest-
+ing in foreign currencies on a speculative basis. Intercom-
+pany financing or investments of operating units are
+preferably carried out in their functional currency or on a
+hedged basis.
+units are exposed to foreign currency exchange rate fluc-
+tuations, particularly between the U.S. dollar and the
+euro. Foreign currency exchange rate exposure is partly
+balanced by purchasing of goods, commodities and ser-
+vices in the respective currencies as well as production
+activities and other contributions along the value chain in
+the local markets.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 135
+Each Siemens unit conducting businesses with interna-
+tional counterparties leading to future cash flows denom-
+inated in a currency other than its functional currency is
+exposed to risks from changes in foreign currency ex-
+change rates. In the ordinary course of business, Siemens
+Lease liabilities
+TRANSACTION RISK
+Any market sensitive instruments, including equity and
+interest-bearing investments that our Company's pen-
+sion plans hold are not included in the following quanti-
+tative and qualitative disclosures.
+Actual results that are included in the Consolidated State-
+ments of Income or Consolidated Statements of Compre-
+hensive Income may differ substantially from VaR figures
+due to fundamental conceptual differences. While the
+Consolidated Statements of Income and Consolidated
+Statements of Comprehensive Income are prepared in
+accordance with IFRS, the VaR figures are the output of a
+model with a purely financial perspective and represent
+the potential financial loss, which will not be exceeded
+within ten days with a probability of 99.5%. Although VaR
+is an important tool for measuring market risk, the as-
+sumptions on which the model is based give rise to some
+limitations including the following. A ten day holding pe-
+riod assumes that it is possible to dispose of the underlying
+positions within this period. This may not be valid during
+continuing periods of illiquid markets. A 99.5% confidence
+level means that there is a 0.5% statistical probability that
+losses could exceed the calculated VaR. The use of histori-
+cal data as a basis for estimating the statistic behavior of
+the relevant markets and finally determining the possible
+range of the future outcomes on the basis of this statistic
+behavior may not always cover all possible scenarios, es-
+pecially those of an exceptional nature.
+In order to quantify market risks Siemens has imple-
+mented a system based on Value at Risk (VaR), which is
+also used for internal management of Corporate Treasury
+activities. The VaR figures are calculated based on histor-
+ical volatilities and correlations of various risk factors, a
+ten day holding period, and a 99.5% confidence level.
+manage and control these risks primarily through its reg-
+ular operating and financing activities and uses deriva-
+tive financial instruments when deemed appropriate.
+Increasing market fluctuations may result in significant
+earnings and cash flow volatility risk for Siemens. The
+Company's operating business as well as its investment
+and financing activities are affected particularly by
+changes in foreign exchange rates and interest rates. In
+order to optimize the allocation of financial resources
+across Siemens' segments and entities, as well as to
+achieve its aims, Siemens identifies, analyzes and man-
+ages the associated market risks. The Company seeks to
+NOTE 25 Financial
+risk management
+The Company had interest rate swap contracts to pay
+variable rates of interest of an average of (0.13)% and
+0.825% as of September 30, 2020 and 2019, respectively
+and received fixed rates of interest (average rate of 1.49%
+and 1.523%, as of September 30, 2020 and 2019, respec-
+tively). The notional amount of indebtedness hedged as
+of September 30, 2020 and 2019 was €6,423 million and
+€6,664 million, respectively. This changed 18% and 22%
+of the Company's underlying notes and bonds from fixed
+interest rates into variable interest rates as of Septem-
+ber 30, 2020 and 2019, respectively. The notional
+amounts of these contracts mature at varying dates
+based on the maturity of the underlying hedged items.
+The net fair value of interest rate swap contracts (exclud-
+ing accrued interest) used to hedge indebtedness as of
+September 30, 2020 and 2019 was €520 million and
+€428 million, respectively.
+Foreign currency exchange rate risk
+3
+695
+921
+6,101
+Investment Grade Ratings
+Non-Investment Grade Ratings
+Stage 3
+Stage 2
+Stage 1
+Stage 3
+Stage 2
+Stage 1
+(in millions of €)
+Lease
+Receivables
+and loan commitments
+Financial guarantees
+Loans and other debt instruments
+under the general approach
+SFS' external financing portfolio disaggregates into credit
+risk rating grades as of September 30, 2020 as follows
+(pre valuation allowances):
+As of September 30, 2020 and 2019, collateral of €829
+million and €835 million, respectively, relate to financial
+assets measured at fair value. Those collaterals are pro-
+vided in connection with netting agreements for deriva-
+tives providing protection from the risk of a counterpar-
+ty's insolvency. As of September 30, 2020 and 2019,
+collateral held for credit-impaired receivables from fi-
+nance leases amounted to €141 million and €55 million,
+respectively. As of September 30, 2020 and 2019, collat-
+eral held for financial assets measured at amortized cost
+amounted to €4,109 million and €3,948 million, respec-
+tively, including €141 million and €86 million, respec-
+tively, for credit-impaired loans in SFS' asset finance
+business. Those collaterals mainly comprised property,
+plant and equipment. Credit risks arising from irrevoca-
+ble loan commitments are equal to the expected future
+pay-offs resulting from these commitments.
+31
+The carrying amount is the maximum exposure to a finan-
+cial asset's credit risk, without taking account of any collat-
+eral. Collateral reduces the valuation allowance to the ex-
+tent it mitigates credit risk. Collateral needs to be specific,
+identifiable and legally enforceable to be taken into account.
+Those collaterals are mostly held in the portfolio of SFS.
+n/a
+n/a
+138
+ANNUAL REPORT 2020
+Siemens' investment portfolio consists of direct and indi-
+rect investments in publicly traded companies that are
+classified as long term investments. These investments
+are monitored based on their current market value, af-
+fected primarily by fluctuations on the volatile technolo-
+gy-related markets worldwide. As of September 30, 2020,
+the market value of Siemens' portfolio, which mainly
+consists of one investment in a publicly traded company,
+was €1,055 million. The VaR relating to the equity price
+was €182 million.
+Equity Price Risk
+Amounts above do not represent economic credit risk,
+since they consider neither collateral held nor valuation
+allowances already recognized.
+Trade receivables of operating units are generally rated
+internally; as of September 30, 2020 and 2019, approxi-
+mately 43% and 42%, respectively, have an investment
+grade rating and 57% and 58%, respectively, have a
+non-investment grade rating. Contract assets generally
+show similar risk characteristics as trade receivables in
+operating units.
+4,172
+100
+130
+2,574
+541
+776
+12,189
+1,966
+n/a
+607
+To analyze and monitor credit risks, the Company applies
+various systems and processes. A main element is a central
+IT application that processes data from operating units to-
+gether with rating and default information and calculates
+an estimate, which may be used as a basis for individual bad
+debt provisions. Additionally, qualitative information is con-
+sidered to particularly incorporate the latest developments.
+An exposure is considered defaulted if the debtor is un-
+willing or unable to pay its credit obligations. A range of
+internally defined events trigger a default rating, includ-
+ing the opening of bankruptcy proceedings, receivables
+being more than 90 days past due, or a default rating by
+an external rating agency.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+113
+513
+liabilities
+Derivative financial
+21
+109
+112
+1,480
+liabilities
+Other financial
+32
+53
+7,786
+Trade payables
+867
+195
+Credit guarantees¹
+604
+Irrevocable loan
+ANNUAL REPORT 2020 137
+Ratings and individually defined credit limits are based
+on generally accepted rating methodologies, with infor-
+mation obtained from customers, external rating agen-
+cies, data service providers and Siemens' credit default
+experiences. Internal ratings consider appropriate for-
+ward-looking information relevant to the specific finan-
+cial instrument like expected changes in the debtor's
+financial position, ownership, management or opera-
+tional risks, as well as broader forward-looking informa-
+tion, such as expected macroeconomic, industry-related
+and competitive developments. The ratings also consider
+a country-specific risk component derived from external
+country credit ratings. Ratings and credit limits for finan-
+cial institutions as well as Siemens' public and private
+customers, which are determined by internal risk assess-
+ment specialists, are continuously updated and consid-
+ered for investments in cash and cash equivalents and in
+determining the conditions under which direct or indirect
+financing will be offered to customers.
+Siemens maintains a Credit Risk Intelligence Unit to
+which numerous operating units from the Siemens
+Group regularly transfer business partner data as a basis
+for a centralized internal rating and credit limit recom-
+mendation process. Due to the identification, quantifica-
+tion and active management of credit risks, this increases
+credit risk transparency.
+The effective monitoring and controlling of credit risk
+through credit evaluations and ratings is a core compe-
+tency of our risk management system. In this context,
+Siemens has implemented a binding credit policy.
+Siemens provides its customers with various forms of
+direct and indirect financing particularly in connection
+with large projects. Hence, credit risks are determined by
+the solvency of the debtors, the recoverability of the col-
+laterals, the success of projects we invested in and the
+global economic development.
+Credit risk is defined as an unexpected loss in financial
+instruments if the contractual partner is failing to dis-
+charge its obligations in full and on time or if the value of
+collateral declines.
+Credit risk
+563
+2 A considerable portion result from asset-based lending transactions
+meaning that the respective loans can only be drawn after sufficient
+collateral has been provided by the borrower.
+14
+NOTE 23 Additional disclosures
+on financial instruments
+335
+3,177
+172
+2
+commitments²
+1 Based on the maximum amounts Siemens could be required to settle
+in the event of default by the primary debtor.
+(57)
+(10)
+Balance as of
+554
+fair value hedges
+therein: included in
+7
+2
+7
+2
+Financial Position
+in the Statement of
+42
+107
+cash flow hedges
+Amounts offset
+therein: included in
+1,056
+457
+795
+Net amounts
+Other (embedded
+3,014 1,273
+978
+2,842
+Related amounts not
+offset in the Statement
+233
+434
+33
+74
+commodity swaps)
+derivatives, options,
+1,049
+793
+2,568
+2,569
+Financial Position
+in the Statement of
+2,575
+2,571
+Gross amounts
+933
+Foreign currency exchange
+contracts
+Liability
+Asset
+Sep 30, 2019
+Sep 30, 2020
+Liability
+Asset
+(in millions of €)
+Siemens enters into master netting and similar agree-
+ments for derivative financial instruments. Potential off-
+setting effects are as follows:
+Offsetting
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 132
+Should the current COVID-19 situation result in
+pro-
+longed recession with a delayed recovery process, valua-
+tion allowances for expected credit losses on financial
+assets at amortized cost could increase by a lower three-
+digit million €-amount.
+Impairment losses on financial instruments are presented
+in line items Cost of sales, Selling and general administra-
+tive expenses and Other financial income (expenses),
+net. Net losses in fiscal 2020 and 2019 are €404 million
+and €237 million, respectively. Impairment losses of
+€33 million and €113 million in fiscal 2020 and 2019 are
+mostly attributable to the SFS business and presented in
+Other financial income (expenses), net.
+184
+617
+942
+792
+Financial assets
+Sep 30,
+248
+1,639
+328
+1,835
+Interest rate swaps and
+combined interest and
+currency swaps
+2019
+2020
+of Financial Position
+2019
+(in millions of €)
+340
+341
+106
+231
+therein: included in
+cash flow hedges
+Financial liabilities
+Sep 30,
+2020
+829
+835
+Net amounts
+October 1, 2018
+Balance as of
+7,842
+reserve
+Cost of
+hedging
+Foreign
+currency risk
+reserve
+reserve
+(in millions of €)
+Cash flow
+hedge
+hedge
+8,248
+10,739 4,435 7,803
+450 7,110
+rate risk
+Cash flow
+Foreign currency
+exchange contracts
+Interest rate swaps
+therein: included in
+cash flow hedges
+35
+72
+598
+1,195
+September 30, 2019
+thereof discontinued
+hedge accounting
+Fair values of each type of derivative financial instru-
+ments reported as financial assets or financial liabilities
+in line items Other current financial assets (liabilities) or
+Other financial assets (liabilities) are:
+(16)
+94
+94
+(4)
+net income
+Interest
+Reclassification to
+6,512
+450
+19
+(223)
+(42)
+Hedging gains (losses)
+presented in OCI
+therein: included in
+fair value hedges
+6,647
+891
+More than
+12 months
+Up to
+12 months
+Cash flow
+hedge
+reserve
+reserve
+hedge
+Foreign
+currency risk
+Interest
+rate risk
+Cash flow
+Balance as of
+October 1, 2019
+Siemens Energy spin-off
+Hedging gains (losses)
+presented in OCI
+(in millions of €)
+To hedge foreign currency exchange and interest rate
+risks, derivatives are contracted to achieve a 1:1 hedge
+ratio so that the main characteristics match the underly-
+ing hedged items (e.g. nominal amount, maturity) in a
+critical term match, which ensures an economic relation-
+ship between hedging instruments and hedged items
+suitable for hedge accounting. The nominal amounts of
+hedging instruments by maturity are:
+NOTE 24 Derivative
+financial instruments
+and hedging activities
+Other components of equity, net of income taxes, relat-
+ing to cash flow hedges reconciles as follows:
+391
+658
+571
+221
+1,733
+1,739
+Cost of
+hedging
+reserve
+(10)
+(57)
+21
+(in millions of €)
+Sep 30, 2020
+1
+117
+133
+(59)
+Balance as of
+September 30, 2020
+thereof discontinued
+hedge accounting
+Sep 30, 2019
+More than
+Up to
+12 months 12 months
+income
+8
+(1)
+Reclassification to net
+163
+162
+(48)
+3
+(49)
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+14
+Some of our board members hold, or in the last year have
+held, positions of significant responsibility with other en-
+tities. We have relationships with almost all of these en-
+tities in the ordinary course of our business whereby we
+buy and sell a wide variety of products and services on
+arm's length terms.
+2,383
+556
+189
+80
+77
+217
+100
+(1,730)
+5,672
+(1,491)
+6,933
+59,548
+123,897
+85,498
+150,248
+(1,684)
+(2,339)
+347
+371
+543
+225
+6,625
+1,544
+2
+(504)
+220
+620
+7,560
+7,789
+33,859
+32,467
+7,142
+6,696
+1,104
+1,306
+5,167
+2,144
+345
+632
+28,946
+29,901
+611
+621
+23
+27
+253
+1,735
+815
+1,554
+3,157
+AMORTIZATION, DEPRECIATION AND IMPAIRMENTS
+Amortization, depreciation and impairments includes
+depreciation and impairments of property, plant and
+equipment as well as amortization and impairments of
+intangible assets each net of reversals of impairment.
+ANNUAL REPORT 2020 144
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Measurement
+-
+POC and Siemens Real Estate
+POC follows the measurement principles of the segments
+except for SFS. Siemens Real Estate applies the measure-
+ment principles of SFS.
+Reconciliation to
+Consolidated Financial Statements
+In fiscal 2020 and 2019, Profit of SFS includes interest
+income of €1,238 million and €1,331 million, respec-
+tively and interest expenses of €436 million and €564
+million, respectively.
+Assets
+(in millions of €)
+2020
+Sep 30,
+2019
+Siemens Energy Investment
+6,748
+Assets Siemens Real Estate
+Profit
+3,898
+Free cash flow of the segments constitutes cash flows
+from operating activities less additions to intangible as-
+sets and property, plant and equipment. Except for SFS,
+it excludes financing interest, except for cases where in-
+terest on qualifying assets is capitalized or classified as
+contract costs; it also excludes income tax as well as
+certain other payments and proceeds. Free cash flow of
+SFS includes related financing interest payments and pro-
+ceeds; income tax payments and proceeds of SFS are
+excluded. In individual cases, free cash flow of Mobility
+includes project-specific intercompany financing of long-
+term projects.
+FREE CASH FLOW DEFINITION
+As of September 30, 2020 and 2019, order backlog to-
+taled €70 billion and €69 billion (continuing operations);
+thereof Digital Industries €5 billion and €5 billion, Smart
+Infrastructure €10 billion and €10 billion, Mobility €32
+billion and €33 billion and Siemens Healthineers €18 bil-
+lion and €18 billion. In fiscal 2021, Siemens expects to
+convert approximately €28 billion of the September 30,
+2020 order backlog into revenue; thereof at Digital Indus-
+tries approximately €4 billion, Smart Infrastructure ap-
+proximately €7 billion, Mobility approximately €8 billion
+and Siemens Healthineers approximately €6 billion.
+Orders are determined principally as estimated revenue
+of accepted purchase orders for which enforceable rights
+and obligations exist as well as subsequent order value
+changes and adjustments, excluding letters of intent.
+To determine orders, Siemens considers termination
+rights and customer's creditworthiness.
+2,280
+Centrally carried pension expense - includes the Com-
+pany's pension related income (expense) not allocated to
+the segments, POC or Siemens Real Estate.
+-
+Eliminations, Corporate Treasury and other reconciling
+items comprise consolidation of transactions within
+the segments, certain reconciliation and reclassification
+items as well as central financing activities. It also in-
+cludes interest income and expense, such as, for example,
+interest not allocated to segments or POC (referred to as
+financing interest), interest related to central financing
+activities or resulting consolidation and reconciliation
+effects on interest.
+REVENUE
+Revenue includes revenue from contracts with customers
+and revenue from leasing activities. In fiscal 2020 and
+2019, lease revenue is €916 million and €795 million,
+respectively. In fiscal 2020 and 2019, Digital industries
+recognized €4,144 million and €4,039 million revenue,
+respectively, from its software business, Smart Infrastruc-
+ture recognized €5,224 million and €5,515 million in its
+product business. Revenues of Mobility are mainly de-
+rived from construction-type business.
+Measurement - Segments
+Accounting policies for Segment information are gener-
+ally the same as those used for the Consolidated Finan-
+cial Statements. Segment information is disclosed for
+continuing operations; prior year Assets are reclassified
+to conform to the current year presentation. For internal
+and segment reporting purposes intercompany lease
+transactions, however, are classified as operating leases
+by the lessor and are accounted for off-balance sheet
+by the lessee (except for intercompany leases with
+Siemens Healthineers and Mobility as lessees). Interseg-
+ment transactions are based on market prices.
+PROFIT
+1,780
+Siemens' Managing Board is responsible for assessing the
+performance of the segments (chief operating decision
+maker). The Company's profitability measure of the seg-
+ments except for SFS is earnings before financing inter-
+est, certain pension costs, income taxes and amortiza-
+tion expenses of intangible assets acquired in business
+combinations as determined by the chief operating deci-
+sion maker (Profit). The major categories of items ex-
+cluded from Profit are presented below.
+ANNUAL REPORT 2020 143
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Decisions on essential pension items are made centrally.
+Accordingly, Profit primarily includes amounts related to
+service cost of pension plans only, while all other regularly
+recurring pension related costs are included in reconcilia-
+tions in line item Centrally carried pension expense.
+Amortization expenses of intangible assets acquired in
+business combinations are not part of Profit. Further-
+more, income taxes are excluded from Profit since in-
+come tax is subject to legal structures, which typically do
+not correspond to the structure of the segments. The
+effect of certain litigation and compliance issues is ex-
+cluded from Profit, if such items are not indicative of per-
+formance. This may also be the case for items that refer
+to more than one reportable segment, SRE and (or) POC
+or have a corporate or central character. Costs for support
+functions are primarily allocated to the segments.
+PROFIT OF THE SEGMENT SFS
+In contrast to performance measurement principles ap-
+plied to other segments, interest income and expenses
+are included, since interest is an important source of rev-
+enue and expense of SFS.
+ASSET MEASUREMENT PRINCIPLES
+Management determined Assets (Net capital employed)
+as a measure to assess capital intensity of the segments
+except for SFS. Its definition corresponds to the Profit
+measure except for amortization expenses of intangible
+assets acquired in business combinations which are not
+part of Profit, however, the related intangible assets are
+included in the segments' Assets. Segment Assets is
+based on Total assets of the Consolidated Statements of
+Financial Position, primarily excluding intragroup financ-
+ing receivables, tax related assets and assets of discontin-
+ued operations, since the corresponding positions are
+excluded from Profit. The remaining assets are reduced
+by non-interest-bearing liabilities other than tax related
+liabilities, e.g. trade payables, to derive Assets. In con-
+trast, Assets of SFS is Total assets. In individual cases
+assets of Mobility include project-specific intercompany
+financing of long-term projects. Assets of Siemens
+Healthineers includes real estate, while real estate of all
+other Siemens segments is carried at SRE, except for
+carved-out real estate of Mobility.
+ORDERS
+Financing interest, excluded from Profit, is any interest
+income or expense other than interest income related to
+receivables from customers, from cash allocated to the
+segments and interest expenses on payables to suppliers.
+Financing interest is excluded from Profit because deci-
+sion-making regarding financing is typically made at the
+corporate level.
+575
+544
+1,618
+→ Smart Infrastructure, supplies and intelligently con-
+nects energy systems and building technologies, to
+significantly improve efficiency and sustainability
+while supporting its customers in addressing major
+technology shifts,
+→ Mobility, combines all Siemens businesses in the area
+of passenger and freight transportation, including rail
+vehicles, rail automation systems, rail electrification
+systems, road traffic technology, digital solutions and
+related services,
+→ Siemens Healthineers is a global provider of technol-
+ogy to the healthcare industry. It provides medical
+technology and software solutions as well as clinical
+consulting services, supported by an extensive set of
+training and service offerings,
+→ Siemens Financial Services (SFS) supports its custom-
+ers' investments with leasing solutions and equip-
+ment, project and structured financing in the form of
+debt and equity investments
+Portfolio Companies (POC)
+comprise businesses which include a broad range of
+customized and application-specific products, software,
+solutions, systems and services in different industries
+including oil and gas, marine, mining, cement, water,
+fiber, wind, logistics and energy.
+Reconciliation to
+Consolidated Financial Statements
+Siemens Energy Investment - includes our investment
+in Siemens Energy after the spin-off accounted for using
+the equity method as well as a smaller investment in con-
+nection with Siemens Energy.
+Siemens Real Estate (SRE) - manages the Group's real
+estate business portfolio, operates the properties, and is
+responsible for building projects and the purchase and
+sale of real estate; excluded are the carved-out real estate
+of Mobility and Siemens Healthineers.
+Corporate items - includes corporate costs, such as
+group managing costs, basic research of Corporate Tech-
+nology, Siemens Advanta, as well as corporate services
+and projects. Corporate items also include equity inter-
+ests, activities generally intended for closure as well as
+activities remaining from divestments and discontinued
+operations.
+ANNUAL REPORT 2020 142
+Consolidated Financial Statements
+→ B.6 Notes to Consolidated Financial Statements
+Profit
+Assets
+Fiscal year
+Sep 30,
+Free cash flow
+Fiscal year
+→ Digital Industries, offers a comprehensive product
+portfolio and system solutions for automation used in
+discrete and process industries, complemented by
+product lifecycle and data-driven services,
+Description of reportable segments
+(1,922)
+58,483
+58,483
+Portfolio Companies
+5,258
+5,562
+4,633
+4,749
+760
+706
+5,393
+5,455
+Additions to intangible assets
+and property, plant & equipment
+Fiscal year
+Reconciliation to
+(1,959)
+(1,993)
+458
+369 (2,259)
+(2,292)
+Siemens (continuing operations)
+59,977
+64,682
+57,139
+Consolidated Financial Statements
+Amortization,
+depreciation & impairments
+Fiscal year
+2020
+1,540
+182
+239
+337
+263
+822
+983
+3,424
+3,045
+1,498
+862
+183
+175
+292
+184
+2,184
+2,461
+15,338
+13,889
+1,928
+903
+3,146
+4,907
+1,465
+2019
+2020
+2019
+2020
+2019
+2020
+2019
+2020
+2019
+4,340
+3,252
+10,756
+10,626
+2,854
+2,635
+194
+316
+700
+668
+1,302
+2,880
+(in millions of €)
+Siemens Energy Investment
+2020
+68
+137
+87
+215
+291
+121
+89
+12
+107
+119
+Liabilities
+Sep 30,
+2019
+Receivables
+Sep 30,
+(in millions of €)
+2020
+2019
+2020
+Joint ventures
+Associates
+34
+153
+147
+therein U.S.
+12,981
+12,937
+12,992
+12,817
+13,656
+20,296
+Non-current assets consist of property, plant and equip-
+ment, goodwill and other intangible assets.
+ANNUAL REPORT 2020 145
+76
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Joint ventures and associates
+Siemens has relationships with many joint ventures and
+associates in the ordinary course of business whereby
+Siemens buys and sells a wide variety of products and
+services generally on arm's length terms. The transac-
+tions between continuing operations and joint ventures
+and associates were as follows:
+Purchases of goods
+and services
+and other expenses
+Fiscal year
+2019
+Sales of goods
+and services
+and other income
+Fiscal year
+(in millions of €)
+2020
+2019
+2020
+Joint ventures
+NOTE 31 Related
+party transactions
+228
+49
+197
+In fiscal 2020 and 2019, expense related to share-based
+payment amounted to €17.7 million and €4.7 million,
+respectively, including expenses related to the addi-
+tional cash payment compensation due to the spin-off of
+Siemens Energy.
+Associated with the earlier termination of her duties on
+the Managing Board, Lisa Davis was granted a severance
+payment of €2.4 million, fringe benefits of €0.7 million
+and a special contribution to the BSAV of €0.4 million.
+Associated with the earlier termination of his duties on
+the Managing Board, Michael Sen was granted a cash
+compensation of €2.2 million, a BSAV contribution of
+€0.6 million and a share-based payment of €1.3 million
+for the period until the earlier termination of his employ-
+ment contract. For the remaining period until the regular
+end of his Managing Board appointment he was granted
+a severance payment of €3.5 million and a special contri-
+bution to the BSAV of €0.6 million.
+Former members of the Managing Board and their
+surviving dependents received emoluments within the
+meaning of Section 314 para. 1 No. 6 b of the German
+Commercial Code totaling €16.0 million and €21.1 million
+in fiscal 2020 and 2019, respectively.
+The defined benefit obligation (DBO) of all pension com-
+mitments to former members of the Managing Board and
+their surviving dependents as of September 30, 2020
+and 2019 amounted to €176.5 million and €175.7 million,
+respectively.
+ANNUAL REPORT 2020 147
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Compensation attributable to members of the Super-
+visory Board comprises in fiscal 2020 and 2019 of a base
+compensation and additional compensation for commit-
+tee work and amounted to €5.3 and €5.1 million (includ-
+ing meeting fees), respectively.
+Information regarding the remuneration of the members
+of the Managing Board and Supervisory Board is disclosed
+on an individual basis in the Compensation Report, which
+is part of the Combined Management Report.
+Therefore, in fiscal 2020 and 2019, compensation and
+benefits, attributable to members of the Managing Board
+amounted to €31.0 million and €38.6 million in total,
+respectively.
+In fiscal 2020 and 2019, no other major transactions took
+place between the Company and the members of the
+Managing Board and the Supervisory Board.
+accountant fees and services
+Fees related to professional services rendered by the
+Company's principal accountant, EY, for fiscal 2020 and
+2019 are:
+Fiscal year
+(in millions of €)
+2020
+2019
+Audit services
+58.1
+51.1
+NOTE 32 Principal
+43,442
+In fiscal 2020 and 2019, members of the Managing
+Board - including members who left during fiscal 2020-
+received cash compensation of €15.3 million and €22.0
+million. The fair value of stock-based compensation
+amounted to €11.3 million and €11.1 million for 203,460
+and 254,693 stock awards, respectively, in fiscal 2020 and
+2019. In fiscal 2020 and 2019, the Company granted con-
+tributions under the BSAV to members of the Managing
+Board totaling €4.5 million and €5.6 million, respectively.
+For information regarding the funding of our post-em-
+ployment benefit plans see > NOTE 17.
+Associates
+1,105
+1,181
+271
+44 1,358
+1,407
+223
+420
+In fiscal 2020 and 2019, sales of goods and services and
+other income resulting from transactions between dis-
+continued operations and joint ventures and associates
+amounted to €391 million and €641 million, respectively.
+Purchases of goods and services and other expenses re-
+sulting from transactions between discontinued opera-
+tions and joint ventures and associates amounted to
+€173 million and €245 million, respectively.
+As of September 30, 2020, receivables to associates in-
+cluded reimbursement rights against Siemens Energy
+totaling €658 million. These rights were recognized cor-
+respondingly with obligations from customer contracts in
+connection with Siemens Energy activities legally re-
+maining at Siemens. Liabilities to associates as of Sep-
+tember 30, 2020 were mainly due to trade receivables
+that also result from these activities and that have eco-
+nomically to be allocated to Siemens Energy.
+As of September 30, 2020 and 2019, guarantees to joint
+ventures and associates amounted to €27,505 million
+and €470 million, respectively, thereof €27,253 million
+and €142 million, respectively, to associates. Guarantees
+as of September 30, 2020 included mainly Siemens' obli-
+gations from performance and credit guarantees in con-
+nection with the Siemens Energy business. For these
+guarantees, Siemens has reimbursement rights for the
+full amount.
+Related individuals
+As of September 30, 2020 and 2019, loans given to joint
+ventures and associates amounted to €900 million and
+€679 million, therein €881 million and €662 million re-
+lated to joint ventures, respectively. The related book
+values amounted to €26 million and €481 million,
+therein €20 million and €477 million related to joint ven-
+tures, respectively. Valuation adjustments recognized in
+fiscal 2020 and 2019 reduced book values of loans re-
+lated to joint ventures by €744 million and €100 million,
+respectively.
+As of September 30, 2020 and 2019, there were loan
+commitments to joint ventures amounting to €299 mil-
+lion and €361 million, respectively.
+From the effective date of the spin-off, Siemens Energy
+is reported as an associate of Siemens. There are various
+relationships between Siemens and Siemens Energy
+in the ordinary course of business, such as purchases
+or sales of goods and services, leases, transfers under
+license agreements and cooperation in research and
+development.
+ANNUAL REPORT 2020
+146
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Furthermore, Siemens Energy will continue to receive ser-
+vices from Siemens, particularly in the areas of informa-
+tion technology, human resources, communications, se-
+curity and procurement as well as from Siemens Advanta,
+Global Business Services and Corporate Technology.
+Additionally, Siemens and Siemens Energy concluded
+a non-exclusive Preferred Financing Agreement with
+a term until September 30, 2030 governing the coopera-
+tion in the areas of debt financing, commercial financing
+and equity financing of customers of the Siemens Energy
+business and their projects. Debt financing comprises the
+provision of debt capital via standard market debt financ-
+ing structures. An investment volume of up to €300 mil-
+lion per fiscal year has been committed by Siemens for
+the first five years. For a further five years, it was agreed
+to reinvest any sales revenue from the equity portfolio,
+but at least €500 million. Moreover, equity financing can
+also be provided up to a total volume of €210 million
+upon full recourse to Siemens Energy. Furthermore,
+a Preferred Financing Agreement with Siemens Gamesa
+Renewable Energy existed with a financing commitment
+of up to €200 million per fiscal year for a period of five
+years until September 30, 2025.
+Pension entities
+In fiscal 2020, funding of post-employment benefit
+plans included the transfer of 9.9% interest in Siemens
+Energy AG.
+As of September 30, 2020 and 2019, the Company had
+commitments to make capital contributions to joint ven-
+tures and associates of €62 million and €145 million,
+therein €51 million and €127 million related to joint ven-
+tures, respectively.
+832
+28,543
+45,119
+Eliminations, Corporate Treasury,
+other items
+(34,607)
+7,294
+Amortization of intangible assets
+acquired in business combinations
+(691)
+(634)
+Reconciliation to
+Consolidated Financial Statements
+59,548
+85,498
+Eliminations, Corporate Treasury
+and other reconciling items
+(236) (310)
+Reconciliation to
+Consolidated Financial Statements
+(1,730)
+(1,491)
+NOTE 30 Information
+about geographies
+Revenue by location
+(210)
+(211)
+Centrally carried pension expense
+26,284
+Fiscal year
+2019
+Assets Corporate items and pensions
+(612)
+230
+Asset-based adjustments:
+(24)
+Intragroup financing receivables
+51,509
+45,493
+of customers
+Siemens Real Estate
+135
+Tax-related assets
+4,383
+3,052
+Corporate items
+(892)
+(472)
+Liability-based adjustments
+28,228
+325
+(in millions of €)
+2020
+Fiscal year
+2019
+12,505
+3,504
+5,284
+Siemens
+57,139
+58,483
+57,139
+58,483
+35,537
+12,420
+52,143
+9,726
+9,882
+12,020
+12,390
+6,995
+8,701
+thereof countries outside of Germany
+47,413
+48,601
+thereof Germany
+46,093
+14,065
+Asia, Australia
+2020
+Revenue by location
+of companies
+Fiscal year
+2019
+Non-current
+assets
+Sep 30,
+2020
+2019
+Europe, C.I.S., Africa, Middle East
+28,062
+28,821
+13,613
+29,566
+17,624
+25,065
+Americas
+15,464
+15,597
+15,154
+15,243
+14,410
+21,795
+30,735
+716
+(1,801)
+57,139
+Non-vested, beginning of period
+Granted
+363
+383
+NOTE 28 Earnings per share
+(shares in thousands; earnings per share in €)
+Income from continuing operations
+Less: Portion attributable
+to non-controlling interest
+Fiscal year
+2020
+2019
+4,290
+5,158
+311
+362
+Income from continuing operations
+attributable to shareholders of Siemens AG
+3,979
+293
+294
+37
+35
+and services
+167
+163
+219
+232
+Sales and marketing
+Research and development
+Administration and general services
+55
+NOTE 27 Personnel costs
+57
+69
+41
+40
+44
+45
+31
+33
+64
+Manufacturing
+Less: Dilutive effect from share based payment
+3
+817,364
+818,309
+expenses for optional
+support
+Basic earnings per share
+3,010
+3,183 3,970
+3,984
+(from continuing operations)
+4.93
+5.94
+Expenses relating
+Diluted earnings per share
+to post-employment
+(from continuing operations)
+4.86
+Weighted average shares outstanding - diluted
+contributions and
+Statutory social welfare
+10,657
+380
+Continuing and
+Continuing
+operations
+(in millions of €)
+2020
+Fiscal year
+2019
+2020
+discontinued
+operations
+Fiscal year
+2019
+resulting from Siemens Healthineers
+Income from continuing operations
+attributable to shareholders of Siemens AG
+to determine dilutive earnings per share
+Weighted average shares outstanding - basic
+806,335 807,273
+Effect of dilutive share-based payment
+11,029
+Wages and salaries
+20,132
+20,585 26,660 25,975
+Effect of dilutive warrants
+3,976
+(in thousands)
+For their 25th and 40th service anniversary eligible em-
+ployees receive jubilee shares. There were 3.29 million
+and 4.23 million entitlements to jubilee shares outstand-
+ing as of September 30, 2020 and 2019, respectively. In
+fiscal 2020, the obligation to provide 0.88 million jubilee
+shares was transferred to Siemens Energy in connection
+with the spin-off.
+Jubilee Share Program
+COMMITMENTS TO MEMBERS OF THE SENIOR
+MANAGEMENT AND OTHER ELIGIBLE EMPLOYEES
+In fiscal 2020, 2,688,334 equity settled stock awards were
+granted relating to the TSR-target with a fair value of
+€132 million; 672,197 equity settled stock awards were
+granted relating to the ESG-target with a fair value of
+€66 million. In fiscal 2019, 3,751,556 stock awards were
+granted with a fair value of equity-settled stock awards of
+€168 million contingent upon attaining the prospective
+performance-based target of Siemens stock relative to
+five competitors.
+ANNUAL REPORT 2020 139
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Fair value of stock awards granted in fiscal 2020 (TSR-
+related) and 2019 were calculated applying a valuation
+model. In fiscal 2020 and 2019, inputs to that model in-
+clude an expected weighted volatility of Siemens shares
+of 21.58% and 21.73%, respectively, and a market price of
+€116.02 and €98.92 per Siemens share. Expected volatil-
+ity was determined by reference to historic volatilities.
+The model applies a risk-free interest rate of up to (0.26)%
+in fiscal 2020 and up to 0.16 in fiscal 2019 and an ex-
+pected dividend yield of 3.31% and 3.84% in fiscal 2020
+and 2019, respectively. Assumptions relating to correla-
+tions between the Siemens share price and a) the devel-
+opment of the MSCI Index in fiscal 2020 respectively
+b) the share prices of the competitor basket in fiscal 2019
+were derived from historic observations of share price
+and index changes. In fiscal 2020, fair value of the ESG
+component of €98.02 per share was determined as the
+market price of Siemens shares less the present value of
+expected dividends during the vesting period.
+Changes in the stock awards held by members of the
+senior management and other eligible employees are:
+Vested and fulfilled
+Adjustments due to vesting conditions
+other than market conditions
+Forfeited
+Modified
+Settled (thereof 2,293,915 in
+connection with the Siemens Energy spin-off
+in fiscal 2020)
+Non-vested, end of period
+2020
+Fiscal year
+2019
+Most of the Managing Board's stock awards are based on
+criteria described above. Fair values are €12 million and
+€11 million, respectively, in fiscal 2020 and 2019, calcu-
+lated by applying a valuation model. In fiscal 2020 and
+2019, inputs to that model include, for the majority of the
+stock awards granted, an expected weighted volatility of
+Siemens shares of 21.58% and 21.72%, respectively, and
+a market price of €116.80 and €102.42 per Siemens share.
+Expected volatility was determined by reference to his-
+toric volatilities. The model applies a risk-free interest
+rate of up to (0.24)% and 0.14% in fiscal 2020 and 2019,
+respectively, and an expected dividend yield of 3.31% in
+fiscal 2020 and 3.71% in fiscal 2019. Assumptions relating
+to correlations between the Siemens share price and a)
+the development of the MSCI index in fiscal 2020, respec-
+tively b) the shares prices of the competitors basket in
+fiscal 2019 were derived from historic observations of
+share price and index changes.
+COMMITMENTS TO MEMBERS
+OF THE MANAGING BOARD
+Siemens internal sustainability target considering envi-
+ronmental, social and governance targets (ESG-Target).
+The annual target amount for stock awards up to and in-
+cluding tranche 2019 is linked to the share price perfor-
+mance of Siemens relative to the share price perfor-
+mance of five important competitors during the four-year
+restriction period. The target attainment for each individ-
+ual performance criteria ranges between 0% and 200%.
+For awards granted since fiscal 2019 settlement is in
+shares only corresponding to the actual target attain-
+ment. Awards granted prior to fiscal 2019, target out-
+performances in excess of 100% are settled in cash. The
+vesting period is four years.
+Stock awards are tied to performance criteria. For stock
+awards granted in fiscal 2020, 80% of the target amount
+is linked to the relative total shareholder return of Siemens
+compared to the total shareholder return of the MSCI
+World Industrials sector index (TSR-Target) during a four-
+year restriction period; the remaining 20% are linked to a
+Other attestation services
+Tax services
+10.4
+6.1
+0.1
+0.1
+68.6
+57.3
+8,742,219 6,641,400
+3,360,531 3,751,556
+(1,733,082) (603,572)
+In fiscal 2020 and 2019, 44% and 35%, respectively, of the
+total fees related to Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft, Germany.
+ANNUAL REPORT 2020 148
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+NOTE 26 Share-based payment
+Share-based payment awards may be settled in newly
+issued shares of capital stock of Siemens AG, in treasury
+shares or in cash. Share-based payment awards may
+forfeit if the employment of the beneficiary terminates
+prior to the expiration of the vesting period. In fiscal 2020
+and 2019, expense from equity-settled awards on a con-
+tinuing basis are €298 million and €250 million; cash-
+settled awards on a continuing basis resulted in gains
+(expenses) of €(26) million in fiscal 2020 and €24 million
+in fiscal 2019.
+In connection with the Siemens Energy spin-off, share-
+based payment arrangements were altered in fiscal 2020.
+To address an expected dilution from the spin off, bene-
+ficiaries remaining with Siemens receive at the date of
+transfer, in addition to Siemens shares, a compensating
+cash payment based on the spin-off ratio 2:1 and based
+on the Siemens Energy share price at vesting. Due to the
+modifications of the underlying stock awards and match-
+ing shares, €55 million were reclassified from equity to
+liabilities as of July 9, 2020, and thereby recognized as
+cash-settled share-based payment plan, taking into ac-
+count the proportionate vesting period passed. In con-
+nection with the spin-off, beneficiaries leaving Siemens
+and joining Siemens Energy no longer participate in
+the stock award and share matching programs. Related
+Siemens obligations were settled, the beneficiaries
+received a compensating cash payment from Siemens
+Energy following the spin-off.
+Stock Awards
+The Company grants stock awards to members of the
+Managing Board, members of the senior management
+and other eligible employees. Stock awards are subject to
+a restriction period of about four years and entitle the
+beneficiary to Siemens shares following the restriction
+period without payment of consideration.
+Audit Services relate primarily to services provided by EY
+for auditing Siemens' Consolidated Financial Statements,
+for auditing financial statements of Siemens AG and its
+subsidiaries, for reviews of interim financial statements
+being integrated into the audit, for project-accompany-
+ing IT audits as well as for audit services in connection
+with the implementation of new accounting standards.
+Other Attestation Services include primarily audits of fi-
+nancial statements as well as other attestation services in
+connection with M&A activities, audits of employee ben-
+efit plans, attestation services related to the sustainabil-
+ity reporting, comfort letters and other attestation
+services required under regulatory requirements, con-
+tractually agreed or requested on a voluntary basis.
+(351,339)
+(412,903) (386,041)
+(643,619)
+(2,303,850)
+7,301,576
+Forfeited
+1,692,909
+874,793
+943,399
+(569,405) (702,125)
+(122,659) (105,092)
+Settled (thereof 420,174 in
+connection with the Siemens
+Energy spin-off in fiscal 2020)
+Outstanding, end of period
+(459,596)
+1,509,046
+(43,178)
+1,785,913
+Employees were engaged in (averages; based on head-
+count):
+Continuing
+operations
+Vested and fulfilled
+Continuing and
+discontinued
+Fiscal year
+Fiscal year
+2020
+2019
+2020
+2019
+The weighted average fair value of matching shares
+granted in fiscal 2020 and 2019 of €89.71 and €76.76 per
+share, respectively, was determined as the market price
+of Siemens shares less the present value of expected div-
+idends taking into account non-vesting conditions.
+operations
+5.86
+Granted
+Outstanding, beginning of period
+(17,505)
+8,742,219
+Share Matching Program
+and its underlying plans
+In fiscal 2020, Siemens issued a new tranche under each
+of the plans of the Share Matching Program.
+SHARE MATCHING PLAN
+Under the Share Matching Plan, senior managers may
+invest a specified part of their variable compensation in
+Siemens shares (investment shares). The shares are pur-
+chased at the market price at a predetermined date in
+the second quarter. Plan participants receive the right to
+one Siemens share without payment of consideration
+(matching share) for every three investment shares con-
+tinuously held over a period of about three years (vest-
+ing period) provided the plan participant has been con-
+tinuously employed by Siemens until the end of the
+vesting period.
+MONTHLY INVESTMENT PLAN
+Under the Monthly Investment Plan employees other
+than senior managers may invest a specified part of their
+compensation in Siemens shares on a monthly basis over
+a period of twelve months. Shares are purchased at mar-
+ket price at a predetermined date once a month. If the
+Managing Board decides that shares acquired under the
+Monthly Investment Plan are transferred to the Share
+Matching Plan, plan participants will receive the right to
+matching shares under the same conditions applying to
+the Share Matching Plan described above with a vesting
+period of about two years. The Managing Board decided
+that shares acquired under the tranches issued in fiscal
+2019 and 2018 are transferred to the Share Matching Plan
+as of February 2020 and February 2019, respectively.
+1,785,913
+ANNUAL REPORT 2020 140
+Under the Base Share Program employees of Siemens AG
+and participating domestic Siemens companies may
+invest a fixed amount of their compensation in Siemens
+shares, sponsored by Siemens. The shares are bought at
+market price at a predetermined date in the second quar-
+ter and grant the right to receive matching shares under
+the same conditions applying to the Share Matching Plan
+described above. The fair value of the Base Share Pro-
+gram amounted to €33 million and €33 million in fiscal
+2020 and 2019, respectively.
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+RESULTING MATCHING SHARES
+Fiscal year
+2019
+In fiscal 2020 and 2019, severance charges for continuing
+operations amount to €591 million and €340 million, re-
+spectively, thereof at Digital Industries €210 million and
+€92 million and at Smart Infrastructure €195 million and
+€46 million.
+2020
+BASE SHARE PROGRAM
+benefits
+4,796
+992 1,348 1,263
+24,760 31,978 31,222
+111
+14,412
+14,349
+15,853
+16,163
+Siemens Healthineers
+8,916
+9,052
+45
+40
+8,870
+9,012
+12,894
+9,169
+Mobility
+105
+14,597
+14,517
+55,963
+1,031
+24,173
+55
+48
+777
+667
+832
+716
+Siemens Financial Services
+54,118
+52,832
+1,531
+1,450
+52,587
+51,381
+60,281
+Industrial Businesses
+14,323
+14,460
+581
+2019
+2020
+2019
+2020
+Fiscal year
+Fiscal year
+Fiscal year
+2020
+Fiscal year
+Intersegment Revenue
+External revenue
+Orders
+NOTE 29 Segment information
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+612
+ANNUAL REPORT 2020 141
+Total revenue
+2019
+(in millions of €)
+2020
+13,986
+15,590
+14,734
+Smart Infrastructure
+16,087
+14,997
+769
+718
+13,742
+14,279
+15,944
+15,896
+Digital Industries
+2019
+15,319
+100 10
+Siemens Private Finance
+10010
+in %
+Equity interest
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+September 30, 2020
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+Versicherungsvermittlungsgesellschaft mbH, Munich
+or legal circumstances.
+10010
+Siemens Real Estate GmbH & Co. KG, Kemnath
+Siemens Real Estate Management GmbH, Kemnath
+10010
+1007
+Equity interest
+in %
+100
+100
+Siemens Healthcare GmbH, Munich
+100
+Siemens Healthcare Diagnostics Products GmbH,
+Marburg
+100
+Siemens Real Estate Consulting Management GmbH,
+Grünwald
+1007
+Siemens Global Innovation Partners Management
+GmbH, Munich
+1009
+Siemens Real Estate Consulting GmbH & Co. KG,
+Munich
+10010
+Siemens Fonds Invest GmbH, Munich
+10010
+Siemens Project Ventures GmbH, Erlangen
+Siemens Financial Services GmbH, Munich
+Siemens Digital Logistics GmbH, Frankenthal
+Siemens Finance & Leasing GmbH, Munich
+KACO new energy GmbH, Neckarsulm
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Siemens Campus Erlangen Objektmanagement
+GmbH, Grünwald
+1007
+Kyros 54 GmbH, Munich
+1007
+Kyros 51 Aktiengesellschaft, Munich
+1009
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG,
+Grünwald
+10010
+KompTime GmbH, Munich
+1009
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG,
+Grünwald
+100
+Siemens Healthineers AG, Munich
+100
+1009
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG,
+Grünwald
+IPGD Grundstücksverwaltungs-Gesellschaft mbH,
+Grünwald
+100
+September 30, 2020
+Kyros 58 GmbH, Munich
+Kyros 62 GmbH, Munich
+150
+ANNUAL REPORT 2020
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+1 Control due to a majority of voting rights.
+1007
+Siemens Campus Erlangen Verwaltungs-GmbH,
+Grünwald
+1007
+1007
+79
+Siemens Mobility GmbH, Munich
+100
+100
+Siemens Industriepark Karlsruhe GmbH & Co. KG,
+Grünwald
+Siemens-Fonds Pension Captive, Munich
+100
+1009
+Siemens-Fonds S-7, Munich
+100
+Siemens Industry Software GmbH, Cologne
+100
+Siemens-Fonds S-8, Munich
+100
+Siemens Liquidity One, Munich
+100
+Siemens Logistics GmbH, Constance
+100 10
+Siemensstadt Grundstücks-GmbH & Co. KG,
+Grünwald
+1009
+1007
+Siemens Medical Solutions Health Services GmbH,
+Grünwald
+Siemens Immobilien Management GmbH, Grünwald
+Siemens Treasury GmbH, Munich
+85
+Siemens Healthineers Holding I GmbH, Röttenbach
+100
+Siemens Technopark Nürnberg GmbH & Co. KG,
+Grünwald
+1009
+Siemens Healthineers Innovation GmbH & Co. KG,
+Röttenbach
+100
+Siemens Traction Gears GmbH, Penig
+10010
+Siemens Healthineers Innovation Verwaltungs-
+GmbH, Röttenbach
+Siemens Trademark GmbH & Co. KG, Kemnath
+1009
+1007
+Siemens Trademark Management GmbH, Kemnath
+1007
+Siemens Immobilien GmbH & Co. KG, Grünwald
+100⁹
+10010
+Siemens Spezial-Investmentaktiengesellschaft
+mit TGV, Munich
+Siemensstadt Management GmbH, Grünwald
+100
+SYKATEC Systeme, Komponenten,
+Anwendungstechnologie GmbH, Erlangen
+10010
+1009
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+100
+Siemens OfficeCenter Verwaltungs GmbH, Grünwald
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+1007
+Siemens Technopark Mülheim GmbH & Co. KG i.L.,
+Grünwald
+Verwaltungs-GmbH, Röttenbach
+Siemens Healthineers Beteiligungen
+10010
+Siemens Technology Accelerator GmbH, Munich
+100
+Siemens Healthineers Beteiligungen GmbH & Co. KG,
+Röttenbach
+Siemens OfficeCenter Frankfurt GmbH & Co. KG,
+Grünwald
+1007
+100
+100 10
+Siemens Middle East Holding GmbH & Co. KG,
+Grünwald
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH,
+Munich
+100
+1007
+10010
+Siemens Mobility Real Estate GmbH & Co. KG,
+Grünwald
+1009
+Siemens Mobility Real Estate Management GmbH,
+Grünwald
+SIMAR Nordost Grundstücks-GmbH, Grünwald
+SIMAR Nordwest Grundstücks-GmbH, Grünwald
+SIMAR Ost Grundstücks-GmbH, Grünwald
+SIMAR Süd Grundstücks-GmbH, Grünwald
+100 10
+10010
+10010
+10010
+1009
+1007
+Siemens Nixdorf Informationssysteme GmbH,
+Grünwald
+SIMAR West Grundstücks-GmbH, Grünwald
+SIMOS Real Estate GmbH, Munich
+10010
+100⁹
+5 No significant influence due to contractual arrangements
+ILLIT Grundstücksverwaltungs-Management GmbH,
+Grünwald
+ECG Acquisition, Inc., Wilmington, DE/United States
+100
+Siemens Corporation, Wilmington, DE/United States
+100
+ECG TopCo Holdings, LLC, Wilmington,
+Siemens Credit Warehouse, Inc., Wilmington,
+DE/United States
+75
+100
+DE/United States
+eMeter Corporation, Wilmington, DE/United States
+100
+Siemens Electrical, LLC, Wilmington,
+Enlighted, Inc., Wilmington, DE/United States
+100
+DE/United States
+100
+Executive Consulting Group, LLC, Wilmington,
+DE/United States
+100
+100
+DE/United States
+DE/United States
+NOTE 33 Corporate governance
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+or legal circumstances.
+ANNUAL REPORT 151
+ANNUAL REPORT 2020 158
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+80
+9 Exemption pursuant to Section 264 b German Commercial Code.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+Corindus, Inc., Wilmington, DE/United States
+100
+DE/United States
+100
+Dedicated21maging LLC, Wilmington,
+Siemens Capital Company LLC, Wilmington,
+8 Not accounted for using the equity method due to immateriality.
+The Managing and Supervisory Boards of Siemens
+Aktiengesellschaft and of Siemens Healthineers AG, a
+publicly listed subsidiary of Siemens, provided as of
+October 1, 2020, and September 30, 2020, respectively,
+the declarations required under Section 161 of the Ger-
+man Stock Corporation Act (AktG) and made them pub-
+licly available on their company websites at ☐ www.
+SIEMENS.COM/GCG-CODE and at ☐ www.CORPORATE.SIEMENS-
+HEALTHINEERS.COM/INVESTOR-RELATIONS/CORPORATE-GOVERNANCE,
+Siemens Financial Services, Inc., Wilmington,
+DE/United States
+Falcon Sub Inc., Wilmington, DE/United States
+Flender Corporation, Wilmington, DE/United States
+100
+DE/United States
+100
+Next47 Fund 2018, L.P., Palo Alto, CA/United States
+Next47 Fund 2019, L.P., Palo Alto, CA/United States
+Next47 Fund 2020, L.P., Palo Alto, CA/United States
+Next47 Fund 2021, L.P., Palo Alto, CA/United States
+100
+Siemens Industry, Inc., Wilmington,
+100
+DE/United States
+Siemens Industry Software Inc., Wilmington,
+100
+100
+Siemens Logistics LLC, Wilmington, DE/United States
+Siemens Medical Solutions USA, Inc., Wilmington,
+DE/United States
+100
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+100
+100
+Mentor Graphics Global Holdings, LLC, Wilmington,
+DE/United States
+Siemens Healthcare Laboratory, LLC, Wilmington,
+DE/United States
+1007
+Siemens Financial, Inc., Wilmington,
+DE/United States
+100
+100
+Siemens Government Technologies, Inc.,
+J2 Innovations, Inc., Los Angeles, CA/United States
+100
+100
+Wilmington, DE/United States
+Mannesmann Corporation, New York,
+NY/United States
+100
+Siemens Healthcare Diagnostics Inc., Los Angeles,
+CA/United States
+100
+Mentor Graphics Corporation, Salem,
+OR/United States
+100
+100
+respectively.
+NOTE 34 Subsequent events.
+In October 2020, Siemens signed an agreement to sell
+100% of its shares in Flender GmbH, including Siemens'
+Wind Energy Generation business (Flender), both cur-
+rently reported under Portfolio Companies. The purchase
+price is €2 billion (enterprise value). The transaction is
+subject to foreign-investment and antitrust approvals
+and is expected to close in the first half of calendar year
+2021. Flender will be presented as held for disposal and
+discontinued operations starting in the first quarter of
+fiscal 2021.
+eos.uptrade GmbH, Hamburg
+100
+10010
+Siemens Beteiligungen USA GmbH, Berlin
+Dade Behring Grundstücks GmbH, Kemnath
+100
+1007
+Siemens Beteiligungen Management GmbH,
+Kemnath
+10010
+Capta Grundstücks-Verwaltungsgesellschaft mbH,
+Grünwald
+10010
+Siemens Beteiligungen Inland GmbH, Munich
+Berliner Vermögensverwaltung GmbH, Berlin
+85
+10010
+Siemens Beteiligungen Europa GmbH, Munich
+Befund24 GmbH, Erlangen
+100
+10010
+100
+Siemens Beteiligungsverwaltung GmbH & Co. OHG,
+Kemnath
+evosoft GmbH, Nuremberg
+10010
+HaCon Ingenieurgesellschaft mbH, Hanover
+100⁹
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG,
+Grünwald
+100
+Flender Industriegetriebe GmbH, Penig
+100
+Flender GmbH, Bocholt
+1009,12
+100⁹
+1007
+Flender Beteiligungen Management GmbH, Munich
+1009
+GmbH & Co. KG, Grünwald
+100
+Flender Beteiligungen GmbH & Co. KG, Munich
+Siemens Campus Erlangen Grundstücks-
+10010
+Siemens Campus Erlangen Objekt 2 GmbH & Co. KG,
+Grünwald
+100
+10010
+REMECH Systemtechnik GmbH, Unterwellenborn
+RISICOM Rückversicherung AG, Grünwald
+Siemens Bank GmbH, Munich
+10010
+Next47 GmbH, Munich
+100
+100
+10010
+Lincas Electro Vertriebsgesellschaft mbH, Grünwald
+Mentor Graphics (Deutschland) GmbH, Munich
+NEO New Oncology GmbH, Cologne
+Equity interest
+in %
+September 30, 2020
+Next47 Services GmbH, Munich
+1007
+in %
+Equity interest
+Kyros 65 GmbH, Munich
+Kyros 66 GmbH, Munich
+September 30, 2020
+NOTE 35 List of subsidiaries and
+associated companies pursuant
+to Section 313 para. 2 of the
+German Commercial Code
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 2020 149
+In November 2020, to fund its pension plan, Siemens
+transferred its stake in Bentley Systems, Inc., measured at
+FVTPL, to the Siemens Pension-Trust e. V. The contribu-
+tion amounts to €1,146 million.
+1007
+10010
+SUBSIDIARIES
+Omnetric GmbH, Munich
+Atecs Mannesmann GmbH, Erlangen
+10010
+Alpha Verteilertechnik GmbH, Cham
+100
+AIT Verwaltungs-GmbH, Stuttgart
+1009
+100
+R&S Restaurant Services GmbH, Munich
+GmbH & Co. KG, Stuttgart
+AIT Applied Information Technologies
+10010
+Projektbau-Arena-Berlin GmbH, Grünwald
+100 10
+Hallbergmoos
+1009
+OPTIO Grundstücks-Vermietungsgesellschaft
+mbH & Co. Objekt Tübingen KG, Grünwald
+Airport Munich Logistics and Services GmbH,
+Germany (112 companies)
+100
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG,
+Grünwald
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Siemens-Fonds C-1, Munich
+Equity interest
+in %
+100
+LIGHTWORKS SOFTWARE LIMITED, Frimley,
+100
+Surrey/United Kingdom
+100
+Materials Solutions Holdings Limited, Frimley,
+100
+Surrey/United Kingdom
+100
+Siemens Mobility Ulasim Sistemleri Anonim Sirketi,
+Mendix Technology Limited, Frimley,
+Istanbul/Turkey
+100
+Surrey/United Kingdom
+100
+Siemens Sanayi ve Ticaret Anonim Sirketi,
+Mentor Graphics (UK) Limited, Frimley,
+Istanbul/Turkey
+100
+Surrey/United Kingdom
+100
+100% foreign owned subsidiary "Siemens Ukraine”,
+Kiev/Ukraine
+MRX Technologies Limited, Frimley,
+100
+Surrey/United Kingdom
+KACO New Enerji Limited Sirketi, Pendik/Turkey
+Siemens Finansal Kiralama A.S., Istanbul/Turkey
+Siemens Healthcare Saglik Anonim Sirketi,
+Istanbul/Turkey
+100
+Surrey/United Kingdom
+100
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 155
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+September 30, 2020
+Mentor Graphics Tunisia SARL, Tunis/Tunisia
+Equity interest
+in %
+Equity interest
+September 30, 2020
+100
+in %
+Flomerics Group Limited, Frimley,
+Surrey/United Kingdom
+100
+Siemens Mobility S.A.R.L., Tunis/Tunisia
+100
+GYM Renewables Limited, Frimley,
+Siemens S.A., Tunis/Tunisia
+100
+Surrey/United Kingdom
+100
+Flender Mekanik Güc Aktarma Sistemleri Sanayi
+ve Ticaret Anonim Sirketi, Istanbul/Turkey
+Lightwork Design Limited, Frimley,
+100
+7 Not consolidated due to immateriality.
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY,
+Kiev/Ukraine
+100
+Dubai/United Arab Emirates
+492
+Siemens Financial Services Ltd., Stoke Poges,
+Buckinghamshire/United Kingdom
+100
+Siemens Industrial LLC,
+Masdar City/United Arab Emirates
+492
+Siemens Healthcare Diagnostics Ltd., Frimley,
+Surrey/United Kingdom
+100
+Siemens Middle East Limited,
+Masdar City/United Arab Emirates
+100
+Siemens Healthcare Diagnostics Manufacturing Ltd,
+Frimley, Surrey/United Kingdom
+100
+SIEMENS MOBILITY LLC, Dubai/United Arab Emirates
+492
+Siemens Healthcare Diagnostics Products Ltd,
+AIMSUN LIMITED, London/United Kingdom
+100
+Frimley, Surrey/United Kingdom
+100
+ByteToken, Ltd, Edinburgh/United Kingdom
+100
+100
+Stoke Poges, Buckinghamshire/United Kingdom
+Siemens Financial Services Holdings Ltd.,
+100
+Surrey/United Kingdom
+100
+PSE Software and Consulting L.L.C.,
+Process Systems Enterprise Limited, Frimley,
+Abu Dhabi/United Arab Emirates
+492
+Surrey/United Kingdom
+100
+Samateq FZ LLC, UAE,
+Project Ventures Rail Investments I Limited, Frimley,
+Abu Dhabi/United Arab Emirates
+100
+Preactor International Limited, Frimley,
+Surrey/United Kingdom
+SD (Middle East) LLC, Dubai/United Arab Emirates
+492
+PSE Oil & Gas Limited, Frimley,
+Surrey/United Kingdom
+100
+Siemens Capital Middle East Ltd,
+Abu Dhabi/United Arab Emirates
+100
+SBS Pension Funding (Scotland) Limited Partnership,
+Edinburgh/United Kingdom
+573
+Siemens Healthcare FZ LLC,
+Dubai/United Arab Emirates
+Siemens Healthcare L.L.C.,
+100
+Siemens Healthcare Limited, Frimley,
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+5 No significant influence due to contractual arrangements
+100
+SAT Systémy automatizacnej techniky spol. s.r.o.,
+Bratislava/Slovakia
+Siemens Logistics S. L. Unipersonal, Madrid/Spain
+SIEMENS MOBILITY, S.L.U., Tres Cantos/Spain
+100
+100
+60
+Siemens Rail Automation S.A.U., Tres Cantos/Spain
+100
+Siemens Healthcare s.r.o., Bratislava/Slovakia
+100
+Siemens Renting S.A., Madrid/Spain
+100
+Siemens Mobility, s.r.o., Bratislava/Slovakia
+100
+Siemens S.A., Madrid/Spain
+100
+Siemens s.r.o., Bratislava/Slovakia
+100
+SIPRIN s.r.o., Bratislava/Slovakia
+100
+Telecomunicación, Electrónica y Conmutación S.A.,
+Madrid/Spain
+100
+Siemens d.o.o., Ljubljana/Slovenia
+100
+Mentor Graphics (Scandinavia) AB, Solna/Sweden
+Bratislava/Slovakia
+OEZ Slovakia, spol. s r.o.,
+100
+Siemens Industry Software S.L., Barcelona/Spain
+Aimsun S.L., Barcelona/Spain
+03
+100
+Siemens Healthcare Limited, Riyadh/Saudi Arabia
+51
+Fábrica Electrotécnica Josa, S.A.U.,
+Siemens Ltd., Riyadh/Saudi Arabia
+51
+Tres Cantos/Spain
+100
+Siemens Mobility Saudi Ltd, Al Khobar/Saudi Arabia
+51
+100
+FLENDER IBERICA SL, Tres Cantos/Spain
+Flender d.o.o. Subotica, Subotica/Serbia
+1007
+Siemens d.o.o. Beograd, Belgrade/Serbia
+100
+Siemens Healthcare d.o.o. Beograd, Belgrade/Serbia
+100
+Mentor Graphics (España) SL, Madrid/Spain
+SIEMENS HEALTHCARE, S.L.U., Getafe/Spain
+Siemens Holding S.L., Madrid/Spain
+100
+100
+100
+Siemens Mobility d.o.o. Cerovac, Kragujevac/Serbia
+100
+100
+or legal circumstances.
+Siemens Healthcare d.o.o., Ljubljana/Slovenia
+Siemens AB, Solna/Sweden
+100
+Johannesburg/South Africa
+03
+Siemens Industry Software GmbH,
+Siemens Employee Share Ownership Trust,
+Zurich/Switzerland
+100
+Johannesburg/South Africa
+03
+Siemens Logistics AG, Zurich/Switzerland
+100
+Siemens Healthcare Employee Share Ownership
+Trust, Midrand/South Africa
+03
+Siemens Mobility AG, Wallisellen/Switzerland
+100
+Siemens Healthcare Proprietary Limited, Halfway
+House/South Africa
+Siemens Schweiz AG, Zurich/Switzerland
+100
+75
+Siemens Tanzania Ltd. i.L., Dar es Salaam/Tanzania,
+United Republic of
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+Siemens Healthcare AG, Zurich/Switzerland
+S'Mobility Employee Stock Ownership Trust,
+100
+Mentor Graphics (Schweiz) AG, Zurich/Switzerland
+100
+Siemens Mobility d.o.o., Ljubljana/Slovenia
+100
+Siemens Financial Services AB, Solna/Sweden
+100
+Crabtree South Africa Pty. Limited,
+September 30, 2020
+100
+Midrand/South Africa
+100
+Siemens Industry Software AB, Solna/Sweden
+100
+100
+Flender (Pty) Ltd, Johannesburg/South Africa
+Siemens Mobility AB, Solna/Sweden
+100
+KACO NEW ENERGY AFRICA (PTY) LTD,
+Vizendo AB, Gothenburg/Sweden
+100
+Midrand/South Africa
+100
+Linacre Investments (Pty) Ltd.,
+BlueWatt engineering Sàrl, Lausanne/Switzerland
+100
+Kenilworth/South Africa
+03
+100
+51
+Electrium Sales Limited, Frimley,
+100
+100
+Siemens Industry Software, S.A. de C.V.,
+Mexico City/Mexico
+100
+Siemens Participações Ltda., São Paulo/Brazil
+100
+Siemens Inmobiliaria S.A. de C.V.,
+Bytemark Canada Inc., Saint John/Canada
+100
+Mexico City/Mexico
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 157
+Siemens Mobility Soluções de Mobilidade Ltda.,
+São Paulo/Brazil
+100
+Mexico City/Mexico
+Siemens Healthcare Servicios S. de R.L. de C.V.,
+100
+Siemens Mobility S.A., Munro/Argentina
+100
+Siemens S.A., Antiguo Cuscatlán/El Salvador
+100
+Iriel Indústria e Comercio de Sistemas Eléctricos
+Siemens S.A., Guatemala/Guatemala
+100
+Ltda., Canoas/Brazil
+100
+Grupo Siemens S.A. de C.V., Mexico City/Mexico
+100
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Siemens Healthcare Diagnósticos Ltda.,
+100
+Indústria de Trabajos Eléctricos S.A. de C.V.,
+Ciudad Juárez/Mexico
+100
+Siemens Industry Software Ltda.,
+São Caetano do Sul/Brazil
+100
+Siemens Healthcare Diagnostics, S. de R.L. de C.V.,
+Mexico City/Mexico
+100
+Siemens Infraestrutura e Indústria Ltda.,
+São Paulo/Brazil
+100
+São Paulo/Brazil
+Antiguo Cuscatlán/El Salvador
+September 30, 2020
+Equity interest
+100
+Next47 TTGP, L.L.C., Wilmington, DE/United States
+100
+Aimsun Inc., New York, NY/United States
+100
+Omnetric Corp., Wilmington, DE/United States
+100
+Avatar Integrated Systems, Inc., Dover,
+P.E.T.NET Houston, LLC, Austin, TX/United States
+51
+DE/United States
+100
+Building Robotics Inc., Wilmington, DE/United States
+100
+Bytemark Inc., Dover, DE/United States
+95
+PETNET Indiana, LLC, Indianapolis, IN/United States
+PETNET Solutions Cleveland, LLC, Wilmington,
+DE/United States
+501
+63
+CD-adapco Battery Design LLC, Dover,
+PETNET Solutions, Inc., Knoxville, TN/United States
+100
+DE/United States
+502
+Process Systems Enterprise Inc., Wilmington,
+Siemens S.A.C., Surquillo/Peru
+100
+DE/United States
+100
+September 30, 2020
+in %
+Siemens Logistics S. de R.L. de C.V.,
+Next47 Inc., Wilmington, DE/United States
+100
+Mexico City/Mexico
+100
+Siemens Mobility S. de R.L. de C.V.,
+Next47 Mid-Tier GP 2018, L.P., Wilmington,
+DE/United States
+100
+Mexico City/Mexico
+100
+Equity interest
+in %
+Next47 Mid-Tier GP 2019, L.P., Wilmington,
+100
+DE/United States
+100
+Siemens, S.A. de C.V., Mexico City/Mexico
+100
+Next47 Mid-Tier GP 2020, L.P., Wilmington,
+DE/United States
+100
+Siemens Healthcare S.A.C., Surquillo/Peru
+100
+Next47 Mid-Tier GP 2021, L.P., Wilmington,
+Siemens Mobility S.A.C., Lima/Peru
+Siemens Servicios S.A. de C.V., Mexico City/Mexico
+Surrey/United Kingdom
+100
+Siemens Healthcare, Sociedad Anonima,
+September 30, 2020
+in %
+Siemens Industry Software Limited, Frimley,
+Surrey/United Kingdom
+EPOCAL INC., Toronto/Canada
+100
+100
+Mentor Graphics (Canada) ULC, Vancouver/Canada
+10013
+Siemens Industry Software Simulation and Test
+Limited, Frimley, Surrey/United Kingdom
+Siemens Canada Limited, Oakville/Canada
+100
+100
+Siemens Financial Ltd., Oakville/Canada
+100
+Siemens Mobility Limited, London/United Kingdom
+100
+Siemens Healthcare Limited, Oakville/Canada
+100
+Siemens Pension Funding (General) Limited, Frimley,
+Surrey/United Kingdom
+100
+Siemens Pension Funding Limited, Frimley,
+Siemens Industry Software ULC, Vancouver/Canada
+Siemens Logistics Ltd., Oakville/Canada
+100 13
+100
+in %
+September 30, 2020
+Equity interest
+Equity interest
+Surrey/United Kingdom
+100
+Siemens Holdings plc, Frimley,
+FAST TRACK DIAGNOSTICS RESEARCH LIMITED,
+Surrey/United Kingdom
+100
+Dunblane/United Kingdom
+100
+Flender Limited, Frimley, Surrey/United Kingdom
+100
+Siemens Industry Software Computational Dynamics
+Limited, Frimley, Surrey/United Kingdom
+100
+Surrey/United Kingdom
+1 Control due to a majority of voting rights.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 2020 156
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+Siemens IT Services S.A., Buenos Aires/Argentina
+100
+100
+100
+Siemens S.A., Tenjo/Colombia
+100
+UltraSoc Technologies Limited, Frimley,
+Siemens Healthcare Diagnostics S.A.,
+San José/Costa Rica
+100
+Surrey/United Kingdom
+100
+VA TECH (UK) Ltd., Frimley, Surrey/United Kingdom
+Siemens S.A., San José/Costa Rica
+100
+100
+Siemens Mobility, S.R.L.,
+Santo Domingo/Dominican Republic
+100
+Americas (105 companies)
+Siemens S.A., Quito/Ecuador
+100
+Siemens Healthcare S.A., Buenos Aires/Argentina
+100
+Siemens-Healthcare Cia. Ltda., Quito/Ecuador
+100
+Siemens Industrial S.A., Buenos Aires/Argentina
+100
+Surrey/United Kingdom
+The Preactor Group Limited, Frimley,
+100
+Siemens Mobility S.A.S., Tenjo/Colombia
+Siemens plc, Frimley, Surrey/United Kingdom
+100
+Flender SpA, Santiago de Chile/Chile
+100
+Siemens Postal, Parcel & Airport Logistics Limited,
+Frimley, Surrey/United Kingdom
+100
+Nimbic Chile SpA, Las Condes/Chile
+100
+Siemens Rail Automation Limited,
+London/United Kingdom
+100
+SIEMENS MOBILITY LIMITED, Oakville/Canada
+Siemens Healthcare Equipos Médicos Sociedad por
+Acciones, Santiago de Chile/Chile
+Siemens Rail Systems Project Holdings Limited,
+Siemens Mobility SpA, Santiago de Chile/Chile
+100
+London/United Kingdom
+100
+Siemens S.A., Santiago de Chile/Chile
+100
+Siemens Rail Systems Project Limited,
+Siemens Healthcare S.A.S., Tenjo/Colombia
+100
+London/United Kingdom
+100
+100
+Jeddah/Saudi Arabia
+Siemens Healthcare AB, Solna/Sweden
+Arabia Electric Ltd. (Equipment),
+September 30, 2020
+Aimsun SARL, Paris/France
+100
+Siemens Limited, Dublin/Ireland
+Equity interest
+in %
+100
+Flender-Graffenstaden SAS,
+Mentor Graphics (Israel) Limited, Herzilya
+Illkirch-Graffenstaden/France
+100
+Pituah/Israel
+100
+KACO new energy SARL, Croissy-Beaubourg/France
+100
+Mentor Graphics Development Services (Israel) Ltd.,
+Rehovot/Israel
+100
+The Flender Employee Share Ownership Trust,
+Johannesburg/South Africa
+Meudon La Forêt/France
+100
+Siemens Concentrated Solar Power Ltd.,
+Rosh HaAyin/Israel
+100
+Mentor Graphics Development Crolles SARL,
+Monbonnot-Saint-Martin/France
+100
+Equity interest
+in %
+Siemens HealthCare Ltd., Rosh HaAyin/Israel
+September 30, 2020
+Consolidated Financial Statements
+100
+Siemens Mobility Oy, Espoo/Finland
+100
+Siemens W.L.L., Manama/Bahrain
+51
+Siemens Osakeyhtiö, Espoo/Finland
+100
+Flender S.R.L., Beersel/Belgium
+100
+VIBECO - Virtual Buildings Ecosystem Oy,
+Espoo/Finland
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 2020 152
+→ B.6 Notes to Consolidated Financial Statements
+100
+PETNET Solutions SAS, Lisses/France
+100
+100
+Siemens A.E., Electrotechnical Projects and Products,
+Athens/Greece
+Siemens S.p.A., Milan/Italy
+100
+100
+Siemens Healthcare Limited Liability Partnership,
+SIEMENS HEALTHCARE INDUSTRIAL AND
+Almaty/Kazakhstan
+100
+COMMERCIAL SINGLE MEMBER SOCIETE ANONYME,
+Siemens TOO, Almaty/Kazakhstan
+100
+Chalandri/Greece
+100
+Siemens Industrial Business Co. For Electrical,
+SIEMENS MOBILITY RAIL AND RAD TRANSPORTATION
+SOLUTIONS SOCIETE ANONYME, Athens/Greece
+100
+Electronic and Mechanical Contracting WLL, Kuwait
+City/Kuwait
+492
+evosoft Hungary Szamitastechnikai Kft.,
+Crabtree (Pty) Ltd, Maseru/Lesotho
+100
+Budapest/Hungary
+100
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I.,
+Siemens Mobility S.r.I., Milan/Italy
+100
+Siemens SAS, Saint-Denis/France
+100
+Siemens Industry Software Ltd., Airport City/Israel
+100
+Siemens Financial Services SAS, Saint-Denis/France
+100
+Siemens Ltd., Rosh Ha'ayin/Israel
+100
+Siemens France Holding SAS, Saint-Denis/France
+Siemens Healthcare SAS, Saint-Denis/France
+100
+Siemens Mobility Ltd., Rosh HaAyin/Israel
+100
+100
+UGS Israeli Holdings (Israel) Ltd., Airport City/Israel
+VVK Versicherungs-Vermittlungs- und
+Verkehrs-Kontor GmbH, Vienna/Austria
+100
+100
+Flender Italia S.r.I., Milan/Italy
+100
+100
+Siemens Healthcare S.r.I., Milan/Italy
+100
+100
+Siemens Industry Software S.r.I., Milan/Italy
+100
+Siemens Mobility SAS, Châtillon/France
+100
+Siemens Logistics S.r.I., Milan/Italy
+Siemens Industry Software SAS, Châtillon/France
+Siemens Lease Services SAS, Saint-Denis/France
+Siemens Logistics SAS, Saint-Denis/France
+100
+Siemens Healthcare Oy, Espoo/Finland
+52
+51
+Siemens EOOD, Sofia/Bulgaria
+100
+Siemens Spa, Algiers/Algeria
+100
+Siemens Healthcare EOOD, Sofia/Bulgaria
+100
+Mentor Graphics Development Services CJSC,
+Yerevan/Armenia
+Siemens Mobility EOOD, Sofia/Bulgaria
+100
+100
+ETM professional control GmbH, Eisenstadt/Austria
+Flender GmbH, Vienna/Austria
+Siemens d.d., Zagreb/Croatia
+100
+100
+Siemens Healthcare d.o.o., Zagreb/Croatia
+100
+100
+Hochquellstrom-Vertriebs GmbH, Vienna/Austria
+OEZ s.r.o., Letohrad/Czech Republic
+100
+100
+Siemens Electric Machines s.r.o.,
+ITH icoserve technology for healthcare GmbH,
+Innsbruck/Austria
+Drasov/Czech Republic
+ESTEL Rail Automation SPA, Algiers/Algeria
+100
+Sarajevo/Bosnia and Herzegovina
+Siemens Medicina d.o.o.,
+Equity interest
+September 30, 2020
+in %
+VVK Versicherungsvermittlungs- und
+Samtech SA, Angleur/Belgium
+100
+Verkehrskontor GmbH, Munich
+10010
+Siemens Healthcare NV, Beersel/Belgium
+100
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+100
+100
+Siemens Industry Software NV, Leuven/Belgium
+Zeleni Holding GmbH, Kemnath
+100
+Siemens Mobility S.A./N.V, Beersel/Belgium
+100
+Zeleni Real Estate GmbH & Co. KG, Kemnath
+100
+Siemens S.A./N.V., Beersel/Belgium
+100
+Siemens d.o.o. Sarajevo - U Likvidaciji,
+Europe, Commonwealth of Independent States
+(C.I.S.), Africa, Middle East (without Germany)
+(284 companies)
+Sarajevo/Bosnia and Herzegovina
+100
+100
+Mentor Graphics Magyarország Kft.,
+69
+Siemens Healthcare, s.r.o., Prague/Czech Republic
+Siemens Konzernbeteiligungen GmbH,
+Vienna/Austria
+100
+Mentor Graphics Egypt Company (A Limited Liability
+Company - Private Free Zone), Cairo/Egypt
+100
+Siemens Metals Technologies
+Vermögensverwaltungs GmbH, Vienna/Austria
+100
+Siemens Healthcare Logistics LLC, Cairo/Egypt
+100
+Siemens Healthcare S.A.E., Cairo/Egypt
+100
+Siemens Mobility Austria GmbH, Vienna/Austria
+100
+Siemens Personaldienstleistungen GmbH,
+Siemens Industrial LLC, New Cairo/Egypt
+100
+Vienna/Austria
+100
+Siemens Mobility Egypt LLC, Cairo/Egypt
+100
+Steiermärkische Medizinarchiv GesmbH,
+Graz/Austria
+Mentor Graphics (Finland) Oy, Espoo/Finland
+100
+100
+Siemens Mobility A/S, Ballerup/Denmark
+100
+Siemens Industry Software GmbH, Linz/Austria
+100
+100
+Omnetric GmbH, Vienna/Austria
+100
+Siemens Industry Software, s.r.o.,
+Prague/Czech Republic
+100
+Siemens Aktiengesellschaft Österreich,
+Siemens Mobility, s.r.o., Prague/Czech Republic
+100
+Vienna/Austria
+100
+KDAG Beteiligungen GmbH, Vienna/Austria
+Siemens, s.r.o., Prague/Czech Republic
+Siemens Gebäudemanagement & -Services
+G.m.b.H., Vienna/Austria
+100
+Siemens A/S, Ballerup/Denmark
+100
+Siemens Healthcare Diagnostics GmbH,
+Siemens Healthcare A/S, Ballerup/Denmark
+100
+Vienna/Austria
+100
+Siemens Industry Software A/S, Ballerup/Denmark
+100
+100
+Esch-sur-Alzette/Luxembourg
+Mentor Graphics (France) SARL,
+Budapest/Hungary
+100
+J2 Innovative Concepts Europe SRL,
+Bucharest/Romania
+100
+Siemens International Holding B.V.,
+The Hague/Netherlands
+100
+SIEMENS (AUSTRIA) PROIECT SPITAL COLTEA SRL,
+Bucharest/Romania
+100
+Siemens International Holding II B.V.,
+The Hague/Netherlands
+100
+Siemens Healthcare S.R.L., Bucharest/Romania
+100
+Siemens International Holding III B. V.,
+Siemens Industry Software S.R.L., Brasov/Romania
+100
+The Hague/Netherlands
+100
+Siemens Mobility S.R.L., Bucharest/Romania
+100
+Siemens Mobility B.V., Zoetermeer/Netherlands
+100
+Siemens S.R.L., Bucharest/Romania
+The Hague/Netherlands
+Siemens Industry Software Holding II B.V.,
+55
+100
+Siemens Sp. z o.o., Warsaw/Poland
+100
+Siemens Healthineers Holding III B.V.,
+UltraSoc Poland sp.zo.o, Warsaw/Poland
+100
+The Hague/Netherlands
+100
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA,
+Siemens Healthineers Nederland B.V.,
+Amadora/Portugal
+100
+The Hague/Netherlands
+100
+100
+100
+Siemens Industry Software and Services B.V.,
+SIEMENS MOBILITY, UNIPESSOAL LDA,
+Rijswijk/Netherlands
+100
+Amadora/Portugal
+Siemens Industry Software B.V.,
+Siemens S.A., Amadora/Portugal
+Eindhoven/Netherlands
+100
+Siemens W.L.L., Doha/Qatar
+100
+Siemens Logistics, Unipessoal Lda, Lisbon/Portugal
+100
+Siemens Mobility Holding B.V.,
+100
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 2020
+154
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+September 30, 2020
+Equity interest
+in %
+Equity interest
+September 30, 2020
+in %
+Siemens Finance and Leasing LLC,
+Vladivostok/Russian Federation
+100
+SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD,
+Centurion/South Africa
+100
+Siemens Healthcare Limited Liability Company,
+Moscow/Russian Federation
+Siemens Mobility (Pty) Ltd, Randburg/South Africa
+75
+100
+Siemens Proprietary Limited, Midrand/South Africa
+70
+Siemens Mobility LLC, Moscow/Russian Federation
+100
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+'s-Gravenhage/Netherlands
+100
+LIMITED LIABILITY COMPANY SIEMENS
+Siemens Nederland N.V., The Hague/Netherlands
+100
+100
+100
+TASS International B.V., Helmond/Netherlands
+100
+000 Legion II, Moscow/Russian Federation
+100
+TASS International Holding B.V.,
+SIMEA SIBIU S.R.L., Sibiu/Romania
+Helmond/Netherlands
+000 Siemens, Moscow/Russian Federation
+100
+100
+100
+000 Siemens Industry Software,
+Moscow/Russian Federation
+100
+100
+Siemens Healthcare AS, Oslo/Norway
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+Siemens AS, Oslo/Norway
+The Hague/Netherlands
+ELEKTROPRIVOD, St. Petersburg/Russian Federation
+100
+Siemens Healthcare Diagnostics Manufacturing
+FTD Europe Ltd, Sliema/Malta
+100
+Limited, Swords, County Dublin/Ireland
+100
+Siemens Healthcare SARL, Casablanca/Morocco
+100
+Siemens Healthcare Medical Solutions Limited,
+Siemens Industry Software SARL,
+Swords, County Dublin/Ireland
+100
+Sala Al Jadida/Morocco
+100
+100
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+1 Control due to a majority of voting rights.
+ANNUAL REPORT 153
+Shannon, County Clare/Ireland
+Fast Track Diagnostics Ltd, Sliema/Malta
+Siemens Financieringsmaatschappij N.V.,
+100
+Siemens Healthcare Kft., Budapest/Hungary
+Siemens Mobility Holding SARL,
+100
+Luxembourg/Luxembourg
+100
+Siemens Mobility Kft., Budapest/Hungary
+100
+SPT Affiliates, LLC, SARL, Contern/Luxembourg
+100
+Siemens Zrt., Budapest/Hungary
+100
+100
+100
+Mentor Graphics (Holdings) Unlimited Company,
+Shannon, County Clare/Ireland
+SPT Invest Management, SARL,
+10013
+Luxembourg/Luxembourg
+100
+Mentor Graphics (Ireland) Limited, Shannon, County
+Clare/Ireland
+TFM International S.A. i.L.,
+100
+Luxembourg/Luxembourg
+100
+SPT Holding SARL, Luxembourg/Luxembourg
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Mentor Graphics Development Services Limited,
+Equity interest
+Flowmaster Group N.V., Eindhoven/Netherlands
+100
+Mentor Graphics Polska Sp. z o.o., Poznan/Poland
+100
+Mendix Technology B.V., Rotterdam/Netherlands
+100
+Siemens Digital Logistics Sp. z o.o., Wroclaw/Poland
+100
+Mentor Graphics (Netherlands) B.V.,
+Eindhoven/Netherlands
+100
+Siemens Finance Sp. z o.o., Warsaw/Poland
+Pollux III B.V., The Hague/Netherlands
+100
+Siemens Healthcare Sp. z o.o., Warsaw/Poland
+100
+PSE (Europe) B.V., Rotterdam/Netherlands
+100
+Siemens Industry Software Sp. z o.o.,
+Warsaw/Poland
+100
+Siemens Finance B.V., The Hague/Netherlands
+100
+Equity interest
+Siemens Mobility Sp. z o.o., Warsaw/Poland
+75
+Karachi/Pakistan
+100
+100
+September 30, 2020
+Siemens Pakistan Engineering Co. Ltd.,
+in %
+September 30, 2020
+in %
+Siemens S.A., Casablanca/Morocco
+100
+Siemens Mobility AS, Oslo/Norway
+100
+100
+Siemens Industrial LLC, Muscat/Oman
+51
+Dresser-Rand International B.V.,
+Castor III B.V., The Hague/Netherlands
+Siemens Healthcare (Private) Limited,
+The Hague/Netherlands
+100
+Limited, Lahore/Pakistan
+Flender B.V., Rotterdam/Netherlands
+100
+Enlighted International B.V.,
+Mentor Graphics Pakistan Development (Private)
+Amsterdam/Netherlands
+100
+Lahore/Pakistan
+100
+Zhi Dao Railway Equipment Ltd., Taiyuan/China
+Bangalore International Airport Ltd., Bangalore/India
+Fluence Energy, LLC, Wilmington, DE/United States
+298
+DELARO, S.A.P.I. DE C.V., Mexico City/Mexico
+50
+20
+Orange Sironj Wind Power Private Limited,
+New Delhi/India
+27
+DeepHow Corp., Princeton, NJ/United States
+238
+50
+33
+46
+CEF-L Holding, LLC, Wilmington, DE/United States
+50
+49
+2013
+Micropower Comerc Energia S.A., São Paulo/Brazil
+Pune IT City Metro Rail Limited, Pune/India
+20
+Smart Metering Solutions (Changsha) Co. Ltd.,
+Changsha/China
+MPC Serviços Energéticos 1A S.A, Navegantes/Brazil
+48
+Zhenjiang Siemens Busbar Trunking Systems Co.
+Ltd., Yangzhong/China
+33
+Santiago de Cali/Colombia
+Akuo Energy Dominicana, S.R.L,
+Santo Domingo/Dominican Republic
+Tianjin ZongXi Traction Motor Ltd., Tianjin/China
+Xi'An X-Ray Target Ltd., Xi'an/China
+50
+438
+Union Temporal Recaudo y Tecnologia,
+26
+308
+206
+Forest Wind Holdings Pty Limited, Sydney/Australia
+50
+50
+Exemplar Health (NBH) Partnership,
+Melbourne/Australia
+Asia, Australia (20 companies)
+30
+Wi-Tronix Group Inc., Dover, DE/United States
+USARAD Holdings, Inc., Fort Lauderdale,
+FL/United States
+308
+Rether networks, Inc., Berkeley, CA/United States
+26
+PTG Holdings Company LLC, Dover, DE/United States
+218
+Powerit Holdings, Inc., Seattle, WA/United States
+33
+PhSiTh LLC, New Castle, DE/United States
+49
+Transparent Energy Systems Private Limited,
+Pune/India
+258
+Panda Hummel Station Intermediate Holdings I LLC,
+P.T. Jawa Power, Jakarta/Indonesia
+50
+Wilmington, DE/United States
+Hickory Run Holdings, LLC, Wilmington,
+DE/United States
+32
+Panda Stonewall Intermediate Holdings I, LLC,
+Singapore/Singapore
+24
+Wilmington, DE/United States
+37
+Power Automation Pte. Ltd., Singapore/Singapore
+BE C&I Solutions Holding Pte. Ltd.,
+Zhuzhou/China
+574,8
+Siemens Traction Equipment Ltd., Zhuzhou,
+508
+Plessey Holdings Ltd., Frimley,
+Surrey/United Kingdom
+49
+Temir Zhol Electrification LLP, Astana/Kazakhstan
+498
+KACO New Energy Co., Amman/Jordan
+50
+Lincs Renewable Energy Holdings Limited,
+London/United Kingdom
+864,8,13
+VAL 208 Torino GEIE, Milan/Italy
+498
+25
+Galloper Wind Farm Holding Company Limited,
+Swindon, Wiltshire/United Kingdom
+Transfima S.p.A., Milan/Italy
+42 8,13
+Transfima GEIE, Milan/Italy
+25
+388
+50
+TRIXELL SAS, Moirans/France
+25
+Awel Y Môr Offshore Wind Farm Limited, Swindon,
+Wiltshire/United Kingdom
+106
+EGM Holding Limited, Marsaskala/Malta
+Eviop-Tempo A.E. Electrical Equipment
+Manufacturers, Vassiliko/Greece
+Cross London Trains Holdco 2 Limited,
+London/United Kingdom
+33
+Parallel Graphics Ltd., Dublin/Ireland
+Reindeer Energy Ltd., Bnei Berak/Israel
+33
+Five Estuaries Offshore Wind Farm Limited,
+Swindon, Wiltshire/United Kingdom
+48
+GNA 1 Geração de Energia S.A., São João da
+Barra/Brazil
+33
+Tangier/Morocco
+974
+40
+Shanghai Electric Power Generation Equipment Co.,
+Ltd., Shanghai/China
+Brasol Participaçoes e Empreendimentos S.A., Brazil,
+São Paulo/Brazil
+Americas (19 companies)
+35
+Guangzhou/China
+Guangzhou Suikai Smart Energy Co., Ltd.,
+in %
+September 30, 2020
+Equity interest
+Equity interest
+in %
+September 30, 2020
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+162
+ANNUAL REPORT 2020
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+Buitengaats C.V., Amsterdam/Netherlands
+20
+206,13
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+Energie Electrique de Tahaddart S.A.,
+4 No control due to contractual arrangements or legal circumstances.
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+5 No significant influence due to contractual arrangements
+Forest Wind Investment Company (1) Pty Limited,
+Sydney/Australia
+100
+PHM Technology Pty Ltd, Melbourne/Australia
+Matthias Rebellius
+M. Rubelle's
+Dr. Roland Busch
+Rre
+Joe Kaeser
+The Managing Board
+Siemens Aktiengesellschaft
+Munich, November 27, 2020
+Siemens Aktiengesellschaft, includes a fair review of the
+development and performance of the business and
+the position of the Group, together with a description
+of the material opportunities and risks associated with
+the expected development of the Group.
+To the best of our knowledge, and in accordance with
+the applicable reporting principles, the Consolidated
+Financial Statements give a true and fair view of the
+assets, liabilities, financial position and profit or loss of
+the Group, and the Group Management Report, which
+has been combined with the Management Report for
+Responsibility Statement
+C.1
+Additional Information C.1 Responsibility Statement
+Information
+Additional
+C.
+PAGES 165-199
+298
+4
+(122)
+53
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+Klous filmich
+9 Exemption pursuant to Section 264 b German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+N/A No financial data available.
+ANNUAL REPORT 2020
+164
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+92
+Klaus Helmrich
+Prof. Dr. Ralf P. Thomas
+Padam Mobility S.A.S, Paris/France
+ANNUAL REPORT 2020 168
+We also evaluated the identification of the business activ-
+ities falling within the scope of IFRS 5 using the underly-
+ing contracts and assessed the implementation of the
+classification as held for sale and as discontinued opera-
+tions in the consolidation system, including adjustments
+Auditor's response: As part of our audit of the consoli-
+dated financial statements, we first evaluated manage-
+ment's assessment of fulfillment of the criteria pursuant
+to IFRS 5, Non-current Assets Held for Sale and Discontin-
+ued Operations, for classification as held for sale and dis-
+continued operations as of March 31, 2020. For this pur-
+pose, we obtained an understanding of the planned
+contractual agreements and examined the probability of
+the shareholders giving their approval at the extraordinary
+shareholders' meeting, the progress of the carve-outs of
+the Siemens Gas and Power Business and the decisions by
+corporate bodies on the capitalization of the spin-off
+group. In addition, we evaluated the planned legal execu-
+tion of the spin-off including the Deconsolidation Agree-
+ment as to whether the requirements of commercial and
+stock corporation law are fulfilled with regard to the loss
+of control and thus the deconsolidation of the Siemens
+Energy Business when the spin-off becomes effective pur-
+suant to IFRS 10, Consolidated Financial Statements.
+The accounting for the spin-off of the Siemens Energy
+Business was a key audit matter due to the complexity
+of the transaction and the associated significant risk of
+material misstatement, the estimation uncertainties and
+judgment involved in the measurements performed as
+well as the overall significant impact on the assets, lia-
+bilities, financial position and financial performance of
+the Group. First of all, the classification of the Siemens
+Energy Business as assets held for sale and as discontin-
+ued operations since March 31, 2020 was of key signifi-
+cance for our audit due to the complexity. In addition, the
+recognition of the spin-off liability pursuant to IFRIC 17,
+Distributions of Non-cash Assets to Owners, its measure-
+ment as of September 25, 2020, and the disposal of this
+spin-off liability and of the carrying amount of the assets
+and liabilities held for sale as well as the addition of the
+45% investment in Siemens Energy AG, including the rec-
+ognition of the difference as a spin-off result in the in-
+come statement, is subject to a significant risk due to the
+complexity of the measurements.
+SPIN-OFF OF THE SIEMENS ENERGY BUSINESS
+Reasons why the matter was determined to be a key
+audit matter: The spin-off and public listing of the
+Siemens Gas and Power business, which was made a
+legally independent entity under Siemens Energy AG
+prior to the spin-off, including the shares previously held
+by the Siemens Group comprising an interest of around
+67% in the listed company Siemens Gamesa Renewable
+Energy S.A., Spain, and its subsidiaries ("SGRE") (herein-
+after "Siemens Energy Business"), was completed at the
+end of September 2020. As consideration for the spin-
+off, Siemens AG transferred 55% of the capital stock of
+Siemens Energy AG existing after the spin-off capital in-
+crease and in-kind capital increase to the shareholders of
+Siemens AG. The remaining 45% of the capital stock of
+Siemens Energy AG was initially held by Siemens AG and
+a wholly owned subsidiary when the spin-off became
+effective. A share of 9.9% of Siemens Energy AG's capital
+stock was transferred by Siemens AG as a contribution to
+Siemens Pension-Trust e. V., Germany, in connection with
+the spin-off.
+Below, we describe what we consider to be the key audit
+matters:
+Key audit matters are those matters that, in our profes-
+sional judgment, were of most significance in our audit
+of the consolidated financial statements for the fiscal
+year from October 1, 2019 to September 30, 2020. These
+matters were addressed in the context of our audit of the
+consolidated financial statements as a whole, and in
+forming our opinion thereon; we do not provide a sepa-
+rate opinion on these matters.
+Key audit matters in the audit of the
+consolidated financial statements
+responsibilities in accordance with these require-
+ments. In addition, in accordance with Art. 10 (2) f) of the
+EU Audit Regulation, we declare that we have not pro-
+vided non-audit services prohibited under Art. 5 (1) of the
+EU Audit Regulation. We believe that the audit evidence
+we have obtained is sufficient and appropriate to provide
+a basis for our opinions on the consolidated financial
+statements and on the group management report.
+Additional Information → C.2 Independent Auditor's Report
+ANNUAL REPORT 2020 167
+We conducted our audit of the consolidated financial
+statements and of the group management report in ac-
+cordance with Sec. 317 HGB and the EU Audit Regulation
+(No 537/2014, referred to subsequently as "EU Audit
+Regulation") and in compliance with German Generally
+Accepted Standards for Financial Statement Audits pro-
+mulgated by the Institut der Wirtschaftsprüfer [Institute
+of Public Auditors in Germany] (IDW). In conducting the
+audit of the consolidated financial statements we also
+complied with International Standards on Auditing (ISA).
+Our responsibilities under those requirements, principles
+and standards are further described in the "Auditor's
+responsibilities for the audit of the consolidated financial
+statements and of the group management report" sec-
+tion of our auditor's report. We are independent of the
+group entities in accordance with the requirements of
+European law and German commercial and professional
+law, and we have fulfilled our other German professional
+Basis for the opinions
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that
+our audit has not led to any reservations relating to the
+legal compliance of the consolidated financial state-
+ments and of the group management report.
+by the International Accounting Standards Board
+(IASB), and, in compliance with these requirements,
+give a true and fair view of the assets, liabilities and
+financial position of the Group as of September 30,
+2020 and of its financial performance for the fiscal
+year from October 1, 2019 to September 30, 2020, and
+→ the accompanying group management report as a
+whole provides an appropriate view of the Group's
+position. In all material respects, this group manage-
+ment report is consistent with the consolidated
+financial statements, complies with German legal
+requirements and appropriately presents the oppor-
+tunities and risks of future development. Our opinion
+on the group management report does not cover the
+content of the Corporate Governance Statement re-
+ferred to above.
+→ the accompanying consolidated financial statements
+comply, in all material respects, with the International
+Financial Reporting Standards (IFRSS) as adopted
+by the European Union (EU), and the additional
+requirements of German commercial law pursuant
+to Sec. 315e (1) HGB ["Handelsgesetzbuch": German
+Commercial Code] as well as with full IFRSS as issued
+Cedrik Neike
+Wiesz
+Judith Wiese
+ANNUAL REPORT 2020 166
+Additional Information → C.2 Independent Auditor's Report
+C.2
+Jomal
+Independent Auditor's Report
+Report on the audit of
+the Consolidated Financial
+Statements and of the
+Group Management Report
+Opinions
+We have audited the consolidated financial statements of
+Siemens Aktiengesellschaft, Berlin and Munich, and its
+subsidiaries (the Group), which comprise the consoli-
+dated statements of income and comprehensive income
+for the fiscal year from October 1, 2019 to September 30,
+2020, the consolidated statements of financial position
+as of September 30, 2020, the consolidated statements
+of cash flows and changes in equity for the fiscal year
+from October 1, 2019 to September 30, 2020, and notes
+to the consolidated financial statements, including a
+summary of significant accounting policies. In addition,
+we have audited the group management report of
+Siemens Aktiengesellschaft, which is combined with the
+management report of Siemens Aktiengesellschaft, for
+the fiscal year from October 1, 2019 to September 30,
+2020. In accordance with the German legal requirements
+we have not audited the content of chapter 7 A.9.3 CORPO-
+RATE GOVERNANCE STATEMENT of the Combined Management
+Report, including chapter 7 c.4.2 of the Annual Report
+2020 referred to in chapter 7 A.9.3.
+In our opinion, on the basis of the knowledge obtained in
+the audit,
+To Siemens Aktiengesellschaft, Berlin and Munich
+50
+13
+6 Significant influence due to contractual arrangements
+N/A
+N/A
+1004,5
+320
+21
+1004,5
+BSAV Kapitalbeteiligungen und Vermögensverwaltungs Management GmbH, Grünwald
+Erlapolis 20 GmbH, Munich
+Germany (8 companies)
+OTHER INVESTMENTS 11
+Equity
+in millions of €
+Net income
+in millions of €
+Equity interest
+in %
+September 30, 2020
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+ANNUAL REPORT 163
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+378
+DBEST (Beijing) Facility Technology Management
+Co., Ltd., Beijing/China
+25
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+Kyros Beteiligungsverwaltung GmbH, Grünwald
+4 No control due to contractual arrangements or legal circumstances.
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+1004,5
+565
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+1 Control due to a majority of voting rights.
+Bentley Systems, Incorporated, Wilmington, DE/United States
+ChargePoint, Inc., Campbell, CA/United States
+Americas (2 companies)
+N/A
+N/A
+2
+Europe, Commonwealth of Independent States (C.I.S.),
+Africa, Middle East (without Germany) (1 company)
+Siemens Gas and Power Holding B.V., Zoeterwoude/Netherlands
+N/A
+N/A
+1004,5
+SPT Beteiligungen GmbH & Co. KG, Grünwald
+316
+5
+Munipolis GmbH, Munich
+1004,5
+0
+251
+OWP Butendiek GmbH & Co. KG, Bremen
+Project Ventures Butendiek Holding GmbH, Munich
+71
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+102
+466
+1004,5
+2
+66
+904,5
+235
+5013
+100
+Interessengemeinschaft TUS,
+Bangalore/India
+100
+Siemens Medium Voltage Switching Technologies
+(Wuxi) Ltd., Wuxi/China
+Enlighted Energy Systems Pvt Ltd, Chennai/India
+100
+85
+Fast Track Diagnostics Asia Private Limited,
+Siemens Mobility Electrification Equipment
+(Shanghai) Co., Ltd., Shanghai/China
+New Delhi/India
+54
+51
+Siemens Mobility Equipment (China) Co., Ltd,
+51
+Flender Drives Private Limited, Kancheepuram,
+Kancheepuram/India
+Shanghai Pilot Free Trade Zone/China
+100
+Flomerics India Private Limited, Mumbai/India
+100
+Siemens Mobility Rail Equipment (Tianjin) Ltd.,
+Tianjin/China
+100
+Mentor Graphics (India) Private Limited,
+New Delhi/India
+100
+Siemens Mobility Technologies (Beijing) Co., Ltd,
+Beijing/China
+100
+Mentor Graphics (Sales and Services) Private
+Limited, New Delhi/India
+1007
+100
+Bytemark Technology Solutions India Pvt Ltd,
+100
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 159
+Siemens Manufacturing and Engineering Centre
+Ltd., Shanghai/China
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+Equity interest
+September 30, 2020
+Siemens Logistics Automation Systems (Beijing) Co.,
+Ltd, Beijing/China
+in %
+September 30, 2020
+in %
+100
+AIS Design Automation Private Limited,
+Bangalore/India
+100
+Siemens Ltd., China, Beijing/China
+100
+Bytemark India LLP, Bangalore/India
+Equity interest
+1 Control due to a majority of voting rights.
+Siemens Numerical Control Ltd., Nanjing,
+80
+Siemens Industry Software (India) Private Limited,
+New Delhi/India
+100
+Siemens Technology Development Co.,
+Ltd. of Beijing, Beijing/China
+90
+Siemens Industry Software Computational Dynamics
+India Pvt. Ltd., Bangalore/India
+100
+Siemens Venture Capital Co., Ltd., Beijing/China
+100
+Siemens Limited, Mumbai/India
+65
+51
+55
+Siemens Wiring Accessories Shandong Ltd.,
+Zibo/China
+100
+Navi Mumbai/India
+100
+Siemens X-Ray Vacuum Technology Ltd., Wuxi,
+Wuxi/China
+Siemens Rail Automation Pvt. Ltd.,
+100
+Navi Mumbai/India
+100
+TASS International Co. Ltd., Shanghai/China
+100
+Siemens Technology and Services Private Limited,
+Navi Mumbai/India
+100
+Siemens Logistics India Private Limited,
+Nanjing/China
+Siemens Switchgear Ltd., Shanghai, Shanghai/China
+Siemens Standard Motors Ltd., Yizheng/China
+PETNET Radiopharmaceutical Solutions Pvt. Ltd.,
+Mumbai/India
+100
+Siemens Power Automation Ltd., Nanjing/China
+100
+Preactor Software India Private Limited,
+Siemens Sensors & Communication Ltd.,
+Bangalore/India
+100
+Dalian/China
+100
+Siemens Factoring Private Limited,
+Siemens Shanghai Medical Equipment Ltd.,
+100
+Navi Mumbai/India
+Shanghai/China
+100
+Siemens Shenzhen Magnetic Resonance Ltd.,
+Shenzhen/China
+Siemens Financial Services Private Limited,
+Mumbai/India
+100
+100
+Siemens Healthcare Private Limited, Mumbai/India
+100
+Siemens Signalling Co., Ltd., Xi'an/China
+70
+Siemens Healthineers India LLP, Bangalore/India
+100
+100
+100
+100
+Siemens Investment Consulting Co., Ltd.,
+Beijing/China
+Bolivarian Republic of
+100
+Siemens Business Information Consulting Co., Ltd,
+Beijing/China
+Siemens Healthcare S.A., Caracas/Venezuela,
+100
+Maracaibo/Venezuela, Bolivarian Republic of
+70
+Siemens Building Technologies (Tianjin) Ltd.,
+Tianjin/China
+Dresser-Rand de Venezuela, S.A.,
+100
+Siemens S.A., Montevideo/Uruguay
+100
+1007
+Mentor Graphics (Shanghai) Electronic Technology
+Co., Ltd., Shanghai/China
+UltraSoc Inc., Wilmington, DE/United States
+100
+SMI Holding LLC, Wilmington, DE/United States
+100
+IBS Industrial Business Software (Shanghai), Ltd.,
+Shanghai/China
+100
+DE/United States
+100
+Flender Ltd., China, Tianjin/China
+Siemens USA Holdings, Inc., Wilmington,
+100
+Siemens Public, Inc., Iselin, NJ/United States
+100
+100
+Siemens Rail Automation, C.A.,
+75
+Männedorf/Switzerland
+Bayswater/Australia
+Exemplar Health (NBH) 2 Pty Limited,
+100
+Siemens Factory Automation Engineering Ltd.,
+Beijing/China
+100
+Bayswater/Australia
+Australia Hospital Holding Pty Limited,
+85
+Siemens Electrical Drives Ltd., Tianjin/China
+100
+Aimsun Pty Ltd, Sydney/Australia
+Siemens Circuit Protection Systems Ltd., Shanghai,
+Shanghai/China
+100
+Siemens Electrical Drives (Shanghai) Ltd.,
+Asia, Australia (130 companies)
+100
+Suzhou/China
+Siemens Electrical Apparatus Ltd., Suzhou,
+100
+100
+Shanghai/China
+Dade Behring Hong Kong Holdings Corporation,
+Tortola/Virgin Islands, British
+Siemens Computational Science (Shanghai) Co., Ltd,
+100
+Caracas/Venezuela, Bolivarian Republic of
+Shanghai/China
+Camstar Systems Software (Shanghai) Company
+Limited, Shanghai/China
+100
+Siemens Mobility, Inc, Wilmington, DE/United States
+Siemens Healthineers Ltd., Shanghai/China
+100
+100
+Siemens Ltd., Bayswater/Australia
+100
+Siemens Industrial Automation Products Ltd.,
+Chengdu, Chengdu/China
+100
+Siemens Mobility Pty Ltd, Bayswater/Australia
+100
+Siemens Industry Software (Beijing) Co., Ltd.,
+SIEMENS RAIL AUTOMATION PTY. LTD.,
+Beijing/China
+Siemens Industry Software Pty Ltd,
+100
+100
+Siemens Bangladesh Ltd., Dhaka/Bangladesh
+100
+Siemens Industry Software (Shanghai) Co., Ltd.,
+Shanghai/China
+100
+Siemens Healthcare Ltd., Dhaka/Bangladesh
+100
+Siemens International Trading Ltd., Shanghai,
+Shanghai/China
+100
+Siemens Industrial Limited, Dhaka/Bangladesh
+Beijing Siemens Cerberus Electronics Ltd.,
+Beijing/China
+1007
+Bayswater/Australia
+100
+(Shanghai) Co., Ltd., Shanghai/China
+100
+in %
+September 30, 2020
+in %
+September 30, 2020
+Equity interest
+Equity interest
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+1007
+Exemplar Health (NBH) Holdings 2 Pty Limited,
+Siemens Finance and Leasing Ltd., Beijing/China
+Siemens Financial Services Ltd., Beijing/China
+100
+100
+Bayswater/Australia
+100
+Siemens Healthcare Diagnostics Manufacturing Ltd.,
+Exemplar Health (NBH) Trust 2, Bayswater/Australia
+100
+Shanghai, Shanghai/China
+100
+Flender Pty. Ltd., Bayswater/Australia
+100
+Siemens Healthineers Diagnostics (Shanghai) Co.,
+Ltd., Shanghai/China
+100
+J.R.B. Engineering Pty Ltd, Bayswater/Australia
+100
+Siemens Healthineers Digital Technology
+Siemens Healthcare Pty. Ltd., Melbourne/Australia
+Siemens Healthcare Limited, Hong Kong/Hong Kong
+100
+Bayswater/Australia
+100
+100
+MeVis BreastCare GmbH & Co. KG, Bremen
+49
+Siemens Pte. Ltd., Singapore/Singapore
+100
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+Siemens Mobility Pte. Ltd., Singapore/Singapore
+7 Not consolidated due to immateriality.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 161
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+September 30, 2020
+238
+BioMensio Oy, Tampere/Finland
+50
+Certas AG, Zurich/Switzerland
+478
+Meomed s.r.o., Prerov/Czech Republic
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+49
+238
+100
+498
+Siemens, Inc., Manila/Philippines
+100
+GuD Herne GmbH, Essen
+50
+Aimsun Pte Ltd, Singapore/Singapore
+100
+IFTEC GmbH & Co. KG, Leipzig
+50
+Flender Pte. Ltd., Singapore/Singapore
+100
+Mentor Graphics Asia Pte Ltd, Singapore/Singapore
+MetisMotion GmbH, Munich
+100
+Siemens Healthcare Pte. Ltd., Singapore/Singapore
+100
+Berlin
+258
+Siemens Industry Software Pte. Ltd.,
+LIB Verwaltungs-GmbH, Leipzig
+508
+Singapore/Singapore
+100
+Ludwig Bölkow Campus GmbH, Taufkirchen
+258
+Siemens Logistics PTE. LTD., Singapore/Singapore
+INPRO Innovationsgesellschaft für fortgeschrittene
+Produktionssysteme in der Fahrzeugindustrie mbH,
+WS Tech Energy Global S.L., Viladecans/Spain
+Stavro Holding I AB, Stockholm/Sweden
+20
+SMATRICS GmbH & Co KG, Vienna/Austria
+Sternico GmbH, Wendeburg
+Locomotive Workshop Rotterdam B.V.,
+56
+Siemens EuroCash, Munich
+50
+50
+Dordrecht/Netherlands
+35
+Siemens Energy AG, Munich
+Infraspeed Maintainance B.V.,
+338
+508,13
+458
+Zoetermeer/Netherlands
+33
+Nordlicht Holding GmbH & Co. KG, Frankfurt
+Nordlicht Holding Verwaltung GmbH, Frankfurt
+208
+Eemshaven/Netherlands
+Buitengaats Management B.V.,
+498
+MeVis BreastCare Verwaltungsgesellschaft mbH,
+Bremen
+in %
+Equity interest
+September 30, 2020
+Equity interest
+in %
+P.T. Siemens Indonesia, Jakarta/Indonesia
+Infraspeed EPC Consortium V.O.F.,
+Zoetermeer/Netherlands
+Valeo Siemens eAutomotive GmbH, Erlangen
+50
+208
+E-Mobility Provider Austria GmbH, Vienna/Austria
+514
+31
+358
+26
+Rousch (Pakistan) Power Ltd., Islamabad/Pakistan
+000 Transconverter, Moscow/Russian Federation
+Impilo Consortium (Pty.) Ltd., La Lucia/South Africa
+Nertus Mantenimiento Ferroviario y Servicios S.A.,
+Madrid/Spain
+44
+448
+Aspern Smart City Research GmbH, Vienna/Austria
+Aspern Smart City Research GmbH & Co KG,
+Vienna/Austria
+40
+Armpower CJSC, Yerevan/Armenia
+208
+Eemshaven/Netherlands
+Europe, Commonwealth of Independent States
+(C.I.S.), Africa, Middle East (without Germany)
+(42 companies)
+ZeeEnergie Management B.V.,
+206,13
+ZeeEnergie C.V., Amsterdam/Netherlands
+458
+50
+Ural Locomotives Holding Besloten Vennootschap,
+'s-Gravenhage/Netherlands
+20
+Veja Mate Offshore Project GmbH, Oststeinbek
+WUN H2 GmbH, Wunsiedel
+50
+52
+21
+Screenpoint Medical B.V., Nijmegen/Netherlands
+FEAG Fertigungscenter für Elektrische Anlagen
+GmbH, Erlangen
+100
+40
+egrid applications & consulting GmbH, Kempten
+September 30, 2020
+in %
+September 30, 2020
+in %
+Avatar Integrated Systems Kabushiki Kaisha,
+Yokohama/Japan
+Siemens Healthcare Limited, Taipei/Taiwan,
+Province of China
+100
+Mentor Graphics Japan Co., Ltd., Tokyo/Japan
+100
+Siemens Industry Software (TW) Co., Ltd.,
+Taipei/Taiwan, Province of China
+100
+Siemens Healthcare Diagnostics K.K., Tokyo/Japan
+100
+Siemens Healthcare K.K., Tokyo/Japan
+Siemens Limited, Taipei/Taiwan, Province of China
+100
+100
+Siemens K.K., Tokyo/Japan
+Dresser-Rand (Thailand) Limited, Rayong/Thailand
+100
+100
+Siemens PLM Software Computational Dynamics
+K.K., Yokohama/Japan
+100
+Siemens Healthcare Limited, Bangkok/Thailand
+Siemens Limited, Bangkok/Thailand
+100
+100
+Avatar Integrated Systems Korea LLC, Bundang-gu,
+Seongnam-si, Gyeonggi-do/Korea, Republic of
+Siemens Logistics Automation Systems Ltd.,
+100
+Equity interest
+Equity interest
+Consolidated Financial Statements → B.6 Notes to Consolidated Financial Statements
+160
+Siemens Industry Software Limited,
+498
+Hong Kong/Hong Kong
+100
+PT Siemens Healthineers Indonesia,
+Jakarta/Indonesia
+100
+Siemens Limited, Hong Kong/Hong Kong
+PT Siemens Mobility Indonesia, Jakarta/Indonesia
+100
+Siemens Logistics Limited, Hong Kong/Hong Kong
+100
+Acrorad Co., Ltd., Okinawa/Japan
+96
+Bangkok/Thailand
+Siemens Mobility Limited, Hong Kong/Hong Kong
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members
+of the key management personnel.
+3 Control due to contractual arrangements to determine the direction
+of the relevant activities.
+4 No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements
+or legal circumstances.
+6 Significant influence due to contractual arrangements
+or legal circumstances.
+7 Not consolidated due to immateriality.
+8 Not accounted for using the equity method due to immateriality.
+9 Exemption pursuant to Section 264 b German Commercial Code.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements;
+the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder
+with unlimited liability of this company.
+ANNUAL REPORT 2020
+100
+100
+100
+Siemens Mobility Sdn. Bhd., Kuala Lumpur/Malaysia
+Siemens (N.Z.) Limited, Auckland/New Zealand
+100
+AND JOINT VENTURES
+Siemens Mobility Ltd., Seoul/Korea, Republic of
+100
+Germany (24 companies)
+Dresser-Rand Asia Pacific Sdn. Bhd.,
+Kuala Lumpur/Malaysia
+100
+Siemens Healthcare Limited, Auckland/New Zealand
+Siemens Healthcare Inc., Manila/Philippines
+Alchemist Accelerator Europe Fund I GmbH & Co. KG,
+Grünwald
+418
+Siemens Healthcare Sdn. Bhd., Petaling
+ATS Projekt Grevenbroich GmbH, Schüttorf
+258
+Jaya/Malaysia
+100
+BELLIS GmbH, Braunschweig
+498
+Siemens Industry Software Sdn. Bhd., George Town,
+Pulau Pinang/Malaysia
+Caterva GmbH, Pullach i. Isartal
+50
+100
+Siemens Malaysia Sdn. Bhd., Petaling Jaya/Malaysia
+Curagita Holding GmbH, Heidelberg
+30
+100
+498
+Cologne
+100
+Siemens Ltd. Seoul, Seoul/Korea, Republic of
+ASSOCIATED COMPANIES
+100
+Seoul/Korea, Republic of
+100
+Mentor Graphics (Korea) LLC, Bundang-gu,
+Seongnam-si, Gyeonggi-do/Korea, Republic of
+DKS Dienstleistungsgesellschaft f. Kommunikations-
+anlagen des Stadt- und Regionalverkehrs mbH,
+Siemens Mobility Limited, Bangkok/Thailand
+100
+100
+Siemens Healthcare Limited,
+PSE Korea Ltd, Daejeon/Korea, Republic of
+100
+100
+100
+Siemens Healthineers Ltd., Seoul/Korea, Republic of
+100
+Siemens Ltd., Ho Chi Minh City/Viet Nam
+100
+Siemens Industry Software Ltd.,
+Ho Chi Minh City/Viet Nam
+Additional Information C.3 Report of the Supervisory Board
+C.3
+Report of the Supervisory Board
+Berlin and Munich, December 1, 2020
+Additional Information C.3 Report of the Supervisory Board
+Dear Shareholders,
+-
+In fiscal 2020, the Supervisory Board performed in full
+the duties assigned to it by law, the Siemens Articles of
+Association and the Bylaws for the Supervisory Board.
+On the basis of detailed written and oral reports provided
+by the Managing Board, we monitored the Managing
+Board and advised it on the management of the Com-
+pany. In addition, I regularly exchanged information with
+the President and CEO and the other Managing Board
+members. As a result, the Supervisory Board was always
+kept up to date on projected business policies, Company
+planning - including financial, investment and personnel
+planning - and the Company's profitability and business
+operations as well as on the state of Siemens AG and the
+Siemens Group. We were directly involved at an early
+stage in all decisions of fundamental importance to the
+Company and discussed these decisions with the Manag-
+ing Board intensively and in detail. To the extent that
+Supervisory Board approval of the decisions and mea-
+sures of Company management was required by law,
+the Siemens Articles of Association or our Bylaws, the
+members of the Supervisory Board - prepared in some
+cases by the Supervisory Board's committees - issued
+-
+such approval after intensive review and discussion. The
+relevant Managing Board members informed us – within
+the limits set by the applicable legal framework – about
+measures and decisions of fundamental importance at
+the former Strategic Companies.
+A special focus of our activities in fiscal 2020 was the
+Company's further strategic development. At meetings
+and additional informational sessions in the first three
+quarters of the fiscal year, in particular, we concerned
+ourselves intensively with the spin-off of Siemens' energy
+business via a carve-out and subsequent public listing.
+We support the spin-off of the energy business and ap-
+proved it at an extraordinary meeting on May 22, 2020.
+In the second half of fiscal 2020, our activities focused on
+the further strategic development of Siemens AG after
+the spin-off. Together with the Managing Board, we dis-
+cussed markets and trends, the goals and priorities of
+Siemens' businesses and the Company's technological
+and personnel strategy. Succession planning for the
+Managing Board was another focal point of our work in
+fiscal 2020. To open a new chapter in Siemens' history,
+we successfully completed the succession process and
+established the management team that will lead the fo-
+cused Siemens AG as of October 1, 2020.
+Topics at the plenary meetings
+of the Supervisory Board
+ANNUAL REPORT 2020 176
+In fiscal 2020, the employees of Siemens AG delivered an
+extraordinary performance. Despite the impact of the
+COVID-19 pandemic, the Company not only demon-
+strated impressive operating strength, it also successfully
+completed a realignment of its structure and personnel.
+Siemens Energy was listed on the stock exchange as orig-
+inally scheduled. This spin-off marks the implementation
+of a key element of the Vision 2020+ strategy concept.
+In fiscal 2020, the Supervisory Board also successfully
+completed the succession process for the Managing
+Board of Siemens AG and established the new Managing
+Board team headed by Dr. Roland Busch. These steps pro-
+vided an excellent foundation for the successful further
+development and growth of a focused Siemens AG.
+We held a total of six regular plenary meetings and five
+extraordinary meetings in fiscal 2020. Topics of discus-
+sion at our regular plenary meetings were revenue, profit
+and employment development at Siemens AG and the
+Siemens Group as well as the Company's financial posi-
+tion and the results of its operations. In addition, we con-
+cerned ourselves, as occasion required, with acquisition
+and divestment projects and with risks to the Company.
+Portfolio measures were further topics of discussion.
+We also met at regular intervals without the Managing
+Board in attendance. On these occasions, we dealt with
+agenda items that concerned either the Managing Board
+itself or internal Supervisory Board matters.
+-
+The spin-off of Siemens' energy business was a particular
+focus of our activity. At our meetings on November 6,
+2019, December 4, 2019, and February 4, 2020, the Man-
+aging Board updated us on the current status of the carve-
+out of the energy business and on the progress in spin-off
+preparation. At an extraordinary meeting on January 15,
+2020, the Audit Committee discussed financial, account-
+ing and other key spin-off-related topics. An informational
+session was held for the employee representatives on the
+Supervisory Board on April 24, 2020. Another such session
+was held for the shareholder representatives on April 27,
+2020. At these informational sessions, at an extraordinary
+Audit Committee meeting on April 27, 2020, and at our
+meeting on May 8, 2020, the Managing Board and
+Siemens Energy's designated leadership team
+ported by external consultants and experts - provided us
+with detailed information regarding the planned spin-off
+in preparation for our decisions scheduled for May 22,
+2020. At our meeting on May 8, 2020, we approved - on
+the recommendation of the Audit Committee - the clos-
+ing statements of financial position of Siemens AG as of
+March 31, 2020, which also serve as the closing state-
+ments of financial position pursuant to Section 125, sent. 1
+and Section 17, para. 2 of the German Transformation Act
+(Umwandlungsgesetz). At our extraordinary meeting on
+May 22, 2020, we approved - on the basis of prior detailed
+reporting by the Managing Board and intensive discus-
+sions in the Supervisory Board and with the Managing
+Board the spin-off of Siemens' energy business as ap-
+proved by the Managing Board. On the recommendation
+of the Compensation Committee, we approved, in addi-
+tion, the adjustments to the stock-based compensation
+programs for active and former Managing Board members
+that had to be made in the course of the spin-off of
+Siemens' energy business. At this meeting, we also con-
+cerned ourselves with the agenda for the Extraordinary
+Shareholders' Meeting on July 9, 2020, and approved the
+Managing Board's decisions regarding the conduct of this
+meeting as a virtual shareholders' meeting without the
+physical presence of shareholders or their proxies in
+accordance with Section 1, para. 2 of the German Act Con-
+cerning Measures Under the Law of Companies, Cooper-
+ative Societies, Associations, Foundations and Common-
+hold Property to Combat the Effects of the COVID-19
+Pandemic (Gesetz über Maßnahmen im Gesellschafts-,
+Genossenschafts-, Vereins-, Stiftungs- und Wohnungs-
+At our extraordinary meeting on May 22, 2020, we ap-
+proved the spin-off of Siemens' energy business via a
+carve-out and subsequent public listing and made the
+further decisions mentioned above. The meeting also
+focused on Siemens AG's digitalization strategy.
+At our meeting on May 8, 2020, the Managing Board
+reported to us on the Company's current business and
+financial position following the conclusion of the sec-
+ond quarter
+in particular, on the impact of the
+COVID-19 pandemic – and on the spin-off of Siemens'
+energy business. The Managing Board also informed us
+about the business situation, development and strategic
+orientation of Mobility, one of Siemens' former Strategic
+Companies. Finally, we concerned ourselves with corpo-
+rate governance at Siemens. We approved the internal
+control process for related-party transactions and trans-
+ferred the responsibility for monitoring this process to
+the Audit Committee.
+-
+At our extraordinary meeting on May 7, 2020, we ap-
+proved the Managing Board's decision regarding the
+preparation of a spin-off of Flender following the inte-
+gration of Siemens' wind power generator business into
+Flender.
+At an informational session on April 24, 2020, the em-
+ployee representatives on the Supervisory Board dis-
+cussed the planned spin-off of Siemens' energy business
+in depth, as did the shareholder representatives at an-
+other such session on April 27, 2020.
+At our extraordinary meeting on March 19, 2020, which
+was in the form of a conference call, we concerned our-
+selves with personnel-related matters regarding the Man-
+aging Board. In order to ensure an orderly succession
+process, we decided on the recommendation of the
+Chairman's Committee – to appoint Dr. Roland Busch to
+another term of office as a full member of the Managing
+Board for the period from April 1, 2020, through March 31,
+2025, and to terminate by mutual agreement his current
+appointment, effective the end of the day on March 31,
+2020. In addition, we appointed Dr. Roland Busch Presi-
+dent and CEO, effective no later than the conclusion of
+the next ordinary Annual Shareholders' Meeting on Feb-
+ruary 3, 2021. On the recommendation of the Chairman's
+Committee, we also approved the termination by mutual
+agreement of Michael Sen's appointment as a full mem-
+ber of the Managing Board, effective the end of the day
+on March 31, 2020, and we were informed about addi-
+tional personnel-related decisions regarding Siemens
+Energy. The Managing Board also informed us about the
+impact of the COVID-19 pandemic.
+-
+-
+At our meeting on February 4, 2020, the Managing Board
+reported to us on the Company's current business and
+financial position following the conclusion of the first
+quarter. We dealt with the carve-out and preparations for
+the spin-off of Siemens' energy business. We also ap-
+proved the Managing Board's decision to acquire the en-
+tire stake in Siemens Gamesa Renewable Energy held by
+Iberdrola S.A., Spain. Based on the endorsement of the
+Managing Board compensation system by the Annual
+Shareholders' Meeting on February 5, 2020, we confirmed
+our decisions of December 4, 2019, defining Managing
+Board compensation as of October 1, 2019.
+development of Siemens Healthineers. In addition, we
+concerned ourselves with the annual report of the Chief
+Compliance Officer and the annual report of the Cyber-
+security Officer. The carve-out and preparations for the
+spin-off of Siemens' energy business were also topics at
+this meeting. Finally, on the recommendation of the
+Chairman's Committee, we approved the termination by
+mutual agreement of Lisa Davis's appointment as a full
+member of the Managing Board, effective the end of the
+day on February 29, 2020.
+Additional Information C.3 Report of the Supervisory Board
+ANNUAL REPORT 2020 177
+-
+On December 4, 2019, we discussed the financial state-
+ments and the Combined Management Report for
+Siemens AG and the Siemens Group as of September 30,
+2019, the Annual Report for 2019 – including the Report
+of the Supervisory Board, the Corporate Governance
+Report and the Compensation Report - and the agenda
+for the ordinary Annual Shareholders' Meeting on Febru-
+ary 5, 2020. In addition, we dealt with Managing Board
+compensation for fiscal 2020. On the recommendation of
+the Compensation Committee, we approved the Manag-
+ing Board compensation system – including planned max-
+imum compensation – effective October 1, 2019, as de-
+scribed in the "Notice of Annual Shareholders' Meeting."
+On the recommendation of the Compensation Commit-
+tee, we also made a further decision regarding the target
+setting and the maximum compensation for Managing
+Board compensation in fiscal 2020. The Managing Board
+updated us on the current status of acquisitions and
+divestments and on the business situation and business
+At our meeting on November 6, 2019, we discussed the
+key financial figures for fiscal 2019 and approved the
+budget for fiscal 2020. We dealt with the carve-out and
+the preparations for the spin-off of Siemens' energy
+business. On a recommendation by the Compensation
+Committee, we also defined the Managing Board mem-
+bers' compensation for fiscal 2019 on the basis of calcu-
+lated target achievement. An internal review confirmed
+the appropriateness of this compensation. Against the
+backdrop of the changing regulatory framework and the
+new Group structure due to the Vision 2020+ strategy
+concept, we had already approved an adjustment to the
+Managing Board compensation system as of fiscal 2020
+at our meeting on September 18, 2019. At that meeting,
+we had also defined the performance criteria for the
+Managing Board's variable compensation for fiscal 2020.
+On this basis and on the recommendation of the Com-
+pensation Committee, we made a decision on target
+setting for Managing Board compensation for fiscal
+2020, at our meeting on November 6, 2019. At this
+meeting, we also approved a Managing Board decision
+on financing measures.
+eigentumsrecht zur Bekämpfung der Auswirkungen der
+COVID-19-Pandemie) of March 27, 2020 (Federal Law Ga-
+zette | No. 14 2020, p. 570).
+ANNUAL REPORT 2020 175
+sup-
+[German Public Auditor]
+conformity with German law, and the view of the
+Group's position it provides.
+Breitsameter
+Furthermore, management is responsible for the prepara-
+tion of the group management report that, as a whole,
+provides an appropriate view of the Group's position and is,
+in all material respects, consistent with the consolidated
+financial statements, complies with German legal require-
+ments and appropriately presents the opportunities and
+risks of future development. In addition, management is
+responsible for such arrangements and measures (sys-
+tems) as management has considered necessary to enable
+the preparation of a group management report that is in
+accordance with the applicable German legal require-
+ments, and to be able to provide sufficient appropriate ev-
+idence for the assertions in the group management report.
+The Supervisory Board is responsible for overseeing the
+Group's financial reporting process for the preparation of
+the consolidated financial statements and of the group
+management report.
+ANNUAL REPORT 2020 173
+Additional Information → C.2 Independent Auditor's Report
+Auditor's responsibilities for the audit
+of the consolidated financial statements
+and of the group management report
+Our objectives are to obtain reasonable assurance about
+whether the consolidated financial statements as a whole
+are free from material misstatement, whether due to
+fraud or error, and whether the group management
+report as a whole provides an appropriate view of the
+Group's position and, in all material respects, is consis-
+tent with the consolidated financial statements and the
+knowledge obtained in the audit, complies with the Ger-
+man legal requirements and appropriately presents the
+opportunities and risks of future development, as well as
+to issue an auditor's report that includes our opinions on
+the consolidated financial statements and on the group
+management report.
+Reasonable assurance is a high level of assurance, but is
+not a guarantee that an audit conducted in accordance
+with Sec. 317 HGB and the EU Audit Regulation as well as
+in compliance with German Generally Accepted Stan-
+dards for Financial Statement Audits promulgated by the
+IDW and in supplementary compliance with ISA will
+always detect a material misstatement. Misstatements
+can arise from fraud or error and are considered material
+if, individually or in the aggregate, they could reasonably
+be expected to influence the economic decisions of users
+taken on the basis of these consolidated financial state-
+ments and this group management report.
+We exercise professional judgment and maintain profes-
+sional skepticism throughout the audit. We also:
+→ Identify and assess the risks of material misstatement
+of the consolidated financial statements and of the
+group management report, whether due to fraud or
+error, design and perform audit procedures responsive
+to those risks, and obtain audit evidence that is suffi-
+cient and appropriate to provide a basis for our opin-
+ions. The risk of not detecting a material misstatement
+resulting from fraud is higher than for one resulting
+from error, as fraud may involve collusion, forgery,
+intentional omissions, misrepresentations, or the
+override of internal control.
+→ Obtain an understanding of internal control relevant
+to the audit of the consolidated financial statements
+and of arrangements and measures (systems) rele-
+vant to the audit of the group management report
+in order to design audit procedures that are appropri-
+ate in the circumstances, but not for the purpose
+of expressing an opinion on the effectiveness of
+these systems.
+We communicate with those charged with governance
+regarding, among other matters, the planned scope and
+→ Evaluate the appropriateness of accounting policies
+used by management and the reasonableness of esti-
+mates made by management and related disclosures.
+→ Conclude on the appropriateness of management's
+use of the going concern basis of accounting and,
+based on the audit evidence obtained, whether a ma-
+terial uncertainty exists related to events or conditions
+that may cast significant doubt on the Group's ability
+to continue as a going concern. If we conclude that a
+material uncertainty exists, we are required to draw
+attention in the auditor's report to the related disclo-
+sures in the consolidated financial statements and in
+the group management report or, if such disclosures
+are inadequate, to modify our respective opinions.
+Our conclusions are based on the audit evidence ob-
+tained up to the date of our auditor's report. However,
+future events or conditions may cause the Group to
+cease to be able to continue as a going concern.
+→ Evaluate the overall presentation, structure and con-
+tent of the consolidated financial statements, includ-
+ing the disclosures, and whether the consolidated
+financial statements present the underlying transac-
+tions and events in a manner that the consolidated
+financial statements give a true and fair view of the
+assets, liabilities, financial position and financial per-
+formance of the Group in compliance with IFRSS as
+adopted by the EU and the additional requirements of
+German commercial law pursuant to Sec. 315e (1) HGB
+as well as with full IFRSS as issued by the IASB.
+→ Obtain sufficient appropriate audit evidence regard-
+ing the financial information of the entities or busi-
+ness activities within the Group to express opinions on
+the consolidated financial statements and on the
+group management report. We are responsible for the
+direction, supervision and performance of the group
+audit. We remain solely responsible for our opinions.
+ANNUAL REPORT 2020 174
+Additional Information → C.2 Independent Auditor's Report
+→ Perform audit procedures on the prospective informa-
+tion presented by management in the group manage-
+ment report. On the basis of sufficient appropriate
+audit evidence we evaluate, in particular, the signifi-
+cant assumptions used by management as a basis for
+the prospective information, and evaluate the proper
+derivation of the prospective information from these
+assumptions. We do not express a separate opinion on
+the prospective information and on the assumptions
+used as a basis. There is a substantial unavoidable risk
+that future events will differ materially from the pro-
+spective information.
+At our extraordinary meeting on June 30, 2020, we de-
+cided on the recommendation of the Chairman's Com-
+mittee to appoint Judith Wiese a full member of the
+Managing Board and the successor to Dr. Roland Busch as
+Labor Director for the period from October 1, 2020,
+through September 30, 2023. We also concerned our-
+selves with succession planning for the Managing Board.
+In preparing the consolidated financial statements, man-
+agement is responsible for assessing the Group's ability
+to continue as a going concern. It also has the responsi-
+bility for disclosing, as applicable, matters related to go-
+ing concern. In addition, management is responsible for
+financial reporting based on the going concern basis of
+accounting, unless there is an intention to liquidate the
+Group or to cease operations, or there is no realistic alter-
+native but to do so.
+Other legal and
+regulatory requirements
+→ Evaluate the consistency of the group management
+report with the consolidated financial statements, its
+Preisa
+[German Public Auditor]
+Spannagl
+Wirtschaftsprüfer
+Отв
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+Munich, November 27, 2020
+The German Public Auditor responsible for the engage-
+ment is Thomas Spannagl.
+Wirtschaftsprüferin
+From the matters communicated with those charged with
+governance, we determine those matters that were of
+most significance in the audit of the consolidated finan-
+cial statements of the current period and are therefore
+the key audit matters. We describe these matters in our
+auditor's report unless law or regulation precludes public
+disclosure about the matter.
+ing any significant deficiencies in internal control that we
+identify during our audit.
+timing of the audit and significant audit findings, includ- responsible for the engagement
+German Public Auditor
+We declare that the opinions expressed in this auditor's
+report are consistent with the additional report to the
+Audit Committee pursuant to Art. 11 of the EU Audit Reg-
+ulation (long-form audit report).
+to Art. 10 of the EU Audit Regulation
+We were elected as group auditor by the Annual Share-
+holders' Meeting on February 5, 2020. We were engaged
+by the Supervisory Board on February 5, 2020. We have
+been the group auditor of Siemens Aktiengesellschaft
+without interruption since the fiscal year from October 1,
+2008 to September 30, 2009.
+Further information pursuant
+If, based on the work we have performed, we conclude
+that there is a material misstatement of this other infor-
+mation, we are required to report that fact. We have
+nothing to report in this regard.
+We also provide those charged with governance with a
+statement that we have complied with the relevant inde-
+pendence requirements, and communicate with them all
+relationships and other matters that may reasonably be
+thought to bear on our independence and where appli-
+cable, the related safeguards.
+At our extraordinary meeting on July 30, 2020, the
+Managing Board informed us about the planned
+acquisition of Varian Medical Systems, Inc., USA, by
+Siemens Healthineers AG. We approved the Managing
+Board's decision regarding the financing measures
+relating to this transaction.
+Additional Information → C.2 Independent Auditor's Report
+→ otherwise appears to be materially misstated.
+PROVISIONS FOR PROCEEDINGS OUT OF
+Reference to related disclosures: With regard to the rec-
+ognition and measurement policies applied in account-
+ing for construction contracts, refer to > NOTE 2 MATERIAL
+ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the
+notes to the consolidated financial statements. With re-
+spect to contract assets and liabilities as well as provisions
+for order related losses and risks, refer to 7 NOTE 10 CON-
+TRACT ASSETS AND LIABILITIES and 7 NOTE 18 PROVISIONS in the
+notes to the consolidated financial statements.
+Our audit procedures did not lead to any reservations re-
+lating to revenue recognition on construction contracts.
+Additional Information → C.2 Independent Auditor's Report
+ANNUAL REPORT 2020 170
+Due to the large contract volume and risk profile, in par-
+ticular with respect to the developments of the power
+generation markets, our audit procedures especially
+focused on large contracts for the turnkey construction
+of power plants, high-voltage-direct-current solutions,
+the delivery of high-speed and commuter trains, and the
+construction of onshore and offshore wind farms.
+future uncertainties and risks, such as fixed-price or turn-
+key projects, projects with complex technical require-
+ments or with a large portion of materials and services to
+be provided by suppliers, subcontractors or consortium
+partners, cross-border projects, projects in regions partic-
+ularly affected by the COVID-19 pandemic and projects
+with changes in cost estimates, delays and/or low or neg-
+ative margins. Our audit procedures included, among
+others, review of the contracts and their terms and condi-
+tions including contractually agreed partial deliveries and
+services, termination rights, penalties for delay and
+breach of contract as well as liquidated damages. In order
+to evaluate whether revenues were recognized on an ac-
+crual basis for the selected projects, we analyzed billable
+revenues and corresponding cost of sales to be recog-
+nized in the statement of income in the reporting period
+considering the extent of progress towards completion,
+and examined the accounting for the associated items
+in the statement of financial position. Considering the
+requirements of IFRS 15, we also assessed the accounting
+for contract amendments or contractually agreed options.
+We further performed inquiries of project management
+(both commercial and technical project managers) with
+respect to the development of the projects including the
+effects of COVID-19 on project execution, the reasons for
+deviations between planned and actual costs, the current
+estimated costs to complete the projects, and manage-
+ment's assessments on probabilities that contract risks
+will materialize. To identify anomalies in the development
+of margins throughout the projects' execution, we also
+applied data analysis procedures. In designing our audit
+procedures, we also considered results from project audits
+conducted by the internal audit function. Furthermore,
+we obtained evidence from third parties for selected proj-
+ects (e.g., project acceptance documentation, contrac-
+tual terms and conditions, and lawyers' confirmations
+regarding alleged breaches of contract and asserted
+claims) and inspected plant and project locations.
+ANNUAL REPORT 2020 178
+Auditor's response: As part of our audit, we obtained an
+understanding of the Group's internally established
+methods, processes and control mechanisms for project
+management in the bid and execution phase of construc-
+tion contracts. In this regard, we assessed the design and
+operating effectiveness of the accounting-related inter-
+nal controls in the project business by obtaining an un-
+derstanding of business transactions specific to construc-
+tion contracts, from the initiation of the transaction
+through presentation in the consolidated financial state-
+ments. We also tested internal controls on management
+level including project reviews and controls addressing
+the timely assessment of changes in cost estimates and
+the timely and complete recognition of such changes in
+the project calculation.
+Contracts with Customers, generally over time under
+the percentage-of-completion method. We consider the
+accounting for construction contracts to be an area posing
+a significant risk of material misstatement (including the
+potential risk of management override of internal con-
+trols) and accordingly a key audit matter, because manage-
+ment's assessments significantly impact the determination
+of the extent of progress towards completion. These assess-
+ments include, in particular, the scope of deliveries and
+services required to fulfill contractually defined obligations,
+total estimated contract costs, remaining costs to comple-
+tion and total estimated contract revenues, as well as con-
+tract risks including technical, political, regulatory and legal
+risks. Revenues, total estimated contract costs and profit
+recognition may deviate significantly from original esti-
+mates based on new knowledge about cost overruns and
+changes in project scope over the term of a construction
+contract. Furthermore, in fiscal year 2020 the effects of the
+coronavirus pandemic (COVID-19) on the project business,
+such as delays in project execution due to access restric-
+tions at customer sites or short-term interruptions to supply
+chains as well as the invocation of force majeure or change
+in law clauses with regard to compensation for damages or
+contractual penalties for delays in delivery and their ac-
+counting treatment were of key significance for our audit.
+Additional Information → C.2 Independent Auditor's Report
+169
+OR IN CONNECTION WITH ALLEGED COMPLIANCE
+VIOLATIONS AS WELL AS PROVISIONS FOR ASSET
+RETIREMENT OBLIGATIONS
+ANNUAL REPORT 2020
+ON CONSTRUCTION CONTRACTS
+REVENUE RECOGNITION
+Reference to related disclosures: With regard to the rec-
+ognition and measurement policies applied for the spin-off
+of the Siemens Energy Business, refer to > NOTE 2 MATERIAL
+ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the
+notes to the consolidated financial statements. An expla-
+nation of the transaction and disclosures on the deconsol-
+idation and spin-off result are presented in > NOTE 3 ACQUI-
+SITIONS, DISPOSITION AND DISCONTINUED OPERATIONS in the notes
+to the consolidated financial statements.
+Our audit procedures did not lead to any reservations re-
+lating to the spin-off of the Siemens Energy Business.
+Furthermore, we evaluated the disclosures on the spin-
+off of the Siemens Energy Business provided in the notes
+to the consolidated financial statements.
+In addition, drawing on the expertise of IT specialists, we
+evaluated the IT related implementation of the deconsol-
+idation in the consolidation systems as well as the meth-
+odological, mathematical and accounting approach to
+the derecognition calculation in accordance with IFRS 10.
+and the subsequent contribution of 9.9% to Siemens
+Pension-Trust e. V. and their presentation in the consoli-
+dated financial statements. Our audit procedures partic-
+ularly included assessing the determination of the fair
+value of the spin-off liability and of the investment held
+in Siemens Energy AG as an associate as of September 25,
+2020 on the basis of the opinion prepared by the inde-
+pendent expert and the calculation of the disposal result.
+Additional audit procedures were performed related to
+management's assessment of the recoverability of the
+35.1% investment in Siemens Energy accounted for as an
+associate as of September 30, 2020.
+Finally, we examined the accounting for the disposal of
+the remeasured spin-off liability and the carrying amount
+of the assets and liabilities held for sale as well as the
+addition of the 45% investment in Siemens Energy AG
+In connection with the recognition of the spin-off liabil-
+ity, we assessed the methodology of the independent
+expert engaged by management, the valuation models
+applied and the assumptions and estimates subject to
+judgment used in determining the fair value of the spin-
+off liability pursuant to IFRIC 17, Distributions of Non-cash
+Assets to Owners, drawing on the expertise of our valua-
+tion specialists and taking into account the audit evi-
+dence obtained from the abovementioned impairment
+tests. This also included assessing the appropriateness as
+audit evidence of the expert opinion commissioned by
+management from an independent expert.
+As part of our assessment of the impairment test – to be
+performed directly before the classification as held for
+sale - for goodwill contained in the spin-off group and re-
+lating to the previous groups of cash-generating units Gas
+and Power, SGRE Operation and Maintenance and SGRE
+Wind Turbines as well as the impairment test for the entire
+spin-off group as of March 31, 2020 and June 30, 2020, we,
+among other procedures, obtained an understanding of
+the process for the preparation of the multi-year plan in
+the Group and for the cash-generating units. In addition,
+we evaluated the methodology and the valuation models
+for performing the impairment tests with the assistance of
+internal specialists who have expertise in business valua-
+tion. We also assessed the stated future cash inflows by,
+among other procedures, comparing this information
+against the five-year plan prepared by management as
+well as by comparing the internal growth and earnings
+forecasts with general and industry-specific market expec-
+tations and significant competitors. In addition, we exam-
+ined the underlying assumptions and parameters, walked
+through the sensitivity analyses prepared by management
+and performed supplementary sensitivity analyses of our
+own to account for the existing forecast uncertainties.
+to the consolidation entries and prior-year figures in the
+consolidated statement of income and consolidated
+statement of cash flows, drawing on the expertise of in-
+ternal IT specialists.
+and the Supervisory Board for the
+consolidated financial statements
+and the group management report
+Management is responsible for the preparation of the con-
+solidated financial statements that comply, in all material
+respects, with IFRSS as adopted by the EU and the addi-
+tional requirements of German commercial law pursuant
+to Sec. 315e (1) HGB as well as with full IFRSs as issued by
+the IASB, and that the consolidated financial statements,
+in compliance with these requirements, give a true and
+fair view of the assets, liabilities, financial position and
+financial performance of the Group. In addition, manage-
+ment is responsible for such internal control as manage-
+ment has determined necessary to enable the preparation
+of consolidated financial statements that are free from
+material misstatement, whether due to fraud or error.
+Reasons why the matter was determined to be a key au-
+dit matter: The Group conducts a significant portion of its
+business in continuing and discontinued operations under
+construction contracts, particularly in the Gas and Power
+business and at Siemens Gamesa Renewable Energy (until
+the spin-off became effective) as well as in the Mobility
+business. Revenue from long-term construction contracts
+is recognized in accordance with IFRS 15, Revenue from
+Reasons why the matter was determined to be a key
+audit matter: We considered the accounting for provi-
+sions for proceedings out of or in connection with alleged
+compliance violations, including allegations of corrup-
+tion and antitrust violations, and for asset retirement
+obligations to be a key audit matter. These matters are
+subject to inherent uncertainties and require estimates
+that could have a significant impact on the recognition
+and measurement of the respective provision and, ac-
+cordingly, on assets, liabilities and financial performance.
+Proceedings out of or in connection with alleged compli-
+ance violations are subject to uncertainties because they
+frequently involve complex legal issues and accordingly,
+considerable management judgment, in particular when
+determining whether and in what amount a provision is
+required to account for the risks. The uncertainties and
+estimates with respect to asset retirement obligations
+pertain especially to the estimated costs of interim and
+final nuclear waste storage, the estimated time frame
+over which cash outflows are expected, and the relevant
+discount rates.
+As part of our substantive audit procedures, we evaluated
+management's estimates and assumptions based on a risk-
+based selection of a sample of contracts. Our sample par-
+ticularly included projects that are subject to significant
+management's estimates of the expected cash outflows,
+our audit procedures included inquiring of management
+and other persons within the Group entrusted with these
+matters, obtaining written statements from in-house legal
+counsels with respect to the assessment of estimated cash
+outflows and their probability, obtaining confirmations
+from external legal advisors and evaluating internal state-
+ments concerning the accounting treatment in the con-
+solidated financial statements. Furthermore, we exam-
+ined legal consulting expense accounts for any indications
+of legal matters not yet considered.
+→ is materially inconsistent with the consolidated finan-
+cial statements, with the group management report
+or our knowledge obtained in the audit, or
+In connection with our audit, our responsibility is to read
+the other information and, in so doing, to consider
+whether the other information
+Our opinions on the consolidated financial statements
+and on the group management report do not cover the
+other information, and consequently we do not express
+an opinion or any other form of assurance conclusion
+thereon.
+Auditor's response: During our audit of the financial
+reporting of proceedings out of or in connection with
+alleged compliance violations, we examined the pro-
+cesses implemented by Siemens for identifying, assess-
+ing and accounting for legal and regulatory proceedings.
+To determine what potentially significant pending legal
+proceedings or claims asserted are known and to assess
+→ Corporate Governance in chapter > c.4 of the Annual
+Report 2020, and
+→ the Report of the Supervisory Board in chapter 7 c.3 of
+the Annual Report 2020,
+→ the Responsibility Statement in chapter 7 c.1 of the
+Annual Report 2020,
+The Supervisory Board is responsible for the Report of the
+Supervisory Board in chapter c.3 of the Annual Report
+2020. Management and the Supervisory Board are re-
+sponsible for the declaration pursuant to Sec. 161 AktG
+["Aktiengesetz": German Stock Corporation Act] on the
+Corporate Governance Code, which is part of the Corpo-
+rate Governance Statement in chapter > c.4.2. In all other
+respects, management is responsible for the other infor-
+mation. The other information comprises the Corporate
+Governance Statement referred to above. In addition, the
+other information comprises parts to be included in the
+Annual Report, of which we received a version prior to
+issuing this auditor's report, in particular:
+Other information
+Additional Information → C.2 Independent Auditor's Report
+ANNUAL REPORT 2020 172
+Reference to related disclosures: With regard to the recog-
+nition and measurement policies applied in accounting for
+income taxes, refer to > NOTE 2 MATERIAL ACCOUNTING POLICIES
+AND CRITICAL ACCOUNTING ESTIMATES in the notes to the consol-
+idated financial statements. With respect to disclosures for
+deferred tax assets and liabilities, refer to > NOTE 7 INCOME
+TAXES in the notes to the consolidated financial statements.
+Our audit procedures did not lead to any reservations
+relating to the accounting for uncertain tax positions and
+deferred taxes.
+→ Notes and forward-looking statements in chapter 7 c.5
+of the Annual Report 2020.
+In assessing the recoverability of deferred tax assets,
+we above all analyzed management's assumptions with
+respect to tax planning strategies and projected future
+taxable income, particularly in view of the implications of
+the COVID-19 pandemic, and compared them to internal
+business plans. In the course of our audit procedures re-
+garding deferred tax liabilities, we examined in particular
+the assumptions regarding reinvestment of subsidiaries'
+retained profits for an indefinite period and assessed
+these taking into account dividend planning.
+We also examined the accounting effects resulting from
+the first-time application of IFRIC 23, Uncertainty over
+Income Tax Treatments.
+We further considered alleged or substantiated non-com-
+pliance with legal provisions, official regulations and
+internal company policies (compliance violations) by
+inspecting internal and external statements on specific
+matters, obtaining written statements from external
+legal advisors, and by inquiring of the compliance orga-
+nization. In this regard, among other procedures, we
+evaluated the conduct and results of internal investiga-
+tions by inspecting internal reports and the measures
+taken to remediate identified weaknesses, and assessed
+whether any risks have to be accounted for in the consol-
+idated financial statements.
+Based on the aforementioned uncertainties, our audit
+procedures with respect to asset retirement obligations
+focused on the remediation and environmental protection
+liabilities in connection with the decommissioning of the
+facilities in Hanau, Germany (Hanau facilities), as well as
+for the nuclear research and service center in Karlstein,
+Germany (Karlstein facilities). Our audit procedures in-
+cluded, among others, assessing the estimated costs for
+the construction, operation and decommissioning of the
+final storage facility, the appropriateness as audit evi-
+dence of an independent expert's report commissioned
+by management with regard to the estimated price infla-
+tion, evaluating the valuation methods used by drawing
+on the expertise of our valuation specialists, and assess-
+ing the significant estimates resulting from the long-term
+nature of the related obligations. Through inquiries of
+persons entrusted with the matter and inspections of in-
+ternal and external documents, we evaluated manage-
+ment's assessment whether, as of September 30, 2020,
+Siemens continues to be subject to the German Atomic
+Energy Act ("Atomgesetz"), whereby radioactive waste
+ANNUAL REPORT 2020 171
+Additional Information → C.2 Independent Auditor's Report
+resulting from decommissioning a nuclear facility must
+be reprocessed without causing damage and be deliv-
+ered to a government-approved final storage facility.
+Responsibilities of management
+Our audit procedures did not lead to any reservations
+relating to the accounting for proceedings out of or in
+connection with alleged compliance violations as well as
+for asset retirement obligations.
+Reference to related disclosures: With regard to the rec-
+ognition and measurement policies applied in account-
+ing for provisions, refer to > NOTE 2 MATERIAL ACCOUNTING
+POLICIES AND CRITICAL ACCOUNTING ESTIMATES in the notes to
+the consolidated financial statements. With respect to
+proceedings out of or in connection with alleged compli-
+ance violations, refer to > NOTE 22 LEGAL PROCEEDINGS. With
+respect to the uncertainties and estimates relating to
+asset retirement obligations, refer to > NOTE 18 PROVISIONS.
+UNCERTAIN TAX POSITIONS AND DEFERRED TAXES
+Reasons why the matter was determined to be a key
+audit matter: Siemens operates in numerous countries
+with different local tax legislation. The accounting for un-
+certain tax positions as well as deferred taxes requires
+management to exercise considerable judgment and
+make estimates and assumptions, and was therefore a key
+audit matter. In particular, this affects the measurement
+and completeness of uncertain tax positions, the recover-
+ability of deferred tax assets as well as the measurement
+and completeness of deferred tax liabilities. In addition,
+management's assessments regarding the tax implica-
+tions of the COVID-19 pandemic, including the accounting
+treatment of tax relief, were of particular significance.
+Auditor's response: With the assistance of internal tax
+specialists who have knowledge of relevant local tax law,
+we examined the processes installed by management and
+obtained an understanding of internal controls for the
+identification, recognition and measurement of tax posi-
+tions. In the course of our audit procedures relating to
+uncertain tax positions, we evaluated whether manage-
+ment's assessment of the tax implications of significant
+business transactions or events in fiscal year 2020, which
+could result in uncertain tax positions or influence the
+measurement of existing uncertain tax positions, was in
+compliance with tax law. In particular, this includes the
+tax implications arising from the acquisition or disposal of
+investments, corporate (intragroup) restructuring activi-
+ties, carve-outs, especially in preparation of the spin-off
+of the Siemens Energy Business, findings of tax audits and
+cross-border matters, such as determining transfer prices.
+In order to assess measurement and completeness, we
+also obtained confirmations from external tax advisors
+and inspected expert legal or tax opinions and assess-
+ments commissioned by management. Further, we eval-
+uated management's assessments with respect to the
+prospects of success of appeal and tax court proceedings
+by inquiring of the employees of the Siemens tax depart-
+ment and by considering current tax case law.
+Furthermore, we evaluated the disclosures on proceed-
+ings out of or in connection with alleged compliance vio-
+lations as well as on asset retirement obligations in the
+notes to the consolidated financial statements.
+11/11
+100
+(DBE, DPhil)
+Baroness Nemat Shafik
+2/2 100
+91
+10/11
+(Dr.-Ing. Dr.-Ing. E.h.)
+11/11
+100
+Hagen Reimer
+67
+4/6
+6/6
+91
+Nathalie von Siemens
+Norbert Reithofer
+100
+4/4 100
+Additional Information C.3 Report of the Supervisory Board
+8/8
+100
+4/4
+100
+100 11/11
+11/11
+100
+First Deputy Chairwoman
+99
+6/6
+100
+2/2
+100
+4/4
+Birgit Steinborn
+100
+4/4
+2/2
+11/11 100
+Werner Brandt (Dr. rer. pol.)
+6/6 100
+100
+2/2
+100
+100
+4/4
+100 11/11
+11/11
+Second Deputy Chairman
+100
+Werner Wenning
+100
+100
+8/8
+8/8
+4/4
+in %
+No.
+Nominating
+Committee
+Innovation
+and Finance
+Committee
+Compliance
+Committee
+Audit
+Committee
+No.
+Committee
+Supervisory
+Board (plenary
+meetings)
+(Number of meetings/
+participation in %)
+a virtual format or as in-person meetings in which virtual
+participation was possible. The participation rate of individ-
+ual members in the meetings of the Supervisory Board and
+its committees is set out in the following chart:
+(Dr. phil.)
+pandemic, all meetings after March 2020 were held either in
+Disclosure of participation by individual
+Supervisory Board members in meetings
+The average rate of participation by members in the meet-
+ings of the Supervisory Board and its committees was 97.4%.
+Due to the exceptional circumstances caused by the COVID-19
+Chairman's Compensation
+Committee
+100
+in %
+in %
+100
+11/11
+100
+11/11
+Chairman
+Jim Hagemann Snabe
+No.
+in %
+in %
+No.
+in %
+No.
+in %
+No.
+No.
+100
+4/4
+100
+At our meeting on September 23, 2020, the Managing
+Board reported to us on the state of the Company.
+Siemens AG's strategy was also a focus of this meeting.
+The Managing Board reported to us on current trends and
+market developments. We discussed the goals and prior-
+ities of Siemens' businesses as well as its technological
+and personnel strategy. We concerned ourselves with the
+annual review of Managing Board compensation and -
+after preparation by, and on a recommendation of, the
+Compensation Committee – defined for each Managing
+Board member individual target total compensation and
+maximum compensation as well as the performance cri-
+teria for variable compensation for fiscal 2021. At this
+meeting, we also discussed matters relating to corporate
+governance and, in particular, the preparation of the Dec-
+laration of Conformity with the German Corporate Gov-
+ernance Code and the independence of the shareholder
+representatives on the Supervisory Board. We approved
+amendments to the Bylaws for the Managing Board, for
+the Supervisory Board and for the Audit Committee of
+the Supervisory Board. In particular, we decided to rein-
+tegrate the Compliance Committee into the Audit Com-
+mittee and to transfer the Compliance Committee's du-
+ties to the Audit Committee, effective October 1, 2020. In
+addition, we approved a new version of the objectives for
+the composition of the Supervisory Board, including the
+profile of skills and expertise and the diversity concept for
+-
+At our meeting on August 5, 2020, the Managing Board
+updated us on the Company's current business and
+financial position, including the impact of the COVID-19
+pandemic, following the conclusion of the third quarter.
+This meeting focused on the Managing Board's reporting
+on the status of the execution of the Vision 2020+ strategy
+concept. In addition, we concerned ourselves again with
+succession planning for the Managing Board. On the rec-
+ommendation of the Chairman's Committee, we decided
+in mutual agreement with Managing Board member Klaus
+Helmrich not to extend his Managing Board appointment,
+which will expire on March 31, 2021, due to his retirement
+on that date. On the recommendation of the Chairman's
+Committee, we also decided to appoint Matthias Rebellius
+a full member of the Managing Board, for the period from
+October 1, 2020, through September 30, 2025. In addition,
+we reassigned the Managing Board members' areas of re-
+sponsibility, effective October 1, 2020.
+Additional Information C.3 Report of the Supervisory Board
+10/11
+Benoît Potier
+the Supervisory Board, which are explained in chapter
+75
+63
+63
+5/8
+82
+9/11
+(Dr. phil.)
+3/4
+Nicola Leibinger-Kammüller
+7 C.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT TO SEC-
+Corporate Governance Code
+ANNUAL REPORT 2020 180
+The Audit Committee held six regular and two extra-
+ordinary meetings. In the presence of the independent
+auditors as well as the President and CEO and the Chief
+Financial Officer, the Committee dealt with the financial
+statements and the Combined Management Report
+for Siemens AG and the Siemens Group. The Audit Com-
+mittee discussed the Half-year Financial Report and the
+quarterly statements with the Managing Board and the
+independent auditors. In the presence of the indepen-
+dent auditors, it also discussed the report on the auditors'
+review of the Company's Half-year Consolidated Financial
+Statements and of its Interim Group Management Report.
+The Audit Committee prepared the Supervisory Board
+decision regarding approval of the interim statements of
+financial position of Siemens AG as of March 31, 2020. In
+connection with the spin-off of Siemens' energy business,
+these statements also serve as the closing statements of
+financial position pursuant to Section 125, sent. 1 and
+Section 17, para. 2 of the German Transformation Act (Um-
+wandlungsgesetz). The Audit Committee awarded the
+audit contract for fiscal 2020 to the independent audi-
+tors, who had been elected by the Annual Shareholders'
+Meeting, defined the Audit Committee's focus areas
+and determined the auditors' fee. The Audit Committee
+monitored the selection, independence, qualification,
+rotation and efficiency of the independent auditors
+as well as the services they provided and concerned
+itself with the review of the quality of the audit of the
+financial statements. Against the backdrop of the
+The Innovation and Finance Committee met twice.
+The focuses of its meetings included its recommenda-
+tion regarding the budget for fiscal 2020 and the discus-
+sion of the pension system. Within the limits of the ap-
+plicable regulatory framework, the relevant Managing
+Board members informed the Innovation and Finance
+Committee regarding measures and decisions of funda-
+mental importance at the former Strategic Companies.
+The Compensation Committee met four times. It also
+made two decisions by written circulation. The Compen-
+sation Committee prepared, in particular, Supervisory
+Board decisions regarding the definition of performance
+criteria and the targets for variable compensation, the de-
+termination and review of the appropriateness of Manag-
+ing Board compensation and the approval of the Compen-
+sation Report. In addition, the Compensation Committee
+prepared the Supervisory Board's decision regarding the
+adjustments to the stock-based compensation programs
+for active and former Managing Board members that had
+to be made in the course of the spin-off.
+The Mediation Committee had no need to meet.
+The Compliance Committee met four times. It dealt pri-
+marily with the Company's quarterly reports and the an-
+nual report of the Chief Compliance Officer. Additional
+topics were the further development and setup of the
+compliance function within the Siemens Group in view of
+the Company's strategic realignment.
+TIONS 289 F AND 315 D OF THE GERMAN COMMERCIAL CODE. Finally,
+we dealt with the efficiency review of our activities.
+The Nominating Committee met six times. With a view
+to the regular Supervisory Board elections scheduled for
+2021 and 2023, the Nominating Committee gave in-depth
+consideration to succession planning for the Supervisory
+Board and prepared the Supervisory Board's nominations
+for the election by the 2021 Annual Shareholders' Meet-
+ing of shareholder representatives on the Supervisory
+Board. In this connection, the Nominating Committee
+was supported by an external consulting firm. In select-
+ing the potential candidates and in preparing a recom-
+mendation for the Supervisory Board decision, the Nom-
+inating Committee gave particular consideration to the
+objectives that the Supervisory Board had previously ap-
+proved for its composition, including the profile of re-
+quired skills and expertise and the diversity concept for
+the Supervisory Board.
+ANNUAL REPORT 2020 179
+The Chairman's Committee met 11 times. In addition,
+two decisions were made by written circulation. Between
+meetings, some of which were in the form of conference
+calls, I also discussed topics of major importance with the
+members of the Chairman's Committee. The Committee
+concerned itself, in particular, with personnel-related
+matters, succession planning for the composition of the
+Managing Board, related-party transactions, corporate
+governance issues and the acceptance by Managing
+Board members of positions at other companies and in-
+stitutions. Within the limits of the applicable regulatory
+framework, the Chairman's Committee was informed of
+and/or approved personnel-related measures of funda-
+mental importance at the former Operating Companies
+and the former Strategic Companies.
+In fiscal 2020, the Supervisory Board had seven standing
+committees. These committees prepare proposals and
+issues to be dealt with at the Supervisory Board's plenary
+meetings. Some of the Supervisory Board's decision-mak-
+ing powers have also been delegated to these commit-
+tees within the permissible legal framework. The commit-
+tee chairpersons report to the Supervisory Board on their
+committees' work at subsequent Board meetings. A list of
+the members and a detailed explanation of the tasks of
+the individual Supervisory Board committees are included
+in chapter 7 c.4.1 MANAGEMENT AND CONTROL STRUCTURE.
+Work in the Supervisory Board
+committees
+TO SECTIONS 289 F AND 315 D OF THE GERMAN COMMERCIAL CODE.
+At our meeting on September 23, 2020, we approved a
+Declaration of Conformity in accordance with Section 161
+of the German Stock Corporation Act. Information on
+corporate governance at Siemens is available in chapter
+7 C.4 CORPORATE GOVERNANCE. The Company's Declaration
+of Conformity has been made permanently available
+to shareholders on the Siemens Global Website. The
+current Declaration of Conformity is also available in
+chapter 7 c.4.2 CORPORATE GOVERNANCE STATEMENT PURSUANT
+Additional Information C.3 Report of the Supervisory Board
+100
+212
+100
+Robert Kensbock
+4/4 100
+8/8 100
+100
+11/11
+Bettina Haller
+(until September 25, 2020)
+100
+Andrea Fehrmann (Dr. phil.)
+75
+3/4
+བ་
+11/11 100
+Michael Diekmann
+11/11
+11/11
+100
+4/4
+4/4
+100
+8/8
+4/4 100
+100
+11/11 100 11/11
+Jürgen Kerner
+2/2 100
+100
+11/11
+Harald Kern
+2/2 100
+100
+8/8
+100
+Wirecard situation, the Audit Committee's review in fiscal
+2020 included, in particular, discussion of the role of
+Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
+Stuttgart, as the independent auditors of Wirecard AG.
+The Siemens Audit Committee posed questions to the
+independent auditors regarding this matter and evalu-
+ated the impact on Siemens AG. No background details
+became known that would preclude Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft, Stuttgart, from being
+elected to serve as independent auditors for fiscal 2021.
+The Audit Committee also dealt with the Company's
+accounting and accounting process, the effectiveness of
+its internal control system, its risk management system
+and the effectiveness, resources and findings of its
+internal audit as well as with reports concerning poten-
+tial and pending legal disputes. The members of the
+Audit Committee participated as guests in the Innovation
+and Finance Committee's discussion of the budget for
+fiscal 2020. At two extraordinary meetings, the Audit
+Committee gave in-depth consideration to the spin-off of
+Siemens' energy business and dealt, in particular, with
+the related financial and accounting topics.
+11/11 100
+100
+Michael Sigmund
+Werner Brandt
+(Dr. rer. pol.)
+Werner Wenning
+Second Deputy Chairman
+Birgit Steinborn*
+First Deputy Chairwoman
+2021
+October 1,
+2013
+October 27,
+1965
+Member since
+Date of birth
+→ A.P. Møller-Mærsk A/S, Denmark
+(Chairman)²
+→ Allianz SE, Munich (Deputy Chairman)²
+Positions outside Germany:
+German positions:
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2020)
+Term
+expires¹
+Chairwoman of the Central Works
+Council of Siemens AG
+of Siemens AG and of the Board of
+Directors of A.P. Møller-Mærsk A/S
+Jim Hagemann Snabe Chairman of the Supervisory Board
+Occupation
+Name
+MEMBERS OF THE SUPERVISORY BOARD AND
+POSITIONS HELD BY SUPERVISORY BOARD MEMBERS
+In fiscal 2020, the Supervisory Board had the following
+members:
+7 A.10 COMPENSATION REPORT.
+Details regarding the work of the Supervisory Board are
+provided in chapter 7 C.3 REPORT OF THE SUPERVISORY BOARD.
+The curricula vitae of the members of the Supervisory
+Board are published on the Siemens Global Website at:
+WWW.SIEMENS.COM/SUPERVISORY-BOARD and are updated
+annually. Information on the compensation paid to the
+members of the Supervisory Board is provided in chapter
+The Supervisory Board of Siemens AG has 20 members.
+As stipulated by the German Codetermination Act, half of
+its members represent Company shareholders, and half
+represent Company employees. The employee represen-
+tatives' names are marked below with an asterisk (*).
+The shareholder representatives on the Supervisory
+Board are elected at the Annual Shareholders' Meeting by
+a simple majority vote. Elections to the Supervisory
+Board are conducted, as a rule, on an individual basis.
+The Supervisory Board's employee representatives are
+elected in accordance with the provisions of the German
+Codetermination Act.
+Separate preparatory meetings of the shareholder repre-
+sentatives and of the employee representatives are held
+regularly in order to prepare the Supervisory Board meet-
+ings. The Supervisory Board also meets regularly without
+the Managing Board in attendance. Every Supervisory
+Board member must disclose conflicts of interest to the
+Supervisory Board. Information regarding conflicts of in-
+terest that may have arisen and their handling is provided
+in the Report of the Supervisory Board. Special informa-
+tional (onboarding) events are held in order to familiarize
+new Supervisory Board members with the Company's
+business model and the structures of the Siemens Group.
+-
+-
+individual Managing Board member, reviews the appropri-
+ateness of total compensation and regularly reviews the
+Managing Board compensation system. Effective Octo-
+ber 1, 2019, the Supervisory Board approved – on the basis
+of a proposal by the Compensation Committee - an ad-
+justed compensation system, which was approved by the
+Annual Shareholders' Meeting on February 5, 2020. Im-
+portant Managing Board decisions – such as those regard-
+ing major acquisitions, divestments, fixed asset invest-
+ments or financial measures – require Supervisory Board
+approval unless the Bylaws for the Supervisory Board spec-
+ify that such authority be delegated to the Innovation and
+Finance Committee of the Supervisory Board.
+Additional Information → C.4 Corporate Governance
+ANNUAL REPORT 2020 186
+Chairman
+March 26,
+1960
+January 24,
+2008
+2023
+Name
+Additional Information C.4 Corporate Governance
+Bad Homburg (Deputy Chairman)²
+→ Fresenius SE & Co. KGaA,
+→ Fresenius Management SE,
+Bad Homburg
+→ Allianz SE, Munich (Chairman)2
+German positions:
+→ RWE AG, Essen (Chairman)²
+→ ProSiebenSat.1 Media SE, Munich
+(Chairman)²
+German positions:
+ANNUAL REPORT 2020 187
+4 Shareholders' Committee.
+2/2 100
+2 Publicly listed.
+1 As a rule, the term of office ends upon completion of the (relevant) ordinary Annual Shareholders' Meeting.
+2023
+January 24,
+2008
+December 23,
+1954
+Chairman of the Supervisory Board
+of Allianz SE
+Michael Diekmann
+2023
+January 31,
+2018
+January 3,
+1954
+2021
+January 23,
+2013
+October 21,
+1946
+of RWE AG and of ProSiebenSat.1 Media SE
+Chairman of the Supervisory Board
+Second Deputy Chairman of the
+Supervisory Board of Siemens AG
+ments of Siemens AG, the Consolidated Financial State-
+ments of the Siemens Group, the Combined Management
+Report of Siemens AG and the Siemens Group, and the
+proposal for the appropriation of net income. It approves
+the Annual Financial Statements of Siemens AG as well as
+the Consolidated Financial Statements of the Siemens
+Group, based on the results of the preliminary review con-
+ducted by the Audit Committee and taking into account
+the reports of the independent auditors. The Supervisory
+Board approves the Managing Board's proposal for the ap-
+propriation of net income and the Report of the Super-
+visory Board to the Annual Shareholders' Meeting. In addi-
+tion, the Company's adherence to statutory provisions,
+official regulations and internal Company policies (compli-
+ance) are monitored by the Supervisory Board and/or its
+relevant committee. The Supervisory Board also appoints
+the members of the Managing Board and determines each
+member's portfolios. The Supervisory Board approves - on
+the basis of a proposal by the Compensation Committee -
+the compensation system for Managing Board members
+and defines their concrete compensation in accordance
+with this system. It sets the individual targets for the vari-
+able compensation and the total compensation of each
+Occupation
+The Supervisory Board oversees and advises the Manag-
+ing Board in its management of the Company's business.
+At regular intervals, the Supervisory Board discusses
+business development, planning, strategy and strategy
+implementation. It reviews the Annual Financial State-
+Matthias Rebellius (born on January 2, 1965) and
+Judith Wiese (born on January 30, 1971) were appointed
+members of the Managing Board, effective October 1,
+2020. Matthias Rebellius was appointed until Septem-
+ber 30, 2025, and Judith Wiese until September 30, 2023.
+Matthias Rebellius holds the following positions in super-
+visory boards whose establishment is required by law or in
+comparable domestic or foreign controlling bodies of busi-
+ness enterprises: he is a member of the supervisory board
+of Siemens Energy AG, Munich, and a member of the su-
+pervisory board of Siemens Energy Management GmbH
+(formerly Siemens Gas and Power Management GmbH),
+Munich (external positions) as well as a member of the
+supervisory board of Siemens Mobility GmbH, Munich,
+and a member of the Board of Directors of Siemens Ltd.
+Australia, Australia (group company positions).
+Ralf P. Thomas
+as of March 31, 2020
+(until March 31, 2020)
+Michael Sen
+May 31,
+2025
+April 1,
+2017
+March 7,
+1973
+Cedrik Neike
+January 31,
+2020
+February 1,
+2015
+January 12,
+1970
+as of January 31, 2020
+(until January 31, 2020)
+November 17,
+1968
+Janina Kugel
+April 1,
+2011
+May 24,
+1958
+Klaus Helmrich
+Term expires
+First appointed
+Date of birth
+Name
+Additional Information C.4 Corporate Governance
+185
+ANNUAL REPORT 2020
+→ Siemens Proprietary Ltd., South Africa
+(Chairwoman)
+Positions outside Germany:
+→ Siemens W.L.L., Qatar
+March 31,
+2021
+April 1,
+2017
+March 7,
+1961
+September 18,
+2013
+→ Siemens Healthineers AG,
+Munich (Chairman)1
+Positions outside Germany:
+→ Siemens Proprietary Ltd.,
+South Africa (Chairman)
+→ Siemens Healthcare GmbH,
+Munich (Chairman)
+German positions:
+→ Siemens Energy AG, Munich'
+→Siemens Gas and Power Management
+GmbH (now: Siemens Energy
+Management GmbH), Munich
+German positions:
+September 17,
+2023
+to have expired
+on March 31,
+2022
+Term originally
+→ Siemens Gamesa Renewable Energy,
+S.A., Spain¹
+Positions outside Germany:
+Switzerland (Chairman)
+→ Siemens Schweiz AG,
+→ Siemens France Holding S.A., France
+→Siemens Ltd., India'
+Positions outside Germany:
+→ Siemens Aktiengesellschaft Österreich,
+Austria (Chairman)
+→ Siemens AB, Sweden (Chairman)
+Positions outside Germany:
+(as of September 30, 2020)
+Group company positions
+Positions outside Germany:
+→ Atos SE, France'
+→ Pensions-Sicherungs-Verein
+Versicherungsverein auf
+Gegenseitigkeit, Cologne
+Positions outside Germany:
+→ Konecranes Plc., Finland1
+→ inpro Innovationsgesellschaft für
+fortgeschrittene Produktionssysteme
+in der Fahrzeugindustrie mbH, Berlin
+German positions:
+→ EOS Holding AG, Krailling
+German positions:
+(as of September 30, 2020)
+External positions
+Memberships in supervisory boards whose establishment is required by law
+or in comparable domestic or foreign controlling bodies of business enterprises
+1 Publicly listed.
+(Prof. Dr. rer. pol.)
+C.4.1.2 Supervisory Board
+→ Siemens Ltd., Saudi Arabia
+(Deputy Chairman)
+Andrea Fehrmann*
+(Dr. phil.)
+IG Metall Regional Office for Bavaria
+188
+ANNUAL REPORT 2020
+Shareholders' Committee.
+4
+3 Group company position.
+2 Publicly listed.
+1 As a rule, the term of office ends upon completion of the (relevant) ordinary Annual Shareholders' Meeting.
+2023
+October 1,
+2017
+1969
+August 3,
+Chairwoman of the Central Works
+Council of Siemens Healthcare GmbH
+2023
+German positions:
+March 1,
+2014
+Dorothea Simon*
+of Spokespersons of the Siemens Group
+and Chairman of the Central Committee
+of Spokespersons of Siemens AG
+Chairman of the Committee
+Michael Sigmund*
+(Dr. phil.)
+2023
+January 27,
+2015
+July 14,
+1971
+von Siemens
+Member of Supervisory Boards
+Nathalie
+2023
+January 31,
+2018
+September 13,
+1957
+→ MAN SE, Munich (Deputy Chairman)²
+→ MAN Truck & Bus SE, Munich
+(Deputy Chairman)
+The Supervisory Board members take part, on their own
+responsibility, in the educational and training measures
+necessary for the performance of their duties - measures
+relating, for example, to changes in the legal framework
+and new, groundbreaking technologies. The Company
+supports them in this regard. Internal informational
+events are offered when necessary to support targeted
+educational measures. New Supervisory Board members
+can meet with Managing Board members and other man-
+agers with specialist responsibility to exchange views on
+current topics and topics of fundamental importance
+and thus gain an overview of Company-relevant matters
+(onboarding).
+Additional Information C.3 Report of the Supervisory Board
+→ Siemens Healthcare GmbH, Munich
+German positions:
+→ Siemens Healthineers AG, Munich²
+→ TÜV Süd AG, Munich
+→ Siemens Healthcare GmbH, Munich
+→ Messer Group GmbH, Sulzbach
+German positions:
+→ Henkel AG & Co. KGaA, Düsseldorf 2.4
+→ Henkel Management AG, Düsseldorf
+→ Bayerische Motoren Werke Aktien-
+gesellschaft, Munich (Chairman)²
+German positions:
+→ Siemens Gas and Power Management
+GmbH (now: Siemens Energy
+Management GmbH), Munich
+German positions:
+→ The Hydrogen Company S.A., France³
+→ Danone S.A., France²
+Inc., USA³
+→ American Air Liquide Holdings,
+→ Air Liquide International Corporation
+(ALIC), USA (Chairman)³
+→ Air Liquide International S.A., France
+(Chairman and Chief Executive
+Officer)³
+Positions outside Germany:
+→ TRUMPF Schweiz AG, Switzerland³
+Positions outside Germany:
+→ Traton SE, Munich²
+(Deputy Chairman)2
+→ Thyssenkrupp AG, Essen
+Management GmbH), Munich
+→ Siemens Gas and Power Management
+GmbH (now: Siemens Energy
+(Deputy Chairman)
+→ Premium Aerotec GmbH, Augsburg
+August 13,
+1962
+Trade Union Secretary,
+School of Economics
+2023
+Nicola
+of the Managing Board of IG Metall
+Chief Treasurer and Executive Member
+Siemens Europe Committee
+Chairman of the
+Jürgen Kerner*
+Harald Kern*
+Deputy Chairman of the Central
+Works Council of Siemens AG
+Robert Kensbock*
+(until September 25, 2020)
+as of September 25, 2020
+2023
+April 1,
+2007
+March 14,
+1959
+Chairwoman of the Combine
+Works Council of Siemens AG
+Leibinger-Kammüller
+(Dr. phil.)
+Bettina Haller*
+→ Siemens Gas and Power Management
+GmbH (now: Siemens Energy
+German positions:
+→ Siemens Mobility GmbH, Munich
+(Deputy Chairwoman)
+German positions:
+→ Siemens Gas and Power Management
+GmbH (now: Siemens Energy
+Management GmbH), Munich
+German positions:
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2020)
+Term
+expires¹
+2023
+January 31,
+2018
+June 21,
+1970
+Member since
+Date of birth
+Management GmbH), Munich (Deputy
+Chairman)
+Chief Executive Officer (CEO) - President
+and Chairwoman of the Group Management
+of TRUMPF GmbH + Co. KG
+March 13,
+1971
+January 23,
+2013
+January 27,
+2015
+May 29,
+1956
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+(DBE, DPhil)
+Nemat Shafik
+Baroness
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+2023
+January 30,
+2019
+April 26,
+1967
+Trade Union Secretary of the
+Managing Board of IG Metall
+Hagen Reimer*
+2023
+January 31,
+2018
+1957
+September 3,
+Chairman and Chief Executive Officer
+of Air Liquide S.A.²
+Benoît Potier
+2021
+January 24,
+2008
+December 15,
+1959
+2023
+January 25,
+2012
+January 22,
+1969
+2008
+2023
+January 24,
+March 16,
+1960
+2023
+Director of the London
+→ Arabia Electric Ltd. (Equipment),
+Saudi Arabia
+3 Group company position.
+→ Siemens Healthineers AG, Munich'
+→ Siemens Mobility GmbH, Munich
+(Chairman)
+MEMBERS OF THE MANAGING BOARD AND
+POSITIONS HELD BY MANAGING BOARD MEMBERS
+In fiscal 2020, the Managing Board had the following
+members:
+Information on the areas of responsibility and the curric-
+ula vitae of the members of the Managing Board are
+available on the Siemens Global Website at: ☐ www.
+SIEMENS.COM/MANAGEMENT. Information on the compensa-
+tion paid to the members of the Managing Board is pro-
+vided in chapter 7 A.10 COMPENSATION REPORT.
+capital measures and equity-linked financial instruments
+relating to the compensation of all employees and man-
+agers of the Siemens Group except the members of the
+Managing Board and of Top Management and relating to
+share-based compensation components and employee
+share plans. The Equity and Compensation Committee
+comprises the President and CEO, the Managing Board
+member with responsibility for the Human Resources
+portfolio, the Managing Board member with responsibil-
+ity for the Controlling and Finance portfolio and – as of
+October 1, 2020 – the Deputy CEO. As of September 30,
+2020, its members are Joe Kaeser (Chairman), Dr. Roland
+Busch and Prof. Dr. Ralf P. Thomas. As of October 1, 2020,
+it will also include Judith Wiese.
+The Managing Board has one committee, the Equity and
+Compensation Committee. This committee is responsible
+for the duties assigned to it by a decision of the Managing
+Board - including, in particular, duties in connection with
+OF THE MANAGING BOARD
+EQUITY AND COMPENSATION COMMITTEE
+The members of the Managing Board are subject to a
+comprehensive prohibition on competitive activity for
+the period of their employment at Siemens AG. They are
+committed to serving the interest of the Company. When
+making their decisions, they may not be guided by per-
+sonal interests nor may they exploit for their own advan-
+tage business opportunities offered to the Company.
+Managing Board members may engage in secondary ac-
+tivities – in particular, supervisory board positions out-
+side the Siemens Group - only with the approval of the
+Chairman's Committee of the Supervisory Board. The
+Supervisory Board is responsible for decisions regarding
+any adjustments to Managing Board compensation that
+are necessary in order to take account of possible com-
+pensation for secondary activities. Every Managing Board
+member is under an obligation to disclose conflicts of
+interest without delay to the Chairman or Chairwoman of
+the Supervisory Board and to inform the other members
+of the Managing Board thereof.
+-
+Name
+Additional Information → C.4 Corporate Governance
+ANNUAL REPORT 2020
+The Managing Board and the Supervisory Board cooper-
+ate closely for the benefit of the Company. The Manag-
+ing Board informs the Supervisory Board regularly,
+comprehensively and without delay on all issues of im-
+portance to the entire Company with regard to strategy,
+planning, business development, financial position,
+results of operations, compliance and entrepreneurial
+risks. At regular intervals, the Managing Board also dis-
+cusses the status of strategy implementation with the
+Supervisory Board.
+SIEMENS.COM/BYLAWS-MANAGINGBOARD
+As a rule, a portfolio assigned to an individual member is
+that member's own responsibility. Activities and transac-
+tions in a particular Managing Board portfolio that are
+considered to be extraordinarily important for the Com-
+pany or associated with an extraordinary economic risk
+require the prior consent of the full Managing Board. The
+same applies to activities and transactions for which the
+President and CEO or another member of the Managing
+Board demands a prior decision by the Managing Board.
+The President and CEO is responsible for the coordination
+of all Managing Board portfolios. Further details are avail-
+able in the Bylaws for the Managing Board at: www.
+CONFORMITY WITH THE GERMAN CORPORATE GOVERNANCE CODE.
+The Managing Board members responsible for the indi-
+vidual Managing Board portfolios are defined in a busi-
+ness assignment plan that is approved by the Supervisory
+Board. As the Managing Board member with responsibil-
+ity for the Human Resources portfolio, the Labor Director
+(Arbeitsdirektor) is appointed in accordance with the re-
+quirements of Section 33 of the German Codetermina-
+tion Act (Mitbestimmungsgesetz). While the first-time
+appointment of Managing Board members shall not, as a
+rule, exceed a period of three years, an assessment is to
+be made in each individual case in order to determine
+what period of appointment is deemed appropriate
+within the legally permissible period. This matter is ex-
+plained in greater detail in chapter 7 c.4.2.1 DECLARATION OF
+The Supervisory Board has issued Bylaws for the Manag-
+ing Board that contain the assignment of different port-
+folios and the rules for cooperation both within the Man-
+aging Board and between the Managing Board and the
+Supervisory Board. In accordance with these Bylaws, the
+Managing Board is divided into the portfolio of the Presi-
+dent and CEO and a variety of Managing Board portfolios.
+at: www.SIEMENS.COM/SUSTAINABILITYINFORMATION
+184
+The Managing Board prepares the Company's Quarterly
+Statements and Half-year Financial Report, the Annual
+Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Com-
+bined Management Report of Siemens AG and the
+Siemens Group. In addition, the Managing Board ensures
+that the Company adheres to statutory requirements, of-
+ficial regulations and internal Company policies and
+works to achieve compliance with these provisions and
+policies within the Siemens Group. The Managing Board
+has established a comprehensive compliance manage-
+ment system. Protection is offered to employees and third
+parties who provide information on unlawful behavior
+within the Company. Details on the compliance manage-
+ment system are available on the Siemens Global Website
+Joe Kaeser
+Chief Executive Officer
+(as of September 30, 2020)
+Memberships in supervisory boards whose establishment is required by law
+or in comparable domestic or foreign controlling bodies of business enterprises
+External positions
+Term originally
+to have expired
+on October 31,
+2020
+August 1,
+2014
+October 15,
+1963
+March 31,
+2025
+April 1,
+2011
+November 22,
+1964
+President and
+of the 2021
+Annual
+Shareholders'
+Meeting
+May 1,
+2006
+First appointed Term expires
+June 23,
+1957
+Date of birth
+1 Publicly listed.
+(until February 29, 2020)
+as of February 29, 2020
+Lisa Davis
+Roland Busch
+(Dr. rer. nat.)
+At the end
+German positions:
+As the top management body, the Managing Board is
+committed to serving the interests of the Company and
+achieving sustainable growth in company value. The
+members of the Managing Board are jointly responsible
+for the entire management of the Company and decide on
+basic issues of business policy and corporate strategy as
+well as on the Company's annual and multi-year plans.
+Siemens AG is subject to German corporate law. There-
+fore, it has a two-tier board structure, consisting of a
+Managing Board and a Supervisory Board.
+Detailed discussion of the
+92
+100
+97
+95
+96
+98
+11/11 100
+audit of the financial statements
+Gunnar Zukunft
+100
+8/8
+100
+11/11
+Matthias Zachert
+100
+11/11
+11/11 100
+Dorothea Simon
+4/4 100
+C.4.1.1 Managing Board
+The independent auditors, Ernst & Young GmbH Wirt-
+schaftsprüfungsgesellschaft (Stuttgart, Germany), au-
+dited the Annual Financial Statements of Siemens AG, the
+Consolidated Financial Statements of the Siemens Group
+and the Combined Management Report for Siemens AG
+and the Siemens Group for fiscal 2020 and issued unqual-
+ANNUAL REPORT 2020
+and control structure
+C.4.1 Management
+Corporate Governance
+C.4
+Additional Information C.4 Corporate Governance
+ANNUAL REPORT 2020 183
+Chairman
+Jim Hagemann Snabe
+ified opinions for each. Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft (Stuttgart, Germany) has served as
+independent auditors of Siemens AG and the Siemens
+Group since fiscal 2009. Katharina Breitsameter has
+signed as auditor since fiscal 2016, and Thomas Spannagl
+has signed as auditor responsible for the audit since fiscal
+2014. The Annual Financial Statements of Siemens AG
+and the Combined Management Report for Siemens AG
+#
+On behalf of the Supervisory Board, I would like to thank
+the members of the Managing Board and all the employ-
+ees and employee representatives of Siemens AG and all
+Group companies for their outstanding commitment and
+constructive cooperation in fiscal 2020.
+Robert Kensbock left the Supervisory Board on Septem-
+ber 25, 2020, the effective date of the spin-off of Siemens'
+energy business. In a decision of October 16, 2020, the
+Charlottenburg District Court appointed Tobias Bäumler
+to succeed Robert Kensbock as an employee represen-
+tative on the Supervisory Board for the remainder of
+Robert Kensbock's term of office.
+Changes in the composition of the
+Supervisory and Managing Boards
+The following members left the Managing Board in
+fiscal 2020: Janina Kugel (effective January 31, 2020),
+Lisa Davis (effective February 29, 2020) and Michael Sen
+(effective March 31, 2020). The Supervisory Board ap-
+pointed Judith Wiese and Matthias Rebellius full members
+of the Managing Board, effective October 1, 2020.
+Committee's examination and our own examination, we
+have no objections. The Managing Board prepared the
+Annual Financial Statements of Siemens AG and the
+Consolidated Financial Statements of the Siemens Group.
+We approved the Annual Financial Statements and
+the Consolidated Financial Statements. In view of our
+approval, the financial statements are accepted as
+submitted. We endorsed the Managing Board's proposal
+that the net income available for distribution be used
+to pay out a dividend of €3.50 per share entitled to a
+dividend and that the amount of net income attributable
+to shares of stock not entitled to receive a dividend for
+fiscal 2020 be carried forward.
+The Supervisory Board concurs with the results of the
+audit. Following the definitive findings of the Audit
+and the Siemens Group were prepared in accordance
+with the requirements of German law. The Consolidated
+Financial Statements of the Siemens Group were prepared
+in accordance with the International Financial Reporting
+Standards (IFRS) as adopted by the EU and with the addi-
+tional requirements of German law set out in Section 315 e
+(1) of the German Commercial Code (Handelsgesetzbuch).
+The Consolidated Financial Statements of the Siemens
+Group also comply with the IFRS as issued by the Interna-
+tional Accounting Standards Board (IASB). The indepen-
+dent auditors conducted their audit in accordance with
+Section 317 of the German Commercial Code and the EU
+Audit Regulation and German generally accepted stan-
+dards for the audit of financial statements as promulgated
+by the Institut der Wirtschaftsprüfer (IDW) as well as in sup-
+plementary compliance with the International Standards
+on Auditing (ISA). The abovementioned documents as well
+as the Managing Board's proposal for the appropriation of
+net income were submitted to us by the Managing Board
+in advance. The Audit Committee discussed the dividend
+proposal in detail at its meeting on November 10, 2020. It
+discussed the Annual Financial Statements of Siemens AG,
+the Consolidated Financial Statements of the Siemens
+Group and the Combined Management Report in detail at
+its meeting on November 30, 2020. In this context, the
+Audit Committee concerned itself, in particular, with the
+key audit matters described in the independent auditors'
+respective opinions, including the audit procedures imple-
+mented. The Audit Committee's review also covered the
+non-financial information for Siemens AG and the Siemens
+Group that is included in the Combined Management Re-
+port. The audit reports prepared by the independent audi-
+tors were distributed to all members of the Supervisory
+Board and comprehensively reviewed at the Supervisory
+Board meeting on December 1, 2020, in the presence of
+the independent auditors, who reported on the scope, focal
+points and main findings of their audit, addressing, in par-
+ticular, key audit matters and the audit procedures imple-
+mented. No major weaknesses in the Company's internal
+control or risk management systems were reported. At this
+meeting, the Managing Board explained the financial
+statements of Siemens AG and the Siemens Group as well
+as the Company's risk management system.
+Additional Information C.3 Report of the Supervisory Board
+182
+For the Supervisory Board
+Positions outside Germany:
+ANNUAL REPORT 2020 181
+→ Siemens Energy AG,
+→ Daimler AG, Stuttgart'
+→ Mercedes-Benz AG, Stuttgart
+Munich (Chairman)1
+→ Siemens Gas and Power Management
+GmbH (now: Siemens Energy
+Management GmbH), Munich
+(Chairman as of October 12, 2020)
+Positions outside Germany:
+Netherlands'
+German positions:
+→ NXP Semiconductors N.V.,
+Positions outside Germany:
+→ Kosmos Energy Ltd., USA
+→ Penske Automotive Group,
+Inc., USA¹
+Group company positions
+(as of September 30, 2020)
+Positions outside Germany:
+→ Siemens Ltd., India'
+German positions:
+→ European School of Management
+and Technology GmbH, Berlin
+n/a
+ANNUAL REPORT 2020 16
+Volume development was held back by impacts related
+to COVID-19 and the development of the oil-price. Lower
+orders were due mainly to Siemens Logistics and Large
+Drives Applications. Lower revenue was due mainly to
+Siemens Energy Assets primarily related to mandated
+0.0%
+(9.3)%
+2
+(691)
+Adjusted EBITA
+Adjusted EBITA
+margin
+0%
+(1)%
+5,455
+Combined Management Report → A.3 Segment information
+(504)
+factory closures, which more than offset increases in
+other fully consolidated units, primarily Flender's busi-
+Siemens Energy Investment
+Siemens Real Estate
+Corporate items
+nesses. Although the fully consolidated units made good Statements
+progress and delivered an improved earnings per-
+formance, Adjusted EBITA for fully consolidated units
+decreased substantially compared to fiscal 2019 due to a
+goodwill impairment of €99 million related to Siemens
+Energy Assets, mainly to the activities in Asia. In addition,
+sharply higher negative results from equity investments
+due mainly to an impairment of €453 million on the
+Valeo Siemens eAutomotive investment. Results from
+investments accounted for using the equity method are
+expected to remain volatile in coming quarters. Portfolio
+Companies' order backlog was €4 billion at the end of
+fiscal 2020, of which €3 billion was expected to be con-
+verted into revenue in fiscal 2021.
+Profit
+(in millions of €)
+Fiscal year
+2020
+2019
+5,393
+(24)
+325
+135
+(892)
+A.3.8 Reconciliation
+to Consolidated Financial
+(4)%
+(in millions of €)
+5,562
+2019
+28,946
+29,901
+business was negatively affected, resulting in clear
+market declines in fiscal 2020. Given that hospitals had
+to free up capacities and resources for potential COVID-19
+emergencies, the number of routine and elective proce-
+dures severely decreased. It is expected to fully recover
+only after the end of fiscal 2021. On a regional basis, pub-
+lic investment programs in selected countries as well as
+increased demand related to COVID-19 in several major
+countries drove market growth for the imaging and
+advanced therapies businesses in Europe, C.I.S., Africa,
+Middle East. This counterbalanced negative effects due
+to country lockdowns, resulting in clear to significant
+overall market growth in fiscal 2020 in those markets.
+Clear market growth for the diagnostics business in that
+region was driven by test programs for SARS-CoV-2. For
+the U.S. market, project postponements or cessation and
+limited access to healthcare providers due to COVID-19
+pandemic and related lockdowns resulted in significant
+market declines across all imaging and advanced
+therapies markets. The continued rise in COVID-19 cases
+increased the U.S. diagnostics market growth on clear
+levels, as demand for molecular and point-of-care
+COVID-19 tests further increased. In China, the most
+important market for Siemens Healthineers in the Asia,
+Australia region, lockdowns and postponed or cancelled
+elective procedures led to clear declines in the market for
+the advanced therapies business. In contrast, public
+investments in selected provinces with a high number of
+COVID-19 cases drove significant market growth in the
+imaging business. The growing private market segment
+was more burdened by the COVID-19 crisis, leading to a
+slower recovery and potential consolidation within that
+segment. Although diagnostic tests were widely applied
+to identify SARS-CoV-2, including large scale testing
+of whole populations of certain regions, this additional
+demand could not counterbalance the downturn of
+routine testing, resulting in an overall significant
+decrease in the diagnostics market.
+The planned acquisition of Varian Medical Systems, Inc.,
+U.S. (Varian), announced in August 2020, will add an
+additional business within Siemens Healthineers. It ad-
+dresses the field of cancer care and provides innovative
+solutions in radiation oncology and related software.
+A.3.6 Siemens Financial Services
+Siemens Financial Services (SFS) supports its custom-
+ers' investments with leasing solutions and equipment,
+project and structured financing in the form of debt and
+equity investments. Based on its comprehensive financ-
+ing know-how and specialist technology expertise in the
+areas of Siemens businesses, SFS provides financial solu-
+tions for Siemens customers as well as other companies.
+(in millions of €)
+Earnings before taxes (EBT)
+ROE (after taxes)
+(in millions of €)
+Total assets
+Earnings before taxes decreased sharply compared to
+fiscal 2019. From the beginning of calendar 2020, SFS
+addressed continuing high uncertainty in its markets, in-
+cluding effects related to COVID-19, resulting in a sharp
+increase of credit risk provisions in the debt business
+compared to fiscal 2019. Results in the equity business
+came in significantly lower compared to fiscal 2019, the
+main factor being a loss of €98 million from an impair-
+ment of an equity investment in the U.S. The decrease in
+total assets since the end of fiscal 2019 is due mainly to
+negative currency translation effects.
+Net cash from operations (defined as the sum of cash
+flows from operating and investing activities) amounted
+to €(284) million compared to €(782) million in fiscal
+2019. In fiscal 2020 and fiscal 2019, net cash from opera-
+tions comprised a Free cash flow of €611 million and
+€621 million, respectively, and remaining cash flows from
+investing activities, including from change in receivables
+from financing activities, of €(895) million and €(1,403)
+million, respectively.
+SFS is particularly geared to Siemens' industrial businesses
+and its markets. As such, SFS is influenced by the busi-
+ness development of the markets served by our industrial
+businesses, among other factors. SFS will continue to
+focus its business scope on areas of intense domain
+know-how.
+(5)%
+ANNUAL REPORT 2020 15
+A.3.7 Portfolio Companies
+Portfolio Companies comprise businesses which include
+a broad range of customized and application-specific
+products, software, solutions, systems and services for
+different industries including oil and gas, marine, min-
+ing, cement, water, fiber, wind, logistics and energy.
+Unrealized potential within these businesses requires
+adjustment in their approach using defined measures
+including internal re-organization, digitalization, cost im-
+provements, and optimizing procurement, production
+and service activities. After achieving certain threshold
+performance targets, businesses may be transferred to
+one of Siemens industrial businesses, combined with an
+external business from the same industry, spun off via
+public listing, or placed into an external private equity
+partnership.
+Beginning with fiscal 2020, the equity investments
+Ethos Energy Group Limited and Voith Hydro Holding
+GmbH & Co. KG, the subsea business, and the majority of
+the process solutions business were transferred to the
+former Gas and Power segment and during the second
+quarter of fiscal 2020 Siemens' stake in Primetals Tech-
+nologies Limited was sold.
+After these changes Portfolio Companies included at the
+end of fiscal 2020 mainly the following fully consolidated
+units, which are managed separately: gear units and
+couplings (Mechanical Drives) and generators for wind
+turbines (Wind Energy Generation), which were com-
+bined at the end of fiscal 2020 within the company
+Flender; electric motors, converters and generators
+(Large Drives Applications); sorting technology and solu-
+tions for mail, parcel, baggage and cargo handling
+(Siemens Logistics); and certain regional remaining busi-
+ness activities of the former Gas and Power segment
+(Siemens Energy Assets), which were not carved out
+With certain notable exceptions, demand within the in-
+dustries served by Portfolio Companies generally shows
+a delayed response to changes in the overall economic
+environment. The results of fully consolidated units are
+strongly dependent, however, on customer investment
+cycles in their key industries. In commodity-based indus-
+tries such as oil and gas or mining, these cycles are driven
+mainly by commodity price fluctuations rather than
+changes in produced volumes. The broad range of fully
+consolidated units and their aggregate, heterogonous
+industrial customer base is reflected in its sales and mar-
+keting channels. For example, the large drives applica-
+tions business leverages the shared regional sales orga-
+nization employed by Siemens industrial businesses,
+while other businesses require a dedicated sales ap-
+proach based on in-depth understanding of specific in-
+dustries and customer requirements.
+(472)
+2020
+Fiscal year
+2019
+Actual
+% Change
+Comp.
+Orders
+Revenue
+5,258
+Combined Management Report → A.3 Segment information
+Centrally carried pension expense
+Although the broad range of businesses are operating in
+diverse markets, overall, the main markets served by
+Portfolio Companies are generally impacted by rising un-
+certainties regarding geopolitical and economic develop-
+ments, including developments mentioned above, which
+are expected to weaken investment sentiment also in the
+coming year.
+(210)
+(11)%
+8%
+17,045 18,469
+(8)%
+(9)%
+14,458 14,675
+(1)%
+(5)%
+14,361 14,049
+2%
+3%
+therein: China
+7,840 7,065
+10,927 10,088
+11%
+59,977 64,682
+therein: emerging markets'
+16,120
+18,111
+(7)%
+(11)%
+(7)%
+(8)%
+1 As defined by the International Monetary Fund.
+12%
+In a challenging environment resulting from COVID-19,
+orders related to external customers were clearly down
+year-over-year, due mainly to a substantial decline in
+Mobility which in the prior year recorded a higher volume
+from large orders. While Siemens Healthineers posted
+slight growth, order intake in Digital Industries was close
+to the prior-year level and down clearly in Smart Infra-
+structure. The decrease in emerging markets was due
+mainly to lower order intake in Russia, which in the prior
+year had included a €1.2 billion contract for high-speed
+trains including maintenance at Mobility.
+In the Europe, C.I.S., Africa, Middle East region, order
+intake was down significantly year-over-year due mainly
+to a lower volume from large orders in Mobility, which
+won several large contracts in the prior year, and clear
+declines in Smart Infrastructure and Digital Industries
+that were only partly offset by a moderate increase in
+Siemens Healthineers. In contrast to the region overall,
+orders were up clearly in Germany, driven by sharp
+growth in Mobility which won several large contracts in
+the year under review, among them a €1.1 billion order
+for high-speed trains and a €0.3 billion order for regional
+trains. Siemens Healthineers posted clear growth in
+Germany year-over-year, while order intake declined in
+Smart Infrastructure and Digital Industries.
+ANNUAL REPORT 2020 18
+Siemens (continuing operations)
+therein: Germany
+28,571 32,164
+Europe, C.I.S., Africa, Middle East
+Amortization of intangible assets
+acquired in business combinations
+Eliminations, Corporate Treasury
+and other reconciling items
+Reconciliation to Consolidated
+Financial Statements
+(634)
+(236)
+(310)
+(1,730)
+(1,491)
+2020
+During fiscal 2020 Flender's businesses recorded in-
+creases in revenue from €2,021 million in fiscal 2019 to
+€2,185 million and in Adjusted EBITA from €129 million
+to €169 million. At the end of October 2020, Siemens
+agreed to sell Flender GmbH, Germany, for a price of
+€2.0 billion to Carlyle Group Inc., U.S. The transaction,
+which is subject to foreign-investment and antitrust ap-
+provals, is expected to close in the first half of calendar
+2021. The criteria for the classification of Flender's busi-
+nesses as held for disposal and discontinued operations
+will be met in the first quarter of fiscal 2021.
+Siemens Energy Investment comprised the results re-
+lated to our investment in Siemens Energy for the period
+between September 25, 2020 (spin-off day) and the fiscal
+year-end.
+Higher profit at Siemens Real Estate was driven by gains
+related to disposals mainly due to transfers to Siemens
+Pension-Trust e.V. in Germany to fund pension plans, in-
+cluding a gain of €219 million from the transfer of an in-
+vestment in the first quarter of fiscal 2020.
+The change in Corporate items involved a mix of factors.
+The main factor of the change was a positive effect in
+the prior year resulting from the measurement of a major
+asset retirement obligation. Severance charges within
+Corporate items were €68 million (€99 million in fiscal
+2019).
+Eliminations, Corporate Treasury and other reconciling
+items included lower interest expenses on debt.
+ANNUAL REPORT 2020 17
+Combined Management Report → A.4 Results of operations
+A.4
+Results of operations
+A.4.1 Orders and revenue
+by region
+Currency translation effects took one percentage point
+each from order and revenue development; portfolio
+transactions added one percentage point to order devel-
+opment but had only minimal effects on revenue devel-
+opment year-over-year. The resulting ratio of orders to
+revenue (book-to-bill) for Siemens in fiscal 2020 was
+1.05. The order backlog was €70 billion as of Septem-
+ber 30, 2020.
+Orders (location of customer)
+Americas
+therein: U.S.
+Asia, Australia
+% Change
+Comp.
+(11)%
+8%
+(in millions of €)
+2020
+Fiscal year
+2019
+Actual
+(211)
+Sep 30,
+to Siemens Energy due to country-specific regulatory re-
+strictions or economic considerations. Siemens Energy
+Assets were classified to Portfolio Companies during the
+second quarter of fiscal 2020. Portfolio Companies also
+holds an at-equity investment in Valeo Siemens eAuto-
+motive GmbH.
+11.7%
+therein: products
+business
+5,224
+5,515
+(5)%
+(5)%
+Adjusted EBITA
+Adjusted EBITA
+margin
+1,302
+1,465
+(11)%
+9.1%
+10.0%
+The decline in orders at Smart Infrastructure primarily
+involves the solutions and services business, which took
+in a sharply higher volume from large orders a year
+earlier. Orders in the products business decreased only
+moderately year-over-year, despite an adverse market
+environment for the short-cycle activities at the be-
+ginning of fiscal 2020 that rapidly became significantly
+worse due to COVID-19. The systems and software busi-
+ness was able to keep orders close to the prior-year level.
+Weakness in short-cycle markets also strongly impacted
+revenue development in the products business. Revenue
+for the solutions and services business and for the sys-
+tems and software business remained close to the prior-
+year levels. On a geographic basis, the decline in orders
+and revenue was due to the regions Europe, C.I.S., Africa,
+Middle East and Asia, Australia, while volume in the
+Americas remained largely stable. Adjusted EBITA de-
+clined across the businesses and was impacted by sever-
+ance charges of €195 million associated with the execu-
+tion of Smart Infrastructure's competitiveness program,
+up from severance charges of €46 million a year earlier.
+Impacts on Adjusted EBITA and profitability related to
+COVID-19 were partly offset by expense reductions result-
+ing from pandemic restrictions. Adjusted EBITA in fiscal
+2020 benefited from a €159 million gain from the sale of
+a business while the prior fiscal year included negative
+effects related to grid control projects. Smart Infrastruc-
+ture's order backlog was €10 billion at the end of the fis-
+cal year, of which €7 billion are expected to be converted
+into revenue in fiscal 2021.
+Demand in the markets served by Smart Infrastructure
+declined moderately in fiscal 2020 due primarily to ef-
+fects related to COVID-19, which impacted most key cus-
+tomer industries and all reporting regions. The strongest
+declines in market volume came from the automotive, oil
+ANNUAL REPORT 2020 10
+Combined Management Report → A.3 Segment information
+-
+and gas and machine-building industries. In the chemi-
+cals industry, demand declined moderately. Grid markets
+remained relatively stable, as utilities continued to prior-
+itize investment in making legacy networks more auto-
+mated, intelligent, flexible and reliable. Despite a moder-
+ate decline in demand in the construction market overall,
+the important segment of that market for Smart Infra-
+structure energy performance services - continued to
+grow, benefiting from persistent demand for energy effi-
+ciency and digital services. The data center market grew
+clearly, supported by higher demand for remote working
+and cloud services. On a geographic basis, European
+markets were most strongly impacted by effects related
+to COVID-19, followed by the markets in the Asia, Austra-
+lia region, while impacts on the U.S. markets were less
+severe. In fiscal 2021, utilities markets are expected to
+grow moderately and industry markets are forecast to
+recover slightly. However, market development overall
+is expected to be impacted by lower demand from the
+building construction sector, leading to an overall slight
+decline in volume of markets served by Smart Infrastruc-
+ture year-over-year. On a geographic basis, markets in
+Asia, Australia are expected to return to their growth path
+with some of the region's countries already reaching
+pre-pandemic market volume. Markets in Europe overall
+are expected to remain on the reduced level and within
+the Americas, market volume in the U.S. is forecast to
+decline in fiscal 2021.
+A.3.4 Mobility
+Mobility combines all Siemens businesses in the area of
+passenger and freight transportation, including rail vehi-
+cles, rail automation systems, rail electrification systems,
+road traffic technology, digital solutions and related ser-
+vices. It also provides its customers with consulting, plan-
+ning, financing, construction, service and operation of
+turnkey mobility systems. Moreover, Mobility offers inte-
+grated mobility solutions for networking of different
+types of traffic systems. It sells its products, systems and
+solutions through its worldwide network of sales units.
+The principal customers of Mobility are public and state-
+owned companies in the transportation and logistics sec-
+tors, so its markets are driven primarily by public spend-
+ing. Customers usually have multi-year planning and
+implementation horizons, and their contract tenders
+therefore tend to be independent of short-term eco-
+nomic trends. Mobility's principal competitors are multi-
+national companies. Consolidation among Mobility's
+competitors is continuing: In May 2020, CRRC Zhuzhou
+Locomotives Co., Ltd., China (CRRC) finalized the acqui-
+sition of Vossloh Locomotives GmbH, Germany to gain a
+foothold in Europe, in line with CRRC's ambitious growth
+and internationalization strategy. In September 2020,
+Alstom SA of France (Alstom) signed the sale and pur-
+chase agreement for the acquisition of Bombardier Trans-
+portation. Already in July 2020, the European Commis-
+sion decided to grant conditional clearance of the
+proposed acquisition. The closing of the transaction is
+expected for the first quarter of calendar 2021, subject to
+regulatory approvals and customary closing conditions.
+While CRRC retains its place as the largest rolling stock
+manufacturer in the world in terms of revenue, the
+planned acquisition of Bombardier Transportation by
+Alstom will create the second-largest rolling stock manu-
+facturer worldwide. Market consolidation may lead to in-
+creased competitive pressure within the rail supply indus-
+try and also to fewer sourcing options for rail customers.
+The main trends driving Mobility's markets are urbaniza-
+tion and the need to reduce emissions. Increasing popu-
+lations in urban centers need daily mobility that is sim-
+pler, faster, and more flexible, reliable and affordable. At
+the same time, cities and national economies face the
+challenge of cutting CO2 and noise emissions and reduc-
+ing space requirements and costs of transportation. The
+pressure on mobility providers to meet all these needs is
+expected to rise continuously.
+Mobility's R&D strategy is focused on making trains and
+infrastructures more intelligent, thereby increasing its
+customers' return on investment, improving passenger
+experience, and guaranteeing availability. Decarboniza-
+tion and seamlessly connected (e-)mobility are key fac-
+tors for the future of transportation. Mobility's major
+R&D areas include the development of efficient vehicle
+platforms with optimized lifecycle cost and maximum
+customization flexibility; eco-friendly, alternative power
+supplies for trains (batteries, fuel cells, dual mode) and
+trucks (eHighway); digital services for railways via its
+Railigent application suite; "signaling in the cloud," a
+ANNUAL REPORT 2020 11
+(2)%
+(2)%
+14,597
+14,323
+19.1%
+Combined Management Report → A.3 Segment information
+pandemic while continuing to address historic techno-
+logical changes driven by CO₂ emission reduction. The
+production cuts in the automotive industry were also a
+main factor for a massive decline in demand in the ma-
+chine building industry. The food and beverage markets
+declined moderately due to weak demand for beverages.
+The chemicals and pharmaceuticals industry was less
+impacted by the pandemic, due mainly to stable produc-
+tion levels in the pharmaceuticals industry. The global
+electronics and semiconductor markets kept growing
+during fiscal 2020. While the forecast for fiscal 2021 indi-
+cates a slight recovery of the markets served by Digital
+Industries, including moderate expansion in manufactur-
+ing investments, pre-pandemic market volume is not
+expected to be reached in the next fiscal year.
+In October 2020, the stake in Bentley was transferred to
+Corporate items, reported within the Reconciliation to
+Consolidated Financial Statements. In November 2020,
+to further strengthen Siemens' pension assets and safe-
+guards the post-employment benefits of employees,
+Siemens transferred the stake in Bentley from Corporate
+items to Siemens Pension-Trust e. V.
+A.3.3 Smart Infrastructure
+Smart Infrastructure supplies and intelligently connects
+energy systems and building technologies, to signifi-
+cantly improve efficiency and sustainability of public and
+private infrastructures, while supporting its customers in
+addressing major technology shifts. Smart Infrastructure
+delivers these benefits with a range of products and sys-
+tems for intelligent grid control, low- and medium volt-
+age electrification and control products, building auto-
+mation, fire safety and security and energy efficiency in
+buildings. At the grid edge – the interface between en-
+ergy grids and buildings and energy consumers - Smart
+Infrastructure serves high-growth markets in distributed
+energy systems, electric vehicle infrastructure, microg-
+rids and energy trading. Beginning with fiscal 2020, the
+distribution transformer business was transferred to the
+former segment Gas and Power. Smart Infrastructure
+serves its customers through a broad range of channels,
+including its global product and systems sales organi-
+zation, distributors, panel builders, original equipment
+manufacturers (OEM) and value added resellers and in-
+stallers, all complemented by direct sales through the
+branch offices of its regional solutions and services units
+worldwide. Smart Infrastructure's customer base is di-
+verse. It encompasses infrastructure developers, con-
+struction companies and contractors; owners, operators
+and tenants of both public and commercial buildings in-
+cluding hospitals, campuses, airports and data centers;
+utilities and power distribution network operators; com-
+panies in heavy industries such as oil and gas, mining and
+chemicals; and companies in discrete manufacturing in-
+dustries such as automotive and machine building. Smart
+Infrastructure's principal competitors consist mainly of
+large multinational companies and smaller manufactur-
+ers in emerging countries. Its solutions and services busi-
+ness also competes with local players such as system
+integrators and facility management firms. Smart Infra-
+structure's businesses are impacted by changes in the
+overall economic environment to varying degrees, de-
+pending on customer segment. While customer demand
+in discrete manufacturing industries changes quickly
+and strongly with macroeconomic cycles, it reacts more
+slowly in infrastructure, construction, heavy industries
+and the utilities sector. Particularly in its solutions and
+service business, Smart Infrastructure is affected by
+changes in the non-residential building construction
+markets with a time lag of two to four quarters. Overall,
+Smart Infrastructure has developed a balanced and resil-
+ient business mix with its diversified regional and vertical
+markets; its range of products, systems, solutions and
+services; and its participation in both long- and short-
+cycle markets.
+The markets served are experiencing shifts that present
+opportunities where building technologies and electri-
+fication meet. Key trends include climate change, rising
+population and urbanization which increase the need for
+safe, secure and sustainable environments that provide
+interactive, comfortable spaces and affordable costs for
+energy, operation and maintenance. These trends lead to
+cross-sector coupling of previously separate technolo-
+gies, such as electrification of heat and transportation to
+optimize energy efficiency. Decarbonization is changing
+the energy generation mix towards renewable energy
+sources, which fluctuate with time of day and weather
+conditions. As a result, the energy system is becoming
+ANNUAL REPORT 2020 9
+Combined Management Report → A.3 Segment information
+increasingly decentralized, more strongly influenced
+by prosumers, and more dependent on integration of
+intermittent/distributed energy sources including wind,
+photovoltaic and biomass. Both smarter buildings and
+the integration of more distributed energy sources into
+conventional power networks result in increasing tech-
+nological and management complexity, including rising
+volumes of data, bi-directional energy and information
+flows. These can be reliably managed only through
+digitalization of buildings, transportation and energy
+systems.
+Combined Management Report → A.3 Segment information
+Smart Infrastructure's R&D activities focus on the one
+hand on addressing the trends of decentralization, decar-
+bonization and digitalization of energy markets. On the
+other hand, R&D expenses strengthen Smart Infrastruc-
+ture's capabilities to create comfortable, safe and energy-
+efficient buildings and infrastructures that support in-
+creased efficiency of occupants, equipment and the use
+of building space. Smart Infrastructure is expanding its
+digital offerings in its existing businesses while integrat-
+ing recent acquisitions in such critical areas as power
+control systems, power electronics and building loT. Fur-
+thermore, it develops technologies for environmentally
+friendly and increasingly renewable energy systems,
+ranging from photovoltaic inverter technology to battery
+storage and charging solutions for e-mobility. In this re-
+gard, data from field devices is the basis to intelligently
+deliver grid flexibility and continuously match energy
+supply and demand while protecting grid assets. For elec-
+trical distribution systems and industrial plants, Smart
+Infrastructure continuously drives digitalization of its
+switching and control products with built-in intelligence,
+connectivity to the cloud, and increasingly remote diag-
+nostics and edge computing capability. Its digital twins
+of products, building systems or grids deliver customer
+value with online configuration tools, maintenance and
+service management. Smart Infrastructure also develops
+data-driven applications and digital services. To a large
+extent, its capital expenditures relate to the products
+businesses. Main investment areas are replacement of
+fixed assets and further digitalization of factories and
+technical equipment, with a strong focus on innovation.
+Revenue
+Fiscal year
+% Change
+(in millions of €)
+2019
+Actual
+Comp.
+14,734
+15,590
+(5)%
+(5)%
+Orders
+(in millions of €)
+2020
+Revenue
+outcomes at lower costs, regulatory schemes around the
+world increasingly seek to introduce new remuneration
+models for healthcare services, leading to a shift of
+healthcare reimbursement systems away from a pay-per-
+procedure model towards an outcome-based model.
+Most developed countries are currently considering reg-
+ulatory changes within their healthcare systems.
+R&D activities at Siemens Healthineers are ultimately
+geared towards delivering innovative, sustainable solu-
+tions to its customers while safeguarding and improving
+its competitiveness. Particularly in the field of artificial
+intelligence, it has further expanded its activities and has
+more than 65 products and applications on the market
+that further improve its customers' productivity, while
+enabling clinical decisions to be more precise and tai-
+lored to the individual patient. Artificial intelligence-
+based technology will, starting in fiscal 2021, also be
+used in sample handling and classification in its Atellica
+Solution laboratory system. Furthermore, Siemens
+Healthineers is continuously expanding its portfolio of
+digital services to support customers in their transition to
+value-based care. The teamplay digital health platform
+brings together data, applications and services to make
+better decisions for patients in an efficient way. In addi-
+tion to continually updating its portfolio, Siemens
+Healthineers also improves existing products and solu-
+tions. Siemens Healthineers focuses its investments
+mainly on enhancing competitiveness and innovation.
+The main capital expenditures were for spending for fac-
+tories to expand manufacturing and technical capabili-
+ties, in particular in China and the U.S., and for additions
+to intangible assets, including capitalized development
+expenses within the Atellica Solution and Blood Gas
+product lines.
+(in millions of €)
+Orders
+Revenue
+Adjusted EBITA
+Adjusted EBITA margin
+2020
+Fiscal year
+2019
+Actual
+16,163 15,853
+14,460 14,517
+2,184 2,461 (11)%
+15.1% 17.0%
+Combined Management Report → A.3 Segment information
+2%
+0%
+In fiscal 2020, orders grew slightly on increases in the
+diagnostics and imaging business, partly offset by a de-
+cline in the advanced therapies business. On a regional
+basis, orders were up in the Americas and in Europe,
+C.I.S., Africa, Middle East, while order intake in the Asia,
+Australia region was near the prior-year level. For reve-
+nue, slight increases in the imaging and advanced thera-
+pies businesses were offset by a moderate decline in
+the diagnostics business. On a regional basis, moderate
+growth in Europe, C.I.S., Africa, Middle East was offset
+by slight decreases in the Americas and Asia, Australia.
+Adjusted EBITA was down year-over-year, mainly due
+to the diagnostics business where COVID-19 led to lower
+volume from testing for routine care and higher costs,
+and where costs rose also related to Atellica Solution.
+Adjusted EBITA was down slightly in the advanced thera-
+pies business. In contrast, the imaging business again
+posted strong results, which were higher than in the prior
+year. Severance charges were €65 million in fiscal 2020
+and €57 million in fiscal 2019. The order backlog for
+Siemens Healthineers was €18 billion at the end of the
+fiscal year, of which €6 billion are expected to be con-
+verted into revenue in fiscal 2021.
+In fiscal 2020, the markets of Siemens Healthineers were
+impacted by COVID-19. Overall, the long-term market
+trends remained intact, however the pandemic rein-
+forced some of them. For example, the already increasing
+cost pressure for health systems and customers rose to
+unprecedented levels. For the markets addressed by the
+imaging business, Siemens Healthineers saw a slight
+market decrease. Significant market declines in major
+modalities such as magnetic resonance systems were
+balanced out by an increased interest in equipment and
+solutions used to diagnose and treat COVID-19, leading to
+moderate to significant growth of these markets.
+Siemens Healthineers expects that a recovery will not be
+achieved before the end of fiscal 2021. For the diagnos-
+tics business, markets increased for point-of-care tests to
+monitor patients and lab tests to detect SARS-CoV-2 and
+identify antibodies, while at the same time the demand
+for certain diagnostic reagents, particularly tests for
+routine care, was reduced as patient volume decreased.
+The development of the diagnostics market depends on
+a number of factors related to COVID-19, including de-
+velopment of a vaccine, additional waves of infection,
+and potential pent-up demand for routine testing. SARS-
+COV-2 tests are expected to drive a market growth surge
+in fiscal 2021. The market for the advanced therapies
+ANNUAL REPORT 2020 14
+Combined Management Report → A.3 Segment information
+Fiscal year
+2020
+2019
+345
+Orders
+632
+% Change
+Comp.
+ANNUAL REPORT 2020 13
+3%
+0%
+Healthineers are to a certain extent resilient to short-
+term economic trends because large portions of its reve-
+nue stem from recurring business. They are, however,
+directly and indirectly dependent on trends in healthcare
+markets and on developments in health policy, and geo-
+political developments around the world.
+Adjusted EBITA
+Adjusted EBITA margin
+2020
+Fiscal year
+2019
+Actual
+9,169
+new system architecture for rail infrastructure and loT/
+cloud-based concepts; solutions for more automated
+and autonomous driving for rail and road; and digital
+technologies and loT solutions including cyber security,
+connectivity, simulation and digital twin, data analytics
+and Al, additive manufacturing or intermodal apps and
+platforms and connected e-mobility. Mobility's invest-
+ments focus mainly on maintaining or enhancing its pro-
+duction facilities for example in its Sacramento facility in
+the U.S. or its new site in Goole in the U.K., on meeting
+project demands and enhancing its depot services.
+12,894
+9,052
+8,916
+983
+(29)%
+2%
+(16)%
+822
+9.1%
+% Change
+Comp.
+(29)%
+Siemens as majority shareholder holds about 79% of the
+shares of the publicly listed Siemens Healthineers AG,
+Germany (Siemens Healthineers). Siemens Healthineers
+is a global provider of healthcare solutions and services.
+It develops, manufactures, and sells a diverse range of
+innovative imaging, diagnostic and advanced therapies
+products and services to healthcare providers. In addi-
+tion, it also provides clinical consulting services, comple-
+mented by an extensive range of training and service
+offerings. This comprehensive portfolio supports cus-
+tomers all along the care continuum, from prevention
+and early detection to diagnosis, treatment, and follow-
+up care. The customer spectrum ranges from public and
+private healthcare providers, including hospitals and hos-
+pital systems, public and private clinics and laboratories,
+universities, physicians/physician groups, public health
+agencies, state-run and private health insurers, to phar-
+maceutical companies and clinical research institutes. In
+its imaging business, the most important products are
+equipment for magnetic resonance, computed tomogra-
+phy, X-ray systems, molecular imaging, and ultrasound.
+Its diagnostics business offers in-vitro diagnostic prod-
+ucts and services to healthcare providers in laboratory,
+molecular and point-of-care diagnostics. The products in
+its advanced therapies business facilitate image-guided
+minimally invasive treatments, in areas such as cardiol-
+ogy, interventional radiology, surgery and radiation on-
+cology. In October 2019, Siemens Healthineers acquired
+Corindus Vascular Robotics, Inc., USA, (Corindus) for
+US$1.1 billion (€1.0 billion) in cash. Corindus develops and
+provides a robotic-assisted platform for endo-vascular
+coronary and peripheral vascular interventions and was
+integrated in the advanced therapies business. In Sep-
+tember 2020, Siemens Healthineers AG placed 75 million
+new shares to institutional investors. Siemens did not
+participate in the placement, thus, Siemens' stake in
+Siemens Healthineers decreased from 85% to 79%. Com-
+petition in the imaging and advanced therapies busi-
+nesses consists mainly of a small number of large multi-
+national companies, while the diagnostics market is
+fragmented with a variety of global players that compete
+with each other across market segments and also with
+several regional players and specialized companies in
+niche technologies. The business activities of Siemens
+A.3.5 Siemens Healthineers
+Combined Management Report → A.3 Segment information
+ANNUAL REPORT 2020 12
+11.0%
+measures to safeguard employee health in manufactur-
+ing facilities. Severance charges were €20 million in both
+fiscal years under review. Mobility's order backlog was
+€32 billion at the end of the fiscal year, of which €8 billion
+are expected to be converted into revenue in fiscal 2021.
+While the long-term demand for efficient and environ-
+mentally friendly public transport continues to be a
+growth driver for the markets served by Mobility, order
+development in fiscal 2020 partly reflected the postpone-
+ment of large rail and infrastructure projects due to
+COVID-19, which led to a temporary decline in market
+volume, particularly in Europe. Despite these postpone-
+ments, market development in Europe continued to be
+characterized by awards of mid-size to large orders, par-
+ticularly in Germany, France and in the U.K. Demand in
+the Middle East and Africa was held back by ongoing
+uncertainties related to budget constraints and political
+climates. In the Americas region, investment activities
+were driven by demand for urban and mainline trans-
+port, especially in the U.S. and Canada. Within the Asia,
+Australia region, Chinese markets saw ongoing invest-
+ments in high-speed trains, urban transport, freight
+logistics and rail infrastructure, while India continues to
+invest in modernizing the country's transportation infra-
+structure. We expect these main regional investment
+trends to continue in fiscal 2021. Furthermore, we expect
+market volume in fiscal 2021 to exceed the pre-pandemic
+level due in part to fiscal stimulus that benefits rail and
+public transport operators across various countries. Over-
+all, rail transport and intermodal mobility solutions are
+expected to remain a focus as urbanization continues to
+progress around the world. In emerging countries, rising
+incomes are expected to result in greater demand for
+public transport solutions.
+Although Mobility won a number of important orders in
+fiscal 2020, orders overall still declined compared to the
+prior year, which included a sharply higher volume from
+large orders. Those important orders in fiscal 2020 in-
+cluded a €1.1 billion contract for high-speed trains; orders
+for the commuter rail platform Mireo, such as a first order
+for battery-powered trains including a long-term service
+agreement; a first order of 100 dual-power locomotives
+out of a framework agreement comprising up to 400 ve-
+hicles, all in Germany; and an order for signaling infra-
+structure in Singapore. Revenue rose on clear growth in
+the rolling stock business, which executed strongly on its
+large order backlog, and in the customer services busi-
+ness. These increases were partly offset by lower revenue
+in the rail infrastructure business. Volume development
+in the rail infrastructure and the customer services busi-
+nesses was impacted by effects related to COVID-19, in-
+cluding restricted access to customer sites and lower
+operating mileage on public transport. On a geographic
+basis, revenue rose in Europe, C.I.S., Africa, Middle East,
+due particularly to a significant growth contribution from
+Germany, and in the Americas. This growth was partly
+offset by a double-digit decline in revenue in Asia, Aus-
+tralia. Adjusted EBITA and profitability declined due to a
+less favorable revenue mix year-over-year, including a
+lower share from the higher-margin rail infrastructure
+business and expenses related to COVID-19 for internal
+2%
+The addressable markets of Siemens Healthineers are
+shaped by four major trends. The first is demographic, in
+particular the growing and aging global population. This
+trend poses major challenges for global healthcare sys-
+tems and, at the same time, offers opportunities as the
+demand for cost-efficient healthcare solutions continues
+to intensify. The second trend is economic development
+in emerging countries, which opens up improved access
+to healthcare for many people. As the middle class con-
+tinues to grow, significant investment in the expansion
+of private and public healthcare systems will persist, driv-
+ing overall demand for healthcare products and services
+and hence market growth. The third trend is the increase
+in chronic diseases as a consequence of an aging popula-
+tion and environmental and lifestyle-related changes.
+This development creates additional pressure on health
+systems and leads to increased costs to address it. The
+fourth global trend, the transformation of healthcare pro-
+viders, results from a combination of societal and market
+forces that are driving healthcare providers to operate
+and organize their businesses differently. Increasing cost
+pressure on the healthcare sector is prompting the intro-
+duction of new remuneration models for healthcare ser-
+vices, such as value-based rather than treatment-based
+reimbursement. Digitalization and artificial intelligence
+are likely to be key enablers for healthcare providers as
+they increasingly focus on enhancing the overall patient
+experience, with better outcomes and overall reduction
+in cost of care. This development is driven partly by soci-
+ety's increasing resistance to healthcare costs, payers'
+increasing professionalization, burdens from chronic dis-
+ease and rapid scientific progress. As a result, healthcare
+providers are consolidating into networked structures,
+resulting in larger clinic and laboratory chains, often op-
+erating internationally, which act increasingly like large
+corporations. Applying this industrial logic to the health-
+care market can lead to systematic improvements in qual-
+ity, while at the same time reducing costs. Driven by the
+need of healthcare systems worldwide to deliver better
+As of September 30, 2020, the Audit Committee comprised
+Dr. Werner Brandt (Chairman), Bettina Haller, Jürgen Kerner,
+Dr. Nicola Leibinger-Kammüller, Jim Hagemann Snabe,
+Birgit Steinborn and Matthias Zachert. Robert Kensbock
+was a member of the committee until September 25,
+2020. The members of the Audit Committee are, as a
+group, familiar with the sector in which the Company
+operates. Pursuant to the German Stock Corporation Act,
+the Audit Committee must include at least one Super-
+visory Board member with knowledge and experience in
+the areas of accounting or the auditing of financial state-
+ments. Pursuant to the Code, the chairman or chair-
+woman of the Audit Committee shall have specialist
+knowledge and experience in the application of account-
+ing principles and internal control processes, be familiar
+with audits and be independent. The Chairman of the
+Audit Committee, Dr. Werner Brandt, fulfills these re-
+quirements.
+The Audit Committee oversees, in particular, the account-
+ing and the accounting process and conducts a prelimi-
+nary review of the Annual Financial Statements of
+Siemens AG, the Consolidated Financial Statements of
+the Siemens Group and the Combined Management
+Report of Siemens AG and the Siemens Group (including
+non-financial measures). On the basis of the indepen-
+dent auditors' report on their audit of the annual finan-
+cial statements, the Audit Committee makes, after its
+preliminary review, recommendations regarding Super-
+visory Board approval of the Annual Financial Statements
+of Siemens AG and the Consolidated Financial State-
+ments of the Siemens Group. The Audit Committee dis-
+cusses the Quarterly Statements and Half-year Financial
+Report with the Managing Board and the independent
+auditors and deals with the auditors' reports on the re-
+view of the Half-year Consolidated Financial Statements
+and Interim Group Management Report. It concerns itself
+with the Company's risk monitoring system and oversees
+the effectiveness of its internal control, risk management
+and internal audit systems as well as the internal process
+for related party transactions. The Audit Committee re-
+ceives regular reports from the internal assurance depart-
+ment. It prepares the Supervisory Board's recommenda-
+tion to the Annual Shareholders' Meeting concerning the
+election of the independent auditors and submits the
+corresponding proposal to the Supervisory Board. Prior to
+submitting this proposal, the Audit Committee obtains a
+statement from the prospective independent auditors
+affirming that their independence is not in question.
+It awards the audit contract to the independent auditors
+elected by the Annual Shareholders' Meeting and moni-
+tors the independent audit of the financial statements as
+well as the auditors' selection, independence, qualifica-
+tion, rotation and efficiency and the services rendered by
+the auditors. The Audit Committee assesses the quality of
+the audit of the financial statements on a regular basis.
+Outside its meetings, the Supervisory Board is also in reg-
+ular communication with the independent auditors via
+the Chairman of the Audit Committee.
+As of September 30, 2020, the Compensation Commit-
+tee comprised Werner Wenning (Chairman), Michael
+Diekmann, Harald Kern, Jürgen Kerner, Jim Hagemann
+Snabe and Birgit Steinborn. Robert Kensbock was a
+member of the committee until September 25, 2020.
+Additional Information → C.4 Corporate Governance
+ANNUAL REPORT 2020 189
+The Compliance Committee concerned itself, in partic-
+ular, with monitoring the Company's adherence to statu-
+tory provisions, official regulations and internal Company
+policies (compliance).
+In fiscal 2020, the Supervisory Board had seven commit-
+tees,
+, 
+whose duties, responsibilities and procedures fulfill
+the requirements of the German Stock Corporation Act
+(Aktiengesetz) and the German Corporate Governance
+Code (Code). The chairmen of these committees provide
+the Supervisory Board with regular reports on their com-
+mittees' activities.
+As of September 30, 2020, the Chairman's Committee com-
+prised Jim Hagemann Snabe (Chairman), Jürgen Kerner,
+Birgit Steinborn and Werner Wenning.
+-
+the targets for the proportion of women on the Manag-
+ing Board that have been defined by the Supervisory
+Board and the diversity concept for the Managing Board
+that has been approved by the Supervisory Board. The
+Chairman's Committee concerns itself with questions
+regarding the Company's corporate governance and pre-
+pares the resolutions to be approved by the Supervisory
+Board regarding the Declaration of Conformity with the
+Code - including the explanation of deviations from the
+Code and regarding the approval of the corporate gov-
+ernance reporting and of the Report of the Supervisory
+Board to the Annual Shareholders' Meeting. It is respon-
+sible for approving the Company's related party transac-
+tions. Furthermore, the Chairman's Committee submits
+recommendations to the Supervisory Board regarding
+the composition of the Supervisory Board committees
+and decides whether to approve contracts and business
+transactions with Managing Board members and parties
+related to them.
+The Chairman's Committee makes proposals, in particu-
+lar, regarding the appointment and dismissal of Manag-
+ing Board members and is responsible for concluding,
+amending, extending and terminating employment con-
+tracts with members of the Managing Board. When mak-
+ing recommendations for first-time appointments, it
+takes into account that the terms of these appointments
+shall not, as a rule, exceed three years, whereby it is to be
+determined in each individual case what period of ap-
+pointment is to be deemed appropriate within the legally
+permissible period. In preparing recommendations re-
+garding the appointment of Managing Board members,
+the Chairman's Committee takes into account the candi-
+dates' professional qualifications, international experi-
+ence and leadership qualities, the age limit specified for
+Managing Board members and the long-range plans for
+succession as well as diversity. It also takes into account
+As of September 30, 2020, the Compliance Commit-
+tee comprised Jim Hagemann Snabe (Chairman),
+Dr. Werner Brandt, Bettina Haller, Harald Kern, Jürgen
+Kerner, Dr. Nicola Leibinger-Kammüller, Birgit Steinborn
+and Matthias Zachert. Effective October 1, 2020, the
+duties that had been transferred to the Compliance Com-
+mittee were assumed again by the Audit Committee, and
+the Compliance Committee was thereby dissolved.
+SUPERVISORY BOARD COMMITTEES
+Robert Kensbock left the Supervisory Board on Septem-
+ber 25, 2020, the effective date of the spin-off of Siemens'
+energy business. Tobias Bäumler (born on October 10,
+1979), the Deputy Chairman of the Central Works Council
+and the Combine Works Council of Siemens AG, was ap-
+pointed by court order on October 16, 2020, to succeed
+him and to complete his term of office as an employee
+representative on the Supervisory Board.
+→ Siemens Industry Software GmbH,
+Cologne
+The Compensation Committee prepares, in particular,
+the proposals for decisions at the Supervisory Board's
+plenary meetings regarding the system of Managing
+Board compensation, including the implementation of
+this system in Managing Board contracts, the definition
+of the targets for variable Managing Board compensa-
+tion, the determination and review of the appropriate-
+ness of the total compensation of individual Managing
+Board members and the approval of the annual Compen-
+sation Report.
+The Nominating Committee is responsible for making
+recommendations to the Supervisory Board on suitable
+candidates for the election by the Annual Shareholders'
+Meeting of shareholder representatives on the Super-
+visory Board. In preparing these recommendations, the
+objectives defined by the Supervisory Board for its com-
+position and the approved diversity concept – in particu-
+lar, independence and diversity – are to be appropriately
+considered, as are the proposed candidates' required
+knowledge, abilities and professional experience. Fulfill-
+ment of the required profile of skills and expertise is also
+to be aimed at. Attention shall be paid to an appropriate
+participation of women and men in accordance with the
+SUPERVISORY BOARD SELF-ASSESSMENT
+ANNUAL REPORT 2020
+C.4.1.4 Annual Shareholders'
+Meeting and investor relations
+Shareholders exercise their rights at the Annual Share-
+holders' Meeting. An ordinary Annual Shareholders'
+Meeting normally takes place within the first four months
+of each fiscal year. The Annual Shareholders' Meeting de-
+cides, among other things, on the appropriation of net
+income, the ratification of the acts of the members of the
+Managing and Supervisory Boards, and the appointment
+of the independent auditors. Amendments to the Articles
+of Association and measures that change the Company's
+capital stock are approved at the Annual Shareholders'
+CIAL STATEMENTS.
+German positions:
+ANNUAL REPORT 2020 191
+Details regarding transactions with members of the Man-
+aging and Supervisory Boards as related individuals are
+available in NOTE 31 in 7 B. 6 NOTES TO CONSOLIDATED FINAN-
+C.4.1.3 Share transactions by members
+of the Managing and Supervisory Boards
+Pursuant to Article 19 of EU Regulation No. 596/2014 of
+the European Parliament and Council of April 16, 2014,
+on market abuse (Market Abuse Regulation), members of
+the Managing Board and the Supervisory Board are le-
+gally required to disclose all transactions conducted on
+their own account relating to the shares or debt instru-
+ments of Siemens AG or to the derivatives or financial
+instruments linked thereto if the total value of such trans-
+actions entered into by a Board member or any closely
+associated person in any calendar year reaches or ex-
+ceeds €5,000 (in calendar year 2019) or €20,000 (as of
+calendar year 2020). All transactions reported to
+Siemens AG in accordance with this requirement have
+been duly published and are available on the Siemens
+Global Website at: www.SIEMENS.COM/DIRECTORS-DEALINGS
+Board concerned itself intensively with the results of this
+review. These results confirm that cooperation within the
+Supervisory Board and with the Managing Board is pro-
+fessional, constructive and characterized by a high de-
+gree of trust and openness. The results also confirm that
+meetings are organized and conducted efficiently and
+that the participants receive sufficient information.
+The review did not reveal a need for any fundamental
+changes. Individual suggestions for improvement are
+also discussed and implemented during the year.
+-
+The Supervisory Board and its committees regularly con-
+duct reviews - either internally or with the involvement
+of external consultants - in order to determine how effi-
+ciently they perform their duties. In fiscal 2020, the Super-
+visory Board conducted an internal efficiency review. At
+its meeting on September 23, 2020, the Supervisory
+Based on the Company's overall strategy, the Innovation
+and Finance Committee discusses, in particular, the
+Company's innovation focuses and prepares the Super-
+visory Board's discussions and resolutions regarding
+questions relating to the Company's financial situation
+and structure – including annual planning (budget) – as
+well as the Company's fixed asset investments and its
+financial measures. In addition, the Innovation and
+Finance Committee has been authorized by the Super-
+visory Board to decide on the approval of transactions
+and measures that require Supervisory Board approval
+and have a value of less than €600 million.
+As of September 30, 2020, the Mediation Committee com-
+prised Jim Hagemann Snabe (Chairman), Jürgen Kerner,
+Birgit Steinborn and Werner Wenning.
+The Mediation Committee submits proposals to the
+Supervisory Board in the event that the Supervisory
+Board cannot reach the two-thirds majority required for
+the appointment or dismissal of a Managing Board mem-
+ber on the first ballot.
+As of September 30, 2020, the Nominating Committee
+comprised Jim Hagemann Snabe (Chairman), Dr. Nicola
+Leibinger-Kammüller, Benoît Potier and Werner Wenning.
+legal requirements relating to the gender quota as well
+as to ensuring that the members of the Supervisory
+Board are, as a group, familiar with the sector in which
+the Company operates.
+Additional Information → C.4 Corporate Governance
+190
+As of September 30, 2020, the Innovation and Finance
+Committee comprised Jim Hagemann Snabe (Chairman),
+Harald Kern, Jürgen Kerner, Dr.-Ing. Dr.-Ing. E.h. Norbert
+Reithofer, Dr. Nathalie von Siemens, Birgit Steinborn and
+Werner Wenning. Robert Kensbock was a member of the
+committee until September 25, 2020.
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2020)
+Additional Information → C.4 Corporate Governance
+4
+corporate governance practices
+SUGGESTIONS OF THE CODE
+C.4.2.2 Information on
+This Declaration of Conformity is available on the Siemens
+Global Website at: ☐ WWW.SIEMENS.COM/DECLARATIONOF
+CONFORMITY. The website also provides access to the Dec-
+larations of Conformity for the last five years.
+ANNUAL REPORT 2020 193
+The Managing Board The Supervisory Board"
+Siemens Aktiengesellschaft
+Berlin and Munich, October 1, 2020
+Siemens AG voluntarily complies with the Code's sugges-
+tions, with only the following exceptions:
+Instead of regarding the recommended maximum pe-
+riod of the first-time appointment of Managing Board
+members and the recommended maximum number of
+mandates for Managing Board and Supervisory Board
+members as rigid upper limits, an assessment is to be
+possible in each individual case. While the period of
+the first-time appointment of a Managing Board mem-
+ber shall not, as a rule, exceed three years, an assess-
+ment is to be possible in each individual case in order
+to determine what period of appointment is deemed
+appropriate within the legally permissible period. This
+assessment is to consider the individual qualifications
+and experience of the Managing Board member to be
+appointed and, in particular, the qualifications and ex-
+perience that he or she has acquired over many years
+in management positions within the Siemens Group.
+With regard to the number of mandates accepted by
+Managing Board and Supervisory Board members, an
+assessment is to be possible in each individual case in
+order to determine if the number of accepted man-
+dates relevant within the meaning of the Code is
+deemed appropriate. This assessment is to consider the
+expected personal workload caused by the accepted
+mandates, which can vary from mandate to mandate.
+→ Siemens AG does not comply with the recommen-
+dation in B.3. According to this recommendation,
+the first-time appointment of Managing Board
+members shall be for a period of not more than
+three years.
+Siemens AG complies, and will continue to comply,
+with all the recommendations of the Government Com-
+mission on the German Corporate Governance Code in
+the version of December 16, 2019 ('2019 Code') pub-
+lished by the Federal Ministry of Justice and Consumer
+Protection in the official section of the Federal Gazette
+(Bundesanzeiger), with the following exceptions:
+→ Siemens AG has not complied with the recommen-
+dation in Section 5.4.5 para. 1 sent. 2 of the 2017
+Code. According to this recommendation, mem-
+bers of the Managing Board of a listed corporation
+shall not accept more than a total of three Super-
+visory Board mandates in non-group listed corpo-
+rations or on the supervisory bodies of non-group
+entities that make similar requirements.
+ANNUAL REPORT 2020
+Additional Information → C.4 Corporate Governance
+"Declaration of Conformity by the Managing Board and
+the Supervisory Board of Siemens Aktiengesellschaft
+with the German Corporate Governance Code pursu-
+ant to Section 161 of the German Stock Corporation Act
+Since making its last Declaration of Conformity dated
+October 1, 2019, Siemens AG has complied with all the
+recommendations of the Government Commission on
+the German Corporate Governance Code in the ver-
+sion of February 7, 2017 ('2017 Code') published by the
+Federal Ministry of Justice and Consumer Protection in
+the official section of the Federal Gazette (Bundesan-
+zeiger), with the following exception:
+→ Siemens AG does not comply with the recommen-
+dations in C.4 and C.5. According to the recom-
+mendation in C.4, a Supervisory Board member
+who is not a member of any Managing Board of a
+listed company shall not accept more than five
+Supervisory Board mandates at non-group listed
+companies or comparable functions, with an ap-
+pointment as chair of the Supervisory Board being
+counted twice. According to the recommendation
+in C.5, members of the Managing Board of a listed
+company shall not have, in aggregate, more than
+two Supervisory Board mandates in non-group
+listed companies or comparable functions, and
+shall not accept the chairmanship of a Supervisory
+Board in a non-group listed company.
+Shareholders' Committee.
+According to the suggestion in A.5 of the Code, in the
+case of a takeover offer, the Managing Board should con-
+vene an Extraordinary General Meeting at which share-
+holders discuss the takeover offer and may decide on
+corporate actions. The convening of a shareholders'
+meeting - even taking into account the shortened time
+limits stipulated in the German Securities Acquisition and
+Takeover Act (Wertpapiererwerbs- und Übernahme-
+gesetz) - is an organizational challenge for large publicly
+listed companies. It appears doubtful whether the asso-
+ciated effort is justified in cases where no relevant deci-
+sions by the shareholders' meeting are intended. There-
+fore, extraordinary shareholders' meetings shall be
+convened only in appropriate cases.
+Name
+3 Group company position.
+1 As a rule, the term of office ends upon completion of the (relevant) ordinary Annual Shareholders' Meeting.
+2 Publicly listed.
+2023
+January 31,
+2018
+June 21,
+1965
+Deputy Chairman of the Central
+Works Council of Siemens Industry
+Software GmbH
+Gunnar Zukunft*
+Additional Information C.4 Corporate Governance
+2023
+Term
+expires¹
+Member since
+Date of birth
+November 8,
+1967
+Chairman of the Board of
+Management of LANXESS AG²
+Occupation
+Matthias Zachert
+January 31,
+2018
+-
+-
+Meeting and implemented by the Managing Board. The
+Managing Board facilitates shareholder participation in
+this meeting through electronic communications
+particular, via the Internet - and enables shareholders
+who are unable to attend the meeting to vote by proxy.
+Proxies can also be reached during the Annual Sharehold-
+ers' Meeting. Furthermore, shareholders may exercise
+their right to vote in writing or by means of electronic
+communications (absentee voting). The Managing Board
+may enable shareholders to participate in the Annual
+Shareholders' Meeting without the need to be present at
+the venue and without a proxy and to exercise some or all
+of their rights fully or partially by means of electronic
+communications. The Company enables shareholders to
+follow the entire Annual Shareholders' Meeting via the
+Internet. Shareholders may submit motions regarding
+the proposals of the Managing and Supervisory Boards
+and may contest decisions of the Annual Shareholders'
+Meeting. Shareholders owning Siemens stock with an
+aggregate notional value of €100,000 or more may also
+demand the judicial appointment of special auditors to
+examine specific issues. The reports, documents and in-
+formation required by law for the Annual Shareholders'
+Meeting, including the Annual Report, can be down-
+loaded from the Siemens Global Website. The same ap-
+plies to the agenda for the Annual Shareholders' Meeting
+and to any counterproposals or shareholders' nomina-
+tions that may require disclosure. For the election of
+shareholder representatives on the Supervisory Board, a
+detailed curriculum vitae of every candidate is published.
+"The goal is to achieve a composition that is as diverse
+as possible and comprises individuals who comple-
+ment one another in a Managing Board that provides
+strong leadership as well as to ensure that, as a group,
+the members of the Managing Board have all the
+knowhow and skills that are considered essential in
+view of Siemens' activities.
+When selecting members of the Managing Board, the
+Supervisory Board pays close attention to candidates'
+personal suitability, integrity, convincing leadership
+qualities, international experience, expertise in their
+prospective areas of responsibility, achievements to
+date and knowledge of the Company as well as their
+ability to adjust business models and processes in a
+changing world. Diversity with respect to such charac-
+teristics as age and gender as well as professional and
+educational background is an important selection cri-
+terion for appointments to Managing Board positions.
+When selecting members of the Managing Board, the
+Supervisory Board also gives special consideration to
+the following factors:
+→ In addition to the expertise and the management
+and leadership experience required for their spe-
+cific tasks, the Managing Board members shall
+have the broadest possible range of knowledge
+and experience and the widest possible educa-
+tional and professional backgrounds.
+→ Taking the Company's international orientation
+into account, the composition of the Managing
+Board shall reflect internationality with respect to
+different cultural backgrounds and international
+experience (such as extensive professional experi-
+ence in foreign countries and responsibility for
+business activities in foreign countries in areas that
+are relevant for Siemens).
+→ As a group, the Managing Board shall have experi-
+ence in the business areas that are important for
+Siemens in particular, in the industry, energy,
+healthcare and infrastructure sectors.
+→ As a group, the Managing Board shall have many
+years of experience in technology (including infor-
+mation technology and digitalization), research
+and development, procurement, manufacturing
+and sales, finance, law (including compliance) and
+human resources.
+In September 2018, the Supervisory Board approved the
+following diversity concept for the composition of the
+Managing Board:
+→ When selecting individuals for Managing Board posi-
+tions, the targets set by the Supervisory Board for the
+proportion of women on the Managing Board shall
+be taken into account. The Supervisory Board has
+established as a target that - until June 30, 2022
+25% of the Managing Board positions are to be held
+by women.
+→ It is considered helpful if different age groups are
+represented on the Managing Board. In accordance
+with the recommendation of the Code, the Super-
+visory Board has defined an age limit for the mem-
+bers of the Managing Board. In keeping with this
+limit, the members of the Managing Board are, as
+a rule, to be not older than 63 years of age.
+When making an appointment to a specific Managing
+Board position, the decisive factor is always the Com-
+pany's best interest, taking into consideration all cir-
+cumstances in the individual case."
+STATUS OF IMPLEMENTATION OF THE
+DIVERSITY CONCEPT FOR THE MANAGING BOARD
+The diversity concept for the Managing Board is imple-
+mented as part of the process for making appointments
+to the Managing Board. When selecting candidates and/or
+making proposals for the appointment of Managing Board
+members, the Supervisory Board and the Chairman's
+Committee of the Supervisory Board take into account
+the requirements defined in the diversity concept for the
+Managing Board.
+The Managing Board members have a broad range of
+knowledge, experience and educational and professional
+backgrounds as well as international experience. The
+Managing Board has all the knowledge and experience
+that is considered essential in view of Siemens' activities.
+ANNUAL REPORT 2020 195
+198
+-
+Additional Information → C.4 Corporate Governance
+long-term succession planning
+Additional Information → C.4 Corporate Governance
+ANNUAL REPORT 2020 192
+Additional Information → C.4 Corporate Governance
+When filling managerial positions at the Company, the
+Managing Board takes diversity into account and, in par-
+ticular, aims for an appropriate consideration of women
+and internationality. In 2017, the Managing Board set the
+target for the percentage of women at each of the two
+management levels below the Managing Board at 20%,
+applicable in each case until June 30, 2022.
+At Siemens AG, the target for the proportion of women
+on the Managing Board has been set at a minimum of
+25% until June 30, 2022.
+C.4.2.4 Targets for the quota of women
+on the Managing Board and at the two
+management levels below the Managing
+Board; Information on Supervisory
+Board compliance with minimum gender
+quota requirements
+A general description of the composition and operation
+of the Managing Board, the Supervisory Board and their
+committees, including the Supervisory Board's self-
+assessment, can be found in chapter > C.4.1 MANAGEMENT
+AND CONTROL STRUCTURE. Further details can be derived
+from the bylaws for the governing bodies concerned.
+C.4.2.3 Operation of the Managing
+Board and the Supervisory Board,
+and composition and operation of
+their committees
+C.4.2.5 Diversity concept for
+the Managing Board and
+The Business Conduct Guidelines provide the ethical and
+legal framework within which we want to conduct our ac-
+tivities and remain on course for success. They contain the
+basic principles and rules for our conduct within our Com-
+pany and in relation to our external partners and the gen-
+eral public. They set out how we meet our ethical and legal
+responsibility as a Company and give expression to our
+Company values: "Responsible" - "Excellent" - "Innovative."
+In the 173 years of its existence, our Company has built an
+excellent reputation around the world. Technical perfor-
+mance, innovation, quality, reliability, and international
+THE COMPANY'S VALUES AND
+BUSINESS CONDUCT GUIDELINES
+Further corporate governance practices applied beyond
+legal requirements are contained in our Business Con-
+duct Guidelines.
+According to the suggestion in D.8 sent. 2, participation
+by telephone or video conference in the meetings of the
+Supervisory Board and its committees should not be the
+rule. At Siemens AG, participation in meetings is, as a
+rule, in person. Participation by telephone takes place
+only in exceptional cases. Due to the special circum-
+stances created by the COVID-19 pandemic, several meet-
+ings of the Supervisory Board and its committees in
+fiscal 2020 took place as virtual meetings or with the
+possibility of participation in a virtual format.
+The composition of the Supervisory Board fulfilled the
+legal requirements regarding the minimum gender quota
+in the reporting period.
+ANNUAL REPORT 2020
+194
+engagement have made Siemens a leading company in
+its areas of activity. It is top performance with the highest
+ethics that has made Siemens strong. This is what the
+Company will continue to stand for in the future.
+in
+As a group, the Managing Board has experience in the
+business areas that are important for Siemens - in partic-
+ular, in the industry, energy, healthcare and infrastructure
+sectors - as well as many years of experience in technol-
+ogy (including information technology and digitaliza-
+tion), research and development, procurement, manu-
+facturing and sales, finance, law (including compliance)
+and human resources.
+LONG-TERM SUCCESSION PLANNING
+FOR THE MANAGING BOARD
+LIMITS ON AGE AND ON LENGTH OF MEMBERSHIP
+In compliance with the age limit stipulated by the
+Supervisory Board in its Bylaws, only individuals who
+are no older than 70 years of age shall, as a rule, be
+nominated for election to the Supervisory Board.
+Nominations shall take into account the regular limit
+established by the Supervisory Board, which restricts
+membership on the Supervisory Board to a maximum
+of three full terms of office. It is considered helpful if
+different age groups are represented on the Super-
+visory Board."
+IMPLEMENTATION OF THE OBJECTIVES REGARDING
+THE SUPERVISORY BOARD'S COMPOSITION AS
+WELL AS THE PROFILE OF REQUIRED SKILLS AND
+EXPERTISE AND THE DIVERSITY CONCEPT FOR THE
+SUPERVISORY BOARD; INDEPENDENT SUPERVISORY
+BOARD MEMBERS
+Within the framework of the selection process and the
+nomination of candidates for the Supervisory Board, the
+Supervisory Board as well as the Nominating Committee
+of the Supervisory Board take into account the objec-
+tives regarding the Supervisory Board's composition and
+the requirements defined in its diversity concept. The
+Supervisory Board and the Nominating Committee have
+recently taken the objectives - including the profile of
+ANNUAL REPORT 2020 197
+Additional Information → C.4 Corporate Governance
+required skills and expertise and the diversity concept -
+into consideration in the nominations of three shareholder
+representatives to be elected by the Annual Shareholders'
+Meeting in 2021.
+The Supervisory Board members shall have sufficient
+time to exercise their mandates with the necessary
+regularity and diligence.
+The Supervisory Board is of the opinion that, with its cur-
+rent composition, it meets the objectives for its composi-
+tion and fulfills the profile of required skills and expertise
+as well as the diversity concept. The Supervisory Board
+members have the specialist and personal qualifications
+considered necessary. As a group, they are familiar with
+the sector in which the Company operates and have the
+knowledge, skills and experience essential for Siemens.
+A considerable number of Supervisory Board members
+are engaged in international activities and/or have many
+years of international experience. Appropriate consider-
+ation has been given to diversity in the Supervisory
+Board. In fiscal 2020, the Supervisory Board had seven
+female members, of whom three are shareholder repre-
+sentatives and four are employee representatives. As a
+result, 35% of the Supervisory Board members are
+women. Dr. Nicola Leibinger-Kammüller is a member of
+the Nominating Committee.
+SIEMENS.COM/289F
+The information and documents referred to in this chap-
+ter - including the Bylaws for the Managing Board, the
+Bylaws for the Supervisory Board, the bylaws for Super-
+visory Board committees, the Code and the Business
+Conduct Guidelines are publicly available at: www.
+The Corporate Governance statement pursuant to Sec-
+tions 289f and 315d of the German Commercial Code
+(Handelsgesetzbuch) is an integral part of the Combined
+Management Report. In accordance with Section 317
+para. 2 sent. 6 of the German Commercial Code, the audit
+of the disclosures made within the scope of Sections 289f
+and 315d of the German Commercial Code is to be limited
+to determining whether disclosures have been made.
+C.4.2 Corporate Governance
+statement pursuant to
+Sections 289f and 315d of the
+German Commercial Code
+The Articles of Association of Siemens AG, the Bylaws for
+the Supervisory Board, the bylaws for the most important
+Supervisory Board committees, the Bylaws for the Man-
+aging Board, our Declarations of Conformity with the
+Code and a variety of other corporate-governance-re-
+lated documents are posted on the Siemens Global Web-
+site at: wWW.SIEMENS.COM/CORPORATE-GOVERNANCE
+As part of our investor relations activities, we inform our
+investors comprehensively about developments within
+the Company. For communication purposes, Siemens
+makes extensive use of the Internet. We publish Quar-
+terly Statements, Half-year Financial and Annual Reports,
+earnings releases, ad hoc announcements, analyst pres-
+entations, letters to shareholders and press releases as
+well as the financial calendar for the current year, which
+contains the publication dates of significant financial
+communications and the date of the Annual Sharehold-
+ers' Meeting, at: www.SIEMENS.COM/INVESTORS. When
+required, the Chairman of the Supervisory Board dis-
+cusses Supervisory-Board-specific topics with investors.
+In accordance with Section 1 para. 2 of the German Act
+Concerning Measures Under the Law of Companies, Co-
+operative Societies, Associations, Foundations and Com-
+monhold Property to Combat the Effects of the COVID-19
+Pandemic (Gesetz über Maßnahmen im Gesellschafts-,
+Genossenschafts-, Vereins-, Stiftungs- und Wohnungsei-
+gentumsrecht zur Bekämpfung der Auswirkungen der
+COVID-19-Pandemie) of March 27, 2020 (Federal Law Ga-
+zette | No. 14 2020, p. 570), the Extraordinary Sharehold-
+ers' Meeting on July 9, 2020, was conducted as a virtual
+shareholders' meeting without the physical presence of
+shareholders or their proxies due to the special circum-
+stances created by the COVID-19 pandemic.
+In the estimation of the shareholder representatives, the
+Supervisory Board now has at least eight independent
+shareholder representatives – namely, Dr. Werner Brandt,
+Benoît Potier, Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer,
+Baroness Nemat Shafik, Dr. Nathalie von Siemens,
+Jim Hagemann Snabe, Werner Wenning and Matthias
+Zachert and thus an appropriate number of members
+who are independent in the meaning of the Code. The
+regulations establishing limits on age and restricting
+membership in the Supervisory Board to three full terms
+of office are complied with.
+During fiscal 2020, Lisa Davis, Janina Kugel and Michael
+Sen left the Managing Board. In the summer of 2020, the
+Supervisory Board appointed Judith Wiese and Matthias
+Rebellius to the Managing Board as of October 1, 2020,
+taking into account the diversity concept and the Compa-
+ny's best interest. The target for June 30, 2022, has been
+retained. The appropriate consideration of women is a
+key component of long-term succession planning for the
+Managing Board. Different age groups are represented
+on the Managing Board. No Managing Board member is
+currently older than 63 years of age.
+No more than two former members of the Managing
+Board of Siemens AG shall belong to the Supervisory
+Board.
+INDEPENDENCE
+Jointly with the Managing Board and with the support of
+the Chairman's Committee, the Supervisory Board con-
+ducts long-term succession planning for the Managing
+Board. In its long-term succession planning, the Super-
+visory Board considers the target it has defined for the
+proportion of women on the Managing Board and the
+criteria set out in the diversity concept it has approved for
+the Managing Board's composition as well as the require-
+ments of the German Stock Corporation Act (Aktien-
+gesetz), the Code and the Bylaws for the Chairman's
+Committee. Considering the concrete qualification re-
+quirements and the above-mentioned criteria, the Chair-
+man's Committee prepares an ideal profile, on the basis
+of which it compiles a shortlist of the available candi-
+dates. Structured interviews are then conducted with
+these candidates. After the interviews, a proposal is sub-
+mitted to the Supervisory Board for approval. When
+developing the profile of requirements and selecting
+candidates, the Supervisory Board and the Chairman's
+Committee are supported, if necessary, by external
+consultants.
+C.4.2.6 Objectives regarding the
+Supervisory Board's composition as well
+as the profile of required skills and
+expertise and the diversity concept for
+the Supervisory Board
+In September 2020, the Supervisory Board approved
+changes to the objectives for its composition including
+the profile of required skills and expertise and the diver-
+sity concept:
+"The composition of the Supervisory Board of
+Siemens AG shall be such that the Supervisory Board's
+ability to effectively monitor and advise the Managing
+Board is ensured. In this connection, mutually comple-
+mentary collaboration among members with a wide
+range of personal and professional backgrounds and
+diversity with regard to internationality, age and gen-
+der are considered helpful.
+PROFILE OF REQUIRED SKILLS AND EXPERTISE
+The candidates proposed for election to the Super-
+visory Board shall have the knowledge, skills and ex-
+perience necessary to carry out the functions of a
+Supervisory Board member in a multinational com-
+pany oriented toward the capital markets and to safe-
+guard the reputation of Siemens in public. In particu-
+lar, care shall be taken in regard to the personality,
+integrity, commitment and professionalism of the in-
+dividuals proposed for election.
+The goal is to ensure that, in the Supervisory Board, as
+a group, all knowhow and experience is available that
+is considered essential in view of Siemens' activities.
+This includes, for instance, knowledge and experience
+in the areas of technology (including information
+technology and digitalization), procurement, manu-
+facturing and sales, finance, law (including compli-
+ance) and human resources. In addition, the members
+of the Supervisory Board shall collectively have knowl-
+edge and experience in the business areas that are im-
+portant for Siemens, in particular, in the areas of indus-
+try, energy, healthcare and infrastructure. As a group,
+the members of the Supervisory Board are to be famil-
+iar with the sector in which the Company operates.
+ANNUAL REPORT 2020
+The Supervisory Board shall include what the share-
+holder representatives on the Supervisory Board con-
+sider to be an appropriate number of independent
+shareholder representatives. More than half of the
+shareholder representatives shall be independent of
+the Company and its Managing Board. Substantial
+and not merely temporary - conflicts of interest are to
+be avoided.
+196
+At least one independent member of the Supervisory
+Board shall have knowledge and expertise in the areas
+of accounting or the auditing of financial statements
+and specific knowledge and experience in applying
+accounting principles and internal control processes.
+In particular, the Supervisory Board shall also include
+members who have leadership experience as senior
+executives or members of a supervisory board (or
+comparable body) at a major company with interna-
+tional operations.
+When a new member is to be appointed, a review shall
+be performed to determine which of the areas of ex-
+pertise deemed desirable for the Supervisory Board
+are to be strengthened.
+INTERNATIONALITY
+Taking the Company's international orientation into
+account, care shall be taken to ensure that the Super-
+visory Board has an adequate number of members
+with extensive international experience. The goal is to
+make sure that the present considerable share of Su-
+pervisory Board members with extensive international
+experience is maintained.
+DIVERSITY
+With regard to the composition of the Supervisory
+Board, attention shall be paid to achieving sufficient
+diversity. Not only is appropriate consideration to be
+given to women. Diversity of cultural heritage and a
+wide range of different educational and professional
+backgrounds, experiences and ways of thinking are
+also to be promoted. When considering possible can-
+didates for new elections or for filling Supervisory
+Board positions that have become vacant, the Super-
+visory Board shall give appropriate consideration to
+diversity at an early stage in the selection process.
+In accordance with the German Stock Corporation
+Act, the Supervisory Board is composed of at least
+30% women and at least 30% men. The Nominat-
+ing Committee shall continue to include at least one
+female member.
+Additional Information → C.4 Corporate Governance
+C.4.2.1 Declaration of Conformity with
+the German Corporate Governance Code
+The Managing Board and the Supervisory Board of
+Siemens AG approved the following Declaration of Con-
+formity pursuant to Section 161 of the German Stock
+Corporation Act as of October 1, 2020:
+Fax
+80333 Munich
+Phone
+E-mail
+Siemens AG
+Werner-von-Siemens-Str. 1
+Germany
+www.siemens.com
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
++49 89 636-1332474 (Investor Relations)
+press@siemens.com
+investorrelations@siemens.com
+Internet
+Address
+Order no. CMXX-B10005-00-7600
+ANNUAL REPORT 2020 199
+Additional Information C.5 Notes and forward-looking statements
+C.5
+Notes and forward-looking statements
+© 2020 by Siemens AG, Berlin and Munich
+This document includes in the applicable financial
+reporting framework not clearly defined – supplemental
+financial measures that are or may be alternative perfor-
+mance measures (non-GAAP-measures). These supple-
+mental financial measures should not be viewed in isola-
+tion or as alternatives to measures of Siemens' net assets
+and financial positions or results of operations as pre-
+sented in accordance with the applicable financial
+reporting framework in its Consolidated Financial State-
+ments. Other companies that report or describe similarly
+titled alternative performance measures may calculate
+them differently.
+This document contains statements related to our future
+business and financial performance and future events or
+developments involving Siemens that may constitute for-
+ward-looking statements. These statements may be iden-
+tified by words such as "expect," "look forward to," "antic-
+ipate," "intend," "plan," "believe," "seek," "estimate," "will,"
+"project" or words of similar meaning. We may also make
+forward-looking statements in other reports, in prospec-
+tuses, in presentations, in material delivered to share-
+holders and in press releases. In addition, our represen-
+tatives may from time to time make oral forward-looking
+statements. Such statements are based on the current
+expectations and certain assumptions of Siemens' man-
+agement, of which many are beyond Siemens' control.
+These are subject to a number of risks, uncertainties and
+factors, including, but not limited to, those described in
+disclosures, in particular in the chapter Report on ex-
+pected developments and associated material opportu-
+nities and risks in the Annual Report. Should one or more
+of these risks or uncertainties materialize, events of
+force majeure, such as pandemics, occur or should un-
+derlying expectations including future events occur at a
+later date or not at all or assumptions prove incorrect,
+actual results, performance or achievements of Siemens
+may (negatively or positively) vary materially from those
+described explicitly or implicitly in the relevant for-
+ward-looking statement. Siemens neither intends, nor
+assumes any obligation, to update or revise these for-
+ward-looking statements in light of developments which
+differ from those anticipated.
+This document is an English language translation of the
+German document. In case of discrepancies, the German
+language document is the sole authoritative and univer-
+sally valid version.
+For technical reasons, there may be differences between
+the accounting records appearing in this document and
+those published pursuant to legal requirements.
+The "Sustainability Information 2020" which reports on
+Sustainability and Citizenship at Siemens is available at:
+WWW.SIEMENS.COM/INVESTOR/EN/
+Due to rounding, numbers presented throughout this
+and other documents may not add up precisely to the
+totals provided and percentages may not precisely reflect
+the absolute figures.
+8,862
+Cash flows from operating activities - continuing and discontinued operations
+684
+8,178
+Cash flows from operating activities - continuing operations
+Cash flows from operating activities - discontinued operations
+4,314
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+(336)
+Change in operating net working capital
+4,200
+Net income
+2020
+Fiscal year
+Cash flows from operating activities
+Cash flows from investing activities
+Other reconciling items to cash flows from operating activities - continuing operations
+Additions to intangible assets and property, plant and equipment
+(4,105)
+Purchase of investments and financial assets for investment purposes
+Purchase of treasury shares
+Cash flows from financing activities
+(5,184)
+Cash flows from investing activities - continuing and discontinued operations
+(1,080)
+Cash flows from investing activities - discontinued operations
+(in millions of €)
+1,440
+(994)
+Cash flows from investing activities - continuing operations
+Other disposals of assets
+Change in receivables from financing activities of SFS
+(1,269)
+(1,727)
+(1,554)
+Acquisitions of businesses, net of cash acquired
+A.6.2 Cash flows
+In addition to these commitments, we issued other guar-
+antees. To the extent future claims are not considered
+remote, maximum future payments from these commit-
+ments amounted to €0.4 billion.
+ANNUAL REPORT 2020 24
+ANNUAL REPORT 2020 23
+The increase in short-term debt and current maturities
+of long-term debt was due mainly to reclassifications of
+long-term euro instruments totaling €3.5 billion from
+long-term debt, the issuance of a commercial paper
+program of €1.3 billion and increased lease liabilities due
+to the adoption of IFRS 16. Set against these factors
+were decreases resulting from €4.0 billion repayment of
+euro and U.S. dollar instruments and from derecognition
+of loans from banks in connection with the spin-off of
+Siemens Energy.
+The spin-off of Siemens Energy was the main factor for
+the decreases in trade payables, contract liabilities,
+current provisions, other current liabilities and pro-
+visions. While the spin-off resulted also in decreased
+provisions for pensions and similar obligations, the
+major impact there resulted from extraordinary fundings
+in Germany, including the transfer of a 9.9% interest
+in Siemens Energy AG to Siemens Pension Trust e. V.
+(18)%
+150,248
+20%
+2,858
+3,433
+123,897
+34%
+32%
+(24)%
+48,125
+36,390
+Total liabilities and equity
+Non-controlling interests
+Combined Management Report → A.6 Financial position
+Long-term debt increased due primarily to the issuance
+of euro and British pound instruments totaling €10.3 bil-
+lion and increased lease liabilities due to the above-men-
+tioned adoption of IFRS 16. Set against these factors were
+decreases from the above-mentioned reclassifications of
+euro instruments, currency translation effects for bonds
+issued in the U.S. dollar and British pound, and the
+Siemens Energy spin-off.
+The main factors for the decrease in total equity attrib-
+utable to shareholders of Siemens AG were changes
+in equity resulting from major portfolio transactions to-
+taling €9.6 billion, including the transfer of 55% of
+Siemens' ownership interest in Siemens Energy to its
+shareholders; dividend payments of €3.2 billion (for
+fiscal 2019); negative other comprehensive income, net
+of income taxes, of €2.8 billion, resulting mainly from
+negative currency translation effects; and the repurchase
+of 19,071,746 treasury shares at an average cost per
+share of €79.24, totaling €1.5 billion (including incidental
+transaction charges). This decrease was partly offset
+by €4.0 billion in net income attributable to shareholders
+of Siemens AG.
+CAPITAL STRUCTURE RATIO
+Out of the above-mentioned treasury shares repurchased
+in fiscal 2020, 18,219,708 treasury shares were repur-
+chased under the share buyback announced in Novem-
+ber 2018 of up to €3.0 billion in volume until Novem-
+ber 15, 2021 at the latest. Furthermore, the Company
+repurchased the number of treasury shares that were
+necessary to keep the stock of treasury shares stable on
+a certain level until the spin-off of Siemens Energy be-
+came legally effective. In pursuit of this goal, a total of
+852,038 treasury shares were repurchased.
+SHARE BUYBACK
+TO CONSOLIDATED FINANCIAL STATEMENTS.
+We have credit facilities totaling €23.0 billion, thereof
+€23.0 billion unused as of September 30, 2020. This
+includes a syndicated bridge facility in an amount of
+nearly €12.5 billion to secure Siemens Healthineers AG's
+financing of the acquisition of Varian. For further infor-
+mation about this acquisition see 7 NOTE 3 in 7 B.6 NOTES
+As of September 30, 2020, we recorded, in total, €38.3 bil-
+lion in notes and bonds, €1.4 billion in loans from banks,
+€2.1 billion in other financial indebtedness and €2.8 bil-
+lion in lease liabilities. Notes and bonds were issued
+mainly in the U.S. dollar and euro, and to a lower extent
+in the British pound.
+DEBT AND CREDIT FACILITIES
+FINANCIAL STATEMENTS.
+Combined Management Report → A.6 Financial position
+For further information about our commitments and
+contingencies see > NOTE 21 in > B.6 NOTES TO CONSOLIDATED
+(1,517)
+As of September 30, 2020, the undiscounted amount of
+maximum potential future payments related primarily
+to credit and performance guarantees amounted to
+€28.5 billion. This includes Siemens' obligations from
+performance and credit guarantees in connection with
+the Siemens Energy business, for which Siemens has
+reimbursement rights for the full amount.
+OFF-BALANCE-SHEET COMMITMENTS
+TO CONSOLIDATED FINANCIAL STATEMENTS.
+7 B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. For fur-
+ther information about the functions and objectives of
+our financial risk management see > NOTE 25 in 7 B.6 NOTES
+For further information about our debt see > NOTE 16 in
+Our capital structure ratio as of September 30, 2020 in-
+creased to 1.3 from 0.6 a year earlier. The change was
+due primarily to the above-mentioned increases in long-
+term debt.
+Irrevocable loan commitments amounted to €3.8 billion.
+A considerable portion of these commitments resulted
+from asset-based lending transactions, meaning that the
+respective loans can be drawn only after the borrower
+has provided sufficient collateral.
+Re-issuance of treasury shares and other transactions with owners
+(208)
+Issuance of long-term debt
+A.7
+Combined Management Report → A.7 Overall assessment of the economic position
+ANNUAL REPORT 2020 26
+With regard to capital expenditures for continuing oper-
+ations, we expect a significant increase in fiscal 2021. In
+the coming years, up to €0.6 billion are to be invested in
+"Siemensstadt 2.0″. This project initiated in fiscal 2019
+aims to transform Siemens' existing industrial area in
+Berlin into a modern urban district supporting a diverse
+range of purposes, including strengthening key tech-
+nologies. Further investments are planned in relation
+to Siemens Campus Erlangen. In addition, we plan to in-
+vest significant amounts in coming years in attractive
+innovation fields through Siemens' global venture capital
+unit Next47.
+The remaining portion related mainly to Siemens Real
+Estate, including significant amounts for projects such
+as new office buildings in Germany. Siemens Real Estate
+is responsible for uniform and comprehensive manage-
+ment of Company real estate worldwide and supports
+the industrial businesses and corporate activities with
+customer-specific real estate solutions; excluded are
+Siemens Healthineers and Mobility.
+Additions to intangible assets and property, plant and
+equipment from continuing operations totaled €1.6 bil-
+lion in fiscal 2020. Within the industrial businesses, on-
+going investments related mainly to technological inno-
+vations; maintaining and extending our capacities for
+designing, manufacturing and marketing new solutions;
+improving productivity; and replacements of fixed assets.
+These investments amounted to €1.1 billion in fiscal 2020.
+INVESTING ACTIVITIES
+With our ability to generate positive operating cash
+flows from continuing and discontinuing operations of
+€8.9 billion in fiscal 2020, our total liquidity (defined as
+cash and cash equivalents plus current interest-bearing
+debt securities) of €15.3 billion, our unused lines of credit,
+and our credit ratings at year-end, we believe that we
+have sufficient flexibility to fund our capital require-
+ments. Also in our opinion, our operating net working
+capital is sufficient for our present requirements.
+The Free cash flow for the Industrial Businesses amounted
+to €7,142 million, resulting in a cash conversation rate
+of 0.94.
+(2,458)
+6,404
+(220)
+6,625
+Free cash flow
+(905)
+(1,554)
+Overall assessment of the economic position
+Additions to intangible assets and property, plant
+and equipment
+For Siemens, fiscal 2020 was to a large extent determined
+by two factors, one external - COVID-19 – and one inter-
+nal - the spin-off and public listing of our energy business.
+During fiscal 2020, we created an independent player in
+the energy market with the spin-off and public listing of
+our energy business under the name Siemens Energy.
+Following approval by our shareholders, we completed
+this transaction in September 2020 as planned. We allo-
+cated 55.0% of our ownership interest in Siemens Energy
+to our shareholders, transferred a further 9.9% to Siemens
+Pension-Trust e. V., and hold the remaining share of 35.1%.
+This gives Siemens Energy more entrepreneurial freedom
+in its rapidly changing market environment. The three
+Siemens companies - Siemens, Siemens Healthineers
+and Siemens Energy are now a family of companies
+specialized in their respective fields and tied together
+by the strong Siemens brand.
+ANNUAL REPORT 2020 28
+We intend to continue providing an attractive return to
+shareholders. After the successful spin-off of Siemens
+Energy, the Siemens Managing Board, in agreement with
+the Supervisory Board, proposes a dividend of €3.50 per
+share, consisting of €3.00, which is at the upper end of
+our targeted dividend payout ratio, supplemented by an
+additional €0.50. A year earlier the dividend paid per
+share was €3.90.
+Free cash flow from continuing and discontinued opera-
+tions for fiscal 2020 increased 10% year-over-year to
+€6.4 billion, reaching its highest level since fiscal 2010.
+We evaluate our capital structure using the ratio of indus-
+trial net debt to EBITDA. Due primarily to an increase in
+long-term debt year-over-year, this ratio rose to 1.3, com-
+pared to 0.6 in fiscal 2019. Our forecast given in our
+Annual Report 2019 was to achieve a ratio of up to 1.0.
+ROCE for fiscal 2020 was 7.8%, down from 11.1% in fiscal
+2019. This decline was due to a combination of lower net
+income and an increase in average capital employed. Our
+forecast for ROCE given in our Annual Report 2019 was to
+achieve a double-digit result but to come in below the
+lower end of our long-term goal of 15% to 20%.
+Net income was €4.2 billion, down from €5.6 billion
+over-year. This was due mainly to the aforementioned
+lower results, particularly outside the Industrial Busi-
+nesses. In addition, discontinued operations, largely re-
+lated to our former energy business, reported a loss of
+€0.1 billion in fiscal 2020 compared to income from
+discontinued operations of €0.5 billion a year earlier. As
+a result, basic EPS from net income declined to €5.00,
+compared to €6.41 in fiscal 2019. In our Annual Report
+2019, we forecast basic EPS from net income in the range
+from €6.30 to €7.00.
+year-
+risk provisions and lower equity investment results year-
+over-year, and a return on equity after tax of 11.7%, below
+its margin range. Prior-year results outside the Industrial
+Businesses benefited from a significant positive effect
+related to the measurement of a major asset retirement
+obligation.
+The loss outside the Industrial Businesses came in sub-
+stantially larger year-over-year. The change was due
+mainly to an impairment of €0.5 billion on our equity
+investment stake in Valeo Siemens eAutomotive in fiscal
+2020. In addition, Siemens Financial Services reported a
+sharp decline in earnings before taxes on higher credit
+The Adjusted EBITA margin of our Industrial Businesses
+was 14.3%, nearly on the prior-year level of 14.4%. With
+Adjusted EBITA margins of 21.7% and 9.1%, respectively,
+Digital Industries and Mobility were within their long-
+term margin ranges; Digital Industries was within its
+range even without the above-mentioned effect related
+to Bentley, which added 5.1 percentage points to the
+Adjusted EBITA margin. With Adjusted EBITA margins of
+15.1% and 9.1%, respectively, Siemens Healthineers and
+Smart Infrastructure were below their long-term margin
+ranges.
+Adjusted EBITA Industrial Businesses declined 3% to
+€7.6 billion on lower Adjusted EBITA at Siemens
+Healthineers, at Smart Infrastructure including declines
+across its businesses, and at Mobility due in part to a less
+favorable revenue mix. These decreases were only partly
+offset by higher Adjusted EBITA at Digital Industries,
+which included a strong contribution from the software
+business and benefited from a €0.8 billion positive effect
+related mainly to a revaluation of its stake in Bentley.
+Overall, Adjusted EBITA Industrial Businesses was bur-
+dened by severance charges of €0.5 billion, sharply
+higher than a year earlier. The vast majority of these
+severance charges were booked at Digital Industries and
+Smart Infrastructure, which are executing cost structure
+improvement and competitiveness programs.
+Revenue declined 2% on both a nominal and a compa-
+rable basis, to €57.1 billion. This was due mainly to a clear
+decrease at Digital Industries' automation businesses,
+and a more modest decline at Smart Infrastructure.
+Siemens Healthineers kept revenue on the prior-year
+level, while revenue at Mobility rose slightly driven
+primarily by the rolling stock business. In our Annual
+Report 2019, we had forecast moderate comparable
+revenue growth for fiscal 2020. In our Half-year Financial
+Report, we revised our expectation to a moderate decline
+in comparable revenue in fiscal 2020.
+ANNUAL REPORT 2020 27
+Orders were €60.0 billion, down 7% year-over-year on
+both a nominal and a comparable basis. The decline came
+mainly from Mobility, due to sharply lower volume from
+large orders year-over-year, partly caused by the post-
+ponement of tenders for large rail and infrastructure
+projects as a consequence of COVID-19. Lower volume
+from large orders was also a main reason for a clear de-
+cline in orders at Smart Infrastructure. Digital Industries
+kept orders on the prior-year level with rapid growth in its
+software business, while orders in its automation busi-
+nesses declined due to lower demand from some of their
+most important customer segments, particularly the
+automotive and machine building industries. Orders at
+Siemens Healthineers rose slightly on increases in its
+diagnostics and imaging businesses. The book-to-bill-ratio
+for Siemens was 1.05, thus fulfilling our expectation of
+a ratio above 1.
+At the beginning of fiscal 2020, we already faced macro-
+economic headwinds, particularly at our short-cycle busi-
+nesses. In addition, effects related to COVID-19 began to
+burden volume, the Adjusted EBITA and the Adjusted
+EBITA margin of our industrial businesses from the sec-
+ond quarter of fiscal 2020 onwards. As a consequence,
+we were no longer able to confirm the original outlook
+for fiscal 2020 given in our Annual Report 2019. In our
+Half-year Financial Report 2020 we revised our outlook
+for revenue growth and refrained from giving guidance
+for basic EPS from net income for fiscal 2020. While we
+continued to deliver solid results in our industrial busi-
+nesses and in Siemens Financial Services, particularly
+given the adverse economic environment, we missed the
+targets for our primary measures set in our Annual Report
+2019, but achieved our revised target for revenue devel-
+opment. On a comparable basis, revenue declined 2%,
+we delivered basic EPS from net income of €5.00, return
+on capital employed (ROCE) was 7.8%, and our capital
+structure came in at 1.3.
+The worldwide spread of COVID-19 led to the biggest
+health crisis and the deepest recession since the Second
+World War and affected many of our key customer indus-
+tries. Siemens managed this challenge well. The health
+and security of our employees and business partners
+was - and continues to be - our highest priority. Our
+other key priorities during the crisis have been ensuring
+business continuity wherever possible in a responsible
+manner and safeguarding Siemens' strong financial
+position. While the pandemic has affected our markets in
+various ways and with different prospects for recovery,
+Siemens has remained a reliable partner for customers
+and suppliers. The pandemic has increased activity in the
+digital economy and underscored the need for digitaliza-
+tion and the development of the industrial internet of
+things. These are core competencies of Siemens, and
+common to each of our industrial businesses Digital
+Industries, Smart Infrastructure, Mobility and Siemens
+Healthineers.
+8,862
+684
+8,178
+(1,091)
+3,172
+Cash flows from financing activities - continuing and discontinued operations
+Cash flows from financing activities – discontinued operations
+4,263
+Cash flows from financing activities - continuing operations
+Dividends attributable to non-controlling interests
+(3,174)
+Dividends paid to shareholders of Siemens AG
+(833)
+Interest paid
+1,588
+Change in short-term debt and other financing activities
+(4,472)
+Repayment of long-term debt (including current maturities of long-term debt)
+10,255
+All industrial businesses converted their Adjusted EBITA
+in significant amounts to Cash flows from operating
+activities, with the highest contribution from Digital
+Industries. Cash outflows associated with changes in
+operating net working included a build-up in inventories
+at Siemens Healthineers. At Mobility, higher cash out-
+flows from contract assets were nearly offset by higher
+cash inflows from contract liabilities, both related to its
+project business.
+Cash outflows from acquisitions of businesses, net of
+cash acquired, mainly involved acquisitions by Siemens
+Healthineers including €1.0 billion for Corindus and
+€0.3 billion for ECG.
+Cash outflows for purchase of investments and finan-
+cial assets for investment purposes primarily included
+additions of assets eligible as central bank collateral and
+payments related to investments such as debt or equity
+investments related to certain projects.
+Cash flows from operating activities
+discontinued operations
+Fiscal year 2020
+Continuing and
+Discontinued
+operations
+Continuing
+operations
+(in millions of €)
+Free cash flow
+2,624
+measure:
+Cash flows from discontinued operations related mainly
+to the former energy business, which included cash
+outflows from investing activities from additions to
+intangible assets and property, plant and equipment of
+€0.9 billion and cash outflows from financing activities
+of €1.1 billion relating to the purchase of the 8.1% stake
+in Siemens Gamesa Renewable Energy.
+Cash inflows from the change in short-term debt and
+other financing activities mainly included net cash in-
+flows related to commercial paper.
+Cash inflows from the re-issuance of treasury shares and
+other transactions with owners mainly included pro-
+ceeds of €2.7 billion related to Siemens Healthineers AG's
+issuance of 75 million new shares to institutional investors.
+Cash inflows from other disposals of assets mainly in-
+cluded disposals of above-mentioned eligible collateral
+and from equity investments.
+Combined Management Report → A.6 Financial position
+ANNUAL REPORT 2020 25
+Cash outflows from change in receivables from financ-
+ing activities of SFS related mainly to SFS' debt business.
+We report Free cash flow as a supplemental liquidity
+66%
+Combined Management Report →A.7 Overall assessment of the economic position
+(15)%
+n/a
+Reconciliation to Consolidated Financial Statements
+(1,730)
+(1,491)
+(16)%
+Income from continuing operations before income taxes
+2
+5,672
+(18)%
+Income tax expenses
+(1,775)
+22%
+Income from continuing operations
+4,290
+6,933
+(504)
+Portfolio Companies
+(45)%
+1,465
+(11)%
+822
+983
+(16)%
+2,184
+2,461
+(11)%
+7,560
+7,789
+(3)%
+14.3%
+14.4%
+345
+632
+5,158
+(17)%
+Income (loss) from discontinued operations, net of income taxes
+Net income
+(90)
+As expected, ROCE at 7.8% was below the target range
+set in our Siemens Financial Framework. The decline year-
+over-year was due both to lower income before interest
+after tax and to higher average capital employed, which
+increased due mainly to effects from the adoption of
+IFRS 16, Leases, and acquisitions during the fiscal year,
+including Corindus at Siemens Healthineers.
+A.4.3 Research and development
+In fiscal 2020, we reported research and development
+(R&D) expenses of €4.6 billion, compared to €4.7 billion
+in fiscal 2019. The resulting R&D intensity, defined as the
+ratio of R&D expenses and revenue, was 8.1% (fiscal
+2019: 8.0%). Additions to capitalized development ex-
+penses amounted to €0.4 billion as in prior year. As of
+September 30, 2020 and 2019, Siemens held approxi-
+mately 42,900 and 42,400 respectively, granted patents
+worldwide in its continuing operations. On average, we
+had 40,800 R&D employees in fiscal 2020.
+Our research and development activities are ultimately
+geared to developing innovative, sustainable solutions
+for our customers - and the Siemens businesses - while
+also strengthening our own competitiveness. Joint imple-
+mentation by the operating units and Corporate Technol-
+ogy, our central R&D department, ensures that research
+activities and business strategies are closely aligned with
+one another, and that all units benefit equally and quickly
+from technological developments. As in fiscal 2019 the
+following technologies were the focus in fiscal 2020:
+additive manufacturing, autonomous robotics, block-
+chain applications, connected (e-)mobility, connectivity
+and edge devices, cyber security, data analytics and arti-
+ficial intelligence, distributed energy systems, energy
+storage, future of automation, materials, power electron-
+ics, simulation and digital twins, and software systems
+and processes.
+We further develop technologies through our "open inno-
+vation" concept. We are working closely with scholars
+from leading universities and research institutions, not
+only under bilateral cooperation agreements but also in
+publicly funded collective projects. Our focus here is on
+our strategic research partners, and especially the eight
+Centers of Knowledge Interchange that we maintain at
+leading universities worldwide.
+Siemens' global venture capital unit, Next47, provides
+capital to help start-ups expand and scale. It serves as the
+creator of next-generation businesses for Siemens by
+building, buying and partnering with innovative compa-
+nies at any stage. Next47 is focused on anticipating how
+emerging technologies will influence our end markets.
+This foreknowledge enables Siemens and our customers
+to grow and thrive in the age of digitalization.
+ANNUAL REPORT 2020 21
+Combined Management Report → A.5 Net assets position
+A.5
+Net assets position
+(in millions of €)
+2020
+Sep 30,
+2019
+% Change
+Cash and cash equivalents
+The decline in basic earnings per share reflects the
+decrease of Net income attributable to Shareholders of
+Siemens AG, which was €4,030 million in fiscal 2020
+compared to €5,174 million in fiscal 2019, partially off-
+set by a lower number of weighted average shares out-
+standing.
+1,302
+The negative swing year-over-year was due primarily to
+losses at Gas and Power and SGRE, both of which had
+recorded positive earnings in the prior year, and income
+tax expenses of €298 million mainly related to the carve-
+out of the distribution group, partly offset by a pretax
+gain of €946 million, net of related expenses, from the
+spin-off.
+ANNUAL REPORT 2020 20
+490
+n/a
+4,200
+5,648
+(26)%
+Basic earnings per share
+ROCE
+5.00
+6.41
+(22)%
+7.8%
+11.1%
+As a result of the developments described above, Income
+from continuing operations before income taxes de-
+clined 18%. Severance charges for continuing operations
+were €591 million, of which €490 million were in Indus-
+trial Businesses. Adjusted EBITA margin Industrial Busi-
+nesses excluding severance charges was 15.2% in fiscal
+2020. In fiscal 2019, severance charges for continuing
+operations were €340 million, of which €215 million
+were in Industrial Businesses.
+The tax rate of 24% for fiscal 2020 was below the tax rate
+of 26% for the prior year, benefiting from largely tax-free
+gains associated with the revaluation of the Bentley
+investment and with the transfer of investments to
+Siemens Pension-Trust e. V., and from a positive effect
+related to a retroactive statutory tax rate reduction; these
+factors were partly offset by impairment losses, which
+were not tax-deductible. As a result, the decline in
+Income from continuing operations was 17%.
+Income (loss) from discontinued operations, net of
+income taxes in both years predominantly included
+income related to Siemens Energy.
+In May 2019, Siemens announced its intention to trans-
+fer the energy business into a new company, Siemens
+Energy AG, and list it on the stock market via a spin-off.
+Siemens Energy, or the distribution group, includes the
+former reportable segment Gas and Power and Siemens'
+67% stake in SGRE., 8.1% of which was purchased in Feb-
+ruary 2020 from Iberdrola S.A. for a purchase price of
+€1.1 billion. The criteria for classification of the distribu-
+tion group as held for disposal and discontinued opera-
+tions were met at the end of the second quarter of fiscal
+2020. In the Consolidated Statements of Income and in
+the Consolidated Statements of Cash Flows, results and
+cash flows of the distribution group are reported as
+discontinued operations on a comparable basis for all
+periods presented. Effective with Siemens classifying the
+distribution group as held for disposal, depreciation and
+amortization of assets within the distribution group
+ceased. The spin-off was completed on September 25,
+2020. After the spin-off, Siemens Energy was deconsoli-
+dated; the remaining minority stake that Siemens holds in
+Siemens Energy is accounted for using the equity method.
+Combined Management Report → A.4 Results of operations
+Siemens Financial Services
+Adjusted EBITA margin Industrial Businesses
+Industrial Businesses
+(2)%
+(2)%
+Americas
+15,464
+15,597
+(1)%
+(1)%
+therein: U.S.
+12,981 12,937
+0%
+(1)%
+Asia, Australia
+13,613 14,065
+(3)%
+(2)%
+9,882
+therein: China
+9,726
+(2)%
+68%
+Combined Management Report → A.4 Results of operations
+Order intake in the Americas was also influenced strongly
+by a lower volume from large orders for Mobility which in
+the prior year included large contract wins in the U.S. and
+Canada. This decline was only partly offset by clear
+growth in Digital Industries and a moderate increase in
+Siemens Healthineers. Order intake for Smart Infrastruc-
+ture was slightly below the prior-year level. The pattern
+of order development in the U.S. was largely the same as
+for the Americas region.
+In the Asia, Australia region, orders overall rose slightly
+due to clear growth in Digital Industries, partly offset by
+a decrease in Smart Infrastructure. Order growth for
+Digital Industries was particularly strong in China.
+Siemens Healthineers also posted an increase in that
+country, while the other two industrial businesses posted
+declines.
+Revenue (location of customer)
+2020
+Fiscal year
+2019
+Actual
+% Change
+Comp.
+(in millions of €)
+Europe, C.I.S.,
+Africa, Middle East
+28,062
+28,821
+(3)%
+therein: Germany
+14,041
+7,254
+4%
+ANNUAL REPORT 2020 19
+Combined Management Report → A.4 Results of operations
+A.4.2 Income
+Fiscal year
+(in millions of €, earnings per share in €)
+2020
+2019
+% Change
+Digital Industries
+3,252
+2,880
+13%
+Smart Infrastructure
+Mobility
+Siemens Healthineers
+1 As defined by the International Monetary Fund.
+6,947
+Revenue in Asia, Australia declined moderately year-
+over-year on decreases in all four industrial businesses
+due mainly to the above-mentioned pandemic effect in
+India. In contrast, revenue in China was up moderately
+on growth in all industrial businesses except for Mobility.
+In the Americas, revenue came in close to the prior-year
+level, as Mobility recorded clear growth that was offset by
+decreases in Siemens Healthineers and Digital Industries.
+In the U.S., year-over-year changes in revenue were small
+for all industrial businesses.
+6%
+Siemens
+(continuing
+operations)
+57,139
+58,483
+(2)%
+(2)%
+therein: emerging
+markets1
+16,168
+16,773
+(4)%
+Revenue related to external customers went down only
+slightly year-over-year due mainly to a clear decrease in
+Digital Industries driven by a decline in demand in its
+short-cycle automation businesses. Smart Infrastructure
+posted a slight decline, also involving short-cycle busi-
+nesses, while revenue in Siemens Healthineers came in
+close to the prior-year level. In contrast, Mobility posted
+slight revenue growth due mainly to increases in its
+rolling stock business. The revenue decline in emerging
+markets was due mainly to lower revenue in countries
+that were strongly affected by the pandemic, in particu-
+lar India.
+Revenue in Europe, C.I.S., Africa, Middle East decreased
+moderately as a significant decline in Digital Industries
+and a slight decrease in Smart Infrastructure were only
+partly offset by moderate growth in Mobility and Siemens
+Healthineers. In Germany, revenue was down only slightly
+with a decline in Digital Industries to a large degree offset
+by growth in Mobility.
+(1)%
+12,391
+(1,382)
+Trade and other receivables
+(54)%
+Current provisions
+1,674
+3,682
+(55)%
+Current income tax liabilities
+2,281
+2,378
+(4)%
+Other current liabilities
+6,209
+9,023
+(31)%
+Liabilities associated with assets classified as held for disposal
+35
+16,452
+2
+7,524
+12%
+(in millions of €)
+2020
+Sep 30,
+2019
+% Change
+Short-term debt and current maturities of long-term debt
+6,562
+6,034
+9%
+Trade payables
+7,873
+11,409
+(31)%
+Other current financial liabilities
+1,958
+1,743
+Contract liabilities
+A.6.1 Capital structure
+> 200%
+34,117
+769
+986
+(22)%
+Other liabilities
+Total non-current liabilities
+Total liabilities
+Debt ratio
+1,808
+2,226
+(19)%
+49,957
+48,541
+3%
+84,074
+99,265
+(37)%
+Total current liabilities
+3,714
+Other financial liabilities
+50,723
+(33)%
+Long-term debt
+13%
+30,414
+25%
+Provisions for pensions and similar obligations
+6,360
+9,896
+(36)%
+Deferred tax liabilities
+664
+1,305
+(49)%
+Provisions
+2,352
+Financial position
+38,005
+Combined Management Report → A.6 Financial position
+Other current assets
+1,271
+1,960
+(35)%
+Assets classified as held for disposal
+Total current assets
+338
+238
+42%
+52,968
+70,370
+(25)%
+Goodwill
+20,449
+30,160
+38%
+(32)%
+1,103
+(47)%
+A.6
+14,074
+18,894
+(26)%
+Other current financial assets
+8,382
+10,669
+(21)%
+Contract assets
+5,545
+10,309
+(46)%
+Inventories
+7,795
+14,806
+1,523
+Other intangible assets
+Current income tax assets
+9,800
+Total assets
+1,769
+2,475
+(29)%
+70,928
+79,878
+123,897
+150,248
+(18)%
+Our total assets at the end of fiscal 2020 were influenced
+by negative currency translation effects of €7.5 billion,
+primarily involving the U.S. dollar.
+In fiscal 2020, the spin-off of Siemens Energy was the
+major factor related to the decrease of Siemens' assets,
+mainly trade and other receivables, contract assets,
+inventories, goodwill and other intangible assets. This
+was partly offset by goodwill and other intangible assets
+resulting from Siemens Healthineers' acquisitions of
+Corindus and ECG Management Consultants, U.S. (ECG).
+For further information see 7 NOTE 3 in 7 B.6 NOTES TO
+CONSOLIDATED FINANCIAL STATEMENTS. While the spin-off also
+reduced property, plant and equipment, this was partly
+offset by assets recognized in connection with the
+adoption of IFRS 16, Leases. For further information see
+7 NOTE 2 in 7 B.6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
+The remaining minority stake that Siemens holds in
+Siemens Energy AG after the spin-off increased invest-
+ments accounted for using the equity method by
+€6.6 billion.
+The major factor for the decrease in other current finan-
+cial assets was a reassessment of the expected repay-
+ment dates of loans receivable at SFS. This decrease was
+partly offset by receivables related to customer contracts
+in connection with the Siemens Energy activities legally
+remaining at Siemens. The reassessment of the expected
+repayment dates of loans receivable mentioned above
+was also the main factor for the increase in other
+financial assets, along with revaluation of Siemens'
+stake in Bentley.
+4,838
+ANNUAL REPORT 2020 22
+Total non-current assets
+Other assets
+(11)%
+3,174
+Property, plant and equipment
+(6)%
+10,250
+12,183
+(16)%
+(51)%
+7,862
+2,244
+Investments accounted for using the equity method
+> 200%
+Other financial assets
+22,771
+19,843
+15%
+Deferred tax assets
+2,988
+We aim in general for a capital structure, defined as the
+ratio of industrial net debt to EBITDA (continuing opera-
+tions), of up to 1.0. Due mainly to an increase in long-
+term debt year-over-year, this ratio came in at 1.3 in fiscal
+2020 and is expected to remain above 1 fiscal 2021. The
+planned acquisition of Varian by Siemens Healthineers
+mentioned above, which is excluded from this outlook,
+will also significantly influence our capital structure.
+A.8.1.3 Overall assessment
+Our long-term goal is to achieve a ROCE in the range of
+15% to 20%. Due mainly to factors currently influencing
+net income and average capital employed, particularly
+recent acquisitions at Siemens Healthineers, we expect
+ROCE to increase compared to 7.8% in fiscal 2020 but to
+remain in the single-digit range in fiscal 2021. Addition-
+ally we expect the planned acquisition of Varian by
+Siemens Healthineers, which is excluded from this out-
+look, to constitute a significant burden on ROCE.
+For our outlook for fiscal 2021 we assume that the
+COVID-19 pandemic will not have a long-lasting impact on
+the world economy. Given this condition, we expect a
+fairly robust return to global GDP growth. While we an-
+ticipate that important customer industries for Siemens
+will continue to face challenges related to the pandemic
+and industry-specific structural changes, and that this will
+cause growth in global fixed investments to lag behind
+GDP growth, we expect improved conditions particularly
+for our high-margin short-cycle businesses in the second
+half of fiscal 2021.
+We further anticipate that negative currency effects will
+strongly burden both nominal growth rates in volume and
+Adjusted EBITA for our industrial businesses in fiscal 2021.
+For comparable revenue, net of currency translation and
+portfolio effects, we expect the Siemens Group to achieve
+moderate growth and a book-to-bill ratio above 1.
+CAPITAL STRUCTURE
+Assuming the expectations described above are fulfilled
+during fiscal 2021, we anticipate net income to increase
+moderately from €4.2 billion in fiscal 2020 despite the
+strong currency headwinds.
+of risk management
+Excluded from this outlook are burdens from legal and
+regulatory issues and effects in connection with Siemens
+Healthineers' planned acquisition of Varian, which is
+expected to close in the first half of calendar 2021.
+Overall, the actual development for Siemens and its
+segments may vary, positively or negatively, from our
+outlook due to the risks and opportunities described
+below or if our expectations and assumptions do not
+materialize.
+ANNUAL REPORT 2020 31
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+A.8.2.1 Basic principles
+Our risk management policy stems from a philosophy
+of pursuing sustainable growth and creating economic
+value while managing appropriate risks and opportuni-
+ties and avoiding inappropriate risks. As risk manage-
+ment is an integral part of how we plan and execute our
+business strategies, our risk management policy is set by
+the Managing Board. Our organizational and account-
+ability structure requires each of the respective manage-
+ments of our organizational units to implement risk man-
+agement programs that are tailored to their specific
+industries and responsibilities, while being consistent
+with the overall policy.
+We have implemented and coordinated a set of risk
+management and control systems which support us in
+the early recognition of developments that could jeopar-
+dize the continuity of our business. The most important
+of these systems include our enterprise-wide processes
+for strategic planning and management reporting. Stra-
+tegic planning is intended to support us in considering
+potential risks well in advance of major business decisions,
+while management reporting is intended to enable us
+to monitor such risks more closely as our business pro-
+gresses. Our internal auditors regularly review the ade-
+quacy and effectiveness of our risk management. Ac-
+cordingly, if deficits are detected, it is possible to adopt
+appropriate measures for their elimination. This coordi-
+nation of processes and procedures is intended to help
+ensure that the Managing Board and the Supervisory
+Board are fully informed about significant risks in a timely
+CAPITAL EFFICIENCY
+A.8.2.2 Enterprise risk
+management process
+For our net income guidance, we assume that the gain
+related to the announced divestment of Flender will be
+largely offset by burdens related to Siemens Energy.
+Within our equity investment in Siemens Energy, we ex-
+pect an €0.3 billion impact from amortization of assets in
+addition to our participation in its profit after tax. We also
+expect expenses remaining from the spin-off transaction.
+Our forecast for net income takes into account a number
+of additional factors. We expect solid project execution to
+continue in fiscal 2021. We plan to keep the ratio of R&D
+expenses to revenue above 8% with a strong focus on
+software and digital technologies and to keep selling and
+general administrative expenses as a percent of revenue
+close to the fiscal 2020 level of 18.9%. Severance charges,
+which were €0.6 billion in fiscal 2020, are expected to be
+somewhat lower in fiscal 2021.
+SEGMENTS
+For our net income guidance, we assume that the gain
+related to the announced divestment of Flender will be
+largely offset by burdens related to Siemens Energy and
+expected additional expenses remaining from the spin-
+off transaction.
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+manner.
+expected to close in the first half of calendar 2021 and to
+benefit nominal volume growth and burden net income
+for fiscal 2021.
+We are exposed to currency translation effects, mainly
+involving the U.S. dollar, the British pound and currencies
+of emerging markets, particularly the Chinese yuan.
+While we expect volatility in global currency markets to
+continue in fiscal 2021, we have improved our natural
+hedge on a global basis through geographic distribution
+of our production facilities in the past. Nevertheless,
+Siemens is still a net exporter from the Eurozone to the
+rest of the world, so a weak euro is principally favorable
+for our business and a strong euro is principally unfavor-
+able. In addition to the natural hedging strategy just
+mentioned, we also hedge currency risk in our export
+business using derivative financial instruments. We ex-
+pect these steps to help us limit effects on income related
+to currency in fiscal 2021. Nevertheless, based on cur-
+rency exchange rates as of the beginning of Novem-
+ber 2020, we anticipate that negative currency effects
+will strongly burden both nominal growth rates in vol-
+ume and Adjusted EBITA for our businesses in fiscal 2021.
+Based on these assumptions and exclusions, our outlook
+is as follows:
+Digital Industries expects fiscal 2021 comparable revenue
+to grow modestly year-over-year. Adjusted EBITA margin
+is expected at 17% to 18%.
+Smart Infrastructure expects to achieve moderate com-
+parable revenue growth in fiscal 2021. Adjusted EBITA
+margin is expected at 10% to 11%.
+Due mainly to executing its large order backlog, Mobility
+anticipates mid-single-digit comparable revenue growth
+in fiscal 2021. Adjusted EBITA margin is expected to be
+9.5% to 10.5%.
+Siemens Healthineers expects to achieve comparable rev-
+enue growth in the range of 5% to 8% in fiscal 2021. Ad-
+justed EBITA margin is expected to improve considerably
+and to come in slightly below our target margin range for
+this segment of 17% to 21%.
+Siemens Financial Services is expected to achieve signif-
+icant improvements year-over-year and to approach the
+target range for return on equity (ROE) (after tax) of 17%
+to 22% in fiscal 2021.
+REVENUE GROWTH
+For comparable revenue, net of currency translation and
+portfolio effects, we expect the Siemens Group to
+achieve moderate growth. Furthermore, we anticipate
+that orders in fiscal 2021 will exceed revenue for a book-
+to-bill ratio above 1.
+As of September 30, 2020, our order backlog totaled
+€70 billion, and we expect conversion from the backlog
+to strongly support revenue growth in fiscal 2021 with
+approximately €28 billion of past orders converted to cur-
+rent revenue. For expected conversion of order backlog
+to revenue for our respective segments, see 7 A.3 SEGMENT
+INFORMATION.
+PROFITABILITY
+In addition to the above-mentioned expectations for our
+segments, we expect our fully consolidated units within
+Portfolio Companies to be profitable while equity invest-
+ments therein are expected to be volatile and to continue
+to generate losses. Results related to our investment in
+Siemens Energy include our participation in its profit af-
+ter tax and amortization of assets resulting from pur-
+chase price allocation due to the initial recognition of the
+investment at fair value. We anticipate this amortization,
+which is expected to be approximately €0.3 billion after
+tax in fiscal 2021, to result in a substantial loss related to
+Siemens Energy Investment. We anticipate that Siemens
+Real Estate will continue with real estate disposals de-
+pending on market conditions, at a lower level compared
+to fiscal 2020. Corporate items and Centrally carried pen-
+sion expenses, which were a negative €1.1 billion are ex-
+pected on a similar level in fiscal 2021, including impacts
+of approximately €0.2 billion to €0.3 billion related to
+Siemens Energy. Amortization of intangible assets ac-
+quired in business combinations, which was €0.7 billion
+in fiscal 2020, is expected at €0.6 billion, and Elimina-
+tions, Corporate Treasury and other reconciling items,
+which were a negative €0.2 billion in fiscal 2020, are ex-
+pected to be slightly more negative in fiscal 2021.
+ANNUAL REPORT 2020 30
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+We anticipate our tax rate for fiscal 2021 to be in the
+range of 27% to 31%, up from 24% in fiscal 2020. We ex-
+pect income from discontinued operations at a positive
+mid-triple-digit level, due primarily to a gain from the
+announced divestment of Flender, which is expected to
+close in the first half of calendar 2021.
+Assuming the expectations described above are fulfilled
+during fiscal 2021, we anticipate net income to increase
+moderately from €4.2 billion in fiscal 2020 despite the
+strong currency
+headwinds.
+Risk management at Siemens builds on a comprehensive,
+interactive and management-oriented Enterprise Risk
+Management (ERM) approach that is integrated into the
+organization and that addresses both risks and oppor-
+tunities. Our ERM approach is based on the globally ac-
+cepted COSO Standard (Committee of Sponsoring Orga-
+nizations of the Treadway Commission) “Enterprise Risk
+Management Integrating with Strategy and Perfor-
+ANNUAL REPORT 2020 37
+Our ERM process aims for early identification and evalu-
+ation of, and response regarding, risks and opportunities
+that could materially affect the achievement of our stra-
+tegic, operational, financial and compliance objectives.
+The time horizon is typically three years, and we take a
+net risk approach, addressing risks and opportunities re-
+maining after the execution of existing control measures.
+If risks have already been considered in plans, budgets,
+forecasts or the consolidated financial statements (e.g.
+as a provision or risk contingency), they are supposed to
+be incorporated with their financial impact in the entity's
+business objectives. As a consequence, only additional
+risks arising from the same subject (e.g. deviations from
+business objectives, different impact perspectives) should
+be considered. In order to provide a comprehensive view
+of our business activities, risks and opportunities are
+identified in a structured way combining elements of
+both top-down and bottom-up approaches. Reporting
+generally follows a quarterly cycle; we complement this
+periodic reporting with an ad-hoc reporting process that
+aims to escalate critical issues in a timely manner. Rele-
+vant risks and opportunities are prioritized in terms of
+impact and likelihood, considering different impact per-
+spectives, including business objectives, reputation and
+regulatory requirements. The bottom-up identification
+and prioritization process is supplemented by workshops
+with the respective managements of our organizational
+units. The top-down element ensures that potential new
+risks and opportunities are discussed at different man-
+agement levels and are included in the subsequent re-
+porting process, if found to be relevant. Reported risks
+and opportunities are analyzed regarding potential cu-
+mulative effects and are aggregated within and for each
+of the organizations mentioned above.
+property may not prevent competitors from independently
+developing or selling products and services that are simi-
+lar to ours.
+Competitive environment: The worldwide markets for
+our products, solutions and services are highly competi-
+tive in terms of pricing, product and service quality, prod-
+uct development and introduction time, customer ser-
+vice, financing terms and shifts in market demands. We
+face strong established competitors and rising competi-
+tors from emerging markets and new industries, which
+may have a better cost structure. Some industries in which
+we operate are undergoing consolidation, which may
+result in stronger competition, a change in our relative
+market position, increase in inventory of finished or work-
+in-progress goods or unexpected price erosion. Further-
+more, there is a risk that critical suppliers are taken over
+by competitors and a risk that competitors are increas-
+ingly offering services to our installed base. We address
+these risks with various measures, for example bench-
+marking, strategic initiatives, sales push initiatives, exe-
+cuting productivity measures and target cost projects,
+rightsizing of our footprint, outsourcings, mergers and
+joint ventures and optimizing our product and service
+portfolio. We continuously monitor and analyze compet-
+itive, market and industry information in order to be able
+to anticipate unfavorable changes in the competitive en-
+vironment rather than merely reacting to such changes.
+Increasing sustainability focus: The increasing environ-
+mental, social and governance requirements from gov-
+ernments and customers as well as financing restrictions
+from governments, customer demands and financing
+restrictions for greenhouse gas emitting technologies
+could result in additional costs. Additionally, business
+involvement in sensitive environmental, social or gover-
+nance activities might be negatively perceived and
+trigger adverse media attention. This could lead to repu-
+tational damage and have an impact on achieving our
+business goals. We are implementing an environmental,
+social and governance due diligence tool during fiscal
+2021, which is mandatory for all Siemens units.
+ANNUAL REPORT 2020 36
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+Footprint and Restructuring: We see risks that we may
+not be flexible enough in adjusting our organizational
+and manufacturing footprint in order to quickly respond
+to changing markets. The necessary restructuring might
+not be executed to the extent or in the timeframe planned
+(e.g. due to local co-determination regulations), limiting
+our improvements of our cost position with negative
+profit impacts and the loss of key personnel. Strikes and
+disputes with unions and workers councils might result
+in negative media coverage and delivery problems. Addi-
+tionally, public criticism related to restructuring might
+negatively impact Siemens' reputation. We mitigate these
+risks by closely monitoring the implementation of the
+planned measures, maintaining strict cost management,
+and conducting ongoing discussions with all concerned
+interest groups.
+A.8.3.2 Operational risks
+Cyber/Information security: Digital technologies are
+deeply integrated into our business portfolio. We observe
+a global increase of cyber security threats and higher
+levels of professionalism in computer crime, which pose
+a risk to the security of products, systems and networks
+and the confidentiality, availability and integrity of data.
+According to the various external data sources, this ten-
+dency has accelerated during the COVID-19 pandemic.
+Especially the number of phishing attacks as well as the
+number of malicious websites have increased signifi-
+cantly. Moreover, the information technology market is
+concentrated around a small number of information
+technology and software vendors, which could lead to
+dependence on a single provider. There can be no assur-
+ance that the measures aimed at protecting our Intellec-
+tual Property and portfolio will address these threats
+under all circumstances. There is a risk that confidential
+information may be stolen or that the integrity of our
+portfolio may be compromised, e.g. by attacks on our
+networks, social engineering, data manipulations in crit-
+ical applications and a loss of critical resources, resulting
+in financial damages. Cyber security covers the IT of our
+entire enterprise including office IT, systems and applica-
+tions, special purpose networks, and our operating envi-
+ronments such as manufacturing and research and devel-
+opment (R&D). Like other large multinational companies
+we face active cyber threats from sophisticated adversar-
+ies that are supported by organized crime and nation-
+states engaged in economic espionage or even sabotage.
+We attempt to mitigate these risks by employing a num-
+ber of measures, including employee training, consider-
+ing new models of flexible working environments, and
+comprehensive monitoring of our networks and systems
+through Cyber Defense with an artificial intelligence
+solution to identify attacks faster and prevent damage to
+society and especially to critical infrastructures, our cus-
+tomers, our partners and Siemens overall. We initiated
+the industrial "Charter of Trust”, signed by a growing
+group of global companies, which sets out principles for
+building trust in digital technologies and creating a more
+secure digital world. Nonetheless, our systems, products,
+solutions and services, as well as those of our service pro-
+viders, remain potentially vulnerable to attacks. Such at-
+tacks could potentially lead to the publication, manipula-
+tion or leakage of information such as through industrial
+espionage. They could also result in deliberate improper
+use of our systems, vulnerable products, production
+downtimes and supply shortages, with potential adverse
+effects on our reputation, our competitiveness and re-
+sults of operations. For increased protection of Siemens
+and reduction of a potential financial impact caused by
+cyber incidents, we have assessed in detail the possibility
+of transferring risk. As a result of an international insur-
+ance tender, out currently insurable cybersecurity risks
+have been to a partial extent transferred to a consortium
+of insurance companies.
+Internal programs and initiatives: We are in a continu-
+ous process of operational optimization and constantly
+engage in cost-reduction initiatives, including ongoing
+capacity adjustment measures and structural initiatives.
+Consolidation of business activities and manufacturing
+facilities, outsourcings, joint ventures and the stream-
+lining of product portfolios are all part of these cost-
+reduction efforts. These measures may not be imple-
+mented as planned, may turn out to be less effective than
+anticipated, may become effective later than estimated
+or may not become effective at all. Any future contribu-
+tion of these measures to our profitability will be influ-
+enced by the actual savings achieved and by our ability to
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+sustain them. In case of restructuring and outsourcing
+activities, there could be delays in product deliveries or
+we might even experience delivery failures. Furthermore,
+delays in critical R&D projects could lead to negative
+impacts in running projects. We constantly control and
+monitor the progress of these projects and initiatives
+using standardized controlling and milestone tracking
+approaches.
+Project-related risks: A number of our segments conduct
+activities, under long-term contracts that are awarded
+on a competitive bidding basis. Such contracts typically
+arise at Mobility and in various activities of Smart Infra-
+structure. Some of these contracts are inherently risky
+because we may assume substantially all of the risks
+associated with completing a project and meeting post-
+completion warranty obligations. For example, we may
+face the risk that we must satisfy technical requirements
+of a project even though we have not gained experience
+with those requirements before winning the project. The
+profit margins realized on fixed-priced contracts may
+vary from original estimates as a result of changes in
+costs and productivity over the contract's term. We some-
+times bear the risk of unanticipated project modifica-
+tions, shortage of key personnel, quality problems, fi-
+nancial difficulties of our customers and/or significant
+partners, cost overruns or contractual penalties caused
+by unexpected technological problems, unforeseen de-
+velopments at the project sites, unforeseen changes or
+difficulties in the regulatory or political environment,
+performance problems with our suppliers, subcontrac-
+tors and consortium partners or other logistical difficul-
+ties. Some of our multi-year contracts also contain de-
+manding installation and maintenance requirements in
+addition to other performance criteria relating to timing,
+unit cost and compliance with government regulations,
+which, if not satisfied, could subject us to substantial
+contractual penalties, damages, non-payment and con-
+tract termination. There can be no assurance that con-
+tracts and projects, in particular those with long-term
+duration and fixed-priced calculation, can be completed
+profitably. To tackle those risks, we established a global
+project management organization to systematically im-
+prove the technical and commercial capabilities of our
+project management personnel. For very complex proj-
+ects we conduct dedicated risk assessments in very early
+stages of the sales phase before we decide to hand over
+a binding offer to our customers.
+Supply chain management: The financial performance
+of our operating units depends on reliable and effective
+supply chain management for components, sub-assem-
+blies and materials. Capacity constraints and supply
+shortages resulting from ineffective supply chain man-
+agement may lead to production bottlenecks, delivery
+delays, quality issues and additional costs. We also rely
+on third parties to supply us with parts, components and
+services. Using third parties to manufacture, assemble
+and test our products may reduce our control over man-
+ufacturing yields, quality assurance, product delivery
+schedules and costs. Although we work closely with our
+suppliers to avoid supply-related problems, there can be
+no assurance that we will not encounter supply problems
+in the future, especially if we use single-source suppliers
+for critical components. Shortages and delays could ma-
+terially harm our businesses. Unanticipated increases in
+the price of components or raw materials due to market
+shortages or other reasons could also adversely affect
+performance. Furthermore, we may be exposed to the
+risk of delays and interruptions in the supply chain as
+a consequence of catastrophic events (including pan-
+demics), cyber incidents or suppliers' financial difficul-
+ties, particularly if we are unable to identify alternative
+sources of supply or means of transportation in a timely
+manner or at all. Besides other measures, we mitigate
+price fluctuation in global raw material markets with
+various hedging instruments.
+Shortage of skilled personnel: Competition for diverse
+and highly qualified personnel (e.g. specialists, experts,
+digital talent) remains intense in the industries and re-
+gions in which our businesses operate. We have ongoing
+demand for highly skilled employees and a need to en-
+hance diversity, inclusion and sense of belonging in our
+workforce. Our future success depends in part on our
+continued ability to identify, assess and hire engineers,
+digital talent and other qualified personnel. We must also
+integrate, develop and retain them after they join us,
+ANNUAL REPORT 2020 38
+ANNUAL REPORT 2020 29
+Disruptive technologies: The markets in which our busi-
+nesses operate experience rapid and significant changes
+due to the introduction of innovative and disruptive tech-
+nologies. In the fields of digitalization (e.g. IoT, artificial
+intelligence, cloud computing, Industry 4.0), there are
+risks associated with new competitors, substitutions of
+existing products/solutions/services, new business mod-
+els (e.g. in terms of pricing, financing, extended scopes
+for project business or subscription models in the soft-
+ware business) and finally the risk that our competitors
+may have more advanced time-to-market strategies and
+introduce their disruptive products and solutions faster
+than Siemens. Our operating results depend to a signifi-
+cant extent on our technological leadership, our ability
+to anticipate and adapt to changes in our markets and
+to optimize our cost base accordingly. Introducing new
+products and technologies requires a significant commit-
+ment to research and development, which in return re-
+quires expenditure of considerable financial resources
+that may not always result in success. Our results of
+operations may suffer if we invest in technologies that do
+not operate or may not be integrated as expected, or that
+are not accepted in the marketplace as anticipated, or if
+our products, solutions or systems are not introduced to
+the market in a timely manner, particularly compared
+to our competitors, or even become obsolete. We con-
+stantly apply for new patents and actively manage our
+intellectual property portfolio to secure our technological
+position. However, our patents and other intellectual
+mance" (2017) and the ISO (International Organization
+for Standardization) Standard 31000 (2018) and is adapted
+to Siemens requirements. The frameworks connect the
+ERM process with our financial reporting process and our
+internal control system. They consider a company's strat-
+egy, the efficiency and effectiveness of its business oper-
+ations, the reliability of its financial reporting and compli-
+ance with relevant laws and regulations to be equally
+important.
+influence corporate governance processes or business
+decisions taken by our at-equity investments, other in-
+vestments and strategic alliances, which may have a neg-
+ative effect on our business and especially on our reputa-
+tion. In addition, joint ventures bear the risk of difficulties
+that may y arise when integrating people, operations, tech-
+nologies and products. Strategic alliances may also pose
+risks for us because we compete in some business areas
+with companies with which we have strategic alliances.
+Besides other measures, we handle these risks with stan-
+dardized processes as well as dedicated roles and respon-
+sibilities in the areas of mergers, acquisitions, divestments
+and carve-outs. This includes the systematic treatment of
+all contractual obligations and post-closing claims.
+ANNUAL REPORT 2020 35
+ANNUAL REPORT 2020 32
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+Responsibilities are assigned for all relevant risks and op-
+portunities, with the hierarchical level of responsibility
+depending on the significance of the respective risk or
+opportunity. In a first step, assuming responsibility for a
+specific risk or opportunity involves choosing one of our
+general response strategies. Our general response strat-
+egies with respect to risks are avoidance, transfer, reduc-
+tion or acceptance of the relevant risk. Our general re-
+sponse strategy with respect to opportunities is to "seize"
+the relevant opportunity. In a second step, responsibility
+for a risk or opportunity also involves the development,
+initiation and monitoring of appropriate response mea-
+sures corresponding to the chosen response strategy.
+These response measures have to be specifically tailored
+to allow for effective risk management. Accordingly, we
+have developed a variety of response measures with dif-
+ferent characteristics. For example, we mitigate the risk
+of fluctuations in currency and interest rates by engaging
+in hedging activities. Regarding our projects, systematic
+and comprehensive project management with standard-
+ized project milestones, including provisional accep-
+tances during project execution and complemented by
+clearly defined approval processes, assists us in identify-
+ing and responding to project risks at an early stage, even
+before the bidding phase. Furthermore, we maintain ap-
+A.8.2.3 Risk management
+organization and responsibilities
+To oversee the ERM process and to further drive the inte-
+gration and harmonization of existing control activities
+to align with legal and operational requirements, the
+Managing Board established a Risk Management and
+Internal Control Organization, led by the Head of Assur-
+ance. In order to allow for a meaningful discussion of risk
+at the Siemens Group level, this organization aggregates
+individual risks and opportunities of similar cause-and-
+effect nature into broader risk and opportunity themes.
+This aggregation naturally results in a mixture of risks,
+including those with a primarily qualitative assessment
+and those with a primarily quantitative risk assessment.
+Accordingly, we do not adopt a purely quantitative as-
+sessment of risk themes. Thematic risk and opportunity
+assessments then form the basis for the evaluation of the
+company-wide risk and opportunity situation. The Head
+of Assurance reports quarterly to the Managing Board on
+matters relating to the implementation, operation and
+oversight of the risk and internal control system and
+assists the Managing Board, for example in reporting to
+the Audit Committee of the Supervisory Board.
+Below we describe the risks that could have a material
+adverse effect on our business situation, financial condi-
+tion (including effects on assets, liabilities and cash
+flows), results of operations and reputation. The order in
+which the risks are presented in each of the four catego-
+ries reflects the currently estimated relative exposure for
+Siemens associated with these risks and thus provides an
+indication of the risks' current importance to us. Addi-
+tional risks not known to us or that we currently consider
+immaterial may also negatively impact our business ob-
+jectives and operations. Unless otherwise stated, the risks
+described below relate to all our organizational units.
+propriate insurance levels for potential cases of damage A.8.3 Risks
+and liability risks in order to reduce our exposure to such
+risks and to avoid or minimize potential losses. Among
+others, we address the risk of fluctuation in economic
+activity and customer demand by closely monitoring
+macroeconomic conditions and developments in relevant
+industries, and by adjusting capacity and implementing
+cost-reduction measures in a timely and consistent man-
+ner if they are deemed necessary. Worldwide there are
+risks from the transmission of infectious agents from
+animals to humans, from humans to humans and in other
+ways. Epidemic, pandemic or other spread patterns such
+as bioterrorism threaten to cause high disease rates in
+different countries, regions or continents. We constantly
+check information from the World Health Organization
+(WHO), the American and European Centers of Disease
+Control and Prevention, the German Robert Koch Institute
+and other institutions in order to be able to identify early
+epidemic or pandemic risks and determine and initiate
+related mitigation actions as early as possible.
+ANNUAL REPORT 2020 33
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+A.8.3.1 Strategic risks
+COVID-19 pandemic (COVID-19): COVID-19 has come to
+a head again in autumn 2020 with the number of new
+infections rising rapidly in many countries. Current im-
+pacts from the pandemic vary considerably between re-
+gions and customer industries. Governments and other
+local authorities are striving to contain the spread of
+the disease by implementing various countermeasures
+ranging from recommending social distancing and new
+hygiene standards to imposing large-scale lockdowns
+and restrictions on opening conditions in certain sectors
+of the economy. Governments are expected to ease eco-
+nomic restrictions to relieve associated suffering depend-
+ing on epidemiological trends and political pressure. As a
+result, the extent and duration of the individual effects
+on our business are extremely difficult to predict. For ex-
+ample, if containment measures are initiated on short
+notice or last unforeseeably long, this might significantly
+impact our business in a way that exceeds current expec-
+tations and might go beyond already initiated mitigation
+measures. We could be facing unexpected shutdowns of
+locations, factories or office buildings of our suppliers,
+customers or our own operations, thus impairing our
+ability to produce or deliver our products, solutions and
+services. Key uncertainties of the COVID-19 crisis are its
+duration, including for example potential additional
+waves of infections or mutations of the virus, and the
+economic cost of the lockdowns. Since the second quar-
+ter of fiscal 2020, we gradually started to see the effects
+in our businesses, short-cycle as well as project busi-
+nesses, as for example customers have been cancelling
+orders or delaying investments, we have been exposed to
+an increased risk of default and our supply chain has
+been experiencing difficulties in certain areas. Potential
+consequences include an unsustainable burden of public
+and private debt that hampers the post-pandemic recov-
+ery, severe disruptions in the financial system and bank-
+ruptcies among Siemens customers and suppliers. In the
+long term, a roll-back of globalization could reduce the
+potential for future growth. Various task forces and crisis
+teams have been set up across all functions of Siemens
+to diligently monitor and mitigate the diverse effects
+related to COVID-19 including an enduring on securing
+the health and safety of our employees and business
+continuity. On Group level a senior management task
+force prepares overarching decisions and coordinates the
+flow of information through the various levels of the
+organization while empowering the responsible manage-
+ment in the businesses and countries to take actions
+appropriate to their respective contexts.
+Economic, political and geopolitical conditions (macro-
+economic deterioration): We see significant uncertain-
+ties regarding the global economic outlook. Especially
+the renewed severe escalation of the COVID-19 pandemic
+with a sustained long globally synchronized shutdown
+would stall the recovery already underway and lead to a
+new deep recession. Because the fiscal and monetary
+policy scope for action appears already largely exhausted,
+the economic impact could be much greater than in fiscal
+2020. There is also great uncertainty about the long-term
+consequences of the pandemic for important Siemens
+customer industries, such as aerospace and non-residen-
+tial construction. Moreover, during the COVID-19 pan-
+demic essential trouble spots have not been defused and
+in some cases they even have intensified. A further esca-
+lation of the trade conflict between the U.S. and China
+into a full-fledged global trade war or even geopolitical
+conflict would significantly worsen global growth pros-
+pects. Adverse effects to confidence and investment
+activity would severely hit Siemens business. Increasing
+trade barriers would negatively impact production costs
+and productivity along our many value chains, as well as
+our sales markets. In addition, the probability of the U.K.
+exiting the European Single Market without a trade
+agreement has increased significantly. A "No deal"-Brexit
+could trigger a deep recession in the U.K, thereby signifi-
+cantly reducing investment activity and posing a risk to
+the financial markets. A further and massive loss of eco-
+nomic confidence and a longer period of restraint in
+investment decisions and the awarding of new orders
+would have a negative impact on our business. We con-
+tinuously monitor the exit process and coordinate our
+local and global risk mitigation measures. Uncertainties
+in the context of U.S. election results could potentially
+burden the global economy, including a stand-still in
+U.S. economic policy, with significant effects on invest-
+ment decisions as well as on financial markets. Other
+ANNUAL REPORT 2020 34
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+significant risks arise from geopolitical tensions (particu-
+larly in the Near and Middle East, Hong Kong and
+Taiwan), the European Union's relations with Russia, the
+economic vulnerability of several emerging markets
+(including Argentina, Turkey, Venezuela) and political
+upheavals. We are dependent on the economic develop-
+ment of certain industries, especially on continued weak-
+ness in the automotive markets we serve, caused by
+both, cyclical and structural forces. Further business risk
+would result from an abrupt weakening of Chinese
+economic growth. A terrorist mega-attack or a significant
+cybercrime incident, or a series of such attacks or
+incidents in major economies, could depress economic
+activity globally and undermine consumer and business
+confidence. Additionally, the highly interconnected
+global economy remains vulnerable to natural disasters
+or further pandemics.
+In general, due to long-cycle businesses in our organiza-
+tional units and the importance of long-term contracts for
+Siemens, there is usually a time lag between changes in
+macroeconomic conditions and their impact on our finan-
+cial results. In contrast, short-cycle business activities of
+Digital Industries and Smart Infrastructure react quickly to
+volatility in market demand. If the moderate growth of
+certain markets stalls again and if we are not successful in
+adapting our production and cost structure to subsequent
+changes in conditions in the markets in which we operate,
+there can be no assurance that we will not experience
+adverse effects. For example, our customers may modify,
+delay or cancel plans to purchase our products, solutions
+and services, or fail to follow through on purchases or
+contracts already executed. Furthermore, the prices for
+our products, solutions and services may decline to a
+greater extent than we currently anticipate. In addition,
+it may become more difficult for our customers to obtain
+financing. Contracted payment terms, especially regard-
+ing the level of advance payments by our customers re-
+lating to long-term projects, may become less favorable,
+which could negatively impact our financial condition.
+Siemens' global setup with operations in almost all rele-
+vant economies, our wide range of offerings with varied
+exposures to business cycles, and our balanced mix of
+business models (e.g. equipment, components, systems,
+software, services and solutions) help us to absorb im-
+pacts from adverse developments in any single market.
+Portfolio measures, at-equity investments, other invest-
+ments and strategic alliances: Our strategy includes
+divesting our activities in some business areas and
+strengthening others through portfolio measures, includ-
+ing mergers and acquisitions. With respect to divest-
+ments, we may not be able to divest some of our activi-
+ties as planned, and the divestitures we do carry out
+could have a negative impact on our business situation,
+financial condition, results of operations and reputation.
+Mergers and acquisitions are inherently risky because of
+difficulties that may arise when integrating people, oper-
+ations, technologies and products. There can be no assur-
+ance that any of the businesses we acquire can be inte-
+grated successfully and in a timely manner as originally
+planned, or that they will perform as anticipated once
+integrated. In addition, we may incur significant acquisi-
+tion, administrative, tax and other expenditures in con-
+nection with these transactions, including costs related
+to integration of acquired businesses. Furthermore, port-
+folio measures may result in additional financing needs
+and adversely affect our capital structure. Acquisitions
+can lead to substantial additions to intangible assets, in-
+cluding goodwill, in our statements of financial position.
+If we were to encounter continuing adverse business
+developments or if we were otherwise to perform worse
+than expected at acquisition activities, then these in-
+tangible assets, including goodwill, might have to be im-
+paired, which could adversely affect our business situa-
+tion, financial condition and results of operations. Our
+investment portfolio includes investments held for pur-
+poses other than trading and other investments. Any fac-
+tors negatively influencing the financial condition and
+results of operations of our at-equity investments and
+other investments could have an adverse effect on our
+equity pick-up related to these investments or may result
+in a related write-off. In addition, our business situation,
+financial condition and results of operations could also
+be adversely affected in connection with loans, guaran-
+tees or non-compliance with financial covenants related
+to these investments. Furthermore, such investments are
+inherently risky as we may not be able to sufficiently
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+Excluded from this outlook are burdens from legal and
+regulatory issues and effects in connection with Siemens
+Healthineers' planned acquisition of Varian, which is
+A.8.2 Risk management
+A.8.1.2 Siemens Group
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+A.8
+Report on expected developments and
+associated material opportunities and risks
+A.8.1 Report on expected
+developments
+We are basing our outlook for fiscal 2021 for the Siemens
+Group and its reportable segments on the above-men-
+tioned expectations and assumptions regarding the over-
+all economic situation as well as the specific market con-
+ditions we expect for our respective industrial businesses,
+as described in A.3 SEGMENT INFORMATION. For our outlook
+for fiscal 2021, we assume that the COVID-19 pandemic
+will not have a long-lasting impact on the world econ-
+omy. Given this condition, we expect a fairly robust
+return to global GDP growth. While we anticipate that
+important customer industries for Siemens will continue
+to face challenges related to the pandemic and industry-
+specific structural changes, and that this will cause
+growth in global fixed investments to lag behind GDP
+growth, we expect improved conditions particularly for
+our high-margin short-cycle businesses in the second
+half of fiscal 2021.
+In fiscal 2021, the world economy is expected to recover
+from the recession caused by COVID-19 in fiscal 2020.
+Global GDP is projected to expand by 4.4% in calendar
+2021. The risks and uncertainties surrounding this base-
+line forecast are unusually large. The further develop-
+ment of the virus outbreak (e.g. waves of new infections,
+lockdowns, and possible mutations), advances in medical
+treatment, availability and acceptance of vaccines, possi-
+ble spillover effects from weak demand (especially in
+contact-intensive service sectors) or from financial mar-
+ket tensions (increasing insolvencies) are very hard to
+predict at the start of fiscal 2021. In Europe, it is expected
+that the new wave of infection in October and Novem-
+ber 2020, with varying degrees of lockdowns in different
+countries, will interrupt the recovery and lead to a de-
+cline in economic activity in the first quarter of fiscal
+2021. However, the impact is expected to be much less
+severe compared to spring 2020, as the recovery is so far
+intact globally (especially in Asia and the U.S.) and no
+significant disruptions in global supply chains have been
+observed. High uncertainty also applies to significant
+political developments, such as the U.S.-China trade re-
+lationship and the U.K.'s exit from the EU, as well as to
+the longer-term outcome of the 2020 U.S. election cycle.
+In our baseline forecast, we assume that vaccines will be
+generally available during the first half of calendar 2021
+and immunization of large parts of the population will
+occur during 2021. Until then, contact-intensive industries
+will still be subject to severe restraints. Based on these
+assumptions, the EU economy is expected to expand by
+4.1% in calendar 2021, U.S. 3.7%, China 7.3%, Japan 2.2%
+and India 9.2%. Given the steep decline in economic
+activity in calendar 2020, this is only a moderate rebound
+with still a high level of under-utilized resources, which
+will weigh on overall investment activity. Accordingly,
+global fixed investments are expected to expand by only
+3.7% in calendar 2021, after a decline of 4.9% in calendar
+2020. In addition, important customer industries for
+Siemens are suffering from effects related to both
+COVID-19 and structural problems, e.g. machine-building
+(weak capacity utilization), oil and gas (decarbonization),
+automotive (accelerated structural change). Therefore,
+fiscal 2021 is expected to bring many headwinds for
+Siemens' market environment. On the positive side, op-
+portunities could arise from large government stimulus
+programs, which may be set in place in the next years.
+The forecasts presented here for GDP and fixed invest-
+ments are based on a report from IHS Markit dated Octo-
+ber 15, 2020.
+A.8.1.1 Worldwide economy
+As of September 30, 2020, the number of employees
+was 50,400.
+ANNUAL REPORT 2020 46
+Combined Management Report →A.9 Siemens AG
+A.9.1 Results of operations
+Statement of Income of Siemens AG in accordance
+with German Commercial Code (condensed)
+29%
+12%
+n/a
+We intend to continue providing an attractive return to
+shareholders. Therefore, we intend to propose a dividend
+whose distribution volume is within a dividend payout
+range of 40% to 60% of net income of the Siemens Group
+attributable to shareholders of Siemens AG, which we
+may adjust for this purpose to exclude selected excep-
+tional non-cash effects. For fiscal 2021, we expect that
+net income of Siemens AG will be sufficient to fund the
+distribution of a corresponding dividend.
+2020
+% Change
+(26)%
+24%
+(31)%
+(in millions of €)
+Siemens AG
+With regard to the spin-off, on September 25, 2020 (spin-
+off day), Siemens AG contributed, in a first step, indi-
+rectly or directly, its interests in Siemens Energy Global
+GmbH & Co. KG and also in its general partner to Siemens
+Energy AG in return for the issuance of shares. In a
+second step, Siemens AG transferred its remaining inter-
+ests in Siemens Energy Global GmbH & Co. KG and in its
+general partner to Siemens Energy AG in a spin-off in
+accordance with the German Transformation Act
+(Umwandlungsgesetz). This step followed the approval
+by the extraordinary shareholder's meeting on July 9,
+2020 in return for the issuance of shares in Siemens
+Energy AG to the shareholders of Siemens AG. The inter-
+ests transferred represented the equivalent of 55% of
+the subscribed capital of Siemens Energy AG.
+Effective as of January 1, 2020, the business activities
+"Gas and Power" were transferred to Siemens Energy
+Global GmbH & Co. KG (formerly Siemens Gas and Power
+GmbH & Co. KG) by means of singular succession. Fur-
+thermore, domestic and foreign investments attributable
+to the Siemens Energy business were transferred to
+Siemens Energy Global GmbH & Co. KG, indirectly or di-
+rectly. These transfers resulted in an increase in shares
+in affiliated companies, and a decrease in transferred
+assets and liabilities, particularly including property,
+plant and equipment, securities, inventories, receiv-
+ables and other assets, advance payments received,
+provisions for pensions and other provisions. In addi-
+tion, the transfers resulted in a corresponding year-over-
+year
+decline in income and expenses, particular including
+revenue, cost of sales, gross profit, research and devel-
+opment expenses as well as selling expenses.
+The Annual Financial Statements of Siemens AG have
+been prepared in accordance with the regulations set
+forth in the German Commercial Code (Handelsgesetz-
+buch) and the German Stock Corporation Act (Aktien-
+gesetz).
+Fiscal year
+2019
+A.9
+Combined Management Report → A.9 Siemens AG
+ANNUAL REPORT 2020 45
+Our internal audit function systematically evaluates our
+financial reporting integrity, the effectiveness of the con-
+trol system and the risk management system, and adher-
+ence to our compliance policies. Siemens Healthineers
+has its own internal audit department and annual audit
+plan. Topics from the annual audit plan of Siemens
+Healthineers that are also relevant for our Managing
+Board and Audit Committee first have to be mandated by
+Siemens Healthineers' Managing Board and Audit Com-
+mittee and subsequently be mandated by our Managing
+Board and Audit Committee. The audit procedures for
+these topics will be generally executed in joint teams of
+our and Siemens Healthineers' internal audit functions;
+thus reflecting the interest of both Siemens AG and
+Siemens Healthineers. In addition, the Audit Committee
+is integrated into our control system. In particular, it over-
+sees the accounting and accounting process and the
+effectiveness of the internal control system, the risk man-
+agement system and the internal audit system. More-
+over, we have rules for accounting-related complaints.
+Siemens Healthineers is subject to our Group-wide prin-
+ciples for the accounting-related internal control and risk
+management system and is responsible for adhering to
+those principles. The management of Siemens Healthi-
+neers provides periodic sign-offs to the Managing Board
+of Siemens AG, certifying the effectiveness of its ac-
+counting-related internal control system as well as the
+completeness, accuracy, and reliability of the financial
+data reported to us.
+On a quarterly basis, we execute an internal certification
+process. Management at different levels of our organiza-
+tion, supported by confirmations by managements of
+entities under their responsibility, confirms the accuracy
+of the financial data that has been reported to Siemens'
+corporate headquarters and reports on the effectiveness
+of the related control systems.
+ing Standards (IFRS) closing data to the Annual Financial
+Statements of Siemens AG.
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+ANNUAL REPORT 2020 44
+As of the end of fiscal 2020, results for Siemens AG arise
+mainly from the business activities of Digital Industries,
+Smart Infrastructure and Portfolio Companies and are
+influenced significantly by the results of subsidiaries and
+investments we own either directly or indirectly. The
+business development of Siemens AG is fundamen-
+tally subject to the same risks and opportunities as the
+Siemens Group. Therefore, the foregoing explanations
+for the Siemens Group apply also for Siemens AG. We
+expect that income from investments or profit transfer
+agreements with affiliated companies and a substantial
+gain related to an agreement to sell Flender GmbH,
+Germany, for a price of €2.0 billion will significantly
+influence the profit of Siemens AG.
+Revenue
+4,357
+Cost of sales
+5,192
+Income from business activity
+3,188
+6,557
+(prior year 3,754)
+investments, net 8,078
+thereof Income from
+Financial income, net
+9,469
+(555)
+(expenses), net
+Other operating income
+16,389
+(3,979)
+administrative expenses
+Selling and general
+(2,362)
+(1,677)
+expenses
+Research and development
+22,104
+(15,825)
+6,279
+28%
+27%
+as percentage of revenue
+Qualification of employees involved in the accounting pro-
+cess is ensured through appropriate selection processes
+and training. As a fundamental principle, based on mate-
+riality considerations, the "four eyes” principle applies,
+and specific procedures must be adhered to for data
+authorization. Additional control mechanisms include
+target-performance comparisons and analyses of the
+composition of and changes in individual line items, both
+in the closing data submitted by reporting units and in
+the Consolidated Financial Statements. In line with our
+information security requirements, accounting-related IT
+systems contain defined access rules protecting them
+from unauthorized access. The manual and system-based
+control mechanisms referred to above generally also ap-
+ply when reconciling the International Financial Report-
+Gross profit
+(12,032)
+(3,490)
+The base data used in preparing our financial statements
+consists of the closing data reported by the operations of
+Siemens AG and its subsidiaries. The preparation of the
+closing data of most of our entities is supported by an
+internal shared services organization. Furthermore, other
+accounting activities, such as governance and monitor-
+ing activities, are usually bundled on a regional level. In
+particular cases, such as valuations relating to post-
+employment benefits, we use external experts. The re-
+ported closing data is used to prepare the financial state-
+ments in the consolidation system. The steps necessary
+to prepare the financial statements are subject to both
+manual and automated controls.
+A.8.5 Significant characteristics
+of the accounting-related
+internal control and risk manage-
+ment system
+At the end of each fiscal year, our management performs
+an evaluation of the effectiveness of the implemented
+control system, both in design and operating effective-
+ness. We have a standardized procedure under which
+necessary controls are defined, documented in accor-
+dance with uniform standards, and tested regularly for
+their effectiveness. Nevertheless, there are inherent lim-
+itations on the effectiveness of any control system, and
+no system, including one determined to be effective,
+may prevent or detect all misstatements.
+trade restrictions (hereafter referred to as "sanctions")
+imposed by the U.S., the EU or other countries or organi-
+zations. New or expanded sanctions in countries in which
+we do business may result in a curtailment of our existing
+business in such countries or indirectly in other countries.
+We are also aware of policies of national authorities and
+institutional investors, such as pension funds or insur-
+ance companies, requiring divestment of interests in and
+prohibiting investment in and transactions with entities
+doing business with countries identified by the U.S.
+Department of State as state sponsors of terrorism. There-
+fore, it is possible that such policies may result in our
+being unable to gain or retain certain investors or cus-
+tomers. In addition, the termination of our activities in
+sanctioned countries may expose us to customer claims
+and other actions. Our reputation could also suffer due
+to our activities with counterparties in or affiliated with
+these countries.
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+40
+ANNUAL REPORT 2020
+Geopolitical uncertainties including sanctions and
+export control: As a globally operating organization, we
+conduct business with customers in countries which are
+subject to export control regulations, embargoes, eco-
+nomic sanctions, debarment policies or other forms of
+Protectionism (including tariffs/trade war): Protection-
+ist trade policies and changes in the political and regula-
+tory environment in the markets in which we operate,
+such as import and export controls, tariffs and other
+trade barriers including debarment from certain markets
+and price or exchange controls, could affect our business
+in national markets and could impact our business situa-
+tion, financial position and results of operations; and
+may expose us to penalties, other sanctions and reputa-
+tional damage. In addition, the uncertainty of the legal
+environment in some regions could limit our ability to
+enforce our rights and subject us to increasing costs re-
+lated to appropriate compliance programs.
+Changes of regulations, laws and policies: As a diversi-
+fied company with global businesses we are exposed to
+various product- and country-related regulations, laws
+and policies influencing our business activities and pro-
+cesses. We monitor the political and regulatory landscape
+in all our key markets to anticipate potential problem
+areas, with the aim of quickly adjusting our business ac-
+tivities and processes to changed conditions. However,
+any changes in regulations, laws and policies could ad-
+versely affect our business activities and processes as
+well as our financial condition and results of operations.
+Along with other measures, Siemens has established a
+global compliance organization that conducts among
+others compliance risk mitigation processes such as Com-
+pliance Risk Assessments or initiates internal audit activ-
+ities performed by the internal assurance department.
+requests of governmental authorities and cooperating
+with them, could divert management's attention and
+resources from other issues facing our business. Further-
+more, we might be exposed to compliance risks in con-
+nection with recently acquired operations that are in the
+ongoing process of integration.
+In addition, future developments in ongoing and poten-
+tial future investigations, such as responding to the
+Siemens conducts a large share of its business with gov-
+ernments and government-owned enterprises. We also
+participate in a number of projects funded by govern-
+ment agencies and intergovernmental and supranational
+organizations, such as multilateral development banks.
+Ongoing or potential future investigations into allega-
+tions of corruption, antitrust violations or other violations
+of law could as well impair relationships with such parties
+or could result in our exclusion from public contracts.
+Such investigations may also adversely affect existing
+private business relationships and our ability to pursue
+potentially important strategic projects and transactions,
+such as strategic alliances, joint ventures or other busi-
+ness alliances, or could result in the cancellation of certain
+of our existing contracts. Moreover, third parties, includ-
+ing our competitors, could initiate significant litigation.
+Current and future investigations regarding allega-
+tions of corruption, of antitrust violations and of other
+violations of law: Proceedings against us or our business
+partners regarding allegations of corruption, of antitrust
+violations and of other violations of law may lead to fines
+as well as penalties, sanctions, injunctions against future
+conduct, profit disgorgements, disqualifications from
+directly and indirectly engaging in certain types of busi-
+ness, the loss of business licenses or permits, other re-
+strictions and legal consequences as well as negative
+public media coverage. Accordingly, we may, among
+other things, be required to comply with potential obliga-
+tions and liabilities arising in connection with such inves-
+tigations and proceedings, including potential tax penal-
+ties. Moreover, any findings related to public corruption
+that are not covered by the 2008 and 2009 corruption
+charge settlements, which we concluded with U.S. and
+German authorities, may endanger our business with
+government agencies and intergovernmental and supra-
+national organizations. Monitors could again be ap-
+pointed to review future business practices and we may
+otherwise be required to further modify our business
+practices and our compliance program.
+Environmental, health & safety and other governmen-
+tal regulations: Some of the industries in which we
+operate are highly regulated. Current and future en-
+vironmental, health and safety and other governmental
+regulations or changes thereto may require us to change
+the way we run our operations and could result in signif-
+icant increases in our operating or production costs. Fur-
+thermore, we see the risk of potential environmental and
+health and safety incidents as well as potential non-
+compliance with environmental and health and safety
+regulations affecting Siemens and our contractors or
+sub-suppliers, resulting for example in serious injuries,
+penalties, loss of reputation and internal or external
+investigations.
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+Audits by tax authorities and changes in tax regula-
+tions: We operate in nearly all countries of the world and
+therefore are subject to many different tax regulations.
+Changes in tax laws in any of these jurisdictions could
+result in higher tax expenses and increased tax payments.
+Furthermore, legislative changes could impact our tax
+receivables and liabilities as well as deferred tax assets
+and deferred tax liabilities. In addition, the uncertain legal
+environment in some regions could limit our ability to en-
+force our rights. As a globally operating organization, we
+conduct business in countries subject to complex tax
+rules, which may be interpreted in different ways. Future
+interpretations or developments of tax regimes may
+affect our business situation, financial condition and
+results of operations. We are regularly audited by tax
+authorities in various jurisdictions and we continuously
+identify and assess relevant risks.
+STATEMENTS.
+For further information on post-employment benefits,
+derivative financial instruments, hedging activities, finan-
+cial risk management and related measures, see > NOTES
+17, 24 and 25 in 7 B.6 NOTES TO CONSOLIDATED FINANCIAL
+Risks from pension obligations: The provisions for pen-
+sions and similar obligations may be affected by changes
+in actuarial assumptions, including the discount rate, as
+well as by movements in financial markets or a change in
+the mix of assets in our investment portfolio. Addition-
+ally, they are subject to legal risks with regard to plan
+design among other factors. A significant increase in the
+underfunding may have a negative effect on our capital
+structure and rating, and thus may tighten refinancing
+options and increase costs. In order to comply with local
+pension regulations in selected foreign countries, we
+may face an economic risk of increasing cash outflows
+due to change in funding level according to local regula-
+tions of our pension plans in these countries and the
+change of the regulations themselves.
+ties if, for example, customers do not, only partially or
+late meet obligations arising from these financing ar-
+rangements.
+Credit risks: We provide our customers with various
+forms of direct and indirect financing of orders and proj-
+ects, including guarantees. Siemens Financial Services in
+particular bears credit risks due to such financing activi-
+Liquidity and financing risks: Our treasury and financing
+activities could face adverse deposit and/or financing
+conditions from negative developments related to finan-
+cial markets, such as limited availability of funds and
+hedging instruments, an updated evaluation of our sol-
+vency, particularly from rating agencies, negative inter-
+est rates, and impacts arising from more restrictive regu-
+lation of the financial sector, central bank policy, or the
+usage of financial instruments. Widening credit spreads
+due to uncertainty and risk aversion in the financial mar-
+kets might lead to adverse changes in the market values
+of our financial assets, in particular our derivative finan-
+cial instruments.
+Market price risks: We are exposed to fluctuations in
+exchange rates, especially between the U.S. dollar and
+the euro, because a high percentage of our business vol-
+ume is conducted as exports from Europe to areas using
+the U.S. dollar. In addition, we are exposed to effects in-
+volving the currencies of emerging markets, in particular
+the Chinese yuan. Appreciable changes in euro exchange
+rates could materially change our competitive position.
+We are also exposed to fluctuations in interest rates. Even
+hedging activities to mitigate such risks may result in a
+reverse effect. Fluctuations in exchange or interest rates,
+negative developments in the financial markets and
+changes in central bank policies could therefore nega-
+tively impact our financial results.
+A.8.3.3 Financial risks
+which appears especially relevant in times of a new, in-
+creasingly virtual working environment. We address these
+topics for example by strengthening the capabilities and
+skills of our Talent Acquisition teams and a strategy of
+proactive search for people with the required capabilities
+in our respective industries and markets. Technology and
+digitalization help us to be more effective in attracting
+and selecting diverse talent. Furthermore, we have a
+focus on diversity and structured succession planning.
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+2%
+ANNUAL REPORT 2020 39
+In addition, while we have procedures in place to ensure
+compliance with applicable governmental regulations in
+the conduct of our business operations, it cannot be ex-
+cluded that violations of applicable governmental regu-
+lations may be caused either by us or by third parties that
+we contract with, including suppliers or service providers
+whose activities may be attributed to us. Any such viola-
+tions particularly expose us to the risk of liability, penal-
+ties, fines, reputational damage or loss of licenses or
+permits that are important to our business operations. In
+particular, we could also face liability for damage or re-
+mediation for environmental contamination at the facil-
+ities we design or operate. With regard to certain en-
+vironmental risks, we maintain liability insurance at
+levels that our management believes are appropriate and
+consistent with industry practice. We may incur environ-
+mental losses beyond the limits, or outside the coverage,
+of such insurance, and such losses may have an adverse
+effect on our business situation, financial condition and
+results of operations.
+Current or future litigation and legal and regulatory
+proceedings: Siemens is and potentially will be involved
+in numerous legal disputes and proceedings in various
+jurisdictions. These legal disputes and proceedings could
+result, in particular, in Siemens being subject to payment
+of damages and punitive damages, equitable remedies
+or sanctions, fines or disgorgement of profit. In individual
+cases this may also lead to formal or informal exclusion
+from tenders or the revocation or loss of business licenses
+or permits. Asserted claims are generally subject to inter-
+est rates. Some of these legal disputes and proceedings
+could result in adverse decisions for Siemens or deci-
+sions, assessments or requirements of regulatory author-
+ities could deviate from our expectations, which may
+have material effects on our business activities as well
+as our financial position, results of operations and cash
+flows. Siemens maintains liability insurance for certain
+legal risks at levels our management believes are appro-
+priate and consistent with industry practice. The insur-
+ance policy, however, does not protect Siemens against
+reputational damage. Moreover, Siemens may incur
+losses relating to legal proceedings beyond the limits, or
+outside the coverage, of such insurance or exceeding any
+provisions made for losses related to legal proceedings.
+Finally, there can be no assurance that Siemens will be
+able to maintain adequate insurance coverage on com-
+mercially reasonable terms in the future.
+Our ERM approach is based on the globally accepted
+COSO Standard (Committee of Sponsoring Organizations
+of the Treadway Commission) "Enterprise Risk Manage-
+ment Integrating with Strategy and Performance"
+(2017) and the ISO (International Organization for Stan-
+dardization) Standard 31000 (2018) and is adapted to
+Siemens requirements. The frameworks connect the ERM
+process with our financial reporting process and our in-
+ternal control system. They consider a company's strat-
+egy, the efficiency and effectiveness of its business oper-
+ations, the reliability of its financial reporting and
+compliance with relevant laws and regulations to be
+equally important. Our accounting-related internal con-
+trol system is based on the internationally recognized
+"Internal Control Integrated Framework" (2013) also
+developed by COSO. The two systems are comple-
+mentary.
+-
+The overarching objective of our accounting-related in-
+ternal control and risk management system is to ensure
+that financial reporting is conducted in a proper manner,
+such that the Consolidated Financial Statements and the
+Combined Management Report of Siemens Group as
+well as the Annual Financial Statements of Siemens AG
+as the parent company are prepared in accordance with
+all relevant regulations.
+12,596
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+ANNUAL REPORT 2020 43
+While our assessments of individual opportunities have
+changed during fiscal 2020 due to developments in the
+external environment, changes in our business portfolio,
+our endeavors to profit from them and revision of our
+strategic plans, the overall opportunity situation for
+Siemens did not change significantly as compared to
+the prior year.
+Assessment of the overall opportunities situation: The
+most significant opportunity for Siemens continues to be
+value creation through innovation as described above.
+Optimization of organization and processes: On the
+one hand, we leverage ideas to drive further improve-
+ments in our processes and cost structure, such as com-
+mon computing architecture for image processing or
+optimizing factory capacities for shorter lead times. On
+the other hand, we see an opportunity of further pene-
+trating markets by ramping up local business excellence
+(e.g. engineering) and increasing local sourcing and local
+manufacturing.
+subsidies (including tax reforms among others) may lead
+to more government spending (e.g. infrastructure or dig-
+italization investments) and ultimately result in an oppor-
+tunity for us to participate in ways that increase our rev-
+enue and profit. By enabling our customers to lower their
+GHG (Greenhouse Gas) emissions across our portfolio and
+by reducing CO2 emission in our own operation, Siemens
+strives to support the trend towards a low-carbon econ-
+omy. Recent legislative and governmental accelerate to
+mitigate climate change worldwide, especially in Europe
+through e.g. the Green Deal or Sustainable Finance Initia-
+tive represent an opportunity for Siemens.
+Favorable political and regulatory environment (in-
+cluding sustainability): We see opportunities from po-
+tential improvement in the geopolitical policy environ-
+ment, which could quickly restore a more positive
+industrial investment sentiment that supports the growth
+of our markets. In addition, government initiatives and
+Mergers, acquisitions, equity investments, partner-
+ships, divestments and streamlining our portfolio: We
+constantly monitor our current and potential markets to
+identify opportunities for strategic mergers, acquisitions,
+equity investments and partnerships, which may comple-
+ment our organic growth. Such activities may help us
+to strengthen our position in our existing markets, pro-
+vide access to new or underserved markets, or comple-
+ment our technological portfolio in strategic areas. Op-
+portunities might also arise when portfolio optimization
+measures generate gains, which enable us to further
+pursue our other strategies for growth and profitability.
+Turning COVID-19 challenges into opportunities: The
+participation in governmental COVID-19 recovery pro-
+grams such as the European Union's "Next Generation
+EU" recovery plan is an opportunity for Siemens. There is
+also the chance to strengthen our customer relationship
+through additional market offerings that specifically
+address use cases related directly to the COVID-19 pan-
+demic. Potential growth areas might arise through the
+optimization program "new normal" with, for example,
+more working flexibility for our employees.
+Leveraging market potential: Through sales initiatives
+and masterplans in our operating units, we continuously
+strive to grow and extend our businesses in established
+markets, open up new markets for existing portfolio
+elements and strengthen our installed base in order to
+gain a higher market share and increased profits. Further-
+more, we aim to increase our sales via improved account
+management and new distribution channels.
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+ANNUAL REPORT 2020 42
+Value creation through innovation: We drive innova-
+tion by investing significantly in R&D in order to develop
+sustainable solutions for our customers while also
+strengthening our own competitiveness. Being an inno-
+vative company and constantly inventing new technolo-
+gies that we expect will meet future demands arising
+from the megatrends of demographic change, urbaniza-
+tion, climate change and globalization is one of our core
+purposes. We are granted thousands of new patents
+every year and continuously develop new concepts and
+convincing new digital and data-driven business models.
+This helps us create the next generation of ground-break-
+ing innovations in such fields as digitalization, artificial
+intelligence, autonomous machines and edge comput-
+ing. Across our operating units, we are profiting from
+our strength in the "Digital Enterprise." Foremost, our
+cloud-based MindSphere platform enhances the avail-
+ability of our customers' digital products and systems and
+improves their productivity and efficiency. We offer edge
+computing apps along with Mindsphere in individual
+facilities, so that customers can connect all their facilities
+to create an integrated data network. We see also signif-
+icant opportunities to generate additional volume and
+profit from innovative digital products, services and solu-
+tions, including cyber security and applications for opti-
+mized energy consumption. We see growth opportuni-
+ties in opening up access to new markets and customers
+through new marketing and sales strategies, which we
+implement in our operating units. Our position along the
+value chains of automation and digitalization allows us
+to further increase market penetration. Along these value
+chains, we have identified several concrete growth fields
+in which we see our greatest long-term potential. Hence,
+we are combining and developing our resources and
+capabilities for these growth fields.
+Within our ERM we regularly identify, evaluate and re-
+spond to opportunities that present themselves in our
+various fields of activity. Below we describe our most sig-
+nificant opportunities. Unless otherwise stated, the op-
+portunities described relate to all organizational units.
+The order in which the opportunities are presented re-
+flects the currently estimated relative exposure for
+Siemens associated with these opportunities and thus
+provides an indication of the opportunities' current im-
+portance to us. The described opportunities are not nec-
+essarily the only ones we encounter. In addition, our as-
+sessment of opportunities is subject to change because
+the Company, our markets and technologies are con-
+stantly advancing. It is also possible that opportunities
+we see today will never materialize.
+A.8.4 Opportunities
+At present, no risks have been identified that either indi-
+vidually or in combination could endanger our ability to
+continue as a going concern.
+While our assessments of individual risks have changed
+during fiscal 2020 due to developments in the external
+environment, changes in our business portfolio, effects
+of our own mitigation measures and the revision of
+our risk assessment, the overall risk situation for Siemens
+did not change significantly as compared to the prior
+year with the exception of the COVID-19 pandemic. We
+currently see this strategic risk as the most significant
+challenge for us followed by the operational risk arising
+from cyber/information security.
+The most significant challenges have been mentioned
+first in each of the four risk categories - strategic, opera-
+tional, financial and compliance.
+A.8.3.5 Assessment of the
+overall risk situation
+Combined Management Report → A.8 Report on expected developments and associated material opportunities and risks
+ANNUAL REPORT 2020 41
+FINANCIAL STATEMENTS.
+For additional information with respect to specific pro-
+ceedings, see > NOTE 22 in 7 B.6 NOTES TO CONSOLIDATED
+Our Consolidated Financial Statements are prepared on
+the basis of a centrally issued conceptual framework
+which primarily consists of uniform Financial Reporting
+Guidelines and a chart of accounts. For Siemens AG and
+other companies within the Siemens Group required to
+prepare financial statements in accordance with German
+Commercial Code, this conceptual framework is comple-
+mented by mandatory regulations specific to the German
+Commercial Code. The need for adjustments in the con-
+ceptual framework due to regulatory changes is analyzed
+on an ongoing basis. Accounting departments are in-
+formed quarterly about current topics and deadlines
+from an accounting and closing process perspective.
+106%
+(59)%
+A.8.3.4 Compliance risks
+78
+17,959
+16,023
+(23)%
+5,616
+4,323
+Provisions for taxes and other provisions
+(5)%
+12,343
+11,700
+Provisions for pensions and similar commitments
+Provisions
+(7)%
+(11)%
+668
+(38)%
+30,428
+18,917
+Special reserve with an equity portion
+Equity
+LIABILITIES AND EQUITY
+3%
+100,328
+102,975
+Total assets
+26%
+68
+619
+85
+Liabilities
+Advance payments received
+Income taxes
+ANNUAL REPORT 2020 48
+3%
+100,328
+102,975
+326
+271
+Total liabilities and equity
+Deferred income
+32%
+50,947
+67,145
+Liabilities to banks
+37%
+67,047
+Trade payables, liabilities to affiliated companies
+and other liabilities
+(100)%
+1,841
+> 200%
+1,122
+1,884
+(40)%
+74,877
+73,158
+27
+98
+49,079
+Active difference resulting from offsetting
+(17)%
+829
+Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed)
+position
+A.9.2 Net assets and financial
+Combined Management Report → A.9 Siemens AG
+ANNUAL REPORT 2020 47
+The change in income taxes was primarily due to the
+recognition of deferred tax liabilities related to the
+transfer of the trademark "Siemens" in fiscal 2019.
+The increase in financial income, net was primarily at-
+tributable to higher income from investments, net. In
+fiscal 2020 we recorded a number of major changes com-
+pared to fiscal 2019, including income of €1.3 billion from
+the profit transfer agreement with Siemens Beteiligungen
+Inland GmbH, Germany; income of €1.4 billion from the
+investment in Siemens Holdings plc, Ltd., United Kingdom;
+and a gain of €2.1 billion from the disposal of Siemens
+Limited, India. These factors were partly offset by an
+impairment of €1.3 billion on the shares in Siemens
+Energy AG. Financial income, net, also included an
+impairment of a loan receivable of €0.5 billion related to
+an investment.
+The change in other operating income (expenses), net,
+was mainly due to a gain of €9.5 billion related to
+Siemens AG's transfer of the trademark "Siemens" to the
+affiliated company Siemens Trademark GmbH & Co. KG,
+Germany, in fiscal 2019. In fiscal 2020 other operating
+expenses included primarily expenses in connection with
+the valuation of an investment as well as expenses re-
+lated to the carve-out of the Siemens Energy business.
+The R&D intensity (R&D as a percentage of revenue) was
+10%, nearly on the same level as fiscal 2019. The research
+and development activities of Siemens AG are funda-
+mentally the same as for its corresponding business ac-
+tivities within the Siemens Group. On an average basis,
+we employed 7,300 people in R&D in fiscal 2020.
+On a geographical basis, 77% of revenue was generated
+in the Europe, C.I.S., Africa, Middle East region, 16% in
+the Asia, Australia region and 7% in the Americas region.
+Exports from Germany accounted for 53% of overall rev-
+enue. In fiscal 2020, orders for Siemens AG amounted to
+€14.7 billion.
+(59)%
+n/a
+(53)%
+(17)%
+(45)%
+5,384
+2,975
+income
+Unappropriated net
+(6,005)
+(2,436)
+earnings
+Allocation to other retained
+170
+141
+(1,377)
+11,219
+5,270
+25%
+Net income
+Sep 30,
+2020
+Profit carried forward
+2019
+Deferred tax assets
+133
+1,034
+Prepaid expenses
+6%
+24,241
+25,724
+96%
+4,489
+8,786
+Cash and cash equivalents, other securities
+(14)%
+147
+16,937
+19,752
+% Change
+(in millions of €)
+ASSETS
+Non-current assets
+Intangible and tangible assets
+(10)%
+75,999
+75,043
+1%
+Current assets
+Inventories, receivables and other assets
+Financial assets
+In addition, there are malus and clawback regulations
+that allow the Supervisory Board to withhold or reclaim
+both short-term and long-term variable compensation in
+certain cases.
+Short-term variable compensation (Bonus)
+Short-term variable compensation (Bonus) rewards the
+contribution in a fiscal year to the operational execution
+of the Company's strategy and therefore also to the
+Company's long-term performance. The Bonus system is
+based on three equally weighted target dimensions,
+which take account of the overall responsibility of the
+Managing Board as well as the Managing Board mem-
+bers' respective business responsibilities and their indi-
+vidual challenges:
+→ "Siemens Group"
+The dimension "Siemens Group" reflects the Managing
+Board's overall responsibility and measures the per-
+formance of the Siemens Group in its entirety, as the
+sum of the contributions of each individual part of the
+Company.
+The dimension "Managing Board portfolio" focuses on
+the business activities for which each Managing Board
+member is responsible and measures his or her perfor-
+mance based on the predefined portfolio strategy. In
+the case of mainly functional responsibility (for exam-
+ple, the President and CEO and the Chief Financial
+Officer), the performance of the Siemens Group is
+considered.
+→ "Individual targets"
+A minimum of two and a maximum of four individual
+targets allow for further differentiation depending on
+the specific strategic and operational challenges of
+each Managing Board member.
+Performance criteria are assigned to each of the three
+target dimensions based on Company priorities and the
+responsibilities of each Managing Board member. The fo-
+cus is on short-term measures that execute the Company's
+strategy, such as strengthening earnings and ensuring
+profitability/capital efficiency and liquidity.
+→ "Managing Board portfolio"
+The Supervisory Board ensures that targets are demanding
+and ambitious. If they are not met, variable compensation
+can be reduced to as little as zero. If the targets are sub-
+stantially exceeded, target attainment is limited to 200%.
+Sustainability
+Long-term
+value creation
+non-financial
+financial
+of Company
+strategy
+Execution
+Liquidity
+Growth
+Profitability/
+Profit
+Bonus
+line with Siemens' social responsibility, sustainability is
+also included in the performance criteria. Ultimately, the
+performance criteria measure successful value creation
+in all its different forms, as strategically envisioned.
+Stock Awards
+capital efficiency
+33.33% Individual targets
+ANNUAL REPORT 2020 53
+Target attainment for TSR is specifically determined by
+first calculating a TSR reference value for Siemens AG and
+a TSR reference value for the sector index. The TSR refer-
+ence value is equal to the average of the end-of-month
+Performance criteria for variable compensation
+Total shareholder return - TSR is indicative of the perfor-
+mance of a share over a period of time - in the case of
+Siemens, during the approximately four-year vesting
+period. It includes the dividends paid and any changes
+in the share price during this period. To reflect the
+Company's international footprint, the TSR of Siemens AG
+is compared at the end of the vesting period with the
+TSR of an international sector index, the MSCI World
+Industrials or a comparable successor index.
+Combined Management Report → A.10 Compensation Report
+54
+ANNUAL REPORT 2020
+Since fiscal 2020, the number of Siemens shares that are
+actually transferred depends 80% on the financial per-
+formance criterion “long-term value creation,” measured
+on the basis of total shareholder return (TSR), and 20% on
+the non-financial performance criterion "sustainability."
+For measuring the sustainability criterion, Siemens AG's
+performance in the area of Environmental, Social & Gover-
+nance (ESG) is assessed on the basis of a Siemens internal
+ESG/Sustainability index, the composition of which is
+determined annually by the Supervisory Board.
+Performance criteria
+dividing the maximum grant amount by the price of the
+Siemens share on the grant date, less the estimated
+discounted dividends ("grant price"). An approximately
+four-year vesting period begins with the granting of
+Stock Awards, after the expiration of which Siemens
+shares are transferred. Beneficiaries are not entitled to
+dividends during the vesting period.
+At the beginning of a fiscal year, the Supervisory Board
+defines a target amount in euros based on 100% target
+attainment for each Managing Board member. This
+target amount is multiplied using target attainment of
+200% ("maximum grant amount"). Stock Awards for
+this maximum grant amount are then granted to the
+beneficiary. The number of Stock Awards is calculated by
+Granting of Stock Awards
+Long-term variable compensation (Stock Awards)
+The Managing Board is required to commit itself to the
+Company's long-term success, promote sustainable
+growth and achieve long-lasting value creation. In accor-
+dance with these principles, a significant part of total
+compensation is tied to the long-term performance of
+the Siemens share. Siemens grants long-term variable
+compensation in the form of Stock Awards. A Stock
+Award is the claim to one share - conditional on target
+attainment - after the expiration of a defined vesting
+period.
+Bonus payout
+amount
+x =
+Target
+amount
+values over the first 12 months of the vesting period
+(reference period).
+Weighted
+average target
+attainment
+(0-200%)
+33.33% Managing Board portfolio
+33.34% Siemens Group
+Short-term
+variable
+compensation
+(Bonus)
+Bonus design and calculation of payout amount
+After the end of the fiscal year, target attainment for the
+key performance indicators for the target dimensions
+"Siemens Group" and "Managing Board portfolio" and the
+attainment for the individual targets are determined and
+aggregated to form a weighted average. The percentage
+of weighted target attainment multiplied by the individ-
+ual target amount yields the Bonus payout amount for
+the past fiscal year. The payable Bonus is limited to two
+times the target amount and is disbursed entirely in cash.
+customer satisfaction, employee satisfaction and succes-
+sion planning.
+Growth and liquidity can both be employed as financial
+performance criteria in the "Individual targets" dimen-
+sion, as can additional non-financial performance cri-
+teria. In the case of non-financial performance criteria,
+the Supervisory Board considers the degree to which a
+Managing Board member has fulfilled so-called focus
+topics, which comprise both operational aspects of the
+execution of the Company's strategy - such as business
+performance, the execution of large-scale projects, opti-
+mization and efficiency enhancement - as well as sus-
+tainability aspects - such as diversity, ownership culture,
+Combined Management Report → A.10 Compensation Report
+One financial performance criterion is assigned to the
+"Siemens Group" dimension and another to the "Manag-
+ing Board portfolio" dimension. The fulfillment of these
+criteria is measured on the basis of key performance indi-
+cators. These key performance indicators are predomi-
+nantly operational steering parameters derived from the
+Company's strategic direction. They are based on the
+Siemens Financial Framework and are also, as a rule, part
+of the Company's external financial reporting. See chap-
+ter 7 A.2 FINANCIAL PERFORMANCE SYSTEM.
+The final payout amount from both components depends
+on the fulfillment of financial and non-financial perfor-
+mance criteria. Performance criteria are derived from the
+Company's strategic goals and operational steering. In
+→ fixed compensation: minimum 36% to maximum
+43% of total target compensation
+ANNUAL REPORT 2020 52
+horizontal market comparison, the Supervisory Board
+considers Siemens' market position, industry affiliation,
+size and global presence. In addition, the Supervisory
+Board considers the development of Managing Board
+compensation in relation to the compensation of the
+employees of Siemens in Germany. In this vertical com-
+parison, it conducts a market comparison of the ratio of
+Managing Board compensation to the compensation of
+upper management and the wider workforce with the
+corresponding ratios at companies included in the DAX.
+For this purpose, the Supervisory Board has defined
+upper management as the executive employees in the
+Senior Management and Top Management contract
+groups. The wider workforce is divided into employees
+who are covered by collective bargaining agreements
+and those who are not.
+The Supervisory Board ensures that total target compen-
+sation conforms to market conditions. For assessing the
+market conformance of total compensation, compensa-
+tion data for companies included in the DAX, the German
+blue-chip stock index, and for comparable non-listed
+companies (insofar as these are available) are consid-
+ered. In view of Siemens' international footprint,
+compensation data for companies included in the
+STOXX Europe 50 index are also considered. In this
+The Supervisory Board determines, in accordance with
+the compensation system, the amount of each Managing
+Board member's total target compensation for the up-
+coming fiscal year. This determination is based on an
+appropriate consideration of the Managing Board
+member's tasks and performance and the Company's
+economic situation, performance and future prospects.
+Share Ownership
+Guidelines
+variable compensation
+(Stock Awards)
+Long-term
+Pension commitment
+variable compensation
+(Bonus)
+Short-term
+Fringe benefits
+Variable components
+ANNUAL REPORT 2020 51
+Base salary
+Total target compensation
+The Managing Board compensation system is also sup-
+plemented by appropriate and market-based commit-
+ments granted in connection with the commencement
+and termination of appointments to the Managing Board
+as well as any change in the regular place of work.
+In addition, the Share Ownership Guidelines are a further
+key component of the compensation system. They obli-
+gate Managing Board members to permanently hold
+Siemens shares worth a defined multiple of their base
+salary and to purchase additional shares in the event that
+the value of their shares falls below the defined multiple.
+Components comprising the Managing Board compensation system
+The compensation of the members of the Managing
+Board of Siemens AG comprises fixed and variable com-
+ponents. Fixed, non-performance-based compensation
+comprises base salary, fringe benefits and pension
+commitment. Short-term variable compensation (Bonus)
+and long-term variable compensation (Stock Awards) are
+granted as performance-based compensation and are
+thus variable.
+COMPONENTS AND STRUCTURE OF MANAGING
+BOARD COMPENSATION
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 50
+→ The compensation of Managing
+Board members should conform
+to market conditions and be appro-
+priate for the Company's size,
+complexity and economic situation.
+In order to determine at the end of the vesting period
+how well the TSR of Siemens AG has performed in com-
+parison to the sector index, the TSR performance value is
+calculated over the subsequent 36 months (performance
+period). The TSR performance value is the average of the
+end-of-month values during the performance period.
+→ The compensation system for
+Managing Board members also
+extends to the other management
+levels in the Group.
+Fixed components
+Combined Management Report → A.10 Compensation Report
+Combined Management Report → A.10 Compensation Report
+→ short-term variable compensation (Bonus): minimum
+20% to maximum 28% of total target compensation
+→ long-term variable compensation (Stock Awards):
+minimum 30% to maximum 42% of total target com-
+pensation.
+VARIABLE COMPENSATION COMPONENTS
+The variable, performance-based compensation of Man-
+aging Board members is tied to performance and aligned
+with the Company's short- and long-term development.
+It consists of a short-term component (Bonus) and a long-
+term component (Stock Awards).
+Like the employees of Siemens AG, the members of the
+Managing Board are included for the most part in the
+Siemens Defined Contribution Pension Plan (BSAV). Under
+the BSAV, Managing Board members receive contribu-
+tions that are credited to their pension accounts. Newly
+appointed members of the Managing Board can be
+granted, instead of a BSAV contribution, a fixed cash
+amount that he or she can freely dispose of.
+Pension commitment
+Like other eligible employees of Siemens AG, Managing
+Board members who were employed by the Company
+before September 30, 1983 are entitled to transition pay-
+ments equal to the difference between the last base
+salary and the pension entitlement under the Company
+pension plan in the first six months after retirement.
+→ The risk that benefits may have to
+be drawn before the age of 60 due
+to disability or death is mitigated by
+crediting contributions from the age
+at the time benefits are first drawn
+until the covered individual reaches
+or would have reached the age of 60.
+→ Annual guaranteed interest credited
+to the pension account until benefits
+are first drawn (currently: 0.9%)
+→ As a rule, in 12 yearly installments;
+other payment options, on request,
+are: ten or 11 installments, a lump sum
+payment and an annuitization with
+or without survivors' benefits as well
+as a combination of these options
+→ In accordance with the provisions of
+the German Company Pensions Act
+(Betriebsrentengesetz)
+→ Upon request, on or after reaching
+the age of 60 for pension commit-
+ments made before January 1, 2012
+→ Upon request, on or after reaching the
+age of 62 for pension commitments
+made on or after January 1, 2012
+Disability/death
+The compensation system enables the Supervisory Board
+to define total target compensation according to the
+function of each Managing Board member and thus to
+consider the different requirements for each function
+when defining both the absolute amount and the struc-
+ture of compensation. In doing so, the Supervisory Board
+ensures that the proportions of total target compensa-
+tion represented by each of the individual compensation
+components are within the following percentage ranges:
+Guaranteed
+interest
+Vested status
+Entitlement
+Other essential characteristics of the BSAV for Managing
+Board members are summarized in the following table:
+If a member of the Managing Board earned a pension
+entitlement from the Company before the BSAV was in-
+troduced, a portion of his or her contributions will go
+toward financing this legacy entitlement.
+A maximum value of fringe benefits for the upcoming fiscal
+year is established for each Managing Board member. For
+this purpose, the Supervisory Board determines an amount
+relative to base salary. This amount covers expenses in-
+curred to the benefit of the Managing Board member, for
+example, in-kind compensation and fringe benefits granted
+by the Company, including the provision of a company car,
+insurance allowances and medical check-ups.
+Fringe benefits
+Each Managing Board member receives a base salary,
+which is paid in 12 monthly installments.
+Base salary
+ment.
+Fixed, non-performance-based compensation comprises
+the base salary, fringe benefits and the pension commit-
+FIXED COMPENSATION COMPONENTS
+Disbursement
+At the end of the vesting period, the change in Siemens'
+TSR as well as that of the sector index is determined by
+comparing the TSR values for the reference period with
+those for the performance period.
+Under the Siemens Share Ownership Guidelines, Manag-
+ing Board members are obligated to permanently hold
+Siemens shares of an amount equal to a multiple of their
+base salary-300% for the President and CEO and 200%
+for the other members of the Managing Board – during
+their terms of office on the Managing Board, following an
+initial four-year build-up phase. The average base salary
+received by each member of the Managing Board in the
+four years before the applicable verification date is rele-
+vant for this
+purpose.
+FYn
+Termination by mutual agreement
+Deduction
+Increase/
+discount
+Special pension
+contribution;
+one-time
+Payment
+Limit
+(severance cap)
+Basis for
+calculation
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 57
+No severance payments or special pension contributions
+are made.
+Termination due to regular expiration of term
+of office
+In the event of an early termination of membership on
+the Managing Board by mutual agreement and without
+serious cause, Managing Board members' employment
+contracts provide for a severance payment:
+The compensation system also governs the amount of
+compensation a Managing Board member receives if his
+or her Managing Board appointment is terminated early.
+Depending on the reason for the termination, the follow-
+ing provisions apply to compensation guaranteed upon
+departure from office:
+COMMITMENTS IN CONNECTION WITH
+THE TERMINATION OF MANAGING BOARD
+If the appointment as a member of the Managing
+Board or a change of the regular place of work at the
+request of the Company requires the Managing Board
+member to move to a new residence, moving ex-
+penses will be reimbursed up to an appropriate maxi-
+mum amount to be specified in the individual employ-
+ment contract.
+→ Moving expenses
+Depending on whether the compensation and/or
+benefits granted by a previous employer (for exam-
+ple, long-term variable compensation grants or pen-
+sion commitments) are lost by reason of moving to
+Siemens AG, the Supervisory Board may grant com-
+pensation in the form of (usually Phantom) Stock
+Awards, special contributions within the scope of the
+BSAV or cash payments.
+→ Compensation for the loss of benefits from the
+previous employer
+Upon the commencement of Managing Board member-
+ship or if the regular place of work is changed at the re-
+quest of the Company, the Supervisory Board will decide
+on the basis of a proposal by the Compensation Commit-
+tee whether and to what extent, in addition to the regu-
+lar fringe benefits, the following compensation and/or
+benefits will be granted under the Managing Board
+member's individual employment contract:
+WITH THE COMMENCEMENT OF MANAGING BOARD
+APPOINTMENTS OR A CHANGE IN THE REGULAR
+PLACE OF WORK
+COMMITMENTS GRANTED IN CONNECTION
+Memberships on supervisory boards whose establish-
+ment is required by law or on comparable domestic or
+foreign controlling bodies of business enterprises are
+listed in chapter 7 C.4.1 MANAGEMENT AND CONTROL STRUCTURE
+in 7 C.4 CORPORATE GOVERNANCE.
+DEDUCTION OF COMPENSATION FOR MANAGING
+BOARD MEMBERS' SECONDARY ACTIVITIES
+The acceptance of public offices, seats on supervisory
+boards (including any committee memberships), boards
+of directors, advisory boards and comparable bodies and
+of appointments to scientific bodies are subject to prior
+approval by the Chairman's Committee of the Super-
+visory Board. As a rule, approval is not granted for more
+than two supervisory board positions or comparable
+functions at listed companies outside the Group. If a Man-
+aging Board member holds a supervisory board position
+within the Group, the compensation received for such a
+position will be deducted from his or her Managing Board
+compensation. If supervisory board positions outside the
+Group are accepted, the Supervisory Board will decide at
+its duty-bound discretion on a case-by-case basis whether
+and to what extent the compensation for such positions
+is to be deducted. In this context, particular consideration
+will be given to the extent to which the activity is in the
+interest of the Company or the Managing Board member.
+Fulfillment of this obligation must be verified for the first
+time after the four-year build-up phase and annually
+thereafter. If share price fluctuations cause the value of
+the accumulated shareholding to fall below the respec-
+tive amounts to be verified, the Managing Board member
+will be obligated to purchase additional shares.
+APPOINTMENTS
+-
+→ Base salary plus actual short-term variable compen-
+sation received in the last fiscal year before termi-
+nation and granted long-term variable compensation
+→ Based on the contribution that the Managing Board
+member received in the prior year and on the
+remaining term of his or her appointment
+→ Compensation takes into account
+the individual performance of
+Managing Board members in their
+respective areas of responsibility.
+Overall responsibility for the
+Company's long-term development
+is represented by targets set at
+the Group level. These targets
+apply equally to all Managing
+Board members.
+There is no entitlement to severance payment if the Man-
+aging Board member receives payments from third parties
+on the occasion of, or in connection with, a change of
+control. Furthermore, there is no right of termination if
+the change of control takes place within 12 months before
+the Managing Board member reaches retirement age.
+ANNUAL REPORT 2020 58
+→ Stock-based compensation compo-
+nents granted by the Company
+in the past remain unaffected
+→ In-kind benefits will be covered by
+a payment of 5% of the severance
+payment as a lump sum.
+→ The reduction shall apply to the
+portion of the severance payment
+calculated for the period following
+the first six months of the remaining
+contract term.
+→ Severance payment will be reduced
+by 10% as a lump-sum allowance
+for discounting and for earnings
+obtained elsewhere.
+→ Two years' annual compensation
+→ Base salary plus the target amount
+for the Bonus and the target amount
+for Stock Awards, each based on the
+values for the last fiscal year before
+contract termination
+Stock Awards
+Increase/discount
+→ In the month of departure
+Limit
+(severance cap)
+If a change of control occurs, as a consequence of which
+the role of a Managing Board member significantly
+changes, the Managing Board member is entitled to
+terminate his or her employment contract. If this right
+of termination is exercised, the Managing Board member
+is entitled to a severance payment for the remainder of
+his or her term of office.
+The following is applicable for existing Managing Board
+employment contracts:
+For newly concluded Managing Board employment con-
+tracts (first-time appointments) or the extension of these
+contracts, there are no special provisions for the event
+that a change of control occurs, that is, neither special
+rights to terminate the contract nor severance payments.
+Change of control
+No severance payments or special pension contributions
+are made.
+Early termination at the request of the Managing
+Board member or termination for cause by the
+Company
+→ In the event of a post-contractual non-compete
+agreement, the severance payment and special
+pension contribution shall be taken into account
+in the calculation of any compensation payments.
+→In-kind benefits are compensated for by a payment
+of 5% of the severance amount.
+→ Reduction refers only to that portion of the severance
+payment that was determined without consideration
+of the first six months of the remaining term of
+office.
+→ Severance payment will be reduced by 5% as a lump
+sum allowance for discounting and for earnings
+obtained elsewhere if the remaining term of office
+is more than six months.
+→ Limited to not more than the contributions for two
+years (cap)
+Basis for calculation
+Calculation of TSR reference values and TSR performance values for Stock Awards
+SHARE OWNERSHIP GUIDELINES
+ANNUAL REPORT 2020 56
+Determination of total target attainment
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 55
+internal ESG/Sustainability index consists of three equally
+weighted, structured and verifiable ESG key performance
+indicators. At the beginning of each tranche, the Super-
+visory Board sets ambitious target values for each of the
+ESG key performance indicators. Targets are measured
+based on pre-defined interim targets for each fiscal year.
+Target attainment for the Siemens internal ESG/Sustain-
+ability index is finally determined at the end of the
+approximately four-year vesting period based on
+the weighted average of the target attainment values
+calculated for each of the key performance indicators.
+The Siemens
+Environmental, Social & Governance
+If the change in the TSR of Siemens AG is between
+20 percentage points above and 20 percentage points
+below that of the sector index, target attainment is
+calculated using linear interpolation.
+→ If the change in the TSR of Siemens AG is at least
+20 percentage points below that of the sector index,
+target attainment is 0%.
+→ If the change in the TSR of Siemens AG is equal to that
+of the sector index, target attainment is 100%.
+→ If the change in the TSR of Siemens AG is at least
+20 percentage points above that of the sector index,
+target attainment is 200%.
+The following applies for the determination of target at-
+tainment:
+At the end of the approximately four-year vesting period,
+the Supervisory Board determines the degree of target
+attainment. The target attainment range for TSR and the
+Siemens internal ESG/Sustainability index is between 0%
+and 200%. If target attainment is less than 200%, a num-
+ber of Siemens Stock Awards equivalent to the shortfall
+are forfeited without refund or replacement and an ac-
+cordingly reduced number of shares will be transferred.
+ост
+→ MSCI World Industrials
+→ Siemens AG
+TSR performance values for
+36 months
+→ MSCI World Industrials
+→ Siemens AG
+TSR reference values for
+12 months
+NOV
+OCT
+NOV
+FYn+1
+•
+FYn+3
+Combined Management Report → A.10 Compensation Report
+The value of the Siemens shares transferred after the ex-
+piration of the vesting period is further limited to a max-
+imum of 300% of the target amount. If this ceiling is
+exceeded, a corresponding number of Stock Awards will
+be forfeited without refund or replacement.
+Calculation of the number of Siemens shares
+Maximum compensation is determined annually by the
+Supervisory Board for each Managing Board member in
+accordance with Section 87a para. 1 sent. 2 No. 1 of the
+German Stock Corporation Act (Aktiengesetz, AktG).
+Maximum compensation is equal to the sum of the max-
+imum amounts that can be paid out to each Managing
+Board member for all compensation components for the
+given fiscal year and is calculated by adding base salary,
+maximum fringe benefits, BSAV contribution (or cash
+amount at the member's free disposal) as well as two
+times the Bonus target amount and three times the Stock
+Awards target amount.
+MAXIMUM COMPENSATION LIMITS
+CIAL STATMENTS.
+With regard to the further terms of the Stock Awards,
+the same principles apply in general to the Managing
+Board and to executive employees. These principles are
+explained in NOTE 26 in 7 B.6 NOTES TO CONSOLIDATED FINAN-
+If the employment contract of a Managing Board mem-
+ber begins during a fiscal year, an equivalent number of
+forfeitable virtual Stock Awards (Phantom Stock Awards)
+will be granted instead of Stock Awards. Unlike Stock
+Awards, Phantom Stock Awards will not be settled by a
+transfer of shares, but by a cash payment after the expi-
+ration of the vesting period. The remaining provisions
+applicable to the Stock Awards apply analogously.
+In the event of exceptional, unforeseen events that have
+an influence on the performance criteria, the Supervisory
+Board may decide that the number of granted Stock
+Awards will be reduced after the fact, that only a cash
+settlement of a limited amount to be determined will
+take place instead of a transfer of Siemens shares or that
+the transfer of Siemens shares for vested Stock Awards
+will be suspended until the event ceases to influence the
+performance criteria.
+Further provisions for Stock Awards
+Final number
+of shares
+Social & Governance (ESG)
+20%
+80%
++
+The remaining Stock Awards are settled by the transfer
+of Siemens shares to the relevant Managing Board
+member.
+Environmental,
+X
+300% of target value
+Payout cap:
+Target attainment:
+0-200%
+FYn
+FYn+1
+FYn+2
+FYn+3
+Awards
+of Stock
+Number
+Total Shareholder
+Return (TSR)
+→ Extraordinary performance should
+be appropriately rewarded, and
+failure to achieve targets should
+lead to an appreciable reduction of
+compensation.
+→ Not more than two years' annual compensation and
+not more than the member would receive for the
+remaining term of his or her employment contract
+Compatibility
+of compensation
+systems
+Appropriateness
+of compensation
+Combined Management Report →A.9 Siemens AG
+The changes in financial assets included in particular the
+contributions of the line of business "Gas and Power,"
+cash, interests in domestic and foreign investments of the
+Siemens Energy business, including shares in Siemens
+Gamesa Renewable Energy, S.A., Spain, to Siemens
+Energy Global GmbH & Co. KG in return for the issuance
+of shares. These shares issued amounted in total to
+€20.3 billion. As the following steps, it also included the
+contribution of interests in Siemens Energy Global
+GmbH & Co. KG of €7.6 billion to Siemens Energy AG, in
+return for the issuance of shares. Interests in Siemens
+Energy Global GmbH & Co. KG of €12.7 billion were con-
+tributed in the context of a spin-off in return for the issu-
+ance of shares in Siemens Energy AG to the shareholder
+of Siemens AG.
+The decrease in equity was attributable to a decrease in
+retained earnings of €12.7 billion due to the spin-off of
+Siemens Energy, dividends paid in fiscal 2020 (for fiscal
+2019) of €3.2 billion, and share buybacks during the year
+amounting to €1.5 billion. These factors were partly off-
+set by net income for the year of €5.3 billion, and the
+transfer of treasury shares to employees in connection
+with our share-based payments programs amounting
+to €0.6 billion. The equity ratio as of September 30,
+2020 and 2019 was 18% and 30%, respectively. For the
+disclosures in accordance with Section 160 para. 1 no. 2
+of the German Stock Corporation Act about treasury
+shares, refer to 7 NOTE 15 of our 7 ANNUAL FINANCIAL STATE-
+MENTS OF SIEMENS AG for the fiscal year ended Septem-
+ber 30, 2020.
+Cash and cash equivalents, other securities was signifi-
+cantly affected by the spin-off of Siemens Energy and
+the liquidity management of the Corporate Treasury of
+Siemens AG, which was focused not solely on business
+activities of Siemens AG. The liquidity management is
+based on the financing policy of the Siemens Group,
+which is aimed towards a balanced financing portfolio,
+a diversified maturity profile and a comfortable liquid-
+ity cushion.
+The increase in trade payables, liabilities to affiliated
+companies and other liabilities was due to higher liabil-
+ities to affiliated companies mainly relating to intra-group
+financing activities, including funding activities in con-
+nection with the spin-off of Siemens Energy.
+A.9.3 Corporate Governance
+statement
+PURSUANT TO SECTIONS 289 F AND 315D OF THE GERMAN COMMER-
+CIAL CODE.
+ANNUAL REPORT 2020 49
+Combined Management Report →A.10 Compensation Report
+A.10
+Compensation Report
+The Corporate Governance statement pursuant to Sec-
+tions 289f and 315d of the German Commercial Code is
+an integral part of the Combined Management Report
+and is presented in 7 c.4.2 CORPORATE GOVERNANCE STATEMENT
+The report is based on the requirements of the German
+Commercial Code (Handelsgesetzbuch, HGB), the German
+Accounting Standards (Deutsche Rechnungslegungs-
+standards, DRS) and the International Financial Reporting
+Standards (IFRS). It also includes previously selected volun-
+tary disclosures in accordance with the substantive require-
+ments of the German Act on the Implementation of the
+Second Shareholder Rights Directive (Gesetz zur Umsetzung
+der zweiten Aktionärsrechterichtlinie, ARUG II) of Decem-
+ber 12, 2019, such as detailed information on the applica-
+tion of performance criteria in variable compensation.
+This report describes the compensation system and the
+compensation of the members of the Managing Board
+and the Supervisory Board of Siemens AG for fiscal 2020.
+It provides detailed and individualized explanations of
+the structure and amount of the individual components
+of Managing and Supervisory Board compensation.
+Consideration
+of the collective
+and individual
+performance of
+Managing Board
+members
+Compensation
+linked to
+performance
+The Supervisory Board makes decisions regarding the de-
+sign of the compensation system and the structure and
+amount of the Managing Board members' compensation
+with due consideration of the following principles:
+BASIC PRINCIPLES OF THE MANAGING BOARD
+COMPENSATION SYSTEM
+The current compensation system for the members of
+the Managing Board of Siemens AG has been in place
+since fiscal 2020 and was endorsed at the Annual Share-
+holders' Meeting on February 5, 2020 by a majority of
+94.51%.
+The Managing Board compensation system contributes
+to the execution of the Company's strategy: The com-
+pensation system is designed to motivate Managing
+Board members to achieve the strategic goals defined in
+"Vision 2020+." The system promotes innovation and
+fosters incentives for the Company's value-creating and
+long-term development while avoiding excessive risks.
+MANAGING BOARD COMPENSATION
+RESPONSIBILITY FOR ESTABLISHING
+A.10.1.1 Compensation system
+A.10.1 Compensation of
+Managing Board members
+The compensation system for Siemens' Managing Board
+members is established by the Supervisory Board. The
+Compensation Committee of the Supervisory Board de-
+velops corresponding recommendations and prepares, in
+particular, the proposals for decisions by the Supervisory
+Board's plenary meetings. The Supervisory Board may
+consult external advisors when necessary. The system
+approved by the Supervisory Board is then presented to
+the Annual Shareholders' Meeting for endorsement.
+Target attainment: 131%
+€69.38
+€95.53 €110.21
+Siemens AG
+Competitors (average)
+€53.86
+MHI/Toshiba¹
+$111.60 $168.61
+Rockwell
+CHF 19.17 CHF21.99
+$16.44
+$29.21
+¥4,555.58 ¥4,308.66
+(43.73)%
+Schneider
+(4.50)%
+For the "Siemens Group" target dimension in fiscal 2020,
+the Supervisory Board of Siemens AG approved the per-
+formance criterion "profit," measured in terms of basic
+earnings per share (EPS). For both target setting and
+target attainment, the average EPS of three consecutive
+fiscal years is used. The averaged values take account
+of the Company's long-term performance and provide
+incentives for a sustainable increase in profit.
+14.68%
+51.08%
+28.81%
+9.27%
+15.37%
+1 The reported relative deviation of (4.50) % also takes into account Toshiba's performance, which is factored into the reported deviation
+on a weighted basis for seven months. Toshiba's reference price was ¥2,682.26, and its performance price was ¥2,663.83, yielding a
+relative deviation of (0.69) %. MHI's relative deviation was (5.42) %, with a weighting of 29 months.
+ANNUAL REPORT 2020
+65
+A = 6.10
+percentage
+points
+→ the adjusted EBITA margin of the relevant business for
+Managing Board members with business responsibility.
+→ return on capital employed (ROCE) for Managing Board
+members with primarily functional responsibility or
+"Managing Board portfolio" target dimension
+For the "Managing Board portfolio" target dimension in
+fiscal 2020, the Supervisory Board of Siemens AG ap-
+proved the performance criterion "profitability/capital
+efficiency," measured in terms of
+GE
+Reference price vs.
+performance price
+ABB
+Target
+amount²
+Reference
+price
+6.63% 12.63%
+9.63%
+employed (ROCE) 1
+Return on capital
+73.72%
+135.50%
+39.67%
+7.82%
+6.63% 12.63%
+9.63%
+employed (ROCE) 1
+Return on capital
+Total target
+attainment
+Target
+attainment
+Target
+attainment
+Actual
+value
+Performance range
+(floor/cap)
+"Siemens Group" target dimension
+ΚΡΙ
+Total target
+attainment
+"Individual targets"
+(Weighting 33.33%)
+"Managing Board portfolio"
+(Weighting 33.33%)
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 62
+6 In accordance with his severance agreement, Michael Sens' entitlement to a Bonus for the first six months of fiscal 2020
+(October 1, 2019, to March 31, 2020), will be settled in accordance with the terms of his employment contract and the actual
+degree of target attainment, subject to the provision that Michael Sen will receive 50% (pro rata temporis) of the actual bonus
+achieved. For the second six months of fiscal 2020 (April 1, 2020, to September 30, 2020), his Bonus is set at 100% of the
+pro-rated target amount - that is, at a gross amount of €550,800.
+4 The adjusted EBITA margin of Digital Industries was adjusted for portfolio effects, which reduced the calculated target attainment.
+5 Excluding Lisa Davis, who left the Company as of February 29, 2020, and to whom a pro-rated Bonus of €476,962 for fiscal 2020 was
+granted in accordance with her severance agreement.
+The 2016 Stock Awards tranche depended on the per-
+formance of the Siemens share compared to the share
+performance of relevant competitors during the roughly
+four-year vesting period from November 2015 through
+October 2019.
+Target attainment for the 2016 Stock Awards tranche
+Performance of the Siemens share compared to the share performance of relevant competitors
+Performance
+price
+→ for the President and CEO, Joe Kaeser: €2,205,000
+→ for the Deputy CEO, Dr. Roland Busch: €1,277,300
+→ for the other members of the Managing Board:
+€1,101,600.
+Total
+7 B.6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
+6,702,858
+616,896
+616,896
+Prof. Dr. Ralf P. Thomas
+2,349,895
+2,938,080
+616,896
+616,896
+Cedrik Neike
+6,473,904
+7,026,562
+616,896
+616,896
+Klaus Helmrich
+6,071,233
+6,566,101
+14,299,267
+15,592,209
+1,234,800
+616,896
+616,896
+Dr. Roland Busch
+1,234,800
+Joe Kaeser
+in office as of September 30, 2020
+2019
+Defined benefit obligation
+for all pension commitments
+excluding deferred compensation¹
+2020
+Total contri-
+butions for
+2019
+2020
+Managing Board members
+6,184,498
+SHORT-TERM VARIABLE COMPENSATION (BONUS)
+The Bonus target amounts for fiscal 2020 were as follows:
+Total
+3,702,384
+The defined benefit obligation (DBO) of all pension com-
+mitments to former members of the Managing Board and
+their surviving dependents as of September 30, 2020 -
+including to those members of the Managing Board who
+left in fiscal 2020 - amounted to €176.5 million (2019:
+€175.7 million). This figure is included in 7 NOTE 17 in
+In fiscal 2020, former members of the Managing Board
+and their surviving dependents received emoluments
+within the meaning of Section 314 para. 1 No. 6b of the
+German Commercial Code (HGB) totaling €15.96 million
+(2019: €21.09 million).
+Combined Management Report → A.10 Compensation Report
+60
+ANNUAL REPORT 2020
+2 In accordance with the provisions of the BSAV, benefits to be paid to Lisa Davis are not in any way secured or financed
+through the trust associated with the Company's BSAV plan or with any other trust. They represent only an unsecured,
+unfunded legal obligation on the part of the Company to pay such benefits in the future under certain conditions, and
+the payout will only be made from the Company's general assets.
+1 Deferred compensation totals €3,911,848 (2019: €4,125,612), including €3,512,020 for Joe Kaeser (2019: €3,703,123),
+€342,276 for Klaus Helmrich (2019: €361,494) and €57,552 for Prof. Dr. Ralf P. Thomas (2019: €60,995).
+10,238,903
+11,707,147
+1,850,688
+771,120
+7.82%
+1,862,660
+616,896
+308,448
+Michael Sen
+2,674,432
+2,829,621
+616,896
+205,632
+Janina Kugel
+5,701,811
+6,444,855
+616,896
+257,040
+Lisa Davis²
+Former members of the Managing Board
+35,378,797
+38,825,810
+3,702,384
+39.67%
+7.97% 11.97%
+70.39%
+€1,259,000
+6,656
+26,622
+€3,188,000
+€1,594,000
+10,505
+42,021
+€5,032,000
+€2,516,000
+(Weighting 20%)
+(Weighting 80%)
+index
+ESG/Sustainability
+€2,518,000
+Maximum number of Stock Awards
+(based on 200% target attainment)
+Klaus Helmrich
+Dr. Roland Busch
+Joe Kaeser
+September 30, 2020
+in office as of
+Managing Board members
+Maximum grant value
+(based on 200% target attainment)
+Target amount
+(based on 100% target attainment)
+Information on the grant of the 2020 Stock Awards tranche
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 64
+1 ESG stands for "Environmental, Social & Governance."
+The grant price applicable for the 2020 tranche was
+€95.80. The Supervisory Board set the grant date at
+November 8, 2019. The target amounts, the maximum
+grant values and the maximum number of Stock Awards
+granted to each Managing Board member were as follows:
+Total shareholder
+return
+21,027
+5,257
+Cedrik Neike
+the 2016 tranche
+Determination of target attainment for
+Concrete target setting and the degree of target attain-
+ment for total shareholder return and the Siemens inter-
+nal ESG/Sustainability index for the 2020 Stock Awards
+tranche will be published in the Compensation Report
+after the expiration of the vesting period.
+2,628
+10,514
+1,752
+7,009
+€839,333
+€1,259,000
+2,190
+8,761
+€1,049,167
+1 Pro-rated target amount for the period from October 1, 2019, to February 29, 2020.
+2 Pro-rated target amount for the period from October 1, 2019, to January 31, 2020.
+3 Pro-rated target amount for the period from October 1, 2019, to March 31, 2020.
+€629,500
+€419,667
+€524,583
+Michael Sen³
+Janina Kugel²
+Lisa Davis¹
+the Managing Board
+Former members of
+6,447
+25,787
+€3,088,000
+€1,544,000
+Prof. Dr. Ralf P. Thomas
+5,257
+21,027
+€2,518,000
+€1,259,000
+ESG performance measurement based on interim targets for each fiscal year
+TSR performance period
+TSR reference period
+measurement
+7.82%
+6.63% 12.63%
+9.63%
+employed (ROCE) 1
+Return on capital
+73.72%
+135.50%
+39.67%
+7.82%
+6.63% 12.63%
+9.63%
+employed (ROCE) 1
+Return on capital
+79.83%
+137.50%
+56.00%
+9.09%
+(Amounts in €)
+9.97%
+Smart Infrastructure
+Adjusted EBITA margin
+86.00%
+130.00%
+82.00%
+17.02%
+15.38% 19.38%
+17.38%
+Digital Industries 4
+Adjusted EBITA margin
+39.67%
+125.50%
+105.50%
+Adjusted EBITA margin
+Performance
+NOV '23
+OCT '23
+SEP '23
+2022
+2021
+NOV '20
+OCT '20
+NOV '19
+OCT '19
+Process sequence
+Transfer
+Grant and four-year vesting period
+Time sequence for the 2020 Stock Awards tranche
+The time sequence for the 2020 Stock Awards tranche is
+set out in the following chart:
+→ "Sustainability," measured in terms of a Siemens inter-
+nal ESG/Sustainability index,' which is based on the
+following three equally weighted key performance
+indicators: CO2 emissions (environmental), learning
+hours per employee (social), and Net Promoter Score
+(governance).
+→ "Long-term value creation," measured in terms of the
+development of the total shareholder return (TSR) of
+Siemens AG relative to the international sector index
+MSCI World Industrials and
+Information on the granting of the 2020 tranche
+The Supervisory Board approved the following perfor-
+mance criteria for the 2020 Stock Awards tranche:
+(STOCK AWARDS)
+LONG-TERM VARIABLE COMPENSATION
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 63
+54.72%
+102.50%
+15.67%
+0.97%
+0.50% 6.50%
+3.50%
+Gas and Power
+63.72%
+The following table shows the individualized contribu-
+tions (allocations) under the BSAV for fiscal 2020 and the
+defined benefit obligations for pension commitments:
+2,432,671
+The expense recognized in fiscal 2020 as a service cost
+under IFRS for Managing Board members' entitlements
+under the BSAV in fiscal 2020 totaled €5.5 million (2019:
+€5.4 million).
+Tranche 1,2
+Provisional target attainment for the 2017 to 2020 Stock Awards tranches (as of October 2020)
+2017 to 2020 tranches of the Stock Awards was as fol-
+lows:
+As of October 2020, provisional target attainment for the
+2017 to 2020 tranches
+Provisional target attainment for the
+2 The Stock Awards settled by share transfer were valued at the German low price of the Siemens share on November 11, 2019,
+of €111.52; Stock Awards settled by cash payment were valued at the Xetra closing price on November 11, 2019, of €112.54.
+1 In accordance with plan requirements, the 2016 Stock Awards tranche was settled by the transfer of Siemens shares up to
+a target attainment of 100%. For the portion of target attainment above 100%, Managing Board members received a cash
+payment in accordance with plan requirements.
+18,022 > €2,014,163.74
+€2,091,614.38
+18,715 >
+Contributions under the BSAV are added to the individual
+pension accounts in the January following each fiscal
+year. Until pension payments begin, members' pension
+accounts are credited with an annual interest payment
+(guaranteed interest) on January 1 of each year. The in-
+terest rate is currently 0.90%.
+14,286 x
+13,757 x
+€75.60
+€75.60 =
+€1,080,000 /
+€1,040,000/
+2017
+Janina Kugel
+2018
+2020
+1 The 2017 to 2019 tranches of the Stock Awards depend on the performance of the Siemens share compared to the share performance
+of relevant competitors during the roughly four-year vesting period.
+92%
+Nov. 2020 Oct. 2023
+Oct. 2019 Sep. 2023
+ESG3
+Nov. 2019 Oct. 2020
+TSR compared to
+MSCI World Industrials
+89%
+115%
+89%
+Nov. 2017 Oct. 2020
+Nov. 2018 - Oct. 2021
+Nov. 2019 Oct. 2022
+Target
+attainment
+(provisional)
+Performance period
+Reference period
+Nov. 2016 Oct. 2017
+Nov. 2017 Oct. 2018
+Nov. 2018 - Oct. 2019
+Share price performance
+compared to competitors
+Performance criteria
+Vesting period
+Nov. 2016 Nov. 2020
+Nov. 2017 Nov. 2021
+Nov. 2018 Nov. 2022
+Nov. 2019 Nov. 2023
+2019
+2 The 2020 Stock Awards tranche depends 80% on the development of the total shareholder return (TSR) of Siemens AG compared
+to the international sector index MSCI World Industrials and 20% on the Siemens internal ESG/Sustainability index.
+Lisa Davis
+Former members of
+€2,120,000 /
+Joe Kaeser
+of September 30, 2020
+November
+11, 2019
+of transfer²
+Value at the day
+calculated
+Stock Awards1
+Number of
+attainment
+share price
+performance
+Target
+Number of
+Stock Awards
+granted
+November
+13, 2015
+Grant price
+Target amount
+(based on
+100% target
+attainment)
+€75.60 =
+the Managing Board
+28,043 x
+Dr. Roland Busch
+36,737 > €4,105,778.12
+18,715 > €2,091,614.38
+18,715 > €2,091,614.38
+18,715 > €2,091,614.38
+131% =
+14,286 x
+€75.60 =
+€1,080,000 /
+131% =
+14,286 x
+€75.60 =
+€1,080,000 /
+Prof. Dr. Ralf P. Thomas
+Klaus Helmrich
+131% =
+14,286 x
+€75.60 =
+€1,080,000 /
+131% =
+members in office as
+3 In fiscal 2020, the three ESG key performance indicators were strongly impacted by the COVID-19 pandemic. Therefore, it was
+decided not to measure the interim targets for fiscal 2020. The provisional target attainment shown is based on estimated target
+attainments for the three ESG key performance indicators up to the end of the vesting period.
+66
+BENEFITS IN CONNECTION WITH THE TERMINATION
+OF MANAGING BOARD APPOINTMENTS
+Janina Kugel's appointment as a member of the Manag-
+ing Board of Siemens AG ended regularly on January 31,
+2020. In accordance with the provisions of her employ-
+ment contract, no severance payment or special pension
+contribution was made.
+1 The amount of the obligation is based on the average base salary for the four years prior to the respective dates of verification.
+2 Based on the average Xetra opening price of €109.53 for the fourth quarter of 2019 (October-December).
+3 As of March 13, 2020 (date of verification).
+143,778
+15,748,004
+118,264
+12,953,413
+30,745
+3,367,500
+312%
+19,693
+2,156,950
+200%
+25,497
+23,884
+63,652
+As part of the termination by mutual agreement of the
+Managing Board appointment of Lisa Davis, it was agreed
+that her appointment and employment contract would
+end as of February 29, 2020, prior to the end of her con-
+tractual term of office. All contractually committed ben-
+efits continued to be granted until the termination date
+of February 29, 2020. To settle her claims for the period
+from the termination date of February 29, 2020, to the
+6,971,804
+2,616,015
+259% 2,792,686
+regular end of her appointment and employment con-
+tract on October 31, 2020, a severance payment in the
+gross amount of €2,369,353, which was due and payable
+on the termination date of February 29, 2020, was
+agreed with Lisa Davis. In addition, Lisa Davis will receive
+a special contribution to the BSAV of €411,264, which will
+be credited to her pension account in January 2021.
+Lisa Davis will receive the contractually agreed tax adjust-
+ment and the currency adjustment for both the regular
+payments until the termination date of February 29,
+2020, and the severance payment on the basis of the
+base salary included in the severance payment and the
+pro-rated Bonus. In addition, she will receive the unad-
+justed lump-sum payment for tax advisory services for
+the calendar year 2020 in the gross amount of €15,000,
+which was due and payable at the termination date of
+Combined Management Report → A.10 Compensation Report
+68
+ANNUAL REPORT 2020
+The payments made in 2020 and 2019 are reported under
+"Benefits received." The payouts for stock-based compen-
+sation refer to the grants for the fiscal years 2016, 2015
+and 2014, respectively.
+Total compensation in accordance with the applicable
+accounting standards is also reported under "Benefits
+granted." According to these accounting standards, this
+figure includes the amount of short-term variable com-
+pensation (Bonus) actually paid, instead of the target
+amount, and excludes the pension service cost.
+The respective target amounts for short-term variable
+compensation (Bonus), including floors and caps, are re-
+ported under "Benefits granted." The amounts for long-
+term variable compensation (Stock Awards) granted in
+fiscal 2020 and fiscal 2019 reflect the fair values on the
+grant date. The figures for individual maximums for
+short-term variable compensation (Bonus) and long-term
+variable compensation (Stock Awards) reflect the possi-
+ble maximum values in accordance with the maximum
+amounts defined in the compensation system – that is,
+200% and 300% of the applicable target amounts. Maxi-
+mum compensation, which is reported in column "2020
+(Max)" under "Total compensation (Code)," represents
+the contractually agreed upon maximum amount of total
+compensation for fiscal 2020 in accordance with Sec-
+tion 87a para. 1 sent. 2 No. 1 of the German Stock Corpo-
+ration Act (AktG). For each Managing Board member,
+maximum compensation equals the sum of the maxi-
+mum amount of all compensation components for fiscal
+2020 and is calculated by adding the base salary, maxi-
+mum fringe benefits, BSAV contribution, twice the Bonus
+target amount and three times the Stock Awards target
+amount.
+-
+The amounts of base salary, the Bonus and fringe bene-
+fits relate to fiscal 2020 and fiscal 2019.
+"Code") in its version of February 7, 2017, show individ-
+ually for each Managing Board member the benefits
+granted in fiscal 2020 and fiscal 2019. The actual amounts
+paid out are reported under "Benefits received."
+The following tables, which are based on the model
+tables of the German Corporate Governance Code (the
+IN FISCAL 2020
+BENEFITS GRANTED AND PAYMENTS MADE
+No loans or advances from the Company are provided to
+members of the Managing Board.
+OTHER
+Michael Sen's appointment as a member of the Manag-
+ing Board of Siemens AG was terminated by mutual
+agreement as of March 31, 2020, prior to the end of his
+contractual term of office. His employment relationship
+will remain unaffected until the end of the day on
+March 31, 2021. All contractually committed benefits
+will continue to be granted until the termination date of
+March 31, 2021. To settle his claims for the period from
+the termination date of March 31, 2021, until the regular
+end of his appointment and employment contract on
+March 31, 2022, a severance payment in the gross
+amount of €3,544,427, which will be due and payable on
+the termination date of March 31, 2021, was agreed with
+Michael Sen. In addition, Michael Sen will receive a spe-
+cial contribution to the BSAV in the amount of €616,896,
+which will be credited to his pension account in Janu-
+ary 2022. In accordance with his employment contract,
+the 2017 to 2020 tranches of the Stock Awards that were
+granted in the past and are still within the vesting period
+will not be forfeited and will remain unaffected; they are
+still governed by the terms and conditions of the applica-
+ble Siemens Stock Awards Guideline. The Stock Awards
+will become due and will be settled upon the expiration
+of the regular vesting period for each tranche.
+February 29, 2020. In accordance with her employment
+contract, the 2017 to 2020 tranches of the Stock Awards
+that were granted in the past and are still within the vest-
+ing period will not be forfeited and will remain unaf-
+fected; they are still governed by the terms and condi-
+tions of the applicable Siemens Stock Awards Guideline.
+The Stock Awards will become due and will be settled
+upon the expiration of the regular vesting period of each
+tranche.
+ANNUAL REPORT 2020 67
+ANNUAL REPORT 2020
+19,693
+200%
+Klaus Helmrich
+Dr. Roland Busch
+Joe Kaeser
+compliance as of March 13, 2020
+2020, and required to verify
+in office as of September 30,
+Managing Board members
+Obligations under the Share Ownership Guidelines
+Ownership Guidelines vary from member to member,
+depending on when they were appointed to the Manag-
+ing Board. For Managing Board members in office as of
+September 30, 2020, the following table shows the num-
+ber of Siemens shares each held as of the March 2020
+deadline for verifying compliance with the Share Owner-
+ship Guidelines. It also shows the number of shares to
+be held throughout their terms of office with a view to
+future deadlines.
+The deadlines by which the individual Managing Board
+members must first verify compliance with the Share
+Share Ownership Guidelines
+In the course of transferring the 2016 Stock Awards
+tranche, compliance with the maximum amounts of total
+compensation for fiscal 2016 was also reviewed. The
+applicable maximum amount was not exceeded in the
+case of any active or former Managing Board member.
+of total compensation
+Review of the maximum amount
+Combined Management Report → A.10 Compensation Report
+Prof. Dr. Ralf P. Thomas
+2,156,950
+Total
+Verified
+239%
+19,978
+2,188,200
+200%
+324%
+58,900
+6,451,313
+"Individual targets" target dimension
+300%
+Number
+of shares³
+Value2
+in €
+Percentage of
+base salary¹
+Number
+of shares²
+Value¹
+in €
+Percentage of
+base salary'
+Required
+Managing Board
+131% =
+131% =
+meters of the 2016 Stock Awards tranche:
+(in % of target amount)
+Fixed
+Base salary
+Fringe benefits
+100%¹
+compensation
+Maximum payout
+Pension commitment
+33.34%
+Siemens Group
+33.33%
+compensation
+(Bonus)
+Managing Board
+portfolio
+33.33%
+Individual
+targets
+200%
+Short-term
+variable
+Design of compensation
+components
+Compensation
+components
+Cash
+46.00%
+Earnings per share
+(EPS), basic
+€6.99
+€5.49 €8.49
+€6.18
+46.00%
+2 Based on 100% target attainment.
+3 The target value equals the average of EPS values in fiscal 2017, 2018 and 2019. The actual value results from the average EPS values
+for fiscal 2018, 2019 and 2020.
+Combined Management Report → A.10 Compensation Report
+THE COMPENSATION SYSTEM AT A GLANCE
+The following chart provides an overview of all compo-
+nents of the compensation system:
+Overview of the compensation system for Managing Board members
+Variable
+Fixed
+Stock Awards
+Long-term
+variable
+compensation
+(Stock Awards)
+80%
+20%
+300%
+TOTAL COMPENSATION
+In accordance with the applicable accounting princi-
+ples, the total compensation of all Managing Board
+members for fiscal 2020 totaled €26.53 million (2019:
+€33.04 million). This amount corresponds to a decrease
+of 19.7%. Of total compensation, €15.28 million (2019:
+€21.97 million) was attributable to cash compensation
+and €11.25 million (2019: €11.07 million) was attributable
+to stock-based compensation (Stock Awards).
+In fiscal 2020, total compensation, excluding fringe ben-
+efits, underwent a regular, upward adjustment of 3.0%
+to the benefit of the target amount for long-term variable
+compensation (Stock Awards). This increase was based,
+among other things, on adjustments to the compensa-
+tion of other employee groups within the Siemens Group.
+In addition, the Supervisory Board exercised its option to
+differentiate the compensation of three members of the
+Managing Board in fiscal 2020. As in previous years, all
+components of Joe Kaeser's compensation were differ-
+entiated due to his function as President and CEO. The
+target amount of Prof. Dr. Ralf P. Thomas's Stock Awards
+was differentiated due to his particular responsibility as
+CFO. Dr. Roland Busch's base salary and the target amount
+of his Stock Awards were differentiated due to his ap-
+pointment as Deputy CEO. Compared to the previous
+year, this differentiation resulted in an adjustment of
+Dr. Roland Busch's total compensation, excluding fringe
+benefits, by 15% upwards, effective October 1, 2019. Due
+to his assumption, among other things, of the overarching
+coordination of Digital Industries, Smart Infrastructure
+and Mobility, Dr. Busch's total compensation, excluding
+fringe benefits, was adjusted upwards by a further
+12% to the benefit of his base salary and the target
+amount of his Bonus, effective April 1, 2020.
+ANNUAL REPORT 2020 59
+Combined Management Report → A.10 Compensation Report
+The internal review of the appropriateness of the com-
+pensation of the Managing Board for fiscal 2020 estab-
+lished that the Managing Board compensation resulting
+from target attainment for fiscal 2020 is appropriate.
+BASE SALARY
+Base salary in fiscal 2020 was as follows:
+→ for the President and CEO, Joe Kaeser: €2,205,000
+→ for the Deputy CEO, Dr. Roland Busch: €1,352,300
+→ for the other members of the Managing Board:
+€1,101,600.
+FRINGE BENEFITS
+In fiscal 2020, Managing Board members were entitled
+to fringe benefits equal to a maximum of 7.5% of their
+base salary (maximum fringe benefits). As an exception,
+Lisa Davis was entitled to fringe benefits equal to a
+maximum of 100% of her base salary in fiscal 2020 on the
+basis of existing contractual commitments (in particular,
+a currency adjustment).
+PENSION BENEFIT COMMITMENT
+For fiscal 2020, Managing Board members were granted
+contributions under the Siemens Defined Contribution
+Pension Plan (BSAV) totaling €4.5 million (2019: €5.6 mil-
+lion) on the basis of a decision by the Supervisory Board
+on September 18, 2019. Of this amount, €0.02 million
+(2019: €0.02 million) related to the funding of pension
+commitments earned prior to the transfer to the BSAV.
+A.10.1.2 Compensation of the members
+of the Managing Board for fiscal 2020
+This section describes the concrete application of the
+compensation system for the members of the Managing
+Board of Siemens AG in fiscal 2020. It provides detailed
+information and background regarding total Managing
+Board compensation, target setting and target attainment
+for variable compensation as well as individualized dis-
+closures regarding the compensation of each Managing
+Board member for fiscal 2020.
+€6.18
+Severance cap
+Claw-
+Total shareholder return (TSR)
+compared to
+MSCI World Industrials
+Environmental,
+Social & Governance (ESG)
+Overview of the 2016 Stock Awards tranche
+Maximum
+compensation
+Other design
+characteristics
+Sum of
+maximum
+payout
+from each
+compensation
+component
+for the
+relevant
+fiscal year
+Share Ownership
+Guidelines
+Extra-
+ordinary
+develop-
+ments
+Malus
+back
+€5.49 - €8.49
+1 Fringe benefits are reimbursed up to a maximum amount set by the Supervisory Board.
+Earnings per share
+(EPS), basic
+Joe Kaeser
+September 30, 2020
+in office as of
+Managing Board members
+Target dimension
+Target setting and target attainment for short-term variable compensation (Bonus)
+Dr. Roland Busch
+The targets and target attainment for the Bonus for
+fiscal 2020 are summarized in the following table:
+The following table provides a summary of the key para-
+Combined Management Report → A.10 Compensation Report
+In addition to the aforementioned financial targets, the
+Supervisory Board of Siemens AG established four equally
+weighted "individual targets" for each Managing Board
+member for fiscal 2020. These targets are related to the
+Managing Board members' specific areas of responsibility.
+The individual targets "successful spin-off of Siemens
+Energy" and "achievement of the "Vision 2020+" goals"
+were established for all Managing Board members. The
+performance criterion "liquidity" measured in terms of
+the cash conversion rate was also established as an indi-
+vidual target. For the Managing Board members with
+functional responsibility, the cash conversion rate at the
+Industrial Businesses is relevant. For the Managing Board
+members with business responsibility, the cash conver-
+sion rate at their respective businesses is relevant. For
+Klaus Helmrich (Digital Industries) and Cedrik Neike
+(Smart Infrastructure), a further individual target was
+the performance criterion "growth" in the particular
+business for which they are responsible. The other
+individual targets for Managing Board members were
+defined on the basis of the following focus topics:
+succession planning, innovation performance, business
+development, employee satisfaction, optimization/effi-
+ciency enhancement and the implementation of other
+strategic measures.
+ANNUAL REPORT 2020 61
+Combined Management Report → A.10 Compensation Report
+€6.99
+Klaus Helmrich
+Determination of target attainment
+Prof. Dr. Ralf P. Thomas
+Actual
+value³
+Target
+attainment
+Target
+amount2,3
+Cedrik Neike
+ΚΡΙ
+(floor/cap)
+(Weighting 33.34%)
+Continuing and discontinued operations.
+1
+Michael Sen 6
+Janina Kugel
+Former members of
+the Managing Board5
+"Siemens Group"
+Performance range
+477
+477
+Performance-based
+compensation
+Total
+1,830
+940
+918 1,835
+Short-term variable compensation
+Bonus4
+477
+Long-term variable compensation
+477
+1,140
+Stock Awards 2020 (Vesting period: 2019-23)
+606
+0
+1,574
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2016 (Vesting period: 2015-19)
+1,166
+2,092
+Stock Awards 2015 (Vesting period: 2014-18)
+918
+Stock Awards 2014 (Vesting period: 2014-18)5
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other
+2,463
+|
+1,102
+2,478
+2019
+729
+Benefits granted
+Fringe benefits³
+Base salary
+based compensation
+Non-performance-
+(Amounts in thousands of €)
+Benefits received
+Appointed: August 2014; Left: February 2020
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 70
+2 The maximum compensation of Dr. Roland Busch was not adjusted in the course of his intra-year salary increase as of April 1, 2020.
+Consequently, his maximum compensation does not correspond to the sum of the individual compensation components, see
+column "2020 (Max)."
+1 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension
+service cost, see column "2020 (Max)."
+3,501
+1,176
+Lisa Davis 1,2
+2020
+2020
+2020
+481
+751
+459
+459
+459
+1,102
+459
+459 1,102
+459
+459
+58
+2020
+2019
+(Max)
+(Min)
+918
+Total non-performance/performance-based compensation
+257
+611
+3,667 4,731
+Total compensation (Code)
+based compensation
+Base salary
+2020
+(Min)
+2020
+(Max)
+2019
+2020
+2019
+1,102
+Fringe benefits
+Total
+45
+45
+1,147
+1,147
+1,102 1,102 1,102
+83
+45
+1,184 1,147
+1,102 1,102
+45
+45
+1,147
+1,147
+Performance-based
+compensation
+Short-term variable compensation
+Bonus
+1,102
+0 2,203 1,102
+947
+1,213
+Long-term variable compensation
+4,189
+Non-performance-
+Pension service cost6
+(Amounts in thousands of €)
+Benefits received
+Compensation according to applicable accounting standards
+Performance-based
+compensation
+Short-term variable compensation
+Bonus (payout amount)
+Total compensation (HGB)
+2,000
+1,395 2,969 4,120
+3,509
+7,969
+601
+601
+2,601
+1,996
+601
+4,110
+611
+8,580
+477
+2,000
+1,140
+4,158
+1 Pro-rated compensation for the period from October 1, 2019, to February 29, 2020, due to early termination of appointment and employment
+contract. To settle her claims for the period from the termination date of February 29, 2020, to the regular end of her appointment and
+employment contract on October 31, 2020, a severance payment in the gross amount of €2,369,353, which was due and payable on the
+termination date of February 29, 2020, was agreed with Lisa Davis. In addition, Lisa Davis will receive a special contribution to the BSAV
+of €411,264, which will be credited to her pension account in January 2021. Additional pension service costs of €395,141 were recognized
+accordingly in fiscal 2020. Fringe benefits granted to Lisa Davis for the period from March 1, 2020, to October 31, 2020, for payments in
+connection with the early termination of her appointment and employment contract amounted to €684,245, including contractually
+agreed tax and currency adjustment.
+2 Lisa Davis's compensation was paid out in Germany in euros. It has been agreed that any tax liability that arises due to tax rates that are
+higher in Germany than in the U. S. will be reimbursed. In addition, a currency adjustment payment was granted for base salary in calendar
+years 2018 and 2019 as well as for the Bonus for fiscal years 2018 and 2019. Furthermore, Lisa Davis was granted a currency adjustment
+payment for base salary in calendar year 2020 as well as for the Bonus for fiscal year 2020 up to the termination date of February 29, 2020.
+3 The fringe benefits reported under "Benefits received" (fiscal 2020) include fringe benefits of €22,288 received in October 2019
+that were, however, granted already in September 2019 (fiscal 2019).
+4 In the termination agreement, Lisa Davis was granted an amount of €476,962 for the period from October 1, 2019, until the termination
+date on February 29, 2020, as compensation for her entitlement to a pro-rata Bonus for fiscal 2020. Accordingly, the floor and cap applicable
+to the Bonus did not apply. The amount of €476,962 is therefore reported in the section "Benefits granted" in column "2020" and also in
+columns "2020 (Min)" and "2020 (Max)."
+5 The amount reported under "Benefits received" includes €2,236,573 from the settlement of Siemens Stock Awards that were
+granted to Lisa Davis in fiscal 2014 as compensation for the forfeiture of entitlements granted by her previous employer.
+6 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead
+of the pension service cost, see column "2020 (Max)."
+ANNUAL REPORT 2020 71
+Combined Management Report → A.10 Compensation Report
+Klaus Helmrich
+Appointed: April 2011
+Benefits granted
+2020
+899
+2020
+(Min)
+566
+0
+7,548
+2,330
+Stock Awards 2016 (Vesting period: 2015-19)
+4,106
+Stock Awards 2015 (Vesting period: 2014-18)
+4,647
+Stock Awards 2014 (Vesting period: 2014-18)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other
+2,580
+931
+Total non-performance/performance-based compensation
+Pension service cost¹
+Total compensation (Code)
+Compensation according to applicable accounting standards
+Performance-based
+Short-term variable compensation
+compensation
+Bonus (Payout amount)
+Total compensation (HGB)
+1 Maximum compensation includes the contribution to the Siemens Defined Contribution
+Pension Plan (BSAV) instead of the pension service cost, see column "2020 (Max)."
+ANNUAL REPORT 2020 69
+7,429 2,320
+1,220 1,220 1,235
+8,649 3,540 15,563
+14,328 6,854
+1,271
+8,125
+8,051 12,978
+1,220 1,271
+9,271 14,249
+1,626
+2,502
+6,850
+2,904
+7,151
+Long-term variable compensation
+Stock Awards 2020 (Vesting period: 2019-23)
+Stock Awards 2019 (Vesting period: 2018-22)
+2,205
+Combined Management Report → A.10 Compensation Report
+Joe Kaeser
+Appointed: May 2006; President and CEO since August 2013
+(Amounts in thousands of €)
+Non-performance-
+based compensation
+Performance-based
+compensation
+Base salary
+Fringe benefits
+Total
+Short-term variable compensation
+Bonus
+Benefits granted
+Benefits received
+2020
+Stock Awards 2020 (Vesting period: 2019-23)
+2020
+(Max)
+2019
+2020
+2019
+2,205
+115
+2,320
+2,205 2,205 2,205
+115
+165 115
+2,320 2,370 2,320
+2,205
+2,205
+115
+115
+2,320 2,320
+2,205
+0 4,410
+1,626 2,502
+Combined Management Report → A.10 Compensation Report
+Dr. Roland Busch
+Appointed: April 2011; Deputy CEO since October 2019
+1,840
+0
+4,782
+1,166
+2,092
+Stock Awards 2015 (Vesting period: 2014-18)
+2,478
+Stock Awards 2014 (Vesting period: 2014-18)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other
+1,358
+I
+559
+Total non-performance/performance-based compensation
+Pension service cost¹
+Total compensation (Code)²
+Compensation according to applicable accounting standards
+Performance-based
+Short-term variable compensation
+compensation
+Bonus (payout amount)
+Total compensation (HGB)
+4,567
+608
+1,450 8,790
+608
+617
+5,175
+2,058 8,948
+3,426
+566
+3,992
+4,441 6,730
+608
+Long-term variable compensation
+Stock Awards 2020 (Vesting period: 2019-23)
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2016 (Vesting period: 2015-19)
+899 1,176
+0 2,555 1,102
+1,277
+Benefits granted
+Benefits received
+2020
+2020
+(Amounts in thousands of €)
+Non-performance-
+Base salary
+based compensation
+Fringe benefits
+Total
+2020
+(Min)
+(Max)
+2019
+5,049 7,296
+2020
+1,352
+98
+98
+1,352 1,352
+101
+1,102
+1,352
+1,102
+57
+98
+57
+1,450 1,450 1,454 1,159
+1,450 1,159
+Performance-based
+compensation
+Short-term variable compensation
+Bonus
+2019
+1,453
+Combined Management Report → A.10 Compensation Report
+Stock Awards 2019 (Vesting period: 2018-22)
+2,478
+Stock Awards 2015 (Vesting period: 2014-18)
+2,092
+1,457
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2016 (Vesting period: 2015-19)
+4,632
+0
+1,782
+Long-term variable compensation
+Stock Awards 2020 (Vesting period: 2019-23)
+1,250
+812
+Stock Awards 2014 (Vesting period: 2014-18)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other
+2,203 1,102
+1,183
+1,183 1,184 1,171
+1,183
+69
+81
+69
+1,102 1,102
+1,102 1,102 1,102
+83
+81
+81
+1,102
+0
+2019
+1,358
+483
+1,250
+812
+4,688 7,325
+586
+601
+6,740
+4,087
+8,019 3,730
+586
+617
+1,183
+601
+1,784 8,636 4,315
+4,668
+I
+601
+ANNUAL REPORT 2020 76
+1 Maximum compensation includes the contribution to the Siemens Defined Contribution
+Pension Plan (BSAV) instead of the pension service cost, see column "2020 (Max)."
+Total compensation (HGB)
+Bonus (payout amount)
+compensation
+Short-term variable compensation
+Performance-based
+Compensation according to applicable accounting standards
+Total compensation (Code)
+Pension service cost¹
+Total non-performance/performance-based compensation
+4,067
+3,777
+2020
+2020
+(Max)
+3,891
+562
+618
+562
+308
+618
+1,185
+2,463
+618
+2,448
+868
+567 3,582 3,831
+4,393
+1,844
+Total compensation (Code)
+Pension service cost²
+Total non-performance/performance-based compensation
+Stock Awards 2014 (Vesting period: 2014-18)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2016 (Vesting period: 2015-19)
+1,457
+0 1,889
+727
+Stock Awards 2020 (Vesting period: 2019-23)
+Stock Awards 2019 (Vesting period: 2018-22)
+Long-term variable compensation
+Compensation according to applicable accounting standards
+2019
+1,487 3,010
+compensation
+(Min)
+2020
+2020
+Benefits received
+Benefits granted
+Short-term variable compensation
+Bonus
+Performance-based
+compensation
+Total
+Fringe benefits
+Base salary
+Non-performance-
+based compensation
+Performance-based
+(Amounts in thousands of €)
+Prof. Dr. Ralf P. Thomas
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 75
+2 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension service
+cost, see column "2020 (Max)."
+1 Pro-rated compensation for the period from October 1, 2019, to March 31, 2020, due to early termination of appointment. His employment
+relationship will remain unaffected until the end of the day on March 31, 2021. In addition to the compensation as a Managing Board
+member reported in the table above, Michael Sen received the following compensation for the period from April 1, 2020, until September 30,
+2020 (fiscal 2020): base salary of €550,800, fringe benefits of €20,750, BSAV contribution of €308,448, Bonus of €550,800 and Stock
+Awards of €629,500. Furthermore, Michael Sen has been granted the following compensation for the period from October 1, 2020, until the
+early termination of his employment contract on March 31, 2021 (fiscal 2021): base salary of €550,800, fringe benefits in the maximum
+amount of €24,357.50, BSAV contribution of €308,448, Bonus of €550,800 and Stock Awards of €629,500. In accordance with the terms of
+his contract, the Bonus for fiscal 2020 and fiscal 2021 will be paid out entirely in cash. In accordance with the terms of his contract and the
+guidelines for the 2020 and 2021 tranche, the Stock Awards will be settled and transferred after the expiration of the vesting period in
+November 2023 and November 2024, respectively, on the basis of the actual degree of target attainment. To settle his claims for the period
+from the termination date of March 31, 2021, until the regular end of his appointment and employment contract on March 31, 2022, a sever-
+ance payment in the gross amount of €3,544,427, which will be due and payable on the termination date of March 31, 2021, was agreed
+with Michael Sen. In addition, Michael Sen will receive a special contribution to the BSAV in the amount of €616,896, which will be credited
+to his pension account in January 2022.
+3,906
+1,176
+1,595
+301
+Total compensation (HGB)
+Short-term variable compensation
+Bonus (payout amount)
+Appointed: September 2013
+1,176
+3,878
+A.10.1.3 Additional disclosures on stock-
+based compensation instruments in
+fiscal 2020
+0
+58,298 2,006,764 578,552
+0
+60,981 2,109,885 605,764
+0
+14,286
+2,190
+1,752 13,757
+2,628
+64,316 8,761
+63,294 7,009
+55,912 10,514
+Michael Sen4
+Janina Kugel
+Lisa Davis
+0
+of the Managing Board
+1,247,806 679,797
+471,408 8,979,433 3,682,407
+0
+1,255,741 557,575
+76,314 1,099,367 606,940
+70,291
+0 88,967
+14,286
+70,901
+34,122
+136,484
+371,703
+Total
+6,447
+25,787
+Former members
+71,019
+69,054 4,641,135 716,334
+183,522
+ANNUAL REPORT 2020 78
+→ "sustainability," measured in terms of the Siemens
+ESG/Sustainability index and taking into account the
+following three equally weighted key performance
+indicators: CO2 emissions (environmental), digital
+learning hours per employee (social) and Net Pro-
+moter Score (governance).
+→ "long-term value creation," measured in terms of total
+shareholder return (TSR) relative to the MSCI World
+Industrials index and
+The Supervisory Board also approved the following per-
+formance criteria for the 2021 Stock Awards tranche (vest-
+ing period: November 2020 through November 2024):
+In addition, the Supervisory Board has set from two
+to four individual targets for each member of the
+Managing Board.
+→ for "Managing Board portfolio," the performance cri-
+terion "profitability/capital efficiency," measured in
+terms of return on capital employed (ROCE).
+→ for "Siemens Group," the performance criterion "profit,"
+measured in terms of basic earnings per share (EPS)
+On September 23, 2020, the Supervisory Board of
+Siemens AG approved the following performance cri-
+teria for the short-term variable compensation (Bonus)
+for fiscal 2021:
+in fiscal 2021
+A.10.1.4 Outlook for target-setting
+In fiscal 2020, a gain from stock-based compensation
+for former Managing Board member Prof. Dr. Siegfried
+Russwurm amounting to €54,084 was recognized in
+accordance with IFRS. The gain was due to the reversal of
+accrued provisions, which were recognized as income.
+These provisions exceeded the payout for the 2016 Stock
+Awards tranche received in fiscal 2020 and exceeded the
+provisions required for the portion of the 2017 tranche to
+be settled in cash. Beyond this, a gain of €1,630 was rec-
+ognized for the additional cash payment for the 2017
+tranche due to the spin-off of Siemens Energy. The settle-
+ment of Stock Awards for former Managing Board mem-
+bers via the transfer of Siemens shares takes place, as a
+rule, after the expiration of the relevant vesting period.
+Total
+The spin-off of Siemens Energy in fiscal 2020 led to
+adjustments in the stock-based compensation grants
+agreed upon until then (2017 to 2020 tranches of the
+Stock Awards). To counteract an expected dilution from
+the spin-off, Managing Board members - like all other
+entitled employees will receive an additional cash
+payment based on the spin-off ratio of 2:1 and the price
+of the Siemens Energy share on the date when their
+stock-based compensation grants become due. A total
+expense of €775,882, which is already included in the
+expense for stock-based compensation (see the pre-
+ceding table), was recognized for these stock grants in
+the past fiscal year.
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 77
+4 The number of Stock Awards granted to Michael Sen during fiscal 2020 includes only the portion of Stock Awards attribut-
+able to his membership on the Managing Board. The value reported under "Expenses for stock-based compensation (in €)
+fiscal 2020" includes, however, the full expenses recognized for Michael Sen in the past fiscal year.
+3 The reported figures include the Stock Awards granted to Cedrik Neike for his position as Executive Chairman of the Board
+of Directors of Siemens Ltd. China.
+2 The figures take into account the Stock Awards granted in November 2019 for fiscal 2020. The provisional target attainment
+for the portion of the 2020 Stock Awards tranche that is dependent on the Siemens internal ESG/Sustainability index
+(weighting 20%) is 92%. According to IFRS, this target attainment results in a reduction of the number of Stock Awards,
+which has been accounted for in the recognition of expenses. As the provisional target attainment does not provide for any
+information about the final target attainment or the number of Stock Awards to be transferred after the expiration of the
+vesting period, the reduction is not reported in the table above. Rather, emphasis is placed on the transparent reporting of
+the stock-based commitments for the individual members of the Managing Board. At the end of the vesting period,
+a final number of shares to be transferred is determined based on actual target attainment, taking into account the maxi-
+mum amount for the Stock Awards.
+1 The resulting fair value at grant date in fiscal 2020 per granted Stock Award (TSR) was on the basis of 200% target attain-
+ment - €44.42 and per granted Stock Award (ESG) €98.80.
+188,333 8,757,785 1,900,651
+0
+28,043
+6,570
+26,284
+-
+Combined Management Report → A.10 Compensation Report
+Prof. Dr. Ralf P. Thomas
+0
+(TSR)
+grants
+grants
+Awards
+Stock
+Awards
+Forfeitable
+Forfeitable
+Stock
+Awards
+Stock
+Forfeitable
+(in €)
+Expenses for
+grants
+(ESG)
+stock-based
+compensation
+Balance
+at the end
+Forfeited
+during
+fiscal year
+Vested
+and settled
+during
+fiscal year
+Granted during
+fiscal year¹
+Balance at
+beginning of
+fiscal 2020
+as of September 30, 2020
+members in office
+Managing Board
+(Amounts in number of units)
+fiscal 2020. The table also includes the expenses for each
+individual Managing Board member arising from stock-
+based compensation recognized in accordance with IFRS
+in fiscal 2020 and fiscal 2019.
+The following table shows changes in the balance of
+the Stock Awards held by Managing Board members in
+of fiscal
+2020²
+0
+Stock
+Awards
+grants
+Forfeitable
+Stock
+Awards
+grants
+5,257
+21,027
+44,007
+Cedrik Neike3
+0
+14,286
+5,257
+64,316 21,027
+Klaus Helmrich
+83,308 1,180,201 606,684
+0
+Stock
+Awards
+grants
+14,286
+64,316 26,622
+Dr. Roland Busch
+152,528 4,196,318 1,231,410
+0
+28,043
+10,505
+42,021
+128,045
+Joe Kaeser
+Fiscal 2019
+Fiscal 2020
+6,656
+0 3,777
+301
+0 1,102
+484
+Stock Awards 2020 (Vesting period: 2019-23)
+Stock Awards 2019 (Vesting period: 2018-22)
+Stock Awards 2016 (Vesting period: 2015-19)
+Stock Awards 2015 (Vesting period: 2014-18)1
+Stock Awards 2014 (Vesting period: 2014-18)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other¹
+Long-term variable compensation
+1,140
+234
+734 1,102
+0
+367
+1,142
+383
+395 1,142
+0 1,259
+383
+41
+16
+41
+28
+16
+16
+16
+1,102
+367
+367 1,102
+367
+383
+367
+1,166
+1,652
+compensation
+Short-term variable compensation
+Performance-based
+3,235 4,777
+3,994
+986 2,594
+1,838
+584
+603
+584
+206
+2,014
+603
+4,192
+2,631
+2,388 3,410
+383
+1,235
+258
+Compensation according to applicable accounting standards
+Total compensation (Code)
+Pension service cost²
+Total non-performance/performance-based compensation
+I
+603
+Bonus (payout amount)
+2019
+2019
+617
+4,186 6,679
+3,415
+1,147 7,164
+611
+4,313 1,758
+611
+3,702
+ANNUAL REPORT 2020 72
+1 Maximum compensation includes the contribution to the Siemens Defined Contribution
+Pension Plan (BSAV) instead of the pension service cost, see column "2020 (Max)."
+Total compensation (HGB)
+Short-term variable compensation
+Bonus (payout amount)
+compensation
+618
+Performance-based
+Total compensation (Code)
+Pension service cost¹
+Total non-performance/performance-based compensation
+483
+1,358
+Stock Awards 2014 (Vesting period: 2014-18)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other
+2,478
+Stock Awards 2015 (Vesting period: 2014-18)
+2,092
+Stock Awards 2016 (Vesting period: 2015-19)
+1,166
+Compensation according to applicable accounting standards
+2020
+611
+7,781
+(Max)
+(Min)
+2020
+2020
+2020
+Benefits received
+Benefits granted
+Short-term variable compensation
+Bonus
+Performance-based
+compensation
+Total
+Fringe benefits
+618
+Base salary
+Non-performance-
+(Amounts in thousands of €)
+Appointed: February 2015; Left: January 2020
+Janina Kugel
+Combined Management Report → A.10 Compensation Report
+3,526
+3,548
+1,213
+947
+4,797 7,297
+4,033
+based compensation
+1,102
+Total compensation (HGB)
+1,102
+Benefits received
+Benefits granted
+Short-term variable compensation
+Bonus
+Performance-based
+compensation
+Total
+Fringe benefits
+Base salary
+based compensation
+Non-performance-
+(Amounts in thousands of €)
+Appointed: April 2017; Left: March 2020
+2020
+Michael Sen¹
+2 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension
+service cost, see column "2020 (Max)."
+1 In addition to his role as a member of the Managing Board of Siemens AG, Cedrik Neike served as Executive Chairman of the Board
+of Directors of Siemens Ltd. China until March 31, 2019. Of the fixed compensation and payout amount for short-term variable compen-
+sation reported in section "Benefits received" (fiscal 2019), an amount of €262,260 was granted and paid by Siemens Ltd. China and
+deducted from the compensation for his Managing Board activities at Siemens AG. Of the long-term variable compensation and fringe
+benefits reported in section "Benefits granted" (fiscal 2019), amounts of €131,359 and €10,842, respectively, were granted and paid
+by Siemens Ltd. China.
+1,213
+3,497
+3,471
+879
+2,638 2,899
+4,314 1,759 7,781 3,954
+568
+621
+568
+2,017 2,331
+ANNUAL REPORT 2020 74
+3,386
+2020
+(Min)
+551
+1,272
+567
+1,272
+592
+567
+567
+170
+16
+170
+41
+2020
+16
+16
+1,102
+551
+1,102
+551
+551
+551
+2019
+2020
+2019
+(Max)
+16
+234
+1,138 7,164
+621
+617
+3,693
+1,138
+1,102
+36
+2019
+2020
+2019
+2020
+(Max)
+2020
+(Min)
+2020
+Benefits received
+Benefits granted
+Total
+1,102 1,102 1,102
+36
+83
+1,138 1,184
+Fringe benefits
+Base salary
+Non-performance-
+(Amounts in thousands of €)
+Appointed: April 2017
+Cedrik Neike1
+Combined Management Report → A.10 Compensation Report
+ANNUAL REPORT 2020 73
+2 Maximum compensation includes the contribution to the Siemens Defined Contribution Pension Plan (BSAV) instead of the pension
+service cost, see column "2020 (Max)."
+1 Janina Kugel was appointed to the Managing Board, effective February 1, 2015. The value of Siemens Phantom Stock Awards granted
+to Janina Kugel upon her appointment for fiscal 2015 on a pro-rata basis and settled in November 2018 following the expiration of
+the four-year vesting period is reported under "Stock Awards 2015 (Vesting period 2014-18)." Furthermore, Janina Kugel was entitled
+to Siemens Stock Awards from the 2014 and 2015 tranches acquired when she was an employee of Siemens AG, before she became
+a member of the Managing Board. These Stock Awards were also settled in November 2018, and their value is reported under
+"Other" (see "Benefits received," fiscal 2019).
+3,448
+1,140
+based compensation
+621
+17
+17
+Total compensation (HGB)
+Short-term variable compensation
+Bonus (payout amount)
+compensation
+Performance-based
+Compensation according to applicable accounting standards
+Total compensation (Code)
+Pension service cost²
+Total non-performance/performance-based compensation
+Stock Awards 2014 (Vesting period: 2014-18)
+Bonus Awards 2014 (Waiting period: 2014-18)
+Other
+Stock Awards 2015 (Vesting period: 2014-18)
+Stock Awards 2016 (Vesting period: 2015-19)
+1,102 1,102
+36
+1,166
+1,453
+Long-term variable compensation
+Stock Awards 2020 (Vesting period: 2019-23)
+Stock Awards 2019 (Vesting period: 2018-22)
+1,213
+879
+0 2,203 1,102
+1,102
+Short-term variable compensation
+Bonus
+Performance-based
+compensation
+1,118
+1,138
+1,118
+0 3,777
+1,102
+1,171
+Dr. Werner Brandt
+156,758
+132,222
+9,000
+141,222
+Hagen Reimer'
+140,000
+18,000 158,000
+105,000
+4,500
+109,500
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
+135,758
+38,788
+19,500
+132,222
+37,778
+12,000
+182,000
+Baroness Nemat Shafik (DBE, DPhil)
+140,000
+18,000
+245,500
+158,000
+25,500
+140,000
+140,000
+80,000
+24,000
+244,000
+Harald Kern¹
+Jürgen Kerner¹
+Dr. Nicola Leibinger-Kammüller
+Benoît Potier
+140,000 80,000
+140,000 200,000
+131,515 75,152
+135,758
+27,000 247,000
+140,000
+80,000
+19,500
+239,500
+61,500 401,500
+140,000
+200,000
+51,000
+391,000
+34,500
+21,000
+241,167
+80,000
+36,000 256,000
+132,222
+139,722
+of the Supervisory Board
+Robert Kensbock 1,2
+Total³
+140,000
+80,000
+36,000 256,000
+140,000
+80,000
+24,000
+244,000
+140,000
+18,000 158,000
+140,000
+9,000
+149,000
+140,000
+3,083,031
+180,000
+1,613,940
+39,000 359,000
+180,000
+646,500 5,343,470 3,041,666 1,617,778
+140,000
+28,500
+435,000
+348,500
+5,094,444
+Former members
+7,500
+Gunnar Zukunft¹
+149,000
+Dr. Nathalie von Siemens
+140,000
+40,000
+21,000
+201,000
+140,000
+40,000
+13,500
+193,500
+Michael Sigmund
+140,000
+18,000
+158,000
+140,000
+9,000
+149,000
+Dorothea Simon1
+140,000
+18,000 158,000
+140,000
+9,000
+Matthias Zachert
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have declared
+their willingness to transfer their compensation to the Hans Boeckler Foundation, in accordance with the guidelines of the Confederation of
+German Trade Unions.
+80,000
+Bettina Haller¹
+Member
+€60,000
+Member
+€40,000
+Member
+€40,000
+Compensation for work on the Chairman's Committee
+counts toward compensation for work on the Compensa-
+tion Committee. No additional compensation is paid for
+work on the Compliance Committee if a member of that
+committee is already entitled to compensation for work
+on the Audit Committee.
+If a Supervisory Board member is absent from any Super-
+visory Board meetings, one-third of the aggregate com-
+pensation due to that member is reduced by the percent-
+age of Supervisory Board meetings he or she does not
+attend in relation to the total number of Supervisory
+Board meetings held during the fiscal year. In the event
+of changes in the composition of the Supervisory Board
+or its committees, compensation is paid on a pro-rata
+basis, rounding up to the next full month.
+In addition, the members of the Supervisory Board are
+entitled to receive a fee of €1,500 for each meeting of the
+Supervisory Board and/or its committees they attend.
+The members of the Supervisory Board are reimbursed
+for out-of-pocket expenses incurred in connection with
+their duties and for any value-added taxes to be paid on
+their compensation. For the performance of his duties,
+the Chairman of the Supervisory Board is also entitled to
+ANNUAL REPORT 2020 79
+Combined Management Report → A.10 Compensation Report
+(Amounts in €)
+an office with secretarial support and the use of a car
+service. No loans or advances from the Company are pro-
+vided to members of the Supervisory Board.
+Under Section 113 (3) of the German Stock Corporation
+Act (AktG) in the version amended by the German Act
+Implementing the Second Shareholders' Rights Directive
+(ARUG II), the annual shareholders' meeting of a listed
+company must resolve on compensation for the mem-
+bers of the supervisory board at least every four years.
+Such a resolution is planned for the Annual Shareholders'
+Meeting on February 3, 2021. The current provisions
+in Section 17 of Siemens' Articles of Association are to be
+amended effective October 1, 2021, and replaced by
+simplified compensation arrangements.
+In addition, at its meeting on September 23, 2020, the
+Supervisory Board decided to reintegrate the Compliance
+Committee into the Audit Committee. Effective Octo-
+ber 1, 2020, the duties that had been transferred to the
+Compliance Committee were assumed again by the Audit
+Committee, and the Compliance Committee was thereby
+dissolved.
+The compensation shown in the following table was
+determined for each Supervisory Board member for
+fiscal 2020 (individualized disclosure).
+Supervisory Board
+Additional
+compensation
+Base for committee
+work
+compensation
+2020
+Member
+€80,000
+2019
+Member
+€80,000
+Chair
+€80,000
+Combined Management Report →A.10 Compensation Report
+A.10.2 Compensation of
+Supervisory Board members
+The current compensation policies for the Supervisory
+Board were authorized at the Annual Shareholders' Meet-
+ing on January 28, 2014, and have been in effect since
+fiscal 2014. Details are set out in Section 17 of the Articles
+of Association of Siemens AG. Supervisory Board com-
+pensation consists entirely of fixed compensation; it re-
+flects the responsibilities and scope of the work of the
+Supervisory Board members. The Chairman and Deputy
+Chairs of the Supervisory Board as well as the chairs and
+members of the Audit Committee, the Chairman's Com-
+mittee, the Compensation Committee, the Compliance
+Committee and the Innovation and Finance Committee
+receive additional compensation.
+Under the current rules, the members of the Supervisory
+Board receive an annual base compensation, and the
+members of the Supervisory Board committees receive
+additional compensation for their committee work.
+Compensation of members of the Supervisory Board and its committees
+Chairman
+€280,000
+Base compensation of Supervisory Board
+Deputy Chair
+€220,000
+Additional compensation for committee work
+Audit Committee
+Chairman's Committee
+Compensation
+Committee
+Member
+€140,000
+Innovation and
+Compliance Committee
+Finance Committee
+Chair
+€160,000
+Chair
+€120,000
+Chair
+€100,000
+Chair
+€80,000
+140,000
+Meeting
+attendance
+Base
+36,000
+336,000
+140,000
+160,000
+24,000
+324,000
+Michael Diekmann
+140,000
+60,000
+22,500
+222,500
+140,000
+60,000
+15,000
+215,000
+Dr. Andrea Fehrmann'
+140,000
+18,000 158,000
+140,000
+9,000
+149,000
+397,500
+Additional
+compensation
+37,500
+220,000
+fee
+Total compensation
+for committee
+work
+Meeting
+attendance
+fee
+Total
+members in office
+as of September 30, 2020
+Jim Hagemann Snabe
+Birgit Steinborn¹
+Werner Wenning
+280,000 280,000
+220,000 200,000
+220,000 140,000
+140,000 160,000
+72,000 632,000
+61,500 481,500
+280,000
+220,000
+280,000
+52,500
+612,500
+200,000
+51,000
+471,000
+51,000 411,000
+140,000
+2 Robert Kensbock left the Supervisory Board on September 25, 2020, the effective date of the spin-off of Siemens' energy business.
+194,045
+ANNUAL REPORT 2020 80
+(10,774)
+(10,688)
+ம
+631
+376
+(403)
+(362)
+(596)
+112
+1,547
+1,534
+(815)
+(965)
+496
+(39)
+Income from continuing operations before income taxes
+5,672
+(4,669)
+6,933
+(4,601)
+20,187
+Cost of sales
+Gross profit
+Research and development expenses
+Selling and general administrative expenses
+Other operating income
+Other operating expenses
+Income (loss) from investments accounted for using the equity method, net
+Interest income
+Interest expenses
+Other financial income (expenses), net
+Note
+2020
+2019
+2,30
+57,139
+58,483
+(36,953)
+(36,849)
+21,634
+Revenue
+Income tax expenses
+(1,775)
+474
+4,030
+5,174
+28
+4.93
+5.94
+0.06
+0.47
+5.00
+6.41
+3 Compared to the amounts reported in the 2019 Compensation Report, this amount does not include compensation totaling €51,167
+for former Supervisory Board member Reinhard Hahn.
+4.86
+5.86
+0.06
+0.46
+4.93
+6.32
+170
+(1,382)
+88
+Net income
+Income from continuing operations
+4,290
+5,158
+Income (loss) from discontinued operations, net of income taxes
+(90)
+490
+Net income
+4,200
+5,648
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+Basic earnings per share
+Income from continuing operations
+Income from discontinued operations
+Net income
+Diluted earnings per share
+Income from continuing operations
+Income from discontinued operations
+ANNUAL REPORT 2020
+(in millions of €, per share amounts in €)
+28
+of Income
+Combined Management Report → A.11 Takeover-relevant information
+According to Section 179 of the German Stock Corpora-
+tion Act, any amendment to the Articles of Association
+requires a resolution of the Shareholders' Meeting. The
+authority to adopt purely formal amendments to the
+Articles of Association was transferred to the Supervisory
+Board under Section 13 para. 2 of the Articles of Associ-
+ation. In addition, by resolutions adopted during past
+Shareholders' Meetings, the Supervisory Board has been
+authorized to amend Section 4 of the Articles of Associ-
+ation in accordance with the utilization of the Authorized
+and Conditional Capitals, and after expiration of the
+then-applicable authorization and utilization period.
+Resolutions of the Shareholders' Meeting require a sim-
+ple majority vote, unless a greater majority is required by
+law (Section 23 para. 2 of the Articles of Association).
+Pursuant to Section 179 para. 2 of the German Stock Cor-
+poration Act, amendments to the Articles of Association
+require a majority of at least three-quarters of the capital
+stock represented at the time of the casting of the votes,
+unless another capital majority is prescribed by the Arti-
+cles of Association.
+A.11.4 Powers of the Managing
+Board to issue and repurchase
+shares
+The Managing Board is authorized to increase, with the
+approval of the Supervisory Board, the capital stock until
+January 25, 2021 by up to €90 million through the issu-
+ance of up to 30 million Siemens shares against contribu-
+tions in cash (Authorized Capital 2016). Subscription
+rights of existing shareholders are excluded. The new
+shares shall be issued under the condition that they are
+offered exclusively to employees of the Company and
+any of its affiliated companies. To the extent permitted
+by law, such employee shares may also be issued in such
+a manner that the contribution to be paid on such shares
+is covered by that part of the annual net income which
+the Managing Board and the Supervisory Board may allo-
+cate to other retained earnings under Section 58 para. 2
+of the German Stock Corporation Act.
+Furthermore, the Managing Board is authorized to in-
+crease, with the approval of the Supervisory Board, the
+capital stock until January 29, 2024 by up to €510 million
+through the issuance of up to 170 million Siemens shares
+against cash contributions and/or contributions in kind
+(Authorized Capital 2019).
+As of September 30, 2020, the total unissued authorized
+capital of Siemens AG therefore consisted of €600 mil-
+lion nominal that may be used, in installments with
+varying terms, by issuance of up to 200 million Siemens
+shares.
+By resolutions of the Shareholders' Meetings on Janu-
+ary 30, 2019 and February 5, 2020, the Managing Board
+is authorized to issue bonds with conversion, exchange
+or option rights or with warrants attached, or a combina-
+tion of these instruments, entitling the holders to sub-
+scribe to up to 80 million and up to 60 million Siemens
+shares, respectively. Based on these two authorizations,
+the Company or its affiliated companies may issue bonds
+until January 29, 2024 and February 4, 2025, respec-
+tively, each in an aggregate principal amount of up to
+€15 billion. In order to grant shares of stock to holders/
+creditors of such convertible bonds or warrant bonds, the
+capital stock was conditionally increased by resolutions
+of the Shareholders' Meetings in 2019 and 2020, by up to
+80 million and up to 60 million Siemens shares, respec-
+tively (Conditional Capitals 2019 and 2020), i.e. in total
+by up to €420 million through the issuance of up to
+140 million Siemens shares.
+The new shares under Authorized Capital 2019 and the
+aforementioned bonds are to be issued against cash or
+non-cash contributions. They are, as a matter of princi-
+ple, to be offered to shareholders for subscription. The
+Managing Board is authorized to exclude, with the ap-
+proval of the Supervisory Board, subscription rights of
+shareholders in the event of capital increases against
+contributions in kind. In the event of capital increases
+against contributions in cash, the Managing Board is
+authorized to exclude shareholders' subscription rights
+with the approval of the Supervisory Board in the follow-
+ing cases:
+→ The issue price of the new shares/bonds is not signifi-
+cantly lower than the stock market price of the Siemens
+shares already listed or the theoretical market price of
+ANNUAL REPORT 2020 83
+Combined Management Report → A.11 Takeover-relevant information
+the bonds computed in accordance with generally ac-
+cepted actuarial methods (exclusion of subscription
+rights, limited to 10% of the capital stock, in accordance
+with or by mutatis mutandis application of Section 186
+para. 3 sentence 4 German Stock Corporation Act).
+→ The exclusion is necessary with regard to fractional
+amounts resulting from the subscription ratio.
+→ The exclusion is used to grant holders of conversion
+or option rights or conversion or option obligations
+on Siemens shares a compensation for the effects of
+dilution.
+The new shares issued or to be issued in exchange for
+contributions in cash and in kind and with shareholders'
+subscription rights excluded, may in certain cases be sub-
+ject to further restrictions. The details of those restric-
+tions are described in the relevant authorization. In addi-
+tion, the Managing Board has issued the commitment
+not to increase the capital stock from the Authorized
+Capital 2019 and the Conditional Capitals 2019 and 2020
+by a total of more than 10% of the capital stock existing
+at the time of the Shareholders' Meeting on February 5,
+2020, to the extent that capital increases with share-
+holders' subscription rights excluded are made from the
+Authorized Capital 2019 against contributions in cash or
+in kind or to service convertible bonds and/or warrant
+bonds issued under the authorizations approved on Jan-
+uary 30, 2019 or February 5, 2020 with shareholders' sub-
+scription rights excluded. This commitment ends no later
+than February 4, 2025.
+The Company may not repurchase its own shares unless
+so authorized by a resolution duly adopted by the share-
+holders at a general meeting or in other very limited cir-
+cumstances set forth in the German Stock Corporation
+Act. On February 5, 2020, the Shareholders' Meeting
+authorized the Company to acquire until February 4,
+2025 up to 10% of its capital stock existing at the date of
+adopting the resolution or if this value is lower - as of
+the date on which the authorization is exercised. The
+aggregate of shares of stock of Siemens AG repurchased
+under this authorization and any other Siemens shares
+previously acquired and still held in treasury by the Com-
+pany or attributable to the Company pursuant to Sec-
+tions 71d and 71e of the German Stock Corporation Act
+may at no time exceed 10% of the then existing capital
+ANNUAL REPORT 2020 82
+-
+The appointment and removal of members of the Man-
+aging Board are subject to the provisions of Sections 84
+and 85 of the German Stock Corporation Act and Sec-
+tion 31 of the German Codetermination Act (Mitbestim-
+mungsgesetz). According to Section 8 para. 1 of the Arti-
+cles of Association, the Managing Board is comprised of
+several members, the number of which is determined by
+the Supervisory Board.
+The von Siemens-Vermögensverwaltung GmbH (VSV)
+has, on a sustained basis, powers of attorney allowing it
+to exercise the voting rights for 10,599,284 shares (as of
+September 30, 2020) on behalf of members of the
+Siemens family. These shares are part of the total number
+of shares held by the family's members. The powers of
+attorney are based on an agreement between the VSV
+and, among others, members of the Siemens family. The
+shares are voted together by VSV, taking into account
+the suggestions of a family partnership established by
+the family's members or of one of this partnership's gov-
+erning bodies.
+Fiscal year
+Combined Management Report →A.10 Compensation Report
+A.10.3 Other
+The Company provides a group insurance policy for
+Supervisory and Managing Board members and certain
+other employees of the Siemens Group. The policy is
+taken out for one year at a time or renewed annually. It
+covers the personal liability of the insured individuals in
+cases of financial loss associated with their activities
+on behalf of the Company. The insurance policy for
+fiscal 2019 includes a deductible for the members of
+the Managing Board and the Supervisory Board that
+complies with the requirements of the German Stock
+Corporation Act and the Code in its version dated
+February 7, 2017. Due to the amended recommendations
+of the Code in its version dated December 16, 2019, the
+policy for fiscal 2021 no longer includes a deductible
+for the members of the Supervisory Board.
+Combined Management Report → A.11 Takeover-relevant information
+A.11
+Takeover-relevant information
+(pursuant to Sections 289a and 315a
+of the German Commercial Code)
+and explanatory report
+A.11.1 Composition
+of common stock
+As of September 30, 2020, the Company's common stock
+totaled €2.550 billion. The capital stock is divided into
+850 million registered shares of no par value (Siemens
+shares). The shares are fully paid in. All shares confer the
+same rights and obligations. The shareholders' rights and
+obligations are governed in detail by the provisions of the
+German Stock Corporation Act, in particular by Sections 12,
+53a et seq., 118 et seq. and 186 of the German Stock Cor-
+poration Act.
+A.11.2 Restrictions on voting
+rights or transfer of shares
+At the Shareholders' Meeting, each share of stock has one
+vote and accounts for the shareholder's proportionate
+share in the Company's net income. An exception to this
+rule applies with regard to treasury shares held by the
+Company, which do not entitle the Company to any rights.
+Under Section 136 of the German Stock Corporation Act
+the voting right of the affected shares is excluded by law.
+Siemens shares issued to employees worldwide under
+the employee share programs implemented since the be-
+ginning of fiscal 2009, in particular the Share Matching
+Plan, are freely transferable unless applicable local laws
+provide otherwise. Under the rules of the Share Matching
+Plan, however, in order to receive one matching share
+free of charge for each three shares purchased, partici-
+pants are required to hold the shares purchased by them
+for a vesting period of several years, during which
+the participants must be continuously employed by
+Siemens AG or any of its affiliated companies. The right
+to receive matching shares is forfeited if the purchased
+shares are sold, transferred, hedged on, pledged or hy-
+pothecated in any way during the relevant vesting period.
+A.11.3 Legislation and provisions
+of the Articles of Association
+applicable to the appointment
+and removal of members of the
+Managing Board and governing
+amendment to the Articles of
+Association
+stock. Any repurchase of Siemens shares shall be accom-
+plished at the discretion of the Managing Board either
+(1) by acquisition over the stock exchange, (2) through
+a public share repurchase offer or (3) through a public
+offer to swap Siemens shares for shares in a listed com-
+pany within the meaning of Section 3 para. 2 German
+Stock Corporation Act. The Managing Board is addition-
+ally authorized to complete the repurchase of Siemens
+shares in accordance with the authorization described
+above by using certain derivatives (put and call options,
+forward purchases and any combination of these deriva-
+tives). In exercising this authorization, all stock repur-
+chases based on the derivatives are limited to a maxi-
+mum volume of 5% of Siemens' capital stock existing at
+the date of adopting the resolution at the Shareholders'
+Meeting. A derivative's term of maturity may not, in any
+case, exceed 18 months and must be chosen in such
+a way that the repurchase of Siemens shares upon
+exercise of the derivative will take place no later than
+February 4, 2025.
+ANNUAL REPORT 2020 81
+→ retired;
+Combined Management Report → A.11 Takeover-relevant information
+or (2) a person or a group of persons acting in concert
+acquires effective control over Siemens AG by being able
+to exercise decisive influence over its activities (Art. 3(2)
+of Council Regulation (EC) 139/2004).
+Framework agreements concluded by Siemens AG under
+International Swaps and Derivatives Association Inc. doc-
+umentation (ISDA Agreements) grant each counterparty
+a right of termination, including in certain cases of (i)
+a transformation (for example mergers and changes of
+form), (ii) an asset transfer or (iii) acquisition of owner-
+ship interests that enables the acquirer to exercise con-
+trol over Siemens AG or its controlling bodies. Partially
+this right of termination exists only, if (1) the resulting
+entity fails to simultaneously assume Siemens AG's ob-
+ligations under the ISDA Agreements or (2) the result-
+ing entity's creditworthiness is materially weaker than
+Siemens AG's immediately prior to such event. Generally,
+ISDA Agreements are designed such that upon termina-
+tion all outstanding payment claims documented under
+them are to be netted.
+A.11.6 Compensation agreements
+with members of the Managing
+Board or employees in the event
+of a takeover bid
+The contracts with the members of the Managing Board
+previously contained the right of the member to termi-
+nate his or her contract with the Company for good cause
+in the event of a change of control that results in a
+substantial change in the position of a Managing Board
+member (for example, due to a change in corporate strat-
+egy or a change in the Managing Board member's duties
+and responsibilities). A change of control exists if one or
+several shareholders acting jointly or in concert acquire a
+majority of the voting rights in Siemens AG and exercise
+a controlling influence, or if Siemens AG becomes a de-
+pendent enterprise as a result of entering into an inter-
+company agreement within the meaning of Section 291
+of the German Stock Corporation Act, or if Siemens AG is
+to be merged into an existing corporation or other entity.
+If this right of termination is exercised, the Managing
+Board member is entitled to a severance payment in the
+amount of no more than two years' compensation. The
+calculation of the annual compensation includes not only
+the base compensation and the target amount for the
+bonus, but also the target amount for the stock awards,
+in each case based on the most recent completed fiscal
+year prior to termination of the contract. The stock-based
+compensation components for which a firm commitment
+already exists will remain unaffected. Additionally, the
+severance payments cover non-monetary benefits by in-
+cluding an amount of 5% of the total severance amount.
+Severance payments will be reduced by 10% as a lump-
+sum allowance for discounted values and for income
+earned elsewhere. However, this reduction will apply
+only to the portion of the severance payment that was
+calculated without taking account of the first six months
+of the remaining term of the Managing Board member's
+contract. There is no entitlement to a severance payment
+if the Managing Board member receives benefits from
+third parties in connection with a change of control.
+A right to terminate the contract does not exist if
+the change of control occurs within a period of twelve
+months prior to a Managing Board member's retirement.
+On September 18, 2019, the Supervisory Board of
+Siemens AG resolved that the contracts with members
+of the Managing Board should not contain such right of
+termination in the future. This has already been taken
+into account in the case of a contract extension and in
+the case of new contracts with the newly appointed
+members of the Managing Board as of October 1, 2020.
+A.11.7 Other takeover-relevant
+information
+We are not aware of, nor have we during the last fiscal
+year been notified of, any shareholder directly or indi-
+rectly holding 10% or more of the voting rights. There are
+no Siemens shares with special rights conferring powers
+of control. Shares of stock issued by Siemens AG to em-
+ployees under its employee share program and/or as
+share-based compensation are transferred to the employ-
+ees. The beneficiary employees who hold shares of em-
+ployee stock may exercise their control rights in the same
+way as any other shareholder in accordance with applica-
+ble laws and the Articles of Association.
+ANNUAL REPORT 2020 86
+PAGES 87-164
+B.
+Consolidated
+Financial
+Consolidated Financial Statements → B.1 Consolidated Statements of Income
+B.1
+In addition to selling them over the stock exchange
+or through a public sales offer to all shareholders, the
+Managing Board is authorized by resolution of the Share-
+holders' Meeting on February 5, 2020 to also use Siemens
+shares repurchased on the basis of this or any previously
+given authorization for every permissible purpose, in par-
+ticular as follows: Such Siemens shares may be
+ANNUAL REPORT 2020 85
+The lines of credit, the bridge facility and the loan
+agreements mentioned above provide their respective
+lenders with a right of termination in the event that
+(1) Siemens AG becomes a subsidiary of another company
+Statements
+Consolidated Statements
+In addition, in March 2020 and in June 2019 respectively,
+a consolidated subsidiary as borrower and Siemens AG
+as guarantor entered into a bilateral loan agreement,
+each of which has been drawn in the full amount of
+US$500 million.
+→ offered and transferred, with the approval of the
+Supervisory Board, to third parties against non-cash
+contributions;
+→ used in connection with share-based compensation
+programs and/or employee share programs of the
+Company or any of its affiliated companies and issued
+to individuals currently or formerly employed by the
+Company or any of its affiliated companies as well as
+to board members of any of the Company's affiliated
+companies;
+ANNUAL REPORT 2020 84
+Combined Management Report → A.11 Takeover-relevant information
+of Section 186 para. 3 sentence 4 German Stock Cor-
+poration Act); or
+→ used to service or secure obligations or rights to ac-
+quire Siemens shares arising particularly from or in
+connection with convertible bonds or warrant bonds
+of the Company or its affiliated companies (exclusion
+of subscription rights, limited to 10% of the capital
+stock, by mutatis mutandis application of Section 186
+para. 3 sentence 4 German Stock Corporation Act).
+Moreover, the Managing Board is authorized to ex-
+clude subscription rights in order to grant holders/
+creditors of conversion or option rights or respective
+conversion or option obligations on Siemens shares
+subscription rights as compensation against effects of
+dilution to the extent to which they would be entitled
+after exercise of such rights or fulfillment of such ob-
+ligations, and to use Siemens shares to service such
+subscription rights.
+Furthermore, the Supervisory Board is authorized to use
+→ sold by the Managing Board, with the approval of the
+Supervisory Board, against payment in cash if the
+price at which such Siemens shares are sold is not sig-
+nificantly lower than the market price of Siemens
+stock (exclusion of subscription rights, limited to 10%
+of the capital stock, by mutatis mutandis application
+In November 2018, the Company announced that it would
+carry out a share buyback of up to €3 billion in volume
+until November 15, 2021 at the latest. The buyback com-
+menced on December 3, 2018. Using the authorizations
+given by the Annual Shareholders' Meetings on Janu-
+ary 27, 2015 and February 5, 2020, Siemens repurchased
+28.4 million shares by September 30, 2020 under this
+share buyback. The total consideration paid for these
+Siemens shares amounted to about €2.404 billion (ex-
+cluding incidental transaction charges). This buyback has
+the exclusive purposes of retirement, of issuing shares to
+employees, board members of affiliated companies and
+members of the Managing Board of Siemens AG, and of
+servicing/securing the obligations or rights to acquire
+Siemens shares arising particularly from or in connection
+with convertible bonds and warrant bonds. The current
+buyback was suspended as of May 7, 2020 because of the
+spin-off of Siemens Energy. From May 8, 2020, until the
+completion of the spin-off, Siemens AG conducted a
+technical share buyback to keep the number of Siemens
+treasury shares constant and, in connection with share-
+based compensation and employee stock programs of
+the Company or any of its affiliated companies, to com-
+pensate for current transfers of Siemens shares to per-
+sons who are or were in an employment relationship
+with the Company or any of its affiliates, as well as to
+members of the boards of the Company or any of its
+affiliated companies.
+As of September 30, 2020, the Company held 50,690,288
+shares of stock in treasury.
+For details on the authorizations referred to above, espe-
+cially with the restrictions to exclude subscription rights
+and the terms to include shares when calculating such
+restrictions, please refer to the relevant resolution and to
+Section 4 of the Articles of Association.
+A.11.5 Significant agreements
+which take effect, alter or
+terminate upon a change
+of control of the Company
+following a takeover bid
+As of September 30, 2020, Siemens AG maintained lines
+of credit in the total amount of €10 billion.
+In connection with the planned acquisition of the shares
+in Varian Medical Systems, Inc. by Siemens Healthi-
+neers AG, a consolidated subsidiary of Siemens AG as
+borrower maintains an undrawn bridge facility in an
+amount of nearly €12.5 billion guaranteed by Siemens AG
+as of September 30, 2020.
+shares acquired on the basis of this or any previously
+given authorization to meet obligations or rights to ac-
+quire Siemens shares that were or will be agreed with
+members of the Managing Board within the framework
+of rules governing Managing Board compensation.
+Under the modified framework, we aim to achieve comparable revenue growth in the range of 5% to 7% per year over a cycle of three to
+five years.
+Currency translation effects are the difference between revenue for the current period calculated using the exchange rates of the current
+period and revenue for the current period calculated using the exchange rates of the comparison period. For calculating the percentage
+change year-over-year, this absolute difference is divided by revenue for the comparison period. A portfolio effect arises in the case of an
+acquisition or a disposition and is calculated as the change year-over-year in revenue related to the transaction. For calculating the
+percentage change, this absolute change is divided by revenue for the comparison period. Any portfolio effect is excluded for the 12
+months following the relevant transaction after which both current and past reporting periods fully reflect the portfolio change. For orders,
+we apply the same calculations for currency translation and portfolio effects as described above.
+Our primary measure for managing and controlling our revenue growth is comparable growth, because it shows the development in our
+business net of currency translation effects, which arise from the external environment outside of our control, and portfolio effects, which
+involve business activities which are either new to or no longer a part of the respective business.
+In the Siemens Financial Framework, up to and including fiscal 2021, we aimed to achieve a revenue growth range of 4% to 5% per year
+on a comparable basis.
+2.2 Revenue growth
+The Siemens Financial Framework includes targets that we aim to achieve over a cycle of three to five years. During fiscal 2021, we
+modified this framework. The resulting changes became effective starting with fiscal 2022.
+2.1 Overview
+3
+Combined Management Report
+Siemens has policies for environmental, employee and social matters, for the respect of human rights, and anti-corruption and bribery
+matters, among others. Our business model is described in chapters 1 and 3 of this Combined Management Report. Reportable information
+that is necessary for an understanding of the development, performance, position and the impact of our activities on these matters is
+included in this Combined Management Report, in particular in chapters 3 through 7. Forward-looking information, including risk
+disclosures, is presented in chapter 8. Chapter 9 includes additional information that is required to be reported in the Combined
+Management Report related to the parent company Siemens AG. As supplementary information, amounts reported in the Consolidated
+Financial Statements and the Annual Financial Statements of Siemens AG related to such non-financial matters, and additional
+explanations thereto, are included in Notes to Consolidated Financial Statements for fiscal 2021, Notes 17, 18, 22, 26 and 27, and in the
+Notes to the Annual Financial Statements for fiscal 2021, Notes 16, 17, 20, 21 and 25. In order to inform the users of the financial reports
+in a focused manner, these disclosures are not subject to a specific non-financial framework – in contrast to the disclosures in our separate
+"Sustainability Report 2021" document, which are based on the standards developed by the Global Reporting Initiative (GRI). Said
+document also includes detailed information on DEGREE, Siemens' new sustainability framework which was introduced during fiscal 2021.
+With DEGREE, Siemens intends to manage and track its progress on selected ambitions in the environmental, social and governance areas.
+Non-financial matters of the Group and Siemens AG
+Our reportable segments and Portfolio Companies may do business with each other, leading to corresponding orders and revenue. Such
+orders and revenue are eliminated on the Group level.
+As of September 30, 2021, Siemens has the following reportable segments: Digital Industries, Smart Infrastructure, Mobility and
+Siemens Healthineers, which together form our "Industrial Business" and Siemens Financial Services (SFS), which supports the activities
+of our industrial businesses and also conducts its own business with external customers. Furthermore, we report results for Portfolio
+Companies, which comprises businesses that are managed separately to improve their performance.
+Siemens comprises Siemens Aktiengesellschaft (Siemens AG), a stock corporation under the Federal laws of Germany, as the parent
+company, and its subsidiaries. Our Company is incorporated in Germany, with our corporate headquarters situated in Munich. As of
+September 30, 2021, Siemens had around 303,000 employees.
+Siemens is a technology group that is active in nearly all countries of the world, focusing on the areas of automation and digitalization in
+the process and manufacturing industries, intelligent infrastructure for buildings and distributed energy systems, smart mobility solutions
+for rail and road and medical technology and digital healthcare services.
+2. Financial performance system
+2.3 Profitability and capital efficiency
+The margin ranges were set as follows:
+For our industrial businesses, in fiscal 2021 profit represented EBITA adjusted for operating financial income (expenses), net, and
+amortization of intangible assets not acquired in business combinations (Adjusted EBITA).
+The margin ranges for our industrial businesses were as follows:
+Margin ranges from fiscal 2022
+Beginning with fiscal 2022, the profit definition no longer adjusts EBITA for operating financial income (expenses), net to present a more
+transparent view on operating earnings. Operating financial income, net for Industrial Business was €23 million in fiscal 2021, without a
+change to the reported margin.
+1. Organization of the Siemens Group and basis of
+presentation
+17-22%
+11-15%
+17-21%
+9-12%
+Within the Siemens Financial Framework, we aim to achieve margins that are comparable to those of our relevant competitors. Therefore,
+we have defined profit margin ranges for our industrial businesses which also consider the profit margins of their respective relevant
+competitors. Profit margin is defined as profit of the respective business divided by its revenue.
+10-15%
+Margin range
+Siemens Financial Services (ROE after tax)
+Siemens Healthineers
+Mobility
+Smart Infrastructure
+Digital Industries
+Margin ranges until fiscal 2021
+17-23%
+Industrial Business
+4.
+Takeover-relevant information
+Organization of the Siemens Group and basis of presentation
+Combined Management Report
+2.
+4
+1.
+3
+Table of contents
+SIEMENS
+FOR FISCAL 2021
+Report
+Combined Management
+Notes and forward-looking statements
+Digital Industries
+Report of the Supervisory Board
+Corporate Governance Statement
+However, momentum again weakened in the first half of calendar 2021, due to increasing infections in many countries. The new Delta
+variant was more contagious than previous virus strains. Vaccine roll-out could not keep up with the spread of this new variant, especially
+in emerging countries. In addition, supply disruptions, which were both caused and magnified by the pandemic, impaired the recovery.
+Bottlenecks had impacts across the value chains from raw materials to high tech goods, especially semiconductors, and were exemplified
+by extraordinary disruptions in global logistics systems. In addition, many companies were surprised by the strong recovery and high
+demand for goods which often exceeded their production plans and short-term capacity. The extraordinarily high demand for goods was
+caused by consumers with high excess savings and limited spending alternatives as many service offerings were still not available
+("services-to-products shift"). Limited supply, logistics bottlenecks and record high consumer demand for goods caused substantial
+increases of producer prices for many products, which partly translated to an increase of general inflation. In addition, energy prices
+increased, and base effects from reduced 2020 price levels as well as temporary effects (e.g. provisional changes in taxation) contributed
+to the elevated rate of inflation.
+7
+3.
+Segment information
+10.
+37
+9. Siemens AG
+Report on expected developments and associated material opportunities and risks
+8.
+Overall assessment of the economic position
+7.
+Combined Management Report
+Financial position
+20
+2355 3
+Net assets position
+5.
+19
+Results of operations
+16
+6.
+Smart Infrastructure
+4,200
+Siemens Healthineers
+purposes of calculating ROCE in interim periods, Income before interest after tax is annualized. Average capital employed is determined
+using the average of the respective balances as of the quarterly reporting dates for the periods under review.
+Calculation of capital employed
+Total equity
+Plus: Long-term debt
+Plus: Short-term debt and current maturities of long-term debt
+Less: Cash and cash equivalents
+Less: Current interest-bearing debt securities
+Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt
+Plus: Provisions for pensions and similar obligations
+Less: SFS debt
+Plus: Adjustments from assets classified as held for disposal and liabilities associated with assets classified as held for disposal
+Less: Adjustment for deferred taxes on net accumulated actuarial gains/losses on provisions for pensions and similar obligations
+Capital employed (continuing and discontinued operations)
+Beginning with fiscal 2022, ROCE will exclude defined Varian-related acquisition effects. For that purpose, in the numerator, Income before
+interest after tax is adjusted for effects resulting from purchase price allocation which are comprised of amortization of tangible and
+intangible assets, inventory step-ups, deferred revenue adjustments and related income taxes. The denominator Average capital employed
+is adjusted for goodwill and other intangible assets resulting from purchase price allocation. ROCE adjusted for Varian-related acquisition
+effects was 15.1% in fiscal 2021.
+6
+Combined Management Report
+3. Segment information
+Combined Management Report
+For
+5
+'Item Other interest expenses/income, net primarily consists of interest relating to corporate debt, and related hedging activities, as well as interest income on corporate assets.
+Compensation Report (including Auditor's Report)
+(692)
+842
+806
+53
+66
+(11)
+3.1 Overall economic conditions
+100
+(84)
+6,778
+4,397
+51,723
+56,190
+13.1%
+7.8%
+(34)
+(769)
+6,697
+2020
+2.4 Capital structure
+Beginning with fiscal 2022, ROCE excludes defined acquisition-related effects for Varian Medical Systems, Inc. (Varian), which was acquired
+by Siemens Healthineers in fiscal 2021, to further increase the transparency on our operating performance. Our goal is to achieve a ROCE
+within a range of 15% to 20% over a cycle of three to five years.
+We seek to work profitably and as efficiently as possible with the capital provided by our shareholders and lenders. For purposes of
+managing and controlling our capital efficiency, we use return on capital employed, or ROCE, as our primary measure in our Siemens
+Financial Framework.
+Beginning with fiscal 2022, we will in addition report EPS before purchase price allocation accounting (EPS pre PPA) to increase
+transparency regarding our operating performance. EPS pre PPA is defined as basic earnings per share from net income adjusted for
+amortization of intangible assets acquired in business combinations and related income taxes. Like for EPS, EPS pre PPA includes the
+amounts attributable to shareholders of Siemens AG. We aim to achieve high-single-digit annual growth in EPS pre PPA over a cycle of
+three to five years. EPS pre PPA for fiscal 2021 was €8.32.
+Combined Management Report
+4
+For purposes of managing and controlling profit and profitability at the Group level, we use net income as our primary measure. This
+measure is the primary driver of basic earnings per share from net income (EPS).
+Sustainable revenue and profit development is supported by a healthy capital structure. Accordingly, a key consideration within the
+Siemens Financial Framework is to maintain ready access to the capital markets through various debt products and preserve our ability to
+repay and service our debt obligations over time. Our primary measure for managing and controlling our capital structure is the ratio of
+Industrial net debt to EBITDA (continuing operations). This financial measure indicates the approximate amount of time in years that would
+be needed to cover Industrial net debt through income from continuing operations, without taking into account interest, taxes,
+depreciation and amortization. In fiscal 2021, we aimed to achieve a ratio of up to 1.0. Beginning with fiscal 2022, this ratio was raised to
+up to 1.5.
+In line with common practice in the financial services business, our financial indicator for measuring capital efficiency at Siemens Financial
+Services is return on equity after tax, or ROE after tax. ROE is defined as Siemens Financial Services' profit after tax, divided by its average
+allocated equity.
+15-20%
+17-21%
+10-13%
+11-16%
+17-23%
+Margin range
+Siemens Financial Services (ROE after tax)
+For Siemens Healthineers, we present the margin range we expect as that company's majority shareholder.
+Mobility
+2.5 Liquidity and dividend
+As in the past, we intend to fund the dividend payout from Free cash flow. To provide an assessment of our ability to generate cash, and
+ultimately to pay dividends, in fiscal 2021 we used the cash conversion rate of Industrial Business, defined as the ratio of Free cash flow
+from Industrial Business to Adjusted EBITA Industrial Business. Because growth requires investments, we aimed to achieve a cash
+conversion rate of 1 minus the annual comparable revenue growth rate of Industrial Business.
+2021
+Fiscal year
+(1)/(II) ROCE
+(II) Average capital employed
+(I) Income before interest after tax
+Less: Taxes on interest adjustments (tax rate (flat) 30%)
+Less: Interest adjustments (discontinued operations)
+We intend to continue providing an attractive return to our shareholders under the Siemens Financial Framework. Beginning with fiscal
+2022, this includes striving for a dividend per share that exceeds the amount of the preceding year, or that at least matches the prior-year-
+level.
+Plus: Net interest expenses related to provisions for pensions and similar obligations
+Less: Other interest expenses/income, net¹
+Net income
+(in millions of €)
+Calculation of ROCE
+2.6 Calculation of return on capital employed
+At the Annual Shareholders' Meeting, the Managing Board, in agreement with the Supervisory Board, will submit the following proposal
+to allocate the unappropriated net income of Siemens AG for fiscal 2021: to distribute a dividend of €4.00 on each share of no par value
+entitled to the dividend for fiscal 2021 existing at the date of the Annual Shareholders' Meeting; the remaining amount is to be carried
+forward. Payment of the proposed dividend is contingent upon approval by Siemens shareholders at the Annual Shareholders' Meeting on
+February 10, 2022. The prior-year dividend was €3.50 per share.
+Beginning with fiscal 2022, we use the cash conversion rate for the Siemens Group to reinforce our commitment to cash generation on a
+Group level. It is defined as the ratio of Free cash flow (continuing and discontinued operations) to Net income. We aim to achieve a cash
+conversion rate of 1 minus the annual comparable revenue growth rate for the Group over a cycle of three to five years.
+Plus: SFS Other interest expenses/income
+Five-Year Summary
+Financial performance system
+Responsibility Statement (Siemens AG)
+Comp.
+18,427
+15,896
+16%
+18%
+16,514
+14,997
+10%
+13%
+4,290
+4,144
+4%
+7%
+3,362
+3,252
+3%
+20.4%
+21.7%
+Significant order growth for Digital Industries was driven by the automation businesses, particularly factory automation and motion
+control, on a recovery of their most important customer industries such as the automotive and machine building industries, which a year
+earlier were strongly impacted by effects related to COVID-19. Orders in the software business came in lower compared to fiscal 2020,
+which included a sharply higher volume from large orders, most notably in the EDA business. Revenue rose in all businesses, including
+significant growth contributions from the factory automation and motion control businesses and successful mitigation of supply chain
+risks primarily associated with electronics components. On a geographic basis, order and revenue were up in all regions with growth
+mainly driven by the region Asia, Australia, due primarily to substantial increases in China, and the region comprising Europe,
+Commonwealth of Independent States (C.I.S.), Africa, Middle East, including a strong growth contribution from Germany. Adjusted EBITA
+rose moderately even though the prior fiscal year included a €767 million positive effect related to Digital Industries' former stake in
+Bentley. The effect resulted mainly from revaluation of the stake following Bentley's public listing. Excluding this effect, Adjusted EBITA
+rose on double-digit increases in all businesses and improved profitability compared to the prior fiscal year, with the strongest growth
+contributions coming from the factory automation and motion control businesses. Adjusted EBITA improved also from successful execution
+of the cost structure improvement program in prior periods, which strengthened current profitability. Furthermore, severance charges,
+which resulted primarily from the ongoing program, fell substantially to €114 million from €210 million in the prior year. During the first
+half of fiscal 2021, Adjusted EBITA development benefited from expense reductions year-over-year related to COVID-19 restrictions, such
+as lower travel and marketing expenses. Digital Industries' order backlog was €7 billion at the end of the fiscal year, of which €6 billion are
+expected to be converted into revenue in fiscal 2022.
+In fiscal 2021 the market environment for Digital Industries improved strongly as global manufacturing production recovered throughout
+the fiscal year from burdens related to COVID-19, which were most noticeable in the second and third quarter a year earlier. The rebound
+was faster and stronger than assumed and led to constraints in global value chains over the course of the fiscal year. The main driver of
+the upswing was China where the growth dynamic was extremely strong in the first half of the fiscal year. Other countries followed with
+a delay of around three to six months, but their recovery was less pronounced than in China resulting in moderate growth in the regions
+Americas and Europe, C.I.S., Africa, Middle East. Discrete industries recovered particularly quickly and strongly, benefiting in part from
+restocking effects, while recovery in the more project-related process industries was delayed. The automotive industry started strongly
+into fiscal 2021, but the recovery was held back by supply chain constraints which impacted production especially in the second half of
+the fiscal year. This led to slowing or even limited contraction of production during the last months of the fiscal year. The machine building
+industry also recovered faster than expected, with the recovery starting in China and benefiting from demand for general investment
+goods. This development was evident in demand for automation equipment which in addition benefited from the trend towards
+digitalization and from stock-building effects to mitigate risks from supply chain constraints. The pharmaceutical and the chemicals
+industries expanded during the entire fiscal year. While the pharmaceuticals industry benefited from COVID-19 vaccine demand among
+other factors, the chemicals industry steadily improved in line with the overall economic recovery. The development in the food and
+beverage industry followed a similar pattern and grew steadily throughout the fiscal year. Global production of electronics and
+semiconductors was not held back by effects related to COVID-19, and experienced strong growth during fiscal 2021. However, market
+shifts within the semiconductor industry led to global shortages of semiconductors for certain customer segments that grew worse through
+the fiscal year and increasingly affected the automotive and machine building industries. In addition, supply constraints for plastics, metals
+and freight delivery impacted Digital Industries' market environment. Price increases affected all markets and were stronger than usually
+experienced during periods of economic rebound. While prices started to surge in the first quarter of fiscal 2021 mainly in the raw material
+sector (e. g. copper), they spread further to intermediate goods and to all markets, including electrical equipment, in the following
+8
+Independent Auditor's Report (Siemens AG)
+The global economic development in fiscal 2021 was still dominated by the coronavirus pandemic (COVID-19) and its many repercussions.
+After the recession in calendar 2020, in which global gross domestic product (GDP) contracted by 3.4%, calendar 2021 is expected to show
+a very strong rebound with global GDP increasing by 5.5%.
+% Change
+Actual
+2020
+Global economic activity expanded at very high rates in the third quarter of calendar 2020 after the first wave of COVID-19 ebbed.
+Subsequent infection waves in winter months caused fears of a new global recession. But economic activity had already adapted to the
+pandemic and was supported by massive stimulus programs, especially in Europe and the U.S. Globally, governments allocated nearly USD
+11 trillion in stimulus programs and more than USD 6 trillion in liquidity support to businesses and households in response to the pandemic.
+Central banks gave support with expansionary measures, in particular new quantitative easing programs, while short-term interest rates
+were at or near zero. Accordingly, the global economy continued to expand also in the fourth quarter of calendar 2020 and the first quarter
+of calendar 2021, despite renewed outbreaks and lockdowns. In December 2020, the first countries approved new COVID-19 vaccines,
+which were developed in a very short time and which are of paramount importance in order to solve the health crisis and economic
+challenges.
+Adjusted EBITA margin
+Fiscal year
+2021
+Annual Financial Statements
+Independent Auditor's Report (Siemens Group)
+Responsibility Statement (Siemens Group)
+Consolidated Financial Statements
+Combined Management Report
+Table of contents
+SIEMENS
+Siemens Report
+The Chinese economy - with the world's largest manufacturing sector - benefited particularly from the high global demand for goods and
+is expected to grow by 8.2% in calendar 2021. However, tensions in the property sector and energy shortages weighed on economic
+activity in the second half of calendar 2021.
+Overall, the other major economies have experienced very strong economic rebounds and GDP is expected to grow strongly in calendar
+2021: European Union (EU) 5.0%, U.S. 5.4%, Japan 2.3%, India 7.7%. For advanced countries in aggregate, calendar 2021 GDP is expected
+to expand by 4.9%. For emerging markets, the increase in calendar 2021 GDP is estimated at 6.4%.
+The partly estimated figures presented here for GDP are based on an IHS Markit report dated October 15, 2021.
+FOR FISCAL 2021
+Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries;
+these offerings include automation systems and software for factories, numerical control systems, motors, drives and inverters and
+integrated automation systems for machine tools and production machines. Digital Industries also provides process control systems,
+machine-to-machine communication products, sensors (for measuring pressure, temperature, level, flow rate, distance or shape) and
+radio frequency identification systems. Furthermore, Digital Industries offers production and product lifecycle management (PLM)
+software, and software for simulation and testing of mechatronic systems. These leading software offerings are integrated with an
+electronic design automation (EDA) software portfolio, and the open, cloud-based industrial internet of things (IoT) operating system
+MindSphere, which connects machines and physical infrastructure to the digital world. All these software offerings are complemented by
+the Mendix cloud-native low-code application development platform, which allows customers to significantly reduce app development
+times through visual representation of underlying code. Digital Industries also provides customers with lifecycle and data-driven services.
+During the first quarter of fiscal 2021, Digital Industries' stake in Bentley Systems, Inc. (Bentley) was transferred to Siemens Pension-Trust
+e.V. In August 2021, Digital Industries closed the acquisition of Supplyframe, Inc. (Supplyframe), a marketplace for the global electronics
+value chain, to significantly strengthen and accelerate growth of its offerings in digital marketplaces. For further information on the
+acquisition see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
+Taken together, Digital Industries' offerings enable customers to optimize entire value chains from product design and development
+through production and post-sale services. With its advanced software solutions in particular, Digital Industries supports customers in their
+evolution towards the "Digital Enterprise," resulting in increased flexibility and efficiency of production processes and reduced time to
+market for new products. The most important markets include the automotive industry, the machine building industry, the pharmaceutical
+and chemicals industry, the food and beverage industry and the electronics and semiconductor industry. Digital Industries serves its
+customers through a common regional sales organization spanning all its businesses, using various sales channels depending on the type
+of customer and industry and also enhancing customer choice across all channels. Changes in customer demand, especially for standard
+products, are driven strongly by macroeconomic cycles, and can lead to significant short-term fluctuation in Digital Industries' profitability.
+Volume from large contracts in the software business, particularly for EDA, may also result in strong fluctuations in quarterly volume and
+profitability. Starting in fiscal 2022, Digital Industries intends to transition parts of its software business, particularly PLM, from largely
+upfront revenue recognition towards Software as a Service (SaaS), which yields more predictable recurring revenue and offers growth
+opportunities by opening access to new customers, especially small and medium-sized companies seeking to reduce costs associated with
+owning complex IT infrastructure. During the transition, Digital Industries expects impacts on revenue growth rates and profit margin
+development in the software business. Competition with Digital Industries' business activities comes primarily from multinational
+corporations that offer a relatively broad portfolio and from smaller companies active only in certain geographic or product markets.
+7
+Adjusted EBITA
+Combined Management Report
+Digital Industries sees three trends influencing its business and providing long-term growth opportunities. Producers of investment goods
+in today's increasingly digital environment must modernize their production capacity, particularly to increase production flexibility and
+reduce time to market. This environment also spurs producers to complement their core products with vertical solutions and service
+offerings, which their customers either need or want in order to take full advantage of the investment goods. Finally, there is a trend from
+globalization to regionalization, to support local economic development or to better adapt solutions to local needs. This is increasingly
+accompanied by more differentiated regulatory requirements.
+Research & Development (R&D) activities at Digital Industries are aimed at providing its customers with solutions that allow them to
+exploit the potential of data in their businesses and to combine the real and the digital worlds. Digital Industries is developing and
+integrating technologies such as artificial intelligence (AI), edge computing, cloud technologies, additive manufacturing and industrial 5G
+wireless technology. For example, Digital Industries cooperated with Schaeffler Group by combining its lloT platform Sidrive IQ, which
+augments drive systems with Al-based analytics and digital content, with Schaeffler's products and services in the area of designing,
+manufacturing, and servicing bearings. Digital Industries introduced a new Industrial Edge Management system with which users can
+remotely monitor the status of every connected device and remotely install edge apps and software functions on distributed edge devices.
+Also in fiscal 2021, Digital Industries announced a cooperation with Google Cloud which aims at the integration of factory automation
+systems from Digital Industries with Google's data cloud, Al and machine learning technologies. In the field of additive manufacturing,
+Digital Industries worked with EOS and DyeMansion to present the first virtual additive manufacturing reference factory for selective laser
+sintering and industrial post-processing. During the 2021 Hanover Fair, Digital Industries demonstrated its first industrial 5G router and
+set up a private 5G campus network with a focus on industrial use cases such as automated guided vehicles, augmented reality, and
+autonomous mobile robots. Major investments of Digital Industries in fiscal 2021 relate to its own factory automation, motion control
+and process automation businesses, to further automate and digitalize facilities particularly in Germany, China and the Czech Republic.
+(in millions of €)
+Orders
+Revenue
+3.2 Digital Industries
+therein: software business
+10125032 CANADA INC, Mississauga / Canada
+10262595 Canada Inc., Mississauga / Canada
+12241510 CANADA INC., Mississauga / Canada
+Bytemark Canada Inc., Saint John / Canada
+62
+100
+100
+100
+100
+EPOCAL INC., Toronto / Canada
+52
+Mentor Graphics (Canada) ULC, Vancouver / Canada
+Talent Choice Investment Limited, George Town / Cayman Islands
+RailTerm Systems Inc., Dorval / Canada
+Siemens Canada Limited, Oakville / Canada
+Siemens Financial Ltd., Oakville / Canada
+Siemens Healthcare Limited, Oakville / Canada
+Siemens Industry Software ULC, Vancouver / Canada
+Siemens Logistics Ltd., Oakville / Canada
+SIEMENS MOBILITY LIMITED, Oakville / Canada
+TimeSeries Canada Inc., Montreal / Canada
+Varian Medical Systems Canada, Inc., Ottawa / Canada
+Monarch Capital, Limited, Grand Cayman Cayman Islands
+RAIL-TERM INC., Mississauga / Canada
+100
+Siemens Mobility S.A., Munro / Argentina
+100
+100
+100
+UltraSoc Technologies Limited, Frimley, Surrey / United Kingdom
+Varian Medical Systems UK Holdings Limited, Crawley, West Sussex / United Kingdom
+Varian Medical Systems UK Limited, Crawley, West Sussex / United Kingdom
+Yunex Limited, Poole, Dorset / United Kingdom
+Americas (124 companies)
+100
+100
+100
+100
+100
+Siemens Healthcare S.A., Buenos Aires / Argentina
+Siemens IT Services S.A., Buenos Aires Argentina
+Nimbic Chile SpA, Las Condes / Chile
+Iriel Indústria e Comercio de Sistemas Eléctricos Ltda., Canoas / Brazil
+Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
+Siemens Industry Software Ltda., São Caetano do Sul / Brazil
+Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
+Siemens Mobility Soluções de Mobilidade Ltda., São Paulo/ Brazil
+Siemens Participações Ltda., São Paulo / Brazil
+Varian Medical Systems Brasil Ltda., São Paulo / Brazil
+100
+100
+100
+100
+Siemens Industrial S.A., Buenos Aires / Argentina
+Siemens Healthcare Equipos Médicos Sociedad por Acciones, Santiago de Chile / Chile
+Siemens Healthcare, Sociedad Anonima, Antiguo Cuscatlán / El Salvador
+Siemens S.A., Santiago de Chile / Chile
+10013
+100
+100
+100
+100
+100
+10013
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+J. Restrepo Equiphos S.A.S, Bogotá / Colombia
+Siemens Healthcare S.A.S., Tenjo / Colombia
+Siemens S.A., Tenjo / Colombia
+YUNEX S.A.S., Bogotá / Colombia
+Siemens Healthcare Diagnostics S.A., San José / Costa Rica
+Siemens S.A., San José / Costa Rica
+Siemens Mobility, S.R.L., Santo Domingo / Dominican Republic
+Siemens S.A., Quito Ecuador
+Siemens-Healthcare Cia. Ltda., Quito / Ecuador
+Siemens S.A., Antiguo Cuscatlán / El Salvador
+Siemens S.A., Guatemala Guatemala
+Grupo Siemens S.A. de C.V., Mexico City / Mexico
+Indústria de Trabajos Eléctricos S.A. de C.V., Ciudad Juárez / Mexico
+Siemens Healthcare Diagnostics, S. de R.L. de C.V., Mexico City / Mexico
+Siemens Industry Software, S.A. de C.V., Mexico City / Mexico
+Siemens Inmobiliaria S.A. de C.V., Mexico City / Mexico
+Siemens Logistics S. de R.L. de C.V., Mexico City / Mexico
+Siemens Mobility S. de R.L. de C.V., Mexico City / Mexico
+SIEMENS SERVICIOS COMERCIALES SA DE CV, SOFOM, ENR, Mexico City / Mexico
+Siemens, S.A. de C.V., Mexico City / Mexico
+Siemens Large Drive Applications S.A., Panama City / Panama
+Siemens Healthcare S.A.C., Surquillo / Peru
+100
+Siemens Mobility SpA, Santiago de Chile / Chile
+Consolidated Financial Statements
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+501
+Siemens Logistics LLC, Wilmington, DE / United States
+Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
+Siemens Mobility, Inc, Wilmington, DE / United States
+Siemens Process Systems Engineering Inc., Wilmington, DE / United States
+Siemens Public, Inc., Iselin, NJ / United States
+Siemens USA Holdings, Inc., Wilmington, DE / United States
+SMI Holding LLC, Wilmington, DE / United States
+63
+Supplyframe, Inc., Pasadena, CA / United States
+Varian BioSynergy, Inc., Wilmington, DE / United States
+Varian Medical Systems Africa Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems Canada Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems India Private Limited, Wilmington, DE / United States
+Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems Latin America, Ltd., Wilmington, DE / United States
+Varian Medical Systems Netherlands Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems Pacific, Inc., Wilmington, DE / United States
+Varian Medical Systems, Inc., Wilmington, DE / United States
+Yunex LLC, Wilmington, DE / United States
+Siemens S.A., Montevideo / Uruguay
+Siemens Healthcare S.A., Caracas / Venezuela, Bolivarian Republic of
+Siemens Rail Automation, C.A., Caracas / Venezuela, Bolivarian Republic of
+Dade Behring Hong Kong Holdings Corporation, Tortola Virgin Islands, British
+TimeSeries US, Inc., Centennial, CO / United States
+100
+100
+100
+Asia, Australia (154 companies)
+Aimsun Pty Ltd, Sydney / Australia
+ALDRIDGE TRAFFIC CONTROLLERS PTY. LTD, Sydney / Australia
+Australia Hospital Holding Pty Limited, Bayswater / Australia
+Exemplar Health (NBH) 2 Pty Limited, Bayswater / Australia
+Exemplar Health (NBH) Holdings 2 Pty Limited, Bayswater / Australia
+Exemplar Health (NBH) Trust 2, Bayswater / Australia
+J.R.B. Engineering Pty Ltd, Bayswater / Australia
+Siemens Healthcare Pty. Ltd., Melbourne / Australia
+54
+Siemens Industry Software Pty Ltd, Bayswater / Australia
+Siemens Mobility Pty Ltd, Bayswater / Australia
+SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater / Australia
+Varian Medical Systems Australasia Pty Ltd., Belrose / Australia
+YUNEX PTY. LTD., Sydney / Australia
+Siemens Healthcare Ltd., Dhaka / Bangladesh
+Siemens Industrial Limited, Dhaka / Bangladesh
+Acuson (Shanghai) Co., Ltd., Shanghai / China
+Siemens Ltd., Bayswater / Australia
+54
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+Siemens Industry, Inc., Wilmington, DE / United States
+100
+Siemens Government Technologies, Inc., Wilmington, DE / United States
+Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
+Siemens Healthcare Laboratory, LLC, Wilmington, DE / United States
+Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
+Siemens Industry Software Inc., Wilmington, DE / United States
+Siemens Electrical, LLC, Wilmington, DE / United States
+100
+1007
+100
+100
+97
+100
+100
+100
+Siemens S.A.C., Surquillo / Peru
+Varian Medical Systems Puerto Rico, LLC, Guaynabo / Puerto Rico
+Acuson, LLC, Wilmington, DE / United States
+Aimsun Inc., New York, NY / United States
+Building Robotics Inc., Wilmington, DE / United States
+Bytemark Inc., Dover, DE / United States
+Siemens Mobility S.A.C., Lima / Peru
+CD-adapco Battery Design LLC, Dover, DE / United States
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Corindus, Inc., Wilmington, DE / United States
+D3 Oncology Inc., Wilmington, DE / United States
+Dedicated 21maging LLC, Wilmington, DE / United States
+ECG Acquisition, Inc., Wilmington, DE / United States
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+51
+100
+100
+100
+73
+Siemens Corporation, Wilmington, DE / United States
+100
+80
+100
+53
+Consolidated Financial Statements
+ECG TopCo Holdings, LLC, Wilmington, DE / United States
+498
+Enlighted, Inc., Wilmington, DE / United States
+Executive Consulting Group, LLC, Wilmington, DE / United States
+J2 Innovations, Inc., Los Angeles, CA / United States
+Mannesmann Corporation, New York, NY / United States
+Mansfield Insurance Company, Burlington, VT / United States
+Next47 Inc., Wilmington, DE / United States
+Next47 Mid-Tier GP 2018, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2019, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2020, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2021, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2022, L.P., Wilmington, DE / United States
+Next47 TTGP, L.L.C., Wilmington, DE / United States
+Omnetric Corp., Wilmington, DE / United States
+P.E.T.NET Houston, LLC, Austin, TX / United States
+Page Mill Corporation, Boston, MA / United States
+PETNET Indiana, LLC, Indianapolis, IN / United States
+PETNET Solutions Cleveland, LLC, Wilmington, DE / United States
+PETNET Solutions, Inc., Knoxville, TN / United States
+PolyDyne Software Inc., Austin, TX / United States
+Rail-Term Corp., Plymouth, MI / United States
+Siemens Capital Company LLC, Wilmington, DE / United States
+Siemens Financial Services, Inc., Wilmington, DE / United States
+Siemens Financial, Inc., Wilmington, DE / United States
+100
+eMeter Corporation, Wilmington, DE / United States
+100
+22
+48
+48
+Shanghai Electric Power Generation Equipment Co., Ltd., Shanghai / China
+Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou / China
+DBEST (Beijing) Facility Technology Management Co., Ltd., Beijing / China
+Guangzhou Suikai Smart Energy Co., Ltd., Guangzhou / China
+PHM Technology Pty Ltd, Melbourne / Australia
+Forest Wind Investment Company (1) Pty Limited, Sydney / Australia
+Forest Wind Holdings Pty Limited, Sydney / Australia
+Exemplar Health (NBH) Partnership, Melbourne / Australia
+Asia, Australia (22 companies)
+Wi-Tronix Group Inc., Dover, DE / United States
+USARAD Holdings, Inc., Fort Lauderdale, FL / United States
+Software.co Technologies, Inc., Wilmington, DE / United States
+Rether networks, Inc., Berkeley, CA / United States
+PTG Holdings Company LLC, Dover, DE / United States
+Panda Stonewall Intermediate Holdings I, LLC, Wilmington, DE / United States
+PhSiTh LLC, New Castle, DE / United States
+MSS Energy Holdings, LLC, New York, NY / United States
+Hickory Run Holdings, LLC, Wilmington, DE / United States
+Fluence Energy, LLC, Wilmington, DE / United States
+CEF-L Holding, LLC, Wilmington, DE / United States
+DeepHow Corp., Princeton, NJ / United States
+Union Temporal Recaudo y Tecnologia, Santiago de Cali / Colombia
+Akuo Energy Dominicana, S.R.L, Santo Domingo / Dominican Republic
+DELARO, S.A.P.I. DE C.V., Mexico City / Mexico
+MPC Serviços Energéticos 1B S.A., Cabo de Santo Agostinho / Brazil
+UTE GNA II GERAÇÃO DE ENERGIA S.A., Rio de Janeiro / Brazil
+MPC Serviços Energéticos 1A S.A, Navegantes / Brazil
+Consolidated Financial Statements
+58
+20
+22
+2013
+974
+33
+27
+Zhi Dao Railway Equipment Ltd., Taiyuan / China
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
+Xi'An X-Ray Target Ltd., Xi'an / China
+Tieke Intelligent Signalling Railway Equipment Co., Ltd., Tianjin / China
+50
+49
+50
+TianJin ZongXi Traction Motor Ltd., Tianjin / China
+Smart Metering Solutions (Changsha) Co. Ltd., Changsha / China
+40
+35
+25
+378
+50
+50
+50
+30
+308
+24
+308
+26
+33
+37
+20
+206
+43
+238
+29
+508
+25
+25
+Locomotive Workshop Rotterdam B.V., Zoetermeer / Netherlands
+50
+508, 13
+208
+206,13
+20
+33
+49
+498
+498
+428, 13
+33
+574,8
+48
+25
+238
+674, 8, 12, 13
+478
+44
+448
+40
+458
+20
+50
+498
+46
+35
+Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
+ZeeEnergie C.V., Amsterdam / Netherlands
+ZeeEnergie Management B.V., Eemshaven / Netherlands
+50
+50
+33
+106
+5013
+50
+40
+49
+514
+31
+358
+26
+Micropower Comerc Energia S.A., São Paulo / Brazil
+GNA 1 Geração de Energia S.A., São João da Barra / Brazil
+Brasol Participações e Empreendimentos S.A., Brazil, São Paulo / Brazil
+Bangalore International Airport Ltd., Bangalore / India
+Americas (21 companies)
+Five Estuaries Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
+Cross London Trains Holdco 2 Limited, London / United Kingdom
+Awel Y Môr Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
+Interessengemeinschaft TUS, Volketswil / Switzerland
+Certas AG, Zurich / Switzerland
+Stavro Holding | AB, Stockholm / Sweden
+WS Tech Energy Global S.L., Viladecans / Spain
+Nertus Mantenimiento Ferroviario y Servicios S.A., Madrid / Spain
+Impilo Consortium (Pty.) Ltd., La Lucia / South Africa
+OOO Transconverter, Moscow / Russian Federation
+Rousch (Pakistan) Power Ltd., Islamabad / Pakistan
+208
+206, 13
+Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
+Plessey Holdings Ltd., Frimley, Surrey / United Kingdom
+HEALTH CONTINUUM PRIVATE LIMITED, Bangalore / India
+Orange Sironj Wind Power Private Limited, New Delhi / India
+Pune IT City Metro Rail Limited, Pune / India
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+1007
+492
+100
+492
+492
+Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley, Surrey / United Kingdom
+Siemens Healthcare Diagnostics Products Ltd, Frimley, Surrey / United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
+Siemens Financial Services Holdings Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+Siemens Healthcare Diagnostics Ltd, Frimley, Surrey / United Kingdom
+Project Ventures Rail Investments | Limited, Frimley, Surrey / United Kingdom
+Samacsys Limited, London / United Kingdom
+Next47 Fund 2022, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2021, L.P., Palo Alto, CA / United Kingdom
+Data Sheet Archive Limited, London / United Kingdom
+Electrium Sales Limited, Frimley, Surrey / United Kingdom
+Flomerics Group Limited, Frimley, Surrey / United Kingdom
+GYM Renewables Limited, Frimley, Surrey / United Kingdom
+Mendix Technology Limited, Frimley, Surrey / United Kingdom
+Mentor Graphics (UK) Limited, Frimley, Surrey / United Kingdom
+MRX Technologies Limited, Frimley, Surrey / United Kingdom
+Next47 Fund 2018, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2019, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2020, L.P., Palo Alto, CA / United Kingdom
+ByteToken, Ltd, Edinburgh / United Kingdom
+AIMSUN LIMITED, London / United Kingdom
+Acuson United Kingdom Ltd., Frimley, Surrey / United Kingdom
+Siemens Middle East Limited, Masdar City / United Arab Emirates
+SIEMENS MOBILITY LLC, Dubai United Arab Emirates
+Siemens Industrial LLC, Masdar City / United Arab Emirates
+Siemens Healthcare L.L.C., Dubai / United Arab Emirates
+100
+100
+100
+100
+The Preactor Group Limited, Frimley, Surrey / United Kingdom
+Siemens Rail Systems Project Holdings Limited, London / United Kingdom
+Siemens Process Systems Engineering Limited, Frimley, Surrey / United Kingdom
+Siemens Pension Funding Limited, Frimley, Surrey / United Kingdom
+Siemens Rail Automation Limited, London / United Kingdom
+Siemens plc, Frimley, Surrey / United Kingdom
+100
+Siemens Pension Funding (General) Limited, Frimley, Surrey / United Kingdom
+100
+Siemens Mobility Limited, London / United Kingdom
+100
+Siemens Logistics Limited, Frimley, Surrey / United Kingdom
+100
+Consolidated Financial Statements
+Siemens Industry Software Limited, Frimley, Surrey / United Kingdom
+Siemens Industry Software Computational Dynamics Limited, Frimley, Surrey / United Kingdom
+100
+Siemens Holdings plc, Frimley, Surrey / United Kingdom
+100
+Siemens Healthcare Limited, Frimley, Surrey / United Kingdom
+100
+100
+100
+100
+100
+573
+100
+100
+100
+100
+155
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Beijing Siemens Cerberus Electronics Ltd., Beijing / China
+59
+59
+24
+49
+24
+50
+26
+46
+308
+20
+50
+50
+438
+49
+SINGAPORE AQUACULTURE TECHNOLOGIES (SAT) PTE LTD, Singapore / Singapore
+Power Automation Pte. Ltd., Singapore / Singapore
+BE C&I Solutions Holding Pte. Ltd., Singapore / Singapore
+P.T. Jawa Power, Jakarta / Indonesia
+Mentor Graphics Tunisia SARL, Tunis / Tunisia
+100
+Siemens Mobility S.A.R.L., Tunis / Tunisia
+Siemens S.A., Tunis / Tunisia
+100
+492
+100
+492
+Siemens Capital Middle East Ltd, Abu Dhabi / United Arab Emirates
+Siemens Healthcare FZ LLC, Dubai / United Arab Emirates
+SD (Middle East) LLC, Dubai / United Arab Emirates
+PSE Software and Consulting L.L.C., Abu Dhabi / United Arab Emirates
+Samateq FZ LLC, UAE, Abu Dhabi / United Arab Emirates
+100
+100
+100% foreign owned subsidiary "Siemens Ukraine", Kiev / Ukraine
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY, Kiev / Ukraine
+100
+YUNEX ULAŞIM TEKNOLOJILERI ANONIM ŞIRKETI, Kartal/Istanbul / Turkey
+100
+51
+V.O.S.S. Varinak Onkoloji Sistemleri Satis Ve Servis Anonim Sirketi, Istanbul / Turkey
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Turkey
+100
+Siemens Mobility Ulasim Sistemleri Anonim Sirketi, Istanbul / Turkey
+100
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Turkey
+100
+Siemens Finansal Kiralama A.S., Istanbul / Turkey
+100
+Siemens AG - Siemens Sanayi ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Turkey
+100
+100
+100
+KACO New Enerji Limited Sirketi, Pendik / Turkey
+100
+Green Matrix (Suzhou) Network Technology Co., Ltd., Suzhou / China
+100
+Mentor Graphics (Shanghai) Electronic Technology Co., Ltd., Shanghai / China
+100
+BlueWatt engineering Sàrl, Lausanne / Switzerland
+Siemens Healthcare AG, Zurich / Switzerland
+Hangzhou Alicon Pharm Sci & Tec Co., Ltd., Hangzhou / China
+Siemens Logistics AG, Zurich / Switzerland
+Siemens Mobility AG, Wallisellen / Switzerland
+Siemens Schweiz AG, Zurich / Switzerland
+Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil / Switzerland
+Varian Medical Systems International AG, Steinhausen / Switzerland
+Yunex AG, Zurich / Switzerland
+Siemens Tanzania Ltd. i.L., Dar es Salaam Tanzania, United Republic of
+100
+100
+Siemens Mobility AB, Solna / Sweden
+Aspern Smart City Research GmbH, Vienna / Austria
+Meomed s.r.o., Prerov / Czech Republic
+Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
+BioMensio Oy, Tampere / Finland
+TRIXELL SAS, Moirans / France
+EVIOP-TEMPO S.A. Electrical Equipment Manufacturers, Vassiliko / Greece
+Parallel Graphics Ltd., Dublin Ireland
+Reindeer Energy Ltd., Bnei Berak / Israel
+Transfima GEIE, Milan / Italy
+Transfima S.p.A., Milan / Italy
+KACO New Energy Co., Amman / Jordan
+Temir Zhol Electrification LLP, Astana / Kazakhstan
+EGM Holding Limited, Marsaskala / Malta
+Energie Electrique de Tahaddart S.A., Tangier / Morocco
+Aspern Smart City Research GmbH & Co KG, Vienna / Austria
+100
+100
+100
+100
+_3
+_3
+_3
+_3
+90
+100
+75
+70
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Mentor Graphics (Scandinavia) AB, Solna / Sweden
+100
+Siemens AB, Solna / Sweden
+Siemens Financial Services AB, Solna / Sweden
+Siemens Healthcare AB, Solna / Sweden
+Siemens Industry Software AB, Solna / Sweden
+100
+Buitengaats C.V., Amsterdam / Netherlands
+Buitengaats Management B.V., Eemshaven / Netherlands
+Infraspeed EPC Consortium V.O.F., Zoetermeer / Netherlands
+Infraspeed Maintainance B.V., Dordrecht / Netherlands
+Caterva GmbH, Pullach i. Isartal
+BentoNet GmbH, Baden-Baden
+49
+258
+418
+BELLIS GmbH, Braunschweig
+ATS Projekt Grevenbroich GmbH, Schüttorf
+Alchemist Accelerator Europe Fund I GmbH & Co. KG, Grünwald
+Germany (24 companies)
+Associated companies and joint ventures
+Varian Medical Systems Vietnam Co Ltd, Ho Chi Minh City / Viet Nam
+100
+100
+100
+100
+100
+100
+100
+Siemens Ltd., Ho Chi Minh City / Viet Nam
+Siemens Healthcare Limited, Ho Chi Minh City I Viet Nam
+Siemens Mobility Limited, Bangkok/Thailand
+Siemens Logistics Automation Systems Ltd., Bangkok / Thailand
+Siemens Limited, Bangkok Thailand
+100
+100
+100
+100
+100
+100
+50
+100
+50
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen des Stadt- und Regionalverkehrs mbH, Cologne
+FEAG Fertigungscenter für Elektrische Anlagen GmbH, Erlangen
+Consolidated Financial Statements
+508
+258
+238
+49
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (37 companies)
+Armpower CJSC, Yerevan / Armenia
+WUN H2 GmbH, Wunsiedel
+Veja Mate Offshore Project GmbH, Oststeinbek
+Valeo Siemens eAutomotive GmbH, Erlangen
+Sternico GmbH, Wendeburg
+Siemens EuroCash, Munich
+Siemens Energy AG, Munich
+Nordlicht Holding Verwaltung GmbH, Frankfurt
+Nordlicht Holding GmbH & Co. KG, Frankfurt
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+MeVis BreastCare GmbH & Co. KG, Bremen
+Ludwig Bölkow Campus GmbH, Taufkirchen
+MetisMotion GmbH, Munich
+LIB Verwaltungs-GmbH, Leipzig
+57
+57
+338
+INPRO Innovationsgesellschaft für fortgeschrittene Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
+50
+IFTEC GmbH & Co. KG, Leipzig
+50
+498
+498
+30
+GuD Herne GmbH, Essen
+Curagita Holding GmbH, Heidelberg
+100
+Varian Medical Systems Iberica SL, Alcobendas / Spain
+Siemens S.A., Madrid / Spain
+51
+100
+100
+75
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+55
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+Arabia Electric Ltd. (Equipment), Jeddah / Saudi Arabia
+Varian Medical Systems (RUS) Limited Liability Company, Moscow / Russian Federation
+Siemens Mobility LLC, Moscow / Russian Federation
+Consolidated Financial Statements
+Siemens Mobility AS, Oslo / Norway
+Siemens Industrial LLC, Muscat / Oman
+Mentor Graphics Pakistan Development (Private) Limited, Lahore / Pakistan
+Siemens Healthcare (Private) Limited, Lahore / Pakistan
+Siemens Pakistan Engineering Co. Ltd., Karachi / Pakistan
+Mentor Graphics Polska Sp. z o.o., Katowice / Poland
+Siemens Digital Logistics Sp. z o.o., Wroclaw / Poland
+Siemens Finance Sp. z o.o., Warsaw / Poland
+Siemens Healthcare Sp. z o.o., Warsaw / Poland
+Siemens Industry Software Sp. z o.o., Warsaw / Poland
+Siemens Mobility Sp. z o.o., Warsaw / Poland
+Siemens Sp. z o.o., Warsaw / Poland
+Varian Medical Systems Poland Sp. z o.o., Warsaw / Poland
+YUNEX Sp. z o.o., Warsaw / Poland
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
+Siemens Logistics, Unipessoal Lda, Lisbon Portugal
+SIEMENS MOBILITY, UNIPESSOAL LDA, Amadora / Portugal
+Siemens S.A., Amadora / Portugal
+YUTRAFFIC, UNIPESSOAL LDA, Amadora / Portugal
+Siemens W.L.L., Doha Qatar
+J2 Innovative Concepts Europe SRL, Bucharest / Romania
+Siemens Healthcare S.R.L., Bucharest / Romania
+Siemens Industry Software S.R.L., Brasov / Romania
+Siemens Mobility S.R.L., Bucharest / Romania
+Siemens S.R.L., Bucharest / Romania
+SIMEA SIBIU S.R.L., Sibiu / Romania
+Varinak Europe SRL (Romania), Pantelimon / Romania
+Acuson RUS Limited Liability Company, Moscow / Russian Federation
+LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD, St. Petersburg / Russian Federation
+000 Legion II, Moscow / Russian Federation
+000 Siemens, Moscow / Russian Federation
+000 Siemens Industry Software, Moscow / Russian Federation
+Siemens Finance and Leasing LLC, Vladivostok / Russian Federation
+Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
+100
+100
+100
+100
+Siemens Trgovsko in storitveno podjetje, d.o.o., Ljubljana / Slovenia
+60
+100
+100
+100
+100
+100
+100
+100
+100
+50
+Consolidated Financial Statements
+Crabtree South Africa Pty. Limited, Midrand / South Africa
+KACO NEW ENERGY AFRICA (PTY) LTD, Midrand / South Africa
+Linacre Investments (Pty) Ltd., Kenilworth/South Africa
+S'Mobility Employee Stock Ownership Trust, Johannesburg / South Africa
+Siemens Employee Share Ownership Trust, Johannesburg / South Africa
+Siemens Healthcare Employee Share Ownership Trust, Midrand / South Africa
+Siemens Healthcare Proprietary Limited, Halfway House / South Africa
+SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD, Centurion / South Africa
+Siemens Mobility (Pty) Ltd, Randburg / South Africa
+Siemens Proprietary Limited, Midrand / South Africa
+Varian Medical Systems Africa (Pty) Ltd., Midrand / South Africa
+Aimsun S.L., Barcelona / Spain
+Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
+SIEMENS HEALTHCARE, S.L.U., Getafe / Spain
+Siemens Holding S.L., Madrid / Spain
+Siemens Industry Software S.L., Tres Cantos / Spain
+Siemens Logistics S.L. Unipersonal, Madrid / Spain
+SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
+Siemens Rail Automation S.A.U., Tres Cantos / Spain
+Siemens Renting S.A., Madrid / Spain
+Siemens Mobility d.o.o., Ljubljana / Slovenia
+Telecomunicación, Electrónica y Conmutación S.A., Madrid / Spain
+Siemens Healthcare d.o.o., Ljubljana / Slovenia
+SIPRIN s.r.o., Bratislava Slovakia
+100
+100
+_3
+Siemens Healthcare Limited, Riyadh / Saudi Arabia
+Siemens Ltd., Riyadh / Saudi Arabia
+Siemens Mobility Saudi Ltd, Al Khobar / Saudi Arabia
+Varian Medical Systems Arabia Commercial Limited, Riyadh / Saudi Arabia
+Siemens d.o.o. Beograd, Belgrade / Serbia
+Siemens Healthcare d.o.o. Beograd, Belgrade / Serbia
+Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
+51
+51
+51
+51
+75
+100
+100
+100
+1007
+100
+1007
+Supplyframe d.o.o, Beograd-Vracar, Belgrade / Serbia
+Yunex Traffic d.o.o. Beograd, Belgrade / Serbia
+Acuson Slovakia s. r. o., Bratislava / Slovakia
+OEZ Slovakia, spol. s r.o., Bratislava / Slovakia
+SAT Systémy automatizacnej techniky spol. s.r.o., Bratislava / Slovakia
+Siemens Healthcare s.r.o., Bratislava / Slovakia
+100
+Siemens Mobility, s.r.o., Bratislava / Slovakia
+Siemens s.r.o., Bratislava / Slovakia
+Yunex, s.r.o., Bratislava / Slovakia
+502
+Siemens Industry Software GmbH, Zurich / Switzerland
+100
+Siemens Venture Capital Co., Ltd., Beijing / China
+Siemens Wiring Accessories Shandong Ltd., Zibo / China
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi / China
+Suzhou Ling Dong Zhen GE Network Technology Co., Ltd., Suzhou / China
+Varian Medical Systems China Co., Ltd., Beijing / China
+Varian Medical Systems Trading (Beijing) Co., Ltd., Beijing / China
+Siemens Technology Development Co., Ltd. of Beijing, Beijing / China
+Yutraffic Technologies (Beijing) Co., Ltd., Beijing / China
+Siemens Healthcare Limited, Hong Kong / Hong Kong
+Siemens Industry Software Limited, Hong Kong / Hong Kong
+Siemens Limited, Hong Kong / Hong Kong
+Siemens Logistics Limited, Hong Kong / Hong Kong
+Siemens Mobility Limited, Hong Kong / Hong Kong
+Supply Frame (Hong Kong) Limited, Hong Kong / Hong Kong
+Scion Medical Limited, Hong Kong / Hong Kong
+Vertice Investment Limited, Hong Kong / Hong Kong
+Siemens Switchgear Ltd., Shanghai, Shanghai / China
+Siemens Signalling Co., Ltd., Xi'an / China
+100
+100
+51
+85
+51
+100
+Siemens Standard Motors Ltd., Yizheng / China
+100
+80
+100
+100
+100
+100
+55
+100
+YUTRAFFIC LTD., Hong Kong / Hong Kong
+AIS Design Automation Private Limited, Bangalore / India
+American Institute of Pathology and Laboratory Sciences Private Limited, Hyderabad / India
+Siemens Rail Automation Pvt. Ltd., Navi Mumbai / India
+Siemens Technology and Services Private Limited, Navi Mumbai / India
+Varian Medical Systems International (India) Private Limited, Mumbai / India
+P.T. Siemens Indonesia, Jakarta / Indonesia
+PT Siemens Healthineers Indonesia, Jakarta / Indonesia
+PT Siemens Mobility Indonesia, Jakarta / Indonesia
+Siemens Logistics India Private Limited, Navi Mumbai / India
+Acrorad Co., Ltd., Okinawa / Japan
+OneSpin Solutions Japan K.K., Yokohama / Japan
+Siemens Electronic Design Automation Japan K.K., Tokyo / Japan
+Siemens Healthcare Diagnostics K.K., Tokyo / Japan
+Siemens Healthcare K.K., Tokyo / Japan
+Siemens K.K., Tokyo / Japan
+Siemens PLM Software Computational Dynamics K.K., Yokohama / Japan
+Avatar Integrated Systems Kabushiki Kaisha, Yokohama / Japan
+Siemens Limited, Mumbai / India
+Siemens Industry Software (India) Private Limited, New Delhi / India
+SIEMENS HEALTHINEERS INDIA MANUFACTURING PRIVATE LIMITED, Mumbai / India
+Artmed Healthcare Private Limited, Hyderabad / India
+Bytemark India LLP, Bangalore / India
+Bytemark Technology Solutions India Pvt Ltd, Bangalore / India
+C&S Electric Limited, New Delhi / India
+Cancer Treatment Services Hyderabad Private Limited, Hyderabad / India
+Enlighted Energy Systems Pvt Ltd, Chennai / India
+Flomerics India Private Limited, Mumbai / India
+Mentor Graphics (India) Private Limited, New Delhi / India
+Mentor Graphics (Sales and Services) Private Limited, New Delhi / India
+PETNET Radiopharmaceutical Solutions Pvt. Ltd., Mumbai / India
+Preactor Software India Private Limited, Bangalore / India
+Siemens Factoring Private Limited, Navi Mumbai / India
+Siemens Financial Services Private Limited, Mumbai / India
+Siemens Healthcare Private Limited, Mumbai / India
+Siemens Healthineers India LLP, Bangalore / India
+100
+Varian Medical Systems K.K., Tokyo / Japan
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+70
+100
+100
+Scion Medical Technologies (Shanghai) Ltd., Shanghai / China
+Siemens Building Technologies (Tianjin) Ltd., Tianjin / China
+Siemens Business Information Consulting Co., Ltd, Beijing / China
+Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
+Siemens Commercial Factoring Ltd., Shanghai / China
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
+100
+Siemens Electrical Drives Ltd., Tianjin / China
+Siemens Finance and Leasing Ltd., Beijing / China
+Consolidated Financial Statements
+100
+100
+100
+1007
+Siemens Factory Automation Engineering Ltd., Beijing / China
+100
+75
+100
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
+Siemens Mobility Electrification Equipment (Shanghai) Co., Ltd., Shanghai / China
+Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
+Siemens Mobility Rail Equipment (Tianjin) Ltd., Tianjin / China
+Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
+Siemens Numerical Control Ltd., Nanjing, Nanjing / China
+Siemens Manufacturing and Engineering Centre Ltd., Shanghai / China
+Siemens Power Automation Ltd., Nanjing / China
+Siemens Shanghai Medical Equipment Ltd., Shanghai / China
+Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
+100
+100
+100
+100
+Siemens Sensors & Communication Ltd., Dalian / China
+Siemens Ltd., China, Beijing / China
+Siemens Logistics Automation Systems (Beijing) Co., Ltd, Beijing / China
+Siemens Investment Consulting Co., Ltd., Beijing / China
+100
+100
+85
+100
+100
+100
+100
+Siemens Financial Services Ltd., Beijing / China
+Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
+Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
+Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
+Siemens Healthineers Ltd., Shanghai / China
+Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
+100
+Siemens Industry Software (Beijing) Co., Ltd., Beijing / China
+Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
+Siemens Intelligent Signalling Technologies Co. Ltd., Foshan / China
+Siemens International Trading Ltd., Shanghai, Shanghai / China
+60
+100
+33
+100
+100
+100
+100
+100
+100
+100
+100
+338
+100
+1007
+100
+51
+100
+100
+100
+100
+100
+100
+96
+100
+100
+100
+100
+100
+100
+100
+100
+99
+100
+Acuson Korea Ltd., Seongnam-si / Korea, Republic of
+Consolidated Financial Statements
+70
+100
+55
+90
+100
+100
+100
+_3
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+Consolidated Financial Statements
+Siemens Healthcare Limited, Bangkok / Thailand
+100
+100
+100
+56
+100
+100
+100
+100
+100
+100
+100
+Varian Medical Systems Taiwan Co., Ltd., Taipei / Taiwan, Province of China
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+Siemens Industry Software (TW) Co., Ltd., Taipei / Taiwan, Province of China
+Siemens Limited, Taipei / Taiwan, Province of China
+100
+Asiri A O I Cancer Centre (Private) Limited, Colombo/Sri Lanka
+Siemens Electronic Design Automation (Korea) LLC, Seoul / Korea, Republic of
+Siemens Healthineers Ltd., Seoul / Korea, Republic of
+Siemens Industry Software Ltd., Seoul / Korea, Republic of
+Siemens Ltd. Seoul, Seoul / Korea, Republic of
+Siemens Mobility Ltd., Seoul / Korea, Republic of
+Siemens Process Systems Engineering Limited, Daejeon / Korea, Republic of
+Fang Chi Health Management Co., Ltd, Taipei / Taiwan, Province of China
+Hong Tai Health Management Co. Ltd., Taipei / Taiwan, Province of China
+New Century Technology Co. Ltd., Taipei / Taiwan, Province of China
+Siemens Healthcare Limited, Taipei / Taiwan, Province of China
+Siemens Healthcare Sdn. Bhd., Petaling Jaya / Malaysia
+Siemens Industry Software Sdn. Bhd., George Town, Penang / Malaysia
+Siemens Malaysia Sdn. Bhd., Petaling Jaya Malaysia
+Siemens Mobility Sdn. Bhd., Kuala Lumpur / Malaysia
+Varian Medical Systems Malaysia Sdn Bhd, Kuala Lumpur / Malaysia
+Siemens (N.Z.) Limited, Auckland / New Zealand
+Siemens Healthcare Limited, Auckland New Zealand
+Varian Medical Systems Korea, Inc., Seoul / Korea, Republic of
+Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur / Malaysia
+Siemens Healthcare Inc., Manila / Philippines
+YUNEX PTE. LTD., Singapore / Singapore
+Siemens Pte. Ltd., Singapore / Singapore
+Siemens Mobility Pte. Ltd., Singapore / Singapore
+Siemens Industry Software Pte. Ltd., Singapore / Singapore
+Siemens Healthcare Pte. Ltd., Singapore / Singapore
+Siemens Logistics PTE. LTD., Singapore / Singapore
+Aimsun Pte Ltd, Singapore / Singapore
+Acuson Singapore Pte. Ltd., Singapore / Singapore
+Varian Medical Systems Philippines, Inc., City of Pasig / Philippines
+Siemens, Inc., Manila / Philippines
+Mentor Graphics Asia Pte Ltd, Singapore / Singapore
+SPT Beteiligungen GmbH & Co. KG, Grünwald
+2
+1004,5
+170
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (1
+company)
+Siemens Gas and Power Holding B.V., Zoeterwoude / Netherlands
+1,307
+Other matter - use of the auditor's report
+Americas (2 companies)
+Babson Diagnostics, Inc., Dover, DE / United States
+7
+Our auditor's report must always be read together with the audited consolidated financial statements and the audited group management
+report as well as the assured ESEF documents. The consolidated financial statements and the group management report converted to the
+ESEF format - including the versions to be published in the Bundesanzeiger [German Federal Gazette] ― are merely electronic renderings
+of the audited consolidated financial statements and the audited group management report and do not take their place. In particular, the
+ESEF report and our assurance opinion contained therein are to be used solely together with the assured ESEF documents made available
+in electronic form.
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
+to Art. 11 of the EU Audit Regulation (long-form audit report).
+257
+5,592
+1004,5
+2 Control due to rights to appoint, reassign or remove members of the key management personnel.
+(1)
+We were elected as group auditor by the Annual Shareholders' Meeting on February 3, 2021. We were engaged by the Supervisory Board
+on February 3, 2021. We have been the group auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October
+1, 2008 to September 30, 2009.
+Other investments11
+Germany (3 companies)
+Erlapolis 20 GmbH, Munich
+Consolidated Financial Statements
+Equity
+interest
+Munipolis GmbH, Munich
+Net income
+in %
+in millions
+of €
+in millions
+of €
+1004,5
+(1)
+Equity
+Further information pursuant to Art. 10 of the EU Audit Regulation
+Evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Arts.
+4 and 6 of Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, enables an
+appropriate and complete machine-readable XBRL copy of the XHTML rendering.
+•
+Accounting for the acquisition of Varian
+Below, we describe what we consider to be the key audit matters:
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
+statements for the fiscal year from October 1, 2020 to September 30, 2021. These matters were addressed in the context of our audit of
+the consolidated financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these
+matters.
+Key audit matters in the audit of the consolidated financial statements
+We conducted our audit of the consolidated financial statements and of the group management report in accordance with Sec. 317 HGB
+and the EU Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally
+Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
+Germany] (IDW). In conducting the audit of the consolidated financial statements we also complied with International Standards on
+Auditing (ISA). Our responsibilities under those requirements, principles and standards are further described in the "Auditor's
+responsibilities for the audit of the consolidated financial statements and of the group management report" section of our auditor's report.
+We are independent of the group entities in accordance with the requirements of European law and German commercial and professional
+law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance
+with Art. 10 (2) f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the
+EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions
+on the consolidated financial statements and on the group management report.
+Basis for the opinions
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
+consolidated financial statements and of the group management report.
+⚫ the accompanying group management report as a whole provides an appropriate view of the Group's position. In all material respects,
+this group management report is consistent with the consolidated financial statements, complies with German legal requirements and
+appropriately presents the opportunities and risks of future development. Our opinion on the group management report does not cover
+the content of the Corporate Governance Statement referred to above.
+the accompanying consolidated financial statements comply, in all material respects, with the International Financial Reporting
+Standards (IFRSs) as adopted by the European Union (EU), and the additional requirements of German commercial law pursuant to
+Sec. 315e (1) HGB ["Handelsgesetzbuch”: German Commercial Code] as well as with full IFRSS as issued by the International Accounting
+Standards Board (IASB), and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial
+position of the Group as of September 30, 2021 and of its financial performance for the fiscal year from October 1, 2020 to September
+30, 2021, and
+In our opinion, on the basis of the knowledge obtained in the audit,
+.
+We have audited the consolidated financial statements of Siemens Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the Group),
+which comprise the consolidated statements of income and comprehensive income for the fiscal year from October 1, 2020 to September
+30, 2021, the consolidated statements of financial position as of September 30, 2021, the consolidated statements of cash flows and
+changes in equity for the fiscal year from October 1, 2020 to September 30, 2021, and notes to the consolidated financial statements,
+including a summary of significant accounting policies. In addition, we have audited the group management report of Siemens
+Aktiengesellschaft, which is combined with the management report of Siemens Aktiengesellschaft, for the fiscal year from October 1,
+2020 to September 30, 2021. In accordance with the German legal requirements, we have not audited the content of the Corporate
+Governance Statement which is published on the website stated in the combined management report.
+Opinions
+Report on the audit of the consolidated financial statements and of the group management
+report
+To Siemens Aktiengesellschaft, Berlin and Munich
+Reasons why the matter was determined to be a key audit matter: The acquisition of Varian Medical Systems, Inc., USA (Varian), was
+completed on April 15, 2021. Since then, Siemens AG indirectly holds all the shares in Varian via its subsidiary Siemens Healthineers AG.
+The acquisition was accounted for in accordance with IFRS 3, Business Combinations, on the basis of a preliminary purchase price
+allocation. To finance the acquisition, a further capital increase was carried out at the level of Siemens Healthineers AG in fiscal year 2021
+by issuing new shares, resulting in an increase of non-controlling interests in the Siemens consolidated financial statements. Furthermore,
+the Group issued bonds denominated in US dollars to finance the transaction. To hedge foreign currency risks in connection with the
+acquisition and its financing, the Group entered into hedging transactions which were designated as hedging instruments in hedging
+relationships.
+Independent Auditor's Report (Group)
+The accounting for the acquisition, including financing and hedging of foreign currency risks, was a key audit matter due to the estimation
+uncertainties and judgments involved in the preliminary purchase price allocation (particularly regarding the measurement of acquired
+intangible assets) and due to the overall significant impact on the assets, liabilities, financial position and financial performance of the
+Group, the complexity of the transaction and the associated significant risk of material misstatement.
+2
+Provisions for proceedings out of or in connection with alleged compliance violations as well as provisions for asset retirement
+obligations
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for construction-type
+contracts, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
+statements. With respect to contract assets and liabilities as well as provisions for order related losses and risks, refer to Note 10 Contract
+assets and liabilities, Note 18 Provisions and Note 21 Commitments and contingencies in the notes to the consolidated financial
+statements.
+Our audit procedures did not lead to any reservations relating to revenue recognition on construction-type contracts.
+Due to the large contract volume and risk profile, our audit procedures focused on large contracts for delivery of high-speed and commuter
+trains.
+Independent Auditor's Report (Group)
+3
+As part of our substantive audit procedures, which particularly involved project reviews, we evaluated management's estimates and
+assumptions based on a risk-based selection of a sample of contracts. Our sample primarily included projects that are subject to significant
+future uncertainties and risks, such as projects with complex safety/technical and regulatory requirements or projects with a large portion
+of materials and services to be provided by suppliers or consortium partners, fixed-price or turnkey projects, cross-border projects, projects
+in regions particularly affected by the COVID-19 pandemic and projects with changes in cost estimates, delays and/or low or negative
+margins. Our audit procedures included, among others, review of the contracts and their terms and conditions including contractually
+agreed partial deliveries and services, termination rights, penalties for delay and breach of contract, liquidated damages as well as joint
+and several liability. In order to evaluate whether revenues were recognized on an accrual basis for the selected projects, we analyzed
+revenues attributable to the fiscal year and corresponding cost of sales to be recognized in the statement of income considering the extent
+of progress towards completion and examined the accounting for the associated items in the statement of financial position. Considering
+the requirements of IFRS 15, we also assessed the accounting for contract amendments or contractually agreed options. We further
+performed inquiries of project management (both commercial and technical project managers) with respect to the development of the
+projects including the effects of COVID-19 on project execution, the reasons for deviations between planned and actual costs, the current
+estimated costs to complete the projects, and management's assessments on probabilities that contract risks and claims from joint and
+several liability will materialize. To identify anomalies in the development of margins and other project KPIs, we also applied data analysis
+procedures. In designing our audit procedures, we also considered results from project audits conducted by the internal audit function.
+Furthermore, we obtained evidence from third parties for selected projects (e.g., project acceptance documentation, contractual terms
+and conditions, and lawyers' confirmations regarding alleged breaches of contract and asserted claims).
+Auditor's response: As part of our audit, we obtained an understanding of the Group's internally established methods, processes and
+control mechanisms for project management in the bid and execution phase of construction-type contracts. In this regard, we assessed
+the design and operating effectiveness of the accounting-related internal controls in the project business by obtaining an understanding
+of business transactions specific to construction-type contracts, from the initiation of the transaction through presentation in the
+consolidated financial statements. We also tested controls addressing the timely assessment of changes in cost estimates and the timely
+and complete recognition of such changes in the project calculation.
+Reasons why the matter was determined to be a key audit matter: The Group conducts a significant portion of its business under
+construction-type contracts, particularly in the Mobility business. Revenue from long-term construction-type contracts is recognized in
+accordance with IFRS 15, Revenue from Contracts with Customers, generally over time under the percentage-of-completion method. We
+consider the accounting for construction-type contracts to be an area posing a significant risk of material misstatement (including the
+potential risk of management override of internal controls) and accordingly a key audit matter, because management's assessments
+significantly impact the determination of the extent of progress towards completion. These assessments include, in particular, the scope
+of deliveries and services required to fulfill contractually defined obligations, total estimated contract costs, remaining costs to completion
+and total estimated contract revenues, as well as contract risks including technical, political, regulatory and legal risks. Revenues, total
+estimated contract costs and profit recognition may deviate significantly from original estimates based on new knowledge about cost
+overruns and changes in project scope over the term of a construction-type contract. The effects of the coronavirus pandemic (COVID-19)
+on the project business, such as delays in project execution or disruptions in supply chains as well as change in law clauses with regard to
+compensation for damages or contractual penalties for delays in delivery and their accounting treatment remained of key significance for
+our audit.
+Revenue recognition on construction-type contracts
+Reference to related disclosures: With regard to the accounting and measurement policies applied in connection with the business
+combination, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
+statements. An explanation of the transaction including the related financing and hedging transactions as well as disclosures on the
+preliminary purchase price allocation is included in Note 3 Acquisitions, dispositions and discontinued operations, Note 16 Debt and Note
+24 Derivative financial instruments and hedging activities in the notes to the consolidated financial statements.
+Our audit procedures did not lead to any reservations relating to the accounting for the acquisition of Varian.
+Furthermore, we assessed the application of uniform accounting policies, tax effects resulting from the acquisition and the accounting for
+the first-time consolidation of the Varian entities in the consolidation system. In addition, we assessed the acquisition-related disclosures
+(including financing and hedging) in the notes to the consolidated financial statements taking into account the respective IFRS
+requirements.
+3. We assessed the suitability of the preliminary external appraisal as audit evidence, among other things, through inquiries of
+management as well as of the external appraiser. With the assistance of internal valuation specialists, we also analyzed whether the
+assumptions and estimates (particularly growth rates, cost of capital, royalty rates and remaining useful lives) used in determining the fair
+values of the identifiable assets acquired (particularly the acquired customer relationships and trade names as well as technologies) and
+liabilities assumed correspond to general and industry-specific market expectations. In addition, we used the expertise of internal industry
+specialists for the assessment of the recognition and valuation of identified intangible assets and liabilities assumed. Further, we
+reperformed the calculations in the valuation models and reconciled the expected future cash flows underlying the valuations with, inter
+alia, internal business plans. As part of our audit procedures, we also assessed the earnings effects in fiscal year 2021 resulting from the
+subsequent accounting for assets acquired and liabilities assumed, particularly taking into account the remaining useful lives of the
+acquired assets. As part of our audit of the accounting for the capital increase, we compared the change in equity with the underlying
+resolutions of the Managing Board and the Supervisory Board of Siemens Healthineers, the register entries as well as other contractual
+agreements with third parties. For the bonds issued, we compared the recognized amounts with the respective underlying contractual
+agreements. With regard to the accounting for hedging relationships we assessed whether the requirements for hedge accounting in
+accordance with IFRS 9, Financial Instruments, were satisfied based on the documentation prepared by management and the underlying
+contractual agreements. We also assessed the accounting for hedging relationships and reconciled the amounts with the respective line
+items in the consolidated statement of financial position, consolidated statement of income and consolidated statement of comprehensive
+income. In this context, we further assessed the methodology applied to determine the fair values of hedging instruments and the clerical
+accuracy of the respective calculations.
+Independent Auditor's Report (Group)
+Auditor's response: Our audit procedures in relation to the preliminary purchase price allocation included the assessment of the
+consideration transferred by Siemens and an evaluation of the methodology applied by the external appraiser engaged by management
+with respect to the identification and valuation of the assets acquired and liabilities assumed in accordance with the requirements of IFRS
+Reasons why the matter was determined to be a key audit matter: We considered the accounting for provisions for proceedings out
+of or in connection with alleged compliance violations, including allegations of corruption and antitrust violations, and for asset retirement
+obligations to be a key audit matter. These matters are subject to inherent uncertainties and require estimates that could have a significant
+impact on the recognition and measurement of the respective provision and, accordingly, on assets, liabilities and financial performance.
+The proceedings out of or in connection with alleged compliance violations are subject to uncertainties because they involve complex
+legal issues and accordingly, considerable management judgment, in particular when determining whether and in what amount a
+provision is required to account for the risks. The uncertainties and estimates with respect to asset retirement obligations pertain especially
+to the estimated costs for waste treatment and packaging for final storage, for interim storage as well as transport to the final nuclear
+waste storage facility.
+SIEMENS
+Independent
+Auditor's Report
+7
+(4)
+205
+n/a = No financial data available.
+13 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability of this company.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements; the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+⁹ Exemption pursuant to Section 264 b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+* No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the relevant activities.
+8
+TO THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
+GROUP MANAGEMENT REPORT FOR FISCAL 2021
+65
+60
+2
+Judith Wiese
+Matthias Rebellius
+Prof. Dr. Ralf P. Thomas
+Cedrik Neike
+Dr. Roland Busch
+The Managing Board
+Siemens Aktiengesellschaft
+Munich, November 30, 2021
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a
+true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Management Report, which has
+been combined with the Management Report for Siemens Aktiengesellschaft, includes a fair review of the development and performance
+of the business and the position of the Group, together with a description of the material opportunities and risks associated with the
+expected development of the Group.
+Responsibility Statement (Group)
+SIEMENS
+TO THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
+GROUP MANAGEMENT REPORT FOR FISCAL 2021
+Responsibility Statement
+60
+395
+1 Control due to a majority of voting rights.
+Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
+we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
+determine what potentially significant pending legal proceedings or claims asserted are known and to assess management's estimates of
+the expected cash outflows, our audit procedures included inquiring of management and other persons within the Group entrusted with
+these matters, obtaining written statements from in-house legal counsels with respect to the assessment of estimated cash outflows and
+their probability, obtaining confirmations from external legal advisors and evaluating internal statements concerning the accounting
+treatment in the consolidated financial statements. Furthermore, we examined legal consulting expense accounts for any indications of
+legal matters not yet considered.
+Furthermore, we evaluated the disclosures on proceedings out of or in connection with alleged compliance violations as well as on asset
+retirement obligations in the notes to the consolidated financial statements.
+Other legal and regulatory requirements
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
+audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in
+our auditor's report unless law or regulation precludes public disclosure about the matter.
+We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
+and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
+applicable, the related safeguards.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
+significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
+Perform audit procedures on the prospective information presented by management in the group management report. On the basis of
+sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
+prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
+a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+•
+• Evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law,
+and the view of the Group's position it provides.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
+to express opinions on the consolidated financial statements and on the group management report. We are responsible for the direction,
+supervision and performance of the group audit. We remain solely responsible for our opinions.
+•
+• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
+the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial
+statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance
+with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as
+with full IFRSS as issued by the IASB.
+• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
+obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to
+continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report
+to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are
+inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
+report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.
+• Evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
+and related disclosures.
+Obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and
+measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in
+the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems.
+Identify and assess the risks of material misstatement of the consolidated financial statements and of the group management report,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
+and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than
+for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
+internal control.
+•
+Report on the assurance on the electronic rendering of the consolidated financial statements and the group
+management report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
+Opinion
+•
+We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
+of the consolidated financial statements and the group management report (hereinafter the "ESEF documents") contained in the file
+SIEMENS 2021.zip (SHA-256 checksum: c2fee878a23005add85c87b5f4a7cf3e7883b81d2626892870c12ff3d2a977f8) and prepared for
+publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting format ("ESEF
+Independent Auditor's Report (Group)
+• Evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited consolidated financial
+statements and to the audited group management report.
+• Evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
+Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
+specification for this file.
+Obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
+controls.
+Identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
+and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
+a basis for our assurance opinion.
+•
+.
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
+non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
+throughout the assurance work. We also:
+The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
+Group auditor's responsibilities for the assurance work on the ESEF documents
+In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
+documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
+electronic reporting format.
+Management is responsible for the preparation of the ESEF documents including the electronic rendering of the consolidated financial
+statements and the group management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB and for the tagging of the
+consolidated financial statements in accordance with Sec. 328 (1) Sentence 4 No. 2 HGB.
+Responsibilities of management and the Supervisory Board for the ESEF documents
+We conducted our assurance work on the rendering, of the consolidated financial statements and the group management report contained
+in the file identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering
+of Financial Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410)
+and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described
+in the "Group auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW Standard
+on Quality Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
+Basis for the opinion
+In our opinion, the rendering of the consolidated financial statements and the group management report contained in the file identified
+above and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
+reporting format. Beyond this assurance opinion and our audit opinions on the accompanying consolidated financial statements and the
+accompanying group management report for the fiscal year from October 1, 2020 to September 30, 2021 contained in the "Report on the
+audit of the consolidated financial statements and of the group management report" above, we do not express any assurance opinion on
+the information contained within these renderings or on the other information contained in the file identified above.
+format"). In accordance with German legal requirements, this assurance work extends only to the conversion of the information contained
+in the consolidated financial statements and the group management report into the ESEF format and therefore relates neither to the
+information contained within these renderings nor to any other information contained in the file identified above.
+6
+We further considered alleged or substantiated non-compliance with legal provisions, official regulations and internal company policies
+(compliance violations) by inspecting internal and external statements on specific matters, obtaining written statements from external
+legal advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and
+results of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed
+on this basis whether management's evaluation of any risks to be accounted for in the consolidated financial statements is plausible.
+Based on the aforementioned uncertainties, our audit procedures with respect to asset retirement obligations focused on the remediation
+and environmental protection liabilities in connection with the decommissioning of the facilities in Hanau, Germany (Hanau facilities), as
+well as for the nuclear research and service center in Karlstein, Germany (Karlstein facilities). Our audit procedures included, among others,
+assessing the estimated costs for waste treatment and packaging for final storage, for interim storage as well as transport to the final
+nuclear waste storage facility, and the valuation methods used by drawing on the expertise of our valuation specialists. We evaluated
+management's assessments, particularly regarding the accounting effects of the contractually agreed transfer of the nuclear waste disposal
+obligation to the Federal Republic of Germany, which is still subject to the approval of the EU commission under state-aid-rules, and the
+expected costs to fulfill the obligations remaining with Siemens through inquiries of persons entrusted with the matter and inspections of
+internal and external documents.
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+Auditor's responsibilities for the audit of the consolidated financial statements and of the group
+management report
+the Responsibility Statement (to the Annual Financial Statements and the Management Report),
+the Responsibility Statement (to the Consolidated Financial Statements and the Group Management Report),
+•
+•
+•
+The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2021 within the meaning of ISA [DE]
+720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
+German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
+Compensation Report. In all other respects, management is responsible for the other information. The other information comprises the
+Corporate Governance Statement referred to above. In addition, the other information comprises parts to be included in the Annual Report,
+of which we received a version prior to issuing this auditor's report, in particular:
+In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
+strategies and projected future taxable income, also in view of the implications of the COVID-19 pandemic, and compared them to internal
+business plans. In the course of our audit procedures regarding deferred tax liabilities, we examined in particular the assumptions regarding
+reinvestment of subsidiaries' retained profits for an indefinite period and assessed these taking into account dividend planning.
+Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and deferred taxes.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
+to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
+to disclosures for deferred tax assets and liabilities, refer to Note 7 Income taxes in the notes to the consolidated financial statements.
+Other information
+In order to assess measurement and completeness, we also obtained confirmations from external tax advisors. Further, we evaluated
+management's assessments with respect to the prospects of success of appeal and tax court proceedings by inquiring of the employees of
+the Siemens tax department and by considering current tax case law.
+Independent Auditor's Report (Group)
+4
+Auditor's response: With the assistance of internal tax specialists who have knowledge of relevant local tax law, we examined the
+processes installed by management for the identification, recognition and measurement of tax positions. In the course of our audit
+procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax implications of significant
+business transactions or events in fiscal year 2021, which could result in uncertain tax positions or influence the measurement of existing
+uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising from the results of tax field
+audits, the acquisition or disposal of company shares, corporate (intragroup) restructuring activities and cross-border matters, such as the
+determination of transfer prices.
+Reasons why the matter was determined to be a key audit matter: Siemens operates in numerous countries with different local tax
+legislation. The accounting for uncertain tax positions as well as deferred taxes requires management to exercise considerable judgment
+and make estimates and assumptions, and was therefore a key audit matter. In particular, this affects the measurement and completeness
+of uncertain tax positions, the recoverability of deferred tax assets, the measurement and completeness of deferred tax liabilities as well
+as management's assessments regarding the tax implications of the COVID-19 pandemic.
+Uncertain tax positions and deferred taxes
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for provisions, refer to
+Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
+to proceedings out of or in connection with alleged compliance violations, refer to Note 22 Legal proceedings. With respect to the
+uncertainties and estimates relating to asset retirement obligations, refer to Note 18 Provisions of the notes to the consolidated financial
+statements.
+Thoughtworks Holding Inc., Wilmington, DE / United States
+the Five-Year Summary,
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
+misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the
+Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the
+audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
+as to issue an auditor's report that includes our opinions on the consolidated financial statements and on the group management report.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
+the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
+error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
+decisions of users taken on the basis of these consolidated financial statements and this group management report.
+•
+the Report of the Supervisory Board,
+Independent Auditor's Report (Group)
+5
+The Supervisory Board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial
+statements and of the group management report.
+Furthermore, management is responsible for the preparation of the group management report that, as a whole, provides an appropriate
+view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German
+legal requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible
+for such arrangements and measures (systems) as management has considered necessary to enable the preparation of a group
+management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate
+evidence for the assertions in the group management report.
+In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going
+concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
+responsible for financial reporting based on the going concern basis of accounting, unless there is an intention to liquidate the Group or
+to cease operations, or there is no realistic alternative but to do so.
+Management is responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSS
+as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as with full IFRSS
+as issued by the IASB, and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of
+the assets, liabilities, financial position and financial performance of the Group. In addition, management is responsible for such internal
+control as management has determined necessary to enable the preparation of consolidated financial statements that are free from
+material misstatement, whether due to fraud or error.
+Responsibilities of management and the Supervisory Board for the consolidated financial statements and the
+group management report
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+⚫ otherwise appears to be materially misstated.
+is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in
+the audit, or
+In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information
+•
+Our opinions on the consolidated financial statements and on the group management report do not cover the other information, and
+consequently we do not express an opinion or any other form of assurance conclusion thereon.
+but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
+report whose content is audited and not our auditor's reports thereon.
+• Notes and forward-looking statements,
+the Compensation Report,
+Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
+compliance violations as well as for asset retirement obligations.
+282
+9
+Income from investments included in particular profit distributions from Siemens Ltd., China, amounting to €1,331 million, from Siemens
+Holdings plc., United Kingdom, amounting to €698 million and from Siemens Healthineers AG, Germany, amounting to €534 million.
+Income from profit transfer agreements with affiliated companies included profit transfers from Siemens Beteiligungen Inland GmbH,
+Germany, amounting to €307 million.
+8,078
+5,303
+(21)
+(39)
+2,452
+1,724
+664
+32
+(1,646)
+(619)
+(6)
+(4)
+1,968
+610
+4,655
+3,534
+NOTE 3 Income (loss) from investments, net
+(in millions of €)
+Income from investments
+thereof from affiliated companies
+Income from profit transfer agreements with affiliated companies
+Expenses from loss transfers from affiliated companies
+Gains from the disposal of investments included gains from the disposal of Flender GmbH, Germany, amounting to €875 million, of Kyros
+Beteiligungsverwaltung GmbH, Germany, amounting to €411 million and of BSAV Kapitalbeteiligungen und Vermögensverwaltungs
+Management GmbH, Germany, amounting to €301 million.
+Impairments on investments
+Gains from the disposal of investments
+Losses from the disposal of investments
+Income from investments, net
+Fiscal year
+2021
+2020
+3,599
+4,666
+Reversals of impairments on investments
+NOTE 4 Interest income and interest expenses
+Interest income presented in the income statement included interest income from affiliated companies of €209 (2020: €326) million.
+Interest expenses included interest income from borrowing from affiliated companies of €166 (2020: interest expenses from borrowing
+of €88) million.
+Interest income from loans of non-current financial assets amounted to €79 (2020: €81) million.
+(895)
+39
+(1,800)
+Other financial expenses
+Impairments and reversal of impairments of loans and securities of non-current and current assets
+Other financial income (expenses), net
+Financial income (expenses), net relating to the pension and personnel-related provisions that are offset against designated plan assets
+represented a net amount from offset income totaling €57 (2020: €18) million and expenses totaling €46 (2020: €50) million.
+Other financial income resulted from gains from non-current securities, in fiscal 2021 primarily from the transfer of investment funds to
+SPT Beteiligungen GmbH & Co. KG, totaling €692 (2020: €186) million, the release of provisions for risks relating to derivative financial
+instruments totaling €213 (2020: expenses of €48) million, from derivative instruments related to interest rate hedging totaling €312
+(2020: expenses of €10) million, and from derivative financial instruments related to foreign currency hedging amounting to €197 (2020:
+expenses of €176) million.
+(132)
+Other financial expenses included expenses from monetary balance sheet items denominated in foreign currencies totaling €186 (2020:
+income of €32) million. In addition, the position included expenses from compounding of other provisions amounting to €18 (2020: €33)
+million.
+7
+NOTE 6 Income taxes
+(in millions of €)
+Income tax expenses
+Deferred taxes
+Income taxes
+Annual Financial Statements
+Impairments and reversal of impairments of loans and securities of non-current and current assets included an impairment of €149 million
+of a long-term loan related to an investment.
+Other operating expenses included expenses of €191 million for an intragroup service contract and expenses of €109 million for the
+recognition of a provision related to guarantees and expected obligations from consortium contracts.
+(277)
+218
+NOTE 5 Other financial income (expenses), net
+Fiscal year
+(in millions of €)
+H2021
+2020
+Interest component of changes in the pension provisions that are not offset against designated plan assets
+(206)
+(1,058)
+Financial income (expenses), (net) relating to the pension and personnel-related provisions that are offset against designated plan
+assets
+11
+(31)
+Other financial income
+1,424
+(815)
+Fiscal year
+Other operating income included income of €171 million from the release of a provision related to an investment and income from the
+release of the special reserve with an equity portion of €78 (2020: €49) million.
+Annual Financial Statements
+5
+Pensions and similar commitments: Siemens AG measures its pension obligations using the settlement amount calculated with the
+actuarial projected unit credit method on the basis of biometric probabilities. The discount rate used corresponds to the average market
+interest rate for instruments with an assumed remaining maturity of 15 years as published by German Federal Reserve Bank (Deutsche
+Bundesbank).
+Offsetting of assets and of income and expenses: Siemens AG measures assets at fair value that are designated as being held exclusively
+to settle specified pension obligations and obligations for early retirement ("Altersteilzeit") arrangements and which cannot be accessed
+by other creditors. Income and expenses relating to these designated assets are offset against the expenses arising from compounding
+the corresponding obligations and are reported within the line item Other financial income (expenses), net.
+Deferred tax assets for differences between valuations of balance sheet line items in accordance to commercial and tax law and tax loss
+carryforwards are recognized if a future tax benefit is expected. Deferred tax assets are netted with deferred tax liabilities. Recognized
+deferred tax assets and liabilities comprise temporary differences of assets, liabilities, and deferred items of entities forming part of the
+Siemens AG tax group and partnerships to the extent that the recovery or settlement of the carrying amount of assets, liabilities, or deferred
+items result in a deductible or taxable amount in the taxable profit (loss) of Siemens AG.
+Allowances on receivables are determined on the basis of the probability of default and country risks.
+Financial assets: Impairment losses are recognized if the decline in value is presumed to be other than temporary. This applies, if objective
+evidence, particularly events or changes in circumstances, indicate a significant or other than temporary decline in value. In case of an
+impairment in prior periods, a lower recognized value may not be maintained if the reasons for the impairment do no longer exist.
+Inventories are measured at the lower of average acquisition or production costs and daily values. Production costs comprise, in addition
+to direct costs, an appropriate portion of production and material overheads and depreciation of property, plant and equipment. General
+administration expenses, expenses for social facilities, voluntary social costs and company pension scheme costs are not capitalized. Write-
+downs are recorded to cover inventory risks for reduced usability and technological obsolescence as well as in the context of loss-free
+valuation of unbilled contracts in construction-type and service businesses.
+Special reserve with an equity portion includes reserves pursuant to Section 6b of the German Income Tax Act
+(Einkommensteuergesetz), recognized and transferred in fiscal years prior to the transition to regulations of the German Accounting Law
+Modernisation Act (Bilanzrechtsmodernisierungsgesetz).
+3 to 8 years
+mostly 3 to 5 years
+20 to 50 years
+5 to 10 years
+mostly 10 years
+Other equipment, plant and office equipment
+Equipment leased to others
+Technical equipment and machines
+Other buildings
+Factory and office buildings
+Useful lives of property, plant and equipment
+Property, plant and equipment: The components of production costs are described in the context of the explanations for inventories. In
+general, property, plant and equipment is depreciated using the straight-line method. In certain cases, the declining balance method is
+applied, whereby a switch is made from the declining balance to the straight-line method as soon as the latter results in higher depreciation
+expense. Items are depreciated on a pro rata temporis basis in the year of acquisition. Low-value non-current assets that are subject to
+wear and tear, movable, and capable of being used independently, are expensed immediately or capitalized and fully depreciated in the
+year of acquisition.
+Acquired goodwill is generally amortized systematically over the expected useful life of five to 15 years. The expected useful life is based
+on the expected use of the acquired businesses and is determined in particular by economic factors such as future growth and profit
+expectations, synergy effects and employee base.
+Intangible assets acquired for consideration are capitalized at acquisition costs and amortized on a straight-line basis over a maximum of
+five years or, if longer, the contractually agreed useful life. Items are amortized on a pro rata temporis basis in the year of acquisition. The
+capitalization option for internally generated intangible assets is not used.
+1,632
+67,145
+271
+101,487
+102,975
+4
+Annual Financial Statements
+Annual Financial Statements
+3.1 General Disclosures
+Siemens AG has registered offices in Berlin and Munich, Germany. The Company is registered in the commercial register maintained by
+the local courts in Berlin Charlottenburg, Germany, under the entry number HRB 12300, and in Munich, Germany, under the entry number
+HRB 6684.
+The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
+Commercial Code (Handelsgesetzbuch, HGB) and the German Stock Corporation Act (Aktiengesetz, AktG). Amounts are presented in
+millions of euros (€ million). Due to rounding, numbers presented may not add up precisely to totals provided.
+3.2 Accounting and Measurement Principles
+Revenue are proceeds from selling and leasing products, providing services and granting licenses, including licensing contracts for the
+use of the Siemens trademark.
+Negative interest from financial investments is presented as a deduction in interest income, and positive interest from borrowings as a
+deduction in interest expenses.
+|| 3. Notes to Annual Financial Statements
+Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
+assets at the balance sheet date. If the performance of the underlying assets is lower than a guaranteed return, the pension provision is
+measured by projecting forward the contributions at the guaranteed fixed return and discounting to a present value.
+According to the Act on the Improvement of Company Pensions (Gesetz zur Verbesserung der betrieblichen Altersversorgung), Siemens
+AG is secondarily liable for pension benefits provided under an indirect pension funding vehicle (mittelbarer Durchführungsweg). Siemens
+AG recognizes the underfunding in the item Provisions for pensions and similar commitments as far as the respective assets of the pension
+fund or of the pension and support fund (Pensions- und Unterstützungskasse) do not cover the settlement amount of the respective
+pension obligations.
+Other provisions are recognized in an appropriate and sufficient amount to cover individual obligations for all identifiable risks relating
+to liabilities of uncertain timing and amount and for anticipated losses on onerous contracts, taking account of price and cost increases
+expected to arise in the future. Provisions for agreed personnel restructuring measures were recognized for legal and constructive
+obligations. Significant provisions with a remaining term of more than one year are discounted using a discount rate which corresponds
+to the average market interest rate appropriate for the remaining term of the obligations, as calculated and published by Deutsche
+Bundesbank.
+Revenue
+Fiscal year
+2021
+8,176
+4,832
+2,086
+Asia, Australia
+15,094
+2021
+11,507
+1,058
+2,529
+15,094
+6
+Fiscal year
+NOTE 2 Other operating income and expenses
+Americas
+(in millions of €)
+Foreign currency translation: Receivables, other current assets, securities, cash and cash equivalents, provisions and liabilities (excluding
+advance payments received on orders) as well as commitments and contingencies denominated in foreign currency are generally
+measured applying the mean spot exchange rate on the balance sheet date. Balance Sheet line items denominated in foreign currency
+which are part of a valuation unit used to hedge foreign currency risk are measured using the mean spot exchange rate on the transaction
+date. Non-current assets and inventories acquired in foreign currency are generally measured applying the mean spot exchange rate on
+the transaction date.
+Guarantees and other commitments: Siemens AG issues parent company guarantees, i.e. guarantees to ensure performance obligations
+incurred from the delivery of goods or provision of services by affiliated and long-term investee companies or their parent companies. For
+measurement purposes, the contract amount of the secured delivery or service agreement is reduced using the straight-line method over
+the planned term of the delivery or service agreement, unless there are reasons for a different risk assessment and an increased liability
+amount ("risk-adequate liability amount"). Credit lines included in the guarantee obligations in the context of financing affiliated
+companies are recognized at their nominal amount.
+Derivative financial instruments are used by Siemens AG almost exclusively for hedging purposes and - if the relevant conditions are
+met- are aggregated with the underlying hedged item into valuation units. When a valuation unit is created, changes in values or cash
+flows from the hedged item and hedging contract are compared. A provision is recognized only for a negative surplus from the ineffective
+part of the market value changes. The unrealized gains and losses from the effective part offset each other completely and are not
+recognized in the Balance Sheet or the Income Statement.
+Classification of items in the annual financial statements: Siemens AG aggregates individual line items of the Income Statement and
+Balance Sheet if the individual line item is not material for providing a true and fair view of the Company's financial position and if such
+an aggregation improves the clarity of the presentation. Siemens AG discloses these items separately in the notes.
+The business and economic environment continues to be affected by the coronavirus pandemic (COVID-19). Due to the spread of the
+virus, it is difficult to predict the duration and extent of the resulting impact on Siemens AG's assets, provisions, liabilities and results.
+However, the Company does not anticipate that COVID-19-related effects will have a material impact on the financial statements.
+3.3 Notes to the Income Statement
+Europe, C.I.S., Africa, Middle East
+NOTE 1 Revenue
+(in millions of €)
+Digital Industry
+Smart Infrastructure
+Other revenue
+Revenue
+Revenue by region
+Revenue by lines of business
+1,293
+62,890
+249
+2021
+(229)
+Equipment leased to others
+290
+264
+(919)
+135
+(127)
+(927)
+1,183
+(137)
+6
+98
+1,217
+Other equipment, plant and office equipment
+318
+310
+(1,016)
+56
+(246)
+(7)
+2
+(252)
+175
+146
+164
+Technical equipment and machinery
+37
+23
+(59)
+1,326
+(1,008)
+(65)
+1,326
+7
+(6)
+165
+64
+73
+197
+(2,289)
+876
+897
+(211)
+Financial assets
+Shares in investments
+59,672
+9,738
+285
+(4,910)
+8,896
+Shares in affiliated companies
+427
+(2,275)
+(205)
+(95)
+(11)
+4
+(101)
+64
+69
+3,165
+Advanced payments made and construction in
+progress
+40
+(49)
+(1)
+64
+3,172
+199
+73
+2020
+(2)
+17
+Property, plant and equipment
+10
+606
+203
+10
+(1,324)
+Concessions and industrial property rights
+Goodwill
+Disposals
+Reclassifi-
+cations
+Additions
+Oct 01, 2020
+Acquisition or production costs
+Intangible assets
+(in millions of €)
+NOTE 10 Non-current assets
+3.4 Notes to the Balance Sheet
+8
+(126)
+209
+204
+(20)
+78
+Income tax expenses resulted primarily from foreign withholding taxes as well as from expenses for previous years from the completion
+of a tax audit. Tax income from the remedy of appeals filed had an offsetting effect.
+Annual Financial Statements
+Deferred taxes included income from the increase of deferred tax assets related to pension provisions.
+Other taxes of €16 (2020: €16) million were included in functional costs.
+NOTE 8 Impact of tax regulations on net income
+The use of tax incentives had a positive effect on net income of €78 million.
+NOTE 9 Income and expenses relating to prior periods
+The income statement of Siemens AG included expenses and income relating to prior periods of €253 million and €512 million,
+respectively. Expenses relating to prior periods included tax expenses related to the completion of a tax audit. Income relating to prior
+periods resulted mainly from the release of provisions as well as tax income, particularly related to the remedy of appeals filed.
+00
+NOTE 7 Other taxes
+Accumulated depreciation/amortization
+Carrying amount
+Disposals
+(100)
+103
+119
+(88)
+528
+(382)
+(16)
+(42)
+(336)
+192
+225
+Land, land rights and buildings, including
+buildings on third-party land
+392
+88
+20
+(84)
+106
+Sep 30, 2021
+Sep 30, 2021
+Sep 30, 2020
+Sep 30, 2021
+Oct 01, 2020
+Depreciation/
+amortization
+203
+Write-ups
+325
+(298)
+(26)
+88
+(236)
+89
+(88)
+1 Conditional Capital as of September 30, 2021 and 2020 amounted to €421 million and €421 million, respectively.
+Total shareholders' equity and liabilities
+Deferred income
+(10,960)
+16,389
+15,094
+1
+2020
+2021
+Note
+Other operating income
+General administrative expenses
+Selling expenses
+Research and development expenses
+Gross profit
+Cost of sales
+Revenue
+(in millions of €)
+Fiscal year
+Annual Financial Statements
+* This document is an English language translation of the decisive German version and is not provided in
+the European Single Electronic Format (ESEF). The legally required rendering in ESEF is filed in German
+language with the operator of the German Federal Gazette and published in the German Federal Gazette.
+SIEMENS
+Table of contents
+Annual Financial Statements
+3
+1.
+(12,032)
+Income Statement
+2.
+Balance Sheet
+5
+3.
+Notes
+1. Income Statement
+4
+4,135
+4,357
+(1,570)
+8,078
+Interest income
+4
+319
+411
+thereof negative interest from financial investment
+5,303
+(26)
+Interest expenses
+4
+137
+(131)
+thereof positive interest from borrowing
+395
+(18)
+FOR FISCAL 2021
+3
+(1,365)
+(1,677)
+(1,999)
+(2,131)
+(1,001)
+(1,359)
+2
+Income (loss) from investments, net
+279
+Other operating expenses
+2
+(475)
+(757)
+Income (loss) from operations
+(631)
+202
+286
+Annual Financial
+Statements*
+00
+5,450
+1,202
+(4,933)
+1,718
+(24)
+24
+1,718
+5,426
+78,133
+12,450
+(12,063)
+78,520
+(3,255)
+(770)
+36
+321
+(3,668)
+75,999
+75,920
+(6,293)
+606
+37
+(1,023)
+Securities
+(5,912)
+(12,356)
+12,659
+81,911
+Non-current assets
+74,877
+74,852
+82,213
+3,561
+3,746
+(701)
+32
+(441)
+(1,154)
+64,786
+7,570
+German Public Auditor responsible for the engagement
+The German Public Auditor responsible for the engagement is Katharina Breitsameter.
+81
+Munich, November 30, 2021
+Wirtschaftsprüfungsgesellschaft
+Breitsameter
+Wirtschaftsprüferin
+[German Public Auditor]
+Dr. Gaenslen
+Wirtschaftsprüfer
+[German Public Auditor]
+Independent Auditor's Report (Group)
+Ernst & Young GmbH
+8
+(1,482)
+58,517
+4
+(151)
+(554)
+4,447
+(897)
+1,229
+63,304
+4,115
+7,373
+6,084
+(1,485)
+216
+(178)
+(1,523)
+Loans
+Other financial income (expenses), net
+5
+39
+2,550
+2,550
+15
+Special reserve with an equity portion
+Unappropriated net income
+Other retained earnings
+Capital reserve
+Issued capital
+Treasury shares
+Subscribed capital¹
+Shareholders' equity
+Shareholders' equity and liabilities
+102,975
+101,487
+85
+51
+14
+1,583
+1,937
+20,844
+16,074
+215
+2,082
+435
+(143)
+8,351
+25,724
+184
+133
+13
+1,243
+1,034
+24,089
+(152)
+2,407
+2,398
+3,592
+16,592
+11,700
+636
+3,687
+16,023
+Liabilities
+18
+Liabilities to banks
+17
+Trade payables
+Other liabilities
+501
+2,111
+98
+1,777
+58,985
+63,638
+Liabilities to affiliated companies
+12,694
+Other provisions
+Provisions for taxes
+8,289
+8,156
+7,119
+5,387
+3,400
+2,975
+628
+21,216
+541
+619
+Provisions
+Provisions for pensions and similar commitments
+16
+12,372
+18,917
+17,564
+1,442
+1,696
+27
+5,147
+171
+5,270
+141
+12,694
+(12,694)
+(1,918)
+3,400
+(2,436)
+Unappropriated net income
+2,975
+2. Balance Sheet
+(in millions of €)
+Assets
+Non-current assets
+Intangible assets
+Property, plant and equipment
+3
+Financial assets
+Allocation to other retained earnings
+Withdrawals from other retained earnings
+(1,800)
+Income from business activity
+5,166
+5,192
+Income taxes
+Net income
+Asset reduction due to spin-off
+6
+78
+5,147
+5,270
+Appropriation of net income
+Net income
+Profit carried forward
+(20)
+(285)
+Current assets
+Advance payments received
+876
+897
+74,852
+74,877
+75,920
+75,999
+225
+11
+1,869
+(986)
+(1,005)
+949
+863
+12
+1,934
+Inventories
+192
+2020
+Receivables and other assets
+Trade receivables
+Receivables from affiliated companies
+Other receivables and other assets
+Other Securities
+Cash and cash equivalents
+10
+Prepaid expenses
+Active difference resulting from offsetting
+Total assets
+Annual Financial Statements
+Sep. 30,
+Note
+2021
+Deferred tax assets
+404
+(8,510)
+Additions and disposals in Shares in affiliated companies and Securities were mainly related to supplemental fundings of Siemens
+Pension Trust e.V. as well as to corporate law measures to simplify the investment structure of the pension assets. The additions to Shares
+in affiliated companies resulted primarily from the increase in the carrying amount of the shares in SPT Beteiligungen GmbH & Co. KG of
+€7.8 billion. This increase was due, on the one hand, from the fair value transfer of investment funds by disclosing unrealized gains of
+€4.8 billion, which led to a corresponding disposal in Securities with a carrying amount of €4.1 billion. On the other hand, the additions
+included supplemental fundings, including shares in Bentley Systems, Inc. in the amount of €1.0 billion and in Charge Point Holdings, Inc.
+in the amount of €0.3 billion as well as zero-coupon receiver swaps in the amount of €0.3 billion. In connection with the contribution of
+the shares in Bentley Systems, Inc., there was a corresponding capital reduction at Siemens Beteiligungsverwaltung GmbH & Co. OHG in
+the same amount, which resulted in a disposal in Shares in affiliated companies. Also, the intragroup sale of a stake in Atecs Mannesmann
+GmbH of €1.1 billion and the sale of Flender GmbH of €1.0 billion to Carlyle Group Inc. were reflected in disposals in Shares in affiliated
+companies.
+Memberships in supervisory boards whose establishment is required by law or in
+comparable domestic or foreign controlling bodies of business enterprises
+External positions
+(as of September 30, 2021)
+Group company positions
+(as of September 30, 2021)
+German positions:
+- Siemens Healthineers AG, Munich¹
+- Siemens Mobility GmbH, Munich
+(Chairman)
+EOS Holding AG, Krailling
+(since February 3, 2021)
+Klaus Helmrich
+May 24, 1958
+April 1, 2011
+March 31, 2021
+German positions:
+(until March 31, 2021)
+as of March 31, 2021
+Joe Kaeser
+June 23, 1957
+May 1, 2006
+(President and Chief
+Executive Officer,
+member of the
+Managing Board
+until February 3, 2021)
+as of February 3, 2021
+Term expires
+March 31, 2025
+Cedrik Neike
+First appointed
+April 1, 2011
+President and Chief
+Executive Officer
+note 28 Remuneration of the members of the Managing Board and the Supervisory Board
+Remuneration of the members of the Managing Board
+Members of the Managing Board, including members who retired from the Managing Board during the fiscal year, received cash
+compensation of €21.4 million. The fair value of share-based compensation amounted to €11.6 million for 202,139 stock awards. The
+Company granted contributions under the BSAV to members of the Managing Board totaling €3.0 million.
+Therefore, the compensation and benefits attributable to members of the Managing Board amounted to €36.0 million in total.
+Total remuneration of former members of the Managing Board
+Former members of the Managing Board and their surviving dependents received a total of €30.1 million according to Section 285 para.
+1 number 9b of the German Commercial Code.
+Siemens recognized pension provisions totaling €131.7 million for the pension entitlements to former members of the Managing Board
+and their surviving dependents.
+17
+Annual Financial Statements
+Remuneration of the members of the Supervisory Board
+Compensation attributable to members of the Supervisory Board comprises a base compensation and additional compensation for
+committee work and amounted to €5.2 million (including meeting fees).
+NOTE 29 Declaration of Compliance with the German Corporate Governance Code
+As of October 1, 2021, the mandatory statement pursuant to Section 161 of the German Stock Corporation Act (AktG) has been issued by
+the Managing Board and the Supervisory Board and is permanently accessible on www.SIEMENS.DE/CORPORATE-GOVERNANCE.
+NOTE 30 Members of the Managing Board and Supervisory Board
+Members of the Managing Board and positions held by Managing Board members
+In fiscal 2021, the Managing Board had the following members:
+Name
+Roland Busch
+(Dr. rer. nat.)
+Date of birth
+November 22,
+1964
+The Supervisory Board and the Managing Board propose the unappropriated net income of Siemens AG for the fiscal year ended September
+30, 2021, amounting to €3,400 million to be appropriated as follows: Distribution of a dividend of €4.00 on each share of no par value
+entitled to the dividend, and carry-forward of the unappropriated net income for shares of no par value not entitled to the dividend.
+At the end of
+the 2021
+Annual
+March 7, 1973 April 1, 2017
+German positions:
+Siemens Energy AG, Munich¹
+Siemens Energy Management GmbH,
+Munich
+Positions outside Germany:
+- Siemens Ltd., India¹
+Positions outside Germany:
+- Siemens Aktiengesellschaft Österreich,
+Austria (Chairman)
+- Siemens France Holding S.A., France
+Positions outside Germany:
+- Arabia Electric Ltd., Saudi Arabia
+(Deputy Chairman)
+- Siemens Ltd., Australia
+- Siemens Ltd., India¹
+- Siemens Ltd., Saudi Arabia (Deputy
+Chairman)
+- Siemens Schweiz AG, Switzerland
+(Chairman)
+- Siemens W.L.L., Qatar
+German positions:
+Munich
+Shareholders'
+Meeting
+Siemens Energy Management GmbH,
+German positions:
+May 31, 2025
+Matthias Rebellius
+January 2,
+1965
+October 1,
+2020
+September 30,
+2025
+Ralf P. Thomas
+(Prof. Dr. rer. pol.)
+March 7, 1961
+September 18, September 17,
+2013
+2023
+German positions:
+Daimler AG, Stuttgart¹
+- Mercedes-Benz AG, Stuttgart
+- Siemens Energy AG, Munich (Chairman)¹
+- Siemens Energy Management GmbH,
+Munich (Chairman)
+Positions outside Germany:
+- NXP Semiconductors N.V., Netherlands'
+German positions:
+- Evonik Industries AG, Essen¹
+Positions outside Germany:
+- Atos SE, France¹
+Siemens Energy AG, Munich'
+- Siemens Healthcare GmbH, Munich
+(Chairman)
+NOTE 27 Proposal for the appropriation of net income
+To hedge receivables from affiliated companies against interest rate risk, Siemens AG has entered into interest rate derivatives with
+external counterparties and combined these instruments with the underlying transactions in a macro valuation unit. As of September 30,
+2021, the notional amount of the receivables, which had a maximum maturity until the year 2045, amounted to €13,904 million. As of
+September 30, 2021, the cumulative market value changes of these receivables of €131 million were matched by offsetting interest rate
+derivatives with a positive net fair value of €37 million and maximum maturity terms until the year 2040, of which positive fair values
+were €148 million and negative fair values were €111 million.
+Sep 30, 2021
+Notional
+amount
+Fair values
+(in millions of €)
+Interest rate hedging contracts
+Interest rate swaps
+Interest rate options
+Existing derivative financial instruments
+5,325
+950
+6,275
+24
+5
+30
+The notional amounts equal the contractual amounts of the individual derivative financial instrument which – irrespective of the nature
+of the concluded position (sale or purchase) – are presented on a gross basis (gross notional amounts).
+-
+Fair values of interest rate derivative financial instruments are determined by discounting expected future cash flows over the remaining
+term of the instrument using current market interest rates and yield curves. If option components are included, fair values are determined
+based on an option price model or quoted market prices.
+The following table presents the carrying amounts, if existing, of derivative financial instruments not included in valuation units and the
+balance sheet line items in which these amounts were recognized.
+(in millions of €)
+Interest rate hedging contracts
+The following table presents the notional amounts and fair values of those existing derivative financial instruments that were not included
+in a valuation unit at the balance sheet date:
+Interest rate swaps
+As a consequence of its global operating, investing and financing activities, Siemens AG is in particular exposed to risks resulting from
+changes in exchange rates and interest rates, managed in line with a proven risk management system in consideration of defined risk
+limits. As the parent company of the Siemens Group, Siemens AG has the central role within the group-wide management of financial
+market risks. To manage the risks resulting from changes in exchange rates and interest rates, Siemens uses primarily foreign currency
+forward contracts, interest rate swaps, combined interest and foreign currency swaps as well as interest rate options and interest rate
+futures. Thereby the operating units of Siemens AG are not allowed to enter into derivative financial instruments for speculative purposes.
+The contract partners of the Company for derivative financial instruments are banks, brokers and affiliated companies. The credit rating
+for banks and brokers is constantly monitored.
+being subject to payment of damages and punitive damages, equitable remedies or criminal or civil sanctions, fines or disgorgements of
+profit. In individual cases, this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or
+permits. In addition, further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be expanded. Some
+of these legal proceedings could result in adverse decisions for Siemens AG that may have material effects on its financial position, the
+results of its operations and/or its cash flows in the respective reporting period. In addition, Siemens is jointly and severally liable within
+consortia. As far as not recognized in the financial statements, Siemens AG did not expect any material negative effects on its financial
+position, the results of its operations and/or its cash flows at balance sheet date.
+2021
+2,711
+111,515
+75,845
+20,011
+15,658
+114,226
+Warranty obligations relating to financing of affiliated companies included guarantees towards banks for credit lines granted to affiliated
+companies.
+Effective January 1, 2020, the Gas and Power business line was transferred to Siemens Energy Global GmbH & Co. KG in preparation for
+the spin-off of the Siemens Energy business, which occurred on September 25, 2020. The items Obligations from guarantees and Others
+included guarantees and other commitments for the benefit of companies of the Siemens Energy Group totaling €0.8 billion and €12.3
+billion, respectively, with corresponding full reimbursement rights towards Siemens Energy Global GmbH & Co. KG. In addition, the
+position included indemnifications issued in connection with dispositions of businesses. Such indemnifications, if customary to the
+relevant transactions, may protect the buyer from potential tax, legal and other risks in conjunction with the purchased business.
+Warranty obligations included obligations of Siemens AG towards affiliated companies totaling €414 million.
+Siemens AG only enters into guarantees and other commitments after careful consideration of the risks concerned and in general only in
+relation to its own business activities or those of affiliated companies as well as to business activities of companies, if it holds an investment
+in them or their parent companies. Based on an ongoing risk evaluation of the arrangements entered into and taking into account all
+information available up to the date on which the Annual Financial Statements were issued for approval, Siemens AG concluded that the
+relevant primary debtors are able to fulfill the underlying obligations. For this reason, Siemens AG considered it not probable that it will
+be called upon in conjunction with any of the guarantees and commitments described above.
+NOTE 24 Financial payment obligations under lease and rental arrangements
+Expenses for lease and rental arrangements with third parties in which the economic ownership of the leased/rented asset was not
+attributable to Siemens AG and the relevant items were not recognized as assets by Siemens AG amounted to €195 million. Object of
+these contracts were mainly real estate and other non-current assets.
+Payment obligations under lease and rental arrangements amounted to €1,155 million, of which €74 million resulted from transactions
+with affiliated companies. Payment obligations under lease and rental arrangements due within the next fiscal year amounted to €259
+million.
+NOTE 25 Other financial obligations
+Obligations for equity and debt contributions amounted to €379 million, of which €165 million related to associates.
+Approximately €2.2 billion were outstanding as of September 30, 2021 from an outsourcing agreement with a maturity of several years.
+Siemens AG has entered into a contract to pay its affiliated company Siemens Trademark GmbH & Co. KG, Germany, a running royalty for
+the use of the Siemens trademark rights. The fee is calculated by applying business-specific royalty rates to brand-related revenue. The
+contract has an indefinite duration. For fiscal 2021, the corresponding expenses amounted to €725 million. For fiscal 2022, the royalty is
+expected to be in the same magnitude.
+In the course of its normal business operations, Siemens AG is involved in numerous legal and regulatory proceedings as well as
+governmental investigations (legal proceedings) in various jurisdictions. These legal proceedings could result in particular in the Company
+15
+Annual Financial Statements
+NOTE 26 Derivative financial instruments and valuation units
+To hedge payables to affiliated companies against interest rate risk, Siemens AG has entered into interest rate derivatives with external
+counterparties. The payables hedged within this micro valuation unit had a nominal volume of €2,147 million as of September 30, 2021
+and maximum maturity terms until the year 2025. As of September 30, 2021, negative cumulative changes in market value of these
+liabilities of €101 million were matched by external interest rate derivatives with identical maturities whose market value was €109 million.
+The amount of interest rate risks hedged with the valuation unit that did not lead to a provision for anticipated losses accordingly totaled
+€227 million.
+Other assets
+Interest rate options
+Net foreign currency position (after hedging)
+Sep 30,
+2021
+(891)
+14,534
+(15,426)
+466
+779
+(312)
+(425)
+292
+7,289
+(6,998)
+(133)
+Firm commitments and forecast transactions concern business transactions for which a legally binding contract was concluded but not yet
+performed on by either contracting party, as well as contingent payment claims for already partially completed performance obligations
+in the project and product businesses.
+The net fair value of derivative financial instruments from foreign currency hedge accounting was €320 million as of September 30, 2021;
+positive fair values were €1,328 million and negative fair values were €1,008 million. Accordingly, no provision for anticipated losses was
+recognized for the derivative financial instruments with negative fair values that were included in this macro valuation unit.
+Valuation unit used to hedge the interest rate risk
+The interest rate hedging contracts used by Siemens AG serve mainly to hedge against interest rate risks and to optimize the interest result
+in accordance with internal interest rate benchmarks.
+Siemens AG has entered into interest rate derivatives with external counterparties to hedge interest rate swaps transacted with its affiliated
+companies against interest rate risk. As of September 30, 2021, the interest rate swaps transacted with affiliated companies included in
+this macro valuation unit had a notional amount of €2,080 million and fair values of €(255) million and had maximum maturity terms
+until the year 2028. At balance sheet date, these underlying transactions were matched by external interest rate derivatives with fair values
+of €115 million, and maximum maturity terms until the year 2028. As of September 30, 2021, the negative surplus for the macro valuation
+unit, recorded in provisions for onerous contracts, amounted to €139 million.
+thereof with affiliated companies
+Sep 30, 2021
+Other
+provisions Other liabilities
+thereof with external contract partners
+Net foreign currency position (before hedging)
+Derivative financial instruments requiring recognition
+(283)
+1
+1
+(283)
+(10)
+(10)
+Provided the relevant conditions are met, derivative financial instruments are aggregated with the underlying hedged item into valuation
+units. Using the freezing method, the hedging transactions are not recognized in the balance sheet. The effectiveness of the valuation
+unit is either ensured through risk management, or is demonstrated both prospectively and retrospectively based on appropriate methods
+used to demonstrate effectiveness (e.g. dollar offset method, regression method, sensitivity analysis). Valuation gains and losses from
+derivative financial instruments and hedged items are netted for each valuation unit. A provision for anticipated losses on onerous
+contracts is recognized for the respective valuation unit in the amount of an existing loss surplus. Profit surpluses are not recognized.
+Valuation unit used to hedge the foreign currency risk
+According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
+exposure. The net foreign currency position of the Siemens units serves as a central performance measure and has to be hedged within a
+band of at least 75% but no more than 100% with the Corporate Treasury of Siemens AG.
+The remaining foreign currency risk after offsetting cash flows in the same currency is hedged by the Corporate Treasury of Siemens AG
+with external contract partners. The net foreign currency position (before hedging) of Siemens AG is combined with the offsetting foreign
+currency exchange contracts to a macro valuation unit. For this purpose, hedged items and hedging instruments are measured with the
+respective underlying discounted cash flows. For foreign currency derivative financial instruments, the determination is based on the
+changes in relevant forward exchange rates. The existing derivative currency hedging contracts are included in the valuation unit in their
+entirety and had maturity terms until the year 2041. The cash in- and outflows from the foreign currency exchange contracts, firm
+commitments and forecast transactions are disclosed on a net basis in the following table.
+16
+Annual Financial Statements
+(in millions of €)
+Foreign currency risk from balance sheet items
+thereof assets
+thereof liabilities
+Foreign currency risk from firm commitments and forecast transactions
+thereof expected cash inflows from firm commitments and forecasted transactions
+thereof expected cash outflows from firm commitments and forecasted transactions
+Foreign currency exchange contracts (net face value)
+Sep 30,
+- Siemens Healthineers AG, Munich
+(Chairman)1
+- Siemens Proprietary Ltd., South Africa
+(Chairman)
+January 31, 2023
+2018
+January 27, 2023
+2015
+Positions outside Germany:
+- Air Liquide International S.A., France (Chairman and
+Chief Executive Officer) 3,4
+- Air Liquide International Corporation (ALIC), USA
+(Chairman)4
+American Air Liquide Holdings, Inc., USA4
+The Hydrogen Company S.A., France4
+German positions:
+- Siemens Energy AG, Munich³
+- Siemens Energy Management GmbH, Munich
+German positions:
+Bayerische Motoren Werke Aktiengesellschaft,
+Munich (Chairman)³
+Henkel AG & Co. KGaA, Düsseldorf³,5
+Henkel Management AG, Düsseldorf
+Positions outside Germany:
+- Member of the Board of Directors, Nestlé S.A.,
+Switzerland³
+German positions:
+Messer Group GmbH, Sulzbach
+Siemens Healthcare GmbH, Munich
+August 13,
+1962
+July 14, 1971
+Siemens Healthineers AG, Munich³
+Baroness Nemat Shafik Director of the London School of
+(DBE, DPhil)
+Nathalie von Siemens
+(Dr. phil.)
+- ThyssenKrupp AG, Essen (Deputy Chairman)³
+Traton SE, Munich³
+Positions outside Germany:
+- TRUMPF Schweiz AG, Switzerland4
+January 31, 2023
+Hagen Reimer²
+Trade Union Secretary of the Managing
+Board of IG Metall
+April 26,
+1967
+January 30, 2023
+2019
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+Chairman of the Supervisory Board of
+Bayerische Motoren Werke
+Aktiengesellschaft
+May 29, 1956 January 27, 2023
+2015
+Kasper Rørsted
+(since February 3, 2021)
+Chief Executive Officer and Board
+Member of adidas AG³
+February 24,
+1962
+February 3, 2025
+2021
+Economics
+Member of supervisory boards
+- Siemens Energy Management GmbH, Munich
+- TÜV Süd AG, Munich
+EssilorLuxottica SA, France³
+until February 3, 2021)
+1967
+June 21,
+1965
+January 31, 2023
+2018
+January 31, 2023
+2018
+German positions:
+Siemens Industry Software GmbH, Cologne
+as of February 3, 2021
+Matthias Zachert
+Chairman of the Board of Management of November 8,
+LANXESS AG³
+Gunnar Zukunft²
+Deputy Chairman of the Central Works
+Council of Siemens Industry Software
+GmbH
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+2 Employee representative.
+3 Publicly listed.
+4 Group company position.
+5 Shareholders' Committee.
+1
+19
+Annual Financial Statements
+January 23, 2021
+2013
+Positions outside Germany:
+October 21,
+1946
+Siemens Healthcare GmbH, Munich
+Michael Sigmund²
+Chairman of the Committee of
+September
+Spokespersons of the Siemens Group and 13, 1957
+Chairman of the Central Committee of
+March 1,
+2014
+2023
+Spokespersons of Siemens AG
+Chairwoman of the Central Works Council August 3,
+Dorothea Simon²
+of Siemens Healthcare GmbH
+Grazia Vittadini
+(since February 3, 2021)
+Werner Wenning
+(Second Deputy Chairman
+and member of the
+Supervisory Board
+Airbus Special Advisor
+1969
+September
+23, 1969
+October 1,
+2017
+February 3, 2025
+2021
+2023
+German positions:
+Member of the Supervisory Board
+Positions outside Germany:
+- Siemens Energy AG, Munich³
+- Premium Aerotec GmbH, Augsburg (Deputy
+- C3.ai, Inc., USA³
+Birgit Steinborn²
+Chairwoman of the Central Works Council March 26,
+First Deputy Chairwoman
+Werner Brandt
+of Siemens AG
+Chairman of the Supervisory Board of
+1960
+January 3,
+January 24, 2023
+2008
+January 31, 2023
+German positions:
+18
+Annual Financial Statements
+(Dr. rer. pol.)
+Second Deputy Chairman
+(since February 3, 2021)
+Tobias Bäumler²
+(since October 16, 2020)
+Michael Diekmann
+RWE AG and of ProSiebenSat.1 Media SE
+Deputy Chairman of the Central Works
+Council and of the Combine Works
+Council of Siemens AG
+Chairman of the Supervisory Board of
+Allianz SE
+1954
+2018
+-A.P. Møller-Mærsk A/S, Denmark (Chairman)³
+October 10,
+1979
+- Allianz SE, Munich (Deputy Chairman)³
+Positions outside Germany:
+enterprises (as of September 30, 2021)
+Judith Wiese
+January 30,
+1971
+October 1,
+2020
+September 30,
+2023
+1 Publicly listed.
+German positions:
+- European School of Management and
+Technology GmbH, Berlin
+Members of the Supervisory Board and positions held by Supervisory Board members
+In fiscal 2021, the Supervisory Board had the following members:
+Memberships in supervisory boards whose
+establishment is required by law or in comparable
+Name
+Occupation
+Jim Hagemann Snabe
+Chairman
+Chairman of the Supervisory Board of
+Siemens AG and of the Board of Directors
+of A.P. Møller-Mærsk A/S
+Date of birth
+October 27,
+1965
+Member
+since
+October 1,
+2013
+Term
+domestic or foreign controlling bodies of business
+expires
+2025
+German positions:
+Chairman)
+October
+16, 2020
+December 23, January 24, 2023
+1954
+2008
+- Fresenius Management SE, Bad Homburg
+German positions:
+- Siemens Energy AG, Munich³
+Siemens Energy Management GmbH, Munich
+German positions:
+Siemens Mobility GmbH, Munich (Deputy
+Chairwoman)
+Nicola Leibinger-
+Kammüller
+(Dr. phil.)
+(until February 3, 2021)
+as of February 3, 2021
+Benoît Potier
+Chief Executive Officer (CEO) - President
+and Chairwoman of the Group
+Management of TRUMPF GmbH + Co. KG
+Chairman and Chief Executive Officer of
+Air Liquide S.A.
+January 25, 2023
+December 15, January 24, 2021
+1959
+2008
+September 3,
+1957
+2018
+German positions:
+- MAN Truck & Bus SE, Munich (Deputy Chairman)
+- Allianz SE, Munich (Chairman)³
+2023
+German positions:
+- ProSiebenSat.1 Media SE, Munich (Chairman)³
+Andrea Fehrmann²
+(Dr. phil.)
+Trade Union Secretary, IG Metall Regional June 21,
+Office for Bavaria
+January 31, 2023
+1970
+2018
+Bettina Haller²
+Chairwoman of the Combine Works
+Council of Siemens AG
+March 14,
+1959
+April 1,
+2007
+2023
+Harald Kern²
+Chairman of the Siemens Europe
+Committee
+March 16,
+1960
+January 24, 2023
+2008
+Jürgen Kerner²
+Chief Treasurer and Executive Member of January 22,
+the Managing Board of IG Metall
+1969
+2012
+- RWE AG, Essen (Chairman)³
+Guarantees and other commitments
+Fresenius SE & Co. KGaA, Bad Homburg (Deputy
+Chairman)³
+thereof relating to performance guarantees on behalf of affiliated companies
+5,147
+21,216
+The capital stock of Siemens AG is divided into 850,000,000 registered shares of no-par value with a notional value of €3.00 per share.
+Authorized capital (not issued)
+As of September 30, 2021, Siemens AG had authorized capital totaling a nominal amount of €600 million, which can be issued in
+instalments and with different time limits by issuing up to 200 million registered no-par value shares.
+In detail, there are the following authorizations to increase the capital stock:
+.
+•
+By resolution of the Annual Shareholders' Meeting of February 3, 2021, the Managing Board is authorized to increase the capital stock
+until February 2, 2026 by up to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash
+(Authorized Capital 2021). Subscription rights of existing shareholders are excluded. The new shares may exclusively be offered to
+employees of Siemens AG and its affiliated companies (employee shares). To the extent permitted by law, employee shares may also be
+issued in such a manner that the contribution to be paid on such shares is covered by that part of the annual net income which the
+Managing Board and the Supervisory Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock
+Corporation Act.
+Further, by resolution of the Annual Shareholders' Meeting of January 30, 2019, the Managing Board is authorized to increase, with the
+approval of the Supervisory Board, the capital stock until January 29, 2024 by up to €510 million through the issuance of up to 170
+million registered no-par value shares against cash contributions and/or contributions in kind (Authorized Capital 2019). Under certain
+conditions, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude shareholders' subscription rights
+in the event of issue against contributions in kind. In the case of issue against cash payment, the shares are generally to be offered to
+shareholders for subscription. However, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude
+subscription rights, firstly for any fractional amounts, secondly, to grant dilution compensation in connection with convertible bonds or
+bonds with warrants already issued, and thirdly, under certain further conditions, if the issue price of the new shares does not fall
+significantly below the stock exchange price of the company's already listed shares.
+Treasury shares
+The following table presents the development of treasury shares:
+(in number of shares)
+Treasury shares, beginning of fiscal year
+Share buyback
+Issuance under share-based payments and employee share programs
+Treasury shares, end of fiscal year
+Fiscal year
+2021
+50,690,288
+976,346
+(4,022,053)
+(2,804)
+47,644,581
+503
+18,917
+(3)
+12
+(143)
+2,398
+(3)
+12
+2,407
+8,156
+133
+8,289
+5,387
+(544)
+359
+1,918
+7,119
+2,975
+(2,804)
+3,229
+3,400
+(547)
+(152)
+Siemens AG held 47,644,581 treasury shares, equaling a nominal amount of €143 million, representing 5.6% of the capital stock.
+Annual Financial Statements
+12
+Annual Financial Statements
+Therefore, the assets do not meet the criteria for offsetting against the pension obligation and are presented as financial assets of Siemens
+AG.
+The actuarial valuation of the settlement amount of €13,123 million as of September 30, 2021 was based, among others, on a discount
+rate of 1.98% and on a rate of pension progression of 1.50% per year, except for the BSAV and deferred compensation plans with 1.00%
+per year. The mortality tables used (Siemens Bio 2017/2021) are primarily based on data of the German Siemens population, using a set
+of formulas that corresponds to generally accepted actuarial standards.
+NOTE 17 Other provisions
+The main amounts in other provisions were contributed by provisions related to personnel costs of €1,271 million, provisions for
+decontamination obligations of €496 million, and provisions for onerous contracts from derivative financial instruments amounting to
+€422 million.
+In May 2021, Siemens AG and the Federal Republic of Germany entered into a public-law contract based on which the obligation of final
+disposal of nuclear waste is transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the
+payment is subject to the approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made
+to measure the obligations that remain with Siemens AG, with regard to conditioning and packaging of nuclear waste, as well as
+intermediate storage and transport to the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032.
+NOTE 18 Liabilities
+(in million of €)
+Liabilities to banks
+Advance payments received
+Trade payables
+Liabilities to affiliated companies
+Other liabilities
+thereof to long-term investees
+thereof miscellaneous liabilities
+therein from taxes
+therein for social security
+In Germany, Siemens AG provides pension benefits through the BSAV (Beitragsorientierte Siemens Altersversorgung), frozen legacy plans
+and deferred compensation plans. The majority of Siemens' active employees participate in the BSAV. The benefits are predominantly
+based on nominal contributions by the Company and investment returns on assets designated to that plan, subject to a minimum return
+guaranteed by the Company. In connection with the implementation of the BSAV, benefits provided under the frozen legacy plans were
+modified to substantially eliminate the effects of compensation increases. Therefore, valuation assumptions for salary and pension
+increases including career trend are no longer significant for the pension obligation of Siemens AG. The pension benefits are funded via
+contractual trust arrangements (CTA). A portion of these trust assets also covers the pension obligations of other domestic subsidiaries.
+11
+NOTE 16 Provisions for pensions and similar commitments
+The State of Qatar, Doha, acting by and through the DIC Company Limited, notified us on May 10, 2012, that its percentage of voting
+rights (held either directly or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on May 7, 2012
+and amounted to 3.04% (27,758,338 voting rights) as per this date.
+On September 24, 2021, the share buyback announced on November 8, 2018 with a volume of up to €3 billion was completed. The share
+buyback, which began on December 3, 2018, was executed in the reporting period based on the authorization granted by the Annual
+Shareholders' Meeting on February 5, 2020. In addition to the dividend policy, the share buyback was intended to allow shareholders to
+continuously participate in the success of the company. In fiscal 2021, Siemens AG repurchased a total of 976,346 treasury shares under
+this share buyback program. This represented a nominal amount of €3 million or 0.1% of capital stock. In this reporting period, €137
+million (excluding incidental transaction charges) were spent for this purpose; this represents a weighted average stock price of €140.22
+per share. The purchases were made in the reporting period on 228 Xetra trading days and were carried out by a bank that had been
+commissioned by Siemens AG; the shares were purchased exclusively on the electronic trading platform of the Frankfurt Stock Exchange
+(Xetra). The average volume on these trading days was about 4,282 shares.
+In addition, a final payment of €410 million was made to the executing bank in fiscal 2021, which led to weighted average acquisition
+costs of €100.42 per share in relation to the total share buyback from 2018 to 2021 of 29,385,132 shares with a buyback volume including
+the final payment of €2,951 million. The final payment was recognized in the balance sheet as a purchase price adjustment against other
+retained earnings.
+On June 24, 2021, Siemens again announced a share buyback with a volume of up to €3 billion in the period from the beginning of fiscal
+2022 to 2026. The share buyback, which began on November 15, 2021, will be executed based on the authorizations granted by the
+Annual Shareholders' Meeting on February 5, 2021. In addition to the dividend policy, the share buyback is intended to allow shareholders
+to continuously participate in the success of the company.
+The treasury shares purchased under the share buybacks may be used for purposes of retirement, distribution to employees, members of
+the executive bodies of companies affiliated with Siemens and members of the Managing Board, as well as the servicing of convertible
+bonds with attached warrants.
+In fiscal 2021, Siemens AG re-issued in total 4,022,053 treasury shares under the exclusion of subscription rights in connection with share-
+based payments and employee share programs in the Group, equaling a nominal amount of €12 million and 0.5% of the capital stock. The
+Company received in total €203 million for 1,729,089 shares, re-issued against payment of a purchase price. Siemens AG received this
+amount for unrestricted use. All shares were sold as investment shares in connection with the share matching program to plan participants.
+In each case, the purchase price was determined on the basis of the closing rate in Xetra trading, determined on a monthly effective date.
+Therefore, in the reporting period, in total 1,199,097 shares related to the monthly investment plan at a weighted average share price of
+€130.61 per share, 158,769 shares related to the share matching plan at a weighted average share price of €134.02 per share, and
+371,223 shares related to the base share program at a weighted average share price of €67.01 per share (after consideration of a 50%
+subsidy by the Company). The other shares re-issued during the reporting period can be primarily attributed to the servicing of stock
+awards granted in fiscal 2017 totaling 1,555,044 shares, to 624,480 matching shares under the share matching program for fiscal 2018,
+and to 113,440 jubilee shares.
+Information on amounts subject to dividend payout restrictions
+(in millions of €)
+Fiscal Year
+2021
+Amount representing the difference of the recognition of provisions and similar commitments based on average interest rates covering ten and
+seven years, respectivly
+890
+Amounts from the capitalization of deferred taxes
+1,243
+Amounts from the capitalization of assets at fair value
+38
+These amounts subject to dividend payout restrictions face other retained earnings in a sufficiently high amount. The unappropriated net
+income of €3,400 million is available for distribution.
+Disclosures on shareholdings of Siemens AG
+As of September 30, 2021, the following information on shareholdings subject to reporting requirements was available to the Company
+pursuant to Section 160 para 1 No. 8 German Stock Corporation Act (Aktiengesetz):
+BlackRock, Inc., Wilmington, USA, notified us on April 14, 2021, that its percentage of voting rights (held either directly or indirectly) in
+Siemens AG amounted to 6.17% (52,408,410 voting rights) on April 9, 2021.
+The Werner Siemens-Stiftung, Zug, Switzerland, notified us on January 21, 2008, that its percentage of voting rights (held either directly
+or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on January 2, 2008 and amounted to 3.03%
+(27,739,285 voting rights) as per this date.
+Liabilities
+2,550
+Sep 30, 2021
+404
+264
+238
+253
+280
+856
+874
+70
+73
+1,934
+1,869
+Sep 30, 2021
+1,696
+17,564
+thereof
+maturities
+more than
+one year
+40
+4,407
+Sep 30, 2020
+thereof
+maturities
+more than
+one year
+1,442
+12,694
+69
+2,845
+491
+1,583
+2020
+Sep 30,
+Disposals of investments resulted primarily from the sale of shares in Siemens Energy AG held by Siemens Pension-Trust e.V., totaling
+€1.0 billion. Proceeds from the sales were also contributed to SPT Beteiligungen GmbH & Co. KG.
+thereof Others
+For the investment in Siemens Energy AG, the market price as of September 30, 2021, was around 11% below the carrying amount of
+€5.3 billion. However, the investment is not considered to be permanently impaired due to the unchanged expected value potential.
+Loans included loans to affiliated companies amounting to €3,327 (2020: €3,249) million, loans to investments amounting to €43 (2020:
+€0) million, and other loans amounting to €375 (2020: €312) million.
+Total impairments of non-current assets were €772 (2020: €2,193) million.
+NOTE 11 Inventories
+(in millions of €)
+Raw materials and supplies
+Work in progress
+Finished products and goods
+Cost of unbilled contracts
+Advance payments made
+Inventories
+NOTE 12 Receivables and other assets
+(in millions of €)
+Trade receivables
+Receivables from affiliated companies
+Other receivables and other assets
+thereof from long-term investees
+thereof other assets
+Receivables and other assets
+2021
+2,550
+186
+170
+Subscribed capital
+Treasury shares
+Issued capital
+Capital reserve
+Other retained earnings
+Unappropriated net income
+Shareholders' equity
+Subscribed capital
+Oct 01, 2020 Share buybacks Issuance of treasury
+shares under share-
+based payments
+and employee
+share programs
+Annual Financial Statements
+Sep 30,
+2021
+1,089
+(751)
+(287)
+51
+950
+Dividend
+for 2020
+Net income
+(in millions of €)
+1,937
+NOTE 15 Shareholders' equity
+Settlement amount for offset personnel-related provisions
+2
+2
+1,582
+186
+1,936
+170
+20,844
+4,632
+16,074
+3,084
+NOTE 13 Deferred tax assets
+Deferred tax assets resulted mainly from pension provisions and pension-related assets as well as deferred taxes of companies within the
+consolidated tax group. Deferred taxes from partnerships had an offsetting effect.
+For the measurement of deferred taxes, a tax rate of 31.33% was applied. Deviating from this, a tax rate of 15.83% was applied for
+temporary differences related to assets, liabilities and prepaid/deferred items of partnerships.
+10
+10
+NOTE 14 Active difference resulting from offsetting
+(in millions of €)
+Fair value of designated plan assets
+Settlement amount for offset pension provisions
+Active difference resulting from offsetting
+Acquisition cost of designated plan assets
+Sep 30,
+Receivables from affiliated companies resulted primarily from intragroup-financing activities and included trade receivables totaling €6
+(2020: €31) million.
+up to 1
+year
+Fiscal year
+2021
+4,145,939
+1,402,547
+(663,086)
+(227,627)
+(3,591)
+(90,280)
+114,516
+4,678,418
+The pro rata intrinsic value of all stock awards issued to beneficiaries of Siemens AG amounted to €288 million at the balance sheet date.
+Share Matching Program
+Plan participants receive the right to one Siemens share without payment (matching share) for every three investment shares continuously
+held over a vesting period.
+Matching shares granted to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic
+value (= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired at
+the balance sheet date.
+The following table shows the changes in the entitlements to matching shares of beneficiaries of Siemens AG:
+(in number of shares)
+Outstanding, beginning of fiscal year
+Granted
+Vested and fulfilled
+Forfeited
+Non-vested, end of fiscal year
+Settled
+Organizational changes
+Settled
+Employees
+Annual Financial Statements
+Fiscal year
+2021
+27,100
+8,300
+7,000
+7,200
+49,500
+NOTE 21 Share-based payment
+Siemens AG allows employees and members of the Managing Board to participate in share-based payment programs. For the purpose of
+servicing share-based payment programs Siemens AG also delivers Siemens shares, which have been granted by affiliated companies.
+Stock Awards
+Siemens AG grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
+Stock awards to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic value
+(= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired
+considering the estimated target attainment at the balance sheet date.
+The following table shows the changes in the stock awards held by beneficiaries of Siemens AG:
+(in number of shares)
+Non-vested, beginning of fiscal year
+Granted
+Vested and fulfilled
+Forfeited
+Change in connection with the adjustment of the ESG target
+Organizational changes
+Fiscal year
+2021
+from carrying
+amount
+2,383
+226
+331
+331
+37
+37
+59
+59
+2,583
+2,809
+226
+Generally, shares in investment funds are accounted for securities held as non-current financial assets. Exceptions were those shares which
+represented plan assets and therefor were not accessible by all other creditors. These shares are held exclusively for the purpose of settling
+liabilities arising from post-employment obligations or comparable obligations with a long-term maturity, and are to be offset against such
+liabilities.
+NOTE 23 Guarantees and other commitments
+(in millions of €)
+Obligations from guarantees
+2021
+thereof relating to financing of affiliated companies
+Warranty obligations
+Market value
+amount
+2,157
+Carrying
+Deviation
+744,034
+314,473
+(268,767)
+(36,845)
+(20,289)
+4,975
+Outstanding, end of fiscal year
+The pro rata intrinsic value of all matching shares issued to beneficiaries of Siemens AG amounted to €64 million.
+737,581
+Administration and general functions
+±
+NOTE 22 Shares in investment funds
+The following shares in investment funds according to investment objects were held:
+Mixed funds
+Bond-based funds
+Share-based funds
+Money market funds
+Shares in investment assets according to investment objects
+Annual Financial Statements
+Sep 30, 2021
+14
+Research and development
+(in million of €)
+Production
+1,293
+1,224
+68
+1,632
+1,619
+14
+5
+5
+1
+1
+1,288
+50
+1,220
+68
+1,632
+1,618
+14
+50
+39
+39
+3,163
+8,674
+51,802
+63,638
+thereof
+maturities
+more than
+5 years
+1 year up
+to 5 years
+Sep 30,
+2020
+Sales
+up to
+1 year
+1 year up
+to 5 years
+thereof
+maturities
+more than
+5 years
+501
+501
+209
+98
+2,111
+2,072
+39
+1,777
+1,708
+69
+52,047
+5,270
+1,669
+98
+209
+58,985
+231
+(3,009)
+(3,211)
+(7,722)
+(in millions of €)
+Wages and salaries
+Fiscal year
+2021
+2020
+(4,584)
+(4,993)
+Expenses for pensions
+(657)
+(383)
+(738)
+(437)
+Personnel expenses
+(5,624)
+13
+231
+(6,168)
+Personnel expenses did not include the expenses resulting from the compounding of the pension and personnel-related provisions, which
+are included in other financial income (expenses), net.
+(5,299)
+(4,713)
+Social security contributions and expenses for other employee benefits
+2021
+5,377
+1,669
+55,844
+2020
+62,890
+67,145
+55,226
+8,756
+Liabilities to affiliated companies resulted primarily from intragroup-financing activities.
+The breakdown of employees per function is as follows:
+3,163
+NOTE 19 Material expenses
+(in millions of €)
+Fiscal year
+Expenses for raw materials, supplies and purchased merchandise
+Costs of purchased services
+3.5 Other disclosures
+NOTE 20 Personnel expenses
+Material expenses
+1005
+58
+Siemens Corporation, Wilmington, DE / United States
+100
+1
+1,497
+(48)
+Siemens Capital Company LLC, Wilmington, DE / United States
+6
+5,327
+PolyDyne Software Inc., Austin, TX / United States
+100
+422
+124
+1,607
+100
+Siemens Government Technologies, Inc., Wilmington, DE / United States
+Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
+Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
+Siemens Industry Software Inc., Wilmington, DE / United States
+Siemens Industry, Inc., Wilmington, DE / United States
+5
+100
+(14)
+6,632
+100
+100
+160
+13,895
+100
+Siemens Financial Services, Inc., Wilmington, DE / United States
+158
+3
+375
+530
+100
+(46)
+4,675
+176
+100
+(21)
+129
+73
+(4)
+98
+100
+(15)
+100
+Fluence Energy, LLC, Wilmington, DE / United States
+Hickory Run Holdings, LLC, Wilmington, DE / United States
+Mannesmann Corporation, New York, NY / United States
+(44)
+(18)
+43
+4
+275
+205
+43
+100
+-
+Panda Stonewall Intermediate Holdings I, LLC, Wilmington, DE / United States
+PETNET Solutions, Inc., Knoxville, TN / United States
+-
+28
+100
+Dade Behring Hong Kong Holdings Corporation, Tortola / Virgin Islands, British
+6,852
+Varian Medical Systems Netherlands Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems, Inc., Wilmington, DE / United States
+214
+423
+100
+246
+8,620
+100
+94
+33
+100
+Asia, Australia (53 companies)
+Australia Hospital Holding Pty Limited, Bayswater / Australia
+J.R.B. Engineering Pty Ltd, Bayswater / Australia
+100
+1
+100
+-
+100
+Siemens Ltd., Bayswater / Australia
+12
+102
+100
+Siemens Mobility Pty Ltd, Bayswater / Australia
+22
+159
+eMeter Corporation, Wilmington, DE / United States
+Enlighted, Inc., Wilmington, DE / United States
+100
+Beijing Siemens Cerberus Electronics Ltd., Beijing / China
+22
+7,415
+6,587
+Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
+100
+Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
+165
+16,362
+100
+Siemens Mobility, Inc, Wilmington, DE / United States
+70
+938
+100
+Siemens Public, Inc., Iselin, NJ / United States
+27
+1,476
+100
+Siemens USA Holdings, Inc., Wilmington, DE / United States
+-
+10,376
+100
+SMI Holding LLC, Wilmington, DE / United States
+(6)
+7
+100
+Supplyframe, Inc., Pasadena, CA / United States
+(1)
+60
+100
+Thoughtworks Holding Inc., Wilmington, DE / United States
+65
+395
+85
+461
+ECG TopCo Holdings, LLC, Wilmington, DE / United States
+100
+Corindus, Inc., Wilmington, DE / United States
+2
+378
+100
+Siemens Industry Software Limited, Frimley, Surrey / United Kingdom
+18
+101
+Siemens Mobility Limited, London / United Kingdom
+111
+750
+100
+Siemens Pension Funding Limited, Frimley, Surrey / United Kingdom
+(2)
+480
+Siemens Industry Software Computational Dynamics Limited, Frimley, Surrey / United Kingdom
+100
+22
+1,053
+100
+Siemens Process Systems Engineering Limited, Frimley, Surrey / United Kingdom
+(15)
+105
+100
+Yunex Limited, Poole, Dorset / United Kingdom
+60
+100
+Americas (47 companies)
+Siemens Industrial S.A., Buenos Aires / Argentina
+GNA 1 Geração de Energia S.A., São João da Barra / Brazil
+Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
+Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
+Siemens Participações Ltda., São Paulo/ Brazil
+EPOCAL INC., Toronto / Canada
+Siemens plc, Frimley, Surrey / United Kingdom
+100
+1,214
+577
+100
+22
+Next47 Fund 2021, L.P., Palo Alto, CA / United Kingdom
+162
+100
+Project Ventures Rail Investments I Limited, Frimley, Surrey / United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
+Siemens Financial Services Holdings Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+Siemens Healthcare Diagnostics Manufacturing Ltd, Frimley, Surrey / United Kingdom
+Siemens Healthcare Diagnostics Products Ltd, Frimley, Surrey / United Kingdom
+15
+8
+100
+15
+591
+57
+23
+137
+100
+41
+341
+100
+6
+180
+100
+3
+170
+100
+Siemens Healthcare Limited, Frimley, Surrey / United Kingdom
+34
+(26)
+100
+Siemens Holdings plc, Frimley, Surrey / United Kingdom
+(1)
+ECG Acquisition, Inc., Wilmington, DE / United States
+19
+(11)
+17
+44
+100
+(2)
+46
+100
+58
+83
+100
+6
+111
+100
+Babson Diagnostics, Inc., Dover, DE / United States
+100
+(4)
+205
+Bentley Systems, Incorporated, Wilmington, DE / United States
+101
+278
+95,7
+CEF-L Holding, LLC, Wilmington, DE / United States
+7
+247
+275
+ChargePoint Holdings, Inc., Campbell, CA / United States
+n/a
+n/a
+4
+7
+77
+3
+100
+277
+225
+20
+138
+100
+16
+78
+100
+(12)
+74
+100
+3
+116
+100
+22
+22
+Annual Financial Statements
+Siemens Canada Limited, Oakville / Canada
+Siemens Financial Ltd., Oakville / Canada
+Siemens Healthcare Limited, Oakville / Canada
+Siemens S.A., Santiago de Chile / Chile
+Siemens S.A., Tenjo / Colombia
+Grupo Siemens S.A. de C.V., Mexico City / Mexico
+Siemens, S.A. de C.V., Mexico City / Mexico
+26
+284
+100
+13
+463
+100
+30
+44
+Mentor Graphics (Shanghai) Electronic Technology Co., Ltd., Shanghai / China
+126
+100
+Dresser-Rand Asia Pacific Sdn. Bhd., Kuala Lumpur / Malaysia
+6
+100
+Siemens Malaysia Sdn. Bhd., Petaling Jaya Malaysia
+6
+86
+100
+3
+100
+Siemens, Inc., Manila / Philippines
+Siemens Pte. Ltd., Singapore / Singapore
+13
+39
+100
+Siemens Limited, Taipei / Taiwan, Province of China
+13
+100
+Siemens Mobility Limited, Bangkok/Thailand
+11
+10
+100
+Siemens Ltd., Ho Chi Minh City / Viet Nam
+1
+25
+100
+1 The values correspond to the annual financial statements after a possible profit transfer, for subsidiaries according to the IFRS closing.
+92
+2 Siemens AG is a shareholder with unlimited liability of this company.
+Siemens Ltd. Seoul, Seoul / Korea, Republic of
+100
+1,523
+51
+Siemens Technology and Services Private Limited, Navi Mumbai / India
+28
+65
+100
+P.T. Jawa Power, Jakarta / Indonesia
+195
+909
+505
+Siemens Healthcare Diagnostics K.K., Tokyo / Japan
+7
+207
+100
+100
+25
+251
+100
+Siemens K.K., Tokyo / Japan
+5
+180
+100
+Varian Medical Systems K.K., Tokyo / Japan
+10
+77
+100
+Siemens Healthineers Ltd., Seoul / Korea, Republic of
+27
+Siemens Healthcare K.K., Tokyo / Japan
+3 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability of this company.
+4 Values from fiscal year October 01, 2019 - September 30, 2020
+5 Values from fiscal year January 01, 2020 - December 31, 2020
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
+annual financial statements and of the management report.
+Basis for the opinions
+We conducted our audit of the annual financial statements and of the management report in accordance with Sec. 317 HGB and the EU
+Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted
+Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
+In conducting the audit of the annual financial statements we also complied with International Standards on Auditing (ISA). Our
+responsibilities under those requirements, principles and standards are further described in the "Auditor's responsibilities for the audit of
+the annual financial statements and of the management report" section of our auditor's report. We are independent of the Company in
+accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German
+professional responsibilities in accordance with these requirements. In addition, in accordance with Art. 10 (2) f) of the EU Audit
+Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the EU Audit Regulation. We believe
+that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the annual financial statements
+and on the management report.
+Key audit matters in the audit of the annual financial statements
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual financial
+statements for the fiscal year from October 1, 2020 to September 30, 2021. These matters were addressed in the context of our audit of
+the annual financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these matters.
+Below, we describe what we consider to be the key audit matters:
+Impairment of non-current financial assets
+Reasons why the matter was determined to be a key audit matter: The impairment test of non-current financial assets was a key audit
+matter, as in particular shares in affiliated companies and investments entail a significant risk of material misstatement due to the
+materiality of these assets as well as the judgment involved in assessing whether there is objective evidence to indicate a lower net
+realizable value and permanent impairment. The valuations of non-current financial assets also depend to a large extent on the assessment
+of future cash inflows, particularly given the continuing effects of the COVID-19 pandemic, and the discount rate applied.
+Auditor's response: In assessing whether there was objective evidence to indicate a lower net realizable value and permanent impairment,
+we obtained an understanding of management's evaluation and also obtained external evidence of ratings, stock market prices, analyst
+assessments and observable valuation inputs in this regard.
+With regard to the net realizable values calculated by management and its assessment as to whether an impairment is expected to be
+permanent, we examined the underlying processes related to the planning of future cash flows as well as to the calculation of net realizable
+value. We assessed the underlying valuation models for the determination of net realizable value in terms of methodology and reperformed
+the calculations with the assistance of internal valuation specialists. We further obtained explanations from management regarding
+material value drivers of the planning, including the effects of the COVID-19 pandemic, and examined whether the budget planning
+reflects general and industry-specific market expectations.
+Forecast accuracy was assessed on a sample basis using budget-to-actual comparisons of historically forecast data with the actual results,
+also considering the effects attributable to the COVID-19 pandemic. The parameters used to estimate net realizable value such as the
+estimated growth rates and the weighted average cost of capital rates were assessed by comparing them to publicly available market data.
+We also performed our own sensitivity analyses to assess the impairment risk in the case of a reasonably possible change in one of the
+significant assumptions.
+Our audit procedures did not lead to any reservations relating to assessing the impairment of non-current financial assets.
+2
+Independent Auditor's Report (Siemens AG)
+the accompanying management report as a whole provides an appropriate view of the Company's position. In all material respects, this
+management report is consistent with the annual financial statements, complies with German legal requirements and appropriately
+presents the opportunities and risks of future development. Our opinion on the management report does not cover the content of the
+Corporate Governance Statement referred to above.
+Reference to related disclosures: With regard to the recognition and measurement policies applied for the impairment of non-current
+financial assets, refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements and with respect to
+write-downs and write-ups of non-current financial assets, refer to chapter 3.3 Notes to the Income Statement, Note 3 Income (loss) from
+investments, net as well as chapter 3.4 Notes to the Balance Sheet, Note 10 Non-current assets in the notes to the financial statements.
+Reasons why the matter was determined to be a key audit matter: We considered the accounting for other provisions, especially for
+legal disputes, regulatory proceedings and governmental investigations (legal proceedings) resulting from or in connection with alleged
+compliance violations as well as for decontamination to be a key audit matter. These matters are subject to inherent uncertainties and
+require estimates that could have a significant impact on the recognition and measurement of the respective provision and, accordingly,
+on assets, liabilities and financial performance. Legal proceedings resulting from or in connection with alleged compliance violations are
+subject to uncertainties because they involve complex legal issues and accordingly, considerable management judgment, in particular
+when determining whether and in what amount a provision is required to account for the risks. The uncertainties and estimates with
+respect to provisions for decontamination pertain especially to the estimated costs for waste treatment and packaging for final storage,
+for interim storage as well as transport to the final nuclear waste storage facility.
+Auditor's response: During our audit of the financial reporting of legal proceedings resulting from or in connection with alleged
+compliance violations, we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and
+regulatory proceedings. To determine what potentially significant pending legal proceedings or claims asserted also in connection with
+joint and several liability are known and to assess management's estimates of the expected cash outflows, our audit procedures included
+inquiring of management and other persons within the Company entrusted with these matters, obtaining written statements from in-
+house legal counsels with respect to the assessment of estimated cash outflows and their probability, obtaining confirmations from
+external legal advisors and evaluating internal statements concerning the accounting treatment in the annual financial statements.
+Furthermore, we examined legal consulting expense accounts for any indications of legal matters not yet considered.
+We further considered alleged or substantiated non-compliance with legal provisions, official regulations and internal company policies
+(compliance violations) by inspecting internal and external statements on specific matters, obtaining written statements from external
+legal advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and
+results of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed
+on this basis whether management's evaluation of any risks to be accounted for in the annual financial statements is plausible.
+Based on the aforementioned uncertainties, our audit procedures with respect to the provisions for decontamination focused on the
+remediation and environmental protection liabilities in connection with the decommissioning of the facilities in Hanau, Germany (Hanau
+facilities), as well as for the nuclear research and service center in Karlstein, Germany (Karlstein facilities). Our audit procedures included,
+among others, assessing the estimated costs for waste treatment and packaging for final storage, for interim storage as well as transport
+to the final nuclear waste storage facility, and the valuation methods used by drawing on the expertise of our valuation specialists. We
+evaluated management's assessments particularly regarding the accounting effects of the contractually agreed transfer of the nuclear
+waste disposal obligation to the Federal Republic of Germany, which is still subject to the approval of the EU commission under state-aid
+rules, and the expected costs to fulfill the obligations remaining with Siemens through inquiries of persons entrusted with the matter and
+inspections of internal and external documents.
+Furthermore, we evaluated the disclosures on provisions for decontamination in the notes to the financial statements.
+Our audit procedures did not lead to any reservations relating to the accounting for other provisions.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for other provisions,
+refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements. With respect to the legal proceedings,
+regulatory proceedings and governmental investigations, refer to chapter 3.5 Other Disclosures, Note 25 Other financial obligations and
+with respect to the uncertainties and estimates relating to the provisions for decontamination, refer to chapter 3.4 Notes to the Balance
+Sheet, Note 17 Other provisions in the notes to the financial statements.
+Uncertain tax positions and recoverability of deferred tax assets
+Reasons why the matter was determined to be a key audit matter: The accounting for uncertain tax positions as well as deferred taxes
+requires management to exercise considerable judgment and make estimates and assumptions, and was therefore a key audit matter. In
+particular, this affects the measurement and completeness of uncertain tax positions, the recoverability of deferred tax assets as well as
+management's assessments regarding the tax implications of the COVID-19 pandemic.
+Auditor's response: With the assistance of internal tax specialists who have knowledge of tax law, we examined the processes installed
+by management for the identification, recognition and measurement of tax positions. In the course of our audit procedures relating to
+uncertain tax positions, we evaluated whether management's assessment of the tax implications of significant business transactions or
+events in fiscal year 2021, which could result in uncertain tax positions or influence the measurement of existing uncertain tax positions,
+was in compliance with tax law. In particular, this includes the tax implications arising from the results of tax field audits, the acquisition
+or disposal of company shares, corporate (intragroup) restructuring activities and cross-border matters, such as the determination of
+transfer prices. In order to assess measurement and completeness, we also obtained confirmations from external tax advisors. Further, we
+evaluated management's assessments with respect to the prospects of success of appeal and tax court proceedings by inquiring of the
+employees of the Siemens tax department and by considering current tax case law.
+In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
+strategies and projected future taxable income, also in view of the implications of the COVID-19 pandemic, and compared them to internal
+business plans.
+Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and the assessment of the
+recoverability of deferred tax assets.
+3
+124
+Other provisions
+the accompanying annual financial statements comply, in all material respects, with the requirements of German commercial law
+applicable to business corporations and give a true and fair view of the assets, liabilities and financial position of the Company as of
+September 30, 2021 and of its financial performance for the fiscal year from October 1, 2020 to September 30, 2021 in compliance
+with German legally required accounting principles, and
+•
+.
+6 Values from fiscal year April 01, 2020 - March 31, 2021
+7 Therein are 2% held via an investment fund managed by Siemens Fonds Invest GmbH.
+n/a = No financial data available.
+24
+224
+Responsibility Statement
+TO THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT
+FOR FISCAL 2021
+SIEMENS
+Responsibility Statement (Siemens AG)
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Annual Financial Statements give a true and
+fair view of the assets, liabilities, financial position and profit or loss of the Company, and the Management Report for Siemens
+Aktiengesellschaft, which has been combined with the Group Management Report, includes a fair review of the development and
+performance of the business and the position of the Company, together with a description of the material opportunities and risks
+associated with the expected development of the Company.
+Munich, November 30, 2021
+Siemens Aktiengesellschaft
+The Managing Board
+Dr. Roland Busch
+Cedrik Neike
+Prof. Dr. Ralf P. Thomas
+Matthias Rebellius
+Judith Wiese
+2
+Independent
+Auditor's Report
+TO THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT
+FOR FISCAL 2021
+SIEMENS
+Independent Auditor's Report (Siemens AG)
+To Siemens Aktiengesellschaft, Berlin and Munich
+Report on the audit of the annual financial statements and of the management report
+Opinions
+We have audited the annual financial statements of Siemens Aktiengesellschaft, Berlin and Munich, (the Company) which comprise the
+income statement for the fiscal year from October 1, 2020 to September 30, 2021, the balance sheet as of September 30, 2021 and notes
+to the financial statements, including the recognition and measurement policies presented therein. In addition, we have audited the
+management report of Siemens Aktiengesellschaft, which is combined with the group management report, for the fiscal year from October
+1, 2020 to September 30, 2021. In accordance with the German legal requirements, we have not audited the content of the Corporate
+Governance Statement which is published on the website stated in the combined management report.
+In our opinion, on the basis of the knowledge obtained in the audit,
+120
+Siemens Limited, Mumbai / India
+100
+171
+Siemens Financial Services Ltd., Beijing / China
+25
+433
+100
+Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
+(7)
+77
+100
+Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
+41
+333
+100
+Siemens Healthineers Ltd., Shanghai / China
+Annual Financial Statements
+96
+100
+Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
+162
+192
+100
+Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
+39
+81
+100
+Siemens International Trading Ltd., Shanghai, Shanghai / China
+Siemens Ltd., China, Beijing / China
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
+13
+182
+23
+100
+132
+2
+62
+100
+Shanghai Electric Power Generation Equipment Co., Ltd., Shanghai / China
+10
+507
+405
+Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
+21
+30
+75
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
+74
+122
+100
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
+32
+40
+100
+Siemens Electrical Drives Ltd., Tianjin / China
+63
+134
+85
+Siemens Factory Automation Engineering Ltd., Beijing / China
+Siemens Finance and Leasing Ltd., Beijing / China
+25
+29
+100
+23
+41
+100
+100
+2,333
+14
+100
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
+21
+33
+505
+Siemens Limited, Hong Kong / Hong Kong
+9
+24
+100
+Bangalore International Airport Ltd., Bangalore / India
+(64)
+318
+7
+206
+(4)
+248
+99
+Mentor Graphics (India) Private Limited, New Delhi / India
+7
+85
+100
+Siemens Financial Services Private Limited, Mumbai / India
+8
+69
+100
+Siemens Healthcare Private Limited, Mumbai / India
+31
+C&S Electric Limited, New Delhi / India
+Siemens Wiring Accessories Shandong Ltd., Zibo / China
+55
+49
+100
+50
+55
+85
+Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
+Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
+17
+93
+100
+19
+123
+100
+Siemens Numerical Control Ltd., Nanjing, Nanjing / China
+73
+89
+80
+Siemens Shanghai Medical Equipment Ltd., Shanghai / China
+102
+128
+100
+Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
+60
+99
+100
+Siemens Standard Motors Ltd., Yizheng / China
+60
+87
+100
+Siemens Switchgear Ltd., Shanghai, Shanghai / China
+29
+851
+Next47 Fund 2020, L.P., Palo Alto, CA / United Kingdom
+105
+94
+170
+1004
+Valeo Siemens eAutomotive GmbH, Erlangen
+(12)
+153
+505
+Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
+(18)
+150
+1003
+Veja Mate Offshore Project GmbH, Oststeinbek
+137
+347
+SPT Beteiligungen GmbH & Co. KG, Grünwald
+205
+3
+220
+100
+Yunex GmbH, Munich
+2
+69
+100
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without
+Germany) (104 companies)
+Siemens Spa, Algiers / Algeria
+19
+40
+100
+20
+VMS Deutschland Holdings GmbH, Darmstadt
+20
+100
+(1)
+Siemens Mobility GmbH, Munich
+212
+2,178
+100
+Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
+7
+121
+100
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+28
+100
+Siemens Project Ventures GmbH, Erlangen
+Siemens Real Estate GmbH & Co. KG, Kemnath
+Siemens Trademark GmbH & Co. KG, Kemnath
+Siemens Treasury GmbH, Munich
+(26)
+(30)
+263
+14
+115
+100
+653
+1,841
+100
+2
+3
+100
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+SIMAR Ost Grundstücks-GmbH, Grünwald
+6
+321
+904
+100
+Annual Financial Statements
+ETM professional control GmbH, Eisenstadt / Austria
+14
+100
+14
+84
+100
+17
+52
+100
+Siemens Mobility, s.r.o., Prague / Czech Republic
+12
+27
+100
+Siemens, s.r.o., Prague / Czech Republic
+44
+24
+103
+Siemens A/S, Ballerup / Denmark
+6
+40
+100
+Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
+672,3
+Siemens Osakeyhtiö, Espoo / Finland
+9
+40
+100
+ATOS SE, Bezons / France
+(262)
+6,871
+100
+7
+100
+388
+21
+100
+Siemens Aktiengesellschaft Österreich, Vienna / Austria
+160
+1,374
+100
+Siemens Healthcare Diagnostics GmbH, Vienna / Austria
+14
+112
+100
+Siemens Konzernbeteiligungen GmbH, Vienna / Austria
+359
+1,818
+100
+Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
+Siemens Mobility Austria GmbH, Vienna / Austria
+42
+100
+20
+(153)
+100
+Siemens Healthcare NV, Beersel / Belgium
+10
+99
+100
+Siemens Industry Software NV, Leuven / Belgium
+Siemens Mobility S.A. / N.V, Beersel / Belgium
+Siemens S.A./N.V., Beersel / Belgium
+OEZ s.r.o., Letohrad / Czech Republic
+23
+100
+105
+80
+Siemens Logistics GmbH, Constance
+1
+100
+Onespin Solutions Holding GmbH, Munich
+(1)
+53
+100
+OWP Butendiek GmbH & Co. KG, Bremen
+119
+648
+235
+Project Ventures Butendiek Holding GmbH, Munich
+66
+1006
+(28)
+RISICOM Rückversicherung AG, Grünwald
+316
+100
+Siemens Bank GmbH, Munich
+29
+1,149
+100
+Siemens Beteiligungen Europa GmbH, Munich
+47
+5,159
+100
+Siemens Beteiligungen Inland GmbH, Munich
+(97)
+21,257
+70
+100
+100
+1004
+Annual Financial Statements
+NOTE 31 List of subsidiaries and associated companies pursuant to Section 285 para. 11, 11a and
+11b of the German Commercial Code
+September 30, 2021
+Germany (46 companies)
+Erlapolis 20 GmbH, Munich
+evosoft GmbH, Nuremberg
+HaCon Ingenieurgesellschaft mbH, Hanover
+KACO new energy GmbH, Neckarsulm
+Munipolis GmbH, Munich
+NEO New Oncology GmbH, Cologne
+Next47 Services GmbH, Munich
+Net income in
+millions of €1
+Equity in
+millions of €¹
+1,142
+Equity interest
+(1)
+(1)
+1004
+2
+8
+100
+(7)
+150
+100
+(16)
+47
+100
+257
+in %
+Siemens Beteiligungen USA GmbH, Berlin
+(17)
+13,723
+Siemens Healthcare GmbH, Munich
+138
+1,619
+100
+Siemens Healthineers AG, Munich
+1,377
+24,363
+75
+Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
+95
+23,648
+100
+Siemens Healthineers Holding I GmbH, Munich
+100
+(60)
+100
+Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
+101
+101
+100
+Siemens Immobilien GmbH & Co. KG, Grünwald
+68
+92
+100
+Siemens Industry Software GmbH, Cologne
+13
+308
+100
+(4,811)
+473
+(13)
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+100
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
+1,058
+23,511
+100²
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
+14
+31
+100
+Siemens Electronic Design Automation GmbH, Munich
+(9)
+69
+100
+Siemens Energy AG, Munich
+200
+13,021
+100
+Siemens Finance & Leasing GmbH, Munich
+6
+130
+100
+Siemens Financial Services GmbH, Munich
+Siemens Fonds Invest GmbH, Munich
+8
+2,033
+100
+1
+12
+100
+28
+Siemens France Holding SAS, Saint-Denis / France
+40
+224
+50
+115
+100
+Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
+19
+14
+100
+Siemens Mobility LLC, Moscow / Russian Federation
+16
+25
+100
+Siemens Healthcare Limited, Riyadh / Saudi Arabia
+20
+Siemens Finance and Leasing LLC, Vladivostok / Russian Federation
+40
+Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
+Siemens s.r.o., Bratislava / Slovakia
+Siemens Proprietary Limited, Midrand / South Africa
+Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
+(9)
+34
+100
+5
+29
+100
+(12)
+43
+70
+2
+51
+45
+100
+20
+505
+Varian Medical Systems Nederland B.V., Houten / Netherlands
+27
+6,273
+100
+21
+Annual Financial Statements
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
+4
+91
+100
+Siemens S.A., Amadora / Portugal
+11
+51
+108
+Siemens W.L.L., Doha Qatar
+11
+25
+55
+LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD, St. Petersburg / Russian Federation
+5
+25
+100
+000 Legion II, Moscow / Russian Federation
+3
+74
+100
+000 Siemens, Moscow / Russian Federation
+100
+100
+SIEMENS HEALTHCARE, S.L.U., Getafe / Spain
+12
+110
+100
+35
+1,103
+100
+74
+5,968
+100
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Turkey
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Turkey
+Electrium Sales Limited, Frimley, Surrey / United Kingdom
+11
+49
+29
+100
+93
+100
+(6)
+81
+100
+Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
+Next47 Fund 2018, L.P., Palo Alto, CA / United Kingdom
+38
+99
+255
+92
+100
+Next47 Fund 2019, L.P., Palo Alto, CA / United Kingdom
+74
+35
+100
+142
+7
+277
+100
+Siemens Holding S.L., Madrid / Spain
+9
+76
+100
+SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
+1
+65
+100
+Siemens Rail Automation S.A.U., Tres Cantos / Spain
+27
+639
+100
+Siemens S.A., Madrid / Spain
+20
+188
+100
+Siemens Financial Services AB, Solna / Sweden
+26
+100
+Siemens Healthcare AG, Zurich / Switzerland
+4
+157
+100
+Siemens Industry Software GmbH, Zurich / Switzerland
+Siemens Mobility AG, Wallisellen / Switzerland
+Siemens Schweiz AG, Zurich / Switzerland
+Varian Medical Systems International AG, Steinhausen / Switzerland
+100
+11
+214
+100
+100
+2
+13
+100
+Mentor Graphics Development Services (Israel) Ltd., Rehovot / Israel
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin / Israel
+Siemens Industry Software Ltd., Airport City / Israel
+116
+100
+(1)
+81
+100
+14
+1,836
+51
+UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
+-
+1
+100
+Siemens Healthcare S.r.l., Milan / Italy
+17
+254
+100
+Siemens S.p.A., Milan / Italy
+35
+198
+100
+Varian Medical Systems Italy SpA, Segrate / Italy
+100
+146
+1003
+1,995
+100
+Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
+Siemens Healthcare SAS, Saint-Denis / France
+22
+222
+100
+Siemens Industry Software SAS, Châtillon / France
+7
+53
+100
+Siemens Mobility SAS, Châtillon / France
+(31)
+106
+100
+Siemens SAS, Saint-Denis / France
+44
+183
+100
+Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
+7
+92
+100
+Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
+Mentor Graphics (Ireland) Limited, Shannon, County Clare / Ireland
+Siemens Limited, Dublin Ireland
+1
+62
+100
+348
+3
+22
+SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME,
+Chalandri / Greece
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
+1,307
+5,592
+2
+170
+4,420
+100
+13,895
+100
+114
+1,029
+100
+61
+459
+100
+Siemens International Holding B.V., The Hague / Netherlands
+1,452
+100
+Siemens International Holding III B.V., The Hague / Netherlands
+(1)
+2
+100
+Siemens Mobility Holding B.V., The Hague / Netherlands
+86
+960
+100
+Siemens Nederland N.V., The Hague / Netherlands
+100
+29
+166
+100
+83
+12,299
+Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
+Siemens Gas and Power Holding B.V., Zoeterwoude / Netherlands
+Siemens Healthineers Holding III B.V., The Hague / Netherlands
+Siemens Healthineers Holding IV B.V., The Hague / Netherlands
+Siemens Healthineers Nederland B.V., The Hague / Netherlands
+Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
+100
+SPT Holding SARL, Luxembourg / Luxembourg
+8
+33
+(146)
+36
+1004
+SPT Invest Management, SARL, Luxembourg Luxembourg
+(2)
+Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
+77
+100
+Castor III B.V., The Hague / Netherlands.
+3
+100
+1004
+3
+Dresser-Rand International B.V., The Hague / Netherlands
+3
+100
+57
+Mentor Graphics (Netherlands) B.V., Eindhoven / Netherlands
+Pollux III B.V., The Hague / Netherlands
+-
+100
+100
+(73)
+Mendix Technology B.V., Rotterdam / Netherlands
+100
+122
+Sep 30,
+Sep 30,
+Sep 30,
+Sep 30,
+Sep 30,
+4,819
+5,719
+4,769
+6,352
+8,379
+5,824
+5,845
+(2,228)
+2021
+8,237
+6,404
+5,086
+2020
+FY 2019
+2018
+€7.34
+€6.36
+2,677
+€7.12
+€6.41
+€5.00
+€7.68
+FY 2017
+FY 2018
+FY 2020
+FY 2021
+Basic earnings per share - continuing operations¹
+Basic earnings per share - continuing and discontinued operations
+Stock market information
+377
+288
+287
+285
+303
+2019
+1,325
+FY 2019
+(4,509)
+7,851
+10,109
+FY 2017
+FY 2018
+FY 2020
+FY 2021
+136,111
+33%
+6,825
+35%
+138,915
+32%
+123,897
+44,619
+48,046
+50,984
+39,823
+49,274
+35%
+139,608
+€4.77
+9,582
+34%
+150,248
+7,539
+7,225
+3,075
+(1,560)
+(2,376)
+(1,214)
+4,267
+785
+(2,406)
+(1,820)
+(1,739)
+(1,498)
+(1,730)
+(7,456)
+(3,288)
+(4,166)
+(4,050)
+(17,192)
+3,211
+2,131
+2,222
+3,098
+1,663
+€5.82
+B.7 Outlook for fiscal 2022
+€7.27
+D. Comparative information on
+C. Compensation of Supervisory Board members
+31
+30
+27
+B.6.1 Active Managing Board members in fiscal 2021
+B.6.2 Former members of the Managing Board
+27
+B.6 Compensation awarded and due
+profit development and annual
+change in compensation
+26
+26
+B.4 Share Ownership Guidelines
+25
+B.3.3 Malus and clawback regulations
+18
+B.3.2 Long-term variable compensation (Stock Awards)
+14
+B.3.1 Short-term variable compensation (Bonus)
+B.5 Pension benefit commitment
+12
+E.
+Independent auditor's report
+7,684
+FISCAL 2021 4
+Following the scheduled departure of Werner Wenning,
+the previous, long-serving Chairman of the Compensa-
+tion Committee of the Supervisory Board of Siemens AG,
+from the Supervisory Board and thereby also from the
+Compensation Committee, the Compensation Commit-
+tee elected Michael Diekmann to serve as its new Chair-
+man effective February 4, 2021. The Compensation Com-
+mittee also acquired two new members: Harald Kern,
+who joined the Committee in October 2020, succeeding
+Robert Kensbock, who left the Supervisory Board
+on September 25, 2020, the effective date of the
+Siemens Energy spin-off, and Matthias Zachert, who
+joined the Committee in February 2021.
+Dr. Roland Busch was appointed President and CEO effec-
+tive the end of the 2021 Annual Shareholders' Meeting.
+He combines entrepreneurial farsightedness with a de-
+sire to optimally support customers in their digital and
+sustainable transformation. The Company is driving this
+transformation with technologies that add real value for
+customers - technologies that will continue to be crucial
+for Siemens in the future and of which Dr. Roland Busch
+has a deep and broad understanding.
+In fiscal 2021, there were also changes in the Managing
+Board. Matthias Rebellius and Judith Wiese were ap-
+pointed full members of the Managing Board effective
+October 1, 2020. Joe Kaeser left the Managing Board
+effective the end of the Annual Shareholders' Meeting on
+February 3, 2021. Klaus Helmrich left the Managing
+Board effective March 31, 2021. The Supervisory Board is
+very grateful to both Mr. Kaeser and Mr. Helmrich for
+their many years of successful work on behalf of Siemens
+and for their extraordinary services to the Company.
+Managing Board and the
+Compensation Committee
+Changes in the
+-
+Other
+In the fall of 2020, the outlook for the fiscal year ahead
+was anything but stable. Due to the ongoing COVID-19
+pandemic, Siemens and its customers and partners
+worldwide faced major challenges. In the U.S., the presi-
+dential election was imminent, and it wasn't clear what
+economic consequences the tense relations between the
+U.S. and China would have. There were also structural
+problems in Siemens' key customer sectors such as ma-
+chine building due to low capacity utilization - and in
+the automobile industry, which is undergoing a dramatic
+structural transformation. All these factors are having an
+impact on Siemens' business. In retrospect, we've experi-
+enced an exciting and a very challenging, but also a very
+successful fiscal year. The employees of Siemens have
+delivered a stellar performance in difficult times.
+The Managing Board and the Supervisory Board of
+Siemens AG have decided to voluntarily implement
+ahead of time the new legal requirements regarding the
+issuance of the Compensation Report that are set out in
+Section 162 of the German Stock Corporation Act. The
+emphasis of the Report continues to be on providing
+clear, transparent and comprehensive reporting. The
+Managing Board and the Supervisory Board have also
+decided to commission the independent auditor to con-
+duct a substantive audit of the Compensation Report,
+over and above the requirement set out in Section 162
+para. 3 sent. 1 and 2 of the German Stock Corporation Act.
+| A. Fiscal 2021 in retrospect
+Compensation Report → A. Fiscal 2021 in retrospect
+39
+38
+35
+KE
+32
+What did the economic and
+political environment look like
+at the start of fiscal 2021?
+B.3 Variable compensation in fiscal 2021
+12
+11
+1 In FY 2020, Gas and Power and Siemens Gamesa Renewable Energy were classified as discontinued operations. Prior-period amounts beginning with FY 2018 are presented on a comparable basis.
+In FY 2021, Flender GmbH was classified as discontinued operation. Prior-period amounts beginning with FY 2019 are presented on a comparable basis.
+€3.70
+€3.80
+€3.90
+€3.50
+€4.00
+Dividend per share³
+€7.13
+2 Beginning with September 30, 2018 under consideration of IFRS 9.
+€5.84
+€4.70
+€6.28
+€7.19
+€7.01
+€6.32
+€4.93
+€7.59
+Diluted earnings per share - continuing and discontinued operations
+Diluted earnings per share - continuing operations¹
+€5.74
+3 For FY 2021 to be proposed to the Annual Shareholders' Meeting.
+2
+Compensation Report
+B.2.3 Appropriateness of compensation
+B.2.2 Maximum compensation
+9
+B.2.1 Target compensation and compensation structure
+9
+6
+B.2 Principles of the determination of compensation
+B.1 The compensation system at a glance
+6
+B. Compensation of Managing Board members
+4
+A. Fiscal 2021 in retrospect
+Table of
+contents
+Due to rounding, numbers presented throughout this document may not
+add up precisely to the totals provided and percentages may not precisely
+reflect the absolute figures.
+This Compensation Report provides an explanation and a clear and com-
+prehensible presentation of the compensation individually awarded
+and due to the current and former members of the Managing Board and
+the Supervisory Board of Siemens AG for fiscal 2021 (October 1, 2020 to
+September 30, 2021). The Report complies with the requirements of the
+German Stock Corporation Act (Aktiengesetz, AktG). Detailed information
+regarding the compensation systems for members of the Managing Board
+and the Supervisory Board of Siemens AG is available on the Siemens
+Global Website www.SIEMENS.COM/CORPORATE-GOVERNANCE.
+Compensation Report 2021
+Siemens Aktiengesellschaft
+Berlin and Munich
+SIEMENS
+2021
+€5.94
+9,896
+In our opinion, the rendering of the annual financial statements and the management report contained in the file identified above and
+prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting
+format. Beyond this assurance opinion and our audit opinions on the accompanying annual financial statements and the accompanying
+management report for the fiscal year from October 1, 2020 to September 30, 2021 contained in the "Report on the audit of the annual
+financial statements and of the management report" above, we do not express any assurance opinion on the information contained within
+these renderings or on the other information contained in the file identified above.
+2,839
+Obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
+controls.
+•
+•
+• Identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
+and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
+a basis for our assurance opinion.
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
+non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
+throughout the assurance work. We also:
+The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
+Auditor's responsibilities for the assurance work on the ESEF documents
+In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
+documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
+electronic reporting format.
+Management is responsible for the preparation of the ESEF documents including the electronic rendering of the annual financial
+statements and the management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB.
+Evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
+Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
+specification for this file.
+Responsibilities of management and the Supervisory Board for the ESEF documents
+Independent Auditor's Report (Siemens AG)
+5
+We conducted our assurance work on the rendering of the annual financial statements and the management report contained in the file
+identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering of Financial
+Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410) and the
+International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described in the
+Basis for the opinion
+We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
+of the annual financial statements and the management report (hereinafter the "ESEF documents") contained in the file SIEMENS_2021.zip
+(SHA-256-checksum: c2fee878a23005add85c87b5f4a7cf3e7883b81d2626892870c12ff3d2a977f8) and prepared for publication
+purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting format ("ESEF format").
+In accordance with German legal requirements, this assurance work extends only to the conversion of the information contained in the
+annual financial statements and the management report into the ESEF format and therefore relates neither to the information contained
+within these renderings nor to any other information contained in the file identified above.
+Opinion
+Report on the assurance on the electronic rendering of the annual financial statements and the management
+report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
+Other legal and regulatory requirements
+"Auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW Standard on Quality
+Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
+audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our
+auditor's report unless law or regulation precludes public disclosure about the matter.
+Evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited annual financial statements
+and to the audited management report.
+We were elected as auditor by the Annual Shareholders' Meeting on February 3, 2021. We were engaged by the Supervisory Board on
+February 3, 2021. We have been the auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October 1, 2008
+to September 30, 2009.
+Wirtschaftsprüfer
+Dr. Gaenslen
+[German Public Auditor]
+Wirtschaftsprüferin
+Breitsameter
+Wirtschaftsprüfungsgesellschaft
+Ernst & Young GmbH
+Munich, November 30, 2021
+Further information pursuant to Art. 10 of the EU Audit Regulation
+The German Public Auditor responsible for the engagement is Katharina Breitsameter.
+6
+Our auditor's report must always be read together with the audited annual financial statements and the audited management report as
+well as the assured ESEF documents. The annual financial statements and the management report converted to the ESEF format -
+including the versions to be published in the Bundesanzeiger [German Federal Gazette] - are merely electronic renderings of the audited
+annual financial statements and the audited management report and do not take their place. In particular, the ESEF report and our
+assurance opinion contained therein are to be used solely together with the assured ESEF documents made available in electronic form.
+-
+Other matter use of the auditor's report
+Audit-related services include primarily audits of financial statements as well as other attestation services in connection with M&A
+activities, attestation services related to the sustainability reporting, comfort letters and other attestation services required under
+regulatory requirements, contractually agreed or requested on a voluntary basis. Permitted tax services were rendered in connection with
+audit-related support for the analysis of the design of the tax compliance management system performed by Siemens.
+In addition to auditing the statutory financial statements of Siemens AG, we performed the statutory audit of Siemens' consolidated
+financial statements, audits of financial statements of subsidiaries of Siemens AG, reviews of interim financial statements integrated in
+the audit, project-based IT audits, audit services in connection with the implementation of new accounting standards as well as service
+organization control engagements.
+In addition to the financial statement audit, we have provided to the Company or entities controlled by it the following services that are
+not disclosed in the annual financial statements or in the management report:
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
+to Art. 11 of the EU Audit Regulation (long-form audit report).
+German Public Auditor responsible for the engagement
+[German Public Auditor]
+We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
+and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
+applicable, the related safeguards.
+• Perform audit procedures on the prospective information presented by management in the management report. On the basis of
+sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
+prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
+a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+⚫ is materially inconsistent with the annual financial statements, with the management report or our knowledge obtained in the audit, or
+• otherwise appears to be materially misstated.
+In connection with our audit, our responsibility is to read the other information, and, in so doing, to consider whether the other information
+Our opinions on the annual financial statements and on the management report do not cover the other information, and consequently
+we do not express an opinion or any other form of assurance conclusion thereon.
+but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
+report whose content is audited and not our auditor's reports thereon.
+• Notes and forward-looking statements,
+⚫ the Report of the Supervisory Board,
+the Compensation Report,
+•
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+the Five-Year Summary,
+⚫ the Responsibility Statement (to the consolidated financial statements and the group management report),
+the Responsibility Statement (to the annual financial statements and the management report),
+•
+In addition, the other information comprises parts to be included in the Annual Report, of which we received a version prior to issuing this
+auditor's report, in particular:
+The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2021 within the meaning of ISA [DE]
+720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
+German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
+Compensation Report. In all other respects, management is responsible for the other information. The other information comprises the
+Corporate Governance Statement referred to above.
+Other information
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
+to chapter 3.2 Accounting and Measurement Principles and chapter 3.3 Notes to the Income Statement, Note 6 Income taxes and with
+respect to disclosures for deferred tax assets, refer to chapter 3.4 Notes to the Balance Sheet, Note 13 Deferred tax assets in the notes to
+the financial statements.
+Independent Auditor's Report (Siemens AG)
+•
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
+significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
+Responsibilities of management and the Supervisory Board for the annual financial statements and the
+management report
+In preparing the annual financial statements, management is responsible for assessing the Company's ability to continue as a going
+concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
+responsible for financial reporting based on the going concern basis of accounting, provided no actual or legal circumstances conflict
+therewith.
+Evaluate the consistency of the management report with the annual financial statements, its conformity with German law and the view
+of the Company's position it provides.
+Evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the
+annual financial statements present the underlying transactions and events in a manner that the annual financial statements give a true
+and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally
+required accounting principles.
+•
+•
+• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
+obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability
+to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's
+report to the related disclosures in the annual financial statements and in the management report or, if such disclosures are inadequate,
+to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
+However, future events or conditions may cause the Company to cease to be able to continue as a going concern.
+Evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
+and related disclosures.
+Obtain an understanding of internal control relevant to the audit of the annual financial statements and of arrangements and measures
+(systems) relevant to the audit of the management report in order to design audit procedures that are appropriate in the circumstances,
+but not for the purpose of expressing an opinion on the effectiveness of these systems of the Company.
+Identify and assess the risks of material misstatement of the annual financial statements and of the management report, whether due
+to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
+appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for
+one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
+control.
+Management is responsible for the preparation of the annual financial statements that comply, in all material respects, with the
+requirements of German commercial law applicable to business corporations, and that the annual financial statements give a true and fair
+view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally required
+accounting principles. In addition, management is responsible for such internal control as it, in accordance with German legally required
+accounting principles, has determined necessary to enable the preparation of annual financial statements that are free from material
+misstatement, whether due to fraud or error.
+•
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
+decisions of users taken on the basis of these annual financial statements and this management report.
+Independent Auditor's Report (Siemens AG)
+4
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
+the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
+Auditor's responsibilities for the audit of the annual financial statements and of the management report
+Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material
+misstatement, whether due to fraud or error, and whether the management report as a whole provides an appropriate view of the
+Company's position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the
+audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
+as to issue an auditor's report that includes our opinions on the annual financial statements and on the management report.
+The Supervisory Board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial
+statements and of the management report.
+Furthermore, management is responsible for the preparation of the management report that as a whole provides an appropriate view of
+the Company's position and is, in all material respects, consistent with the annual financial statements, complies with German legal
+requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible for
+such arrangements and measures (systems) as management has considered necessary to enable the preparation of a management report
+that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the
+assertions in the management report.
+•
+Independent Auditor's Report (Siemens AG)
+7
+Five-Year Summary
+70,370
+52,968
+52,340
+2017
+2018
+2019
+2020
+2021
+64,556
+Sep 30,
+Sep 30,
+Sep 30,
+Sep 30,
+6,094
+6,120
+5,648
+4,200
+6,697
+Sep 30,
+6,041
+60,750
+34,117
+22,607
+19,840
+22,726
+29,270
+38,022
+26,777
+27,120
+30,414
+39,952
+38,005
+32,224
+32,177
+36,449
+44,567
+48,700
+46,077
+47,874
+50,723
+40,879
+5,084
+5,063
+4,156
+Cash flows
+Total assets
+as a percentage of total assets
+Provisions for pensions and similar obligations
+Equity (including non-controlling interests)
+Net debt
+Long-term debt
+Debt
+Current liabilities
+Cash flows from operating activities – continuing operations¹
+Amortization, depreciation and impairments¹
+Current assets
+Net income
+Income from continuing operations¹
+Gross profit¹
+Revenue¹
+Revenue and profit
+(in millions of €, except where otherwise stated)
+SIEMENS
+FOR THE FIVE YEARS UNTIL FISCAL 2021
+Assets, liabilities and equity2
+Cash flows from investing activities - continuing operations¹
+Additions to intangible assets and property, plant and equipment¹
+Cash flows from financing activities - continuing operations¹
+Change in cash and cash equivalents
+Free cash flow - continuing and discontinued operations
+Free cash flow - continuing operations¹
+5,636
+25,043
+20,535
+21,381
+19,888
+22,737
+82,863
+55,538
+56,797
+55,254
+62,265
+FY 2017
+FY 2018
+FY 2019
+FY 2020
+FY 2021
+Five-Year Summary
+Continuing operations (in thousands)¹
+Employees
+6,360
+2017
+Compensation Report → A. Fiscal 2021 in retrospect
+551
+14%
+1,735
+42%
+1,801
+41%
+1,801
+41%
+1,102 27%
+1,102
+25%
+1,102
+25%
++ Long-term variable compensation
+2021 Stock Awards (vesting: 2020-2024)
+2020 Stock Awards (vesting: 2019-2023)
+Total target compensation (TTC)
+1,259
+31%
+1,544
+35%
+1,544
+35%
+617
+4,096
+14%
+13%
+2021
+Matthias Rebellius
+Managing Board member since Oct. 1, 2020
+2020
+Prof. Dr. Ralf P. Thomas
+Managing Board member since Sept. 18, 2013
+2021
+2020
+27%
+€ thousand in % of TTC € thousand in % of TTC
+1,102
+€ thousand in % of TTC € thousand in % of TTC
+1,102
+25%
+1,102
+25%
+83
+2%
+83
+2%
+83
+2%
+Execution
+617
+Bonus for fiscal 2020
+100%
+100% 4,447 100%
++ Long-term variable compensation
+2021 Stock Awards (vesting: 2020-2024)
+1,259
+31%
+2020 Stock Awards (vesting: 2019-2023)
+= Total target compensation (TTC)
+4,096
+100%
+1 Dr. Roland Busch was first appointed a full member of the Managing Board effective April 1, 2011. He served as Deputy CEO from October 1, 2019, until the
+end of the Annual Shareholders' Meeting on February 3, 2021, when he succeeded Joe Kaeser as President and CEO.
+2 For fiscal 2021, each Managing Board member was awarded fringe benefits equal to a maximum 7.5% of his or her base salary. The target amount reported
+here is also equal to the maximum amount.
+3 Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive
+a fixed cash amount for free disposal.
+FISCAL 2021 10
+Target compensation fiscal 2021 (cont.)
+Compensation Report → B. Compensation of Managing Board members
+Joe Kaeser¹
+President and CEO until Feb. 3, 2021
+Klaus Helmrich²
+Managing Board member until March 31, 2021
+Managing Board members
+who left during the fiscal year
+2021
+2020
+Bonus for fiscal 2020
+4,447
+27%
++ Short-term variable compensation
+Bonus for fiscal 2021
+Judith Wiese
+Managing Board member since Oct. 1, 2020
+2021
+2020
+€ thousand in % of TTC € thousand in % of TTC
+27%
+Fixed
+Base salary
+1,102
+compensation
++Fringe benefits²
+83
+2%
++ BSAV contribution/amount for free disposal³
+551
+13%
+= Total
+1,735
+42%
+Variable
+compensation
+1,102
+2021
++ Short-term variable compensation
+Bonus for fiscal 2021
++ BSAV contribution/amount for free disposal³
+= Total
+Bonus for fiscal 2021
+Bonus for fiscal 2020
+Compensation Report → B. Compensation of Managing Board members
+Dr. Roland Busch'
+President and CEO since Feb. 3, 2021
+2021
+2020
+2021
+Cedrik Neike
+Managing Board member since April 1, 2017
+2020
+€ thousand in % of TTC € thousand in % of TTC
+€ thousand in % of TTC € thousand in % of TTC
+1,770
+25%
+1,352
+27%
+1,102
+26%
+1,102
+26%
+133
++ Short-term variable compensation
+2%
+Variable
+compensation
++ Fringe benefits²
++
+VARIABLE COMPENSATION
+Short-term variable
+compensation
+(Bonus)
+Long-term variable
+compensation
+(Stock Awards)
+20% to 28%
+of total target compensation
+30% to 42%
+of total target compensation
+In line with the decision not to adjust, as a rule, employee
+compensation worldwide in fiscal 2021 due to the ongo-
+ing COVID-19 pandemic, the total target compensation of
+the Managing Board members was not increased except
+in the case of Dr. Roland Busch and is unchanged com-
+pared to fiscal 2020. The total target compensation of
+Dr. Roland Busch was increased as of October 1, 2020,
+due to his appointment as President and CEO effec-
+tive the end of the Annual Shareholders' Meeting on
+February 3, 2021, and the related expansion of his duties
+already at the beginning of fiscal 2021.
+As in previous years, all components of the compen-
+sation of the position of President and CEO¹ were differ-
+entiated. As in fiscal 2020, the target amount of
+Prof. Dr. Ralf P. Thomas's Stock Awards was differentiated
+due to his particular responsibilities as CFO.
+The following table shows the individualized target com-
+pensation of each Managing Board member and the rela-
+tive proportions of total target compensation represented
+by each of the individual compensation components.
+1 Joe Kaeser held this position until the end of the Annual Shareholders'
+Meeting on February 3, 2021, when he was succeeded by Dr. Roland Busch,
+who has held the position since that date.
+FISCAL 2021 9
+Target compensation fiscal 2021
+Managing Board members
+in office on September 30, 2021
+Fixed
+Base salary
+compensation
++ BSAV contribution/amount for free disposal³
+= Total
+Variable
+compensation
+101
+83
+1,102
+26%
++ Long-term variable compensation
+2021 Stock Awards (vesting: 2020-2024)
+2020 Stock Awards (vesting: 2019-2023)
+= Total target compensation (TTC)
+2,390
+34%
+1,259
+30%
+7,054
+100%
+1,594 32%
+4,942 100%
+1,259
+30%
+4,162
+100% 4,162
+100%
+Fixed
+Base salary
+compensation
++ Fringe benefits²
+26%
+2%
+1,277
+1,770 25%
+2%
+83
+2%
+991
+14%
+617
+12%
+617
+15%
+617
+15%
+2,894
+41%
+2,071
+42%
+1,801
+43%
+1,801
+43%
+1,102 26%
+2020
+€ thousand in % of TTC € thousand in % of TTC
+€ thousand in % of TTC € thousand in % of TTC
+vesting: 2020-2024
++
+(three times target amount)'
+= Maximum compensation
+3,540
+2,203
+2,203
+2,203
+2,203
+1,509
+1,102
+7,170
+3,777
+3,777
+4,632
+3,777
+2,583
+1,889
+13,604
+2021 Stock Awards
+7,781
+compensation + (two times target amount)
+Variable
+compensation
++
+Fringe benefits (maximum amount)
+133
+83
+83
+83
+83
+57
+41
+BSAV contribution/amount for
++ free disposal
+991
+617
+551
+617
+551
+423
+308
+Bonus for fiscal 2021
+551
+7,715
+7,715
+Performance
+criterion
+Key performance
+indicator/focus topic Bonus
+Profit
+Profitability/
+capital efficiency
+Liquidity
+Growth
+Long-term
+value creation
+Earnings per
+share (EPS)
+Return on capital
+employed (ROCE)
+Cash conversion
+rate (CCR)
+Comparable
+revenue growth
+Total shareholder
+return (TSR)
+Stock
+Awards Link to strategy
+EPS reflects the net income attributable to the shareholders of Siemens AG and incen-
+tivizes the sustainable increase in profit - particularly by focusing on profitable growth.
+This key performance indicator provides a comprehensive perspective that encompasses
+all units of the Siemens Group.
+ROCE, which is the primary measure for managing capital efficiency at Group level,
+reflects our focus on profitable growth, the implementation of measures to sustainably
+increase competitiveness and stringent working capital management.
+CCR measures the ability to convert profit into cash flow in order to finance growth and
+offer our shareholders an attractive, progressive dividend policy.
+Compensation Report → B. Compensation of Managing Board members
+8,636
+Performance criteria of variable compensation and link to strategy
+NON-FINANCIAL, QUALITATIVE TARGETS
+5,327
+3,891
+1 The value of the Siemens shares transferred after the expiration of the vesting period is capped at 300% of the Stock Awards target amount.
+If this cap is exceeded, a corresponding number of Stock Awards is forfeited without refund or replacement.
+FISCAL 2021 11
+Compensation Report B. Compensation of Managing Board members
+The base salary and the BSAV contribution (or the amount
+for free disposal) are fixed amounts. In no case did the
+fringe benefits awarded to a Managing Board member
+exceed the maximum amount defined for fiscal 2021. The
+Bonus cap was not reached in fiscal 2021.
+Since the 2021 Stock Awards tranche is not due until No-
+vember 2024, compliance with the maximum limit of the
+Stock Awards for fiscal 2021 can only be finally assessed
+in November 2024, when the 2021 Stock Awards tranche
+is settled. However, compliance with the maximum com-
+pensation for fiscal 2021 in accordance with Section 87a
+of the German Stock Corporation Act is already ensured
+since the maximum compensation for fiscal 2021 will not
+be exceeded even if the value of the Siemens shares
+transferred equals 300% of the Stock Awards target
+amount (cap).
+The final assessment of compliance with the maximum
+compensation for fiscal 2021 will be included in the Com-
+pensation Report for fiscal 2025.
+-
+B.2.3 Appropriateness of compensation
+The Supervisory Board conducted the annual review of
+Managing Board compensation in order to determine
+the latter's appropriateness and conformity with market
+conditions. For this purpose, the Supervisory Board
+assessed with the assistance of an external and inde-
+pendent compensation consultant and in accordance
+with the compensation system the compensation's
+level and structure relative to the companies included in
+the DAX 40, the German blue-chip stock index, and rela-
+tive to the companies included in the STOXX Europe 50
+(horizontal comparison). In the course of its review, the
+Supervisory Board also assessed the development of
+Managing Board compensation relative to the compen-
+sation of Senior Management and Siemens' total work-
+force in Germany (vertical comparison). Senior Manage-
+ment comprises executive employees. The total
+workforce comprises Senior Management as well as the
+Siemens employees who are covered by collective bar-
+gaining agreements and those who are not. In addition
+to a status quo analysis, the vertical comparison took into
+account the development of compensation ratios over
+time. Since Siemens Healthineers is a separately man-
+aged, publicly listed company, its workforce was not in-
+cluded in the vertical comparison.
+The appropriateness review of Managing Board com-
+pensation for fiscal 2021 has shown that the Managing
+Board compensation resulting from target achievement
+in fiscal 2021 is appropriate.
+B.3 Variable compensation
+in fiscal 2021
+Variable compensation is tied to performance and
+accounts for a significant proportion of the total compen-
+sation of Managing Board members. It consists of a short-
+term variable component (Bonus) and a long-term variable
+component (Stock Awards).
+The performance criteria and the key performance indi-
+cators used to measure performance for variable com-
+pensation in fiscal 2021 are derived from the Company's
+strategic goals and operational steering and are in line
+with the current compensation system. As a rule, all the
+performance criteria measure successful value creation
+in all its different forms, as strategically envisioned.
+In line with Siemens' social responsibility, sustainability
+is also included in the performance criteria.
+The performance criteria relevant for fiscal 2021, the key
+performance indicators, the focus topics and the ex-
+planations of how these foster the Company's long-term
+development are shown in the following table.
+FISCAL 2021
+12
+FINANCIAL TARGETS
+755
+1,102
+1,102
+1,235
+15%
+308
+15%
+617
+15%
+1,234
+43%
+3,605
+43%
+901
+43%
+1,801
+43%
+Variable
+compensation
++ Short-term variable compensation
+Bonus for fiscal 2021
+Bonus for fiscal 2020
++ Long-term variable compensation
+2021 Stock Awards (vesting: 2020-2024)
+2020 Stock Awards (vesting: 2019-2023)
+= Total target compensation (TTC)
+15%
+755
+423
+2%
+Fixed
+Base salary
+755
+26%
+2,205
+26%
+551
+26%
+1,102
+26%
+compensation
++ Fringe benefits³
+57
+2%
+165
+2%
+41
+2%
+83
++ BSAV contribution/amount for free disposal
+= Total
+26%
+551
+26%
+in office on September 30, 2021
+Managing Board members
+who left during the fiscal year
+Joe
+Dr. Roland
+Busch
+Cedrik
+Neike
+Matthias
+Rebellius
+Prof. Dr.
+Ralf P.
+Thomas
+Kaeser
+Judith
+Wiese
+(until
+Feb. 3, 2021)
+Klaus
+Helmrich
+(until
+March 31, 2021)
+(€ thousand)
+Fixed
+Base salary
+1,770
+1,102
+1,102
+Managing Board members
+The following table shows the maximum compensation
+of each Managing Board member as approved by the
+Supervisory Board for fiscal 2021 in accordance with Sec-
+tion 87a para. 1 sent. 2 No. 1 of the German Stock Corpo-
+ration Act.
+amount and three times the Stock Awards target amount.
+Twice the Bonus target amount and triple the Stock
+Awards target amount also correspond to the respective
+limits (individual caps) on the amount of variable com-
+pensation.
+Maximum compensation fiscal 2021
+2,205
+26%
+1,102
+26%
+861
+30%
+630
+30%
+2,850 100%
+of total target compensation
+2,516
+8,326 100%
+1,259
+30%
+2,081 100%
+4,162
+100%
+1 Pro-rated compensation for the period from October 1, 2020, up to and including February 3, 2021.
+2 Pro-rated compensation for the period from October 1, 2020, up to and including March 31, 2021.
+3 For fiscal 2021, each Managing Board member was awarded fringe benefits equal to a maximum 7.5% of his or her base salary.
+The target amount reported here is also equal to the maximum amount for the fiscal year on a pro-rated basis.
+B.2.2 Maximum compensation
+The maximum compensation of each Managing Board
+member is determined annually by the Supervisory Board
+in accordance with Section 87a para. 1 sent. 2 No. 1 of the
+German Stock Corporation Act. Maximum compensation
+is equal to the total of the maximum amounts of all com-
+pensation components that can possibly be paid out to
+each Managing Board member for the relevant fiscal
+year. It is calculated by adding base salary, maximum
+fringe benefits, the BSAV contribution (or the amount
+for free disposal) as well as two times the Bonus target
+30%
+36% to 43%
+Pension benefit
+commitment
++
+Application
+in 2021
+in compensation
+system
+Implementation
+Link to strategy
+The following table provides an overview of the compo-
+nents of the compensation system for Managing Board
+members, the underlying goals (including the link to the
+Company's strategy) and the components' concrete im-
+plementation in fiscal 2021.
+The Managing Board compensation system is also sup-
+plemented by commitments granted in connection with
+the commencement and termination of appointments to
+the Managing Board as well as any change in the regular
+place of work.
+The Share Ownership Guidelines are a further key com-
+ponent of the compensation system. They obligate Man-
+aging Board members to permanently hold Siemens
+shares worth a defined multiple of their base salary and
+to purchase additional shares in the event that the value
+of their shares falls below the defined amount.
+The compensation of the Managing Board members con-
+sists of fixed and variable components. Fixed compensa-
+tion, which is not performance-based, comprises base
+salary, fringe benefits and a pension benefit commit-
+ment. Short-term variable compensation (Bonus) and
+long-term variable compensation (Stock Awards) are per-
+formance-based compensation and thus variable.
+The current compensation system for the members of
+the Managing Board of Siemens AG has been in place
+since fiscal 2020 and was endorsed by the Annual Share-
+holders' Meeting on February 5, 2020, by a majority of
+94.51%.
+B.1 The compensation system
+at a glance
+B. Compensation of
+Managing Board members
+Compensation Report B. Compensation of Managing Board members
+5
+FISCAL 2021
+In line with the principle anchored in the compensation
+system namely, that exceptional performance should
+be appropriately rewarded and that failure to achieve tar-
+gets should result in a perceptible reduction in compen-
+sation (the pay for performance principle) – the excellent
+results of fiscal 2021 are reflected in the Managing
+Board's variable compensation, which takes into account
+not only financial success but also environmental and
+social aspects. As a result, the compensation of the Man-
+aging Board members is also oriented toward the inter-
+ests of the shareholders as well as the other stakeholders
+of Siemens AG.
+-
+Despite the challenges and the economic and pandem-
+ic-related uncertainty, Siemens has achieved outstanding
+results. For example, the Company succeeded in main-
+taining its supply chains and its delivery capacity during
+the fiscal year and continued to be a reliable partner to its
+customers. These developments were reflected in the
+strong financial performance in fiscal 2021. Siemens
+raised its outlook several times during the fiscal year,
+most recently after the third quarter, and reached or ex-
+ceeded all the targets set for the primary measures for
+fiscal 2021. Return on capital employed (ROCE) was in
+double-digits, and the capital structure ratio came in at
+1.5. Basic EPS from net income increased 54% to €7.68. In
+addition, free cash flow from continuing and discontin-
+ued operations for fiscal 2021 increased 29% year-over-
+year to €8.2 billion, reaching a new high. Revenue also
+was higher at all industrial businesses, rising to €62.3 bil-
+lion. Siemens achieved revenue growth of 11.5% net of
+currency translation and portfolio effects and delivered
+net income of €6.7 billion. Discontinued operations,
+largely related to the sale of Flender, contributed income
+of €1.1 billion in fiscal 2021.
+How did Siemens perform
+in fiscal 2021?
+Sustainability strategic goal and an expression of
+Siemens' social responsibility – is also firmly anchored in
+the long-term variable compensation of both the Manag-
+ing Board and the roughly 7,000 other Company manag-
+ers worldwide. At Capital Market Day in 2021, DEGREE, a
+framework that addresses sustainability from every angle
+and defines ambitious targets, was introduced. As a re-
+sult, the environment, society and good governance will
+play a significantly stronger role. The key performance
+indicators applied in long-term variable compensation are
+part of this framework (CO2 emissions and digital learning
+hours) and/or reflect the Company's priorities (Net Pro-
+moter Score as an expression of customer satisfaction).
+FIXED COMPENSATION
+Competitive compensation in order to obtain the best candidates worldwide to develop and execute the Company's
+strategy and manage its operations and in order to retain these individuals at the Company over the long term
+Base salary
+→ Contractually agreed fixed annual
+compensation based on a
+Managing Board member's duties
+and related responsibilities and his
+or her experience
+Compensation Report B. Compensation of Managing Board members
+FISCAL 2021 6
+→ Other Managing Board members:
+€550,800
+Amount for free disposal
+(payment in January 2022)
+→ Other Managing Board members:
+€616,896
+BSAV contribution
+(credit in January 2022)
+→ President and CEO:
+€991,200
+→ Credit to pension account (BSAV
+contribution) or payout (amount
+for free disposal) in January after
+the end of the fiscal year
+of fiscal year
+→ Newly appointed Managing Board
+members as of October 1, 2019:
+fixed cash amount for free disposal
+→ Commitment at beginning
+-
+Pension benefit commitment
+→ Annual contributions to the
+Siemens Defined Contribution
+Pension Plan (BSAV)
+max. €132,750
+→ President and CEO:
+In fiscal 2021, Managing Board members
+were entitled to fringe benefits equal to
+a maximum of 7.5% of their base salary.
+- Provision of a company car
+- Insurance allowances
+- Costs of medical checkups
+→ Determination of a maximum
+amount relative to base salary, cover-
+ing expenses incurred to the benefit
+of the Managing Board member
+Includes in-kind compensation
+and fringe benefits granted by the
+Company, for example:
+Fringe benefits
+→ Other Managing Board members:
+€1,101,600 p.a.
+→ President and CEO:
+€1,770,000 p.a.
+→ Payment in 12 monthly installments
+→ Other Managing Board members:
+max. €82,620
+-
+Taking into account all the changes and the existing chal-
+lenges, the Compensation Committee of the Supervisory
+Board intensively discussed the key performance indica-
+tors for variable compensation as well as the individual
+targets for Managing Board members. As a result of its
+decision to place the focus on the Managing Board's over-
+all responsibility and cross-business collaboration, two-
+thirds of the short-term variable compensation (Bonus)
+of all Managing Board members were determined on the
+basis of the same criteria. Strategic and sustainability-
+related aspects, which are measured on the basis of the
+members' individual areas of responsibility, are anchored
+in the remaining third of short-term variable compensa-
+tion, the "individual targets."
+The Managing Board presented the new Company strat-
+egy for accelerated high value growth at Capital Market
+Day on June 24, 2021: Siemens as a focused technology
+company, active in highly attractive growth markets that
+are the backbone of the global economy: industry, infra-
+structure, transportation and healthcare. The Supervisory
+Board is convinced that this strategy positions Siemens to
+meet the challenges of the future. The Managing Board
+compensation that has been determined by the Supervi-
+sory Board fosters the implementation of the Company's
+strategic targets by providing incentives for increasing
+profit and capital efficiency and for cash generation.
+→ "Siemens Group"
+→ "Managing Board portfolio"
+→ "Individual targets."
+Performance criteria are assigned to each of the three
+target dimensions based on Company priorities and the
+responsibilities of each Managing Board member. One
+financial performance criterion is assigned to the
+"Siemens Group" dimension and another to the "Manag-
+ing Board portfolio" dimension. The fulfillment of these
+criteria is measured on the basis of key performance indi-
+Bonus design and calculation of payout amount
+cators. Within the "Individual targets" dimension, the
+financial performance criteria growth and liquidity can be
+employed as can additional non-financial performance
+criteria. In the case of non-financial performance criteria,
+the Supervisory Board considers the degree to which a
+Managing Board member has fulfilled so-called focus
+topics, which comprise operations-related aspects of the
+execution of the Company's strategy as well as sustain-
+ability-related aspects.
+At the end of the fiscal year, target achievement for the
+individual key performance indicators and the achieve-
+ment of the Managing Board members' individual tar-
+gets are determined and aggregated to form a weighted
+average. The percentage of weighted target achieve-
+ment multiplied by the individual target amount yields
+the Bonus payout amount for the past fiscal year. The
+payable Bonus is capped at two times the target amount
+and is paid in cash, at the latest, together with the com-
+pensation paid at the end of February of the following
+fiscal year.
+Bonus
+target amount
+B.3.1.1 BASIC PRINCIPLES AND FUNCTIONING
+The Bonus system is based on three equally weighted
+target dimensions, which take account of the overall re-
+sponsibility of the Managing Board as well as each Man-
+aging Board members' specific business responsibilities
+and individual challenges:
+Weighted average target achievement (0%-200%)
+X
+Group
+Bonus
+payout amount
+33.33%
+Managing
+Board portfolio
+Further accelerating high-value qualitative growth is a key element of Siemens' strategy.
+As a focused technology company, Siemens wants to expand its position on all targeted
+markets and tap additional profitable markets.
+FISCAL 2021
+14
+33.34%
+Siemens
+Link to strategy
+compensation (Bonus)
+Compensation Report → B. Compensation of Managing Board members
+How is the new strategy
+reflected in Managing Board
+compensation?
+of Company
+strategy
+Sustainability
+Diverse focus
+topics
+Diverse focus
+topics
+Siemens-internal
+ESG/Sustainability
+index
+The individual targets for executing the Company strategy enable the Company to focus
+on specific factors that are aligned with its short- and medium-term targets and measures
+in order to ensure its long-term strategic development.
+The focus topics in fiscal 2021 comprised business development, optimization/efficiency
+enhancement, the implementation of portfolio measures and the implementation of
+other strategic measures.
+B.3.1 Short-term variable
+→ Succession planning – Thorough succession planning ensures sustainable
+Company development and fosters talents and young employees.
+→ Employee satisfaction - Satisfied employees feel valued. They are motivated
+and resilient, tackle challenges gladly and thus make a major contribution to the
+Company's success.
+→ Sustainability/diversity - Siemens honors its social responsibility by achieving
+ambitious sustainability targets and by fostering diversity, inclusion and equal
+opportunity.
+The Siemens-internal ESG/Sustainability index for the 2021 Stock Awards tranche
+includes:
+→ CO2 emissions - Climate neutrality by 2030 in order to support the 1.5-degree target
+and thus combat global warming.
+→ Digital learning hours - Focus on learning in order to empower our people to
+remain resilient and relevant in a constantly changing environment.
+→ Net Promoter Score - Strong customer relationships are the basis for sustainable
+development both for Siemens and for our customers.
+The Supervisory Board aims to ensure that the targets
+for variable compensation are demanding and ambitious.
+If they are not reached, variable compensation can be
+reduced to zero. If the targets are significantly exceeded,
+target achievement is capped at 200%.
+FISCAL 2021
+13
+→ Innovation performance - Innovation is the basis of our success. The development
+and introduction of future-oriented technologies, products and services create opportu-
+nities for a sustainable and better future by, among other things, reducing emissions
+and waste and enhancing resource efficiency.
+Implementation
+in compensation
+system
+33.33%
+Individual
+targets
+Short-term variable
+compensation (Bonus)
++ two times the Bonus
+target amount
++ BSAV contribution or amount
+for free disposal
++ maximum fringe benefits
+Base salary
+→ Equals the sum of maximum
+amounts that can possibly be
+paid out to each Managing Board
+member from all compensation
+components for the relevant fiscal
+year and is calculated as follows:
+→ Determined annually by the
+Supervisory Board
+Caps Managing Board members'
+compensation in order to avoid
+uncontrollably high payments and
+thus disproportionate costs and risks
+for the Company.
+MAXIMUM COMPENSATION
+50% in cash in March 2021
++ three times the Stock Awards
+target amount
+in November 2020
+→ Compensation alloted to Judith Wiese
+for the loss of benefits granted by her
+former employer: €1,469,124 (gross)
+50% in the form of Stock Awards
+additionally to the 2021 tranche
+Termination by mutual agreement
+and without serious cause
+Change of control (only for
+first-time appointments and/or
+reappointments before Novem-
+ber 2019)
+→ Commitments in connection with
+the termination of Managing Board
+appointments:
+-
+→ Commitments granted in connec-
+tion with the commencement of
+Managing Board appointments:
+Compensation for the loss of
+benefits from a former employer
+Moving expenses due to a change
+of the regular place of work at the
+request of the Company
+Are part of competitive compensation
+and help the Company obtain the
+best candidates worldwide for the
+Managing Board.
+OTHER BENEFITS
+Application
+in 2021
+in compensation
+system
+-
+Implementation
+→ Maximum compensation for each
+Managing Board member for fiscal
+2021 determined in accordance
+with the compensation system
+→ Reporting in Compensation Report
+for fiscal 2025
+Application
+in 2021
++ Fringe benefits
+FIXED COMPENSATION
+TOTAL TARGET COMPENSATION
+Compensation Report B. Compensation of Managing Board members
+Base salary
+Composition of total target compensation
+The Supervisory Board has determined, in accordance
+with the compensation system for the Managing Board
+members, the amount of each Managing Board mem-
+ber's total target compensation for fiscal 2021. In making
+this determination, the Supervisory Board has ensured
+that the proportion of long-term variable compensation
+always exceeds that of short-term variable compensation
+and that the proportions of the individual compensation
+components are within the ranges defined in the com-
+pensation system.
+and compensation structure
+→ Final assessment of compliance with
+maximum compensation when the
+2021 Stock Awards tranche is settled
+in fiscal 2025
+B.2.1 Target compensation
+FISCAL 2021 8
+→ Verification date: March 12, 2021
+→ Relevant share price: €111.13
+→ Fulfilled by all the Managing Board
+members obligated to provide
+verification
+→ Obligation to purchase additional
+shares if the value of the accu-
+mulated shareholding falls below
+the respective amounts to be
+verified due to fluctuations in
+the Siemens share price
+→ Relevant share price: average Xetra
+opening price of the fourth quarter
+of the previous calendar year
+→ Verification date on second Friday
+in March
+→ Four-year build-up phase
+→ Obligates Managing Board members
+to permanently hold Siemens shares
+of an amount equal to a multiple of
+their base salary during their terms
+of office on the Managing Board
+President and CEO: 300%
+- Other Managing Board
+members: 200%
+Foster an alignment of Managing
+Board and shareholder interests and
+provide additional incentives to
+sustainably increase Company value.
+SHARE OWNERSHIP GUIDELINES
+B.2 Principles of the
+determination of compensation
+Link to strategy
+TSR is a yardstick for measuring the achievement of Siemens' strategic goal of sustainably
+increasing Company value. It indicates total value creation for shareholders in the form
+of increases in the Siemens share price and dividends paid.
+7
+VARIABLE COMPENSATION
+€1,101,600
+→ President and CEO: €1,770,000
+→ Other Managing Board members:
+Target amounts (based on 100% target
+achievement)
+- One to three additional individual
+targets with focus topics from
+the Bonus topic catalogue
+Growth (for Managing Board
+members with business responsi-
+bility and the President and CEO)
+the area of responsibility
+-
+- Cash conversion rate (CCR) in
+Long-term variable
+compensation (Stock Awards)
+→33.33% individual targets:
+→ Payout: February 2022 (at the latest)
+→ 33.34% earnings per share (EPS)
+→ 33.33% return on capital
+→ Performance period: October 1,
+2020, to September 30, 2021
+Bonus for fiscal 2021
+→ Consideration of extraordinary
+developments in justified, infre-
+quent special cases possible
+- Managing Board portfolio
+- Individual targets: two to four
+equally weighted financial
+targets or focus topics
+-Siemens Group
+→ Performance range: 0% to 200%,
+using linear interpolation
+→Three equally weighted target
+dimensions:
+Performance-oriented annual
+Bonus, paid in cash in the subsequent
+fiscal year
+Compensation Report B. Compensation of Managing Board members
+employed (ROCE)
+Fosters long-term commitment and
+provides incentives for sustainable
+value creation in accordance with
+the interests of shareholders and
+for the achievement of strategic sus-
+tainability targets.
+Provides incentives for strong
+annual financial and non-financial
+performance as the basis for
+long-term Company strategy
+and sustainable value creation.
+→ Performance range: 0% to 200%,
+using linear interpolation
+FISCAL 2021
+No application in fiscal 2021
+In cases of severe breaches of duty or
+compliance and/or unethical behavior
+or in cases of grossly negligent or willful
+breaches of duty of care or in cases in
+which variable compensation compo-
+nents linked to the achievement of
+specific targets have been unduly paid
+out on the basis of incorrect data, the
+Supervisory Board can withhold
+or reclaim variable compensation.
+Aim to ensure sustainable Company
+development and avoid inappropriate
+risks.
+Malus and clawback
+regulations
+→ Other Managing Board members:
+€1,259,000
+Performance-oriented plan settled
+by share transfer after the end of
+an approximately four-year vesting
+period
+Target amounts (based on 100% target
+achievement)
+Net Promoter Score
+80%: development of TSR relative
+to MSCI World Industrials index
+20%: ESG key performance
+indicators: CO2 emissions,
+digital learning hours and
+→ President and CEO: €2,390,000
+→ CFO: €1,544,000
+→
+→ Performance criteria:
+80%: development of total
+shareholder return (TSR) relative
+to an international sector index
+• 12-month reference and
+•
+36-month performance period
+Outperformance relative to
+sector index-/+20 percent-
+age points
+→ Two performance criteria:
+→ Payout cap: 300% of target amount
+2021 Stock Awards tranche
+→ Grant date: November 13, 2020
+End of vesting period: in Novem-
+ber 2024
+- 20%: Siemens-internal ESG/Sus-
+tainability index with three equally
+weighted key performance indica-
+tors and annual interim targets
+Floor
+(based on 0%
+Compensation range
+Compensation Report B. Compensation of Managing Board members
+Judith Wiese
+Prof. Dr. Ralf P. Thomas
+Cedrik Neike
+Dr. Roland Busch
+in office on September 30, 2021
+avg. 110.00%
+Total target achievement and Bonus payout amounts for fiscal 2021
+Total target achievement and the resulting Bonus payout
+amount for each Managing Board member are summa-
+rized in the following table.
+Bonus for fiscal 2021
+Total target achievement for the
+17
+FISCAL 2021
+Target achievement: 118.00% to 133.50%
+Successful transition of the Digital Industries business to Cedrik Neike
+Succession planning
+Managing Board members
+target achievement)
+€2,801,379
+Cap
+67%
+€0
+€1,712,327
+155.44%
+€2,203,200
+€1,101,600
+€0
+€1,739,867
+157.94%
+€2,203,200
+€1,101,600
+€0
+158.27%
+€3,540,000
+€1,770,000
+€0
+Bonus
+payout amount
+Total target
+achievement
+(based on 200%
+target achievement)
+Target amount
+(based on 100%
+target achievement)
+€1,101,600
+CCR IB
+Optimization of the regional growth concept
+25%
+avg. 130.00%
+131.00%
+Performance of Siemens Financial Services and optimization
+of finance organization
+75%
+P. Thomas
+Prof. Dr. Ralf
+134.00%
+avg. 113.33%
+125.00%
+160.00%
+avg. 130.00%
+132.50%
+140.00%
+Implementation of portfolio measures and drive performance
+of Portfolio Companies
+Expansion and use of innovative loT solution building blocks
+CCR IB
+Further development of the strategy for Smart Infrastructure
+and Supply Chain Management
+Expansion of the software and digital businesses
+Expansion und use of innovative loT solution building blocks
+CCR SI
+Judith
+Wiese
+118.00%
+75%
+Preserve rating and safeguard deleveraging
+122.00%
+134.00%
+110.00%
+134.00%
+Successful transition to new CEO Dr. Roland Busch
+CCR IB
+CCR IB
+Cash conversion rate
+Succession planning
+Cash conversion rate
+Growth
+Klaus
+Helmrich
+33%
+50%
+Joe Kaeser
+50%
+who left during the fiscal year
+Managing Board members
+avg. 123.33%
+126.00%
+Strengthening employee responsibility and people development
+Implementation and realization of CO2 climate targets; succession
+planning, taking into consideration Siemens' diversity targets
+Expansion of Global Business Services
+Sustainability/diversity
+134.00%
+€2,203,200
+Implementation of other
+strategic measures
+Cash conversion rate
+Business development
+Employee satisfaction
+157.44%
+Performance criteria
+€0
+The value of the Siemens shares transferred after the ex-
+piration of the vesting period is also capped at 300% of
+the target amount. If this cap is exceeded, a correspond-
+ing number of Stock Awards is forfeited without refund
+or replacement.
+Calculation of Siemens shares to be transferred (illustrative)
+At the end of the approximately four-year vesting period,
+the Supervisory Board determines the degree of target
+achievement. The target achievement range for TSR and for
+the Siemens-internal ESG/Sustainability index is between
+0% and 200%. If target achievement is less than 200%, a
+number of Siemens Stock Awards equivalent to the short-
+fall are forfeited without refund or replacement and a
+correspondingly smaller number of shares is transferred.
+Determination of total target achievement
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2021 19
+ESG/Sustainability index is finally determined at the end
+of the approximately four-year vesting period on the
+basis of the weighted average of the target achievement
+values calculated for each of the key performance indi-
+cators.
+Environmental, social and governance The Siemens-
+internal ESG/Sustainability index is based on three
+equally weighted, structured and verifiable ESG key per-
+formance indicators. At the beginning of each tranche,
+the Supervisory Board defines ambitious target values for
+each of the ESG key performance indicators. Target mea-
+surement is based on defined interim targets for each
+fiscal year. Target achievement for the Siemens-internal
+The remaining number of Stock Awards is settled by the
+transfer of Siemens shares to the relevant Managing
+Board member.
+OCT
+If the change in the TSR of Siemens AG is between
+20 percentage points above and 20 percentage points
+below that of the sector index, target achievement is
+calculated using linear interpolation.
+→ If the change in the TSR of Siemens AG is equal to
+that of the sector index, target achievement is 100%.
+If the change in the TSR of Siemens AG is at least
+20 percentage points below that of the sector index,
+target achievement is 0%.
+→ If the change in the TSR of Siemens AG is at least
+20 percentage points above that of the sector index,
+target achievement is 200%.
+Siemens compared to MSCI World Industrials index
+Relative
+TSR
++20 ppts.
+(20) ppts.
+0%
+FYn+4
+ESG
+(Weighting: 20%)
+ESG
+→ "Long-term value creation," measured in terms of the
+development of the TSR of Siemens AG relative to the
+international sector index MSCI World Industrials and
+→ "Sustainability," measured in terms of the Siemens-
+internal ESG/Sustainability index, which is based on
+the following three equally weighted key performance
+indicators:
+The Supervisory Board approved the following perfor-
+mance criteria for the 2021 Stock Awards tranche:
+IN FISCAL 2021
+B.3.2.2 ALLOCATION OF STOCK AWARDS
+Compensation Report B. Compensation of Managing Board members
+FISCAL 2021 20
+Settlement by
+transfer of Siemens
+shares to Managing
+Board member
+Final number of
+Stock Awards
+≤300% of target amount
+Number of Stock Awards
+based on target achievement
+= final number of Stock Awards
+>300% of target amount
+Number of Stock Awards
+based on target achievement
+is reduced by amount by which
+cap is exceeded
+Value of
+Stock Awards
+in euros
+(Cap: 300%)
+on transfer date
+Xetra closing price
+of Siemens share
+Number of
+Stock Awards
+based on target
+achievement
+Maximum number
+of Stock Awards
+(based on 200%
+target achievement)
+110%
+Adjustment to actual
+target achievement
+120%
+TSR
+TSR
+(Weighting: 80%)
+100%
+200%
+Target achievement
+achievement.
+At the beginning of a fiscal year, the Supervisory Board
+defines a target amount in euros based on 100% target
+achievement for each Managing Board member. This tar-
+get amount is extrapolated to target achievement of 200%
+("maximum allocation amount"). Stock Awards for this
+maximum allocation amount are then allocated to the
+Managing Board members. The number of Stock Awards is
+calculated by dividing the maximum allocation amount by
+the price of the Siemens share on the allocation date, less
+the estimated discounted dividends ("allocation price").
+B.3.2.1 BASIC PRINCIPLES AND FUNCTIONING
+Siemens grants long-term variable compensation in the
+form of Stock Awards. A Stock Award is the claim to one
+share-conditional on target achievement - after the ex-
+piration of a defined vesting period. The vesting period
+is, accordingly, the term of each tranche.
+B.3.2 Long-term variable
+compensation (Stock Awards)
+€843,330
+€1,165,540
+154.44%
+153.11%
+€1,509,376
+€1,101,600
+€550,800
+€0
+Klaus Helmrich (until March 31, 2021)
+€754,688
+€0
+Joe Kaeser (until Feb. 3, 2021)
+who left during the fiscal year
+Managing Board members
+€1,716,072
+155.78%
+€2,203,200
+€1,101,600
+An approximately four-year vesting period begins with
+the allocation of Stock Awards, after the expiration of
+which Siemens shares are transferred. The beneficiary
+Managing Board members are not entitled to dividends
+during the vesting period.
+€1,734,359
+Since fiscal 2020, the number of Siemens shares that is
+actually transferred depends 80% on the financial perfor-
+mance criterion "long-term value creation," measured on
+the basis of the key performance indicator "total share-
+holder return" (TSR), and 20% on the non-financial per-
+formance criterion "sustainability." For measuring the
+"sustainability" performance criterion, Siemens AG's per-
+formance in the environmental, social and governance
+(ESG) area is assessed on the basis of a Siemens-internal
+ESG/Sustainability index, the composition of which is de-
+termined annually by the Supervisory Board.
+Target achievement for TSR is concretely determined
+by first calculating a TSR reference value for Siemens AG
+and a TSR reference value for the sector index. The TSR
+The following applies for the determination of target
+→ MSCI World Industrials index
+→ Siemens AG
+TSR performance values for
+36 months
+→ MSCI World Industrials index
+→ Siemens AG
+TSR reference values for
+12 months
+NOV
+NOV
+OCT
+FYn+1
+FYn
+Calculation of TSR reference values and TSR performance values for Stock Awards
+At the end of the vesting period, the change in Siemens'
+TSR as well as that of the sector index is determined by
+comparing the TSR reference values with the TSR perfor-
+mance values.
+(performance period). The TSR performance value is the
+average of the end-of-month values during the perfor-
+mance period.
+In order to determine at the end of the vesting period
+how well the TSR of Siemens AG has performed rela-
+tive to the TSR of the sector index, the TSR perfor-
+mance value is calculated over the subsequent 36 months
+reference value is equal to the average of the end-of-
+month values over the first 12 months of the vesting
+period (reference period).
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2021 18
+Total shareholder return - TSR is indicative of the perfor-
+mance of one share over a specified period of time - in
+the case of Siemens, over the approximately four-year
+vesting period. It takes into account changes in the
+share price and the dividends paid during this period. To
+reflect the Company's international footprint, the TSR of
+Siemens AG is compared at the end of the vesting period
+with the TSR of an international sector index, the MSCI
+World Industrials or a comparable successor index.
+Calculation of TSR target achievement
+Matthias Rebellius
+ESG key performance indicators for 2021 Stock Awards tranche
+89% =
+89% =
+89% =
+6,023 x
+12,046 x
+€91.32 =
+€91.32 =
+€1,100,000 /
+Prof. Dr. Ralf P. Thomas
+€550,000 /
+Cedrik Neike (since April 1, 2017)³
+12,046 x
+€91.32 =
+€1,100,000 /
+Dr. Roland Busch
+10,721 >
+5,360 >
+10,721 >
+spin-off
+Cash payment
+Siemens Energy
+Value at
+transfer date
+Number
+of Stock
+Awards¹
+calculated
+Target
+achievement
+of share price
+performance
+of Stock
+Awards¹
+allocated
+Nov. 11, 2016
+Number
+Allocation
+price
+Target amount
+(based on
+100% target
+achievement)
+Managing Board
+members in office on
+September 30, 2021
+Information on the transfer of the 2017 Stock Awards tranche
+Nov. 13, 2020²
+ble employees were, accordingly, entitled to receive an
+additional cash payment based on the spin-off ratio of 2:1
+and on the Siemens Energy share price of €22.20 on the
+date when their stock-based compensation commit-
+ments became due.
+€1,209,114 +
+€608,849 +
+€1,209,114 +
+€59,836
+€119,003
+Managing Board members
+(Amounts in number of units)1
+Changes in Stock Awards in fiscal 2021
+The following overview shows the changes in the balance
+of the Stock Awards held by Managing Board members in
+fiscal 2021.
+IN FISCAL 2021
+B.3.2.4 CHANGES IN STOCK AWARDS
+23
+FISCAL 2021
+In the course of transferring the 2017 Stock Awards
+tranche, compliance with the maximum amounts of total
+compensation for fiscal 2017 was also reviewed. The ap-
+plicable maximum amount was not exceeded in the case
+of any active or former Managing Board member.
+3 The amount reported for Cedrik Neike under "Value at transfer date" comprises the 4,345 Phantom Stock Awards allocated by Siemens AG that were valued
+at €113.72, the Xetra closing price of the Siemens share on November 12, 2020, in accordance with the plan requirements applicable to the Managing Board as well
+as the 1,015 Stock Awards allocated by Siemens Ltd. China that were valued at €113.04, the Xetra closing price of the Siemens share on November 13, 2020, in
+accordance with the plan requirements applicable to Senior Management. For the calculation of the additional cash payment resulting from the Siemens Energy
+spin-off, the Xetra closing prices of the Siemens Energy share on November 12, 2020, of €22.20 and on November 13, 2020, of €22.87, respectively, were used in
+accordance with the relevant plan requirements.
+2 The Stock Awards settled by share transfer were valued at €112.78, the German low price of the Siemens share on November 13, 2020.
+€119,003
+1 Cedrik Neike was appointed a full member of the Managing Board effective April 1, 2017. Due to his intra-year appointment, his Stock Awards target amount for fiscal
+2017 was determined on a pro-rated basis and, instead of Stock Awards, a corresponding number of Phantom Stock Awards was allocated to him in accordance with
+plan requirements. In contrast to Stock Awards, these Phantom Stock Awards were settled after the end of the vesting period by cash payment rather than by share.
+transfer. In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China
+from May 1, 2017, to March 31, 2019. Of the allocated number of Phantom Stock Awards reported here, 1,141 are attributable to the commitment by Siemens Ltd.
+China. Of the calculated number of Phantom Stock Awards reported here, 1,015 were awarded and paid by Siemens Ltd. China.
+€238,006
+€2,418,229 +
+€1,209,114 +
+21,442 >
+10,721 >
+89% =
+89% =
+24,092 x
+12,046 x
+€91.32 =
+€91.32 =
+€2,200,000/
+€1,100,000/
+Klaus Helmrich (until March 31, 2021)
+Joe Kaeser (until Feb. 3, 2021)
+members who left during
+the fiscal year
+Managing Board
+€119,003
+-
+date. At the time when the 2017 Stock Awards became
+due, the Managing Board members - like all other eligi-
+The following table provides a summary of the key pa-
+rameters of the 2017 Stock Awards tranche. In connection
+with the due date and settlement of the Stock Awards for
+fiscal 2017, the table also includes an additional cash pay-
+ment to the Managing Board members as a result of the
+Siemens Energy spin-off. The spin-off of Siemens Energy
+in fiscal 2020 led to adjustments in the stock-based com-
+pensation commitments agreed upon until the spin-off
+Performance
+price
+Reference
+price
+Performance of the Siemens share compared to the share performance of five relevant competitors
+Overview of target achievement for the 2017 Stock Awards tranche
+The 2017 Stock Awards tranche became due and was
+settled in fiscal 2021. The 2017 Stock Awards tranche de-
+pended on the performance of the Siemens share com-
+pared to the share performance of five relevant compet-
+itors during the approximately four-year vesting period
+from November 11, 2016, to November 12, 2020.
+IN FISCAL 2021 (2017 TRANCHE)
+B.3.2.3 TRANSFER OF STOCK AWARDS
+Concrete target setting and the degree of target achieve-
+ment for the Siemens-internal ESG/Sustainability index
+of the 2021 Stock Awards tranche will be published to-
+gether with the degree of target achievement for the
+TSR in the Compensation Report for fiscal 2025, after the
+expiration of the vesting period.
+3 As compensation for the loss of benefits granted by her former employer, the Supervisory Board allotted to Judith Wiese one-time compensation of €1,469,124 (gross)
+in fiscal 2021 -50% in cash and the remaining 50% in the form of Stock Awards from the 2021 tranche. Accordingly, a further 14,944 Stock Awards from the 2021 tranche
+with a fair value of €859,111 were allocated to Judith Wiese in November 2020, based on target achievement of 200%.
+2 In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is Chairman of the Board of Directors and CEO of Siemens Schweiz AG.
+The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under
+the terms of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the target amount reported here (based on 100% target
+achievement), €600,000 is attributable to Siemens Schweiz AG.
+1 The fair value on the allocation date is calculated for the TSR component on the basis of a valuation model and amounts to €47.37. The fair value for the ESG component of
+€97.96 is equal to the Xetra closing price of the Siemens share on the allocation date, less the discounted expected dividends. For the 2021 tranche, the allocation date in
+accordance with IFRS 2 was December 14, 2020 (the date of communication to the Managing Board members).
+Reference price versus
+€736,181
+€1,007,142
+3,504
+10,245
+14,015
+€1,722,262
+€1,259,000
+€861,131
+€629,500
+€1,472,460
+5,123
+20,490
+€2,518,000
+€1,259,000
+2,561
+performance price
+ABB
+GE
+Compensation Report → B. Compensation of Managing Board members
+22
+FISCAL 2021
+A = (2.16)
+percentage
+points
+Target achievement: 89%
+(12.03)%
+€95.29
+€108.32
+(9.87)%
+20.08%
+15.42%
+(16.05)%
+(60.54)%
+(8.27)%
+€78.71
+€65.55
+$159.09 $183.62
+¥4,607.00 ¥3,867.60
+$26.40
+CHF 23.26 CHF 21.33
+$10.42
+Siemens AG
+Competitors (average)
+Schneider
+Rockwell
+MHI
+in office on September 30, 2021
+Further development of the strategy for Digital Industries
+and Advanta
+Dr. Roland Busch
+Matthias Rebellius
+Dr. Roland Busch
+Cedrik Neike
+Matthias Rebellius²
+Prof. Dr. Ralf P. Thomas
+Judith Wiese³
+Managing Board members
+who left during the fiscal year
+Joe Kaeser (until Feb. 3, 2021)
+Klaus Helmrich (until March 31, 2021)
+Target amount
+(based on 100%
+target achievement)
+Maximum
+allocation amount
+in office on September 30, 2021
+Compensation Report → B. Compensation of Managing Board members
+Maximum number
+of Stock Awards
+Fair value at
+allocation date¹
+Siemens-internal
+Total shareholder return
+(Weighting 80%)
+ESG/Sustainability index
+(Weighting 20%)
+€2,390,000
+€4,780,000
+38,897
+9,724
+€2,795,114
+Based on 200% target achievement
+€1,259,000
+Managing Board members
+FISCAL 2021 21
+CO2 emissions
+Amount of greenhouse gases emitted
+by the Company's business operations
+in tons of CO2 equivalent, excluding
+carbon offsets (for example, certifi-
+cates).
+Digital learning hours per employee
+The total number of digital learning
+hours completed in virtual trainer-led
+training sessions, self-paced learning,
+learning on the job, community-based
+virtual learning and hybrid training
+sessions, divided by the total number
+of employees.
+Net Promoter Score (NPS)
+Customer intention to recommend us,
+measured on a scale of 1 (extremely
+unlikely) to 10 (extremely likely). NPS
+is defined as the number of promoters
+(%) minus the number of detractors (%).
+The Supervisory Board set the allocation date for the
+2021 Stock Awards tranche at November 13, 2020. The
+time sequence of this tranche is as follows.
+Time sequence for the 2021 Stock Awards tranche
+Allocation and four-year vesting period
+Transfer
+Process sequence
+Information on the allocation of 2021 Stock Awards tranche
+OCT '20
+OCT '21
+NOV '21
+2022
+2023
+SEPT '24 OCT '24
+NOV '24
+Performance
+measurement
+TSR reference period
+TSR performance period
+ESG performance measurement based on interim targets for each fiscal year
+The target amounts, the maximum allocation amounts,
+the maximum number of Stock Awards allocated and
+the fair value at allocation date in accordance with IFRS 2
+Share-based Payment are shown in the following table.
+The allocation price applicable for the 2021 tranche was
+€98.31.
+NOV '20
+€2,518,000
+20,490
+5,123
+31,411
+88,967
+25,612
+25,612
+89,881
+663
+5,360
+25,613
+70,291
+119,883
+1,325
+10,721
+10,721
+83,308
+Balance at the end
+of fiscal 2021
+Other changes²
+Vested and settled
+Allocated
+of fiscal 2021
+Balance at beginning
+During fiscal year
+Compensation Report B. Compensation of Managing Board members
+Judith Wiese4
+Prof. Dr. Ralf P. Thomas
+48,621
+1,325
+108,332
+40,557
+€1,472,460
+€1,259,000
+€2,518,000
+20,490
+5,122
+€1,472,362
+€1,544,000
+€3,088,000
+25,129
+FISCAL 2021 24
+4 The reported figures also include the Stock Awards allocated to Judith Wiese in November 2020 as compensation for the loss of benefits granted by her former employer
+in addition to the regular allocation of Stock Awards from the 2021 tranche.
+2 The target achievement of the Stock Awards from the 2017 tranche, which were due and settled in fiscal 2021, was 89%. As the Stock Awards from the 2017 tranche were
+allocated on the basis of 100% target achievement, a number equivalent to this shortfall was forfeited without refund or replacement, in accordance with plan requirements.
+3 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017,
+to March 31, 2019. The reported figures include the Stock Awards allocated to Cedrik Neike by Siemens Ltd. China due to this position.
+1 The settlement of Stock Awards from the 2018 tranche will be by share transfer up to a target achievement of 100%, and above 100% in cash. For this reason, the number
+of Stock Awards from the 2018 tranche, as set out in the table, is based on a target achievement of 100%. Starting with the 2019 tranche, settlement of Stock Awards will be
+entirely by share transfer. For this reason, the number of Stock Awards, as set out in the table, is based on a target achievement of 200%. At the end of the vesting period,
+a final number of Siemens shares to be transferred will be determined on the basis of actual target achievement and taking into account the Stock Awards cap.
+77,074
+145,955
+2,650
+1,325
+21,442
+10,721
+17,519
+12,806
+76,314
+152,528
+Klaus Helmrich (until March 31, 2021)
+Joe Kaeser (until Feb. 3, 2021)
+who left during the fiscal year
+Managing Board members
+40,557
+Cedrik Neike3
+Expansion of the software and digital businesses
+CCR DI
+enhancement
+ROCE
+0%
+18.56%
+2021
+value
+100%
+Actual
+Calculation:
+200.00%
+200%
+Target achievement
+33.33% Managing Board portfolio
+Return on capital employed (ROCE)
+Return on capital employed (ROCE): Target setting and target achievement
+for the "Managing Board portfolio" target dimension for
+fiscal 2021 for all Managing Board members. ROCE is
+defined as profit before interest and after tax divided by
+average capital employed. The target amount for ROCE
+is based on the budget plans. To focus on the operating
+performance of Siemens AG, Varian and main effects
+relating to the stake in Siemens Energy (profit "Siemens
+Energy Investment" and asset "Siemens Energy Invest-
+ment") were disregarded in target setting and in deter-
+mining ROCE target achievement.
+Because of the new structure of Siemens AG and the
+changes in the assignment of Managing Board respon-
+sibilities as of October 1, 2020, target setting for the
+Bonus for fiscal 2021 focused on the Managing Board's
+overall responsibility, cross-business collaboration and
+Siemens' strategic realignment. For this reason, the
+Supervisory Board of Siemens AG established "profit-
+ability/capital efficiency" measured in terms of return on
+capital employed (ROCE) as the performance criterion
+"Managing Board portfolio" target dimension
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2021 15
+Target achievement: 141.33%
+100%
+target
+Performance range
+8.54% 11.54% 14.54%
+Floor
+13.10%
+Average achievement of the equally weighted individual targets: CCR as reported, growth and/or further non-financial, qualitative individual targets
+Calculation:
+2 to 4 individual targets, target achievement between 0% and 200% each
+33.33% Individual targets
+Compensation Report → B. Compensation of Managing Board members
+Individual targets: Target setting and target achievement
+Target achievement
+FISCAL 2021 16
+The other individual targets were defined on the basis of
+the Managing Board members' respective areas of re-
+sponsibility.
+For the Managing Board members with business respon-
+sibility for Digital Industries (DI) and Smart Infrastructure
+(SI), the CCR targets are business-specific and defined as
+the ratio of free cash flow to Adjusted EBITA at each busi-
+ness. The target amounts for CCR were based on the
+budget plans.
+When setting the targets for fiscal 2021, the Supervisory
+Board took into account both the shared tasks and the
+individual responsibilities of the Managing Board mem-
+bers. For this reason, the cash conversion rate (CCR) was
+defined as a target for all Managing Board members. The
+CCR reflects a company's ability to convert profit into
+available cash. For the President and CEO and the
+Managing Board members with primarily functional
+responsibility, the CCR target was defined on the basis of
+Siemens' Industrial Businesses (IB). The CCR IB is defined
+as the ratio of free cash flow from IB to Adjusted EBITA IB.
+The "Individual targets" target dimension comprises two
+to four equally weighted individual targets, achievement
+of each of which may be between 0% and 200%.
+"Individual targets" target dimension
+Target achievement: 200.00%
+(3.0) ppts. +3.0 ppts.
+Performance range
++
+Cap
+points
+18.56%
++5.46 percentage
+ROCE (as reported)
+Varian and
+Siemens Energy-related effects
+Actual ROCE value
+-200%
+For fiscal 2018 through 2020: comparable EPS
+of continuing operations
+€(1.50)
+€5.83
+2018
+100%
+Actual
+EPS
+FY
+141.33%
+Calculation of target and actual value:
+200%
+Target achievement
+Basic earnings per share (EPS), three-year average
+33.34% Siemens Group
+Earnings per share (EPS): Target setting and target achievement
+For both target setting and target achievement, the
+average EPS of three consecutive fiscal years is used. The
+averaged values take account of the Company's long-term
+performance and provide incentives for a sustainable in-
+crease in profit. Because of the significant change in the
+portfolio of Siemens AG due to the spin-off of Siemens
+Energy at the end of fiscal 2020, the EPS target for fiscal
+2021 was defined on the basis of the comparable EPS of
+continuing operations in the years 2018 through 2020. In
+this process, the Flender sale in the first half of fiscal 2021
+was also taken into account.
+For the "Siemens Group" target dimension in fiscal 2021,
+the Supervisory Board of Siemens AG approved the perfor-
+mance criterion "profit," measured in terms of basic earn-
+ings per share (EPS). EPS is calculated by dividing income
+from continuing operations, income from discontinued
+operations and net income - all attributable to ordinary
+shareholders of Siemens AG - by the weighted average
+number of shares outstanding during the fiscal year.
+"Siemens Group" target dimension
+B.3.1.2 BONUS FOR FISCAL 2021
+Compensation Report → B. Compensation of Managing Board members
+€1,805,745
+value
++€1.50
+2021
+€5.82
+target
+(actual value)
+Cap
+100%
+Floor
+avg. 2019-2021 €6.09
+€7.68
+2021
+€6.97
+€5.47
+€3.97
+EPS
+0%
+€4.77
+2020
+avg.
+€6.09
+(100% target)
+avg. 2018-2020 --> €5.47
+2019
+134.00%
+6,282
+Industrial Businesses
+(0.4)
+target
+Cap
+100%
+Floor
+1.36
+0.96
+0.56
+CCR
+0%
+1.20
+2021
+value
+100%
+Actual
+Smart Infrastructure
+160.00%
+200%
+Target achievement
++0.4
+75%
+Target
+Total target
+achievement
+100%
+Optimization/efficiency
+Implementation of other
+strategic measures
+Innovation performance
+Cash conversion rate
+Implementation of
+portfolio measures
+25%
+75%
+Rebellius
+Matthias
+Cash conversion rate
+Growth
+25%
+Implementation of other
+strategic measures
+Innovation performance
+75%
+Cedrik
+Neike
+Cash conversion rate
+Growth
+25%
+Succession planning
+Succession planning, taking into consideration Siemens'
+diversity targets
+avg. 133.33%
+133.50%
+Further development of the strategy for the Mobility business
+achievement
+134.00%
+Dr. Roland
+Busch
+Performance range
+CCR IB
+200%
+Digital Industries
+Cash conversion rate
+Target achievement
+Performance range
++0.5
+(0.5)
+Cap
+100%
+Floor
+1.45
+0.95
+0.45
+CCR
+0%
+1.12
+Expansion of the software and digital businesses
+Actual
+value
+2021
+140.00%
+100%
+target
+Performance range
+Cash conversion rate
+Growth
+Actual
+value
+Target setting
+25%
+Key performance
+Weighting indicator/focus topic
+Individual targets per Managing Board member
++0.4
+(0.4)
+target
+Cap
+Floor
+1.36
+0.96
+0.56
+CCR
+0%
+1.12
+2021
+100%
+Implementation of other
+strategic measures
+9%
+2020
+153,500
+Werner Wenning
+91%
+140,000
+140,000
+2021
+13,500
+Total
+who left during the fiscal year
+18,000
+11%
+158,000
+Gunnar Zukunft¹
+(since Jan. 2018)
+Supervisory Board members
+2021
+256,000
+89%
+14%
+50%
+31%
+91,667
+2021
+93,333
+80,000
+42%
+15,000
+8%
+188,333
+2020
+2021
+140,000
+49%
+120,000
+42%
+25,500
+9%
+285,500
+2020
+140,000
+55%
+80,000
+36,000
+(Second Deputy Chairman until Feb. 2021)
+Outstanding Stock Awards tranches on September 30, 2021
+Dr. Nicola Leibinger-Kammüller
+241,167
+32%
+29%
+465,000
+607,500
+9% 5,225,324
+12%
+4,984,470
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed
+to transfer their compensation to the Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
+2 Werner Brandt has been a member of the Supervisory Board since January 31, 2018, and was elected Second Deputy Chairman
+of the Supervisory Board, effective the end of the Annual Shareholders' Meeting on February 3, 2021.
+3 Compared to the amounts reported in the 2020 Compensation Report, the total does not include the compensation of €359,000
+paid to former Supervisory Board member Robert Kensbock.
+14%
+FISCAL 2021 33
+SIEMENS.COM/CORPORATE-GOVERNANCE.
+Compensation Report → C. Compensation of Supervisory Board members
+FISCAL 2021 34
+As of the end of fiscal 2021, the following Stock Awards
+tranches were within the vesting period and are there-
+fore included in the balance at the end of the fiscal year.
+158,000
+2018
+tranche
+Performance
+criterion
+2019
+tranche
+Performance
+criterion
+Pursuant to Section 113 para. 3 of the German Stock Cor-
+poration Act in the version amended by the German Act
+Implementing the Second Shareholders' Rights Directive
+(Gesetz zur Umsetzung der zweiten Aktionärsrechtericht-
+linie, ARUG II), the annual shareholders' meeting of a
+listed company must resolve on compensation for the
+members of the supervisory board at least every four
+years. In accordance with Section 113 para. 3 of the Ger-
+man Stock Corporation Act, the Annual Shareholders'
+Meeting on February 3, 2021, therefore adopted a resolu-
+tion regarding the compensation of Supervisory Board
+members and voted to amend Section 17 of the Articles
+of Association. The compensation system for Supervisory
+Board members submitted to the Annual Shareholders'
+Meeting and the proposed new version of Section 17 of
+the Articles of Association were approved by a majority of
+97.49% of the valid votes cast. The provisions of the new
+version of Section 17 of the Articles of Association, which
+came into effect on October 1, 2021, replace the previous
+provisions of the Articles of Association regarding Super-
+visory Board compensation as of that date. The compen-
+sation system approved by the Annual Shareholders'
+Meeting as well as the Articles of Association are publicly
+available on the Siemens Global Website at ☐ www.
+34,500
+31%
+75,152
+1,650,741
+1,433,939
+2021
+(until Feb. 2021)
+2020
+Total³
+2021
+2020
+220,000
+53,472
+131,515
+3,109,583
+2,943,030
+55%
+54%
+57%
+55%
+60%
+59%
+58,333
+140,000
+30,556
+35%
+16,500
+10%
+166,500
+34%
+51,000
+12%
+411,000
+33%
+9,000
+10%
+93,028
+2020
+11%
+140,000
+89%
+Kasper Rørsted
+2021
+93,333
+72%
+26,667
+20%
+10,500
+8%
+130,500
+194,045
+(since Feb. 2021)
+Baroness Nemat Shafik (DBE, DPhil)
+2021
+129,630
+93%
+10,500
+7%
+140,130
+(since Jan. 2018)
+2020
+2020
+10%
+19,500
+20%
+(since Jan. 2019)
+2020
+140,000
+89%
+18,000
+11%
+158,000
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
+2021
+134,815
+71%
+38,519
+20%
+16,500
+9%
+189,833
+(since Jan. 2015)
+2020
+135,758
+70%
+38,788
+140,000
+18,000
+89%
+11%
+2021
+140,000
+91%
+13,500
+9%
+153,500
+2020
+140,000
+89%
+(since Jan. 2018)
+18,000
+158,000
+2021
+140,000
+91%
+13,500
+9%
+153,500
+2020
+140,000
+11%
+Matthias Zachert
+(since Feb. 2021)
+Grazia Vittadini
+158,000
+Dr. Nathalie von Siemens
+2021
+2020
+81%
+16,667
+10%
+16,500
+10%
+173,167
+(since Jan. 2015)
+2020
+140,000
+70%
+40,000
+20%
+21,000
+10%
+201,000
+Michael Sigmund
+(since March 2014)
+Dorothea Simon¹
+(since Oct. 2017)
+18,000
+tranche
+Performance period
+2021
+tranche
+Managing Board members
+who left during the fiscal year
+Joe Kaeser (until Feb. 3, 2021)
+422,625
+Klaus Helmrich (until March 31, 2021)
+Total
+308,448
+731,073
+1,234,800
+616,896
+1,851,696
+0
+16,207,039
+294,170
+294,170
+13,028,557
+7,397,589
+15,592,209
+7,026,562
+20,426,146
+22,618,771
+1 As in the previous year, a total of €22,950 is attributable to the funding of personal pension benefit commitments earned prior to the transfer to the BSAV.
+2 Deferred compensation totals €4,164,429 (2020: €3,911,848), including €3,741,588 for Joe Kaeser (2020: €3,512,020), €359,363 for Klaus Helmrich (2020: €342,276)
+and €63,478 for Prof. Dr. Ralf P. Thomas (2020: €57,552).
+FISCAL 2021 26
+Compensation Report → B. Compensation of Managing Board members
+Judith Wiese and Matthias Rebellius, who were newly
+appointed to the Managing Board as of October 1, 2020,
+are not included in the BSAV. Instead of BSAV contribu-
+tions, the Supervisory Board awarded them for fiscal 2021
+a fixed cash amount of €550,800 each for free disposal.
+This amount will be paid in January 2022.
+1,219,888
+611,168
+1,831,056
+6,702,858
+2,938,080
+6,566,101
+2020
+Defined benefit obligation
+for all pension commitments
+excluding deferred compensation²
+(Amounts in €)
+2021
+2020
+Managing Board members
+in office on September 30, 2021
+Dr. Roland Busch
+991,200
+616,896
+Cedrik Neike
+616,896
+616,896
+Prof. Dr. Ralf P. Thomas
+616,896
+Total
+2,224,992
+616,896
+1,850,688
+932,613
+594,468
+588,070
+2,115,151
+608,225
+621,266
+601,098
+1,830,589
+8,538,765
+4,069,811
+8,431,412
+21,039,988
+B.6 Compensation awarded
+and due
+2021
+B.6.1 Active Managing Board members
+in fiscal 2021
+The Bonus is reported under "Short-term variable com-
+pensation" as "due compensation" since the underlying
+services were fully rendered by the end of each period
+(September 30). Therefore, the Bonus payout amounts
+Short-term variable compensation: Bonus for 2021
+Payout latest
+in Feb '22
+plus cash payment relating to Siemens Energy spin-off
+Compensation granted in connection with the
+commencement/termination of appointments
+2022
+Fixed compensation
+Variable compensation
+Other
+In addition to the amounts of compensation, Section 162
+para. 1 sent. 2 No. 1 of the German Stock Corporation Act
+requires disclosure of the relative proportion of total
+compensation represented by all fixed and variable
+compensation components. The relative proportions
+reported here refer to the compensation components
+"awarded" and "due" in the respective fiscal years in
+accordance with Section 162 para. 1 sent. 1 of the German
+Stock Corporation Act.
+Although the service costs for Company pension plans
+are not to be classified as awarded and due compensa-
+tion, they are also reported in the following table for pur-
+poses of transparency.
+Payout in
+Jan '22
+FISCAL 2021
+Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
+Active Managing Board members in fiscal 2021
+Managing Board members
+in office on September 30, 2021
+Fixed
+Base salary
+compensation
++ Fringe benefits
+Variable
+compensation
++ Amount for free disposal
+27
+2021
+Settlement in
+Nov '20
+Amount for free disposal
+Compensation awarded and due in fiscal 2021
+for the reporting year are reported, although payout only
+occurs after the end of each reporting year, in order to
+make reporting transparent and comprehensible and in
+order to guarantee a connection between performance
+and compensation in the reporting period.
+Furthermore, in fiscal 2021 and 2020, the Stock Awards
+from the 2017 and 2016 tranches allocated in fiscal 2017
+and 2016, respectively, became due and were settled by
+transfer of Siemens shares. The value of Siemens shares
+at the time of transfer is reported under "Long-term vari-
+able compensation."
+In connection with the due date and settlement of the
+Stock Awards for fiscal 2017, the table also includes the
+additional cash payment to eligible Managing Board
+members as a result of the Siemens Energy spin-off.
+The spin-off of Siemens Energy in fiscal 2020 led to ad-
+justments in the stock-based compensation allocations
+agreed upon until the spin-off date. At the time when
+the 2017 Stock Awards became due, the Managing
+Board members like all other eligible employees -
+were, accordingly, entitled to receive an additional
+cash payment based on the spin-off ratio of 2:1 and on
+the Siemens Energy share price of €22.20 on the date
+when their stock-based compensation allocations be-
+came due.
+-
+2017
+Long-term variable compensation:
+2017 Stock Awards tranche
+Base salary and fringe benefits
+Monthly payout
+€ Oct
+Nov
+Dec
+Jan
+Feb
+March April
+May
+June
+July
+Aug
+Sep
+The following tables show the compensation awarded
+and due to the active members of the Managing Board in
+fiscal 2021 and fiscal 2020 in accordance with Sec-
+tion 162, para. 1, sent. 1 of the German Stock Corporation
+Act. As a result, they include all the amounts actually paid
+to individual Managing Board members in the reporting
+period ("awarded compensation") and/or all the compen-
+sation that is legally due but not yet received ("due com-
+pensation").
+2020
+2021
+Service costs
+according to IAS 19R
+Nov 8, '19
+Nov '23
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+Nov '19 Oct '20 Nov '20
+Reference period
+Oct '23
+Performance period
+Siemens-internal
+ESG/Sustainability index (20%)
+Oct '19
+Sept '23
+Performance period
+Performance period
+Nov '24
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+Siemens-internal
+ESG/Sustainability index (20%)
+Nov '20 Oct '21
+Reference period
+Nov '21
+Oct '24
+153,500
+Oct '20
+Sept '24
+Performance period
+Nov 13, '20
+Oct '22
+Nov '19
+Nov '18 Oct '19
+Reference period
+Performance
+criteria
+Compensation Report B. Compensation of Managing Board members
+Allocation
+Vesting
+period
+End of vesting period
+and transfer
+2018
+2019
+2020
+2021
+2022
+2023
+2024
+Nov 10, '17
+Nov '21
+Share price performance
+compared to competitors¹
+Nov '17 Oct '18 Nov '18
+Reference period
+Oct '21
+Performance period
+Share price performance
+compared to competitors¹
+Nov 9, '18
+Nov '22
+1 The 2018 and 2019 Stock Awards tranches depend on the performance of the Siemens share relative to the share performance
+of five relevant competitors during the approximately four-year vesting period.
+B.3.3 Malus and clawback regulations
+Under existing malus and clawback regulations, the Super-
+visory Board is authorized to withhold or reclaim variable
+compensation in cases of severe breaches of duty or
+compliance and/or unethical behavior or in cases of
+grossly negligent or willful breaches of the duty of care or
+in cases in which variable compensation components
+linked to the achievement of specific targets have been
+unduly paid out on the basis of incorrect data.
+The Supervisory Board exercises its authority to withhold
+or reclaim variable compensation components at its duty-
+bound discretion.
+In fiscal 2021, the Supervisory Board did not exercise this
+authority.
+29,515
+Prof. Dr. Ralf P. Thomas
+200%
+2,181,725
+19,632
+299%
+3,264,444
+29,375
+Total
+4,628,050
+41,645
+6,544,446
+58,890
+1 The amount of the obligation is based on the average base salary during the four years prior to the respective verification dates.
+2 Based on the average Xetra opening price of €111.13 for the fourth quarter of 2020 (October to December).
+3 As of March 12, 2021 (verification date).
+4 Dr. Roland Busch was appointed President and CEO only after the reference date relevant for the calculation of the SOG target.
+As a result, the amount of his obligation on the verification date of March 12, 2021, was still 200% of his relevant average base salary.
+B.5 Pension benefit commitment Contributions under the BSAV are credited to the individ-
+Most of the members of the Managing Board are in-
+cluded in the Siemens Defined Contribution Pension Plan
+(BSAV). Newly appointed members of the Managing Board
+can be awarded, instead of BSAV contributions, a fixed
+cash amount for free disposal.
+ual pension accounts in the January following each fiscal
+year. Until pension payments begin, members' pension
+accounts are credited with an annual interest payment
+(guaranteed interest) in January of each year. The inter-
+est rate is currently 0.90%.
+Information on the BSAV
+Contributions¹
+3,280,002
+Performance
+criteria
+shares³
+Value
+in €²
+FISCAL 2021 25
+Compensation Report → B. Compensation of Managing Board members
+B.4 Share Ownership Guidelines
+The deadlines by which the individual Managing Board
+members must first verify compliance with the Share
+Ownership Guidelines (SOG) vary from member to mem-
+ber, depending on when they were appointed to the
+Managing Board. For Managing Board members in office
+Obligations under the Share Ownership Guidelines
+on September 30, 2021, the following table shows the
+number of Siemens shares that each held in order to
+comply with the SOG on March 12, 2021, the verification
+date. It also shows the number of shares to be held
+throughout the Managing Board members' terms of of-
+fice with a view to future verification dates.
+Required
+Verified
+Managing Board members
+and required to verify
+in office on September 30, 2021,
+Percentage of
+compliance on March 12, 2021
+base salary'
+Value
+in €¹
+Number of
+shares²
+Dr. Roland Busch4
+200%
+2,446,325
+22,013
+Percentage of
+base salary'
+268%
+Number of
+9%
+2020
+91%
+VARIABLE COMPENSATION
+Key
+Target
+dimension
+Performance
+criterion
+performance
+indicator
+Bonus
+fiscal 2022
+Siemens
+Group
+Profit
+Matthias Rebellius
+€7,715,220
+Basic earnings
+per share (EPS)
+Stock Awards
+tranche
+Managing
+Board
+portfolio
+Profitability/
+capital
+efficiency
+Prof. Dr. Ralf P. Thomas
+€8,636,316
+Judith Wiese
+€7,715,220
+Return on
+capital
+employed
+(ROCE)
+Comparable
+revenue
+2022
+Cedrik Neike
+€7,781,316
+Dr. Roland Busch
+€15,295,950
+MAXIMUM COMPENSATION
+1,103
+3,085
+Janina Kugel
+Managing Board member
+until Jan. 31, 2020
+Prof. Dr.
+Siegfried Russwurm
+Managing Board member
+until March 31, 2017
+Prof. Dr.
+Hermann Requardt
+Managing Board member
+until Jan. 31, 2015
+Peter Löscher
+President and CEO
+until July 31, 2013
+Pensions
+2017 Stock Awards (vesting: 2016-2020)³
+Annuity
+Capital payment (partial or full)
+1,274
+664
+42
+588
+1 The table includes only compensation that was awarded to former members after they left the Managing Board.
+2 Fringe benefits include in-kind compensation and fringe benefits awarded by the Company such as the provision of a company car and insurance allowances.
+In the case of Lisa Davis, they also include contractually agreed payments for tax adjustments.
+3 The amounts reported under "2017 Stock Awards (vesting: 2016-2020)" also include the additional cash payment relating to the settlement of the 2017 Stock Awards
+tranche due to the Siemens Energy spin-off.
+4 Like other eligible employees of Siemens AG who were employed by the Company before September 30, 1983, Joe Kaeser was entitled to transition payments
+in the first six months of his retirement equal to the difference between his last base salary and his pension entitlement under the Company pension plan. The
+transition payments that Joe Kaeser received in each month from March through August 2021 amounted to €178,080 and are included under "Pensions: Annuity."
+5 Michael Sen's appointment as a member of the Managing Board of Siemens AG was terminated by mutual agreement as of March 31, 2020, prior to the end
+of his contractual term of office. His employment relationship remained unaffected until the end of the day on March 31, 2021. The amount reported under
+"Other" contains the base salary of €550,800 awarded to Michael Sen for the period from October 1, 2020, until the early termination of his employment
+contract on March 31, 2021, his pro-rated Bonus for fiscal 2021 of €550,800 and a severance payment in the gross amount of €3,544,427, which was due
+and payable on the termination date of March 31, 2021.
+FISCAL 2021 30
+B.7 Outlook for fiscal 2022
+The following overview shows the maximum compen-
+sation and the performance criteria for variable compensa-
+tion for fiscal 2022, as approved by the Supervisory Board
+of Siemens AG on September 23, 2021.
+Outlook fiscal 2022
+Compensation Report B. Compensation of Managing Board members
+growth
+571
+Diverse
+focus topics
+Total
+shareholder
+return (TSR)
+FISCAL 2021
+31
+Compensation Report → C. Compensation of Supervisory Board members
+C. Compensation of
+Supervisory Board members
+The rules for Supervisory Board compensation for fiscal
+2021 were approved by the Annual Shareholders' Meeting
+on January 28, 2014, and have been in effect since fiscal
+2014. They are set out in Section 17 of the Articles of
+Association of Siemens AG in the version applicable for
+fiscal 2021. Supervisory Board compensation consists
+entirely of fixed compensation; it reflects the responsibil-
+ities and scope of the work of the Supervisory Board
+members. The Chairman and Deputy Chairs of the Super-
+visory Board as well as the chairs and members of the
+Audit Committee, the Chairman's Committee, the Com-
+pensation Committee, the Compliance Committee and
+the Innovation and Finance Committee receive additional
+compensation. The compensation authorized by the Arti-
+cles of Association for work in the Compliance Committee
+was no longer paid in fiscal 2021 since the Compliance
+Committee was reintegrated into the Audit Committee
+and the duties of the Compliance Committee were trans-
+ferred to the Audit Committee effective October 1, 2020.
+Under the rules for fiscal 2021, the members of the Super-
+visory Board receive an annual base compensation, and
+the members of the Supervisory Board committees re-
+ceive additional compensation for their committee work.
+Compensation of members of the Supervisory Board and its committees
+→ Net Promoter Score
+Chairman
+€280,000
+Deputy Chair
+€220,000
+Additional compensation for committee work
+Audit Committee
+Chairman's Committee
+Chair
+€160,000
+Member
+€80,000
+Chair
+€120,000
+Member
+€80,000
+Member
+€140,000
+Base compensation of Supervisory Board
+→ Digital learning hours per employee
+The Siemens-internal ESG/Sustainability index for the 2022 Stock Awards tranche
+is based on the following three equally weighted key performance indicators:
+→ CO2 emissions
+Siemens-
+internal ESG/
+Sustainability
+index
+Details
+To strengthen the focus and connection between performance in the reporting year
+and target achievement, the actual value of the reporting year is used. The target
+value continues to be based on the average of the previous three fiscal years and
+thus on the concept of continuous improvement.
+Beginning with fiscal 2022, EPS before purchase price allocation (EPS pre PPA)
+will be used in order to increase transparency regarding the operating performance
+of Siemens. EPS pre PPA is defined as basic earnings per share from net income
+adjusted for amortization of intangible assets acquired in business combinations
+and related income taxes. As for EPS, EPS pre PPA includes the amounts attributable
+to shareholders of Siemens AG.
+This approach is aligned with external communications and the modified Financial
+Framework for the financial steering of the Company, presented at Capital Market
+Day 2021.
+With return on capital employed (ROCE), we aim to focus on Siemens' operating
+performance, analogously to fiscal 2021. Thus ROCE excludes defined Varian-
+related acquisition effects and the main Siemens Energy-related effects in order to
+further increase the transparency of Siemens' operating performance.
+CCR, measured on the basis of:
+→ all-in for Managing Board members with primarily functional responsibility
+→ the relevant business for Managing Board members with business responsibility
+Comparable revenue growth, measured on the basis of:
+→ Siemens for Managing Board members with primarily functional responsibility
+→ the relevant business for Managing Board members with business responsibility
+Business development; implementation of portfolio measures; optimization/
+efficiency enhancement; implementation of other strategic measures
+Sucession planning; sustainability/diversity
+Development of the TSR of Siemens AG relative to the international sector index
+MSCI World Industrials
+Individual
+targets
+Liquidity
+Cash
+conversion
+rate (CCR)
+Growth
+Company
+strategy
+Sustainability
+Long-term
+value creation
+Sustainability
+Diverse
+focus topics
+Compensation
+Committee
+14
+1,247
+1%
+794
+17%
+2,320
+29%
+585
+21%
+1,147
+27%
+45
+1,166 25%
+31%
+1,626 20%
+947
+23%
++ Long-term variable compensation
+2017 Stock Awards (vesting: 2016-2020)
+2016 Stock Awards (vesting: 2015-2019)
+Cash payment Siemens Energy spin-off
+2,418 52%
+1,209 44%
+4,106
+51%
+843
+1%
+34
+1%
++ Short-term variable compensation
+Bonus for fiscal 2021
+Bonus for fiscal 2020
+Joe Kaeser²
+President and CEO until Feb. 3, 2021
+Klaus Helmrich 3
+Managing Board member until March 31, 2021
+2021
+2020
+2021
+2020
+€ thousand in % of TC € thousand in % of TC
+€ thousand in % of TC € thousand in % of TC
+755
+40
+16%
+2,205
+27%
+551
+20%
+1,102
+26%
+1%
+115
+2,092
+1,328
+50%
+5%
+(€ thousand)
+Fixed and
+variable
+compensation
+Fringe benefits²
+Other
+Pensions
+2017 Stock Awards (vesting: 2016-2020) 3
+Annuity
+Capital payment (partial or full)
+Fixed and
+variable
+Fringe benefits²
+Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
+Former members of the Managing Board'
+Other
+Compensation Report B. Compensation of Managing Board members
+Klaus Helmrich
+Managing Board member
+until March 31, 2021
+Joe Kaeser4
+President and CEO
+until Feb. 3, 2021
+Michael Sen
+Managing Board member
+until March 31, 2020
+Lisa Davis
+Managing Board member
+until Feb. 29, 2020
+106
+21
+4,646
+compensation
+and due to former members of the Managing Board in
+fiscal 2021 in accordance with Section 162 para. 1 sent. 1
+of the German Stock Corporation Act. In accordance with
+Section 162 para. 5 of the German Stock Corporation Act,
+the personal information of former Managing Board
+members is no longer included if they left the Managing
+Board before September 30, 2011.
+The following table shows the compensation awarded
+of the Managing Board
+119
+4%
++ Other
+=
+Total compensation (TC)
+(according to Section 162 AktG)
+4,616
+100%
+8,051 100%
+2,756 100% 4,186 100%
++ Service costs
+= Total compensation (incl. service costs)
+4,616
+1,220
+9,271
+1 As compensation for the loss of benefits granted by her former employer, the Supervisory Board allotted to Judith Wiese one-time
+compensation of €1,469,124 (gross) in fiscal 2021. 50% of this compensation was allocated in November 2020 in the form of Stock
+Awards, and the remaining 50% was awarded in cash in March 2021. The cash payment is included under "Other."
+2 Pro-rated compensation for the period from October 1, 2020, up to and including February 3, 2021.
+3 Pro-rated compensation for the period from October 1, 2020, up to and including March 31, 2021.
+294
+3,050
+611
+4,797
+FISCAL 2021 29
+B.6.2 Former members
+238
+Innovation and
+Finance Committee
+Chair
+€100,000
+2021
+140,000
+58%
+80,000
+33%
+22,500
+9%
+242,500
+(since April 2007)
+158,000
+2020
+55%
+80,000
+31%
+36,000
+14%
+256,000
+Harald Kern¹
+2021
+140,000
+140,000
+11%
+18,000
+89%
+8%
+246,167
+(since Jan. 2008)
+Dr. Andrea Fehrmann¹
+(since Jan. 2018)
+Bettina Haller¹
+2020
+63%
+60,000
+27%
+22,500
+10%
+222,500
+2021
+140,000
+91%
+13,500
+9%
+153,500
+2020
+140,000
+53%
+19,500
+100,000
+24,000
+61,500
+15%
+401,500
+Benoît Potier
+2021
+140,000
+90%
+15,000
+10%
+50%
+155,000
+2020
+135,758
+87%
+21,000
+13%
+156,758
+Hagen Reimer¹
+2021
+140,000
+(since Jan. 2018)
+200,000
+35%
+140,000
+9%
+264,000
+(since Jan. 2008)
+140,000
+57%
+80,000
+32%
+27,000
+11%
+247,000
+Jürgen Kerner¹
+2021
+140,000
+37%
+200,000
+52%
+43,500
+11%
+383,500
+(since Jan. 2012)
+2020
+38%
+35%
+86,667
+57%
+2021
+280,000
+46%
+in €
+280,000
+in % of TC
+46%
+in €
+48,000
+in % of TC
+in €
+Jim Hagemann Snabe
+8%
+(since Oct. 2013, Chairman since Jan. 2018)
+2020
+280,000
+44%
+280,000
+44%
+72,000
+11%
+632,000
+608,000
+in % of TC
+in €
+(TC)
+Member
+€60,000
+Chair
+€80,000
+Member
+€40,000
+Compensation for any work on the Chairman's Commit-
+tee is deducted from compensation for work on the Com-
+pensation Committee.
+If a Supervisory Board member is absent from any Super-
+visory Board meetings, one-third of the aggregate com-
+pensation due to that member is reduced by the percent-
+age of Supervisory Board meetings he or she does not
+attend in relation to the total number of Supervisory
+Board meetings held during the fiscal year. In the event
+of changes in the composition of the Supervisory Board
+or its committees, compensation is paid on a pro-rated
+basis, rounding up to the next full month.
+In addition, the members of the Supervisory Board re-
+ceive €1,500 for each meeting of the Supervisory Board
+and its committees they attend.
+The members of the Supervisory Board are reimbursed
+for out-of-pocket expenses incurred in connection with
+their duties and for any value-added tax to be paid on
+their compensation. For the performance of his duties,
+the Chairman of the Supervisory Board is also entitled to
+an office with secretarial support and the use of a car
+service. No loans or advances from the Company are pro-
+vided to members of the Supervisory Board.
+FISCAL 2021
+32
+Compensation Report →C. Compensation of Supervisory Board members
+The following table shows the compensation awarded and due to the members of the Supervisory Board in
+fiscal 2021 and fiscal 2020 in accordance with Section 162, para. 1, sent. 1 of the German Stock Corporation Act.
+Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
+Supervisory Board members
+Total
+Supervisory Board members
+Basic
+in office on September 30, 2021
+compensation
+Comittee
+compensation
+Meeting
+attendence fee
+compensation
+Birgit Steinborn¹
+2021
+220,000
+47%
+140,000
+42%
+160,000
+48%
+36,000
+11%
+336,000
+Tobias Bäumler¹
+2021
+140,000
+49%
+120,000
+42%
+27,000
+9%
+287,000
+(since Oct. 2020)
+2020
+Michael Diekmann
+2021
+140,000
+2020
+13,500
+(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
+7%
+200,000
+43%
+46,500
+10%
+466,500
+(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
+2020
+220,000
+46%
+200,000
+42%
+61,500
+13%
+481,500
+Dr. Werner Brandt²
+2021
+193,333
+44%
+213,333
+49%
+31,500
+438,167
+140,000
+=
++ Amount for free disposal
+2,801
+47%
+1,740
+49%
+899
+20%
+879
+44%
+1,209 20%
+609
+17%
+2,092 47%
+119
+2%
+60
+2%
+6,008 100% 4,441
+56%
+1,138
+1,116 32%
+33%
+Cedrik Neike 2,3
+Managing Board member since April 1, 2017
+2021
+2020
+2021
+2020
+€ thousand in % of TC € thousand in % of TC
+1,770
+109
+29%
+100%
+2%
+30%
+2%
+€ thousand in % of TC € thousand in % of TC
+1,102 31% 1,102
+14
+0%
+55%
+36
+2%
+1,879 31%
+1,450
+1,352
+98
+Dr. Roland Busch¹
+President and CEO since Feb. 3, 2021
+3,524 100%
+100%
+551
+16%
+1,723
+50%
+1,172
+28%
+1,183
+29%
+1,712 50%
+1,734
+41%
+812
+20%
+1,209 29%
+2,092
+51%
+= Total
+2%
+27%
+1,102
+81
+2%
+933
+6,941
+608
+5,049
+594
+4,119
+621
+2,638
+Matthias Rebellius4
+Managing Board member since Oct. 1, 2020
+2,017
+Prof. Dr. Ralf P. Thomas
+Managing Board member since Sept. 18, 2013
+2020
+2021
+2020
+€ thousand in % of TC € thousand in % of TC
+1,102
+70
+2%
+1,102
+71
+€ thousand in % of TC € thousand in % of TC
+26%
+2021
+Compensation Report → B. Compensation of Managing Board members
+32%
+Cash payment Siemens Energy spin-off
+41%
+1,734
+Total
+=
+13%
+551
++ Amount for free disposal
+2%
+82
+26%
+1,102
++ Fringe benefits
+compensation
+Base salary
+Fixed
+€ thousand in % of TC € thousand in % of TC
+2020
+Variable
+compensation
++ Short-term variable compensation
+Bonus for fiscal 2021
+1,716
++ Other
++ Fringe benefits
+Variable
+compensation
+Base salary
+compensation
+Fixed
+who left during the fiscal year
+Managing Board members
+2021
+4,185
++ Service costs
+100%
+4,185
+18%
+735
++ Long-term variable compensation
+2017 Stock Awards (vesting: 2016-2020)
+2016 Stock Awards (vesting: 2015-2019)
+Cash payment Siemens Energy spin-off
++ Other
+Bonus for fiscal 2020
+41%
+= Total compensation (incl. service costs)
+Managing Board member since Oct. 1, 2020
+Total compensation (TC)
+(according to Section 162 AktG)
+Compensation Report → B. Compensation of Managing Board members
+Bonus for fiscal 2021
+Bonus for fiscal 2020
++ Long-term variable compensation
+2017 Stock Awards (vesting: 2016-2020)
+2016 Stock Awards (vesting: 2015-2019)
+Cash payment Siemens Energy spin-off
++ Other
+Total compensation (TC)
+(according to Section 162 AktG)
++ Service costs
+= Total compensation (incl. service costs)
+Fixed
+Base salary
++ Short-term variable compensation
+compensation
+= Total
+Variable
+compensation
++ Short-term variable compensation
+Bonus for fiscal 2021
+Bonus for fiscal 2020
++ Long-term variable compensation
+2017 Stock Awards (vesting: 2016-2020)
+Judith Wiese¹
+2016 Stock Awards (vesting: 2015-2019)
++ Fringe benefits
+119
++ Amount for free disposal
+=
+Managing Board members
+in office on September 30, 2021
+3%
+Compensation awarded and due in accordance with Section 162 para. 1 sent 1 AktG -
+Active Managing Board members in fiscal 2021 (cont.)
+FISCAL 2021 28
+4 In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is Chairman of the Board of Directors and CEO of Siemens Schweiz AG. The corre-
+sponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms of his
+contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the base salary and fringe benefits reported here, €615,367 and €29,579, respectively,
+were awarded and paid by Siemens Schweiz AG. Of the Bonus for fiscal 2021 reported here, €859,802 (corresponding to CHF931,165 and converted into euros as of September 30,
+2021) will be paid by Siemens Schweiz AG. Furthermore, employer contributions to pension plans paid by Siemens Schweiz AG are deducted from the amount for free disposal.
+2 Cedrik Neike was appointed a full member of the Managing Board effective April 1, 2017. Due to his intra-year appointment, his Stock Awards target amount for fiscal 2017 was
+determined on a pro-rated basis and, instead of Stock Awards, a corresponding number of Phantom Stock Awards was allocated to him in accordance with plan requirements.
+In contrast to Stock Awards, these Phantom Stock Awards were settled after the expiration of the vesting period by cash payment rather than by share transfer.
+1 Dr. Roland Busch was first appointed a full member of the Managing Board effective April 1, 2011. He served as Deputy CEO from October 1, 2019, until the end of the Annual
+Shareholders' Meeting on February 3, 2021, when he succeeded Joe Kaeser as President and CEO.
+601
+4,688
+4,823
+3 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
+March 31, 2019. The amount reported under "2017 Stock Awards (vesting: 2016-2020)" includes the value of the Stock Awards allocated by Siemens Ltd. China. Likewise, a portion
+of the additional cash payment attributable to the Stock Awards allocated by Siemens Ltd. China is included under "Cash payment Siemens Energy spin-off." For details, see "Trans-
+fer of Stock Awards in fiscal 2021 (2017 tranche)."
+3,435
+= Total compensation (incl. service costs)
+Total compensation (TC)
+(according to Section 162 AktG)
++ Service costs
+100% 4,087 100%
+4,235
+3,435 100%
+588
+32.4%
+149
+113
+Dr. Andrea Fehrmann1 (since Jan. 2018)
+246
+10.6%
+3.5%
+223
+158
+215
+(0.7)%
+6.1%
+6.0%
+0.0%
+(2.8)%
+Bettina Haller¹ (since April 2007)
+231
+244
+5.8%
+244
+256
+4.9%
+243
+(5.3)%
+217
+Harald Kern (since Jan. 2008)
+229
+154
+204
+477
+287
+613
+244
+14.3%
+632
+3.2%
+608
+(3.8)%
+Birgit Steinborn¹
+(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
+468
+1.9%
+471
+(1.3)%
+482
+2.2%
+467
+(3.1)%
+Dr. Werner Brandt²
+(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
+240
+324
+35.0%
+336
+3.7%
+438
+30.4%
+Tobias Bäumler' (since Oct. 2020)
+Michael Diekmann (since Jan. 2008)
+6.5%
+131
+(1.8)%
+0.6%
+182
+(3.7)%
+194
+6.6%
+190
+(2.2)%
+Kasper Rørsted (since Feb. 2021)
+Baroness Nemat Shafik (DBE, DPhil) (since Jan. 2018)
+113
+140
+24.2%
+158
+13.1%
+140 (11.3)%
+Dr. Nathalie von Siemens (since Jan. 2015)
+151
+185
+22.9%
+194
+4.6%
+201
+3.9%
+173 (13.8)%
+Michael Sigmund (since March 2014)
+151
+536 92.0%
+189
+240
+188
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
+247
+3.1%
+264
+6.9%
+Jürgen Kerner¹ (since Jan. 2012)
+394
+3.5%
+391
+(0.8)%
+402
+2.7%
+384
+(4.5)%
+Benoît Potier (since Jan. 2018)
+113
+141
+25.5%
+157
+11.0%
+155
+(1.1)%
+Hagen Reimer' (since Jan. 2019)
+110
+158
+44.3%
+154
+(2.8)%
+(since Jan. 2015)
+279
+(2)
+Jim Hagemann Snabe
+Comparable revenue growth² (in %)
+3
+2
+n.a.
+3
+n.a.
+152
+n.a.
+11.5
+n.a.
+Earnings per share³ (in €)
+7.44
+7.12
+(4.3)%
+6.41
+Net income according to HGB (in € billion)
+4,076
+4,547
+11.6% 11,219
+(10.0)%
+146.7%
+5.00
+(22.0)%
+5,270 (53.0)% 5,147
+7.68
+53.6%
+(2.3)%
+II. AVERAGE EMPLOYEE COMPENSATION (in € thousand)
+Workforce in Germany
+91
+9.0%
+94
+62,265
+57,139
+Compensation Report → D. Comparative information on profit development and annual change in compensation
+D. Comparative information on
+profit development and annual
+change in compensation
+The following table shows, in accordance with Sec-
+tion 162 para. 1 sent. 2 No. 2 of the German Stock Corpo-
+ration Act, Siemens' profit development, the annual
+change in the Managing Board and Supervisory Board
+members' compensation and the annual change in aver-
+age employee compensation on a full-time equivalent
+basis over the last five fiscal years.
+Profit development is presented on the basis of the
+Siemens Group's key performance indicators revenue,
+comparable revenue growth and earnings per share. The
+latter is also one of the financial targets for the short-
+term variable compensation (Bonus) of the Managing
+Board and thus has a significant influence on the amount
+of the compensation of the Managing Board members. In
+accordance with Section 275 para. 3 No. 16 of the German
+Commercial Code (Handelsgesetzbuch, HGB), the devel-
+opment of the net income of Siemens AG is also shown.
+The compensation awarded and due to the Managing
+Board and Supervisory Board members in each fiscal year
+is presented in accordance with Section 162 para. 1 sent. 1
+of the German Stock Corporation Act.
+The presentation of average employee compensation is
+based on the size of the workforce, including trainees,
+employed by Siemens in Germany. In fiscal 2021, this
+workforce comprised on average 71,838 employees
+(full-time equivalent). By way of comparison, the
+Siemens Group had about 241,000 employees and train-
+ees worldwide as of September 30, 2021. The figures
+exclude the workforce of Siemens Healthineers, which
+is not included in the presentation since it is a separately
+managed, publicly listed company.
+Average employee compensation comprises the person-
+nel costs for wages and salaries, fringe benefits, employer
+contributions to social insurance and any short-term
+variable compensation components attributable to the
+fiscal year. For compensation in connection with share
+plans, the amounts received in the fiscal year are taken
+into account. Therefore, employee compensation is also
+equivalent, in principle, to awarded and due compensa-
+tion within the meaning of Section 162 para. 1 sent. 1 of
+the German Stock Corporation Act and thus in line with
+Managing Board and Supervisory Board compensation.
+FISCAL 2021 35
+Compensation Report → D. Comparative information on profit development and annual change in compensation
+Comparative information on profit development and change in compensation
+of employees, Managing Board and Supervisory Board members
+Fiscal
+2017
+2018
+Change
+in %
+2019
+Change
+in %
+2020
+Change
+in %
+2021
+Change
+in %
+I. PROFIT DEVELOPMENT
+Revenue (in € billion)
+83,049
+83,044
+(0.0)%
+86,849
+4.6%
+(34.2)%
+3.3%
+95
+1.1%
+Lisa Davis (until Feb. 2020)
+2,825
+Janina Kugel (until Jan. 2020)
+2,202
+Prof. Dr. Siegfried Russwurm 4 (until March 2017)
+4,363
+Michael Sen (from April 2017 until March 2020)
+1,272
+2,661 (5.8)% 7,969 199.5% 6,562 (17.6)% 1,434 (78.2)%
+2,718 23.4% 4,192 54.3% 2,631 (37.2)% 1,274 (51.6)%
+3,244 (25.7)% 4,330
+33.5% 2,905 (32.9)% 664 (77.1)%
+2,841 123.4% 2,448 (13.8)% 1,991 (18.7)% 5,914 197.1%
+1 Revenue as reported. In fiscal 2020, the segments "Gas and Power" and "Siemens Gamesa Renewable Energy" were classified as discontinued operations and are therefore not
+included in the amount reported for fiscal 2020.
+2 The primary measure for managing and controlling revenue growth is comparable growth, because it shows the development of Siemens' business net of currency translation
+effects, which arise from the external environment outside the Company's control, and portfolio effects, which involve business activities that are either new to or no longer a
+part of the relevant business.
+3 Basic earnings per share from continuing and discontinued operations as reported.
+4 The increase in compensation in fiscal 2019 is primarily attributable to the one-time benefit from two Stock Awards tranches - the 2014 and 2015 tranches in November 2018,
+due to a reduction in the duration of the Stock Awards to the customary four-year period starting with the 2015 tranche.
+FISCAL 2021 36
+Compensation Report → D. Comparative information on profit development and annual change in compensation
+Comparative information on profit development and change in compensation
+of employees, Managing Board and Supervisory Board members (cont.)
+Fiscal
+2017
+2018
+Change
+in %
+2019
+Change
+in %
+2020
+Change
+in %
+2021
+Change
+in %
+IV. SUPERVISORY BOARD MEMBERS' COMPENSATION (in € thousand)
+Former Managing Board members
+4,616 (42.7)%
+2,756 (34.2)%
+8,051 (38.0)%
+4,186 (37.3)%
+54.7%
+45.0%
+96
+1.1%
+99
+3.1%
+III. MANAGING BOARD MEMBERS' COMPENSATION (in € thousand)
+Dr. Roland Busch 4
+(since April 2011, President and CEO since Feb. 2021)
+5,482
+Cedrik Neike (since April 2017)
+2,556
+4,556 (16.9)%
+3,710 45.1%
+Matthias Rebellius (since Oct. 2020)
+Prof. Dr. Ralf P. Thomas 4 (since Sept. 2013)
+(since Oct. 2013, Chairman since Jan. 2018)
+3,347
+(6.1)%
+6,740 114.5% 4,087
+Judith Wiese (since Oct. 2020)
+6,730 47.7% 4,441 (34.0)% 6,008 35.3%
+2,331 (37.2)% 2,017 (13.5)% 3,524 74.7%
+3,435
+(39.4)% 4,235
+4,185
+3.6%
+Managing Board members
+who left during the fiscal year
+Joe Kaeser (President and CEO until Feb. 2021)
+9,643
+8,391
+Klaus Helmrich 4 (until March 2021)
+5,586
+(13.0)% 12,978
+4,608 (17.5)% 6,679
+3,143
+1.0%
+381
+(2.0)%
+[German Public Auditor]
+Dr. Gaenslen
+Wirtschaftsprüfer
+[German Public Auditor]
+Compensation Report →
+Independent auditor's report
+Wirtschaftsprüferin
+FISCAL 2021
+Report of the
+Supervisory Board
+SIEMENS
+| Report of the Supervisory Board
+Berlin and Munich, December 2, 2021
+Report of the Supervisory Board
+Dear Shareholders,
+40
+Fiscal 2021 was Siemens AG's first year as a newly posi-
+tioned, focused technology company. It was also the
+first year for the Company's new Managing Board
+team. Together with his Managing Board colleagues,
+Dr. Roland Busch pursued clear strategic objectives and
+positioned Siemens' operations for faster growth. As
+planned, Dr. Busch succeeded Joe Kaeser as President
+and CEO at the conclusion of the ordinary Annual Share-
+holders' Meeting on February 3, 2021.
+Breitsameter
+Ernst & Young GmbH
+Management and the Supervisory Board of Siemens AG
+are responsible for the preparation of the Compensation
+Report and the related disclosures in compliance with the
+requirements of Sec. 162 AktG. In addition, management
+and the Supervisory Board are responsible for such inter-
+nal control as they determine is necessary to enable the
+preparation of a Compensation Report and the related
+disclosures that are free from material misstatement,
+whether due to fraud or error.
+Auditor's responsibility
+Our responsibility is to express an opinion on this Com-
+pensation Report and the related disclosures based on
+our audit. We conducted our audit in compliance with
+German Generally Accepted Standards for Financial State-
+ment Audits promulgated by the Institut der Wirtschafts-
+prüfer [Institute of Public Auditors in Germany] (IDW).
+Those standards require that we comply with ethical re-
+quirements and plan and perform the audit to obtain
+reasonable assurance about whether the Compensation
+Report and the related disclosures are free from material
+misstatement.
+An audit involves performing audit procedures to obtain
+audit evidence about the amounts in the Compensation
+Report and the related disclosures. The audit procedures
+selected depend on the auditor's judgment, including
+the assessment of the risks of material misstatement of
+the Compensation Report and the related disclosures,
+whether due to fraud or error. In making those risk as-
+sessments, the auditor considers internal control relevant
+to the preparation of the Compensation Report and the
+related disclosures in order to plan and perform audit
+procedures that are appropriate under the given circum-
+stances, but not for the purpose of expressing an opinion
+on the effectiveness of the entity's internal control. An
+audit also includes evaluating the accounting policies
+used and the reasonableness of accounting estimates
+made by management and the Supervisory Board, as
+well as evaluating the overall presentation of the Com-
+pensation Report and the related disclosures.
+We believe that the evidence we have obtained is suffi-
+cient and appropriate to provide a basis for our opinion.
+Opinion
+Wirtschaftsprüfungsgesellschaft
+In our opinion, on the basis of the knowledge obtained in
+the audit, the Compensation Report for the fiscal year
+from October 1, 2020 to September 30, 2021 and the re-
+lated disclosures comply, in all material respects, with the
+financial reporting provisions of Sec. 162 AktG. Our opin-
+ion on the Compensation Report does not cover the con-
+tent of the abovementioned disclosures in the Compen-
+sation Report that is beyond the scope of Sec. 162 AktG.
+Other matter – formal audit
+of the Compensation Report
+The audit of the content of the Compensation Report de-
+scribed in this auditor's report comprises the formal audit
+of the Compensation Report required by Sec. 162 (3) AktG
+and the issue of a report on this audit. As we are issuing
+an unqualified opinion on the audit of the content of the
+Compensation Report, this also includes the opinion that
+the disclosures pursuant to Sec. 162 (1) and (2) AktG are
+made in the Compensation Report in all material respects.
+FISCAL 2021 39
+Limitation of liability
+The "General Engagement Terms for Wirtschaftsprüfer
+and Wirtschaftsprüfungsgesellschaften [German Public
+Auditors and Public Audit Firms]" as issued by the IDW
+on January 1, 2017, are applicable to this engagement
+and also govern our responsibility and liability to third
+parties in the context of this engagement (☐ wWW.DE.EY.
+COM/GENERAL-ENGAGEMENT-TERMS).
+Munich, December 2, 2021
+-
+Responsibilities of management
+and the Supervisory Board
+This move-intensively promoted by the Supervisory
+Board - successfully concluded Siemens' strategic, struc-
+tural and personnel realignment, which provided a
+strong foundation for the outstanding achievements of
+the Company's roughly 300,000 employees in fiscal 2021.
+Despite the uncertainties due to the ongoing COVID-19
+pandemic, Siemens AG seized the opportunities provided
+by the economic recovery and the accelerated drive to-
+ward digitalization and sustainability that is transforming
+its key markets. The broad-based growth and high profit-
+ability achieved by the Company's businesses are impres-
+sive and speak for themselves. Siemens proved that sus-
+tainable technologies designed to benefit society are
+already a model for success.
+-
+Report of the Supervisory Board
+Board reported to us in detail in particular on the digital
+marketplace strategy of the Digital Industries Business
+and the SaaS business model. We also discussed Manag-
+ing Board compensation. Finally, we concerned ourselves
+with the Company's stake in Siemens Energy.
+On May 16, 2021, we approved – in a decision using other
+customary means of communication and on the recom-
+mendation of the Innovation and Finance Committee -
+the Managing Board's decisions to acquire Supplyframe,
+Inc., U.S., a marketplace for the global electronics value
+chain. On May 21, 2021, we made another decision using
+other customary means of communication to exercise
+ownership rights in subsidiaries of Siemens AG in accor-
+dance with Section 32 of the German Codetermination
+Act (Mitbestimmungsgesetz, MitbestG). At an extraordi-
+nary Supervisory Board meeting on June 22, 2021, the
+Managing Board presented the reporting planned for
+Capital Market Day on June 24, 2021. We approved the
+Managing Board's decision on the share buyback. On
+July 28, 2021, we were informed about matters concern-
+ing Siemens Healthineers.
+At our meeting on August 4, 2021, the Managing Board
+reported on the Company's current business and finan-
+cial position following the conclusion of the third quarter.
+One focus of this meeting was the sustainability strategy
+(DEGREE). We were informed about the current business
+situation at Siemens Healthineers. We approved the Man-
+aging Board's decision to acquire SQCAP B.V. (Sqills),
+Netherlands, a leading supplier of SaaS solutions for the
+rail industry.
+At our meeting on September 23, 2021, the Managing
+Board reported on the state of the Company. One focus of
+this meeting was the Company's human resources strat-
+egy - including talent and leadership development, suc-
+cession planning for the Managing Board and diversity.
+The Managing Board reported on the current situation at
+the Portfolio Companies. We concerned ourselves with
+the annual review of Managing Board compensation and -
+after preparation by and on a recommendation of the
+Compensation Committee - defined each Managing Board
+member's individual target total compensation and max-
+imum compensation as well as the performance criteria
+for variable compensation for fiscal 2022. At this meeting,
+we also discussed the Compensation Report for fiscal 2021
+and made a decision regarding the engagement of an
+auditor for the Compensation Report for fiscal 2021. In
+addition, we dealt with matters relating to corporate gov-
+ernance, in particular with the Declaration of Conformity
+with the German Corporate Governance Code and with
+the independence of the shareholder representatives on
+the Supervisory Board. We approved amendments to the
+Bylaws for the Managing Board, the Bylaws for the Super-
+visory Board and the bylaws for the Chairman's Commit-
+tee, the Audit Committee and the Compensation Commit-
+tee of the Supervisory Board. In addition, we amended
+the objectives for the composition of the Supervisory
+Board as well as the profile of skills and expertise and the
+diversity concept for the Supervisory Board. Finally, we
+conducted a self-assessment of our activities.
+3
+Corporate Governance Code
+Work in the Supervisory Board
+committees
+In fiscal 2021, the Supervisory Board had six standing
+committees. These committees prepare proposals and
+issues to be dealt with at the Supervisory Board's plenary
+meetings. Some of the Supervisory Board's decision-mak-
+ing powers have been delegated to these committees
+within the permissible legal framework. The committee
+chairpersons report to the Supervisory Board on their
+committees' work at the subsequent Board meeting.
+A list of the members and a detailed explanation of the
+tasks of the individual Supervisory Board committees are
+set out in the Corporate Governance Statement.
+The Chairman's Committee met nine times. It also made
+two decisions using other customary means of commu-
+nication. In my capacity as Chairman of the Chairman's
+Committee, I discussed topics of major importance with
+the other Committee members also between meetings.
+FISCAL 2021
+4
+149
+At our meeting on September 23, 2021, we approved a
+Declaration of Conformity in accordance with Section 161
+of the German Stock Corporation Act (Aktiengesetz,
+AktG). Information on corporate governance is provided
+in the Corporate Governance Statement, which is pub-
+licly available on the Siemens Global Website at ☐ www.
+SIEMENS.COM/CORPORATE-GOVERNANCE. The Company's Dec-
+laration of Conformity has been made permanently avail-
+able to shareholders on the Siemens Global Website at
+WWW.SIEMENS.COM/DECLARATION OF CONFORMITY. The cur-
+rent Declaration of Conformity is also available in the
+Corporate Governance Statement.
+In close dialogue with the Supervisory Board, the new
+management team also succeeded in further accelerating
+business and technological innovation. The extensive in-
+troduction of Software-as-a-Service (SaaS) offerings by
+Siemens' industry software business is an excellent exam-
+ple of this success. In addition, the Companywide DEGREE
+program intensified the focus of all Siemens businesses
+on ambitious sustainability targets – targets for environ-
+mental and social sustainability and good governance -
+even further.
+FISCAL 2021
+In April 2021, the members of the Managing and Super-
+visory Boards met several times in smaller groups of a few
+participants each for strategy discussions (so-called multi-
+lateral strategy sessions) in order to conduct detailed con-
+sultations and discussions regarding topics of strategic
+importance for Siemens AG.
+In fiscal 2021, the Supervisory Board performed in full the
+duties assigned to it by law, the Siemens Articles of Asso-
+ciation and the Bylaws for the Supervisory Board. On the
+basis of detailed written and oral reports provided by the
+Managing Board, we monitored the Managing Board and
+advised it on the management of the Company. In my
+capacity as Chairman of the Supervisory Board, I regu-
+larly exchanged information with the President and CEO
+and the other Managing Board members. As a result, the
+Supervisory Board was always kept up to date on pro-
+jected business policies, Company planning - including
+financial, investment and personnel planning – and the
+Company's profitability and business operations as well
+as on the state of Siemens AG and the Siemens Group.
+We were directly involved at an early stage in all deci-
+sions of fundamental importance to the Company and
+discussed these decisions with the Managing Board
+intensively and in detail. To the extent that Supervisory
+Board approval of the decisions and measures of Com-
+pany management was required by law, the Siemens
+Articles of Association or our Bylaws, the members of
+the Supervisory Board - prepared in some cases by the
+Supervisory Board's committees – issued such approval
+after intensive review and discussion. The relevant Man-
+aging Board members informed us - within the limits of
+the applicable legal framework - about critically impor-
+tant measures and decisions at the Company's equity
+investments.
+-
+A special focus of our activities in fiscal 2021 was the
+Company's further strategic development after the suc-
+cessful spin-off and subsequent public listing of Siemens
+Energy. At our meetings and in additional informational
+sessions, we concerned ourselves intensively with the
+goals and priorities of Siemens' businesses and with the
+Managing Board's technology and personnel strategy.
+In this connection, we focused our attention on innova-
+tion, digitalization and the related opportunities for
+growth. Together with the Managing Board, we dis-
+cussed the markets, trends and growth fields. The sus-
+tainability strategy of Siemens AG was another focus of
+our work in fiscal 2021.
+FISCAL 2021 2
+Report of the Supervisory Board
+At our meeting on May 7, 2021, the Managing Board
+reported to us on the Company's current business and
+financial position following the conclusion of the second
+quarter. As part of a strategic focus, we concerned our-
+selves at this meeting - on the basis of the strategy dis-
+cussions conducted in smaller groups with the Managing
+Board in the previous weeks - comprehensively and
+in detail with the strategic priorities of Siemens AG and
+the strategic orientation of its businesses. The Managing
+Topics at the plenary meetings
+of the Supervisory Board
+At an extraordinary meeting on October 29, 2020,
+we approved the Managing Board's decision to sell
+Flender GmbH, a producer of mechanical and electrical
+drive systems, to The Carlyle Group, U.S.
+At our meeting on November 11, 2020, we discussed the
+key financial figures for fiscal 2020 and approved the bud-
+get for fiscal 2021. On a recommendation by the Compen-
+sation Committee, we also defined the Managing Board
+members' compensation for fiscal 2020 on the basis of
+calculated target achievement. An internal review con-
+firmed the appropriateness of this compensation. We had
+already defined the performance criteria for the Manag-
+ing Board's variable compensation for fiscal 2021 at our
+meeting on September 22, 2020. On this basis and on the
+recommendation of the Compensation Committee, we
+made a decision on target setting for Managing Board
+compensation for fiscal 2021 at our meeting on Novem-
+ber 11, 2020. At this meeting, we also approved a Manag-
+ing Board decision on financing measures.
+On December 1, 2020, we discussed the financial state-
+ments and the Combined Management Report for
+Siemens AG and the Siemens Group as of September 30,
+2020, the Annual Report for 2020 - including the Report
+of the Supervisory Board, corporate governance reporting
+and the Compensation Report - and the agenda for the
+ordinary Annual Shareholders' Meeting on February 3,
+2021. On the recommendation of the Compensation
+Committee, we also made a further decision regarding
+the target setting for Managing Board compensation for
+fiscal 2021. In addition, we concerned ourselves with the
+annual reporting of the Chief Compliance Officer and the
+Cybersecurity Officer.
+At our meeting on February 2, 2021, the Managing Board
+reported on the Company's current business and finan-
+cial position following the conclusion of the first quarter.
+The regular terms of office of three shareholder represen-
+tatives on the Supervisory Board, who had been reelected
+early to five-year terms of office by the Annual Sharehold-
+ers' Meeting on January 26, 2016, ended at the Annual
+Shareholders' Meeting on February 3, 2021. Three share-
+holder representatives on the Supervisory Board were
+elected for new, four-year terms of office - that is, for the
+electoral period 2021 to 2025 - by the Annual Sharehold-
+ers' Meeting on February 3, 2021. The constituent meet-
+ing of the Supervisory Board took place immediately after
+the Annual Shareholders' Meeting on February 3, 2021.
+At this Supervisory Board meeting, Jim Hagemann Snabe
+was reelected Chairman of the Supervisory Board.
+The Supervisory Board confirmed Birgit Steinborn in
+her position as First Deputy Chairwoman and elected
+Dr. Werner Brandt Second Deputy Chairman of the Super-
+visory Board. The Supervisory Board also elected the
+members of its committees.
+-
+We have audited the attached Compensation Report of
+Siemens Aktiengesellschaft, Berlin and Munich, prepared
+to comply with Sec. 162 AktG ["Aktiengesetz": German
+Stock Corporation Act] for the fiscal year from October 1,
+2020 to September 30, 2021 and the related disclosures.
+We have not audited the content of disclosures regarding
+appropriateness and marketability of the compensation
+in chapter 7 B.2.3 APPROPRIATENESS OF THE COMPENSATION that
+is beyond the scope of Sec. 162 AktG.
+We held a total of six regular plenary meetings and two
+extraordinary meetings in fiscal 2021. Another extraordi-
+nary meeting the Supervisory Board's constituent meet-
+ing was held immediately after the Annual Sharehold-
+ers' Meeting on February 3, 2021. We also made two
+decisions using other customary means of communica-
+tion. Topics of discussion at our regular plenary meetings
+were revenue, profit and employment development at
+Siemens AG and the Siemens Group as well as the Com-
+pany's financial position and the results of its operations.
+In addition, we concerned ourselves, as occasion required,
+with acquisition and divestment projects and with risks
+to the Company. We received regular reports from the
+Managing Board regarding the impact on Siemens of the
+COVID-19 pandemic. In addition, we met regularly in
+closed sessions without the Managing Board in atten-
+dance. In these sessions, we dealt with agenda items that
+concerned either the Managing Board itself or internal
+Supervisory Board matters.
+Compensation Report → Independent auditor's report
+37.9%
+256
+4.9%
+286
+11.5%
+113
+244
+149
+158
+6.0%
+154 (2.8)%
+Werner Wenning
+(Second Deputy Chairman until Feb. 2021)
+Dr. Nicola Leibinger-Kammüller (until Feb. 2021)
+32.4%
+402
+177
+Supervisory Board members
+158
+To Siemens Aktiengesellschaft, Berlin and Munich
+6.0%
+154 (2.8)%
+Dorothea Simon' (since Oct. 2017)
+152
+who left during the fiscal year
+149
+158
+6.0%
+154
+(2.8)%
+Grazia Vittadini (since Feb. 2021)
+Matthias Zachert (since Jan. 2018)
+Gunnar Zukunft' (since Jan. 2018)
+(2.0)%
+404
+188
+398
+Compensation Report E. Other
+The Company provides a group insurance policy for
+Supervisory and Managing Board members and certain
+other employees of the Siemens Group. The policy is taken
+out for one year at a time or renewed annually. It covers
+the personal liability of the insured individuals in cases of
+financial loss associated with their activities on behalf
+of the Company. The insurance policy for fiscal 2021 in-
+cludes a deductible for the members of the Managing
+Board that complies with the requirements of the Ger-
+man Stock Corporation Act.
+For the Managing Board
+Dr. Roland Busch
+For the Supervisory Board
+| E. Other
+Prof. Dr. Ralf P. Thomas
+Chief Financial Officer
+of Siemens AG
+Chairman of the Supervisory Board
+of Siemens AG
+0.4%
+FISCAL 2021 38
+I Independent auditor's report
+Jim Hagemann Snabe
+37
+President and Chief Executive Officer
+of Siemens AG
+2 Werner Brandt has been a member of the Supervisory Board since January 31, 2018, and was elected Second Deputy Chairman of the Supervisory Board,
+effective the end of the Annual Shareholders' Meeting on February 3, 2021.
+411
+FISCAL 2021
+167 (59.5)%
+243
+249
+3.4%
+246
+2.5%
+(1.2)%
+241
+(1.8)%
+93 (61.4)%
+(1.5)%
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to transfer
+their compensation to the Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
+2020
+28,946
+A high earnings contribution from the debt business resulted in a sharp increase in Earnings before taxes and was also the main factor
+for the increase of the ROE. The improvement was due mainly to sharply lower expenses for credit risk provisions compared to fiscal 2020,
+when results were significantly influenced by effects related to COVID-19. However, results from the equity business were affected by high
+ongoing uncertainty in the macroeconomic environment. Additionally, sales of investments in the previous fiscal year lifted profit for that
+period. This led also, along with seasonal effects on offshore wind-farm projects, to a lower share of profit from investments accounted
+for using the equity method in fiscal 2021. For comparison, results in the equity business in fiscal 2020 included a loss of €98 million from
+an impairment of an equity investment in the U.S.
+Sep 30,
+2021
+30,384
+The increase in total assets since the end of fiscal 2020 was due to growth in the debt business and positive currency translation effects.
+Net cash from operations (defined as the sum of cash flows from operating and investing activities) amounted to €105 million compared
+to €(284) million in fiscal 2020. In fiscal 2021 and fiscal 2020, net cash from operations comprised Free cash flow of €820 million and
+€611 million, respectively, and remaining cash flows from investing activities, including from change in receivables from financing
+activities, of €(715) million and €(895) million, respectively.
+SFS is de-risking its business profile by reducing exposure in connection with energy-related equity investments as a consequence of the
+spin-off of Siemens Energy. This has the additional benefit of more tightly focusing SFS's business scope and capital allocation on areas of
+intense domain know-how closely aligned with Siemens' customers and markets, particularly for Digital Industries, Smart Infrastructure
+and Mobility. Accordingly, SFS is influenced by the business development of the markets served by our industrial businesses, among other
+factors, including effects related to COVID-19. In addition to its high level of diversification across industries, SFS has a strong regional
+footprint in investment-grade countries, with the highest share in the U.S. SFS intends to maintain a highly diversified portfolio across
+regions, while participating in the strong economic development of selected Asian markets.
+Sep 30,
+3.7 Portfolio Companies
+Demand within the industries served by Portfolio Companies mainly shows a delayed response to changes in the overall economic
+environment. The results of fully consolidated units are strongly dependent, however, on customer investment cycles in their key
+industries. In commodity-based industries such as oil and gas or mining, these cycles are driven mainly by commodity price fluctuations
+rather than changes in produced volumes. The broad range of fully consolidated units and their heterogonous industrial customer base
+are reflected in the use of various sales and marketing channels, requiring a dedicated sales approach based on in-depth understanding
+of specific industries and customer requests.
+In March 2021 Siemens sold Flender GmbH, Germany, (Flender) to Carlyle Group Inc., U.S. During the first quarter of fiscal 2021 the
+businesses of Flender (previously reported in Portfolio Companies) were classified as held for disposal and discontinued operations. Prior-
+period amounts are presented on a comparable basis. For further information see Note 3 in Notes to Consolidated Financial Statements
+for fiscal 2021.
+13
+Combined Management Report
+After this disposal, Portfolio Companies consists mainly of three fully consolidated, separately managed units at the end of fiscal 2021.
+Large Drives Applications, which offers electric motors, converters and solutions for mining, will be carved out beginning with fiscal 2022
+to increase its entrepreneurial freedom and thereby unlock its full potential. Similarly, Siemens Logistics, which offers sorting technology
+and solutions, will be reorganized to separate its mail and parcel activities from its airport logistics activities, which focuses on baggage
+and cargo handling. The third fully consolidated unit, Siemens Energy Assets, comprises certain regional remaining business activities of
+the former Gas and Power segment; as part of the Siemens Energy carve-out these activities remained with Siemens due to country-specific
+regulatory restrictions or economic considerations. Portfolio Companies also holds an at-equity investment in Valeo Siemens eAutomotive
+GmbH.
+(in millions of €)
+Orders
+Adjusted EBITA margin
+(in millions of €)
+Total assets
+Revenue
+18
+Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
+solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
+and fiber. Unrealized potential within these businesses requires adjustment in their approach using defined measures including internal
+re-organization, digitalization, cost improvements, and optimizing procurement, production and service activities. After achieving certain
+threshold performance targets, businesses may be transferred to one of Siemens industrial businesses, combined with an external business
+from the same industry, sold or placed into an external private equity partnership.
+11.7%
+Markets addressed by the imaging business grew significantly, mainly due to large COVID 19-driven demand for computer tomography
+systems and initial signs of normalization in all other modalities. For the Imaging market, it is expected that a normalization of growth to
+pre-COVID-19 levels will occur in fiscal year 2022. In the diagnostics business, the markets for point-of-care tests for patient monitoring
+and for lab tests increased in fiscal 2021. On the one hand, the backlog of purchasing decisions and capital expenditure by laboratories
+and hospitals from the previous year dissipated while, on the other, demand for certain diagnostic reagents, particularly tests for routine
+care, increased. The markets for combating the COVID-19 pandemic posted sharp growth. Vaccination rates in the population and further
+COVID-19 implications such as future waves and testing guidelines are key factors for determining expected growth in the market for the
+diagnostics business. Siemens Healthineers expects demand for tests for acute infection with SARS-CoV-2 to decrease sharply. In the Varian
+business, growth was driven primarily by new and replacement business. In markets such as the U.S. and Western Europe, product
+innovations led to higher customer investment. The market for Varian is expected to continue to grow throughout fiscal 2022. The recovery
+in the advanced therapies markets was made possible through a combination of a resumption in elective surgical procedures and the
+gradual return of patients. The expectation is that the slight market recovery already seen in fiscal 2021 will continue on a broad basis in
+fiscal 2022.
+82
+2,184
+2,847
+15.8%
+Fiscal year
+30%
+15.1%
+In fiscal 2021, Siemens Healthineers recorded double-digit growth both in orders and revenue, with both metrics developing similarly.
+While all businesses contributed to growth, the increases were highest in the diagnostics and imaging businesses. On a geographic basis,
+growth was particularly strong in the region Europe, C.I.S. Africa, Middle East. The reporting regions Asia, Australia and Americas also saw
+double-digit increases, the latter one despite significant currency translation effects. Portfolio effects primarily following the acquisition
+of Varian added twelve percentage points to order growth and nine percentage points to revenue growth. Adjusted EBITA was
+substantially higher year-over-year, due primarily to strong earnings development in the diagnostics business that was driven by high
+demand for rapid coronavirus antigen tests. The imaging business again posted strong earnings, which were higher than in the prior year.
+Varian delivered a positive contribution to earnings on an operating basis. In contrast, Adjusted EBITA in the advanced therapies business
+was lower year-over-year. Adjusted EBITA included subsequent measurement effects from purchase price allocation related to the Varian
+acquisition totaling €0.1 billion and expenses totaling €0.1 billion related to the closing of the Varian transaction and its ongoing
+integration. Profitability was also burdened by negative currency effects. Severance charges were €68 million in fiscal 2021 and €65 million
+in fiscal 2020. The order backlog for Siemens Healthineers was €27 billion at the end of the fiscal year, of which €9 billion are expected to
+be converted into revenue in fiscal 2022.
+In general, the markets addressed by Siemens Healthineers showed significant growth in fiscal 2021. Nearly two years after the first case
+of COVID-19 was identified, the virus continues to impact health systems worldwide. Competition among the leading healthcare
+companies remained at elevated high levels. While the long-term market trends generally remained intact, the COVID-19 pandemic did
+reinforce some of these trends and has, for example, raised the already increasing cost pressure on health systems and customers to
+unprecedented levels. Especially in countries with severe COVID-19 outbreaks such as the U.S., India, and Brazil, a significant impact on
+healthcare economics was apparent in the form of additional cost increases combined with simultaneous revenue losses for hospitals.
+Staff shortages became more acute, leading to significant care disruptions at many hospitals and overburdening healthcare systems. The
+pandemic served to drive efforts toward innovation and digital transformation in healthcare. From a regional perspective, China is one of
+the biggest markets for medical technology and a major incremental growth driver. In the course of the last fiscal year, China's healthcare
+market recovered almost fully from effects related to the coronavirus pandemic during the fiscal year. In the region Europe, C.I.S., Africa,
+Middle East, public investment programs as well as a rise in COVID-19-related demand helped drive a market rise in several countries. The
+private market also began to recover. In the U.S., business began to return to normal as progress was made in the vaccination campaign.
+12
+Combined Management Report
+3.6 Siemens Financial Services
+Siemens Financial Services provides financing solutions for Siemens' customers as well as other companies in the form of debt and equity
+investments. Based on its comprehensive financing know-how and specialist technology expertise in the areas of Siemens businesses, SFS
+supports its customers' investments with leasing, lending and working capital financing solutions as well as equipment, project and
+structured financing. In addition, SFS supports Siemens' industrial businesses via a joint go-to-market that includes SFS's risk management
+expertise, such as to assess the risk profiles of projects or business models. Furthermore, SFS collaborates with the industrial businesses
+to co-develop new digital business models. Recent examples include energy as a service or pay-per-use and pay-for-outcome options that
+give customers more financial flexibility.
+(in millions of €)
+Earnings before taxes (EBT)
+therein: equity business
+ROE (after taxes)
+Fiscal year
+2021
+2020
+512
+345
+49
+15.4%
+2021
+325
+% Change
+Actual
+Fiscal year
+2021
+2020
+(396)
+(24)
+94
+(435)
+(887)
+(170)
+Eliminations, Corporate Treasury and other reconciling items
+Reconciliation to Consolidated Financial Statements
+(211)
+(691)
+(94)
+(243)
+(1,739)
+(1,731)
+The result for Siemens Energy Investment included Siemens' share of Siemens Energy AG's result after tax and, in addition, expenses
+from amortization of assets resulting from purchase price allocation due to the initial recognition of the investment at fair value in
+September 2020. In fiscal 2021, Siemens' share of Siemens Energy AG's net loss amounted to €159 million, which was due mainly to
+planned restructuring measures by Siemens Energy to improve its competitiveness, while the expenses from amortization amounted to a
+€237 million.
+Lower profit at Siemens Real Estate was due mainly to reduced gains related to disposals. The prior year included a gain of €219 million
+from the transfer of an investment.
+19%
+The positive change in Corporate items was mainly due to the following factors in fiscal 2021: Firstly, a positive result, primarily resulting
+from revaluation gains, totaling €358 million related to the transfers of assets to Siemens Pension-Trust e.V. in Germany, which included
+the stakes in Bentley and ChargePoint Holdings, Inc. (ChargePoint). Secondly, a gain of €314 million related to the revaluation of, and
+dividends received for the stake in, Thoughtworks Holdings Inc. (Thoughtworks), which completed its initial public offering in the U.S. in
+September 2021. These factors were partly offset by expenses of €94 million from revised estimates related to provisions for a legacy
+project. Severance charges within Corporate items were €73 million (€68 million in fiscal 2020).
+(738)
+Amortization of intangible assets acquired in business combinations
+Centrally carried pension expense
+Corporate items
+Comp.
+3,516
+3,024
+16%
+20%
+3,058
+3,209
+(5)%
+(2)%
+(85)
+(673)
+87%
+(21.0)%
+(2.8)%
+Even though volume development was held back by adverse currency translation effects and impacts related to COVID-19, orders still
+increased significantly, driven by Siemens Logistics and Large Drives Applications. However, Portfolio Companies recorded lower revenue
+compared to fiscal 2020, as Large Drives Applications in particular could not offset these headwinds. Fully consolidated units made good
+progress with profitability and delivered overall a sharply improved earnings performance, even though Portfolio Companies recorded
+higher severance charges of €74 million, up from €21 million in fiscal 2020, related to cost structure improvement measures mainly at
+Large Drives Applications. A positive Adjusted EBITA for fully consolidated units was more than offset by continued negative results from
+the at-equity investment in Valeo Siemens eAutomotive GmbH. For comparison, fiscal 2020 included an impairment of €453 million on
+the at-equity investment and a goodwill impairment of €99 million related to Siemens Energy Assets. Portfolio Companies' order backlog
+was €4 billion at the end of fiscal 2021, of which €2 billion was expected to be converted into revenue in fiscal 2022.
+Although the broad range of businesses are operating in diverse markets, overall the main markets served by Portfolio Companies are
+generally impacted by uncertainties regarding geopolitical and economic developments and by cautiousness of investment sentiment.
+However, ongoing recovery is expected to continue in most end-customer vertical markets in fiscal 2022.
+3.8 Reconciliation to Consolidated Financial Statements
+Profit
+(in millions of €)
+Siemens Energy Investment
+Siemens Real Estate
+2020
+24%
+1,743
+11.6%
+17,997
+15%
+Improved results in Eliminations, Corporate Treasury and other reconciling items were due mainly to lower interest expenses on debt
+and positive effects related to reinsurance contracts.
+1,302
+9.1%
+34%
+Orders at Smart Infrastructure rose in all businesses on broad-based improvements in its main customer markets. The strongest growth
+contributions came from the products business, which saw a clear recovery in demand from industrial customers, and from the systems
+business, which won a number of significant contracts including orders from semiconductor manufacturers in the U.S. Orders in the
+solutions and services business grew slightly as the business saw first signs of recovery in relevant markets towards the end of the fiscal
+year. Revenue growth also was driven mainly by the products business and the systems business, while a slight decline in the solutions
+9
+Combined Management Report
+and services business was due to negative currency translation effects. Despite more challenging supply conditions, Smart Infrastructure
+maintained its delivery capacity by successfully avoiding major supply chain disruptions. On a geographic basis, orders and revenue were
+up in all regions, with double-digit volume growth in the region Asia, Australia including a particularly strong contribution from China.
+Volume growth in the Americas included strong demand from residential markets in the U.S. Overall, growth in this region was sharply
+impacted by negative currency translation effects, which eased towards the end of the fiscal year. Adjusted EBITA and profitability rose
+in all businesses, with the strongest growth contributions coming from the products business and the systems business on higher revenue
+and increased capacity utilization. Adjusted EBITA overall rose also due to cost savings related to prior execution of Smart Infrastructure's
+competitiveness program, while severance associated with the program fell sharply, to €47 million from €195 million a year earlier.
+Particularly during the first half of fiscal 2021, Adjusted EBITA development benefited from expense reductions year-over-year related to
+COVID-19 restrictions. These effects were only partly offset by negative currency effects. For comparison, Adjusted EBITA in fiscal 2020
+benefited from a €159 million gain from the sale of a business. Smart Infrastructure's order backlog was €11 billion at the end of the fiscal
+year, of which €7 billion are expected to be converted into revenue in fiscal 2022.
+Overall, markets served by Smart Infrastructure grew moderately in fiscal 2021, experiencing a recovery from COVID-19-related effects
+that had a strong impact on most customer industries a year earlier. Industrial markets developed well, with strong growth in the machine
+building and pharmaceutical industries, followed by the automotive, food and beverage, oil and gas and chemicals industries. Grid markets
+grew clearly as utilities continued to prioritize investments in making legacy networks more automated, intelligent, flexible and reliable.
+Ongoing strong demand for remote working and cloud services resulted in strong growth in the data center market. Conditions in non-
+residential construction markets were challenging, while residential construction markets, in which Smart Infrastructure has a significantly
+lower exposure, grew strongly. On a geographic basis, market growth in fiscal 2021 was mainly driven by the region Asia, Australia, which
+recovered earlier from impacts related to COVID-19, while market volume in the Americas declined. Smart Infrastructure also experienced
+a number of supply chain constraints, especially in the areas of base metals (copper, aluminum, steel), plastics, semiconductors and
+transportation services. Whereas the management of these constraints required additional effort, Smart Infrastructure's supply chains have
+proven to be resilient, so that major interruptions could be avoided and delivery ability was maintained. In fiscal 2022, markets served by
+Smart Infrastructure are expected to grow slightly faster than in fiscal 2021. Demand from the pharmaceutical industry, data centers and
+utilities are expected to be main growth drivers, while growth rates of the non-residential construction markets are expected to come in
+below the average growth of markets served by Smart Infrastructure. On a geographic basis, Asia, Australia is expected to continue to be
+the fastest-growing region. Growth in the region Europe, C.I.S., Africa, Middle East is expected to accelerate and markets in the region
+Americas are expected to return to growth.
+11%
+3.4 Mobility
+Mobility sells its products, systems and solutions through its worldwide network of sales units. The principal customers of Mobility are
+public and state-owned companies in the transportation and logistics sectors, so its markets are driven primarily by public spending.
+Customers usually have multi-year planning and implementation horizons, and their contract tenders therefore tend to be independent
+of short-term economic trends. Large contracts in the rolling stock and the rail infrastructure business are often awarded together with
+service contracts, which start to generate revenue only after the respective products and solutions have been put in operation, which can
+be a number of years after the contract award. Mobility's principal competitors are multinational companies. Consolidation among
+Mobility's competitors is continuing: In January 2021, Alstom SA of France announced the closing of the acquisition of Bombardier
+Transportation. In August 2021, Hitachi Ltd., Japan, announced an agreement of Hitachi Rail to acquire the Ground Transportation Systems
+business of Thales. Market consolidation may lead to increased competitive pressure within the rail supply industry and also to fewer
+sourcing options for rail customers.
+The main trends driving Mobility's markets are urbanization and the need to reduce emissions, particularly from transportation. Increasing
+populations in urban centers need daily mobility that is simpler, faster, and more flexible, reliable and affordable. At the same time, cities
+and national economies face the challenge of cutting CO₂ and noise emissions and reducing space requirements and costs of
+transportation. The pressure on mobility providers to meet all these needs is expected to rise continuously. Furthermore, improving
+availability, connectivity, and sustainability of rail infrastructures increasingly requires digital solutions, which provide growth
+opportunities. While a significant drop in ridership driven by COVID-19 has strongly impacted mobility operators, overall trends towards
+urbanization and decarbonization persist unchanged and recovery programs in many countries have been allocating significant funds to
+rail and public transport operators to address these trends.
+Mobility's R&D strategy is focused on making trains and infrastructures more intelligent, thereby increasing its customers' return on
+investment, improving the passenger experience, and guaranteeing availability. Decarbonization and seamlessly connected (e-)mobility
+are also key factors for the future of transportation. Mobility's major R&D areas include the development of efficient vehicle platforms with
+optimized lifecycle cost and maximum customization flexibility; eco-friendly, alternative power supplies for trains (batteries, hydrogen,
+dual mode) and trucks (eHighway); digital services for railways via its Railigent application suite; "signaling in the cloud," a new system
+architecture for rail infrastructure and loT/cloud-based technologies; solutions for more automated and autonomous driving for rail and
+road; innovative brake monitoring systems for freight trains; and digital technologies and loT solutions including cyber security,
+10
+Combined Management Report
+connectivity, simulation and digital twin, data analytics and Al, additive manufacturing and software systems and processes. Mobility's
+investments focus mainly on maintaining or enhancing its production facilities, on meeting project demands and enhancing its depot
+services.
+(in millions of €)
+Orders
+Revenue
+Mobility combines all Siemens businesses in the area of passenger and freight transportation. Within its rolling stock business, its offerings
+encompass trains for urban and regional transport such as vehicles for metro systems, trams and light rail, and commuter trains as well as
+trains and passenger coaches for intercity and long-distance services, such as high-speed rail. Rolling stock offerings furthermore include
+locomotives for freight or passenger transport and solutions for automated transportation such as automated people movers. Offerings in
+its rail infrastructure business include products and solutions for rail automation, such as automatic train control systems, interlocking,
+operations control and telematic systems, digital station solutions and railway communication systems, signaling on-board and crossing
+products and yard and depot solutions; for electrification such as AC and DC traction power supply, contact lines and network control; and
+intermodal solutions, such as platforms for fleet management, route planning, ticketing and payments solutions and data analytics. With
+its service business, Mobility provides customer services for rolling stock and rail infrastructure throughout the entire lifecycle, such as
+maintenance and digital services. In its turnkey business, it bundles consulting, planning, financing, construction, service and operation
+of completed mobility systems. Its intelligent traffic systems business provides solutions for traffic management such as autonomous
+driving, eHighway systems and tolling solutions. During fiscal 2021, Mobility carved out the intelligent traffic systems business to form a
+separately managed entity, which operates under the brand name Yunex Traffic.
+5,182
+5,769
+8%
+3.3 Smart Infrastructure
+Smart Infrastructure offers products, systems, solutions, services and software to support a sustainable transition in energy generation
+sources, from fossil to renewable and a transition to smarter, more sustainable buildings and communities. This versatile portfolio is
+structured into three businesses: buildings, electrification and electrical products. The buildings business addresses the needs of operators,
+owners, occupants and users of buildings. It spans integrated building management systems and software; heating, ventilation and air
+conditioning (HVAC) controls; fire safety and security products and systems; and solutions and services such as energy and performance
+services. The electrification business makes grids more resilient, flexible and efficient. Its offerings cover grid simulation, operation and
+control software; substation automation and protection; medium-voltage primary and secondary switchgear (including SF6-free medium-
+voltage switchgear); and low-voltage switchboards and eMobility charging infrastructure. The electrical products business supplies
+electrification and buildings. Its offerings include low-voltage switching, measuring and control equipment; low-voltage distribution
+systems and switchgear; and circuit breakers, contactors and switching for medium-voltage. In fiscal 2021, Smart Infrastructure acquired
+C&S Electric Limited (C&S Electric), India, a provider of electrical and electronic equipment for infrastructure, power generation,
+transmission and distribution to strengthen its position in India as a supplier of low-voltage power distribution and electrical installation
+technology.
+Smart Infrastructure's customer base is diverse. It encompasses infrastructure developers, construction companies and contractors;
+owners, operators and tenants of both public and commercial buildings including hospitals, campuses, airports and data centers;
+companies in heavy industries such as oil and gas, mining and chemicals; companies in discrete manufacturing industries such as
+automotive and machine building; and utilities and power grid network operators (transmission and distribution). Smart Infrastructure
+serves its customers through a broad range of channels, including its global sales organization, distributors and partners such as panel
+builders, original equipment manufacturers (OEM) and value-added resellers and installers, all complemented by direct sales such as
+through the branch offices of its regional solutions and services units worldwide and e-commerce channels. Smart Infrastructure's principal
+competitors consist mainly of large multinational companies and smaller manufacturers in emerging countries. Its solutions and services
+business also competes with local players such as system integrators and facility management firms. Smart Infrastructure's businesses are
+impacted by changes in the overall economic environment to varying degrees, depending on customer segment. While customer demand
+in discrete manufacturing industries changes quickly and strongly with macroeconomic cycles, it reacts more slowly in infrastructure,
+construction, heavy industries and the utilities sector. The building solutions business in particular is affected by economic cycles in the
+non-residential building construction markets with a time lag of two to four quarters. Overall, Smart Infrastructure has developed a
+balanced and resilient business mix with its diversified regional and vertical markets; its range of products, systems, solutions and services;
+and its participation in both long- and short-cycle markets. To further strengthen the resilience of its portfolio, Smart Infrastructure aims
+at increasing the share of service revenue and beginning with fiscal 2022 will report revenue generated from service activities.
+Smart Infrastructure benefits from a number of favorable trends. These include urbanization, demographic change, climate change, and
+digitalization. Urbanization and demographic change drive a need for smarter and more human-centric buildings. Climate change drives
+the need for decarbonization. This results in an increasing demand for flexible and resilient energy infrastructures and rapid growth in
+electric mobility. Digitalization is an enabler for such changes in both buildings and grids, making it possible to develop smarter buildings
+and manage electricity distribution with a higher share of renewables. The markets served are experiencing shifts that present
+opportunities where building technologies and electrification meet.
+Smart Infrastructure's R&D activities focus on sustainable and decarbonized infrastructures in electrification, distribution grids and
+buildings. It develops digital offerings for the energy market such as for integrating renewable energy into conventional grids.
+Furthermore, R&D efforts strengthen Smart Infrastructure's capabilities to create comfortable, safe and energy-efficient buildings and
+infrastructures that support increased efficiency for occupants, equipment and the use of building space. Smart Infrastructure is expanding
+its digital offerings such as cloud solutions using field data from controllers and loT devices. Furthermore, it develops technologies for
+environmentally friendly and increasingly renewable-based energy systems, ranging from photovoltaic and battery storage inverters to
+charging solutions for e-mobility. In this regard, data from field devices is the basis for intelligent grid control and protection, providing
+grid stability and flexibility and continuously matching energy supply and demand while protecting grid assets. For electrical distribution
+systems and industrial plants, Smart Infrastructure continuously drives digitalization of its switching and control products with built-in
+intelligence, connectivity to the cloud, and increasingly remote diagnostics and edge computing capability. Its digital twins of products,
+building systems or grids deliver customer value from online configuration and parametrization, to operation, to maintenance planning.
+Smart Infrastructure also develops data-driven applications and digital services. To a large extent, its capital expenditures relate to the
+products businesses. Main investment areas are replacement of fixed assets and further digitalization of factories and technical
+equipment, with a strong focus on innovation.
+(in millions of €)
+Orders
+Revenue
+therein: products business
+Adjusted EBITA
+Adjusted EBITA margin
+Fiscal year
+2021
+2020
+% Change
+Actual
+Comp.
+16,071
+14,734
+9%
+12%
+15,015
+14,323
+5%
+therein: service business
+14,460
+Adjusted EBITA
+2021
+Siemens is majority shareholder in the publicly listed Siemens Healthineers AG, Germany (Siemens Healthineers). Siemens Healthineers
+is a global provider of healthcare solutions and services. It develops, manufactures, and sells a diverse range of innovative diagnostic and
+therapeutic products and services to healthcare providers. In addition, it also provides clinical consulting services, complemented by
+extensive training and service offerings. This comprehensive portfolio supports customers all along the care continuum, from prevention
+and early detection to diagnosis, treatment, and follow-up care. The customer spectrum ranges from public and private healthcare
+providers, including hospitals and hospital systems, public and private clinics and laboratories, universities, physicians/physician groups,
+public health agencies, state-run and private health insurers, to pharmaceutical companies and clinical research institutes. The imaging
+business provides imaging products, services and solutions. Its most important products are equipment for magnetic resonance, computed
+tomography, X-ray systems, molecular imaging, and ultrasound. The diagnostics business offers in-vitro diagnostic products and services
+to healthcare providers in laboratory, molecular and point-of-care diagnostics. The portfolio of the advanced therapies business consists
+of highly integrated products, solutions and services across multiple clinical fields that are designed to support image-guided minimally
+invasive treatments, in areas such as cardiology, interventional radiology and surgery. On April 15, 2021, Siemens acquired Varian, which
+is active in the field of cancer care, with solutions especially in radiation oncology and related digital solutions and applications. Varian
+thus offers a good complement to Siemens Healthineers' businesses in medical imaging, laboratory diagnostics and interventional
+procedures. The purchase price paid in cash amounted to USD 16.4 billion (€13.9 billion as of the acquisition date). To partially finance
+this acquisition, Siemens Healthineers carried out a capital increase during fiscal 2021 without the participation of Siemens, consequently
+11
+Combined Management Report
+reducing Siemens' stake in Siemens Healthineers from about 79% to slightly over 75%. Competition in the imaging, Varian and advanced
+therapies businesses consists mainly of a small number of large multinational companies, while the diagnostics market is fragmented with
+a variety of global players that compete with each other across market segments and also with several regional players and specialized
+companies in niche technologies. The business activities of Siemens Healthineers are to a certain extent resilient to short-term economic
+trends because large portions of its revenue stem from recurring business. They are, however, directly and indirectly dependent on trends
+in healthcare markets and on developments in health policy, and geopolitical developments around the world.
+The addressable markets of Siemens Healthineers are shaped by four major trends. The first is demographic, in particular the growing and
+aging global population. This trend poses major challenges for global healthcare systems and, at the same time, offers opportunities for
+players in the healthcare industry as the demand for cost-efficient healthcare solutions continues to intensify. The second trend is
+economic development in emerging countries, which opens up improved access to healthcare for many people. Significant investment in
+the expansion of private and public healthcare systems will persist, driving overall demand for healthcare products and services and hence
+market growth. The third trend is the increase in chronic diseases as a consequence of an aging population and environmental and lifestyle-
+related changes. This trend results in far more patients with multiple morbidities, putting further pressure on healthcare systems and
+leading to higher costs; it also increases the need for new, more timely ways to detect and treat diseases. The fourth global trend, the
+transformation of healthcare providers, results from a combination of societal and market forces that are driving healthcare providers to
+operate and organize their businesses differently. Increasing cost pressure on the healthcare sector is prompting the introduction of new
+remuneration models for healthcare services, such as value-based rather than treatment-based reimbursement. Digitalization and artificial
+intelligence are thereby likely to be key enablers for healthcare providers as they increasingly focus on enhancing the overall patient
+experience, with better outcomes and overall reduction in cost of care. This development is driven partly by society's increasing resistance
+to healthcare costs, payers' increasing professionalization, burdens from chronic disease, rapid scientific progress and staff shortages. As
+a result of these factors, healthcare providers are consolidating into networked structures, resulting in larger clinic and laboratory chains,
+often operating internationally, which act increasingly like large corporations. Applying this industrial logic to the healthcare market can
+lead to systematic improvements in quality, while at the same time reducing costs.
+R&D activities at Siemens Healthineers are aimed at delivering innovative, sustainable solutions to its customers while safeguarding and
+improving its competitiveness. Particularly in the field of digitalization and artificial intelligence, it has further expanded its activities and
+has 67 products and applications on the market that are designed to further improve its customers' productivity, while enabling clinical
+decisions to be more precise and tailored to the individual patient. Furthermore, Siemens Healthineers is continuously expanding its
+portfolio of digital services to support customers in their transition to value-based care. The teamplay digital health platform brings
+together data, applications and services to make better decisions for patients in an efficient way. In addition, in fiscal 2021 Siemens
+Healthineers extended its portfolio in the field of cancer care with the Varian acquisition. The combined company pursues an intelligent
+cancer care strategy, harnessing advanced technologies such as Al and data analytics to improve cancer treatment and expand global
+access to cancer care. In addition to continually updating its portfolio, Siemens Healthineers also improves existing products and solutions.
+Siemens Healthineers focuses its investments mainly on enhancing competitiveness and innovation. The main capital expenditures were
+for spending for factories to expand manufacturing and technical capabilities, in particular in China and the U.S., and for additions to
+intangible assets, including capitalized development expenses within the Atellica Solution and Central Lab product lines.
+(in millions of €)
+Orders
+Revenue
+3.5 Siemens Healthineers
+Adjusted EBITA
+Fiscal year
+2021
+% Change
+2020
+Actual
+Comp.
+20,320
+16,163
+26%
+18%
+Adjusted EBITA margin
+In October 2021, Mobility closed the acquisition of SQCAP B.V. (Sqills), Netherlands, a provider of cloud-based inventory management,
+reservation, and ticketing software for public transport operators to enhance its offerings that increase the availability, capacity and
+utilization of public transportation. The purchase price is €537 million paid in cash plus a contingent consideration recognized at the
+acquisition date at its maximum amount of €79 million. For further information see Note 34 in Notes to Consolidated Financial Statements
+for fiscal 2021.
+Markets served by Mobility grew moderately in fiscal 2021 as they partly recovered from impacts related to COVID-19. The market for
+rolling stock saw large orders across all segments, especially for high-speed trains, commuter trains and locomotives. The rail infrastructure
+market has seen growth both in urban and mainline segments due to the renewal and extension of mainline tracks and the ongoing trend
+towards automatic train protection (ATP), including communications-based train control (CBTC) and European train control system (ETCS)
+technologies. Service demand partly recovered from prior-year impacts related to COVID-19, due to growing installed bases which drove
+a corresponding increase in the spare parts and maintenance market. On a geographic basis, market development in Europe continued to
+be characterized by awards of mid-size to large orders, particularly in Germany, Denmark and in Switzerland. While demand in the Middle
+East rose, demand in Africa was held back by ongoing uncertainties related to budget constraints and political climates. In the Americas
+region, investment activities were driven by demand for urban and mainline transport, especially in the U.S. and Canada. Within the Asia,
+Australia region, markets saw ongoing rail investments, particularly in China. For fiscal 2022, markets served by Mobility are expected to
+further recover from impacts related to COVID-19 and to grow clearly, partly benefiting from fiscal stimulus and investment programs.
+Mobility anticipates that rail operators in Europe, particularly in Germany and in the U.K., will continue making significant investments and
+that customers in the Middle East and Africa will tender large turnkey systems, especially for additional rail lines in Egypt and Saudi Arabia.
+Markets in the Americas region are expected to remain strong, especially due to ongoing investments in urban and mainline transport and
+large investment programs dedicated to transportation and enhancements of existing infrastructure in the U.S. In China, investments in
+high-speed trains, urban transport, freight logistics and rail infrastructure are expected to continue to drive growth. In India, privatization
+is expected to drive infrastructure enhancements and upgrades and to lead to strong market growth through investments in mainline
+(high-speed, freight infrastructure, additional rolling stock), urban metro and rail electrification with ambitious electrification targets for
+the broad-gauge network. Despite an adverse short-term impact from COVID-19, rail transport and intermodal mobility solutions are
+expected to remain a high priority as urbanization continues to progress around the world. In emerging countries, rising incomes are
+expected to result in greater demand for public transport solutions.
+Orders grew on sharply higher volume from large orders, which Mobility won across the three reporting regions, highlighted by a €2.8
+billion order for trainsets including dual powered and hybrid battery vehicles and associated services in the U.S., Mobility's largest-ever
+order in the Americas. Large contract wins in the region Europe, C.I.S., Africa, Middle East included an order for passenger coaches in the
+Czech Republic, an order for regional trains in Austria and an order for light rail vehicles in Germany, each worth €0.4 billion, and in the
+region Asia, Australia a €0.2 billion order for a signaling system in Taiwan. Revenue growth was driven by the rail infrastructure business,
+including significant growth in its mainline activities. On a geographic basis, revenue rose in the Americas due particularly to a significant
+growth contribution from the U.S., and in the region Europa, C.I.S., Africa, Middle East, including clear growth in Germany. These increases
+were only partly offset by lower revenue in the region Asia, Australia. Adjusted EBITA rose in the majority of the businesses, most strongly
+in the rail infrastructure business. For Mobility overall, impacts related to COVID-19, such as measures in the rolling stock business to
+safeguard employee health in manufacturing facilities, held back revenue and Adjusted EBITA growth, albeit to a lesser extent than a year
+earlier. Severance charges were €22 million, compared to €20 million a year earlier. Mobility's order backlog reached €36 billion at the
+end of the fiscal year, of which €9 billion are expected to be converted into revenue in fiscal 2022.
+2020
+% Change
+Actual
+Comp.
+12,696
+9,169
+38%
+41%
+9,232
+9,052
+2%
+3%
+1,416
+1,392
+2%
+3%
+857
+822
+4%
+9.3%
+9.1%
+Adjusted EBITA margin
+Fiscal year
+14
+As defined by the International Monetary Fund.
+Beginning with fiscal 2022, governance costs and Siemens brand fees, previously included in Corporate items, will be included within the
+new item Governance; results related to Technology and Next47, also previously included in Corporate items, will be disclosed under the
+new item Innovation. Other components of corporate items, including the businesses Advanta and Global Business Solution, will be
+transferred to the item Financing, eliminations and other items (formerly Eliminations, Corporate Treasury and other reconciling items).
+In line with the change to a new profit definition, this item will also include operating financial income (expenses), net. As a result of the
+changes described above, Corporate items will be retired as a disclosure line item. If this new reporting structure had already existed in
+fiscal 2021, the items Innovation; Governance; and Financing, eliminations and other items would have recorded €(207) million, €(751)
+million and €452 million in profit, respectively.
+(85)
+48%
+345
+512
+14.3%
+15.0%
+17%
+7,560
+8,808
+(673)
+30%
+2,847
+4%
+822
+857
+34%
+1,302
+1,743
+3%
+3,252
+2,184
+3,362
+87%
+(1,731)
+13.1%
+54%
+5.00
+7.68
+59%
+4,200
+6,697
+>200%
+44
+(1,739)
+1,062
+4,156
+5,636
+(38)%
+(1,346)
+(1,861)
+36%
+5,502
+7,496
+0%
+36%
+% Change
+2020
+2021
+15%
+15,323
+11%
+13%
+55,254
+62,265
+17,651
+21%
+25%
+6,594
+15%
+8,232
+16%
+12,784
+14,815
+9%
+6%
+12,761
+13,521
+10%
+quarters. Digital Industries expects its primary markets, as described above, to show clear growth in fiscal 2022, with somewhat diminished
+momentum compared to fiscal 2021 and more geographic balance among the three reporting regions.
+13%
+Revenue related to external customers went up significantly year-over-year, led by double-digit growth in Siemens Healthineers and Digital
+Industries. Smart Infrastructure recorded a clear increase, while Mobility posted slightly higher revenue year-over-year. The revenue
+increase in emerging markets was driven by substantially higher demand in China and, to a lesser degree, India.
+Revenue in Europe, C.I.S., Africa, Middle East increased significantly on growth in all four industrial businesses. Within the region,
+Germany showed sharp growth particularly due to Siemens Healthineers which doubled its revenue in the country through sales of rapid
+coronavirus antigen tests. The other industrial businesses posted sizeable increases in Germany.
+16
+Fiscal year
+ROCE
+Basic earnings per share
+Income from discontinued operations, net of income taxes
+Net income
+Income from continuing operations
+Income tax expenses
+Income from continuing operations before income taxes
+Reconciliation to Consolidated Financial Statements
+Portfolio Companies
+Siemens Financial Services
+Adjusted EBITA margin Industrial Business
+Industrial Business
+Siemens Healthineers
+Mobility
+Smart Infrastructure
+Digital Industries
+(in millions of €, earnings per share in €)
+4.2 Income
+In Asia, Australia, Digital Industries, Siemens Healthineers and Smart Infrastructure all posted double-digit growth, while Mobility reported
+a decline. Growth in the region was primarily due to increases in China and India.
+In the Americas, revenue was up in all four industrial businesses, led by Siemens Healthineers. As with orders, revenue was subject to
+significantly negative currency translation effects, partly offset by portfolio effects related primarily to the acquisition of Varian. The pattern
+of revenue growth in the U.S. was largely the same as for the region.
+Combined Management Report
+7.8%
+As a result of the developments described above, Income from continuing operations before income taxes increased 36%. Severance
+charges for continuing operations were €410 million, of which €251 million were in Industrial Business. In fiscal 2020, severance charges
+for continuing operations were €589 million, of which €490 million were in Industrial Business.
+The tax rate in fiscal 2021 was 25%, close to the 24% rate in fiscal 2020, benefiting from reversal of income tax provisions and largely tax-
+free gains resulting from the transfers of assets to Siemens Pension-Trust e.V. mentioned above. These benefits were partly offset by losses
+related to equity investments which were not tax-deductible. As a result, the increase in Income from continuing operations was 36%.
+Income from discontinued operations, net of income taxes in fiscal 2021 included a gain of €0.9 billion from the sale of Flender and
+also benefited from reversal of income tax provisions. The prior year included a pretax gain of €0.9 billion, net of related expenses, from
+the spin-off of Siemens Energy AG (Siemens Energy), as well as a positive contribution from Flender. These positive factors were largely
+offset, however, by losses at the former operating businesses Gas and Power and Siemens Gamesa Renewable Energy (now part of Siemens
+Energy) and €0.3 billion in income tax expenses mainly related to the carve-out of Siemens Energy.
+The increase in basic earnings per share reflects an increase of Net income attributable to Shareholders of Siemens AG, which was €6,161
+million in fiscal 2021 compared to €4,030 million in fiscal 2020, combined with a lower number of weighted average shares outstanding.
+12,118
+10,646
+14%
+9%
+20,474
+16,780
+22%
+24%
+17,555
+20%
+14,212
+26%
+16,589
+13,473
+23%
+20%
+9,029
+7,094
+27%
+23%
+24%
+24%
+27,778
+34,311
+15
+15
+Combined Management Report
+4. Results of operations
+4.1 Orders and revenue by region
+Currency translation effects took three percentage points each from order and revenue growth, respectively. Portfolio transactions, in
+particular the acquisition of Varian by Siemens Healthineers, added five percentage points to order and four percentage points to revenue
+growth year-over-year. The resulting ratio of orders to revenue (book-to-bill) for Siemens in fiscal 2021 was 1.15. The order backlog was
+€85 billion as of September 30, 2021.
+Orders (location of customer)
+(in millions of €)
+Europe, C.I.S., Africa, Middle East
+therein: Germany
+Americas
+therein: U.S.
+Asia, Australia
+therein: China
+Siemens (continuing operations)
+therein: emerging markets¹
+1 As defined by the International Monetary Fund.
+Fiscal year
+2021
+2020
+% Change
+Actual
+Comp.
+71,374
+Combined Management Report
+58,030
+21%
+27,252
+14%
+12%
+11,249
+9,373
+20%
+16%
+16,312
+15,218
+31,138
+7%
+Siemens' global venture capital unit, Next47, provides capital to help start-ups expand and scale. It serves as the creator of next-generation
+businesses for Siemens by building, buying and partnering with innovative companies at any stage. Next47 is focused on anticipating how
+emerging technologies will influence our end markets. This foreknowledge enables Siemens and our customers to grow and thrive in the
+Combined Management Report
+17
+We advance certain of these technologies also through our open innovation concept. We are working closely with scholars from leading
+universities and research institutions, not only under bilateral cooperation agreements but also in publicly funded collective projects. Our
+focus here is on our strategic research partners, and especially the eight Centers of Knowledge Interchange that we maintain at leading
+universities worldwide.
+Our research and development activities are ultimately geared to developing innovative, sustainable solutions for our customers - and the
+Siemens businesses while also strengthening our own competitiveness. Joint implementation by the operating units and Technology,
+our central R&D department, ensures that research activities and business strategies are closely aligned with one another, and that all
+units benefit equally and quickly from technological developments. As in previous years, we focused on the following technologies:
+additive manufacturing, autonomous robotics, blockchain applications, connected (e-)mobility, connectivity and edge devices, cyber
+security, data analytics and artificial intelligence, distributed energy systems, energy storage, future of automation, materials, power
+electronics, simulation and digital twin, and software systems and processes.
+-
+In fiscal 2021, we reported research and development expenses of €4.9 billion, compared to €4.6 billion in fiscal 2020. The resulting R&D
+intensity, defined as the ratio of R&D expenses and revenue, was 7.8% (fiscal 2020: 8.3%). Additions to capitalized development expenses
+amounted to €0.3 billion in fiscal 2021, compared to €0.4 billion in fiscal 2020. As of September 30, 2021 and 2020, Siemens held
+approximately 43,400 and 40,900 respectively, granted patents worldwide in its continuing operations. On average, we had 42,500 R&D
+employees in fiscal 2021.
+4.3 Research and development
+As expected, ROCE improved year-over-year, but was below the target range set in our Siemens Financial Framework. The increase year-
+over-year was due both to sharply higher income before interest after tax and to clearly lower average capital employed following the
+spin-off of Siemens Energy at the end of fiscal 2020.
+age of digitalization.
+Comp.
+Actual
+2020
+19,208
+15,234
+26%
+25%
+Orders related to external customers were up substantially year-over-year on double-digit growth in all four industrial businesses, reflecting
+a very strong rebound in economic activity even though the economic environment was still strongly impacted by COVID-19. Orders in
+Mobility increased sharply on a higher volume from large orders which included a €2.8. billion order for trainsets including dual powered
+and hybrid battery vehicles and associated services in the U.S., its largest-ever order in the Americas. Siemens Healthineers, Digital
+Industries and Smart Infrastructure also posted double-digit order growth year-over-year. The broad-based increase in emerging markets
+was driven by China and, to a lesser degree, India.
+In the Europe, C.I.S., Africa, Middle East region, order intake was up substantially year-over-year with increases in all four industrial
+businesses. Sharp order growth in Siemens Healthineers included high volume from rapid coronavirus antigen tests. Digital Industries and
+Smart Infrastructure also recorded double-digit growth, while orders in Mobility were up clearly year-over year. In Germany, order intake
+in Siemens Healthineers almost doubled due mainly to the high volume from rapid coronavirus antigens tests. Digital Industries and Smart
+Infrastructure posted double-digit growth, while Mobility posted a substantial decline due to a lower volume from large orders which in
+fiscal 2020 had included a €1.1 billion order for high-speed trains.
+Order growth in the Americas and in the U.S. was due mainly to a higher volume from large orders in Mobility, particularly including the
+large order in the U.S. mentioned above. Overall, order intake both in the region and in the U.S. was subject to significantly negative
+currency translation effects, partly offset by portfolio effects which related primarily to the acquisition of Varian.
+In the Asia, Australia region, orders overall rose substantially due to double-digit increases in all four industrial businesses, with the
+highest contributions from Siemens Healthineers and Digital Industries. The pattern of order development in China was largely the same
+as for the region.
+Revenue (location of customer)
+(in millions of €)
+Europe, C.I.S., Africa, Middle East
+therein: Germany
+Americas
+therein: U.S.
+Asia, Australia
+therein: China
+Siemens (continuing operations)
+therein: emerging markets'
+Fiscal year
+% Change
+2021
+23%
+Combined Management Report
+Adjusted EBITA
+FISCAL 2021
+100
+9/9
+Jürgen Kerner
+100
+FISCAL 2021 9
+Corporate Governance
+Statement
+8/9
+pursuant to Sections 289f and 315d
+of the German Commercial Code
+Corporate Governance Statement
+pursuant to Sections 289f and 315d
+of the German Commercial Code
+Corporate Governance Statement
+In this Statement, the Managing Board and the Super-
+visory Board report as of November 8, 2021, on corporate
+governance at the Company in fiscal 2021 (October 1,
+2020, to September 30, 2021) pursuant to Sections 289f
+and 315d of the German Commercial Code (Handels-
+gesetzbuch, HGB) and as prescribed in Principle 22 of the
+German Corporate Governance Code ("Code"). Further
+information regarding corporate governance – for exam-
+ple, the Bylaws for the Supervisory Board, the Bylaws
+for the Managing Board, the bylaws for the Supervisory
+Board committees and the Corporate Governance State-
+ments of the previous fiscal years is also available
+on the Siemens Global Website at www.SIEMENS.COM/
+CORPORATE-GOVERNANCE.
+-
+1. Declaration of Conformity
+with the German Corporate
+Governance Code
+SIEMENS
+The Managing Board and the Supervisory Board of
+Siemens AG approved the following Declaration of Con-
+formity pursuant to Section 161 of the German Stock Cor-
+poration Act (Aktiengesetz, AktG) as of October 1, 2021:
+89
+75
+100
+1/1
+100
+3/3
+75
+28
+100
+3/4
+9/9
+3/4
+(until February 3, 2021)
+Nicola Leibinger-Kammüller (Dr. phil.)
+100
+3/3
+100
+6/6
+Benoît Potier
+Hagen Reimer
+"Declaration of Conformity by the Managing Board and
+the Supervisory Board of Siemens Aktiengesellschaft
+with the German Corporate Governance Code pursu-
+ant to Section 161 of the German Stock Corporation Act
+→ Siemens AG does not comply with the recommen-
+dation in B.3. According to this recommendation,
+the first-time appointment of Managing Board
+members shall be for a period of not more than
+three years.
+Suggestions of the Code
+Siemens AG voluntarily complies with the Code's sugges-
+tions, with only the following exceptions:
+According to the suggestion in A.5 of the Code, in the
+case of a takeover event, the Managing Board should
+convene an Extraordinary General Meeting at which
+shareholders will discuss the takeover offer and may
+decide on corporate actions. The convening of a share-
+holders' meeting - even taking into account the short-
+ened time limits stipulated in the German Securities
+Acquisition and Takeover Act (Wertpapiererwerbs- und
+Übernahmegesetz, WpÜG) – is an organizational chal-
+lenge for large publicly listed companies. It appears
+doubtful whether the associated effort is justified also
+in cases where no relevant decisions by the sharehold-
+ers' meeting are intended. Therefore, extraordinary
+shareholders' meetings shall be convened only in appro-
+priate cases.
+-
+According to the suggestion in D.8 sent. 2, participation
+by telephone or video conference in the meetings of the
+Supervisory Board and its committees should not be the
+rule. At Siemens AG, participation in meetings is, as a rule,
+in person. Participation by telephone takes place only
+in exceptional cases. Due to the special circumstances
+3
+Corporate Governance Statement
+COM/DECLARATION OF CONFORMITY.
+created by the COVID-19 pandemic, several meetings of
+the Supervisory Board and its committees in fiscal 2021
+took place as virtual meetings or with the possibility of
+participation in a virtual format.
+The Company's values and Business
+Conduct Guidelines
+In the 174 years of its existence, our Company has built an
+excellent reputation around the world. Technical perfor-
+mance, innovation, quality, reliability and international
+engagement have made Siemens a leading company in
+its areas of activity. It is top performance with the highest
+ethics that has made Siemens strong. This is what the
+Company will continue to stand for in the future.
+The Business Conduct Guidelines provide the ethical and
+legal framework within which we want to conduct our
+activities and remain on course for success. They contain
+the basic principles and rules for our conduct within our
+Company and in relation to our external partners and the
+general public. They set out how we meet our ethical and
+legal responsibility as a Company and give expression to
+our Company values: "Responsible" - "Excellent" - "Inno-
+vative." Our Business Conduct Guidelines are publicly
+available on the Siemens Global Website at www.
+SIEMENS.COM/COMPLIANCE.
+4. Description of the operation
+of the Managing Board and the
+Supervisory Board and of the
+composition and operation of
+their committees
+Siemens AG is subject to German corporate law. There-
+fore, it has a two-tier board structure, consisting of a
+Managing Board and a Supervisory Board. The duties and
+powers of the Managing Board and the Supervisory
+Board as well as the regulations regarding their operation
+and composition are defined primarily by the German
+Stock Corporation Act, the Articles of Association of
+Siemens AG and the bylaws for the Company's governing
+bodies. The Articles of Association of Siemens AG,
+the Bylaws for the Managing Board, the Bylaws for
+the Supervisory Board and the bylaws for the Super-
+visory Board's most important committees are available
+on the Siemens Global Website at WWW.SIEMENS.COM/
+Further corporate governance practices applied beyond
+the applicable legal requirements are contained in our
+Business Conduct Guidelines, which are publicly available
+on the Siemens Global Website at WWW.SIEMENS.COM/
+Since making its last Declaration of Conformity dated
+February 4, 2021, Siemens AG has complied, and will
+continue to comply, with all the recommendations of
+the Government Commission on the German Corpo-
+rate Governance Code in the version of December 16,
+2019 ('Code') published by the Federal Ministry of
+Justice and Consumer Protection in the official section
+of the Federal Gazette (Bundesanzeiger), with the fol-
+lowing exceptions:
+The current Declaration of Conformity and the Declara-
+tions of Conformity of the previous five years are avail-
+able on the Siemens Global Website at www.SIEMENS.
+-
+→ Siemens AG does not comply with the recommen-
+dations in C.4 and C.5. According to the recom-
+mendation in C.4, a Supervisory Board member
+who is not a member of any Managing Board of a
+listed company shall not accept more than five
+Supervisory Board mandates at non-group listed
+companies or comparable functions, with an ap-
+pointment as chair of the Supervisory Board being
+counted twice. According to the recommendation
+in C.5, members of the Managing Board of a listed
+company shall not have, in aggregate, more than
+two Supervisory Board mandates in non-group
+listed companies or comparable functions and shall
+not accept the chairmanship of a Supervisory Board
+in a non-group listed company.
+→ Siemens AG does not comply with the recommen-
+dation in C.10 sent. 1 variant 3. According to this
+recommendation, the chair of the committee that
+addresses Managing Board compensation shall
+be independent from the company and the Man-
+aging Board.
+Instead of regarding the recommended maximum pe-
+riod of the first-time appointment of Managing Board
+members and the recommended maximum number
+of mandates for Managing Board and Supervisory
+Board members as rigid upper limits, an assessment is
+to be possible in each individual case. While the period
+of the first-time appointment of a Managing Board
+member shall not, as a rule, exceed three years, an
+assessment is to be possible in each individual case in
+order to determine what period of appointment is
+deemed appropriate within the legally permissible pe-
+riod. This assessment is to consider the individual
+2
+Corporate Governance Statement
+qualifications and experience of the Managing Board
+2. Compensation Report/
+The Managing Board The Supervisory Board"
+member to be appointed and, in particular, the quali- Compensation system
+Following the regular departure of Werner Wenning,
+the previous, long-serving Chairman of the Compen-
+sation Committee of the Supervisory Board of
+Siemens AG, from the Supervisory Board and thereby
+also from the Compensation Committee, the Compen-
+sation Committee elected Michael Diekmann to serve
+The current compensation system for the Managing
+Board members pursuant to Section 87a para. 1 and 2
+sent. 1 of the German Stock Corporation Act, which was
+endorsed by the Annual Shareholders' Meeting on Febru-
+ary 2, 2020, and the decision of the Annual Shareholders'
+Meeting on February 3, 2021, pursuant to Section 113
+para. 3 of the German Stock Corporation Act regarding
+the compensation of the Supervisory Board members are
+publicly available on the Siemens Global Website at
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE. The Compen-
+sation Report and the Independent Auditor's Report in
+accordance with Section 162 of the German Stock Cor-
+poration Act are publicly available at the same Internet
+address.
+3. Information on corporate
+as its new Chairman, effective February 4, 2021. governance practices
+Mr. Diekmann has been a member of the Supervisory
+Board of Siemens AG since January 24, 2008, and is
+therefore not regarded as independent in terms of the
+Code's independence indicators. In the view of the
+Compensation Committee, however, Mr. Diekmann is
+currently the most suitable candidate for the position
+of Chairman because of his professional experience -
+due, among other things, to his many years of work
+on the Compensation Committee and because his
+election will help ensure continuity in the Commit-
+tee's work.
+Berlin and Munich, October 1, 2021
+Siemens Aktiengesellschaft
+fications and experience that he or she has acquired
+over many years in management positions within the
+Siemens Group. With regard to the number of man-
+dates accepted by Managing Board and Supervisory
+Board members, an assessment is also to be possible
+in each individual case in order to determine if the
+number of accepted mandates relevant within the
+meaning of the Code is deemed appropriate. This as-
+sessment is to consider the expected personal work-
+load caused by the accepted mandates, which can
+vary from mandate to mandate.
+9/9
+100
+Norbert Reithofer (Dr. Ing. Dr. Ing. E.h.)
+100
+100
+100
+96
+97
+98
+100
+Detailed discussion of the audit
+9/9
+100
+6/6
+100
+2/2
+100
+9/9
+Matthias Zachert
+Gunnar Zukunft
+100
+of the financial statements
+were prepared in accordance with the requirements of
+German law. The Consolidated Financial Statements of
+the Siemens Group were prepared in accordance with
+the International Financial Reporting Standards (IFRS) as
+adopted by the EU and with the additional requirements
+of German law set out in Section 315 e (1) of the German
+Commercial Code (Handelsgesetzbuch, HGB). The Con-
+solidated Financial Statements of the Siemens Group also
+comply with the IFRS as issued by the International Ac-
+counting Standards Board (IASB). The independent audi-
+tors conducted their audit in accordance with Section 317
+of the German Commercial Code and the EU Audit Regu-
+lation and German generally accepted standards for the
+audit of financial statements as promulgated by the Insti-
+tut der Wirtschaftsprüfer (IDW) as well as in supplemen-
+tary compliance with the International Standards on Au-
+diting (ISA). The abovementioned documents as well as
+Report of the Supervisory Board
+Chairman
+Jim Hagemann Snabe
+For the Supervisory Board
+On behalf of the Supervisory Board, I would like to thank
+the members of the Managing Board and all the employ-
+ees and employee representatives of Siemens AG and of
+all Group Companies for their outstanding commitment
+and constructive cooperation in fiscal 2021.
+and the Supervisory Board reelected Mr. Snabe its Chair-
+man. The Annual Shareholders' Meeting on February 3,
+2021, newly elected Kasper Rørsted and Grazia Vittadini
+to four-year terms of office as shareholder representa-
+tives on the Supervisory Board.
+FISCAL 2021 8
+The independent auditors, Ernst & Young GmbH Wirt-
+schaftsprüfungsgesellschaft, Stuttgart, audited the An-
+nual Financial Statements of Siemens AG, the Consoli-
+dated Financial Statements of the Siemens Group and the
+Combined Management Report for Siemens AG and the
+Siemens Group for fiscal 2021 and issued an unqualified
+opinion for each. Ernst & Young GmbH Wirtschaftsprü-
+fungsgesellschaft, Stuttgart, has served as the indepen-
+dent auditors of Siemens AG and the Siemens Group
+since fiscal 2009. Katharina Breitsameter has signed as
+auditor since fiscal 2016 and as auditor responsible for
+the audit since fiscal 2021. Dr. Philipp Gaenslen has
+signed as auditor since fiscal 2021. The Annual Financial
+Statements of Siemens AG and the Combined Manage-
+ment Report for Siemens AG and the Siemens Group
+The Annual Shareholders' Meeting reelected
+Jim Hagemann Snabe, whose regular term of office also
+expired at the end of the Annual Shareholders' Meeting
+on February 3, 2021, to a four-year term of office as
+shareholder representative on the Supervisory Board,
+Robert Kensbock left the Supervisory Board on Septem-
+ber 25, 2020, the effective date of the spin-off of Siemens
+Energy. In a decision of October 16, 2020, the Charlotten-
+burg District Court appointed Tobias Bäumler to succeed
+Mr. Kensbock as an employee representative on the
+Supervisory Board for the remainder of Mr. Kensbock's
+term of office.
+Matthias Rebellius and Judith Wiese have been full mem-
+bers of the Managing Board since October 1, 2020.
+Joe Kaeser left the Managing Board effective the end of
+the Annual Shareholders' Meeting on February 3, 2021.
+Klaus Helmrich left the Managing Board effective
+March 31, 2021. Joe Kaeser worked for Siemens for more
+than 40 years. For seven years, he headed the Company
+as President and CEO. Klaus Helmrich retired at the expi-
+ration of his term of office after nine years on the Man-
+aging Board and 35 years at the Company. The Super-
+visory Board would like to thank both Mr. Kaeser and
+Mr. Helmrich for their many years of successful work on
+behalf of Siemens and their extraordinary services to the
+Company. We would especially like to thank Joe Kaeser,
+who shaped the Company as few others have done and
+left behind a strong foundation for future generations.
+Changes in the composition of the
+Supervisory and Managing Boards
+The Supervisory Board concurs with the results of the
+audit. Following the definitive findings of the Audit Com-
+mittee's examination and our own examination, we have
+no objections. The Managing Board prepared the Annual
+Financial Statements of Siemens AG and the Consoli-
+dated Financial Statements of the Siemens Group.
+We approved the Annual Financial Statements and the
+Consolidated Financial Statements. In view of our ap-
+proval, the financial statements are accepted as submit-
+ted. We endorsed the Managing Board's proposal that
+the net income available for distribution be used to pay
+out a dividend of €4.00 per share entitled to a dividend
+and that the amount of net income attributable to shares
+of stock not entitled to receive a dividend for fiscal 2021
+be carried forward.
+the Managing Board's proposal for the appropriation of
+net income were submitted to us by the Managing Board
+in advance. The Audit Committee discussed the dividend
+proposal in detail at its meeting on November 9, 2021. It
+discussed the Annual Financial Statements of Siemens AG,
+the Consolidated Financial Statements of the Siemens
+Group and the Combined Management Report in detail
+at its meeting on December 1, 2021. In this context, the
+Audit Committee concerned itself, in particular, with the
+key audit matters described in the independent auditors'
+respective opinions, including the audit procedures im-
+plemented. The Audit Committee's review also covered
+the non-financial information for Siemens AG and the
+Siemens Group that is included in the Combined Man-
+agement Report. The audit reports prepared by the inde-
+pendent auditors were distributed to all members of the
+Supervisory Board and comprehensively reviewed at the
+Supervisory Board meeting on December 2, 2021, in the
+presence of the independent auditors, who reported on
+the scope,
+focal points and main findings of their audit,
+addressing, in particular, key audit matters and the audit
+procedures implemented. No major weaknesses in the
+Company's internal control or risk management systems
+were reported. At this meeting, the Managing Board ex-
+plained the financial statements of Siemens AG and the
+Siemens Group as well as the Company's risk manage-
+ment system.
+Report of the Supervisory Board
+7
+Dr. Nicola Leibinger-Kammüller and Werner Wenning left
+the Supervisory Board at the end of the Annual Share-
+holders' Meeting on February 3, 2021, when their terms
+of office as shareholder representatives on the Super-
+visory Board expired. We thanked Dr. Nicola Leibinger-
+Kammüller and Werner Wenning for their many years of
+trust-based cooperation and for their professional com-
+mitment and contribution to the Company's success. We
+are especially grateful to Mr. Wenning, who, as Second
+Deputy Chairman of the Supervisory Board and Chairman
+of the Compensation Committee, decisively shaped the
+Supervisory Board's work over a period of many years.
+1/1
+100
+2/2
+88828 % 8
+100
+9/9
+Dorothea Simon
+100
+9/9
+Michael Sigmund
+3/3
+100
+Nathalie von Siemens (Dr. phil.)
+7/9
+Baroness Nemat Shafik (DBE, DPhil)
+100
+5/5
+Kasper Rørsted (since February 3, 2021)
+8/9
+9/9
+100
+2/2
+100
+100
+4/4
+100
+4/4
+Werner Wenning (until February 3, 2021)
+100
+2/2
+100
+3/3
+100
+5/5
+Grazia Vittadini (since February 3, 2021)
+100
+1/1
+100
+1/1
+78
+CORPORATE-GOVERNANCE.
+Managing Board
+COMPLIANCE.
+COM/MANAGEMENT.
+4/4
+100
+9/9
+100
+9/9
+99
+100
+in %
+in %
+No.
+in %
+No.
+in %
+No.
+No.
+in %
+6/6
+3/3
+33
+3/3
+100
+6/6
+100
+4/4
+In fiscal 2021, the Managing Board of Siemens AG
+comprised Dr. Roland Busch (President and CEO since
+the conclusion of the ordinary Annual Shareholders'
+Meeting on February 3, 2021, previously Deputy CEO),
+Cedrik Neike, Matthias Rebellius, Prof. Dr. Ralf P. Thomas
+and Judith Wiese as well as Klaus Helmrich (until
+March 31, 2021) and Joe Kaeser (President and CEO until
+the conclusion of the ordinary Annual Shareholders'
+Meeting on February 3, 2021). Further information
+regarding the Managing Board members and their mem-
+berships, which are to be disclosed pursuant to Sec-
+tion 285 No. 10 of the German Commercial Code, are set
+out in Section 10 of this Corporate Governance State-
+ment. Information about the Managing Board members'
+areas of responsibility and their curricula vitae are avail-
+able on the Siemens Global Website at www.SIEMENS.
+100
+100
+9/9
+100
+=1
+1/1
+100
+9/9
+100
+No.
+No.
+Disclosure of participation by individual
+Supervisory Board members in meetings
+The average rate of participation by members in the
+meetings of the Supervisory Board and its committees
+was 98%. Due to the exceptional circumstances caused
+by the COVID-19 pandemic, all meetings in fiscal 2021
+were held either in a virtual format or as in-person meet-
+ings in which virtual participation was possible. The par-
+ticipation rate of individual members in the meetings of
+the Supervisory Board and its committees is set out in the
+following chart:
+New Supervisory Board members can meet with Manag-
+ing Board members and other managers with specialist
+responsibility to exchange views on current topics and
+topics of fundamental importance and thus gain an
+overview of Company-relevant matters (onboarding). In
+fiscal 2021, a separate informational event was held for
+the new Supervisory Board members on March 12, 2021,
+in order to acquaint them, in particular, with the Compa-
+ny's business model and strategy and with the structures
+of the Siemens Group. The new members of the Audit
+Committee participated in discussions with the indepen-
+dent auditors on April 14, 2021. On April 15, 2021, they
+also took part in an introductory event regarding the
+Audit Committee's tasks and processes and the areas of
+the Group relevant for the Audit Committee.
+The Supervisory Board members take part, on their own
+responsibility, in the educational and training measures
+necessary for the performance of their duties - measures
+relating, for example, to changes in the legal framework
+and new, groundbreaking technologies. The Company
+supports them in this regard. Internal informational
+events are offered when necessary to support targeted
+training measures. Two internal training events for all
+Supervisory Board members were held in fiscal 2021: one
+event on April 14, 2021, concerning strategically relevant
+technology-related topics, and another on July 19, 2021,
+concerning Group finance.
+contract for fiscal 2021 to the independent auditors, who
+had been elected by the Annual Shareholders' Meeting,
+defined the Audit Committee's focus areas and deter-
+mined the auditors' fee. The Audit Committee monitored
+the selection, independence, qualification, rotation and
+efficiency of the independent auditors as well as the ser-
+vices they provided and concerned itself with the review
+of the quality of the audit of the financial statements.
+In fiscal 2021, against the backdrop of the Wirecard situ-
+ation, the Audit Committee regularly discussed the role
+of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
+Stuttgart, as the independent auditors of Wirecard AG.
+The Audit Committee questioned the independent audi-
+tors regarding this matter and assessed the impact on
+Siemens AG. No impediments were identified that would
+preclude Ernst & Young GmbH Wirtschaftsprüfungs-
+gesellschaft, Stuttgart, from being elected to serve as
+independent auditors for fiscal 2022. The Audit Commit-
+tee also dealt with the Company's accounting and ac-
+counting process, the effectiveness of its internal control
+system, its risk management system and the effective-
+ness, resources and findings of its internal audit as well
+as with reports concerning potential and pending legal
+disputes. In addition, the Audit Committee concerned
+itself with compliance-related matters and, in particular,
+with the Chief Compliance Officer's quarterly reports and
+annual report. Due to the regular external rotation of
+independent auditors at the conclusion of fiscal 2023
+required in accordance with the current legal situation,
+the Audit Committee's work in fiscal 2021 also focused on
+the preparation and implementation of a transparent and
+non-discriminatory process for the selection of the inde-
+pendent auditors for fiscal 2024. At its meeting on
+August 3, 2021, the Audit Committee approved for this
+purpose the introduction of a tendering process in accor-
+dance with Article 16 of the EU audit regulation (Regula-
+tion (EU) No. 537/2014 of the European Parliament and of
+the Council of April 16, 2014, on specific requirements
+regarding the statutory audit of public-interest entities
+and repealing Commission Decision 2005/909/EG,
+"EU audit regulation"). The members of the Audit Commit-
+tee participated as guests in the Innovation and Finance
+Committee's discussion of the budget for fiscal 2021.
+Report of the Supervisory Board
+5
+FISCAL 2021 6
+FISCAL 2021
+The Innovation and Finance Committee met three
+times. It also made one decision using other customary
+means of communication. The Innovation and Finance
+Committee's work focused on its recommendation re-
+garding the budget for fiscal 2021, the discussion of the
+pension system and the preparation and approval of in-
+vestment and divestment projects and/or financial mea-
+sures. For example, the Innovation and Finance Commit-
+tee prepared the Supervisory Board's decision regarding
+the acquisition of Supplyframe, Inc., U.S. It also con-
+cerned itself with M&A action fields and with Next47, the
+independent unit established by Siemens in 2016 to bun-
+dle the Company's venture capital activities in order to
+foster disruptive ideas more intensively and expedite the
+development of new technologies. Innovation and tech-
+nology-related topics were a further focus. The Managing
+Board reported to the Innovation and Finance Committee
+regarding user-centered product design and experience
+(UX). A guest speaker explained this topic from an exter-
+nal perspective (outside-in). Within the limits of the ap-
+plicable legal framework, the relevant Managing Board
+members informed the Innovation and Finance Commit-
+tee about critically important measures and decisions at
+the Company's equity investments.
+The Compensation Committee met four times. It also
+made one decision using other customary means of com-
+munication. The Compensation Committee prepared, in
+particular, Supervisory Board decisions regarding the
+definition of performance criteria and the targets for vari-
+able compensation, the determination and review of the
+appropriateness of Managing Board compensation and
+the approval of the Compensation Report. In addition,
+the Compensation Committee prepared the Supervisory
+Board's decision regarding the engagement of an auditor
+for the Compensation Report for fiscal 2021.
+The Mediation Committee had no need to meet.
+The Nominating Committee met once. It also made one
+decision using other customary means of communica-
+tion. The Nominating Committee gave in-depth consid-
+eration to succession planning for the Supervisory Board
+and prepared the Supervisory Board's nominations of
+shareholder representatives on the Supervisory Board for
+election by the 2021 Annual Shareholders' Meeting. The
+Nominating Committee was supported in this connection
+by an external consulting firm. In selecting the potential
+candidates and in preparing a recommendation for the
+Supervisory Board decision, the Nominating Committee
+gave particular consideration to the objectives that the
+Supervisory Board had previously approved for its com-
+position, including the profile of required skills and
+expertise and the diversity concept for the Supervisory
+Board. With a view to the regular Supervisory Board elec-
+tions scheduled for 2023, the Nominating Committee
+defined the topics for its work over the next few years
+and examined the regulatory framework conditions for
+the Supervisory Board's composition.
+The Committee concerned itself, in particular, with per-
+sonnel-related matters, succession planning for the com-
+position of the Managing Board, corporate governance
+issues and the acceptance by Managing Board members
+of positions at other companies and institutions. Within
+the limits of the applicable legal framework, the Chair-
+man's Committee was informed of and/or approved crit-
+ically important, personnel-related measures at Siemens'
+businesses and equity investments.
+Report of the Supervisory Board
+The Audit Committee held six regular meetings. In the
+presence of the independent auditors, of the President
+and CEO, of the Deputy Chairman and of the Chief Finan-
+cial Officer, the Audit Committee dealt with the financial
+statements and the Combined Management Report for
+Siemens AG and the Siemens Group. The Audit Commit-
+tee discussed the Half-year Financial Report and the quar-
+terly statements with the Managing Board and the inde-
+pendent auditors. In the presence of the independent
+auditors, it also discussed the report on the auditors'
+review of the Company's Half-year Consolidated Financial
+Statements and of its Interim Group Management Re-
+port. As part of the preparation and implementation of
+the audit, the Audit Committee regularly exchanged
+views with the independent auditors without the Manag-
+ing Board in attendance. In addition, it met regularly in
+closed sessions without the Managing Board and inde-
+pendent auditors in attendance. The Audit Committee
+recommended that the Supervisory Board propose to the
+Annual Shareholders' Meeting that Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft, Stuttgart, be elected
+independent auditors for fiscal 2021. It awarded the audit
+in %
+(Number of meetings/
+participation in %)
+Chairman
+Nominating
+Committee
+Innovation
+and Finance
+Committee
+Committee
+Audit
+Report of the Supervisory Board
+Committee
+Jim Hagemann Snabe
+Committee
+Chairman's
+meetings)
+Board (plenary
+Supervisory
+First Deputy Chairwoman
+Birgit Steinborn
+Compensation
+Werner Brandt (Dr. rer. pol.)
+100
+EQUITY AND COMPENSATION COMMITTEE
+OF THE MANAGING BOARD
+33
+3/3
+100
+100
+6/6
+100
+Harald Kern
+9/9
+100
+4/4
+100
+3/3
+33
+5
+In fiscal 2021, the Managing Board had one committee,
+the Equity and Compensation Committee. The Equity
+and Compensation Committee was dissolved effective
+October 1, 2021. The duties assigned to it were trans-
+ferred back to the Managing Board at that time. The
+Equity and Compensation Committee was responsible for
+the duties assigned to it by a decision of the Managing
+Board - including, in particular, duties in connection with
+capital measures and equity-linked financial instruments
+relating to the compensation of all employees and man-
+agers of the Siemens Group except the members of the
+Second Deputy Chairman
+The members of the Managing Board are subject to a com-
+prehensive prohibition on competitive activity for the pe-
+riod of their employment at Siemens AG. They are commit-
+ted to serving the interest of the Company. When making
+their decisions, they may not be guided by personal inter-
+ests, nor may they exploit for their own advantage busi-
+ness opportunities offered to the Company. Managing
+Board members may engage in secondary activities - in
+particular, supervisory board positions outside the Siemens
+Group-only with the approval of the Chairman's Commit-
+tee of the Supervisory Board. The Supervisory Board is re-
+sponsible for decisions regarding any adjustments to Man-
+aging Board compensation that are necessary in order to
+take account of compensation for secondary activities.
+Every Managing Board member is under an obligation to
+disclose conflicts of interest without delay to the Chairman
+or Chairwoman of the Supervisory Board and to inform the
+other members of the Managing Board thereof.
+As the top management body, the Managing Board is
+committed to serving the interests of the Company and
+achieving sustainable growth in company value. The
+members of the Managing Board are jointly responsible
+for the entire management of the Company and decide
+on basic issues of business policy and corporate strategy,
+including Siemens' sustainability strategy, as well as on
+the Company's annual and multi-year plans, unless spe-
+cific circumstances are taken into account for companies
+that are separately managed and publicly listed them-
+selves (Siemens Healthineers). The Companywide DEGREE
+program, which was approved by the Managing Board in
+fiscal 2021, intensified the focus of all Siemens businesses
+on ambitious sustainability targets – targets for environ-
+mental and social sustainability and good governance -
+even further. More details on sustainability are available
+on the Siemens Global Website at www.SIEMENS.COM/
+SUSTAINABILITYINFORMATION.
+-
+The Managing Board prepares the Company's Quarterly
+Statements and Half-year Financial Report, the Annual
+Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the
+4
+Corporate Governance Statement
+100
+Combined Management Report of Siemens AG and the
+Siemens Group. Together with the Supervisory Board,
+the Managing Board prepares the Compensation Report.
+The Managing Board has established an appropriate and
+effective internal control system and risk management
+system. It also ensures that the Company adheres to stat-
+utory requirements, official regulations and internal
+Company policies and works to achieve compliance with
+these provisions and policies within the Siemens Group.
+The Managing Board has established a comprehensive
+compliance management system. Protection is offered
+to employees and third parties who provide informa-
+tion on unlawful behavior within the Company. Details
+on the compliance management system are available
+on the Siemens Global Website at
+www.SIEMENS.COM/
+The Supervisory Board has issued Bylaws for the Manag-
+ing Board that contain the assignment of different port-
+folios and the rules for cooperation both within the Man-
+aging Board and between the Managing Board and the
+Supervisory Board as well as rules for the so-called Equity
+Investments. In accordance with these Bylaws, the Man-
+aging Board is divided into the portfolio of the President
+and CEO and a variety of Managing Board portfolios. The
+Managing Board members responsible for the individual
+Managing Board portfolios are defined in a business as-
+signment plan that is determined by the Supervisory Board.
+As the Managing Board member with responsibility for
+the People & Organization portfolio, the Labor Director
+(Arbeitsdirektor) is appointed in accordance with the re-
+quirements of Section 33 of the German Codetermina-
+tion Act (Mitbestimmungsgesetz, MitbestG). While the
+first-time appointment of Managing Board members is
+not, as a rule, to exceed a period of three years, an assess-
+ment is to be made in each individual case in order to
+determine what period of appointment is deemed appro-
+priate within the legally permissible period. This matter is
+explained in greater detail in Section 1 of this Corporate
+Governance Statement.
+As a rule, the portfolio assigned to an individual member
+is that member's own responsibility. Activities and trans-
+actions in a particular Managing Board portfolio that are
+considered to be extraordinarily important for the Com-
+pany or associated with an extraordinary economic risk
+require the prior consent of the full Managing Board. The
+same applies to activities and transactions for which the
+President and CEO or another member of the Managing
+Board demands a prior decision by the Managing Board.
+The President and CEO is responsible for the coordina-
+tion of all Managing Board portfolios. Further details
+are available in the Bylaws for the Managing Board
+on the Siemens Global Website at ☐ wWW.SIEMENS.COM/
+BYLAWS-MANAGINGBOARD.
+The Managing Board and the Supervisory Board cooper-
+ate closely for the benefit of the Company. The Managing
+Board informs the Supervisory Board regularly, compre-
+hensively and without delay on all issues of importance
+to the entire Company with regard to strategy, planning,
+business development, financial position, results of oper-
+ations, compliance and entrepreneurial risks. At regular
+intervals, the Managing Board also discusses the status
+of strategy implementation with the Supervisory Board.
+SUSTAINABILITYINFORMATION.
+1/1
+100
+100
+13
+Tobias Bäumler
+Michael Diekmann
+Andrea Fehrmann (Dr. phil.)
+Bettina Haller
+100
+5/5
+100
+100
+22222
+100
+6/6
+100
+6/6
+100
+55
+4/4
+→ When selecting individuals for Managing Board po-
+sitions, the targets set by the Supervisory Board for
+the proportion of women on the Managing Board
+shall be taken into account. The Supervisory Board
+has established as a target that - until June 30,
+2022-25% of the Managing Board positions are to
+be held by women.
+→ As a group, the Managing Board shall have many
+years of experience in technology (including infor-
+mation technology and digitalization), research
+and development, procurement, manufacturing
+and sales, finance, law (including compliance) and
+human resources.
+→ As a group, the Managing Board shall have experi-
+ence in the business areas that are important for
+Siemens in particular, in the industry, energy,
+healthcare and infrastructure sectors.
+The goal is to ensure that, in the Supervisory Board, as
+a group, all the knowhow and experience is available
+that is considered essential in view of Siemens' activi-
+ties. This includes, for instance, knowledge and expe-
+rience in the areas of technology (including informa-
+tion technology and digitalization), procurement,
+manufacturing and sales, finance, law (including
+compliance) and human resources. In addition, the
+members of the Supervisory Board shall collectively
+have knowledge and experience in the business areas
+that are important for Siemens, in particular, in the
+areas of industry, energy, healthcare and infrastruc-
+ture. As a group, the members of the Supervisory
+Board are to be familiar with the sector in which the
+Company operates. In accordance with the German
+Stock Corporation Act, at least one member of the
+Supervisory Board must have knowledge and exper-
+tise in the area of accounting, and at least one addi-
+tional member of the Supervisory Board must have
+knowledge and expertise in the area of financial state-
+ments. These two Supervisory Board members shall
+be independent. At least one member of the Super-
+visory Board shall have specific knowledge and expe-
+rience in applying accounting principles and internal
+control processes. This member shall, in addition, be
+familiar with the auditing of financial statements and
+independent. In particular, the Supervisory Board
+shall also include members who have leadership expe-
+rience as senior executives or members of a super-
+visory board (or comparable body) at a major com-
+pany with international operations.
+Internationality
+Taking the Company's international orientation into
+account, care shall be taken to ensure that the Super-
+visory Board has an adequate number of members
+with extensive international experience. The goal is to
+make sure that the present considerable share of Su-
+pervisory Board members with extensive international
+experience is maintained.
+With regard to the composition of the Supervisory
+Board, attention shall be paid to achieving sufficient
+diversity. Not only is appropriate consideration to be
+given to women. Diversity of cultural heritage and a
+wide range of educational and professional back-
+grounds, experiences and ways of thinking are also to
+be promoted. When considering possible candidates
+for new elections or for filling Supervisory Board posi-
+tions that have become vacant, the Supervisory Board
+shall give appropriate consideration to diversity at an
+early stage in the selection process.
+Diversity
+→It is considered helpful if different age groups are
+represented on the Managing Board. In accordance
+with the recommendation of the Code, the Super-
+visory Board has defined an age limit for the mem-
+bers of the Managing Board. In keeping with this
+limit, the members of the Managing Board are, as
+a rule, to be not older than 63 years of age.
+When a new member is to be appointed, a review shall
+be performed to determine which of the areas of ex-
+pertise deemed desirable for the Supervisory Board
+are to be strengthened.
+When making an appointment to a specific Manag-
+ing Board position, the decisive factor is always the
+Company's best interest, taking into consideration all
+circumstances in the individual case."
+7. Objectives regarding the
+Supervisory Board's composition
+as well as the profile of required
+skills and expertise and the
+diversity concept for the Super-
+visory Board
+In its current composition, the Managing Board fulfills all
+the requirements of the diversity concept. The Managing
+Board members have a broad range of knowledge, expe-
+rience and educational and professional backgrounds as
+well as international experience. The Managing Board has
+all the knowledge and experience that is considered es-
+sential in view of Siemens' activities. As a group, the Man-
+aging Board has experience in the business areas that are
+important for Siemens - in particular, in the industry, en-
+ergy, healthcare and infrastructure sectors - as well as
+many years of experience in technology (including infor-
+mation technology and digitalization), research and devel-
+opment, procurement, manufacturing and sales, finance,
+law (including compliance) and human resources.
+In fiscal 2021, the Managing Board had the following members:
+In the summer of 2020, the Supervisory Board appointed
+Judith Wiese and Matthias Rebellius to the Managing
+Board as of October 1, 2020, taking into account the diver-
+sity concept and the Company's best interest. In the
+course of fiscal 2021, Joe Kaeser and Klaus Helmrich left
+the Managing Board at the completion of their regular
+terms of office. The target for June 30, 2022, continues
+to apply. The appropriate consideration of women is a
+key component of long-term succession planning for the
+Managing Board. Different age groups are represented
+on the Managing Board. No Managing Board member is
+currently older than 63 years of age.
+Long-term succession planning
+for the Managing Board
+Jointly with the Managing Board and with the support of
+the Chairman's Committee, the Supervisory Board conducts
+long-term succession planning for the Managing Board. In
+its long-term succession planning, the Supervisory Board
+takes into account the target it has defined for the propor-
+tion of women on the Managing Board and the criteria set
+out in the diversity concept it has approved for the Manag-
+ing Board's composition as well as the requirements of the
+German Stock Corporation Act, the Code and the Bylaws for
+the Chairman's Committee. Considering the concrete qual-
+ification requirements and the above-mentioned criteria,
+the Chairman's Committee prepares an ideal profile, on the
+basis of which it compiles a shortlist of the available candi-
+dates. Structured interviews are then conducted with these
+candidates. After the interviews, a proposal is submitted to
+the Supervisory Board for approval. When developing the
+profile of requirements and selecting candidates, the Super-
+visory Board and the Chairman's Committee are supported,
+if necessary, by external consultants.
+10
+Corporate Governance Statement
+In September 2021, the Supervisory Board approved
+changes to the objectives for its composition including
+the profile of required skills and expertise and the diver-
+sity concept:
+"The composition of the Supervisory Board of
+Siemens AG shall be such that the Supervisory Board's
+ability to effectively monitor and advise the Managing
+Board is ensured. In this connection, mutually comple-
+mentary collaboration among members with a wide
+range of personal and professional backgrounds and
+diversity with regard to internationality, age and gen-
+der are considered helpful.
+In accordance with the German Stock Corporation
+Act, the Supervisory Board is composed of at least
+30% women and at least 30% men. The Nominating
+Committee shall continue to include at least one fe-
+male member.
+Profile of required skills and expertise
+The candidates proposed for election to the Super-
+visory Board shall have the knowledge, skills and ex-
+perience necessary to carry out the functions of a
+Supervisory Board member in a multinational com-
+pany oriented toward the capital markets and to safe-
+guard the reputation of Siemens in public. In particu-
+lar, care shall be taken with regard to the personality,
+integrity, commitment and professionalism of the in-
+dividuals proposed for election.
+Implementation of the diversity concept
+for the Managing Board in fiscal 2021
+The diversity concept for the Managing Board is imple-
+mented as part of the process for making appointments
+to the Managing Board. When selecting candidates and/
+or making proposals for the appointment of Managing
+Board members, the Supervisory Board and/or the Chair-
+man's Committee of the Supervisory Board take into ac-
+count the requirements defined in the diversity concept
+for the Managing Board.
+11
+13
+Independence
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
+The Articles of Association of Siemens AG, the Bylaws for
+the Supervisory Board, the bylaws for the most important
+Supervisory Board committees, the Bylaws for the Man-
+aging Board, our Declarations of Conformity with the
+Code and a variety of other corporate-governance-related
+documents are posted on the Siemens Global Website at
+As part of our investor relations activities, we inform our
+investors comprehensively about developments within
+the Company. For communication purposes, Siemens
+makes extensive use of the Internet. We publish Quar-
+terly Statements, Half-year Financial and Annual Reports,
+earnings releases, ad hoc announcements, analyst pre-
+sentations, letters to shareholders and press releases as
+well as the financial calendar for the current year, which
+contains the publication dates of significant financial
+communications and the date of the Annual Sharehold-
+ers' Meeting, at ☐ WWW.SIEMENS.COM/INVESTORS. The Chair-
+man of the Supervisory Board regularly discusses Super-
+visory-Board-specific topics with investors.
+wirkungen der COVID-19-Pandemie, GesRua COVBekG)
+of March 27, 2020 (Federal Law Gazette | No. 14 2020,
+p. 570) whose application was extended until Decem-
+ber 31, 2021 by the Ordinance on the Extension of the
+Measures Under the Law of Companies, Cooperative
+Societies, Associations and Foundations to Combat the
+Effects of the COVID-19 Pandemic (Verordnung zur Ver-
+längerung von Maßnahmen im Gesellschafts-, Genossen-
+schafts-, Vereins- und Stiftungsrecht zur Bekämpfung
+der Auswirkungen der COVID-19-Pandemie, GesRGen-
+RCOVMVV) of October 20, 2020 (Federal Law Gazette |
+No. 48 2020, p. 2258), the ordinary Shareholders' Meet-
+ing on February 3, 2021, was conducted as a virtual
+shareholders' meeting without the physical presence of
+shareholders or their proxies due to the special circum-
+stances created by the COVID-19 pandemic.
+Shareholders exercise their rights at the Annual Share-
+holders' Meeting. An ordinary Annual Shareholders'
+Meeting normally takes place within the first five months
+of each fiscal year. The Annual Shareholders' Meeting de-
+cides, among other things, on the appropriation of net
+income, the ratification of the acts of the members of the
+Managing and Supervisory Boards, and the appointment
+of the independent auditors. Amendments to the Articles
+of Association and measures that change the Company's
+capital stock are approved at the Annual Shareholders'
+Meeting and implemented by the Managing Board. The
+Managing Board facilitates shareholder participation in
+this meeting through electronic communications - in
+particular, via the Internet - and enables shareholders
+who are unable to attend the meeting to vote by proxy.
+Proxies can also be reached during the Annual Sharehold-
+ers' Meeting. Furthermore, shareholders may exercise
+their right to vote in writing or by means of electronic
+communications (absentee voting). The Managing Board
+may enable shareholders to participate in the Annual
+Shareholders' Meeting without the need to be present at
+the venue and without a proxy and to exercise some or all
+of their rights fully or partially by means of electronic
+communications. The Company enables shareholders to
+follow the entire Annual Shareholders' Meeting via the
+Internet. Shareholders may submit motions regarding
+the proposals of the Managing and Supervisory Boards
+and may contest decisions of the Annual Shareholders'
+Meeting. Shareholders owning Siemens stock with an
+aggregate notional value of €100,000 or more may also
+demand the judicial appointment of special auditors to
+examine specific issues. The reports, documents and in-
+formation required by law for the Annual Shareholders'
+Meeting, including the Annual Report, can be down-
+loaded from the Siemens Global Website. The same ap-
+plies to the agenda for the Annual Shareholders' Meeting
+and to any counterproposals or shareholders' nomina-
+tions that may require disclosure. For the election of
+shareholder representatives on the Supervisory Board, a
+detailed curriculum vitae of every candidate is published.
+9. Annual Shareholders' Meeting Wohnungseigentumsrecht zur Bekämpfung der Aus-
+and investor relations
+In accordance with Section 1 para. 2 of the German Act
+Concerning Measures Under the Law of Companies,
+Cooperative Societies, Associations, Foundations and
+Commonhold Property to Combat the Effects of the
+COVID-19 Pandemic (Gesetz über Maßnahmen im Gesell-
+schafts-, Genossenschafts-, Vereins-, Stiftungs- und
+DIRECTORS-DEALINGS.
+exceeds €20,000. All transactions reported to Siemens AG
+in fiscal 2021 have been duly published and are available
+on the Siemens Global Website at WWW.SIEMENS.COM/
+Corporate Governance Statement
+12
+Corporate Governance Statement
+Pursuant to Article 19 of EU Regulation No. 596/2014 of
+the European Parliament and Council of April 16, 2014,
+on market abuse (Market Abuse Regulation), members
+of the Managing Board and the Supervisory Board are
+legally required to disclose all transactions conducted on
+their own account relating to the shares or debt instru-
+ments of Siemens AG or to the derivatives or financial
+instruments linked thereto if the total value of such
+transactions entered into by a board member or any
+closely associated person in any calendar year reaches or
+10. Members of the Managing Board and
+positions held by Managing Board members
+In the estimation of the shareholder representatives, the
+Supervisory Board now has at least nine independent
+shareholder representatives – namely, Dr. Werner Brandt,
+Benoît Potier, Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer,
+Kasper Rørsted, Baroness Nemat Shafik, Dr. Nathalie von
+Siemens, Jim Hagemann Snabe, Grazia Vittadini and
+Matthias Zachert - and thus an appropriate number of
+members who are independent in the meaning of the
+Code. The regulations establishing limits on age and re-
+stricting membership in the Supervisory Board to three
+full terms of office are complied with.
+The Supervisory Board is of the opinion that, with its cur-
+rent composition, it meets the objectives for its composi-
+tion and fulfills the profile of required skills and expertise
+as well as the diversity concept. The Supervisory Board
+members have the specialist and personal qualifications
+considered necessary. As a group, they are familiar with
+the sector in which the Company operates and have the
+knowledge, skills and experience essential for Siemens.
+A considerable number of Supervisory Board members
+are engaged in international activities and/or have many
+years of international experience. Appropriate consider-
+ation has been given to diversity in the Supervisory Board.
+In fiscal 2021, the Supervisory Board had seven female
+members, of whom three are shareholder representatives
+and four are employee representatives. As a result, 35% of
+the Supervisory Board members are women. Dr. Nathalie
+von Siemens is a member of the Nominating Committee.
+Name
+Meeting in 2021. As an additional criterion, the Super-
+visory Board takes into account expertise in the area of
+sustainability.
+Implementation of the objectives
+regarding the Supervisory Board's
+composition as well as the profile of
+required skills and expertise and the
+diversity concept for the Supervisory
+Board in fiscal 2021; independent
+members of the Supervisory Board
+Within the framework of the selection process and the
+nomination of candidates for the Supervisory Board, the
+Supervisory Board as well as the Nominating Committee
+of the Supervisory Board take into account the objectives
+regarding the Supervisory Board's composition and the
+requirements defined in its diversity concept. The Super-
+visory Board and the Nominating Committee have re-
+cently taken the objectives - including the profile of re-
+quired skills and expertise and the diversity concept - into
+consideration in the nominations of three shareholder
+representatives to be elected by the Annual Shareholders'
+In compliance with the age limit stipulated by the
+Supervisory Board in its Bylaws, only individuals who
+are no older than 70 years of age shall, as a rule, be
+nominated for election to the Supervisory Board.
+Nominations shall take into account the regular limit
+established by the Supervisory Board, which restricts
+membership on the Supervisory Board to a maximum
+of three full terms of office. It is considered helpful if
+different age groups are represented on the Super-
+visory Board."
+Limits on age and on length of
+membership
+The Supervisory Board members shall have sufficient
+time to exercise their mandates with the necessary
+regularity and diligence.
+No more than two former members of the Managing
+Board of Siemens AG shall belong to the Supervisory
+Board.
+The Supervisory Board shall include what the share-
+holder representatives on the Supervisory Board con-
+sider to be an appropriate number of independent
+shareholder representatives. More than half of the
+shareholder representatives shall be independent of
+the Company and its Managing Board. Substantial -
+and not merely temporary - conflicts of interest are to
+be avoided.
+8. Share transactions by
+members of the Managing and
+Supervisory Boards
+Roland Busch
+(Dr. rer. nat.)
+Occupation
+Chief Executive Officer
+(since February 3, 2021)
+(since February 3, 2021)
+Tobias Bäumler²
+(since October 16, 2020)
+Michael Diekmann
+Chairman of the Supervisory Board
+of RWE AG and of ProSiebenSat.1 Media SE
+Deputy Chairman of the
+Second Deputy Chairman
+Central Works Council and of the
+Chairman of the Supervisory Board
+of Allianz SE
+March 26,
+1960
+January 24,
+2008
+2023
+January 3,
+1954
+January 31,
+2018
+2023
+Combine Works Council of Siemens AG
+October 10,
+1979
+Werner Brandt
+(Dr. rer. pol.)
+First Deputy Chairwoman
+→ European School of Management
+and Technology GmbH, Berlin
+14
+11. Members of the Supervisory Board and
+positions held by Supervisory Board members
+In fiscal 2021, the Supervisory Board had the following members:
+Name
+Jim Hagemann Snabe Chairman of the Supervisory Board
+→ Taking the Company's international orientation
+into account, the composition of the Managing
+Board shall reflect internationality with respect to
+different cultural backgrounds and international
+experience (such as extensive professional experi-
+ence in foreign countries and responsibility for
+business activities in foreign countries in areas that
+are relevant for Siemens).
+Chairwoman of the Central Works
+Council of Siemens AG
+Date of birth
+Term
+expires¹
+Chairman
+of Siemens AG and of the Board of
+Directors of A. P. Møller-Mærsk A/S
+October 27,
+1965
+October 1,
+2013
+2025
+Birgit Steinborn²
+Member since
+September 30, German positions:
+2023
+→ Allianz SE, Munich (Deputy Chairman)³
+Positions outside Germany:
+December 23,
+1954
+(Dr. phil.)
+(until February 3, 2021)
+as of February 3, 2021
+Benoît Potier
+Chief Executive Officer (CEO) - President
+and Chairwoman of the Group Management
+of TRUMPF GmbH + Co. KG
+March 16,
+1960
+January 24,
+2008
+Leibinger-Kammüller
+2023
+January 25,
+2023
+2012
+December 15,
+1959
+January 24,
+2008
+2021
+Corporate Governance Statement
+January 22,
+1969
+2023
+Nicola
+Siemens Europe Committee
+January 24,
+2008
+2023
+Andrea Fehrmann²
+(Dr. phil.)
+Trade Union Secretary,
+IG Metall Regional Office for Bavaria
+June 21,
+1970
+January 31,
+2018
+Chief Treasurer and Executive Member
+of the Managing Board of IG Metall
+2023
+Chairwoman of the Combine
+Works Council of Siemens AG
+March 14,
+1959
+April 1,
+2007
+2023
+Harald Kern²
+Jürgen Kerner²
+Chairman of the
+Bettina Haller²
+1 Publicly listed.
+October 1,
+2020
+January 30,
+1971
+May 1,
+2006
+At the end
+(President and Chief
+Executive Officer, member
+of the Managing Board
+until February 3, 2021)
+as of February 3, 2021
+June 23,
+1957
+of the 2021
+Annual
+Shareholders'
+Meeting
+March 7,
+1973
+April 1,
+2017
+May 31,
+2025
+Matthias Rebellius
+January 2,
+1965
+October 1,
+2020
+Ralf P. Thomas
+(Prof. Dr. rer. pol.)
+Cedrik Neike
+September 30,
+2025
+Joe Kaeser
+(until March 31, 2021)
+Date of birth
+November 22,
+1964
+First appointed Term expires
+April 1,
+2011
+March 31,
+2025
+Corporate Governance Statement
+Memberships in supervisory boards whose establishment is required by law
+or in comparable domestic or foreign controlling bodies of business enterprises
+External positions
+as of March 31, 2021
+(as of September 30, 2021)
+German positions:
+→ Siemens Healthineers AG, Munich'
+→ Siemens Mobility GmbH, Munich
+(Chairman)
+Klaus Helmrich
+May 24,
+1958
+April 1,
+2011
+March 31,
+2021
+Group company positions
+(as of September 30, 2021)
+March 7,
+1961
+September 18,
+2013
+September 17,
+2023
+Positions outside Germany:
+→ Siemens Aktiengesellschaft Österreich,
+Austria (Chairman)
+→ Siemens France Holding S.A., France
+Positions outside Germany:
+→ Arabia Electric Ltd., Saudi Arabia
+(Deputy Chairman)
+→ Siemens Ltd., Australia
+→Siemens Ltd., India'
+→ Siemens Ltd., India¹
+→ Siemens Ltd., Saudi Arabia
+→ Siemens Schweiz AG, Switzerland
+(Chairman)
+→ Siemens W.L.L., Qatar
+German positions:
+→ Siemens Healthcare GmbH,
+Munich (Chairman)
+→ Siemens Healthineers AG,
+Munich (Chairman)'
+Positions outside Germany:
+→ Siemens Proprietary Ltd.,
+South Africa (Chairman)
+Judith Wiese
+(Deputy Chairman)
+Positions outside Germany:
+→ Siemens Energy Management GmbH,
+Munich
+→ Siemens Energy AG, Munich'
+German positions:
+→EOS Holding AG, Krailling
+German positions:
+→Daimler AG, Stuttgart'
+→Mercedes-Benz AG, Stuttgart
+→ Siemens Energy AG,
+Munich (Chairman)1
+→ Siemens Energy Management GmbH,
+Munich (Chairman)
+Positions outside Germany:
+→ NXP Semiconductors N.V.,
+Netherlands'
+German positions:
+→ Evonik Industries AG, Essen¹
+Positions outside Germany:
+→ Atos SE, France¹
+German positions:
+→ Siemens Energy AG, Munich'
+→ Siemens Energy Management GmbH,
+Munich
+German positions:
+President and
+Corporate Governance Statement
+October 16,
+2020
+→ In addition to the expertise and management and
+leadership experience required for their specific
+tasks, the Managing Board members shall have the
+broadest possible range of knowledge and experi-
+ence and the widest possible educational and pro-
+fessional backgrounds.
+→ Siemens Energy AG, Munich³
+Premium Aerotec GmbH, Augsburg
+(Deputy Chairman)
+(Deputy Chairman)
+→ MAN Truck & Bus SE, Munich
+German positions:
+→ Siemens Mobility GmbH, Munich
+(Deputy Chairwoman)
+German positions:
+→ Siemens Energy Management GmbH,
+Munich
+→ Siemens Energy AG, Munich³
+German positions:
+Bad Homburg (Deputy Chairman)³
+→Fresenius SE & Co. KGaA,
+Bad Homburg
+→ Fresenius Management SE,
+→ Allianz SE, Munich (Chairman)³
+German positions:
+→ RWE AG, Essen (Chairman)³
+→ ProSiebenSat.1 Media SE, Munich
+(Chairman)³
+German positions:
+C3.ai, Inc., USA³
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2021)
+→ Siemens Energy Management GmbH,
+Munich
+→ A.P. Møller-Mærsk A/S, Denmark
+(Chairman)³
+→ Thyssenkrupp AG, Essen
+→ Traton SE, Munich³
+9
+15
+5 Shareholders' Committee.
+4 Group company position.
+3 Publicly listed.
+→ The Hydrogen Company S.A., France4
+Inc., USA4
+→ American Air Liquide Holdings,
+→ Air Liquide International Corporation
+(ALIC), USA (Chairman)4
+→ Air Liquide International S.A., France
+(Chairman and Chief Executive
+Officer) 3,4
+Positions outside Germany:
+2 Employee representative.
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+2018
+2023
+January 31,
+September 3,
+1957
+of Air Liquide S.A
+Chairman and Chief Executive Officer
+→ TRUMPF Schweiz AG, Switzerland
+Positions outside Germany:
+(Deputy Chairman)³
+Corporate Governance Statement
+German positions:
+Further details regarding the operation and composition
+of the Managing Board and its committees are provided
+in the Bylaws for the Managing Board, which are publicly
+available on the Siemens Global Website at www.
+As of September 30, 2021, the Mediation Committee
+comprised Jim Hagemann Snabe (Chairman), Dr. Werner
+Brandt, Jürgen Kerner and Birgit Steinborn.
+Based on the Company's overall strategy, the Innovation
+and Finance Committee discusses, in particular, the
+Company's innovation focuses and prepares the Super-
+visory Board's discussions and resolutions regarding ques-
+tions relating to the Company's financial situation and
+structure - including annual planning (budget) – as well
+as the Company's fixed asset investments and its finan-
+cial measures. In addition, the Innovation and Finance
+Committee has been authorized by the Supervisory
+Board to decide on the approval of transactions and mea-
+sures that require Supervisory Board approval and have a
+value of between €300 million and €600 million.
+As of September 30, 2021, the Innovation and Finance
+Committee comprised Jim Hagemann Snabe (Chair-
+man), Tobias Bäumler, Harald Kern, Jürgen Kerner,
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer, Kasper Rørsted,
+Birgit Steinborn and Grazia Vittadini.
+8
+Corporate Governance Statement
+Further details regarding the operation and composition
+of the Supervisory Board and its committees are pro-
+vided in the Bylaws for the Supervisory Board and the
+bylaws for its committees, which are publicly available
+on the Siemens Global Website at ☐ www.SIEMENS.COM/
+CORPORATE-GOVERNANCE.
+SUPERVISORY BOARD SELF-ASSESSMENT
+The Supervisory Board and its committees regularly con-
+duct reviews - either internally or with the involvement
+of external consultants - in order to determine how effi-
+ciently they perform their duties. In fiscal 2021, the Super-
+visory Board conducted an internal self-assessment at its
+meeting on September 23, 2021. The results of this as-
+sessment confirm that cooperation within the Super-
+visory Board and with the Managing Board is professional,
+5. Targets for the quota of
+women on the Managing Board
+and at the two management
+levels below the Managing
+Board; Information on Managing
+Board and Supervisory Board
+compliance with minimum gen-
+der quota requirements
+At Siemens AG, the Supervisory Board has set a target for
+the proportion of women on the Managing Board at a
+minimum of 25% until June 30, 2022. Pursuant to the Ger-
+man Stock Corporation Act in the version of the Second
+Management Positions Act (Zweites Führungspositionen-
+Gesetz, FÜPOG II), the Managing Board must include at
+least one woman and at least one man (minimum partic-
+ipation requirement). In fiscal 2021, Siemens AG already
+complied with this requirement.
+When filling managerial positions at the Company, the
+Managing Board takes diversity into account and, in par-
+ticular, aims for an appropriate consideration of women
+and internationality. In 2017, the Managing Board set the
+target for the percentage of women at each of the two
+management levels below the Managing Board at 20%,
+applicable in each case until June 30, 2022.
+The composition of the Supervisory Board fulfilled the
+legal requirements regarding the minimum gender quota
+in the reporting period.
+Statutory provisions on the equal participation of men
+and women in management positions that may be appli-
+cable to Group Companies other than Siemens AG re-
+main unaffected.
+6. Diversity concept for the
+Managing Board and long-term
+succession planning
+In September 2018, the Supervisory Board approved the
+following diversity concept for the composition of the
+Managing Board:
+"The goal is to achieve a composition that is as diverse
+as possible and comprises individuals who comple-
+ment one another in a Managing Board that provides
+strong leadership as well as to ensure that, as a group,
+the members of the Managing Board have all the
+knowhow and skills that are considered essential in
+view of Siemens' activities.
+When selecting members of the Managing Board, the
+Supervisory Board pays close attention to candidates'
+personal suitability, integrity, convincing leadership
+qualities, international experience, expertise in their
+prospective areas of responsibility, achievements to
+date and knowledge of the Company as well as their
+ability to adjust business models and processes in a
+changing world. Diversity with respect to such charac-
+teristics as age and gender as well as professional and
+educational background is an important selection cri-
+terion for appointments to Managing Board positions.
+When selecting members of the Managing Board, the
+Supervisory Board also gives special consideration to
+the following factors:
+Managing Board and of Top Management and relating to
+share-based compensation components and employee
+share plans. The Equity and Compensation Committee
+comprised the President and CEO, the Managing Board
+member with responsibility for the People & Organization
+portfolio, the Managing Board member with responsibil-
+ity for the Controlling and Finance portfolio and - as of
+October 1, 2020 - the Deputy CEO. As of September 30,
+2021, its members were Dr. Roland Busch (Chairman),
+Prof. Dr. Ralf P. Thomas and Judith Wiese.
+The Mediation Committee submits proposals to the
+Supervisory Board in the event that the Supervisory
+Board cannot reach the two-thirds majority required for
+the appointment or dismissal of a Managing Board mem-
+ber on the first ballot.
+As of September 30, 2021, the Nominating Committee
+comprised Jim Hagemann Snabe (Chairman), Dr. Werner
+Brandt, Benoît Potier and Dr. Nathalie von Siemens.
+constructive and characterized by a high degree of trust
+and openness. The results also confirm that meetings are
+organized and conducted efficiently and that the partici-
+pants receive sufficient information. The review did not
+reveal a need for any fundamental changes. Individual
+suggestions for improvement are also discussed and im-
+plemented during the year.
+As of September 30, 2021, the Audit Committee com-
+prised Dr. Werner Brandt (Chairman), Tobias Bäumler,
+Bettina Haller, Jürgen Kerner, Jim Hagemann Snabe,
+Birgit Steinborn, Grazia Vittadini and Matthias Zachert.
+The members of the Audit Committee are, as a group,
+familiar with the sector in which the Company operates.
+Pursuant to the German Stock Corporation Act, the Audit
+Committee has had to include to date at least one Super-
+visory Board member with knowledge and experience in
+the areas of accounting or the auditing of financial state-
+ments. Pursuant to the German Stock Corporation Act in
+the version of the Financial Market Integrity Strengthen-
+ing Act (Finanzmarktintegritätsstärkungsgesetz, FISG),
+the Supervisory Board must - after the conclusion of a
+defined transition period - have at least one member
+with knowledge and expertise in the area of accounting,
+and at least one additional member with knowledge and
+expertise in the auditing of financial statements. In the
+person of Mr. Zachert, the Supervisory Board and the Au-
+dit Committee have at least one member with knowledge
+and expertise in the area of accounting and in the person
+of Dr. Brandt at least one additional member with knowl-
+edge and expertise in the auditing of financial statements.
+Pursuant to the Code, the chair of the Audit Committee
+shall have specialist knowledge and experience in the ap-
+plication of accounting principles and internal control
+processes, be familiar with the auditing of financial state-
+ments and be independent. The Chairman of the Audit
+Committee, Dr. Werner Brandt, fulfills these requirements.
+Supervisory Board
+SIEMENS.COM/BYLAWS-MANAGINGBOARD.
+The Nominating Committee is responsible for making rec-
+ommendations to the Supervisory Board on suitable can-
+didates for the election by the Annual Shareholders' Meet-
+ing of shareholder representatives on the Supervisory
+Board. In preparing these recommendations, the objec-
+tives defined by the Supervisory Board for its composition
+and the approved diversity concept - in particular, inde-
+pendence and diversity - are to be appropriately consid-
+ered, as are the proposed candidates' required knowledge,
+abilities and professional experience. Fulfillment of the
+required profile of skills and expertise is also to be aimed
+at. Attention shall be paid to an appropriate participation
+of women and men in accordance with the legal require-
+ments relating to the gender quota as well as to ensuring
+that the members of the Supervisory Board are, as a group,
+familiar with the sector in which the Company operates.
+The Supervisory Board of Siemens AG has 20 members.
+As stipulated by the German Codetermination Act, half of
+its members represent Company shareholders, and half
+represent Company employees. The shareholder repre-
+sentatives on the Supervisory Board are elected at the
+Annual Shareholders' Meeting by a simple majority vote.
+Elections to the Supervisory Board are conducted, as a
+rule, on an individual basis. The employee representatives
+on the Supervisory Board are elected in accordance with
+the provisions of the German Codetermination Act. Fur-
+ther information regarding the Supervisory Board mem-
+bers and their memberships, which are to be disclosed
+pursuant to Section 285 No. 10 of the German Commer-
+cial Code, are set out in Section 11 of this Corporate Gov-
+ernance Statement. The curricula vitae of the Supervisory
+Board members are publicly available on the Siemens
+Global Website at www.SIEMENS.COM/SUPERVISORY-BOARD
+and updated annually.
+The Supervisory Board oversees and advises the Manag-
+ing Board in its management of the Company's business.
+At regular intervals, the Supervisory Board discusses
+business development, planning, strategy and strategy
+implementation. It reviews the Annual Financial State-
+ments of Siemens AG, the Consolidated Financial State-
+ments of the Siemens Group, the Combined Manage-
+ment Report of Siemens AG and the Siemens Group, and
+the proposal for the appropriation of net income. It ap-
+proves the Annual Financial Statements of Siemens AG as
+well as the Consolidated Financial Statements of the
+Siemens Group, based on the results of the preliminary
+-
+review conducted by the Audit Committee and taking
+into account the reports of the independent auditors.
+The Supervisory Board approves the Managing Board's
+proposal for the appropriation of net income and the Re-
+port of the Supervisory Board to the Annual Sharehold-
+ers' Meeting. The Supervisory Board is jointly responsible
+with the Managing Board for the preparation of the Com-
+pensation Report. In addition, the Company's adherence
+to statutory provisions, official regulations and internal
+Company policies (compliance) are monitored by the
+Supervisory Board and/or the Audit Committee. The Super-
+visory Board also appoints the members of the Managing
+Board and determines each member's portfolios. The
+Supervisory Board approves - on the basis of a proposal
+by the Compensation Committee the compensation
+system for Managing Board members and defines their
+concrete compensation in accordance with this system.
+It sets the individual targets for the variable compensa-
+tion and the total compensation of each individual Man-
+aging Board member, reviews the appropriateness of to-
+tal compensation and regularly reviews the Managing
+Board compensation system. Effective October 1, 2019,
+the Supervisory Board adopted - on the basis of a pro-
+posal by the Compensation Committee - an adjusted
+compensation system, which was approved by the An-
+nual Shareholders' Meeting on February 5, 2020. Import-
+ant Managing Board decisions - such as those regarding
+major acquisitions, divestments, fixed asset investments
+or financial measures - require Supervisory Board ap-
+proval unless the Bylaws for the Supervisory Board spec-
+ify that such authority be delegated to the Innovation
+and Finance Committee of the Supervisory Board.
+6
+Corporate Governance Statement
+and new, groundbreaking technologies. The Company
+supports them in this regard. Internal informational
+events are offered when necessary to support targeted
+training measures.
+Details regarding the work of the Supervisory Board are
+provided in the Report of the Supervisory Board, which
+will be made publicly available for each previous fiscal
+year on the Siemens Global Website.
+Separate preparatory meetings of the shareholder repre-
+sentatives and of the employee representatives are held
+regularly in order to prepare the Supervisory Board meet-
+ings. The Supervisory Board also meets regularly without
+the Managing Board in attendance. Every Supervisory
+Board member must disclose conflicts of interest to the
+Supervisory Board. Information regarding conflicts of in-
+terest that may have arisen and their handling is provided
+in the Report of the Supervisory Board. Special informa-
+tional (onboarding) events are held in order to familiarize
+new Supervisory Board members with the Company's
+business model and the structures of the Siemens Group.
+The Supervisory Board members take part, on their own
+responsibility, in the educational and training measures
+necessary for the performance of their duties – measures
+relating, for example, to changes in the legal framework
+SUPERVISORY BOARD COMMITTEES
+In fiscal 2021, the Supervisory Board had six committees,
+whose duties, responsibilities and procedures fulfill the
+requirements of the German Stock Corporation Act and
+the Code. The chairmen of these committees provide the
+Supervisory Board with regular reports on their commit-
+tees' activities.
+The Chairman's Committee makes proposals, in particu-
+lar, regarding the appointment and dismissal of Manag-
+ing Board members and is responsible for concluding,
+amending, extending and terminating employment con-
+tracts with members of the Managing Board. When mak-
+ing recommendations for first-time appointments, it
+takes into account that the terms of these appointments
+shall not, as a rule, exceed three years, whereby it is to be
+determined in each individual case what period of ap-
+pointment is to be deemed appropriate within the legally
+permissible period. In preparing recommendations re-
+garding the appointment of Managing Board members,
+the Chairman's Committee takes into account the candi-
+dates' professional qualifications, international experi-
+ence and leadership qualities, the age limit specified for
+Managing Board members and the long-range plans for
+succession as well as diversity. It also takes into account
+the targets for the proportion of women on the Manag-
+ing Board that have been defined by the Supervisory
+Board and the diversity concept for the Managing Board
+that has been approved by the Supervisory Board. The
+Chairman's Committee concerns itself with questions re-
+garding the Company's corporate governance and pre-
+pares the resolutions to be approved by the Supervisory
+Board regarding the Declaration of Conformity with the
+Code - including the explanation of deviations from the
+Code and regarding corporate governance reporting
+and the Report of the Supervisory Board to the Annual
+Shareholders' Meeting. It is responsible for approving the
+Company's related party transactions. Furthermore, the
+Chairman's Committee submits recommendations to the
+Supervisory Board regarding the composition of the Super-
+visory Board committees and decides whether to approve
+contracts and business transactions with Managing
+Board members and parties related to them.
+As of September 30, 2021, the Chairman's Committee
+comprised Jim Hagemann Snabe (Chairman), Dr. Werner
+Brandt, Jürgen Kerner and Birgit Steinborn.
+The Compensation Committee prepares, in particular,
+the proposals for decisions by the Supervisory Board's
+plenary meetings regarding the system of Managing
+Board compensation, including the implementation of
+this system in Managing Board contracts, the definition
+of the targets for variable Managing Board compensa-
+tion, the determination and review of the appropriate-
+ness of the total compensation of individual Managing
+Board members and the annual Compensation Report.
+As of September 30, 2021, the Compensation Committee
+comprised Michael Diekmann (Chairman), Harald Kern,
+Jürgen Kerner, Jim Hagemann Snabe, Birgit Steinborn
+and Matthias Zachert.
+The Audit Committee oversees, in particular, the ac-
+counting and the accounting process and conducts a
+preliminary review of the Annual Financial Statements
+of Siemens AG, the Consolidated Financial Statements of
+the Siemens Group and the Combined Management
+Report of Siemens AG and the Siemens Group (including
+non-financial measures). On the basis of the indepen-
+dent auditors' report on their audit of the annual finan-
+cial statements, the Audit Committee makes, after its
+preliminary review, recommendations regarding Super-
+visory Board approval of the Annual Financial Statements
+of Siemens AG and the Consolidated Financial Statements
+of the Siemens Group. The Audit Committee discusses
+the Quarterly Statements and Half-year Financial Report
+with the Managing Board and the independent auditors
+and deals with the auditors' reports on the review of the
+Half-year Consolidated Financial Statements and Interim
+Group Management Report. It also monitors the Compa-
+ny's adherence to statutory provisions, official regula-
+tions and internal Company policies (compliance). The
+Chief Compliance Officer reports regularly to the Audit
+Committee. The Audit Committee concerns itself with the
+Company's risk monitoring system and oversees the ap-
+propriateness and effectiveness of its internal control, risk
+management and internal audit systems as well as the
+internal process for related party transactions. The Audit
+Committee receives regular reports from the internal au-
+dit department. It prepares the Supervisory Board's rec-
+ommendation to the Annual Shareholders' Meeting con-
+cerning the election of the independent auditors and
+submits the corresponding proposal to the Supervisory
+Board. Prior to submitting this proposal, the Audit Com-
+mittee obtains a statement from the prospective indepen-
+dent auditors affirming that their independence is not in
+question. It awards the audit contract to the independent
+auditors elected by the Annual Shareholders' Meeting and
+monitors the independent audit of the financial state-
+ments as well as the auditors' selection, independence,
+qualification, rotation and efficiency and the services ren-
+dered by the auditors. The Audit Committee assesses the
+quality of the audit of the financial statements on a regu-
+lar basis. Outside its meetings, the Supervisory Board is
+also in regular communication with the independent au-
+ditors via the Chairman of the Audit Committee.
+7
+Corporate Governance Statement
+2023
+2018
+Gunnar Zukunft²
+Deputy Chairman of the Central
+Works Council of Siemens Industry
+Software GmbH
+© 2021 by Siemens AG, Berlin and Munich
+January 31,
+2018
++49 89 636-1332474 (Investor Relations)
+investorrelations@siemens.com
+press@siemens.com
+January 31,
+June 21,
+1965
+November 8,
+1967
+→ Siemens Healthcare GmbH, Munich
+Chairman of the Board of
+Management of LANXESS AG³
+2021
+January 23,
+2013
+October 21,
+1946
+Member of the Supervisory Board
+2025
+February 3,
+2021
+September 23,
+1969
+German positions:
+2023
+October 1,
+2017
++49 89 636-33443 (Media Relations)
++49 89 636-32474 (Investor Relations)
++49 89 636-30085 (Media Relations)
+Matthias Zachert
+www.siemens.com
+5
+80333 Munich
+→ Siemens Industry Software GmbH,
+Cologne
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+2 Employee representative.
+3 Publicly listed.
+4 Group company position.
+August 3,
+1969
+Shareholders' Committee.
+16
+Notes and forward-
+looking statements
+SIEMENS
+Notes and forward-looking statements
+This document contains statements related to our future business and financial performance and future events or developments involving
+Siemens that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward
+to," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-
+looking statements in other reports, in prospectuses, in presentations, in material delivered to shareholders and in press releases. In
+addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current
+expectations and certain assumptions of Siemens' management, of which many are beyond Siemens' control. These are subject to a
+number of risks, uncertainties and factors, including, but not limited to, those described in disclosures, in particular in the chapter Report
+on expected developments and associated material opportunities and risks in the Annual Report. Should one or more of these risks or
+uncertainties materialize, events of force majeure, such as pandemics, occur or should underlying expectations including future events
+occur at a later date or not at all or assumptions prove incorrect, actual results, performance or achievements of Siemens may (negatively
+or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. Siemens neither
+intends, nor assumes any obligation, to update or revise these forward-looking statements in light of developments which differ from
+those anticipated.
+Germany
+-
+Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This document is an English language translation of the German document. In case of discrepancies, the German language document is
+the sole authoritative and universally valid version.
+For technical reasons, there may be differences between the accounting records appearing in this document and those published pursuant
+to legal requirements.
+The Sustainability Report 2021 which reports on Sustainability and Citizenship at Siemens is available at: siemens.com/investor/en/
+2
+Address
+Internet
+Phone
+Fax
+E-mail
+Siemens AG
+Werner-von-Siemens-Str. 1
+This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are
+or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in
+isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance
+with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe
+similarly titled alternative performance measures may calculate them differently.
+2023
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2021)
+September 13,
+1957
+(DBE, DPhil)
+2023
+January 31,
+2018
+August 13,
+1962
+Director of the London
+School of Economics
+2025
+February 3,
+2021
+February 24,
+1962
+Chief Executive Officer and
+Board Member of adidas AG3
+2023
+January 27,
+2015
+May 29,
+1956
+Nathalie
+Baroness
+Nemat Shafik
+Kasper Rørsted
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+2023
+January 30,
+2019
+April 26,
+1967
+Trade Union Secretary of the
+Managing Board of IG Metall
+Hagen Reimer2
+Term
+expires¹
+Member since
+Date of birth
+Occupation
+Name
+(since February 3, 2021)
+March 1,
+2014
+Member of supervisory boards
+July 14,
+1971
+Airbus Special Advisor
+Chairwoman of the Central Works
+Council of Siemens Healthcare GmbH
+of Spokespersons of the Siemens Group
+and Chairman of the Central Committee
+of Spokespersons of Siemens AG
+Chairman of the Committee
+until February 3, 2021)
+as of February 3, 2021
+(Second Deputy Chairman
+and member of the
+Supervisory Board
+Grazia Vittadini
+(since February 3, 2021)
+Werner Wenning
+Dorothea Simon²
+Michael Sigmund²
+→ EssilorLuxottica SA, France³
+Positions outside Germany:
+→ Siemens Healthcare GmbH, Munich
+→Siemens Healthineers AG, Munich³
+→ TÜV Süd AG, Munich
+von Siemens
+→ Messer Group GmbH, Sulzbach
+Member of the Board of Directors,
+Nestlé S.A., Switzerland³
+Positions outside Germany:
+→ Henkel AG & Co. KGaA, Düsseldorf 3,5
+→ Henkel Management AG, Düsseldorf
+→ Bayerische Motoren Werke Aktien-
+gesellschaft, Munich (Chairman)³
+German positions:
+→ Siemens Energy Management GmbH,
+Munich
+→ Siemens Energy AG, Munich³
+German positions:
+Corporate Governance Statement
+(Dr. phil.)
+2023
+January 27,
+2015
+German positions:
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+2023
+German positions:
+Other financial liabilities
+Other liabilities
+Total non-current liabilities
+Total liabilities
+Debt ratio
+1,723
+2,352
+(27)%
+679
+769
+(12)%
+1,925
+1,808
+6%
+50,381
+49,957
+1%
+90,333
+84,074
+Provisions
+7%
+>200%
+2,337
+6,209
+23%
+Liabilities associated with assets classified as held for disposal
+10
+35
+(71)%
+Total current liabilities
+39,952
+34,117
+17%
+Long-term debt
+40,879
+38,005
+8%
+Provisions for pensions and similar obligations
+2,839
+6,360
+(55)%
+Deferred tax liabilities
+664
+7,628
+65%
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+For further information about our debt see Note 16 in Notes to Consolidated Financial Statements for fiscal 2021. For further information
+about the functions and objectives of our financial risk management see Note 25 in Notes to Consolidated Financial Statements for fiscal
+2021.
+20
+Combined Management Report
+Off-balance-sheet commitments
+As of September 30, 2021, the undiscounted amount of maximum potential future payments related primarily to credit and performance
+guarantees amounted to €15.6 billion. This included primarily Siemens' obligations from performance and credit guarantees in connection
+with the Siemens Energy business, for which Siemens has reimbursement rights towards Siemens Energy.
+In addition to these commitments, there are contingent liabilities of €0.5 billion which mainly result from other guarantees, legal
+proceedings and from joint and several liabilities of consortia. Other guarantees include €0.2 billion in connection with the Siemens Energy
+business, for which Siemens has reimbursement rights towards Siemens Energy.
+Irrevocable loan commitments amounted to €3.9 billion. A considerable portion of these commitments resulted from asset-based lending
+transactions, meaning that the respective loans can be drawn only after the borrower has provided sufficient collateral.
+For further information about our commitments and contingencies see Note 21 in Notes to Consolidated Financial Statements for fiscal
+2021.
+Share buyback
+The share buyback announced in November 2018 was completed on September 24, 2021 with a total volume of €3 billion. On June 24,
+2021, Siemens announced that it intends to launch a new five-year share buyback program of up to €3 billion, beginning in fiscal 2022.
+6.2 Cash flows
+(in millions of €)
+Cash flows from operating activities
+Net income
+Change in operating net working capital
+Other reconciling items to cash flows from operating activities - continuing operations
+Cash flows from operating activities - continuing operations
+Cash flows from operating activities - discontinued operations
+Cash flows from operating activities - continuing and discontinued operations
+Cash flows from investing activities
+We have credit facilities totaling €7.5 billion which were unused as of September 30, 2021.
+68%
+As of September 30, 2021, we recorded, in total, €43.4 billion in notes and bonds, €2.3 billion in loans from banks, €0.1 billion in other
+financial indebtedness and €2.9 billion in lease liabilities. Notes and bonds were issued mainly in the U.S. dollar and euro, and to a lesser
+extent in the British pound.
+Our capital structure ratio as of September 30, 2021 increased to 1.5 from 1.3 a year earlier. The change was due primarily to the above-
+mentioned increase in long-term debt and decreased cash and cash equivalents related to the acquisition of Varian.
+Non-controlling interests
+Total liabilities and equity
+44,373
+36,390
+22%
+35%
+32%
+4,901
+3,433
+43%
+139,608
+123,897
+13%
+The increase in short-term debt and current maturities of long-term debt was due mainly to reclassifications of long-term U.S. dollar
+and euro instruments totaling €5.7 billion, and to higher loans from banks totaling €0.9 billion. This was offset by repayment of euro and
+U.S. dollar instruments totaling €3.5 billion, and by a €1.9 billion decrease in commercial papers.
+Increases in deferred tax liabilities and contract liabilities year-over-year were due mainly to the acquisition of Varian. For further
+information see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
+Long-term debt increased due primarily to the issuance of U.S. dollar instruments of €8.4 billion. Set against this were mainly decreases
+from the above-mentioned reclassifications and currency translation effects for bonds issued in the U.S. dollar and British pound.
+Provisions for pensions and similar obligations substantially decreased mainly due to a positive return on plan assets and extraordinary
+fundings in Germany, including the transfer of Siemens' stake in Bentley to Siemens Pension-Trust e.V.
+The decrease of provisions is due mainly to reclassification of a large part of a major asset retirement obligation to current provisions.
+The main factors for the increase in total equity attributable to shareholders of Siemens AG were €6.2 billion in net income attributable
+to shareholders of Siemens AG; positive other comprehensive income, net of income taxes, of €3.5 billion resulting mainly from positive
+effects from remeasurements of defined benefit plans and from currency translation; and higher retained earnings of €1.2 billion due to
+Siemens Healthineers' increase in share capital. The increase was partly offset by dividend payments of €2.8 billion (for fiscal 2020) and
+the repurchase of 976,346 treasury shares totaling €0.5 billion (including final payment to a commissional bank).
+The share capital increase of Siemens Healthineers mentioned above contributed also to higher non-controlling interests totaling €1.0
+billion. For further information see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
+Capital structure ratio
+Debt and credit facilities
+Additions to intangible assets and property, plant and equipment
+Other current liabilities
+2,281
+11,023
+127%
+4,838
+10,964
+45%
+20,449
+29,729
+(1)%
+52,968
+52,340
+(34)%
+338
+223
+38%
+1,271
+1,751
+18%
+1,523
+1,795
+10,250
+13%
+8%
+7,862
+The increase in other financial assets was driven mainly by increased equity investments as well as higher receivables from finance leases
+and higher loans receivable at SFS. The increase of the latter two was mainly due to new business and – in case of loans receivable - also
+to a reassessment of the expected repayment dates. Set against these factors was a decrease resulting mainly from contributions of assets
+to Siemens Pension-Trust e.V., including the stake in Bentley.
+In fiscal 2021, the acquisition of Varian was the major factor related to the increase of Siemens' assets, mainly goodwill, other intangible
+assets, inventories, property, plant and equipment, and trade and other receivables. The increase of the latter was driven also by
+higher business volume, primarily at Siemens Healthineers. Goodwill increased also due to the acquisition of Supplyframe. These increases
+were partly offset by the sale of Flender, among other factors. This applies mainly to inventories, trade and other receivables, and property,
+plant and equipment. For further information see Note 3 in Notes to Consolidated Financial Statements for fiscal 2021.
+Our total assets at the end of fiscal 2021 were influenced by positive currency translation effects of €2.3 billion (mainly goodwill), primarily
+involving the U.S. dollar.
+13%
+123,897
+139,608
+23%
+70,928
+87,267
+23%
+1,769
+2,183
+(4)%
+2,988
+2,865
+1%
+22,771
+22,964
+(4)%
+7,539
+(21)%
+7,795
+21%
+19%
+Trade payables
+8,832
+7,873
+12%
+Other current financial liabilities
+1,731
+1,958
+(12)%
+Contract liabilities
+9,858
+7,524
+31%
+Current provisions
+2,263
+1,674
+35%
+Current income tax liabilities
+1,809
+6,562
+8,836
+7,821
+% Change
+5,545
+| 6. Financial position
+(5)%
+8,382
+7,985
+10%
+14,074
+15,518
+(32)%
+14,041
+9,545
+% Change
+2020
+6.1 Capital structure
+Combined Management Report
+Sep 30,
+(in millions of €)
+2021
+2020
+Short-term debt and current maturities of long-term debt
+Acquisitions of businesses, net of cash acquired
+6,688
+2021
+24
+224
+Combined Management Report
+8. Report on expected developments and associated material
+opportunities and risks
+8.1 Report on expected developments
+8.1.1 Worldwide economy
+After the deepest recession and the fastest rebound in decades, in calendar 2020 and calendar 2021, respectively, the global economic
+recovery is expected to continue with slowing momentum in fiscal 2022. Global gross domestic product (GDP) is expected to expand by
+4.3% in calendar 2022. The outlook is still subject to a high level of uncertainty. The biggest source of concern remains COVID-19. New
+variants could emerge before widespread vaccination is reached globally, or they could escape existing immunity, while vaccine
+effectiveness might fade more quickly than expected.
+However, in our baseline forecast we assume the impact of the Delta variant will recede further, vaccination rates will continue to rise,
+especially in developing countries, and the global economy gradually will return to normal. The service sector will reopen further, and
+consumer spending for services will recover, which will contribute significantly to the global recovery. This is supported by consumers still
+having substantial pent-up savings which will continue to fuel consumer demand. In addition, companies in general have low levels of
+inventory and will seek to re-stock, adding to demand, even if consumer spending should slow. Also, many companies might want to have
+structurally higher inventory levels to improve supply chain resilience, as supply chains were often stressed during the pandemic. However,
+we expect supply shortages to continue in the first half of calendar 2022.
+Besides a potential re-emergence of the pandemic, further risks exist for fiscal 2022. Supply bottlenecks might last longer and restrain the
+recovery. While we expect price pressures to subside for the most part in fiscal 2022 in our baseline outlook, persistent supply bottlenecks
+or further energy price increases could fuel inflation and inflation expectations, and thus prompt a faster-than-anticipated monetary
+tightening. This could reverberate in financial markets and weigh on investment spending. Risks for financial markets could also emerge
+from other sources, e.g. an escalation of the U.S.-China trade and technology conflict, high corporate or government debt levels or China's
+property sector which could undergo a substantial correction after a period of over-investment.
+The necessary adjustments in the Chinese property sector, a high ratio of debt to GDP and worsening business conditions will limit China's
+GDP growth in calendar 2022 to 5.7%. The European Union economy is expected to expand by 4.0% in calendar 2022, still supported by
+catch-up effects and announced stimulus programs becoming effective. In the U.S., GDP is expected to expand by 4.3%, where government
+spending has a negative effect on GDP growth, as it is reduced from calendar 2021 on, implying a negative fiscal impulse. An important
+pre-requisite is preventing federal limits on borrowing (the debt ceiling) from disrupting government operations and spending programs.
+Global fixed investments are expected to expand by 4.4% in calendar 2022, after already growing by 6.4% in calendar 2021. Important
+customer industries for Siemens are participating in the global recovery (e.g. electronics, pharma, materials, chemicals). Yet persistent
+supply bottlenecks have the potential to significantly derail this recovery, such as in the automotive sector due to semiconductor shortages.
+The infrastructure sector (particularly public transport and electricity grids) will benefit from various green stimulus programs.
+Overall, the market environment for Siemens is expected to remain favorable in fiscal 2022, but with some deceleration compared to fiscal
+2021. Risks for the outlook are still substantial.
+The forecasts presented here for GDP and fixed investments are based on a report from IHS Markit dated October 15, 2021.
+8.1.2 Siemens Group
+We are basing our outlook for fiscal 2022 on the above-mentioned expectations and assumptions regarding the overall economic situation,
+including continuing healthy growth in global GDP albeit with slowing momentum, and also on the specific market conditions we expect
+for our respective industrial businesses, as described in chapter 3 Segment information. Furthermore, we assume that the challenges to
+our businesses from COVID-19 will ease during fiscal 2022. Although we also expect supply chain constraints to recede somewhat during
+fiscal 2022, we expect continued impacts from higher prices for raw materials and components and from wage increases, which we intend
+to mitigate by adjusting prices for our own products, solutions and services.
+We are exposed to currency translation effects, mainly involving the U.S. dollar, the British pound and currencies of emerging markets,
+particularly the Chinese yuan. While we expect volatility in global currency markets to continue in fiscal 2022, we have improved our
+natural hedge on a global basis through geographic distribution of our production facilities in the past. Nevertheless, Siemens is still a net
+exporter from the Eurozone to the rest of the world, so a weak euro is principally favorable for our business and a strong euro is principally
+unfavorable. In addition to the natural hedging strategy just mentioned, we also hedge currency risk in our export business using derivative
+financial instruments. We expect these steps to help us limit effects on income related to currency in fiscal 2022. Based on currency
+exchange rates as of the beginning of November 2021, we do not expect significant currency effects on nominal growth rates in volume
+and profit for our businesses in fiscal 2022.
+This outlook excludes burdens from legal and regulatory matters.
+Segments
+We expect our industrial businesses to continue their profitable growth.
+Digital Industries expects for fiscal 2022 to achieve comparable revenue growth of 5% to 8%. The profit margin is expected to be 19% to
+21%, including known headwinds of up to two percentage points associated with the strategic transition to software as a service (SaaS)
+in parts of its large software business.
+Smart Infrastructure expects for fiscal 2022 comparable revenue growth of 5% to 8%. The profit margin is expected to be 12% to 13%.
+Mobility expects for fiscal 2022 comparable revenue growth of 5% to 8%. The profit margin is expected to be 10.0% to 10.5%.
+We intend to continue providing an attractive shareholder return. The Siemens Managing Board, in agreement with the Supervisory Board,
+proposes a dividend of €4.00 per share, up from €3.50 per share a year earlier.
+25
+Free cash flow from continuing and discontinued operations for fiscal 2021 increased 29% year-over-year to €8.2 billion, reaching a new
+high.
+ROCE for fiscal 2021 rose to 13.1%, up from 7.8% in fiscal 2020. This increase was due to a combination of sharply higher net income and
+clearly lower average capital employed year-over-year. We thus exceeded our forecast for ROCE given in our Annual Report 2020, which
+was for ROCE to remain in the single-digit range in fiscal 2021.
+(142)
+8,237
+The Free cash flow for the Industrial Business amounted to €9,847 million, resulting in a cash conversion rate of 1.12. The cash conversion
+rate for the Siemens Group was 1.23.
+With our ability to generate positive operating cash flows from continuing and discontinued operations of €10.0 billion in fiscal 2021, our
+total liquidity (defined as cash and cash equivalents plus current interest-bearing debt securities) of €10.7 billion, our unused lines of
+credit, and our credit ratings at year-end, we believe that we have sufficient flexibility to fund our capital requirements. Also in our opinion,
+our operating net working capital is sufficient for our present requirements.
+Investing activities
+Additions to intangible assets and property, plant and equipment from continuing operations totaled €1.7 billion in fiscal 2021. Within
+the industrial businesses, ongoing investments related mainly to technological innovations; maintaining and extending our capacities for
+designing, manufacturing and marketing new solutions; improving productivity; and replacements of fixed assets. These investments
+amounted to €1.3 billion in fiscal 2021. The remaining portion related mainly to Siemens Real Estate, including significant amounts for
+projects such as new office buildings in Germany. Siemens Real Estate is responsible for uniform and comprehensive management of
+Company real estate worldwide (except for Siemens Healthineers) and supports the industrial businesses and corporate activities with
+customer-specific real estate solutions.
+With regard to capital expenditures for continuing operations, we expect a significant increase in fiscal 2022. In the coming years, up to
+€0.6 billion are to be invested in Siemensstadt Square. This project initiated in fiscal 2019 aims to transform Siemens' existing industrial
+area in Berlin into a modern urban district supporting a diverse range of purposes, including strengthening key technologies. Further
+investments are planned in relation to Siemens Campus Erlangen. In addition, we continue to invest in attractive innovation fields through
+Next47, our global venture capital unit.
+22
+7. Overall assessment of the economic position
+Combined Management Report
+Siemens successfully executed on its strategy as a focused technology company in fiscal 2021, following the spin-off and public listing of
+Siemens Energy in September 2020. All our industrial businesses are addressing highly attractive markets in industrial automation,
+infrastructure, transportation and healthcare. With our offerings we are taking advantage of growth trends such as digitalization and
+decarbonization, for example by helping our customers to combine the real and the digital worlds. With the financial framework that we
+presented in June 2021, we have set ambitious new targets: we aim to further accelerate our profitable growth while placing an even
+greater emphasis on free cash flow.
+In fiscal 2021, Siemens made further progress in sharpening its business focus by divesting activities such as the Flender business on one
+side, while on the other side strengthening our industrial businesses with a number of significant acquisitions. Important examples are: in
+the second quarter of fiscal 2021, the acquisition of C&S Electric, a provider of electrical and electronic equipment for infrastructure, power
+generation, transmission and distribution in India, to strengthen Smart Infrastructure's position in that country as a supplier of low-voltage
+power distribution and electrical installation technology; in the third quarter of fiscal 2021, the acquisition of Varian, a global leader in the
+field of cancer care, with solutions especially in radiation oncology and related digital solutions and applications, which provides a good
+complement to Siemens Healthineers' activities in medical imaging, laboratory diagnostics and interventional procedures; in the fourth
+quarter of fiscal 2021, the acquisition of Supplyframe, a marketplace for the global electronics value chain, with which Digital Industries
+intends to significantly strengthen digital marketing and accelerate sales of its offerings to small and medium-sized companies. At the
+beginning of the first quarter of fiscal 2022, Mobility closed the acquisition of Sqills, a provider of cloud-based inventory management,
+reservation, and ticketing software for public transport operators, which enhances Mobility's existing offerings for increasing the
+availability, capacity and utilization of public transportation.
+Following the deep recession during fiscal 2020, many of Siemens' key customer industries including automotive, machine building,
+pharmaceuticals, chemicals, electronics, and cloud services recovered or continued to grow during fiscal 2021. Although COVID-19 led to
+a significant drop in public transit ridership, recovery programs in many countries have been allocating significant funds to transport
+providers, resulting in strong order development. During the fiscal year, Siemens succeeded in maintaining its supply chains and delivery
+capacity and continued to be a reliable partner for its customers, despite more challenging supply condition. These developments were
+reflected in our strong financial performance for fiscal 2021. We raised our outlook during the fiscal year, most recently after the third
+quarter, and reached or exceeded all the targets set for our primary measures for fiscal 2021. We achieved revenue growth of 11.5% net
+of currency translation and portfolio effects and delivered net income of €6.7 billion. Return on capital employed (ROCE) was double-digit
+at 13.1% and our capital structure ratio came in at 1.5.
+Orders rose 23% year-over-year to €71.4 billion, for a book-to-bill ratio of 1.15, thus fulfilling our expectation of a ratio above 1. All our
+four industrial businesses increased orders year-over-year. Mobility achieved the highest growth rate due to a sharply higher volume from
+large orders, including its largest ever order in the Americas, worth €2.8 billion, for trainsets and associated services. Substantial order
+growth at Siemens Healthineers included new volume from the acquisition of Varian. Significant order growth at Digital Industries was
+driven mainly by its factory automation and motion control businesses, while orders at Smart Infrastructure increased clearly on growth
+in all its businesses, with the strongest contributions coming from the products business and the systems business.
+Revenue was also higher in all our industrial businesses, rising to €62.3 billion, a 13% increase year-over-year. The strongest increases
+came from Siemens Healthineers and Digital Industries, which both posted double-digit growth. Revenue growth at Siemens Healthineers
+included all businesses with the highest increases coming from the diagnostics and imaging businesses. Revenue development at Digital
+Industries also included increases in all its businesses led by factory automation and motion control. Revenue growth at Smart
+Infrastructure was driven by its products business and its systems business. Revenue at Mobility rose slightly, as parts of its businesses
+continued to be impacted by restrictions related to COVID-19. Excluding currency translation and portfolio effects, revenue for Siemens
+grew 11.5%. We thus exceeded our forecast given in our Annual Report 2020, which was to achieve moderate comparable revenue growth
+and we met our raised guidance given after the third quarter of fiscal 2021, which was to achieve comparable revenue growth of 11% to
+12%.
+Adjusted EBITA Industrial Business rose 17% to €8.8 billion on growth in all industrial businesses, led by Siemens Healthineers on strong
+earnings development in its diagnostics business driven by strong demand for rapid coronavirus antigen tests and by Smart Infrastructure
+on increases in all its businesses. Adjusted EBITA at Digital Industries rose moderately even though prior-year results benefited from a €0.8
+billion positive effect related mainly to a revaluation of the stake in Bentley. Adjusted EBITA at Mobility also rose moderately, driven by its
+rail infrastructure business.
+Adjusted EBITA margin Industrial Business rose to 15.0%, up from 14.3% a year earlier. With Adjusted EBITA margins of 11.6%, 15.8% and
+9.3%, respectively, Smart Infrastructure, Siemens Healthineers and Mobility improved their Adjusted EBITA margins year-over-year. The
+Adjusted EBITA margin of 20.4% at Digital Industries came in below the prior-year level of 21.7%, which included the above-mentioned
+substantial positive effect related to Bentley, which added 5.1 percentage points to Digital Industries' Adjusted EBITA margin.
+Siemens Financial Services sharply increased earnings before taxes due to lower expenses for credit risk provisions year-over-year, resulting
+in a return on equity after tax of 15.4%. In addition, results outside Industrial Business in fiscal 2021 benefited from a €0.3 billion
+revaluation gain and gains related to transfers of assets to Siemens Pension Trust e.V. in Germany were higher in the current period. A
+€0.4 billion loss related to Siemens Energy Investment was due mainly to Siemens Energy's execution of planned restructuring measures
+to improve its competitiveness and expenses from amortization of assets resulting from purchase price allocation. For comparison, results
+outside Industrial Business a year earlier included an impairment of €0.5 billion on our equity investment stake in Valeo Siemens
+eAutomotive GmbH.
+Net income in fiscal 2021 rose 59% to €6.7 billion, and basic EPS from net income increased 54% to €7.68. We thus exceeded the forecast
+given in our Annual Report 2020, which was for a moderate increase in net income, and also exceeded our raised forecast after the third
+quarter, which was for net income in the range of €6.1 billion to €6.4 billion. This improvement was due mainly to the aforementioned
+significantly higher Adjusted EBITA Industrial Business and the lower loss outside Industrial Business. In addition, discontinued operations,
+largely related to the sale of Flender, contributed income of €1.1 billion in fiscal 2021.
+23
+Combined Management Report
+We evaluate our capital structure using the ratio of Industrial net debt to EBITDA. Due primarily to an increase in net debt year-over-year,
+this ratio rose to 1.5, compared to 1.3 in fiscal 2020. We thus achieved our forecast given in our Annual Report 2020, which was for a ratio
+above 1.0 in fiscal 2021.
+8,379
+Combined Management Report
+Siemens Financial Services expects to further improve Earnings before taxes year-over-year. Return on equity (ROE) (after tax) is expected
+to reach the lower half of the new target range of 15% to 20%.
+8.2.1 Basic principles of risk management
+Our risk management policy stems from a philosophy of pursuing sustainable growth and creating economic value while managing
+appropriate risks and opportunities and avoiding inappropriate risks. As risk management is an integral part of how we plan and execute
+our business strategies, our risk management policy is set by the Managing Board. Our organizational and accountability structure requires
+each of the respective managements of our organizational units to implement risk management programs that are tailored to their specific
+industries and responsibilities, while being consistent with the overall policy.
+8.2.2 Enterprise risk management process
+We have implemented and coordinated a set of risk management and control systems which support us in the early recognition of
+developments that could jeopardize the continuity of our business. The most important of these systems include our enterprise-wide
+processes for strategic planning and management reporting. Strategic planning is intended to support us in considering potential risks and
+opportunities well in advance of major business decisions, while management reporting is intended to enable us to monitor such risks
+more closely as our business progresses. Our internal auditors regularly review the adequacy and effectiveness of our risk management.
+Accordingly, if deficits are detected, it is possible to adopt appropriate measures for their elimination. This coordination of processes and
+procedures is intended to help ensure that the Managing Board and the Supervisory Board are fully informed about significant risks in a
+timely manner.
+Risk management at Siemens builds on a comprehensive, interactive and management-oriented Enterprise Risk Management (ERM)
+approach that is integrated into the organization and that addresses both risks and opportunities. Our ERM approach is based on the
+globally accepted COSO Standard (Committee of Sponsoring Organizations of the Treadway Commission) Enterprise Risk Management –
+Integrating with Strategy and Performance (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018)
+and is adapted to Siemens requirements. The frameworks connect the ERM process with our financial reporting process and our internal
+control system. They consider a company's strategy, the efficiency and effectiveness of its business operations, the reliability of its financial
+reporting and compliance with relevant laws and regulations to be equally important.
+Our ERM process aims for early identification and evaluation of, and response regarding, risks and opportunities that could materially
+affect the achievement of our strategic, operational, financial and compliance objectives. The time horizon is typically three years, and we
+take a net risk approach, addressing risks and opportunities remaining after the execution of existing and effective measures and controls.
+If risks have already been considered in plans, budgets, forecasts or the consolidated financial statements (e.g. as a provision or risk
+contingency), they are supposed to be incorporated with their financial impact in the entity's business objectives. As a consequence, only
+additional risks arising from the same subject (e.g. deviations from business objectives, different impact perspectives) should be
+considered. In order to provide a comprehensive view of our business activities, risks and opportunities are identified in a structured way
+combining elements of both top-down and bottom-up approaches. Reporting generally follows a quarterly cycle; we complement this
+periodic reporting with an ad-hoc reporting process that aims to escalate critical issues in a timely manner. Relevant risks and opportunities
+are evaluated in terms of impact and likelihood, considering different impact perspectives, including business objectives, reputation and
+regulatory requirements. The bottom-up identification and prioritization process is supplemented by workshops with the respective
+managements of our organizational units. The top-down element ensures that potential new risks and opportunities are discussed at
+different management levels and are included in the subsequent reporting process, if found to be relevant. Reported risks and
+opportunities are analyzed regarding potential cumulative effects and are aggregated within and for each of the organizational units
+mentioned above.
+Responsibilities are assigned for all relevant risks and opportunities, with the hierarchical level of responsibility depending on the
+significance of the respective risk or opportunity. In a first step, assuming responsibility for a specific risk or opportunity involves choosing
+one of our general response strategies. Our general response strategies with respect to risks are avoidance, transfer, reduction or
+acceptance of the relevant risk. Our general response strategy with respect to opportunities is to "seize" the relevant opportunity. In a
+second step, responsibility for a risk or opportunity also involves the development, initiation and monitoring of appropriate response
+measures corresponding to the chosen response strategy. These response measures have to be specifically tailored to allow for effective
+risk management. Accordingly, we have developed a variety of response measures with different characteristics. For example, we mitigate
+the risk of fluctuations in currency and interest rates by engaging in hedging activities. Regarding our projects, systematic and
+comprehensive project management with standardized project milestones, including provisional acceptances during project execution
+and complemented by clearly defined approval processes, assists us in identifying and responding to project risks at an early stage, even
+before the bidding phase. Furthermore, we maintain appropriate insurance levels for potential cases of damage and liability risks in order
+to reduce our exposure to such risks and to avoid or minimize potential losses. Among others, we address the risk of fluctuation in
+economic activity and customer demand by closely monitoring macroeconomic conditions and developments in relevant industries, and
+by adjusting capacity and implementing cost-reduction measures in a timely and consistent manner if they are deemed necessary.
+Worldwide there are risks from the transmission of infectious agents from animals to humans, from humans to humans and in other ways.
+Epidemic, pandemic or other infectious developments such as bioterrorism to cause high disease rates in countries, regions or continents.
+We constantly check information from the World Health Organization (WHO), the - Centers for Disease Control and Prevention in the U.S.
+and Europe, the Robert Koch Institute in Germany and other institutions in order to be able to identify early epidemic or pandemic risks
+and determine and initiate related mitigation actions as early as possible.
+8.2.3 Risk management organization and responsibilities
+To oversee the ERM process and to further drive the integration and harmonization of existing control activities to align with legal and
+operational requirements, the Managing Board established a Risk Management and Internal Control Organization, led by the Head of
+Assurance. In order to allow for a meaningful discussion of risk at the Siemens Group level, this organization aggregates individual risks
+and opportunities of similar cause-and-effect nature into broader risk and opportunity themes. This aggregation naturally results in a
+mixture of risks, including those with a primarily qualitative assessment and those with a primarily quantitative risk assessment.
+Accordingly, we do not adopt a purely quantitative assessment of risk and opportunity themes. Thematic risk and opportunity assessments
+27
+Combined Management Report
+as well as our risk-bearing capacity then form the basis for the evaluation of the company-wide risk and opportunity situation during the
+quarterly board meetings. The Head of Assurance assists the Managing Board with the operation and oversight of the risk and internal
+control system and reporting to the Audit Committee of the Supervisory Board.
+8.3 Risks
+Below we describe the risks that could have a material adverse effect on our business situation, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and reputation. The order in which the risks are presented in each of the four
+categories reflects the currently estimated relative exposure for Siemens associated with these risks and thus provides an indication of the
+risks' current importance to us. Additional risks not known to us or that we currently consider immaterial may also negatively impact our
+business objectives and operations. Unless otherwise stated, the risks described below relate to all our organizational units.
+8.3.1 Strategic risks
+Economic, political and geopolitical conditions: We see significant uncertainties regarding the global economic outlook. In particular, a
+renewed intensity of the COVID-19 pandemic could stall the recovery achieved to date, and even lead to a new recession, for example if
+current vaccines are less effective with new variants, leading to the return of contact restrictions or lockdowns. There is also great
+uncertainty about the long-term consequences of the pandemic for important Siemens customer industries, such as aerospace and non-
+residential construction. Moreover, during the COVID-19 pandemic significant macroeconomic challenges have not been defused and in
+some cases, they have intensified. A renewed escalation of the trade conflict between the U.S. and China and an intensified de-coupling
+would significantly worsen global growth prospects. Adverse effects on confidence and investment activity would severely hit Siemens'
+business. Increasing trade barriers, protectionism, sanctions and in particular technical regulations would negatively impact production
+costs and productivity along our many value chains, as well as significantly impede or even hinder access to sales markets. A significant
+risk to our sales potential and cost structure is coming from mounting supply chain bottlenecks, due to growing lack of availability of
+intermediate goods, in particular electronic components. Bottlenecks in energy supply on the one hand and in access to raw materials on
+the other would substantially reduce industrial production potential. The escalating possibility of major defaults in the Chinese property
+sector, with potential spillover effects into the entire real estate market and financial markets, would significantly impact growth prospects
+of one of our core geographic markets and might have reverberations even on the global financial system and the world economy. A
+substantial increase in inflation rates could lead to serious distortions in global currency, capital, and foreign exchange markets, if central
+banks initiate the tightening cycle too fast and too aggressively. Highly indebted (emerging and industrialized) countries could suffer from
+increasing financing costs and a loss of investor confidence. Additional threats to the outlook could arise as well, ranging from market
+pressure to intensify austerity measures to declining confidence in individual currency markets. Additionally, a strong increase of raw
+material and intermediate goods prices would negatively impact Siemens's cost structure. Other significant risks could arise from
+geopolitical tensions (particularly in the Near and Middle East, Hong Kong and Taiwan), the European Union's relations with Russia, the
+economic vulnerability of several emerging markets (including Argentina, Turkey, Venezuela) and political upheavals. We are dependent
+on the economic development of certain industries; a continuation or even an intensification of the cyclical and structural headwinds in
+core customer industries, e.g., automotive or construction, would have adverse impact on our business prospects. Further business risk
+would result from an abrupt weakening of Chinese economic growth. A terrorist mega-attack or a significant cybercrime incident, or a
+series of such attacks or incidents in major economies, could depress economic activity globally and undermine consumer and business
+confidence. Additionally, the highly interconnected global economy remains vulnerable to natural disasters or further pandemics.
+In general, due to long-cycle businesses in our organizational units and the importance of long-term contracts for Siemens, there is usually
+a time lag between changes in macroeconomic conditions and their impact on our financial results. In contrast, short-cycle business
+activities react quickly to volatility in market demand. If the moderate growth of certain markets stalls again and if we are not successful
+in adapting our production and cost structure to subsequent changes in conditions in the markets in which we operate, there can be no
+assurance that we will not experience adverse effects. For example, our customers may modify, delay or cancel plans to purchase our
+products, solutions and services, or fail to follow through on purchases or contracts already executed. Furthermore, the prices for our
+products, solutions and services may decline to a greater extent than we currently anticipate. In addition, it may become more difficult for
+our customers to obtain financing. Contracted payment terms, especially regarding the level of advance payments by our customers
+relating to long-term projects, may become less favorable, which could negatively impact our financial condition. Siemens' global setup
+with operations in almost all relevant economies, our wide range of offerings with varied exposures to business cycles, and our balanced
+mix of business models (e.g. equipment, components, systems, software, services and solutions) help us to absorb impacts from adverse
+developments in any single market.
+Disruptive technologies: The markets in which our businesses operate experience rapid and significant changes due to the introduction
+of innovative and disruptive technologies. In the fields of digitalization (e.g. IoT, artificial intelligence, cloud computing, Industry 4.0),
+there are risks associated with new competitors, substitutions of existing products/solutions/services, new business models (e.g. in terms
+of pricing, financing, extended scopes for project business or subscription models in the software business) and finally the risk that our
+competitors may have more advanced time-to-market strategies and introduce their disruptive products and solutions faster than Siemens.
+Our operating results depend to a significant extent on our technological leadership, our ability to anticipate and adapt to changes in our
+markets and to optimize our cost base accordingly. Introducing new products and technologies requires a significant commitment to
+research and development, which in return requires expenditure of considerable financial resources that may not always result in success.
+Our results of operations may suffer if we invest in technologies that do not operate or may not be integrated as expected, or that are not
+accepted in the marketplace as anticipated, or if our products, solutions or systems are not introduced to the market in a timely manner,
+particularly compared to our competitors, or even become obsolete. We constantly apply for new patents and actively manage our
+intellectual property portfolio to secure our technological position. However, our patents and other intellectual property may not prevent
+competitors from independently developing or selling products and services that are similar to ours.
+Competitive environment: The worldwide markets for our products, solutions and services are highly competitive in terms of pricing,
+product and service quality, product development and introduction time, customer service, financing terms and shifts in market demands.
+We face strong, established competitors as well as rising competitors from emerging markets and new industries, which may have a better
+cost structure. Some industries in which we operate are undergoing consolidation, which may result in stronger competition, a change in
+our relative market position, an increase in inventory of finished or work-in-progress goods, or unexpected price erosion. Furthermore,
+28
+Combined Management Report
+Siemens Healthineers expects to achieve comparable revenue growth in the range of 0% to 2% in fiscal 2022. The profit margin, which
+was 15.8% in fiscal 2021, is expected to continue to improve.
+8.2 Risk management
+Overall, the actual development for Siemens and its segments may vary, positively or negatively, from our outlook due to the risks and
+opportunities described below or if our expectations and assumptions do not materialize.
+Revenue growth
+For comparable revenue, net of currency translation and portfolio effects, we expect the Siemens Group to achieve mid-single-digit
+growth. Furthermore, we anticipate that orders in fiscal 2022 will exceed revenue for a book-to-bill ratio above 1.
+As of September 30, 2021, our order backlog totaled €85 billion, and we expect conversion from the backlog to strongly support revenue
+growth in fiscal 2022 with approximately €34 billion of past orders converted to current revenue. For expected conversion of order backlog
+to revenue for our respective segments, see chapter 3 Segment information.
+Profitability
+We assume that rigorous execution of our portfolio optimization strategy in fiscal 2022 will contribute similarly as in fiscal 2021, when we
+generated €1.5 billion in net income from the sale of our Flender business, divestment of our stakes in Bentley and ChargePoint, Inc., and
+revaluation of our stake in Thoughtworks. In October 2021, Siemens already recognized a €0.3 billion pretax gain (€0.2 billion after tax)
+related to its investment in Fluence Energy, LLC (Fluence).
+We expect our fully consolidated units within Portfolio Companies to reach profit margins above 5%, while results from the equity
+investment are expected to be volatile and negative.
+In addition, results for Siemens Energy Investment, which includes Siemens' share of Siemens Energy AG's profit after tax, amounting to
+a negative €0.2 billion in fiscal 2021, is expected to improve; amortization of assets resulting from purchase price allocation due to the
+initial recognition of the investment at fair value in September 2020, which are also included in Siemens Energy Investment, are expected
+to decline to €0.1 billion in fiscal 2022, from €0.2 billion in fiscal 2021. We anticipate that Siemens Real Estate will continue with real
+estate disposals depending on market conditions, at a similar level as in fiscal 2021. Results for Innovation also are expected on the prior-
+year level, which was a negative €0.2 billion. Results related to Governance, were a negative €0.8 billion in fiscal 2021; we expect a
+substantial improvement in fiscal 2022, to a negative €0.5 billion. Centrally carried pension expense are expected to be on prior-year level,
+which was a negative €0.2 billion. Amortization of intangible assets acquired in business combinations, which was €0.7 billion in fiscal
+2021, is expected at €0.9 billion due mainly to the acquisition of Varian in April 2021. Financing, eliminations and other items, which were
+a positive €0.5 billion in fiscal 2021, are expected to include substantial parts of gains from revaluation and from divestments in fiscal
+2022, resulting from our portfolio optimization strategy, among them the above-mentioned gain related to Fluence.
+Fiscal year
+We anticipate our tax rate for fiscal 2022 to be in the range of 25% to 29%, depending strongly on portfolio-related gains, compared to
+25% in fiscal 2021. This assumption does not take into consideration possible impacts from potential major tax reforms. We do not expect
+material influence on financial results from discontinued operations in fiscal 2022.
+Our forecast for net income takes into account a number of additional factors. We assume solid project execution to continue in fiscal
+2022. We plan to increase the ratio of R&D expenses to revenue, which was 7.8% in fiscal 2021, to approximately 8% with a strong focus
+on software and digital technologies. Severance charges, which were €0.4 billion in fiscal 2021, are expected at €0.2 billion in fiscal 2022.
+Given the above-mentioned assumptions, we expect profitable growth of our industrial businesses to drive an increase in net income and
+EPS pre PPA to a range of €8.70 to €9.10, up from €8.32 in fiscal 2021.
+Capital efficiency
+For fiscal 2022, we expect ROCE adjusted for defined Varian-related acquisition effects, which was 15.1% in fiscal 2021, to improve in our
+target range of 15% to 20%.
+Capital structure
+For our capital structure, defined as the ratio of industrial net debt to EBITDA (continuing operations), we expect in fiscal 2022 to achieve
+a ratio below the prior-year figure of 1.5. We assume that our targeted cash conversion rate of 1 minus the annual comparable revenue
+growth rate of the Group over a cycle of three to five years will support the achievement of the capital structure target in fiscal 2022.
+8.1.3 Overall assessment
+Our outlook for fiscal 2022 is based on continuing healthy growth in global GDP, albeit with slowing momentum, and our expectation that
+the challenges to our businesses from COVID-19 and supply chain constraints will ease during fiscal 2022. With these conditions and given
+our very strong fiscal year 2021, we expect our industrial businesses to continue their profitable growth.
+For the Siemens Group we expect mid-single-digit comparable revenue growth, net of currency translation and portfolio effects, and a
+book-to-bill ratio above 1.
+We expect profitable growth of our industrial businesses to drive an increase in EPS pre PPA to a range of €8.70 to €9.10, up from €8.32
+in fiscal 2021. We assume that rigorous execution of our portfolio optimization strategy will contribute similarly as in fiscal 2021, when
+we generated €1.5 billion in net income from the sale of our Flender business, divestment of our stakes in Bentley and ChargePoint, and
+revaluation of our stake in Thoughtworks.
+This outlook excludes burdens from legal and regulatory matters.
+26
+(1,759)
+19
+(1,730)
+(631)
+Change in receivables from financing activities of SFS
+(1,523)
+Purchase of investments and financial assets for investment purposes
+(14,391)
+(1,730)
+9,996
+(113)
+10,109
+3,599
+(187)
+6,697
+Other current financial assets
+Contract assets
+Inventories
+Current income tax assets
+Other current assets
+Assets classified as held for disposal
+Total current assets
+Other disposals of assets
+Goodwill
+1,084
+(17,192)
+Trade and other receivables
+(29)
+Cash and cash equivalents
+(in millions of €)
+5. Net assets position
+(952)
+(4,294)
+8,316
+2,055
+(547)
+Change in short-term debt and other financing activities
+Repayment of long-term debt (including current maturities of long-term debt)
+Issuance of long-term debt
+Re-issuance of treasury shares and other transactions with owners
+Purchase of treasury shares
+Cash flows from financing activities
+(15,494)
+1,698
+Cash flows from investing activities - discontinued operations
+Cash flows from investing activities - continuing operations
+Other intangible assets
+Cash flows from investing activities - continuing and discontinued operations
+Investments accounted for using the equity method
+Cash outflows for purchase of treasury shares included a final payment of €0.4 billion to the commissioned bank, which was due with
+completion of the share buyback program 2018-2021.
+Cash inflows from the re-issuance of treasury shares and other transactions with owners mainly included proceeds of €2.3 billion
+related to Siemens Healthineers AG's issuance of 53 million new shares to institutional investors.
+21
+Combined Management Report
+Cash outflows from the change in short-term debt and other financing activities mainly included net cash outflows related to
+commercial paper, partly offset by cash inflows from new bank loans.
+Cash inflows from investing activities from discontinued operations were driven by the sale of Flender, which resulted in cash inflows
+(net of cash disposed) of €1.8 billion.
+We report Free cash flow as a supplemental liquidity measure:
+Free cash flow
+(in millions of €)
+Additions to intangible assets and property, plant and equipment
+Free cash flow
+Fiscal year 2021
+Continuing
+operations
+Discontinued
+operations
+Continuing and
+discontinued
+operations
+10,109
+Property, plant and equipment
+9,996
+(113)
+Cash inflows from other disposals of assets mainly included disposals of assets eligible as central bank collateral.
+Cash outflows from change in receivables from financing activities of SFS related mainly to SFS' debt business.
+Cash flows from operating activities
+Cash outflows from acquisitions of businesses, net of cash acquired, were due mainly to the acquisitions of Varian by Siemens
+Healthineers for €13.4 billion and Supplyframe by Digital Industries for €0.6 billion.
+Other assets
+Cash outflows for purchase of investments and financial assets for investment purposes primarily included additions of assets eligible
+as central bank collateral and payments for debt or equity investments related to certain businesses or projects, including the acquisition
+of an equity stake in Thoughtworks for €0.3 billion.
+Total non-current assets
+Total assets
+Combined Management Report
+Deferred tax assets
+2021
+(704)
+(2,804)
+(285)
+Sep 30,
+Interest paid
+Dividends paid to shareholders of Siemens AG
+Dividends attributable to non-controlling interests
+Cash flows from financing activities continuing operations
+Cash flows from financing activities - discontinued operations
+Other financial assets
+Cash flows from financing activities - continuing and discontinued operations
+785
+785
+Led by Digital Industries, all industrial businesses delivered strong conversion of their Adjusted EBITA to Cash flows from operating
+activities, including only minor cash flows from changes in operating net working capital in all industrial businesses.
+Profit carried forward
+as percentage of revenue
+Research and development expenses
+Selling and general administrative expenses
+Income from business activity
+Financial income, net
+thereof Income from investments, net 5,303 (prior year 8,078)
+Income taxes
+Net income
+Other operating income (expenses), net
+Gross profit
+The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
+Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz).
+Revenue
+(in millions of €)
+Statement of Income of Siemens AG in accordance with German Commercial Code (condensed)
+9.1 Results of operations
+As of September 30, 2021, the number of employees was 49.100.
+The Supervisory Board and the Managing Board propose from the unappropriated net income of Siemens AG for the fiscal year ended
+September 30, 2021, amounting to €3,400 million to distribute a dividend of €4.00 per share of no par value entitled to the dividend. The
+proposed dividend represents a total payout of €3.2 billion based on the estimated number of shares entitled to dividend at the date of
+the Annual Shareholders' Meeting. Based on Net income of Siemens group attributable to shareholders of Siemens AG of €6.2 billion for
+fiscal 2021, the dividend payout percentage is 52%. We intend to continue providing an attractive return to our shareholders. This includes
+striving for a dividend per share that exceeds the amount of the preceding year, or that at least matches the prior-year-level. For fiscal
+2022, we expect that net income of Siemens AG will be sufficient to fund the distribution of a corresponding dividend.
+In fiscal 2021, results for Siemens AG arise mainly from the business activities of Digital Industries and Smart Infrastructure and are
+influenced significantly by the results of subsidiaries and investments we own either directly or indirectly. The business development of
+Siemens AG is fundamentally subject to the same risks and opportunities as the Siemens Group. Therefore, the foregoing explanations for
+the Siemens Group apply also for Siemens AG.
+9. Siemens AG
+Combined Management Report
+34
+Allocation to other retained earnings
+Our internal audit function systematically evaluates our financial reporting integrity, the effectiveness of the control system and the risk
+management system, and adherence to our compliance policies. Siemens Healthineers has its own internal audit department and annual
+audit plan. Topics from the annual audit plan of Siemens Healthineers that are also relevant for our Managing Board and Audit Committee
+must be mandated first by Siemens Healthineers' Managing Board and Audit Committee and subsequently by our Managing Board and
+Audit Committee. The audit procedures for these topics will be generally executed by joint teams including members of our and Siemens
+Healthineers' internal audit functions, thus respecting the interests of both Siemens AG and Siemens Healthineers. In addition, the Audit
+Committee is integrated into our control system. In particular, it oversees the accounting and accounting process and the effectiveness of
+the internal control system, the risk management system and the internal audit system. Moreover, we have rules for accounting-related
+complaints.
+Cost of Sales
+Fiscal year
+5,797
+2021
+15,094
+(10,960)
+After the acquisition of Varian, Siemens Healthineers has commenced to integrate the former Varian entities into our accounting-related
+internal control and risk management system. The integration efforts for the accounting-related internal control system will continue in
+fiscal 2022.
+78
+(20)
+0%
+5,192
+5,166
+(12)%
+6,557
+65%
+(555)
+(196)
+14%
+% Change
+(3,490)
+6%
+(1,677)
+(1,570)
+27%
+27%
+(5)%
+4,357
+4,135
+9%
+(8)%
+16,389
+(12,032)
+2020
+(2,999)
+Siemens Healthineers is subject to our Group-wide principles for the accounting-related internal control and risk management system and
+is responsible for adhering to those principles. The management of Siemens Healthineers provides periodic signoffs to the Managing Board
+of Siemens AG, certifying the effectiveness of its accounting-related internal control system as well as the completeness, accuracy, and
+reliability of the financial data reported to us.
+Risks from pension obligations: The provisions for pensions and similar obligations may be affected by changes in actuarial assumptions,
+including the discount rate, as well as by movements in financial markets or a change in the mix of assets in our investment portfolio.
+Additionally, they are subject to legal risks with regard to plan design among other factors. A significant increase in the underfunding may
+have a negative effect on our capital structure and rating, and thus may tighten refinancing options and increase costs. In order to comply
+with local pension regulations in selected foreign countries, we may face an economic risk of increasing cash outflows due to change in
+funding level according to local regulations of our pension plans in these countries or to changes in the regulations themselves.
+Audits by tax authorities and changes in tax regulations: We operate in nearly all countries of the world and therefore are subject to
+many different tax regulations. Changes in tax laws in any of these jurisdictions could result in higher tax expenses and increased tax
+payments. Furthermore, legislative changes could impact our tax receivables and liabilities as well as deferred tax assets and deferred tax
+liabilities. In addition, the uncertain legal environment in some regions could limit our ability to enforce our rights. As a globally operating
+organization, we conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Future
+interpretations or developments of tax regimes may affect our business situation, financial condition and results of operations. We are
+regularly audited by tax authorities in various jurisdictions and we continuously identify and assess relevant risks.
+Qualification of employees involved in the accounting process is ensured through appropriate selection processes and training. As a
+fundamental principle, based on materiality considerations, the "four eyes" principle applies, and specific procedures must be adhered to
+for data authorization. Additional control mechanisms include target-performance comparisons and analyses of the composition of and
+changes in individual line items, both in the closing data submitted by reporting units and in the Consolidated Financial Statements. In
+line with our information security requirements, accounting-related IT systems contain defined access rules protecting them from
+unauthorized access. The manual and system-based control mechanisms referred to above generally also apply when reconciling the
+International Financial Reporting Standards (IFRS) closing data to the Annual Financial Statements of Siemens AG.
+31
+Changes of regulations, laws and policies: As a diversified company with global businesses we are exposed to various product- and
+country-related regulations, laws and policies influencing our business activities and processes. According to observations and analysis,
+there is an increasing risk that existing technical regulations in target markets will suddenly change, or new ones will be set in force, which
+determine market access criteria that our products do not meet. The affected products would lose marketability in this market. The way
+of resolving the risk of a sales-stop depends on the case of how to correct the non-conformity. In case the product can technically stay as
+is, while it has to undergo new and additional conformity assessment and certification, there will be considerable effort and cost to carry
+out the needed testing and certification procedures. In a worse case, the affected product will need re-engineering or re-design to meet
+the requirements of the changed or new technical regulation even before it can become re-assessed and certified for market approval.
+Along with other measures, Siemens has established a global compliance organization that conducts among others compliance risk
+mitigation processes such as Compliance Risk Assessments or initiates internal audit activities performed by the internal assurance
+department.
+In addition, future developments in ongoing and potential future investigations, such as responding to the requests of governmental
+authorities and cooperating with them, could divert management's attention and resources from other issues facing our business.
+Furthermore, we might be exposed to compliance risks in connection with recently acquired operations that are in the ongoing process of
+integration.
+In its global business, Siemens does part of its business with state-owned enterprises and governments. We also participate in a number
+of projects funded by government agencies and intergovernmental and supranational organizations, such as multilateral development
+banks. Ongoing or potential future investigations into allegations of corruption, antitrust violations or other violations of law could as well
+impair relationships with such parties or could result in our exclusion from public contracts. Such investigations may also adversely affect
+existing private business relationships and our ability to pursue potentially important strategic projects and transactions, such as strategic
+alliances, joint ventures or other business alliances, or could result in the cancellation of certain of our existing contracts. Moreover, third
+parties, including our competitors, could initiate significant litigation.
+Current and future investigations regarding allegations of corruption, of antitrust violations and of other violations of law:
+Proceedings against us or our business partners regarding allegations of corruption, of antitrust violations and of other violations of law
+may lead to fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgements, disqualifications from directly
+and indirectly engaging in certain types of business, the loss of business licenses or permits, other restrictions and legal consequences as
+well as negative public media coverage. Accordingly, we may, among other things, be required to comply with potential obligations and
+liabilities arising in connection with such investigations and proceedings, including potential tax penalties. Moreover, any findings related
+to public corruption that are not covered by the 2008 and 2009 corruption charge settlements, which we concluded with U.S. and German
+authorities, may endanger our business with government agencies and intergovernmental and supranational organizations. Monitors
+could again be appointed to review future business practices and we may otherwise be required to further modify our business practices
+and our compliance program.
+8.3.4 Compliance risks
+For further information on post-employment benefits, derivative financial instruments, hedging activities, financial risk management and
+related measures, see Notes 17, 24 and 25 in Notes to Consolidated Financial Statements for fiscal 2021.
+Credit risks: We provide our customers with various forms of direct and indirect financing of orders and projects, including guarantees.
+Siemens Financial Services in particular bears credit risks due to such financing activities if, for example, customers do not meet obligations
+arising from these financing arrangements, meet them only partially, or meet them late.
+Liquidity and financing risks: Our treasury and financing activities could face adverse deposit and/or financing conditions from negative
+developments related to financial markets, such as limited availability of funds and hedging instruments, an updated evaluation of our
+solvency, particularly from rating agencies, negative interest rates, and impacts arising from more restrictive regulation of the financial
+sector, central bank policy, or the usage of financial instruments. Widening credit spreads due to uncertainty and risk aversion in the
+financial markets might lead to adverse changes in the market values of our financial assets, in particular our derivative financial
+instruments.
+Market price risks: We are exposed to fluctuations in exchange rates, especially between the U.S. dollar and the euro, because a high
+percentage of our business volume is conducted as exports from Europe to areas using the U.S. dollar. In addition, we are exposed to
+effects involving the currencies of emerging markets, in particular the Chinese yuan. Appreciable changes in euro exchange rates could
+materially change our competitive position. We are also exposed to fluctuations in interest rates. Even hedging activities to mitigate such
+risks may result in a reverse effect. Fluctuations in exchange or interest rates, negative developments in the financial markets and changes
+in central bank policies could therefore negatively impact our financial results.
+n/a
+Combined Management Report
+8.3.3 Financial risks
+30
+Project-related risks: A number of our segments conduct activities under long-term contracts that are awarded on a competitive bidding
+basis. Such contracts typically arise at Mobility and in various activities of Smart Infrastructure or Portfolio Companies. Some of these
+contracts are inherently risky because we may assume substantially all of the risks associated with completing a project and meeting post-
+completion warranty obligations. For example, we may face the risk that we must satisfy technical requirements of a project even though
+we have not gained experience with those requirements before winning the project. The profit margins realized on fixed-priced contracts
+may vary from original estimates as a result of changes in costs and productivity over a contract's term. We sometimes bear the risk of
+unanticipated project modifications, shortage of key personnel, quality problems, financial difficulties of our customers and/or significant
+partners, cost overruns or contractual penalties caused by unexpected technological problems, unexpected developments at the project
+sites, unforeseen changes or difficulties in the regulatory or political environment, performance problems with our suppliers,
+subcontractors and consortium partners or other logistical difficulties. Some of our multi-year contracts also contain demanding
+installation and maintenance requirements in addition to other performance criteria relating to timing, unit cost and compliance with
+government regulations, which, if not satisfied, could subject us to substantial contractual penalties, damages, non-payment and contract
+termination. There can be no assurance that contracts and projects, in particular those with long-term duration and fixed-priced
+calculation, can be completed profitably. To tackle those risks, we established a global project management organization to systematically
+improve the technical and commercial capabilities of our project management personnel. For very complex projects we conduct dedicated
+risk assessments in very early stages of the sales phase before we decide to hand over a binding offer to our customers.
+Shortage of skilled personnel: Competition for diverse and highly qualified personnel (e.g. specialists, experts, digital talent) remains
+intense in the industries and regions in which our businesses operate. We have ongoing demand for highly skilled employees and a need
+to enhance diversity, inclusion and sense of belonging in our workforce. Our future success depends in part on our continued ability to
+identify, assess and hire engineers, digital talent and other qualified personnel. We must also integrate, develop and retain them after they
+join us, which appears especially relevant in times of a new, increasingly virtual working environment. We address these topics for example
+by strengthening the capabilities and skills of our talent acquisition teams and a strategy of proactive search for people with the required
+capabilities in our respective industries and markets. Technology and digitalization help us to be more effective in attracting and selecting
+diverse talent. Furthermore, we have a focus on diversity and structured succession planning.
+Internal programs and initiatives: We are in a continuous process of operational optimization and constantly engage in cost-reduction
+initiatives, including ongoing capacity adjustment measures and structural initiatives. Consolidation of business activities and
+manufacturing facilities, outsourcings, joint ventures and the streamlining of product portfolios are all part of these cost-reduction efforts.
+These measures may not be implemented as planned, may turn out to be less effective than anticipated, may become effective later than
+estimated or may not become effective at all. Any future contribution of these measures to our profitability will be influenced by the actual
+savings achieved and by our ability to sustain them. In case of restructuring and outsourcing activities, there could be delays in product
+deliveries or we might even experience delivery failures. Furthermore, delays in critical R&D projects could lead to negative impacts in
+running projects. We constantly control and monitor the progress of these projects and initiatives using standardized controlling and
+milestone tracking approaches.
+Supply chain management: The financial performance of our operating units depends on reliable and effective supply chain management
+for components, sub-assemblies and materials. Capacity constraints and supply shortages resulting from ineffective supply chain
+management may lead to production bottlenecks, delivery delays, quality issues and additional costs. We also rely on third parties to supply
+us with parts, components and services. Using third parties to manufacture, assemble and test our products may reduce our control over
+manufacturing yields, quality assurance, product delivery schedules and costs. Although we work closely with our suppliers to avoid supply-
+related problems, there can be no assurance that we will not encounter supply problems in the future, especially if we use single-source
+suppliers for critical components. Shortages and delays could materially harm our businesses. Unanticipated increases in the price of
+components or raw materials due to market shortages or other reasons could also adversely affect performance. Furthermore, we may be
+exposed to the risk of delays and interruptions in the supply chain as a consequence of catastrophic events (including pandemics), cyber
+incidents or suppliers' financial difficulties, particularly if we are unable to identify alternative sources of supply or means of transportation
+in a timely manner or at all. Besides other measures, we mitigate price fluctuation in global raw material markets with various hedging
+instruments.
+of cybersecurity threats and higher levels of professionalism in computer crime, which pose a risk to the security of products, systems and
+networks and the confidentiality, availability and integrity of data. According to various external data sources, this trend has accelerated
+during the COVID-19 pandemic. Especially the number of phishing attacks as well as the number of malicious websites have increased
+significantly. Moreover, the information technology market is concentrated among a small number of information technology and
+software vendors, which could lead to dependence on a single provider. There can be no assurance that the measures aimed at protecting
+our intellectual property and portfolio will address these threats under all circumstances. There is a risk that confidential information (data
+privacy) may be stolen or that the integrity of our portfolio may be compromised, e.g. by attacks on our networks, social engineering, data
+manipulations in critical applications and a loss of critical resources, resulting in financial damages. Cybersecurity covers the IT of our entire
+enterprise including office IT, systems and applications, special purpose networks, and our operating environments such as manufacturing
+and research and development (R&D). Like other large multinational companies, we face active cyber threats from sophisticated
+adversaries that are supported by organized crime and nation-states engaged in economic espionage or even sabotage. We strive to
+mitigate these risks by employing a number of measures, including employee training, considering new models of flexible working
+environments, and comprehensive monitoring of our networks and systems through cyber defense with an artificial intelligence solution
+to identify attacks faster and prevent damage to society and especially to critical infrastructures, our customers, our partners and Siemens
+overall. We initiated the industrial "Charter of Trust," signed by a growing group of global companies, which sets out principles for building
+trust in digital technologies and creating a more secure digital world. Nonetheless, our systems, products, solutions and services, as well
+as those of our service providers, remain potentially vulnerable to attacks. Such attacks could potentially lead to the publication,
+manipulation or leakage of information such as through industrial espionage. They could also result in deliberate improper use of our
+systems, vulnerable products, production downtimes and supply shortages, with potential adverse effects on our reputation, our
+competitiveness and results of operations. For increased protection of Siemens and reduction of a potential financial impact caused by
+cyber incidents, the risk transfer possibilities have been evaluated. As a result of an international insurance tender, the currently insurable
+cybersecurity risks have been to a partial extent transferred to a consortium of insurance companies.
+Combined Management Report
+29
+Cyber/Information security: Digital technologies are deeply integrated into our business portfolio. Further integration of information
+technology into products and services in conjunction with changing business strategies (such as outsourcing, globally distributed
+development, a lesser degree of sole production) are leading to an increasingly distributed supply chain, making efficient controls difficult.
+The fact of a large number of suppliers requires a significant effort for the initial and regular verification of the effective implementation
+of cybersecurity requirements by suppliers. Siemens business entities might lose market access if their products, solutions and services do
+not comply with increased regulations and legal requirements for cybersecurity in their respective countries. We observe a global increase
+8.3.2 Operational risks
+Portfolio measures, at-equity investments, other investments and strategic alliances: Our strategy includes divesting our activities in
+some business areas and strengthening others through portfolio measures, including mergers and acquisitions. With respect to
+divestments, we may not be able to divest some of our activities as planned, and the divestitures we do carry out could have a negative
+impact on our business situation, financial condition, results of operations and reputation. Mergers and acquisitions are inherently risky
+because of difficulties that may arise when integrating people, operations, technologies and products. There can be no assurance that any
+of the businesses we acquire can be integrated successfully and in a timely manner as originally planned, or that they will perform as
+anticipated once integrated. In addition, we may incur significant acquisition, administrative, tax and other expenditures in connection
+with these transactions, including costs related to integration of acquired businesses. Furthermore, portfolio measures may result in
+additional financing needs and adversely affect our capital structure. Acquisitions can lead to substantial additions to intangible assets,
+including goodwill, in our statements of financial position. If we were to encounter continuing adverse business developments or if we
+were otherwise to perform worse than expected at acquisition activities, then these intangible assets, including goodwill, might have to
+be impaired, which could adversely affect our business situation, financial condition and results of operations. Our investment portfolio
+includes investments held for purposes other than trading and other investments. Any factors negatively influencing the financial
+condition and results of operations of our at-equity investments and other investments could have an adverse effect on our equity pick-
+up related to these investments or may result in a related write-off. In addition, our business situation, financial condition and results of
+operations could also be adversely affected in connection with loans, guarantees or non-compliance with financial covenants related to
+these investments. Furthermore, such investments are inherently risky as we may not be able to sufficiently influence corporate
+governance processes or business decisions taken by our at-equity investments, other investments and strategic alliances, which may have
+a negative effect on our business and especially on our reputation. In addition, joint ventures bear the risk of difficulties that may arise
+when integrating people, operations, technologies and products. Strategic alliances may also pose risks for us because we compete in
+some business areas with companies with which we have strategic alliances. Besides other measures, we handle these risks with
+standardized processes as well as dedicated roles and responsibilities in the areas of mergers, acquisitions, divestments and carve-outs.
+This includes the systematic treatment of all contractual obligations and post-closing claims.
+there is a risk that critical suppliers are taken over by competitors and a risk that competitors are increasingly offering services to our
+installed base. We address these risks with various measures, for example benchmarking, strategic initiatives, sales push initiatives,
+executing productivity measures and target cost projects, rightsizing of our footprint, outsourcings, mergers and joint ventures and
+optimizing our product and service portfolio. We continuously monitor and analyze competitive, market and industry information in order
+to be able to anticipate unfavorable changes in the competitive environment rather than merely reacting to such changes.
+COVID-19 pandemic (COVID-19): The COVID-19 situation may worsen, as the number of new infections is rising again in many countries.
+At the same time, the number of cases and the severe course of the disease will develop very differently depending on the respective
+vaccination rate in the countries. The impact of the pandemic therefore varies considerably between regions and customer sectors.
+Governments and other local authorities are working to contain the spread of infection by implementing various countermeasures such
+as contact restrictions, adherence to minimum hygienic standards, wearing of respiratory masks, vaccine mandates, and vaccination and
+testing services to avoid widespread curfews and restrictions on the opening of certain sectors of the economy. Depending on
+epidemiological trends and political pressure, governments are expected to relax existing restrictions and avoid new ones to reduce the
+associated economic harm. The extent and duration of the individual impacts on our business are difficult to predict. For example, if
+containment measures are initiated at short notice or last an unpredictably long time, our business may be significantly impacted in ways
+that exceed current expectations and go beyond mitigation measures already in place. We could face unexpected closures of sites, factories
+or office buildings of our suppliers, customers or our own operations, which would affect our ability to produce or deliver our products,
+solutions and services. The most material uncertainties of the COVID-19 crisis are its continued duration, including for example potential
+further waves of infection, mutations of the virus and the evolution of global vaccination progress, and the economic costs of restrictions.
+Since the second quarter of fiscal 2020, we have felt the impact in our businesses, both our short-cycle businesses and project businesses,
+as, for example, customers cancelled orders or postponed investments, we were exposed to increased default risk, and our supply chain
+experienced difficulties in certain areas. Now we are seeing a recovery in many business sectors, and travel is also becoming easier. The
+longer the restrictive measures such as curfews last, the deeper the resulting recession will be. Possible consequences include an
+unchecked increase of public and private debt which hampers the post-crisis recovery, serious disruptions in the financial system and
+insolvencies among Siemens customers and suppliers. In the long term, a reversal of globalization could reduce potential future growth.
+Various task forces and crisis teams have been set up in all areas of Siemens to carefully monitor and mitigate the various impacts of
+COVID-19, with a focus on the health and safety of our employees through operational vaccination offers, testing concepts and making
+treatment offers available, and on business continuity. At the Group level, an executive-level crisis team at Group headquarters has worked
+out overarching decisions and coordinated the flow of information through the different levels of the organization, while empowering
+responsible management in each business and country to take appropriate action according to national and regional guidelines.
+Increasing sustainability focus: The increasing environmental, social and governance (ESG) requirements from governments and
+customers as well as financing restrictions from governments, customer demands and financing restrictions for greenhouse gas emitting
+technologies could result in additional costs. Additionally, business involvement in sensitive environmental, social or governance activities
+might be negatively perceived and trigger adverse media attention. This could lead to reputational damage and have an impact on
+achieving our business goals. In fiscal 2021 we introduced a binding ESG risk framework and with it an optimized due diligence process.
+This supports Siemens businesses with due diligence in the customer-oriented environment with a view to possible environmental and
+social risks as well as related human rights and reputational risks.
+Combined Management Report
+Combined Management Report
+On a quarterly basis, we execute an internal certification process. Management at different levels of our organization, supported by
+confirmations by managements of entities under their responsibility, confirms the accuracy of the financial data that has been reported to
+Siemens' corporate headquarters and reports on the effectiveness of the related control systems.
+The latter case will cause significant extra effort and cost to do the needed product changes and to maintain the country-specific product
+variant as an additional derivate item in the portfolio. In the worst case, if the two aforementioned ways of maintaining the product's
+marketability prove to be not feasible, sale of the affected product in the market has to be stopped. We monitor the political and regulatory
+landscape in all our key markets to anticipate potential problem areas, with the aim of quickly adjusting our business activities and
+processes to changed conditions. However, any changes in regulations, laws and policies could adversely affect our business activities and
+processes as well as our financial condition and results of operations.
+Geopolitical uncertainties including sanctions and export control: As a globally operating organization, we conduct business with
+customers in countries which are subject to export control regulations, embargoes, economic sanctions, debarment policies or other forms
+of trade restrictions (hereafter referred to as "sanctions") imposed by the U.S., the EU, China or other countries or organizations. New or
+expanded sanctions in countries in which we do business may result in a curtailment of our existing business in such countries or indirectly
+in other countries. We are also aware of policies of national authorities and institutional investors, such as pension funds or insurance
+companies, requiring divestment of interests in and prohibiting investment in and transactions with entities doing business with countries
+identified by the U.S. Department of State as state sponsors of terrorism. As a result, it is possible that such policies may result in our being
+unable to gain or retain certain investors or customers. In addition, the termination of our activities in sanctioned countries may expose
+us to customer claims and other actions. Our reputation could also suffer due to our activities with counterparties in or affiliated with these
+countries.
+The base data used in preparing our financial statements consists of the closing data reported by the operations of Siemens AG and its
+subsidiaries. The preparation of the closing data of most of our entities is supported by an internal shared services organization.
+Furthermore, other accounting activities, such as governance and monitoring activities, are usually bundled on a regional level. In
+particular cases, such as valuations relating to post-employment benefits, we use external experts. The reported closing data is used to
+prepare the financial statements in the consolidation system. The steps necessary to prepare the financial statements are subject to both
+manual and automated controls.
+is analyzed on an ongoing basis. Accounting departments are informed quarterly about current topics and deadlines from an accounting
+and closing process perspective.
+Combined Management Report
+33
+At the end of each fiscal year, our management performs an evaluation of the effectiveness of the implemented control system, both in
+design and operating effectiveness. We have a standardized procedure under which necessary controls are defined, documented in
+accordance with uniform standards, and tested regularly for their effectiveness. Nevertheless, there are inherent limitations on the
+effectiveness of any control system, and no system, including one determined to be effective, may prevent or detect all misstatements.
+Our Consolidated Financial Statements are prepared on the basis of a centrally issued conceptual framework which primarily consists of
+uniform Financial Reporting Guidelines and a chart of accounts. For Siemens AG and other companies within the Siemens Group required
+to prepare financial statements in accordance with German Commercial Code, this conceptual framework is complemented by mandatory
+regulations specific to the German Commercial Code. The need for adjustments in the conceptual framework due to regulatory changes
+The overarching objective of our accounting-related internal control and risk management system is to ensure that financial reporting is
+conducted in a proper manner, such that the Consolidated Financial Statements and the Combined Management Report of Siemens Group
+as well as the Annual Financial Statements of Siemens AG as the parent company are prepared in accordance with all relevant regulations.
+Our ERM approach is based on the globally accepted COSO Standard (Committee of Sponsoring Organizations of the Treadway
+Commission) Enterprise Risk Management - Integrating with Strategy and Performance (2017) and the ISO (International Organization
+for Standardization) Standard 31000 (2018) and is adapted to Siemens requirements. The frameworks connect the ERM process with our
+financial reporting process and our internal control system. They consider a company's strategy, the efficiency and effectiveness of its
+business operations, the reliability of its financial reporting and compliance with relevant laws and regulations to be equally important.
+Our accounting-related internal control system is based on the internationally recognized Internal Control - Integrated Framework (2013)
+also developed by COSO. The two systems are complementary.
+8.5 Significant characteristics of the accounting-related internal control and risk management
+system
+While our assessments of individual opportunities have changed during fiscal 2021 due to developments in the external environment,
+changes in our business portfolio, our endeavors to profit from them and revision of our strategic plans, the overall opportunity situation
+for Siemens did not change significantly as compared to the prior year.
+Assessment of the overall opportunities situation: The most significant opportunity for Siemens is favorable political and regulatory
+environment (including sustainability) as described above.
+Optimization of organization and processes: On the one hand, we leverage ideas to drive further improvements in our processes and
+cost structure, such as common computing architecture for image processing or optimizing factory capacities for shorter lead times. On
+the other hand, we see an opportunity of further penetrating markets by ramping up local business excellence (e.g. engineering) and
+increasing local sourcing and local manufacturing.
+Turning COVID-19 challenges into opportunities: The participation in governmental COVID-19 recovery programs such as the European
+Union's "Next Generation EU" recovery plan is an opportunity for Siemens. There is also the chance to strengthen our customer relationship
+through additional market offerings that specifically address use cases related directly to the COVID-19 pandemic. Potential growth areas
+might arise through the optimization program "new normal" with, for example, more working flexibility for our employees.
+Value creation through innovation: We drive innovation by investing significantly in R&D in order to develop sustainable solutions for
+our customers while also strengthening our own competitiveness. Being an innovative company and constantly inventing new
+technologies that we expect will meet future demands arising from the megatrends of demographic change, urbanization, climate change
+and globalization is one of our core purposes. We are granted thousands of new patents every year and continuously develop new concepts
+and convincing new digital and data-driven business models. This helps us create the next generation of ground-breaking innovations in
+such fields as digitalization, artificial intelligence, autonomous machines and edge computing. Across our operating units, we are profiting
+from our strength in the "Digital Enterprise." Foremost, our cloud-based MindSphere platform enhances the availability of our customers'
+digital products and systems and improves their productivity and efficiency. We offer edge computing apps along with MindSphere in
+individual facilities, so that customers can connect all their facilities to create an integrated data network. We see also significant
+opportunities to generate additional volume and profit from innovative digital products, services and solutions, including cyber security
+and applications for optimized energy consumption. We see growth opportunities in opening up access to new markets and customers
+through new marketing and sales strategies, which we implement in our operating units. Our position along the value chains of
+automation and digitalization allows us to further increase market penetration. Along these value chains, we have identified several
+concrete growth fields in which we see our greatest long-term potential. Hence, we are combining and developing our resources and
+capabilities for these growth fields.
+Protectionism (including tariffs/trade war): Protectionist trade policies, de-coupling and changes in the political and regulatory
+environment in the markets in which we operate, such as import and export controls, tariffs and other trade barriers including debarment
+from certain markets and price or exchange controls, could affect our business in national markets and could impact our business situation,
+financial position and results of operations; and may expose us to penalties, other sanctions and reputational damage. In addition, the
+uncertainty of the legal environment in some regions could limit our ability to enforce our rights and subject us to increasing costs related
+to appropriate compliance programs.
+Mergers, acquisitions, equity investments, partnerships, divestments and streamlining our portfolio: We constantly monitor our
+current and potential markets to identify opportunities for strategic mergers, acquisitions, equity investments and partnerships, which
+may complement our organic growth. Such activities may help us to strengthen our position in our existing markets, provide access to
+new or underserved markets, or complement our technological portfolio in strategic areas. Opportunities might also arise when portfolio
+optimization measures generate gains, which enable us to further pursue our other strategies for growth and profitability.
+necessarily the only ones we encounter. In addition, our assessment of opportunities is subject to change because the Company, our
+markets and technologies are constantly advancing. It is also possible that opportunities we see today will never materialize.
+Combined Management Report
+32
+Within our ERM we regularly identify, evaluate and respond to opportunities that present themselves in our various fields of activity. Below
+we describe our most significant opportunities. Unless otherwise stated, the opportunities described relate to all organizational units. The
+order in which the opportunities are presented reflects the currently estimated relative exposure for Siemens associated with these
+opportunities and thus provides an indication of the opportunities' current importance to us. The described opportunities are not
+8.4 Opportunities
+concern.
+At present, no risks have been identified that either individually or in combination could endanger our ability to continue as a going
+While our assessments of individual risks have changed during fiscal 2021 due to developments in the external environment, changes in
+our business portfolio, effects of our own mitigation measures and the revision of our risk assessment, the overall risk situation for Siemens
+did not change significantly as compared to the prior year. We currently see the operational risk cyber/information security as the most
+significant challenge for us followed by the strategic risk arising from economic, political and geopolitical conditions.
+The most significant challenges have been mentioned first in each of the four risk categories: strategic, operational, financial and
+compliance.
+For additional information with respect to specific proceedings, see Note 22 in Notes to Consolidated Financial Statements for fiscal 2021.
+8.3.5 Assessment of the overall risk situation
+In addition, while we have procedures in place to ensure compliance with applicable governmental regulations in the conduct of our
+business operations, it cannot be excluded that violations of applicable governmental regulations may be caused either by us or by third
+parties that we contract with, including suppliers or service providers whose activities may be attributed to us. Any such violations
+particularly expose us to the risk of liability, penalties, fines, reputational damage or loss of licenses or permits that are important to our
+business operations. In particular, we could also face liability for damage or remediation for environmental contamination at the facilities
+we design or operate. With regard to certain environmental risks, we maintain liability insurance at levels that our management believes
+are appropriate and consistent with industry practice. We may incur environmental losses beyond the limits, or outside the coverage, of
+such insurance, and such losses may have an adverse effect on our business situation, financial condition and results of operations.
+Current or future litigation and legal and regulatory proceedings: Siemens is and potentially will be involved in numerous legal disputes
+and proceedings in various jurisdictions. These legal disputes and proceedings could result, in particular, in Siemens being subject to
+payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual cases this may
+also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Asserted claims are generally
+subject to interest rates. Some of these legal disputes and proceedings could result in adverse decisions for Siemens or decisions,
+assessments or requirements of regulatory authorities could deviate from our expectations, which may have material effects on our
+business activities as well as our financial position, results of operations and cash flows. Siemens maintains liability insurance for certain
+legal risks at levels our management believes are appropriate and consistent with industry practice. The insurance policy, however, does
+not protect Siemens against reputational damage. Moreover, Siemens may incur losses relating to legal proceedings beyond the limits, or
+outside the coverage, of such insurance or exceeding any provisions made for losses related to legal proceedings. Finally, there can be no
+assurance that Siemens will be able to maintain adequate insurance coverage on commercially reasonable terms in the future.
+Environmental, health & safety and other governmental regulations: Some of the industries in which we operate are highly regulated.
+Current and future environmental, health and safety and other governmental regulations or changes thereto may require us to change
+the way we run our operations and could result in significant increases in our operating or production costs. Furthermore, we see the risk
+of potential environmental and health and safety incidents as well as potential non-compliance with environmental and health and safety
+regulations affecting Siemens and our contractors or sub-suppliers, resulting for example in serious injuries, business interruptions,
+penalties, loss of reputation and internal or external investigations.
+Favorable political and regulatory environment (including sustainability): We see opportunities from potential improvement in the
+geopolitical policy environment, which could quickly restore a more positive industrial investment sentiment that supports the growth of
+our markets. In addition, government initiatives and subsidies (including tax reforms, recovery plans among others) may lead to more
+government spending (e.g. infrastructure, healthcare or digitalization investments) and ultimately result in an opportunity for us to
+participate in ways that increase our revenue and profit. By enabling our customers to lower their GHG (Greenhouse Gas) emissions across
+our portfolio and by reducing CO2 emission in our own operation, Siemens strives to support the trend towards a low-carbon economy.
+Siemens also welcomes and supports from an opportunity perspective, recent legislative and governmental accelerate to mitigate climate
+change worldwide, especially in Europe through e.g. the Green Deal or Sustainable Finance Initiative.
+5,147
+% Change
+(2)%
+101,487
+102,975
+(1)%
+During fiscal 2021 Siemens contributed supplemental fundings to Siemens Pension-Trust e.V. and took measures under company law to
+simplify the investment structure of pension assets, which for the most part had overall no impact on the carrying amount of the financial
+assets as of September 2021 compared to the prior year. The supplemental fundings included stakes in Bentley Systems, Inc. in the amount
+of €1.0 billion and in ChargePoint Holdings, Inc. in the amount of €0.3 billion, as well as zero-coupon receiver swaps in the amount of
+€0.3 billion. The measures to simplify the investment structure included a transfer of investment funds at fair value of €4.8 billion
+(including realization of hidden reserves) to shares in affiliated companies, which led to a disposal of securities with a carrying amount of
+€4.1 billion in the fixed assets register. In addition to these transactions Siemens recorded the disposal of Flender GmbH in the fixed assets
+register, at a carrying amount of €1.0 billion.
+The change in cash and cash equivalents, other securities related to the liquidity management of the Corporate Treasury of Siemens
+AG, which was focused not solely on the business activities of Siemens AG. The liquidity management is based on the financing policy of
+the Siemens Group, which is aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity
+cushion. Intra-group financing activities drove both an increase in receivables from affiliated companies, which resulted in higher
+inventories, receivables and other assets, and lower liabilities to affiliated companies, which was the main reason for the reduction of
+trade payables, liabilities to affiliated companies and other liabilities.
+The increase in provisions for pensions and similar commitments was mainly due to recording of current service and interest costs and
+to lower discount rates partly offset by payments for pensions and similar commitments.
+The increase in equity was attributable to net income for the year of €5.1 billion and the transfer of €0.5 billion in treasury shares to
+employees in connection with our share-based payments programs. These factors were partly offset by dividends paid in fiscal 2021 (for
+fiscal 2020) of €2.8 billion and share buybacks during the year amounting to €0.5 billion (including a €0.4 billion final payment to the
+commissioned bank). The equity ratio as of September 30, 2021 increased to 21%, from 18% a fiscal year earlier. For the disclosures in
+accordance with Section 160 para. 1 no. 2 of the German Stock Corporation Act about treasury shares, refer to Note 15 of our Notes to
+Annual Financial Statements for fiscal 2021.
+9.3 Corporate Governance statement
+The Corporate Governance statement pursuant to Sections 289f and 315d of the German Commercial Code is publicly available on the
+company's website at siemens.de/corporate-governance.
+36
+Combined Management Report
+10. Takeover-relevant information (pursuant to Sections 289a
+and 315a of the German Commercial Code) and
+explanatory report
+10.1 Composition of common stock
+As of September 30, 2021, the Company's common stock totaled €2.550 billion. The capital stock is divided into 850 million registered
+shares of no par value (Siemens shares). The shares are fully paid in. All shares confer the same rights and obligations. The shareholders'
+rights and obligations are governed in detail by the provisions of the German Stock Corporation Act, in particular by Sections 12, 53a et
+seq., 118 et seq. and 186 of the German Stock Corporation Act.
+(8)%
+10.2 Restrictions on voting rights or transfer of shares
+271
+(7)%
+12%
+541
+619
+(13)%
+12,372
+4,220
+16,592
+11,700
+6%
+4,323
+(2)%
+16,023
+4%
+501
+62,389
+62,890
+249
+98
+>200%
+67,047
+67,145
+(6)%
+18,917
+At the Shareholders' Meeting, each share of stock has one vote and accounts for the shareholder's proportionate share in the Company's
+net income. An exception to this rule applies with regard to treasury shares held by the Company, which do not entitle the Company to
+any rights. Under Section 136 of the German Stock Corporation Act the voting right of the affected shares is excluded by law.
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a sustained basis, powers of attorney allowing it to exercise the voting rights
+for 10,716,740 shares (as of September 30, 2021) on behalf of members of the Siemens family. These shares are part of the total number
+of shares held by the family's members. The powers of attorney are based on an agreement between the VSV and, among others, members
+of the Siemens family. The shares are voted together by VSV, taking into account the suggestions of a family partnership established by
+the family's members or of one of this partnership's governing bodies.
+In addition to selling them over the stock exchange or through a public sales offer to all shareholders, the Managing Board is authorized
+by resolution of the Shareholders' Meeting on February 5, 2020 to also use Siemens shares repurchased on the basis of this or any
+previously given authorization for every permissible purpose, in particular as follows: Such Siemens shares may be
+•
+•
+•
+•
+•
+retired;
+used in connection with share-based compensation programs and/or employee share programs of the Company or any of its affiliated
+companies and issued to individuals currently or formerly employed by the Company or any of its affiliated companies as well as to
+board members of any of the Company's affiliated companies;
+offered and transferred, with the approval of the Supervisory Board, to third parties against non-cash contributions;
+sold by the Managing Board, with the approval of the Supervisory Board, against payment in cash if the price at which such Siemens
+shares are sold is not significantly lower than the market price of Siemens stock (exclusion of subscription rights, limited to 10% of the
+capital stock, by mutatis mutandis application of Section 186 para. 3 sentence 4 German Stock Corporation Act); or
+used to service or secure obligations or rights to acquire Siemens shares arising particularly from or in connection with convertible bonds
+or warrant bonds of the Company or its affiliated companies. Moreover, the Managing Board is authorized to exclude subscription rights
+in order to grant holders/creditors of conversion or option rights or respective conversion or option obligations on Siemens shares
+subscription rights as compensation against effects of dilution to the extent to which they would be entitled after exercise of such rights
+or fulfillment of such obligations, and to use Siemens shares to service such subscription rights.
+Furthermore, the Supervisory Board is authorized to use shares acquired on the basis of this or any previously given authorization to meet
+obligations or rights to acquire Siemens shares that were or will be agreed with members of the Managing Board within the framework of
+rules governing Managing Board compensation.
+In November 2018, the Company announced that it would carry out a share buyback of up to €3 billion in volume until November 15,
+2021 at the latest. The buyback commenced on December 3, 2018 and terminated on September 24, 2021. Using the authorizations given
+by the Annual Shareholders' Meetings on January 27, 2015 and February 5, 2020, Siemens repurchased 29.4 million shares by September
+30, 2021 under this share buyback. This buyback had the exclusive purposes of retirement, of issuing shares to employees, board members
+of affiliated companies and members of the Managing Board of Siemens AG, and of servicing/securing the obligations or rights to acquire
+Siemens shares arising particularly from or in connection with convertible bonds and warrant bonds. On June 24, 2021, Siemens
+announced that it intends to launch a new five-year share buyback program of up to €3 billion, beginning in fiscal 2022.
+As of September 30, 2021, the Company held 47,644,581 shares of stock in treasury.
+38
+The Company may not repurchase its own shares unless so authorized by a resolution duly adopted by the shareholders at a general
+meeting or in other very limited circumstances set forth in the German Stock Corporation Act. On February 5, 2020, the Shareholders'
+Meeting authorized the Company to acquire until February 4, 2025 up to 10% of its capital stock existing at the date of adopting the
+resolution or - if this value is lower - as of the date on which the authorization is exercised. The aggregate of shares of stock of Siemens
+AG repurchased under this authorization and any other Siemens shares previously acquired and still held in treasury by the Company or
+attributable to the Company pursuant to Sections 71d and 71e of the German Stock Corporation Act may at no time exceed 10% of the
+then existing capital stock. Any repurchase of Siemens shares shall be accomplished at the discretion of the Managing Board either (1) by
+acquisition over the stock exchange, (2) through a public share repurchase offer or (3) through a public offer to swap Siemens shares for
+shares in a listed company within the meaning of Section 3 para. 2 German Stock Corporation Act. The Managing Board is additionally
+authorized to complete the repurchase of Siemens shares in accordance with the authorization described above by using certain derivatives
+(put and call options, forward purchases and any combination of these derivatives). In exercising this authorization, all stock repurchases
+based on the derivatives are limited to a maximum volume of 5% of Siemens' capital stock existing at the date of adopting the resolution
+at the Shareholders' Meeting. A derivative's term of maturity may not, in any case, exceed 18 months and must be chosen in such a way
+that the repurchase of Siemens shares upon exercise of the derivative will take place no later than February 4, 2025.
+Siemens shares issued to employees worldwide under the employee share programs implemented since the beginning of fiscal 2009, in
+particular the Share Matching Plan, are freely transferable unless applicable local laws provide otherwise. Under the rules of the Share
+Matching Plan, however, in order to receive one matching share free of charge for each three shares purchased, participants are required
+to hold the shares purchased by them for a vesting period of several years, during which the participants must be continuously employed
+by Siemens AG or any of its affiliated companies. The right to receive matching shares is forfeited if the purchased shares are sold,
+transferred, hedged on, pledged or hypothecated in any way during the relevant vesting period.
+The new shares issued or to be issued in exchange for contributions in cash and in kind and with shareholders' subscription rights excluded,
+may in certain cases be subject to further restrictions. The details of those restrictions are described in the relevant authorization. In
+addition, the Managing Board has issued the commitment not to increase the capital stock from the Authorized Capital 2019 and the
+Conditional Capitals 2019 and 2020 by a total of more than 10% of the capital stock existing at the time of the Shareholders' Meeting on
+February 5, 2020, to the extent that capital increases with shareholders' subscription rights excluded are made from the Authorized Capital
+2019 against contributions in cash or in kind or to service convertible bonds and/or warrant bonds issued under the authorizations
+approved on January 30, 2019 or February 5, 2020 with shareholders' subscription rights excluded. This commitment ends no later than
+February 4, 2025.
+The exclusion is necessary with regard to fractional amounts resulting from the subscription ratio.
+10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
+removal of members of the Managing Board and governing amendment to the Articles of
+Association
+The appointment and removal of members of the Managing Board are subject to the provisions of Sections 84 and 85 of the German Stock
+Corporation Act and Section 31 of the German Codetermination Act (Mitbestimmungsgesetz). According to Section 8 para. 1 of the Articles
+of Association, the Managing Board is comprised of several members, the number of which is determined by the Supervisory Board.
+According to Section 179 of the German Stock Corporation Act, any amendment to the Articles of Association requires a resolution of the
+Shareholders' Meeting. The authority to adopt purely formal amendments to the Articles of Association was transferred to the Supervisory
+Board under Section 13 para. 2 of the Articles of Association. In addition, by resolutions adopted during past Shareholders' Meetings, the
+Supervisory Board has been authorized to amend Section 4 of the Articles of Association in accordance with the utilization of the
+Authorized and Conditional Capitals, and after expiration of the then-applicable authorization and utilization period.
+Resolutions of the Shareholders' Meeting require a simple majority vote, unless a greater majority is required by law (Section 23 para. 2 of
+the Articles of Association). Pursuant to Section 179 para. 2 of the German Stock Corporation Act, amendments to the Articles of
+Association require a majority of at least three-quarters of the capital stock represented at the time of the casting of the votes, unless
+another capital majority is prescribed by the Articles of Association.
+10.4 Powers of the Managing Board to issue and repurchase shares
+The Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until February 2, 2026 by up
+to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash (Authorized Capital 2021).
+Subscription rights of existing shareholders are excluded. The new shares shall be offered exclusively to employees of the Company and
+any of its affiliated companies. To the extent permitted by law, such employee shares may also be issued in such a manner that the
+contribution to be paid on such shares is covered by that part of the annual net income which the Managing Board and the Supervisory
+Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock Corporation Act.
+Furthermore, the Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until January 29,
+2024 by up to €510 million through the issuance of up to 170 million Siemens shares against cash contributions and/or contributions in
+kind (Authorized Capital 2019).
+As of September 30, 2021, the total unissued authorized capital of Siemens AG therefore consisted of €600 million nominal that may be
+used, in installments with varying terms, by issuance of up to 200 million Siemens shares.
+By resolutions of the Shareholders' Meetings on January 30, 2019 and February 5, 2020, the Managing Board is authorized to issue bonds
+with conversion, exchange or option rights or with warrants attached, or a combination of these instruments, entitling the holders to
+subscribe to up to 80 million and up to 60 million Siemens shares, respectively. Based on these two authorizations, the Company or its
+affiliated companies may issue bonds until January 29, 2024 and February 4, 2025, respectively, each in an aggregate principal amount
+of up to €15 billion. In order to grant shares of stock to holders/creditors of such convertible bonds or warrant bonds, the capital stock was
+conditionally increased by resolutions of the Shareholders' Meetings in 2019 and 2020, by up to 80 million and up to 60 million Siemens
+37
+Combined Management Report
+shares, respectively (Conditional Capitals 2019 and 2020), i.e. in total by up to €420 million through the issuance of up to 140 million
+Siemens shares.
+The new shares under Authorized Capital 2019 and the aforementioned bonds are to be issued against cash or non-cash contributions.
+They are, as a matter of principle, to be offered to shareholders for subscription. The Managing Board is authorized to exclude, with the
+approval of the Supervisory Board, subscription rights of shareholders in the event of capital increases against contributions in kind. In the
+event of capital increases against contributions in cash, the Managing Board is authorized to exclude shareholders' subscription rights with
+the approval of the Supervisory Board in the following cases:
+.
+•
+The issue price of the new shares/bonds is not significantly lower than the stock market price of the Siemens shares already listed or the
+theoretical market price of the bonds computed in accordance with generally accepted actuarial methods (exclusion of subscription
+rights, limited to 10% of the capital stock, in accordance with or by mutatis mutandis application of Section 186 para. 3 sentence 4
+German Stock Corporation Act).
+• The exclusion is used to grant holders of conversion or option rights or conversion or option obligations on Siemens shares a
+compensation for the effects of dilution.
+21,216
+Total liabilities and equity
+Deferred income
+(in millions of €)
+Assets
+Non-current assets
+Intangible and tangible assets
+Financial assets
+Combined Management Report
+Sep. 30,
+2021
+2020
+1,068
+1,122
+(5)%
+74,852
+74,877
+0%
+Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed)
+75,920
+9.2 Net assets and financial position
+The decrease in financial income, net was due primarily to lower income from investments, net, partly offset by a positive change in
+other financial income (expenses), net. The primary factors in lower income from investments, net were the following: a profit transfer
+agreement with Siemens Beteiligungen Inland GmbH, Germany, which reduced income by €0.9 billion; a decline in income from the
+investment in Siemens Holdings plc, Ltd., United Kingdom, of €0.7 billion; and a decrease of €0.5 billion in income from Siemens Ltd,
+China. Furthermore, fiscal 2020 included a gain of €2.1 billion from the disposal of Siemens Limited, India, which was partly offset by an
+impairment of €1.3 billion on the stake in Siemens Energy AG. In contrast, a gain of €0.9 billion from the sale of Flender GmbH, Germany
+in fiscal 2021 was recorded in income from investments, net. The positive change in other financial income (expenses), net included an
+increase in gains from non-current securities by €0.5 billion and a reduction of expenses by €0.4 billion from impairments of loan
+receivables related to an investment. Higher gains from non-current securities were driven by a transfer of investment funds and
+corresponding realization of hidden reserves as mentioned below.
+171
+141
+22%
+(1,918)
+(2,436)
+21%
+3,400
+14%
+Unappropriated net income
+2,975
+The decrease of revenue and cost of sales was due mainly to the business activities of Gas and Power which, effective with the beginning
+of calendar year 2020, were transferred to Siemens Energy Global GmbH & Co. KG in preparation of the Siemens Energy spin-off completed
+in September 2020.
+On a geographical basis, 76% of revenue was generated in the Europe, C.I.S., Africa, Middle East region, 17% in the Asia, Australia region
+and 7% in the Americas region. Exports from Germany accounted for 54% of overall revenue. In fiscal 2021, orders for Siemens AG
+amounted to €15.7 billion.
+Research and development expenses and selling and general administrative expenses decreased due mainly to the above-mentioned
+transfer of the business activities of Gas and Power.
+The R&D intensity (R&D as a percentage of revenue) was 10%, on the same level as fiscal 2020. The research and development activities
+of Siemens AG are fundamentally the same as for its corresponding business activities within the Siemens Group. Research and
+development expenses in both periods related mainly to Digital Industries. On an average basis, we employed 7,000 people in R&D in
+fiscal 2021.
+The change in other operating income (expenses), net, was mainly due to higher expenses in fiscal 2020, which included expenses
+related to the valuation of an investment as well as expenses related to the spin-off of Siemens Energy.
+35
+75,999
+0%
+Current assets
+51
+85
+(41)%
+Total assets
+101,487
+102,975
+(1)%
+Liabilities and equity
+Equity
+Special reserve with an equity portion
+Provisions
+Provisions for pensions and similar commitments
+Provisions for taxes and other provisions
+Liabilities to banks
+Trade payables, liabilities to affiliated companies and other liabilities
+Active difference resulting from offsetting
+20%
+1,034
+1,243
+Inventories, receivables and other assets
+Cash and cash equivalents, other securities
+Prepaid expenses
+21,792
+16,937
+29%
+2,297
+5,270
+8,786
+24,089
+25,724
+(6)%
+184
+133
+39%
+Deferred tax assets
+(74)%
+Liabilities
+Combined Management Report
+9
+7,539
+4
+Investments accounted for using the equity method
+10,250
+11,023
+13
+4,838
+10,964
+7,862
+3,12
+29,729
+3, 12
+52,968
+52,340
+338
+223
+3
+1,271
+20,449
+1,751
+14, 23
+22,771
+Other current financial liabilities
+7,873
+8,832
+Trade payables
+6,562
+7,821
+16
+Short-term debt and current maturities of long-term debt
+22,964
+Liabilities and equity
+139,608
+70,928
+87,267
+1,769
+2,183
+2,988
+2,865
+7
+123,897
+1,731
+1,523
+7
+Other financial assets
+Property, plant and equipment
+Other intangible assets
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Inventories
+Deferred tax assets
+Contract assets
+Trade and other receivables
+Cash and cash equivalents
+(in millions of €)
+Assets
+3. Consolidated Statements of Financial Position
+Consolidated Financial Statements
+3
+1,261
+9,652
+Other current financial assets
+1,795
+Other assets
+Total assets
+7,795
+8,836
+11
+5,545
+6,688
+10
+8,382
+7,985
+Total non-current assets
+9
+15,518
+8
+14,041
+9,545
+2020
+Sep 30,
+Sep 30,
+2021
+Note
+14,074
+1,958
+Contract liabilities
+10
+39,607
+6,840
+7,040
+Total liabilities and equity
+Total equity
+Non-controlling interests
+Treasury shares, at cost
+Other components of equity
+33,078
+Retained earnings
+2,550
+2,550
+3, 19
+84,074
+90,333
+49,957
+50,381
+1,808
+Capital reserve
+1,925
+(19)
+(4,804)
+2020
+2021
+Fiscal year
+Consolidated Financial Statements
+(in millions of €)
+4. Consolidated Statements of Cash Flows
+4
+123,897
+(1,449)
+139,608
+49,274
+3,433
+4,901
+3
+36,390
+44,373
+Total equity attributable to shareholders of Siemens AG
+(4,629)
+39,823
+769
+679
+Issued capital
+Total current liabilities
+35
+10
+3
+Liabilities associated with assets classified as held for disposal
+6,209
+7,628
+15
+39,952
+Other current liabilities
+1,809
+Current income tax liabilities
+1,674
+2,263
+18
+Current provisions
+7,524
+9,858
+2,281
+34,117
+Long-term debt
+16
+Equity
+Total liabilities
+Total non-current liabilities
+Other liabilities
+Other financial liabilities
+2,352
+1,723
+18
+Provisions
+664
+2,337
+7
+Deferred tax liabilities
+6,360
+2,839
+17
+Provisions for pensions and similar obligations
+38,005
+40,879
+(47)
+Income tax expenses
+693
+Non-controlling interests
+170
+4,030
+28
+6.36
+4.77
+1.32
+0.23
+7.68
+5.00
+6,161
+28
+4.70
+1.31
+0.23
+7.59
+4.93
+|| 2. Consolidated Statements of Comprehensive Income
+(in millions of €)
+Net income
+6.28
+Remeasurements of defined benefit plans
+537
+Income from continuing operations
+Income from continuing operations
+5,636
+4,156
+Income from discontinued operations, net of income taxes
+3
+1,062
+44
+Net income
+Income from discontinued operations
+Net income
+6,697
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+Basic earnings per share
+Income from continuing operations
+Income from discontinued operations
+Net income
+Diluted earnings per share
+4,200
+(1,346)
+therein: Income tax effects
+2020
+Derivative financial instruments
+(237)
+148
+therein: Income tax effects
+31
+(38)
+Income (loss) from investments accounted for using the equity method, net
+88
+(2,805)
+(89)
+1,438
+(2,746)
+Other comprehensive income, net of income taxes
+3,647
+(2,986)
+10,345
+1,214
+For details on the authorizations referred to above, especially with the restrictions to exclude subscription rights and the terms to include
+shares when calculating such restrictions, please refer to the relevant resolution and to Section 4 of the Articles of Association.
+Items that may be reclassified subsequently to profit or loss
+Fiscal year
+2021
+1,587
+(240)
+6,697
+4,200
+17
+2,123
+(261)
+(45)
+33
+Remeasurements of equity instruments
+Currency translation differences
+30
+therein: Income tax effects
+(1)
+(3)
+Income (loss) from investments accounted for using the equity method, net
+57
+17
+Items that will not be reclassified to profit or loss
+2,210
+5
+(1,861)
+7
+Income tax expenses
+1.
+Consolidated Statements of Income
+3
+2.
+Consolidated Statements of Comprehensive Income
+4
+3.
+Consolidated Statements of Financial Position
+3
+5
+45
+4.
+Consolidated Statements of Cash Flows
+5.
+7
+6.
+Consolidated Statements of Changes in Equity
+Notes to Consolidated Financial Statements
+6
+1. Consolidated Statements of Income
+Consolidated Financial Statements
+SIEMENS
+Attributable to:
+Total comprehensive income
+10.5 Significant agreements which take effect, alter or terminate upon a change of control of
+the Company following a takeover bid
+As of September 30, 2021, Siemens AG maintained lines of credit in the amount of € 7.45 billion.
+In March 2021, Siemens AG entered into a bilateral loan agreement, which has been drawn in the full amount of € 500 million.
+In addition, in March 2020 and in June 2019 respectively, a consolidated subsidiary as borrower and Siemens AG as guarantor entered
+into a bilateral loan agreement, each of which has been drawn in the full amount of US$ 500 million. In February 2021, a consolidated
+subsidiary as borrower entered into two bilateral loan agreements in the total amount of US$ 500 million; both loan agreements have
+been guaranteed by Siemens AG and have been fully drawn.
+The lines of credit, and the relevant loan agreements mentioned above provide their respective lenders with a right of termination in the
+event that (1) Siemens AG becomes a subsidiary of another company or (2) a person or a group of persons acting in concert acquires
+effective control over Siemens AG by being able to exercise decisive influence over its activities (Art. 3(2) of Council Regulation (EC) 139/
+2004).
+Framework agreements concluded by Siemens AG under International Swaps and Derivatives Association Inc. documentation (ISDA
+Agreements) grant each counterparty a right of termination, including in certain cases of (i) a transformation (for example mergers and
+changes of form), (ii) an asset transfer or (iii) acquisition of ownership interests that enables the acquirer to exercise control over Siemens
+AG or its controlling bodies. Partially this right of termination exists only, if (1) the resulting entity fails to simultaneously assume Siemens
+AG's obligations under the ISDA Agreements or (2) the resulting entity's creditworthiness is materially weaker than Siemens AG's
+immediately prior to such event. Generally, ISDA Agreements are designed such that upon termination all outstanding payment claims
+documented under them are to be netted.
+Table of contents
+10.6 Compensation agreements with members of the Managing Board or employees in the
+event of a takeover bid
+On September 18, 2019, the Supervisory Board of Siemens AG resolved that the contracts with members of the Managing Board should
+not contain such right of termination in the future. This has already been taken into account in the case of contract extensions and in the
+case of new contracts with the newly appointed members of the Managing Board as of October 1, 2020.
+10.7 Other takeover-relevant information
+We are not aware of, nor have we during the last fiscal year been notified of, any shareholder directly or indirectly holding 10% or more
+of the voting rights. There are no Siemens shares with special rights conferring powers of control. Shares of stock issued by Siemens AG
+to employees under its employee share program and/or as share-based compensation are transferred to the employees. The beneficiary
+employees who hold shares of employee stock may exercise their control rights in the same way as any other shareholder in accordance
+with applicable laws and the Articles of Association.
+39
+Consolidated Financial
+Statements*
+FOR FISCAL 2021
+* This document is an English language translation of the decisive German version and is not provided in
+the European Single Electronic Format (ESEF). The legally required rendering in ESEF-format is filed in
+German language with the operator of the German Federal Gazette and published in the German Federal
+Gazette.
+The contracts with the members of the Managing Board previously contained the right of the member to terminate his or her contract
+with the Company for good cause in the event of a change of control that results in a substantial change in the position of a Managing
+Board member (for example, due to a change in corporate strategy or a change in the Managing Board member's duties and
+responsibilities). A change of control exists if one or several shareholders acting jointly or in concert acquire a majority of the voting rights
+in Siemens AG and exercise a controlling influence, or if Siemens AG becomes a dependent enterprise as a result of entering into an
+intercompany agreement within the meaning of Section 291 of the German Stock Corporation Act, or if Siemens AG is to be merged into
+an existing corporation or other entity. If this right of termination is exercised, the Managing Board member is entitled to a severance
+payment in the amount of no more than two years' compensation. The calculation of the annual compensation includes not only the base
+compensation and the target amount for the bonus, but also the target amount for the stock awards, in each case based on the most
+recent completed fiscal year prior to termination of the contract. The stock-based compensation components for which a firm commitment
+already exists will remain unaffected. Additionally, the severance payments cover non-monetary benefits by including an amount of 5%
+of the total severance amount. Severance payments will be reduced by 10% as a lump-sum allowance for discounted values and for income
+earned elsewhere. However, this reduction will apply only to the portion of the severance payment that was calculated without taking
+account of the first six months of the remaining term of the Managing Board member's contract. There is no entitlement to a severance
+payment if the Managing Board member receives benefits from third parties in connection with a change of control. A right to terminate
+the contract does not exist if the change of control occurs within a period of twelve months prior to a Managing Board member's
+retirement.
+Consolidated Financial Statements
+Fiscal year
+(in millions of €, per share amounts in €)
+(431)
+(396)
+Income (loss) from investments accounted for using the equity method, net
+4
+(478)
+(596)
+Interest income
+1,483
+6
+1,545
+(644)
+(814)
+Other financial income (expenses), net
+641
+496
+Income from continuing operations before income taxes
+7,496
+5,502
+Interest expenses
+Other operating expenses
+630
+236
+Revenue
+Cost of sales
+Gross profit
+Note
+2,30
+2021
+2020
+62,265
+55,254
+(39,527) (35,366)
+22,737
+19,888
+Research and development expenses
+(4,859)
+(4,569)
+Selling and general administrative expenses
+(11,189)
+(10,682)
+Other operating income
+5
+Shareholders of Siemens AG
+Interest (income) expenses, net
+Current income tax assets
+Other non-cash (income) expenses
+39,823
+3,433
+36,390
+(4,629)
+(115)
+(42)
+(1,292)
+33,078
+6,161
+6,161
+Net income
+2,550
+Balance as of October 1, 2020
+39,823
+3,433
+36,390
+(4,629)
+(115)
+(42)
+6,840
+(1,292)
+537
+Other comprehensive income, net of income taxes
+Purchase of treasury shares
+74
+74
+(63)
+137
+Share-based payment
+(3,088)
+(284)
+6,697
+(2,804)
+Dividends
+3,647
+156
+3,492
+(178)
+29
+1,465
+2,175
+(2,804)
+Re-issuance of treasury shares
+33,078
+2,550
+(1,511)
+(1,511)
+545
+5
+Disposal of equity instruments
+Re-issuance of treasury shares
+Purchase of treasury shares
+(147)
+(147)
+(1,511)
+(141)
+(3,492)
+(318)
+(3,174)
+(3,174)
+(2,986)
+(218)
+(2,769)
+111
+(6)
+6,840
+550
+(2)
+Balance as of September 30, 2020
+(677)
+(663)
+(15)
+(15)
+Other changes in equity
+1,969
+1,603
+550
+366
+1
+Other transactions with non-controlling interests
+(9,589)
+(9,589)
+(9,589)
+Changes in equity resulting from major portfolio transactions
+(2)
+(2)
+365
+58
+(547)
+372
+(547)
+8
+The determination of the recoverable amount of a cash-generating unit or a group of cash-generating units to which goodwill is allocated
+involves the use of estimates by management. The outcome predicted by these estimates is influenced e.g. by the successful integration
+of acquired entities, volatility of capital markets, interest rate developments, foreign exchange rate fluctuations and the outlook on
+economic trends. In determining recoverable amounts, discounted cash flow calculations generally use five-year projections (in
+exceptional cases up to ten years) that are based on financial forecasts. Cash flow projections take into account past experience and
+represent management's best estimate about future developments. Cash flows after the planning period are extrapolated using individual
+growth rates. Key assumptions on which management has based its determination of fair value less costs to sell and value in use include
+For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the cash-generating unit or the group
+of cash-generating units that is expected to benefit from the synergies of the business combination. If the carrying amount of the cash-
+generating unit or the group of cash-generating units, to which the goodwill is allocated, exceeds its recoverable amount, an impairment
+loss on goodwill allocated to that (group of) cash-generating unit(s) is recognized. The recoverable amount is the higher of the cash-
+generating unit's or the group of cash-generating units' fair value less costs to sell and its value in use. If either of these values exceeds the
+carrying amount, it is not always necessary to determine both values. These values are generally determined based on discounted cash
+flow calculations. Impairment losses on goodwill are not reversed in future periods.
+Goodwill - Goodwill is not amortized, instead, goodwill is tested for impairment annually, as well as whenever there are events or changes
+in circumstances (triggering events) which suggest that the carrying amount may not be recoverable. Goodwill is carried at cost less
+accumulated impairment losses. The goodwill impairment test is performed at the level of a cash-generating unit or a group of cash-
+generating units, generally represented by a segment. Siemens Healthineers is tested one level below the segment. This is the lowest level
+at which goodwill is monitored for internal management purposes.
+Earnings per share - Basic earnings per share are computed by dividing income from continuing operations, income from discontinued
+operations and net income, all attributable to ordinary shareholders of Siemens AG by the weighted average number of shares outstanding
+during the year. Diluted earnings per share are calculated by assuming conversion or exercise of all potentially dilutive securities and share-
+based payment plans.
+Research and development costs - Costs of research activities are expensed as incurred. Costs of development activities are capitalized
+when the recognition criteria in IAS 38 are met. Capitalized development costs are stated at cost less accumulated amortization and
+impairment losses with an amortization period of generally three to ten years.
+Product-related expenses - Provisions for estimated costs related to product warranties are recorded in line item Cost of sales at the time
+the related sale is recognized.
+Functional costs - In general, operating expenses by types are assigned to the functions following the functional area of the
+corresponding profit and cost centers. Amortization, depreciation and impairment of intangible assets and property, plant and equipment
+are included in functional costs depending on the use of the assets.
+Consolidated Financial Statements
+Income from royalties: Royalties are recognized on an accrual basis in accordance with the substance of the relevant agreement.
+Income from interest - Interest is recognized using the effective interest method.
+Sale of goods: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon delivery of the
+goods. Invoices are issued at that point in time and are usually payable within 30 days. For licensing transactions granting the customer a
+right to use Siemens' intellectual property, payment terms are usually 30 days from the date of invoice issued according to the contractual
+Revenues from services: Revenues are recognized over time on a straight-line basis or, if the performance pattern is other than straight-
+line, as services are provided, i.e. under the percentage-of-completion method as described above. Payment terms are usually 30 days
+from the date of invoice issued according to the contractual terms.
+The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards
+completion and may involve estimates on the scope of deliveries and services required to fulfill the contractually defined obligations. These
+significant estimates include total estimated costs, total estimated revenues, contract risks, including technical, political and regulatory
+risks, risks from supply chain constraints and other judgments. Under the percentage-of-completion method, changes in estimates may
+lead to an increase or decrease of revenue. In addition, Siemens needs to assess whether the contract is expected to continue or whether
+it is terminated. In determining whether the continuation or termination of a contract is expected to be the most likely scenario, all relevant
+facts and circumstances relating to the contract are considered on an individual basis.
+Sales from construction-type contracts: Revenues are recognized over time under the percentage-of-completion method, based on the
+percentage of costs incurred to date compared to total estimated costs. An expected loss on the contract is recognized as an expense
+immediately. Payment terms are usually 30 days from the date of invoice issued according to the contractual terms.
+Revenue recognition - Siemens recognizes revenue when, or as control over distinct goods or services is transferred to the customer; i.e.
+when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits,
+provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking our
+customer's creditworthiness into account. Revenue is the transaction price Siemens expects to be entitled to. Variable consideration is
+included in the transaction price if it is highly probable that a significant reversal of revenue will not occur once associated uncertainties
+are resolved. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending
+on which is expected to better predict the amount of variable consideration. Consideration is adjusted for the time value of money if the
+period between the transfer of goods or services and the receipt of payment exceeds twelve months and there is a significant financing
+benefit either to the customer or Siemens. If a contract contains more than one distinct good or service, the transaction price is allocated
+to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company
+reasonably estimates those. Revenue is recognized for each performance obligation either at a point in time or over time.
+in net income. Those foreign currency-denominated transactions which are classified as non-monetary are remeasured using the historical
+spot exchange rate.
+Consolidated Financial Statements
+7
+terms.
+Foreign currency transaction - Transactions that are denominated in a currency other than the functional currency of an entity, are
+recorded at that functional currency applying the spot exchange rate at the date when the underlying transactions are initially recognized.
+At the end of the reporting period, foreign currency-denominated monetary assets and liabilities are revalued to functional currency
+applying the spot exchange rate prevailing at that date. Gains and losses arising from these foreign currency revaluations are recognized
+estimated growth rates and weighted average cost of capital. These estimates, including the methodology used, can have a material
+impact on the respective values and ultimately the amount of any goodwill impairment.
+Property, plant and equipment - Property, plant and equipment, is valued at cost less accumulated depreciation and impairment losses.
+Depreciation expense is recognized using the straight-line method. The following useful lives are assumed:
+Defined benefit plans Siemens measures the entitlements by applying the projected unit credit method. The approach reflects an
+actuarially calculated net present value of the future benefit entitlement for services already rendered. In determining the net present
+value of the future benefit entitlement for service already rendered (Defined Benefit Obligation (DBO)), the expected rates of future salary
+-
+Inventories - Inventories are valued at the lower of acquisition or production costs and net realizable value, costs being generally
+determined based on an average or first-in, first-out method. Determining net realizable value of inventories involves accounting estimates
+for quantity, technical and price risks.
+Income taxes - Tax positions are calculated taking into consideration the respective local tax laws, relevant court decisions and applicable
+tax authorities' views. Tax regulations can be complex and possibly subject to different interpretations of tax payers and local tax
+authorities. Different interpretations of existing or new tax laws as a result of tax reforms or other tax legislative procedures may result in
+additional tax payments for prior years and are taken into account based on management's considerations. Under the liability method,
+deferred tax assets and liabilities are recognized for expected tax consequences of future periods attributable to differences between the
+financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are recognized if sufficient
+future taxable profit is available, including income from forecasted operating earnings, the reversal of existing taxable temporary
+differences and available tax planning opportunities that Siemens would execute. As of each period-end, Siemens evaluates the
+recoverability of deferred tax assets, based on taxable income of past periods and projected future taxable profits. As future developments
+are uncertain and partly beyond Siemens's control, assumptions are necessary to estimate future taxable profits as well as the period in
+which deferred tax assets will recover. Estimates are revised in the period in which there is sufficient evidence to revise the assumption.
+Contract assets, contract liabilities, receivables - When either party to a contract with customers has performed, Siemens presents a
+contract asset, a contract liability or a receivable depending on the relationship between Siemens' performance and the customer's
+payment. Contract assets and liabilities are presented as current since incurred in the normal operating cycle. Receivables are recognized
+when the right to consideration becomes unconditional. Valuation allowances for credit risks are made for contract assets and receivables
+in accordance with the accounting policy for financial assets measured at amortized cost.
+Discontinued operations and non-current assets held for disposal - Discontinued operations are reported when a component of an
+entity is classified as held for disposal or has been disposed of, if the component represents a separate major line of business or
+geographical area of operations and is part of a single coordinated plan to disposal. A non-current asset or a disposal group is held for
+disposal if its carrying amount will be recovered principally through a sale transaction or through a distribution to owners rather than
+through continuing use. In the Consolidated Statements of Income and of Cash Flows, discontinued operations is reported separately from
+continuing operations; prior periods are presented on a comparable basis. The disclosures in the Notes to the Consolidated Financial
+Statements outside Note 3 relate to continuing operations or assets and liabilities not held for disposal. The determination of the fair value
+less costs to sell includes the use of estimates and assumptions that tend to be uncertain.
+Lessee - Siemens recognizes right-of-use assets and lease liabilities for leases with a term of more than twelve months if the underlying
+asset is not of low value. Payments for short-term and low-value leases are expensed over the lease term. Extension options are included
+in the lease term if their exercise is reasonably certain. Right-of-use assets are measured at cost less accumulated depreciation and
+impairment losses adjusted for any remeasurements. Right-of-use assets are depreciated under the straight-line method over the shorter
+of the lease term and the useful life of the underlying assets. Lease liabilities are measured at the present value of the lease payments due
+over the lease term, generally discounted using the incremental borrowing rate. Lease liabilities are subsequently measured at amortized
+cost using the effective interest method. They are remeasured in case of modifications or reassessments of the lease.
+Lessor - Leases are classified as either finance or operating leases, determined based on whether substantially all the risks and rewards
+incidental to ownership of an underlying asset are transferred. If this is the case, the lease is classified as a finance lease; if not, it is an
+operating lease. Receivables from finance leases are recognized at an amount equal to the net investment in the lease. The assets
+underlying the operating leases are presented in Property, plant and equipment and depreciated on a straight-line basis over their useful
+lives or to their estimated residual value. Operating lease income is recognized on a straight-line basis over the lease term.
+Leases - A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in
+exchange for consideration. Further information on leases can be found in Notes 8, 13 and 16.
+Other intangible assets - The Company amortizes intangible assets with finite useful lives on a straight-line basis over their respective
+estimated useful lives. Estimated useful lives for patents, licenses and other similar rights generally range from three to five years, except
+for intangible assets with finite useful lives acquired in business combinations. Intangible assets acquired in business combinations
+primarily consist of customer relationships and trademarks as well as technology. Useful lives in specific acquisitions ranged from four to
+30 years for customer relationships and trademarks (in fiscal 2020 four to 20 years) and for technology from five to 22 years (in fiscal
+2020 five to 18 years).
+Impairment of property, plant and equipment and other intangible assets - The Company reviews property, plant and equipment and
+other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
+not be recoverable. In addition, intangible assets not yet available for use are subject to an annual impairment test. Impairment testing of
+property, plant and equipment and other intangible assets involves the use of estimates in determining the assets' recoverable amount,
+which can have a material impact on the respective values and ultimately the amount of any impairment.
+generally 10 years
+(Income) loss related to investing activities
+20 to 50 years
+Equipment leased to others
+Office & other equipment
+Technical machinery & equipment
+Other buildings
+Factory and office buildings
+generally 5 years
+generally 3 to 7 years
+Foreign currency translation - Assets and liabilities of foreign subsidiaries, where the functional currency is other than the euro, are
+translated using the spot exchange rate at the end of the reporting period, while the Consolidated Statements of Income are translated
+using average exchange rates during the period. Differences arising from such translations are recognized within equity and reclassified
+to net income when the gain or loss on disposal of the foreign subsidiary is recognized. The Consolidated Statements of Cash Flows are
+translated at average exchange rates during the period, whereas cash and cash equivalents are translated at the spot exchange rate at the
+end of the reporting period.
+Associates and joint ventures are recorded in the Consolidated Financial Statements using the equity method and are initially recognized
+at cost. If the investment was retained in a transaction in which Siemens lost control of a subsidiary, the fair value of the investment
+represents the cost on initial recognition. Siemens' share of its associate's or joint venture's post-acquisition profits or losses is recognized
+in the Consolidated Statements of Income, and its share of post-acquisition changes in equity that have not been recognized in the
+associate's or joint venture's profit or loss is recognized directly in equity. The cumulative post-acquisition changes also include effects
+from fair value adjustments and are adjusted against the carrying amount of the investment. When Siemens' share of losses in an associate
+or joint venture equals or exceeds its interest in the investment, Siemens does not recognize further losses, unless it incurs obligations or
+makes payments on behalf of the associate or joint venture. The interest in an associate or joint venture is the carrying amount of the
+investment together with any long term interests that, in substance, form part of Siemens' net investment in the associate or joint venture.
+Siemens reviews associates and joint ventures for impairment whenever there is objective evidence that its investment is impaired, for
+example a significant or prolonged decline in the fair value of the investment below its cost. This includes the use of estimates and
+assumptions also related to observable valuation inputs that tend to be uncertain.
+Associates and joint ventures - Associates are companies over which Siemens has the ability to exercise significant influence over
+operating and financial policies (generally through direct or indirect ownership of 20% to 50% of the voting rights). Joint ventures are
+entities over which Siemens and one or more parties have joint control. Joint control requires unanimous consent of the parties sharing
+control in decision making on relevant activities.
+Other changes in equity
+(219)
+2,325
+1,095
+(45)
+(174)
+(178)
+5
+1,229
+Balance as of September 30, 2021
+1,229
+8
+8
+Other transactions with non-controlling interests
+Changes in equity resulting from major portfolio transactions
+Disposal of equity instruments
+430
+430
+(547)
+8
+1
+2,550
+7,040
+Business combinations - Cost of an acquisition is measured at the fair value of the assets given and liabilities incurred or assumed at the
+date of exchange. Identifiable assets acquired and liabilities assumed in a business combination (including contingent liabilities) are
+initially measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling
+interests are measured at the proportional fair value of assets acquired and liabilities assumed (partial goodwill method). If there is no loss
+of control, transactions with non-controlling interests are accounted for as equity transactions not affecting net income. At the date control
+is lost, any retained equity interests are remeasured to fair value. In case of a written put option on non-controlling interests the Company
+assesses whether the prerequisites for the transfer of present ownership interest are fulfilled at the balance sheet date. If the Company is
+not the beneficial owner of the shares underlying the put option, the exercise of the put option will be assumed at each balance sheet
+date and treated as equity transaction between shareholders with the recognition of a purchase liability at the respective exercise price.
+The non-controlling interests participate in profits and losses during the reporting period.
+Certain of these accounting policies require critical accounting estimates that involve complex and subjective judgments and the use of
+assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting estimates
+could change from period to period and have a material impact on the Company's results of operations, financial positions and cash flows.
+Critical accounting estimates could also involve estimates where Siemens reasonably could have used a different estimate in the current
+accounting period. Siemens cautions that future events often vary from forecasts and that estimates routinely require adjustment.
+COVID-19 - Impacts of the pandemic coronavirus spread on Siemens' Consolidated Financial Statements are contingent on the further
+evolution of virus variants, the progress of worldwide vaccinations and the vaccines' effectiveness. Potential impacts may also result from
+increasingly phased out financial and non-financial measures originally taken by governments and organizations globally. Related impacts
+could influence fair value and carrying amounts of assets and liabilities, amount and timing of results of operations and cash flows. Effects
+vary considerably by region and customer industries. Siemens based its estimates and assumptions on existing knowledge and best
+information available. We expect that related effects on Siemens' Consolidated Financial Statements will not reach a substantial degree.
+Basis of consolidation - The Consolidated Financial Statements include the accounts of Siemens AG and its subsidiaries over which the
+Company has control. Siemens controls an investee if it has power over the investee. In addition, Siemens is exposed to, or has rights to,
+variable returns from the involvement with the investee and Siemens is able to use its power over the investee to affect the amount of
+Siemens' return.
+note 2 Material accounting policies and critical accounting estimates
+The accompanying Consolidated Financial Statements present the operations of Siemens Aktiengesellschaft with registered offices in
+Berlin (registry number HRB 12300) and Munich (registry number HRB 6684), Germany, and its subsidiaries (the Company or Siemens).
+They have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union as well
+as with the additional requirements set forth in Section 315e (1) of the German Commercial Code (HGB). The financial statements are in
+accordance with IFRS as issued by the International Accounting Standards Board (IASB). The Consolidated Financial Statements were
+authorized for issue by the Managing Board on November 30, 2021. Siemens prepares and reports its Consolidated Financial Statements
+in euros (€). Due to rounding, numbers presented may not add up precisely to totals provided. Siemens is a German based multinational
+focused technology company.
+NOTE 1 Basis of presentation
+| 6. Notes to Consolidated Financial Statements
+Consolidated Financial Statements
+60
+49,274
+4,901
+44,373
+(4,804)
+124
+9
+115
+114
+(179)
+(13)
+173
+39,607
+(2,701)
+(185)
+5 to 10 years
+170
+(1,498)
+(1,730)
+Additions to intangible assets and property, plant and equipment
+Cash flows from investing activities
+8,862
+9,996
+Cash flows from operating activities - continuing and discontinued operations
+1,012
+Acquisitions of businesses, net of cash acquired
+(113)
+7,851
+10,109
+Cash flows from operating activities - continuing operations
+1,347
+1,369
+Interest received
+293
+238
+Cash flows from operating activities - discontinued operations
+(1,632)
+(14,391)
+Purchase of investments and financial assets for investment purposes
+Cash flows from investing activities - discontinued operations
+(4,050)
+(17,192)
+Cash flows from investing activities - continuing operations
+1,174
+985
+Disposal of investments and financial assets for investment purposes
+218
+(1,727)
+2
+47
+98
+Disposal of intangibles and property, plant and equipment
+(994)
+(631)
+Change in receivables from financing activities
+(1,269)
+(1,523)
+Disposal of businesses, net of cash disposed
+(2,324)
+1,183
+1,403
+(44)
+(1,062)
+Income from discontinued operations, net of income taxes
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+4,200
+6,697
+Net income
+Cash flows from operating activities
+Amortization, depreciation and impairments
+Dividends received
+Change in other assets and liabilities
+Contract liabilities
+Trade payables
+Trade and other receivables
+Inventories
+Contract assets
+Change in operating net working capital from
+4,200
+Income taxes paid
+3,075
+3,098
+1,861
+(500)
+(463)
+418
+1,132
+67
+1,286
+214
+(1,227)
+(414)
+(444)
+(723)
+(934)
+373
+586
+(644)
+(243)
+(731)
+(839)
+1,346
+1,698
+(1,134)
+Additions to assets leased to others in operating leases
+(15,494)
+Treasury
+shares
+at cost
+Consolidated Financial Statements
+Derivative
+financial
+instruments
+Equity
+instruments
+Currency
+translation
+differences
+Retained
+earnings
+Capital
+reserve
+Issued
+capital
+Total equity
+attributable
+5. Consolidated Statements of Changes in Equity
+13
+14,041
+9,545
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued operations
+at end of period
+14,054
+9,545
+Cash and cash equivalents at end of period
+12,391
+5
+14,054
+to share-
+holders of
+Siemens AG
+controlling
+interests
+4,030
+51,508
+Cash flows from investing activities - continuing and discontinued operations
+2,858
+48,650
+(226)
+(49)
+1,409
+Non
+41,790
+4,030
+2,550
+Share-based payment
+Dividends
+Other comprehensive income, net of income taxes
+Net income
+Balance as of October 1, 2019
+(in millions of €)
+Total
+equity
+6,839
+Cash and cash equivalents at beginning of period
+(3,663)
+(4,509)
+Interest paid
+1,592
+(952)
+Change in short-term debt and other financing activities
+(4,472)
+(4,294)
+Repayment of long-term debt (including current maturities of long-term debt)
+10,255
+8,316
+Issuance of long-term debt
+2,624
+(5,184)
+2,055
+Re-issuance of treasury shares and other transactions with owners
+(547)
+Cash flows from financing activities
+1,663
+(704)
+(833)
+(1,517)
+(2,804)
+Change in cash and cash equivalents
+(525)
+Dividends paid to shareholders of Siemens AG
+204
+Effect of changes in exchange rates on cash and cash equivalents
+(4,663)
+Effect of deconsolidation of Siemens Energy on cash and cash equivalents
+3,172
+785
+Cash flows from financing activities - continuing and discontinued operations
+Purchase of treasury shares
+(3,174)
+Cash flows from financing activities - discontinued operations
+4,267
+785
+Cash flows from financing activities continuing operations
+(1,095)
+(208)
+Dividends attributable to non-controlling interests
+(285)
+(732)
+4,826
+(3,405)
+1,421
+(270)
+Office and other equipment
+18,987
+75
+142
+511
+81
+(595)
+5,406
+(4,164)
+1,242
+5,249
+85
+Technical machinery and equipment
+73
+(8,023)
+(582)
+10,964
+(1,004)
+Land and buildings
+8,656
+126
+136
+349
+195
+9,454
+(4,029)
+5,425
+(707)
+5,120
+86
+756
+(629)
+23,443
+3,682
+(1)
+(13,578)
+1,053
+11,023
+(2,071)
+'Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+18
+Consolidated Financial Statements
+Gross
+Translation
+Additions Additions
+Reclassi-
+carrying
+amount
+10/01/20191
+differences
+through
+(1,345)
+fications
+Retire-
+ments²
+1,055
+24,601
+(35)
+(2,529)
+2,739
+568
+76
+14
+626
+1
+(538)
+3,860
+(1,979)
+1,882
+Equipment leased to others
+(511)
+construction in progress
+736
+16
+47
+711
+(420)
+Property, plant and equipment
+379
+Advances to suppliers and
+319
+Carrying
+amount
+09/30/2021
+335
+1.7%
+5,827
+1.7%
+discount rate
+8.5%
+7.0%
+2,114
+1.5%
+7.5%
+6,732
+The sensitivity analysis for the groups of cash-generating units to which a significant amount of goodwill is allocated was based on a
+reduction in after-tax future cash flows by 10% or an increase in after-tax discount rates by one percentage point or a reduction in the
+terminal value growth rate by one percentage point. Siemens concluded that no impairment loss would need to be recognized on goodwill
+in any of these groups of cash-generating units.
+Gross Translation
+carrying differences
+amount
+10/01/2020
+Additions Additions
+through
+Reclassi-
+fications
+Retire-
+ments¹
+Gross
+business
+combi-
+NOTE 13 Other intangible assets and property, plant and equipment
+rate
+Goodwill
+After-tax
+Goodwill
+business
+rate
+7,692
+1.7%
+7,417
+1.7%
+After-tax
+discount rate
+7.8%
+8.5%
+6,525
+1.7%
+7.5%
+Revenue figures in the detailed forecast planning period of the groups of cash-generating units to which a significant amount of goodwill
+is allocated are based on average revenue growth rates (excluding portfolio effects) of between 7.3% and 9.3% (3.1% and 6.1% in fiscal
+2020).
+(in millions of €)
+Digital Industries
+Imaging of Siemens Healthineers
+Smart Infrastructure
+Sep 30, 2020
+Terminal
+value growth
+carrying
+amount
+09/30/2021
+Accumu-
+lated depre-
+nations
+ciation/am-
+ortization
+and impair-
+(243)
+7,144
+(3,158)
+3,987
+(458)
+Customer relationships
+and trademarks
+5,037
+176
+3,978
+(1,051)
+8,139
+(2,956)
+5,184
+(338)
+Other intangible assets
+13,124
+43
+6,553
+2,576
+4,631
+ment
+Deprecia-
+tion/amorti-
+zation and
+impairment
+in fiscal
+2021
+(in millions of €)
+Internally generated technology
+3,456
+22
+277
+(51)
+3,704
+(1,910)
+1,794
+(208)
+Acquired technology including patents,
+licenses and similar rights
+138
+combi-
+38
+nations
+3,168
+(11,911)
+23,443
+(13,194)
+10,250
+(2,054)
+1 Opening balance as of October 1, 2019 including effect of adopting IFRS 16
+58
+2 Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+In fiscal 2021 and 2020, expenses recognized for short-term leases are €50 million and €71 million, respectively; expenses for low-value
+leases not accounted for under the right-of-use model are €21 million and €23 million, respectively.
+Future minimum lease payments to be received under operating leases are:
+(in millions of €)
+Within one year
+After one year but not more than two years
+After two years but not more than three years
+After three years but not more than four years
+After four years but not more than five years
+More than five years
+Sep 30,
+The gross carrying amount of Advances to suppliers and construction in progress includes €959 million and €639 million, respectively, of
+property, plant and equipment under construction in fiscal 2021 and 2020. As of September 30, 2021 and 2020, contractual commitments
+for purchases of property, plant and equipment are €625 million and €563 million, respectively. Right-of-use assets are presented in
+Property, plant and equipment in accordance with their nature; right-of-use assets have a carrying amount of €2,641 million and €2,474
+as of September 30, 2021 and 2020, respectively; additions are €901 million and €1,273 million and depreciation expense is €726 million
+and €706 million in fiscal 2021 and 2020. Right-of-use assets mainly relate to leases of land and buildings with a carrying amount of
+€2,320 million and €2,187 million as of September 30, 2021 and 2020, additions of €659 million and €1,029 million and depreciation
+expense of €534 million and €509 million in fiscal 2021 and 2020. Equipment leased to others mainly relate to Technical machinery and
+equipment as well as to Office and other equipment owned by Siemens with a carrying amount of €1,279 million and €404 million,
+respectively, as of September 30, 2021 and €1,223 million and €448 million, respectively, as of September 30, 2020.
+(951)
+33,080
+Property, plant and equipment
+(168)
+656
+(545)
+3,682
+(1,826)
+1,856
+(524)
+Advances to suppliers and
+construction in progress
+1,461
+(39)
+512
+(780)
+(418)
+736
+(1)
+735
+2021
+2020
+449
+454
+2021
+2020
+14,446
+14,189
+4,700
+4,245
+1,552
+2,044
+1,556
+1,670
+710
+623
+22,964
+22,771
+Item Loans receivable primarily relate to long-term loan transactions of SFS.
+19
+Sep 30, 2021
+Terminal
+value growth
+Other
+3,700
+Equity instruments
+Receivables from finance leases
+336
+369
+247
+261
+182
+188
+124
+129
+166
+186
+1,505
+1,586
+In fiscal 2021 and 2020, income from operating leases is €668 million and €571 million, respectively, thereof from variable lease payments
+€127 and €110 million, respectively.
+NOTE 14 Other financial assets
+Sep 30,
+(in millions of €)
+Loans receivable
+Derivative financial instruments
+Gross
+carrying
+amount
+09/30/2020
+Equipment leased to others
+1,171
+7,008
+(202)
+373
+70
+(2,618)
+4,631
+(2,902)
+licenses and similar rights
+1,729
+Customer relationships and trademarks
+9,434
+(333)
+331
+9
+(4,401)
+5,037 (3,642)
+(443)
+Acquired technology including patents,
+(194)
+1,714
+Accumu-
+lated depre-
+ciation/am-
+ortization
+and impair-
+ment
+Carrying
+amount
+09/30/2020
+Deprecia-
+tion/amorti-
+zation and
+impairment
+in fiscal
+2020
+(in millions of €)
+Internally generated technology
+3,885
+(95)
+419
+(753)
+3,456
+(1,741)
+1,395
+(315)
+Other intangible assets
+20,326
+7
+288
+222
+(4,523)
+5,120
+(3,699)
+1,421
+(273)
+Office and other equipment
+7,239
+(206)
+10
+604
+124
+(2,523)
+5,249
+(4,078)
+(233)
+(571)
+9,360
+(685)
+(630)
+704
+495
+(7,772)
+13,124
+(8,286)
+4,838
+(952)
+Land and buildings
+11,319
+(306)
+40
+1,108
+396
+(3,902)
+8,656 (3,589)
+5,067
+Technical machinery and equipment
+Imaging of Siemens Healthineers
+1,346
+Varian of Siemens Healthineers
+369
+(1,120)
+Total comprehensive income (loss), net of income taxes
+(867)
+(2,993)
+attributable to shareholders of Siemens Energy AG
+(793)
+(2,630)
+Total comprehensive income, net of income taxes, attributable to Siemens (2020: since initial recognition on Sep. 25)
+(278)
+(24)
+13
+Consolidated Financial Statements
+Siemens Energy AG is globally active in the transmission and generation of electrical power and is publicly listed. The market capitalization
+of Siemens Energy is €16.6 billion and €16.5 billion, respectively, as of September 30, 2021 and 2020.
+Subsidiary with material non-controlling interests
+Summarized financial information, in accordance with IFRS and before inter-company eliminations, is presented below.
+(in millions of €)
+Ownership interests held by non-controlling interests
+Accumulated non-controlling interests
+Current assets
+Non-current assets
+Current liabilities
+Non-current liabilities
+Net income attributable to non-controlling interests
+Dividends paid to non-controlling interests
+Revenue
+Income (loss) from continuing operations, net of income taxes
+(1,873)
+Other comprehensive income, net of income taxes
+(1,236)
+27,457
+attributable to shareholders of Siemens Energy AG
+Siemens interest in the net assets of Siemens Energy AG at fiscal year-end
+Consolidation adjustments (including goodwill)
+Carrying amount of Siemens Energy AG at end of fiscal year
+Sep 30, 2021
+35.1%
+23,397
+Siemens Energy AG
+registered in Munich, Germany
+Sep 30, 2020
+35.1%
+23,136
+16,874
+18,792
+22,602
+21,669
+7,514
+8,080
+10,155
+12,179
+9,525
+11,731
+3,343
+4,118
+3,009
+2,527
+6,352
+6,645
+Fiscal year 2021
+Fiscal year 2020
+Revenue
+28,482
+Income (loss) from continuing operations, net of income taxes
+Other comprehensive income, net of income taxes
+Total comprehensive income, net of income taxes
+Total cash flows
+Siemens Healthineers AG
+registered in Munich, Germany
+Sep 30, 2021
+25%
+Income tax expenses (benefits) consist of the following:
+(in millions of €)
+Current taxes
+Deferred taxes
+Income tax expenses
+Fiscal year
+2021
+2020
+1,650
+1,563
+211
+(217)
+1,861
+Current income tax expenses in fiscal 2021 and 2020 include adjustments recognized for current taxes of prior years in the amount of
+€(359) million and €(64) million, respectively. The deferred tax expenses (benefits) in fiscal 2021 and 2020 include tax effects of the
+origination and reversal of temporary differences of €94 million and €(289) million, respectively.
+In Germany, the calculation of current taxes is based on a combined tax rate of 31%, consisting of a corporate tax rate of 15%, a solidarity
+surcharge thereon of 5.5% and an average trade tax rate of 15%. For foreign subsidiaries, current taxes are calculated based on the local
+tax law and applicable tax rates in the individual foreign countries. Deferred tax assets and liabilities in Germany and abroad are measured
+at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
+±
+14
+Consolidated Financial Statements
+Current and deferred income tax expenses differ from the amounts computed by applying a combined statutory German income tax rate
+of 31% as follows:
+(in millions of €)
+Expected income tax expenses
+Increase (decrease) in income taxes resulting from:
+Non-deductible expenses
+Tax-free income
+Taxes for prior years
+Change in realizability of deferred tax assets and tax credits
+Change in tax rates
+NOTE 7 Income taxes
+Other operating expenses in fiscal 2021 and 2020 include losses on the sale of businesses as well as effects from insurance, personnel,
+legal and regulatory matters.
+NOTE 6 Other operating expenses
+In fiscal 2021 and 2020, Other operating income mainly includes gains on sales of property, plant and equipment of €73 million and €308
+million, respectively, as well as insurance related income. Fiscal 2020 included gains on the sales of businesses of €177 million.
+Sep 30, 2020
+21%
+4,031
+2,623
+10,824
+10,268
+31,338
+14,827
+10,065
+7,289
+15,758
+5,294
+Fiscal year 2021
+Net Assets
+Fiscal year 2020
+241
+192
+132
+17.997
+14,460
+1.746
+1,423
+700
+2.446
+(598)
+825
+632
+(233)
+NOTE 5 Other operating income
+409
+Non-current liabilities
+Current liabilities
+Non-current assets excluding goodwill
+Acquisitions
+On April 15, 2021, Siemens completed the acquisition of all shares in Varian Medical Systems, Inc., USA (Varian). Varian is active in the
+field of cancer care, with solutions especially in radiation oncology and related digital solutions and applications. The acquired business is
+integrated into Siemens Healthineers. Varian thus offers a good complement to Siemens Healthineers' businesses in medical imaging,
+laboratory diagnostics and interventional procedures. The purchase price paid in cash amounted to US$16.4 billion (€13.9 billion as of the
+acquisition date). The preliminary purchase price allocation as of the acquisition date resulted in the following assets and liabilities:
+Cash and cash equivalents €0.6 billion, Trade and other receivables €0.6 billion, Inventories €0.8 billion, various other
+current assets €0.4 billion, Goodwill €8.0 billion, Other intangible assets €6.3 billion, Property, plant and equipment €0.5 billion,
+miscellaneous assets €0.2 billion, Trade payables €0.2 billion, Contract liabilities €0.7 billion, Current income tax liabilities €0.2 billion,
+Other current liabilities €0.3 billion, Deferred tax liabilities €1.6 billion and miscellaneous liabilities €0.5 billion. Resulting intangible assets
+mainly relate to technologies for oncology solutions, customer relationships, and the acquired order backlog. As of the acquisition date,
+goodwill was allocated to the groups of cash-generating units Varian €7.5 billion and Imaging €0.5 billion in accordance with the expected
+synergies. Goodwill relates to inseparable intangible assets such as synergy effects and employee know-how. Synergies from the
+acquisition are mainly expected from broader regional coverage of the sales network, cross-selling opportunities into our existing customer
+base and from expanded integrated service offerings (e.g. "Oncology-as-a-Service" program) and value partnerships, and joint product
+innovation. In addition, the business combination is expected to generate cost synergies in the administrative field and in procurement
+11
+Consolidated Financial Statements
+activities. The gross contractual amounts of Trade and other receivables is €603 million, of which €24 million were expected to be
+uncollectable at the date of acquisition. The gross contractual amount of loans and bonds receivables is €227 million, of which
+€207 million are probably uncollectible at the acquisition date. The acquired business contributed Revenue of €1,241 million and a net loss
+of €50 million for the period from the acquisition date to September 30, 2021, including earnings effects from the purchase price allocation
+and integration costs. If Varian had been included in the Consolidated Financial Statements since October 1, 2020, Revenue and
+Net income, including earnings effects from the purchase price allocation and integration costs, would have been €63.6 billion and
+€6.6 billion, respectively, in fiscal 2021. The purchase price allocation of Varian is preliminary as, in particular, the allocation of intangible
+assets including goodwill to currency areas is not finalized. Adjustments may lead to changes, such as, in intangible assets including
+goodwill and in deferred tax liabilities.
+In August 2021, Siemens acquired all shares in Supplyframe Inc., USA (Supplyframe). Supplyframe is a design-to-source platform for the
+global electronics value chain. The transaction provides value to both Supplyframe's and Siemens' customers through access to both
+Siemens' offerings and Supplyframe's marketplace intelligence. The acquired business is integrated into Digital Industries. The
+preliminary purchase price paid in cash is €556 million as of the acquisition date. The preliminary purchase price allocation as of the
+acquisition date resulted in Other intangible assets of €111 million, thereof customer-related intangible assets and trademark rights
+€83 million and technology €28 million as well as in liabilities of €87 million. Goodwill of €491 million comprises intangible assets that
+are not separable such as employee know-how and expected synergy effects. The acquired business contributed Revenue of €11 million
+and Net income of €(7) million for the period from its acquisition date to September 30, 2021, including earnings effects from the
+purchase price allocation and integration costs. If Supplyframe had been included in the Consolidated Financial Statements since
+October 1, 2020, Revenue and Net income, including earnings effects from the purchase price allocation and integration costs, would
+have been €62,314 million and €6,694 million, respectively, in fiscal 2021.
+In addition, Siemens closed several smaller acquisitions in fiscal 2021 and 2020 for a total purchase price of €429 million and €551 million,
+respectively, mainly paid in cash. The (preliminary) purchase price allocations resulted in Other intangible assets of €147 million and
+€263 million and Goodwill of €254 million and €298 million, respectively, which comprises intangible assets that are not separable such
+as employee know-how and expected synergy effects. The purchase price allocation for some of the acquired businesses is preliminary, as
+a detailed analysis of the assets and liabilities has not been finalized.
+Dilution of the stake in Siemens Healthineers
+In March 2021, Siemens Healthineers placed 53 million new shares to institutional investors, receiving gross proceeds of €2.3 billion and
+increasing its share capital to €1.128 billion. Siemens did not participate in the placement, thus, Siemens' stake in Siemens Healthineers
+decreased from 79% to 75%. The dilution is accounted for as equity transaction, which increased Non-controlling interests by €1.0 billion
+and Total equity attributable to shareholders of Siemens AG by €1.3 billion (mainly due to an increase in Retained earnings of €1.2 billion).
+Sale of Flender GmbH
+In October 2020, Siemens signed an agreement to sell 100% of its shares in Flender GmbH including Siemens' Wind Energy Generation
+business (Flender) to The Carlyle Group, U.S. Both businesses were previously reported under Portfolio Companies. In the first quarter of
+fiscal 2021, the businesses of Flender (the disposal group) met the criteria for classification as held for disposal as well as for discontinued
+operation, and, accordingly, Siemens ceased depreciation and amortization of assets within the disposal group. Upon closing of the
+transaction in March 2021, Siemens no longer controls Flender. The consideration was €1.875 billion. Derecognized net assets amounted
+to €954 million. The results of Flender are reported as discontinued operations in the Consolidated Statements of Income and Cash Flows
+for all periods presented:
+(in millions of €)
+Revenue
+Expenses
+Disposal gain net of disposal costs
+Income (loss) from discontinued operations before income taxes
+FY 2021
+928
+(818)
+FY 2020
+1,885
+(1,710)
+885
+(5)
+995
+170
+Income taxes on ordinary activities
+Other income taxes
+(8)
+(36)
+NOTE 3 Acquisitions, dispositions and discontinued operations
+The presentation of certain prior-year information has been reclassified to conform to the current year
+Cash flow hedges: The effective portion of changes in the fair value of derivative instruments designated as cash flow hedges are
+recognized in line item Other comprehensive income, net of income taxes, and any ineffective portion is recognized immediately in net
+income. Amounts accumulated in equity are reclassified into net income in the same periods in which the hedged item affects net income.
+Share-based payment - Share-based payment awards at Siemens are predominately designed as equity-settled. Fair value is measured
+at grant date and is expensed over the vesting period. Fair value is determined as the market price of the underlying shares, considering
+dividends during the vesting period the grantees are not entitled to as well as market conditions and non-vesting conditions, if applicable.
+Plans granting the rights to receive subsidiary shares constitute own shares and, accordingly, are accounted as equity-settled.
+Prior-year information
+presentation.
+Fair value hedges: The carrying amount of the hedged item is adjusted by the gain or loss attributable to the hedged risk. Where an
+unrecognized firm commitment is designated as hedged item, the subsequent cumulative change in its fair value is recognized as a
+separate financial asset or liability with corresponding gain or loss recognized in net income. For hedged items carried at amortized cost,
+the adjustment is amortized until maturity of the hedged item. For hedged firm commitments the initial carrying amount of the assets or
+liabilities that result from meeting the firm commitments are adjusted to include the cumulative changes in the fair value that were
+previously recognized as separate financial assets or liabilities.
+Consolidated Financial Statements
+increases and expected rates of future pension progression are considered. The assumptions used for the calculation of the DBO as of the
+period-end of the preceding fiscal year are used to determine the calculation of service cost and interest income and expense of the
+following year. Significant plans apply individual spot rates from full discount rate curves to determine service cost and interest expense.
+The net interest income or expense for the fiscal year will be based on the discount rate for the respective year multiplied by the net
+defined benefit liability (asset) at the preceding fiscal year's period-end date.
+Service cost, past service cost and settlement gains (losses) for pensions and similar obligations as well as administration costs unrelated
+to the management of plan assets are allocated among functional costs. Past service cost and settlement gains (losses) are recognized
+immediately in profit or loss. For unfunded plans, the amount in line item Provisions for pensions and similar obligations equals the DBO.
+For funded plans, Siemens offsets the fair value of the plan assets with the DBO. Siemens recognizes the net amount, after adjustments
+for effects relating to any asset ceiling.
+Remeasurements comprise actuarial gains and losses as well as the difference between the return on plan assets and the amounts included
+in net interest on the net defined benefit liability (asset). They are recognized in Other comprehensive income, net of income taxes.
+Actuarial valuations rely on key assumptions including discount rates, expected compensation increases, rate of pension progression and
+mortality rates. Discount rates used are determined by reference to yields on high-quality corporate bonds of appropriate duration and
+currency at the end of the reporting period. In case such yields are not available, discount rates are based on government bonds yields.
+Due to changing market, economic and social conditions, the underlying key assumptions may differ from actual developments.
+Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
+assets at period-end. If the performance of the underlying assets is lower than a guaranteed return, the DBO is measured by projecting
+forward the contributions at the guaranteed fixed return and discounting back to a present value.
+Provisions - A provision is recognized in the Statement of Financial Position when it is probable that the Company has a present legal or
+constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the
+obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are recognized at
+present value by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of
+money. When a contract becomes onerous, the present obligation under the contract is recognized as a provision.
+Significant estimates are involved in the determination of provisions related to onerous contracts, warranty costs, asset retirement
+obligations, legal and regulatory proceedings as well as governmental investigations (Legal Proceedings). Siemens records a provision for
+onerous contracts with customers when current estimates of total estimated costs exceed estimated revenue. Onerous contracts with
+customers are identified by monitoring the progress of the project and updating the estimates which requires significant judgment relating
+to achieving certain performance standards as well as estimates involving warranty costs and estimates regarding project delays including
+the assessment of responsibility splits between the contract partners for these delays.
+Legal Proceedings often involve complex legal issues and are subject to substantial uncertainties. Accordingly, considerable judgment is
+part of determining whether it is probable that there is a present obligation as a result of a past event at the end of the reporting period,
+whether it is probable that such a Legal Proceeding will result in an outflow of resources and whether the amount of the obligation can
+be reliably estimated. Internal and external counsels are generally part of the determination process. Due to new developments, it may be
+necessary, to record a provision for an ongoing Legal Proceeding or to adjust the amount of a previously recognized provision. Upon
+resolution of a Legal Proceeding, Siemens may incur charges in excess of the recorded provisions for such matters. The outcome of Legal
+Proceedings may have a material effect on Siemens' financial position, its results of operations and/or its cash flows.
+Termination benefits - Termination benefits are provided as a result of an entity's offer made in order to encourage voluntary redundancy
+before the regular retirement date or from an entity's decision to terminate the employment. Termination benefits in accordance with IAS
+19, Employee Benefits, are recognized as a liability and an expense when the entity can no longer withdraw the offer of those benefits.
+Financial instruments - A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
+equity instrument of another entity. Based on their contractual cash flow characteristics and the business model they are held in, financial
+instruments are classified as financial assets and financial liabilities measured at cost or amortized cost, measured at fair value, loan
+commitments, contract assets and receivables from finance leases. Regular way purchases or sales of financial assets are accounted for at
+the trade date. Initially, financial instruments are recognized at fair value and net of transaction costs, if not categorized at FVTPL.
+Subsequently, financial assets and liabilities are measured according to the category to which they are assigned to:
+Financial assets measured at fair value through profit and loss (FVTPL): a) mandatorily measured at FVTPL: Debt financial assets are
+measured at FVTPL if the business model they are held in is not a hold-to-collect or a hold-and-sell business model, or if their contractual
+cash flows do not represent solely payments of principal and interest. Equity instruments are measured at FVTPL unless the FVOCI-option
+is elected. b) Financial assets designated as measured at FVTPL are irrevocably designated at initial recognition if the designation
+significantly reduces accounting mismatches that would otherwise arise if assets and liabilities as well as recognizing gains (losses) were
+measured on different bases.
+Financial assets measured at fair value through other comprehensive income (FVOCI): are equity instruments for which Siemens
+irrevocably elects to present subsequent fair value changes in OCI at initial recognition of the instrument. Unrealized gains and losses, net
+of deferred income tax expenses, as well as gains and losses on the subsequent sale of the instruments are recognized in line item Other
+comprehensive income, net of income taxes.
+Financial assets measured at amortized cost: Loans, receivables and other debt instruments held in a hold-to-collect business model
+with contractual cash flows that represent solely payments of principal and interest are measured at amortized cost using the effective
+interest method less valuation allowances for expected credit losses.
+Valuation allowances are set up for expected credit losses, representing a forward-looking estimate of future credit losses involving
+significant judgment. Expected credit loss is the gross carrying amount less collateral, multiplied by the probability of default and a factor
+reflecting the loss in the event of default. Valuation allowances are not recognized when the gross carrying amount is sufficiently
+collateralized. Probabilities of default are mainly derived from internal rating grades. A simplified approach is used to assess expected
+credit losses from trade receivables, lease receivables and contract assets by applying their lifetime expected credit losses. The valuation
+10
+(40)
+Consolidated Financial Statements
+Stage 1: At inception, twelve-month expected credit losses are recognized based on a twelve months probability of default.
+Stage 2: If the credit risk of a financial asset increases significantly without being credit-impaired, lifetime expected credit losses are
+recognized based on a lifetime probability of default. A significant increase in credit risk is determined for each individual financial
+instrument using internal credit ratings. A rating deterioration does not trigger a transfer into Stage 2, if the credit rating remains within
+the investment grade range. More than 30 days past due payments will not be transferred into Stage 2, if the delay is not credit-risk-
+related.
+Stage 3: If the financial asset is credit-impaired, valuation allowances equal lifetime expected credit losses. A financial asset is considered
+credit-impaired when there is observable information about significant financial difficulties and a high vulnerability to default, however,
+the definition of default is not yet met. Impairment triggers include liquidity problems, a request for debt restructuring or a breach of
+contract. A credit-risk driven contractual modification always results in a credit-impaired financial asset.
+Financial assets are written off as uncollectible if recovery appears unlikely. Generally, if the limitation period expired, when a debtor's
+sworn statement of affairs is received, or when the receivable is not pursued due to its minor value. Receivables are written off when
+bankruptcy proceedings close.
+A financial asset is derecognized when the rights to cash flows expire or the financial asset is transferred to another party. Significant
+modifications of contractual terms of a financial asset measured at amortized cost result in derecognition and recognition of a new
+financial asset; for insignificant modifications, the carrying amount of the financial asset is adjusted without derecognition.
+Cash and cash equivalents - The Company considers all highly liquid investments with less than three months maturity from the date of
+acquisition to be cash equivalents. Cash and cash equivalents are measured at cost.
+-
+Loan Commitments Expected credit losses for irrevocable loan commitments are determined using the three-stage impairment
+approach for financial assets measured at amortized cost and recognized as a liability.
+Financial liabilities
+-
+except for derivative financial instruments, Siemens measures financial liabilities at amortized cost using the
+effective interest method.
+Derivative financial instruments - Derivative financial instruments, such as foreign currency exchange contracts and interest rate swap
+contracts are measured at fair value unless they are designated as hedging instruments, for which hedge accounting is applied. Changes
+in the fair value of derivative financial instruments are recognized either in net income or, in the case of a cash flow hedge, in line item
+Other comprehensive income, net of income taxes (applicable deferred income tax). Certain derivative instruments embedded in host
+contracts are also accounted for separately as derivatives.
+allowance for loans and other long-term debt instruments primarily held at Financial Services (SFS) is measured according to a three-stage
+impairment approach:
+Foreign tax rate differential
+Income (loss) from discontinued operations, net of income taxes
+134
+244
+116
+907
+Income from discontinued operations, net of income taxes includes €119 million from Siemens Energy AG in fiscal 2021, which are mainly
+attributable to the reversal of income tax provisions.
+NOTE 4 Interests in other entities
+Investments accounted for using the equity method
+(in millions of €)
+Share of profit (loss), net
+Gains (losses) on sales, net
+Impairment and reversals of impairment
+Income (loss) from investments accounted for using the equity method, net
+Fiscal year
+2021
+2020
+(514)
+(114)
+57
+108
+(21)
+(590)
+(478)
+(596)
+In fiscal 2021, share of profit (loss) from investments accounted for using the equity method includes a loss of €396 million (loss of €24
+million in fiscal 2020) from Siemens Energy AG. In fiscal 2021, the loss includes Siemens' share of Siemens Energy AG's net losses of €(159)
+million as well as effects from fair value adjustments at initial recognition of €(237) million.
+Below summarized financial information of Siemens Energy AG are disclosed at a 100 per cent basis. They are adjusted to align with
+Siemens' accounting policies and to incorporate effects from fair value adjustments at initial recognition. These adjustments were
+preliminary in fiscal 2020 and have been finalized in fiscal 2021.
+(in millions of €)
+Ownership interest
+Current assets
+193
+355
+1,862
+92
+thereof attributable to Siemens AG shareholders
+946
+134
+The carrying amounts of the major classes of assets and liabilities derecognized were as follows:
+12
+Consolidated Financial Statements
+(in millions of €)
+Cash and cash equivalents
+Trade and other receivables
+Other current financial assets
+Inventories
+Goodwill
+Property, plant and equipment
+946
+Miscellaneous current and non-current assets
+Trade payables
+Other current financial liabilities
+Miscellaneous current liabilities
+Miscellaneous non-current liabilities
+Liabilities associated with assets classified as held for disposal
+Spin-off Siemens Energy AG in fiscal 2020
+Mar 10, 2021
+95
+510
+143
+540
+123
+359
+Assets classified as held for disposal
+Digital Industries
+Tax effect of investments accounted for using the equity method
+Actual income tax expenses
+In fiscal 2021 and 2020, finance income on the net investment in the lease is €412 million and €398 million.
+NOTE 9 Other current financial assets
+(in millions of €)
+Loans receivable
+Interest-bearing debt securities
+Derivative financial instruments
+Other
+Sep 30,
+2021
+2020
+5,085
+4,904
+1,132
+1,256
+398
+798
+1,370
+1,424
+7,985
+8,382
+16
+Consolidated Financial Statements
+NOTE 10 Contract assets and liabilities
+As of September 30, 2021 and 2020, amounts expected to be settled after twelve months are €1,319 million and €960 million for contract
+assets and €1,824 million and €1,112 million for contract liabilities, respectively. In fiscal 2021, contract assets and liabilities increased by
+€141 million and €724 million, respectively, due to business combinations (mainly Varian). In fiscal 2021 and 2020, revenue includes
+€4,966 million and €4,616 million, respectively, which was included in contract liabilities at the beginning of the fiscal year.
+NOTE 11 Inventories
+(in millions of €)
+Raw materials and supplies
+Investments in finance leases primarily relate to industrial machinery, medical equipment, transportation systems, equipment for
+information technology and office machines.
+Work in progress
+6,475
+Net investment in the lease
+1,284
+1,156
+807
+732
+452
+422
+748
+717
+7,914
+7,153
+Future minimum lease payments reconcile to the net investment in the lease as follows:
+Sep 30,
+(in millions of €)
+2021
+2020
+Future minimum lease payments
+7,914
+7,153
+Less: Unearned finance income relating to future minimum lease payments
+(867)
+(778)
+Present value of future minimum lease payments
+7,047
+6,375
+Plus present value of unguaranteed residual value
+115
+100
+7,162
+Finished goods and products held for resale
+Advances to suppliers
+Sep 30,
+2021
+Accumulated impairment losses and other changes
+Balance at begin of fiscal year
+Translation differences and other
+Impairment losses recognized during the period
+Dispositions and reclassifications to assets classified as held for disposal
+Balance at fiscal year-end
+Carrying amount
+Balance at begin of fiscal year
+Balance at fiscal year-end
+1,666
+1,938
+22
+(100)
+99
+(271)
+1,688
+1,666
+20,449
+29,729
+30,160
+20,449
+Siemens performs the mandatory annual impairment test in the three months ended September 30. Key assumptions on which Siemens
+based its determinations of the fair value less costs to sell for the cash-generating units or groups of cash-generating units include terminal
+value growth rates up to 1.7% in fiscal 2021 and fiscal 2020, respectively and after-tax discount rates of 5.5% to 12.0% in fiscal 2021 and
+5.5% to 12.5% in fiscal 2020.
+To estimate the fair value less costs to sell of the cash-generating units or groups of cash-generating units, cash flows were projected for
+the next five years (in exceptional cases up to ten years) based on past experience, actual operating results and management's best
+estimate about future developments as well as market assumptions. The determined fair value of the cash-generating units or groups of
+cash-generating units is assigned to level 3 of the fair value hierarchy.
+The fair value less costs to sell is mainly driven by the terminal value, which is particularly sensitive to changes in the assumptions on the
+terminal value growth rate and discount rate. Both assumptions are determined individually for each cash-generating unit or group of
+cash-generating units. Discount rates are based on the weighted average cost of capital (WACC). Siemens Financial Services' discount rate
+represents its specific cost of equity. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In
+addition, the discount rates reflect the current market assessment of the risks specific to each cash-generating unit or group of cash-
+generating units by taking into account specific peer group information on beta factors, leverage and cost of debt as well as country
+specific premiums. The parameters for calculating the discount rates are based on external sources of information. The peer group is
+subject to an annual review and adjusted, if necessary. Terminal value growth rates take into consideration external macroeconomic
+sources of data and industry specific trends.
+17
+Consolidated Financial Statements
+The following table presents key assumptions used to determine fair value less costs to sell for impairment test purposes for the groups of
+cash-generating units to which a significant amount of goodwill is allocated:
+(in millions of €)
+22,115
+31,417
+Balance at fiscal year-end
+(9,588)
+2020
+1,974
+1,796
+3,421
+3,043
+2,825
+2,355
+616
+600
+8,836
+7,795
+Cost of sales includes inventories recognized as expense amounting to €39,227 million and €35,017 million, respectively, in fiscal 2021
+and 2020. Compared to prior year, write-downs increased by €61 million as of September 30, 2021. As of September 30, 2020, write-
+downs decreased by €18 million compared to FY 2019.
+NOTE 12 Goodwill
+1,685
+(in millions of €)
+Balance at begin of fiscal year
+Translation differences and other
+Fiscal year
+2021
+2020
+22,115
+32,098
+657
+(1,642)
+Acquisitions and purchase accounting adjustments
+8,768
+1,247
+Dispositions and reclassifications to assets classified as held for disposal
+(123)
+Cost
+Other, net (primarily German trade tax differentials)
+1,911
+2,711
+1,346
+Sep 30,
+2021
+2020
+(2,931)
+2,724
+437
+(1,302)
+2,921
+362
+(600)
+(417)
+898
+760
+527
+2,324
+Fiscal year
+(in millions of €)
+Balance at beginning of fiscal year of deferred tax (assets) liabilities
+2021
+(2,324)
+2020
+(1,869)
+Changes in items of the Consolidated Statements of Comprehensive Income
+Additions from acquisitions not impacting net income
+Changes due to Siemens Energy
+Other
+211
+15
+(217)
+8
+1,861
+(109)
+(91)
+33
+Deferred income tax assets and (liabilities) on a net basis are summarized as follows:
+(in millions of €)
+Deferred taxes due to temporary differences
+Intangible assets
+Pensions and similar obligations
+Current assets and liabilities
+Non-current assets and liabilities
+Tax loss carryforwards and tax credits
+Total deferred taxes, net
+Deferred tax balances and expenses (benefits) developed as follows in fiscal 2021 and 2020:
+Fiscal year
+2021
+2020
+1,620
+2,324
+607
+655
+(386)
+(377)
+(398)
+(56)
+100
+(75)
+54
+7
+(496)
+(437)
+147
+1,705
+2,441
+61
+(49)
+435
+(55)
+(588)
+1,690
+1,192
+An uncertain tax regulation arising from a foreign tax reform may result in potential future tax payments amounting to a middle three-
+digit million euro range. Due to the low probability and the character of a contingent liability, no tax liability was recognized.
+NOTE 8 Trade and other receivables
+(in millions of €)
+Trade receivables from the sale of goods and services
+Receivables from finance leases
+Sep 30,
+2021
+2020
+13,267
+12,071
+2,250
+2,003
+15,518
+14,074
+In fiscal 2021 and 2020, the long-term portion of receivables from finance leases is reported in Other financial assets amounting to €4,700
+million and €4,245 million, respectively.
+Future minimum lease payments to be received are as follows:
+Sep 30,
+(in millions of €)
+Within one year
+After one year but not more than two years
+After two years but not more than three years
+After three years but not more than four years
+After four years but not more than five years
+More than five years
+2021
+2020
+(116)
+(301)
+1,346
+2020
+(6)
+Balance at end of fiscal year of deferred tax (assets) liabilities
+(527)
+(2,324)
+Deferred tax assets have not been recognized with respect of the following items (gross amounts):
+(in millions of €)
+Deductible temporary differences
+Tax loss carryforwards
+Sep 30,
+2021
+194
+2020
+192
+2,280
+1,861
+2,172
+2,364
+The amount of €2,280 million for tax loss carryforwards for which no deferred tax asset has been recognized does include material loss
+carryforwards for local taxes only.
+As of September 30, 2021 and 2020, €82 million and €221 million respectively, expire over the periods to 2029.
+Siemens has not recognized deferred tax liabilities for income taxes or foreign withholding taxes on the cumulative earnings of subsidiaries
+of €31,628 million and €25,003 million, respectively in fiscal 2021 and 2020, because the earnings are intended to be permanently
+reinvested in the subsidiaries.
+15
+Consolidated Financial Statements
+Including items charged or credited directly to equity and the expenses (benefits) from continuing and discontinued operations, the
+income tax expenses (benefits) consist of the following:
+(in millions of €)
+Continuing operations
+Discontinued operations
+Income and expenses recognized directly in equity
+Fiscal year
+2021
+2,474
+Income taxes presented in the Consolidated Statements of Income
+Other
+Asset
+retirement
+obligations
+875
+1,697
+1,750
+US$
+6.125%/2006/August 2026/US$ fixed-rate instruments
+23,449
+20,867
+491
+450
+£
+522
+450
+£
+0.875%/2020/June 2023/GBP fixed-rate instruments
+Total Debt Issuance Program
+998
+1,000
+€
+998
+1,000
+€
+997
+1,000
+€
+998
+1,000
+€
+1,496
+1,500
+US$
+1,750
+1,718
+2.9%/2015/May 2022/US$-fixed-rate-instruments
+3.25%/2015/May 2025/US$ fixed-rate-instruments
+4.4%/2015/May 2045/US$ fixed-rate-instruments
+1.7% /2016/September 2021/US$-fixed-rate-instruments
+2.0%/2016/September 2023/US$-fixed-rate-instruments
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+3.3%/2016/September 2046/US$-fixed-rate-instruments
+US$
+638
+750
+US$
+646
+750
+US$
+939
+1,100
+US$
+1,476
+1,750
+US$
+€
+1,493
+US$
+1,401
+1,500
+US$
+1,369
+1,500
+US$
+1,493
+1,750
+US$
+1,511
+1,750
+US$
+1,750
+1,498
+1,500
+€
+0.0%/2020/February 2023/EUR fixed-rate instruments
+1,256
+1,250
+€
+1,251
+1,250
+NOTE 15 Other current liabilities
+Consolidated Financial Statements
+Sep 30,
+(in millions of €)
+Liabilities to personnel
+2021
+2020
+€
+5,375
+Deferred Income
+Accruals for pending invoices
+Other
+96
+108
+541
+518
+1,616
+1,280
+7,628
+6,209
+Other includes miscellaneous tax liabilities of €742 million and €576 million, respectively, in fiscal 2021 and 2020.
+NOTE 16 Debt
+4,304
+1,700
+1,250
+€
+929
+850
+₤
+985
+850
+£
+747
+750
+€
+748
+750
+€
+996
+1,252
+1,000
+997
+1,000
+€
+0.25%/2020/February 2029/EUR fixed-rate instruments
+0.5%/2020/February 2032/EUR fixed-rate instruments
+1.0%/2020/February 2025/GBP fixed-rate instruments
+0.125%/2020/June 2022/EUR fixed-rate instruments
+0.25%/2020/June 2024/EUR fixed-rate instruments
+0.375%/2020/June 2026/EUR fixed-rate instruments
+997
+1,000
+€
+998
+1,000
+€
+0.0%/2020/February 2026/EUR fixed-rate instruments
+1,253
+1,250
+€
+(in millions of €)
+1,463
+1,700
+U.K.
+In the US, the Siemens Pension Plans are sponsored, which for the most part have been frozen to new entrants and to future benefit
+accruals, except for interest credits on cash balance accounts. Siemens has appointed the Investment Committee as the named fiduciary
+for the management of the assets of the Plans. The Plans' assets are held in Master Trusts and the trustees of the Master Trusts are
+responsible for the administration of the assets of the trust, taking directions from the Investment Committee. The Plans are subject to the
+funding requirements under the Employee Retirement Income Security Act of 1974 as amended (ERISA). There is a regulatory requirement
+to maintain a minimum funding level of 80% in the defined benefit plans in order to avoid benefit restrictions. At their discretion,
+sponsoring employers may contribute in excess of this regulatory requirement. Annual contributions are calculated by independent
+actuaries.
+U.S.
+In Germany, pension benefits are provided through the following plans: BSAV (Beitragsorientierte Siemens Altersversorgung), frozen
+legacy plans as well as deferred compensation plans. The majority of active employees participate in the BSAV. Those benefits are
+predominantly based on notional contributions and the return on the corresponding assets of this plan, subject to a minimum return
+guaranteed by the employer. At inception of the BSAV, benefits provided under the frozen legacy plans were modified to substantially
+eliminate the effects of compensation increases. However, the frozen plans still expose Siemens to investment risk, interest rate risk and
+longevity risk. The pension plans are funded via contractual trust arrangements (CTA). In Germany no legal or regulatory minimum funding
+requirements apply.
+The defined benefit plans open to new entrants are based predominantly on contributions made by the Company. Only to a certain extent,
+those plans are affected by longevity, inflation and compensation increases and take into account country specific differences. The
+Company's major plans are funded with assets in segregated entities. In accordance with local laws these plans are managed in the interest
+of the beneficiaries by way of contractual trust agreements with each separate legal entity. The defined benefit plans cover 442,000
+participants, including 178,000 actives, 84,000 deferreds with vested benefits and 180,000 retirees and surviving dependents.
+Germany
+Defined benefit plans
+NOTE 17 Post-employment benefits
+Siemens has a US$9.0 billion (€7.8 billion and €7.7 billion as of September 30, 2021 and 2020) commercial paper program in place
+including US$ extendible notes capabilities as of September 30, 2021 and 2020. As of September 30, 2021 and 2020, US$15 million (€13
+million) and US$2.3 billion (€2.0 billion), respectively, were outstanding. Siemens' commercial papers have a maturity of generally less
+than 90 days. Interest rates ranged from 0.05% to 0.21% in fiscal 2021 and from 0.06% to 1.98% in fiscal 2020.
+Commercial paper program
+As of September 30, 2021 and 2020, five respectively two bilateral term loan facilities are outstanding (in aggregate € 1.8 billion and
+€0.85 billion). In fiscal 2021 three bilateral term loan facilities were newly signed: one bilateral €500 million term loan facility maturing
+in March 2022 with a one-year extension option; one bilateral US$150 million term loan facility (€130 million) maturing in February 2022
+with a one-year extension option and one bilateral US$350 million term loan facility (€302 million) maturing in February 2022 with a one-
+year extension option. One existing bilateral US$500 million term loan facility (€432 million) has a maturity until March 2024 with a one-
+year extension option remaining and the second existing bilateral US$500 million term loan facility (€432 million) has a maturity until
+June 2024.
+Assignable and term loans
+US$ Bonds - In September 2021, the 1.7% US$1.1 billion fixed-rate instruments were redeemed at face value. In March 2021, Siemens
+issued instruments totaling US$10.0 billion (€8.6 billion at September 30, 2021) in seven tranches.
+Debt Issuance Program - The Company has a program for the issuance of debt instruments in place under which, as of September 30,
+2021, up to €30.0 billion of instruments can be issued (€25.0 billion as of September 30, 2020). As of September 30, 2021, €20.8 billion
+in notional amounts were issued and are outstanding (€23.2 billion as of September 30, 2020). In March 2021 the 1.75% €1.25 billion
+fixed-rate instrument was redeemed at face value. In September 2021, the US$ 400 million floating rate instruments were redeemed at
+face value. In September 2021 the 0.0% €1.0 billion fixed-rate instrument was redeemed at face value.
+Consolidated Financial Statements
+22
+38,265
+43,372
+1 Includes adjustments for fair value hedge accounting.
+Total
+14,816
+22,505
+1,284
+1,500
+US$
+2.875%/2021/March 2041/US$ fixed-rate-instruments
+Total US$ Bonds
+1,503
+1,750
+Pension benefits are mainly offered through the Siemens Benefit Scheme for which, until the start of retirement, an inflation increase of
+the majority of accrued benefits is mandatory. The required funding is determined by a funding valuation carried out every third year
+based on legal requirements. Due to deviating guidelines for the determination of the discount rates, the technical funding deficit is usually
+larger than the IFRS funding deficit. To reduce the deficit Siemens entered into an agreement with the trustees to provide annual payments
+of £31 (€35) million until fiscal 2033. The agreement also provides for a cumulative advance payment by Siemens AG compensating the
+remaining annual payments at the date of early termination of the agreement due to cancellation or insolvency.
+Switzerland
+Following the Swiss law of occupational benefits (BVG) each employer has to grant post-employment benefits for qualifying employees.
+Accordingly, Siemens in Switzerland sponsors several cash balance plans. These plans are administered by external foundations. The board
+of the main foundation is composed of equally many employer and employee representatives. The board of the foundation is responsible
+for investment policy and asset management, as well as for any changes in the plan rules and the determination of contributions to finance
+the benefits. The Company is required to make total contributions at least as high as the sum of the employee contributions set out in the
+23
+2020
+2021
+2020
+2021
+2020
+2021
+Other³
+Interest income
+Interest expenses
+Current service cost
+Balance at begin of fiscal year
+(in millions of €)
+Fiscal year
+US$
+Fiscal year
+Fiscal year
+(1 - 11 + 111)
+(III)
+(II)
+(DBO)²
+(I)
+Net defined benefit
+balance
+ceiling
+Effects of asset
+Fair value of
+plan assets
+Defined benefit
+obligation
+Development of the defined benefit plans¹
+plan rules. In case of an underfunded plan the Company together with the employees may be asked to pay supplementary contributions
+according to a well-defined framework of recovery measures.
+Consolidated Financial Statements
+Fiscal year
+2.15%/2021/March 2031/US$ fixed-rate-instruments
+1,074
+1,250
+915
+1,000
+US$
+902
+1,000
+US$
+3.125%/2017/March 2024/US$ fixed-rate-instruments
+725
+850
+US$
+734
+850
+US$
+3.4%/2017/March 2027/US$ fixed-rate-instruments
+US$ 3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
+1,000
+US$
+873
+1,000
+US$
+2.7%/2017/March 2022/US$ fixed-rate-instruments
+846
+1,000
+US$
+856
+1,000
+US$
+1,446
+884
+US$
+US$
+1,077
+US$
+1.7%/2021/March 2028/US$ fixed-rate-instruments
+1,505
+1,750
+US$
+1.2%/2021/March 2026/US$ fixed-rate-instruments
+1,293
+1,500
+US$
+0.65%/2021/March 2024/US$ fixed-rate-instruments
+862
+1,000
+US$
+1,250
+Compounded SOFR+0.43%/2021/March 2024/US$ floating-rate instruments
+1,250
+US$
+0.4%/2021/March 2023/US$ fixed-rate-instruments
+1,269
+1,500
+US$
+1,283
+1,500
+US$
+4.2%/2017/March 2047/US fixed-rate-instruments
+1,064
+1,250
+US$
+1,078
+2021
+Notes and bonds
+Other financial indebtedness
+£
+350
+383
+£
+650
+743
+£
+650
+700
+€
+-
+1,250
+1,254
+€
+1,000
+998
+€
+1,000
+998
+US$
+100
+85
+US$
+100
+84
+US$
+400
+350
+£
+406
+millions of €1
+(2,123)
+(1,865)
+124
+1,191
+44,567
+In addition, other financing activities resulted in €(99) million cash flows in fiscal 2020.
+Credit facilities
+As of September 30, 2021 and 2020, Siemens has €7.45 billion and €22.95 billion lines of credit, thereof unused €7.45 billion and €22.95
+billion, respectively. In fiscal 2021, the unused €7.0 billion syndicated credit facility maturing in 2025 was extended to mature in 2026
+20
+Consolidated Financial Statements
+with no extension option remaining. The €3.0 billion unused syndicated credit facility matured in December 2020. The €12.5 billion
+unused syndicated bridge facility to secure Siemens Healthineers AG's financing of the acquisition of Varian Medical Systems, Inc. was
+cancelled by Siemens in March 2021. In September 2021, the unused €450 million revolving bilateral credit facility was extended to
+September 2022. The facilities are for general corporate purposes.
+21
+Notes and bonds
+342
+Consolidated Financial Statements
+Currency
+Carrying
+Sep 30, 2020
+Currency
+Carrying
+Notional amount
+amount in
+Notional amount
+amount in
+(interest/issued/maturity)
+2.75%/2012/September 2025/GBP fixed-rate instruments
+3.75%/2012/September 2042/GBP fixed-rate instruments
+1.75%/2013/March 2021/EUR fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+2014/September 2021/US$ floating-rate instruments
+0.375%/2018/September 2023/EUR fixed-rate instruments
+1.0%/2018/September 2027/EUR fixed-rate instruments
+1.375%/2018/September 2030/EUR fixed-rate instruments
+0.3%/2019/February 2024/EUR fixed-rate instruments
+0.9%/2019/February 2028/EUR fixed-rate instruments
+1.25%/2019/February 2031/EUR fixed-rate instruments
+1.75%/2019/February 2039/EUR fixed-rate instruments
+0.0%/2019/September 2021/EUR fixed-rate instruments
+0.0%/2019/September 2024/EUR fixed-rate instruments
+0.125%/2019/September 2029/EUR fixed-rate instruments
+(in millions)
+millions of €1
+(in millions)
+Sep 30, 2021
+€
+1,000
+999
+882
+€
+800
+884
+€
+800
+963
+€
+1,000
+1,002
+€
+500
+503
+800
+€
+503
+€
+1,000
+994
+€
+1,000
+993
+0.5%/2019/September 2034/EUR fixed-rate instruments
+€
+1,000
+991
+€
+1,000
+500
+7,664
+€
+800
+€
+1,000
+998
+€
+750
+747
+€
+750
+746
+€
+1,000
+994
+€
+846
+1,000
+€
+750
+759
+€
+750
+764
+€
+650
+673
+€
+650
+690
+€
+994
+Loans from banks
+39,576
+1,351
+(in millions of €)
+Non-current notes and bonds
+Current notes and bonds
+Loans from banks (current and non-current)
+Other financial indebtness (current and non-current)
+Lease liabilities (current and non-current)
+Total debt
+Cash flows
+Non-cash changes
+10/01/2020
+(Acquisi-
+tions)/Dis-
+positions
+Foreign
+currency
+translation
+Reclassifi-
+cations and
+Fair value
+changes
+other
+changes 09/30/2021
+34,728 8,316
+3,537 (3,511)
+461
+(242)
+(5,758)
+37,505
+110
+5
+5,726
+5,867
+1,397
+839
+In fiscal 2021 and 2020, Siemens recognized interest expenses on lease liabilities of €43 million and €39 million and expenses relating to
+variable lease payments not included in the measurement of lease liabilities of €64 million and €100 million, respectively. In fiscal 2021
+and 2020, cash flows to which Siemens is potentially exposed and which are not reflected in the measurement of lease liabilities relate
+primarily to lease contracts entered into, however which have not yet commenced as well as to extension options whose exercise is not
+yet reasonably certain totaling €2.9 billion and €2.6 billion, respectively, and, in addition, to variable lease payments mainly relating to
+incidental and operating costs for buildings leased by Siemens, for which no significant fluctuations are expected in the future.
+Changes in liabilities arising from financing activities
+Total debt
+Lease liabilities
+38,005
+Current debt
+Non-current debt
+Sep 30,
+Sep 30,
+Sep 30,
+Sep 30,
+2021
+2020
+2021
+2020
+5,867
+3,537
+37,505
+67
+34,728
+321
+1,100
+1,076
+70
+701
+2,021
+683
+46
+55
+2,228
+2,146
+7,821
+6,562
+40,879
+1,183
+22
+(42)
+2,282
+Fair value
+changes
+Reclassifi-
+cations and
+other
+changes 09/30/2020
+120
+(3,549)
+34,728
+(46)
+4
+3,509
+3,537
+2,262
+891
+Foreign
+currency
+translation
+(1,276)
+(1,387)
+-
+(144)
+1,397
+€
+1,388
+3,233
+(911)
+(1)
+(735)
+(209)
+-
+24
+2,076
+(108)
+(225)
+2,829
+29,176 10,256
+4,029 (3,959)
+10/01/2019
+2,076
+(1,957)
+(9)
+6
+116
+2,829
+(745)
+92
+26
+726
+2,929
+44,567
+2,941
+(Acquisi-
+tions)/Dis-
+positions
+159
+(236)
+659
+48,700
+In addition, other financing activities resulted in €130 million cash flows in fiscal 2021.
+(in millions of €)
+Non-current notes and bonds
+Current notes and bonds
+Loans from banks (current and non-current)
+Other financial indebtness (current and non-current)
+Lease liabilities (current and non-current)
+Total debt
+Cash flows
+Non-cash changes
+610
+991
+2020
+40,317
+2020
+530
+604
+15,116
+27,917
+15,646
+28,521
+Item Credit guarantees covers the financial obligations of third parties generally in cases where Siemens is the vendor and (or) contractual
+partner or Siemens is liable for obligations of associated companies accounted for using the equity method. Additionally, credit guarantees
+are issued in the course of the SFS business. Credit guarantees generally provide that in the event of default or non-payment by the primary
+debtor, Siemens will be required to settle such financial obligations. The maximum amount of these guarantees is equal to the outstanding
+balance of the credit or, in case a credit line is subject to variable utilization, the nominal amount of the credit line. These guarantees have
+typically residual terms of up to four years. The Company held collateral mainly through inventories and trade receivables. As of September
+30, 2021 and 2020, Credit guarantees include €124 million and €271 million for which Siemens holds reimbursement rights towards
+Siemens Energy. Siemens accrued €3 million and €18 million relating to credit guarantees as of September 30, 2021 and 2020,
+respectively.
+Furthermore, Siemens issues performance guarantees, which mainly include performance bonds. In the event of non-fulfillment of
+contractual obligations by the primary obligor, Siemens will be required to pay up to an agreed-upon maximum amount. These agreements
+typically have terms of up to ten years. As of September 30, 2021 and 2020, Performance guarantees include €14,508 million and €27,425
+28
+Consolidated Financial Statements
+million for which Siemens holds reimbursement rights towards Siemens Energy; the related contract liability amount for parent company
+guarantees is generally reduced using the straight-line method over the planned term of the underlying delivery or service agreement. As
+of September 30, 2021 and 2020, the Company accrued €51 million and €1 million, respectively, relating to performance guarantees.
+As of September 30, 2021 and 2020, in addition to guarantees disclosed in the table above, there are contingent liabilities of €475 million
+and €405 million which mainly result from other guarantees, legal proceedings and from joint and several liabilities of consortia, in
+particular from the construction of a power plant in Finland. Other guarantees include €189 million and €261 million for which Siemens
+holds reimbursement rights towards Siemens Energy.
+NOTE 22 Legal proceedings
+Proceedings out of or in connection with alleged compliance violations
+As previously reported, in July 2008, Hellenic Telecommunications Organization S.A. (OTE) filed a lawsuit against Siemens AG with the
+district court of Munich, Germany, seeking to compel Siemens AG to disclose the outcome of its internal investigations with respect to
+OTE. OTE seeks to obtain information with respect to allegations of undue influence and/or acts of bribery in connection with contracts
+concluded between Siemens AG and OTE from calendar year 1992 to 2006. At the end of July 2010, OTE expanded its claim and requested
+payment of damages by Siemens AG of at least €57 million to OTE for alleged bribery payments to OTE employees. In October 2014, OTE
+increased its damage claim to the amount of at least €68 million. Siemens AG continues to defend itself against the expanded claim.
+As previously reported, in May 2014, the Public Affairs Office (Ministério Público) São Paulo initiated a lawsuit against Siemens Ltda. as
+well as other companies and several individuals claiming, inter alia, damages in an amount of BRL2.5 billion (approximately €399 million
+as of September 2021) plus adjustments for inflation and related interest in relation to train refurbishment contracts entered into between
+2008 and 2011. In January 2015, the district court of São Paulo admitted a lawsuit of the State of São Paulo and two customers against
+Siemens Ltda., Siemens AG and other companies and individuals claiming damages in an unspecified amount. In March 2015, the district
+court of São Paulo admitted a lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other companies
+claiming, inter alia, damages in an amount of BRL487 million (approximately €78 million as of September 2021) plus adjustments for
+inflation and related interest in relation to train maintenance contracts entered into in 2000 and 2002. In September 2015, the district
+court of São Paulo admitted another lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other
+companies claiming, inter alia, damages in an amount of BRL918 million (approximately €147 million as of September 2021) plus
+adjustments for inflation and related interest in relation to train maintenance contracts entered into in 2006 and 2007. Siemens is
+defending itself against these actions. It cannot be excluded that further significant damage claims will be brought by customers or the
+state against Siemens.
+As previously reported, in June 2015, Siemens Ltda. appealed to the Supreme Court against a decision of a previous court to suspend
+Siemens Ltda. from participating in public tenders and signing contracts with public administrations in Brazil for a five year term based on
+alleged irregularities in calendar year 1999 and 2004 in public tenders with the Brazilian Postal authority. In June 2018, the court accepted
+Siemens' appeal and declared the earlier instance decision as void. In June 2021, the court referred the case back to the court of first
+instance. In February 2018, the Ministério Público in Brasilia filed a lawsuit based on the same set of facts, mainly claiming the exclusion
+of Siemens Ltda. from public tenders for a ten year term. Siemens Ltda. is defending itself against the lawsuit. Siemens Ltda. is currently
+not excluded from participating in public tenders.
+Siemens is involved in numerous Legal Proceedings in various jurisdictions. These Legal Proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual
+cases this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. In addition,
+further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be extended. Asserted claims are generally
+subject to interest rates.
+Some of these Legal Proceedings could result in adverse decisions for Siemens, which may have material effects on its business activities
+as well as its financial position, results of operations and cash flows.
+For Legal Proceedings information required under IAS 37, Provisions, Contingent Liabilities and Contingent Assets is not disclosed if the
+Company concludes that disclosure can be expected to seriously prejudice the outcome of the matter.
+29
+risks
+Warranties
+Additions
+thereof: non-current
+Balance as of October 1, 2020
+(in millions of €)
+2021
+Sep 30,
+Sep 30,
+Performance guarantees
+2,774
+2,672
+26,519
+25,267
+9.56
+9.46
+Equity allocated to SFS differs from the carrying amount of equity as it is mainly allocated based on the risks of the underlying business.
+Siemens' current corporate credit ratings are:
+Long-term debt
+Short-term debt
+NOTE 21 Commitments and contingencies
+Sep 30, 2021
+Moody's
+Investors
+Service
+losses and
+S&P
+Global
+Ratings
+S&P
+Global
+Ratings
+A1
+A+
+A1
+A+
+P-1
+A-1+
+P-1
+A-1+
+The following table presents the undiscounted amount of maximum potential future payments for major groups of guarantees:
+(in millions of €)
+Credit guarantees
+Sep 30, 2020
+Moody's
+Investors
+Service
+Order
+related
+NOTE 18 Provisions
+Amounts recognized as expenses for defined contribution plans are €484 million and €710 million in fiscal 2021 and 2020, respectively.
+Contributions to state plans amount to €1,449 million and €1,844 million in fiscal 2021 and 2020. Amounts are based on continuing and
+discontinued operations.
+Derivatives
+Multi strategy funds
+Alternative investments
+Corporate bonds
+Government bonds
+Fixed income securities
+(in millions of €)
+Equity securities
+Consolidated Financial Statements
+Disaggregation of plan assets
+55
+25
+As a significant risk, the Company considers a decline in the plans' funded status due to adverse developments of plan assets and/or defined
+benefit obligations resulting from changing parameters. Accordingly, Siemens implemented a risk management concept aligned with the
+defined benefit obligations (Asset Liability Matching). Risk management is based on a worldwide defined risk threshold (Value at Risk).
+The concept, the Value at Risk and the asset development including the investment strategy are monitored and adjusted on an ongoing
+basis under consultation of senior external experts. Independent asset managers are selected based on quantitative and qualitative
+analyses, which include their performance and risk evaluation. Derivatives are used to reduce risks as part of risk management.
+Asset Liability Matching Strategies
+Cash and cash equivalents
+As in prior years, sensitivity determinations apply the same methodology as applied for the determination of the post-employment benefit
+obligation. Sensitivities reflect changes in the DBO solely for the assumption changed.
+(1,367)
+1,689
+2,412
+(90)
+(2,134)
+95
+2,259
+(89)
+(1,386)
+1,559
+95
+(2,045)
+2020
+2021
+Rate of pension progression
+Rate of compensation increase
+Discount rate
+The DBO effect of a 10% reduction in mortality rates for all beneficiaries would be an increase of €1,196 million and €1,285 million,
+respectively, as of September 30, 2021 and 2020.
+2020
+Insurance contracts
+Sep 30,
+Defined contribution plans and state plans
+Employer contributions expected to be paid to defined benefit plans in fiscal 2022 are €212 million. Over the next ten fiscal years, average
+annual benefit payments of €1,754 million and €1,730 million, respectively, are expected as of September 30, 2021 and 2020. The
+weighted average duration of the DBO for Siemens defined benefit plans was 12 and 13 years, respectively, as of September 30, 2021 and
+2020.
+Future cash flows
+Virtually all equity securities have quoted prices in active markets. The fair value of fixed income securities is based on prices provided by
+price service agencies. The fixed income securities are traded in active markets and almost all fixed income securities are investment grade.
+Alternative investments include hedge funds, private equity and real estate investments, thereof real estate used by the Company with a
+fair value of €530 million and €527 million, respectively, as of September 30, 2021 and 2020. Multi strategy funds mainly comprise
+absolute return funds and diversified growth funds that invest in various asset classes within a single fund and aim to stabilize return and
+reduce volatility. Derivatives predominantly consist of financial instruments for hedging interest rate risk and inflation risk.
+29,970
+33,543
+277
+297
+2,565
+2,690
+813
+547
+750
+Other assets
+Total
+1,510
+4,288
+4,078
+4,627
+9,583
+10,030
+3,583
+3,782
+13,166
+13,811
+5,166
+5,773
+2020
+2021
+3,154
+(in millions of €)
+2021
+Sep 30,
+7
+24
+Accretion expense and effect of changes in discount rates
+(24)
+(24)
+Other changes including reclassifications to held for disposal and disposition of those entities
+Balance as of September 30, 2021
+(93)
+(2)
+3
+115
+23
+1,505
+351
+577
+1,552
+3,985
+thereof: non-current
+539
+138
+199
+847
+1,723
+The majority of the Company's provisions are generally expected to result in cash outflows during the next five years.
+Warranties mainly relate to products sold. Order related losses and risks are provided for anticipated losses and risks on uncompleted
+construction, sales and leasing contracts.
+The Company is subject to asset retirement obligations related to certain items of property, plant and equipment. Such asset retirement
+obligations are primarily attributable to environmental clean-up costs (disclosed in Corporate items of the Segment information) and to
+costs primarily associated with the removal of leasehold improvements at the end of the lease term.
+Environmental clean-up costs relate to remediation and environmental protection liabilities which have been accrued based on the
+estimated costs of decommissioning the site for the production of uranium and mixed-oxide fuel elements in Hanau, Germany (Hanau
+facilities), as well as for a nuclear research and service center in Karlstein, Germany (Karlstein facilities). In May 2021, Siemens AG and the
+Federal Republic of Germany entered into a public-law contract based on which the obligation of final disposal of nuclear waste is
+transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the payment is subject to the
+approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made to measure the obligations
+that remain with Siemens AG, with regard to conditioning and packaging of nuclear waste, as well as intermediate storage and transport
+to the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032. As of September 30, 2021 and 2020, the provisions
+total €507 million and €638 million, respectively. The decrease results primarily from the reversal of advance payments to the federal
+26
+Consolidated Financial Statements
+1
+4
+12
+Translation differences
+Total
+1,574
+380
+702
+1,369
+4,026
+581
+183
+690
+898
+2,352
+633
+134
+government in the amount of €95 million which were capitalized and included in the carrying amount of the provision as well as from
+interest rate adjustments.
+3
+1,195
+Usage
+(375)
+(98)
+(100)
+(199)
+(773)
+Reversals
+(246)
+(68)
+(8)
+(164)
+(486)
+424
+Other includes provisions for life and industrial business reinsurance contracts (liability, property, construction) in connection with the
+Siemens Energy business of €487 million and €499 million as of September 30, 2021 and 2020; thereof life €248 million and €262 million
+and industrial business €239 million and €237 million, respectively, as of September 30, 2021 and 2020. The provisions are for incurred
+and reported insurance losses as well as for incurred, hence, not yet reported insurance losses as of fiscal year-end. The provision is
+determined using actuarial standard valuation methodologies, which are parameterized based on historical loss data. Life reinsurance
+contracts have an average term of 20 years, whereas the cash outflows for the industrial business reinsurance contracts are expected
+within the next five years. Other also includes provisions for Legal Proceedings, as far as the risks that are subject to such Legal Proceedings
+are not already covered by project accounting. Provisions for Legal Proceedings amounted to €251 million and €248 million as of
+September 30, 2021 and 2020, respectively. Furthermore, Other includes provision for indemnifications in connection with dispositions
+of businesses of €96 million and €87 million as of September 30, 2021 and 2020. Such indemnifications may protect the buyer from
+potential tax, legal and other risks in conjunction with the purchased business.
+NOTE 19 Equity
+Siemens' issued capital is divided into 850 million registered shares with no par value and a notional value of €3.00 per share as of
+September 30, 2021 and 2020, respectively. The shares are paid in full. At the Shareholders' Meeting, each share has one vote and
+accounts for the shareholders' proportionate share in the Company's net income. All shares confer the same rights and obligations.
+6,360
+Plus: Credit guarantees
+Industrial net debt
+530
+604
+13,861
+10,189
+Income from continuing operations before income taxes
+Plus/Less: Interest income, interest expenses and other financial income (expenses), net
+Plus: Amortization, depreciation and impairments
+EBITDA
+7,496
+5,672
+(1,480)
+2,839
+(1,228)
+3,157
+9,091
+7,601
+Industrial net debt/EBITDA
+1.5
+1.3
+1 Debt is generally reported with a value representing approximately the amount to be repaid. Accordingly, debt in a hedging relationship is adjusted for fair values of interest hedges as well as for foreign currency hedge effects;
+the latter commencing with financing the acquisition of Varian Medical Systems, Inc. in fiscal 2021. Siemens deducts resulting changes in fair value, to derive an amount of debt that approximates the amount that will be repaid.
+2 The adjustment considers that both Moody's and S&P view Siemens Financial Services as a captive finance company. These rating agencies generally recognize and accept higher levels of debt attributable to captive
+finance subsidiaries in determining credit ratings. Following this concept, Siemens excludes Siemens Financial Services debt.
+The SFS business is capital intensive and operates with a larger amount of debt to finance its operations compared to the industrial
+business.
+(in millions of €)
+Allocated equity
+Siemens Financial Services debt
+Debt to equity ratio
+3,075
+Sep 30,
+Plus: Provisions for pensions and similar obligations
+(26,519)
+In fiscal 2021 and 2020, Siemens repurchased 976,346 shares and 19,071,746 shares, respectively. In fiscal 2021 and 2020, Siemens
+transferred 4,022,053 and 5,613,506 treasury shares, respectively. As of September 30, 2021 and 2020, the Company has treasury shares
+of 47,644,581 and 50,690,288 respectively.
+Share based payment expenses increased Capital reserve by €294 million and €295 million (including non-controlling interests),
+respectively, in fiscal 2021 and 2020. In connection with the settlement of share based payment awards Siemens treasury shares (at cost)
+were transferred to employees of €226 million in fiscal 2021 and €310 million in fiscal 2020 which decreased Capital reserve and Retained
+earnings by €165 million and €61 million, respectively in 2021 and by €218 million and €92 million in fiscal 2020.
+As of September 30, 2021 and 2020, total authorized capital of Siemens AG is €600 million nominal issuable in installments based on
+various time-limited authorizations, by issuance of up to 200 million registered shares of no par value. Siemens AG's conditional capital is
+€420.6 million or 140.2 million shares as of September 30, 2021 and 2020. Primarily, it can be used to serve convertible bonds or warrants
+under warrant bonds that could or can be issued based on various time-limited authorizations approved by the respective Shareholders'
+Meeting.
+Dividends paid per share were €3.50 and €3.90, respectively, in fiscal 2021 and 2020. The Managing Board and the Supervisory Board
+propose to distribute a dividend of €4.00 per share to holders entitled to dividends, in total representing approximately €3.2 billion in
+expected payments. Payment of the proposed dividend is contingent upon approval at the Shareholders' Meeting on February 10, 2022.
+In November 2018, Siemens announced a share-buyback program of up to €3 billion. The program ceased in September 2021. On June
+24, 2021, Siemens announced that it intends to launch a new five-year share buyback program of up to €3 billion, beginning in fiscal
+2022.
+NOTE 20 Additional capital disclosures
+A key consideration of our capital structure management is to maintain ready access to capital markets through various debt instruments
+and to sustain our ability to repay and service our debt obligations over time. In order to achieve this, Siemens intended to maintain an
+Industrial net debt divided by EBITDA (continued operations) ratio of up to 1.0 as of September 30, 2021 and 2020, respectively. In line
+with our updated Financial Framework we target an Industrial net debt divided by EBITDA (continuing operations) ratio of up to 1.5 for
+fiscal 2022 and beyond. The ratio indicates the approximate number of years that would be needed to cover the Industrial net debt through
+Income from continuing operations, excluding interest, other financial income (expenses), taxes, depreciation, amortization and
+impairments. The fiscal 2020 ratio is disclosed as computed in the prior year, it is disclosed before retrospective classification of
+discontinued operation.
+27
+Consolidated Financial Statements
+Sep 30,
+(in millions of €)
+Short-term debt and current maturities of long-term debt
+Plus: Long-term debt
+Less: Cash and cash equivalents
+(25,267)
+2021
+7,821
+6,562
+40,879
+38,005
+(9,545) (14,041)
+Less: Current interest bearing debt securities
+(1,132)
+(1,256)
+Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt¹
+Net debt
+(1,012)
+37,010
+(777)
+28,492
+Less: Siemens Financial Services debt²
+2020
+35,777
+Sep 30,
+increase
+(143)
+(1)
+-
+(2)
+(3)
+Settlement payments
+(121)
+(1,685)
+(1,638)
+(1,828)
+(1,759)
+Benefits paid
+-
+142
+102
+142
+102
+Plan participants' contributions
+(2,898)
+(2,041)
+-
+-
+2,898
+2,041
+Employer contributions
+358
+(2,165)
+(18)
+Business combinations, disposals and other
+Foreign currency translation effects
+195
+371
+(3,489)
+1,768
+-
+-
+5,819
+2,015
+11
+16
+(4,240)
+(2,179)
+(4)
+1
+(1,576)
+(101)
+4
+(17)
+1
+(535)
+(634)
+388
+(5,812) 1,089
+35,542 35,777 33,543 29,970
+21,697 22,223 19,929 17,161
+Germany
+Balance at fiscal year-end
+(1,091)
+Other reconciling items
+(1,097)
+1
+(2)
+-
+(2,394)
+195
+(2)
+(74)
+2,243
+303
+-
+(20)
+(13)
+(31)
+(4)
+(333)
+(254)
+-
+-
+333
+254
+407
+299
+-
+2
+406
+299
+595
+485
+-
+595
+485
+9,042
+5,819
+33
+11
+31,307
+29,970
+-
+5,062
+9
+Components of defined benefit costs recognized in the
+75
+Comprehensive Income
+Remeasurements recognized in the Consolidated Statements of
+(18)
+4
+(18)
+4
+Effects of asset ceiling
+303
+75
+-
+303
+75
+(11)
+Actuarial (gains) losses
+(2,243)
+(74)
+2,243
+income and net interest expenses
+Return on plan assets excluding amounts included in net interest
+658
+540
+2
+313
+241
+970
+780
+Consolidated Statements of income
+74
+decrease
+U.S.
+CH
+0.2%
+0.3%
+1.6%
+1.9%
+2.5%
+2.8%
+0.8%
+0.9%
+1.1%
+1.3%
+2020
+2021
+Sep 30,
+Consolidated Financial Statements
+USD
+EUR
+Discount rate
+The weighted-average discount rate used for the actuarial valuation of the DBO was as follows:
+Actuarial assumptions
+14
+24
+303
+75
+(97)
+455
+402
+(156)
+GBP
+CHF
+The discount rate was derived from high-quality corporate bonds with an issuing volume of more than 100 million units in the respective
+currency zones, which have been awarded an AA rating (or equivalent) by at least one of the three rating agencies Moody's Investors
+Service, S&P Global Ratings or Fitch Ratings.
+Applied mortality tables are:
+Effect on DBO due to a one-half percentage-point
+decrease
+increase
+A one-half-percentage-point change of the above assumptions would result in the following increase (decrease) of the DBO:
+2.7%
+3.1%
+1.5%
+1.5%
+1.4%
+1.4%
+2.6%
+3.0%
+2020
+2021
+(3)
+Sep 30,
+U.K.
+Germany
+Pension progression
+CH
+U.K.
+Compensation increase
+The mortality tables used in Germany (Siemens Bio 2017/2021) are mainly derived from data of the German Siemens population and to a
+lesser extent from data of the Federal Statistical Office in Germany by applying formulas in accordance with recognized actuarial standards.
+The rates of compensation increase and pension progression for countries with significant effects are shown in the following table.
+Inflation effects, if applicable, are included in the assumptions below.
+BVG 2020 G (in fiscal 2020 BVG 2015 G)
+Pri-2012 with generational projection from the US Social Security Administration's Long Range Demographic Assumptions
+SAPS S3 (Standard mortality tables for Self Administered Pension Schemes with allowance for future mortality improvements), (in fiscal 2020
+SAPS S2)
+Siemens specific tables (Siemens Bio 2017/2021), (in fiscal 2020 Siemens Bio 2017/2020)
+U.K.
+CH
+U.S.
+Germany
+Sensitivity analysis
+(224)
+2020
+2021
+925
+1,632
+1,643
+Other countries
+(27)
+(300)
+-
+-
+3,355
+3,702
+3,328
+3,402
+(356)
+838
+(325)
+8
+6,000
+6,339
+5,637
+6,005
+341
+147
+-
+-
+2,617
+2,648
+2,958
+2,795
+8
+U.K.
+8
+726
+Fiscal year
+Total
+Experience (gains) losses
+Changes in financial assumptions
+Changes in demographic assumptions
+(in millions of €)
+The DBO remeasurements comprise actuarial (gains) and losses resulting from:
+Net interest expenses relating to provisions for pensions and similar obligations amount to €53 million and €66 million, respectively, in
+fiscal 2021 and 2020. The DBO is attributable to actives 29% and 28%, to deferreds with vested benefits 15% and 14% and to retirees and
+surviving dependents 57% and 57%, respectively, in fiscal 2021 and 2020.
+Employer contributions in fiscal 2021 include fundings in Germany of €1,887 million, thereof a contribution of a stake in Bentley Systems,
+Inc. amounting to €1,146 million, the contribution of various zero-coupon receiver swaps at total value of €368 million and the
+contribution of a stake in an equity instrument in the amount of €270 million. In fiscal 2020, Employer contributions include fundings in
+Germany of €2,730 million, including the contribution of a 9.9% interest in Siemens Energy AG of €1,881 million and real estate
+contributions from Siemens Real Estate.
+Line item Business combinations, disposals and other includes the acquisition of Varian in fiscal 2021: DBO €303 million, Fair value of plan
+assets €271 million.
+3 Includes past service benefits/costs, settlement gains/losses and administration costs related to liabilities.
+1 Discloses figures including Flender and Siemens Energy AG. Accordingly, it comprises the total of continuing and discontinuing operations.
+2 Total Defined benefit obligation (DBO) includes other post-employment benefits of €345 million and €393 million in fiscal 2021 and 2020 respectively, which primarily consist of transition payments to German employees after
+retirement as well as post-employment health care and life insurance benefits to employees in the U.S. and India.
+541
+4
+825
+2,839
+5,819
+2,015
+11
+16
+29,970
+33,543
+35,777
+35,542
+thereof net defined benefit assets (presented in Other assets)
+thereof provisions for pensions and similar obligations
+Total
+798
+6,360
+3m EURIBOR+0.7%/2019/December 2021/EUR floating-rate instrument
+NOTE 23 Additional disclosures on financial instruments
+39
+Lease
+Receivables
+Assets
+Contract
+the simplified
+approach
+ments under
+debt instru-
+Trade
+receivables
+and other
+Loans and other debt instruments
+under the general approach
+Loans, receivables and other debt instruments measured at
+amortized cost
+212
+53
+535
+98
+15
+86
+37
+27
+22
+-
+(in millions of €)
+-
+Stage 1
+Valuation allowance as of October 1, 2019
+(60)
+(35)
+n/a
+n/a
+Write-offs charged against the allowance
+97
+9
+175
+43
+11
+67
+Change in valuation allowances recorded in the Consolidated Statements of
+Income in the current period
+184
+198
+891
+68
+12
+54
+54
+Stage 2
+(46)
+Valuation allowance as of September 30, 2021
+5
+18
+Change in valuation allowances recorded in the Consolidated Statements of
+Income in the current period
+227
+36
+537
+111
+27
+73
+Valuation allowance as of October 1, 2020
+Stage 3
+Stage 2
+Stage 1
+(in millions of €)
+Lease
+Receivables
+Contract
+Assets
+the simplified
+approach
+ments under
+debt instru-
+and other
+(10)
+Reclassifications to line item Assets held for disposal and dispositions of
+those entities
+2
+(22)
+1
+5
+8
+(3)
+(5)
+Foreign exchange translation differences and other changes
+2
+7
+2
+n/a
+n/a
+Recoveries of amounts previously written off
+(38)
+(89)
+(25)
+n/a
+n/a
+Write-offs charged against the allowance
+15
+48
+Trade
+receivables
+Recoveries of amounts previously written off
+n/a
+Up to 12
+months
+Sep 30, 2020
+Sep 30, 2021
+therein: included in fair value hedges
+therein: included in cash flow hedges
+Interest rate swaps
+Foreign currency exchange contracts
+(in millions of €)
+To hedge foreign currency exchange and interest rate risks, derivatives are contracted to achieve a 1:1 hedge ratio so that the main
+characteristics match the underlying hedged items (e.g. nominal amount, maturity) in a critical term match, which ensures an economic
+relationship between hedging instruments and hedged items suitable for hedge accounting. The nominal amounts of hedging instruments
+by maturity are:
+NOTE 24 Derivative financial instruments and hedging activities
+Consolidated Financial Statements
+32
+22
+221
+163
+1,739
+1,157
+Net amounts
+571
+More than
+12 months
+586
+3,605
+14,676
+5,752
+therein: included in cash flow hedges
+Foreign currency exchange contracts
+(in millions of €)
+Sep 30, 2020
+Sep 30, 2021
+Fair values of each type of derivative financial instruments reported as financial assets or financial liabilities in line items Other current
+financial assets (liabilities) or Other financial assets (liabilities) are:
+6,512
+450
+5,147
+859
+598
+605
+13
+7,110
+450
+4,435
+12 months
+More than
+Up to 12
+months
+10,739
+873
+n/a
+829
+Related amounts not offset in the Statement of Financial Position
+227
+36
+537
+111
+27
+73
+Valuation allowance as of September 30, 2020
+(169)
+(458)
+Reclassifications to line item Assets held for disposal and dispositions of
+those entities
+(11)
+(2)
+(17)
+35
+4
+(48)
+Foreign exchange translation differences and other changes
+2
+6
+Impairment losses on financial instruments are presented in line items Cost of sales, Selling and general administrative expenses and Other
+financial income (expenses), net. Net losses in fiscal 2021 and 2020 are €50 million and €404 million, respectively. Impairment losses net
+of (gains) from reversal of impairments are €(19) million and €33 million in fiscal 2021 and 2020 are mostly attributable to the SFS
+business and presented in Other financial income (expenses), net.
+748
+Offsetting
+Financial assets
+793
+748
+2,569
+1,905
+Net amounts in the Statement of Financial Position
+2
+5
+2
+5
+Amounts offset in the Statement of Financial Position
+2020
+795
+753
+Sep 30,
+2021
+2020
+2,571
+1,910
+Gross amounts
+Sep 30,
+2021
+(in millions of €)
+Financial liabilities
+Siemens enters into master netting and similar agreements for derivative financial instruments. Potential offsetting effects are as follows:
+Loans and other debt instruments
+under the general approach
+amortized cost
+Loans, receivables and other debt instruments measured at
+In connection with cash flow hedges
+In connection with fair value hedges
+Not designated in a hedge accounting relationship (including embedded derivatives)
+Derivative financial instruments
+Debt instruments measured at FVTPL
+Equity instruments measured at FVOCI
+Equity instruments measured at FVTPL
+Financial assets measured at fair value
+(in millions of €)
+The following table allocates financial assets and financial liabilities measured at fair value to the three levels of the fair value hierarchy:
+Fixed-rate and variable-rate receivables with a remaining term of more than twelve months, including receivables from finance leases, are
+evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the
+customer, and the risk characteristics of the financed project. Based on this evaluation, allowances for these receivables are recognized.
+The fair value of notes and bonds is based on prices provided by price service agencies at the period-end date (Level 2). The fair value of
+loans from banks and other financial indebtedness as well as other non-current financial liabilities are estimated by discounting future
+cash flows using rates currently available for debt of similar terms and remaining maturities (Level 2).
+3,473
+2,398
+3,483
+38,264
+Carrying
+amount
+Fair value
+40,868
+Carrying
+amount
+43,373
+Fair value
+45,594
+2,400
+Sep 30, 2021
+Sep 30, 2020
+Level 1
+Level 3
+1,098
+1,950
+1,950
+256
+57
+1
+198
+675
+674
+1
+1,149
+354
+77
+718
+4,031
+1,085
+2,030
+917
+Total
+Level 2
+1,098
+Sep 30, 2021
+Notes and bonds
+3,422
+2,305
+790
+852
+14,041
+9,545
+40,304
+2020
+2021
+42,436
+Sep 30,
+Financial assets
+Equity instruments measured at FVOCI¹
+Financial assets designated as measured at FVTPL³
+Financial assets mandatorily measured at FVTPL²
+Derivatives designated in a hedge accounting relationship
+Cash and cash equivalents
+Loans, receivables and other debt instruments measured at amortized cost¹
+(in millions of €)
+The following table discloses the carrying amounts of each category of financial assets and financial liabilities:
+198
+Loans from banks and other financial indebtedness
+220
+491
+(in millions of €)
+The following table presents the fair values and carrying amounts of financial assets and financial liabilities measured at cost or amortized
+cost for which the carrying amounts do not approximate fair value:
+Cash and cash equivalents include €190 million and €126 million as of September 30, 2021 and 2020, respectively, which are not available
+for use by Siemens mainly due to minimum reserve requirements with banks. As of September 30, 2021 and 2020, the carrying amount
+of financial assets Siemens pledged as collateral is €156 million and €115 million, respectively.
+* Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term debt, Trade payables, Other current financial liabilities, Long-term debt and
+Other financial liabilities, except for separately disclosed derivative financial instruments of €769 million and €978 million as of September 30, 2021 and 2020, respectively.
+5 Reported in line items Other current financial liabilities and Other financial liabilities.
+3 Reported in Other financial assets.
+1 Reported in the following line items of the Statements of Financial Position as of September 30, 2021 and 2020, respectively: Trade and other receivables, Other current financial assets and Other financial
+assets, except for separately disclosed €1,824 million and €1,843 million equity instruments in Other financial assets (thereof €675 million and €491 million at FVOCI), €198 million and €220 million financial
+assets designated as measured at FVTPL and €1,950 million and €2,842 million derivative financial instruments (thereof in Other financial assets €1,552 million and €2,044 million) as well as €58 million and
+€18 million debt instruments measured at FVTPL in Other financial assets. Includes €13,267 million and €12,071 million trade receivables from the sale of goods and services, thereof €663 million and
+2 Reported in line items Other current financial assets and Other financial assets.
+55,167
+59,941
+213
+263
+765
+505
+54,189
+59,172
+Derivatives designated in a hedge accounting relationship 5
+Financial liabilities
+Derivatives not designated in a hedge accounting relationship5
+Financial liabilities measured at amortized cost4
+59,268
+56,012
+675
+307
+307
+545
+2020
+2021
+Fiscal year
+Loans, receivables and other debt instruments measured at amortized cost
+Financial liabilities measured at amortized cost
+Cash and cash equivalents
+(in millions of €)
+Net gains (losses) resulting from financial instruments are:
+In fiscal 2021, a Level 3 equity investment mandatorily measured at FVTPL was merged with a public holding company in exchange for
+shares in the new entity, ChargePoint. The transaction resulted in a gain of €220 million derived from now available Level 1 quoted prices.
+The gain is disclosed in Other financial income (expenses), net and in Next47 of Corporate items. Subsequently, the investment was
+contributed to the Siemens Pension-Trust e.V. at fair value of €270 million.
+As of September 30, 2021 and 2020, Level 3 financial assets include venture capital investments of €515 million and €386 million (Next47
+investments). In fiscal 2021 and 2020, new level 3 investments and purchases amounted to €522 million and €249 million, respectively.
+Sales of Level 3 financial assets amounted to €305 million and €327 million, respectively, in fiscal 2021 and 2020.
+In fiscal 2021, Siemens Advanta acquired equity stakes for €279 million in cash (Thoughtworks). The financial asset is mandatorily
+measured at fair value through profit and loss (FVTPL). The company went public in September 2021 resulting in a gain from fair value
+measurement including foreign currency effects of €289 million at Siemens disclosed in Corporate items of segment information and
+presented in Other financial income (expenses), net.
+Fair values of derivative financial instruments are determined in accordance with the specific type of instrument. Fair values of derivative
+interest rate contracts are estimated by discounting expected future cash flows using current market interest rates and yield curves over
+the remaining term of the instrument. Interest rate futures are valued based on quoted market prices, if available. Fair values of foreign
+currency derivatives are based on forward exchange rates. Options are generally valued based on quoted market prices or based on option
+pricing models. No compensating effects from underlying transactions (e.g. firm commitments and forecast transactions) are considered.
+The Company limits default risks resulting from derivative financial instruments by generally transacting with financial institutions with a
+minimum credit rating of investment grade. Based on Siemens' net risk exposure towards the counterparty, the resulting credit risk is taken
+into account via a credit valuation adjustment.
+Fair value of equity instruments quoted in an active market is based on price quotations at period-end date. Fair value of debt instruments,
+is either based on prices provided by price service agencies or is estimated by discounting future cash flows using current market interest
+rates.
+213
+213
+765
+765
+978
+978
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with cash flow hedges
+(17)
+Financial liabilities measured at fair value – Derivative financial instruments
+(168)
+(526)
+Consolidated Financial Statements
+Valuation allowances for expected credit losses
+31
+(702)
+(672)
+1,503
+1,434
+2020
+2021
+Fiscal year
+Total interest expenses on financial liabilities
+Total interest income on financial assets
+(in millions of €)
+Interest income (expense) includes interest from financial assets and financial liabilities not at fair value through profit or loss:
+Amounts include foreign currency gains (losses) from recognizing and measuring financial assets and liabilities. Net gains (losses) on
+financial assets and liabilities measured at FVTPL resulted from those mandatorily measured at FVTPL and comprise fair value changes of
+derivative financial instruments for which hedge accounting is not applied including interest income (expense), as well as dividends from
+and fair value changes of equity instruments measured at FVTPL.
+Financial assets and financial liabilities at FVTPL
+552
+1,020
+22
+74
+236
+236
+554
+Sep 30, 2020
+Consolidated Financial Statements
+In connection with cash flow hedges
+In connection with fair value hedges
+Not designated in a hedge accounting relationship (including embedded derivatives)
+Derivative financial instruments
+Debt instruments measured at FVTPL
+Financial assets measured at fair value
+Equity instruments measured at FVTPL
+Equity instruments measured at FVOCI
+(in millions of €)
+30
+263
+263
+505
+505
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with cash flow hedges
+769
+769
+Financial liabilities measured at fair value - Derivative financial instruments
+545
+Level 1
+Level 2
+Level 3
+Total
+554
+2,052
+2,052
+2,842
+2,842
+238
+18
+220
+491
+Interest rate swaps and combined interest and currency swaps
+385
+1
+1,353
+209
+77
+1,067
+4,923
+612
+3,023
+1,288
+104
+therein: included in cash flow hedges
+Asset
+Liability
+1,785,913
+1,509,046
+654,483
+Settled
+Forfeited
+Vested and fulfilled
+Granted
+Outstanding, beginning of period
+2020
+2021
+Fiscal year
+Resulting Matching Shares
+Under the Base Share Program employees of Siemens AG and participating domestic Siemens companies may invest a fixed amount of
+their compensation in Siemens shares, sponsored by Siemens. The shares are bought at market price at a predetermined date in the second
+quarter and grant the right to receive matching shares under the same conditions applying to the Share Matching Plan described above.
+The fair value of the Base Share Program amounted to €25 million and €33 million in fiscal 2021 and 2020, respectively.
+Base Share Program
+Under the Monthly Investment Plan employees other than senior managers may invest a specified part of their compensation in Siemens
+shares on a monthly basis over a period of twelve months. Shares are purchased at market price at a predetermined date once a month.
+If the Managing Board decides that shares acquired under the Monthly Investment Plan are transferred to the Share Matching Plan, plan
+participants will receive the right to matching shares under the same conditions applying to the Share Matching Plan described above with
+a vesting period of about two years. The Managing Board decided that shares acquired under the tranches issued in fiscal 2020 and 2019
+are transferred to the Share Matching Plan as of February 2021 and February 2020, respectively.
+Monthly Investment Plan
+Under the Share Matching Plan, senior managers may invest a specified part of their variable compensation in Siemens shares (investment
+shares). The shares are purchased at the market price at a predetermined date in the second quarter. Plan participants receive the right to
+one Siemens share without payment of consideration (matching share) for every three investment shares continuously held over a period
+of about three years (vesting period) provided the plan participant has been continuously employed by Siemens until the end of the vesting
+period.
+7,939,840
+8,670,111
+(2,303,850)
+874,793
+(42,116)
+(624,480)
+(80,385)
+Continuing and
+Continuing
+operations
+Consolidated Financial Statements
+Expenses relating to post-employment benefits
+Statutory social welfare contributions and expenses for optional support
+Wages and salaries
+(in millions of €)
+NOTE 27 Personnel costs
+38
+For their 25th and 40th service anniversary eligible employees receive jubilee shares. There were 3.15 million and 3.29 million entitlements
+to jubilee shares outstanding as of September 30, 2021 and 2020, respectively.
+Jubilee Share Program
+account.
+The weighted average fair value of matching shares granted in fiscal 2021 and 2020 of €96.92 and €89.71 per share, respectively, was
+determined as the market price of Siemens shares less the present value of expected dividends; non-vesting conditions were taken into
+1,509,046
+1,389,016
+Outstanding, end of period
+(459,596)
+(69,648)
+(122,659)
+(569,405)
+discontinued operations
+(412,903)
+(374,733)
+Commitments to members of the senior management and other eligible employees
+The Managing Board's stock awards are based on criteria described above. Fair values are €12 million and €12 million, respectively, in
+fiscal 2021 and 2020, calculated by applying a valuation model. In fiscal 2021 and 2020, inputs to that model include an expected
+weighted volatility of Siemens shares of 24.30% and 21.58%, respectively, and a market price of €112.70 and €116.80 per Siemens share.
+Expected volatility was determined by reference to historic volatilities. The model applies a risk-free interest rate of up to (0.49)% and
+(0.24)% in fiscal 2021 and 2020, respectively, and an expected dividend yield of 3.10% in fiscal 2021 and 3.31% in fiscal 2020.
+Assumptions relating to correlations between the Siemens share price and the development of the MSCI index were derived from historic
+observations of share price and index changes.
+Commitments to members of the Managing Board
+Stock awards are tied to performance criteria. For stock awards granted in fiscal 2021 and 2020, 80% of the target amount is linked to the
+relative total shareholder return of Siemens compared to the total shareholder return of the MSCI World Industrials sector index (TSR-
+Target) during a four-year restriction period; the remaining 20% are linked to a Siemens internal sustainability target considering
+environmental, social and governance targets (ESG-Target). The annual target amount for stock awards up to and including tranche 2019
+is linked to the share price performance of Siemens relative to the share price performance of five important competitors during the four-
+year restriction period. The target attainment for each individual performance criteria ranges between 0% and 200%. For awards granted
+since fiscal 2019 settlement is in shares only corresponding to the actual target attainment. Awards granted prior to fiscal 2019, target
+outperformances in excess of 100% are settled in cash. The vesting period is four years.
+The Company grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
+Stock awards are subject to a restriction period of about four years and entitle the beneficiary to Siemens shares following the restriction
+period without payment of consideration.
+Stock Awards
+Share-based payment awards may be settled in newly issued shares of capital stock of Siemens AG, in treasury shares or in cash. Share-
+based payment awards may forfeit if the employment of the beneficiary terminates prior to the expiration of the vesting period. In fiscal
+2021 and 2020, expense from equity-settled awards on a continuing basis are €294 million and €295 million; cash-settled awards on a
+continuing basis resulted in gains (expenses) of €(8) million and €(26) million in fiscal 2021 and 2020. Included is expense of €127 million
+and €100 million in fiscal 2021 and 2020, respectively, resulting from various individually immaterial plans, of which €66 million and €45
+million, respectively, stem from Siemens Healthineers plans. Siemens Healthineers plans are largely similar to Siemens' plans, except for
+granting Siemens Healthineers AG shares.
+NOTE 26 Share-based payment
+Siemens' investment portfolio consists of direct and indirect investments in publicly traded companies that are classified as long term
+investments. These investments are monitored based on their current market value, affected primarily by fluctuations on the volatile
+technology-related markets worldwide. As of September 30, 2021 and 2020, the market value of Siemens' portfolio, which mainly consists
+of one investment in a publicly traded company, was €678 million and €1,055 million, respectively. As of September 30, 2021 and 2020,
+the VaR relating to the equity price was €105 million and €182 million.
+Equity Price Risk
+Amounts above do not represent economic credit risk, since they consider neither collateral held nor valuation allowances already
+recognized.
+Trade receivables of operating units are generally rated internally; as of September 30, 2021 and 2020, approximately 47% and 43%,
+respectively, have an investment grade rating and 53% and 57%, respectively, have a non-investment grade rating. Contract assets
+generally show similar risk characteristics as trade receivables in operating units.
+4,704
+91
+39
+2,684
+360
+2,068
+n/a
+In fiscal 2021 and 2020, 1,975,492 and 2,688,334 equity-settled stock awards were granted relating to the TSR-Target with a fair value
+of €104 million and €132 million, respectively. In fiscal 2021 and 2020, 493,472 and 672,197 equity-settled stock awards were granted
+relating to the ESG-Target with a fair value of €48 million and €66 million, respectively.
+(444,962)
+The fair value of stock awards granted in fiscal 2021 and 2020 (TSR-related) was calculated applying a valuation model. In fiscal 2021 and
+2020, inputs to that model include an expected weighted volatility of Siemens shares of 24.34% and 21.58%, respectively, and a market
+price of €112.36 and €116.02 per Siemens share. Expected volatility was determined by reference to historic volatilities. The model applies
+a risk-free interest rate of up to (0.49)% in fiscal 2021 and up to (0.26)% in fiscal 2020 and an expected dividend yield of 3.11% and 3.31%
+in fiscal 2021 and 2020, respectively. Assumptions relating to correlations between the Siemens share price and the development of the
+MSCI Index were derived from historic observations of share price and index changes. The fair value of the ESG component of €97.63 and
+Consolidated Financial Statements
+(173,648)
+(1,292,912) (1,846,312)
+9,300,505
+3,577,133
+2,683,909
+7,939,840
+2020
+2021
+Fiscal year
+In fiscal 2021, Siemens issued a new tranche under each of the plans of the Share Matching Program.
+Share Matching Plan
+Share Matching Program and its underlying plans
+Non-vested, end of period
+Settled
+Forfeited
+Adjustments due to vesting conditions other than market conditions
+Vested and fulfilled
+Granted
+Non-vested, beginning of period
+Changes in stock awards:
+€98.02 per share in fiscal 2021 and 2020, respectively, was determined as the market price of Siemens shares less the present value of
+expected dividends during the vesting period.
+37
+Fiscal year
+Fiscal year
+2021
+311
+537
+Less: Portion attributable to non-controlling interest
+4,156
+5,636
+Income from continuing operations
+2020
+2021
+(shares in thousands; earnings per share in €)
+Fiscal year
+363
+295
+285
+293
+29
+26
+25
+26
+45
+Income from continuing operations attributable to shareholders of Siemens AG
+43
+5,099
+Less: Dilutive effect from share based payment resulting from Siemens Healthineers
+4.70
+6.28
+Diluted earnings per share (from continuing operations)
+4.77
+6.36
+Basic earnings per share (from continuing operations)
+817,364
+811,490
+Weighted average shares outstanding - diluted
+806,335
+11,029
+9,661
+Effect of dilutive share-based payment
+801,829
+Weighted average shares outstanding - basic
+3,842
+5,094
+Income from continuing operations attributable to shareholders of Siemens AG to determine dilutive earnings per share
+(3)
+(5)
+3,845
+41
+42
+64
+31,978
+25,008
+23,761
+24,789
+1,348
+1,013
+1,024
+1,010
+3,970
+3,113
+2,948
+3,082
+26,660
+20,882
+19,789
+20,697
+2020
+2021
+2020
+In fiscal 2021 and 2020, severance charges for continuing operations amount to €410 million and €589 million, respectively, thereof at
+Digital Industries €114 million and €210 million.
+Employees were engaged in (averages; based on headcount):
+(in thousands)
+Manufacturing and services
+54
+54
+54
+225
+172
+165
+171
+2020
+2021
+Stage 3
+2020
+Fiscal year
+Fiscal year
+discontinued operations
+Continuing and
+Continuing
+operations
+NOTE 28 Earnings per share
+Administration and general services
+Research and development
+Sales and marketing
+2021
+Consolidated Financial Statements
+Stage 2
+n/a
+n/a
+Cash flow hedges
+The Company manages its risks associated with fluctuations in foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a Company-wide portfolio approach. Under this approach the Company-wide
+risks are aggregated centrally, and various derivative financial instruments, primarily foreign currency exchange contracts, foreign currency
+swaps and options, are utilized to minimize such risks. Such a strategy does not qualify for hedge accounting treatment. The Company
+also accounts for foreign currency derivatives, which are embedded in sale and purchase contracts.
+Derivative financial instruments not designated in a hedging relationship
+Foreign currency exchange rate risk management
+Amounts reclassified to net income in connection with interest rate risk hedges and non-operative foreign currency hedges are presented
+in Other financial income (expenses), net. Reclassifications of foreign currency risk hedges with operative business purposes are presented
+as functional costs. Costs of hedging reserve is the forward element of forward contracts that are not designated as hedge accounting and
+which are amortized to interest expense on a straight-line basis as the hedged item is time-period related. In fiscal 2021, €114 million in
+Other relate to designated foreign currency swaps to hedge risks of the highly probable purchase price payment made for the Varian
+acquisition. The amount was removed from the cash flow hedge reserve and included in the initial cost of Varian.
+(3)
+(11)
+93
+(28)
+(17)
+114
+(121)
+(12)
+6
+97
+(263)
+36
+117
+133
+The Company's operating units apply hedge accounting to certain significant forecast transactions and firm commitments denominated
+in foreign currencies. Particularly, the Company entered into foreign currency exchange contracts to reduce the risk of variability of future
+cash flows resulting from forecast sales and purchases as well as firm commitments. The risk mainly results from contracts denominated
+in US$ both from Siemens' operating units entering into long-term contracts e.g. from the project business and from the standard product
+business. In fiscal 2021 and 2020, the risk is hedged against the euro at an average rate of 1.2808 €/US$ and 1.2013 €/US$ (forward
+purchases of US$), respectively and 1.2070 €/US$ and 1.1950 €/US$ (forward sales of US$). As of September 30, 2021 and 2020, the
+(59)
+33
+hedging transactions have an average remaining maturity until 2026 and 2022 (forward purchases of US$) as well as 2022 and 2021
+(forward sales of US$).
+Each Siemens unit conducting businesses with international counterparties leading to future cash flows denominated in a currency other
+than its functional currency is exposed to risks from changes in foreign currency exchange rates. In the ordinary course of business,
+Siemens units are exposed to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the euro. Foreign
+currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies as well
+as production activities and other contributions along the value chain in the local markets.
+Transaction risk
+Foreign currency exchange rate risk
+Consolidated Financial Statements
+34
+Any market sensitive instruments, including equity and interest-bearing investments that our Company's pension plans hold are not
+included in the following quantitative and qualitative disclosures.
+Actual results that are included in the Consolidated Statements of Income or Consolidated Statements of Comprehensive Income may
+differ substantially from VaR figures due to fundamental conceptual differences. While the Consolidated Statements of Income and
+Consolidated Statements of Comprehensive Income are prepared in accordance with IFRS, the VaR figures are the output of a model with
+a purely financial perspective and represent the potential financial loss, which will not be exceeded within ten days with a probability of
+99.5%. Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some
+limitations including the following. A ten day holding period assumes that it is possible to dispose of the underlying positions within this
+period. This may not be valid during continuing periods of illiquid markets. A 99.5% confidence level means that there is a 0.5% statistical
+probability that losses could exceed the calculated VaR. The use of historical data as a basis for estimating the statistic behavior of the
+relevant markets and finally determining the possible range of the future outcomes on the basis of this statistic behavior may not always
+cover all possible scenarios, especially those of an exceptional nature.
+In order to quantify market risks Siemens has implemented a system based on Value at Risk (VaR), which is also used for internal
+management of Corporate Treasury activities. The VaR figures are calculated based on historical volatilities and correlations of various risk
+factors, a ten day holding period, and a 99.5% confidence level.
+Increasing market fluctuations may result in significant earnings and cash flow volatility risk for Siemens. The Company's operating
+business as well as its investment and financing activities are affected particularly by changes in foreign exchange rates and interest rates.
+In order to optimize the allocation of financial resources across Siemens' segments and entities, as well as to achieve its aims, Siemens
+identifies, analyzes and manages the associated market risks. The Company seeks to manage and control these risks primarily through its
+regular operating and financing activities and uses derivative financial instruments when deemed appropriate.
+NOTE 25 Financial risk management
+The Company had interest rate swap contracts to pay variable rates of interest of an average of (0.14)% and (0.13)% as of September 30,
+2021 and 2020, respectively and received fixed rates of interest (average rate of 1.50% and 1.49%, as of September 30, 2021 and 2020,
+respectively). The notional amount of indebtedness hedged as of September 30, 2021 and 2020 was €6,007 million and €6,423 million,
+respectively. This changed 15% and 18% of the Company's underlying notes and bonds from fixed interest rates into variable interest rates
+as of September 30, 2021 and 2020, respectively. The notional amounts of these contracts mature at varying dates based on the maturity
+of the underlying hedged items. The net fair value of interest rate swap contracts (excluding accrued interest) used to hedge indebtedness
+as of September 30, 2021 and 2020 was €277 million and €520 million, respectively.
+Under interest rate swap agreements outstanding in fiscal 2021 and 2020, the Company agreed to pay a variable rate of interest multiplied
+by a notional principal amount, and to receive in return an amount equal to a specified fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements offset future changes in interest rates designated as hedged risk on the fair value
+of the underlying fixed-rate debt obligations. As of September 30, 2021 and 2020, the carrying amounts of €6,305 million and €6,938
+million, respectively, of fixed-rate debt obligations are designated in fair value hedges, including €304 million and €540 million cumulative
+fair value hedge adjustments. Unamortized fair value hedge adjustments of €181 million and €220 million as of September 30, 2021 and
+2020, respectively, relate to no longer applied hedge accounting. The amounts are amortized over the remaining term of the underlying
+debt, maturing until 2042. Carrying amount adjustments to debt of €236 million and €(123) million, respectively, in fiscal 2021 and 2020
+are included in Other financial income (expenses), net; the related swap agreements resulted in gains (losses) of €(243) million and €91
+million, respectively, in fiscal 2021 and 2020. Net cash receipts and payments relating to such interest rate swap agreements are recorded
+as interest expenses.
+Fair value hedges of fixed-rate debt obligations
+Siemens applies cash flow hedge accounting to a revolving portfolio of floating-rate commercial papers of nominal US$700 million.
+Siemens pays a fixed rate of interest and receives a variable rate of interest, offsetting future changes in interest payments of the
+underlying floating-rate commercial papers. Net cash receipts and payments are recorded as interest expenses. The Company had interest
+rate swap contracts to receive variable rates of interest of an average of 0.13% and 0.23% as of September 30, 2021 and 2020, respectively,
+and paid fixed rates of interest (average rate of 1.95% and 1.95%, as of September 30, 2021 and 2020, respectively).
+Cash flow hedges of floating-rate commercial papers
+Interest rate risk management relating to the Group, excluding SFS' businesses, uses derivative financial instruments under a portfolio-
+based approach to manage interest risk actively relative to a benchmark. Interest rate management of the SFS and businesses remains to
+be managed separately, considering the term structure of SFS' financial assets and liabilities on a portfolio basis. Neither approach qualifies
+for hedge accounting treatment. Net cash receipts and payments in connection with interest rate swap agreements are recorded as interest
+expense in Other financial income (expenses), net.
+Derivative financial instruments not designated in a hedging relationship
+Interest rate risk management
+Included are Siemens' foreign currency forward contracts, entered into in fiscal 2021, to hedge foreign currency risks relating to US$10
+billion (€8.5 billion) bonds granted to Siemens Healthineers, through which a synthetic Euro financing structure is achieved. It factually,
+also turns interest into € with volume weighted average interest rates of currently about 0.3%.
+Consolidated Financial Statements
+Operating units are prohibited from borrowing or investing in foreign currencies on a speculative basis. Intercompany financing or
+investments of operating units are preferably carried out in their functional currency or on a hedged basis.
+reserve
+reserve
+554
+307
+therein: included in fair value hedges
+107
+31
+328
+1,835
+155
+987
+106
+231
+231
+544
+617
+933
+569
+893
+Liability
+Asset
+Other (embedded derivatives, options, commodity swaps)
+reserve
+70
+74
+Cost of
+hedging
+Cash flow
+hedge
+hedge
+Cash flow
+thereof: discontinued hedge accounting
+Balance as of September 30, 2021
+Other
+Reclassification to net income
+Hedging gains (losses) presented in OCI
+Balance as of October 1, 2020
+(in millions of €)
+Foreign currency risk
+Interest
+rate risk
+Other components of equity, net of income taxes, relating to cash flow hedges reconciles as follows:
+978
+2,842
+769
+1,950
+33
+45
+According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
+exposure. The net foreign currency position of Siemens units serves as a central performance measure and has to be hedged within a band
+of at least 75% but no more than 100%.
+Generally, the operating units conclude their hedging activities internally with Corporate Treasury. By applying a cost-optimizing portfolio
+approach, Corporate Treasury itself hedges foreign currency exchange rate risks with external counterparties and limits them.
+As of September 30, 2021 and 2020, the VaR relating to foreign currency exchange rates was €39 million and €90 million. This VaR was
+calculated under consideration of items of the Consolidated Statements of Financial Position in addition to firm commitments, which are
+denominated in foreign currencies, as well as foreign currency denominated cash flows from forecast transactions for the following twelve
+months. The decrease in the VaR resulted mainly from a lower net foreign currency position after hedging activities and a lower volatility
+between the U.S. dollar and the euro.
+Siemens provides its customers with various forms of direct and indirect financing particularly in connection with large projects. Hence,
+credit risks are determined by the solvency of the debtors, the recoverability of the collaterals, the success of projects we invested in and
+the global economic development.
+Credit risk is defined as an unexpected loss in financial instruments if the contractual partner is failing to discharge its obligations in full
+and on time or if the value of collateral declines.
+Credit risk
+2 A considerable portion result from asset-based lending transactions meaning that the respective loans can only be drawn after sufficient collateral has been provided by the borrower.
+1 Based on the maximum amounts Siemens could be required to settle in the event of default by the primary debtor.
+2
+165
+312
+3,408
+Irrevocable loan commitments²
+530
+Credit guarantees¹
+72
+213
+143
+429
+14
+111
+147
+The effective monitoring and controlling of credit risk through credit evaluations and ratings is a core competency of our risk management
+system. In this context, Siemens has implemented a binding credit policy.
+1,430
+Siemens maintains a Credit Risk Intelligence Unit to which numerous operating units from the Siemens Group regularly transfer business
+partner data as a basis for a centralized internal rating and credit limit recommendation process. Due to the identification, quantification
+and active management of credit risks, this increases credit risk transparency.
+An exposure is considered defaulted if the debtor is unwilling or unable to pay its credit obligations. A range of internally defined events
+trigger a default rating, including the opening of bankruptcy proceedings, receivables being more than 90 days past due, or a default
+rating by an external rating agency.
+8
+657
+Stage 1
+Stage 3
+Stage 2
+Stage 1
+5,627
+13,456
+approach
+ceivables
+loan commitments
+Lease Re-
+Financial guarantees and
+Loans and other debt
+instruments under the general
+Non-Investment Grade Ratings
+Investment Grade Ratings
+(in millions of €)
+SFS' external financing portfolio disaggregates into credit risk rating grades as of September 30, 2021 as follows (pre valuation
+allowances):
+Consolidated Financial Statements
+36
+As of September 30, 2021 and 2020, collateral of €748 million and €829 million, respectively, relate to financial assets measured at fair
+value. Those collaterals are provided in connection with netting agreements for derivatives providing protection from the risk of a
+counterparty's insolvency. As of September 30, 2021 and 2020, collateral held for credit-impaired receivables from finance leases
+amounted to €90 million and €141 million, respectively. As of September 30, 2021 and 2020, collateral held for financial assets measured
+at amortized cost amounted to €3,328 million and €4,109 million, respectively, including €90 million and €141 million, respectively, for
+credit-impaired loans in SFS' asset finance business. Those collaterals mainly comprised property, plant and equipment. Credit risks arising
+from irrevocable loan commitments are equal to the expected future pay-offs resulting from these commitments.
+To analyze and monitor credit risks, the Company applies various systems and processes. A main element is a central IT application that
+processes data from operating units together with rating and default information and calculates an estimate, which may be used as a basis
+for individual bad debt provisions. Additionally, qualitative information is considered to particularly incorporate the latest developments.
+The carrying amount is the maximum exposure to a financial asset's credit risk, without taking account of any collateral. Collateral reduces
+the valuation allowance to the extent it mitigates credit risk. Collateral needs to be specific, identifiable and legally enforceable to be taken
+into account. Those collaterals are mostly held in the portfolio of SFS.
+Ratings and individually defined credit limits are based on generally accepted rating methodologies, with information obtained from
+customers, external rating agencies, data service providers and Siemens' credit default experiences. Internal ratings consider appropriate
+forward-looking information relevant to the specific financial instrument like expected changes in the debtor's financial position,
+ownership, management or operational risks, as well as broader forward-looking information, such as expected macroeconomic, industry-
+related and competitive developments. The ratings also consider a country-specific risk component derived from external country credit
+ratings. Ratings and credit limits for financial institutions as well as Siemens' public and private customers, which are determined by
+internal risk assessment specialists, are continuously updated and considered for investments in cash and cash equivalents and in
+determining the conditions under which direct or indirect financing will be offered to customers.
+1
+30
+25
+Non-derivative financial liabilities
+(in millions of €)
+2027 and
+thereafter
+2024 to
+2026
+2023
+2022
+Fiscal year
+Consolidated Financial Statements
+35
+The following table reflects our contractually fixed pay-offs for settlement, repayments and interest. The disclosed expected undiscounted
+net cash outflows from derivative financial liabilities are determined based on each particular settlement date of an instrument and based
+on the earliest date on which Siemens could be required to pay. Cash outflows for financial liabilities (including interest) without fixed
+amount or timing are based on the conditions existing at September 30, 2021.
+In addition, Siemens constantly monitors funding options available in the capital markets, as well as trends in the availability and costs of
+such funding, with a view to maintaining financial flexibility and limiting repayment risks.
+Liquidity risk results from the Company's inability to meet its financial liabilities. Siemens follows a deliberated financing policy that is
+aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Siemens mitigates liquidity
+risk by the implementation of effective working capital and cash management, arranged credit facilities with highly rated financial
+institutions, via a debt issuance program and via a global multi-currency commercial paper program. Liquidity risk may also be mitigated
+by the Siemens Bank GmbH, which increases the flexibility of depositing cash or refinancing.
+Liquidity risk
+As of September 30, 2021 and 2020, the VaR relating to the interest rate was €529 million and €424 million. The increase was driven
+mainly by higher interest rate volatilities for the U.S. dollar and an increase in interest rate sensitivity for the U.S. dollar related to the
+US$10 billion instrument issued in March 2021.
+If there are no conflicting country-specific regulations, all Siemens operating units generally obtain any required financing through
+Corporate Treasury in the form of loans or intercompany clearing accounts. The same concept is adopted for deposits of cash generated
+by the units.
+Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
+interest rates. This risk arises whenever interest terms of financial assets and liabilities are different. In order to manage the Company's
+position with regard to interest rate risk, interest income and interest expenses, Corporate Treasury performs a comprehensive corporate
+interest rate risk management by using fixed or variable interest rates from bond issuances and derivative financial instruments when
+appropriate. The interest rate risk relating to the Group, excluding SFS' business, is mitigated by managing interest rate risk within an
+integrated Asset Liability Management approach. The interest rate risk relating to SFS' business is managed separately, considering the
+term structure of financial assets and liabilities. The Company's interest rate risk results primarily from funding in the U.S. dollar, British
+pound and euro.
+Interest rate risk
+Many Siemens units are located outside the Eurozone. Because the financial reporting currency of Siemens is the euro, the financial
+statements of these subsidiaries are translated into euro for the preparation of the Consolidated Financial Statements. To consider the
+effects of foreign currency translation in the risk management, the general assumption is that investments in foreign-based operations
+are permanent and that reinvestment is continuous. Effects from foreign currency exchange rate fluctuations on the translation of net
+asset amounts into euro are reflected in the Company's consolidated equity position.
+Translation risk
+Notes and bonds
+Loans from banks
+Other financial indebtedness
+Lease liabilities
+8,776
+921
+971
+556
+731
+4
+36
+6
+70
+671
+16
+176
+1,217
+24,290
+14,768
+5,178
+6,600
+Derivative financial liabilities
+Other financial liabilities
+Trade payables
+914
+1,291
+Stage 3
+815
+Mentor Graphics Egypt Company (A Limited Liability Company - Private Free Zone), New Cairo / Egypt
+Siemens Healthcare Logistics LLC, Cairo / Egypt
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+Varian Medical Systems Scandinavia AS, Herlev / Denmark
+100
+100
+100
+100
+Siemens Healthcare S.A.E., Cairo / Egypt
+Siemens Industrial LLC, New Cairo / Egypt
+Siemens Mobility Egypt LLC, Cairo / Egypt
+Siemens Healthcare Oy, Espoo / Finland
+Siemens Industry Software Oy, Espoo / Finland
+Siemens Mobility Oy, Espoo / Finland
+Siemens Osakeyhtiö, Espoo / Finland
+Varian Medical Systems Finland OY, Helsinki / Finland
+100
+Siemens Mobility A/S, Ballerup / Denmark
+Siemens Industry Software A/S, Ballerup / Denmark
+Siemens Healthcare A/S, Ballerup / Denmark
+51
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+47
++2
+Consolidated Financial Statements
+Siemens Healthcare d.o.o., Zagreb / Croatia
+OEZ s.r.o., Letohrad / Czech Republic
+Siemens Electric Machines s.r.o., Drasov / Czech Republic
+Siemens Healthcare, s.r.o., Prague / Czech Republic
+Siemens Industry Software, s.r.o., Prague / Czech Republic
+Siemens Mobility, s.r.o., Prague / Czech Republic
+Siemens, s.r.o., Prague / Czech Republic
+Yunex, s.r.o., Prague / Czech Republic
+Acuson Denmark S/A, Ballerup / Denmark
+Siemens A/S, Ballerup / Denmark
+VIBECO - Virtual Buildings Ecosystem Oy, Espoo / Finland
+Acuson France SAS, Saint-Denis / France
+Aimsun SARL, Paris / France
+Mentor Graphics (France) SARL, Meudon La Forêt / France
+Nextflow Software SAS, Nantes / France
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Padam Mobility SAS, Paris / France
+PETNET Solutions SAS, Lisses / France
+Siemens Financial Services SAS, Saint-Denis / France
+Siemens France Holding SAS, Saint-Denis / France
+Siemens Healthcare SAS, Saint-Denis / France
+Siemens Industry Software SAS, Châtillon / France
+Siemens Lease Services SAS, Saint-Denis / France
+Siemens Logistics SAS, Saint-Denis / France
+Siemens Mobility SAS, Châtillon / France
+Siemens SAS, Saint-Denis / France
+Supplyframe Europe SAS, Grenoble / France
+Varian Medical Systems France SARL, Le Plessis-Robinson / France
+Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
+SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME, Chalandri / Greece
+SIEMENS MOBILITY RAIL AND ROAD TRANSPORTATION SOLUTIONS SINGLE-MEMBER SOCIETE ANONYME, Athens / Greece
+YUNEX SINGLE-MEMBER SOCIETE ANONYME, Athens / Greece
+evosoft Hungary Szamitastechnikai Kft., Budapest / Hungary
+Siemens Healthcare Kft., Budapest / Hungary
+Siemens Industry Software Kft., Budapest / Hungary
+Siemens Mobility Kft., Budapest / Hungary
+Siemens Zrt., Budapest / Hungary
+Varian Medical Systems Hungary Kft., Budapest / Hungary
+Yunex Traffic Kft., Budapest / Hungary
+Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
+Mentor Graphics (Ireland) Limited, Shannon, County Clare / Ireland
+100
+100
+100
+100
+100
+100
+52
+SIMAR Ost Grundstücks-GmbH, Grünwald
+SYKATEC Systeme, Komponenten, Anwendungstechnologie GmbH, Erlangen
+timeseries germany GmbH, Munich
+Varian Medical Systems Deutschland GmbH & Co. KG, Darmstadt
+Varian Medical Systems Haan GmbH, Haan
+Varian Medical Systems München GmbH, Munich
+Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
+VMS Deutschland Holdings GmbH, Darmstadt
+VMZ Berlin Betreibergesellschaft mbH, Berlin
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH, Munich
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+Yunex GmbH, Munich
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+Zeleni Holding GmbH, Kemnath
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (306 companies)
+ESTEL Rail Automation SPA, Algiers / Algeria
+Siemens Spa, Algiers / Algeria
+Varian Medical Systems Algeria Spa., Hydra / Algeria
+Siemens Industry Software Closed Joint-Stock Company, Yerevan / Armenia
+ETM professional control GmbH, Eisenstadt / Austria
+ITH icoserve technology for healthcare GmbH, Innsbruck / Austria
+1007
+1009
+1007
+1007
+1007
+Zeleni Real Estate GmbH & Co. KG, Kemnath
+Siemensstadt VG Verwaltungs GmbH, Grünwald
+Siemensstadt SWHH Verwaltungs GmbH, Grünwald
+Siemensstadt SPE Verwaltungs GmbH, Grünwald
+Siemens-Fonds S-8, Munich
+Siemensstadt C1 Verwaltungs GmbH, Grünwald
+10010
+10010
+1009
+100
+100
+1007
+10010
+1009
+1009
+10010
+1009
+1007
+10010
+100
+100
+100
+100
+1007
+46
+46
+Consolidated Financial Statements
+Siemensstadt CX Verwaltungs GmbH, Grünwald
+Siemensstadt Grundstücks-GmbH & Co. KG, Grünwald
+Siemensstadt Management GmbH, Grünwald
+1007
+100
+10010
+10010
+100
+Siemens S.A./N.V., Beersel / Belgium
+Varian Medical Systems Belgium NV, Machelen / Belgium
+Yunex S.A./N.V., Beersel / Belgium
+Siemens d.o.o. Sarajevo - U Likvidaciji, Sarajevo / Bosnia and Herzegovina
+Siemens Medicina d.o.o., Sarajevo / Bosnia and Herzegovina
+Siemens EOOD, Sofia / Bulgaria
+Siemens Healthcare EOOD, Sofia / Bulgaria
+Siemens Mobility EOOD, Sofia / Bulgaria
+Varinak Bulgaria EOOD, Sofia / Bulgaria
+Siemens d.d., Zagreb / Croatia
+51
+100
+491
+100
+100
+69
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens Mobility S.A. / N.V, Beersel / Belgium
+100
+Siemens Industry Software NV, Leuven / Belgium
+Samtech SA, Angleur / Belgium
+10013
+100
+100
+10013
+100
+100
+10010
+100
+100
+100
+100
+Omnetric GmbH, Vienna / Austria
+Siemens Aktiengesellschaft Österreich, Vienna / Austria
+Siemens Gebäudemanagement & -Services G.m.b.H., Vienna / Austria
+Siemens Healthcare Diagnostics GmbH, Vienna / Austria
+Siemens Industry Software GmbH, Linz / Austria
+Siemens Konzernbeteiligungen GmbH, Vienna / Austria
+Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
+Siemens Mobility Austria GmbH, Vienna / Austria
+Siemens Personaldienstleistungen GmbH, Vienna / Austria
+Steiermärkische Medizinarchiv GesmbH, Graz / Austria
+Varian Medical Systems Gesellschaft mbH, Brunn am Gebirge / Austria
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH, Vienna / Austria
+Yunex Traffic Austria GmbH, Vienna / Austria
+Siemens W.L.L., Manama / Bahrain
+Siemens Healthcare NV, Beersel / Belgium
+100
+100
+100
+3,424
+2,661
+822
+857
+9,052
+9,232
+40
+27
+337
+334
+182
+898
+181
+2,098
+4,340
+4,385
+1,302
+1,743
+15,015 14,323
+581
+344
+700
+640
+194
+1,498
+862
+181
+183
+100
+100
+49
+49
+544
+665
+1,928
+3,101
+2,184 31,489 15,338
+2,847
+8,808
+512
+345 30,384
+(85) (673)
+576
+52,832
+716
+3,209
+58,759
+697
+3,058
+1,450
+48
+461
+34
+179
+2,747
+667
+663
+2,879
+805
+57,954
+14,460
+17,997
+111
+76
+292
+191
+288
+2,854
+3,750
+10,123 10,756
+2020
+15,896
+16,071 14,734 14,671 13,742
+12,696 9,169 9,205 9,012
+20,320 16,163 17,921 14,349
+67,514 55,963
+697
+716
+3,024
+3,516
+Portfolio Companies
+Siemens Financial Services
+Industrial Business
+Siemens Healthineers
+Mobility
+Smart Infrastructure
+18,427
+Digital Industries
+Fiscal year
+2021
+(in millions of €)
+Amortization,
+depreciation &
+impairments
+Additions to
+intangible
+assets and
+property, plant
+& equipment
+Free cash flow
+Assets
+Profit
+Total
+revenue
+Intersegment
+Revenue
+External revenue
+Orders
+Consolidated Financial Statements
+NOTE 29 Segment information
+1,037
+Fiscal year
+2021
+16,156
+100
+Fiscal year
+2020
+3,252
+3,362
+14,997
+16,514
+718
+358
+14,279
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+Fiscal year
+Fiscal year
+Fiscal year
+Sep 30,
+Sep 30,
+2021
+2020
+Fiscal year
+2021
+2020
+2021
+2020
+2021
+Fiscal year
+100
+100
+100
+Consolidated Financial Statements
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+10013
+100
+100
+100
+100
+VMS Kenya, Ltd, Nairobi Kenya
+Siemens Industrial Business Co. For Electrical, Electronic and Mechanical Contracting WLL, Kuwait City / Kuwait
+Crabtree (Pty) Ltd, Maseru / Lesotho
+Atruvi Invest Management S.à.r.l, Munsbach / Luxembourg
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
+Siemens TOO, Almaty / Kazakhstan
+492
+Siemens Healthcare Limited Liability Partnership, Almaty / Kazakhstan
+VAL 208 Torino GEIE, Milan / Italy
+100
+100
+10013
+100
+100
+Mentor Graphics Development Services Limited, Shannon, County Clare / Ireland
+Siemens Healthcare Diagnostics Manufacturing Limited, Swords, County Dublin / Ireland
+Siemens Healthcare Medical Solutions Limited, Swords, County Dublin / Ireland
+100
+100
+48
+Siemens Limited, Dublin Ireland
+Mentor Graphics (Israel) Limited, Herzilya Pituah / Israel
+Mentor Graphics Development Services (Israel) Ltd., Rehovot / Israel
+Siemens Concentrated Solar Power Ltd., Rosh HaAyin / Israel
+Siemens HealthCare Ltd., Rosh HaAyin / Israel
+Siemens Industry Software Ltd., Airport City / Israel
+Siemens Ltd., Rosh Ha'ayin / Israel
+Siemens Mobility Ltd., Rosh HaAyin / Israel
+UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
+Acuson Italy S.r.I., Milan / Italy
+Siemens Healthcare S.r.l., Milan / Italy
+Siemens Industry Software S.r.l., Milan / Italy
+Siemens Logistics S.r.I., Milan / Italy
+Siemens Mobility S.r.I., Milan / Italy
+Siemens S.p.A., Milan / Italy
+Varian Medical Systems Italy SpA, Segrate / Italy
+Siemens-Fonds S-7, Munich
+100
+FTD Europe Ltd, Sliema / Malta
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+TFM International S.A. i.L., Luxembourg / Luxembourg
+100
+1007
+CTSI (Mauritius) Ltd., Ebene / Mauritius
+Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
+Siemens Healthcare SARL, Casablanca / Morocco
+Siemens Industry Software SARL, Sala Al Jadida / Morocco
+Siemens S.A., Casablanca / Morocco
+Castor III B.V., The Hague / Netherlands
+Dresser-Rand International B.V., The Hague / Netherlands
+Flowmaster Group N.V., Eindhoven / Netherlands
+Fractal Technologies B.V., Ospel / Netherlands
+Mendix Technology B.V., Rotterdam / Netherlands
+Mentor Graphics (Netherlands) B.V., Eindhoven / Netherlands
+Pollux III B.V., The Hague / Netherlands
+Siemens Finance B.V., The Hague / Netherlands
+Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
+Siemens Healthineers Holding III B.V., The Hague / Netherlands
+Siemens Healthineers Holding IV B.V., The Hague / Netherlands
+Siemens Healthineers Nederland B.V., The Hague / Netherlands
+Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
+Siemens International Holding B.V., The Hague / Netherlands
+Siemens International Holding III B.V., The Hague / Netherlands
+Siemens Mobility B.V., Zoetermeer / Netherlands
+Siemens Mobility Holding B.V., The Hague / Netherlands
+Siemens Nederland N.V., The Hague / Netherlands
+TASS International B.V., Helmond / Netherlands
+Timeseries Group B.V., Rotterdam / Netherlands
+TS International B.V., Rotterdam / Netherlands
+Varian Medical Systems Nederland B.V., Houten / Netherlands
+Varian Medical Systems Nederland Finance B.V., Houten / Netherlands
+Yunex Traffic B.V., Zoetermeer / Netherlands
+Siemens AS, Oslo / Norway
+Siemens Healthcare AS, Oslo / Norway
+100
+Siemens-Fonds Pension Captive, Munich
+51,381
+Siemens Treasury GmbH, Munich
+Revenue by location
+of customers
+Revenue by location
+of companies
+Non-current assets
+(in millions of €)
+Fiscal year
+2021
+Fiscal year
+Sep 30,
+2020
+2021
+2020
+2021
+60,325
+Europe, C.I.S., Africa, Middle East
+27,252
+32,066
+28,563
+2020
+17,624
+Americas
+16,312
+15,218
+16,426
+15,061
+22,409
+14,410
+31,138
+59,990
+(33,049)
+(45,289)
+Assets Corporate items and pensions
+Asset-based adjustments:
+Intragroup financing receivables
+Tax-related assets
+Liability-based adjustments
+Eliminations, Corporate Treasury, other items
+Reconciliation to Consolidated Financial Statements
+NOTE 30 Information about geographies
+Consolidated Financial Statements
+Sep 30,
+Sep 30,
+2021
+2020
+6,458
+6,748
+4,535
+3,898
+228
+(608)
+56,091
+51,431
+4,511
+4,335
+33,456
+27,568
+Asia, Australia
+14,815
+12,784
+13,773
+21,550
+13,656
+Non-current assets consist of property, plant and equipment, goodwill and other intangible assets.
+NOTE 31 Related party transactions
+Joint ventures and associates
+Siemens has relationships with many joint ventures and associates in the ordinary course of business whereby Siemens buys and sells a
+wide variety of products and services generally on arm's length terms. The transactions between continuing operations and joint ventures
+and associates were as follows:
+(in millions of €)
+Joint ventures
+Associates
+Sales of goods and services
+and other income
+Fiscal year
+2021
+Purchases of goods and
+services and other expenses
+Receivables
+Liabilities
+Fiscal year
+Sep 30,
+2020
+2021
+2020
+2021
+169
+147
+10
+34
+113
+1,329
+1,498
+12,907
+Assets Siemens Real Estate
+13,901
+13,521
+11,630
+5,582
+3,504
+Siemens
+62,265
+55,254
+62,265
+55,254
+51,716
+35,537
+thereof Germany
+11,249
+9,373
+13,226
+11,227
+7,061
+6,995
+thereof countries outside of Germany
+51,016
+45,881
+49,039
+44,027
+44,655
+28,543
+therein U.S.
+12,761
+Siemens Energy Investment
+(in millions of €)
+Assets
+(1,018)
+(1,960)
+(249) (1,502) (1,739) (1,731) 59,990 60,325 (2,642)
+62,265 55,254 7,496 5,502 139,608 123,897 8,379
+(1,670)
+376
+347
+616
+543
+6,352
+1,730 1,498
+3,075
+3,098
+40
+40
+Consolidated Financial Statements
+Description of reportable segments
+Digital Industries, offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries,
+complemented by product lifecycle and data-driven services,
+Smart Infrastructure, offers products, systems, solutions, services and software to support a sustainable transition in energy generation
+sources, from fossil to renewable and a transition to smarter, more sustainable buildings and communities,
+Mobility, combines all Siemens businesses in the area of passenger and freight transportation, including rail vehicles, rail automation
+systems, rail electrification systems, road traffic technology, digital solutions and related services,
+Siemens Healthineers develops, manufactures, and sells a diverse range of innovative diagnostic and therapeutic products and services
+to healthcare providers,
+Siemens Financial Services provides financing solutions to Siemens' customers and other companies via debt and equity investments,
+offering leasing, lending and working capital financing solutions and equipment, project and structured financing.
+Portfolio Companies (POC)
+Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
+solutions, systems and services for various industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water and
+fiber.
+Reconciliation to Consolidated Financial Statements
+Siemens Energy Investment - includes our investment in Siemens Energy accounted for using the equity method as well as a smaller
+investment in connection with Siemens Energy.
+458
+55,254
+Siemens Real Estate (SRE) - manages the Group's real estate business portfolio, operates the properties, and is responsible for building
+projects and the purchase and sale of real estate; excluded is the carved-out real estate of Siemens Healthineers; in fiscal 2020 Mobility
+was excluded as well.
+769
+62,265
+Siemens (continuing operations)
+Siemens-Fonds C-1, Munich
+7,560 48,658 33,859
+9,847
+7,142
+1,314
+1,104
+2,202
+2,144
+28,946
+820
+611
+22
+23
+204
+253
+767
+354
+270
+18
+25
+53
+159
+Reconciliation to
+Consolidated Financial Statements
+(353) (1,672)
+71,374 58,030
+68
+215
+Corporate items - includes corporate costs, such as group managing costs, basic research of Corporate Technology, Siemens Advanta, as
+well as corporate services and projects. Corporate items also include equity interests, activities generally intended for closure as well as
+activities remaining from divestments and discontinued operations.
+Eliminations, Corporate Treasury and other reconciling items - comprise consolidation of transactions within the segments, certain
+reconciliation and reclassification items as well as central financing activities. It also includes interest income and expense, such as, for
+example, interest not allocated to segments or POC (referred to as financing interest), interest related to central financing activities or
+resulting consolidation and reconciliation effects on interest.
+Siemens Real Estate
+Corporate items
+Centrally carried pension expense
+Amortization of intangible assets acquired in business combinations
+2021
+2020
+(396)
+(24)
+94
+325
+(435)
+(887)
+(170)
+(211)
+(738)
+(691)
+Eliminations, Corporate Treasury and other reconciling items
+(94)
+(243)
+Reconciliation to Consolidated Financial Statements
+(1,739)
+(1,731)
+In fiscal 2021, Corporate items includes income of €192 million from Bentley Systems, Inc. stemming from the investment's fair value
+measurement before its transfer to the Siemens Pension-Trust e.V.
+In fiscal 2021 and 2020, Profit of SFS includes interest income of €1,154 million and €1,242 million, respectively and interest expenses of
+€313 million and €436 million, respectively.
+42
+Siemens Energy Investment
+Centrally carried pension expense - includes the Company's pension related income (expense) not allocated to the segments, POC or
+Siemens Real Estate.
+(in millions of €)
+Profit
+Measurement - Segments
+Accounting policies for Segment information are generally the same as those used for the Consolidated Financial Statements. Segment
+information is disclosed for continuing operations; prior year Assets are reclassified to conform to the current year presentation. For
+internal and segment reporting purposes intercompany lease transactions, however, are classified as operating leases by the lessor and
+are accounted for off-balance sheet by the lessee (except for intercompany leases with Siemens Healthineers as lessees). Intersegment
+transactions are based on market prices.
+Revenue
+Revenue includes revenue from contracts with customers and revenue from leasing activities. In fiscal 2021 and 2020, lease revenue is
+€1,050 million and €958 million, respectively. In fiscal 2021 and 2020, Digital industries recognized €4,290 million and €4,144 million
+revenue, respectively, from its software business, Smart Infrastructure recognized €5,769 million and €5,182 million in its products
+business. Revenues of Mobility are mainly derived from construction-type business.
+Profit
+Siemens' Managing Board is responsible for assessing the performance of the segments (chief operating decision maker). The Company's
+profitability measure of the segments except for SFS is earnings before financing interest, certain pension costs, income taxes and
+amortization expenses of intangible assets acquired in business combinations as determined by the chief operating decision maker (Profit).
+The major categories of items excluded from Profit are described below.
+Financing interest, excluded from Profit, is any interest income or expense other than interest income related to receivables from
+customers, from cash allocated to the segments and interest expenses on payables to suppliers. Financing interest is excluded from Profit
+because decision-making regarding financing is typically made at the corporate level.
+Decisions on essential pension items are made centrally. Accordingly, Profit primarily includes amounts related to service cost of pension
+plans only, while all other regularly recurring pension related costs are included in reconciliations in line item Centrally carried pension
+expense.
+Amortization expenses of intangible assets acquired in business combinations are not part of Profit. Furthermore, income taxes are
+excluded from Profit since income tax is subject to legal structures, which typically do not correspond to the structure of the segments.
+The effect of certain litigation and compliance issues is excluded from Profit, if such items are not indicative of performance. This may also
+41
+Consolidated Financial Statements
+be the case for items that refer to more than one reportable segment, SRE and (or) POC or have a corporate or central character. Costs for
+support functions are primarily allocated to the segments.
+Profit of the segment SFS
+In contrast to performance measurement principles applied to other segments, interest income and expenses are included, since interest
+is an important source of revenue and expense of SFS.
+Asset measurement principles
+Management determined Assets (Net capital employed) as a measure to assess capital intensity of the segments except for SFS. Its
+definition corresponds to the Profit measure except for amortization expenses of intangible assets acquired in business combinations
+which are not part of Profit, however, the related intangible assets are included in the segments' Assets. Segment Assets is based on Total
+assets of the Consolidated Statements of Financial Position, primarily excluding intragroup financing receivables, tax related assets and
+assets of discontinued operations, since the corresponding positions are excluded from Profit. The remaining assets are reduced by non-
+interest-bearing liabilities other than tax related liabilities, e.g. trade payables, to derive Assets. In contrast, Assets of SFS is Total assets. In
+individual cases assets of Mobility include project-specific intercompany financing of long-term projects. Assets of Siemens Healthineers
+and in fiscal 2020 of Mobility include real estate, while real estate of all other segments is carried at SRE.
+Orders
+Orders are determined principally as estimated revenue of accepted purchase orders for which enforceable rights and obligations exist as
+well as subsequent order value changes and adjustments, excluding letters of intent. To determine orders, Siemens considers termination
+rights and customer's creditworthiness.
+As of September 30, 2021 and 2020, order backlog totaled €85 billion and €70 billion (continuing operations); thereof Digital Industries
+€7 billion and €5 billion, Smart Infrastructure €11 billion and €10 billion, Mobility €36 billion and €32 billion and Siemens Healthineers
+€27 billion and €18 billion. In fiscal 2022, Siemens expects to convert approximately €34 billion of the September 30, 2021 order backlog
+into revenue; thereof at Digital Industries approximately €6 billion, Smart Infrastructure approximately €7 billion, Mobility approximately
+€9 billion and Siemens Healthineers approximately €9 billion.
+Free cash flow definition
+Free cash flow of the segments constitutes cash flows from operating activities less additions to intangible assets and property, plant and
+equipment. Except for SFS, it excludes financing interest, except for cases where interest on qualifying assets is capitalized or classified as
+contract costs; it also excludes income tax as well as certain other payments and proceeds. Free cash flow of SFS includes related financing
+interest payments and proceeds; income tax payments and proceeds of SFS are excluded. In individual cases, free cash flow of Mobility
+includes project-specific intercompany financing of long-term projects.
+Amortization, depreciation and impairments
+Amortization, depreciation and impairments includes depreciation and impairments of property, plant and equipment as well as
+amortization and impairments of intangible assets each net of reversals of impairment.
+Measurement - POC and Siemens Real Estate
+POC follows the measurement principles of the segments except for SFS. Siemens Real Estate applies the measurement principles of SFS.
+Reconciliation to Consolidated Financial Statements
+Fiscal year
+584
+23,724
+87
+121
+45
+Consolidated Financial Statements
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 2 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objektmanagement GmbH, Grünwald
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+Siemens Digital Logistics GmbH, Frankenthal
+Siemens Electronic Design Automation GmbH, Munich
+Siemens Finance & Leasing GmbH, Munich
+Siemens Financial Services GmbH, Munich
+Siemens Fonds Invest GmbH, Munich
+Siemens Global Innovation Partners Management GmbH, Munich
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+Siemens Healthcare GmbH, Munich
+Siemens Healthineers AG, Munich
+Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
+Siemens Healthineers Beteiligungen Verwaltungs-GmbH, Röttenbach
+Siemens Healthineers Holding I GmbH, Munich
+Siemens Healthineers Holding II GmbH, Munich
+Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
+Siemens Healthineers Innovation Verwaltungs-GmbH, Röttenbach
+Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
+Siemens Immobilien GmbH & Co. KG, Grünwald
+Siemens Immobilien Management GmbH, Grünwald
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+Siemens Industry Software GmbH, Cologne
+Siemens Liquidity One, Munich
+Siemens Logistics GmbH, Constance
+1009, 12
+Siemens Medical Solutions Health Services GmbH, Grünwald
+10010
+10010
+1007
+1009
+100
+10010
+10010
+100
+100
+Onespin Solutions Holding GmbH, Munich
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Tübingen KG, Grünwald
+R & S Restaurant Services GmbH, Munich
+REMECH Systemtechnik GmbH, Unterwellenborn
+100
+1009
+100
+10010
+RISICOM Rückversicherung AG, Grünwald
+Siemens Bank GmbH, Munich
+Siemens Beteiligungen Europa GmbH, Munich
+Siemens Beteiligungen Inland GmbH, Munich
+Siemens Beteiligungen Management GmbH, Kemnath
+Siemens Beteiligungen USA GmbH, Berlin
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
+100
+100
+100
+1007
+10010
+Siemens Middle East Services LP GmbH, Munich
+Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
+1009
+100
+100
+10010
+100
+1007
+10010
+1009
+1007
+100
+1009
+Siemens OfficeCenter Frankfurt GmbH & Co. KG, Grünwald
+Siemens OfficeCenter Verwaltungs GmbH, Grünwald
+Siemens Private Finance Versicherungsvermittlungsgesellschaft mbH, Munich
+Siemens Project Ventures GmbH, Erlangen
+100
+Siemens Real Estate Consulting GmbH & Co. KG, Munich
+Siemens Real Estate Consulting Management GmbH, Grünwald
+Siemens Real Estate GmbH & Co. KG, Kemnath
+Siemens Real Estate Management GmbH, Kemnath
+Siemens Technology Accelerator GmbH, Munich
+Siemens Technopark Mülheim GmbH & Co. KG i.L., Grünwald
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Traction Gears GmbH, Penig
+Siemens Trademark GmbH & Co. KG, Kemnath
+Siemens Trademark Management GmbH, Kemnath
+1007
+Siemens Mobility GmbH, Munich
+1009
+1007
+Siemens Mobility Real Estate Management GmbH, Grünwald
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+1009
+1009
+1009
+1009
+1009
+594
+1009
+100
+1007
+100
+100
+10010
+10010
+10010
+1007
+100
+100
+75
+100
+1007
+100
+1007
+100
+1009
+1007
+1009
+1007
+Some of our board members hold, or in the last year have held, positions of significant responsibility with other entities. We have
+relationships with almost all of these entities in the ordinary course of our business whereby we buy and sell a wide variety of products
+and services on arm's length terms.
+NOTE 32 Principal accountant fees and services
+Fees related to professional services rendered by the Company's principal accountant, EY, for fiscal 2021 and 2020 are:
+(in millions of €)
+Audit services
+Other attestation services
+Tax services
+Fiscal year
+2021
+2020
+37.6
+58.1
+3.9
+10.4
+0.1
+41.6
+68.6
+In fiscal 2021 and 2020, 43% and 44%, respectively, of the total fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
+Germany.
+Audit Services relate primarily to services provided by EY for auditing Siemens' Consolidated Financial Statements, for auditing financial
+statements of Siemens AG and its subsidiaries, for reviews of interim financial statements being integrated into the audit, for project-
+accompanying IT audits, for audit services in connection with the implementation of new accounting standards as well as for audits of the
+internal control system at service companies. Other Attestation Services include primarily audits of financial statements as well as other
+attestation services in connection with M&A activities, audits of employee benefit plans, attestation services related to the sustainability
+reporting, comfort letters and other attestation services required under regulatory requirements, contractually agreed or requested on a
+voluntary basis.
+NOTE 33 Corporate governance
+The Managing and Supervisory Boards of Siemens Aktiengesellschaft and of Siemens Healthineers AG, a publicly listed subsidiary of
+Siemens, provided the declarations required under Section 161 of the German Stock Corporation Act (AktG) on October 1, 2021 and
+September 30, 2021. The declarations are available on the company's websites at siemens.com/gcg-code and at corporate.siemens-
+healthineers.com/investor-relations/corporate-governance.
+NOTE 34 Subsequent events
+In October 2021, Siemens recognized a pre-tax gain of €291 million related to Siemens' investment in Fluence Energy, LLC, Delaware, U.S.
+(Fluence), an investment accounted for using the equity method, which is active in energy storage products and services and digital
+applications for renewables and storage. Fluence issued new equity to a newly formed parent holding company, Fluence Energy, Inc., a
+Delaware corporation, which in turn issued shares of stock through an initial public offering. The transaction diluted Siemens' share
+in Fluence to 34%.
+In October 2021, Siemens acquired the Netherlands based company SQCAP B.V. (Sqills), a provider in the provision of cloud-based
+inventory management, reservation, and ticketing software to public transport operators around the world. The acquired business will be
+integrated into Mobility. The purchase price is €537 million paid in cash plus contingent consideration recognized at the acquisition date
+44
+In fiscal 2021 and 2020, no other major transactions took place between the Company and the members of the Managing Board and the
+Supervisory Board.
+Consolidated Financial Statements
+Compensation attributable to members of the Supervisory Board comprised in fiscal 2021 and 2020 base compensation and additional
+compensation for committee work and amounted to €5.2 and €5.3 million (including meeting fees), respectively.
+In fiscal 2021 and 2020, expense related to share-based compensation amounted to €7.6 million and €17.7 million, respectively, including
+expenses related to the additional cash payment compensation due to the spin-off of Siemens Energy.
+1007
+1,129
+1,242
+Sep 30,
+2020
+76
+1,105
+Sep 30,
+2021
+Sep 30,
+2020
+8
+49
+861
+1,358
+1,181
+870
+1,407
+In fiscal 2021 and 2020, sales of goods and services and other income resulting from transactions between discontinued operations and
+joint ventures and associates amounted to €97 million and €391 million, respectively. Purchases of goods and services and other expenses
+resulting from transactions between discontinued operations and joint ventures and associates amounted to €1 million and €174 million,
+respectively.
+As of September 30, 2021 and 2020, receivables to associates included reimbursement rights against Siemens Energy which were
+recognized correspondingly with obligations from customer contracts in connection with Siemens Energy activities legally remaining at
+Siemens. Liabilities to associates as of September 30, 2021 and 2020 were mainly due to trade receivables that also result from these
+activities and that have economically to be allocated to Siemens Energy.
+As of September 30, 2021 and 2020, guarantees to joint ventures and associates amounted to €14,533 million and €27,505 million,
+respectively, thereof €14,159 million and €27,253 million, respectively, to associates. These guarantees included mainly obligations from
+performance and credit guarantees in connection with the Siemens Energy business. For these guarantees, Siemens has reimbursement
+rights towards Siemens Energy.
+As of September 30, 2021 and 2020, loans given to joint ventures and associates amounted to €1,138 million and €900 million, therein
+€1,122 million and €881 million related to joint ventures, respectively. The related book values amounted to €28 million and €26 million,
+therein €25 million and €20 million related to joint ventures, respectively. Valuation adjustments recognized in fiscal 2021 and 2020
+reduced book values of loans related to joint ventures by €242 million and €744 million, respectively.
+As of September 30, 2021 and 2020, the Company had commitments to make capital contributions to joint ventures and associates of
+€72 million and €62 million, therein €65 million and €51 million related to joint ventures, respectively.
+43
+Consolidated Financial Statements
+As of September 30, 2021 and 2020, there were loan commitments to joint ventures amounting to €222 million and €299 million,
+respectively.
+Pension entities
+For information regarding the funding of our post-employment benefit plans see Note 17.
+Related individuals
+Therefore, in fiscal 2021 and 2020, compensation and benefits, attributable to members of the Managing Board amounted to €36.0
+million and €31.0 million in total, respectively.
+Former members of the Managing Board and their surviving dependents received emoluments within the meaning of
+Section 314 para. 1 No. 6 b of the German Commercial Code totaling €30.1 million and €16.0 million in fiscal 2021 and 2020, respectively.
+The defined benefit obligation (DBO) of all pension commitments to former members of the Managing Board and their surviving
+dependents as of September 30, 2021 and 2020 amounted to €192.0 million and €176.5 million, respectively.
+at its maximum amount of €79 million. The purchase price allocation is preliminary as a detailed analysis of the assets and liabilities has
+not been finalized. Resulting Other Intangible assets include mainly customer-related intangible assets of €193 million and technology-
+related intangible assets of €138 million, while Goodwill of €368 million comprises intangible assets that are not separable such as
+employee know-how and synergy effects.
+In fiscal 2021 and 2020, members of the Managing Board – including members who left during fiscal 2021 - received cash compensation
+of €21.4 million and €15.3 million. The fair value of share-based compensation amounted to €11.6 million and €11.3 million for 202,139
+and 203,460 stock awards, respectively, granted in fiscal 2021 and 2020. In fiscal 2021 and 2020, the Company granted contributions
+under the BSAV to members of the Managing Board totaling €3.0 million and €4.5 million, respectively.
+September 30, 2021
+10010
+1007
+1009
+10010
+85
+100
+Kyros 54 GmbH, Munich
+Kyros 58 GmbH, Munich
+Kyros 66 GmbH, Munich
+Kyros 67 GmbH, Munich
+Kyros B AG, Munich
+Kyros C AG, Munich
+Moorenbrunn Entwicklungs Management GmbH, Grünwald
+Moorenbrunn Entwicklungs-GmbH & Co. KG, Grünwald
+NEO New Oncology GmbH, Cologne
+Next47 GmbH, Munich
+Next47 Services GmbH, Munich
+Omnetric GmbH, Munich
+Onespin Solutions GmbH, Munich
+100
+10010
+1007
+1007
+NOTE 35 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the
+German Commercial Code
+1007
+10010
+100
+Lincas Electro Vertriebsgesellschaft mbH, Grünwald
+10010
+Subsidiaries
+Germany (121 companies)
+100
+Acuson GmbH, Erlangen
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+AIT Applied Information Technologies GmbH & Co. KG, Stuttgart
+AIT Verwaltungs-GmbH, Stuttgart
+Alpha Verteilertechnik GmbH, Cham
+Berliner Vermögensverwaltung GmbH, Berlin
+Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
+Dade Behring Grundstücks GmbH, Kemnath
+eos.uptrade GmbH, Hamburg
+evosoft GmbH, Nuremberg
+BEFUND24 GmbH, Erlangen
+1007
+ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
+IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
+KACO new energy GmbH, Neckarsulm
+KompTime GmbH, Munich
+Equity interest
+85
+in %
+10010
+10010
+1009
+100
+Geisenhausener Entwicklungs Management GmbH, Grünwald
+Geisenhausener Entwicklungs-GmbH & Co. KG, Grünwald
+HaCon Ingenieurgesellschaft mbH, Hanover
+35
+removal of members of the Managing Board and governing amendment to the Articles of Association
+10.4 Powers of the Managing Board to issue and repurchase shares
+10. Takeover-relevant information (pursuant to Sections 289a and 315a of the German Commercial Code) and
+explanatory report
+34
+9.3 Corporate Governance statement
+35
+10.1 Composition of common stock
+35
+35
+In In In In
+10.2 Restrictions on voting rights or transfer of shares
+9.2 Net assets and financial position
+10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
+35
+34
+8.3 Risks
+3
+9. Siemens AG
+33
+8.5 Significant characteristics of the internal control and risk management system
+8.4 Opportunities
+8.2 Risk management
+8. Report on expected developments and associated material opportunities and risks
+8.1 Report on expected developments
+7. Overall assessment of the economic position
+30
+22220
+29
+23
+37
+25
+9.1 Results of operations
+10.5 Significant agreements which take effect, alter or terminate upon a change of control of
+the Company following a takeover bid
+17-23%
+10.6 Compensation agreements with members of the Managing Board or employees in the
+event of a takeover bid
+For Siemens Healthineers, we present the margin range we expect as that company's majority shareholder.
+In line with common practice in the financial services business, our financial indicator for measuring capital efficiency at SFS is return on
+equity after tax, or ROE after tax. ROE is defined as SFS' profit after tax, divided by its average allocated equity.
+22
+15-20%
+Siemens Financial Services (ROE after tax)
+17-21%
+10-13%
+11-16%
+Margin range
+Siemens Healthineers
+Mobility
+Smart Infrastructure
+Digital Industries
+Within the Siemens Financial Framework, we aim to achieve over a cycle of three to five years margins that are comparable to those of
+our relevant competitors. Therefore, we have defined profit margin ranges for our industrial businesses which also consider the profit
+margins of their respective relevant competitors. Profit margin is defined as profit of the respective business divided by its revenue.
+For our industrial businesses, profit represents EBITA adjusted for amortization of intangible assets not acquired in business combinations.
+We have set the following margin ranges:
+2.2 Profitability and capital efficiency
+Currency translation effects are the difference between revenue for the current period calculated using the exchange rates of the current
+period and revenue for the current period calculated using the exchange rates of the comparison period. For calculating the percentage
+change year-over-year, this absolute difference is divided by revenue for the comparison period. A portfolio effect arises in the case of an
+acquisition or a disposition and is calculated as the change year-over-year in revenue related to the transaction. For calculating the
+percentage change, this absolute change is divided by revenue for the comparison period. Any portfolio effect is excluded for the 12
+months following the relevant transaction after which both current and past reporting periods fully reflect the portfolio change. For orders,
+we apply the same calculations for currency translation and portfolio effects as described above.
+In the Siemens Financial Framework we aim to achieve a revenue growth range of 5% to 7% per year on a comparable basis over a cycle
+of three to five years. Our primary measure for managing and controlling our revenue growth is comparable growth, because it shows the
+development in our business net of currency translation effects, which arise from the external environment outside of our control, and
+portfolio effects, which involve business activities which are either new to or no longer a part of the respective business.
+2.1 Revenue growth
+37
+10.7 Other takeover-relevant information
+Combined Management Report
+1. Organization of the Siemens Group and basis of
+presentation
+Siemens is a technology group that is active in nearly all countries of the world, focusing on the areas of automation and digitalization in
+the process and manufacturing industries, intelligent infrastructure for buildings and distributed energy systems, smart mobility solutions
+for rail transport, and medical technology and digital healthcare services.
+Siemens comprises Siemens Aktiengesellschaft (Siemens AG), a stock corporation under the Federal laws of Germany, as the parent
+company, and its subsidiaries. Our Company is incorporated in Germany, with our corporate headquarters situated in Munich. As of
+September 30, 2022, Siemens had around 311,000 employees.
+37
+As of September 30, 2022, Siemens has the following reportable segments: Digital Industries, Smart Infrastructure, Mobility and
+Siemens Healthineers, which together form our “Industrial Business" and Siemens Financial Services (SFS), which supports the activities
+of our industrial businesses and also conducts its own business with external customers. Furthermore, we report results for Portfolio
+Companies, which comprises businesses that are managed separately to improve their performance.
+Non-financial matters of the Group and Siemens AG
+Siemens has policies for environmental, employee and social matters, for the respect of human rights, and anti-corruption and bribery
+matters, among others. Our business model is described in chapters 1 and 3 of this Combined Management Report. Reportable information
+that is necessary for an understanding of the development, performance, position and the impact of our activities on these matters is
+included in this Combined Management Report, in particular in chapters 3 through 7. Forward-looking information, including risk
+disclosures, is presented in chapter 8. Chapter 9 includes additional information that is required to be reported in the Combined
+Management Report related to the parent company Siemens AG. As supplementary information, amounts reported in the Consolidated
+Financial Statements and the Annual Financial Statements of Siemens AG related to such non-financial matters, and additional
+explanations thereto, are included in Notes to Consolidated Financial Statements for fiscal 2022, Notes 17, 18, 22, 26 and 27, and in the
+Notes to the Annual Financial Statements for fiscal 2022, Notes 16, 17, 20, 21 and 25. In order to inform the users of the financial reports
+in a focused manner, these disclosures are not subject to a specific non-financial framework - in contrast to the disclosures in our separate
+"Sustainability report 2022" document, which are based on the standards developed by the Global Reporting Initiative (GRI). Said document
+also includes detailed information on DEGREE, Siemens' sustainability framework. With DEGREE, Siemens intends to manage and track its
+progress on selected ambitions in the environmental, social and governance areas.
+Disclosures in accordance with EU Taxonomy: The key performance indicators in this section were determined based on Commission
+Delegated Regulation (EU) 2021/2178 in conjunction with the International Financial Reporting Standards applicable for the Consolidated
+Financial Statements. Thereby, revenue, capital expenditures and operating expenses were predominantly directly allocated to an
+economic activity listed in Delegated Regulation (EU) 2020/852; in determining capital expenditures and operating expenses, allocations
+were also made based on the revenue of the Taxonomy-eligible activities. To avoid double counting, the allocation was always made to
+one economic activity only. Taxonomy-eligible revenue accounted for 20% of revenue according to the Consolidated Statement of Income
+in the reporting year. In the reporting year, Taxonomy-eligible capital expenditures accounted for 40% of additions (including additions
+from business combinations) to other intangible assets and property, plant and equipment in accordance with Note 13 to the Consolidated
+Financial Statements. Taxonomy-eligible operating expenses accounted for 14% of the corresponding expenses recognized in the
+Consolidated Financial Statements in the reporting year. The remaining portions of the key performance indicators are not Taxonomy-
+eligible. Our main Taxonomy-eligible economic activities are derived from the manufacture of low-carbon transport and energy-efficient
+building technologies (mainly from Mobility and Smart Infrastructure operations), transport infrastructure (from Mobility operations) and
+the service of energy-efficient building technologies (from Smart Infrastructure operations), as well as the Group's own real estate
+portfolio. The majority of Taxonomy-eligible capital expenditures result from the latter economic activity. The above-mentioned economic
+activities refer to chapters 3, 6 and 7 of Annex I of Delegated Regulation (EU) 2020/852.
+3
+Combined Management Report
+|| 2. Financial performance system
+Our reportable segments and Portfolio Companies may do business with each other, leading to corresponding orders and revenue. Such
+orders and revenue are eliminated on the Group level.
+22
+Five-Year Summary
+6.2 Cash flows
+12
+12
+10
+45
+4
+4
+4
+4
+3
+Table of contents
+SIEMENS
+O
+FOR FISCAL 2022
+Report
+Combined Management
+Notes and forward-looking statements
+Corporate Governance Statement
+Primary measure for managing and controlling profit and profitability at the Group level: Net income is the primary driver of basic earnings
+per share from net income (EPS) as well as of EPS before purchase price allocation accounting (EPS pre PPA) which is used for our capital
+market communication. EPS pre PPA is defined as basic earnings per share from net income adjusted for amortization of intangible assets
+acquired in business combinations and related income taxes. As with EPS, EPS pre PPA includes the amounts attributable to shareholders
+of Siemens AG. We aim to achieve high-single-digit annual growth in EPS pre PPA over a cycle of three to five years.
+Siemens Report
+FOR FISCAL 2022
+SIEMENS
+Table of contents
+Combined Management Report
+13
+Consolidated Financial Statements
+Independent Auditor's Reports (Siemens Group)
+Annual Financial Statements
+Responsibility Statement (Siemens AG)
+Independent Auditor's Report (Siemens AG)
+Compensation Report (including Auditor's Report)
+Report of the Supervisory Board
+Responsibility Statement (Siemens Group)
+20
+666890223
+1. Organization of the Siemens Group and basis of presentation
+18
+6.1 Capital structure
+17
+6. Financial position
+17
+5. Net assets position
+16
+4.3 Research and development
+4.2 Income
+4.1 Orders and revenue by region
+4. Results of operations
+4455
+15
+15
+14
+14
+3.8 Reconciliation to Consolidated Financial Statements
+2. Financial performance system
+2.1 Revenue growth
+2.2 Profitability and capital efficiency
+2.3 Capital structure
+2.4 Liquidity and dividend
+2.5 Calculations of EPS pre PPA and ROCE
+Combined Management Report
+3. Segment information
+3.2 Digital Industries
+3.3 Smart Infrastructure
+3.4 Mobility
+3.5 Siemens Healthineers
+3.6 Siemens Financial Services
+3.7 Portfolio Companies
+3.1 Overall economic conditions
+We seek to work profitably and as efficiently as possible with the capital provided by our shareholders and lenders. For purposes of
+managing and controlling our capital efficiency, we use return on capital employed, or ROCE, as our primary measure in our Siemens
+Financial Framework. Our goal is to achieve a ROCE within a range of 15% to 20% over a cycle of three to five years.
+33
+Sustainable revenue and profit development is supported by a healthy capital structure. Accordingly, a key consideration within the
+Siemens Financial Framework is to maintain ready access to the capital markets through various debt products and preserve our ability to
+repay and service our debt obligations over time. Our primary measure for managing and controlling our capital structure is the ratio of
+Industrial net debt to EBITDA (continuing operations). This financial measure indicates the approximate amount of time in years that would
+be needed to cover Industrial net debt through income from continuing operations, without taking into account interest, taxes,
+depreciation and amortization. We aim to achieve a ratio of up to 1.5.
+Profit
+therein: software business
+Revenue
+(in millions of €)
+Orders
+Research & Development (R&D) activities at Digital Industries are aimed at helping customers to increase production and resource
+efficiency by merging the real and the digital worlds in a continuous flow of data using cutting-edge technologies such as artificial
+intelligence (AI), edge computing, cloud technologies, additive manufacturing, and industrial 5G technology. As part of Siemens' open
+digital marketplace Siemens Xcelerator - a business platform that includes a curated portfolio of IoT-enabled hardware, software and
+digital services from across Siemens and certified third parties and facilitates interactions and transactions between customers, partners
+and developers - Digital Industries is developing Industrial Operations X, a next-generation industrial loT solution. Industrial Operations X
+is aimed at bringing together solutions and applications, ranging from sensors and edge computing to the cloud, IoT as a service and low-
+code development capabilities, as well as including a wide range of ready-to-use apps. Furthermore, in fiscal 2022, Digital Industries
+launched the open Industrial Edge Ecosystem where third-party app providers can offer solutions based on the Siemens Industrial Edge
+platform, an IT platform which enables the scalable deployment of IT technologies and apps in the production environment. Customers
+thus benefit from a broad range of compatible software components, offered by numerous providers and manufacturers, which they can
+readily integrate into their manufacturing processes. For example, offerings of the Industrial Edge Ecosystem include an Al-based edge
+app to increase availability of drives. In fiscal 2022, Digital Industries strengthened its transition to SaaS by introducing a cloud-based
+version of its NX software (NXX) that combines the advantages of computer aided design software, centralized storage capacity and native
+collaboration. With its latest advances in additive manufacturing, Digital Industries enables cost-effective bespoke manufacturing of
+consumer products. Also in fiscal 2022, Digital Industries enabled the transmission of Profinet IO via a private 5G network, which allows
+industrial data to be transmitted securely across network boundaries in real time for industrial applications. This is made possible by the
+VXLAN (Virtual Extensible LAN) transmission technology in the Scalance 5G routers and security appliances from Digital Industries. Major
+investments of Digital Industries in fiscal 2022 relate to its own factory automation, motion control and process automation businesses,
+to further automate and digitalize facilities particularly in Germany, China and the Czech Republic.
+Digital Industries sees three trends influencing its business and providing long-term growth opportunities. Producers of investment goods
+in today's increasingly digital environment must modernize their production capacity, particularly to increase production flexibility and
+reduce time to market. This environment also spurs producers to complement their core products with vertical solutions and service
+offerings, which their customers either need or want in order to take full advantage of the investment goods. Finally, there is a trend from
+globalization to regionalization, to support local economic development, to increase supply chain resilience or to better adapt solutions to
+local needs. This is increasingly accompanied by more differentiated regulatory requirements.
+in quarterly volume and profitability. In fiscal 2022, Digital Industries started to transition parts of its software business, particularly PLM,
+from largely upfront revenue recognition towards Software as a Service (SaaS), which yields more predictable recurring revenue and offers
+growth opportunities by opening access to new customers, especially small and medium-sized companies seeking to reduce costs
+associated with owning complex IT infrastructure. The transition held back revenue growth rates and profit margin development in the
+software business in fiscal 2022 and Digital Industries expects continued impacts until completion of the transition. Competition with
+Digital Industries' business activities comes primarily from multinational corporations that offer a relatively broad portfolio and from
+smaller companies active only in certain geographic or product markets.
+Combined Management Report
+6
+Taken together, Digital Industries' offerings enable customers to optimize entire value chains from product design and development
+through production and post-sale services. With its advanced software solutions in particular, Digital Industries supports customers in their
+evolution towards the "Digital Enterprise," resulting in increased flexibility and efficiency of production processes and reduced time to
+market for new products. The most important customer customermarkets include the automotive industry, the machine building industry,
+the pharmaceutical and chemicals industry, the food and beverage industry and the electronics and semiconductor industry. Digital
+Industries serves its customers through a common regional sales organization spanning all its businesses, using various sales channels
+depending on the type of customer and industry and also enhancing customer choice across all channels. Changes in customer demand,
+especially for standard products, are driven strongly by macroeconomic cycles, and can lead to significant short-term fluctuation in Digital
+Industries' profitability. Volume from large contracts in the software business, particularly for EDA, may also result in strong fluctuations
+Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries;
+these offerings include automation systems and software for factories, numerical control systems, motors, drives and inverters and
+integrated automation systems for machine tools and production machines. Digital Industries also provides process control systems,
+machine-to-machine communication products, sensors (for measuring pressure, temperature, level, flow rate, distance or shape) and
+radio frequency identification systems. Furthermore, Digital Industries offers production and product lifecycle management (PLM)
+software, and software for simulation and testing of mechatronic systems. These leading software offerings are integrated with an
+electronic design automation (EDA) software portfolio, and the open, cloud-based industrial Internet of Things (IoT) operating system
+MindSphere, which connects machines and physical infrastructure to the digital world. All these software offerings are complemented by
+the Mendix cloud-native low-code application development platform, which allows customers to significantly reduce app development
+times through visual representation of underlying code as well as by digital marketplaces for the global electronics value chain, such as
+Supplyframe and Pixeom. Digital Industries also provides customers with lifecycle and data-driven services.
+3.2 Digital Industries
+The partly estimated figures presented here for GDP are based on an S&P Global report dated November 15, 2022.
+Overall, the major economies experienced significant economic disruptions during calendar 2022. Therefore, GDP in calendar 2022 will
+grow much more slowly than was expected last year. For advanced countries in aggregate, calendar 2022 GDP is expected to expand by
+2.5%. For emerging markets, the increase in calendar 2022 GDP is estimated at 3.4%.
+As the Federal Reserve went forward with tackling inflation, it was followed by central banks around the world. The appreciation of the
+U.S. dollar against most other currencies added to inflation outside of the U.S. and put pressure on international financial markets,
+especially for some emerging countries.
+While energy prices were a major contributor to inflationary pressure, both the U.S. and the EU experienced broader-based price increases.
+This resulted in a strong response by the Federal Reserve which massively tightened monetary policy by starting to reduce money supply
+(quantitative tightening) and increasing its key interest rate by 300 basis points from March to September 2022. The European Central
+Bank (ECB) also started to tighten monetary policy to reduce inflation. ECB's interest rate on main refinancing operations increased by a
+cumulative 125 basis points in August and September. U.S. inflation (as measured by the consumer price index, or CPI) is currently
+expected at 8.1% for calendar 2022, with EU inflation at 9%. Producer prices (PPI) are expected to increase even more: by 16.8% in the
+U.S. and as much as 30.4% in the EU, though a large part of the increase in the EU is driven by energy prices: while the overall PPI in
+September 2022 increased by 41.4% year-over-year, the index excluding energy grew by only 15% year-over-year.
+China's zero-COVID strategy became even more strict with the emergence of the Delta variant and the highly infectious Omicron variant,
+resulting in more major lockdowns which burdened economic activity and global supply chains in the second half of calendar 2021. In
+addition, regulatory restrictions on several high-growth sectors and companies along with a recession in the very important real estate
+sector weighed on the economy. Hence, China's GDP growth is expected to slow significantly in calendar 2022, to 3.0%, after it rebounded
+in calendar 2021 with 8.1%.
+Less: Cash and cash equivalents
+Less: Current interest-bearing debt securities
+Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt
+Plus: Provisions for pensions and similar obligations
+Less: SFS debt
+Plus: Adjustments from assets classified as held for disposal and liabilities associated with assets classified as held for disposal
+Less: Adjustment for deferred taxes on net accumulated actuarial gains/losses on provisions for pensions and similar obligations
+Capital employed (continuing and discontinued operations)
+Fiscal year
+2022
+5
+3. Segment information
+3.1 Overall economic conditions
+Global economic development in fiscal 2022 was dominated by three disruptions: the war in Ukraine, the repercussions of the coronavirus
+pandemic (COVID-19), and the economic slowdown in China. After the strong rebound of economic growth in calendar 2021, in which
+global gross domestic product (GDP) increased by 5.9%, calendar 2022 is expected to show global GDP increasing by only 2.9%. The post-
+COVID economic recovery came to a sudden end during calendar 2022.
+Global economic activity expanded strongly in the second half of calendar 2021 in light of increasing vaccination rates and lifted COVID-
+19 restrictions as well as recovering consumer spending. This triggered inflationary pressures, especially in the United States (U.S.) and in
+Europe. Primary reasons for these inflationary pressures included limitations on the supply of goods and services due to COVID-19
+repercussions (logistics bottlenecks, material and component shortages in the manufacturing sector, labor shortages especially in the
+service sector), while large stimulus packages and high household savings fueled pent-up demand. In addition, already high energy prices
+increased significantly and added to surging inflation rates.
+The war in Ukraine impacted the overall economic conditions starting in the first quarter of calendar 2022. Energy prices - already soaring
+in the latter half of 2021 - sky-rocketed in the first half of calendar 2022. The tightening of gas flows from Russia to the European Union
+(EU) resulted in European natural gas prices temporarily increasing by as much as ten-fold compared to the prior year. Oil prices also
+increased significantly – global prices for Brent crude oil nearly doubled in March 2022 compared to March 2021. Both over-proportionally
+hit Germany and the industrial sector, especially energy-intensive industries such as chemicals. But due to its very strong start in calendar
+2022, the EU economy is still expected to grow by 3.3% in calendar 2022.
+The war in Ukraine put further pressure on developing economies, especially in the Middle East, Africa, and Turkey, as both Russia and
+Ukraine were major exporters of grain and fertilizer before the war. For emerging markets in aggregate, GDP is estimated to increase by
+3.4% in calendar 2022 after it expanded by nearly 7% in 2021.
+Combined Management Report
+Plus: Short-term debt and current maturities of long-term debt
+% Change
+Actual
+2.3 Capital structure
+8
+00
+Smart Infrastructure's R&D activities focus on sustainable and decarbonizing offerings for buildings, utilities and industrial customers. It
+develops digital offerings for the energy market such as for integrating renewable energy into grids. Furthermore, R&D efforts strengthen
+Smart Infrastructure's capabilities to improve the sustainability, performance and attractiveness of buildings. Smart Infrastructure is
+expanding its digital offerings such as cloud solutions using field data from controllers and IoT devices. In June 2022, Smart Infrastructure
+launched the new software platform Building X, developed in accordance with the principles of openness and modularity of Siemens
+Xcelerator. Furthermore, it develops technologies for environmentally friendly and increasingly renewable-based energy systems, ranging
+from climate-friendly SF6-free switchgear for medium voltage to charging solutions for e-mobility. In this regard, data from field devices
+is the basis for intelligent grid control and protection, providing grid stability and flexibility and continuously matching energy supply and
+demand while protecting grid assets. For electrical distribution systems and industrial plants, Smart Infrastructure continuously drives
+digitalization of its switching and control products with built-in intelligence, connectivity to the cloud, and remote diagnostics and edge
+computing capability. Smart Infrastructure puts an increasing focus of R&D on the sustainability of its products along the lifecycle,
+addressing environmentally friendly designs, materials and processes. To a large extent, its capital expenditures relate to the products
+businesses. Main investment areas are replacement of fixed assets and further digitalization of factories and technical equipment, with a
+strong focus on innovation.
+Smart Infrastructure benefits from a number of major trends. These include urbanization, demographic change, decarbonization, and
+digitalization. Urbanization and demographic change drive a need for smarter and more human-centric buildings. Climate change drives
+the need for decarbonization. This results in an increasing demand for flexible and resilient energy infrastructures including rapid growth
+in electric mobility and more sustainable buildings. Digitalization is an enabler for such changes in both buildings and grids, making it
+possible to develop smarter buildings and manage electricity distribution with a higher share of renewables. The markets served are
+experiencing shifts that present opportunities where building technologies and electrification meet.
+Smart Infrastructure's customer and end user base is diverse. It encompasses infrastructure developers, construction companies and
+contractors; owners, operators and tenants of both public and commercial buildings including hospitals, campuses, airports and data
+centers; companies in process industries such as oil and gas, pharmaceuticals and chemicals; companies in discrete manufacturing
+industries such as automotive and machine building; and utilities and power grid network operators (transmission and distribution). Smart
+Infrastructure serves its customers through a broad range of channels, including distributors and partners such as panel builders, original
+equipment manufacturers (OEM) and value-added resellers and installers, all complemented by direct sales and through e-commerce
+channels. Digital marketplaces, such as Siemens Xcelerator, are increasingly important for Smart Infrastructure's digital offerings. Smart
+Infrastructure's principal competitors consist mainly of large multinational companies and smaller manufacturers in emerging countries.
+Its solutions and services business also competes with local players such as system integrators and facility management firms. Smart
+Infrastructure's businesses are impacted by changes in the overall economic environment to varying degrees, depending on the customer
+segment and offering. Demand for Smart Infrastructure's electrical and building products offerings is driven strongly by macroeconomic
+cycles, while demand for its systems and solutions offerings changes more slowly, with a time lag of several quarters. In contrast, demand
+for service offerings shows only limited influence from macroeconomic cycles. Overall, Smart Infrastructure has developed a balanced and
+resilient business mix with its diversified regional and vertical markets; its range of products, systems, solutions and services; and its
+participation in both long- and short-cycle markets. To further strengthen the resilience of its portfolio, Smart Infrastructure aims at
+increasing the share of overall revenue that comes from services.
+Smart Infrastructure offers products, systems, solutions, services and software to support a sustainable transition from fossil to renewable
+energy sources, as well as a transition to smarter, more sustainable buildings and communities. Smart Infrastructure's versatile portfolio
+consists of buildings, electrification, and electrical products. Its buildings portfolio addresses the needs of operators, owners, occupants
+and users of buildings. It spans integrated building management systems and software; heating, ventilation and air conditioning (HVAC)
+controls; fire safety and security products and systems; and solutions and services such as energy performance services. With its
+electrification portfolio, Smart Infrastructure makes grids more resilient, flexible and efficient. Its offerings cover grid simulation, operation
+and control software; substation automation and protection; medium-voltage primary and secondary switchgear including sulfur
+hexafluoride-free (SF6-free) medium-voltage switchgear; and low-voltage switchboards and eMobility charging infrastructure. The
+electrical products portfolio addresses industrial and building applications. Its offerings include low-voltage switching, measuring and
+control equipment; low-voltage distribution systems and switchgear; and circuit breakers, contactors and switching for medium voltage.
+In fiscal 2022, Smart Infrastructure acquired Brightly Software Inc. (Brightly), a U.S.-based provider of cloud-based SaaS for asset and
+maintenance management and for energy and sustainability management. The acquisition strengthens Smart Infrastructure's presence in
+the market for software used to manage built infrastructure.
+3.3 Smart Infrastructure
+but with slower momentum towards the end of the fiscal year. The food and beverage industry grew steadily throughout the fiscal year,
+with the beverage industry growing faster than the food industry. Global production of electronics and semiconductors experienced strong
+growth in fiscal 2022, with some moderation during the course of the fiscal year due in part to production lockdowns in China. Market
+shifts before fiscal 2022 in the semiconductor industry led to global shortages of semiconductors for certain customer segments such as
+the automotive industry; demand patterns began to normalize at the end of the fiscal year, including more moderate spending on
+consumer electronics. Supplier price increases, caused mainly by shortages, affected all of the key markets for Digital Industries, and were
+sharper than usual for a period of economic rebound. For fiscal 2023, Digital Industries' primary markets are expected to show strong
+revenue growth benefiting in part from high order backlogs and price inflation. While growth is expected to be more evenly spread across
+the three reporting regions than in fiscal 2022, growth momentum is expected to slow down gradually over the course of the fiscal year.
+Growth expectations for fiscal 2023 are subject to a high level of uncertainty depending among other factors on the development of
+geopolitical tensions, trade sanctions, energy markets and interest rates.
+Combined Management Report
+7
+In fiscal 2022, markets served by Digital Industries grew clearly. Growth was driven by a further recovery in global manufacturing
+production, only partly held back by impacts related to the war in Ukraine, lockdown measures and electricity shutdowns in China, and
+global supply chain and logistics constraints. Nominal market growth in fiscal 2022 benefited from fast-rising price inflation especially in
+discrete and process industries, which started to weigh on real demand, especially consumer spending, towards the end of the fiscal year.
+Markets grew in all three reporting regions, led by Asia, Australia and the Americas. Overall, markets for discrete industries rose faster
+while recovery in the more project-related process industries was delayed. Within Digital Industries' most important customer markets,
+growth in the automotive industry was held back by the above-mentioned factors, most notably supply chain constraints, which impacted
+production. Ongoing structural changes in the macroeconomy – such as working from home, adoption of e-vehicles, and international
+trade conflicts - are expected to restrain the automotive industry's mid-term growth perspectives. The machine-building industry
+expanded strongly, with growth driven by demand in Japan, the U.S. and eastern European countries. The machine-building industry
+benefited from demand for general investment goods. This development was evident in demand for automation equipment which in
+addition benefited from the trend towards digitalization. The pharmaceutical and the chemicals industries grew throughout the fiscal year,
+Order growth was driven by extraordinarily strong customer demand in Digital Industries' major market segments. Orders rose in all
+businesses including a sharp increase in the factory automation business and substantial growth contributions from the other businesses.
+Within the software business, both EDA and PLM made strong growth contributions due to large contract wins. Revenue growth was
+mainly driven by the automation businesses. While Digital Industries successfully avoided major supply chain disruptions, shortages for
+electronics components and raw materials led to extended delivery times for some automation products. Growth in the software business
+was due mainly to positive currency translation effects. A high rate of customer acceptance of the PLM SaaS transition reduced current
+license revenue in favor of recurring future subscription revenue. On a geographic basis, orders rose substantially in all three reporting
+regions and revenue was up by double digits in all regions. Volume growth was led by the Asia, Australia region and included positive
+currency translation effects. Profit and profitability rose in all automation businesses led by a sharp increase in the motion control business.
+The increases were supported by higher capacity utilization and pricing measures to offset cost inflation. In contrast, profit in the software
+business declined. This was due mainly to revenue development from the SaaS transition and higher expenses related to cloud-based
+activities, which were also influenced by the SaaS transition. Severance charges fell to €64 million from €114 million in the prior year.
+Digital Industries' order backlog rose sharply year-over-year, reaching €14 billion at the end of the fiscal year, of which €11 billion are
+expected to be converted into revenue in fiscal 2023.
+20.3%
+19.9%
+16%
+3,360
+Comp.
+25,283
+18,427
+37%
+32%
+19,517
+2021
+16,514
+13%
+4,691
+4,290
+9%
+0%
+3,892
+18%
+Less: Goodwill and other intangible assets resulting from purchase price allocation related to the Varian acquisition
+Plus: Long-term debt
+Profit margin
+Calculation of capital employed
+Net income
+(in millions of €)
+Calculation of ROCE
+(I) (II) EPS pre PPA
+8.32
+802
+801
+5.47
+(II) Weighted average shares outstanding
+(I) Adjusted Net income attributable to shareholders of Siemens AG
+6,668
+4,384
+(169)
+(220)
+882
+Plus: Amortization of intangible assets acquired in business combinations - attributable to shareholders of Siemens AG
+Less: Taxes on adjustment
+Net income attributable to shareholders of Siemens AG
+6,161
+Total equity
+We intend to continue providing an attractive return to our shareholders. In the Siemens Financial Framework, we strive for a dividend per
+share that exceeds the amount for the preceding year, or that at least matches the prior year level.
+As in the past, we intend to fund the dividend payout from Free cash flow. Our primary measure to assess our ability to generate cash,
+and ultimately to pay dividends, is the cash conversion rate for the Siemens Group, defined as the ratio of Free cash flow (continuing and
+discontinued operations) to Net income. Over a cycle of three to five years, we aim to achieve a cash conversion rate of 1 minus the annual
+comparable revenue growth rate.
+At the Annual Shareholders' Meeting, the Managing Board, in agreement with the Supervisory Board, will submit the following proposal
+to allocate the unappropriated net income of Siemens AG for fiscal 2022: to distribute a dividend of €4.25 on each share of no par value
+entitled to the dividend for fiscal 2022 existing at the date of the Annual Shareholders' Meeting; the remaining amount is to be carried
+4
+Combined Management Report
+Less: Other interest expenses/income, net¹
+forward. Payment of the proposed dividend is contingent upon approval by Siemens shareholders at the Annual Shareholders' Meeting on
+February 9, 2023. The prior-year dividend was €4.00 per share.
+Calculation of EPS pre PPA
+Fiscal year
+2022
+2021
+(in millions of €, shares in thousands, earnings per share in €)
+3,723
+2.5 Calculations of EPS pre PPA and ROCE
+Plus: SFS Other interest expenses/income
+677
+2.4 Liquidity and dividend
+5
+(11)
+(27)
+(34)
+365
+195
+53
+4,819
+47,996
+46,027
+10.0%
+15.2%
+Plus: Net interest expenses related to provisions for pensions and similar obligations
+For purposes of calculating ROCE in interim periods, Income before interest after tax is annualized. Average capital employed is determined
+using the average of the respective balances as of the quarterly reporting dates for the periods under review.
+6,973
+51
+1 Item Other interest expenses/income, net primarily consists of interest relating to corporate debt, and related hedging activities, as well as interest income on corporate assets.
+2 Effects resulting from purchase price allocation for Varian Medical Systems, Inc. (Varian) which are comprised of amortization of tangible and intangible assets, inventory step-ups, deferred revenue adjustments and
+related income taxes.
+Less: Interest adjustments (discontinued operations)
+Less: Taxes on interest adjustments (tax rate (flat) 30%)
+Plus: Defined Varian-related acquisition effects (after tax)²
+(I) Income before interest after tax
+(II) Average capital employed
+834
+Fiscal year
+2022
+(1)/(II) ROCE
+4,392
+6,697
+(939)
+(761)
+971
+2021
+Acrorad Co., Ltd., Okinawa / Japan
+55
+100
+1007
+100
+100
+1007
+100
+100
+100
+51
+100
+Siemens Electronic Design Automation Japan K.K., Tokyo / Japan
+100
+100
+Siemens Healthcare Diagnostics K.K., Tokyo / Japan
+Siemens Industry Software Ltd., Seoul / Korea
+Siemens K.K., Tokyo / Japan
+Siemens Large Drives G.K., Tokyo / Japan
+Varian Medical Systems K.K., Tokyo / Japan
+Acuson Korea Ltd., Seongnam-si / Korea
+Siemens Electronic Design Automation (Korea) LLC, Seoul / Korea
+Siemens Healthineers Ltd., Seoul / Korea
+Siemens Large Drives Limited, Seoul / Korea
+Siemens Ltd. Seoul, Seoul / Korea
+Siemens Mobility Ltd., Seoul / Korea
+Siemens Process Systems Engineering Limited, Daejeon / Korea
+Varian Medical Systems Korea, Inc., Seoul / Korea
+Radica Software Sdn. Bhd., George Town / Malaysia
+Siemens Healthcare Sdn. Bhd., Petaling Jaya / Malaysia
+Siemens Industry Software Sdn. Bhd., George Town, Penang / Malaysia
+Siemens Healthcare K.K., Tokyo / Japan
+100
+Siemens Technology and Services Private Limited, Navi Mumbai / India
+100
+100
+100
+100
+100
+100
+100
+100
+_3
+PT Siemens Large Drives, Jakarta / Indonesia
+PT Siemens Healthineers Indonesia, Jakarta / Indonesia
+P.T. Siemens Indonesia, Jakarta / Indonesia
+Varian Medical Systems International (India) Private Limited, Mumbai / India
+Siemens Large Drives Sdn. Bhd., Shah Alam / Malaysia
+Siemens Rail Automation Pvt. Ltd., Navi Mumbai / India
+PT Siemens Mobility Indonesia, Jakarta / Indonesia
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+99
+Siemens Malaysia Sdn. Bhd., Petaling Jaya Malaysia
+100
+Varian Medical Systems Malaysia Sdn Bhd, Kuala Lumpur / Malaysia
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+Siemens Mobility Pte. Ltd., Singapore / Singapore
+Siemens Pte. Ltd., Singapore / Singapore
+Asiri A O I Cancer Centre (Private) Limited, Colombo / Sri Lanka
+Fang Zhi Health Management Co., Ltd, Taipei / Taiwan
+Hong Tai Health Management Co. Ltd., Taipei / Taiwan
+New Century Technology Co. Ltd., Taipei / Taiwan
+Siemens Healthcare Limited, Taipei / Taiwan
+502
+Siemens Logistics India Private Limited, Navi Mumbai / India
+Varian Medical Systems Vietnam Co Ltd, Ho Chi Minh City / Viet Nam
+Siemens Ltd., Ho Chi Minh City / Viet Nam
+SIEMENS LARGE DRIVES LIMITED COMPANY, Ho Chi Minh City / Viet Nam
+Siemens Healthcare Limited, Ho Chi Minh City / Viet Nam
+100
+Siemens Mobility Limited, Bangkok/Thailand
+Siemens Limited, Bangkok Thailand
+Siemens Large Drives Ltd., Bangkok/Thailand
+Siemens Healthcare Limited, Bangkok / Thailand
+Varian Medical Systems Taiwan Co., Ltd., Taipei / Taiwan
+Siemens Limited, Taipei / Taiwan
+Siemens Industry Software (TW) Co., Ltd., Taipei / Taiwan
+Siemens Logistics Automation Systems Ltd., Bangkok/Thailand
+100
+100
+100
+100
+96
+Consolidated Financial Statements
+Siemens Logistics Pte. Ltd., Singapore / Singapore
+Siemens Large Drives Pte. Ltd., Singapore / Singapore
+Siemens Industry Software Pte. Ltd., Singapore / Singapore
+100
+Siemens Healthcare Pte. Ltd., Singapore / Singapore
+Acuson Singapore Pte. Ltd., Singapore / Singapore
+Varian Medical Systems Philippines, Inc., City of Pasig / Philippines
+Siemens, Inc., Manila / Philippines
+Siemens Healthcare Inc., Manila / Philippines
+Siemens Healthcare Limited, Auckland / New Zealand
+Siemens (N.Z.) Limited, Auckland / New Zealand
+Siemens Electronic Design Automation Pte. Ltd., Singapore / Singapore
+Siemens Mobility Sdn. Bhd., Kuala Lumpur / Malaysia
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+Siemens Limited, Mumbai / India
+60
+Siemens Industry Software (India) Private Limited, New Delhi / India
+Siemens Electronic Design Automation (Shanghai) Co., Ltd., Shanghai / China
+Siemens Electrical Drives Ltd., Tianjin / China
+100
+100
+100
+85
+Siemens Factory Automation Engineering Ltd., Beijing / China
+100
+100
+75
+100
+70
+100
+100
+100
+100
+Siemens Finance and Leasing Ltd., Beijing / China
+Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
+Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
+Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
+Siemens Healthineers Ltd., Shanghai / China
+Siemens Manufacturing and Engineering Centre Ltd., Shanghai / China
+Siemens Ltd., China, Beijing / China
+Siemens Logistics Automation Systems (Beijing) Co., Ltd, Beijing / China
+Siemens Large Drives Equipment (Tianjin) Ltd., Tianjin / China
+Siemens Large Drives (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone / China
+Siemens Investment Consulting Co., Ltd., Beijing / China
+Siemens Financial Services Ltd., Beijing / China
+Siemens International Trading Ltd., Shanghai, Shanghai / China
+Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
+Siemens Industry Software (Beijing) Co., Ltd., Beijing / China
+Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
+100
+100
+100
+Siemens Intelligent Signalling Technologies Co. Ltd., Foshan, Foshan / China
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
+100
+1007
+100
+100
+100
+Consolidated Financial Statements
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
+100
+Siemens Commercial Factoring Ltd., Shanghai / China
+Scion Medical Technologies (Shanghai) Ltd., Shanghai / China
+Hangzhou Alicon Pharm Sci & Tec Co., Ltd., Hangzhou / China
+Green Matrix (Suzhou) Network Technology Co., Ltd., Suzhou / China
+ELFA New Energy Vehicles ePowertrain Systems Ltd., Tianjin, Tianjin / China
+Beijing Siemens Cerberus Electronics Ltd., Beijing / China
+Acuson (Shanghai) Co., Ltd., Shanghai / China
+Siemens Building Technologies (Tianjin) Ltd., Tianjin / China
+Siemens Business Information Consulting Co., Ltd, Beijing / China
+Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+SIEMENS LARGE DRIVES INDIA PRIVATE LIMITED, Mumbai / India
+100
+100
+Vertice Investment Limited, Hong Kong / Hong Kong
+Supply Frame (Hong Kong) Limited, Hong Kong / Hong Kong
+100
+Siemens Mobility Limited, Hong Kong / Hong Kong
+Siemens Logistics Limited, Hong Kong / Hong Kong
+Siemens Limited, Hong Kong / Hong Kong
+AIS Design Automation Private Limited, Bangalore / India
+Siemens Industry Software Limited, Hong Kong / Hong Kong
+Scion Medical Limited, Hong Kong / Hong Kong
+Varian Medical Systems Trading (Beijing) Co., Ltd., Beijing / China
+Varian Medical Systems China Co., Ltd., Beijing / China
+Suzhou Ling Dong Zhen GE Network Technology Co., Ltd., Suzhou / China
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi / China
+Siemens Wiring Accessories Shandong Ltd., Zibo / China
+Siemens Healthcare Limited, Hong Kong / Hong Kong
+100
+American Institute of Pathology and Laboratory Sciences Private Limited, Hyderabad / India
+Brightly Software India Private Limited, Bangalore / India
+SIEMENS HEALTHINEERS INDIA MANUFACTURING PRIVATE LIMITED, Mumbai / India
+Siemens Healthineers India LLP, Bangalore / India
+Siemens Healthcare Private Limited, Mumbai / India
+Siemens Financial Services Private Limited, Mumbai / India
+Siemens Factoring Private Limited, Navi Mumbai / India
+SIEMENS EDA (SALES & SERVICES) PRIVATE LIMITED, New Delhi / India
+Artmed Healthcare Private Limited, Hyderabad / India
+SIEMENS EDA (INDIA) PRIVATE LIMITED, New Delhi / India
+Flomerics India Private Limited, Mumbai / India
+Enlighted Energy Systems Pvt Ltd, Chennai / India
+Cancer Treatment Services Hyderabad Private Limited, Hyderabad / India
+C&S Electric Limited, New Delhi / India
+Bytemark Technology Solutions India Pvt Ltd, Bangalore / India
+Bytemark India LLP, Bangalore / India
+PETNET Radiopharmaceutical Solutions Pvt. Ltd., Mumbai / India
+100
+100
+55
+Siemens Shanghai Medical Equipment Ltd., Shanghai / China
+Siemens Sensors & Communication Ltd., Dalian / China
+Siemens Mobility Electrification Equipment (Shanghai) Co., Ltd., Shanghai / China
+Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
+Siemens Mobility Rail Equipment (Tianjin) Ltd., Tianjin / China
+Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
+Siemens Numerical Control Ltd., Nanjing, Nanjing / China
+Siemens Power Automation Ltd., Nanjing / China
+54
+85
+51
+Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
+100
+85
+100
+100
+100
+100
+100
+100
+90
+Siemens Signalling Co., Ltd., Xi'an / China
+Siemens Switchgear Ltd., Shanghai, Shanghai / China
+100
+70
+100
+100
+100
+100
+Siemens Standard Motors Ltd., Yizheng / China
+80
+100
+100
+51
+Consolidated Financial Statements
+Siemens Venture Capital Co., Ltd., Beijing / China
+Siemens Technology Development Co., Ltd. of Beijing, Beijing / China
+100
+100
+258
+100
+Zhi Dao Railway Equipment Ltd., Taiyuan / China
+Bangalore International Airport Ltd., Bangalore / India
+Greenko Sironj Wind Power Private Limited, New Delhi / India
+Pune IT City Metro Rail Limited, Pune / India
+SUNSOLE RENEWABLES PRIVATE LIMITED, Mumbai / India
+P.T. Jawa Power, Jakarta / Indonesia
+BE C&I Solutions Holding Pte. Ltd., Singapore / Singapore
+Power Automation Pte. Ltd., Singapore / Singapore
+SINGAPORE AQUACULTURE TECHNOLOGIES (SAT) PTE LTD, Singapore / Singapore
+49
+438
+50
+50
+20
+46
+26
+268
+in millions
+in millions
+of €
+in %
+Equity
+Net income
+Equity
+interest
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
+Consolidated Financial Statements
+Other investments11
+58
+24
+49
+24
+50
+Germany (5 companies)
+Erlapolis 20 GmbH, Munich
+Tieke Intelligent Signalling Railway Equipment Co., Ltd., Tianjin / China
+Xi'An X-Ray Target Ltd., Xi'an / China
+Tianjin ZongXi Traction Motor Ltd., Tianjin / China
+50
+Asia, Australia (22 companies)
+Software.co Technologies, Inc., Wilmington, DE / United States
+Wi-Tronix Group Inc., Dover, DE / United States
+Rether networks, Inc., Berkeley, CA / United States
+308
+33
+49
+Exemplar Health (NBH) Partnership, Melbourne / Australia
+20
+23
+238
+27
+49
+29
+33
+206
+of €
+Forest Wind Holdings Pty Limited, Sydney / Australia
+PHM Technology Pty Ltd, Melbourne / Australia
+49
+50
+40
+35
+25
+378
+Forest Wind Investment Company (1) Pty Limited, Sydney / Australia
+50
+50
+30
+23
+Smart Metering Solutions (Changsha) Co. Ltd., Changsha / China
+Shanghai Electric Power Generation Equipment Co., Ltd., Shanghai / China
+Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou / China
+DBEST (Beijing) Facility Technology Management Co., Ltd., Beijing / China
+Guangzhou Suikai Smart Energy Co., Ltd., Guangzhou / China
+50
+Erlapolis 22 GmbH, Munich
+Munipolis GmbH, Munich
+Siemens Immobilien GmbH & Co. KG, Grünwald
+13 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability of this company.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+11 Values according to the latest available local GAAP financial statements; the underlying fiscal year may differ from the Siemens fiscal year.
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+⁹Exemption pursuant to Section 264 b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+n/a = No financial data available.
+7 Not consolidated due to immateriality.
+5 No significant influence due to contractual arrangements or legal circumstances.
+4 No control due to contractual arrangements or legal circumstances.
+3 Control due to contractual arrangements to determine the direction of the relevant activities.
+2 Control due to rights to appoint, reassign or remove members of the key management personnel.
+1 Control due to a majority of voting rights.
+626
+6 Significant influence due to contractual arrangements or legal circumstances.
+(21)
+59
+Responsibility Statement
+Siemens Industrial Limited, Dhaka / Bangladesh
+2
+Judith Wiese
+Matthias Rebellius
+Prof. Dr. Ralf P. Thomas
+Cedrik Neike
+59
+Dr. Roland Busch
+Siemens Aktiengesellschaft
+Munich, December 5, 2022
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a
+true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Management Report, which has
+been combined with the Management Report for Siemens Aktiengesellschaft, includes a fair review of the development and performance
+of the business and the position of the Group, together with a description of the material opportunities and risks associated with the
+expected development of the Group.
+Responsibility Statement (Group)
+SIEMENS
+TO THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
+GROUP MANAGEMENT REPORT FOR FISCAL 2022
+The Managing Board
+2013
+8
+n/a
+1004,5
+105
+67
+100
+272
+15
+(64)
+1004,5
+n/a
+1004,5
+13
+1
+1004,5
+SPT Beteiligungen GmbH & Co. KG, Grünwald
+n/a
+n/a
+7,921
+Medical Systems S.p.A., Genoa / Italy
+9
+974
+336
+8
+(1)
+(8)
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany)
+(1 company)
+Thoughtworks Holding Inc., Wilmington, DE / United States
+Digital Bridge Zeus Partners, LP, Wilmington, DE / United States
+Atom Power, Inc., Charlotte, NC / United States
+Americas (4 companies)
+131
+9
+455
+Electrify America, LLC, Wilmington, DE / United States
+100
+23
+48
+Nordlicht Holding GmbH & Co. KG, Frankfurt
+Nordlicht Holding Verwaltung GmbH, Frankfurt
+Siemens Energy AG, Munich
+Siemens EuroCash, Munich
+Sternico GmbH, Wendeburg
+WUN H2 GmbH, Wunsiedel
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (37 companies)
+Armpower CJSC, Yerevan / Armenia
+VARIAN MEDICAL SYSTEMS ALGERIA SPA, Hydra / Algeria
+Aspern Smart City Research GmbH, Vienna / Austria
+Aspern Smart City Research GmbH & Co KG, Vienna / Austria
+Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
+Siemens Mobility Aarsleff Konsortium I/S, Ballerup / Denmark
+BioMensio Oy, Tampere / Finland
+TRIXELL SAS, Moirans / France
+EVIOP-TEMPO S.A. Electrical Equipment Manufacturers, Vassiliko / Greece
+Parallel Graphics Ltd., Dublin Ireland
+238
+508
+338
+Infraspeed Maintainance B.V., Dordrecht / Netherlands
+Infraspeed EPC Consortium V.O.F., Zoetermeer / Netherlands
+Buitengaats Management B.V., Eemshaven / Netherlands
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+Buitengaats C.V., Amsterdam / Netherlands
+EGM Holding Limited, Marsaskala / Malta
+Temir Zhol Electrification LLP, Nur-Sultan-City / Kazakhstan
+KACO New Energy Co., Amman / Jordan
+Transfima S.p.A., Milan / Italy
+Transfima GEIE, Milan / Italy
+Reindeer Energy Ltd., Bnei Berak / Israel
+Energie Electrique de Tahaddart S.A., Tangier / Morocco
+MeVis BreastCare GmbH & Co. KG, Bremen
+MetisMotion GmbH, Munich
+50
+Consolidated Financial Statements
+56
+100
+100
+100
+100
+Associated companies and joint ventures
+100
+100
+100
+100
+100
+100
+100
+100
+49
+Germany (20 companies)
+ATS Projekt Grevenbroich GmbH, Schüttorf
+25
+50
+498
+50
+50
+258
+Alchemist Accelerator Europe Fund I GmbH & Co. KG, Grünwald
+418
+inpro Innovationsgesellschaft für fortgeschrittene Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
+LIB Verwaltungs-GmbH, Leipzig
+IFTEC GmbH & Co. KG, Leipzig
+HyDN GmbH, Jülich
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen des Stadt- und Regionalverkehrs mbH, Cologne
+GuD Herne GmbH, Essen
+Caterva GmbH, Pullach i. Isartal
+BentoNet GmbH, Baden-Baden
+Ludwig Bölkow Campus GmbH, Taufkirchen
+498
+33
+338
+Americas (20 companies)
+Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
+Plessey Holdings Ltd., Farnborough, Hampshire / United Kingdom
+Five Estuaries Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
+Awel Y Môr Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
+Cross London Trains Holdco 2 Limited, London / United Kingdom
+CAPTON ENERGY DMCC, Dubai / United Arab Emirates
+Consolidated Financial Statements
+Brasol Participações e Empreendimentos S.A., Brazil, São Paulo / Brazil
+57
+50
+49
+514
+31
+26
+208
+5013
+206,13
+GNA 1 Geração de Energia S.A., São João da Barra / Brazil
+MPC Serviços Energéticos 1A S.A, Navegantes / Brazil
+20
+22
+984
+508
+25
+25
+Micropower Comerc Energia S.A., São Paulo / Brazil
+33
+49
+PhSiTh LLC, New Castle, DE / United States
+CEF-L Holding, LLC, Wilmington, DE / United States
+DeepHow Corp., Princeton, NJ / United States
+Fluence Energy, Inc., Wilmington, DE / United States
+Hickory Run Holdings, LLC, Wilmington, DE / United States
+MSS Energy Holdings, LLC, New York, NY / United States
+NMR-SGT JV, LLC, Wilmington, DE / United States
+Tenedora de Activos Medicos S.A.P.I. de C.V, Mexico City / Mexico
+Union Temporal Recaudo y Tecnologia, Santiago de Cali / Colombia
+Akuo Energy Dominicana, S.R.L, Santo Domingo / Dominican Republic
+DELARO, S.A.P.I. DE C.V., Mexico City / Mexico
+MPC Serviços Energéticos 1B S.A., Cabo de Santo Agostinho / Brazil
+Tractian Limited, Grand Cayman / Cayman Islands
+106
+48
+Interessengemeinschaft TUS, Volketswil / Switzerland
+WS Tech Energy Global S.L., Viladecans / Spain
+574,8
+48
+25
+238
+508, 13
+674, 8, 12, 13
+23
+44
+40
+498
+458
+498
+36
+35
+448
+Certas AG, Zurich / Switzerland
+428,13
+498
+Nertus Mantenimiento Ferroviario y Servicios S.A., Madrid / Spain
+Impilo Consortium (Pty.) Ltd., La Lucia / South Africa
+Rousch (Pakistan) Power Ltd., Islamabad / Pakistan
+50
+50
+ZeeEnergie Management B.V., Eemshaven / Netherlands
+498
+Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
+ZeeEnergie C.V., Amsterdam / Netherlands
+50
+208
+508,13
+206,13
+20
+33
+49
+Locomotive Workshop Rotterdam B.V., Zoetermeer / Netherlands
+Siemens Healthcare Ltd., Dhaka / Bangladesh
+100
+SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater / Australia
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+10013
+100
+100
+10013
+100
+100
+100
+100
+100
+100
+Consolidated Financial Statements
+100
+Bytemark Inc., Dover, DE / United States
+100
+100
+100
+1007
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+Building Robotics Inc., Wilmington, DE / United States
+Brightly Software Intermediate Holdings, Inc., Wilmington, DE / United States
+Siemens S.A.S., Tenjo / Colombia
+Siemens Large Drives S.A.S., Tenjo / Colombia
+Siemens Healthcare S.A.S., Tenjo / Colombia
+J. Restrepo Equiphos S.A.S, Bogotá / Colombia
+Siemens S.A., Santiago de Chile / Chile
+Siemens Mobility SpA, Santiago de Chile / Chile
+Siemens Large Drives S.A., Santiago de Chile / Chile
+Siemens Healthcare Equipos Médicos Sociedad por Acciones, Santiago de Chile / Chile
+Nimbic Chile SpA, Las Condes / Chile
+Talent Choice Investment Limited, George Town / Cayman Islands
+Varian Medical Systems Canada, Inc., Ottawa / Canada
+Siemens Healthcare Diagnostics S.A., San José / Costa Rica
+SIEMENS MOBILITY LIMITED, Oakville / Canada
+Siemens Industry Software ULC, Vancouver / Canada
+Siemens Healthcare Limited, Oakville / Canada
+Siemens Financial Ltd., Oakville / Canada
+Siemens Electronic Design Automation ULC, Vancouver / Canada
+Siemens Canada Limited, Oakville / Canada
+Esilhouette Inc., Toronto / Canada
+EPOCAL INC., Toronto / Canada
+Energy Profiles Limited, Toronto / Canada
+Bytemark Canada Inc., Saint John / Canada
+Brightly Software Canada, Inc., Toronto / Canada
+Dade Behring Hong Kong Holdings Corporation, Tortola / British Virgin Islands
+Siemens Large Drives Limited, Oakville / Canada
+Brightly Software, Inc., Wilmington, DE / United States
+Siemens S.A., San José / Costa Rica
+Siemens S.A., Quito / Ecuador
+Brightly Software Holdings, Inc., Wilmington, DE / United States
+Acuson, LLC, Wilmington, DE / United States
+Acuson Holding LLC, Wilmington, DE / United States
+Varian Medical Systems Puerto Rico, LLC, Guaynabo / Puerto Rico
+Siemens S.A.C., Surquillo / Peru
+Siemens Mobility S.A.C., Lima / Peru
+Siemens Large Drives S.A.C., Surquillo / Peru
+Siemens Healthcare S.A.C., Surquillo / Peru
+Siemens Large Drives S.A., Panama City / Panama
+Siemens, S.A. de C.V., Mexico City / Mexico
+SIEMENS SERVICIOS COMERCIALES SA DE CV, SOFOM, ENR, Mexico City / Mexico
+Siemens Mobility, S.R.L., Santo Domingo / Dominican Republic
+Siemens Mobility S. de R.L. de C.V., Mexico City / Mexico
+Siemens Large Drives S. de R.L. de C.V., Mexico City / Mexico
+Siemens Inmobiliaria S.A. de C.V., Mexico City / Mexico
+Siemens Industry Software, S.A. de C.V., Mexico City / Mexico
+Siemens Healthcare Diagnostics, S. de R.L. de C.V., Mexico City / Mexico
+Indústria de Trabajos Eléctricos S.A. de C.V., Ciudad Juárez / Mexico
+Grupo Siemens S.A. de C.V., Mexico City / Mexico
+Acuson México, S. de R.L. de C.V., Mexico City / Mexico
+Siemens S.A., Guatemala / Guatemala
+Siemens S.A., Antiguo Cuscatlán / El Salvador
+Siemens Healthcare, Sociedad Anonima, Antiguo Cuscatlán / El Salvador
+Siemens-Healthcare Cia. Ltda., Quito / Ecuador
+Siemens Logistics S. de R.L. de C.V., Mexico City / Mexico
+100
+100
+97
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+63
+501
+100
+51
+100
+100
+100
+100
+Siemens Mobility Pty Ltd, Melbourne / Australia
+Siemens Ltd., Bayswater / Australia
+Siemens Large Drives Pty. Ltd., Bayswater / Australia
+Siemens Industry Software Pty Ltd, Bayswater / Australia
+Exemplar Health (NBH) Trust 2, Bayswater / Australia
+Siemens Healthcare Pty. Ltd., Hawthorn East / Australia
+Exemplar Health (NBH) Holdings 2 Pty Limited, Bayswater / Australia
+Exemplar Health (NBH) 2 Pty Limited, Bayswater / Australia
+100
+Brightly Software Australia Pty. Ltd., Sydney / Australia
+Australia Hospital Holding Pty Limited, Bayswater / Australia
+Asia, Australia (157 companies)
+100
+Siemens Rail Automation, C.A., Caracas / Venezuela
+Siemens S.A., Montevideo / Uruguay
+Varian Medical Systems, Inc., Wilmington, DE / United States
+Varian Medical Systems Pacific, Inc., Wilmington, DE / United States
+Varian Medical Systems Netherlands Holdings, Inc., Wilmington, DE / United States
+53
+100
+100
+100
+100
+100
+100
+Siemens Healthcare S.A., Caracas / Venezuela
+100
+Brightly Software Holdings Pty. Ltd., Sydney / Australia
+100
+Siemens Logistics LLC, Wilmington, DE / United States
+Siemens Large Drives LLC, Wilmington, DE / United States
+Siemens Industry, Inc., Wilmington, DE / United States
+Siemens Government Technologies, Inc., Wilmington, DE / United States
+Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
+Siemens Healthcare Laboratory, LLC, Wilmington, DE / United States
+Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
+Siemens Industry Software Inc., Wilmington, DE / United States
+Siemens Financial Services, Inc., Wilmington, DE / United States
+Siemens Financial, Inc., Wilmington, DE / United States
+Siemens Advanta Solutions Corp., Wilmington, DE / United States
+Siemens Capital Company LLC, Wilmington, DE / United States
+Siemens Corporation, Wilmington, DE / United States
+Siemens Electrical, LLC, Wilmington, DE / United States
+PETNET Solutions Cleveland, LLC, Wilmington, DE / United States
+PETNET Solutions, Inc., Knoxville, TN / United States
+PolyDyne Software Inc., Austin, TX / United States
+Rail-Term LLC, Plymouth, MI / United States
+Senseye Technology Inc., Wilmington, DE / United States
+Next47 Mid-Tier GP 2019, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2020, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2021, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2022, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2023, L.P., Wilmington, DE / United States
+Next47 TTGP, L.L.C., Wilmington, DE / United States
+P.E.T.NET Houston, LLC, Austin, TX / United States
+Page Mill Corporation, Boston, MA / United States
+PETNET Indiana, LLC, Indianapolis, IN / United States
+Next47 Mid-Tier GP 2018, L.P., Wilmington, DE / United States
+J2 Innovations, Inc., Los Angeles, CA / United States
+Mannesmann Corporation, New York, NY / United States
+Mansfield Insurance Company, Burlington, VT / United States
+Next47 Inc., Wilmington, DE / United States
+Facility Health, Inc., Wilmington, DE / United States
+Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
+Executive Consulting Group, LLC, Wilmington, DE / United States
+ECG TopCo Holdings, LLC, Wilmington, DE / United States
+ECG Acquisition, Inc., Wilmington, DE / United States
+Dedicated 2Imaging LLC, Wilmington, DE / United States
+D3 Oncology Inc., Wilmington, DE / United States
+Corindus, Inc., Wilmington, DE / United States
+Carolina Software Preferred Intermediate Holdings, Inc., Wilmington, DE / United States
+Carolina Software Intermediate Holdings, Inc., Wilmington, DE / United States
+Consolidated Financial Statements
+62
+52
+100
+eMeter Corporation, Wilmington, DE / United States
+Siemens Mobility, Inc, Wilmington, DE / United States
+Carolina Software Holdings, Inc., Wilmington, DE / United States
+Siemens Public, Inc., Iselin, NJ / United States
+Siemens Process Systems Engineering Inc., Wilmington, DE / United States
+100
+100
+100
+100
+100
+100
+100
+100
+100
+73
+100
+100
+100
+80
+SMI Holding LLC, Wilmington, DE / United States
+Varian BioSynergy, Inc., Wilmington, DE / United States
+Varian Medical Systems Africa Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems India Private Limited, Wilmington, DE / United States
+Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems Latin America, Ltd., Wilmington, DE / United States
+Varian Medical Systems Australasia Pty Ltd., Belrose / Australia
+Supplyframe, Inc., Pasadena, CA / United States
+100
+100
+100
+100
+Siemens USA Holdings, Inc., Wilmington, DE / United States
+• evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
+Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
+specification for this file;
+• evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited consolidated financial
+statements and to the audited group management report;
+-
+•
+evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Arts.
+4 and 6 of Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, enables an
+appropriate and complete machine-readable XBRL copy of the XHTML rendering.
+Further information pursuant to Art. 10 of the EU Audit Regulation
+We were elected as group auditor by the Annual Shareholders' Meeting on February 10, 2022. We were engaged by the Supervisory Board
+on February 10, 2022. We have been the group auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from
+October 1, 2008 to September 30, 2009.
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
+to Art. 11 of the EU Audit Regulation (long-form audit report).
+Other matter use of the auditor's report
+Munich, December 5, 2022
+Our auditor's report must always be read together with the audited consolidated financial statements and the audited group management
+report as well as the assured ESEF documents. The consolidated financial statements and the group management report converted to the
+ESEF format - including the versions to be published in the Bundesanzeiger [German Federal Gazette] – are merely electronic renderings
+of the audited consolidated financial statements and the audited group management report and do not take their place. In particular, the
+ESEF report and our assurance opinion contained therein are to be used solely together with the assured ESEF documents made available
+in electronic form.
+7
+German Public Auditor responsible for the engagement
+The German Public Auditor responsible for the engagement is Katharina Breitsameter.
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+Breitsameter
+Wirtschaftsprüferin
+[German Public Auditor]
+Dr. Gaenslen
+Wirtschaftsprüfer
+[German Public Auditor]
+-
+obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
+controls;
+Independent Auditor's Reports (Group)
+•
+• evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
+the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial
+statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance
+with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as
+with full IFRSS as issued by the IASB;
+Independent Auditor's Reports (Group)
+• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
+express opinions on the consolidated financial statements and on the group management report. We are responsible for the direction,
+supervision and performance of the group audit. We remain solely responsible for our opinions;
+•
+Evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law,
+and the view of the Group's position it provides.
+• Perform audit procedures on the prospective information presented by management in the group management report. On the basis of
+sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
+prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
+a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
+significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
+We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
+and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
+applicable, the related safeguards.
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
+audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in
+our auditor's report unless law or regulation precludes public disclosure about the matter.
+Other legal and regulatory requirements
+Report on the assurance on the electronic rendering of the consolidated financial statements and the group
+management report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
+Opinion
+6
+In our opinion, the rendering of the consolidated financial statements and the group management report contained in the file identified
+above and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
+reporting format. Beyond this assurance opinion and our audit opinions on the accompanying consolidated financial statements and the
+accompanying group management report for the fiscal year from October 1, 2021 to September 30, 2022 contained in the "Report on the
+audit of the consolidated financial statements and of the group management report" above, we do not express any assurance opinion on
+the information contained within these renderings or on the other information contained in the file identified above.
+Basis for the opinion
+We conducted our assurance work on the rendering, of the consolidated financial statements and the group management report contained
+in the file identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering
+of Financial Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410)
+(10.2021) and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further
+described in the "Group auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW
+Standard on Quality Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
+Responsibilities of management and the Supervisory Board for the ESEF documents
+Management is responsible for the preparation of the ESEF documents including the electronic rendering of the consolidated financial
+statements and the group management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB and for the tagging of the
+consolidated financial statements in accordance with Sec. 328 (1) Sentence 4 No. 2 HGB.
+In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
+documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
+electronic reporting format.
+The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
+Group auditor's responsibilities for the assurance work on the ESEF documents
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
+non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
+throughout the assurance work. We also:
+•
+identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
+and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
+a basis for our assurance opinion;
+00
+9
+Independent Auditor's Reports (Group)
+In determining the disclosures in accordance with Art. 8 of the EU Taxonomy Regulation, management is required to interpret undefined
+legal terms. Due to the immanent risk that undefined legal terms may be interpreted differently, the legal conformity of their interpretation
+and, accordingly, our assurance engagement thereon are subject to uncertainties.
+Assurance conclusion
+Based on the assurance procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe
+that the disclosures in accordance with EU Taxonomy of Siemens Aktiengesellschaft for the period from October 1, 2021 to September
+30, 2022 are not prepared, in all material respects, in accordance with the EU Taxonomy Regulation and the Delegated Acts adopted
+thereunder as well as the interpretation by management as disclosed in the disclosures in accordance with EU Taxonomy.
+Restriction of use
+We draw attention to the fact that the assurance engagement was conducted for the Company's purposes and that the report is intended
+solely to inform the Company about the result of the assurance engagement. As a result, it may not be suitable for another purpose than
+the aforementioned. Accordingly, the report is not intended to be used by third parties for making (financial) decisions based on it. Our
+responsibility is to the Company alone. We do not accept any responsibility to third parties. Our assurance conclusion is not modified in
+this respect.
+General engagement terms and liability
+The "General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public Auditors and Public Audit
+Firms]" dated January 1, 2017 are applicable to this engagement and also govern our relations with third parties in the context of this
+engagement (www.de.ey.com/general-engagement-terms). In addition, please refer to the liability provisions contained there in no. 9
+and to the exclusion of liability towards third parties. We accept no responsibility, liability or other obligations towards third parties unless
+we have concluded a written agreement to the contrary with the respective third party or liability cannot effectively be precluded.
+We make express reference to the fact that we will not update the report to reflect events or circumstances arising after it was issued,
+unless required to do so by law. It is the sole responsibility of anyone taking note of the summarized result of our work contained in this
+report to decide whether and in what way this result is useful or suitable for their purposes and to supplement, verify or update it by means
+of their own review procedures.
+Munich, December 5, 2022
+Independent Auditor's Reports (Group)
+Ernst & Young GmbH
+Breitsameter
+Wirtschaftsprüferin
+[German Public Auditor]
+Johne
+Wirtschaftsprüferin
+[German Public Auditor]
+10
+10
+conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
+obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to
+continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report
+to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are
+inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
+report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern;
+Wirtschaftsprüfungsgesellschaft
+Evaluation of the presentation of the disclosures in accordance with EU Taxonomy.
+•
+• Inquiries and inspection of documents on a sample basis relating to the collection and reporting of data,
+Independent auditor's report on a limited assurance
+engagement on the disclosures in accordance with EU
+Taxonomy
+To Siemens Aktiengesellschaft, Berlin and Munich
+We have performed a limited assurance engagement on the "Disclosures in accordance with EU Taxonomy" section included in chapter 1
+"Organization of the Siemens Group and basis of presentation" of the group management report of Siemens Aktiengesellschaft, Berlin and
+Munich (hereinafter the "Company"), which is combined with the management report of Siemens Aktiengesellschaft, for the period from
+October 1, 2021 to September 30, 2022 (hereinafter the "disclosures in accordance with EU Taxonomy").
+Responsibilities of management
+Management of the Company is responsible for the preparation of the disclosures in accordance with EU Taxonomy in accordance with
+Art. 8 of Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on the establishment of a framework
+to facilitate sustainable investment and amending Regulation (EU) 2019/2088 (hereinafter the "EU Taxonomy Regulation") and the
+Delegated Acts adopted thereunder as well as in accordance with their own interpretation of the wording and terms contained in the EU
+Taxonomy Regulation and the Delegated Acts adopted thereunder that is presented in the disclosures in accordance with EU Taxonomy.
+These responsibilities of the Company's management include the selection and application of appropriate EU Taxonomy reporting
+methods and making assumptions and estimates about individual disclosures that are reasonable in the circumstances. Furthermore,
+management is responsible for such internal control as management considers necessary to enable the preparation of disclosures in
+accordance with EU Taxonomy that is free from material misstatement, whether due to fraud (manipulation of the disclosures in
+accordance with EU Taxonomy) or error.
+The EU Taxonomy Regulation and the Delegated Acts adopted thereunder contain wording and terms that are still subject to considerable
+interpretation uncertainties and for which clarifications have not yet been published in every case. Therefore, management has disclosed
+their interpretation of the EU Taxonomy Regulation and the Delegated Acts adopted thereunder in the disclosures in accordance with EU
+Taxonomy. They are responsible for the defensibility of this interpretation. Due to the immanent risk that undefined legal terms may be
+interpreted differently, the legal conformity of the interpretation is subject to uncertainties.
+Independence and quality assurance of the audit firm
+We have complied with the German professional requirements on independence as well as other professional conduct requirements.
+Our audit firm applies the national legal requirements and professional pronouncements, in particular the BS WP/vBP ["Berufssatzung für
+Wirtschaftsprüfer/vereidigte Buchprüfer": Professional Charter for German Public Accountants/German Sworn Auditors]) in the exercise of
+their Profession and the IDW Standard on Quality Management issued by the Institute of Public Auditors in Germany (IDW): Requirements
+for Quality Management in the Audit Firm (IDW QS 1), and accordingly maintains a comprehensive quality management system that
+includes documented policies and procedures with regard to compliance with professional ethical requirements, professional standards
+as well as relevant statutory and other legal requirements.
+Responsibilities of the auditor
+Our responsibility is to express a conclusion with limited assurance on the disclosures in accordance with EU Taxonomy based on our
+assurance engagement.
+We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000
+(Revised): "Assurance Engagements other than Audits or Reviews of Historical Financial Information" issued by the International Auditing
+and Assurance Standards Board (IAASB). This standard requires that we plan and perform the assurance engagement to obtain limited
+assurance about whether any matters have come to our attention that cause us to believe that the Company's disclosures in accordance
+with EU Taxonomy are not prepared, in all material respects, in accordance with the EU Taxonomy Regulation and the Delegated Acts
+adopted thereunder as well as the interpretation by management disclosed in the disclosures in accordance with EU Taxonomy. In a limited
+assurance engagement, the procedures performed are less extensive than in a reasonable assurance engagement, and accordingly, a
+substantially lower level of assurance is obtained. The selection of the assurance procedures is subject to the professional judgment of the
+auditor.
+In the course of our assurance engagement we have, among other things, performed the following assurance procedures and other
+activities:
+•
+.
+•
+•
+Inquiries of relevant employees for the assessment of the process to identify the Taxonomy-eligible economic activities,
+Inquiries of the employees responsible for data capture and consolidation as well as the preparation of the disclosures in accordance
+with EU Taxonomy, to evaluate the reporting processes, the data capture and compilation methods as well as regarding internal controls
+to the extent relevant for the limited assurance of the disclosures in accordance with EU Taxonomy,
+Identification of likely risks of material misstatement in the disclosures in accordance with EU Taxonomy,
+• Analytical evaluation of data at the level of the Group and businesses as well as service and governance units,
+8
+evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
+and related disclosures;
+We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
+of the consolidated financial statements and the group management report (hereinafter the "ESEF documents") contained in the file
+SIEMENS 2022.zip and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for
+the electronic reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work extends only to the
+conversion of the information contained in the consolidated financial statements and the group management report into the ESEF format
+and therefore relates neither to the information contained within these renderings nor to any other information contained in the file
+identified above.
+identify and assess the risks of material misstatement of the consolidated financial statements and of the group management report,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
+and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than
+for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
+internal control;
+The sanctions imposed as a result of the Russia-Ukraine conflict and the management's decision to wind down the affected businesses
+have restricted the fulfilment of existing construction-type contracts with Russian customers. The accounting for risks from these contracts
+is associated with increased uncertainty and complexity, especially with regards to the management's assessments on implications from
+contract terminations.
+Furthermore, the effects of the coronavirus pandemic (COVID-19) as well as current macroeconomic developments on the project
+business, such as delays in project execution, price increases or disruptions in supply chains as well as change in law clauses with regards
+to compensation for damages or contractual penalties for delays in delivery and their accounting treatment were of key significance for
+our audit.
+Auditor's response: As part of our audit, we obtained an understanding of the Group's internally established methods, processes and
+control mechanisms for project management in the bid and execution phase of construction-type contracts. In this regard, we assessed
+the design and operating effectiveness of the accounting-related internal controls in the project business by obtaining an understanding
+of business transactions specific to construction-type contracts, from the initiation of the transaction through presentation in the
+consolidated financial statements. We also tested controls addressing the timely assessment of changes in cost estimates and the timely
+and complete recognition of such changes in the project calculation.
+As part of our substantive audit procedures, which particularly involved project reviews, we evaluated management's estimates and
+assumptions based on a risk-based selection of a sample of contracts. Our sample primarily included projects that are subject to significant
+future uncertainties and risks, such as projects with complex safety/technical and regulatory requirements or projects with a large portion
+of materials and services to be provided by suppliers or consortium partners, fixed-price or turnkey projects, cross-border projects,
+especially projects with Russian customers, projects affected by the COVID-19 pandemic and projects with changes in cost estimates,
+delays and/or low or negative margins.
+Our audit procedures included, among others, review of the contracts and their terms and conditions including contractually agreed partial
+deliveries and services, termination rights, penalties for delay and breach of contract, liquidated damages as well as joint and several
+liability. In order to evaluate whether revenues were recognized on an accrual basis for the selected projects, we analyzed revenues
+attributable to the fiscal year and corresponding cost of sales to be recognized in the statement of income considering the extent of
+progress towards completion and examined the accounting for the associated items in the statement of financial position.
+For this we also assessed the accounting for contractually agreed options, contract amendments or contract terminations (including
+related pending legal proceedings) particularly in relation to construction-type contracts with Russian customers in connection with the
+sanctions against Russia and the Managing Board's decision to wind down the affected businesses. We also assessed the recognition
+requirements and the recoverability of assets, such as inventories, receivables and reimbursement claims.
+We further performed inquiries of project management (both commercial and technical project managers) with respect to the
+development of the projects including the effects of the Russia-Ukraine conflict and COVID-19 on project execution, the reasons for
+deviations between planned and actual costs, the current estimated costs to complete the projects, and management's assessments on
+probabilities that contract risks and claims from joint and several liability will materialize.
+To identify anomalies in the development of margins and other project KPIs, we also applied data analysis procedures. In designing our
+audit procedures, we also considered results from project audits conducted by the internal audit function. Furthermore, we obtained
+evidence from third parties for selected projects (e.g., project acceptance documentation, contractual terms and conditions, and lawyers'
+confirmations regarding alleged breaches of contract and asserted claims) and visited plant sites. Due to the large contract volume and
+risk profile, our audit procedures focused on large contracts for delivery of high-speed and commuter trains and Mobility contracts with
+Russian customers.
+Our audit procedures did not lead to any reservations relating to revenue recognition on construction-type contracts.
+Revenues, total estimated contract costs and profit recognition may deviate significantly from original estimates based on new knowledge
+about cost overruns and changes in project scope over the term of a construction-type contract.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for construction-type
+contracts, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
+statements. With respect to contract assets and liabilities as well as provisions for order related losses and risks, refer to Note 10 Contract
+assets and liabilities, Note 18 Provisions and Note 21 Commitments and contingencies in the notes to the consolidated financial
+statements.
+Reasons why the matter was determined to be a key audit matter: Since the spin-off of Siemens Energy AG in September 2020,
+Siemens AG has held a 35.1% stake in the listed Siemens Energy AG and accounts for this investment as an associate applying the equity
+method in accordance with IAS 28, Investments in Associates and Joint Ventures. During the fiscal year 2022, the market value of the
+investment was predominantly below the carrying amount, also as of September 30, 2022. As of June 30, 2022, the market value has
+declined significantly and an impairment of the investment based on the stock market price was recognized in accordance with IAS 36,
+Impairment of Assets.
+Due to the judgments and estimates by management in the analyses and measurements as well as the overall material impact on the
+assets, liabilities and financial position of the Group and the related significant risk of material misstatement, the assessment of an
+impairment of the investment in Siemens Energy AG was one of the key audit matters.
+Auditor's response: As part of our audit procedures in relation to management's assessment of an impairment of the investment in
+Siemens Energy AG, we examined the methods and processes defined internally for the identification of objective indicators of impairment
+and thus the timing of a possible impairment as well as the measurement of an impairment of the investment in Siemens Energy AG.
+With regards to the assessment of whether there are objective indicators of an impairment, in particular regarding the interpretation of a
+possible significant decline of the fair value, we evaluated management's assessment made on a quarterly and year-end basis as well as
+management's judgements and estimates contained therein and obtained external evidence on credit ratings, stock market prices,
+3
+Independent Auditor's Reports (Group)
+analysts' assessments and observable valuation indicators in this regard. In order to evaluate management's assessment as of September
+30, 2022, we also considered the parameters and effects of the capital measure taken by the investee in September 2022 and of the
+expected acquisition of further shares in Siemens Gamesa Renewable Energy S.A. by Siemens Energy AG. In addition, with the assistance
+of internal valuation specialists, we assessed the judgemental assumptions in determining the recoverable amount and the calculation of
+the impairment loss as of June 30, 2022.
+Furthermore, we evaluated the disclosures regarding the investment in Siemens Energy AG and its impairment in the notes to the
+consolidated financial statements.
+Our audit procedures did not lead to any reservations relating to the valuation of the investment in Siemens Energy AG as of September
+30, 2022.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for investments in
+associates, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
+statements. Details on the impairment of the investment in Siemens Energy AG are presented in Note 4 Interests in other entities.
+Provisions for proceedings out of or in connection with alleged compliance violations
+Valuation of the investment in Siemens Energy AG
+Independent Auditor's Reports (Group)
+2
+Reasons why the matter was determined to be a key audit matter: The Group conducts a significant portion of its business under
+construction-type contracts, particularly in the Mobility business. Revenue from long-term construction-type contracts is recognized in
+accordance with IFRS 15, Revenue from Contracts with Customers, generally over time under the percentage-of-completion method. We
+consider the accounting for construction-type contracts to be an area posing a significant risk of material misstatement (including the
+potential risk of management override of internal controls) and accordingly a key audit matter, because management's assessments
+significantly impact the determination of the extent of progress towards completion. These assessments include, in particular, the scope
+of deliveries and services required to fulfill contractually defined obligations, total estimated contract costs, remaining costs to completion
+and total estimated contract revenues, as well as contract risks including technical, political, regulatory and legal risks.
+obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and
+measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in
+the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems;
+Independent
+Auditor's Reports
+TO THE CONSOLIDATED FINANCIAL STATEMENTS AND THE
+GROUP MANAGEMENT REPORT FOR FISCAL 2022
+SIEMENS
+Independent Auditor's Reports (Group)
+Independent auditor's report
+To Siemens Aktiengesellschaft, Berlin and Munich
+Report on the audit of the consolidated financial statements and of the group management
+report
+Opinions
+We have audited the consolidated financial statements of Siemens Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the Group),
+which comprise the consolidated statements of income and comprehensive income for the fiscal year from October 1, 2021 to September
+30, 2022, the consolidated statements of financial position as of September 30, 2022, the consolidated statements of cash flows and
+changes in equity for the fiscal year from October 1, 2021 to September 30, 2022, and notes to the consolidated financial statements,
+including a summary of significant accounting policies. In addition, we have audited the group management report of Siemens
+Aktiengesellschaft, which is combined with the management report of Siemens Aktiengesellschaft, for the fiscal year from October 1,
+2021 to September 30, 2022. In accordance with the German legal requirements, we have not audited the last paragraph of chapter 1
+beginning with "Disclosures in accordance with EU taxonomy" of the group management report, the sections "8.5.1 Internal Control
+System (ICS) and ERM" and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as
+the content of the Corporate Governance Statement which is published on the website stated in the combined management report.
+In our opinion, on the basis of the knowledge obtained in the audit,
+.
+•
+the accompanying consolidated financial statements comply, in all material respects, with the International Financial Reporting
+Standards (IFRSS) as adopted by the European Union (EU), and the additional requirements of German commercial law pursuant to Sec.
+315e (1) HGB ["Handelsgesetzbuch”: German Commercial Code] as well as with full IFRSs as issued by the International Accounting
+Standards Board (IASB), and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial
+position of the Group as of September 30, 2022 and of its financial performance for the fiscal year from October 1, 2021 to September
+30, 2022, and
+the accompanying group management report as a whole provides an appropriate view of the Group's position. In all material respects,
+this group management report is consistent with the consolidated financial statements, complies with German legal requirements and
+appropriately presents the opportunities and risks of future development. Our opinion on the group management report does not cover
+the last paragraph in chapter 1 beginning with "Disclosures in accordance with EU taxonomy" of the group management report, the
+sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the group
+management report and the content of the Corporate Governance Statement.
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
+consolidated financial statements and of the group management report.
+Basis for the opinions
+We conducted our audit of the consolidated financial statements and of the group management report in accordance with Sec. 317 HGB
+and the EU Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally
+Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
+Germany] (IDW). In conducting the audit of the consolidated financial statements we also complied with International Standards on
+Auditing (ISA). Our responsibilities under those requirements, principles and standards are further described in the "Auditor's
+responsibilities for the audit of the consolidated financial statements and of the group management report" section of our auditor's report.
+We are independent of the group entities in accordance with the requirements of European law and German commercial and professional
+law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance
+with Art. 10 (2) f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the
+EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions
+on the consolidated financial statements and on the group management report.
+Key audit matters in the audit of the consolidated financial statements
+Below, we describe what we consider to be the key audit matters:
+Revenue recognition on construction-type contracts
+Reasons why the matter was determined to be a key audit matter: We considered the accounting for provisions for proceedings out
+of or in connection with alleged compliance violations, including allegations of corruption and antitrust violations to be a key audit matter.
+These matters are subject to inherent uncertainties and require estimates that could have a significant impact on the recognition and
+measurement of the respective provision and, accordingly, on assets, liabilities and financial performance. The proceedings out of or in
+connection with alleged compliance violations are subject to uncertainties because they involve complex legal issues and accordingly,
+considerable management judgment, in particular when determining whether and in what amount a provision is required to account for
+the risks.
+Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
+we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
+determine what potentially significant pending legal proceedings or claims asserted are known and to assess management's estimates of
+the expected cash outflows, our audit procedures included inquiring of management and other persons within the Group entrusted with
+these matters, obtaining written statements from in-house legal counsels with respect to the assessment of estimated cash outflows and
+their probability, obtaining confirmations from external legal advisors and evaluating internal statements concerning the accounting
+treatment in the consolidated financial statements. Furthermore, we examined legal consulting expense accounts for any indications of
+legal matters not yet considered.
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
+statements for the fiscal year from October 1, 2021 to September 30, 2022. These matters were addressed in the context of our audit of
+the consolidated financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these
+matters.
+Furthermore, we evaluated the disclosures on proceedings out of or in connection with alleged compliance violations in the notes to the
+consolidated financial statements.
+In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information
+⚫ is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in
+the audit, or
+•
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+Responsibilities of management and the Supervisory Board for the consolidated financial statements and the
+group management report
+Management is responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSS
+as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as with full IFRSS
+as issued by the IASB, and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of
+the assets, liabilities, financial position and financial performance of the Group. In addition, management is responsible for such internal
+control as management has determined necessary to enable the preparation of consolidated financial statements that are free from
+material misstatement, whether due to fraud or error.
+In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going
+concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
+responsible for financial reporting based on the going concern basis of accounting, unless there is an intention to liquidate the Group or
+to cease operations, or there is no realistic alternative but to do so.
+Furthermore, management is responsible for the preparation of the group management report that, as a whole, provides an appropriate
+view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German
+legal requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible
+for such arrangements and measures (systems) as management has considered necessary to enable the preparation of a group
+management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate
+evidence for the assertions in the group management report.
+The Supervisory Board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial
+statements and of the group management report.
+Auditor's responsibilities for the audit of the consolidated financial statements and of the group
+management report
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
+misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the
+5
+Independent Auditor's Reports (Group)
+Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the
+audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
+as to issue an auditor's report that includes our opinions on the consolidated financial statements and on the group management report.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
+the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
+error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
+decisions of users taken on the basis of these consolidated financial statements and this group management report.
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+•
+•
+•
+We further considered alleged or substantiated non-compliance with legal provisions, official regulations (including sanctions) and internal
+company policies (compliance violations) by inspecting internal and external statements on specific matters, obtaining written statements
+from external legal advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the
+conduct and results of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses,
+and assessed on this basis whether management's evaluation of any risks to be accounted for in the consolidated financial statements is
+plausible.
+Our opinions on the consolidated financial statements and on the group management report do not cover the other information, and
+consequently we do not express an opinion or any other form of assurance conclusion thereon.
+but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
+report whose content is audited and not our auditor's reports as well as not our auditor's report on a limited assurance engagement on the
+disclosures in accordance with EU Taxonomy thereon.
+otherwise appears to be materially misstated.
+•⚫ the Report of the Supervisory Board,
+Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
+compliance violations.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for provisions, refer to
+Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
+to proceedings out of or in connection with alleged compliance violations, refer to Note 22 Legal proceedings.
+Uncertain tax positions and deferred taxes
+Reasons why the matter was determined to be a key audit matter: Siemens operates in numerous countries with different local tax
+legislation. The accounting for uncertain tax positions as well as deferred taxes requires management to exercise considerable judgment
+and make estimates and assumptions, and was therefore a key audit matter. In particular, this affects the measurement and completeness
+of uncertain tax positions, the recoverability of deferred tax assets, the measurement and completeness of deferred tax liabilities as well
+as the tax assessment of the accounting implications of the Russia-Ukraine conflict, especially with regard to the tax deductibility of
+recognized expenses.
+Auditor's response: With the assistance of internal tax specialists who have knowledge of relevant local tax law, we examined the
+processes installed by management for the identification, recognition and measurement of tax positions.
+In the course of our audit procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax
+implications of significant business transactions or events in fiscal year 2022, which could result in uncertain tax positions or influence the
+measurement of existing uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising
+from cross border matters, such as the determination of transfer prices, the results of tax field audits, the acquisition or disposal of company
+shares and corporate (intragroup) restructuring activities. With regard to the accounting implications of the Russia-Ukraine conflict we
+assessed the deductibility of the respective recognized expenses. In order to assess measurement and completeness, we also obtained
+confirmations from external tax advisors. Further, we evaluated management's assessments with respect to the prospects of success of
+appeal and tax court proceedings by inquiring of the employees of the Siemens tax department and by considering current tax case law.
+In this context we also inspected expert tax opinions and assessments commissioned by management.
+• Notes and forward-looking statements,
+4
+Independent Auditor's Reports (Group)
+particular the assumptions regarding reinvestment of subsidiaries' retained profits for an indefinite period and assessed these taking into
+account dividend planning.
+Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and deferred taxes.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
+to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
+to disclosures for deferred tax assets and liabilities, refer to Note 7 Income taxes in the notes to the consolidated financial statements.
+In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
+strategies and projected future taxable income, also in view of the implications of current geopolitical and macroeconomic developments,
+and compared them to internal business plans. In the course of our audit procedures regarding deferred tax liabilities, we examined in
+•
+The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2022 within the meaning of ISA [DE]
+720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
+German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
+Compensation Report. In all other respects, management is responsible for the other information. The other information comprises the
+last paragraph of chapter 1 beginning with "Disclosures in accordance with EU taxonomy" of the group management report, the sections
+"8.5.1 Internal Control System (ICS) and ERM" and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the combined
+management report as well as the content of the Corporate Governance Statement.
+In addition, the other information comprises parts to be included in the Annual Report, of which we received a version prior to issuing this
+auditor's report, in particular:
+•
+the Responsibility Statement (to the Consolidated Financial Statements and the Group Management Report),
+⚫ the Responsibility Statement (to the Annual Financial Statements and the Management Report),
+the Five-Year Summary,
+•
+Other information
+the Compensation Report,
+1,591
+(217)
+(217)
+1,374
+1,718
+(4,266)
+3,022
+(3,065)
+(3,668)
+99
+(142)
+78,520
+78,476
+10
+1,718
+Securities
+3,746
+4,673
+766
+(51)
+38
+(53)
+(701)
+4,673
+(51)
+1,815
+15
+985
+(in millions of €)
+71,576
+4,447
+NOTE 12 Receivables and other assets
+Inventories
+Advance payments made
+Cost of unbilled contracts
+Finished products and goods
+Work in progress
+Raw materials and supplies
+NOTE 11 Inventories
+Total impairments of non-current assets totaled €4,268 (2021: €772) million.
+Loans included loans to affiliated companies amounting to €4,244 (2021: €3,327) million, loans to investments amounting to €0 (2021:
+€43) million, and other loans amounting to €430 (2021: €375) million.
+Annual Financial Statements
+9
+75,920
+72,657
+(9,551)
+1,210
+(52)
+99
+(4,517)
+(6,293)
+82,208
+(3,302)
+3,298
+82,213
+Non-current assets
+74,852
+(6,900)
+Loans
+187
+3,102
+61
+(109)
+3
+264
+263
+(917)
+134
+310
+309
+(1,013)
+65
+175
+(in millions of €)
+(258)
+192
+153
+(353)
+21
+103
+87
+(116)
+89
+66
+(237)
+21
+(213)
+(2,289)
+64
+(1)
+108
+64
+(4,531)
+164
+11
+(3,221)
+(1,485)
+7,632
+(454)
+516
+7,570
+63,304
+62,427
+(2,153)
+55
+6,084
+50
+(1,482)
+64,580
+(881)
+675
+64,786
+Shares in investments
+Shares in affiliated companies
+Financial assets
+876
+928
+(2,298)
+204
+(1)
+(776)
+Trade receivables
+NOTE 14 Active difference resulting from offsetting
+Other receivables and other assets
+Note 11 Inventories
+Note 12 Receivables and other assets
+Note 13 Deferred tax assets
+Note 14 Active difference resulting from offsetting
+Note 15 Shareholders' equity
+Note 16 Provisions for pensions and similar commitments
+12
+Note 17 Other provisions
+13
+Note 18 Liabilities
+13
+Note 19 Material expenses
+13
+Note 20 Personnel expenses
+13
+Note 21 Share-based payment
+14
+Note 22 Shares in investment funds
+14
+15
+15
+15
+16
+17
+19
+455562779
+Note 23 Guarantees and other commitments
+Note 10 Non-current assets
+Note 24 Financial payment obligations under lease and rental arrangements
+Note 25 Other financial obligations
+Note 9 Expenses relating to prior periods
+Note 7 Other taxes
+3,227
+10
+Annual Financial
+Statements*
+FOR FISCAL 2022
+* This document is an English language translation of the decisive German version and is not provided in
+the European Single Electronic Format (ESEF). The legally required rendering in ESEF-format is filed in
+German language with the operator of the German Federal Gazette and published in the German Federal
+Gazette.
+SIEMENS
+Table of contents
+3
+4
+st
+10
+10
+10
+10
+11
+56699 co co co co ooooo -
+9
+12
+Annual Financial Statements
+1. Income Statement
+2. Balance Sheet
+3. Notes to Annual Financial Statements
+Note 1 Revenue
+Note 2 Other operating income and expenses
+Note 3 Income (loss) from investments, net
+Note 4 Interest income and interest expenses
+Note 5 Other financial income (expenses), net
+8
+Note 6 Income taxes
+8
+8
+Note 8 Income relating to prior periods
+Note 26 Derivative financial instruments and valuation units
+Note 27 Proposal for the appropriation of net income
+17
+4,407
+17,564
+40
+1,696
+one year
+Sep 30, 2021
+thereof
+maturities
+more than
+thereof
+maturities
+more than
+one year
+51
+4,345
+Sep 30, 2022
+1,657
+26,093
+1,934
+2,377
+70
+57
+856
+910
+253
+350
+264
+298
+491
+762
+2021
+2022
+Sep 30,
+Receivables and other assets
+thereof other assets
+thereof from long-term investees
+1,340
+193
+1,583
+186
+17
+977
+16
+(306)
+(707)
+1,028
+2022
+Sep 30,
+Acquisition cost of designated plan assets
+Active difference resulting from offsetting
+Settlement amount for offset personnel-related provisions
+Settlement amount for offset pension provisions
+Fair value of designated plan assets
+Receivables from affiliated companies
+(in millions of €)
+Deferred tax assets resulted mainly from pension provisions and pension-related assets, from deferred taxes of companies within the
+consolidated tax group, from tax loss carryforwards as well as from other provisions. Deferred taxes from partnerships had an offsetting
+effect.
+NOTE 13 Deferred tax assets
+Receivables from affiliated companies resulted primarily from intragroup-financing activities and included trade receivables totaling €12
+(2021: €6) million.
+4,632
+20,844
+4,588
+29,090
+186
+1,582
+193
+1,330
+2
+9
+For the measurement of deferred taxes, a tax rate of 31.30% was applied. Deviating from this, a tax rate of 15.83% was applied for
+temporary differences related to assets, liabilities and prepaid/deferred items of partnerships.
+(210)
+(1,588)
+3,165
+13
+2,065
+1,243
+Active difference resulting from offsetting
+14
+16
+51
+Total assets
+107,005
+101,487
+Shareholders' equity and liabilities
+Shareholders' equity
+Subscribed capital¹
+Treasury shares
+Issued capital
+Capital reserve
+Other retained earnings
+Unappropriated net income
+Special reserve with an equity portion
+Provisions
+Provisions for pensions and similar commitments
+Provisions for taxes
+Other provisions
+Deferred tax assets
+184
+220
+24,089
+(1,043)
+(986)
+1,334
+949
+Receivables and other assets
+Trade receivables
+Receivables from affiliated companies
+Other receivables and other assets
+12
+1,657
+1,696
+Liabilities
+26,093
+1,340
+1,583
+29,090
+20,844
+Other Securities
+Cash and cash equivalents
+Prepaid expenses
+170
+1,454
+215
+2,082
+32,047
+17,564
+Advance payments received
+Liabilities to banks
+Liabilities to affiliated companies
+639
+501
+2,249
+2,111
+63,946
+58,985
+1,080
+1,293
+67,914
+62,890
+235
+249
+107,005
+101,487
+4
+Annual Financial Statements
+| 3. Notes to Annual Financial Statements
+3.1 General Disclosures
+Siemens AG has registered offices in Berlin and Munich, Germany. The Company is registered in the commercial register maintained by
+the local courts in Berlin Charlottenburg, Germany, under the entry number HRB 12300, and in Munich, Germany, under the entry number
+HRB 6684.
+The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
+Commercial Code (Handelsgesetzbuch, HGB) and the German Stock Corporation Act (Aktiengesetz, AktG). Amounts are presented in
+millions of euros (€ million). Due to rounding, numbers presented may not add up precisely to totals provided.
+3.2 Accounting and Measurement Principles
+Revenue are proceeds from selling and leasing products, providing services and granting licenses, including licensing contracts for the
+use of the Siemens trademark.
+Negative interest from financial investments is presented as a deduction in interest income, and positive interest from borrowings as a
+deduction in interest expenses.
+18
+12,372
+628
+3,592
+16,592
+17,693
+602
+3,711
+Other liabilities
+Deferred income
+Total shareholders' equity and liabilities
+1 Conditional Capital as of September 30, 2022 and 2021 amounted to €421 million and €421 million, respectively.
+15
+2,550
+2,550
+(172)
+(143)
+2,378
+2,407
+Trade payables
+8,445
+6,188
+7,119
+3,613
+3,400
+20,623
+21,216
+540
+541
+16
+13,380
+17
+8,289
+1,934
+2,377
+11
+(1,001)
+2
+159
+279
+Other operating expenses
+2
+(464)
+(475)
+Loss from operations
+(485)
+(631)
+Income (loss) from investments, net
+3
+271
+5,303
+Interest income
+4
+387
+319
+thereof negative interest from financial investment
+(18)
+(26)
+Interest expenses
+(1,055)
+(1,999)
+(2,228)
+(1,570)
+Note 28 Remuneration of the members of the Managing Board and the Supervisory Board
+Note 29 Declaration of Compliance with the German Corporate Governance Code
+Note 30 Members of the Managing Board and Supervisory Board
+Note 31 List of subsidiaries and associated companies pursuant to Section 285 no. 11, 11a and 11b of the
+German Commercial Code
+1. Income Statement
+Annual Financial Statements
+Fiscal year
+(in millions of €)
+Revenue
+Cost of sales
+Gross profit
+Research and development expenses
+4
+Selling expenses
+Other operating income
+Note
+2022
+1
+17,390
+2021
+15,094
+(12,502)
+(10,960)
+4,888
+4,135
+(1,785)
+General administrative expenses
+51
+137
+thereof positive interest from borrowing
+3,400
+3
+| 2. Balance Sheet
+(in millions of €)
+Assets
+Non-current assets
+Intangible assets
+Property, plant and equipment
+Financial assets
+Annual Financial Statements
+Sep. 30,
+Note
+3,613
+2022
+10
+153
+192
+928
+876
+71,576
+74,852
+72,657
+75,920
+Current assets
+Inventories
+2021
+Intangible assets acquired for consideration are capitalized at acquisition costs and amortized on a straight-line basis over a maximum of
+five years or, if longer, the contractually agreed useful life. Items are amortized on a pro rata temporis basis in the year of acquisition. The
+capitalization option for internally generated intangible assets is not used.
+(1,918)
+171
+341
+395
+Other financial income (expenses), net
+5
+(1,044)
+39
+Income from business activity
+3,115
+5,166
+Income taxes
+Net income
+(185)
+6
+(20)
+3,612
+5,147
+Appropriation of net income
+Net income
+Profit carried forward
+Allocation to other retained earnings
+Unappropriated net income
+27
+3,612
+185
+5,147
+498
+Acquired goodwill is generally amortized systematically over the expected useful life of five to 15 years. The expected useful life is based
+on the expected use of the acquired businesses and is determined in particular by economic factors such as future growth and profit
+expectations, synergy effects and employee base.
+4,204
+Useful lives of property, plant and equipment
+00
+8
+3.4 Notes to the Balance Sheet
+NOTE 10 Non-current assets
+(in millions of €)
+Annual Financial Statements
+Accumulated depreciation/amortization
+Carrying amount
+Disposals
+Sep 30, 2022
+Sep 30, 2022
+Sep 30, 2021
+Acquisition or production costs
+Oct 01, 2021
+Additions Reclassifications
+Disposals
+Sep 30, 2022
+Oct 01, 2021
+Depreciation/
+amortization
+Write-ups
+Additions
+Intangible assets
+Concessions and industrial property rights
+Goodwill
+The income statement of Siemens AG included expenses relating to prior periods of €24 million.
+NOTE 9 Expenses relating to prior periods
+The income statement of Siemens AG included income relating to prior periods of €333 million, resulting mainly from the release of
+provisions.
+NOTE 8 Income relating to prior periods
+Other financial income (expenses), net included impairments on loans to affiliated companies, amounting to €635 million, related to
+Siemens' decision to exit business activities in Russia following the war in Ukraine. In that context, related income from the valuation of
+foreign currency of €502 million was recorded, offset by hedging expenses totaling €513 million.
+The decrease in expenses for the interest component of changes in the pension provisions that are not offset against designated plan
+assets resulted primarily from a decrease in the value of designated plan assets and changes in the discount rates used for the actuarial
+valuation of the settlement amount.
+Financial income (expenses), net relating to the pension and personnel-related provisions that are offset against designated plan assets
+represented a net amount from offset income totaling €43 (2021: €57) million and expenses totaling €96 (2021: €46) million.
+Other financial income resulted from derivative financial instruments related to foreign currency hedging amounting to €540 (2021: €197)
+million, from monetary balance sheet items denominated in foreign currencies amounting to €138 (2021: expenses of €186) million, and
+gains from non-current securities amounting to €40 (2021: €692) million.
+Other financial expenses included expenses from the recognition of provisions for risks relating to derivative financial instruments
+amounting to €361 (2021: income from the release of provisions totaling €213) million and from derivative financial instruments related
+to interest rate hedging amounting to €21 (2021: income of €312) million.
+In addition, the position included expenses from compounding of other provisions amounting to €0 (2021: €18) million.
+7
+NOTE 6 Income taxes
+Annual Financial Statements
+Fiscal year
+(in millions of €)
+325
+Income tax expenses
+Income taxes
+2022
+2021
+(325)
+(229)
+823
+209
+498
+(20)
+Deferred taxes included income from an increase of deferred taxes related to pension provisions, partnerships and other provisions.
+NOTE 7 Other taxes
+Other taxes of €11 (2021: €16) million were included in functional costs.
+Deferred taxes
+39
+5
+528
+(1,016)
+(62)
+1,183
+124
+9
+(136)
+1,180
+(919)
+(131)
+Equipment leased to others
+165
+9
+(4)
+170
+(101)
+(11)
+Advanced payments made and construction in
+progress
+64
+87
+(41)
+110
+(1)
+Property, plant and equipment: The components of production costs are described in the context of the explanations for inventories. In
+general, property, plant and equipment is depreciated using the straight-line method. In certain cases, the declining balance method is
+applied, whereby a switch is made from the declining balance to the straight-line method as soon as the latter results in higher depreciation
+expense. Items are depreciated on a pro rata temporis basis in the year of acquisition. Low-value non-current assets that are subject to
+wear and tear, movable, and capable of being used independently, are expensed immediately or capitalized and fully depreciated in the
+year of acquisition.
+1,322
+(67)
+27
+37
+5
+Property, plant and equipment
+(27)
+303
+(236)
+(22)
+203
+(100)
+(16)
+(27)
+505
+203
+(336)
+Land, land rights and buildings, including
+buildings on third-party land
+427
+14
+5
+(1)
+445
+(252)
+(7)
+Technical equipment and machinery
+1,326
+(38)
+(1,044)
+Other equipment, plant and office equipment
+(828)
+Smart Infrastructure
+Other revenue
+Revenue
+Revenue by region
+(in millions of €)
+Europe, C.I.S., Africa, Middle East
+Americas
+Asia, Australia
+Revenue
+Fiscal year
+2022
+9,771
+5,458
+2,161
+17,390
+Fiscal year
+2022
+12,911
+1,410
+3,069
+17,390
+NOTE 2 Other operating income and expenses
+Other operating income mainly included income from the reversal of an impairment of a loan in connection with a former equity
+investment and income from the release of provisions. Income from the release of the special reserve with an equity portion was €1 (2021:
+€78) million.
+Other operating expenses included expenses of €199 million for an intragroup service contract and expenses of €108 million for the
+recognition of a provision related to guarantees and expected obligations from consortium contracts.
+Digital Industries
+(in millions of €)
+Revenue by lines of business
+NOTE 1 Revenue
+Factory and office buildings
+(132)
+Other buildings
+Technical equipment and machines
+Other equipment, plant and office equipment
+Equipment leased to others
+20 to 50 years
+5 to 10 years
+mostly 10 years
+3 to 8 years
+mostly 3 to 5 years
+Special reserve with an equity portion includes reserves pursuant to Section 6b of the German Income Tax Act
+(Einkommensteuergesetz), recognized and transferred in fiscal years prior to the transition to regulations of the German Accounting Law
+Modernisation Act (Bilanzrechtsmodernisierungsgesetz).
+Financial assets: Impairment losses are recognized if the decline in value is presumed to be other than temporary. This applies, if objective
+evidence, particularly events or changes in circumstances, indicate a significant or other than temporary decline in value. In case of an
+impairment in prior periods, a lower recognized value may not be maintained if the reasons for the impairment do no longer exist.
+Inventories are measured at the lower of average acquisition or production costs and daily values. Production costs comprise, in addition
+to direct costs, an appropriate portion of production and material overheads and depreciation of property, plant and equipment. General
+administration expenses, expenses for social facilities, voluntary social costs and company pension scheme costs are not capitalized. Write-
+downs are recorded to cover inventory risks for reduced usability and technological obsolescence as well as in the context of loss-free
+valuation of unbilled contracts in construction-type and service businesses.
+Allowances on receivables are determined on the basis of the probability of default and country risks.
+6
+Deferred tax assets for differences between valuations of balance sheet line items in accordance to commercial and tax law and tax loss
+carryforwards are recognized if a future tax benefit is expected. Deferred tax assets are netted with deferred tax liabilities. Recognized
+deferred tax assets and liabilities comprise temporary differences of assets, liabilities, and deferred items of entities forming part of the
+Siemens AG tax group and partnerships to the extent that the recovery or settlement of the carrying amount of assets, liabilities, or deferred
+items result in a deductible or taxable amount in the taxable profit (loss) of Siemens AG.
+5
+Annual Financial Statements
+Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
+assets at the balance sheet date. If the performance of the underlying assets is lower than a guaranteed return, the pension provision is
+measured by projecting forward the contributions at the guaranteed fixed return and discounting to a present value.
+According to the Act on the Improvement of Company Pensions (Gesetz zur Verbesserung der betrieblichen Altersversorgung), Siemens
+AG is secondarily liable for pension benefits provided under an indirect pension funding vehicle (mittelbarer Durchführungsweg). Siemens
+AG recognizes the underfunding in the item Provisions for pensions and similar commitments as far as the respective assets of the pension
+fund or of the pension and support fund (Pensions- und Unterstützungskasse) do not cover the settlement amount of the respective
+pension obligations.
+Other provisions are recognized in an appropriate and sufficient amount to cover individual obligations for all identifiable risks relating
+to liabilities of uncertain timing and amount and for anticipated losses on onerous contracts, taking account of price and cost increases
+expected to arise in the future. Provisions for agreed personnel restructuring measures were recognized for legal and constructive
+obligations. Significant provisions with a remaining term of more than one year are discounted using a discount rate which corresponds
+to the average market interest rate appropriate for the remaining term of the obligations, as calculated and published by Deutsche
+Bundesbank.
+Foreign currency translation: Receivables, other current assets, securities, cash and cash equivalents, provisions and liabilities (excluding
+advance payments received on orders) as well as commitments and contingencies denominated in foreign currency are generally
+measured applying the mean spot exchange rate on the balance sheet date. Balance Sheet line items denominated in foreign currency
+which are part of a valuation unit used to hedge foreign currency risk are measured using the mean spot exchange rate on the transaction
+date. Non-current assets and inventories acquired in foreign currency are generally measured applying the mean spot exchange rate on
+the transaction date.
+Guarantees and other commitments: Siemens AG issues parent company guarantees, i.e. guarantees to ensure performance obligations
+incurred from the delivery of goods or provision of services by affiliated and long-term investee companies or their parent companies. For
+measurement purposes, the contract amount of the secured delivery or service agreement is reduced using the straight-line method over
+the planned term of the delivery or service agreement, unless there are reasons for a different risk assessment and an increased liability
+amount ("risk-adequate liability amount"). Credit lines included in the guarantee obligations in the context of financing affiliated
+companies are recognized at their nominal amount.
+Derivative financial instruments are used by Siemens AG almost exclusively for hedging purposes and - if the relevant conditions are
+met- are aggregated with the underlying hedged item into valuation units. When a valuation unit is created, changes in values or cash
+flows from the hedged item and hedging contract are compared. A provision is recognized only for a negative surplus from the ineffective
+part of the market value changes. The unrealized gains and losses from the effective part offset each other completely and are not
+recognized in the Balance Sheet or the Income Statement.
+Classification of items in the annual financial statements: Siemens AG aggregates individual line items of the Income Statement and
+Balance Sheet if the individual line item is not material for providing a true and fair view of the Company's financial position and if such
+an aggregation improves the clarity of the presentation. Siemens AG discloses these items separately in the notes.
+3.3 Notes to the Income Statement
+Siemens' decision to exit business activities in Russia following the war in Ukraine resulted in burdens on Net income totaling €0.8 billion.
+For more information, see Notes 3 and 5.
+Pensions and similar commitments: Siemens AG measures its pension obligations using the settlement amount calculated with the
+actuarial projected unit credit method on the basis of biometric probabilities. The discount rate used corresponds to the average market
+interest rate for instruments with an assumed remaining maturity of 15 years as published by German Federal Reserve Bank (Deutsche
+Bundesbank).
+NOTE 3 Income (loss) from investments, net
+Offsetting of assets and of income and expenses: Siemens AG measures assets at fair value that are designated as being held exclusively
+to settle specified pension obligations and obligations for early retirement ("Altersteilzeit") arrangements and which cannot be accessed
+by other creditors. Income and expenses relating to these designated assets are offset against the expenses arising from compounding
+the corresponding obligations and are reported within the line item Other financial income (expenses), net.
+Income from investments
+Losses from the disposal of investments
+Income (loss) from investments, net
+Income from investments included in particular profit distributions from Siemens Beteiligungsverwaltung GmbH & Co. OHG, Germany,
+amounting to €2,380 million, from Siemens Ltd., China, amounting to €1,060 million, from Siemens Healthineers AG, Germany,
+amounting to €567 million, and from Siemens Beteiligungen Europa GmbH, Germany, amounting to €333 million.
+Income from profit transfer agreements with affiliated companies included profit transfers from Siemens Beteiligungen Inland GmbH,
+Germany, amounting to €2,955 million, and from Siemens Financial Services GmbH, Germany, amounting to €283 million.
+As of September 30, 2022, an impairment was recognized on the investment in Siemens Energy AG, Germany; the impairment to the
+stock market price amounted to €2,860 million. In addition, the item impairments on investments included impairments on the
+investments in SPT Beteiligungen GmbH & Co. KG, Germany, amounting to €488 million, in ATOS SE, France, amounting to €356 million,
+and in OOO Siemens, Russia, amounting to €267 million. The latter was related to Siemens' decision to exit business activities in Russia
+following the war in Ukraine.
+NOTE 4 Interest income and interest expenses
+Interest income presented in the income statement included interest income from affiliated companies of €347 (2021: €209) million.
+Interest expenses included interest income from affiliated companies of €67 (2021: €166) million.
+Interest income from loans of non-current financial assets amounted to €80 (2021: €79) million.
+NOTE 5 Other financial income (expenses), net
+Fiscal year
+2022
+(in millions of €)
+5,303
+Interest component of changes in the pension provisions that are not offset against designated plan assets
+(486)
+2021
+(1,058)
+(53)
+717
+1,424
+Other financial income
+Other financial expenses
+(393)
+Impairments and reversal of impairments of loans and securities
+Other financial income (expenses), net
+(in millions of €)
+(206)
+Financial income (expenses), (net) relating to the pension and personnel-related provisions that are offset against designated plan
+assets
+4,204
+11
+(124)
+Income from profit transfer agreements with affiliated companies
+Expenses from loss transfers from affiliated companies
+(39)
+thereof from affiliated companies
+Impairments on investments
+Reversals of impairments on investments
+Annual Financial Statements
+Fiscal year
+2022
+2021
+4,789
+3,599
+Gains from the disposal of investments
+(619)
+4,768
+61
+61
+(3,997)
+(4)
+32
+(61)
+610
+3,474
+3,534
+1,724
+100
+1
+Siemens Trademark GmbH & Co. KG, Kemnath
+721
+2,561
+100
+Siemens Treasury GmbH, Munich
+100
+307
+SIM 2. Grundstücks-GmbH & Co. KG, Grünwald
+6
+SPT Beteiligungen GmbH & Co. KG, Grünwald
+1005
+SIMAR Ost Grundstücks-GmbH, Grünwald
+(1)
+130
+(32)
+6
+15
+8
+100
+1005
+Siemens Industry Software GmbH, Cologne
+(64)
+(24)
+289
+100
+Siemens Mobility GmbH, Munich
+(11)
+2,435
+100
+Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
+118
+100
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+28
+100
+Siemens Project Ventures GmbH, Erlangen
+(77)
+334
+Siemens Real Estate GmbH & Co. KG, Kemnath
+7,921
+100
+SYKATEC Systeme, Komponenten, Anwendungstechnologie GmbH, Erlangen
+27
+122
+100
+Siemens Konzernbeteiligungen GmbH, Vienna / Austria
+194
+1,822
+100
+Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
+Siemens Healthcare Diagnostics GmbH, Vienna / Austria
+37
+Siemens Mobility Austria GmbH, Vienna / Austria
+(6)
+1
+100
+Siemens Healthcare NV, Groot-Bijgaarden / Belgium
+10
+105
+107
+100
+1,411
+188
+Siemens Aktiengesellschaft Österreich, Vienna / Austria
+3
+12
+100
+Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
+(64)
+96
+100
+VMS Deutschland Holdings GmbH, Darmstadt
+29
+323
+100
+19
+19
+Annual Financial Statements
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without
+Germany) (103 companies)
+ETM professional control GmbH, Eisenstadt / Austria
+17
+23
+100
+1005
+67
+164
+100
+25,272
+100
+Siemens Beteiligungen USA GmbH, Berlin
+16
+13,768
+100
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
+61
+595
+23,840
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
+92
+100
+Siemens Electronic Design Automation GmbH, Munich
+2
+77
+100
+Siemens Energy AG, Munich
+100²
+Siemens Beteiligungen Inland GmbH, Munich
+100
+5,708
+100
+336
+OWP Butendiek GmbH & Co. KG, Bremen
+96
+718
+236
+Project Ventures Butendiek Holding GmbH, Munich
+66
+1008
+RISICOM Rückversicherung AG, Grünwald
+(3)
+313
+100
+Siemens Bank GmbH, Munich
+27
+1,177
+100
+Siemens Beteiligungen Europa GmbH, Munich
+1,041
+172
+Siemens Immobilien GmbH & Co. KG, Grünwald
+13,137
+Siemens Finance & Leasing GmbH, Munich
+287
+23,056
+100
+Siemens Healthineers Holding I GmbH, Munich
+325
+(4,684)
+100
+Siemens Healthineers Holding III GmbH, Munich
+Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
+5,759
+100
+Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
+104
+134
+100
+Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
+14
+114
+6,408
+75
+24,345
+1,164
+10
+141
+100
+Siemens Financial Services GmbH, Munich
+(15)
+2,027
+100
+Siemens Fonds Invest GmbH, Munich
+13
+100
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+20
+520
+100
+Siemens Healthcare GmbH, Munich
+38
+1,065
+100
+Siemens Healthineers AG, Munich
+395
+Siemens Industry Software NV, Leuven / Belgium
+369
+345
+81
+119
+206
+Dresser-Rand International B.V., The Hague / Netherlands
+3
+100
+Mendix Technology B.V., Rotterdam / Netherlands
+(96)
+Buitengaats C.V., Amsterdam / Netherlands
+60
+Siemens Electronic Design Automation B.V., Eindhoven / Netherlands
+2
+59
+100
+Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
+Siemens Healthineers Holding III B.V., The Hague / Netherlands
+8
+83
+100
+100
+285
+100
+Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
+Siemens Healthcare S.r.l., Milan / Italy
+9
+246
+100
+Siemens S.p.A., Milan / Italy
+69
+233
+100
+77
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I., Esch-sur-Alzette / Luxembourg
+89
+100
+SPT Holding SARL, Luxembourg / Luxembourg
+511
+1009
+SPT Invest Management, SARL, Luxembourg / Luxembourg
+1,045
+1009
+13
+3,598
+100
+Siemens Healthineers Holding IV B.V., The Hague / Netherlands
+Siemens Mobility Holding B.V., The Hague / Netherlands
+218
+1,344
+100
+Siemens Nederland N.V., The Hague / Netherlands
+30
+168
+100
+100
+SQCAP B.V., Enschede / Netherlands
+600
+100
+(17)
+585
+100
+20
+20
+147
+Sqills Products B.V., Enschede / Netherlands
+23
+1
+Siemens Mobility B.V., Zoetermeer / Netherlands
+13,895
+100
+Siemens Healthineers Holding V B.V., The Hague / Netherlands
+5,889
+100
+Siemens Healthineers Nederland B.V., The Hague / Netherlands
+Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
+212
+1,116
+100
+42
+513
+100
+Siemens International Holding B.V., The Hague / Netherlands
+541
+13,552
+100
+Siemens International Holding III B.V., The Hague / Netherlands
+2
+100
+456
+131
+9
+Medical Systems S.p.A., Genoa / Italy
+Siemens Osakeyhtiö, Espoo / Finland
+10
+40
+100
+ATOS SE, Bezons / France
+(2,959)
+4,444
+86
+672,5
+Siemens France Holding SAS, Saint-Denis / France
+39
+193
+100
+18
+220
+100
+Siemens Industry Software SAS, Châtillon / France
+3
+Siemens Healthcare SAS, Saint-Denis / France
+Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
+100
+42
+100
+Siemens S.A./N.V., Beersel / Belgium
+OEZ s.r.o., Letohrad / Czech Republic
+Siemens Mobility, s.r.o., Prague / Czech Republic
+15
+95
+100
+8
+46
+100
+14
+40
+100
+Siemens, s.r.o., Prague / Czech Republic
+33
+100
+100
+Siemens A/S, Ballerup / Denmark
+8
+51
+99
+100
+(37)
+23
+1,829
+100
+Mentor Graphics Development Services (Israel) Ltd., Rehovot / Israel
+2
+127
+100
+Siemens Concentrated Solar Power Ltd., Rosh Ha'ayin / Israel
+100
+46
+100
+Siemens Industry Software Ltd., Airport City / Israel
+8
+62
+100
+UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
+1
+100
+4,080
+1,995
+355
+100
+71
+100
+Siemens SAS, Saint-Denis / France
+50
+204
+100
+Varian Medical Systems France SARL, Le Plessis-Robinson / France
+8
+277
+100
+Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
+3
+91
+100
+SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME,
+Chalandri Greece
+Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
+Siemens Industry Software Limited, Shannon, County Clare / Ireland
+4
+65
+Siemens Mobility SAS, Châtillon / France
+Nordlicht Holding GmbH & Co. KG, Frankfurt
+100
+1
+8,300
+27,200
+2022
+Fiscal year
+NOTE 21 Share-based payment
+Employees
+Administration and general functions
+Research and development
+Sales
+Production
+The breakdown of employees per function is as follows:
+Personnel expenses did not include the expenses resulting from the compounding of the pension and personnel-related provisions, which
+are included in other financial income (expenses), net. The increase in expenses for pensions was due mainly to the increase in the rate
+of pension progression as part of the actuarial valuation of the settlement amount of pension obligations, and the recognition of indirect
+pension obligations.
+(5,624)
+(6,073)
+(383)
+7,000
+(1,213)
+6,600
+Siemens AG allows employees and members of the Managing Board to participate in share-based payment programs. For the purpose of
+servicing share-based payment programs, Siemens AG also delivers Siemens shares, which have been granted by affiliated companies.
+Organizational changes
+Change in connection with the adjustment of the ESG target
+Settled
+Forfeited
+Vested and fulfilled
+Granted
+Non-vested, beginning of fiscal year
+(in number of shares)
+2022
+Fiscal year
+Annual Financial Statements
+The following table shows the changes in the stock awards held by beneficiaries of Siemens AG:
+13
+Siemens AG grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
+Stock awards to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic value
+(= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired
+considering the estimated target attainment at the balance sheet date.
+Stock Awards
+49,100
+Non-vested, end of fiscal year
+(657)
+(4,584)
+Costs of purchased services
+Expenses for raw materials, supplies and purchased merchandise
+(in millions of €)
+NOTE 19 Material expenses
+3.5 Other disclosures
+Liabilities to affiliated companies resulted primarily from intragroup-financing activities.
+1,669
+5,377
+55,844
+62,890
+1,684
+6,220
+60,010
+67,914
+Liabilities
+Material expenses
+(674)
+NOTE 20 Personnel expenses
+2022
+(4,186)
+2021
+Fiscal year
+2022
+Personnel expenses
+Expenses for pensions
+Social security contributions and expenses for other employee benefits
+Wages and salaries
+(in millions of €)
+(7,722)
+(9,117)
+(3,009)
+(3,576)
+(4,713)
+(5,541)
+2021
+Fiscal year
+4,678,418
+1,002,372
+(600,044)
+(in millions of €)
+NOTE 23 Guarantees and other commitments
+Generally, shares in investment funds are accounted for securities held as non-current financial assets. Exceptions were those shares which
+represented plan assets and therefore were not accessible by all other creditors. These shares are held exclusively for the purpose of
+settling liabilities arising from post-employment obligations or comparable obligations with a long-term maturity, and are to be offset
+against such liabilities.
+383
+2,540
+2,157
+47
+47
+26
+26
+338
+338
+383
+2,130
+from carrying
+amount
+Obligations from guarantees
+Deviation
+Warranty obligations
+thereof relating to performance guarantees on behalf of affiliated companies
+thereof Others
+NOTE 24 Financial payment obligations under lease and rental arrangements
+Siemens AG only enters into guarantees and other commitments after careful consideration of the risks concerned and in general only in
+relation to its own business activities or those of affiliated companies as well as to business activities of companies, if it holds an investment
+in them or their parent companies. Based on an ongoing risk evaluation of the arrangements entered into and taking into account all
+information available up to the date on which the Annual Financial Statements were issued for approval, Siemens AG concluded that the
+relevant primary debtors are able to fulfill the underlying obligations. For this reason, Siemens AG considered it not probable that it will
+be called upon in conjunction with any of the guarantees and commitments described above.
+Warranty obligations included obligations of Siemens AG towards affiliated companies totaling €0.5 billion.
+The items Obligations from guarantees and Warranty Obligations - Others included guarantees and other commitments for the benefit of
+companies of the Siemens Energy Group totaling €0.4 billion and €7.2 billion, respectively, with corresponding full reimbursement rights
+towards Siemens Energy Global GmbH & Co. KG. In addition, the items included indemnifications issued in connection with dispositions
+of businesses. Such indemnifications, if customary to the relevant transactions, may protect the buyer from potential tax, legal and other
+risks in conjunction with the purchased business.
+Warranty obligations relating to financing of affiliated companies included guarantees towards banks for credit lines granted to affiliated
+companies.
+Annual Financial Statements
+14
+109,477
+10,411
+18,062
+76,389
+104,862
+2022
+4,615
+Sep 30,
+Guarantees and other commitments
+thereof relating to financing of affiliated companies
+Sep 30, 2022
+Market value
+amount
+1,747
+Settled
+Forfeited
+Vested and fulfilled
+Granted
+Outstanding, beginning of fiscal year
+(in number of shares)
+The following table shows the changes in the entitlements to matching shares of beneficiaries of Siemens AG:
+Matching shares granted to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic
+value (=share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired at
+the balance sheet date.
+Plan participants receive the right to one Siemens share without payment (matching share) for every three investment shares continuously
+held over a vesting period.
+The pro rata intrinsic value of all stock awards issued to beneficiaries of Siemens AG amounted to €193 million at the balance sheet date.
+Share Matching Program
+4,878,671
+957
+(65,487)
+(6,890)
+(130,655)
+Fiscal year
+2022
+737,581
+277,635
+Carrying
+Shares in investment assets according to investment objects
+Money market funds
+Share-based funds
+Bond-based funds
+Mixed funds
+(in million of €)
+209
+667,125
+The following shares in investment funds according to investment objects were held:
+NOTE 22 Shares in investment funds
+The pro rata intrinsic value of all matching shares issued to beneficiaries of Siemens AG amounted to €42 million.
+Outstanding, end of fiscal year
+Organizational changes
+(27,347)
+(18,537)
+(302,672)
+464
+209
+137
+137
+Issuance under share-based payments and employee share programs
+Treasury shares, end of fiscal year
+Share buyback
+Treasury shares, beginning of fiscal year
+(in number of shares)
+The following table presents the development of treasury shares:
+Treasury shares
+Further, by resolution of the Annual Shareholders' Meeting of January 30, 2019, the Managing Board is authorized to increase, with the
+approval of the Supervisory Board, the capital stock until January 29, 2024 by up to €510 million through the issuance of up to 170
+million registered no-par value shares against cash contributions and/or contributions in kind (Authorized Capital 2019). Under certain
+conditions, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude shareholders' subscription rights
+in the event of issue against contributions in kind. In the case of issue against cash payment, the shares are generally to be offered to
+shareholders for subscription. However, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude
+subscription rights, firstly for any fractional amounts, secondly, to grant dilution compensation in connection with convertible bonds or
+bonds with warrants already issued, and thirdly, under certain further conditions, if the issue price of the new shares does not fall
+significantly below the stock exchange price of the Company's already listed shares.
+By resolution of the Annual Shareholders' Meeting of February 3, 2021, the Managing Board is authorized to increase the capital stock
+until February 2, 2026 by up to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash
+(Authorized Capital 2021). Subscription rights of existing shareholders are excluded. The new shares may exclusively be offered to
+employees of Siemens AG and its affiliated companies (employee shares). To the extent permitted by law, employee shares may also be
+issued in such a manner that the contribution to be paid on such shares is covered by that part of the annual net income which the
+Managing Board and the Supervisory Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock
+Corporation Act.
+In detail, there are the following authorizations to increase the capital stock:
+As of September 30, 2022, Siemens AG had authorized capital totaling a nominal amount of €600 million, which can be issued in
+instalments and with different time limits by issuing up to 200 million registered no-par value shares.
+The capital stock of Siemens AG is divided into 850,000,000 registered shares of no-par value with a notional value of €3.00 per share.
+Authorized capital (not issued)
+20,623
+3,612
+(3,215)
+598
+Fiscal year
+(1,588)
+2022
+14,185,791
+2,065
+16
+Amounts from the capitalization of deferred taxes
+687
+Amount representing the difference of the recognition of provisions and similar commitments based on average interest rates covering ten and
+seven years, respectively
+2022
+Fiscal Year
+(in millions of €)
+Information on amounts subject to dividend payout restrictions
+100
+Annual Financial Statements
+11
+The treasury shares purchased under the share buybacks may be used for purposes of retirement, distribution to employees, members of
+the executive bodies of companies affiliated with Siemens and members of the Managing Board, as well as the servicing of convertible
+bonds with attached warrants.
+Siemens AG held 57,454,171 treasury shares, equaling a nominal amount of €172 million, representing 6.8% of the capital stock.
+On June 24, 2021, Siemens announced a share buyback with a volume of up to €3 billion in the period from the beginning of fiscal 2022
+to 2026. The share buyback, which began on November 15, 2021 and will run no longer than until September 15, 2026, is executed based
+on the authorizations granted by the Annual Shareholders' Meeting on February 5, 2020. In addition to the dividend policy, the share
+buyback is intended to allow shareholders to continuously participate in the success of the Company. In fiscal 2022, Siemens AG
+repurchased a total of 14,185,791 treasury shares under this buyback program. This represented a nominal amount of €43 million or 1.7%
+of capital stock. In this reporting period, €1,566 million (excluding incidental transaction charges) were spent for this purpose; this
+represents a weighted average stock price of €110.38 per share. The purchases were made in the reporting period on 218 Xetra trading
+days and were carried out by a bank that had been commissioned by Siemens AG; the shares were purchased exclusively on the electronic
+trading platform of the Frankfurt Stock Exchange (Xetra). The average volume on these trading days was about 65,072 shares.
+57,454,171
+(4,376,201)
+47,644,581
+21,216
+3,613
+3,427
+Sep 30, 2022
+Net income
+Dividend
+for 2021
+Annual Financial Statements
+Issuance of treasury
+shares under share-
+based payments
+and employee
+share programs
+Share buybacks
+Oct 01, 2021
+Subscribed capital
+Shareholders' equity
+Unappropriated net income
+Other retained earnings
+Capital reserve
+Issued capital
+(in millions of €)
+Subscribed capital
+Treasury shares
+NOTE 15 Shareholders' equity
+2,550
+2,550
+(143)
+(43)
+(3,215)
+3,400
+6,188
+185
+429
+(1,546)
+7,119
+Amounts from the capitalization of assets at fair value
+8,445
+8,289
+2,378
+13
+(43)
+2,407
+(172)
+13
+156
+Expenses for lease and rental arrangements with third parties in which the economic ownership of the leased/rented asset was not
+attributable to Siemens AG and the relevant items were not recognized as assets by Siemens AG amounted to €197 million. Object of
+these contracts were mainly real estate and other non-current assets.
+These amounts subject to dividend payout restrictions face other retained earnings in a sufficiently high amount. The unappropriated net
+income of €3,613 million is available for distribution.
+As of September 30, 2022, the following information on shareholdings subject to reporting requirements was available to the Company
+pursuant to Section 160 para 1 No. 8 German Stock Corporation Act (Aktiengesetz):
+1,224
+1,293
+61
+1,019
+1,080
+Other liabilities
+1,669
+5,270
+52,047
+58,985
+1,684
+6,119
+56,143
+63,946
+39
+68
+2,072
+thereof to long-term investees
+6
+therein for social security
+50
+50
+93
+93
+therein from taxes
+68
+1,220
+1,288
+61
+1,013
+1,074
+thereof miscellaneous liabilities
+5
+5
+6
+2,111
+40
+2,209
+Advance payments received
+Liabilities to banks
+(in million of €)
+Annual Financial Statements
+NOTE 18 Liabilities
+12
+In May 2021, Siemens AG and the Federal Republic of Germany entered into a public-law contract based on which the obligation of final
+disposal of nuclear waste is transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the
+payment is subject to the approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made
+to measure the obligations that remain with Siemens AG, with regard to conditioning and packaging of nuclear waste, as well as
+intermediate storage and transport to the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032.
+The major amounts in other provisions were contributed by provisions related to personnel costs amounting to €1,026 million, provisions
+for contingent losses from derivative financial instruments amounting to €782 million, provisions for warranties, delay compensations,
+penalties for delay and breach of contract amounting to €634 million, provisions for decontamination obligations amounting to €493
+million, and provisions related to guarantees and expected obligations from consortium agreements amounting to €187 million.
+NOTE 17 Other provisions
+The actuarial valuation of the settlement amount as of September 30, 2022 was based, among others, on a discount rate of 1.78%
+(2021:1.98%) and on a rate of pension progression of 2.00% (inflation-related increase compared to prior year-rate of 1.50%) per year,
+except for the BSAV and deferred compensation plans with 1.00% (2021: 1.00%) per year. The mortality tables used (Siemens Bio
+2017/2022) are primarily based on data of the German Siemens population, using a set of formulas that corresponds to generally accepted
+actuarial standards.
+In Germany, Siemens AG provides pension benefits through the BSAV (Beitragsorientierte Siemens Altersversorgung), frozen legacy plans
+and deferred compensation plans. The majority of Siemens' active employees participate in the BSAV. The benefits are predominantly
+based on nominal contributions by the Company and investment returns on assets designated to that plan, subject to a minimum return
+guaranteed by the Company. In connection with the implementation of the BSAV, benefits provided under the frozen legacy plans were
+modified to substantially eliminate the effects of compensation increases. Therefore, valuation assumptions for salary and pension
+increases including career trend are no longer significant for the pension obligation of Siemens AG. The pension benefits are funded via
+contractual trust arrangements (CTA). A portion of these trust assets also covers the pension obligations of other domestic subsidiaries.
+Therefore, the assets do not meet the criteria for offsetting against the pension obligation and are presented as financial assets of Siemens
+AG.
+NOTE 16 Provisions for pensions and similar commitments
+The Werner Siemens-Stiftung, Zug, Switzerland, notified us on January 21, 2008, that its percentage of voting rights (held either directly
+or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on January 2, 2008 and amounted to 3.03%
+(27,739,285 voting rights) as per this date.
+The State of Qatar, Doha, acting by and through the DIC Company Limited, notified us on May 10, 2012, that its percentage of voting
+rights (held either directly or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on May 7, 2012
+and amounted to 3.04% (27,758,338 voting rights) as per this date.
+BlackRock, Inc., Wilmington, USA, notified us on June 21, 2022, that its percentage of voting rights (held either directly or indirectly) in
+Siemens AG amounted to 6.25% (53,108,691 voting rights) on June 16, 2022.
+Trade payables
+Liabilities to affiliated companies
+Sep 30,
+2022
+2,249
+5 years
+thereof
+maturities
+more than
+501
+501
+639
+1 year up
+to 5 years
+Disclosures on shareholdings of Siemens AG
+up to
+1 year
+5 years
+to 5 years
+Sep 30,
+thereof
+maturities
+more than
+1 year up
+up to 1
+year
+639
+2021
+Payment obligations under lease and rental arrangements amounted to €1,350 million, of which €134 million resulted from transactions
+with affiliated companies. Payment obligations under lease and rental arrangements due within the next fiscal year amounted to €268
+million.
+In fiscal 2022, Siemens AG re-issued in total 4,376,201 treasury shares under the exclusion of subscription rights in connection with share-
+based payments and employee share programs in the Group, equaling a nominal amount of €13 million and 0.5% of the capital stock. The
+Company received in total €255 million for 2,004,924 shares, re-issued against payment of a purchase price. Siemens AG received this
+amount for unrestricted use. All shares were sold as investment shares in connection with the share matching program to plan participants.
+In each case, the purchase price was determined on the basis of the closing rate in Xetra trading, determined on a monthly effective date.
+Therefore, in the reporting period, in total 1,405,428 shares related to the monthly investment plan at a weighted average share price of
+€122.02 per share, 259,927 shares related to the share matching plan at a weighted average share price of €139.50 per share, and
+339,569 shares related to the base share program at a weighted average share price of €69.75 per share (after consideration of a 50%
+subsidy by the Company). The other shares re-issued during the reporting period can be primarily attributed to the servicing of stock
+awards granted in fiscal 2018 totaling 1,699,017 shares, to 573,441 matching shares under the share matching program for fiscal 2019,
+and to 98,819 jubilee shares.
+Approximately €1.8 billion were outstanding as of September 30, 2022, from an outsourcing agreement with a maturity of several years.
+Obligations for equity contributions were €408 million.
+Jürgen Kerner²
+Chief Treasurer and Executive Member of January 22,
+the Managing Board of IG Metall
+Benoît Potier
+Chairman of the Board of Directors of
+L'Air Liquide S.A.
+Hagen Reimer²
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+Trade Union Secretary of the Managing
+Board of IG Metall
+Chairman of the Supervisory Board of
+Bayerische Motoren Werke
+Aktiengesellschaft
+1969
+January 25, 2023
+2012
+September 3, January 31, 2023
+1957
+April 26,
+1967
+2018
+January 30, 2023
+2019
+May 29, 1956 January 27, 2023
+2015
+German positions:
+- MAN Truck & Bus SE, Munich (Deputy Chairman)
+- Premium Aerotec GmbH, Augsburg (Deputy
+January 24, 2023
+2008
+Chairman)
+March 16,
+1960
+Harald Kern²
+- C3.ai, Inc., USA³
+German positions:
+RWE AG, Essen (Chairman)³
+German positions:
+- Allianz SE, Munich (Chairman)³
+- Fresenius Management SE, Bad Homburg
+Fresenius SE & Co. KGaA, Bad Homburg (Deputy
+Chairman)³
+German positions:
+Siemens Energy AG, Munich³
+Siemens Energy Management GmbH, Munich
+Siemens Mobility GmbH, Munich (Deputy
+Chairwoman)
+Andrea Fehrmann²
+(Dr. phil.)
+Bettina Haller²
+Trade Union Secretary, IG Metall Regional June 21,
+Office for Bavaria
+January 31, 2023
+1970
+2018
+Chairwoman of the Combine Works
+Council of Siemens AG
+March 14,
+1959
+April 1,
+2007
+2023
+German positions:
+Chairman of the Siemens Europe
+Committee
+Memberships in supervisory boards whose
+establishment is required by law or in comparable
+domestic or foreign controlling bodies of business
+enterprises (as of September 30, 2022)
+Positions outside Germany:
+- Siemens Energy AG, Munich³
+- ThyssenKrupp AG, Essen (Deputy Chairman)³
+Spokespersons of Siemens AG
+Chairwoman of the Central Works Council August 3,
+Dorothea Simon²
+of Siemens Healthcare GmbH
+Grazia Vittadini
+Matthias Zachert
+Chief Technology and Strategy Officer
+and Member of the Executive Team of
+Rolls-Royce Holdings plc³
+Remuneration of the members of the Managing Board
+1969
+September
+23, 1969
+Chairman of the Board of Management of November 8,
+LANXESS AG³
+October 1,
+2017
+February 3,
+2021
+2023
+2025
+January 31, 2023
+2018
+German positions:
+Messer SE & Co. KGaA, Bad Soden am Taunus
+- Siemens Healthcare GmbH, Munich
+- Siemens Healthineers AG, Munich³
+TÜV Süd AG, Munich
+Positions outside Germany:
+2023
+- Siemens Energy Management GmbH, Munich
+March 1,
+2014
+September
+- Traton SE, Munich³
+Positions outside Germany:
+-L'Air Liquide S.A., France (Chairman)³
+- The Hydrogen Company S.A., France
+German positions:
+- Bayerische Motoren Werke Aktiengesellschaft,
+Munich (Chairman)³
+- Henkel AG & Co. KGaA, Düsseldorf³,4
+Henkel Management AG, Düsseldorf
+Kasper Rørsted
+Baroness Nemat Shafik
+(DBE, DPhil)
+Nathalie von Siemens
+(Dr. phil.)
+Chief Executive Officer and Board
+Member of adidas AG³ (until November
+11, 2022), Supervisory Board Member
+Director of the London School of
+Economics
+Member of supervisory boards
+February 24,
+1962
+February 3, 2025
+2021
+August 13,
+1962
+July 14, 1971
+January 31, 2023
+2018
+January 27, 2023
+2015
+Michael Sigmund²
+Chairman of the Committee of
+Spokespersons of the Siemens Group and 13, 1957
+Chairman of the Central Committee of
+- EssilorLuxottica SA, France³
+Annual Financial Statements
+2023
+October 1,
+2020
+September 30,
+2025
+Ralf P. Thomas
+(Prof. Dr. rer. pol.)
+March 7, 1961
+September 18,
+2013
+December 14,
+2026
+Judith Wiese
+January 30,
+1971
+October 1,
+2020
+September 30,
+20232
+1 Publicly listed.
+Memberships in supervisory boards whose establishment is required by law or in
+comparable domestic or foreign controlling bodies of business enterprises
+External positions
+(as of September 30, 2022)
+German positions:
+- Evonik Industries AG, Essen¹
+German positions:
+Siemens Energy AG, Munich'
+Siemens Energy Management GmbH,
+Munich
+German positions:
+- Siemens Energy AG, Munich'
+January 2,
+1965
+- Siemens Energy Management GmbH,
+Munich
+Matthias Rebellius
+March 7, 1973 April 1, 2017
+Members of the Managing Board received cash compensation of €16.0 million. The fair value of share-based compensation amounted to
+€10.3 million for 134,006 stock awards. The Company granted contributions under the BSAV to members of the Managing Board totaling
+€2.2 million.
+Therefore, the compensation and benefits attributable to members of the Managing Board amounted to €28.5 million in total.
+Total remuneration of former members of the Managing Board
+Former members of the Managing Board and their surviving dependents received a total of €23.6 million according to Section 285 no. 9b
+of the German Commercial Code.
+Siemens recognized pension provisions totaling €130.4 million for the pension entitlements to former members of the Managing Board
+and their surviving dependents.
+Remuneration of the members of the Supervisory Board
+Compensation attributable to members of the Supervisory Board comprises a base compensation and additional compensation for
+committee work and amounted to €5.1 million (including meeting fees).
+NOTE 29 Declaration of Compliance with the German Corporate Governance Code
+As of October 1, 2022, the mandatory statement pursuant to Section 161 of the German Stock Corporation Act (AktG) has been issued by
+the Managing Board and the Supervisory Board and is permanently accessible on siemens.com/gcg-code.
+NOTE 30 Members of the Managing Board and Supervisory Board
+Members of the Managing Board and positions held by Managing Board members
+In fiscal 2022, the Managing Board had the following members:
+Name
+Roland Busch
+(Dr. rer. nat.)
+President and Chief
+Executive Officer
+Cedrik Neike
+Date of birth
+November 22,
+1964
+First appointed
+April 1, 2011
+Term expires
+March 31, 2025
+May 31, 2025
+December 23, January 24, 2023
+1954
+2008
+German positions:
+(as of September 30, 2022)
+Chairman of the Supervisory Board of
+Siemens AG
+Birgit Steinborn²
+First Deputy Chairwoman
+Werner Brandt
+Date of birth
+October 27,
+1965
+Chairwoman of the Central Works Council March 26,
+of Siemens AG
+Member
+since
+October 1,
+2013
+Term
+expires
+2025
+January 24, 2023
+1960
+2008
+January 3,
+January 31, 2023
+1954
+2018
+(Dr. rer. pol.)
+Second Deputy Chairman
+Tobias Bäumler²
+Michael Diekmann
+Chairman of the Supervisory Board of
+RWE AG
+Deputy Chairman of the Central Works
+Council and of the Combine Works
+Council of Siemens AG
+Chairman of the Supervisory Board of
+Allianz SE
+October 10,
+1979
+October
+16, 2020
+Jim Hagemann Snabe
+Chairman
+Group company positions
+Occupation
+In fiscal 2022, the Supervisory Board had the following members:
+German positions:
+- Siemens Healthineers AG, Munich¹
+- Siemens Mobility GmbH, Munich
+(Chairman)
+Positions outside Germany:
+- Siemens Aktiengesellschaft Österreich,
+Austria (Chairman)
+- Siemens France Holding SAS, France
+Positions outside Germany:
+Arabia Electric Ltd. (Equipment), Saudi
+Arabia (Deputy Chairman)
+Siemens Ltd., India¹
+Siemens Ltd., Saudi Arabia (Deputy
+Chairman)
+- Siemens Schweiz AG, Switzerland
+(Chairman)
+- Siemens W.L.L., Qatar
+German positions:
+- Siemens Healthcare GmbH, Munich
+(Chairman)
+- Siemens Healthineers AG, Munich
+(Chairman)1
+Positions outside Germany:
+- Siemens Proprietary Ltd., South Africa
+(Chairman)
+2 By a decision of the Supervisory Board on November 16, 2022, the appointment of Judith Wiese as a full member of the Managing Board was extended from October 1, 2023, through September 30, 2028.
+17
+15
+Members of the Supervisory Board and positions held by Supervisory Board members
+Name
+German positions:
+- European School of Management and
+Technology GmbH, Berlin
+The Exploration Company GmbH, Gilching
+Net foreign currency position (after hedging)
+thereof with affiliated companies
+thereof with external contract partners
+Foreign currency exchange contracts (net face value)
+thereof expected cash inflows from firm commitments and forecasted transactions
+thereof expected cash outflows from firm commitments and forecasted transactions
+Net foreign currency position (before hedging)
+Foreign currency risk from firm commitments and forecast transactions
+thereof liabilities
+thereof assets
+Foreign currency risk from balance sheet items
+(in millions of €)
+Sep 30,
+2022
+2,243
+The remaining foreign currency risk after offsetting cash flows in the same currency is hedged by the Corporate Treasury with external
+contract partners. The net foreign currency position (before hedging) is combined with the offsetting foreign currency exchange contracts
+to a macro valuation unit. For this purpose, hedged items and hedging instruments are measured with the respective underlying
+discounted cash flows. For foreign currency derivative financial instruments, the determination is based on the changes in relevant forward
+exchange rates. The existing derivative currency hedging contracts are included in the valuation unit in their entirety and had maturity
+terms until the year 2042. The cash in- and outflows from the foreign currency exchange contracts, firm commitments and forecast
+transactions are disclosed on a net basis in the following table.
+Valuation unit used to hedge the foreign currency risk
+15
+Provided the relevant conditions are met, derivative financial instruments are aggregated with the underlying hedged item into valuation
+units. Using the freezing method, the hedging transactions are not recognized in the balance sheet. The effectiveness of the valuation
+unit is either ensured through risk management, or is demonstrated both prospectively and retrospectively based on appropriate methods
+used to demonstrate effectiveness (e.g. dollar offset method, regression method, sensitivity analysis). Valuation gains and losses from
+derivative financial instruments and hedged items are netted for each valuation unit. A provision for anticipated losses on onerous
+contracts is recognized for the respective valuation unit in the amount of an existing loss surplus. Profit surpluses are not recognized.
+Fair values of interest rate derivative financial instruments are determined by discounting expected future cash flows over the remaining
+term of the instrument using current market interest rates and yield curves.
+The notional amounts equal the contractual amounts of the individual derivative financial instrument which – irrespective of the nature
+of the concluded position (sale or purchase) – are presented on a gross basis (gross notional amounts).
+-
+As of September 30, 2022, interest rate swaps with a net negative fair value of €635 million (notional amount: €10,005 million) were not
+included in a valuation unit. For interest rate swaps with a negative fair value of €782 million, provisions for contingent losses were
+recognized in the same amount. The notional amount equals the contract value of the individual derivative financial instruments before
+netting (gross notional amount), independent of the type of contracted position (purchase or sale).
+As a consequence of its global operating, investing and financing activities, Siemens AG is in particular exposed to risks resulting from
+changes in exchange rates and interest rates, managed in line with a proven risk management system in consideration of defined risk
+limits. As the parent company of the Siemens Group, Siemens AG has the central role within the group-wide management of financial
+market risks. To manage the risks resulting from changes in exchange rates and interest rates, Siemens AG uses primarily foreign currency
+forward contracts, interest rate swaps as well as combined interest and foreign currency swaps. Thereby the operating units of Siemens
+AG are not allowed to enter into derivative financial instruments for speculative purposes. The contract partners of the Company for
+derivative financial instruments are banks, brokers and affiliated companies. The credit rating for banks and brokers is constantly
+monitored.
+NOTE 26 Derivative financial instruments and valuation units
+In the course of its normal business operations, Siemens AG is involved in numerous legal and regulatory proceedings as well as
+governmental investigations (legal proceedings) in various jurisdictions. These legal proceedings could result in particular in the Company
+being subject to payment of damages and punitive damages, equitable remedies or criminal or civil sanctions, fines or disgorgements of
+profit. In individual cases, this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or
+permits. In addition, further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be expanded. Some
+of these legal proceedings could result in adverse decisions for Siemens AG that may have material effects on its financial position, the
+results of its operations and/or its cash flows in the respective reporting period. In addition, Siemens is jointly and severally liable within
+consortia. As far as not recognized in the financial statements, Siemens AG did not expect any material negative effects on its financial
+position, the results of its operations and/or its cash flows at balance sheet date.
+According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
+exposure. Foreign currency transaction exposure of the Siemens units from contracted business and cash balances in foreign currency is
+generally hedged approximately by 100% with Corporate Treasury. Foreign currency transaction exposure of the Siemens units from
+planned business above defined thresholds has to be hedged with Corporate Treasury within a band of 75% to 100% for a hedging period
+of at least three months.
+16,368
+(14,124)
+759
+NOTE 25 Other financial obligations
+Siemens AG has entered into a contract to pay its affiliated company Siemens Trademark GmbH & Co. KG, Germany, a running royalty for
+the use of the Siemens trademark rights. The fee is calculated by applying business-specific royalty rates to brand-related revenue. The
+contract has an indefinite duration. For fiscal 2022, the corresponding expenses amounted to €804 million. For fiscal 2023, the royalty is
+expected to be in the same magnitude.
+- Siemens Healthcare GmbH, Munich
+German positions:
+NOTE 28 Remuneration of the members of the Managing Board and the Supervisory Board
+Annual Financial Statements
+16
+14
+The Supervisory Board and the Managing Board propose the unappropriated net income of Siemens AG for the fiscal year ended September
+30, 2022, amounting to €3,613 million to be appropriated as follows: Distribution of a dividend of €4.25 on each share of no par value
+entitled to the dividend, and carry-forward of the unappropriated net income for shares of no par value not entitled to the dividend.
+NOTE 27 Proposal for the appropriation of net income
+To hedge payables to affiliated companies against interest rate risk, Siemens AG has entered into interest rate derivatives with external
+counterparties. The payables hedged within this micro valuation unit had a nominal volume of €2,551 million as of September 30, 2022
+and a maximum maturity until the year 2025. As of September 30, 2022, positive cumulative changes in market value of these payables
+of €125 million were matched by external interest rate derivatives with identical maturities whose negative market value was €100 million.
+The amount of interest rate risks hedged with the valuation unit that did not lead to a provision for anticipated losses accordingly totaled
+€494 million.
+To hedge receivables from affiliated companies against interest rate risk, Siemens AG has entered into interest rate derivatives with
+external counterparties and combined these instruments with the underlying transactions in a macro valuation unit. As of September 30,
+2022, the notional amount of the receivables, which had a maximum maturity until the year 2047, amounted to €15,966 million. As of
+September 30, 2022, the negative cumulative market value changes of these receivables of €504 million were matched by offsetting
+interest rate derivatives with a positive net fair value of €257 million and a maximum maturity until the year 2041, of which positive fair
+values were €547 million and negative fair values were €290 million.
+Siemens AG has entered into interest rate derivatives with external counterparties to hedge interest rate swaps transacted with its affiliated
+companies against interest rate risk. As of September 30, 2022, the interest rate swaps transacted with affiliated companies included in
+this macro valuation unit had a notional amount of €1,163 million and maximum maturity terms until the year 2028. At balance sheet
+date, these underlying transactions were matched by external interest rate derivatives in the same amount. Thereby, positive fair values
+of €105 million were offset by negative fair values in the same amount.
+The interest rate hedging contracts used by Siemens AG serve to reduce interest rate risks within the framework of an integrated asset-
+liability management approach and to optimize the interest results.
+Valuation unit used to hedge the interest rate risk
+The net fair value of derivative financial instruments from foreign currency hedge accounting was €633 million as of September 30, 2022;
+positive fair values were €3,814 million and negative fair values were €3,181 million. Accordingly, no provision for anticipated losses was
+recognized for the derivative financial instruments with negative fair values that were included in this macro valuation unit.
+Firm commitments and forecast transactions concern business transactions for which a legally binding contract was concluded but not yet
+performed on by either contracting party, as well as contingent payment claims for already partially completed performance obligations
+in the project and product businesses.
+(303)
+(9,331)
+6,026
+(3,305)
+3,002
+(480)
+1,239
+Next47 Services GmbH, Munich
+100
+Annual Financial Statements
+(3)
+Erlapolis 20 GmbH, Munich
+Berliner Vermögensverwaltung GmbH, Berlin
+Germany (47 companies)
+in %
+Equity interest
+Equity in
+millions of €¹
+Net income in
+millions of €¹
+September 30, 2022
+(12)
+Annual Financial Statements
+18
+4 Shareholders' Committee.
+3 Publicly listed.
+- Siemens Industry Software GmbH, Cologne
+German positions:
+January 31, 2023
+2018
+2 Employee representative.
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+1965
+June 21,
+Member of the Central Works Council of
+Siemens Industry Software GmbH
+1967
+Gunnar Zukunft²
+60
+81
+NOTE 31 List of subsidiaries and associated companies pursuant to Section 285 no. 11, 11a and 11b
+of the German Commercial Code
+1
+1005
+272
+100
+Next47 GmbH, Munich
+Munipolis GmbH, Munich
+100
+55
+(7)
+KACO new energy GmbH, Neckarsulm
+100
+170
+15
+100
+13
+19
+Erlapolis 22 GmbH, Munich
+n/a
+n/a
+1005
+evosoft GmbH, Nuremberg
+HaCon Ingenieurgesellschaft mbH, Hanover
+9
+100
+(128)
+135
+276
+ChargePoint Holdings, Inc., Campbell, CA / United States
+(119)
+490
+27
+Corindus, Inc., Wilmington, DE / United States
+(55)
+568
+Digital Bridge Zeus Partners, LP, Wilmington, DE / United States
+ECG Acquisition, Inc., Wilmington, DE / United States
+ECG TopCo Holdings, LLC, Wilmington, DE / United States
+Electrify America, LLC, Wilmington, DE / United States
+eMeter Corporation, Wilmington, DE / United States
+Fluence Energy, Inc., Wilmington, DE / United States
+CEF-L Holding, LLC, Wilmington, DE / United States
+336
+974
+86
+175
+100
+127
+73
+100
+100
+n/a
+n/a
+Grupo Siemens S.A. de C.V., Mexico City / Mexico
+Siemens, S.A. de C.V., Mexico City / Mexico
+6
+91
+100
+-
+Siemens S.A.S., Tenjo / Colombia
+5
+3
+45
+100
+46
+88
+100
+100
+Siemens Large Drives Limited, Oakville / Canada
+Siemens Healthcare Limited, Oakville / Canada
+100
+Dade Behring Hong Kong Holdings Corporation, Tortola / British Virgin Islands
+EPOCAL INC., Toronto / Canada
+Siemens Canada Limited, Oakville / Canada
+143
+594
+100
+3
+131
+100
+27
+297
+100
+Siemens Financial Ltd., Oakville / Canada
+17
+527
+27
+n/a
+133
+Atom Power, Inc., Charlotte, NC / United States
+100
+Building Robotics Inc., Wilmington, DE / United States
+(33)
+(36)
+100
+Carolina Software Holdings, Inc., Wilmington, DE / United States
+n/a
+(7)
+10010
+Carolina Software Intermediate Holdings, Inc., Wilmington, DE / United States
+n/a
+n/a
+100
+Carolina Software Preferred Intermediate Holdings, Inc., Wilmington, DE / United States
+121
+n/a
+Brightly Software, Inc., Wilmington, DE / United States
+100
+(8)
+(1)
+_6
+Bentley Systems, Incorporated, Wilmington, DE / United States
+82
+361
+56
+Brightly Software Holdings, Inc., Wilmington, DE / United States
+n/a
+n/a
+100
+༐ |
+Brightly Software Intermediate Holdings, Inc., Wilmington, DE / United States
+n/a
+n/a
+100
+n/a
+100
+(4)
+7,414
+481
+Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems Netherlands Holdings, Inc., Wilmington, DE / United States
+86
+626
+(21)
+Thoughtworks Holding Inc., Wilmington, DE / United States
+100
+(48)
+(28)
+Supplyframe, Inc., Pasadena, CA / United States
+100
+8
+SMI Holding LLC, Wilmington, DE / United States
+100
+10,407
+2,532
+Siemens USA Holdings, Inc., Wilmington, DE / United States
+100
+1,772
+17
+100
+(6)
+100
+Varian Medical Systems, Inc., Wilmington, DE / United States
+7
+Shanghai Electric Power Generation Equipment Co., Ltd., Shanghai / China
+100
+35
+30
+Beijing Siemens Cerberus Electronics Ltd., Beijing / China
+100
+177
+20
+Siemens Mobility Pty Ltd, Melbourne / Australia
+Siemens Public, Inc., Iselin, NJ / United States
+100
+8
+Siemens Ltd., Bayswater / Australia
+100
+4
+1
+Siemens Large Drives Pty. Ltd., Bayswater / Australia
+Asia, Australia (49 companies)
+100
+8,587
+392
+96
+9
+100
+21
+1,631
+(141)
+100
+132
+1
+PolyDyne Software Inc., Austin, TX / United States
+Siemens Capital Company LLC, Wilmington, DE / United States
+Siemens Corporation, Wilmington, DE / United States
+Siemens Financial Services, Inc., Wilmington, DE / United States
+Siemens Government Technologies, Inc., Wilmington, DE / United States
+Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
+Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
+Siemens Industry Software Inc., Wilmington, DE / United States
+Siemens Industry, Inc., Wilmington, DE / United States
+100
+176
+32
+100
+51
+Mannesmann Corporation, New York, NY / United States
+PETNET Solutions, Inc., Knoxville, TN / United States
+206
+360
+50
+Hickory Run Holdings, LLC, Wilmington, DE / United States
+345
+(150)
+(140)
+Annual Financial Statements
+112
+100
+2,400
+4,910
+100
+Siemens Mobility, Inc, Wilmington, DE / United States
+100
+17,142
+137
+Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
+100
+6,108
+1,062
+100
+5,677
+1,026
+100
+13,895
+100
+8,748
+513
+100
+561
+9
+100
+2,082
+177
+100
+21
+3
+55
+000 Legion II, Moscow / Russian Federation
+5
+112
+100
+000 Siemens, Moscow / Russian Federation
+(34)
+39
+100
+Siemens Healthcare Limited, Riyadh / Saudi Arabia
+18
+45
+51
+Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
+Siemens Mobility, s.r.o., Bratislava / Slovakia
+Siemens Proprietary Limited, Midrand / South Africa
+Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
+SIEMENS HEALTHCARE, S.L.U., Madrid / Spain
+SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
+Siemens Rail Automation S.A.U., Tres Cantos / Spain
+Siemens S.A., Madrid / Spain
+Siemens AB, Solna / Sweden
+Siemens Financial Services AB, Solna / Sweden
+100
+Siemens Healthineers International AG, Steinhausen / Switzerland
+32
+LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD, St. Petersburg / Russian Federation
+Annual Financial Statements
+Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
+Varian Medical Systems Nederland B.V., Houten / Netherlands
+11
+100
+503
+36
+3,123
+100
+ZeeEnergie C.V., Amsterdam / Netherlands
+81
+119
+206
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
+6
+94
+100
+13
+110
+100
+Siemens S.A., Amadora / Portugal
+(4)
+561
+Siemens Industry Software GmbH, Zurich / Switzerland
+(4)
+20
+223
+100
+226
+527
+100
+12
+Siemens AG - Siemens Sanayi ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Türkiye
+184
+100
+10
+143
+100
+40
+967
+100
+Siemens Schweiz AG, Zurich / Switzerland
+Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil /Switzerland
+22
+36
+100
+100
+Siemens Mobility AG, Wallisellen / Switzerland
+100
+100
+42
+100
+2
+8
+100
+(5)
+39
+70
+1
+45
+100
+10
+281
+100
+64
+100
+2
+644
+100
+18
+210
+9
+(1)
+100²
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Türkiye
+478
+(2)
+Siemens Pension Funding Limited, Farnborough, Hampshire / United Kingdom
+100
+904
+104
+Siemens Mobility Limited, London / United Kingdom
+100
+87
+23
+Siemens Industry Software Limited, Farnborough, Hampshire / United Kingdom
+100
+4
+(106)
+Siemens Industry Software Computational Dynamics Limited, Farnborough, Hampshire / United
+Kingdom
+100
+1,200
+146
+Siemens Holdings plc, Farnborough, Hampshire / United Kingdom
+100
+25
+100
+49
+Siemens plc, Farnborough, Hampshire / United Kingdom
+705
+(31)
+100
+78
+24
+100
+181
+16
+226
+222
+(55)
+100
+25
+(4)
+GNA 1 Geração de Energia S.A., São João da Barra / Brazil
+Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
+Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
+Siemens Participações Ltda., São Paulo / Brazil
+Siemens S.A., Buenos Aires / Argentina
+Americas (54 companies)
+100
+91
+(12)
+Siemens Process Systems Engineering Limited, Farnborough, Hampshire / United Kingdom
+100
+26
+100
+169
+100
+46
+Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
+Next47 Fund 2018, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2019, L.P., Palo Alto, CA / United Kingdom
+100
+63
+(6)
+Electrium Sales Limited, Farnborough, Hampshire / United Kingdom
+334
+3
+17
+Cross London Trains Holdco 2 Limited, London / United Kingdom
+49
+13
+8
+SD (Middle East) LLC, Dubai / United Arab Emirates
+100
+67
+27
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Türkiye
+100
+47
+(11)
+83
+256
+64
+100
+173
+7
+100
+324
+37
+57
+591
+17
+100
+31
+100
+23
+100
+154
+100
+167
+(1)
+100
+130
+Next47 Fund 2020, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2021, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2022, L.P., Palo Alto, CA / United Kingdom
+100
+86
+Project Ventures Rail Investments | Limited, Farnborough, Hampshire / United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
+Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+Siemens Healthcare Diagnostics Manufacturing Ltd, Camberley, Surrey / United Kingdom
+Siemens Healthcare Diagnostics Products Ltd, Camberley, Surrey / United Kingdom
+Siemens Healthcare Limited, Camberley, Surrey / United Kingdom
+406
+(24)
+Annual Financial Statements
+2
+Judith Wiese
+Matthias Rebellius
+Prof. Dr. Ralf P. Thomas
+Cedrik Neike
+Dr. Roland Busch
+Independent
+The Managing Board
+Munich, December 5, 2022
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Annual Financial Statements give a true and
+fair view of the assets, liabilities, financial position and profit or loss of the Company, and the Management Report for Siemens
+Aktiengesellschaft, which has been combined with the Group Management Report, includes a fair review of the development and
+performance of the business and the position of the Company, together with a description of the material opportunities and risks
+associated with the expected development of the Company.
+Responsibility Statement (Siemens AG)
+SIEMENS
+TO THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT
+FOR FISCAL 2022
+Responsibility Statement
+Siemens Aktiengesellschaft
+23
+Auditor's Report
+SIEMENS
+Key audit matters in the audit of the annual financial statements
+We conducted our audit of the annual financial statements and of the management report in accordance with Sec. 317 HGB and the EU
+Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted
+Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
+In conducting the audit of the annual financial statements we also complied with International Standards on Auditing (ISA). Our
+responsibilities under those requirements, principles and standards are further described in the "Auditor's responsibilities for the audit of
+the annual financial statements and of the management report" section of our auditor's report. We are independent of the Company in
+accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German
+professional responsibilities in accordance with these requirements. In addition, in accordance with Art. 10 (2) f) of the EU Audit
+Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the EU Audit Regulation. We believe
+that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the annual financial statements
+and on the management report.
+Basis for the opinions
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
+annual financial statements and of the management report.
+the accompanying management report as a whole provides an appropriate view of the Company's position. In all material respects, this
+management report is consistent with the annual financial statements, complies with German legal requirements and appropriately
+presents the opportunities and risks of future development. Our opinion on the management report does not cover the last paragraph
+in chapter 1 beginning with "Disclosures in accordance with EU taxonomy" of the combined management report, the sections "8.5.1
+Internal Control System (ICS) and ERM" and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the combined management
+report and the content of the Corporate Governance Statement.
+the accompanying annual financial statements comply, in all material respects, with the requirements of German commercial law
+applicable to business corporations and give a true and fair view of the assets, liabilities and financial position of the Company as of
+September 30, 2022 and of its financial performance for the fiscal year from October 1, 2021 to September 30, 2022 in compliance
+with German legally required accounting principles, and
+TO THE ANNUAL FINANCIAL STATEMENTS AND THE MANAGEMENT REPORT
+FOR FISCAL 2022
+•
+We have audited the annual financial statements of Siemens Aktiengesellschaft, Berlin and Munich, (the Company) which comprise the
+income statement for the fiscal year from October 1, 2021 to September 30, 2022, the balance sheet as of September 30, 2022 and notes
+to the financial statements, including the recognition and measurement policies presented therein. In addition, we have audited the
+management report of Siemens Aktiengesellschaft, which is combined with the group management report, for the fiscal year from October
+1, 2021 to September 30, 2022. In accordance with the German legal requirements, we have not audited the last paragraph of chapter 1
+beginning with "Disclosures in accordance with EU taxonomy" of the combined management report, the sections "8.5.1 Internal Control
+System (ICS) and ERM" and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as
+the content of the Corporate Governance Statement which is published on the website stated in the combined management report.
+In our opinion, on the basis of the knowledge obtained in the audit,
+Opinions
+Report on the audit of the annual financial statements and of the management report
+To Siemens Aktiengesellschaft, Berlin and Munich
+Independent auditor's report
+Independent Auditor's Report (Siemens AG)
+•
+10 Values from fiscal year August 03, 2022 - September 30, 2022
+n/a = No financial data available.
+⁹ Values from fiscal year October 01, 2021 - December 31, 2021
+8 Values from fiscal year April 01, 2021 - September 30, 2021
+Siemens Ltd., Ho Chi Minh City / Viet Nam
+Siemens Mobility Limited, Bangkok/Thailand
+Siemens Limited, Taipei Taiwan
+Siemens Pte. Ltd., Singapore / Singapore
+100
+26
+33
+5
+137
+8
+Siemens Malaysia Sdn. Bhd., Petaling Jaya Malaysia
+Siemens Ltd. Seoul, Seoul / Korea
+100
+86
+100
+92
+100
+16
+7 Values from fiscal year February 01, 2021 - January 31, 2022
+6 Values from fiscal year January 01, 2021 - December 31, 2021
+5 Values from fiscal year October 01, 2020 - September 30, 2021
+4 Values from fiscal year July 01, 2020 - June 30, 2021
+3 Values from fiscal year January 01, 2020 - December 31, 2020
+2 Siemens AG is a shareholder with unlimited liability of this company.
+1 The values correspond to the annual financial statements after a possible profit transfer, for subsidiaries according to the IFRS closing.
+100
+10
+3
+100
+5
+9
+100
+51
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual financial
+statements for the fiscal year from October 1, 2021 to September 30, 2022. These matters were addressed in the context of our audit of
+the annual financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these matters.
+Below, we describe what we consider to be the key audit matters:
+24
+Impairment of non-current financial assets
+The determination of the fair values of non-current financial assets also depends to a large extent on the assessment of future cash inflows,
+in individual cases particularly considering the potential effects of the Russia-Ukraine conflict and the COVID-19 pandemic, and the
+discount rate applied.
+.
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material
+misstatement, whether due to fraud or error, and whether the management report as a whole provides an appropriate view of the
+Company's position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the
+audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
+as to issue an auditor's report that includes our opinions on the annual financial statements and on the management report.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
+the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
+error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
+decisions of users taken on the basis of these annual financial statements and this management report.
+Auditor's responsibilities for the audit of the annual financial statements and of the management report
+Independent Auditor's Report (Siemens AG)
+4
+identify and assess the risks of material misstatement of the annual financial statements and of the management report, whether due
+to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
+appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for
+one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
+control;
+The Supervisory Board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial
+statements and of the management report.
+In preparing the annual financial statements, management is responsible for assessing the Company's ability to continue as a going
+concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
+responsible for financial reporting based on the going concern basis of accounting, provided no actual or legal circumstances conflict
+therewith.
+Management is responsible for the preparation of the annual financial statements that comply, in all material respects, with the
+requirements of German commercial law applicable to business corporations, and that the annual financial statements give a true and fair
+view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally required
+accounting principles. In addition, management is responsible for such internal control as it, in accordance with German legally required
+accounting principles, has determined necessary to enable the preparation of annual financial statements that are free from material
+misstatement, whether due to fraud or error.
+Responsibilities of management and the Supervisory Board for the annual financial statements and the
+management report
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+is materially inconsistent with the annual financial statements, with the management report or our knowledge obtained in the audit, or
+otherwise appears to be materially misstated.
+•
+Furthermore, management is responsible for the preparation of the management report that, as a whole, provides an appropriate view of
+the Company's position and is, in all material respects, consistent with the annual financial statements, complies with German legal
+requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible for
+such arrangements and measures (systems) as management has considered necessary to enable the preparation of a management report
+that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the
+assertions in the management report.
+.
+• obtain an understanding of internal control relevant to the audit of the annual financial statements and of arrangements and measures
+(systems) relevant to the audit of the management report in order to design audit procedures that are appropriate in the circumstances,
+but not for the purpose of expressing an opinion on the effectiveness of these systems of the Company;
+• conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
+obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability
+to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's
+report to the related disclosures in the annual financial statements and in the management report or, if such disclosures are inadequate,
+to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
+However, future events or conditions may cause the Company to cease to be able to continue as a going concern;
+22
+5
+In our opinion, the rendering of the annual financial statements and the management report contained in the file identified above and
+prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting
+format. Beyond this assurance opinion and our audit opinions on the accompanying annual financial statements and the accompanying
+We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
+of the annual financial statements and the management report (hereinafter the "ESEF documents") contained in the file SIEMENS_2022.zip
+and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
+reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work extends only to the conversion of
+the information contained in the annual financial statements and the management report into the ESEF format and therefore relates
+neither to the information contained within these renderings nor to any other information contained in the file identified above.
+Opinion
+Report on the assurance on the electronic rendering of the annual financial statements and the management
+report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
+evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
+and related disclosures;
+Other legal and regulatory requirements
+We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
+and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
+applicable, the related safeguards.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
+significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
+perform audit procedures on the prospective information presented by management in the management report. On the basis of
+sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
+prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
+a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+•
+• evaluate the consistency of the management report with the annual financial statements, its conformity with German law and the view
+of the Company's position it provides;
+• evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the
+annual financial statements present the underlying transactions and events in a manner that the annual financial statements give a true
+and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally
+required accounting principles;
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
+audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our
+auditor's report unless law or regulation precludes public disclosure about the matter.
+In connection with our audit, our responsibility is to read the other information, and, in so doing, to consider whether the other information
+Our opinions on the annual financial statements and on the management report do not cover the other information, and consequently
+we do not express an opinion or any other form of assurance conclusion thereon.
+but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
+report whose content is audited and not our auditor's reports as well as not our auditor's report on a limited assurance engagement on the
+disclosures in accordance with EU Taxonomy thereon.
+Reasons why the matter was determined to be a key audit matter: The accounting for uncertain tax positions as well as deferred taxes
+requires management to exercise considerable judgment and make estimates and assumptions, and was therefore a key audit matter. In
+particular, this affects the measurement and completeness of uncertain tax positions, the recoverability of deferred tax assets as well as
+management's assessments regarding the tax implications of the Russia-Ukraine conflict, especially with regard to the tax deductibility of
+recognized expenses.
+Uncertain tax positions and recoverability of deferred tax assets
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for other provisions,
+refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements. With respect to the legal proceedings,
+regulatory proceedings and governmental investigations, refer to chapter 3.5 Other Disclosures, Note 25 Other financial obligations.
+Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
+compliance violations.
+We further considered alleged or substantiated non-compliance with legal provisions, official regulations (including sanctions) and internal
+company policies (compliance violations) by inspecting internal and external statements on specific matters, obtaining written statements
+from external legal advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the
+conduct and results of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses,
+and assessed on this basis whether management's evaluation of any risks to be accounted for in the annual financial statements is
+plausible.
+Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
+we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
+determine what potentially significant pending legal proceedings or claims asserted also in connection with joint and several liability are
+known and to assess management's estimates of the expected cash outflows, our audit procedures included inquiring of management
+and other persons within the Company entrusted with these matters, obtaining written statements from in-house legal counsels with
+respect to the assessment of estimated cash outflows and their probability, obtaining confirmations from external legal advisors and
+evaluating internal statements concerning the accounting treatment in the annual financial statements. Furthermore, we examined legal
+consulting expense accounts for any indications of legal matters not yet considered.
+In the course of our audit procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax
+implications of significant business transactions or events in fiscal year 2022, which could result in uncertain tax positions or influence the
+measurement of existing uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising
+from cross border matters, such as the determination of transfer prices, the results of tax field audits, the acquisition or disposal of company
+shares and corporate (intragroup) restructuring activities. With regard to the accounting implications of the Russia-Ukraine conflict we
+assessed the deductibility of the respective recognized expenses. In order to assess measurement and completeness of uncertain tax
+positions, we also obtained confirmations from external tax advisors. Further, we evaluated management's assessments with respect to
+the prospects of success of appeal and tax court proceedings by inquiring of the employees of the Siemens tax department and by
+considering current tax case law. In this context we also inspected expert tax opinions and assessments commissioned by management.
+Other Provisions for legal disputes, regulatory proceedings and governmental investigations
+Reasons why the matter was determined to be a key audit matter: We considered the accounting for other provisions for legal disputes,
+regulatory proceedings and governmental investigations (legal proceedings) out of or in connection with alleged compliance violations to
+be a key audit matter. These matters are subject to inherent uncertainties and require estimates that could have a significant impact on
+the recognition and measurement of the respective provision and, accordingly, on assets, liabilities and financial performance. The
+proceedings out of or in connection with alleged compliance violations are subject to uncertainties because they involve complex legal
+issues and accordingly, considerable management judgment, in particular when determining whether and in what amount a provision is
+required to account for the risks.
+With regard to the impairment of the investment in Siemens Energy AG, we have traced the development of the stock market price and
+assessed the determination of the fair value as well as the calculation of the impairment as of September 30, 2022. Furthermore, we
+evaluated the disclosures regarding the investment in Siemens Energy AG and its impairment in the notes to the financial statements.
+Our audit procedures did not lead to any reservations relating to assessing the impairment of non-current financial assets.
+We assessed the underlying valuation models for the determination of the net realizable value in terms of methodology and reperformed
+the calculations with the assistance of internal valuation specialists. We further obtained explanations from management regarding
+material value drivers of the planning, particularly considering the potential effects of the Russia-Ukraine conflict and the COVID-19
+pandemic, and examined whether the budget planning reflects general and industry-specific market expectations. Decisions of the
+Managing Board regarding the termination of business activities in Russia were taken into account. Forecast accuracy was assessed on a
+sample basis using budget-to-actual comparisons of historically forecast data with the actual results. The parameters used to estimate net
+realizable value such as the estimated growth rates and the weighted average cost of capital rates were assessed by comparing them to
+publicly available market data. We also performed our own sensitivity analyses to assess the impairment risk in the case of a reasonably
+possible change in one of the significant assumptions.
+an impairment is expected to be permanent, we examined the underlying processes related to the planning of future cash flows as well
+as to the calculation of net realizable value.
+Independent Auditor's Report (Siemens AG)
+2
+Auditor's response: In assessing whether there was objective evidence to indicate a lower net realizable value and permanent impairment,
+we obtained an understanding of management's evaluation and also obtained external evidence in this regard, amongst others, on the
+development of stock market prices. With regard to the net realizable values calculated by management and its assessment as to whether
+Reference to related disclosures: With regard to the recognition and measurement policies applied for the impairment of non-current
+financial assets, refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements and with respect to
+write-downs and write-ups of non-current financial assets, refer to chapter 3.3 Notes to the Income Statement, Note 3 Income (loss) from
+investments, net as well as chapter 3.4 Notes to the Balance Sheet, Note 10 Non-current assets in the notes to the financial statements.
+3
+Independent Auditor's Report (Siemens AG)
+In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
+strategies and projected future taxable income, also in view of the implications of current geopolitical and macroeconomic developments,
+and compared them to internal business plans.
+• Notes and forward-looking statements,
+the Report of the Supervisory Board,
+•
+the Compensation Report,
+•
+⚫ the Five-Year Summary,
+the Responsibility Statement (to the consolidated financial statements and the group management report),
+•
+the Responsibility Statement (to the annual financial statements and the management report),
+•
+In addition, the other information comprises parts to be included in the Annual Report, of which we received a version prior to issuing this
+auditor's report, in particular:
+The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2022 within the meaning of ISA [DE]
+720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
+German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
+Compensation Report. In all other respects, management is responsible for the other information. The other information comprises the
+last paragraph of chapter 1 beginning with "Disclosures in accordance with EU taxonomy" of the combined management report, the
+sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the combined
+management report as well as the content of the Corporate Governance Statement.
+Other information
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
+to chapter 3.2 Accounting and Measurement Principles and chapter 3.3 Notes to the Income Statement, Note 6 Income taxes and with
+respect to disclosures for deferred tax assets, refer to chapter 3.4 Notes to the Balance Sheet, Note 13 Deferred tax assets in the notes to
+the financial statements.
+Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and the assessment of the
+recoverability of deferred tax assets.
+Reasons why the matter was determined to be a key audit matter: The impairment test of non-current financial assets was a key audit
+matter, as in particular shares in affiliated companies and investments, especially the investment in Siemens Energy AG, entail a higher
+risk of material misstatement due to the materiality of these assets as well as the estimation uncertainties and judgments involved in
+assessing whether there is objective evidence to indicate a lower net realizable value and permanent impairment, and the determination
+of the fair values. In case of the investment in Siemens Energy AG, in which 26.7% is held directly, the market capitalization during fiscal
+2022 was below the book value sometimes significantly. As of September 30, 2022, an impairment of the investment to the stock market
+price has been recorded.
+Siemens Healthineers Ltd., Seoul / Korea
+Auditor's response: With the assistance of internal tax specialists who have knowledge of tax law, we examined the processes installed
+by management for the identification, recognition and measurement of tax positions.
+1,072
+Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
+100
+241
+213
+Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
+100
+25
+181
+100
+80
+79
+Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
+Siemens Healthineers Ltd., Shanghai / China
+100
+179
+119
+38
+84
+Siemens International Trading Ltd., Shanghai, Shanghai / China
+95
+9
+Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
+85
+57
+44
+100
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
+2,805
+1,408
+Siemens Ltd., China, Beijing / China
+100
+45
+18
+100
+100
+58
+(25)
+Siemens Electrical Drives Ltd., Tianjin / China
+100
+39
+33
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
+100
+82
+126
+75
+28
+19
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
+Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
+100
+77
+136
+85
+Siemens Electronic Design Automation (Shanghai) Co., Ltd., Shanghai / China
+Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
+Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
+100
+279
+27
+100
+151
+28
+Siemens Finance and Leasing Ltd., Beijing / China
+100
+33
+28
+Siemens Factory Automation Engineering Ltd., Beijing / China
+100
+71
+5
+100
+Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
+Siemens Financial Services Ltd., Beijing / China
+146
+37
+Siemens Technology and Services Private Limited, Navi Mumbai / India
+51
+1,787
+150
+Siemens Limited, Mumbai / India
+75
+100
+SIEMENS LARGE DRIVES INDIA PRIVATE LIMITED, Mumbai / India
+100
+279
+90
+Siemens Healthcare Private Limited, Mumbai / India
+100
+17
+100
+P.T. Jawa Power, Jakarta / Indonesia
+194
+4
+14
+100
+132
+Siemens K.K., Tokyo / Japan
+100
+233
+25
+Siemens Healthcare K.K., Tokyo / Japan
+100
+209
+23
+Siemens Healthcare Diagnostics K.K., Tokyo / Japan
+506
+942
+94
+19
+Varian Medical Systems K.K., Tokyo / Japan
+100
+28
+Siemens Switchgear Ltd., Shanghai, Shanghai / China
+100
+92
+61
+100
+100
+177
+69
+Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
+80
+118
+104
+Siemens Numerical Control Ltd., Nanjing, Nanjing / China
+Siemens Financial Services Private Limited, Mumbai / India
+48
+55
+Siemens Standard Motors Ltd., Yizheng / China
+33
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
+7
+SIEMENS EDA (INDIA) PRIVATE LIMITED, New Delhi / India
+99
+268
+(1)
+C&S Electric Limited, New Delhi / India
+97
+36
+19
+Siemens Limited, Hong Kong / Hong Kong
+506
+46
+100
+Berlin and Munich
+Table of contents
+Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+B. Compensation of Managing Board members
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
+This Compensation Report provides an explanation and a clear and comprehensible presentation of the compensation
+individually awarded and due to the current and former members of the Managing Board and the Supervisory Board of
+Siemens AG for fiscal 2022 (October 1, 2021, to September 30, 2022). The Report complies with the requirements of the
+German Stock Corporation Act (Aktiengesetz, AktG). Detailed information regarding the compensation systems for
+members of the Managing Board and the Supervisory Board of Siemens AG is available on the Siemens Global Website
+€4.25
+Compensation Report 2022
+A. Fiscal 2022 in retrospect
+1 In FY 2021, Flender GmbH was classified as a discontinued operation. Prior-period amounts beginning with FY 2019 are presented on a comparable basis.
+2 For FY 2022 to be proposed to the Annual Shareholders' Meeting.
+SIEMENS
+2022
+Compensation Report
+2
+€3.80
+€3.90
+€4.00
+€3.50
+Siemens Aktiengesellschaft
+B.1 The compensation system at a glance
+6
+B.2.1 Target compensation and compensation structure
+B.2.2 Maximum compensation
+14
+13
+12
+12
+10
+10
+6
+Dividend per share²
+10
+B.7 Outlook for fiscal 2023
+B.6.2 Former members of the Managing Board
+B.6.1 Active Managing Board members in fiscal 2022
+B.6 Compensation awarded and due
+B.5 Pension benefit commitment
+B.4 Share Ownership Guidelines
+B.3.2 Long-term variable compensation (Stock Awards)
+B.3.3 Malus and clawback regulations
+B.3.1 Short-term variable compensation (Bonus)
+B.3 Variable compensation in fiscal 2022
+B.2.3 Appropriateness of compensation
+B.2 Principles of the determination of compensation
+€5.84
+€7.12
+€4.70
+Basic earnings per share - continuing and discontinued operations
+Stock market information
+288
+287
+285
+303
+311
+2018
+2019
+2020
+2021
+2022
+Sep 30,
+Sep 30,
+Sep 30,
+Sep 30,
+Sep 30,
+20
+5,719
+FY 2022
+€5.74
+FY 2021
+FY 2019
+€6.28
+€4.62
+€7.01
+€6.32
+€4.93
+€7.59
+€4.59
+Diluted earnings per share - continuing and discontinued operations
+Diluted earnings per share - continuing operations¹
+€5.94
+€5.82
+€4.77
+€6.36
+€4.67
+Basic earnings per share - continuing operations¹
+€6.41
+€5.00
+€7.68
+€4.65
+FY 2018
+FY 2020
+26
+Pension benefit
+commitment
+27
+compensation
+Not applicable
+100% 1
+Fringe benefits
+Base salary
+Fixed
+Maximum
+compensation
+Malus and clawback
+regulations
+Maximum payout
+(in % of target amount)
+Design of compensation
+components
+Compensation
+components
+Cash
+Shares
+Fixed
+Variable
+Overview of the compensation system for Managing Board members
+work.
+The Managing Board compensation system is also supplemented by commitments granted in connection with the
+commencement and termination of appointments to the Managing Board as well as any change in the regular place of
+The Share Ownership Guidelines are a further key component of the compensation system. They obligate Managing Board
+members to permanently hold Siemens shares worth a defined multiple of their base salary and to purchase additional
+shares in the event that the value of their shares falls below the defined amount.
+Short-term
+variable
+compensation
+The compensation of the Managing Board members consists of fixed and variable components. Fixed compensation, which
+is not performance-based, comprises base salary, fringe benefits and a pension benefit commitment. Short-term variable
+compensation (Bonus) and long-term variable compensation (Stock Awards) are performance-based compensation and
+thus variable.
+(Bonus)
+33.34%
+Siemens
+Group
+6
+5,086
+FISCAL 2022
+Commitments in
+the event of
+termination of
+appointments
+Severance cap
+in connection with
+the commence-
+ment of appoint-
+ments
+Commitments
+Share Ownership
+Guidelines
+fiscal year
+Equals the sum
+of maximum
+amounts that
+can possibly be
+paid out to each
+Managing Board
+member from all
+compensation
+components for
+the relevant
+Other design
+characteristics
+300%
+1 Fringe benefits are reimbursed up to a maximum amount set by the Supervisory Board.
+Environment, Social
+and Governance (ESG/
+Sustainability index)
+20%
+Total shareholder
+return (TSR) com-
+pared to MSCI World
+İndustrials Index
+80%
+200%
+33.33%
+Individual
+targets
+33.33%
+Managing
+Board
+portfolio
+Long-term
+variable
+compensation
+(Stock Awards)
+The current compensation system for the members of the Managing Board of Siemens AG has been in place since fiscal
+2020 and was endorsed by the Annual Shareholders' Meeting on February 5, 2020, by a majority of 94.51%.
+B.1 The compensation system at a glance
+B. Compensation of Managing Board members
+-
+Siemens positioned itself as a leading technology company focused on accelerated high-value growth. The Supervisory
+Board is convinced that this strategy positions Siemens to meet the challenges of the future. The Managing Board
+compensation that has been determined by the Supervisory Board fosters the implementation of the Company's strategic
+targets by providing incentives for increasing profit and capital efficiency and for cash generation.
+How is the strategy reflected in Managing Board compensation?
+In the fall of 2021, the starting position for fiscal 2022 was beset by many uncertainties. The COVID-19 pandemic had not
+yet peaked, and there was a risk of further, more-contagious or more-severe virus variants. Supply chain bottlenecks
+continued as did the trade conflict between the U.S. and China. The already tense geopolitical situation further deteriorated
+dramatically due to Russia's war of aggression against Ukraine. Inflation subsequently rose to heights not seen in decades,
+triggered mainly by large price jumps in the energy sector. Siemens withdrew from Russia following the imposition of
+international sanctions. This move had a negative impact on the Company's profit as did the necessary impairment of our
+stake in Siemens Energy. However, Siemens AG proved, in retrospect, to be very strong: the Company leveraged growth
+opportunities in many key markets. The Siemens team delivered a very good operating performance in extremely
+challenging times.
+What did the economic and political environment look like at the start of fiscal 2022?
+A. Fiscal 2022 in retrospect
+Compensation Report → A. Fiscal 2022 in retrospect
+39
+38
+35
+33
+Independent auditor's report
+E. Other
+D. Comparative information on profit development and annual change in compensation
+C. Compensation of Supervisory Board members
+32
+31
+28
+28
+In addition, sustainability as a strategic goal and an expression of Siemens' social responsibility – is a high priority at
+Siemens. Sustainability is managed using the DEGREE framework. Introduced in fiscal 2021, this framework addresses
+sustainability from every angle and determines Siemens' ambitions in the sustainability area with systematized, measurable
+and specific long-term targets for environment, social and governance (ESG) dimensions. DEGREE is an acronym that stands
+for decarbonization, ethics, governance, resource efficiency, equity and employability. The DEGREE framework is
+continuously developed and adapted to the commitments that Siemens has made, such as the Science Based Targets
+initiative. The key performance indicators applied in long-term variable compensation are part of this DEGREE framework
+(CO2 emissions and digital learning hours per employee) and/or reflect the Company's priorities (Net Promoter Score as an
+expression of customer satisfaction).
+How did Siemens perform in fiscal 2022?
+Siemens was very successful in fiscal 2022 despite the complex geopolitical and economic environment. Many of our key
+customer industries - including automotive, machine building, pharmaceuticals, chemicals, electronics, cloud services and
+public transport - kept growing, and we continued to successfully avoid major supply chain disruptions.
+Our Industrial Business again achieved excellent results, particularly in Digital Industries, Smart Infrastructure and
+Siemens Healthineers. Results at Mobility were strongly impacted by the negative effects of withdrawing from business
+activities in Russia. Outside Industrial Business, exiting our financing and leasing activities in Russia resulted in further
+charges. A significant decline in the market value of Siemens Energy AG also led to an impairment of our stake in that
+company as of June 30, 2022.
+B. Compensation of Managing Board members
+→
+Compensation Report
+FISCAL 2022 5
+In view of the high level of approval of the application of the compensation system in fiscal 2021 and taking into account
+regular feedback from investors, no changes to the compensation system were deemed necessary in fiscal 2022. Pursuant
+to Section 120a para. 1 sent. 1 of the German Stock Corporation Act, the compensation system for Managing Board
+members must be presented to the Annual Shareholders' Meeting for approval in February 2024. In this connection, a
+comprehensive audit of the current compensation system is planned for fiscal 2023.
+In discussions between the Chairman of the Supervisory Board and investors, we received very positive feedback on the
+structure and transparency of the Compensation Report for fiscal 2021. The suggestions for improvement mentioned in
+these discussions have been taken into account in the current Compensation Report for fiscal 2022. To make compensation
+reporting even more transparent, chapter B.3.1 SHORT-TERM VARIABLE COMPENSATION (BONUS) has been expanded to
+include further details of the Managing Board members' individual targets. Chapter B.3.2 LONG-TERM VARIABLE
+COMPENSATION (STOCK AWARDS) has also been expanded to include further information on the Siemens-internal
+ESG/Sustainability index.
+Vote on the Compensation Report for fiscal 2021 at the 2022 Annual Shareholders' Meeting
+The Compensation Report for fiscal 2021 was prepared for the first time in accordance with Section 162 of the German
+Stock Corporation Act (AktG), and its content was also audited by the independent auditors, beyond the requirement of
+Section 162 para. 3 sent. 1 and 2 of the German Stock Corporation Act. The Compensation Report on the compensation
+individually awarded and due to the members of the Managing Board and the Supervisory Board of Siemens AG in fiscal
+2021 was approved by a majority of 91.70% at the Annual Shareholders' Meeting on February 10, 2022.
+In fiscal 2022, the Compensation Committee comprised Michael Diekmann (Chairman), Harald Kern, Jürgen Kerner,
+Jim Hagemann Snabe, Birgit Steinborn and Matthias Zachert.
+In fiscal 2022, the Managing Board comprised Dr. Roland Busch (President and CEO), Cedrik Neike, Matthias Rebellius,
+Prof. Dr. Ralf P. Thomas and Judith Wiese.
+27
+There were no changes in the composition of the Managing Board of Siemens AG or in the Compensation Committee of
+the Supervisory Board of Siemens AG in fiscal 2022.
+Siemens' strong operating performance in fiscal 2022 is reflected in the Managing Board's variable compensation, which
+takes into account not only financial success but also environmental and social aspects. As a result, the compensation of
+the Managing Board members is also oriented toward the interests of the shareholders as well as the other stakeholders of
+Siemens AG.
+Free cash flow from continuing and discontinued operations for fiscal 2022 was €8.2 billion, reaching the high level of
+fiscal 2021. The cash conversion rate for Siemens, defined as the ratio of free cash flow from continuing and discontinued
+operations to net income, was 1.86, exceeding our targeted cash conversion rate of 1 minus the annual comparable
+revenue growth rate for Siemens.
+The impairment of our stake in Siemens Energy AG burdened return on capital employed (ROCE) by 5.3 percentage points,
+resulting in ROCE of 10.0% for fiscal 2022.
+our stake in Siemens Energy AG and a negative effect of €1.3 billion related to our previously mentioned decision to exit
+business activities in Russia. Basic earnings per share (EPS) from net income came in at €4.65, and earnings per share before
+purchase price allocation (EPS pre PPA) was €5.47. The impairment of our stake in Siemens Energy AG burdened basic EPS
+from net income and EPS pre PPA by €3.37 per share.
+A. Fiscal 2022 in retrospect
+Compensation Report →
+FISCAL 2022 4
+Despite the excellent performance of our Industrial Business and a net gain of €2.2 billion from the successful further
+focusing of our business, which included gains from the divestments of Siemens Logistics' mail and parcel business and
+Yunex Traffic, Siemens' net income declined to €4.4 billion. This decline was chiefly due to the €2.7 billion impairment of
+Revenue increased at all our industrial businesses and, including positive currency translation effects, climbed 16% to
+€72.0 billion. Net of currency translation and portfolio effects, revenue for Siemens grew 8.2%. Profit Industrial Business
+rose 17% to a record high of €10.3 billion. Our Industrial Business generated a strong profit margin of 15.1%.
+Composition of the Managing Board and the Compensation Committee
+6,352
+(2,376)
+8,238
+Employees
+Free cash flow - continuing and discontinued operations
+Free cash flow - continuing operations¹
+Cash flows from financing activities - continuing operations¹
+Change in cash and cash equivalents
+Cash flows from investing activities - continuing operations¹
+Additions to intangible assets and property, plant and equipment¹
+Cash flows from operating activities – continuing operations¹
+Amortization, depreciation and impairments¹
+Cash flows
+Total assets
+as a percentage of total assets
+Continuing operations (in thousands)¹
+Provisions for pensions and similar obligations
+Equity (including non-controlling interests)
+Long-term debt
+Debt
+Current liabilities
+Current assets
+Assets, liabilities and equity
+Net income
+Income from continuing operations¹
+Gross profit¹
+Net debt
+Five-Year Summary
+FY 2022
+FY 2021
+4,392
+5,084
+5,063
+4,156
+5,636
+4,413
+20,535
+21,381
+19,888
+22,737
+25,847
+55,538
+56,797
+55,254
+62,265
+71,977
+FY 2018
+FY 2019
+FY 2020
+Revenue¹
+Revenue and profit
+(in millions of €, except where otherwise stated)
+SIEMENS
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
+to Art. 11 of the EU Audit Regulation (long-form audit report).
+We were elected as auditor by the Annual Shareholders' Meeting on February 10, 2022. We were engaged by the Supervisory Board on
+February 10, 2022. We have been the auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October 1,
+2008 to September 30, 2009.
+Further information pursuant to Art. 10 of the EU Audit Regulation
+evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited annual financial statements
+and to the audited management report.
+•
+• evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
+Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
+specification for this file;
+obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
+controls;
+•
+• identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
+and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
+a basis for our assurance opinion;
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
+non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
+throughout the assurance work. We also:
+The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
+Auditor's responsibilities for the assurance work on the ESEF documents
+In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
+documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
+electronic reporting format.
+Management is responsible for the preparation of the ESEF documents including the electronic rendering of the annual financial
+statements and the management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB.
+Responsibilities of management and the Supervisory Board for the ESEF documents
+We conducted our assurance work on the rendering of the annual financial statements and the management report contained in the file
+identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering of Financial
+Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410) (10.2021)
+and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described
+in the "Auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW Standard on Quality
+Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
+Basis for the opinion
+management report for the fiscal year from October 1, 2021 to September 30, 2022 contained in the "Report on the audit of the annual
+financial statements and of the management report" above, we do not express any assurance opinion on the information contained within
+these renderings or on the other information contained in the file identified above.
+Independent Auditor's Report (Siemens AG)
+8,379
+In addition to the financial statement audit, we have provided to the Company or entities controlled by it the following services that are
+not disclosed in the annual financial statements or in the management report:
+6,697
+In addition to auditing the statutory financial statements of Siemens AG, we performed the statutory audit of Siemens' consolidated
+financial statements, audits of financial statements of subsidiaries of Siemens AG, reviews of interim financial statements integrated in
+the audit, project-based IT audits, audit services in connection with the implementation of new accounting standards as well as service
+organization control engagements.
+Other matter
+FOR THE FIVE YEARS UNTIL FISCAL 2022
+Five-Year Summary
+7
+Independent Auditor's Report (Siemens AG)
+[German Public Auditor]
+Wirtschaftsprüfer
+Dr. Gaenslen
+[German Public Auditor]
+Wirtschaftsprüferin
+Breitsameter
+Wirtschaftsprüfungsgesellschaft
+Ernst & Young GmbH
+Munich, December 5, 2022
+The German Public Auditor responsible for the engagement is Katharina Breitsameter.
+German Public Auditor responsible for the engagement
+60
+Our auditor's report must always be read together with the audited annual financial statements and the audited management report as
+well as the assured ESEF documents. The annual financial statements and the management report converted to the ESEF format
+including the versions to be published in the Bundesanzeiger [German Federal Gazette] – are merely electronic renderings of the audited
+annual financial statements and the audited management report and do not take their place. In particular, the ESEF report and our
+assurance opinion contained therein are to be used solely together with the assured ESEF documents made available in electronic form.
+use of the auditor's report
+-
+Audit-related services include primarily audits of financial statements as well as other attestation services in connection with M&A
+activities, attestation services related to the sustainability reporting, the compensation reporting and the EU Taxonomy, comfort letters
+and other attestation services required under regulatory requirements, contractually agreed or requested on a voluntary basis.
+4,200
+-
+6,120
+(2,467)
+2,131
+2,222
+3,098
+3,075
+3,561
+FY 2018
+7,539
+6,825
+7,851
+10,109
+10,322
+FY 2019
+FY 2020
+FY 2021
+FY 2022
+138,915
+35%
+34%
+150,248
+48,046
+(17,192)
+50,984
+(4,050)
+(3,288)
+5,824
+5,648
+5,845
+6,404
+8,237
+8,157
+2,677
+1,325
+1,663
+(4,509)
+927
+(1,214)
+4,267
+785
+(1,820)
+(1,739)
+(1,498)
+(1,730)
+(2,084)
+(4,166)
+39,823
+32%
+123,897
+(7,502)
+36%
+151,502
+50,723
+34,117
+40,000
+42,686
+64,556
+70,370
+52,968
+52,298
+58,829
+2018
+2020
+2021
+2022
+Sep 30,
+Sep 30,
+Sep 30,
+35%
+139,372
+Sep 30,
+Sep 30,
+47,874
+50,636
+2019
+44,567
+7,684
+54,805
+48,700
+48,991
+9,896
+6,360
+2,839
+19,840
+22,726
+28,492
+2,275
+37,212
+27,120
+30,414
+36,449
+38,005
+40,879
+32,177
+37,010
+43,978
+of Managing Board
+and shareholder
+interests and provide
+additional incentives
+to sustainably increase
+Company value.
+Link to strategy
+Foster an alignment
+No application in fiscal 2022
+Application in fiscal 2022
+• Termination by mutual agreement and without serious cause
+• Change of control (only for first-time appointments and/or reappointments
+before November 2019)
+Implementation in compensation system
+No application in fiscal 2022
+at the request of the Company
+Link to strategy
+Are part of competitive
+compensation and help
+the Company obtain
+the best candidates
+worldwide for the
+Managing Board.
+Application in fiscal 2022
+.
+FISCAL 2022 9
+Base salary
+→
+B. Compensation of Managing Board members
+B.2 Principles of the determination of compensation
+B.2.1 Target compensation and compensation structure
+The Supervisory Board has determined, in accordance with the compensation system for the Managing Board members,
+the amount of each Managing Board member's total target compensation for fiscal 2022. In making this determination, the
+Supervisory Board has ensured that the proportion of long-term variable compensation always exceeds that of short-term
+variable compensation and that the proportions of total target compensation represented by each of the individual
+compensation components are within the ranges defined in the compensation system.
+Composition of total target compensation
+TOTAL TARGET COMPENSATION
+FIXED COMPENSATION
++
+Fringe benefits
+Short-term variable
+compensation
+(Bonus)
+• Compensation for the loss of benefits from a former employer
+Moving expenses due to a change of the regular place of work
+Pension benefit
+commitment
+36% to 43%
+Compensation Report
+Implementation in compensation system
+OTHER DESIGN CHARACTERISTICS
+Relevant share price: €145.45
++three times the Stock Awards target amount
+of total target compensation
+Application in fiscal 2022
+• Maximum compensation for each Managing Board member for fiscal 2022
+determined in accordance with the compensation system
+• Final assessment of compliance with maximum compensation when
+•
+the 2022 Stock Awards tranche is settled in fiscal 2026
+Reporting in Compensation Report for fiscal 2026
+Link to strategy
+Caps Managing Board
+members' compensation
+in order to avoid
+uncontrollably high
+payments and thus
+disproportionate
+costs and risks for
+the Company.
+Implementation in compensation system
+Share Ownership
+Guidelines
+• Fulfilled by all the Managing Board members obligated to provide verification
+•
+connection with the
+commencement
+of Managing Board
+appointments
+Commitments in the
+event of termination
+of Managing Board
+appointments
+•
+Obligates Managing Board members to permanently hold Siemens shares of an
+amount equal to a multiple of their base salary during their terms of office on the
+Managing Board
+• President and CEO: 300%
+• Other Managing Board members: 200%
+Four-year build-up phase
+• Verification date on second Friday in March
+• Relevant share price: average Xetra opening price of the fourth quarter
+of the previous calendar year
+• Obligation to purchase additional shares if the value of the accumulated
+shareholding falls below the respective amounts to be verified due to
+fluctuations in the Siemens share price
+Application in fiscal 2022
+• Verification date: March 11, 2022
+Commitments in
+VARIABLE COMPENSATION
+2%
+of total target compensation
+compensation
++Fringe benefits'
+133
+2%
+133
+2%
+83
+83
+2%
++ BSAV contribution / amount for free disposal²
+= Total
+991
+13%
+991
+14%
+617
+15%
+617
+15%
+2,894
+38% 2,894
+41%
+1,801
+43%
+1,801
+43%
+Variable
+compensation
++ Short-term variable compensation
+Bonus for fiscal 2022
++two times the Bonus target amount
+26%
+1,102
+26%
+1,102
+Long-term variable
+compensation
+(Stock Awards)
+30% to 42%
+of total target compensation
+As part of its regular review to determine the appropriateness of Managing Board income and the latter's conformity with
+market conditions, the Supervisory Board approved, at its meeting on September 23, 2021, an increase in the total target
+compensation of Dr. Roland Busch effective October 1, 2021. This increase was implemented by raising his Stock Awards
+target amount to €2,954,000 from €2,390,000.
+In addition, the Supervisory Board decided at its meeting on December 2, 2021, to extend the appointment of Chief
+Financial Officer (CFO) Prof. Dr. Ralf P. Thomas until December 2026. In connection with this extension, the Supervisory
+Board approved retroactively an increase in the total target compensation of Prof. Dr. Ralf P. Thomas effective
+October 1, 2021. This increase was implemented by raising his Stock Awards target amount to €2,000,000 from
+€1,544,000.
+By increasing the Stock Awards target amounts, variable compensation is structured on a more long-term basis, while
+compensation as a whole is oriented even more toward sustainable Company development.
+Regarding compensation, all components of the compensation of the position of President and CEO are differentiated. The
+target amount of Prof. Dr. Ralf P. Thomas's Stock Awards is differentiated due to his particular responsibilities as CFO.
+The following table shows the individualized target compensation of each Managing Board member and the relative
+proportions of total target compensation represented by each of the individual compensation components.
+FISCAL 2022
+10
+Target compensation fiscal 2022
+Compensation Report →
+B. Compensation of Managing Board members
+Dr. Roland Busch
+President and CEO since Feb. 3, 2021
+20% to 28%
+Cedrik Neike
+Managing Board members
+in office on September 30, 2022
+2022
+2021
+2022
+2021
+€ thousand in % of TTC € thousand in % of TTC
+€ thousand in % of TTC € thousand in % of TTC
+Fixed
+Base salary
+1,770
+23%
+1,770
+25%
+Managing Board member since April 1, 2017
++ BSAV contribution or amount for free disposal
+FISCAL 2022
+Base salary
+President and CEO: €991,200
+• Other Managing Board members: €616,896
+Amount for free disposal (payment in January 2023)
+Other Managing Board members: €550,800
+Link to strategy
+Competitive compen-
+sation in order to obtain
+the best candidates
+worldwide to develop
+and execute the
+Company's strategy
+and manage its opera-
+tions and in order to
+retain these individuals
+at the Company
+over the long term.
+7
+VARIABLE COMPENSATION
+Compensation Report →
+B. Compensation of Managing Board members
+Short-term
+variable
+compensation
+(Bonus)
+Implementation in compensation system
+Performance-oriented annual Bonus, paid in cash in the subsequent fiscal year
+• Performance range: 0% to 200%, using linear interpolation
+Three equally weighted target dimensions:
+⚫ Siemens Group
+•
+Managing Board portfolio
+• Individual targets: two to four equally weighted financial targets or focus topics
+• Consideration of extraordinary developments in justified,
+infrequent special cases possible
+Application in fiscal 2022
+Bonus for fiscal 2022
+• Performance period: October 1, 2021, to September 30, 2022
+•
+•
+BSAV contribution (credit in January 2023)
+Application in fiscal 2022
+(amount for free disposal) in January after the end of the fiscal year
+1,770
+Compensation Report → B. Compensation of Managing Board members
+The following tables describe the components of the compensation system for the Managing Board members, the
+components' link to the Company's strategy and their concrete application in fiscal 2022.
+FIXED COMPENSATION
+Base salary
+Fringe benefits
+Pension benefit
+commitment
+Implementation in compensation system
+•
+Contractually agreed fixed annual compensation based on a Managing Board
+member's duties and related responsibilities and his or her experience
+Payment in 12 monthly installments
+Application in fiscal 2022
+• President and CEO: €1,770,000 p.a.
+• Other Managing Board members: €1,101,600 p.a.
+Implementation in compensation system
+Payout: February 2023 (at the latest)
+• Determination of a maximum amount relative to base salary, covering expenses
+incurred to the benefit of the Managing Board member
+• Provision of a company car
+• Insurance allowances
+• Costs of medical checkups
+Application in fiscal 2022
+In fiscal 2022, Managing Board members were entitled to fringe benefits equal
+to a maximum of 7.5% of their base salary
+President and CEO: max. €132,750
+• Other Managing Board members: max. €82,620
+Implementation in compensation system
+• Annual contributions to the Siemens Defined Contribution Pension Plan (BSAV)
+•
+Newly appointed Managing Board members as of October 1, 2019: fixed cash
+amount for free disposal
+• Commitment at beginning of fiscal year
+• Credit to pension account (BSAV contribution) or payout
+• Includes in-kind compensation and fringe benefits granted by the Company,
+for example:
++ maximum fringe benefits
+•
+• 33.34% earnings per share before purchase price allocation (EPS pre PPA)
+• Allocation date: November 12, 2021
+• End of vesting period: in November 2025
+.
+Performance criteria:
+• Development of TSR relative to MSCI World Industrials index (weighting: 80%)
+• ESG key performance indicators: CO2 emissions, digital learning hours per
+employee and Net Promoter Score (weighting: 20%)
+Target amounts (based on 100% target achievement)
+• President and CEO: €2,954,000
+Chief Financial Officer: €2,000,000
+• Other Managing Board members: €1,259,000
+Implementation in compensation system
+In cases of severe breaches of duty or compliance and/or unethical behavior or in
+cases of grossly negligent or willful breaches of duty of care or in cases in which
+variable compensation components linked to the achievement of specific targets
+have been unduly paid out on the basis of incorrect data, the Supervisory Board can
+withhold or reclaim variable compensation.
+Link to strategy
+Fosters long-term
+commitment and
+provides incentives
+for sustainable value
+creation in accordance
+with the interests of
+shareholders and for
+the achievement of
+strategic sustainability
+targets.
+Link to strategy
+Aim to ensure
+sustainable Company
+development and
+avoid inappropriate
+risks.
+Application in fiscal 2022
+No application in fiscal 2022
+FISCAL 2022
+8
+Compensation Report →
+B. Compensation of Managing Board members
+MAXIMUM COMPENSATION
+Maximum
+compensation
+Implementation in compensation system
+•
+.
+Determined annually by the Supervisory Board based on total target compensation
+Equals the sum of maximum amounts that can possibly be paid out to each Managing
+Board member from all compensation components for the relevant
+fiscal year and is calculated as follows:
+2022 Stock Awards tranche
+Application in fiscal 2022
+• Payout cap: 300% of target amount
+key performance indicators and annual interim targets (weighting: 20%)
+Link to strategy
+Provides incentives for
+strong annual financial
+and non-financial per-
+formance as the basis
+for long-term Company
+strategy and sustainable
+value creation.
+.
+33.33% return on capital employed adjusted (ROCE adjusted)
+•
+33.33% individual targets:
+Long-term
+variable
+compensation
+(Stock Awards)
+Malus and
+clawback
+regulations
+• Cash conversion rate (CCR) in the area of responsibility
+Performance criteria:
+• Comparable revenue growth in the area of responsibility
+the Bonus topic catalogue
+Target amounts (based on 100% target achievement)
+President and CEO: €1,770,000
+• Other Managing Board members: €1,101,600
+Implementation in compensation system
+Performance-oriented plan settled by share transfer after the end of an approximately
+four-year vesting period
+• Performance range: 0% to 200%, using linear interpolation
+•
+Two performance criteria:
+•
+Development of total shareholder return (TSR) relative
+to an international sector index (weighting: 80%)
+• 12-month reference and 36-month performance period
+• Outperformance relative to sector index -/+ 20 percentage points
+• Siemens-internal ESG/Sustainability index with three equally weighted
+• Two additional individual targets with focus topics from
+23%
+→
+26%
+⚫ Succession planning - Thorough succession planning ensures sustainable
+Company development and fosters talents and young employees.
+The focus topics in fiscal 2022 comprised business development, the implemen-
+tation of other strategic target setting, optimization / efficiency enhancement and
+the implementation of portfolio measures.
+The individual targets for executing the Company strategy enable the Company to
+focus on specific factors that are aligned with its short- and medium-term targets
+and measures in order to ensure its long-term strategic development.
+Link to strategy
+Stock
+Awards
+Siemens-internal
+ESG/Sustaina-
+bility index
+Various focus
+topics
+Various focus
+topics
+•
+Sustainability
+Execution
+indicator/focus topic Bonus
+Key performance
+Performance
+criterion
+Compensation Report → B. Compensation of Managing Board members
+Performance criteria of variable compensation and link to strategy (cont.)
+NON-FINANCIAL, QUALITATIVE TARGETS
+FISCAL 2022 13
+of Company
+strategy
+Sustainability / diversity - Siemens honors its social responsibility
+by fostering diversity, inclusion and equal opportunity.
+The Siemens-internal ESG/Sustainability index for the 2022 Stock Awards
+tranche includes:
+X
+target amount
+Bonus
+Bonus design and calculation of payout amount
+14
+FISCAL 2022
+At the end of the fiscal year, target achievement for the individual key performance indicators and the achievement of the
+Managing Board members' individual targets are determined and aggregated to form a weighted average. The percentage
+of weighted target achievement multiplied by the individual target amount yields the Bonus payout amount for the past
+fiscal year. The payable Bonus is capped at two times the target amount and is paid in cash, at the latest, together with the
+compensation paid at the end of February of the following fiscal year.
+Performance criteria are assigned to each of the three target dimensions based on Company priorities and the
+responsibilities of each Managing Board member. One financial performance criterion is assigned to the "Siemens Group"
+dimension and another to the "Managing Board portfolio" dimension. The fulfillment of these criteria is measured on the
+basis of key performance indicators. Within the "Individual targets" dimension, the financial performance criteria "growth"
+and "liquidity" can be employed as can additional, non-financial performance criteria. In the case of non-financial
+performance criteria, the Supervisory Board considers the degree to which a Managing Board member has fulfilled so-called
+focus topics, which comprise operations-related aspects of the execution of the Company's strategy as well as sustainability-
+related aspects.
+→> "Individual targets."
+→ "Managing Board portfolio"
+→> "Siemens Group"
+The Bonus system is based on three equally weighted target dimensions, which take account of the overall responsibility of
+the Managing Board as well as each Managing Board members' specific business responsibilities and individual challenges:
+B.3.1.1 BASIC PRINCIPLES AND FUNCTIONING
+B.3.1 Short-term variable compensation (Bonus)
+The Supervisory Board aims to ensure that the targets for variable compensation are demanding and sustainable. If they
+are not reached, variable compensation can be reduced to zero. If the targets are significantly exceeded, target achievement
+is capped at 200%.
+• Net Promoter Score - Strong customer relationships are the basis for
+sustainable development both for Siemens and for our customers.
+Digital learning hours - Focus on learning in order to empower our people
+to remain resilient and relevant in a constantly changing environment.
+CO2 emissions - Climate neutrality by 2030 in order to support the 1.5-degree
+target and thus combat global warming.
+•
+TSR is a yardstick for measuring the achievement of Siemens' strategic goal of
+sustainably increasing Company value. It indicates total value creation for share-
+holders in the form of increases in the Siemens share price and dividends paid.
+33.34%
+Siemens
+Group
+Further accelerating high-value qualitative growth is a key element of Siemens'
+strategy. As a leading technology company, Siemens wants to expand its position
+on all targeted markets and tap additional profitable markets.
+EPS reflects the net income attributable to the shareholders of Siemens AG and
+incentivizes the sustainable increase in profit - particularly by focusing on profitable
+growth. This key performance indicator provides a comprehensive perspective that
+encompasses all units of the Siemens Group. The consideration of EPS pre PPA
+strengthens the focus on Siemens' operating performance.
+The appropriateness review of Managing Board compensation in fiscal 2022 has shown that Managing Board compensation
+is appropriate.
+Compensation Report → B. Compensation of Managing Board members
+FINANCIAL TARGETS
+FISCAL 2022 12
+The Supervisory Board conducted the annual review of Managing Board compensation in order to determine the latter's
+appropriateness and conformity with market conditions. For this purpose, the Supervisory Board assessed with the
+assistance of an external and independent compensation consultant and in accordance with the compensation system
+the compensation's level and structure relative to the companies included in the DAX 40, the German blue-chip stock index,
+and relative to the companies included in the STOXX Europe 50 (horizontal comparison). In the course of its review, the
+Supervisory Board also assessed the development of Managing Board compensation relative to the compensation of Senior
+Management and Siemens' total workforce in Germany (vertical comparison). Senior Management comprises executive
+employees. The total workforce comprises Senior Management as well as the Siemens employees who are covered by
+collective bargaining agreements and those who are not. In addition to a status quo analysis, the vertical comparison took
+into account the development of compensation ratios over time. Since Siemens Healthineers is a separately managed,
+publicly listed company, its workforce was not included in the vertical comparison.
+-
+B.2.3 Appropriateness of compensation
+The final assessment of compliance with the maximum compensation for fiscal 2022 will be included in the Compensation
+Report for fiscal 2026.
+B.3 Variable compensation in fiscal 2022
+Since the 2022 Stock Awards tranche is not due until November 2025, compliance with the maximum limit of the Stock
+Awards for fiscal 2022 can be finally assessed only in November 2025, when the 2022 Stock Awards tranche is settled.
+7,715
+10,004
+7,715
+7,781
+15,296
+3,777
+6,000
+3,777
+The base salary and the BSAV contribution (or the amount for free disposal) are fixed amounts. In no case did the fringe
+benefits awarded to a Managing Board member exceed the maximum amount defined for fiscal 2022. The Bonus cap was
+not reached in fiscal 2022.
+Variable compensation is tied to performance and accounts for a significant proportion of the total compensation of
+Managing Board members. It consists of a short-term variable component (Bonus) and a long-term variable component
+(Stock Awards).
+The performance criteria and the key performance indicators used to measure performance for variable compensation in
+fiscal 2022 are derived from the Company's strategic goals and operational steering and are in line with the current
+compensation system. As a rule, all the performance criteria measure successful value creation in all its different forms, as
+strategically envisioned. In line with Siemens' social responsibility, sustainability is also included in the performance criteria.
+The performance criteria relevant for fiscal 2022, the key performance indicators, the focus topics and the explanations of
+how these foster the Company's long-term development are shown in the following table.
+Link to strategy
+Total shareholder
+return (TSR)
+Comparable
+revenue growth
+Cash conversion
+rate (CCR)
+Return on capital
+employed
+adjusted (ROCE
+adjusted)
+purchase price
+allocation
+(EPS pre PPA)
+Long-term
+value creation
+Growth
+Liquidity
+Profitability/
+capital efficiency
+Profit
+share before
+Earnings per
+Awards
+indicator/focus topic Bonus
+Stock
+Key performance
+Performance
+criterion
+Performance criteria of variable compensation and link to strategy
+ROCE, which is the primary measure for managing capital efficiency at Group
+level, reflects our focus on profitable growth, the implementation of measures to
+sustainably increase competitiveness and stringent working capital management.
+The adjustment of ROCE places the focus on Siemens' operating performance.
+CCR measures the ability to convert profit into cash flow in order to finance growth
+and offer our shareholders an attractive, progressive dividend policy.
+Compensation Report
+B. Compensation of Managing Board members
+Weighted average target achievement (0%-200%)
+0%
+20.83%
+2022
+value
+actual
+100%
+Final
+194.33%
+15.00%
+Floor
+200%
+Percentage
+Target achievement
+ROCE adjusted
+33.33% Managing Board portfolio
+Return on capital employed adjusted (ROCE adjusted): Target setting and target achievement
+In the case of such unforeseeable extraordinary developments, it is at the discretion of the Supervisory Board whether to
+take them into account when determining target achievement. In order to acknowledge Siemens' performance in fiscal
+2022 and the actual performance of Managing Board members in the context of variable compensation, the Supervisory
+Board has decided to take into account the effect of the withdrawal from the Russian market when determining the target
+achievement of ROCE adjusted.
+As a result of the war in Ukraine, Siemens AG decided to withdraw from the Russian market. This decision was neither
+foreseeable in budget planning, which is used as a basis for target setting, nor in the actual target setting in November
+2021 and was thus not taken into account. In fiscal 2022, the necessary measures resulted in extraordinary charges of
+€1.3 billion. These charges are reflected in the financial key performance indicators in the Bonus – in particular, in ROCE
+adjusted and resulted especially from the divestment and impairment of businesses, the termination of customer
+contracts and write-downs of assets.
+The Supervisory Board of Siemens AG established "profitability / capital efficiency" measured in terms of return on capital
+employed (ROCE) as the performance criterion for the "Managing Board portfolio" target dimension for fiscal 2022 for all
+Managing Board members. ROCE is defined as profit before interest and after tax divided by average capital employed. For
+the purposes s of target setting and determining target achievement, ROCE - as defined in the Siemens Financial Framework,
+which excludes certain Varian-related acquisition effects – is adjusted for main effects relating to the stake in Siemens
+Energy (profit "Siemens Energy Investment" in the numerator and asset "Siemens Energy Investment" in the denominator).
+The target value for ROCE adjusted is derived from budget planning.
+points = ppts.
+18.00%
+100%
+21.00%
+Cap
+1,102
+The cash conversion rate (CCR) was defined as the first individual target for all Managing Board members. The CCR reflects
+a company's ability to convert profit into available cash. For the President and CEO and the Managing Board members with
+primarily functional responsibility, the CCR target was defined on the basis of the Siemens Group in order to support
+Siemens' voluntary commitment to generate cash at Group level. CCR Siemens Group is defined as the ratio of free cash
+flow from continuing and discontinued operations to net income. For the Managing Board members with business
+The "Individual targets" target dimension comprises four equally weighted individual targets, achievement of each of which
+may be between 0% and 200%.
+"Individual targets" target dimension
++2.72 ppts.
+20.83%
+18.11%
++8.07 ppts.
+Final actual ROCE adjusted value
+Actual ROCE adjusted value
+Consideration of extraordinary charges
+in determination of target achievement
+Extraordinary charges (Russia)
+Main Siemens-Energy-related effects
+Varian-related acquisition effects)
+ROCE as reported
+(excluding defined
+10.04%
+Calculation according to target setting for fiscal 2022
+Target achievement: 194.33%
+Performance range
+(3) ppts. +3 ppts.
+target
+ROCE
+adjusted
+"Managing Board portfolio" target dimension
+Compensation Report → B. Compensation of Managing Board members
+15
+FISCAL 2022
+EPS pre PPA
+0%
+Actual value 2022
+€5.47
+50.80%
+100%
+Target achievement
+200%
+33.34% Siemens Group
+EPS pre PPA basic
+Earnings per share before purchase price allocation (EPS pre PPA): Target setting and target achievement
+As part of target achievement, the actual EPS pre PPA value of the reporting year is used to ensure that the focus in the
+reporting year is on performance.
+To take account of the Company's long-term performance and provide incentives for a sustainable increase in profit, the
+average EPS pre PPA of three consecutive fiscal years was used for target setting. Because of the significant change in the
+portfolio of Siemens AG due to the spin-off of Siemens Energy at the end of fiscal 2020, target setting for fiscal 2022 was
+defined on the basis of the comparable EPS pre PPA values of continuing operations for the fiscal years 2019 and 2020 as
+well as the EPS pre PPA value for fiscal 2021.
+For the "Siemens Group” target dimension in fiscal 2022, the Supervisory Board of Siemens AG defined the performance
+criterion "profit." In accordance with external communications and the Siemens Financial Framework for the financial
+steering of the Company, the focus is on the transparent presentation of Siemens' operating performance. For this reason,
+"profit" is measured in terms of basic earnings per share before purchase price allocation (EPS pre PPA). EPS pre PPA is
+defined as basic earnings per share from net income adjusted for amortization of intangible assets acquired in business
+combinations and related income taxes. It includes the amounts attributable to shareholders of Siemens AG.
+"Siemens Group" target dimension
+B.3.1.2. BONUS FOR FISCAL 2022
+payout amount
+Bonus
+။
+33.33%
+Individual
+targets
+33.33%
+Managing
+Board
+portfolio
+€4.20
+Floor
+3,777
+€6.70
+€9.20
+Cap
+comparable EPS pre PPA of continuing operations
+For fiscal 2019 and 2020:
+Actual value
+€5.47
+2022
+€8.32
+2021
+= €6.70
+avg. 2019-2021 -100% target
+€5.39
+2020
+EPS pre PPA
+€6.39
+2019
+Fiscal
+Calculation of target and actual value:
+Target achievement: 50.80%
+Performance range
++ €2.50
+€(2.50)
+100%
+target
+8,862
+FISCAL 2022 16
+2,203
+1,102
+Bonus for fiscal 2021
++ Short-term variable compensation
+Bonus for fiscal 2022
+Variable
+compensation
+41%
+1,801
+37%
+1,801
+27%
+42%
+1,735
+14%
+617
+13%
+617
+13%
+551
+13%
+42% 1,735
+1,102
+22%
+1,102
+Managing Board member since Oct. 1, 2020
+Judith Wiese
+100%
+4,447
+4,903 100%
+100%
+100% 4,096
+4,096
+35%
+1,544
+31%
+1,259
+2,000 41%
+31%
+1,259
++ Long-term variable compensation
+2022 Stock Awards (vesting: 2021-2025)
+2021 Stock Awards (vesting: 2020-2024)
+= Total target compensation (TTC)
+25%
+1,102
+27%
+551
++BSAV contribution / amount for free disposal²
+= Total
+2%
+83
+Prof. Dr. Ralf P. Thomas
+Managing Board member since Sept. 18, 2013
+Matthias Rebellius
+Managing Board member since Oct. 1, 2020
+100%
+100% 4,162
+4,162
+30%
+1,259
+-
+2,390 34%
+100% 7,054 100%
+7,618
+30%
+1,259
+2,954 39%
++ Long-term variable compensation
+2022 Stock Awards (vesting: 2021-2025)
+2021 Stock Awards (vesting: 2020-2024)
+= Total target compensation (TTC)
+Bonus for fiscal 2021
+26%
+1,102
+25%
+2,203
+2022
+2022
+2021
+2021
+2%
+83
+2%
+83
+2%
+83
+25%
+1,102
+22%
+1,102
+27%
+1,102
+27%
+1,102
+Base salary
++Fringe benefits¹
+compensation
+Fixed
+€ thousand in % of TTC € thousand in % of TTC
+€ thousand in % of TTC € thousand in % of TTC
+2022
+2021
+1,770
+Fixed
+Neike
+Busch
+Cedrik
+Dr. Roland
+in office on September 30, 2022
+Managing Board members
+Maximum compensation
++ (three times target amount)
+€ thousand in % of TTC € thousand in % of TTC
+vesting: 2021-2025
+compensation + (two times target amount)
+Bonus for fiscal 2022
+amount for free disposal
+BSAV contribution/
++ Fringe benefits (maximum amount)
+Base salary
+Variable
+compensation
+2022 Stock Awards
+Prof. Dr. Ralf P.
+Judith
+Thomas
+2,203
+2,203
+3,540
+551
+617
+551
+617
+991
+83
+83
+83
+83
+133
+1,102
+1,102
+1,102
+1,102
+1,770
+Wiese
+Fixed
+(€ thousand)
+Matthias
+Rebellius
+The following table shows the maximum compensation of each Managing Board member as approved by the Supervisory
+Board for fiscal 2022 in accordance with Section 87a para. 1 sent. 2 No. 1 of the German Stock Corporation Act.
+1,735
+42%
+1,735
+= Total
+13%
+551
+13%
+551
++ BSAV contribution / amount for free disposal²
+2%
+83
+2%
+83
+27%
+1,102
+27%
+1,102
+Base salary
++Fringe benefits'
+Maximum compensation fiscal 2022
+42%
+Variable
+compensation
+compensation
+Bonus for fiscal 2021
+The maximum compensation of each Managing Board member is determined annually by the Supervisory Board in
+accordance with Section 87a para. 1 sent. 2 No. 1 of the German Stock Corporation Act. Maximum compensation is equal
+to the total of the maximum amounts of all compensation components that can possibly be paid out to each Managing
+Board member for the relevant fiscal year. It is calculated by adding base salary, maximum fringe benefits and the BSAV
+contribution (or the amount for free disposal) as well as two times the Bonus target amount and three times the Stock
+Awards target amount. Twice the Bonus target amount and triple the Stock Awards target amount also correspond to the
+respective limits (individual caps) on the amount of variable compensation.
+B.2.2 Maximum compensation
+Compensation Report → B. Compensation of Managing Board members
+11
+FISCAL 2022
++ Short-term variable compensation
+Bonus for fiscal 2022
+1 For fiscal 2022, each Managing Board member was awarded fringe benefits equal to a maximum 7.5% of his or her base salary. The target amount reported
+here is also equal to the maximum amount.
+100%
+4,096
+2 Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive
+a fixed cash amount for free disposal.
+31%
+4,096 100%
+27%
+1,102
+27%
+1,102
+1,259
+31%
+1,259
++ Long-term variable compensation
+2022 Stock Awards (vesting: 2021-2025)
+2021 Stock Awards (vesting: 2020-2024)
+= Total target compensation (TTC)
+€1,496,141 +
+€123,742
+11,169 x
+91%=
+10,164 >
+€1,496,141 +
+€123,594
+2
+Cedrik Neike3
+In the course of transferring the 2018 Stock Awards tranche, compliance with the maximum amounts of total compensation
+for fiscal 2018 was also reviewed. The applicable maximum amount was not exceeded in the case of any Managing Board
+member.
+B.3.2.4 CHANGES IN STOCK AWARDS IN FISCAL 2022
+The following overview shows the changes in the balance of the Stock Awards held by Managing Board members in fiscal
+2022.
+Changes in Stock Awards in fiscal 2022
+(Amounts in number of units)1
+Managing Board members
+in office on September 30, 2022
+Dr. Roland Busch
+€123,594
+1 The Stock Awards settled by share transfer were valued at €147.20, the German low price of the Siemens share on November 12, 2021.
+In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017,
+to March 31, 2019. Of the allocated number of Stock Awards reported here, 2,500 are attributable to the commitment by Siemens Ltd. China. Of the calculated number of
+Stock Awards reported here, 2,275 were awarded and paid by Siemens Ltd. China. For the calculation of the additional cash payment resulting from the Siemens Energy spin-off,
+the Siemens Energy share's Xetra closing price of €24.32 on November 11, 2021, was used, in accordance with the plan requirements applicable to the Managing Board, for
+the 7,889 Stock Awards awarded by Siemens AG, while the Siemens Energy share's Xetra closing price of €24.45 on November 12, 2021, was used, in accordance with the plan
+requirements applicable to Senior Management, for the 2,275 Stock Awards awarded by Siemens Ltd. China.
+€1,496,141 +
+€1,117,000 /
+91% =
+91% =
+100% target
+achievement)
+Nov. 10, 2017
+Number of
+Stock Awards
+allocated
+Target
+achievement
+of share price
+performance
+Number of
+Stock Awards
+Value at
+transfer date
+calculated
+Nov. 12, 20211
+10,164 >
+10,164
+Cash payment
+Siemens Energy
+spin-off
+Dr. Roland Busch
+€100.01 =
+11,169 x
+Cedrik Neike²
+Prof. Dr. Ralf P. Thomas
+€1,117,000 /
+€1,117,000/
+€100.01 =
+€100.01 =
+11,169 x
+Stock Awards from the 2018 tranche
+Matthias Rebellius
+2019
+Judith Wiese4
+(1,005)
+127,859
+40,557
+19,324
+59,881
+1 The settlement of Stock Awards from the 2018 tranche was by share transfer up to a target achievement of 100%, and above 100% in cash. For this reason, the number of
+Stock Awards from the 2018 tranche, as set out in the table, is based on a target achievement of 100%. Starting with the 2019 tranche, settlement of Stock Awards will be
+entirely by share transfer. For this reason, the number of Stock Awards, as set out in the table, is based on a target achievement of 200%. At the end of the vesting period, a
+final number of Siemens shares to be transferred will be determined on the basis of actual target achievement and taking into account the Stock Awards cap.
+2 The target achievement of the Stock Awards from the 2018 tranche, which were due and settled in fiscal 2022, was 91%. As the Stock Awards from the 2018 tranche were
+allocated on the basis of 100% target achievement, a number equivalent to this shortfall was forfeited without refund or replacement, in accordance with plan requirements.
+3 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017,
+to March 31, 2019. The reported figures include the Stock Awards allocated to Cedrik Neike by Siemens Ltd. China due to this position.
+4 The reported figures also include the Stock Awards allocated to Judith Wiese in November 2020 as compensation for the loss of benefits granted by her former employer in
+addition to the regular allocation of Stock Awards from the 2021 tranche.
+(10,164)
+FISCAL 2022
+Compensation Report → B. Compensation of Managing Board members
+As of the end of fiscal 2022, the following Stock Awards tranches were within the vesting period and are therefore included
+in the balance at the end of the fiscal year.
+Outstanding Stock Awards tranches on September 30, 2022
+Fiscal
+Allocation
+Vesting
+period
+End of vesting period
+and transfer
+25
+30,696
+108,332
+44,936
+During fiscal year
+Balance at beginning
+Balance at the end
+of fiscal 2022
+Allocated
+Vested and settled
+Other changes²
+of fiscal 2022
+119,883
+45,338
+89,881
+19,324
+(10,164)
+(10,164)
+(1,005)
+154,052
+(1,005)
+98,036
+25,612
+19,324
+Prof. Dr. Ralf P. Thomas
+Allocation
+price
+price
+with a commitment of the
+3,865
+€1,479,190
+€2,000,000
+€4,000,000
+24,557
+6,139
+€2,349,641
+€1,259,000
+15,459
+€2,518,000
+3,865
+€1,479,190
+1 The fair value on the allocation date is calculated for the TSR component on the basis of a valuation model and amounts to €61.87. The fair value for the ESG component of
+€135.25 is equal to the Xetra closing price of the Siemens share on the allocation date, less the discounted expected dividends. For the 2022 tranche, the allocation date in
+accordance with IFRS 2 was November 23, 2021 (the date of communication to the Managing Board members).
+2 In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG. The correspond-
+ing legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms of his contract
+with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the target amount reported here (based on 100% target achievement), €600,000 is attributable
+to Siemens Schweiz AG.
+3 At its meeting on December 2, 2021, the Supervisory Board extended the appointment of Chief Financial Officer Prof. Dr. Ralf P. Thomas until December 2026. In connection with this
+extension, the Supervisory Board approved retroactively an increase in Prof. Dr. Ralf P. Thomas's Stock Awards target amount effective October 1, 2021. This increase was implemented
+by raising his Stock Awards target amount for the 2022 tranche to €2,000,000 from €1,544,000. Due to the intra-year extension, Prof. Dr. Ralf P. Thomas was not allocated Stock
+Awards for the increase of €456,000 in his target amount but a corresponding number of virtual Stock Awards (Phantom Stock Awards), in accordance with plan requirements.
+Concrete target setting and the degree of target achievement for the Siemens-internal ESG/Sustainability index of the 2022
+Stock Awards tranche will be published together with the degree of target achievement for the TSR in the Compensation
+Report for fiscal 2026, after the expiration of the vesting period.
+B.3.2.3 TRANSFER OF STOCK AWARDS IN FISCAL 2022 (2018 TRANCHE)
+The 2018 Stock Awards tranche became due and was settled in fiscal 2022. The 2018 Stock Awards tranche depended on
+the performance of the Siemens share compared to the share performance of five relevant competitors during the
+approximately four-year vesting period from November 10, 2017, to November 11, 2021.
+15,459
+€2,518,000
+€1,259,000
+€1,479,190
+2020
+Based on 200% target achievement
+Target amount
+(based on 100%
+target achievement)
+Maximum
+allocation amount
+Total shareholder return
+(weighting: 80%)
+Maximum number
+of Stock Awards
+Siemens-internal
+ESG/Sustainability index
+(weighting: 20%)
+Fair value at
+allocation date'
+€2,954,000
+€5,908,000
+36,270
+9,068
+€3,470,472
+€1,259,000
+€2,518,000
+15,459
+3,865
+Overview of target achievement for the 2018 Stock Awards tranche
+Target amount
+(based on
+Performance of the Siemens share compared to the share performance of five relevant competitors
+Performance
+(20.00)%
+Floor
+0.00%
+100%
+target
+20.00%
+Сар
+(20) ppts.
++20 ppts.
+Performance range
+41.64%
+0%
+6.35%
+4.55%
+The following table provides a summary of the key parameters of the 2018 Stock Awards tranche. In connection with the
+due date and settlement of the Stock Awards for fiscal 2018, the table also includes an additional cash payment to the
+Managing Board members as a result of the Siemens Energy spin-off. The spin-off of Siemens Energy in fiscal 2020 led to
+FISCAL 2022 24
+Compensation Report → B. Compensation of Managing Board members
+adjustments in the stock-based compensation commitments agreed upon until the spin-off date. At the time when the
+2018 Stock Awards became due, the Managing Board members – like all other eligible employees - were, accordingly,
+entitled to receive an additional cash payment based on the spin-off ratio of 2:1 and on the Siemens Energy share price of
+€24.32 on the date when their stock-based compensation commitments became due.
+Information on the transfer of the 2018 Stock Awards tranche
+Managing Board
+members in office on
+September 30, 2022
+A = (1.80) percentage points
+(1.80) ppts.
+31.85%
+91.00%
+ABB
+CHF23.28
+Eaton
+General Electric
+Mitsubishi
+CHF23.30
+$79.37 $104.65
+$108.44
+$80.53
+(25.73)%
+Heavy Industries
+Schneider
+(16.11)%
+¥4,172.42 ¥3,500.11
+€70.22
+€99.46
+Competitors (average)
+Siemens AG
+€101.05
+€105.64
+Target achievement: 91%
+Reference price versus
+performance price
+-200%
+0.10%
+100%
+Reference
+price
+B. Compensation of Managing Board members
+Actual
+2022
++0.4
+(0.4)
++0.4
+Performance range
+Performance range
+Performance range
+Target achievement: 200.00%
+Target achievement: 132.50%
+(0.4)
+Target achievement: 115.00%
+Individual targets: Comparable revenue growth - Target setting and target achievement
+Siemens c/o
+200%
+200.00%
+100%
+Actual
+value
+2022
+In addition to CCR, "comparable revenue growth" was defined as the second individual target for fiscal 2022 for all members
+of the Managing Board. It indicates the development in Siemens' business net of currency translation effects arising from
+the external environment outside of Siemens' control and the portfolio effects that involve business activities that are either
+new to or no longer a part of the relevant business. For the President and CEO and the members of the Managing Board
+with primarily functional responsibility, the growth target was determined on the basis of continuing operations (c/o)
+related to the Siemens Group (Siemens c/o). For the Managing Board members with business responsibility for Digital
+Industries and Smart Infrastructure, growth targets are based on their respective businesses. The respective target values
+were derived from the external outlook for fiscal 2022.
+target
+target
+Cap
+115.00%
+100%
+Actual
+value
+2022
+0.99
+0%
+CCR
+0%
+CCR
+0.52
+Floor
+0.92
+1.32
+100%
+Cap
+0.53
+Floor
+0.93
+1.33
+100%
+8.19%
+Target achievement
+0% 41
+5.00%
+Smart Infrastructure
+- 200%
+200.00%
+100%
+Actual
+value
+2022
+9.54%
+0% 41
+1.00%
+Floor
+Target achievement
+5.00%
+Growth
+100%
+Cap
+target
+(4) ppts.+4 ppts.
+Performance range
+Target achievement: 200.00%
+→
+9.00%
+Target achievement: 200.00%
+Target achievement: 200.00%
+Performance range
+7.00%
+Growth
+Floor
+100%
+target
+Cap
+Target a
+-200%
+200.00%
+100%
+Digital Industries
+Actual
+value
+2022
+12.53%
+0%
+0.00%
+Floor
+5.00%
+100%
+target
+10.00%
+Cap
+Growth
+(2) ppts. +2 ppts.
+Performance range
+(5) ppts. +5 ppts.
+3.00%
+1.05
+2022
+value
+Sept '23
+Performance period
+2021
+tranche
+Performance
+criteria
+2022
+tranche
+Performance
+criteria
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+Oct '19
+Siemens-internal
+13 Nov '20
+Nov '24
+Nov '20 Oct '21 Nov '21
+Reference period
+Oct '24
+Performance period
+Oct '20
+Sept '24
+Performance period
+ESG/Sustainability index (20%)
+Siemens-internal
+ESG/Sustainability index (20%)
+Performance period
+Oct '23
+2023
+2024
+2025
+2019
+tranche
+9 Nov '18
+Nov '22
+Performance
+criterion
+Share price performance
+compared to five competitors
+Nov '18 Oct '19 Nov '19
+Reference period
+Oct'22
+Performance period
+2020
+8 Nov '19
+Nov '23
+tranche
+Performance
+criteria
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+Nov '19 Oct '20
+Reference period
+Nov '20
+12 Nov '21
+Nov '25
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+Siemens-internal
+ESG/Sustainability index (20%)
+Nov '21 Oct 22 Nov '22
+Reference period
+Actual
+value
+2022
+1.86
+0%
+CCR
+0.54
+0.94
+1.34
+Floor
+100%
+Сар
+target
+(0.4)
++0.4
+Target achievement
+200%
+132.50%
+100%
+100%
+2021
+200.00%
+-200%
+Oct '25
+Performance period
+Oct '21
+Sept '25
+Performance period
+B.3.3 Malus and clawback regulations
+Under existing malus and clawback regulations, the Supervisory Board is authorized to withhold or reclaim variable
+compensation in cases of severe breaches of duty or compliance and/or unethical behavior or in cases of grossly negligent
+or willful breaches of the duty of care or in cases in which variable compensation components linked to the achievement
+of specific targets have been unduly paid out on the basis of incorrect data.
+The Supervisory Board exercises its authority to withhold or reclaim variable compensation components at its duty-bound
+discretion.
+In fiscal 2022, the Supervisory Board did not exercise this authority.
+FISCAL 2022 26
+Target achievement
+Target achievement
+Compensation Report →
+B. Compensation of Managing Board members
+responsibility for Digital Industries and Smart Infrastructure, the CCR targets are business-specific and defined as the ratio
+of free cash flow to profit at each business. The target amounts for CCR were based on the budget plans.
+Individual targets: Cash conversion rate (CCR) - Target setting and target achievement
+Siemens Group
+Digital Industries
+Smart Infrastructure
+200%
+Compensation Report
+Floor
+(based on 0%
+Prof. Dr. Ralf P. Thomas³
+175.00%
+Busch
+Business development
+50%
+150.00%
+Succession planning
+25%
+CCR Digital Industries
+200.00%
+200.00%
+132.50%
+25%
+Comparable revenue growth Digital Industries
+200.00%
+153.13%
+Neike
+Business development
+50%
+140.00%
+Cedrik
+Comparable revenue growth Siemens c/o
+25%
+Dr. Roland
+DEGREE targets for fiscal 2022
+Succession planning taking into
+account Siemens' diversity targets
+• Overachievement of budgeted Global Business Services' productivity targets
+for fiscal 2022 while increasing customer satisfaction and maintaining
+employee satisfaction
+•
+Target achievement and, in some cases, overachievement of planned
+DEGREE key performance indicators
+• Successful integration of sustainability topics in control process and reporting
+•
+Setup of robust pipeline for key functions
+• Considerable improvement of diversity in key functions compared
+to fiscal 2021 and in accordance with Siemens' target setting
+•
+Implementation of comprehensive gender equality program, including
+monitoring of hiring and promotion rates
+Target achievement for the target dimension "Individual targets" is summarized for each Managing Board member in the
+following table.
+Individual targets: Total target achievement per Managing Board member
+Weighting
+25%
+Key performance indicator/ focus topics
+CCR Siemens Group
+Target achievement
+Total target achievement
+Implementation of other strategic target setting
+Operationalization and
+implementation of
+25%
+115.00%
+25%
+CCR Siemens Group
+200.00%
+Judith
+25%
+Comparable revenue growth Siemens c/o
+200.00%
+160.00%
+Succession planning
+Wiese
+50%
+120.00%
+Sustainability / diversity
+Target achievement: 143.75% to 175.00%
+FISCAL 2022
+19
+Compensation Report → B. Compensation of Managing Board members
+Total target achievement for the Bonus for fiscal 2022
+Optimization efficiency enhancement
+140.00%
+50%
+Implementation of portfolio measures
+Matthias
+25%
+Comparable revenue growth Smart Infrastructure
+200.00%
+143.75%
+Rebellius
+Business development
+50%
+130.00%
+Implementation of other strategic target setting
+25%
+CCR Siemens Group
+200.00%
+Prof. Dr. Ralf P.
+25%
+Comparable revenue growth Siemens c/o
+200.00%
+170.00%
+Thomas
+CCR Smart Infrastructure
+Total target achievement and the resulting Bonus payout amount for each Managing Board member are summarized in the
+following table.
+Sustainability/ diversity
+Optimization / efficiency enhancement
+above target communicated at 2021 Capital Market Day
+Result better than competitors
+Strengthening of supply chain through use of market intelligence
+and continuous supplier dialogue
+Setup of robust pipeline for key functions
+• Considerable improvement of diversity in key functions compared
+•
+to fiscal 2021 and in accordance with Siemens' target setting
+Implementation of comprehensive gender equality program, including
+monitoring of hiring and promotion rates
+•
+Business development
+and digital business
+Management of supply chain
+to ensure delivery capability
+• Digital business considerably above fiscal year targets
+•
+Successful implementation of several acquisitions to strengthen
+software business
+Significantly stronger revenue growth compared to global competitors in
+automation area due to proactive supply chain management
+Implementation of other strategic target setting
+Expansion of software
+•
+•
+• Considerable growth in digital revenue of the businesses over and
+FISCAL 2022
+Compensation Report → B. Compensation of Managing Board members
+The other two individual targets include focus topics from the areas of Company strategy / sustainability and were defined
+on the basis of the Managing Board members' respective areas of responsibility.
+Individual targets: Focus topics from the areas of Company strategy / sustainability
+Dr. Roland
+Busch
+Business development
+Cedrik
+Neike
+Matthias
+Rebellius
+Prof. Dr. Ralf P.
+Thomas
+Expansion of software
+and digital business
+Management of supply chain.
+to ensure delivery capability
+Succession planning
+Succession planning taking into
+account Siemens' diversity targets
+• Successful expansion of Siemens software and of the loT (Internet of things)
+and digital businesses
+Further development of factory auto-
+mation strategy and implementation
+Achievement of efficiency
+enhancement targets for
+Global Business Services
+of "software-as-a-service" model
+Expansion of software
+• Development and integration of financing solutions in new business
+models of industrial businesses
+•
+Successful provision of access to new business fields and markets,
+particularly in the areas of decarbonization and resource efficiency
+Succession planning
+Succession planning in finance
+organization taking into account
+Siemens' diversity targets
+•
+Further expansion of robust and diverse talent pipeline
+Very successful conclusion of sale of stake in Valeo Siemens eAutomotive
+and Siemens Logistics' mail and parcel business
+•
+Sustainable development of talents in early career stages, taking particular
+account of Siemens' diversity targets
+Increase in percentage of women in management and top management positions
+FISCAL 2022
+18
+Individual targets: Focus topics from the areas of Company strategy / sustainability (cont.)
+Judith
+Wiese
+Compensation Report → B. Compensation of Managing Board members
+•
+•
+• Further strengthening of profitability and enterprise value of individual
+businesses and rigorous implementation of private equity approach
+• Successful conclusion of Brightly acquisition and start of integration
+and digital business
+Management of supply chain
+to ensure delivery capability
+⋅
+Successful implementation of Siemens Xcelerator
+•
+Transition to "software-as-a-service" considerably above plan
+Profitable growth of Smart Infrastructure and increase in digital revenue
+far above fiscal 2022 targets
+Delivery capability considerably better than competitors due to consolidated
+escalation management and long-term supplier relationship management
+Implementation of other strategic target setting
+Further development of software
+strategy and implementation of
+various portfolio measures
+Implementation of portfolio measures
+Driving performance
+of Portfolio Companies
+Further development
+of Siemens Financial Services
+.
+Successful market launch of new products and conclusion
+of new partnership agreements
+Business development
+Total target achievement and Bonus payout amounts for fiscal 2022
+Managing Board members
+Target amount
+(Xetra closing price on the
+allocation date, less the
+performance
+period
+estimated discounted dividends)
+= Maximum number
+of Stock Awards
+(based on 200% target
+achievement)
+Actual target achievement
+4-year
+= Final number of Stock Awards
+B.3.2.2 ALLOCATION OF STOCK AWARDS IN FISCAL 2022
+The Supervisory Board approved the following performance criteria for the 2022 Stock Awards tranche:
+→ "Long-term value creation," measured in terms of the development of the TSR of Siemens AG relative to the
+international sector index MSCI World Industrials and
+→ “Sustainability,” measured in terms of the Siemens-internal ESG/Sustainability index, which is based on the following
+three equally weighted key performance indicators. Target setting for the three key performance indicators is oriented
+on the Company's strategic sustainability planning, which is described in detail in Siemens' sustainability reporting.
+FISCAL 2022
+22
+22
+ESG key performance indicators for 2022 Stock Awards tranche
+Settlement by transfer of Siemens
+shares to Managing Board member
++ Allocation price
+= final number of
+Stock Awards
+≤ 300% of target amount
+Number of Stock Awards
+based on target
+achievement
+maximum possible target
+achievement of 200%)
+= Maximum allocation
+amount
+(based on 200% target
+achievement)
+Four-year vesting period
+Performance range 0%-200%
+Relative Total shareholder return (TSR)
+compared to sector index
+(weighting: 80%)
+1-year
+3-year
+period
+reference performance
+period
+Settlement after expiration of vesting period
+Number of Stock Awards based
+on target achievement
+× Siemens share price
+(Xetra closing price on
+transfer date)
+= Value of Stock Awards in €
+(Cap: 300% of target amount)
+Siemens-internal
+ESG/Sustainability index
+(weighting: 20%)
+> 300% of target amount
+Number of Stock Awards
+based on target
+achievement is reduced
+by amount by which
+cap is exceeded
+Compensation Report
+x 2 (Extrapolation to
+→ B. Compensation of Managing Board members
+Amount of greenhouse gases emitted
+by the Company's business operations
+in tons of CO2 equivalent, excluding
+carbon offsets (for example, certificates).
+OCT '22
+NOV '22
+2023
+2024
+SEPT '25 OCT '25
+NOV '25
+Performance
+measurement
+TSR reference period
+NOV '21
+TSR performance period
+The target amounts, the maximum allocation amounts, the maximum number of Stock Awards allocated and the fair value
+at allocation date in accordance with IFRS 2 Share-based Payment are shown in the following table. The allocation price
+applicable for the 2022 tranche was €130.31.
+FISCAL 2022 23
+Information on the allocation of 2022 Stock Awards tranche
+Managing Board members
+in office on September 30, 2022
+Dr. Roland Busch
+Cedrik Neike
+Matthias Rebellius²
+ESG performance measurement based on interim targets for each fiscal year
+OCT '21
+Process sequence
+Transfer
+Digital learning hours per employee
+The total number of digital learning hours
+completed in virtual trainer-led training ses-
+sions, self-paced learning, learning on
+the job, community-based virtual learning
+and hybrid training sessions, divided by the
+total number of employees.
+Net Promoter Score (NPS)
+Customer intention to recommend us,
+measured on a scale of 1 (extremely unlikely)
+to 10 (extremely likely) and based on
+comprehensive annual customer satisfaction
+surveys. The NPS is calculated by subtracting
+the percentage of detractors from the
+percentage of promoters."
+Derived from:
+Sustainability strategy
+(DEGREE framework)
+Sustainability strategy
+(DEGREE framework)
+and Company priorities
+(Growth mindset)
+Company priorities
+(Customer impact)
+Ambition:
+Net zero operations by 2030 in line with
+SBTI pathway2 as well as further rein-
+forcement of Siemens' climate protection
+strategy by joining the RE100, EV100 and
+EP100 initiatives in fiscal 2021.3
+Siemens' success is inseparably linked with
+highly qualified employees. The right
+employees with the right expertise are
+decisive for our further growth.
+That's why we place a strong emphasis on
+learning in order to sustainably anchor it in
+our day-to-day working environment while
+continuously increasing learning hours.
+Customer satisfaction is Siemens' top priority.
+For us, this means identifying customer
+requirements as early as possible, streng-
+thening partnerships and maintaining and
+building trust. As a result, we systematically
+measure customer satisfaction and take.
+steps to improve it.
+1 Customers that rate Siemens high on the scale are promoters. Customers that find it unlikely to recommend Siemens to others are named detractors. Example: promoters (55%)
+minus detractors (10%) = NPS (45%).
+2 Science Based Target Initiative (SBTI): Reduction targets for 2030 based on the scientific requirements for limiting global warming to 1.5 degrees Celsius.
+3 Use of renewable energy (RE): 100% green electricity by 2030; use of electric vehicles (EV): 100% electric vehicles; improving energy productivity (EP): 100% CO2-neutral buildings.
+The Supervisory Board set the allocation date for the 2022 Stock Awards tranche at November 12, 2021. The time sequence
+of this tranche is as follows.
+Time sequence for the 2022 Stock Awards tranche
+Allocation and four-year vesting period
+CO₂ emissions
+(based on 100% target
+achievement)
+Target amount
+Allocation
+€1,101,600
+€2,203,200
+129.62%
+€0
+€1,101,600
+€2,203,200
+138.37%
+€1,427,894
+€1,524,284
+€0
+€0
+€2,203,200
+135.03%
+€1,487,490
+B.3.2 Long-term variable compensation (Stock Awards)
+B.3.2.1. BASIC PRINCIPLES AND FUNCTIONING
+Siemens grants long-term variable compensation in the form of Stock Awards. A Stock Award is the claim to one share -
+conditional on target achievement - after the expiration of a defined vesting period. The vesting period is, accordingly, the
+term of each tranche.
+At the beginning of a fiscal year, the Supervisory Board defines a target amount in euros based on 100% target achievement
+for each Managing Board member. This target amount is extrapolated to target achievement of 200% ("maximum allocation
+amount"). Stock Awards for this maximum allocation amount are then allocated to the Managing Board members. The
+number of Stock Awards is calculated by dividing the maximum allocation amount by the price of the Siemens share on the
+allocation date, less the estimated discounted dividends ("allocation price").
+An approximately four-year vesting period begins with the allocation of Stock Awards, after the expiration of which Siemens
+shares are transferred. The beneficiary Managing Board members are not entitled to dividends during the vesting period.
+€1,101,600
+Judith Wiese
+Prof. Dr. Ralf P. Thomas
+Matthias Rebellius
+Compensation range
+Cap
+in office on September 30, 2022
+target achievement)
+(based on 100%
+target achievement)
+(based on 200%
+target achievement)
+Total target
+achievement
+Bonus
+payout amount
+Dr. Roland Busch
+€0
+€1,770,000
+€3,540,000
+140.03%
+Cedrik Neike
+€0
+€1,101,600
+€2,203,200
+132.75%
+€2,478,531
+€1,462,374
+Performance criteria
+Since fiscal 2020, the number of Siemens shares that is actually transferred depends 80% on the financial performance
+criterion "long-term value creation," measured on the basis of the key performance indicator "total shareholder return"
+(TSR), and 20% on the non-financial performance criterion "sustainability." For measuring the "sustainability" performance
+criterion, Siemens AG's performance in the environment, social and governance (ESG) area is assessed on the basis of a
+Siemens-internal ESG/Sustainability index, the composition of which is determined annually by the Supervisory Board.
+-
+Total shareholder return – TSR is indicative of the performance of one share over a specified period of time – in the case of
+Siemens, over the approximately four-year vesting period. It takes into account changes in the share price and the dividends
+paid during this period. To reflect the Company's international footprint, the TSR of Siemens AG is compared at the end of
+the vesting period with the TSR of an international sector index, the MSCI World Industrials or a comparable successor index.
+(20) ppts.
++20 ppts.
+FYn+4
+Relative
+TSR
+• If the change in the TSR of Siemens AG is at least
+20 percentage points above that of the sector index,
+target achievement is 200%.
+• If the change in the TSR of Siemens AG is equal to
+that of the sector index, target achievement is 100%.
+• If the change in the TSR of Siemens AG is at least
+20 percentage points below that of the sector index,
+target achievement is 0%.
+If the change in the TSR of Siemens AG is between
+20 percentage points above and 20 percentage points
+below that of the sector index, target achievement is
+calculated using linear interpolation.
+Siemens compared to MSCI World Industrials index
++
+ост
+Environment, social and governance - The Siemens-internal ESG/Sustainability index is based on three equally weighted,
+structured and verifiable ESG key performance indicators. At the beginning of each tranche, the Supervisory Board defines
+the target values for each of the ESG key performance indicators. Target measurement is based on defined interim targets
+for each fiscal year. Target achievement for the Siemens-internal ESG/Sustainability index is finally determined at the end
+of the approximately four-year vesting period on the basis of the weighted average of the target achievement values
+calculated for each of the key performance indicators.
+FISCAL 2022 21
+Compensation Report →
+B. Compensation of Managing Board members
+Determination of total target achievement
+At the end of the approximately four-year vesting period, the Supervisory Board determines the degree of target
+achievement. The target achievement range for TSR and for the Siemens-internal ESG/Sustainability index is between 0%
+and 200%. If target achievement is less than 200%, a number of Siemens Stock Awards equivalent to the shortfall are
+forfeited without refund or replacement and a correspondingly smaller number of shares is transferred.
+The value of the Siemens shares transferred after the expiration of the vesting period is also capped at 300% of the target
+amount. If this cap is exceeded, a corresponding number of Stock Awards is forfeited without refund or replacement.
+The remaining number of Stock Awards is settled by the transfer of Siemens shares to the relevant Managing Board member.
+Basic principles and functioning of Stock Awards
+0%
+Judith Wiese
+100%
+Target achievement
+Target achievement for TSR is concretely determined by first calculating a TSR reference value for Siemens AG and a TSR
+reference value for the sector index. The TSR reference value is equal to the average of the end-of-month values over the
+first 12 months of the vesting period (reference period).
+FISCAL 2022 20
+Compensation Report → B. Compensation of Managing Board members
+In order to determine at the end of the vesting period how well the TSR of Siemens AG has performed relative to the TSR of
+the sector index, the TSR performance value is calculated over the subsequent 36 months (performance period). The TSR
+performance value is the average of the end-of-month values during the performance period.
+At the end of the vesting period, the change in Siemens' TSR as well as that of the sector index is determined by comparing
+the TSR reference values with the TSR performance values.
+Calculation of TSR reference values and TSR performance values for Stock Awards
+FYn
+FY n+1
+OCT
+NOV
+NOV
+12 months
+TSR reference values for
+• MSCI World Industrials index
+• Siemens AG
+36 months
+TSR performance values for
+• MSCI World Industrials index
+• Siemens AG
+The following applies for the determination of target achievement.
+Calculation of TSR target achievement
+200%
+17
+Analogously to fiscal 2022, basic earnings per share before purchase price
+allocation (EPS pre PPA) is used to place the focus on Siemens' operating
+performance and present it transparently.
+4 The increase in compensation in fiscal 2019 is primarily attributable to the one-time benefit from two Stock Awards tranches - the 2014 and 2015 tranches in November 2018,
+due to a reduction in the duration of the Stock Awards to the customary four-year period starting with the 2015 tranche.
+variable
+Fixed and
+(€ thousand)
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
+Former members of the Managing Board'
+The following table shows the compensation awarded and due to former members of the Managing Board in fiscal 2022 in
+accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act. In accordance with Section 162 para. 5
+of the German Stock Corporation Act, the personal information of former Managing Board members is no longer included
+if they left the Managing Board before September 30, 2012. The amounts reported under Stock Awards also include the
+additional cash payment due to the Siemens Energy spin-off.
+B.6.2 Former members of the Managing Board
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2022 30
+2 As compensation for the loss of benefits granted by her former employer, the Supervisory Board allotted to Judith Wiese one-time compensation
+of €1,469,124 (gross) in fiscal 2021. 50% of this compensation was allocated in November 2020 in the form of Stock Awards, and the remaining
+50% was awarded in cash in March 2021. The cash payment is included under "Other."
+1 Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions,
+they receive a fixed cash amount for free disposal.
+3,223 - 4,185 -
+100%
+compensation
+3,223 100% 4,185
+735
+¯¯¯¯¯¯¯¯¯¯- 1,716 41%
+= Total compensation (incl. service costs)
++ Service costs
+(according to Section 162 AktG)
+Total compensation (TC)
++ Other
+Cash payment Siemens Energy spin-off
++ Long-term variable compensation
+2018 Stock Awards (vesting: 2017-2021)
+2017 Stock Awards (vesting: 2016-2020)
+Bonus for fiscal 2021
+46%
+1,487
+18%
+Bonus for fiscal 2022
+FISCAL 2022 36
+(vesting: 2017-2021)
+Prof. Dr.
+Hermann Requardt
+Managing Board member
+until Jan. 31, 2015
+Janina Kugel
+Managing Board member
+until Jan. 31, 2020
+1,096
+577
+58
+1,620
+1,620
+3,238
+1,620
+28
+102
+Managing Board member
+until Feb. 29, 2020
+Lisa Davis²
+2018 Stock Awards
+Michael Sen
+Managing Board member
+until March 31, 2020
+Klaus Helmrich
+Managing Board member
+until March 31, 2021
+Annuity
+Pensions
+(vesting: 2017-2021)
+compensation
+2018 Stock Awards
+variable
+Fringe benefits
+Fixed and
+Capital payment (partial or full)
+Annuity
+Pensions
+Joe Kaeser
+President and CEO
+until Feb. 3, 2021
+Peter Löscher
+President and CEO
+until July 31, 2013
++ Short-term variable compensation
+41%
+FISCAL 2022 29
+5 In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG. The correspond-
+ing legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms of his contract
+with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the base salary and fringe benefits reported here, €647,749 and €32,551, respectively, were
+awarded and paid by Siemens Schweiz AG. Of the Bonus for fiscal 2022 reported here, €812,915 (corresponding to CHF 777,228 and converted into euros as of September 30, 2022)
+will be paid by Siemens Schweiz AG. Furthermore, employer contributions to pension plans paid by Siemens Schweiz AG are deducted from the amount for free disposal.
+4 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
+March 31, 2019. The amounts reported under "2018 Stock Awards (vesting: 2017-2021)" and "2017 Stock Awards (vesting: 2016-2020)" include the value of the Stock Awards allo-
+cated by Siemens Ltd. China. Likewise, a portion of the additional cash payment attributable to the Stock Awards allocated by Siemens Ltd. China is included under "Cash payment
+Siemens Energy spin-off." For details, see chapter "B.3.2.3 Transfer of Stock Awards in fiscal 2022 (2018 tranche)."
+3 Cedrik Neike was appointed a full member of the Managing Board effective April 1, 2017. Due to his intra-year appointment, his Stock Awards target amount for fiscal 2017 was
+determined on a pro-rated basis and, instead of Stock Awards, a corresponding number of Phantom Stock Awards was allocated to him in accordance with plan requirements. In
+contrast to Stock Awards, these Phantom Stock Awards were settled after the expiration of the vesting period by cash payment rather than by share transfer.
+2 Dr. Roland Busch was first appointed a full member of the Managing Board effective April 1, 2011. He served as Deputy CEO from October 1, 2019, until the end of the Annual
+Shareholders' Meeting on February 3, 2021, when he succeeded Joe Kaeser as President and CEO.
+1 Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive a fixed cash amount
+for free disposal.
+4,823
+4,882
+3,435
+3,160
+= Total compensation (incl. service costs)
+588
+Compensation Report → B. Compensation of Managing Board members
+578
+4,304 100% 4,235
+100%
+3,435
+3,160 100%
+29%
+3%
+1,209
+119
+3%
+124
+1,496 35%
+41%
+1,734
+50%
+100%
+Variable
+compensation
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
+Active Managing Board members in fiscal 2022 (cont.)
+in office on September 30, 2022
+1,734
+54%
+1,735
+= Total
+13%
+551
+17%
+551
++Amount for free disposal¹
+2%
+82
+3%
+Managing Board members
+83
+compensation
+26%
+1,102
+34%
+1,102
+Base salary
+Fixed
+€ thousand in % of TC € thousand in % of TC
+2021
+2022
+Managing Board member since Oct. 1, 2020
+Judith Wiese²
++Fringe benefits
+1,712
+1,620
+598
+Member
+€90,000
+Chair
+€180,000
+Chairman's Committee
+Audit Committee
+Additional compensation for committee work
+Deputy Chair
+€210,000
+Base compensation of Supervisory Board
+Chairman
+€280,000
+Compensation of members of the Supervisory Board and its committees
+Supervisory Board compensation consists entirely of fixed compensation; it reflects the responsibilities and scope of the
+work of the Supervisory Board members. Under the applicable rules, the members of the Supervisory Board receive base
+compensation for each full fiscal year, and the members of the Audit Committee, the Chairman's Committee, the
+Compensation Committee and the Innovation and Finance Committee receive additional compensation for their committee
+work. The Chairman and Deputy Chairs of the Supervisory Board as well as the chairs of the Audit Committee, the Chairman's
+Committee, the Compensation Committee and the Innovation and Finance Committee receive additional compensation.
+The currently applicable rules for Supervisory Board compensation are set out in Section 17 of the Articles of Association of
+Siemens AG. They have been in effect since October 1, 2021, and stem from a decision of the Annual Shareholders' Meeting
+on February 3, 2021, in accordance with Section 113 para. 3 of the German Stock Corporation Act. The compensation
+system for Supervisory Board members submitted to the Annual Shareholders' Meeting and the proposed new version of
+Section 17 of the Articles of Association were approved by a majority of 97.49% of the valid votes cast. The compensation
+system approved by the Annual Shareholders' Meeting as well as the Articles of Association are publicly available on the
+Siemens Global Website at WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
+C. Compensation of Supervisory Board members
+Chair
+€80,000
+Compensation Report → C. Compensation of Supervisory Board members
+• Net Promoter Score
+creation
+tranche
+Long-term
+value
+Stock Awards
+2023
+Digital learning hours per employee
+•
+CO₂ emissions
+•
+The Siemens-internal ESG/Sustainability index for the 2023 Stock Awards
+tranche is based on the following three equally weighted key performance
+indicators:
+Development of the TSR of Siemens AG relative to the international
+sector index MSCI World Industrials
+FISCAL 2022 32
+Sustainability diversity
+Member
+€40,000
+Compensation
+Committee
+in €
+in % of TC
+47%
+280,000
+2022
+Jim Hagemann Snabe
+in €
+Total com-
+pensation (TC)
+Meeting
+attendance fee
+Committee
+compensation
+compensation
+in office on September 30, 2022
+Basic
+Member
+€140,000
+Supervisory Board members
+The following table shows the compensation awarded and due to the members of the Supervisory Board in fiscal 2022 and
+fiscal 2021 in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act.
+Compensation Report → C. Compensation of Supervisory Board members
+FISCAL 2022 33
+The members of the Supervisory Board are reimbursed for out-of-pocket expenses incurred in connection with their duties
+and for any value-added tax to be paid on their compensation. For the performance of his duties, the Chairman of the
+Supervisory Board is also entitled to an office with secretarial support and the use of a car service. No loans or advances
+from the Company are provided to members of the Supervisory Board.
+In addition, the members of the Supervisory Board receive a fee of €2,000 for each of the meetings of the Supervisory Board
+and its committees that they attend. Attendance at a meeting also includes participation via telephone, video conference
+or other similar customary means of communication. For attendance at several meetings on the same day, only a single fee
+is paid.
+In the event of changes in the composition of the Supervisory Board and/or its committees within a fiscal year,
+compensation is paid on a pro-rated basis, rounding up to the next full month.
+Member
+€40,000
+Chair
+€80,000
+Finance Committee
+Innovation and
+Member
+€40,000
+Chair
+€80,000
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
+Supervisory Board members
+44
+Implementation of portfolio measures
+Implementation of other strategic target setting
+Board
+portfolio
+Managing
+EPS pre PPA,
+basic
+Profit
+Siemens
+Group
+fiscal 2023
+Bonus
+Details
+performance
+indicator
+Performance
+criterion
+Target
+dimension
+Key
+Profitability/
+capital
+efficiency
+VARIABLE COMPENSATION
+Cedrik Neike
+€8,414,316
+Dr. Roland Busch
+€16,453,950
+MAXIMUM COMPENSATION
+Outlook for fiscal 2023
+The following overview shows the maximum compensation and the performance criteria for variable compensation for
+fiscal 2023, as approved by the Supervisory Board of Siemens AG.
+B.7 Outlook for fiscal 2023
+Compensation Report → B. Compensation of Managing Board members
+31
+FISCAL 2022
+2 Lisa Davis's fringe benefits include contractually agreed payments for tax adjustments.
+1 The table includes only compensation that was awarded to former members after they left the Managing Board.
+Capital payment (partial or full)
+Matthias Rebellius
+€8,078,220
+• Optimization / efficiency enhancement
+ROCE
+adjusted
+Judith Wiese
+Siemens-
+internal ESG/
+Sustainability
+index
+Total
+shareholder
+return (TSR)
+Various
+focus topics
+Sustainability
+Sustainability
+Business development
+•
+Various
+focus topics
+Company
+strategy
+Growth
+CCR
+Liquidity
+Prof. Dr. Ralf P. Thomas
+€10,439,316
+Individual
+targets
+Siemens (c/o) for Managing Board members with primarily functional
+responsibility
+•
+Comparable revenue growth, measured on the basis of:
+⚫ the relevant business for Managing Board members with business
+responsibility
+Siemens Group for Managing Board members with primarily functional
+responsibility
+•
+Cash conversion rate (CCR), measured on the basis of:
+With adjusted return on capital employed (ROCE adjusted), we aim to focus
+on Siemens' operating performance, analogously to fiscal 2022.
+Therefore, ROCE - as defined in the Siemens Financial Framework, which
+excludes certain Varian-related acquisition effects - is adjusted for the main
+effects relating to the stake in Siemens Energy.
+growth
+revenue
+Comparable
+€8,078,220
+⚫ the relevant business for Managing Board members with business
+responsibility
+in % of TC
+1,524 35%
+1,428
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2022 27
+Judith Wiese and Matthias Rebellius, who were appointed to the Managing Board as of October 1, 2020, are not included
+in the BSAV. Instead of BSAV contributions, the Supervisory Board awarded them for fiscal 2022 a fixed cash amount of
+€550,800 each for free disposal. This amount will be paid in January 2023.
+1 A total of €12,325 is attributable to the funding of personal pension benefit commitments earned prior to the transfer to the BSAV.
+2 Deferred compensation for Prof. Dr. Ralf P. Thomas totals €57,419 (2021: €63,478).
+21,039,988
+8,431,412
+4,069,811
+8,538,765
+7,814,364
+4,026,008
+7,572,833
+19,413,205
+932,613
+594,468
+588,070
+2,115,151
+578,296
+2,072,444
+2,224,992
+B.6 Compensation awarded and due
+616,896
+Total
+Prof. Dr. Ralf P. Thomas
+913,079
+581,069
+991,200
+616,896
+616,896
+Cedrik Neike
+991,200
+Dr. Roland Busch
+in office on September 30, 2022
+Managing Board members
+(Amounts in €)
+2021
+616,896
+2,224,992
+2022
+B.6.1 Active Managing Board members in fiscal 2022
+The Bonus is reported under "Short-term variable compensation" as "due compensation" since the underlying services were
+fully rendered by the end of each period (September 30). Therefore, the Bonus payout amounts for the reporting year are
+reported, although payout only occurs after the end of each reporting year, in order to make reporting transparent and
+comprehensible and in order to guarantee a connection between performance and compensation in the reporting period.
+Managing Board members
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
+Active Managing Board members in fiscal 2022
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2022 28
+Although the service costs for Company pension plans are not to be classified as awarded and due compensation, they are
+also reported in the following table for purposes of transparency.
+In addition to the amounts of compensation, Section 162 para. 1 sent. 2 No. 1 of the German Stock Corporation Act requires
+disclosure of the relative proportion of total compensation represented by all fixed and variable compensation components.
+The relative proportions reported here refer to the compensation components "awarded" and "due" in the respective fiscal
+years in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act.
+Other
+Fixed compensation
+Variable compensation
+2023
+plus cash payment relating to Siemens Energy spin-off
+Compensation granted in connection with the
+commencement/termination of appointments
+in Feb '23
+Payout latest
+The following tables show the compensation awarded and due to the active members of the Managing Board in fiscal 2022
+and fiscal 2021 in accordance with Section 162 para. 1, sent. 1 of the German Stock Corporation Act. As a result, they
+include all the amounts actually paid to individual Managing Board members in the reporting period ("awarded
+compensation") and/or all the compensation that is legally due but not yet received ("due compensation").
+Short-term variable compensation: Bonus for 2022
+2022
+Settlement in
+Nov '21
+Amount for free disposal
+Sept
+Oct Nov Dec Jan Feb March April May June July Aug
+Monthly payout
+Base salary and fringe benefits
+Long-term variable compensation:
+2018 Stock Awards tranche
+2018
+Compensation awarded and due in fiscal 2022
+In connection with the due date and settlement of the Stock Awards for fiscal 2018 and fiscal 2017, the table also includes
+the additional cash payments to eligible Managing Board members as a result of the Siemens Energy spin-off. The spin-off
+of Siemens Energy in fiscal 2020 led to adjustments in the stock-based compensation allocations agreed upon until the
+spin-off date. At the time when the 2018 and 2017 Stock Awards became due, the Managing Board members – like all
+other eligible employees – were, accordingly, entitled to receive an additional cash payment based on the spin-off ratio of
+2:1 and on the Siemens Energy share price of €24.32 and €22.20, respectively, on the date when their respective stock-
+based compensation allocations became due.
+Furthermore, in fiscal 2022 and fiscal 2021, the Stock Awards from the 2018 and 2017 tranches allocated in fiscal 2018
+and fiscal 2017, respectively, became due and were settled by transfer of Siemens shares. The value of Siemens shares at
+the time of transfer is reported under "Long-term variable compensation."
+Payout in
+Jan '23
+in office on September 30, 2022
+2021
+2021
+5,069,369
+Number of
+shares³
+in €²
+Value
+Percentage of
+base salary'
+363%
+28,832
+4,193,550
+300%
+Number of
+shares²
+Value
+in €¹
+base salary
+Percentage of
+34,853
+Verified
+Total
+Prof. Dr. Ralf P. Thomas
+Cedrik Neike
+Dr. Roland Busch
+compliance on March 11, 2022
+and required to verify
+in office on September 30, 2022,
+Managing Board members
+Obligations under the Share Ownership Guidelines
+The deadlines by which the individual Managing Board members must first verify compliance with the Share Ownership
+Guidelines (SOG) vary from member to member, depending on when they were appointed to the Managing Board. For
+Managing Board members in office on September 30, 2022, the following table shows the number of Siemens shares that
+each held in order to comply with the SOG on March 11, 2022, the verification date. It also shows the number of shares to
+be held throughout the Managing Board members' terms of office with a view to future verification dates.
+B.4 Share Ownership Guidelines
+Compensation Report → B. Compensation of Managing Board members
+Required
+2022
+200%
+15,104
+2022
+for all pension commitments
+excluding deferred compensation²
+Service costs
+according to IAS 19R
+Contributions'
+Defined benefit obligation
+Information on the Siemens Defined Contribution Pension Plan (BSAV)
+Contributions under the BSAV are credited to the individual pension accounts in the January following each fiscal
+pension payments begin, members' pension accounts are credited with an annual interest payment (guaranteed interest)
+on January 1 of each year. The interest rate is currently 0.25%.
+year. Until
+Most of the members of the Managing Board are included in the Siemens Defined Contribution Pension Plan (BSAV). Since
+fiscal 2020, newly appointed members of the Managing Board can be awarded, instead of BSAV contributions, a fixed cash
+amount for free disposal.
+B.5 Pension benefit commitment
+3 As of March 11, 2022 (verification date).
+2 Based on the average Xetra opening price of €145.45 for the fourth quarter of 2021 (October to December).
+2,196,900
+1 The amount of the obligation is based on the average base salary during the four years prior to the respective verification dates.
+12,530,227
+59,040
+8,587,350
+34,713
+5,049,006
+460%
+15,104
+2,196,900
+200%
+16,582
+2,411,852
+220%
+86,148
+45%
+Fixed
+Base salary
++ Long-term variable compensation
+2018 Stock Awards (vesting: 2017-2021)
+2017 Stock Awards (vesting: 2016-2020)
+Cash payment Siemens Energy spin-off
+Bonus for fiscal 2021
++ Short-term variable compensation
+Bonus for fiscal 2022
+Amount for free disposal¹
+Total
+=
+Variable
+compensation
++Fringe benefits
+compensation
+Base salary
+Fixed
+594
+4,119
+4,796
++ Other
+581
+6,892
+913
+= Total compensation (incl. service costs)
++ Service costs
+100%
+3,524
+100%
+4,215
+100%
+100% 6,008
+5,979
+(according to Section 162 AktG)
+933
+6,941
+Total compensation (TC)
+Total compensation (TC)
++Service costs
+28%
+1,172
+1,160 27%
+50%
+1,723
+16%
+551
+551 17%
+1,733 55%
+2%
+26%
+1,102
+71
+€ thousand in % of TC € thousand in % of TC
+1,102 26%
+58
+(according to Section 162 AktG)
+1%
+32%
+1,102
+70
+3%
+80
+€ thousand in % of TC € thousand in % of TC
+1,102
+35%
+2021
+2022
+2021
+2022
+Prof. Dr. Ralf P. Thomas
+Managing Board member since Sept. 18, 2013
+Matthias Rebellius 5
+Managing Board member since Oct. 1, 2020
+2%
+compensation
+2%
+3%
+31% 1,879
+1,881
+= Total
++ Amount for free disposal¹
+0%
+31%
+1,102
+14
+1%
+26%
+1,102
+31
+2%
+109
+31%
+2%
+1,770
+30%
+1,770
+111
+€ thousand in % of TC € thousand in % of TC
+€ thousand in % of TC € thousand in % of TC
+2021
+2022
+2021
+2022
+Cedrik Neike 3,4
+Managing Board member since April 1, 2017
+Dr. Roland Busch²
+President and CEO since Feb. 3, 2021
++Fringe benefits
+29%
+60
+1,132
+1,116
+124
+17%
+609
+20%
+2%
+1,209
+119
+2%
+124
+Cash payment Siemens Energy spin-off
++ Other
++ ||
+-
+25%
+1,496
+27%
++ Long-term variable compensation
+2018 Stock Awards (vesting: 2017-2021)
+2017 Stock Awards (vesting: 2016-2020)
+1,740
+47%
+2,801
+Bonus for fiscal 2021
+1,462 35%
+41%
+2,479
+Bonus for fiscal 2022
+compensation
++ Short-term variable compensation
+Variable
+32%
+49%
+290,000
+Fringe benefits
+in €
+32,000
+3,080,000
+2,964,444
+2022
+2021
+Total²
+153,500
+9%
+13,500
+91%
+140,000
+2021
+(since Jan. 2018)
+152,000
+8%
+60%
+12,000
+140,000
+2022
+Gunnar Zukunft¹
+285,500
+9%
+25,500
+42%
+120,000
+49%
+140,000
+2021
+(since Jan. 2018)
+92%
+292,000
+60%
+32%
+Change
+in %
+2020
+Change
+in %
+2019
+2018
+I. PROFIT DEVELOPMENT
+Fiscal
+Comparative information on profit development and change in compensation
+of employees, Managing Board and Supervisory Board members
+D. Comparative information on profit development and annual change in compensation
+Compensation Report →
+FISCAL 2022 35
+Average employee compensation comprises the personnel costs for wages and salaries, fringe benefits, employer
+contributions to social insurance and any short-term variable compensation components attributable to the fiscal year.
+For
+compensation in connection with share plans, the amounts received in the fiscal year are taken into account. Therefore,
+employee compensation is also equivalent, in principle, to awarded and due compensation within the meaning of
+Section 162 para. 1 sent. 1 of the German Stock Corporation Act and thus in line with Managing Board and Supervisory
+Board compensation.
+1,650,000
+1,561,852
+The presentation of average employee compensation is based on the size of the workforce, including trainees, employed
+by Siemens in Germany. In fiscal 2022, this workforce comprised on average 69,767 employees (full-time equivalent). By
+way of comparison, the Siemens Group had about 247,000 employees and trainees worldwide as of September 30, 2022.
+The figures exclude the workforce of Siemens Healthineers, which is not included in the presentation since it is a separately
+managed, publicly listed company.
+shown.
+Profit development is presented on the basis of the Siemens Group's key performance indicators revenue, comparable
+revenue growth and basic earnings per share from continuing and discontinued operations. Through fiscal 2021, the latter
+was also one of the financial targets for the short-term variable compensation (Bonus) of the Managing Board and thus had
+a significant influence on the amount of the compensation of the Managing Board members. Beginning in fiscal 2022, the
+comparative information will also include basic earnings per share before purchase price allocation. This key performance
+indicator supersedes basic earnings per share from continuing and discontinued operations in the Bonus in accordance with
+the Siemens Financial Framework, which has been in effect since fiscal 2022. In accordance with Section 275 para. 3 No. 16
+of the German Commercial Code (Handelsgesetzbuch, HGB), the development of the net income of Siemens AG is also
+The following table shows, in accordance with Section 162 para. 1 sent. 2 No. 2 of the German Stock Corporation Act,
+Siemens' profit development, the annual change in the Managing Board and Supervisory Board members' compensation
+and the annual change in average employee compensation on a full-time equivalent basis over the last five fiscal years.
+D. Comparative information on profit development
+and annual change in compensation
+Compensation Report → D. Comparative information on profit development and annual change in compensation
+FISCAL 2022 34
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to
+transfer their compensation to the Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
+2 Compared to the amounts reported in the 2021 Compensation Report, the total does not include the compensation of €259,528 paid to former
+Supervisory Board members Dr. Nicola Leibinger-Kammüller and Werner Wenning.
+4,965,796
+9%
+8% 5,114,000
+384,000
+439,500
+31%
+The compensation awarded and due to the Managing Board and Supervisory Board members in each fiscal year is presented
+in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act. Pension payments to former members
+of the Managing Board are not listed here since they do not depend on Siemens' profit development.
+2021
+8%
+45%
+8%
+12,000
+92%
+140,000
+2022
+153,500
+9%
+13,500
+91%
+140,000
+2021
+152,000
+152,000
+8%
+92%
+140,000
+2022
+(since Oct. 2017)
+Dorothea Simon¹
+(since March 2014)
+Michael Sigmund
+173,167
+10%
+16,500
+10%
+16,667
+12,000
+22,000
+2021
+91%
+130,000
+48%
+140,000
+2022
+Matthias Zachert
+188,333
+8%
+15,000
+42%
+80,000
+50%
+93,333
+140,000
+2021
+290,000
+7%
+20,000
+45%
+130,000
+48%
+140,000
+2022
+Grazia Vittadini
+153,500
+9%
+13,500
+(since Feb. 2021)
+81%
+Change
+in %
+Change
+in %
+4%
+4,235
+(39)%
+4,087
+114%
+6,740
+3,143
+Prof. Dr. Ralf P. Thomas 4 (since Sept. 2013)
+(8)%
+3,160
+3,435
+Matthias Rebellius (since Oct. 2020)
+4,304
+20%
+75%
+3,524
+(13)%
+2,017
+(37)%
+2,331
+3,710
+Cedrik Neike (since April 2017)
+0%
+5,979
+35%
+6,008
+4,215
+(34)%
+2%
+4,185
+3 Basic earnings per share from continuing and discontinued operations as reported.
+2 The primary measure for managing and controlling revenue growth is comparable growth, because it shows the development in Siemens' business net of currency translation
+effects arising from the external environment outside of Siemens' control and the portfolio effects that involve business activities that are either new to or no longer a part of
+the relevant business.
+1 Revenue as reported. In fiscal 2020, the segments "Gas and Power" and "Siemens Gamesa Renewable Energy" were classified as discontinued operations and are therefore not
+included in the amount reported for fiscal 2020.
+(73)%
+27%
+(41)%
+(30)%
+20%
+6,562 (18)% 1,434 (78)% 1,721
+4,186 (37)% 2,756 (34)% 1,620
+8,051 (38)%
+4,616 (43)% 3,238
+2,631 (37)% 1,274 (52)% 1,620
+2,905 (33)%
+664 (77)%
+1,991
+(19)%
+5,914 197% 1,620
+33%
+(14)%
+2,448
+2,841
+4,330
+Judith Wiese (since Oct. 2020)
+3,244
+199%
+45%
+55%
+54%
+4,192
+2,718
+8,391 12,978
+Joe Kaeser 4 (President and CEO until Feb. 2021)
+Janina Kugel (until Jan. 2020)
+7,969
+6,679
+4,608
+Klaus Helmrich 4 (until March 2021)
+2,661
+Lisa Davis (until Feb. 2020)
+Former Managing Board members
+3,223 (23)%
+Prof. Dr. Siegfried Russwurm 4 (until March 2017)
+Michael Sen (from April 2017 until March 2020)
+2022
+4,441
+6,730
+7.68
+(22)%
+5.00
+(10)%
+6.41
+7.12
+Earnings per share³ (in €)
+n.a.
+8.2
+n.a.
+11,5
+n.a.
+54%
+16%
+9.0%
+62,265
+(34)%
+57,139
+(2)
+n.a.
+3
+2
+Comparable revenue growth² (in %)
+5%
+86,849
+83,044
+Revenue (in € million)
+71,977
+48%
+48%
+Earnings per share before
+4,556
+(since April 2011, President and CEO since Feb. 2021)
+Dr. Roland Busch 4
+III. MANAGING BOARD MEMBERS' COMPENSATION (in € thousand)
+3%
+102
+3%
+99
+1%
+96
+1%
+95
+(40)%
+94
+II. AVERAGE EMPLOYEE COMPENSATION (in € thousand)
+(34)%
+(30)%
+(2)% 3,612
+5,147
+(53)%
+5,270
+147%
+4,547 11,219
+Net income according to HGB (in € million)
+5.47
+8.32
+purchase price allocation (in €)
+Workforce in Germany
+140,000
+4.65
+1,496 35%
+Dr. Andrea Fehrmann'
+246,167
+8%
+19,500
+35%
+86,667
+57%
+140,000
+2021
+(since Jan. 2008)
+238,000
+8%
+2022
+18,000
+80,000
+59%
+140,000
+Michael Diekmann
+2022
+287,000
+9%
+27,000
+42%
+120,000
+49%
+140,000
+34%
+2021
+140,000
+12,000
+9%
+22,500
+33%
+80,000
+58%
+140,000
+2021
+(since April 2007)
+250,000
+8%
+20,000
+36%
+92%
+90,000
+140,000
+2022
+Bettina Haller 1
+153,500
+9%
+13,500
+91%
+140,000
+2021
+(since Jan. 2018)
+152,000
+8%
+56%
+242,500
+(since Oct. 2020)
+8%
+220,000
+2021
+(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
+446,000
+6%
+26,000
+47%
+210,000
+47%
+210,000
+2022
+Birgit Steinborn¹
+47%
+608,000
+48,000
+46%
+280,000
+46%
+280,000
+2021
+(since Oct. 2013, Chairman since Jan. 2018)
+602,000
+5%
+in €
+in % of TC
+2021
+8%
+292,000
+200,000
+46,500
+22,000
+45%
+130,000
+48%
+140,000
+2022
+Tobias Bäumler¹
+438,167
+7%
+31,500
+49%
+44%
+43%
+193,333
+(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
+462,000
+7%
+32,000
+48%
+220,000
+45%
+210,000
+Dr. Werner Brandt
+2022
+466,500
+10%
+2021
+Harald Kern¹
+(since Jan. 2008)
+Jürgen Kerner¹
+213,333
+Benoît Potier
+(since Feb. 2021)
+196,000
+8%
+16,000
+20%
+40,000
+71%
+140,000
+2022
+Kasper Rørsted
+189,833
+9%
+2021
+16,500
+38,519
+71%
+134,815
+2021
+(since Jan. 2015)
+194,000
+7%
+14,000
+21%
+40,000
+72%
+140,000
+20%
+2022
+93,333
+26,667
+(since Jan. 2015)
+(since Jan. 2012)
+162,000
+14%
+22,000
+86%
+140,000
+2022
+Dr. Nathalie von Siemens
+140,130
+7%
+10,500
+72%
+93%
+2021
+(since Jan. 2018)
+152,000
+8%
+12,000
+92%
+140,000
+2022
+Baroness Nemat Shafik (DBE, DPhil)
+130,500
+10,500
+20%
+129,630
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
+8%
+9%
+37%
+140,000
+2021
+376,000
+7%
+26,000
+56%
+210,000
+37%
+140,000
+2022
+264,000
+9%
+38%
+100,000
+53%
+140,000
+2021
+240,000
+8%
+20,000
+33%
+80,000
+58%
+153,500
+140,000
+2022
+200,000
+52%
+24,000
+11%
+140,000
+43,500
+2021
+(since Jan. 2019)
+152,000
+8%
+12,000
+91%
+140,000
+2022
+Hagen Reimer1
+13,500
+155,000
+92%
+86%
+2022
+10%
+140,000
+22,000
+14%
+383,500
+(since Jan. 2018)
+2021
+140,000
+90%
+15,000
+162,000
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to transfer
+their compensation to the Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
+The Company provides a group insurance policy for Supervisory and Managing Board members and certain other employees
+of the Siemens Group. The policy is taken out for one year at a time or renewed annually. It covers the personal liability of
+the insured individuals in cases of financial loss associated with their activities on behalf of the Company. The insurance
+policy for fiscal 2022 includes a deductible for the members of the Managing Board that complies with the requirements of
+the German Stock Corporation Act.
+E. Other
+E. Other
+Compensation Report →
+FISCAL 2022 37
+149
+6%
+152
+(3%)
+154
+158
+32%
+113
+(1%)
+For the Managing Board
+Independent auditor's report
+Dr. Roland Busch
+Auditor's responsibility
+Gunnar Zukunft' (since Jan. 2018)
+Our responsibility is to express an opinion on this Compensation Report and the related disclosures based on our audit. We
+conducted our audit in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we comply
+with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Compensation
+Report and the related disclosures are free from material misstatement.
+Management and the Supervisory Board of Siemens AG are responsible for the preparation of the Compensation Report
+and the related disclosures in compliance with the requirements of Sec. 162 AktG. In addition, management and the
+Supervisory Board are responsible for such internal control as they determine is necessary to enable the preparation of a
+Compensation Report and the related disclosures that are free from material misstatement, whether due to fraud or error.
+Responsibilities of management and the Supervisory Board
+We have audited the attached Compensation Report of Siemens Aktiengesellschaft, Berlin and Munich, prepared to comply
+with Sec. 162 AktG ["Aktiengesetz": German Stock Corporation Act] for the fiscal year from October 1, 2021 to
+September 30, 2022 and the related disclosures. We have not audited the content of disclosures regarding appropriateness
+and marketability of the compensation in chapter B.2.3 APPROPRIATENESS OF COMPENSATION that is beyond the scope of
+Sec. 162 AktG.
+To Siemens Aktiengesellschaft, Berlin and Munich
+Compensation Report → Independent auditor's report
+38
+FISCAL 2022
+Jim Hagemann Snabe
+Chairman of the Supervisory Board
+of Siemens AG
+of Siemens AG
+Chief Financial Officer
+Prof. Dr. Ralf P. Thomas
+President and Chief Executive Officer
+of Siemens AG
+For the Supervisory Board
+2%
+6%
+12%
+152
+Dorothea Simon' (since Oct. 2017)
+(1%)
+152
+(3%)
+154
+158
+(2%)
+149
+152
+Michael Sigmund (since March 2014)
+(6%)
+162
+An audit involves performing procedures to obtain audit evidence about the amounts in the Compensation Report and the
+related disclosures. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
+material misstatement of the Compensation Report and the related disclosures, whether due to fraud or error. In making
+those risk assessments, the auditor considers internal control relevant to the preparation of the Compensation Report and
+the related disclosures in order to plan and perform audit procedures that are appropriate in the circumstances, but not for
+the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating
+the accounting policies used and the reasonableness of accounting estimates made by management and the Supervisory
+Board, as well as evaluating the overall presentation of the Compensation Report and the related disclosures.
+(14%)
+149
+292
+(2%)
+6%
+286
+5%
+256
+38%
+244
+177
+Matthias Zachert (since Jan. 2018)
+54%
+290
+188
+Grazia Vittadini (since Feb. 2021)
+(1%)
+152
+(3%)
+154
+158
+We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+4
+In our opinion, on the basis of the knowledge obtained in the audit, the Compensation Report for the fiscal year from
+October 1, 2021 to September 30, 2022 and the related disclosures comply, in all material respects, with the financial
+reporting provisions of Sec. 162 AktG. Our opinion on the Compensation Report does not cover the content of the above
+mentioned disclosures of the Compensation Report that go beyond the scope of Sec. 162 AktG.
+-
+-
+strategy as well as the Companywide DEGREE sustainabil-
+ity framework. We discussed the Company's business
+opportunities connected with sustainability-related fac-
+tors and concerned ourselves with business potential
+particularly in the areas of decarbonization, energy effi-
+ciency and resource efficiency. We also discussed the re-
+quirements of the EU Taxonomy and their impact on
+Siemens. With regard to Siemens Healthineers, we were
+informed about progress in the integration of Varian. We
+discussed the business situation and the Managing
+Board's deliberations in the area of Large Drives Applica-
+tions. We approved the Managing Board's decision to sell
+Siemens Financial Services' leasing business in Russia.
+As part of regular reporting on the activities of the
+Supervisory Board committees, we were informed that
+the Audit Committee had decided - following a compre-
+hensive tendering process in accordance with the current
+European legal norms to propose that the Super-
+visory Board recommend to shareholders at the Annual
+Shareholders' Meeting in 2024 two audit firms Price-
+At our meeting on August 10, 2022, the Managing Board
+reported on the Company's current business and finan-
+cial position and on personnel-related matters, as of the
+third quarter. The Managing Board explained to us, in
+particular, the unscheduled write-down of the Company's
+investment in Siemens Energy AG, which was published
+in an ad hoc announcement, and the resulting nontax-
+deductible impairment in the third quarter of fiscal 2022.
+Sustainability-related topics were also a focus of the
+meeting. We dealt with the Company's sustainability
+On June 30, 2022, we were informed about the publi-
+cation of an ad hoc announcement in which Siemens AG
+reported an extraordinary write-down of its at-equity
+investment in Siemens Energy AG.
+At our meeting on May 11, 2022, the Managing Board
+reported to us on the Company's current business and
+financial position, including personnel-related matters
+and sustainability, as of the second quarter. The focus was
+on the political and economic consequences of the war in
+Ukraine and on the war's impact on Siemens. The Manag-
+ing Board informed us about its decision, as a result of the
+war in Ukraine, to withdraw from the Russian market and
+to wind down the Company's industrial business activi-
+ties in Russia through an orderly process. As part of a stra-
+tegic and technology focus, we concerned ourselves at
+this meeting extensively and in detail with the growth
+targets and the further implementation of Siemens' strat-
+egy as a focused technology company. We discussed the
+market and business situation and the Company's strat-
+egy for China. The Managing Board informed us about
+the planned market launch of Siemens Xcelerator, the
+Company's open digital business platform, and reported
+on the business situation at Siemens Financial Services.
+We were also informed about the planned acquisition of
+Brightly Software, Inc., USA, a leading U.S. software-as-a-
+service (SaaS) provider in the area of building technology.
+On June 23, 2022, we approved – in a decision using other
+customary means of communication the Managing
+Board's decision regarding this acquisition.
+sell the Company's 50% stake in the joint venture
+Valeo Siemens eAutomotive GmbH to Valeo GmbH. On
+February 25, 2022, we made a decision - using other cus-
+tomary means of communication - regarding the engage-
+ment of an external consultant to support the Supervisory
+Board in conducting its self-assessment as recommended
+by the German Corporate Governance Code.
+Report of the Supervisory Board
+3
+FISCAL 2022
+At our meeting on February 9, 2022, the Managing Board
+reported on the Company's current business and financial
+position, including personnel-related matters and sus-
+tainability, as of the first quarter. We also discussed port-
+folio optimization in order to further sharpen Siemens'
+profile as a focused technology company. We approved
+the Managing Board's decisions to sell the mail and parcel
+business of Siemens Logistics to the Körber Group and to
+On January 17, 2022, we approved – in a decision using
+other customary means of communication – the Manag-
+ing Board's decision to sell the Yunex Traffic road traffic
+business to Atlantia S.p.A.
+-
+-
+On December 2, 2021, we discussed the 2021 Annual
+Financial Report - comprising the financial statements
+and the Combined Management Report for Siemens AG
+and the Siemens Group as of September 30, 2021 – as well
+as the Report of the Supervisory Board to the Annual
+Shareholders' Meeting, the Sustainability Report, the Com-
+pensation Report for fiscal 2021 and the agenda for the
+ordinary Annual Shareholders' Meeting on February 10,
+2022. In addition, we concerned ourselves with the annual
+reporting by the Chief Compliance Officer and the Global
+Chief Cybersecurity Officer. As part of a technology
+focus, the Managing Board reported on the status of
+Siemens Xcelerator, the Company's open digital busi-
+ness platform for accelerating the digital transformation.
+We also concerned ourselves with personnel-related
+matters regarding the Managing Board. With a view to
+the long-term succession planning for the composition
+of the Managing Board, we decided - on the recommen-
+dation of the Chairman's Committee - to terminate
+Prof. Dr. Ralf Thomas's current appointment by mutual
+consent, effective the end of December 14, 2021, and to
+reappoint Prof. Dr. Ralf Thomas a full member of the
+Managing Board for a term of office extending from
+December 15, 2021, through December 14, 2026.
+waterhouseCoopers GmbH, Wirtschaftsprüfungsgesell-
+schaft, Frankfurt a. M., and KPMG AG, Wirtschafts-
+prüfungsgesellschaft, München, with a preference for
+PricewaterhouseCoopers GmbH - as independent audi-
+tors for the tendered audit mandate for the fiscal year
+beginning on October 1, 2023. We discussed the results
+of the Supervisory Board's comprehensive self-assess-
+ment, which had been conducted in May through
+July 2022 with the support of an external consultant, and
+the resulting recommendations and measures. Finally,
+we made a decision regarding the engagement of an
+independent compensation expert to conduct an appro-
+priateness review of Managing Board compensation in
+fiscal 2022.
+the appropriateness of this compensation. We had al-
+ready defined the performance criteria for the Managing
+Board's variable compensation for fiscal 2022 at our
+meeting on September 22, 2021. On this basis and on the
+recommendation of the Compensation Committee, we
+made a decision on target setting for Managing Board
+compensation for fiscal 2022 at our meeting on Novem-
+ber 10, 2021. At this meeting, we also approved the
+Corporate Governance Statement for fiscal 2021.
+The Supervisory Board meeting on September 23,
+2022, was held at the Company's locomotive plant in
+Munich-Allach, Germany. While touring the facility, we
+familiarized ourselves with the advanced production
+methods at the longstanding location and had products
+for freight and passenger transport and the modular and
+adaptable approach to manufacturing explained to us.
+At the meeting, the Managing Board reported on the state
+of the Company. The Company's personnel strategy - in-
+cluding talent and leadership development, long-term
+succession planning for the composition of the Managing
+Board and diversity - was also a focus of this meeting. We
+discussed the Managing Board's considerations regarding
+the 2023 budget. In connection with Siemens' strategy,
+Report of the Supervisory Board
+173
+The Audit Committee held six regular meetings. Three
+meetings were held in person, one in a virtual format via
+video conference and two in a so-called hybrid format. In
+the presence of the independent auditors, the President
+and CEO, the Chief Financial Officer, the General Coun-
+sel, the Head of Accounting and the Head of Corporate
+Audit, the Audit Committee dealt with the financial state-
+ments and the Combined Management Report for
+Siemens AG and the Siemens Group, including the
+non-financial information integrated into the Combined
+Management Report. It discussed the Half-year Financial
+Report and the quarterly statements with the Managing
+Board and the independent auditors. In the presence of
+the independent auditors, it also discussed the report on
+the auditors' review of the Company's Half-year Consoli-
+dated Financial Statements and of its Interim Group Man-
+agement Report. As part of the preparation and imple-
+mentation of the audit, the Audit Committee regularly
+exchanged views with the independent auditors without
+the Managing Board in attendance. In addition, it met
+regularly in closed sessions without the Managing Board
+and the independent auditors in attendance. Outside its
+meetings, the Chairman of the Audit Committee regu-
+larly exchanged views with the independent auditors re-
+garding the progress of the audit and reported to the
+Audit Committee thereon. The Audit Committee recom-
+mended that the Supervisory Board propose to the An-
+nual Shareholders' Meeting that Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft, Stuttgart, be elected
+independent auditors for fiscal 2022. It awarded the audit
+contract for fiscal 2022 to the independent auditors, who
+had been elected by the Annual Shareholders' Meeting,
+defined the audit's focus areas and determined the audi-
+tors' fee. The Audit Committee defined the audit plan and
+the Audit Committee's focus areas. It monitored the se-
+lection, independence, qualification, rotation and effi-
+ciency of the independent auditors as well as the services
+The Innovation and Finance Committee also concerned
+itself with Next47, the independent unit established by
+Siemens in 2016 to bundle the Company's venture capital
+activities in order to foster disruptive ideas more inten-
+sively and expedite the development of new technolo-
+gies. In addition, the Committee's meetings focused on
+the discussion of the pension system and the preparation
+and approval of investment and divestment projects
+and/or financial measures. The Innovation and Finance
+Committee approved the Managing Board's decision re-
+garding the Siemens Campus Erlangen Project.
+The Innovation and Finance Committee met two times.
+One meeting was held in person and one in a so-called
+hybrid format. The Innovation and Finance Committee's
+work focused on innovation- and technology-related top-
+ics. The Innovation and Finance Committee discussed the
+Company's strategic priorities, technologies and growth
+opportunities relating to the industrial metaverse. Under
+the heading "UX Transformation," the Managing Board
+reported on progress in user-centered product design.
+The Compensation Committee met three times. All
+three meetings were held in person. The Compensation
+Committee also made two decisions using other custom-
+ary means of communication. The Compensation Com-
+mittee prepared, in particular, Supervisory Board deci-
+sions regarding the definition of performance criteria and
+the targets for variable compensation, the determination
+and review of the appropriateness of Managing Board
+compensation and the approval of the Compensation
+Report. In addition, the Compensation Committee pre-
+pared the Supervisory Board's decision regarding the
+engagement of an auditor for the Compensation Report
+for fiscal 2022.
+The Mediation Committee had no need to meet.
+The Nominating Committee met seven times. One
+meeting was held in person, three in a virtual format via
+video conference and three in a so-called hybrid format.
+The Nominating Committee gave in-depth consideration
+to succession planning for the composition of the
+Supervisory Board. Based on the results of the Super-
+visory Board's self-assessment, which was conducted in
+fiscal 2022, the Nominating Committee further devel-
+oped the qualification matrix for the Supervisory Board.
+One focus of the Nominating Committee's activities in
+fiscal 2022 was the preparation of the Supervisory
+Board's nominations of shareholder representatives on
+the Supervisory Board for election by the 2023 Annual
+Shareholders' Meeting. The Nominating Committee was
+supported in this connection by an external consulting
+firm. In selecting the potential candidates and in pre-
+paring a recommendation for the Supervisory Board
+decision, the Nominating Committee gave particular con-
+sideration to the objectives that the Supervisory Board
+had previously approved for its composition, including
+the profile of required skills and expertise, the diversity
+concept and the further developed qualification matrix
+for the Supervisory Board.
+Report of the Supervisory Board
+FISCAL 2022 5
+The Chairman's Committee met eight times. Two meet-
+ings were held in person, four in a virtual format via video
+conference and two in a so-called hybrid format. The
+Chairman's Committee also made two decisions using
+other customary means of communication. In my capac-
+ity as Chairman of the Chairman's Committee, I discussed
+topics of major importance with the other Committee
+members also between meetings. The Committee con-
+cerned itself, in particular, with personnel-related mat-
+ters, long-term succession planning for the composition
+of the Managing Board, corporate governance issues and
+the acceptance by Managing Board members of positions
+at other companies and institutions.
+In fiscal 2022, the Supervisory Board had six standing
+committees. These committees prepare proposals and
+issues to be dealt with at the Supervisory Board's plenary
+meetings. Some of the Supervisory Board's decision-mak-
+ing powers have been delegated to these committees
+within the permissible legal framework. The committee
+chairpersons report to the Supervisory Board on their
+committees' work at the subsequent Board meeting. A
+list of the members and a detailed explanation of the
+tasks of the individual Supervisory Board committees are
+set out in the Corporate Governance Statement.
+Work in the Supervisory Board
+committees
+At our meeting on September 23, 2022, we approved a
+Declaration of Conformity in accordance with Section 161
+of the German Stock Corporation Act (Aktiengesetz,
+AktG). Information on corporate governance is provided
+in the Corporate Governance Statement, which is publicly
+available on the Siemens Global Website at www.
+SIEMENS.COM/CORPORATE-GOVERNANCE. The Company's Dec-
+laration of Conformity has been made permanently avail-
+able to shareholders on the Siemens Global Website at
+WWW.SIEMENS.COM/DECLARATION OF CONFORMITY. The current
+Declaration of Conformity is also available in the Corpo-
+rate Governance Statement.
+Corporate Governance Code
+the Managing Board reported to us on the successful
+market launch of Siemens Xcelerator, the Company's
+open digital business platform. Under the heading
+"Future of Industrial Operations," the Managing Board
+reported to us - as part of an in-depth focus - on Digital
+Industries' strategic approach to the acceleration of the
+digital transformation. In light of the changes in market
+conditions due to digitalization and the change in cus-
+tomer behavior, the Managing Board also reported to us
+on the transformation of the Company's sales activities.
+We approved the Managing Board's decision regarding
+the Facility Siemensstadt Square Project in Berlin, Ger-
+many. A further focus of the meeting was Managing
+Board compensation. A review by an independent com-
+pensation expert confirmed the appropriateness of this
+compensation in fiscal 2022. As part of the annual review
+of Managing Board compensation and - after prepara-
+tion by and on a recommendation of the Compensation
+Committee - we defined each Managing Board mem-
+ber's individual target total compensation and maximum
+compensation as well as the performance criteria for vari-
+able compensation for fiscal 2023. At this meeting, we
+also made a decision regarding the engagement of an
+auditor for the Compensation Report for fiscal 2022. In
+addition, we dealt with matters relating to corporate gov-
+ernance, in particular, with the Declaration of Conformity
+with the German Corporate Governance Code. Due to
+changes in the legal requirements and the reform of the
+German Corporate Governance Code in 2022, we ap-
+proved changes to the diversity concept for the Manag-
+ing Board and to the objectives for the composition of the
+Supervisory Board as well as the profile of required skills
+and expertise and the diversity concept for the Supervi-
+sory Board. We concerned ourselves with the indepen-
+dence of the Supervisory Board members within the
+meaning of the German Corporate Governance Code and
+with the qualification matrix for the Supervisory Board.
+FISCAL 2022
+Opinion
+At our meeting on November 10, 2021, we discussed
+the key financial figures for fiscal 2021 and approved
+the budget for fiscal 2022. On a recommendation by the
+Compensation Committee, we also defined the Manag-
+ing Board members' compensation for fiscal 2021 on the
+basis of calculated target achievement. A review con-
+ducted by an external compensation expert confirmed
+On October 15, 2021, the Supervisory approved - in a
+decision using other customary means of communi-
+cation the Managing Board's preliminary decision re-
+garding the holding of the 2022 Annual Shareholders'
+Meeting in a virtual format.
+FISCAL 2022
+[German Public Auditor]
+Dr. Gaenslen
+Wirtschaftsprüfer
+[German Public Auditor]
+Wirtschaftsprüferin
+Breitsameter
+Wirtschaftsprüfungsgesellschaft
+Ernst & Young GmbH
+Munich, December 7, 2022
+The "General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public Auditors and
+Public Audit Firms]" as issued by the IDW on January 1, 2017, are applicable to this engagement and also govern our
+responsibility and liability to third parties in the context of this engagement (WWW.DE.EY.COM/GENERAL-ENGAGEMENT-
+TERMS).
+Limitation of liability
+Compensation Report → Independent auditor's report
+FISCAL 2022 39
+The audit of the content of the Compensation Report described in this auditor's report comprises the formal audit of the
+Compensation Report required by Sec. 162 (3) AktG and the issue of a report on this audit. As we are issuing an unqualified
+opinion on the audit of the content of the Compensation Report, this also includes the opinion that the disclosures pursuant
+to Sec. 162 (1) and (2) AktG are made in the Compensation Report in all material respects.
+Other matter - formal audit of the Compensation Report
+40
+-
+Report of the
+Supervisory Board
+Report of the Supervisory Board
+We held a total of six regular plenary meetings in
+fiscal 2022. Two meetings were held in person, two in a
+virtual format via video conference and two in a so-called
+hybrid format - that is, as in-person meetings with the pos-
+sibility of virtual participation. No meetings were held via
+telephone conference. We also made four decisions using
+other customary means of communication. Topics of dis-
+cussion at our regular plenary meetings were revenue,
+profit and employment development at Siemens AG and
+the Siemens Group, the Company's financial position and
+the results of its operations, personnel-related matters and
+sustainability. In addition, we concerned ourselves, as oc-
+casion required, with acquisition and divestment projects
+and with risks to the Company. We received regular reports
+from the Managing Board regarding the political and eco-
+nomic consequences of the war in Ukraine, its impact on
+Siemens and the impact on Siemens of the COVID-19 pan-
+demic. In this connection, we discussed, in particular, the
+risk of bottlenecks in the supply chain. In addition, we met
+regularly in closed sessions without the Managing Board
+in attendance. In these sessions, we dealt with agenda
+items that concerned either the Managing Board itself or
+internal Supervisory Board matters.
+Topics at the plenary meetings of the
+Supervisory Board
+was DEGREE, our Companywide sustainability frame-
+work, with its aspects decarbonization, ethics, gover-
+nance, resource efficiency, equity and employability. The
+Supervisory Board discussed the risks and opportunities
+for the Company connected with social and environmen-
+tal factors as well as the environmental and social impact
+of the Company's activities. The Supervisory Board also
+concerned itself with the 2021 Sustainability Report.
+Report of the Supervisory Board
+FISCAL 2022 2
+A special focus of our activities in fiscal 2022 was the fur-
+ther implementation of the Company's growth strategy.
+At our meetings and in additional informational sessions,
+we concerned ourselves intensively with the goals and
+priorities of Siemens' businesses and with the Managing
+Board's technology and personnel strategy. In this con-
+nection, we focused our attention on the accelerated
+transformation toward digitalization, sustainability and
+business and technological innovation and on the related
+opportunities for growth. Together with the Managing
+Board, we discussed markets, trends and growth fields.
+An additional focus of our activities in fiscal 2022 was
+Siemens AG's sustainability strategy. We concerned our-
+selves with sustainability-related topics in the environ-
+mental, social and governance (ESG) area. At the center
+In fiscal 2022, the Supervisory Board performed in full the
+duties assigned to it by law, the Siemens Articles of Asso-
+ciation and the Bylaws for the Supervisory Board. On the
+basis of detailed written and oral reports provided by the
+Managing Board, we monitored the Managing Board and
+advised it on the management of the Company. In my
+capacity as Chairman of the Supervisory Board, I regu-
+larly exchanged information with the President and CEO
+and the other Managing Board members. As a result, the
+Supervisory Board was always kept up to date on pro-
+jected business policies, Company planning - including
+financial, investment and personnel planning – and the
+Company's profitability and business operations as well
+as on the state of Siemens AG and the Siemens Group.
+We were directly involved at an early stage in all decisions
+of fundamental importance to the Company and dis-
+cussed these decisions with the Managing Board inten-
+sively and in detail. To the extent that Supervisory Board
+approval of the decisions and measures of Company
+management was required by law, the Siemens Articles
+of Association or our Bylaws, the members of the Super-
+visory Board - prepared in some cases by the Supervisory
+Board's committees - issued such approval after inten-
+sive review and discussion.
+-
+Against this backdrop, technology and sustainability
+were key focal topics of the Supervisory Board's work in
+fiscal 2022. In the area of technology, the launch of
+Siemens Xcelerator - an open, digital business platform
+for accelerating the digital transformation of the global
+economy is a particular highlight. The steps to imple-
+ment this groundbreaking project were continuously
+discussed by the Managing and Supervisory Boards. In
+the area of sustainability, the Supervisory Board paid
+particular attention to the further development of busi-
+ness models: effective solutions that cut CO2 emissions,
+reduce resource utilization and are indispensable for
+advanced economies. These solutions are becoming a
+centerpiece of successful business activity - both at
+Siemens and far beyond. In addition, the Supervisory
+Board intensively monitored the further development of
+DEGREE, Siemens' sustainability framework.
+-
+The new image of Siemens that the Supervisory Board
+and the Managing Board are pursuing consistently and
+in close cooperation is gaining ever-wider recognition -
+the image of a globally successful technology company
+focused on industry, infrastructure, transport and health-
+care with strong business models in the areas of digitali-
+zation and sustainability.
+In fiscal 2022, Siemens AG accelerated growth, gained
+market share in its key markets and created ground-
+breaking innovations. These achievements were par-
+ticularly striking in view of the major disruptions that
+took place during the year I above all, Russia's war
+against Ukraine and the geopolitical, energy-related and
+economic distortions that it entailed. Siemens strongly
+condemned this war, while demonstrating its ability to
+deal with the resulting disruptions. The Company's inno-
+vative, sustainability-focused portfolio proved to be a
+reliable, future-oriented basis for business success.
+Dear Shareholders,
+Report of the Supervisory Board
+Berlin and Munich, December 7, 2022
+SIEMENS
+4%
+FISCAL 2022
+5%
+217
+Michael Diekmann (since Jan. 2008)
+2%
+292
+287
+Tobias Bäumler1 (since Oct. 2020)
+215
+5%
+30%
+438
+4%
+336
+35%
+324
+462
+(1%)
+223
+3%
+Bettina Haller¹ (since April 2007)
+(1%)
+152
+(3%)
+154
+6%
+158
+32%
+149
+113
+Dr. Andrea Fehrmann' (since Jan. 2018)
+(3%)
+238
+11%
+246
+240
+(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
+Dr. Werner Brandt
+(4%)
+Jim Hagemann Snabe
+IV. SUPERVISORY BOARD MEMBERS' COMPENSATION (in € thousand)
+Change
+in %
+2022
+Change
+in %
+2021
+Change
+in %
+2020
+Change
+in %
+2019
+2018
+Fiscal
+Comparative information on profit development and change in compensation
+of employees, Managing Board and Supervisory Board members (cont.)
+D. Comparative information on profit development and annual change in compensation
+Compensation Report →
+(since Oct. 2013, Chairman since Jan. 2018)
+244
+536
+14%
+446
+(3%)
+467
+482
+(1%)
+471
+477
+(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
+Birgit Steinborn¹
+(1%)
+602
+(4%)
+608
+3%
+632
+613
+244
+0%
+256
+(2%)
+190
+7%
+194
+(4%)
+182
+189
+(since Jan. 2015)
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer
+(1%)
+「|
+152
+(3%)
+154
+44%
+194
+158
+2%
+131
+194
+185
+Dr. Nathalie von Siemens (since Jan. 2015)
+8%
+152
+(11%)
+140
+13%
+158
+24%
+140
+113
+Baroness Nemat Shafik (DBE, DPhil) (since Jan. 2018)
+50%
+196
+Kasper Rørsted (since Feb. 2021)
+201
+110
+5%
+(9%)
+240
+7%
+264
+3%
+247
+(2%)
+240
+244
+Harald Kern (since Jan. 2008)
+3%
+250
+(5%)
+243
+5%
+Jürgen Kerner (since Jan. 2012)
+Hagen Reimer (since Jan. 2019)
+394
+(1%)
+162
+(1%)
+155
+11%
+157
+26%
+141
+113
+Benoît Potier (since Jan. 2018)
+(2%)
+376
+(4%)
+384
+3%
+402
+391
+2%
+6
+(2,084)
+1,795
+1,432
+20%
+8,836
+10,626
+14%
+6,645
+7,559
+21%
+7,985
+9,696
+8%
+15,518
+16,701
+% Change
+10%
+9,545
+10,465
+2021
+2022
+Sep 30,
+Combined Management Report
+Total assets
+Total non-current assets
+(20)%
+1,935
+1,751
+10%
+(14)%
+2,865
+2,459
+13%
+22,964
+25,903
+(34)%
+7,539
+4,955
+6%
+11,023
+Other assets
+11,733
+10,827
+12,196
+14%
+29,672
+33,861
+12%
+52,298
+58,829
+85%
+223
+413
+13%
+1,565
+Deferred tax assets
+Investments accounted for using the equity method
+8.32
+5.47
+(40)%
+7.68
+4.65
+(34)%
+6,697
+4,392
+n/a
+1,062
+(21)
+(22)%
+5,636
+4,413
+(47)%
+(1,861)
+(2,741)
+(5)%
+7,496
+7,154
+(199)%
+(1,717)
+(5,141)
+(34)%
+10.0%
+15.2%
+As a result of the developments described in chapter 3, Income from continuing operations before income taxes decreased by 5%.
+Severance charges for continuing operations were €272 million, of which €190 million were in Industrial Business. In fiscal 2021,
+severance charges for continuing operations were €410 million, of which €251 million were in Industrial Business.
+Property, plant and equipment
+Other intangible assets
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Current income tax assets
+Inventories
+Contract assets
+Other current financial assets
+Cash and cash equivalents
+Trade and other receivables
+Other financial assets
+(in millions of €)
+15
+Siemens' global venture capital unit, Next47, provides capital to help start-ups expand and scale. It serves as the creator of next-generation
+businesses for Siemens by building, buying and partnering with innovative companies at any stage. Next47 is focused on anticipating how
+emerging technologies will influence our end markets. This foreknowledge enables our Company and our customers to grow and thrive
+in the age of digitalization.
+We advance technologies also through our open innovation concept. We work closely with scholars from leading universities, research
+institutions and academic start-ups, not only under bilateral cooperation agreements but also in publicly funded collective projects. Our
+focus here is on our strategic research partners and in particular the Siemens Research and Innovation Ecosystems, which we maintain at
+16 locations worldwide.
+Siemens core technologies have been determined to be critical for our Company's long-term success and that of our customers and have
+been refocused in fiscal 2022 in eleven technology areas: additive manufacturing and materials, cybersecurity and trust, data analytics
+and artificial intelligence, power electronics, simulation and digital twin, sustainable energy and infrastructure, automation, integrated
+circuits and electronics, connectivity and edge, software systems and processes, and user experience.
+Our research and development activities are ultimately geared to developing innovative, sustainable solutions for our customers - and our
+businesses - while also strengthening our own competitiveness. Joint implementation by the operating units and Technology, our central
+R&D department, ensures that research activities and business strategies are closely aligned with one another, and that all units benefit
+equally and quickly from technological developments.
+In fiscal 2022, we reported research and development expenses of €5.6 billion, compared to €4.9 billion in fiscal 2021. The resulting R&D
+intensity, defined as the ratio of R&D expenses and revenue, was 7.8%, as in fiscal 2021. Additions to capitalized development expenses
+amounted to €0.3 billion as in the prior year. As of September 30, 2022 and 2021, Siemens worldwide held approximately 43,600 granted
+patents in its continuing operations. On average, we had 46,900 R&D employees in fiscal 2022.
+4.3 Research and development
+The impairment of our stake in Siemens Energy AG burdened ROCE by 5.3 percentage points, resulting in a declined ROCE year-over-year
+which is below the target range set in our Siemens Financial Framework.
+The decrease in Basic EPS and in EPS pre PPA reflects the decrease of Net income attributable to Shareholders of Siemens AG, which was
+€3,723 million in fiscal 2022 compared to €6,161 million in fiscal 2021.
+Income from discontinued operations, net of income taxes in fiscal 2021 included primarily a gain of €0.9 billion from the sale of
+Flender GmbH.
+Income from continuing operations decreased by 22%. The tax rate in fiscal 2022 was 38% (fiscal 2021: 25%), substantially impacted
+by the nontax-deductible impairment of the stake in Siemens Energy AG. Following the war in Ukraine, Siemens decided to exit business
+activities in Russia. Subsequent to this decision, Income from continuing operations was burdened by negative effects totaling €1.3 billion
+related to these activities primarily at Mobility, SFS and Corporate Treasury.
+5. Net assets position
+2,183
+(28)%
+92,673
+679
+1,867
+8%
+1,723
+1,857
+Debt ratio
+Total liabilities
+Total non-current liabilities
+Other liabilities
+Other financial liabilities
+Provisions
+2%
+2,337
+2,381
+Deferred tax liabilities
+(20)%
+2,839
+2,275
+Provisions for pensions and similar obligations
+8%
+40,879
+43,978
+Long-term debt
+175%
+1,654
+1,925
+(14)%
+452
+Contract liabilities increased in all industrial businesses, with the build-up most evident at Siemens Healthineers, Digital Industries and
+Mobility.
+The decrease in short-term debt and current maturities of long-term debt was due mainly to repayment of euro and U.S. dollar
+instruments totaling €6.1 billion. This was partly offset by reclassifications of long-term instruments totaling €4.5 billion.
+9%
+139,372
+22%
+4,831
+5,910
+151,502
+Total liabilities and equity
+Non-controlling interests
+35%
+7%
+36%
+44,160
+48,895
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+65%
+64%
+7%
+90,381
+96,697
+7%
+50,381
+54,011
+11%
+40,000
+42,686
+Total current liabilities
+(15)%
+7,821
+6,658
+Short-term debt and current maturities of long-term debt
+% Change
+2021
+2022
+(in millions of €)
+Sep 30,
+Combined Management Report
+6.1 Capital structure
+Trade payables
+| 6. Financial position
+Deferred tax assets decreased due mainly to income tax effects related to remeasurement of defined benefits plans.
+The decrease in other assets was driven mainly by lower net defined benefit assets, primarily from effects of asset ceiling.
+The impairment on Siemens' 35% stake in Siemens Energy was the main factor for the decrease of investments accounted for using the
+equity method.
+While the currency translation effects mentioned above resulted in an increase of goodwill and other intangible assets, another major
+factor was the acquisition of Brightly. The increase of other intangible assets resulted also from the acquisition of Sqills. For further
+information see Note 3 in Notes to Consolidated Financial Statements for fiscal 2022.
+Inventories increased in all industrial businesses, with the build-up most evident at Siemens Healthineers, Digital Industries and Smart
+Infrastructure.
+Both other current financial assets and other financial assets increased due mainly to higher loans receivable at SFS. The latter line item
+rose also due to increased positive fair values of derivative financial instruments, partly offset by effects related to the sale of Siemens'
+financing and leasing business in Russia.
+Our total assets at the end of fiscal 2022 were influenced by positive currency translation effects of €10.7 billion (particularly affecting
+goodwill, other intangible assets and other financial assets), primarily involving the U.S. dollar.
+9%
+139,372
+151,502
+6%
+87,074
+16
+n/a
+10,317
+17%
+>200%
+10
+61
+Liabilities associated with assets classified as held for disposal
+(2)%
+7,628
+7,448
+Other current liabilities
+32%
+1,809
+2,381
+8,832
+Current income tax liabilities
+2,293
+2,156
+Current provisions
+22%
+9,876
+12,049
+Contract liabilities
+(7)%
+1,731
+1,616
+Other current financial liabilities
+(6)%
+(84)
+1,520
+(3)%
+Europe, C.I.S., Africa, Middle East
+(in millions of €)
+Orders (location of customer)
+Currency translation effects added five percentage points each to order and revenue growth, respectively. Portfolio transactions, in
+particular the acquisition of Varian by Siemens Healthineers in the third quarter of fiscal 2021, added three percentage points to order and
+two percentage points to revenue growth year-over-year. The ratio of orders to revenue (book-to-bill) for Siemens in fiscal 2022 was 1.24.
+The order backlog was €102 billion as of September 30, 2022.
+4.1 Orders and revenue by region
+4. Results of operations
+Combined Management Report
+13
+Financing, eliminations and other items included impacts totaling €0.5 billion at Corporate Treasury, resulting from the sale of Siemens'
+financing and leasing business in Russia at the end of fiscal 2022. Further negative effects included a revaluation loss of €0.3 billion on
+the stake in Thoughtworks Holding, Inc. (the prior year included a gain of €0.3 billion on this stake) as well as a loss of €0.1 billion resulting
+from applying hyperinflation accounting related mainly to Türkiye. These effects were partly offset by a gain of €0.5 billion in connection
+with an investment accounted for using the equity method mainly due to its fair value measurement. For comparison, fiscal 2021 included
+gains of €0.4 billion related to the transfers of assets to Siemens Pension-Trust e.V. in Germany and expenses of €0.1 billion from revised
+estimates related to provisions for a legacy project.
+The result for Siemens Energy Investment was strongly influenced by an impairment of €2.7 billion on Siemens' 35% stake in Siemens
+Energy AG. The negative result also included Siemens' share of Siemens Energy's after-tax loss and, in addition, expenses from amortization
+of assets resulting from purchase price allocation due to the initial recognition of the investment at fair value in September 2020.
+The increase in Amortization of intangible assets acquired in business combinations related mainly to the acquisition of Varian by
+Siemens Healthineers.
+(1,717)
+(5,141)
+(in millions of €)
+Total assets
+Sep 30,
+Sep 30,
+2022
+2021
+30,384
+33,263
+Earnings before taxes were affected by an increase of expenses for credit risk provisions compared to fiscal 2021 and for impairments
+on assets in the debt business. Therein impacts of €0.2 billion were recorded in connection with the sale of the financing and leasing
+business in Russia at the end of fiscal 2022. Decreased results from the debt business were nearly offset by a sharply improved earnings
+contribution from the equity business, which was driven by gains from fair value measurements and sales of investments, including an
+offshore wind-farm project divested for a gain of €0.1 billion, and from energy-related investments in connection with rising prices in
+global energy markets.
+The increase in total assets since the end of fiscal 2021 was driven by positive currency translation effects.
+Net cash from operations (defined as the sum of cash flows from operating and investing activities) amounted to €(616) million compared
+to €105 million in fiscal 2021. In fiscal 2022 and fiscal 2021, net cash from operations comprised Free cash flow of €985 million and €820
+million, respectively, and remaining cash flows from investing activities, including from change in receivables from financing activities, of
+€(1,601) million and €(715) million, respectively.
+SFS is de-risking its business profile by reducing exposure to energy-related equity investments. This has the additional benefit of more
+tightly focusing SFS's business scope and capital allocation on areas of intense domain know-how closely aligned with Siemens' customers
+and markets, particularly for Digital Industries, Smart Infrastructure and Mobility. Accordingly, SFS is influenced by the business
+development of the markets served by our industrial businesses, among other factors, including macroeconomic effects like inflation or
+recession which could impact the credit risk of customers. In addition to its high level of diversification across industries, SFS has a strong
+regional footprint in investment-grade countries, with the highest share in the U.S. SFS intends to maintain a highly diversified portfolio
+across regions, while participating in the strong economic development of selected Asian markets.
+therein: Germany
+Americas
+therein: U.S.
+Asia, Australia
+20,990
+5%
+23%
+17,555
+21,563
+8%
+25%
+20,474
+25,646
+24%
+24%
+3.7 Portfolio Companies
+12,118
+22%
+23%
+34,311
+42,373
+Comp.
+% Change
+Actual
+2021
+Fiscal year
+2022
+'As defined by the International Monetary Fund.
+Siemens (continuing operations)
+therein: emerging markets'
+therein: China
+15,046
+Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
+solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
+and fiber. Unrealized potential within these businesses requires adjustment in their approach using defined measures including internal
+re-organization, digitalization, cost improvements, and optimizing procurement, production and service activities. After achieving certain
+threshold performance targets, businesses may be transferred to one of Siemens industrial businesses, combined with an external business
+from the same industry, sold or placed into an external private equity partnership.
+During fiscal 2022, Siemens sold its mail and parcel-handling business (formerly part of Siemens Logistics) to the Körber Group and its at-
+equity investment in Valeo Siemens eAutomotive GmbH to Valeo GmbH. Siemens also reached an agreement in May 2022 to sell its
+Commercial Vehicles business to Meritor, Inc. Closing of the transaction was at the beginning of fiscal 2023.
+Taking these divestments into consideration, Portfolio Companies consists mainly of three fully consolidated, separately managed units.
+Large Drives Applications, which offers electric motors, converters and solutions for mining, is being carved out to increase its
+entrepreneurial freedom and thereby unlock its full potential. Siemens Logistics, offers sorting technology and solutions, focused on
+baggage and cargo handling at airports. The third fully consolidated unit, Siemens Energy Assets, comprises certain remaining regional
+business activities of the former Gas and Power segment; as part of the Siemens Energy carve-out these activities remained with Siemens
+due to country-specific regulatory restrictions or economic considerations.
+Profit
+(in millions of €)
+Siemens Energy Investment
+Siemens Real Estate
+Innovation
+Governance
+Centrally carried pension expense
+Amortization of intangible assets acquired in business combinations
+Financing, eliminations and other items
+Reconciliation to Consolidated Financial Statements
+Fiscal year
+2022
+2021
+Despite supply chain constraints, volume increased primarily due to Large Drives Applications, Siemens Energy Assets and the airport
+business of Siemens Logistics. The profit was driven by the two disposals mentioned above: a gain of €1.1 billion from the sale of the mail
+and parcel-handling business and a revaluation gain of €0.3 billion in connection with the sale of the equity investment in Valeo Siemens
+eAutomotive GmbH. For comparison, the loss in fiscal 2021 was due mainly to negative results in the equity investment. Additionally,
+Portfolio Companies recorded lower severance charges of €20 million, down from €74 million in fiscal 2021. Portfolio Companies' order
+backlog was €4 billion at the end of fiscal 2022, of which €3 billion are expected to be converted into revenue in fiscal 2023.
+Although the broad range of businesses is operating in diverse markets, overall the main markets served by Portfolio Companies are
+generally impacted by uncertainties regarding geopolitical and economic developments which tend to increase customer caution
+regarding purchasing decisions. However, ongoing recovery is expected to continue in most end-customer vertical markets in fiscal 2023.
+3.8 Reconciliation to Consolidated Financial Statements
+(2,911)
+118
+94
+(190)
+(207)
+(582)
+(751)
+(113)
+(170)
+(990)
+(738)
+(474)
+(396)
+16,589
+Profit margin
+47.0%
+Demand within the industries served by Portfolio Companies mainly shows a delayed response to changes in the overall economic
+environment. The results are strongly dependent, however, on customer investment cycles in their key industries. In commodity-based
+industries such as oil and gas or mining, these cycles are driven mainly by commodity price fluctuations rather than changes in produced
+volumes. The heterogonous industrial customer base of the fully consolidated units requires a dedicated sales approach based on in-depth
+understanding of specific industries and customer requests, resulting in the use of various sales and marketing channels for Portfolio
+Companies.
+12
+(in millions of €)
+Orders
+Revenue
+Profit
+Combined Management Report
+Fiscal year
+% Change
+2022
+2021
+(2.8)%
+Actual
+3,995
+3,516
+14%
+15%
+3,234
+3,058
+6%
+8%
+1,520
+(84)
+n/a
+Comp.
+Long-term debt increased due primarily to the issuance of euro instruments of €5.0 billion and currency translation effects for bonds
+issued in the U.S. dollar and British pound. Set against this were mainly decreases from the above-mentioned reclassifications.
+Provisions for pensions and similar obligations decreased mainly due to a higher discount rate. This effect was partially offset by a
+negative return on plan assets and inflation-related adjustments.
+27%
+10,831
+Income tax expenses
+Income from continuing operations before income taxes
+Reconciliation to Consolidated Financial Statements
+Portfolio Companies
+Siemens Financial Services
+Profit margin Industrial Business
+Industrial Business
+Siemens Healthineers
+Mobility
+Smart Infrastructure
+Digital Industries
+(in millions of €, earnings per share in €)
+4.2 Income
+In the Asia, Australia region, all four industrial businesses contributed to the revenue increase. As in the region, in China, the strong
+revenue growth was driven by Digital Industries, which recorded substantial growth. Revenue growth both in the region and in China
+benefited from strong positive currency translation effects.
+Combined Management Report
+14
+In the Americas and in the U.S., revenue was up in all four industrial businesses with Siemens Healthineers, driven by a high demand from
+rapid coronavirus antigen tests, Smart Infrastructure and Digital Industries reporting double-digit growth. As with orders, revenue was
+subject to strong positive currency translation effects and portfolio effects which related primarily to the acquisition of Varian.
+Revenue related to external customers rose in all four industrial businesses year-over-year, with the highest contributions coming from
+Siemens Healthineers. Digital Industries and Smart Infrastructure recorded significant increases, while Mobility posted moderately higher
+revenue year-over-year. The revenue increase in emerging markets was driven by strong demand in China and, to a lesser degree in India.
+Revenue in Europe, C.I.S., Africa, Middle East increased with contributions from all four industrial businesses, led by significant growth
+at Digital Industries. Within the region, Germany showed clear growth driven by double-digit growth at Mobility and Digital Industries,
+while revenue at Siemens Healthineers declined significantly mainly due to lower volume from rapid coronavirus antigen tests.
+6%
+15%
+17,651
+8%
+16%
+Income from continuing operations
+Income (loss) from discontinued operations, net of income taxes
+Net income
+Basic EPS
+512
+498
+15.0%
+15.1%
+17%
+8,786
+10,277
+18%
+2,847
+3,369
+(7)%
+62,265
+850
+29%
+1,729
+2,222
+16%
+3,360
+3,892
+% Change
+2021
+2022
+Fiscal year
+EPS pre PPA
+ROCE
+794
+71,977
+20,249
+5%
+16%
+Siemens (continuing operations)
+therein: China
+Asia, Australia
+therein: U.S.
+Americas
+therein: Germany
+Europe, C.I.S., Africa, Middle East
+(in millions of €)
+Revenue (location of customer)
+In the Asia, Australia region, order intake was up on double-digit increases in the majority of industrial businesses, with sharp growth at
+Digital Industries. The pattern of order development in China was largely the same as for the region. Overall, order intake both in the
+region and in China benefited clearly from positive currency translation effects.
+Order intake in both the Americas region and in the U.S. showed a similar pattern: Smart Infrastructure, Digital Industries and Siemens
+Healthineers recorded double-digit growth, while orders in Mobility declined sharply on a lower volume from large orders which in the
+prior year included a €2.8 billion order in the U.S. In addition, order intake both in the region and in the U.S. was subject to significant
+positive currency translation effects, as well as strong portfolio effects which related primarily to the acquisition of Varian.
+therein: emerging markets'
+In the Europe, C.I.S., Africa, Middle East region, order intake increased in all four industrial businesses. Order growth was led by
+substantial increases in Digital Industries and Mobility. Smart Infrastructure and Siemens Healthineers also recorded strong order growth
+year-over year. In Germany, Mobility posted sharp growth due to a higher volume from large orders that included a €1.5 billion order for
+high-speed trains. Digital Industries and Smart Infrastructure also posted double-digit growth, while orders for Siemens Healthineers
+declined due mainly to lower volume from rapid coronavirus antigen tests.
+17%
+26%
+19,208
+24,139
+17%
+25%
+71,374
+89,010
+8%
+20%
+9,029
+Despite a continuing complex macroeconomic environment influenced by energy shortages and availability concerns stemming from the
+war in Ukraine, high inflation and effects associated with COVID-19, orders related to external customers rose in all four industrial
+businesses year-over-year with Digital Industries, Smart Infrastructure and Siemens Healthineers recording substantial order growth. The
+broad-based increase in emerging markets was driven by China and, to a lesser degree, India.
+15%
+1 As defined by the International Monetary Fund.
+2022
+8,232
+9,557
+10%
+20%
+14,815
+17,816
+10%
+28%
+13,521
+17,241
+10%
+Fiscal year
+27%
+20,680
+6%
+6%
+11,249
+11,961
+6%
+Comp.
+% Change
+Actual
+8%
+31,138
+33,481
+2021
+16,312
+The increase of other financial liabilities resulted primarily from negative fair values of derivative financial instruments, which declined
+further.
+Current income tax liabilities increased mainly due to future tax payments resulting from the sale of Siemens' mail and parcel-handling
+business, among other divestments.
+Capital structure ratio
+3.4 Mobility
+Overall, markets served by Smart Infrastructure grew clearly in fiscal 2022. Market dynamics were influenced by a further recovery from
+COVID-19-related effects, severe supply chain and logistics constraints, strong price inflation and effects from the war in Ukraine. On a
+geographic basis, all reporting regions contributed to growth. Price inflation affected all regions and came in particularly high in the U.S.
+In China, growth was held back by lockdown measures, which also impacted growth dynamics in other countries, while Europe was most
+strongly affected by the war in Ukraine. Grid markets grew above average with market growth driven by demand for integration of energy
+from renewable resources. Industrial markets grew nearly as fast as grid markets, driven by growth in the automotive industry among
+other factors. Growth in the buildings market came in somewhat lower mainly due to weaker growth momentum in commercial building
+markets. In fiscal 2023, markets served by Smart Infrastructure are expected to grow slightly slower than in fiscal 2022. While growth in
+residential and commercial building markets and some industrial markets is expected to slow down somewhat, demand for data centers
+and power distribution is expected to be robust. Price inflation is expected to contribute to market growth in fiscal 2023. Overall, market
+development in fiscal 2023 is expected to continue to be influenced by supply chain constraints and effects from the war in Ukraine,
+including on energy prices. Further impacts could arise from potential lockdown measures in China and geopolitical tensions.
+Orders at Smart Infrastructure rose by double-digits in all businesses, led by the electrical products business and the electrification business
+including a number of larger contract wins. Order growth was highlighted by strong demand from industrial customers, for data centers
+and for digital building services, and included proactive purchasing by customers. Revenue also rose in all businesses led by the electrical
+products business, which operated in strong customer markets. Smart Infrastructure successfully avoided major disruptions from
+challenging supply chain conditions. On a geographic basis, orders and revenue rose in all three reporting regions. The strongest growth
+contribution came from the Americas region, driven by the U.S., while growth in the Asia, Australia region was held back by impacts related
+to COVID-19 in China. Both order and revenue development included positive currency translation effects. Profit and profitability rose in
+all businesses, with the strongest increases coming from the electrical products business and the buildings business. The increases were
+due mainly to higher capacity utilization, pricing measures to offset cost inflation and cost savings related to prior execution of Smart
+Infrastructure's competitiveness program. Severance charges, largely associated with the program, fell to €28 million from €47 million a
+year earlier. In fiscal 2022, Smart Infrastructure recorded a €54 million gain from the sale of a business. These positive effects were only
+partly offset by COVID-19-related impacts mainly from medical leaves and lockdowns in China. Smart Infrastructure's order backlog was
+€15 billion at the end of the fiscal year, of which €10 billion are expected to be converted into revenue in fiscal 2023.
+Profit margin
+11.5%
+12.8%
+29%
+1,729
+2,222
+7%
+Mobility combines all Siemens businesses in the area of passenger and freight transportation. Within its rolling stock business, its offerings
+encompass trains for urban and regional transport such as vehicles for metro systems, trams and light rail, and commuter trains as well as
+trains and passenger coaches for intercity and long-distance services, such as high-speed rail. Rolling stock offerings furthermore include
+locomotives for freight or passenger transport and solutions for automated transportation such as automated people movers. Offerings in
+its rail infrastructure business include products and solutions for rail automation, such as automatic train control systems, interlocking,
+operations control and telematic systems, digital station solutions and railway communication systems, signaling on-board and crossing
+products and yard and depot solutions; and for electrification such as AC and DC traction power supply, contact lines and network control.
+With its service business, Mobility provides customer services for rolling stock and rail infrastructure throughout the entire lifecycle, such
+as maintenance and digital services. In its turnkey business, it bundles consulting, planning, financing, construction, service and operation
+of complete mobility systems. Mobility's software business comprises intermodal solutions, such as platforms for fleet management, route
+planning, ticketing and payments solutions and data analytics. To enhance these offerings, Mobility at the beginning of fiscal 2022
+acquired SQCAP B.V. (Sqills), Netherlands, a provider of cloud-based inventory management, reservation, and ticketing software for public
+transport operators. During fiscal 2022, Mobility divested its road traffic business, Yunex Traffic.
+12%
+3,799
+10%
+16%
+15,015
+17,353
+23%
+29%
+16,071
+20,798
+Comp.
+3,387
+Mobility sells its products, systems and solutions through its worldwide network of sales and execution units. The principal customers of
+Mobility are public and state-owned companies in the transportation and logistics sectors, so its markets are driven primarily by public
+spending. Customers usually have multi-year planning and implementation horizons, and their contract tenders therefore tend to be
+independent of short-term economic trends. Large contracts in the rolling stock and the rail infrastructure business are often awarded
+together with service contracts, which start to generate revenue only after the respective products and solutions have been put in
+operation, which can be a number of years after the contract award. Mobility's principal competitors are multinational companies.
+Consolidation among Mobility's competitors is continuing and may lead to increased competitive pressure within the rail transport industry
+and also to fewer sourcing options for rail customers.
+The main trends driving Mobility's markets are urbanization, the need to reduce emissions from transportation, and digitalization.
+Increasing populations in urban centers need daily mobility that is simpler, faster, and more flexible, reliable and affordable. At the same
+time, cities and national economies face the challenge of cutting CO₂ and noise emissions and reducing space requirements and costs of
+transportation. The pressure on mobility providers to meet all these needs is expected to rise continuously. Furthermore, improving
+availability, connectivity, and sustainability of rail infrastructures increasingly requires digital solutions, which generates growth
+opportunities for providers of such solutions. IoT systems and new software-based solutions such as Mobility as a Service (MaaS) are
+expected to become major growth enablers for the rail industry. While a significant drop in ridership driven by COVID-19 has strongly
+impacted mobility operators, overall trends towards urbanization and decarbonization persist unchanged and many countries have been
+allocating significant funds to rail and public transport operators to address these trends.
+9
+794
+7%
+12%
+1,420
+1,592
+3%
+5%
+9,232
+9,692
+2%
+4%
+12,696
+13,200
+Comp.
+% Change
+Actual
+2021
+2022
+Fiscal year
+therein: service business
+Revenue
+(in millions of €)
+Orders
+Mobility's R&D strategy is focused on reducing life-cycle costs of rail infrastructures and rolling stock, securing system availability,
+increasing network capacity of rail infrastructures, optimizing the processes of rail operators and improving passenger experience. With
+Siemens Xcelerator, Mobility intends to make software more modular and increasingly move it to the cloud. At the same time, Mobility
+intends to enhance connectivity of hardware and software and provide open application programming interfaces (APIs). Thereby Mobility
+accelerates the pace and impact of digital innovation, which in turn benefits owners, operators, and customers of rail transport. Mobility's
+major R&D areas include the development of efficient vehicle platforms with optimized lifecycle cost; eco-friendly, alternative power
+supplies for trains; the Railigent X open application suite for maintenance of rail assets; the Distributed Smart Safe System (DS3), which
+allows for hardware-independent and cloud-enabled signaling; automatic train operation for European Train Control System (ETCS); 5G
+for wireless-based activities; the Mobility Software Suite X for operators and passengers; and cyber security. Mobility's investments focus
+mainly on maintaining or enhancing its production facilities, on meeting project demands and enhancing its depot services.
+Combined Management Report
+Actual
+2022
+% Change
+Fiscal year
+455
+Change in short-term debt and other financing activities
+(6,663)
+Repayment of long-term debt (including current maturities of long-term debt)
+4,969
+Issuance of long-term debt
+(305)
+Re-issuance of treasury shares and other transactions with owners
+(1,565)
+Purchase of treasury shares
+Cash flows from financing activities
+(2,490)
+Cash flows from investing activities - continuing and discontinued operations
+(23)
+Cash flows from investing activities - discontinued operations
+(2,467)
+Cash flows from investing activities - continuing operations
+4,327
+Other disposals of assets
+(1,100)
+Change in receivables from financing activities of SFS
+(1,404)
+Purchase of investments and financial assets for investment purposes
+(824)
+850
+Interest paid
+Dividends attributable to non-controlling interests
+Combined Management Report
+Profit
+therein: service business
+Revenue
+Orders
+(in millions of €)
+(2,207)
+The main factors for the increase in total equity attributable to shareholders of Siemens AG were €3.7 billion in net income attributable
+to shareholders of Siemens AG; positive other comprehensive income, net of income taxes, of €5.8 billion resulting mainly from currency
+translation, partly offset by negative effects from remeasurements of defined benefit plans. The increase was partly offset by dividend
+payments of €3.2 billion (for fiscal 2021) and the repurchases of 14,185,791 treasury shares totaling €1.6 billion (including commission
+to a commissional bank).
+18
+Cash outflows from the re-issuance of treasury shares and other transactions with owners were driven by the purchase of Siemens
+Healthineers AG treasury shares.
+Cash inflows from other disposals of assets mainly included proceeds of €1.1 billion from the sale of the mail and parcel-handling
+business by Portfolio Companies and €0.9 billion from the sale of Yunex Traffic by Mobility, as well as repayments of loans and disposals
+of assets eligible as central bank collateral.
+Cash outflows from change in receivables from financing activities of SFS related primarily to SFS' debt business.
+Cash outflows for purchase of investments and financial assets for investment purposes primarily included additions of assets eligible
+as central bank collateral and payments for debt or equity investments.
+Cash outflows from acquisitions of businesses, net of cash acquired, were due mainly to the acquisitions of Brightly by Smart
+Infrastructure for €1.5 billion, including the settlement of debt, and Sqills by Mobility for €0.5 billion.
+All industrial businesses recorded cash inflows from operating activities which exceed their profit, with the highest contribution from
+Digital Industries. Cash inflows from changes in operating net working capital were driven by Mobility.
+(7,502)
+(1)
+Cash flows from financing activities - continuing and discontinued operations
+(7,502)
+(354)
+(3,215)
+Cash flows from financing activities - discontinued operations
+Cash flows from financing activities continuing operations
+Dividends paid to shareholders of Siemens AG
+(7)%
+2021
+9.2%
+Debt and credit facilities
+Our capital structure ratio as of September 30, 2022 decreased to 1.0 from 1.5 a year earlier. The change was due to a decrease in Industrial
+net debt and a higher EBITDA.
+Acquisitions of businesses, net of cash acquired
+Fiscal year
+2022
+4,392
+537
+8.2%
+5,392
+10,322
+(81)
+10,241
+Cash flows from investing activities
+15.5%
+15.6%
+49
+269
+As of September 30, 2022, we recorded, in total, €44.8 billion in notes and bonds, €2.7 billion in loans from banks, €0.1 billion in other
+financial indebtedness and €3.0 billion in lease liabilities. Notes and bonds were issued mainly in the U.S. dollar and euro, and to a lesser
+extent in the British pound.
+512
+We have credit facilities totaling €7.5 billion which were unused as of September 30, 2022.
+17
+Cash flows from operating activities - continuing and discontinued operations
+Cash flows from operating activities - discontinued operations
+Cash flows from operating activities - continuing operations
+Other reconciling items to cash flows from operating activities - continuing operations
+Change in operating net working capital
+Net income
+Cash flows from operating activities
+(in millions of €)
+6.2 Cash flows
+The share buyback program announced on June 24, 2021 with a volume of up to €3 billion ending September 15, 2026, at the latest,
+began on November 15, 2021. This buyback is executed based on the authorization provided by the Annual Shareholders' Meeting on
+February 5, 2020. In fiscal 2022, Siemens repurchased 14,185,791 shares under this share buyback program.
+Share buyback
+For further information about our commitments and contingencies see Note 21 in Notes to Consolidated Financial Statements for fiscal
+2022.
+Irrevocable loan commitments amounted to €4.0 billion. A considerable portion of these commitments resulted from asset-based lending
+transactions, meaning that the respective loans can be drawn only after the borrower has provided sufficient collateral.
+In addition to these commitments, there are contingent liabilities of €0.4 billion which result mainly from other guarantees, legal
+proceedings and from joint and several liabilities of consortia. Other guarantees include €0.1 billion in connection with the Siemens Energy
+business, for which Siemens has reimbursement rights towards Siemens Energy.
+As of September 30, 2022, the undiscounted amount of maximum potential future payments related primarily to credit and performance
+guarantees amounted to €9.8 billion. This included primarily Siemens' obligations from performance and credit guarantees in connection
+with the Siemens Energy business, for which Siemens has reimbursement rights towards Siemens Energy.
+Off-balance-sheet commitments
+Combined Management Report
+For further information about our debt see Note 16 in Notes to Consolidated Financial Statements for fiscal 2022. For further information
+about the functions and objectives of our financial risk management see Note 25 in Notes to Consolidated Financial Statements for fiscal
+2022.
+498
+Additions to intangible assets and property, plant and equipment
+2022
+3,369
+15.5%
+6%
+21%
+9%
+Comp.
+% Change
+Actual
+26%
+20,320
+17,997
+21,715
+25,556
+2021
+2022
+Fiscal year
+Profit
+Revenue
+Orders
+(in millions of €)
+The addressable markets of Siemens Healthineers are shaped by four major trends. The first is demographic, in particular the growing and
+aging global population. This trend poses major challenges for global healthcare systems and, at the same time, offers opportunities for
+players in the healthcare industry as the demand for cost-efficient healthcare solutions continues to intensify. The second trend is
+economic development in emerging countries, which opens up improved access to healthcare for many people. Significant investment in
+the expansion of private and public healthcare systems will persist, driving overall demand for healthcare products and services and hence
+market growth. The third trend is the increase in chronic diseases as a consequence of an aging population and environmental and lifestyle-
+related changes. This trend results in far more patients with multiple morbidities, putting further pressure on healthcare systems and
+leading to higher costs; it also increases the need for new ways to detect and treat diseases more timely. The fourth global trend, the
+transformation of healthcare providers such as hospitals and laboratories, results from a combination of societal and market forces that
+are driving healthcare providers to operate and organize their businesses differently. Increasing cost pressure on the healthcare sector is
+prompting the introduction of new remuneration models for healthcare services, such as value-based rather than treatment-based
+reimbursement. Digitalization and artificial intelligence are thereby likely to be key enablers for healthcare providers as they increasingly
+focus on enhancing the overall patient experience, with better outcomes and overall reduction in cost of care. This development is driven
+partly by society's increasing resistance to healthcare costs, payers' increasing professionalization, burdens from chronic disease, rapid
+scientific progress and staff shortages. As a result of these factors, healthcare providers are consolidating into networked structures,
+resulting in larger clinic and laboratory chains, often operating internationally, which act increasingly like large corporations. Applying this
+industrial logic to the healthcare market can lead to systematic improvements in quality, while at the same time reducing costs.
+R&D activities at Siemens Healthineers are aimed at delivering innovative, sustainable solutions to its customers while safeguarding and
+improving its competitiveness. In particular, in the areas of artificial intelligence, sensing technology, and robotics R&D activities were
+expanded. In addition, Siemens Healthineers harnesses advanced technologies such as Al and data analytics to improve cancer treatment
+and expand global access to cancer care. Key applications of sensing technology range from laboratory diagnostic tests via computed
+tomography detectors and electromagnetic measurement fields in magnetic resonance all the way to ultrasonic transducers. Siemens
+Healthineers already uses robots for laboratory assistance, radiation, patient handling, and robotic imaging devices. Siemens Healthineers
+focuses its investments mainly on enhancing competitiveness and innovation. The main capital expenditures were for spending for
+factories to expand manufacturing and technical capabilities, in particular in the U.S. and China, and for additions to intangible assets,
+including capitalized development expenses within the Atellica Solution and Central Lab product lines.
+guided minimally invasive treatments, in areas such as cardiology, interventional radiology, and surgery. Competition in the imaging,
+Varian and advanced therapies businesses consists mainly of a small number of large multinational companies, while the diagnostics
+market is fragmented with a variety of global players that compete with each other across market segments and also with several regional
+players and specialized companies in niche technologies. The business activities of Siemens Healthineers are to a certain extent resilient
+to short-term economic trends because large portions of its revenue stem from recurring business. They are, however, directly and
+indirectly dependent on trends in healthcare markets and on developments in health policy, and geopolitical developments around the
+world.
+Combined Management Report
+10
+Siemens as majority shareholder holds just over 75% of the shares of the publicly listed Siemens Healthineers AG, Germany (Siemens
+Healthineers). Siemens Healthineers is a global provider of healthcare solutions and services. It develops, manufactures, and sells a diverse
+range of innovative diagnostic and therapeutic products and services to healthcare providers. In addition, Siemens Healthineers also
+provides clinical consulting services, as well as an extensive range of training and service offerings. This comprehensive portfolio supports
+customers along the entire care continuum, from prevention and early detection through to diagnosis, treatment, and follow-up care. The
+customer spectrum ranges from public and private healthcare providers, including hospitals and hospital systems, public and private clinics
+and laboratories, universities, physicians/joint medical practices, public health agencies, public and private health insurers, through to
+pharmaceutical companies and clinical research institutes. The imaging business provides imaging products, services, and solutions as
+well as digital offerings. Its most important products are devices for magnetic resonance imaging, computed tomography, X-ray, molecular
+imaging, and ultrasound. The diagnostics business comprises in-vitro diagnostic products and services that are offered to healthcare
+providers in the fields of laboratory and point-of-care diagnostics. The Varian business provides innovative, multi-modality cancer care
+technologies along with solutions and services to oncology departments in hospitals and clinics. The portfolio of the advanced therapies
+business consists of highly integrated products, solutions, and services across multiple clinical fields that are designed to support image-
+3.5 Siemens Healthineers
+Order intake exceeded the strong prior-year level and reached a new record. Mobility again took in a substantial volume from large orders,
+nearly on the high level of the prior year. Contract wins in fiscal 2022 were highlighted by an order worth €1.5 billion for high-speed trains
+in Germany, a number of orders for locomotives, among them a €0.6 billion order for locomotives and associated service in the U.S., and
+an order worth €0.3 billion for a train control system from Norway. Order intake a year earlier included among others Mobility's largest-
+ever contract in the Americas, worth €2.8 billion, for trainsets and associated services. Revenue rose in all businesses, led by the services
+business and the rail infrastructure business. Growth was partly held back by supplier delays in delivering materials and components, along
+with effects related to COVID-19 mainly including medical leave for employees. On a geographic basis, revenue growth was driven mainly
+by the region Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East, due particularly to a significant growth
+contribution from Germany. Profit was burdened by impairments and other charges totaling €0.6 billion for winding down business
+activities in Russia, among them a €0.2 billion impairment of the entire carrying amount of an investment accounted for using the equity
+method. In addition, profit included impacts from supplier delays and COVID-19 effects. These burdens were largely offset by a gain of
+€0.7 billion from the sale of Yunex Traffic. Severance charges were €27 million, compared to €22 million a year earlier. Mobility's order
+backlog was €36 billion at the end of the fiscal year, of which €10 billion are expected to be converted into revenue in fiscal 2023.
+Markets served by Mobility grew moderately in fiscal 2022, supported by long-term trends such as urbanization and decarbonization,
+though growth dynamics were held back by effects related to COVID-19 and by material shortages. The market for rolling stock saw large
+orders across all segments, especially for high-speed trains, commuter trains and locomotives. The rail infrastructure market has seen
+growth in both urban and mainline segments due to the renewal and extension of mainline tracks and the ongoing trend towards
+automatic train protection (ATP), including communications-based train control (CBTC) and ETCS technologies. The service business
+benefited from an increased installed base at global level and large backlogs in maintenance orders backlogs in some countries. On a
+geographic basis, market development in Europe continued to be characterized by awards of mid-size to large orders, particularly in
+Germany, Denmark and in Switzerland. While demand in the Middle East rose, demand in Africa was held back by ongoing uncertainties
+related to budget constraints and political climates. In the Americas region, customer demand was strongest for urban and mainline
+transport, especially in the U.S. and Canada. Within the Asia, Australia region, markets saw ongoing rail investments, particularly in China.
+For fiscal 2023, markets served by Mobility are expected to grow significantly with all reporting regions contributing to growth. Market
+expansion is expected to be supported by a large number of fiscal stimulus and investment programs. Mobility anticipates that rail
+operators in Europe, particularly in Germany and in the U.K., will continue making significant investments in rolling stock and advanced
+rail infrastructure solutions and that customers in the Middle East and Africa will tender large turnkey systems, especially for additional rail
+lines in Egypt, Saudi Arabia and the United Arab Emirates. Markets in the Americas region are expected to remain strong, especially due
+to ongoing investments in urban and mainline transport and large investment programs dedicated to transportation and enhancements
+of existing infrastructure in the U.S. In Asia, markets in China are also expected to remain strong with investments in high-speed trains,
+urban transport, freight logistics and rail infrastructure driving growth. Markets in India are expected to grow strongly due to investments
+in high-speed trains and infrastructure. Despite an adverse short-term impact from COVID-19, rail transport and intermodal mobility
+solutions are expected to remain a high priority. In emerging countries, rising incomes are expected to result in greater demand for public
+transport solutions.
+Profit margin
+Profit
+2,847
+18%
+15.8%
+Profit margin
+In fiscal 2022, Siemens Healthineers recorded double-digit growth both in orders and revenue, which developed similarly. All businesses
+contributed to this growth. On a geographic basis, the Americas and Asia, Australia regions recorded substantial growth, both benefiting
+from strong positive portfolio and currency translation effects. In total, portfolio effects, primarily related to the acquisition of Varian in
+the third quarter of fiscal 2021, added ten percentage points to order and nine percentage points to revenue growth; additionally, currency
+translation effects added seven percentage points to order and six percentage points to revenue growth. Profit benefited primarily from
+strong earnings development in the diagnostics business which was driven by high demand for rapid coronavirus antigen tests. The
+imaging business again posted strong earnings, which were higher than in the prior year. Overall profitability was burdened by subsequent
+measurement effects from purchase price allocation related to the Varian acquisition totaling €0.2 billion and by higher procurement and
+logistics costs. Severance charges were €71 million in fiscal 2022 and €68 million in fiscal 2021. The order backlog for Siemens
+Healthineers was €34 billion at the end of the fiscal year, of which €12 billion are expected to be converted into revenue in fiscal 2023.
+In general, the addressable global markets excluding rapid coronavirus antigen tests grew slightly on a revenue basis in fiscal 2022. From
+a regional perspective, the Asia, Australia region saw market growth in most businesses; in China, growth opportunities were prevented
+by COVID-19-related restrictions. In the region Europe, C.I.S., Africa, Middle East, EU government investment programs, among others,
+were able to support growth in most businesses. In the U.S., market growth was recorded in most businesses. Globally, overall market
+development for the imaging business was supported by positive developments in the magnetic resonance imaging and nuclear medicine
+markets, after demand had already recovered in the prior fiscal year; in contrast, delays in revenue recognition due to global supply chain
+constraints, among other factors, weakened growth. The imaging market is expected to grow moderately overall in fiscal 2023, driven
+mainly by pent-up demand for major modalities. Within the diagnostics business, the rapid coronavirus antigen test market experienced a
+sharp increase; in addition, point-of-care (excluding rapid coronavirus antigen tests) and laboratory diagnostics (excluding molecular
+diagnostics) recorded ongoing recovery in patient volumes as markets continued to return to normalized levels following COVID-19
+lockdowns. The diagnostics market is expected to achieve moderate growth in fiscal 2023, excluding COVID-19 testing and molecular
+diagnostics, and return to pre-COVID-19 market growth across most regions. In Varian markets, product and service innovations led to
+higher customer investment in the U.S. and Western Europe, while other markets were driven by a need to expand access to oncology
+equipment and services to underserved population groups and regions. The market for Varian is expected to continue its significant
+growth. Despite macroeconomic headwinds and global supply chain challenges, the resumption of oncology investments is expected to
+increase. For advanced therapies, the market recovered from COVID-19 in all relevant regions. The expectation for advanced therapies is
+that the market will continue to grow clearly in fiscal 2023, but at a more measured pace than in fiscal 2022.
+11
+Combined Management Report
+3.6 Siemens Financial Services
+Fiscal year
+ROE (after taxes)
+therein: equity business
+Earnings before taxes (EBT)
+(in millions of €)
+Siemens Financial Services provides financing solutions for Siemens' customers as well as other companies in the form of debt and equity
+investments. Based on its comprehensive financing know-how and specialist technology expertise in the areas of Siemens businesses, SFS
+supports its customers' investments with leasing, lending, working capital and structured financing solutions and offers a broad range of
+equipment and project financing. In addition, SFS supports Siemens' industrial businesses with financial advisory services and via a joint
+go-to-market that includes SFS's risk management expertise, such as to assess the risk profiles of projects or business models. Furthermore,
+SFS collaborates with Siemens' industrial businesses to co-develop new digital business models and enables its customers to drive
+sustainable growth through smart financing solutions. Recent examples include pay-per-use and pay-for-outcome models that give
+customers more financial flexibility.
+2021
+100
+100
+3/3
+100
+5/6
+83
+100
+By a decision of the Supervisory Board on November 16,
+2022, the appointment of Judith Wiese as a full member of
+the Managing Board was extended from October 1, 2023,
+through September 30, 2028.
+Changes in the composition of the
+Supervisory and Managing Boards
+There were no changes in the composition of the Manag-
+ing Board or the Supervisory Board in fiscal 2022.
+The Sustainability Report for fiscal 2022, the information
+regarding the EU Taxonomy in the Combined Manage-
+ment Report for Siemens AG and the Siemens Group for
+fiscal 2022 and the independent auditors' related reports
+were dealt with at the Audit Committee meeting on
+December 6, 2022, and at the Supervisory Board meeting
+on December 7, 2022.
+The Supervisory Board concurs with the results of the
+audit. Following the definitive findings of the Audit
+Committee's examination and our own examination, we
+have no objections. The Managing Board prepared the
+Annual Financial Statements of Siemens AG and the
+Consolidated Financial Statements of the Siemens Group.
+We approved the Annual Financial Statements and
+the Consolidated Financial Statements. In view of our
+approval, the financial statements are accepted as sub-
+mitted. We endorsed the Managing Board's proposal
+that the net income available for distribution be used
+to pay out a dividend of €4.25 per share entitled to a
+dividend and that the amount of net income attributable
+to shares of stock not entitled to receive a dividend for
+fiscal 2022 be carried forward.
+the Managing Board's proposal for the appropriation of
+net income were submitted to us by the Managing Board
+in advance. The Audit Committee discussed the dividend
+proposal in detail at its meeting on November 15, 2022.
+It discussed the Annual Financial Statements of
+Siemens AG, the Consolidated Financial Statements of
+the Siemens Group and the Combined Management
+Report in detail at its meeting on December 6, 2022. In
+this context, the Audit Committee concerned itself, in
+particular, with the key audit matters described in the
+independent auditors' respective opinions, including the
+audit procedures implemented. The Audit Committee's
+review also covered the non-financial information for
+Siemens AG and the Siemens Group that is included in
+the Combined Management Report, including the infor-
+mation regarding the EU Taxonomy. The audit reports
+prepared by the independent auditors were distributed
+to all members of the Supervisory Board and compre-
+hensively reviewed at the Supervisory Board meeting on
+December 7, 2022, in the presence of the independent
+auditors, who reported on the scope, focal points and
+main findings of their audit, addressing, in particular,
+key audit matters, the Audit Committee's focus areas
+and the audit procedures implemented. No major weak-
+nesses in the Company's internal control or risk manage-
+ment systems were reported. At this meeting, the
+Managing Board explained the financial statements of
+Siemens AG and the Siemens Group as well as the
+Company's risk management system.
+Report of the Supervisory Board
+8
+FISCAL 2022
+2/2
+6/6
+Michael Sigmund
+Matthias Zachert
+67
+5/6
+83
+2/2
+100
+717
+100
+2/2
+100
+2/2
+100
+Nathalie von Siemens (Dr. phil.)
+6/6
+100
+717
+100
+Gunnar Zukunft
+6/6
+100
+Dorothea Simon
+6/6
+100
+Grazia Vittadini
+5/6
+83
+6/6
+6/6
+Managing Board
+98
+As of October 1, 2021, the date of its last Declaration
+of Conformity, Siemens AG complied with all the
+recommendations of the Government Commission on
+the German Corporate Governance Code in the ver-
+sion of December 16, 2019, published by the Federal
+Ministry of Justice and Consumer Protection in the
+official section of the Federal Gazette (Bundesanzeiger),
+with the following exceptions:
+→ Siemens AG did not comply with the recommenda-
+tion in B.3. According to this recommendation, the
+first-time appointment of Managing Board members
+shall be for a period of not more than three years.
+→ Siemens AG did not comply with the recommenda-
+tions in C.4 and C.5. According to the recommenda-
+tion in C.4, a Supervisory Board member who is not a
+member of any Managing Board of a listed company
+shall not accept more than five Supervisory Board
+mandates at non-group listed companies or compa-
+rable functions, with an appointment as chair of the
+Supervisory Board being counted twice. According to
+the recommendation in C.5, members of the Manag-
+ing Board of a listed company shall not have, in aggre-
+gate, more than two Supervisory Board mandates in
+non-group listed companies or comparable functions
+and shall not accept the chairmanship of a Super-
+visory Board in a non-group listed company.
+→ Siemens AG did not comply with the recommenda-
+tion in C.10 sent. 1 variant 3. According to this recom-
+mendation, the chair of the committee that addresses
+Managing Board compensation shall be independent
+from the company and the Managing Board.
+Following the regular departure of Werner Wenning,
+the previous, long-serving Chairman of the Compensa-
+tion Committee of the Supervisory Board of Siemens AG,
+from the Supervisory Board and thereby also from
+the Compensation Committee, the Compensation Com-
+mittee elected Michael Diekmann to serve as its new
+2
+Corporate Governance Statement
+independent from the company and the Managing
+Board.
+Chairman, effective February 4, 2021. Mr. Diekmann
+has been a member of the Supervisory Board of Compensation system
+Siemens AG since January 24, 2008, and is therefore
+not regarded as independent in terms of the Code's in-
+dependence indicators. In the view of the Compensa-
+tion Committee, however, Mr. Diekmann is currently
+the most suitable candidate for the position of Chair-
+man because of his professional experience - due,
+among other things, to his many years of work on the
+Compensation Committee - and because his election
+will help ensure continuity in the Committee's work.
+The previous deviations from the recommendations in
+B.3, C.4 and C.5 were explained as follows:
+Instead of regarding the recommended maximum pe-
+riod of the first-time appointment of Managing Board
+members and the recommended maximum number of
+mandates for Managing Board and Supervisory Board
+members as rigid upper limits, an assessment is to be
+The current compensation system for the Managing
+Board members pursuant to Section 87a para. 1 and 2
+sent. 1 of the German Stock Corporation Act, which was
+endorsed by the Annual Shareholders' Meeting on Febru-
+ary 2, 2020, and the decision of the Annual Shareholders'
+Meeting on February 3, 2021, pursuant to Section 113
+para. 3 of the German Stock Corporation Act regarding
+the compensation of the Supervisory Board members are
+publicly available on the Siemens Global Website at
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE. The Compen-
+sation Report and the Independent Auditor's Report in
+accordance with Section 162 of the German Stock Corpo-
+ration Act are publicly available at the same Internet
+address.
+3. Information on corporate
+possible in each individual case. While the period of the governance practices
+2. Compensation Report/
+→ Siemens AG does not comply with the recommen-
+dation in C.10 sent. 1 variant 3. According to this
+recommendation, the chair of the committee that
+addresses Managing Board compensation shall be
+As of today, Siemens AG complies with and will con-
+tinue to comply with all the recommendations of the
+Government Commission on the German Corporate
+Governance Code in the version of April 28, 2022,
+published by the Federal Ministry of Justice in the
+official section of the Federal Gazette (Bundesanzeiger),
+with the following exception:
+"Declaration of Conformity by the Managing Board and
+the Supervisory Board of Siemens Aktiengesellschaft
+with the German Corporate Governance Code pursu-
+ant to Section 161 of the German Stock Corporation Act
+In this Statement, the Managing Board and the Super-
+visory Board report as of November 10, 2022, on corpo-
+rate governance at the Company in fiscal 2022 (October 1,
+2021, to September 30, 2022) pursuant to Sections 289f
+and 315d of the German Commercial Code (Handels-
+gesetzbuch, HGB) and as prescribed in Principle 23 of the
+German Corporate Governance Code ("Code"). Further
+information regarding corporate governance - for exam-
+ple, the Bylaws for the Supervisory Board, the Bylaws for
+the Managing Board, the bylaws for the Supervisory
+Board committees and the Corporate Governance State-
+ments of the previous fiscal years is also available
+on the Siemens Global Website at www.SIEMENS.COM/
+Corporate Governance Statement
+pursuant to Sections 289f and 315d
+of the German Commercial Code
+2/3
+Corporate Governance Statement
+SIEMENS
+pursuant to Sections 289f and 315d
+of the German Commercial Code
+Statement
+Corporate Governance
+9
+FISCAL 2022
+Jim Hagemann Snabe
+Chairman
+H
+For the Supervisory Board
+CORPORATE-GOVERNANCE.
+1. Declaration of Conformity
+with the German Corporate
+Governance Code
+The Managing Board and the Supervisory Board of
+Siemens AG approved the following Declaration of Con-
+formity pursuant to Section 161 of the German Stock Cor-
+poration Act (Aktiengesetz, AktG) as of October 1, 2022:
+first-time appointment of a Managing Board member
+shall not, as a rule, exceed three years, an assessment
+is to be possible in each individual case in order to de-
+termine what period of appointment is deemed appro-
+priate within the legally permissible period. This assess-
+ment is to consider the individual qualifications and
+experience of the Managing Board member to be ap-
+pointed and, in particular, the qualifications and expe-
+rience that he or she has acquired over many years in
+management positions within the Siemens Group. With
+regard to the number of mandates accepted by Manag-
+ing Board and Supervisory Board members, an assess-
+ment is also to be possible in each individual case in
+order to determine if the number of accepted mandates
+relevant within the meaning of the Code is deemed ap-
+propriate. This assessment is to consider the expected
+personal workload caused by the accepted mandates,
+which can vary from mandate to mandate.
+100
+Berlin and Munich, October 1, 2022
+The Managing Board The Supervisory Board"
+As of September 30, 2022, the Chairman's Commit-
+tee comprised Jim Hagemann Snabe (Chairman),
+Dr. Werner Brandt, Jürgen Kerner and Birgit Steinborn.
+are to be disclosed pursuant to Section 285 No. 10 of the
+German Commercial Code, are set out in Section 10 of this
+Corporate Governance Statement. Information about the
+Managing Board members' areas of responsibility and
+their curricula vitae are available on the Siemens Global
+Website at WWW.SIEMENS.COM/MANAGEMENT.
+As the top management body, the Managing Board is
+committed to serving the interests of the Company and
+achieving sustainable growth in company value. The
+members of the Managing Board are jointly responsible
+for the entire management of the Company and decide on
+basic issues of business policy and corporate strategy, in-
+cluding Siemens' sustainability strategy, as well as on the
+Company's annual and multi-year plans, unless specific
+circumstances are taken into account for companies that
+are separately managed and publicly listed themselves
+(Siemens Healthineers). The Companywide DEGREE pro-
+gram, which was approved by the Managing Board in
+fiscal 2021, intensified the focus of all Siemens businesses
+on ambitious sustainability targets – targets for environ-
+mental and social sustainability and good governance
+even further. The Managing Board ensures that the risks
+and opportunities for the Company connected with social
+and environmental factors and the environmental and so-
+cial impact of the Company's activities are systematically
+identified and assessed. The Company strategy gives due
+consideration to long-term targets as well as to environ-
+mental and social objectives. Company planning encom-
+passes both the appropriate financial targets and the appro-
+priate sustainability-related objectives. More details on
+sustainability are available on the Siemens Global Website
+at WWW.SIEMENS.COM/SUSTAINABILITYINFORMATION.
+-
+The Managing Board prepares the Company's Quarterly
+Statements and Half-year Financial Report, the Annual
+Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the Com-
+bined Management Report of Siemens AG and the
+Siemens Group. Together with the Supervisory Board, the
+Managing Board prepares the Compensation Report. The
+Managing Board has established an appropriate and
+effective internal control system and risk management
+system that also covers sustainability-related aspects. In
+addition, it ensures that the Company adheres to statutory
+requirements, official regulations and internal Company
+policies and works to achieve compliance with these pro-
+visions and policies within the Siemens Group. The Man-
+aging Board has established a comprehensive compliance
+management system oriented toward the Company's risk
+On behalf of the Supervisory Board, I would like to thank
+the members of the Managing Board and all the employ-
+ees and employee representatives of Siemens AG and of
+all Group companies for their outstanding commitment
+and constructive cooperation in fiscal 2022.
+4
+The Compensation Committee prepares, in particular,
+the proposals for decisions by the Supervisory Board's
+plenary meetings regarding the system of Managing
+Board compensation, including the implementation of
+this system in Managing Board contracts, the definition
+of the targets for variable Managing Board compensa-
+tion, the determination and review of the appropriate-
+ness of the total compensation of the individual Manag-
+ing Board members and the annual Compensation
+Report. Insofar as the non-financial aspects of Managing
+Board compensation are concerned, the Compensation
+Committee also considers sustainability in the environ-
+mental, social and governance (ESG) area.
+Corporate Governance Statement
+WWW.SIEMENS.COM/SUSTAINABILITYINFORMATION.
+Detailed discussion of the audit of the
+financial statements
+100
+100
+94
+94
+100
+situation. Protection is offered to employees and third par-
+ties who provide information on unlawful behavior within
+the Company. Details on the compliance management
+system are available on the Siemens Global Website at
+As of September 30, 2022, the Compensation Committee
+comprised Michael Diekmann (Chairman), Harald Kern,
+Jürgen Kerner, Jim Hagemann Snabe, Birgit Steinborn
+and Matthias Zachert.
+The Audit Committee oversees, in particular, the ac-
+counting and the accounting process and conducts a pre-
+liminary review of the Annual Financial Statements of
+Siemens AG, the Consolidated Financial Statements of
+the Siemens Group and the Combined Management Re-
+port of Siemens AG and the Siemens Group, including
+non-financial matters. On the basis of the independent
+auditors' report on their audit of the annual financial
+statements, the Audit Committee makes, after its prelim-
+inary review, recommendations regarding Supervisory
+Board approval of the Annual Financial Statements of
+Siemens AG and the Consolidated Financial Statements
+of the Siemens Group. The Audit Committee discusses
+the quarterly statements and Half-year Financial Report
+with the Managing Board and the independent auditors
+and deals with the auditors' reports on the review of the
+Half-year Consolidated Financial Statements and Interim
+Group Management Report. The Audit Committee con-
+cerns itself with sustainability reporting, which includes
+the Sustainability Report in addition to reporting on
+non-financial matters in the Combined Management Re-
+port. It also monitors the Company's adherence to statu-
+tory provisions, official regulations and internal Company
+policies (compliance). The Chief Compliance Officer re-
+ports regularly to the Audit Committee. The Audit Com-
+mittee concerns itself with the Company's risk monitor-
+ing system and oversees the appropriateness and
+effectiveness of its internal control, risk management
+and internal audit systems as well as the internal process
+for related party transactions. The Audit Committee re-
+ceives regular reports from the internal audit depart-
+ment. It prepares the Supervisory Board's recommenda-
+tion to the Annual Shareholders' Meeting concerning the
+election of the independent auditors and submits the
+corresponding proposal to the Supervisory Board. Prior to
+submitting this proposal, the Audit Committee obtains a
+statement from the prospective independent auditors
+affirming that their independence is not in question. It
+awards the audit contract to the independent auditors
+elected by the Annual Shareholders' Meeting and moni-
+tors the independent audit of the financial statements as
+well as the auditors' selection, independence, qualifica-
+tion, rotation and efficiency and the services rendered by
+the auditors. The Audit Committee assesses the quality of
+the audit of the financial statements on a regular basis.
+Outside its meetings, the Supervisory Board is also in reg-
+ular communication with the independent auditors via
+the Chairman of the Audit Committee. The Audit Com-
+mittee regularly consults with the independent auditors
+7
+The current Declaration of Conformity and the Declara-
+tions of Conformity of the previous five years are avail-
+able on the Siemens Global Website at www.SIEMENS.
+COM/DECLARATION OF CONFORMITY.
+Suggestions of the Code
+Siemens AG voluntarily complies with the Code's sugges-
+tions, with only the following exception:
+According to the suggestion in A.8 of the Code, in the
+case of a takeover event, the Managing Board should
+convene an Extraordinary General Meeting at which
+shareholders will discuss the takeover offer and may de-
+cide on corporate actions. The convening of a share-
+holders' meeting – even taking into account the short-
+ened time limits stipulated in the German Securities
+Acquisition and Takeover Act (Wertpapiererwerbs- und
+Übernahmegesetz, WpÜG) – is an organizational chal-
+lenge for large publicly listed companies. It appears
+doubtful whether the associated effort is justified also in
+cases where no relevant decisions by the shareholders'
+meeting are intended. Therefore, extraordinary share-
+holders' meetings shall be convened only in appropriate
+cases.
+Further corporate governance practices applied beyond
+the applicable legal requirements are contained in our
+Business Conduct Guidelines, which are publicly available
+on the Siemens Global Website at www.SIEMENS.COM/
+COMPLIANCE.
+3
+Corporate Governance Statement
+The Company's values and Business
+Conduct Guidelines
+In the 175 years of its existence, our Company has built an
+excellent reputation around the world. Technical perfor-
+mance, innovation, quality, reliability and international
+engagement have made Siemens a leading company in
+its areas of activity. It is top performance with the highest
+ethics that has made Siemens strong. This is what the
+Company will continue to stand for in the future.
+The Business Conduct Guidelines provide the ethical and
+legal framework within which we want to conduct our activ-
+ities and remain on course for success. They contain the basic
+principles and rules for our conduct within our Company and
+in relation to our external partners and the general public.
+They set out how we meet our ethical and legal responsibility
+as a Company and give expression to our Company values:
+"Responsible" - "Excellent" - "Innovative." Our Business
+Conduct Guidelines are publicly available on the Siemens
+Global Website at www.SIEMENS.COM/COMPLIANCE.
+4. Description of the operation
+of the Managing Board and the
+Supervisory Board and of the
+composition and operation of
+their committees
+Siemens AG is subject to German corporate law. There-
+fore, it has a two-tier board structure, consisting of a
+Managing Board and a Supervisory Board. The duties and
+powers of the Managing Board and the Supervisory
+Board as well as the regulations regarding their operation
+and composition are defined primarily by the German
+Stock Corporation Act, the Articles of Association of
+Siemens AG and the bylaws for the Company's governing
+bodies. The Articles of Association of Siemens AG, the
+Bylaws for the Managing Board, the Bylaws for the
+Supervisory Board and the bylaws for the Supervisory
+Board's most important committees are available on
+the Siemens Global Website at WWW.SIEMENS.COM/
+CORPORATE-GOVERNANCE.
+In fiscal 2022, the Managing Board of Siemens AG
+comprised Dr. Roland Busch (President and CEO),
+Cedrik Neike, Matthias Rebellius, Prof. Dr. Ralf P. Thomas
+and Judith Wiese. Further information regarding the
+Managing Board members and their memberships, which
+Siemens Aktiengesellschaft
+100
+in %
+100
+Chairman's
+Compensation
+Committee
+Committee
+Report of the Supervisory Board
+Audit
+Committee
+Innovation
+and Finance
+Committee
+Nominating
+Committee
+100
+8/8
+100
+100
+meetings)
+100
+100
+Harald Kern
+100
+Jürgen Kerner
+100
+8/8
+100
+Benoît Potier
+100
+Hagen Reimer
+100
+Norbert Reithofer (Dr. Ing. Dr. Ing. E.h.)
+83
+100
+Board (plenary
+Supervisory
+FISCAL 2022 7
+making recommendations for first-time appointments, it
+takes into account that the terms of these appointments
+shall not, as a rule, exceed three years. In preparing rec-
+ommendations regarding the appointment of Managing
+Board members, the Chairman's Committee takes into
+account the candidates' professional qualifications, inter-
+national experience and leadership qualities, the age
+limit specified for Managing Board members and the
+long-range plans for succession as well as diversity. It also
+takes into account the diversity concept for the Manag-
+ing Board that has been approved by the Supervisory
+Board. The Chairman's Committee concerns itself with
+questions regarding the Company's corporate gover-
+nance and prepares the resolutions to be approved by the
+Supervisory Board regarding the Declaration of Confor-
+mity with the Code - including the explanation of devia-
+tions from the Code - and regarding corporate gover-
+nance reporting/the Corporate Governance Statement
+and the Report of the Supervisory Board to the Annual
+Shareholders' Meeting. It is responsible for approving the
+Company's related party transactions. Furthermore, the
+Chairman's Committee submits recommendations to
+the Supervisory Board regarding the composition of
+the Supervisory Board committees and decides whether
+to approve contracts and business transactions with
+Managing Board members and parties related to them.
+Corporate Governance Statement
+6
+The Chairman's Committee makes proposals, in particu-
+lar, regarding the appointment and dismissal of Manag-
+ing Board members and is responsible for concluding,
+amending, extending and terminating employment
+contracts with members of the Managing Board. When
+In fiscal 2022, the Supervisory Board had six committees,
+whose duties, responsibilities and procedures fulfill the
+requirements of the German Stock Corporation Act and
+the Code. The chairmen of these committees provide the
+Supervisory Board with regular reports on their commit-
+tees' activities.
+SUPERVISORY BOARD COMMITTEES
+Details regarding the work of the Supervisory Board are
+provided in the Report of the Supervisory Board, which is
+made publicly available for each previous fiscal year on
+the Siemens Global Website.
+Separate preparatory meetings of the shareholder repre-
+sentatives and of the employee representatives are held
+regularly in order to prepare the Supervisory Board meet-
+ings. The Supervisory Board also meets regularly without
+the Managing Board in attendance. Every Supervisory
+Board member must disclose conflicts of interest to the
+Supervisory Board. Information regarding conflicts of in-
+terest that may have arisen and their handling is provided
+in the Report of the Supervisory Board. Special informa-
+tional (onboarding) events are held in order to familiarize
+new Supervisory Board members with the Company's
+business model and the structures of the Siemens Group.
+The Supervisory Board members take part, on their own
+responsibility, in the educational and training measures
+necessary for the performance of their duties – measures
+relating, for example, to changes in the legal framework
+and new, groundbreaking technologies. The Company
+supports them in this regard. Internal informational
+events are offered when necessary to support targeted
+training measures.
+the appropriateness of total compensation and regularly
+reviews the Managing Board compensation system. Im-
+portant Managing Board decisions - such as those re-
+garding major acquisitions, divestments, fixed asset in-
+vestments or financial measures - require Supervisory
+Board approval unless the Bylaws for the Supervisory
+Board specify that such authority be delegated to the In-
+novation and Finance Committee of the Supervisory
+Board.
+The Supervisory Board oversees and advises the Manag-
+ing Board in its management of the Company's business.
+At regular intervals, the Supervisory Board discusses
+business development, planning, strategy (including
+sustainability strategy) and strategy implementation.
+It reviews the Annual Financial Statements of
+Siemens AG, the Consolidated Financial Statements of
+the Siemens Group, the Combined Management Report
+of Siemens AG and the Siemens Group (including non-
+financial matters), and the proposal for the appropriation
+of net income. It approves the Annual Financial State-
+ments of Siemens AG as well as the Consolidated Finan-
+cial Statements of the Siemens Group, based on the re-
+sults of the preliminary review conducted by the Audit
+Committee and taking into account the reports of the
+independent auditors. The Supervisory Board approves
+the Managing Board's proposal for the appropriation
+of net income and the Report of the Supervisory Board
+to the Annual Shareholders' Meeting. The Supervisory
+Board is jointly responsible with the Managing Board for
+the preparation of the Compensation Report. In addition,
+the Company's adherence to statutory provisions, official
+regulations and internal Company policies (compliance)
+are monitored by the Supervisory Board and/or the Audit
+Committee. The Supervisory Board's oversight and advi-
+sory activities also encompass, in particular, sustainabili-
+ty-related topics in the environmental, social and gover-
+nance (ESG) area. The Managing Board reports regularly
+to the Supervisory Board on Siemens' Companywide sus-
+tainability strategy and on the status of this strategy's
+implementation. The Supervisory Board deals with both
+the risks and the opportunities for Siemens relating to
+social and environmental factors and the environmental
+and social impact of the Company's activities. The Super-
+visory Board and the Audit Committee also concern
+themselves with sustainability reporting, which includes
+the Sustainability Report in addition to reporting on
+non-financial matters in the Combined Management Re-
+port, and are kept up to date on new developments and
+the status of their implementation at Siemens. In addi-
+tion, the Supervisory Board appoints and dismisses the
+members of the Managing Board and determines each
+member's portfolios. The Supervisory Board approves
+on the basis of a proposal by the Compensation Commit-
+tee the compensation system for Managing Board
+members and defines their concrete compensation in
+accordance with this system. It sets the individual targets
+for the variable compensation and the total compensa-
+tion of each individual Managing Board member, reviews
+Corporate Governance Statement
+5
+The Supervisory Board of Siemens AG has 20 members.
+As stipulated by the German Codetermination Act, half of
+its members represent Company shareholders, and half
+represent Company employees. The shareholder repre-
+sentatives on the Supervisory Board are elected at the
+Annual Shareholders' Meeting by a simple majority vote.
+Elections to the Supervisory Board are conducted, as a
+rule, on an individual basis. The employee representa-
+tives on the Supervisory Board are elected in accordance
+with the provisions of the German Codetermination Act.
+Further information regarding the Supervisory Board
+members and their memberships, which are to be dis-
+closed pursuant to Section 285 No. 10 of the German
+Commercial Code, are set out in Section 11 of this Cor-
+porate Governance Statement. The curricula vitae of
+the Supervisory Board members are publicly available
+on the Siemens Global Website at www.SIEMENS.COM/
+SUPERVISORY-BOARD and updated annually.
+Supervisory Board
+BYLAWS-MANAGINGBOARD.
+Further details regarding the operation and composition
+of the Managing Board are provided in the Bylaws for
+the Managing Board, which are publicly available on
+the Siemens Global Website at ☐ wWW.SIEMENS.COM/
+The members of the Managing Board are subject to a
+comprehensive prohibition on competitive activity for the
+period of their employment at Siemens AG. They are com-
+mitted to serving the interest of the Company. When mak-
+ing their decisions, they may not be guided by personal
+interests, nor may they exploit for their own advantage
+business opportunities offered to the Company. Manag-
+ing Board members may engage in secondary activities -
+in particular, supervisory board positions outside the
+Siemens Group - only with the approval of the Chairman's
+Committee of the Supervisory Board. The Supervisory
+Board is responsible for decisions regarding any adjust-
+ments to Managing Board compensation that are neces-
+sary in order to take account of compensation for second-
+ary activities. Every Managing Board member is under an
+obligation to disclose conflicts of interest without delay to
+the Chairman of the Supervisory Board and to inform the
+other members of the Managing Board thereof.
+development, financial position, results of operations,
+compliance and entrepreneurial risks. At regular inter-
+vals, the Managing Board also discusses the status of
+strategy implementation with the Supervisory Board.
+The Managing Board and the Supervisory Board cooper-
+ate closely for the benefit of the Company. The Managing
+Board informs the Supervisory Board regularly, compre-
+hensively and without delay on all issues of importance
+to the entire Company with regard to strategy (including
+the Company's sustainability strategy), planning, business
+BYLAWS-MANAGINGBOARD.
+As a rule, the portfolio assigned to an individual member
+is that member's own responsibility. Activities and trans-
+actions in a particular Managing Board portfolio that are
+considered to be extraordinarily important for the Com-
+pany or associated with an extraordinary economic risk
+require the prior consent of the full Managing Board. The
+same applies to activities and transactions for which the
+President and CEO or another member of the Managing
+Board demands a prior decision by the Managing Board.
+The President and CEO is responsible for the coordina-
+tion of all Managing Board portfolios. The Managing
+Board had no committee in fiscal 2022. Further details
+are available in the Bylaws for the Managing Board on
+the Siemens Global Website at ☐ www.SIEMENS.COM/
+The Supervisory Board has issued Bylaws for the Manag-
+ing Board that contain the assignment of different port-
+folios and the rules for cooperation both within the Man-
+aging Board and between the Managing Board and the
+Supervisory Board as well as rules for the so-called Equity
+Investments. In accordance with these Bylaws, the Man-
+aging Board is divided into the portfolio of the President
+and CEO and a variety of Managing Board portfolios. The
+Managing Board members responsible for the individual
+Managing Board portfolios are defined in a business as-
+signment plan that is determined by the Supervisory
+Board. As the Managing Board member with responsibility
+for the People & Organization portfolio, the Labor Director
+(Arbeitsdirektor) is appointed in accordance with the re-
+quirements of Section 33 of the German Codetermination
+Act (Mitbestimmungsgesetz, MitbestG). When making
+recommendations for the first-time appointments of
+Managing Board members, it is to be taken into account
+that the terms of these appointments shall not, as a rule,
+exceed three years.
+Report of the Supervisory Board
+they provided and concerned itself with the review of the
+quality of the audit of the financial statements. In
+fiscal 2022, against the backdrop of the Wirecard situa-
+tion, the Audit Committee regularly discussed the role of
+Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
+Stuttgart, as the independent auditors of Wirecard AG.
+The Audit Committee questioned the independent audi-
+tors regarding this matter and assessed the impact on
+Siemens AG. No impediments were identified that would
+preclude Ernst & Young GmbH Wirtschaftsprüfungs-
+gesellschaft, Stuttgart, from being elected to serve as
+independent auditors for fiscal 2023. The Audit Commit-
+tee also dealt with the Company's accounting and ac-
+counting process, the appropriateness and effectiveness
+of its internal control system and its risk management
+system (including sustainability-related aspects), and the
+effectiveness, resources and findings of its internal audit
+as well as with reports concerning potential and pending
+legal disputes. In addition, the Audit Committee con-
+cerned itself with the Company's compliance with legal
+requirements, official regulations and the Company's
+internal guidelines (compliance) and dealt, in particular,
+with the quarterly reports, the Chief Compliance Offi-
+cer's annual report and the compliance management
+system. For this topic, the Managing Board member re-
+sponsible for People & Organization also attended the
+Audit Committee meetings at the invitation of the Audit
+Committee Chairman. The Audit Committee concerned
+itself with the new German Supply Chain Act (Lieferketten-
+sorgfaltspflichtengesetz, LkSG). It also focused on the
+current and future regulatory requirements regarding
+sustainability reporting and its implementation, includ-
+ing, in particular, the requirements of the EU Taxonomy.
+Due to the regular external rotation of independent audi-
+tors at the conclusion of fiscal 2023 required in accor-
+dance with the current legal situation, the Audit Commit-
+tee's work in fiscal 2022 also focused on the preparation
+and implementation of a transparent and non-discrimi-
+natory process for the selection of the independent audi-
+tors for fiscal 2024. At its meeting on August 3, 2021, the
+Audit Committee had already approved for this purpose
+the introduction of a tendering process in accordance with
+Article 16 of the EU audit regulation (Regulation (EU)
+No. 537/2014 of the European Parliament and of the Council
+of April 16, 2014, on specific requirements regarding the
+-
+statutory audit of public-interest entities and repealing
+Commission Decision 2005/909/EG, "EU audit regula-
+tion"). After a thorough review of the applicants, the Audit
+Committee decided to propose to the Supervisory Board
+two audit firms PricewaterhouseCoopers GmbH,
+Wirtschaftsprüfungsgesellschaft, Frankfurt a. M., and
+KPMG AG, Wirtschaftsprüfungsgesellschaft, München,
+with a preference for PricewaterhouseCoopers GmbH - as
+independent auditors for the tendered audit mandate for
+the fiscal year beginning on October 1, 2023.
+The Supervisory Board members take part, on their own
+responsibility, in the educational and training measures
+necessary for the performance of their duties - measures
+relating, for example, to changes in the legal framework
+and new, groundbreaking technologies. The Company
+supports them in this regard. Internal informational
+events are offered when necessary to support targeted
+training measures. In fiscal 2022, two internal training
+events concerning strategically relevant technology-
+related topics were held for all Supervisory Board mem-
+bers: one on March 30, 2022, and one on April 12, 2022.
+New Supervisory Board members can meet with Manag-
+ing Board members and other managers with specialist
+responsibility to exchange views on current topics and
+topics of fundamental importance and thus gain an over-
+view of Company-relevant matters (onboarding). There
+was no need for such informational events in fiscal 2022
+since the Supervisory Board's composition did not change
+over the course of the year.
+Disclosure of participation by individual
+Supervisory Board members in meetings
+The average rate of participation by members in the
+meetings of the Supervisory Board and its committees
+was 98%. Due to the exceptional circumstances caused
+by the COVID-19 pandemic, all meetings in fiscal 2022
+were held not only in person but also in a virtual format
+via video conference or as in-person meetings in which
+virtual participation was also possible (so-called hybrid
+meetings). No meetings were held via telephone confer-
+ence. The participation rate of individual members in the
+meetings of the Supervisory Board and its committees is
+set out in the following chart:
+Kasper Rørsted
+2/2
+100
+100
+100
+3/3
+100
+6/6
+100
+2/2
+100
+Werner Brandt (Dr. rer. pol.)
+Second Deputy Chairman
+Tobias Bäumler
+Michael Diekmann
+Andrea Fehrmann (Dr. phil.)
+Bettina Haller
+88
+222222222222
+100
+6/6
+100
+3/3
+100
+42
+717
+100
+2/2
+100
+5/6
+83
+3/3
+6/6
+8/8
+100
+6/6
+(Number of meetings/
+participation in %)
+No.
+in %
+No.
+in %
+No.
+in %
+No.
+in %
+No.
+No.
+in %
+Jim Hagemann Snabe
+Chairman
+6/6
+100
+8/8
+100
+3/3
+100
+6/6
+100
+2/2
+100
+717
+100
+Birgit Steinborn
+First Deputy Chairwoman
+Baroness Nemat Shafik (DBE, DPhil)
+were prepared in accordance with the requirements of
+German law. The Consolidated Financial Statements of
+the Siemens Group were prepared in accordance with the
+International Financial Reporting Standards (IFRS) as
+adopted by the EU and with the additional requirements
+of German law set out in Section 315 e (1) of the German
+Commercial Code (Handelsgesetzbuch, HGB). The Con-
+solidated Financial Statements of the Siemens Group also
+comply with the IFRS as issued by the International Ac-
+counting Standards Board (IASB). The independent audi-
+tors conducted their audit in accordance with Section 317
+of the German Commercial Code and the EU Audit Regu-
+lation and German generally accepted standards for the
+audit of financial statements as promulgated by the Insti-
+tut der Wirtschaftsprüfer (IDW) as well as in supplemen-
+tary compliance with the International Standards on Au-
+diting (ISA). The abovementioned documents as well as
+The independent auditors, Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft, Stuttgart, audited the
+Annual Financial Statements of Siemens AG, the Consol-
+idated Financial Statements of the Siemens Group and
+the Combined Management Report for Siemens AG and
+the Siemens Group for fiscal 2022 and issued an unqual-
+ified opinion for each. Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft, Stuttgart, has served as the inde-
+pendent auditors of Siemens AG and the Siemens Group
+since fiscal 2009. Katharina Breitsameter has signed as
+auditor since fiscal 2016 and as auditor responsible for
+the audit since fiscal 2021. Dr. Philipp Gaenslen has
+signed as auditor since fiscal 2021. The Annual Financial
+Statements of Siemens AG and the Combined Manage-
+ment Report for Siemens AG and the Siemens Group
+First appointed Term expires
+April 1,
+March 31,
+2011
+2025
+January 31,
+2018
+October 16,
+2020
+Member since
+Length of membership
+Gunnar
+Zukunft
+Birgit
+Steinborn
+April 1,
+2007
+Dorothea
+Simon
+Reimer
+Kerner
+Kern
+Haller
+Hagen
+Jürgen
+Michael
+Sigmund
+Harald
+January 24,
+2008
+2012
+1969
+April 26,
+January 22,
+March 16,
+1960
+March 14,
+1959
+June 21,
+1970
+January 25, January 30,
+October 10,
+1979
+Diversity
+January 31,
+2018
+January 24,
+2008
+October 1,
+2017
+March 1,
+2014
+2019
+Date of birth
+1967
+Bettina
+Bäumler
+Technology
+Leadership experience
+Asia/Pacific
+Professional aptitude
+China
+Americas
+Sustainability
+German
+Danish
+German
+Italian/
+Egyptian/
+British/
+US-American
+Danish
+German
+German
+Andrea
+Fehrmann
+(Dr. phil.)
+Transformation
+facturing/sales/R&D
+Tobias
+Corporate Governance Statement
+Employee representatives
+14
+● Criterion met, based on a self-assessment by the Supervisory Board. A dot means at least "good knowledge" and thus the ability to understand the relevant issues well and make
+informed decisions on the basis of existing qualifications, the knowledge and experience acquired in the course of work as a member of the Supervisory Board (for example, many
+years of service on the Audit Committee) or the training measures regularly attended by all members of the Supervisory Board.
+2 According to Section 100 para. 5 of the German Stock Corporation Act and recommendation D.3 of the Code.
+Procurement/manu-
+1 According to the Code.
+Familiarity with
+Human resources
+Legal/compliance
+Risk management
+Financial expert²
+Finance
+business area/sector
+French
+September 13,
+1957
+March 26,
+1960
+In accordance with Section 1 of the German Act Concern-
+ing Measures Under the Law of Companies, Cooperative
+Societies, Associations, Foundations and Commonhold
+Property to Combat the Effects of the COVID-19 Pandemic
+(Gesetz über Maßnahmen im Gesellschafts-, Genossen-
+of the Managing and Supervisory Boards and may contest
+decisions of the Annual Shareholders' Meeting. Share-
+holders owning Siemens stock with an aggregate notional
+value of €100,000 or more may also demand the judicial
+appointment of special auditors to examine specific
+issues. The reports, documents and information required
+by law for the Annual Shareholders' Meeting, including
+the Annual Financial Report, can be downloaded from the
+Siemens Global Website. The same applies to the agenda
+for the Annual Shareholders' Meeting and to any counter-
+proposals or shareholders' nominations that may require
+disclosure. For the election of shareholder representatives
+on the Supervisory Board, a detailed curriculum vitae of
+every candidate is published.
+DIRECTORS-DEALINGS.
+Pursuant to Article 19 of EU Regulation No. 596/2014 of
+the European Parliament and Council of April 16, 2014,
+on market abuse (Market Abuse Regulation), members of
+the Managing Board and the Supervisory Board are le-
+gally required to disclose all transactions conducted on
+their own account relating to the shares or debt instru-
+ments of Siemens AG or to the derivatives or financial
+instruments linked thereto if the total value of such trans-
+actions entered into by a board member or any closely
+associated person in any calendar year reaches or ex-
+ceeds €20,000. All transactions reported to Siemens AG
+in fiscal 2022 have been duly published and are available
+on the Siemens Global Website at ☐ WWW.SIEMENS.COM/
+members of the Managing and
+Supervisory Boards
+8. Share transactions by
+9. Annual Shareholders' Meeting schafts-, Vereins-, Stiftungs- und Wohnungseigentums-
+and investor relations
+Corporate Governance Statement
+● Criterion met, based on a self-assessment by the Supervisory Board. A dot means at least "good knowledge" and thus the ability to understand the relevant issues well and make
+informed decisions on the basis of existing qualifications, the knowledge and experience acquired in the course of work as a member of the Supervisory Board (for example, many
+years of service on the Audit Committee) or the training measures regularly attended by all members of the Supervisory Board.
+2 According to Section 100 para. 5 of the German Stock Corporation Act and recommendation D.3 of the Code.
+1 According to the Code.
+business area/sector
+Familiarity with
+Human resources
+15
+Legal/compliance
+=
+-
+Chief Executive Officer
+President and
+(Dr. rer. nat.)
+Roland Busch
+Name
+In fiscal 2022, the Managing Board had the following members:
+Shareholders exercise their rights at the Annual Share-
+holders' Meeting. An ordinary Annual Shareholders' Meet-
+ing normally takes place within the first five months of
+each fiscal year. The Annual Shareholders' Meeting de-
+cides, among other things, on the appropriation of net
+income, the ratification of the acts of the members of the
+Managing and Supervisory Boards, and the appointment
+of the independent auditors. Amendments to the Articles
+of Association and measures that change the Company's
+capital stock are approved at the Annual Shareholders'
+Meeting and implemented by the Managing Board. The
+Managing Board facilitates shareholder participation in
+this meeting through electronic communications – in par-
+ticular, via the Internet and enables shareholders who
+are unable to attend the meeting to vote by proxy. Proxies
+can also be reached during the Annual Shareholders'
+Meeting. Furthermore, shareholders may exercise their
+right to vote in writing or by means of electronic commu-
+nications (absentee voting). The Managing Board may
+enable shareholders to participate in the Annual Share-
+holders' Meeting without the need to be present at the
+venue and without a proxy and to exercise some or all of
+their rights fully or partially by means of electronic com-
+munications. The Company enables shareholders to follow
+the entire Annual Shareholders' Meeting via the Internet.
+Shareholders may submit motions regarding the proposals
+10. Members of the Managing Board and
+positions held by Managing Board members
+The Articles of Association of Siemens AG, the Bylaws
+for the Supervisory Board, the bylaws for the most
+important Supervisory Board committees, the Bylaws
+for the Managing Board, our Declarations of Conformity
+with the Code and a variety of other corporate-
+governance-related documents are posted on the
+Siemens Global Website at www.SIEMENS.COM/
+The Chairman of the Supervisory Board regularly dis-
+cusses Supervisory-Board-specific topics with investors.
+As part of our investor relations activities, we inform our
+investors comprehensively about developments within
+the Company. For communication purposes, Siemens
+makes extensive use of the Internet. We publish quarterly
+statements, Half-year and Annual Financial Reports,
+earnings releases, ad hoc announcements, analyst
+presentations, letters to shareholders and press releases
+as well as the financial calendar for the current year,
+which contains the publication dates of significant
+financial communications and the date of the Annual
+Shareholders' Meeting, at ☐ WWW.SIEMENS.COM/INVESTORS.
+Corporate Governance Statement
+16
+recht zur Bekämpfung der Auswirkungen der COVID-19-
+Pandemie, GesRua COVBekG) of March 27, 2020 (Federal
+Gazette | No. 14 2020, p. 570) as amended by the
+German Act on the Further Shortening of the Residual
+Debt Exemption Procedure and on the Adjustment of
+Pandemic-Related Provisions in Company, Cooperative,
+Association and Foundation Law and in Tenancy and Lease
+Law (Gesetz zur weiteren Verkürzung des Restschuld-
+befreiungsverfahrens und zur Anpassung pandemiebe-
+dingter Vorschriften im Gesellschafts-, Genossenschafts-,
+Vereins- und Stiftungsrecht sowie im Miet- und Pacht-
+recht) of December 22, 2020 (Federal Gazette | No. 67
+2020, p. 3332), the validity of which was extended until
+August 31, 2022, by the German Act on the Establishment
+of a Special Fund "Reconstruction Assistance 2021" and on
+the Temporary Suspension of the Obligation to File an
+Insolvency Petition due to Heavy Rainfall and Floods in
+July 2021 and on the Amendment of Other Laws (Gesetz
+zur Errichtung eines Sondervermögens "Aufbauhilfe 2021"
+und zur vorübergehenden Aussetzung der Insolvenz-
+antragspflicht wegen Starkregenfällen und Hochwassern
+im Juli 2021 sowie zur Änderung weiterer Gesetze)
+of September 10, 2021 (Federal Gazette | No. 63 2021,
+p. 4153), the ordinary Annual Shareholders' Meeting on
+February 10, 2022, was conducted as a virtual share-
+holders' meeting without the physical presence of share-
+holders or their proxies due to the special circumstances
+created by the COVID-19 pandemic.
+CORPORATE-GOVERNANCE.
+August 3,
+1969
+Risk management
+Finance
+German
+German
+Male
+Female
+Female
+Male
+German
+Male
+Male
+Female
+Female
+Male
+1965
+June 21,
+Male
+Financial expert²
+German
+German
+facturing/sales/R&D
+Procurement/manu-
+Transformation
+Sustainability
+Technology
+Leadership experience
+German
+Professional aptitude
+Nationality
+Gender
+German
+German
+German
+German
+International experience
+November 22,
+1964
+German
+Nationality
+Europe
+experience and educational and professional back-
+grounds as well as international experience. The Manag-
+ing Board has all the knowledge and experience that is
+considered essential in view of Siemens' activities. As a
+group, the Managing Board has experience in the busi-
+ness areas that are important for Siemens - in particular,
+in the industry, infrastructure, energy, mobility and
+healthcare sectors - as well as many years of experience
+in technology (including information technology, digita-
+lization and cybersecurity), sustainability, transforma-
+tion, procurement, manufacturing, research and devel-
+opment, sales, finance, risk management, law (including
+compliance) and human resources.
+In its current composition, the Managing Board fulfills all
+the requirements of the diversity concept. The Manag-
+ing Board members have a broad range of knowledge,
+Implementation of the diversity concept
+for the Managing Board in fiscal 2022
+The diversity concept for the Managing Board is imple-
+mented as part of the process for making appointments
+to the Managing Board. When selecting candidates
+and/or making proposals for the appointment of Manag-
+ing Board members, the Supervisory Board and/or the
+Chairman's Committee of the Supervisory Board take into
+account the requirements defined in the diversity con-
+cept for the Managing Board.
+When making an appointment to a specific Managing
+Board position, the decisive factor is always the Com-
+pany's best interest, taking into consideration all cir-
+cumstances in the individual case."
+→ Diversity also means gender diversity. According to
+the legal requirement applicable to Siemens AG
+(Section 76 para. 3a of the German Stock Corpora-
+tion Act), the Managing Board must include at least
+one woman and at least one man (minimum partici-
+pation requirement). Beyond the minimum partici-
+pation requirement, the consideration of women is
+an essential aspect of the Supervisory Board's long-
+term succession planning for the Managing Board.
+→ It is considered helpful if different age groups are
+represented on the Managing Board. In accordance
+with the recommendation of the Code, the Super-
+visory Board has defined an age limit for the mem-
+bers of the Managing Board. In keeping with this
+limit, the members of the Managing Board are, as
+a rule, to be not older than 63 years of age.
+→ As a group, the Managing Board shall have many
+years of experience in technology (including in-
+formation technology, digitalization and cyber-
+security), sustainability, transformation, procure-
+ment, manufacturing, research and development,
+sales, finance, risk management, law (including
+compliance) and human resources.
+Siemens AG complies with the minimum participation
+requirement set out in Section 76 para. 3a of the German
+Stock Corporation Act. The Managing Board has one fe-
+male member, Judith Wiese. Beyond the minimum par-
+ticipation requirement, the consideration of women is a
+key component of the Supervisory Board's long-term
+succession planning for the Managing Board. Different
+age groups are represented on the Managing Board. No
+Managing Board member is currently older than 63 years
+of age.
+ence in the business areas that are important for
+Siemens - in particular, in the industry, infrastruc-
+ture, energy, mobility and healthcare sectors.
+Corporate Governance Statement
+10
+→ Taking the Company's international orientation
+into account, the composition of the Managing
+Board shall reflect internationality with respect to
+different cultural backgrounds and international
+experience (such as extensive professional experi-
+ence in foreign countries and responsibility for
+business activities in foreign countries in areas that
+are relevant for Siemens).
+→In addition to the expertise and management and
+leadership experience required for their specific
+tasks, the Managing Board members shall have the
+broadest possible range of knowledge and experi-
+ence and the widest possible educational and pro-
+fessional backgrounds.
+When selecting members of the Managing Board, the
+Supervisory Board pays close attention to candidates'
+personal suitability, integrity, convincing leadership
+qualities, international experience, expertise in their
+prospective areas of responsibility, achievements to
+date and knowledge of the Company as well as their
+ability to adjust business models and processes in a
+changing world. Diversity with respect to such charac-
+teristics as age and gender as well as professional and
+educational background is an important selection cri-
+terion for appointments to Managing Board positions.
+When selecting members of the Managing Board, the
+Supervisory Board also gives special consideration to
+the following factors:
+"The goal of this diversity concept is to achieve a com-
+position that is as diverse as possible and comprises
+individuals who complement one another in a Manag-
+ing Board that provides strong leadership and brings
+different perspectives to the management of the
+Company as well as to ensure that, as a group, the
+members of the Managing Board have all the know-
+how and skills that are considered essential in view of
+Siemens' activities.
+→ As a group, the Managing Board shall have experi-
+In September 2022, the Supervisory Board approved the
+following diversity concept for the composition of the
+Managing Board:
+Long-term succession planning
+for the Managing Board
+11
+12
+In accordance with the German Stock Corporation
+Act, the Supervisory Board is composed of at least
+30% women and at least 30% men. The Nominating
+Committee shall continue to include at least one
+female member.
+With regard to the composition of the Supervisory
+Board, attention shall be paid to achieving sufficient
+diversity. Not only is appropriate consideration to be
+given to women. Diversity of cultural heritage and a
+wide range of educational and professional back-
+grounds, experiences and ways of thinking are also to
+be promoted. When considering possible candidates
+for new elections or for filling Supervisory Board posi-
+tions that have become vacant, the Supervisory Board
+shall give appropriate consideration to diversity at an
+early stage in the selection process.
+Diversity
+Taking the Company's international orientation into
+account, care shall be taken to ensure that the Super-
+visory Board has an adequate number of members
+with extensive international experience. The goal is to
+make sure that the present considerable share of
+Supervisory Board members with extensive inter-
+national experience is maintained.
+Internationality
+Jointly with the Managing Board and with the support of
+the Chairman's Committee, the Supervisory Board con-
+ducts long-term succession planning for the Managing
+Board. In its long-term succession planning, the Super-
+visory Board takes into account the requirements of the
+German Stock Corporation Act, the Code and the Bylaws
+for the Chairman's Committee as well as the criteria set
+out in the diversity concept it has approved for the Man-
+aging Board's composition. Considering the concrete
+qualification requirements and the above-mentioned
+criteria, the Chairman's Committee prepares an ideal
+profile. When a concrete decision regarding succession is
+to be made, it compiles a shortlist of the available candi-
+dates on the basis of this profile. Structured interviews
+are then conducted with these candidates. After the in-
+terviews, a proposal is submitted to the Supervisory
+Board for approval. When developing the profile of re-
+quirements and selecting candidates, the Supervisory
+Board and the Chairman's Committee are supported, if
+necessary, by external consultants.
+When a new member is to be appointed, a review shall
+be performed to determine which of the areas of ex-
+pertise deemed desirable for the Supervisory Board
+are to be strengthened.
+The goal is to ensure that, in the Supervisory Board, as a
+group, all the knowhow and experience is available that
+is considered essential in view of Siemens' activities.
+This includes, for instance, knowledge and experience
+in the areas of technology (including information tech-
+nology, digitalization and cybersecurity), sustainability,
+transformation, procurement, manufacturing, research
+and development, sales, finance, risk management, law
+(including compliance) and human resources. In addi-
+tion, the members of the Supervisory Board shall collec-
+tively have knowledge and experience in the business
+areas that are important for Siemens, in particular, in
+the areas of industry, infrastructure, energy, mobility
+and healthcare. As a group, the members of the Super-
+visory Board are to be familiar with the sector in which
+the Company operates. In accordance with the German
+Stock Corporation Act, at least one member of the
+Supervisory Board must have knowledge and expertise
+Profile of required skills and expertise
+The candidates proposed for election to the Super-
+visory Board shall have the knowledge, skills and ex-
+perience necessary to carry out the functions of a
+Supervisory Board member in a multinational com-
+pany oriented toward the capital markets and to safe-
+guard the reputation of Siemens in public. In particu-
+lar, care shall be taken with regard to the personality,
+integrity, commitment and professionalism of the
+individuals proposed for election.
+"The composition of the Supervisory Board of
+Siemens AG shall be such that the Supervisory Board's
+ability to effectively monitor and advise the Managing
+Board is ensured. In this connection, mutually comple-
+mentary collaboration among members with a wide
+range of personal and professional backgrounds
+and diversity with regard to internationality, age and
+gender are considered helpful.
+In September 2022, the Supervisory Board approved the
+objectives for its composition including the profile of
+required skills and expertise and the diversity concept:
+7. Objectives regarding the
+Supervisory Board's composition
+as well as the profile of required
+skills and expertise and the
+diversity concept for the Super-
+visory Board
+Corporate Governance Statement
+in the area of accounting, and at least one additional
+member of the Supervisory Board must have knowledge
+and expertise in the auditing of financial statements.
+The expertise in the field of accounting shall consist of
+special knowledge and experience in the application of
+accounting principles and internal control and risk man-
+agement systems and the expertise in the field of audit-
+ing shall consist of special knowledge and experience in
+the auditing of financial statements. Accounting and
+auditing also include sustainability reporting and its au-
+dit and assurance. The chairman of the audit committee
+shall have appropriate expertise in at least one of the
+two areas and shall be independent. In particular, the
+Supervisory Board shall also include members who have
+leadership experience as senior executives or members
+of a supervisory board (or comparable body) at a major
+company with international operations.
+Corporate Governance Statement
+6. Diversity concept for the
+Managing Board and long-term
+succession planning
+The composition of the Supervisory Board fulfilled the
+legal requirements regarding the minimum gender quota
+in the reporting period.
+Based on the Company's overall strategy, the Innovation
+and Finance Committee discusses, in particular, the
+Company's innovation focuses and prepares the Super-
+visory Board's discussions and decisions regarding ques-
+tions relating to the Company's financial situation and
+structure - including annual planning (budget) – as well
+as the Company's fixed asset investments and its finan-
+cial measures. In addition, the Innovation and Finance
+Committee has been authorized by the Supervisory
+Board to decide on the approval of transactions and
+measures that require Supervisory Board approval and
+have a value of between €300 million and €600 million.
+As of September 30, 2022, the Mediation Commit-
+tee comprised Jim Hagemann Snabe (Chairman),
+Dr. Werner Brandt, Jürgen Kerner and Birgit Steinborn.
+The Mediation Committee submits proposals to the
+Supervisory Board in the event that the Supervisory
+Board cannot reach the two-thirds majority required for
+the appointment or dismissal of a Managing Board
+member on the first ballot.
+Corporate Governance Statement
+8
+As of September 30, 2022, the Nominating Committee
+comprised Jim Hagemann Snabe (Chairman), Dr. Werner
+Brandt, Benoît Potier and Dr. Nathalie von Siemens.
+As of September 30, 2022, the Innovation and Finance
+Committee comprised Jim Hagemann Snabe (Chair-
+man), Tobias Bäumler, Harald Kern, Jürgen Kerner,
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer, Kasper Rørsted,
+Birgit Steinborn and Grazia Vittadini.
+The Nominating Committee is responsible for making
+recommendations to the Supervisory Board on suitable
+candidates for the election by the Annual Shareholders'
+Meeting of shareholder representatives on the Super-
+visory Board. In preparing these recommendations, the
+objectives defined by the Supervisory Board for its com-
+position and the approved diversity concept – in particu-
+lar, independence and diversity - are to be appropriately
+considered, as are the proposed candidates' required
+knowledge, abilities and professional experience. Fulfill-
+ment of the required profile of skills and expertise is also
+to be aimed at. Attention shall be paid to an appropriate
+participation of women and men in accordance with the
+legal requirements relating to the gender quota as well
+as to ensuring that the members of the Supervisory
+Board are, as a group, familiar with the sector in which
+the Company operates.
+Due to his many years of work at a major auditing firm -
+the former Price Waterhouse GmbH - and his many years
+of service as the chief financial officer of publicly listed
+international companies - Fresenius Medical Care AG
+and, subsequently, SAP AG - Dr. Werner Brandt has spe-
+cialist knowledge and experience in the auditing of finan-
+cial statements. Due to his above-mentioned activities
+and his many years of experience as the chairman of the
+supervisory board and audit committee of various pub-
+licly listed international companies, he also has specialist
+knowledge and experience in the application of account-
+ing principles and internal control and risk management
+systems and thus has expertise in the area of accounting.
+In addition, Dr. Werner Brandt is independent. As former
+chief financial officer of various companies and as the
+current chairman of the supervisory board of RWE AG
+and Chairman of the Audit Committee of Siemens AG,
+Dr. Werner Brandt also has extensive knowledge regard-
+ing sustainability reporting. Dr. Werner Brandt follows
+current developments in sustainability reporting and its
+audit and assurance and is an active participant in discus-
+sions of this topic in expert committees. He actively
+applies this expertise for the benefit of the Supervisory
+Board and the Audit Committee of Siemens AG.
+actively applies this expertise for the benefit of the Super-
+visory Board and the Audit Committee of Siemens AG.
+In the course of his professional career, Matthias Zachert
+has served as the chief financial officer of a variety of
+publicly listed companies and thus has specialist knowl-
+edge and experience in the application of accounting
+principles and internal control and risk management sys-
+tems, including sustainability reporting. His activities as
+the chief financial officer of a publicly listed international
+company include engagement with non-financial aspects
+and the reporting thereon. As the current chief executive
+officer and former chief financial officer of Lanxess AG,
+Matthias Zachert has extensive knowledge of the require-
+ments for sustainability reporting and of current develop-
+ments in this area. Matthias Zachert follows and moni-
+tors current developments in sustainability reporting and
+As of September 30, 2022, the Audit Committee com-
+prised Dr. Werner Brandt (Chairman), Tobias Bäumler,
+Bettina Haller, Jürgen Kerner, Jim Hagemann Snabe,
+Birgit Steinborn, Grazia Vittadini and Matthias Zachert.
+The members of the Audit Committee are, as a group,
+familiar with the sector in which the Company operates.
+Pursuant to the German Stock Corporation Act, the
+Supervisory Board must have at least one member with
+expertise in the area of accounting and at least one ad-
+ditional member with expertise in the auditing of finan-
+cial statements. According to the Code, expertise in the
+area of accounting consists of specialist knowledge and
+experience in the application of accounting principles
+and internal control and risk management systems,
+while expertise in the area of auditing consists of
+specialist knowledge and experience in the auditing of
+financial statements. Accounting and auditing also
+include sustainability reporting and its audit and
+assurance. In the person of Matthias Zachert, the Super-
+visory Board and the Audit Committee have at least one
+member with expertise in the area of accounting and in
+the person of Dr. Werner Brandt, the Chairman of the
+Audit Committee, at least one additional member with
+expertise in the area of auditing. Pursuant to the Code,
+the chair of the Audit Committee shall be an expert in
+at least one of these two areas and independent. The
+Chairman of the Audit Committee, Dr. Werner Brandt,
+fulfills these requirements.
+also without the Managing Board in attendance. Outside
+its meetings, the Chairman of the Audit Committee is in
+regular communication with the independent auditors
+regarding the progress of the audit and reports thereon
+to the Audit Committee.
+Corporate Governance Statement
+-
+Statutory provisions on the equal participation of men
+and women in management positions that may be appli-
+cable to Group companies other than Siemens AG remain
+unaffected.
+The Supervisory Board has not established a dedicated
+sustainability committee. Sustainability is one of the fo-
+cus topics of the Supervisory Board's work. Sustainability
+plenary meetings. As a cross-cutting issue, sustainability
+When filling managerial positions at the Company, the
+Managing Board takes diversity into account and, in par-
+ticular, aims for an appropriate consideration of women
+and internationality. In 2017, in compliance with the legal
+requirements in Germany regarding the equal participa-
+tion of men and women in management positions set
+out in the German First Management Positions Act (Erste
+Führungspositionengesetz), the Managing Board set the
+target, within the meaning of Section 76 para. 4 of the
+German Stock Corporation Act, for the percentage of
+women at each of the two management levels below the
+Managing Board of Siemens AG at 20%, applicable in
+each case until June 30, 2022. As of June 30, 2022, these
+targets had been met. In May 2022, the Managing Board
+set the targets for the percentage of women in manage-
+ment positions at Siemens AG that will apply until Sep-
+tember 30, 2025: 30% for the first management level
+below the Managing Board and 25% for the second level
+below the Managing Board. On the basis of projected em-
+ployee figures, women will, accordingly, hold a total of
+four of the 13 positions at Siemens AG at the first man-
+agement level below the Managing Board and a total of
+32 of the 126 positions at Siemens AG at the second man-
+agement level below the Managing Board. For the
+Siemens Group worldwide, the targets set out in the
+Companywide DEGREE sustainability framework con-
+tinue to apply without change.
+Corporate Governance Statement
+9
+Pursuant to the German Stock Corporation Act, the Man-
+aging Board of Siemens AG must include at least one
+woman and at least one man (minimum participation
+requirement). In fiscal 2022, Siemens AG complied with
+this requirement. Beyond the minimum participation re-
+quirement, the consideration of women is an essential
+aspect of the Supervisory Board's long-term succession
+planning for the Managing Board.
+5. Targets, within the meaning
+of Section 76 para. 4 of the
+German Stock Corporation Act,
+for the quota of women at the
+two management levels below
+the Managing Board; Information
+on Managing Board compliance
+with the participation require-
+ment and Supervisory Board
+compliance with minimum
+gender quota requirements
+The Supervisory Board and its committees regularly con-
+duct reviews - either internally or with the involvement
+of external consultants - in order to determine how effi-
+ciently they perform their duties. In fiscal 2022, the Su-
+pervisory Board conducted a comprehensive self-assess-
+ment with the support of an external consultant. This
+assessment also took into account the Managing Board's
+perspective. The Supervisory Board discussed the assess-
+ment's results and the measures to be derived from it at
+its meetings on August 10, 2022, and September 23,
+2022. The results of the assessment confirm that cooper-
+ation within the Supervisory Board and with the Manag-
+ing Board is professional, constructive and characterized
+by a high degree of trust and openness. The composition
+and structure of the Supervisory Board, including the
+structure and mechanisms of its committees, were as-
+sessed as effective and efficient. The results also confirm
+that meetings are organized and conducted efficiently
+and that the participants receive sufficient information.
+The external consultant confirmed that, in all key catego-
+ries, the results compare well with those of oversight
+bodies at other companies. The review did not reveal a
+need for any fundamental changes. Individual sugges-
+tions for improvement are also discussed and imple-
+mented during the year.
+is of such central importance for Siemens that it is dis-
+cussed regularly and in detail at the Supervisory Board's
+SUPERVISORY BOARD SELF-ASSESSMENT
+Further details regarding the operation and composition
+of the Supervisory Board and its committees are pro-
+vided in the Bylaws for the Supervisory Board and the
+bylaws for its committees, which are publicly available
+on the Siemens Global Website at www.SIEMENS.COM/
+ability-related aspects of Managing Board compensation
+are dealt with in the Compensation Committee.
+Supervisory Board's plenary meetings. To prepare for dis-
+cussions and decisions at these meetings, the sustain-
+the Audit Committee considers sustainability-related
+questions in detail and reports on these matters at the
+tees. To the extent that sustainability affects reporting,
+touches on the areas of responsibility of several commit-
+CORPORATE-GOVERNANCE.
+German
+Independence
+-
+February 24,
+1962
+May 29,
+1956
+December 23, September 3,
+1957
+1954
+January 3,
+1954
+Date of birth
+August 13,
+1962
+Diversity
+Independence¹
+Personal aptitude
+January 31,
+2018
+February 3,
+2021
+October 1,
+2013
+January 27,
+2015
+No overboarding'
+January 31,
+2018
+July 14,
+1971
+1965
+International
+experience
+Male
+Female
+Male
+Female
+Female
+October 27, September 23, November 8,
+Male
+Male
+Male
+Male
+Gender
+1967
+1969
+Male
+The Supervisory Board shall include what the share-
+holder representatives on the Supervisory Board con-
+sider to be an appropriate number of independent
+shareholder representatives. More than half of the
+shareholder representatives shall be independent of
+the Company and its Managing Board. Substantial
+and not merely temporary - conflicts of interest are to
+be avoided.
+February 3,
+2021
+January 24, January 31,
+2008
+2018
+Norbert
+Corporate Governance Statement
+Length of membership Member since
+Shareholder representatives
+Qualification matrix
+13
+Werner
+Brandt
+The implementation status of the profile of required
+skills and expertise is disclosed below in the form of
+a qualification matrix.
+The Supervisory Board is of the opinion that, with its cur-
+rent composition, it meets the objectives for its composi-
+tion and fulfills the profile of required skills and expertise
+as well as the diversity concept. The Supervisory Board
+members have the specialist and personal qualifications
+considered necessary. As a group, they are familiar with
+the sector in which the Company operates and have the
+knowledge, skills and experience essential for Siemens in
+the areas of technology (including information technol-
+ogy, digitalization and cybersecurity), transformation,
+procurement, manufacturing, research and develop-
+ment, sales, finance, risk management, law (including
+compliance) and human resources. Due to the presence
+in the Supervisory Board of expertise in the sustainability-
+related matters important for Siemens, the Supervisory
+Board is in a position to monitor the way in which envi-
+ronmental and social sustainability is taken into consid-
+eration in the Company's strategic orientation and in
+Company planning. Knowledge and experience in the
+business areas important for Siemens - in particular, in
+the industry, infrastructure, energy, mobility and health-
+care sectors - are also present in the Supervisory Board.
+A considerable number of Supervisory Board members
+are engaged in international activities and/or have many
+years of international experience. Appropriate consid-
+eration has been given to diversity in the Supervisory
+Board. In fiscal 2022, the Supervisory Board had seven
+female members, of whom three are shareholder repre-
+sentatives and four are employee representatives. As a
+result, 35% of the Supervisory Board members are
+women. Dr. Nathalie von Siemens is a member of the
+Nominating Committee.
+Implementation of the objectives
+regarding the Supervisory Board's
+composition as well as the profile of
+required skills and expertise and the
+diversity concept for the Supervisory
+Board in fiscal 2022; Independent
+members of the Supervisory Board
+Within the framework of the selection process and the
+nomination of candidates for the Supervisory Board, the
+Supervisory Board as well as the Nominating Committee
+of the Supervisory Board take into account the objectives
+regarding the Supervisory Board's composition and the
+requirements defined in its diversity concept. In preparing
+the nominations of the three shareholder representatives
+elected by the 2021 Annual Shareholders' Meeting and of
+the seven shareholder representatives to be elected by the
+2023 Annual Shareholders' Meeting, the Supervisory
+Board and the Nominating Committee have taken these
+objectives including the profile of required skills and
+expertise and the diversity concept - into consideration.
+In compliance with the age limit stipulated by the Super-
+visory Board in its Bylaws, only individuals who are no
+older than 70 years of age shall, as a rule, be nominated
+for election to the Supervisory Board. Nominations shall
+take into account the regular limit established by the
+Supervisory Board, which restricts membership on the
+Supervisory Board to a maximum of three full terms of
+office. It is considered helpful if different age groups are
+represented on the Supervisory Board."
+Limits on age and on length of
+membership
+The Supervisory Board members shall have sufficient
+time to exercise their mandates with the necessary
+regularity and diligence.
+No more than two former members of the Managing
+Board of Siemens AG shall belong to the Supervisory
+Board.
+In the estimation of the shareholder representatives, the
+Supervisory Board now has nine independent shareholder
+representatives - namely, Dr. Werner Brandt, Benoît Potier,
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer, Kasper Rørsted,
+Baroness Nemat Shafik, Dr. Nathalie von Siemens,
+Jim Hagemann Snabe, Grazia Vittadini and Matthias
+Zachert and thus an appropriate number of members
+who are independent within the meaning of the Code.
+The regulations establishing limits on age and restricting
+membership in the Supervisory Board to three full terms
+of office are complied with.
+January 27,
+2015
+Reithofer
+Benoît
+January 31,
+2018
+Matthias
+Zachert
+Grazia
+Vittadini
+Jim
+Hagemann
+Snabe
+Siemens
+(Dr. phil.)
+von
+Michael
+Nathalie
+Rørsted
+Kasper
+(Dr.-Ing.
+Dr.-Ing. E.h.)
+Potier
+Diekmann
+(Dr. rer. pol.)
+Baroness
+Nemat
+Shafik
+(DBE, DPhil)
+Cedrik Neike
+→ Siemens Healthcare GmbH,
+Munich (Chairman)
+German positions:
+→ Siemens Energy AG, Munich'
+→Siemens Energy Management GmbH,
+Munich
+German positions:
+→ Siemens Energy AG, Munich'
+→ Siemens Energy Management GmbH,
+Munich
+September 30, German positions:
+2023
+German positions:
+→ European School of Management
+and Technology GmbH, Berlin
+(as of September 30, 2022)
+German positions:
+→ Siemens Healthineers AG, Munich'
+→ Siemens Mobility GmbH, Munich
+(Chairman)
+Positions outside Germany:
+→ Siemens Aktiengesellschaft Österreich,
+Austria (Chairman)
+Group company positions
+→ Evonik Industries AG, Essen¹
+(as of September 30, 2022)
+or in comparable domestic or foreign controlling bodies of business enterprises
+External positions
+March 7,
+1973
+April 1,
+2017
+May 31,
+2025
+Matthias Rebellius
+January 2,
+1965
+October 1,
+2020
+September 30,
+2025
+Ralf P. Thomas
+(Prof. Dr. rer. pol.)
+March 7,
+1961
+September 18,
+2013
+December 14,
+2026
+Judith Wiese
+January 30,
+1971
+October 1,
+2020
+Memberships in supervisory boards whose establishment is required by law
+Positions outside Germany:
+→ Arabia Electric Ltd. (Equipment),
+Saudi Arabia (Deputy Chairman)
+→Siemens Ltd., India'
+→ Siemens France Holding SAS, France
+(Deputy Chairman)
+→ Siemens Schweiz AG, Switzerland
+(Chairman)
+→Siemens W.L.L., Qatar
+German positions:
+Date of birth
+→ Siemens Healthineers AG,
+Munich (Chairman)¹
+Positions outside Germany:
+→Siemens Proprietary Ltd.,
+South Africa (Chairman)
+1 Publicly listed.
+17
+→ Siemens Ltd., Saudi Arabia
+www.siemens.com
+Germany
+80333 Munich
+Werner-von-Siemens-Str. 1
+Siemens AG
+Harald Kern²
+Fax
+Phone
+Internet
++49 (0)89 7805-33443 (Media Relations)
++49 (0)89 7805-32474 (Investor Relations)
++49 (0)89 7805-32475 (Investor Relations)
+press@siemens.com
+→ Siemens Mobility GmbH, Munich
+(Deputy Chairwoman)
+German positions:
+E-mail
+investorrelations@siemens.com
+2023
+January 31,
+September 3,
+1957
+Chairman of the Board of Directors
+of L'Air Liquide S.A.
+Benoît Potier
+Jürgen Kerner²
+January 25,
+2012
+January 22,
+1969
+2023
+January 24,
+2008
+March 16,
+1960
+Chief Treasurer and Executive Member
+of the Managing Board of IG Metall
+Siemens Europe Committee
+Chairman of the
+→ Siemens Energy AG, Munich 3
+→Siemens Energy Management GmbH,
+Munich
+© 2022 by Siemens AG, Berlin and Munich
+German positions:
+2023
+→ Fresenius SE & Co. KGaA,
+Central Works Council and of the
+Combine Works Council of Siemens AG
+Chairman of the Supervisory Board
+of Allianz SE
+October 10,
+1979
+October 16,
+2020
+2023
+December 23,
+1954
+January 24,
+2008
+2023
+Andrea Fehrmann²
+(Dr. phil.)
+Trade Union Secretary,
+IG Metall Regional Office for Bavaria
+June 21,
+1970
+January 31,
+2023
+Bad Homburg (Deputy Chairman)³
+2018
+Chairwoman of the Combine
+Works Council of Siemens AG
+March 14,
+1959
+April 1,
+2007
+2023
+Corporate Governance Statement
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2022)
+Positions outside Germany:
+C3.ai, Inc., USA³
+German positions:
+Address
+→ RWE AG, Essen (Chairman)³
+German positions:
+→ Allianz SE, Munich (Chairman)³
+→Fresenius Management SE,
+Bad Homburg
+Bettina Haller²
+2
+The Sustainability Report 2022 which reports on Sustainability and Citizenship at Siemens is available at: siemens.com/investor/en/
+For technical reasons, there may be differences between the accounting records appearing in this document and those published pursuant
+to legal requirements.
+May 29,
+1956
+January 30,
+2019
+2023
+January 27,
+2015
+2023
+Kasper Rørsted
+Baroness
+Nemat Shafik
+(DBE, DPhil)
+Chief Executive Officer and
+Board Member of adidas AG³
+Director of the London
+School of Economics
+February 24,
+1962
+February 3,
+2021
+April 26,
+1967
+2025
+January 31,
+2018
+2023
+Nathalie
+Member of supervisory boards
+von Siemens
+July 14,
+1971
+January 27,
+2015
+2023
+(Dr. phil.)
+Michael Sigmund²
+Dorothea Simon²
+August 13,
+1962
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+Trade Union Secretary of the
+Managing Board of IG Metall
+2 Employee representative.
+German positions:
+→ MAN Truck & Bus SE, Munich
+(Deputy Chairman)
+→ Premium Aerotec GmbH, Augsburg
+(Deputy Chairman)
+→ Siemens Energy AG, Munich³
+→ Siemens Energy Management GmbH,
+Munich
+→ Thyssenkrupp AG, Essen
+(Deputy Chairman)³
+→ Traton SE, Munich³
+Positions outside Germany:
+→ L'Air Liquide S.A., France (Chairman)³
+→ The Hydrogen Company S.A., France
+3 Publicly listed.
+4
+Shareholders' Committee.
+18
+Term
+Name
+Occupation
+Date of birth
+Member since
+expires'
+Hagen Reimer²
+Grazia Vittadini
+Matthias Zachert
+Chairman of the Committee
+of Spokespersons of the Siemens Group
+and Chairman of the Central Committee
+of Spokespersons of Siemens AG
+January 31,
+2023
+2018
+Gunnar Zukunft²
+Member of the Central
+Works Council of Siemens Industry
+Software GmbH
+June 21,
+1965
+January 31,
+2023
+German positions:
+2018
+→ Siemens Industry Software GmbH,
+Cologne
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+2 Employee representative.
+3 Publicly listed.
+4
+Shareholders' Committee.
+19
+Notes and forward-
+looking statements
+SIEMENS
+Notes and forward-looking statements
+This document contains statements related to our future business and financial performance and future events or developments involving
+Siemens that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward
+to," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-
+looking statements in other reports, in prospectuses, in presentations, in material delivered to shareholders and in press releases. In
+addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current
+expectations and certain assumptions of Siemens' management, of which many are beyond Siemens' control. These are subject to a
+number of risks, uncertainties and factors, including, but not limited to, those described in disclosures, in particular in the chapter Report
+on expected developments and associated material opportunities and risks in the Combined Management Report of the Siemens Report
+(siemens.com/siemensreport). Should one or more of these risks or uncertainties materialize, should decisions, assessments or
+requirements of regulatory authorities deviate from our expectations, should events of force majeure, such as pandemics, unrest or acts
+of war, occur or should underlying expectations including future events occur at a later date or not at all or assumptions prove incorrect,
+actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or
+implicitly in the relevant forward-looking statement. Siemens neither intends, nor assumes any obligation, to update or revise these
+forward-looking statements in light of developments which differ from those anticipated.
+-
+This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are
+or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in
+isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance
+with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe
+similarly titled alternative performance measures may calculate them differently.
+Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This document is an English language translation of the German document. In case of discrepancies, the German language document is
+the sole authoritative and universally valid version.
+November 8,
+1967
+Deputy Chairman of the
+Chairman of the Board of
+Management of LANXESS AG³
+German positions:
+Chairwoman of the Central Works
+Council of Siemens Healthcare GmbH
+Chief Technology and Strategy Officer
+and member of the Executive Team
+of Rolls-Royce Holdings plc³
+September 13,
+1957
+March 1,
+2014
+2023
+August 3,
+1969
+October 1,
+2017
+2023
+September 23,
+1969
+February 3,
+2021
+2025
+Corporate Governance Statement
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2022)
+German positions:
+→ Bayerische Motoren Werke Aktien-
+gesellschaft, Munich (Chairman)³
+→ Henkel AG & Co. KGaA, Düsseldorf 3,4
+→ Henkel Management AG, Düsseldorf
+German positions:
+→ Messer SE & Co. KGaA,
+Bad Soden am Taunus
+→Siemens Healthcare GmbH, Munich
+→ Siemens Healthineers AG, Munich³
+→ TÜV Süd AG, Munich
+Positions outside Germany:
+→ EssilorLuxottica SA, France³
+German positions:
+→ Siemens Healthcare GmbH, Munich
+→ The Exploration Company GmbH,
+Gilching
+Michael Diekmann
+Jim Hagemann Snabe Chairman of the Supervisory Board
+Second Deputy Chairman
+Tobias Bäumler²
+11. Members of the Supervisory Board and
+positions held by Supervisory Board members
+In fiscal 2022, the Supervisory Board had the following members:
+Name
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+Chairman
+Birgit Steinborn²
+First Deputy Chairwoman
+Werner Brandt
+Chairman of the Supervisory Board
+of RWE AG
+Occupation
+Date of birth
+Member since
+2018
+of Siemens AG
+(Dr. rer. pol.)
+Term
+expires¹
+2018
+2023
+January 3,
+1954
+2023
+January 31,
+March 26,
+1960
+Chairwoman of the Central Works
+Council of Siemens AG
+2025
+October 1,
+2013
+October 27,
+1965
+January 24,
+2008
+Our risk management policy stems from a philosophy of pursuing sustainable growth and creating economic value while managing
+appropriate risks and opportunities and avoiding inappropriate risks. As risk management is an integral part of how we plan and execute
+our business strategies, our risk management policy is set by the Managing Board. Our organizational and accountability structure requires
+We expect this profitable growth of our industrial businesses to drive an increase in EPS pre PPA to a range of €8.70 to €9.20 in fiscal 2023.
+This outlook excludes burdens from legal and regulatory matters and material impairments.
+Overall, the actual development for Siemens and its segments may vary, positively or negatively, from our outlook due to the risks and
+opportunities described below or if our expectations and assumptions do not materialize.
+8.2 Risk management
+8.2.1 Basic principles of risk management
+23
+Responsibilities are assigned for all relevant risks and opportunities, with the hierarchical level of responsibility depending on the
+significance of the respective risk or opportunity. In a first step, assuming responsibility for a specific risk or opportunity involves choosing
+one of our general response strategies. Our general response strategies with respect to risks are avoidance, transfer, reduction or
+acceptance of the relevant risk. Our general response strategy with respect to opportunities is to "seize" the relevant opportunity. In a
+second step, responsibility for a risk or opportunity also involves the development, initiation and monitoring of appropriate response
+measures corresponding to the chosen response strategy. These response measures have to be specifically tailored to allow for effective
+risk management. Accordingly, we have developed a variety of response measures with different characteristics. For example, we mitigate
+the risk of fluctuations in currency and interest rates by engaging in hedging activities. Regarding our projects, systematic and
+comprehensive project management with standardized project milestones, including provisional acceptances during project execution
+and complemented by clearly defined approval processes, assists us in identifying and responding to project risks at an early stage, even
+before the bidding phase. Furthermore, we maintain appropriate insurance levels for potential cases of damage and liability risks in order
+to reduce our exposure to such risks and to avoid or minimize potential losses. Among others, we address the risk of fluctuation in
+economic activity and customer demand by closely monitoring macroeconomic conditions and developments in relevant industries, and
+by adjusting capacity and implementing cost-reduction measures in a timely and consistent manner if they are deemed necessary. Due to
+regular screening of climate risks and environmental, social and governance (ESG) developments we can initiate related mitigation actions
+in a timely manner as part of our DEGREE implementation. Worldwide there are risks from the transmission of infectious agents from
+animals to humans, from humans to humans and in other ways. Epidemic, pandemic or other infectious developments such as bioterrorism
+to cause high disease rates in countries, regions or continents. We constantly check information from the World Health Organization
+(WHO), the - Centers for Disease Control and Prevention in the U.S. and Europe, the Robert Koch Institute in Germany and other institutions
+in order to be able to identify early epidemic or pandemic risks and determine and initiate related mitigation actions as early as possible.
+each of the respective managements of our organizational units to implement risk management programs that are tailored to their specific
+industries and responsibilities, while being consistent with the overall policy.
+8.2.2 Enterprise risk management process
+We have implemented and coordinated a set of risk management and control systems which support us in the early recognition of
+developments that could jeopardize the continuity of our business. The most important of these systems include our enterprise-wide
+processes for strategic planning and management reporting. Strategic planning is intended to support us in considering potential risks and
+opportunities well in advance of major business decisions, while management reporting is intended to enable us to monitor such risks
+more closely as our business progresses. Our risk management and its contributing elements are regularly subject of audit activities by our
+internal audit function. Accordingly, if deficits are detected, it is possible to adopt appropriate measures for their elimination. This
+coordination of processes and procedures is intended to help ensure that the Managing Board and the Supervisory Board are fully informed
+about significant risks in a timely manner.
+Risk management at Siemens builds on a comprehensive, interactive and management-oriented Enterprise Risk Management (ERM)
+approach that is integrated into the organization and that addresses both risks and opportunities. Our ERM approach is based on the
+globally accepted COSO Standard (Committee of Sponsoring Organizations of the Treadway Commission) Enterprise Risk Management
+Integrating with Strategy and Performance (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018)
+and is adapted to Siemens requirements. The frameworks connect the ERM process with our financial reporting process, our internal
+control and compliance management system. They consider a company's strategy, the efficiency and effectiveness of its business
+operations, the reliability of its financial reporting and compliance with relevant laws and regulations to be equally important.
+Our ERM process aims for early identification and evaluation of, and response regarding, risks and opportunities that could materially
+affect the achievement of our strategic, operational, financial and compliance objectives. The time horizon is typically three years, and we
+take a net risk approach, addressing risks and opportunities remaining after the execution of existing and effective measures and controls.
+If risks have already been considered in plans, budgets, forecasts or the consolidated financial statements (e.g. as a provision or risk
+contingency), they are supposed to be incorporated with their financial impact in the entity's business objectives. As a consequence, only
+additional risks arising from the same subject (e.g. deviations from business objectives, different impact perspectives) should be
+considered. In order to provide a comprehensive view of our business activities, risks and opportunities are identified in a structured way
+combining elements of both top-down and bottom-up approaches. Reporting generally follows a quarterly cycle; we complement this
+periodic reporting with an ad-hoc reporting process that aims to escalate critical issues in a timely manner. Relevant risks and opportunities
+are evaluated in terms of impact and likelihood, considering different impact perspectives, including business objectives, reputation and
+regulatory requirements. The bottom-up identification and prioritization process is supplemented by workshops with the respective
+managements of our organizational units. The top-down element ensures that potential new risks and opportunities are discussed at
+different management levels and are included in the subsequent reporting process, if found to be relevant. Reported risks and
+opportunities are analyzed regarding potential cumulative effects and are aggregated within and for each of the organizational units
+mentioned above.
+For the Siemens Group we expect comparable revenue growth in the range of 6% to 9% and a book-to-bill ratio above 1.
+8.2.3 Risk management organization and responsibilities
+To oversee the ERM process and to further drive the integration and harmonization of existing control activities to align with legal and
+operational requirements, the Managing Board established a Risk Management and Internal Control Organization, led by the Head of
+Assurance. In order to allow for a meaningful discussion of risk at the Siemens Group level, this organization aggregates individual risks
+and opportunities of similar cause-and-effect nature into broader risk and opportunity themes. This aggregation naturally results in a
+mixture of risks, including those with a primarily qualitative assessment and those with a primarily quantitative risk assessment.
+Accordingly, we do not adopt a purely quantitative assessment of risk and opportunity themes. Thematic risk and opportunity assessments
+as well as our risk-bearing capacity then form the basis for the evaluation of the company-wide risk and opportunity situation during the
+quarterly Managing Board meetings. The Head of Assurance assists the Managing Board with the operation and oversight of the risk and
+internal control system and reporting to the Audit Committee of the Supervisory Board.
+Combined Management Report
+Our outlook for fiscal 2023 is based on the assumptions that geopolitical tensions do not further escalate and challenges from COVID-19
+and supply chain constraints continue to ease. Under these conditions, with our high order backlog, particularly in short-cycle businesses,
+we expect our industrial businesses to continue their profitable growth.
+Capital efficiency
+For fiscal 2023, we expect a cash conversion rate that contributes to reaching our target of 1 minus the annual comparable revenue growth
+rate of Siemens over a cycle of three to five years.
+Siemens Healthineers expects to achieve comparable revenue development between (1)% and 1% in fiscal 2023. Siemens Healthineers is
+expected to contribute solidly to the profit and profit margin of our Industrial Business.
+Siemens Financial Services expects Earnings before taxes in fiscal 2023 close to the prior-year level. Return on equity (ROE) (after tax) is
+expected to be at the lower end of the target range of 15% to 20%.
+Revenue growth
+For comparable revenue, we expect the Siemens Group to achieve comparable revenue growth in the range of 6% to 9%. Furthermore,
+we anticipate that orders in fiscal 2023 will exceed revenue for a book-to-bill ratio above 1.
+As of September 30, 2022, our order backlog totaled €102 billion, and we expect conversion from the backlog to strongly support revenue
+growth in fiscal 2023 with approximately €45 billion of past orders converted to current revenue. For expected conversion of order backlog
+to revenue for our respective segments, see chapter 3 Segment information.
+Profitability
+Outside our reportable segments, we expect profit at Portfolio Companies of €0.3 billion in fiscal 2023, including a substantial contribution
+from the sale of the Commercial Vehicles business, which closed at the beginning of fiscal 2023.
+Furthermore, within Siemens Energy Investment, we expect amortization of assets resulting from purchase price allocation due to the
+initial recognition of the investment at fair value in September 2020, to be €0.1 billion in fiscal 2023. In addition, Siemens Energy
+Investment includes further effects from at-equity accounting, such as our share in Siemens Energy's profit (loss) after tax. We anticipate
+that Siemens Real Estate will continue with real estate disposals depending on market conditions, at a similar level as in fiscal 2022. Results
+for Innovation also are expected on the prior-year level, which was a negative €0.2 billion. Results related to Governance were a negative
+€0.6 billion in fiscal 2022; we expect an improvement in fiscal 2023, to a negative €0.5 billion. Centrally carried pension expense are
+expected to be on the prior-year level, which was a negative €0.1 billion. Amortization of intangible assets acquired in business
+combinations, which was €1.0 billion in fiscal 2022, is expected at €0.9 billion in fiscal 2023. Financing, eliminations and other items,
+which were a negative €0.5 billion in fiscal 2022, are expected in a range between a negative €0.5 billion and a negative €0.6 billion.
+We anticipate our tax rate for fiscal 2023 to be in the range of 26% to 31%, compared to 38% in fiscal 2022. This assumption does not take
+into consideration possible impacts from potential major tax reforms. We do not expect material influence on financial results from
+discontinued operations in fiscal 2023.
+Our forecast for net income takes into account a number of additional factors. We assume solid project execution to continue in fiscal
+2023. We plan to increase the ratio of R&D expenses to revenue, which was 7.8% in fiscal 2022, to approximately 8% with a strong focus
+on software and digital technologies. Severance charges, which were €0.3 billion in fiscal 2022, are expected at a similar level in fiscal
+2023. While gains from executing our portfolio improvement program contributed €2.2 billion to net income in fiscal 2022, we expect a
+sharply lower contribution from such gains in fiscal 2023.
+Given the above-mentioned assumptions, we expect profitable growth of our industrial businesses to drive an increase in EPS pre PPA to
+a range of €8.70 to €9.20 in fiscal 2023, along with a corresponding increase in net income.
+24
+For fiscal 2023, we expect ROCE, to come close to or reach the lower end of our target range of 15% to 20%.
+Capital structure
+We aim in general for a capital structure, defined as the ratio of industrial net debt to EBITDA (continuing operations), of up to 1.5 and
+expect to achieve this in fiscal 2023.
+Cash conversion rate
+8.1.3 Overall assessment
+14
+In general, due to long-cycle businesses in our organizational units and the importance of long-term contracts for Siemens, there is usually
+a time lag between changes in macroeconomic conditions and their impact on our financial results. In contrast, short-cycle business
+activities react quickly to volatility in market demand. If the moderate growth of certain markets stalls again and if we are not successful
+in adapting our production and cost structure to subsequent changes in conditions in the markets in which we operate, there can be no
+assurance that we will not experience adverse effects. For example, our customers may modify, delay or cancel plans to purchase our
+products, solutions and services, or fail to follow through on purchases or contracts already executed. Furthermore, the prices for our
+products, solutions and services may decline to a greater extent than we currently anticipate. In addition, it may become more difficult for
+our customers to obtain financing. Contracted payment terms, especially regarding the level of advance payments by our customers
+relating to long-term projects, may become less favorable, which could negatively impact our financial condition. Siemens' global setup
+with operations in almost all relevant economies, our wide range of offerings with varied exposures to business cycles, and our balanced
+mix of business models (e.g., equipment, components, systems, software, services and solutions) help us to absorb impacts from adverse
+developments in any single market.
+8.3 Risks
+8.3.3 Financial risks
+Risks from pension obligations: The provisions for pensions and similar obligations may be affected by changes in actuarial assumptions,
+including the discount rate, as well as by movements in financial markets or a change in the mix of assets in our investment portfolio.
+Additionally, they are subject to legal risks with regard to plan design, among other factors. A significant increase in underfunding may
+27
+Combined Management Report
+have a negative effect on our capital structure and rating, and thus may tighten refinancing options and increase costs. In order to comply
+with local pension regulations in selected foreign countries, we may face an economic risk of increasing cash outflows due to changes in
+funding level according to local regulations of our pension plans in these countries or to changes in the regulations themselves.
+Audits by tax authorities and changes in tax regulations: We operate in nearly all countries of the world and therefore are subject to
+many different tax regulations. Changes in tax laws in any of these jurisdictions could result in higher tax expenses and increased tax
+payments. Furthermore, legislative changes could impact our tax receivables and liabilities as well as deferred tax assets and deferred tax
+liabilities. In addition, the uncertain legal environment in some regions could limit our ability to enforce our rights. As a globally operating
+organization, we conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Future
+interpretations or developments of tax regimes may affect our business situation, financial condition and results of operations. We are
+regularly audited by tax authorities in various jurisdictions and we continuously identify and assess relevant risks.
+Market price risks: We are exposed to fluctuations in exchange rates, especially between the U.S. dollar and the euro, because a high
+percentage of our business volume is conducted as exports from Europe to regions using the U.S. dollar. In addition, we are exposed to
+effects involving the currencies of emerging markets, in particular the Chinese yuan. Appreciable changes in euro exchange rates could
+materially change our competitive position. We are also exposed to fluctuations in interest rates. Even hedging activities to mitigate such
+risks may result in a reverse effect. Fluctuations in exchange or interest rates, negative developments in the financial markets and changes
+in central bank policies could therefore negatively impact our financial results. Market prices show higher volatility than before due to
+increased macroeconomic uncertainties (e.g. resulting from inflation, COVID-19, war in Ukraine).
+Liquidity and financing risks: Our treasury and financing activities could face adverse deposit and/or financing conditions from negative
+developments related to financial markets, such as limited availability of funds and hedging instruments, an updated evaluation of our
+solvency, particularly from rating agencies, negative interest rates, and impacts arising from more restrictive regulation of the financial
+sector, central bank policy, or the usage of financial instruments. Widening credit spreads due to uncertainty and risk aversion in the
+financial markets might lead to adverse changes in the market values of our financial assets, in particular our derivative financial
+instruments.
+Shortage of skilled personnel: Competition for diverse and highly qualified personnel (e.g. specialists, experts, digital talent) remains
+intense in the industries and regions in which our businesses operate. We have ongoing demand for highly skilled employees and a need
+to enhance diversity, inclusion and sense of belonging in our workforce. Our future success depends in part on our continued ability to
+identify, assess and hire engineers, digital talent and other qualified personnel. We must also integrate, develop and retain them after they
+join us, which appears especially relevant in times of a new, increasingly virtual working environment. We address these topics for example
+by strengthening the capabilities and skills of our talent acquisition teams and a strategy of proactive search for people with the required
+capabilities in our respective industries and markets. Starting in fiscal 2023 we will roll out our new Employer Branding activities with focus
+on hard-to-fill positions in our key markets. Technology and digitalization help us to be more effective in attracting and selecting diverse
+talent. In addition, we have a focus on diversity and structured succession planning.
+Credit risks: We provide our customers with various forms of direct and indirect financing of orders and projects, including guarantees.
+Siemens Financial Services in particular bears credit risks due to such financing activities if, for example, customers do not meet obligations
+arising from these financing arrangements, meet them only partially, or meet them late. The credit environment has become more
+dynamic due to a more uncertain macroeconomic outlook (e.g. inflation) and geopolitical tensions.
+8.3.4 Compliance risks
+Current and future investigations regarding allegations of corruption, of antitrust violations and of other violations of law:
+Proceedings against us or our business partners regarding allegations of corruption, of antitrust violations and of other violations of law
+may lead to fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgements, disqualifications from directly
+and indirectly engaging in certain types of business, the loss of business licenses or permits, other restrictions and legal consequences as
+well as negative public media coverage. Accordingly, we may, among other things, be required to comply with potential obligations and
+liabilities arising in connection with such investigations and proceedings, including potential tax penalties. Moreover, any findings related
+to public corruption that are not covered by the 2008 and 2009 corruption charge settlements, which we concluded with U.S. and German
+authorities, may endanger our business with government agencies and intergovernmental and supranational organizations. Monitors
+could again be appointed to review future business practices and we may otherwise be required to further modify our business practices
+and our compliance program.
+In its global business, Siemens does part of its business with state-owned enterprises and governments. We also participate in a number
+of projects funded by government agencies and intergovernmental and supranational organizations, such as multilateral development
+banks. Ongoing or potential future investigations into allegations of corruption, antitrust violations or other violations of law could as well
+impair relationships with such parties or could result in our exclusion from public contracts. Such investigations may also adversely affect
+existing private business relationships and our ability to pursue potentially important strategic projects and transactions, such as strategic
+alliances, joint ventures or other business alliances, or could result in the cancellation of certain of our existing contracts. Moreover, third
+parties, including our competitors, could initiate significant litigation.
+In addition, future developments in ongoing and potential future investigations, such as responding to the requests of governmental
+authorities and cooperating with them, could divert management's attention and resources from other issues facing our business.
+Furthermore, we might be exposed to compliance risks in connection with recently acquired operations that are in the ongoing process of
+integration.
+Along with other measures, Siemens has established a global compliance organization that conducts among others compliance risk
+mitigation processes such as Compliance Risk Assessments or initiates internal audit activities performed by the internal assurance
+department.
+Changes of regulations, laws and policies: As a diversified company with global businesses we are exposed to various product- and
+country-related regulations, laws and policies influencing our business activities and processes. According to observations and analysis,
+there is an increasing risk that existing technical regulations in target markets will suddenly change, or new ones will be set in force, which
+result in market access criteria that our products do not meet. The affected products would lose marketability in this market. Reducing the
+risk of a sales-stop depends on the required correction for the non-conformity. In case the product can technically stay as is, while it has
+to undergo new and additional conformity assessment and certification, there will be considerable effort and cost to carry out the needed
+testing and certification procedures. In a worse case, the affected product will need re-engineering or re-design to meet the requirements
+of the changed or new technical regulation even before it can become re-assessed and certified for market approval. The latter case will
+cause significant extra effort and cost to make the needed product changes and to maintain the country-specific product variant as an
+additional derivative item in the portfolio. In the worst case, if the two aforementioned ways of maintaining the product's marketability
+prove to be not feasible, we must stop selling the affected product in the market. We monitor the political and regulatory landscape in all
+28
+For further information on post-employment benefits, derivative financial instruments, hedging activities, financial risk management and
+related measures, see Notes 17, 24 and 25 in Notes to Consolidated Financial Statements for fiscal 2022.
+Combined Management Report
+Project-related risks: A number of our segments conduct activities under long-term contracts that are awarded on a competitive bidding
+basis. Such contracts typically arise at Mobility and in various activities of Smart Infrastructure or Portfolio Companies. Some of these
+contracts are inherently risky because we may assume substantially all of the risks associated with completing a project and meeting post-
+completion warranty obligations. For example, we may face the risk that we must satisfy technical requirements of a project even though
+we have not gained experience with those requirements before winning the project. The profit margins realized on fixed-priced contracts
+may vary from original estimates as a result of changes in costs and productivity over a contract's term. We sometimes bear the risk of
+unanticipated project modifications, shortage of key personnel, quality problems, financial difficulties of our customers and/or significant
+partners, cost overruns or contractual penalties caused by unexpected technological problems, unexpected developments at the project
+sites, unforeseen changes or difficulties in the regulatory or political environment, performance problems with our suppliers,
+subcontractors and consortium partners or other logistical difficulties. Some of our multi-year contracts also contain demanding
+installation and maintenance requirements in addition to other performance criteria relating to timing, unit cost and compliance with
+government regulations, which, if not satisfied, could subject us to substantial contractual penalties, damages, non-payment and contract
+termination. There can be no assurance that contracts and projects, in particular those with long-term duration and fixed-price calculation,
+can be completed profitably. To tackle those risks, we established a global project management organization to systematically improve
+the technical and commercial capabilities of our project management personnel. For very complex projects we conduct dedicated risk
+assessments in very early stages of the sales phase before we decide to hand over a binding offer to our customers.
+e.g. by attacks on our networks, social engineering, data manipulations in critical applications and a loss of critical resources, resulting in
+financial damages and violating the data privacy laws. Cybersecurity covers the IT of our entire enterprise including office IT, systems and
+applications, special-purpose networks, and our operating environments such as manufacturing and research and development (R&D).
+Like other large multinational companies, we face active cyber threats from sophisticated adversaries that are supported by organized
+crime and nation-states engaged in economic espionage or even sabotage. We strive to mitigate these risks by employing a number of
+measures, including employee training, considering new models of flexible working environments, and comprehensive monitoring of our
+networks and systems through cyber defense with an artificial intelligence solution to identify attacks faster and prevent damage to society
+and to critical infrastructures, our customers, our partners and Siemens overall. We initiated the industrial "Charter of Trust,” signed by a
+growing group of global companies, which sets out principles for building trust in digital technologies and creating a more secure digital
+world. Nonetheless, our systems, products, solutions and services, as well as those of our service providers, remain potentially vulnerable
+to attacks. Such attacks could potentially lead to the publication, manipulation or leakage of information such as through industrial
+espionage. They could also result in deliberate improper use of our systems, vulnerable products, production downtimes and supply
+shortages, with potential adverse effects on our reputation, our competitiveness and results of operations. We might lose market access
+if our products, solutions and services do not comply with local regulations and requirements for cybersecurity. For increased protection
+of Siemens and reduction of a potential financial impact caused by cyber incidents, the risk transfer possibilities have been evaluated. As
+a result of an international insurance tender, the currently insurable cybersecurity risks have been to a partial extent transferred to a
+consortium of insurance companies.
+Below we describe the risks that could have a material adverse effect on our business situation, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and reputation. The order in which the risks are presented in each of the four
+categories reflects the currently estimated relative exposure for Siemens associated with these risks and thus provides an indication of the
+risks' current importance to us. Additional risks not known to us or that we currently consider immaterial may also negatively impact our
+business objectives and operations. Unless otherwise stated, the risks described below relate to all our organizational units.
+8.3.1 Strategic risks
+Economic, political and geopolitical conditions: We see high uncertainties regarding the global economic and geopolitical outlook,
+which deteriorated significantly in the past year due to multiple headwinds, all of which may continue to intensify. First and foremost,
+Russia's invasion of Ukraine and its political and economic consequences, such as sanctions and countermeasures, result in far-reaching
+risks. War in Ukraine may have a negative impact on sales development, production processes as well as purchasing and logistics processes,
+for example through interruptions in supply chains and energy supplies or bottlenecks affecting components, raw materials and
+intermediate products. The conflict could also intensify further to the point of expanding to include other warring parties, including NATO
+countries, and the use of unconventional weapons. An expansion of the war would have a significant impact on the Siemens market
+environment. But even the current state of war could have a further negative impact on economic development if potential energy supply
+shortfalls make rationing necessary in industry and households or even result in blackouts during the next months. This would fuel already
+high inflation, with further risk of a sustained wage-price-spiral. In any case one of the core risks for the Siemens outlook is that central
+banks may fail to get inflation under control and have then to react even more restrictively. Alternatively, central banks may overreact,
+which could lead to rapid monetary tightening. More restrictive financial conditions would likely push advanced economies into recession
+and pose a significant risk to vulnerable emerging economies. Highly indebted (emerging and industrialized) countries could suffer from
+increasing financing costs, further U.S. dollar appreciation, and loss of investor confidence. Other risks could arise for the stability of public
+finances and the banking sector. Further risks are coming from other geopolitical tensions (particularly associated with Ukraine, the Baltics,
+Eastern Europe, the Western Balkans, China, Taiwan, and Iran). Recent, electoral results within the European Union may make cooperation
+and implementation of reforms more difficult. Obstruction and redefinitions of international cooperation could severely impact our
+business. First and foremost a aggravating U.S.-China decoupling would have adverse effects on confidence and investment activity and
+would severely hit Siemens' business. Increasing trade barriers, protectionism, sanctions and in particular technical regulations would
+negatively impact production costs and productivity along our global value chains, as well as significantly impede or even hinder access
+to sales markets. Even though the latest virus variants have seemed less dangerous, the COVID-19 pandemic is still taking a toll on global
+economic activity, in particular due to the strict "zero-COVID" policy in China with potential spillovers to the global economy (e.g., further
+tightening supply chain bottlenecks). But also, the evolution of more aggressive and lethal variants remains a key risk for the global
+economy. We have additional business risk from further weakening of Chinese economic growth. The ongoing crisis in China's real estate
+sector poses a threat to China's economic outlook, with potential spillovers to the global economy. A significant risk to our sales potential
+and cost structure is coming from potential supply chain bottlenecks, due to growing lack of availability of intermediate goods, in particular
+electronic components. We are dependent on the economic development of certain industries; a continuation or even an intensification
+of the cyclical and structural headwinds in core customer industries, e.g., automotive or construction, would have adverse impact on our
+business prospects. A terrorist attack, an escalation of conflicts like in the Ukraine or elsewhere or a significant cybercrime incident, or a
+series of such attacks or incidents in major economies, could depress economic activity globally and undermine consumer and business
+confidence. Additionally, the highly interconnected global economy remains vulnerable to natural disasters, further pandemics or hybrid
+warfare.
+Combined Management Report
+Disruptive technologies: The markets in which our businesses operate experience rapid and significant changes due to the introduction
+of innovative and disruptive technologies. In the fields of digitalization (e.g. IoT, artificial intelligence, cloud computing, industrial
+metaverse), there are risks associated with new competitors, substitutions for existing products/solutions/services, new business models
+(e.g. in terms of pricing, financing, extended scopes for project business or subscription models in the software business) and finally the
+risk that our competitors may have more advanced time-to-market strategies and introduce their disruptive products and solutions faster
+than Siemens. Our operating results depend to a significant extent on our technological leadership, our ability to anticipate and adapt to
+changes in our markets and to optimize our cost base accordingly. Introducing new products and technologies requires a significant
+commitment to research and development, which in return requires expenditure of considerable financial resources that may not always
+result in success. Our results of operations may suffer if we invest in technologies that do not operate or may not be integrated as expected,
+or that are not accepted in the marketplace as anticipated, or if our products, solutions or systems are not introduced to the market in a
+timely manner, particularly compared to our competitors, or even become obsolete. We constantly apply for new patents and actively
+manage our intellectual property portfolio to secure our technological position. However, our patents and other intellectual property may
+not prevent competitors from independently developing or selling products and services that are similar to ours.
+Increasing sustainability focus: The increasing ESG-requirements from governments, investors and customers as well as financing
+restrictions for greenhouse gas emitting technologies could result in additional costs. The growing requirements in the regulatory
+25
+Supply chain management: The financial performance of our operating units depends on reliable and effective supply chain management
+for components, sub-assemblies, energy, critical parts (e.g. semiconductors) and materials. Capacity constraints and supply shortages
+resulting from ineffective supply chain management may lead to production bottlenecks, delivery delays, quality issues and additional
+costs. We also rely on third parties to supply us with parts, components and services. Using third parties to manufacture, assemble and
+test our products may reduce our control over manufacturing yields, quality assurance, product delivery schedules and costs. Although we
+work closely with our suppliers to avoid supply-related problems, there can be no assurance that we will not encounter supply problems
+in the future, especially if we use single-source suppliers for critical components. Shortages and delays could materially harm our
+businesses. Unanticipated increases in the price of components or raw materials due to market shortages or other reasons could also
+adversely affect performance. Furthermore, we may be exposed to the risk of delays and interruptions in the supply chain as a consequence
+of catastrophic events (including pandemics), geopolitical uncertainties, energy shortages, sabotage, cyber incidents or suppliers' financial
+difficulties, particularly if we are unable to identify alternative sources of supply or means of transportation in a timely manner or at all.
+Besides other measures, we mitigate price fluctuation in global raw material markets with various hedging instruments.
+Internal programs and initiatives: We are in a continuous process of operational optimization and constantly engage in cost-reduction
+initiatives, including ongoing capacity adjustment measures and structural initiatives. Consolidation of business activities and
+manufacturing facilities, outsourcings, joint ventures and the streamlining of product portfolios are all part of these cost-reduction efforts.
+These measures may not be implemented as planned, may turn out to be less effective than anticipated, may become effective later than
+estimated or may not become effective at all. Any future contribution of these measures to our profitability will be influenced by the actual
+savings achieved and by our ability to sustain them. In case of restructuring and outsourcing activities, there could be delays in product
+deliveries or we might even experience delivery failures. Furthermore, delays in critical R&D projects could lead to negative impacts in
+running projects. We constantly control and monitor the progress of these projects and initiatives using standardized controlling and
+milestone tracking approaches.
+Combined Management Report
+COVID-19: Compared to the first years of the pandemic, we are seeing a recovery in many business sectors, and travel has also normalized
+in many areas. The availability of vaccines has improved, although their effectiveness against emerging virus variants cannot yet be
+conclusively assessed. Nevertheless, regional lockdowns may continue to be the result. The extent and duration of individual impacts on
+our business are difficult to predict. For example, if measures to the virus are initiated at short notice or last an unpredictably long time,
+our business may be significantly impacted in ways that exceed current expectations and go beyond mitigation measures already in place.
+We could face unexpected closures of sites, factories or office buildings of our suppliers, customers or our own operations, which would
+affect our ability to produce or deliver our products, solutions and services. The longer such restrictive measures (e.g. curfews) last, the
+deeper the resulting consequences will be. Possible consequences include an unchecked increase of public and private debt which hampers
+the post-crisis recovery, serious disruptions in the financial system, and insolvencies among Siemens customers and suppliers. In the long
+term, a reversal of globalization could reduce the potential for future growth. Various task forces and crisis teams in all functional areas of
+Siemens continue to closely monitor COVID-19 events and engage in active mitigation activities if required.
+Competitive environment: The worldwide markets for our products, solutions and services are highly competitive in terms of pricing,
+product and service quality, product development and introduction time, customer service, financing terms and shifts in market demands.
+We face strong, established competitors as well as rising competitors from emerging markets and new industries, which may have a better
+cost structure. Some industries in which we operate are undergoing consolidation, which may result in stronger competition, a change in
+our relative market position, an increase in inventory of finished or work-in-progress goods, or unexpected price erosion. Furthermore,
+there is a risk that critical suppliers could be taken over by competitors and a risk that competitors are increasingly offering services to our
+installed base. We address these risks with various measures, for example benchmarking, strategic initiatives, sales push initiatives,
+executing productivity measures and target cost projects, rightsizing of our footprint, outsourcings, mergers and joint ventures and
+optimizing our product and service portfolio. We continuously monitor and analyze competitive, market and industry information in order
+to be able to anticipate unfavorable changes in the competitive environment rather than merely reacting to such changes.
+Portfolio measures, at-equity investments, other investments and strategic alliances: Our strategy includes divesting our activities in
+some business areas and strengthening others through portfolio measures, including mergers and acquisitions. With respect to
+divestments, we may not be able to divest some of our activities as planned, and the divestitures we do carry out could have a negative
+impact on our business situation, financial condition, results of operations and reputation. Mergers and acquisitions are inherently risky
+because of difficulties that may arise when integrating people, operations, technologies and products. There can be no assurance that any
+of the businesses we acquire can be integrated successfully and in a timely manner as originally planned, or that they will perform as
+anticipated once integrated. In addition, we may incur significant acquisition, administrative, tax and other expenditures in connection
+with these transactions, including costs related to integration of acquired businesses. Furthermore, portfolio measures may result in
+additional financing needs and adversely affect our capital structure. Acquisitions can lead to substantial additions to intangible assets,
+including goodwill, in our statements of financial position. If we were to encounter continuing adverse business developments or if we
+were otherwise to perform worse than expected at acquisition activities, then these intangible assets, including goodwill, might have to
+be impaired, which could adversely affect our business situation, financial condition and results of operations. Our investment portfolio
+includes investments held for purposes other than trading and other investments. Any factors negatively influencing the financial
+condition and results of operations of our at-equity investments and other investments could have an adverse effect on our equity pick-
+up related to these investments or may result in a related write-off. In addition, our business situation, financial condition and results of
+operations could also be adversely affected in connection with loans, guarantees or non-compliance with financial covenants related to
+these investments. Furthermore, such investments are inherently risky as we may not be able to sufficiently influence corporate
+governance processes or business decisions taken by our at-equity investments, other investments and strategic alliances, which may have
+a negative effect on our business and especially on our reputation. In addition, joint ventures bear the risk of difficulties that may arise
+when integrating people, operations, technologies and products. Strategic alliances may also pose risks for us because we compete in
+some business areas with companies with which we have strategic alliances. Besides other measures, we handle these risks with
+standardized processes as well as dedicated roles and responsibilities in the areas of mergers, acquisitions, divestments and carve-outs.
+This includes the systematic treatment of all contractual obligations and post-closing claims.
+8.3.2 Operational risks
+Cyber/Information security: Digital technologies are deeply integrated into our business portfolio. Further integration of information
+technology into products and services in conjunction with changing business strategies (such as outsourcing, globally distributed
+development, a lesser degree of sole production) are leading to an increasingly distributed supply chain, making efficient controls difficult.
+The fact of a large number of suppliers requires a significant effort for the initial and regular verification of the effective implementation
+of cybersecurity requirements by suppliers. Siemens business entities might lose market access if their products, solutions and services do
+not comply with increased regulations and legal requirements for cybersecurity in their respective countries. We observe a global increase
+of cybersecurity threats and higher levels of professionalism in computer crime, which pose a risk to the security of products, systems and
+networks and the confidentiality, availability and integrity of data. According to external sources of relevant data this trend has accelerated
+during the COVID-19 pandemic and the outbreak of the war in Ukraine. Especially the numbers of phishing attacks and malicious websites
+have increased significantly. Moreover, the information technology market is concentrated among a small number of information
+technology and software vendors, which could lead to dependence on a single provider. There can be no assurance that the measures
+aimed at protecting our intellectual property and portfolio will address these threats under all circumstances. There is a risk that
+confidential information or data privacy-relevant information may be stolen or that the integrity of our portfolio may be compromised,
+26
+Combined Management Report
+environment, but also the self-commitment to own sustainability and climate protection targets, bear further liability risks. Additionally,
+business involvement in areas of public debate regarding sustainability might be negatively perceived and trigger adverse media attention.
+This could lead to reputational damage and have an impact on achievement of our business goals. We address these risks, among other
+things, in the context of our sustainability framework DEGREE, in which we have also set ourselves ambitious sustainability targets.
+Measures to reduce climate-related risks include, for example, our decarbonization strategy (including Science Based Target), as well as
+our engagement in the supply chain. In fiscal 2021, we introduced an ESG risk framework along with an optimized ESG due diligence
+process. This supports Siemens businesses with due diligence in the customer-oriented environment with a view to possible environmental
+and social risks as well as related human rights and reputational risks.
+22
+The forecasts presented here for GDP and fixed investments are based on a report from S&P Global dated November 15, 2022.
+With our high order backlog, particularly in short-cycle businesses, we expect our industrial businesses to continue their profitable growth.
+Digital Industries expects for fiscal 2023 to achieve comparable revenue growth of 10% to 13%. The profit margin is expected to be 19%
+to 22%.
+9,996
+Additions to intangible assets and property, plant and equipment
+(2,084)
+(1) Free cash flow
+8,238
+(81)
+(2,083)
+8,157
+(1,730)
+(29)
+(1,759)
+8,379
+(142)
+(II) Net income
+4,392
+(1)/(II) Cash conversion rate
+(113)
+1.86
+10,109
+(81)
+Combined Management Report
+Cash inflows from the change in short-term debt and other financing activities mainly included cash inflows related to the settlement
+of financial derivatives used to hedge currency exposure in our financing activities and from new bank loans, partly offset by cash outflows
+related to commercial paper.
+Cash outflows for dividends attributable to non-controlling interests mainly included dividends paid to the shareholders of Siemens
+Healthineers AG.
+With our ability to generate positive operating cash flows from continuing and discontinued operations of €10.2 billion in fiscal 2022, our
+total liquidity (defined as cash and cash equivalents plus current interest-bearing debt securities) of €11.7 billion, our unused lines of
+credit, and our credit ratings at year-end, we believe that we have sufficient flexibility to fund our capital requirements. Also in our opinion,
+our operating net working capital is sufficient for our present requirements.
+Cash conversion rate
+Continuing Discontinued
+operations
+operations
+Fiscal year 2022
+Continuing
+and
+Fiscal year 2021
+Continuing Discontinued Continuing
+operations operations
+and
+discontinued
+operations
+discontinued
+operations
+(in millions of €)
+Cash flows from operating activities
+10,322
+10,241
+8,237
+6,697
+1.23
+The cash conversion rate increased sharply primarily due to lower net income, which was burdened by a non-cash impairment of €2.7
+billion on our stake in Siemens Energy AG.
+We intend to continue providing an attractive shareholder return. The Siemens Managing Board, in agreement with the Supervisory Board,
+proposes a dividend of €4.25 per share, up from €4.00 per share a year earlier.
+21
+Combined Management Report
+8. Report on expected developments and associated material
+opportunities and risks
+8.1 Report on expected developments
+After a dynamic start in calendar 2022, the global economy experienced a substantial slowdown in the course the year, mainly due to the
+war in Ukraine, spiraling energy prices and very high inflation rates. Several regions were expected to be already in or on the verge of a
+recession at the end of calendar 2022. Calendar 2023 is likely to be a year of economic headwinds, with GDP in Europe and the U.S.
+contracting slightly and global GDP expanding by only 1.5%. The outlook is subject to an extraordinarily high level of uncertainty.
+The EU's economic output is expected to decline by 0.5% in calendar 2023. This assumes that the war in Ukraine does not escalate further.
+Energy prices, which increased dramatically in calendar 2022, should remain at a high level but ease further compared with the highs of
+summer 2022. Germany is likely to see a somewhat more significant decline in GDP (-1.0%) due to its high dependence on Russian energy
+supplies.
+In the USA, the Federal Reserve is expected to raise the key policy interest rate to almost 5% in calendar 2023 in order to bring inflation
+back down to the target level of 2%. The ECB is expected to raise its main refinancing rate to almost 3% in calendar 2023. Rising financing
+costs will likely cause residential and commercial construction to decline. Investment in property, plant and equipment and software is
+expected to weaken. Consumer spending is expected to increase slightly, while spending on services is expected to increase more
+significantly than spending on goods - thus the shift from services to products triggered by COVID-19 should continue to reverse and
+spending patterns normalize. Economic output is expected to contract slightly by 0.2% in calendar 2023.
+Economic growth in China is expected to accelerate only slightly in calendar 2023, after the COVID-19 lockdowns and the housing sector
+crisis already weighed on GDP growth in calendar 2022 (+3%). The impact of the necessary adjustments in China's real estate sector, the
+limited benefit of stimulus packages due to concerns about high debt levels, and weakening export demand are together expected to limit
+China's GDP growth to 4.4% in calendar 2023.
+Having probably peaked in calendar 2022, inflation is expected to weaken slightly in calendar 2023. In the USA, consumer price inflation
+is estimated at 4.3% in calendar 2023, down from 8.1% in calendar 2022. In the EU, inflation is still expected to be 6.5% (down from 9%
+in calendar 2022). Producer prices, which are more volatile than consumer prices and run ahead of them, are expected to fall by 5.4% in
+the USA in calendar 2023 (after an increase of 16.8% in calendar 2022), while they are still expected to rise by 5.4% in the EU (after 30.4%
+in calendar 2022).
+Overall, the macroeconomic environment is likely to be challenging for Siemens in fiscal 2023 given the economic headwinds. For
+example, global fixed capital formation is expected to grow by only 1.7% in calendar 2023, down from 2.7% in calendar 2022. However,
+two effects are expected to provide significant support to our customer markets in fiscal 2023: Firstly, key customer sectors should be
+supported by the still very high order backlogs and work them off as supply and logistics chains ease. In this context, the infrastructure
+sector should continue to benefit from various (green) stimulus programs. On the other hand, producer prices are rising, which means
+that higher costs are being passed on to customers, at least in part. These higher prices also contribute to nominal (not price-adjusted)
+growth in customer markets in fiscal 2023.
+8.1.2 Siemens Group
+We are basing our outlook for fiscal 2023 on the above-mentioned expectations and assumptions regarding the overall economic situation
+and also on the specific market conditions we expect for our respective industrial businesses, as described in chapter 3 Segment
+information. Furthermore, we assume that geopolitical tensions do not further escalate and challenges from COVID-19 and supply chain
+constraints continue to ease. We expect continued impacts from higher prices for raw materials and components and from wage increases,
+which we intend to cover with improved productivity and by adjusting prices for our own products, solutions and services, particularly at
+Digital Industries and Smart Infrastructure.
+We are exposed to currency translation effects, mainly involving the U.S. dollar, the British pound and currencies of emerging markets,
+particularly the Chinese yuan. While we expect volatility in global currency markets to continue in fiscal 2023, we have improved our
+natural hedge on a global basis through geographic distribution of our production facilities in the past. Additionally, Siemens is still a net
+exporter from the Eurozone to the rest of the world, so a weak euro is principally favorable for our business and a strong euro is principally
+unfavorable. In addition to the natural hedging strategy just mentioned, we also hedge currency risk in our export business using derivative
+financial instruments. We expect these steps to help us limit effects on income related to currency in fiscal 2023. In this outlook, we
+assume that currency translation effects in fiscal 2023 do not significantly influence nominal volume growth rates for our businesses.
+This outlook excludes burdens from legal and regulatory matters and material impairments.
+Segments
+Free cash flow from continuing and discontinued operations for fiscal 2022 was €8.2 billion, on the high level of a year earlier. The cash
+conversion rate for Siemens, defined as the ratio of Free cash flow from continuing and discontinued operations to Net income, was 1.86,
+exceeding our targeted cash conversion rate of 1 minus the annual comparable revenue growth rate for Siemens.
+The impairment of our stake in Siemens Energy AG burdened ROCE by 5.3 percentage points, resulting in ROCE of 10.0% for fiscal 2022,
+below our forecast given in the Combined Management Report 2021, which was for ROCE to improve in our target range of 15% to 20%.
+We evaluate our capital structure using the ratio of Industrial net debt to EBITDA. Due to a combination of a decrease in Industrial net debt
+and higher EBITDA year-over-year, this ratio declined to 1.0. We thus achieved the forecast provided in our Combined Management Report
+2021, which was to achieve a ratio below the prior-year figure of 1.5.
+impairment of our stake in Siemens Energy AG and a negative €1.3 billion following our decision to exit business activities in Russia, as
+mentioned above. Basic EPS from net income came in at €4.65 and EPS pre PPA was €5.47. Due particularly to the impairment of our stake
+in Siemens Energy AG, which burdened basic EPS from net income and EPS pre PPA each by €3.37 per share, we did not reach the forecast
+provided in our Combined Management Report for fiscal 2021, which was to achieve EPS pre PPA in a range of €8.70 to €9.10; we did
+achieve our forecast revised after the third quarter of fiscal 2022, which was for EPS pre PPA in a range of €5.33 to €5.73.
+Combined Management Report
+Investing activities
+Additions to intangible assets and property, plant and equipment from continuing operations totaled €2.1 billion in fiscal 2022. Within
+the industrial businesses, ongoing investments related mainly to technological innovations; maintaining, extending and digitalizing our
+capacities for designing, manufacturing and marketing new solutions; improving productivity; and replacements of fixed assets. These
+investments amounted to €1.5 billion in fiscal 2022. The remaining portion related mainly to Siemens Real Estate, including significant
+amounts for projects such as new office buildings in Germany. Siemens Real Estate is responsible for uniform and comprehensive
+management of Company real estate worldwide (except for Siemens Healthineers) and supports the industrial businesses and corporate
+activities with customer-specific real estate solutions.
+With regard to capital expenditures for continuing operations, we expect a significant increase in fiscal 2023. In the coming years, up to
+€0.6 billion are to be invested in Siemensstadt Square. This project initiated in fiscal 2019 aims to transform Siemens' existing industrial
+area in Berlin into a modern urban district supporting a diverse range of purposes, including strengthening key technologies. Further
+investments are planned in relation to Siemens Campus Erlangen. In addition, we continue to invest in attractive innovation fields through
+Next47, our global venture capital unit.
+19
+7. Overall assessment of the economic position
+Combined Management Report
+Fiscal 2022 was marked by geopolitical and economic turmoil, in particular by the war in Ukraine and its global repercussions, which
+further exacerbated already existing economic problems in many countries and which also affected Siemens. As a consequence of the
+war, Siemens decided to exit business activities in Russia. Despite strong global efforts in combating COVID-19, the pandemic continued
+to impact economic development worldwide, resulting in lockdowns particularly in China and affecting global supply and logistics chains.
+Our focus has been on successfully managing in this complex environment. In fiscal 2022, we saw accelerated demand in particular for
+our offerings in the areas of automation, digitalization, resource efficiency and decarbonization. We expect them to continue to be growth
+drivers in the coming years.
+Smart Infrastructure expects for fiscal 2023 comparable revenue growth of 8% to 11%. The profit margin is expected to be 13% to 14%.
+Mobility expects for fiscal 2023 comparable revenue growth of 6% to 9%. The profit margin is expected to be 8% to 10%.
+During the fiscal year, we made further progress in sharpening our business portfolio. On the divestment side, we sold the road-traffic
+business Yunex Traffic, our share in Valeo Siemens eAutomotive and the mail and parcel-handling business of Siemens Logistics. On the
+acquisition side, we strengthened our industrial businesses through the acquisition of Sqills, a provider of cloud-based inventory
+management, reservation, and ticketing software for public transport operators. This acquisition enhances Mobility's existing offerings for
+increasing the availability, capacity and utilization of public transportation. We also strengthened Smart Infrastructure's presence in the
+market for the software used to manage built infrastructure through the acquisition of Brightly, a U.S.-based provider of cloud-based
+Software as a Service (SaaS) for asset and maintenance management and for energy and sustainability management. As a significant
+further step in implementing our digitalization strategy, in June 2022 we launched Siemens Xcelerator, a digital business platform that
+includes a curated portfolio of IoT-enabled hardware, software and digital services from across Siemens and from certified third parties.
+Siemens Xcelerator facilitates interactions and transactions between customers, partners and developers and thus enables acceleration of
+the digital transformation of our customers of all sizes in industry, buildings, power transmission grids and mobility.
+Orders rose 25% year-over-year to €89.0 billion, for a book-to-bill ratio of 1.24, thus fulfilling our expectation of a ratio above 1. All our
+four industrial businesses increased orders year-over-year. Order growth was led by substantial increases at Digital Industries and Smart
+Infrastructure. Orders at Siemens Healthineers also rose substantially and included new orders from the acquisition of Varian. Mobility,
+which won large contracts in both periods under review, among them an order worth €1.5 billion for high-speed trains in Germany in
+fiscal 2022, increased order intake moderately year-over-year. Overall, order growth benefited from positive currency translation effects.
+Revenue was also higher in all our industrial businesses, rising to €72.0 billion, a 16% increase year-over-year, which included positive
+currency translation effects. Digital Industries, Smart Infrastructure and Siemens Healthineers contributed double-digit growth. Revenue
+growth at Digital Industries was driven mainly by the automation businesses, while in its software business a high rate of customer
+acceptance of the PLM SaaS transition reduced current license revenue in favor of recurring future subscription revenue. Revenue at Smart
+Infrastructure rose on contributions from all businesses, led by the electrical products business. At Siemens Healthineers, revenue also
+grew in all businesses and included positive portfolio effects. Revenue at Mobility rose moderately, as revenue development was held back
+by supplier delays in delivering materials and components and by effects related to COVID-19. Excluding currency translation and portfolio
+effects, revenue for Siemens grew 8.2%. We thus exceeded the forecast provided in our Combined Management Report for fiscal 2021,
+which was to achieve mid-single-digit comparable revenue growth, and also exceeded our subsequent guidance provided in the Half-year
+Financial Report 2022, which was to achieve 6% to 8% in comparable revenue growth.
+Profit Industrial Business rose 17% to a record-high €10.3 billion. All industrial businesses except Mobility increased their profit year-over-
+year. The strongest increase came from Smart Infrastructure on improvements in all its businesses. Higher profit at Siemens Healthineers
+included another strong contribution from the rapid coronavirus antigen testing business in the diagnostics business. Profit growth at
+Digital Industries was driven by the automation businesses, only partly offset by a decline in profit in the software business due mainly to
+higher expenses related to cloud-based activities. Profit at Mobility came in lower due mainly to negative effects for winding down business
+activities in Russia totaling €0.6 billion and also to burdens from supplier delays and COVID-19 effects, only partly offset by a €0.7 billion
+gain from the sale of Yunex Traffic.
+Our Industrial Business generated a strong profit margin of 15.1%, up slightly from 15.0% a year earlier. This increase was due to Smart
+Infrastructure which improved its profit margin to 12.8%. Digital Industries and Siemens Healthineers contributed the highest margins
+with 19.9% and 15.5%, respectively, while the profit margin for Mobility came in at 8.2%.
+Earnings before taxes at SFS declined moderately as higher earnings from the equity business were more than offset by decreased results
+in the debt business, including a €0.2 billion impact in connection with the sale of the financing and leasing business in Russia. Return on
+equity after tax for SFS was 15.6%. Profit for Portfolio Companies included a €1.1 billion gain from the sale of the mail and parcel-handling
+business of Siemens Logistics and a €0.3 billion revaluation gain in connection with the sale of our stake in Valeo Siemens eAutomotive
+GmbH. Results within Reconciliation to Consolidated Financial Statements were burdened by a €2.7 billion impairment of our stake in
+Siemens Energy AG and a €0.5 billion impact resulting from the sale of Siemens' financing and leasing business in Russia.
+Despite the excellent performance of our Industrial Business, net income in fiscal 2022 declined to €4.4 billion, down from €6.7 billion a
+year earlier in which discontinued operations contributed income of €1.1 billion largely related to the sale of Flender. The successful
+further focusing of our portfolio in fiscal 2022 resulted in income of €2.2 billion, including the above-mentioned gains related to the mail
+and parcel-handling business of Siemens Logistics and Yunex Traffic; this figure exceeded the €1.5 billion in such income a year earlier,
+including the gain from the sale of Flender. Nevertheless, positive results from divestments were more than offset by the €2.7 billion
+20
+20
+Siemens was very successful in fiscal 2022 despite the complex geopolitical and economic environment mentioned above. Many of our
+key customer industries including automotive, machine building, pharmaceuticals, chemicals, electronics, cloud services and public
+transport kept growing and we continued to successfully avoid major supply chain disruptions. However, tight supply and logistics chains
+led to extended delivery times for some automation products, while effects related to COVID-19, mainly including medical leave for
+employees, impacted some of our own production capacity. Our Industrial Business again achieved excellent results, particularly in Digital
+Industries, Smart Infrastructure and Siemens Healthineers. Results at Mobility were strongly burdened by negative effects for winding
+down business activities in Russia. Outside Industrial Business, exiting financing and leasing activities in Russia resulted in further charges,
+burdening results in Reconciliation to Consolidated Financial Statements and SFS. Also outside Industrial Business, a significant decline in
+the market value of Siemens Energy AG led to an impairment of our stake in the company; as a consequence, after the third quarter of
+fiscal 2022 we had to revise the forecast provided in our Combined Management Report for fiscal 2021 for EPS pre PPA to include the
+earnings effect of the impairment.
+8.1.1 Worldwide economy
+effective processes for implementing, monitoring and reporting on internal control and ERM activities. It consists of the central RIC
+departments of Siemens AG and the RIC departments at our organizational units. The central RIC departments are responsible for
+monitoring and coordinating the entire processes in order to ensure an adequate and effective ICS and ERM within the Group.
+Combined Management Report
+In connection with the decision to exit business activities in Russia following the war in Ukraine Net income was burdened by €0.8 billion.
+rates.
+decrease in performance of entitlements resulting from plans based on asset returns from underlying assets and changes in the discount
+Combined Management Report
+33
+A negative change in other financial income (expenses), net included a decrease of €0.7 billion in gains from non-current securities and a
+negative change of €0.6 billion for provisions relating to derivative financial instruments. Additionally, it included the allowances on
+receivables from affiliated companies of €0.6 billion as mentioned above. In contrast, there was a decrease of €0.6 billion in expenses
+from interest component of changes in pension provisions that are not offset against designated plan assets; this related mainly to a
+The main factors in lower income (loss) from investments, net included an increase of €3.4 billion in impairments on investments, driven
+by an impairment of €2.9 billion on Siemens AG's stake in Siemens Energy AG, Germany, and a decrease of €1.7 billion in gains from the
+disposals of investments, which in fiscal 2021 included a gain of €0.9 billion from the sale of Flender GmbH, Germany. These factors were
+partly offset by an increase of €2.9 billion in income from profit transfer agreements with affiliated companies, due mainly to higher
+income of €2.6 billion from Siemens Beteiligungen Inland GmbH, Germany, and an increase of €1.2 billion in income from investments,
+which included income of €2.4 billion from the investment in Siemens Beteiligungsverwaltung GmbH & Co. OHG, Germany.
+Financial income, net, was burdened by Siemens' decision to exit business activities in Russia as a consequence of the war in the Ukraine.
+Subsequent to this decision, Siemens AG recorded impacts of €0.6 billion in connection with allowances on receivables from affiliated
+companies and an impairment of €0.3 billion on the investment OOO Siemens, Russia. In addition to these impacts, financial income, net,
+decreased mainly due to the following reasons:
+The increase in selling and general administrative expenses was due mainly to higher selling expenses led also by Digital Industries.
+Other operating income (expenses), net, included lower income from the release of provisions related to a former investment, as in
+fiscal 2021.
+The R&D intensity (R&D as a percentage of revenue) was 10%, on the same level as fiscal 2021. The research and development activities
+of Siemens AG are fundamentally the same as for its corresponding business activities within the Siemens Group. Research and
+development expenses in both periods related mainly to Digital Industries. On an average basis, Siemens AG employed 7,000 people in
+R&D in fiscal 2022.
+The increases of revenue, cost of sales and research and development expenses were due mainly to Digital Industries.
+On a geographical basis, 74% of revenue was generated in the Europe, C.I.S., Africa, Middle East region, 18% in the Asia, Australia region
+and 8% in the Americas region. Exports from Germany accounted for 57% of overall revenue. In fiscal 2022, orders for Siemens AG
+amounted to €20.8 billion.
+6%
+3,400
+90%
+(1,918)
+8%
+5,166
+(40)%
+498
+(20)
+n/a
+Net income
+9.2 Net assets and financial position
+3,612
+(30)%
+Profit carried forward
+Allocation to other retained earnings
+Unappropriated net income
+185
+(185)
+3,613
+171
+5,147
+3,115
+Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed)
+Assets
+(4)%
+74,852
+71,576
+1%
+1,068
+1,081
+2021
+2022
+% Change
+Sep. 30,
+Total liabilities and equity
+Deferred income
+Trade payables, liabilities to affiliated companies and other liabilities
+Liabilities to banks
+Liabilities
+Provisions for taxes and other provisions
+Provisions for pensions and similar commitments
+Non-current assets
+Intangible and tangible assets
+Financial assets
+Current assets
+Inventories, receivables and other assets
+Cash and cash equivalents, other securities
+(in millions of €)
+Prepaid expenses
+Active difference resulting from offsetting
+Total assets
+Liabilities and equity
+Equity
+Special reserve with an equity portion
+Provisions
+Deferred tax assets
+(38)%
+5,797
+3,599
+In fiscal 2022, results for Siemens AG arise mainly from the business activities of Digital Industries and Smart Infrastructure and are
+influenced significantly by the results of subsidiaries and investments we own either directly or indirectly. The business development of
+Siemens AG is fundamentally subject to the same risks and opportunities as the Siemens Group. Therefore, the foregoing explanations for
+the Siemens Group apply also for Siemens AG.
+The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
+Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz).
+9. Siemens AG
+Combined Management Report
+32
+22
+Our internal audit function systematically reviews our financial reporting integrity, our accounting-related ICS and ERM. Siemens
+Healthineers has its own internal audit department and annual audit plan (see also 8.5.1). The Audit Committee is integrated into our
+accounting-related ICS. In particular, it oversees the accounting and accounting process and the adequacy and effectiveness of the
+associated ICS, the ERM and the internal audit system. Moreover, we have rules for accounting-related complaints.
+The integration of Varian into our accounting-related ICS, which began in fiscal 2021 after the acquisition by Siemens Healthineers,
+continued in fiscal 2022 and was largely completed with regard to the main Varian entities. The integration measures will be continued in
+fiscal 2023.
+Siemens Healthineers is subject to our Group-wide principles for the accounting-related internal control and risk management system and
+is responsible for adhering to those principles.
+On a quarterly basis, we execute an internal certification process. Management at different levels of our organization, supported by
+confirmations by managements of entities under their responsibility, confirms the accuracy of the financial data that has been reported to
+Siemens' corporate headquarters and reports on the effectiveness of the related control systems.
+Qualification of employees involved in the accounting process is ensured through appropriate selection processes and training. As a
+fundamental principle, based on materiality considerations, the "four eyes" principle applies, and specific procedures must be adhered to
+for data authorization. Additional control mechanisms include target-performance comparisons and analyses of the composition of and
+changes in individual line items, both in the closing data submitted by reporting units and in the Consolidated Financial Statements. In
+line with our information security requirements, accounting-related IT systems contain defined access rules protecting them from
+unauthorized access. The manual and system-based control mechanisms referred to above generally also apply when reconciling the
+International Financial Reporting Standards (IFRS) closing data to the Annual Financial Statements of Siemens AG.
+The base data used in preparing our financial statements consists of the closing data reported by the operations of Siemens AG and its
+subsidiaries. The preparation of the closing data of most of our entities is supported by an internal shared services organization.
+Furthermore, other accounting activities, such as governance and monitoring activities, are usually bundled on a regional level. In
+particular cases, such as valuations relating to post-employment benefits, we use external experts. The reported closing data is used to
+prepare the financial statements in the consolidation system. The steps necessary to prepare the financial statements are subject to both
+manual and automated controls.
+Our Consolidated Financial Statements are prepared on the basis of a centrally issued conceptual framework which primarily consists of
+uniform Financial Reporting Guidelines and a chart of accounts. For Siemens AG and other companies within the Siemens Group required
+to prepare financial statements in accordance with German Commercial Code, this conceptual framework is complemented by mandatory
+regulations specific to the German Commercial Code. The need for adjustments in the conceptual framework due to regulatory changes
+is analyzed on an ongoing basis. Accounting departments are informed quarterly about current topics and deadlines from an accounting
+and closing process perspective.
+Combined Management Report
+31
+At the end of each fiscal year, our management performs an evaluation of the effectiveness of the accounting-related ICS. We have a
+standardized procedure under which necessary controls are defined, documented in accordance with uniform standards, and tested
+regularly for their effectiveness. Nevertheless, there are inherent limitations on the effectiveness of any control system, and no system,
+including one determined to be effective, may prevent or detect all misstatements
+Our ICS and ERM are based on the globally recognized COSO framework (Committee of Sponsoring Organizations of the Treadway
+Commission), for further information see 8.5.1.
+We have an overarching, integrated ICS and ERM methodology (RIC methodology) with a standardized procedure under which necessary
+controls are defined, documented in accordance with uniform standards, and tested regularly for their adequacy and effectiveness. For
+more information on ERM, see chapter 8.2 Risk management.
+Our ICS and ERM and their contributing elements are regularly subject of audit activities by our internal audit function. These are carried
+out either as part of the risk-based annual audit plan or as part of audits scheduled during the year upon request. Siemens Healthineers
+has its own internal audit function and annual audit plan. Topics from the annual audit plan of Siemens Healthineers that are also relevant
+for our Managing Board and Audit Committee must be mandated first by Siemens Healthineers' Managing Board and Audit Committee
+and subsequently by our Managing Board and Audit Committee. The audit procedures for these topics will be generally executed by joint
+teams including members of our and Siemens Healthineers' internal audit functions, thus respecting the interests of both Siemens AG and
+Siemens Healthineers.
+At the end of each fiscal year, our Managing Board performs an evaluation of the adequacy and effectiveness of the ICS and ERM. This
+evaluation is based primarily on the Siemens "In Control"-Statement and quarterly Managing Board meetings. The purpose of the "In
+Control" Statement is to provide an overview of the key elements of the ICS and ERM of Siemens AG and its affiliated companies at the
+end of the fiscal year, to summarize the activities undertaken to review its adequacy and effectiveness and highlight any critical control
+weaknesses identified as part of these activities. The information contained in this statement is provided to the Audit Committee of the
+Supervisory Board of Siemens AG to report on the effectiveness of the ICS and ERM. The Siemens "In Control" Statement is supported by
+certifications at various corporate levels and by all affiliated companies. In the quarterly Managing Board meetings, the company-wide risk
+and opportunity situation is evaluated, the results of the internal control process are explained and once a year an overall conclusion is
+made about the adequacy and effectiveness of our ICS or ERM. Based on this, the Managing Board has no indication that our ICS or ERM
+in their respective wholes have not been adequate or effective as of September 30, 2022.
+Nevertheless, there are inherent limitations on the effectiveness of any risk management and control system. For example, no system -
+even if deemed to be adequate and effective - can guarantee that all risks that will actually occur will be identified in advance or that any
+process violations will be ruled out under all circumstances.
+The Audit Committee is systematically integrated into our ICS and ERM. In particular, it oversees the accounting and the accounting process
+as well as the adequacy and effectiveness of the ICS, ERM and the internal audit system.
+30
+The Supervisory Board and the Managing Board propose to distribute a dividend of €4.25 per share of no par value entitled to the dividend,
+from the unappropriated net income of Siemens AG for the fiscal year ended September 30, 2022 amounting to €3.613 million. The
+proposed dividend represents a total payout of €3.4 billion based on the estimated number of shares entitled to dividend at the date of
+the Annual Shareholders' Meeting. We intend to continue providing an attractive return to our shareholders. This includes striving for a
+dividend per share that exceeds the amount for the preceding year, or that at least matches the prior-year level. For fiscal 2023, we expect
+that net income of Siemens AG will be sufficient to fund the distribution of a corresponding dividend.
+8.5.2 Compliance Management System (CMS)
+Our CMS is based on the three pillars -- prevent, detect and react -- and includes the legal risk areas of corruption, antitrust law, data
+protection, money laundering, export controls and respect for human rights. It is based on an extensive internal set of rules: The Siemens
+Business Conduct Guidelines ("BCG") define the basic principles and standards of behavior that must be observed by all employees in the
+company units and in relation to customers, external partners and the public. In addition, there are extensive internal compliance
+regulations, including associated controls, which oblige all Siemens employees to ensure the implementation of the CMS. They contain
+topic-specific implementation regulations for the individual risk areas with regard to compliance processes and tools as well as additional
+guidelines and information. The compliance operating model contains binding specifications for the employees of the compliance
+organization and describes responsibilities and how the CMS works.
+Compliance risk management and compliance reviews as part of the CMS aim to identify compliance risks at an early stage and thus enable
+to take appropriate and effective measures to avoid or minimize risks. The risk assessment is also integrated into individual business
+processes and tools. The results of CMS that are relevant to the Group are taken into account as part of the Company-wide ERM.
+The Compliance Control Program aims to ensure compliance and implementation of the CMS and processes used worldwide. It is part of
+the ICS and is continuously further developed and adapted to the current Siemens guidelines. In addition, current compliance issues are
+discussed at the management level on a regular basis.
+The entire CMS is continuously adapted to business-specific risks and various local legal requirements. The findings from compliance risk
+management as well as compliance controls and audits are used to derive measures for its further development.
+8.5.3 Significant characteristics of the accounting-related ICS and ERM
+The overarching objective of our accounting-related ICS and ERM -- as part of the overarching ICS and ERM -- is to ensure that financial
+reporting is conducted in a proper manner, such that the Consolidated Financial Statements and the Combined Management Report of
+the Siemens Group and the Annual Financial Statements of Siemens AG as the parent company are prepared in accordance with all relevant
+regulations.
+The ICS and ERM also include a CMS geared to the Company's risk situation.
+As of September 30, 2022, the number of employees was around 49,000.
+9.1 Results of operations
+Statement of Income of Siemens AG in accordance with German Commercial Code (condensed)
+(1,785)
+(1,570)
+(14)%
+(3,283)
+(2,999)
+(9)%
+27%
+Other operating income (expenses), net
+thereof Income (loss) from investments, net 4.204 (prior year 5.303)
+Income from business activity
+Income taxes
+(306)
+(196)
+(56)%
+Financial income, net
+72,657
+28%
+4,135
+Fiscal year
+% Change
+(in millions of €)
+2022
+2021
+Revenue
+18%
+Cost of sales
+as percentage of revenue
+Research and development expenses
+Selling and general administrative expenses
+17,390
+(12,502)
+4,888
+15,094
+(10,960)
+15%
+(14)%
+Gross profit
+75,920
+(4)%
+30,424
+Framework agreements concluded by Siemens AG under International Swaps and Derivatives Association Inc. documentation (ISDA
+Agreements) grant each counterparty a right of termination, including in certain cases of (i) a transformation (for example mergers and
+changes of form), (ii) an asset transfer or (iii) acquisition of ownership interests that enables the acquirer to exercise control over Siemens
+AG or its controlling bodies. Partially this right of termination exists only, if (1) the resulting entity fails to simultaneously assume Siemens
+AG's obligations under the ISDA Agreements or (2) the resulting entity's creditworthiness is materially weaker than Siemens AG's
+immediately prior to such event. Generally, ISDA Agreements are designed such that upon termination all outstanding payment claims
+documented under them are to be netted.
+The lines of credit, and the relevant loan agreements mentioned above provide their respective lenders with a right of termination in the
+event that (1) Siemens AG becomes a subsidiary of another company or (2) a person or a group of persons acting in concert acquires
+effective control over Siemens AG by being able to exercise decisive influence over its activities (Art. 3(2) of Council Regulation (EC)
+139/2004).
+In December 2021, a consolidated subsidiary as borrower and Siemens AG as guarantor entered into a bilateral loan agreement in the
+amount of €500 million, which has been fully drawn. In addition, in March 2020 and in June 2019 respectively, a consolidated subsidiary
+as borrower and Siemens AG as guarantor entered into a bilateral loan agreement, each of which has been drawn in the full amount of
+US$ 500 million.
+In December 2021, Siemens AG entered into two bilateral loan agreements in the total amount of €600 million, which have been fully
+drawn.
+As of September 30, 2022, Siemens AG maintained lines of credit in the amount of €7.45 billion.
+10.5 Significant agreements which take effect, alter or terminate upon a change of control of
+the Company following a takeover bid
+For details on the authorizations referred to above, especially the terms to exclude subscription rights, please refer to the relevant
+resolution and to Section 4 of the Articles of Association.
+Combined Management Report
+36
+As of September 30, 2022, the Company held 57,454,171 shares of stock in treasury.
+On June 24, 2021, the Company announced that it would launch a new five-year share buyback program, beginning in fiscal 2022. This
+buyback, which began on November 15, 2021 and extends at the latest until September 15, 2026, is limited to a maximum value of €3
+billion (excluding incidental transaction charges) on purchases of no more than 50 million Siemens shares. Using the authorization given
+by the Annual Shareholders' Meeting on February 5, 2020, Siemens repurchased 14.2 million shares by September 30, 2022 under this
+share buyback. This buyback has the exclusive purposes of retirement, of issuing shares to employees, board members of affiliated
+companies and members of the Managing Board of Siemens AG, and of servicing/securing the obligations or rights to acquire Siemens
+shares arising particularly from or in connection with convertible bonds and warrant bonds.
+Furthermore, the Supervisory Board is authorized to use shares acquired on the basis of this or any previously given authorization to meet
+obligations or rights to acquire Siemens shares that were or will be agreed with members of the Managing Board within the framework of
+rules governing Managing Board compensation.
+used to service or secure obligations or rights to acquire Siemens shares arising particularly from or in connection with convertible bonds
+or warrant bonds of the Company or its affiliated companies. Moreover, the Managing Board is authorized to exclude subscription rights
+in order to grant holders/creditors of conversion or option rights or respective conversion or option obligations on Siemens shares
+subscription rights as compensation against effects of dilution to the extent to which they would be entitled after exercise of such rights
+or fulfillment of such obligations, and to use Siemens shares to service such subscription rights.
+sold by the Managing Board, with the approval of the Supervisory Board, against payment in cash if the price at which such Siemens
+shares are sold is not significantly lower than the market price of Siemens stock (exclusion of subscription rights, limited to 10% of the
+capital stock, by mutatis mutandis application of Section 186 para. 3 sentence 4 German Stock Corporation Act); or
+offered and transferred, with the approval of the Supervisory Board, to third parties against non-cash contributions;
+used in connection with share-based compensation programs and/or employee share programs of the Company or any of its affiliated
+companies and issued to individuals currently or formerly employed by the Company or any of its affiliated companies as well as to
+board members of any of the Company's affiliated companies;
+retired;
+The new shares under Authorized Capital 2019 and the aforementioned bonds are to be issued against cash or non-cash contributions.
+They are, as a matter of principle, to be offered to shareholders for subscription. The Managing Board is authorized to exclude, with the
+approval of the Supervisory Board, subscription rights of shareholders in the event of capital increases against contributions in kind. In the
+event of capital increases against contributions in cash, the Managing Board is authorized to exclude shareholders' subscription rights with
+the approval of the Supervisory Board in the following cases:
+.
+•
+The issue price of the new shares/bonds is not significantly lower than the stock market price of the Siemens shares already listed or the
+theoretical market price of the bonds computed in accordance with generally accepted actuarial methods (exclusion of subscription
+rights, limited to 10% of the capital stock, in accordance with or by mutatis mutandis application of Section 186 para. 3 sentence 4
+German Stock Corporation Act).
+The exclusion is necessary with regard to fractional amounts resulting from the subscription ratio.
+• The exclusion is used to grant holders of conversion or option rights or conversion or option obligations on Siemens shares a
+compensation for the effects of dilution.
+10.6 Compensation agreements with members of the Managing Board or employees in the
+event of a takeover bid
+The new shares issued or to be issued in exchange for contributions in cash and in kind and with shareholders' subscription rights excluded,
+may in certain cases be subject to further restrictions. The details of those restrictions are described in the relevant authorization. In
+addition, the Managing Board has issued the commitment not to increase the capital stock from the Authorized Capital 2019 and the
+Conditional Capitals 2019 and 2020 by a total of more than 10% of the capital stock existing at the time of the Shareholders' Meeting on
+February 5, 2020, to the extent that capital increases with shareholders' subscription rights excluded are made from the Authorized Capital
+2019 against contributions in cash or in kind or to service convertible bonds and/or warrant bonds issued under the authorizations
+approved on January 30, 2019 or February 5, 2020 with shareholders' subscription rights excluded. This commitment ends no later than
+February 4, 2025.
+In addition to selling them over the stock exchange or through a public sales offer to all shareholders, the Managing Board is authorized
+by resolution of the Shareholders' Meeting on February 5, 2020 to also use Siemens shares repurchased on the basis of this or any
+previously given authorization for every permissible purpose, in particular as follows: Such Siemens shares may be
+•
+•
+•
+•
+•
+The Company may not repurchase its own shares unless so authorized by a resolution duly adopted by the shareholders at a general
+meeting or in other very limited circumstances set forth in the German Stock Corporation Act. On February 5, 2020, the Shareholders'
+Meeting authorized the Company to acquire until February 4, 2025 up to 10% of its capital stock existing at the date of adopting the
+resolution or - if this value is lower - as of the date on which the authorization is exercised. The aggregate of shares of stock of Siemens
+AG repurchased under this authorization and any other Siemens shares previously acquired and still held in treasury by the Company or
+attributable to the Company pursuant to Sections 71d and 71e of the German Stock Corporation Act may at no time exceed 10% of the
+then existing capital stock. Any repurchase of Siemens shares shall be accomplished at the discretion of the Managing Board either (1) by
+acquisition over the stock exchange, (2) through a public share repurchase offer or (3) through a public offer to swap Siemens shares for
+shares in a listed company within the meaning of Section 3 para. 2 German Stock Corporation Act. The Managing Board is additionally
+authorized to complete the repurchase of Siemens shares in accordance with the authorization described above by using certain derivatives
+(put and call options, forward purchases and any combination of these derivatives). In exercising this authorization, all stock repurchases
+based on the derivatives are limited to a maximum volume of 5% of Siemens' capital stock existing at the date of adopting the resolution
+at the Shareholders' Meeting. A derivative's term of maturity may not, in any case, exceed 18 months and must be chosen in such a way
+that the repurchase of Siemens shares upon exercise of the derivative will take place no later than February 4, 2025.
+The contracts with the members of the Managing Board previously contained the right of the member to terminate his or her contract
+with the Company for good cause in the event of a change of control that results in a substantial change in the position of a Managing
+Board member (for example, due to a change in corporate strategy or a change in the Managing Board member's duties and
+responsibilities). A change of control exists if one or several shareholders acting jointly or in concert acquire a majority of the voting rights
+in Siemens AG and exercise a controlling influence, or if Siemens AG becomes a dependent enterprise as a result of entering into an
+intercompany agreement within the meaning of Section 291 of the German Stock Corporation Act, or if Siemens AG is to be merged into
+an existing corporation or other entity. If this right of termination is exercised, the Managing Board member is entitled to a severance
+payment in the amount of no more than two years' compensation. The calculation of the annual compensation includes not only the base
+compensation and the target amount for the bonus, but also the target amount for the stock awards, in each case based on the most
+recent completed fiscal year prior to termination of the contract. The stock-based compensation components for which a firm commitment
+already exists will remain unaffected. Additionally, the severance payments cover non-monetary benefits by including an amount of 5%
+of the total severance amount. Severance payments will be reduced by 10% as a lump-sum allowance for discounted values and for income
+earned elsewhere. However, this reduction will apply only to the portion of the severance payment that was calculated without taking
+account of the first six months of the remaining term of the Managing Board member's contract. There is no entitlement to a severance
+payment if the Managing Board member receives benefits from third parties in connection with a change of control. A right to terminate
+the contract does not exist if the change of control occurs within a period of twelve months prior to a Managing Board member's
+retirement.
+On September 18, 2019, the Supervisory Board of Siemens AG resolved that the contracts with members of the Managing Board should
+not contain such right of termination in the future. This has already been taken into account in the case of contract extensions and in the
+case of new contracts with the newly appointed members of the Managing Board as of October 1, 2020.
+10.7 Other takeover-relevant information
+Combined Management Report
+29
+Within our ERM we regularly identify, evaluate and respond to opportunities that present themselves in our various fields of activity. Below
+we describe our most significant opportunities. Unless otherwise stated, the opportunities described relate to all organizational units. The
+order in which the opportunities are presented reflects the currently estimated relative exposure for Siemens associated with these
+opportunities and thus provides an indication of the opportunities' current importance to us. The described opportunities are not
+necessarily the only ones we encounter. In addition, our assessment of opportunities is subject to change because the Company, our
+markets and technologies are constantly advancing. It is also possible that opportunities we see today will never materialize.
+Favorable political and regulatory environment (including sustainability): A favorable political and regulatory environment including
+the transition towards a low-carbon economy could restore a more positive industrial investment sentiment that supports the growth of
+8.4 Opportunities
+concern.
+At present, no risks have been identified that either individually or in combination could endanger our ability to continue as a going
+our markets. In addition, government initiatives and subsidies (including tax reforms, green and digital recovery plans, R&D among others)
+may lead to more government spending (e.g. infrastructure, healthcare, mobility or digitalization investments) and ultimately result in an
+opportunity for us to participate in ways that increase our revenue and profit. Investments to strengthen countries' resilience, energy and
+food security, as well as to diversify value chains close to major markets (reshoring, nearshoring) can present opportunities to businesses.
+By enabling our customers to reduce their greenhouse gas (GHG) emissions using our portfolio and by reducing CO2 emission in our own
+operations, Siemens strives to support the transition towards a low-carbon economy. Siemens also welcomes and supports recent
+legislative and governmental measures to accelerate the mitigation of climate change, especially in Europe such as through the Green
+Deal or sustainable finance initiatives.
+While our assessments of individual risks have changed during fiscal 2022 due to developments in the external environment, changes in
+our business portfolio, effects of our own mitigation measures and the revision of our risk assessment, the overall risk situation for Siemens
+did not change significantly as compared to the prior year. We currently see the strategic risk economic, political and geopolitical conditions
+as the most significant challenge for us followed by the operational risk cyber/information security.
+For additional information with respect to specific proceedings, see Note 22 in Notes to Consolidated Financial Statements for fiscal 2022.
+8.3.5 Assessment of the overall risk situation
+In addition, while we have procedures in place to ensure compliance with applicable governmental regulations in the conduct of our
+business operations, it cannot be excluded that violations of applicable governmental regulations may be caused either by us or by third
+parties that we contract with, including suppliers or service providers whose activities may be attributed to us. Any such violations
+particularly expose us to the risk of liability, penalties, fines, reputational damage or loss of licenses or permits that are important to our
+business operations. In particular, we could also face liability for damage or remediation for environmental contamination at the facilities
+we design or operate. With regard to certain environmental risks, we maintain liability insurance at levels that our management believes
+are appropriate and consistent with industry practice. We may incur environmental losses beyond the limits, or outside the coverage, of
+such insurance, and such losses may have an adverse effect on our business situation, financial condition and results of operations.
+Current or future litigation and legal and regulatory proceedings: Siemens is and potentially will be involved in numerous legal disputes
+and proceedings in various jurisdictions. These legal disputes and proceedings could result, in particular, in Siemens being subject to
+payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual cases this may
+also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Asserted claims are generally
+subject to interest rates. Some of these legal disputes and proceedings could result in adverse decisions for Siemens; or decisions,
+assessments or requirements of regulatory authorities could deviate from our expectations, which may have material effects on our
+business activities as well as our financial position, results of operations and cash flows. Siemens maintains liability insurance for certain
+legal risks at levels our management believes are appropriate and consistent with industry practice. However, the insurance policy does
+not protect Siemens against, in particular, reputational damage. Moreover, Siemens may incur losses relating to legal disputes and
+proceedings beyond the limits, or outside the coverage, of such insurance or exceeding any provisions made for losses related to legal
+disputes and proceedings. Finally, there can be no assurance that Siemens will be able to maintain adequate insurance coverage on
+commercially reasonable terms in the future.
+Environmental, health & safety and other governmental regulations: Some of the industries in which we operate are highly regulated.
+Current and future environmental, health and safety and other governmental regulations or changes thereto may require us to change
+the way we run our operations and could result in significant increases in our operating or production costs. Furthermore, we see the risk
+of potential environmental and health and safety incidents as well as potential non-compliance with environmental and health and safety
+regulations affecting Siemens and our contractors or sub-suppliers, resulting for example in serious injuries, business interruptions,
+penalties, loss of reputation and internal or external investigations.
+Protectionism (including tariffs/trade war): Protectionist trade policies, de-coupling and changes in the political and regulatory
+environment in the markets in which we operate, such as import and export controls, tariffs and other trade barriers including debarment
+from certain markets, and price or exchange controls, could affect our business in national markets and could impact our business
+situation, financial position and results of operations; we may also be exposed to penalties, other sanctions and reputational damage. In
+addition, the uncertainty of the legal environment in some regions could limit our ability to enforce our rights and subject us to increasing
+costs related to adjusting our compliance programs.
+Sanctions and export control: As a globally operating organization, we conduct business with customers in countries which are subject
+to export control regulations, embargoes, economic sanctions, debarment policies or other forms of trade restrictions (hereafter referred
+to as "sanctions") imposed by the U.S., the EU, China or other countries or organizations. New or expanded sanctions in countries in which
+we do business may result in a curtailment of our existing business in such countries or indirectly in other countries. We are also aware of
+policies of national authorities and institutional investors, such as pension funds or insurance companies, requiring divestment of interests
+in and prohibiting investment in and transactions with entities doing business with countries identified by the U.S. Department of State as
+state sponsors of terrorism. As a result, it is possible that such policies may result in our inability to gain or retain certain investors or
+customers. In addition, the termination of our activities in sanctioned countries may expose us to customer claims and other actions. Our
+reputation could also suffer due to our activities with counterparties in or affiliated with these countries.
+our key markets to anticipate potential problem areas, with the aim of quickly adjusting our business activities and processes to changed
+conditions. However, any changes in regulations, laws and policies could adversely affect our business activities and processes as well as
+our financial condition and results of operations.
+The most significant challenges have been mentioned first in each of the four risk categories: strategic, operational, financial and
+compliance.
+shares, respectively (Conditional Capitals 2019 and 2020), i.e. in total by up to €420 million through the issuance of up to 140 million
+Siemens shares.
+Turning COVID-19 challenges into opportunities: Accelerated post COVID-19 recovery of certain markets driven by e.g. digitalization,
+decarbonization and demographic change might lead to business opportunities. One of the success factors is a balanced and flexible
+workforce strategy. There is also the chance to strengthen our customer relationships through additional market offerings that specifically
+address use cases related directly to the COVID-19.
+Mergers, acquisitions, equity investments, partnerships, divestments and streamlining our portfolio: We constantly monitor our
+current and potential markets to identify opportunities for strategic mergers, acquisitions, equity investments and partnerships, which
+may complement our organic growth. Such activities may help us to strengthen our position in our existing markets, provide access to
+new or underserved markets, or complement our technological portfolio in strategic areas. Opportunities might also arise when portfolio
+optimization measures generate gains, which enable us to further pursue our other strategies for growth and profitability.
+Optimization of organization and processes: On the one hand, we leverage ideas to drive further improvements in our processes and
+cost structure, such as common computing architecture for image processing. Furthermore, we leverage ideas to drive further
+improvements in our processes and cost structure optimizing factory capacities for shorter lead times. On the other hand, we see an
+opportunity of further penetrating markets by quality initiative program and avoiding or reducing non conformance cost.
+We are not aware of, nor have we during the last fiscal year been notified of, any shareholder directly or indirectly holding 10% or more
+of the voting rights. There are no Siemens shares with special rights conferring powers of control. Shares of stock issued by Siemens AG
+to employees under its employee share program and/or as share-based compensation are transferred to the employees. The beneficiary
+employees who hold shares of employee stock may exercise their control rights in the same way as any other shareholder in accordance
+with applicable laws and the Articles of Association.
+37
+Consolidated Financial
+Statements*
+FOR FISCAL 2022
+* This document is an English language translation of the decisive German version and is not provided in
+the European Single Electronic Format (ESEF). The legally required rendering in ESEF-format is filed in
+German language with the operator of the German Federal Gazette and published in the German Federal
+Gazette.
+Value creation through innovation: We drive innovation by investing significantly in R&D in order to develop sustainable solutions for
+our customers while also strengthening our own competitiveness. Being an innovative company and constantly inventing new
+technologies that we expect will meet future demands arising from the megatrends of demographic change, urbanization, digitalization,
+environmental change, resource scarcity and glocalization is one of our core purposes. We are granted thousands of new patents every
+year and continuously develop new concepts and convincing new digital and data-driven business models. This helps us create the next
+generation of ground-breaking innovations in such fields as digital twin, artificial intelligence, automation and edge computing. Across
+our operating units, we are profiting from our strength in connecting the real and digital worlds. Our new Xcelerator platform is an open,
+digital business platform featuring a curated portfolio of IoT-enabled hardware and software, an ecosystem and a marketplace to enhance
+the digital transformation of our customers. We see growth opportunities in opening up access to new markets and customers through
+new marketing and sales strategies, which we implement in our operating units. Our position along the value chains of automation and
+digitalization allows us to further increase market penetration. Along these value chains, we have identified several clear growth fields in
+which we see our greatest long-term potential. Hence, we are combining and developing our resources and capabilities for these growth
+fields.
+SIEMENS
+Our ICS and ERM are based on the principles, guidelines and measures introduced by the Managing Board, which are aimed at the
+organizational implementation of the Managing Board's decisions. Our ICS and ERM include the management of risks and opportunities
+relating to the achievement of business goals, the correctness and reliability of internal and external accounting, and compliance with the
+laws and regulations relevant to Siemens. Sustainability aspects are covered as well and are continuously developed based on the
+regulatory requirements.
+8.5.1 Internal Control System (ICS) and ERM
+8.5 Significant characteristics of the internal control and risk management system
+While our assessments of individual opportunities have changed during fiscal 2022 due to developments in the external environment,
+changes in our business portfolio, our endeavors to profit from them and revision of our strategic plans, the overall opportunity situation
+for Siemens did not change significantly as compared to the prior year.
+Assessment of the overall opportunities situation: The most significant opportunity for Siemens is favorable political and regulatory
+environment (including sustainability) as described above.
+Leveraging Market Potential: Through sales and services initiatives we continuously strive to grow and extend our businesses in
+established markets, open up new markets for existing portfolio elements and strengthen our installed base in order to gain a higher
+market share and increased profits. Furthermore, we aim to increase our sales via improved account management and new distribution
+channels.
+Our ICS and ERM are based on the globally accepted COSO framework (Committee of Sponsoring Organizations of the Treadway
+Commission). Our ERM approach is based on the COSO Standard "Enterprise Risk Management - Integrating with Strategy and
+Performance" (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018) and is adapted to Siemens
+requirements. Our ICS is based on the internationally recognized "Internal Control - Integrated Framework" (2013) also developed by
+COSO. The framework defines the elements of a control system and sets the standard for assessing the adequacy and effectiveness of the
+ICS. The frameworks connect the ERM process with our financial reporting process and our ICS, both systems are complementary.
+All Siemens entities are part of our ICS and ERM. The scope of activities to be performed by each entity is different, depending, among
+others, on the entity's impact on the Consolidated Financial Statements of Siemens and the specific risks associated with the entity. The
+management of each entity is obliged to implement an adequate and effective ICS and ERM within their area of responsibility, based on
+the group-wide mandatory methodology.
+Combined Management Report
+Combined Management Report
+By resolutions of the Shareholders' Meetings on January 30, 2019 and February 5, 2020, the Managing Board is authorized to issue bonds
+with conversion, exchange or option rights or with warrants attached, or a combination of these instruments, entitling the holders to
+subscribe to up to 80 million and up to 60 million Siemens shares, respectively. Based on these two authorizations, the Company or its
+affiliated companies may issue bonds until January 29, 2024 and February 4, 2025, respectively, each in an aggregate principal amount
+of up to €15 billion. In order to grant shares of stock to holders/creditors of such convertible bonds or warrant bonds, the capital stock was
+conditionally increased by resolutions of the Shareholders' Meetings in 2019 and 2020, by up to 80 million and up to 60 million Siemens
+4,220
+4,313
+17,693
+8%
+12,372
+13,380
+0%
+541
+540
+(3)%
+21,216
+20,623
+5%
+101,487
+107,005
+(69)%
+51
+16
+21,792
+40%
+1,623
+2,297
+(29)%
+32,047
+2%
+24,089
+220
+184
+19%
+2,065
+1,243
+66%
+33%
+16,592
+7%
+639
+67,275
+67,914
+235
+10. Takeover-relevant information (pursuant to Sections 289a
+and 315a of the German Commercial Code) and explanatory
+report
+10.1 Composition of common stock
+As of September 30, 2022, the Company's common stock totaled €2.550 billion. The capital stock is divided into 850 million registered
+shares of no par value (Siemens shares). The shares are fully paid in. All shares confer the same rights and obligations. The shareholders'
+rights and obligations are governed in detail by the provisions of the German Stock Corporation Act, in particular by Sections 12, 53a et
+seq., 118 et seq. and 186 of the German Stock Corporation Act.
+10.2 Restrictions on voting rights or transfer of shares
+At the Shareholders' Meeting, each share of stock has one vote and accounts for the shareholder's proportionate share in the Company's
+net income. An exception to this rule applies with regard to treasury shares held by the Company, which do not entitle the Company to
+any rights. Under Section 136 of the German Stock Corporation Act the voting right of the affected shares is excluded by law.
+Siemens shares issued to employees worldwide under the employee share programs implemented since the beginning of fiscal 2009, in
+particular the Share Matching Plan, are freely transferable unless applicable local laws provide otherwise. Under the rules of the Share
+Matching Plan, however, in order to receive one matching share free of charge for each three shares purchased, participants are required
+to hold the shares purchased by them for a vesting period of several years, during which the participants must be continuously employed
+by Siemens AG or any of its affiliated companies. The right to receive matching shares is forfeited if the purchased shares are sold,
+transferred, hedged on, pledged or hypothecated in any way during the relevant vesting period.
+Combined Management Report
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a sustained basis, powers of attorney allowing it to exercise the voting rights
+for 10,584,465 shares (as of September 30, 2022) on behalf of members of the Siemens family. These shares are part of the total number
+of shares held by the family's members. The powers of attorney are based on an agreement between the VSV and, among others, members
+of the Siemens family. The shares are voted together by VSV, taking into account the suggestions of a family partnership established by
+the family's members or of one of this partnership's governing bodies.
+The appointment and removal of members of the Managing Board are subject to the provisions of Sections 84 and 85 of the German Stock
+Corporation Act and Section 31 of the German Codetermination Act (Mitbestimmungsgesetz). According to Section 8 para. 1 of the Articles
+of Association, the Managing Board is comprised of several members, the number of which is determined by the Supervisory Board.
+According to Section 179 of the German Stock Corporation Act, any amendment to the Articles of Association requires a resolution of the
+Shareholders' Meeting. The authority to adopt purely formal amendments to the Articles of Association was transferred to the Supervisory
+Board under Section 13 para. 2 of the Articles of Association. In addition, by resolutions adopted during past Shareholders' Meetings, the
+Supervisory Board has been authorized to amend Section 4 of the Articles of Association in accordance with the utilization of the
+Authorized and Conditional Capitals, and after expiration of the then-applicable authorization and utilization period.
+Resolutions of the Shareholders' Meeting require a simple majority vote, unless a greater majority is required by law (Section 23 para. 2 of
+the Articles of Association). Pursuant to Section 179 para. 2 of the German Stock Corporation Act, amendments to the Articles of
+Association require a majority of at least three-quarters of the capital stock represented at the time of the casting of the votes, unless
+another capital majority is prescribed by the Articles of Association.
+10.4 Powers of the Managing Board to issue and repurchase shares
+The Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until February 2, 2026 by up
+to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash (Authorized Capital 2021).
+Subscription rights of existing shareholders are excluded. The new shares shall be offered exclusively to employees of the Company and
+any of its affiliated companies. To the extent permitted by law, such employee shares may also be issued in such a manner that the
+contribution to be paid on such shares is covered by that part of the annual net income which the Managing Board and the Supervisory
+Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock Corporation Act.
+Furthermore, the Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until January 29,
+2024 by up to €510 million through the issuance of up to 170 million Siemens shares against cash contributions and/or contributions in
+kind (Authorized Capital 2019).
+As of September 30, 2022, the total unissued authorized capital of Siemens AG therefore consisted of €600 million nominal that may be
+used, in installments with varying terms, by issuance of up to 200 million Siemens shares.
+Overall responsibility for our ICS and ERM lies with the Managing Board. The Siemens Risk and Internal Control (RIC) organization bundles
+and integrates the internal control and ERM processes and supports the Managing Board in designing and maintaining adequate and
+35
+34
+The Corporate Governance statement pursuant to Sections 289f and 315d of the German Commercial Code is publicly available on the
+company's website at siemens.com/corporate-governance.
+501
+28%
+62,389
+62,890
+8%
+8%
+249
+34
+(5)%
+101,487
+5%
+The main factor for the decrease in financial assets was the impairment on the stake in Siemens Energy AG.
+The change in cash and cash equivalents, other securities related to the liquidity management of Corporate Treasury, which was focused
+not solely on the business activities of Siemens AG. The liquidity management is based on the financing policy of the Siemens Group,
+which is aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Intra-group
+financing activities drove both an increase of €8.5 billion in receivables from affiliated companies, which resulted in higher inventories,
+receivables and other assets, and an increase of €5.0 billion in liabilities to affiliated companies, which was the main reason for the
+increase of trade payables, liabilities to affiliated companies and other liabilities.
+The increase in provisions for pensions and similar commitments was due mainly to recording of current service and interest costs,
+including actuarial valuation effects relating to the increase of the rate of pension progression up to 2.0% per year (1.5% per year in fiscal
+2021) in connection with the inflation, partly offset by payments for pensions and similar commitments.
+The decrease in equity was due to dividends paid in fiscal 2022 (for fiscal 2021) of €3.2 billion and share buybacks during the year
+amounting to €1.6 billion. These factors were partly offset by net income for the year of €3.6 billion and the transfer of €0.6 billion in
+treasury shares to employees in connection with our share-based payment programs. The equity ratio as of September 30, 2022 decreased
+to 19%, from 21% a fiscal year earlier. For the disclosures in accordance with Section 160 para. 1 no. 2 of the German Stock Corporation
+Act about treasury shares, refer to Note 15 of our Notes to Annual Financial Statements for fiscal 2022.
+9.3 Corporate Governance statement
+107,005
+10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
+removal of members of the Managing Board and governing amendment to the Articles of
+Association
+Siemens Healthineers is largely subject to the Group-wide principles for our ICS and ERM and is responsible for adhering to those principles.
+The integration of Varian into our ICS, which began in fiscal 2021 after the acquisition by Siemens Healthineers, continued in fiscal 2022
+and was completed to a large extent with regard to the most significant Varian entities. The integration measures will be continued in
+fiscal 2023.
+financial
+instruments
+7,127
+1,154
+Other comprehensive income, net of income taxes
+6,611
+3,364
+11,003
+10,061
+Total comprehensive income
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+1,450
+623
+9,553
+9,438
+3
+Consolidated Financial Statements
+204
+679
+Effect of changes in exchange rates on cash and cash equivalents
+785
+(7,502)
+Cash flows from financing activities - continuing and discontinued operations
+(1)
+Cash flows from financing activities - discontinued operations
+Items that may be reclassified subsequently to profit or loss
+785
+88
+Income (loss) from investments accounted for using the equity method, net
+17
+(589)
+2,123
+(560)
+(45)
+Remeasurements of equity instruments
+1
+30
+therein: Income tax effects
+(1)
+(1)
+Income (loss) from investments accounted for using the equity method, net
+Items that will not be reclassified to profit or loss
+72
+57
+(516)
+2,210
+Currency translation differences
+6,803
+1,304
+Derivative financial instruments
+(74)
+(237)
+therein: Income tax effects
+45
+31
+398
+6,697
+(7,502)
+(285)
+(17,192)
+(2,467)
+Cash flows from investing activities - continuing operations
+985
+1,973
+Disposal of investments and financial assets for investment purposes
+2
+2,078
+Disposal of businesses, net of cash disposed
+98
+276
+Disposal of intangibles and property, plant and equipment
+(631)
+(1,100)
+Change in receivables from financing activities
+(1,523)
+(1,404)
+Purchase of investments and financial assets for investment purposes
+(14,391)
+(2,207)
+Acquisitions of businesses, net of cash acquired
+(1,730)
+(2,084)
+Additions to intangible assets and property, plant and equipment
+Cash flows from investing activities
+Cash flows from investing activities - discontinued operations
+Cash flows from financing activities - continuing operations
+(23)
+(2,490)
+(354)
+Dividends attributable to non-controlling interests
+(2,804)
+(3,215)
+Dividends paid to shareholders of Siemens AG
+(704)
+(824)
+Interest paid
+(952)
+455
+Change in short-term debt and other financing activities
+(4,294)
+(6,663)
+Repayment of long-term debt (including current maturities of long-term debt)
+8,316
+4,969
+Issuance of long-term debt
+2,055
+(305)
+Re-issuance of treasury shares and other transactions with owners
+(547)
+(1,565)
+Purchase of treasury shares
+Cash flows from financing activities
+1,698
+(15,494)
+Cash flows from investing activities - continuing and discontinued operations
+9,996
+4,392
+2022
+Other operating income
+Other operating expenses
+Income (loss) from investments accounted for using the equity method, net
+Interest income
+Interest expenses
+Other financial income (expenses), net
+Income from continuing operations before income taxes
+Income tax expenses
+Income from continuing operations
+Income (loss) from discontinued operations, net of income taxes
+Net income
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+Basic earnings per share
+Income from continuing operations
+Income (loss) from discontinued operations
+Net income
+Diluted earnings per share
+Income from continuing operations
+Income (loss) from discontinued operations
+Net income
+Consolidated Financial Statements
+Fiscal year
+Note
+2,30
+Selling and general administrative expenses
+2022
+Research and development expenses
+Cost of sales
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued operations
+at end of period
+9,545
+10,472
+Cash and cash equivalents at end of period
+14,054
+9,545
+Cash and cash equivalents at beginning of period
+(4,509)
+927
+Change in cash and cash equivalents
+Note 28 Earnings per share
+39
+42
+Note 30 Information about geographies
+42
+Note 31 Related party transactions
+43
+Note 32 Principal accountant fees and services
+43
+Note 33 Corporate governance
+44
+Note 34 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the German
+Commercial Code
+1. Consolidated Statements of Income
+(in millions of €, per share amounts in €)
+Revenue
+Gross profit
+2021
+2021
+25,847
+4,392
+6,697
+669
+3,723
+537
+6,161
+28
+4.67
+6.36
+(0.03)
+1.32
+4.65
+7.68
+28
+4.62
+6.28
+(0.03)
+1.31
+4.59
+7.59
+|| 2. Consolidated Statements of Comprehensive Income
+Fiscal year
+(in millions of €)
+Net income
+Remeasurements of defined benefit plans
+therein: Income tax effects
+1,062
+71,977 62,265
+(46,130) (39,527)
+(21)
+4,413
+22,737
+(5,591) (4,859)
+(12,857)
+(11,191)
+5
+2,171
+236
+6
+(285)
+(431)
+4
+(2,085)
+(428)
+1,632
+1,441
+(689)
+(644)
+6
+(987)
+635
+7,154
+7,496
+7
+(2,741)
+(1,861)
+5,636
+10,241
+Cash flows from operating activities - continuing and discontinued operations
+(113)
+Other current financial liabilities
+8,832
+10,317
+Trade payables
+7,821
+6,658
+16
+Short-term debt and current maturities of long-term debt
+Liabilities and equity
+139,372
+151,502
+87,074
+92,673
+2,183
+1,565
+2,865
+2,459
+7
+22,964
+25,903
+14, 23
+7,539
+4,955
+4
+11,023
+1,616
+11,733
+1,731
+10
+17
+Provisions for pensions and similar obligations
+40,879
+43,978
+16
+Long-term debt
+40,000
+42,686
+Total current liabilities
+10
+61
+Liabilities associated with assets classified as held for disposal
+7,628
+7,448
+15
+Other current liabilities
+1,809
+2,381
+Current income tax liabilities
+2,293
+2,156
+18
+Current provisions
+9,876
+12,049
+Contract liabilities
+2,275
+2,13
+12,196
+2022
+Note
+Sep 30,
+Total assets
+Total non-current assets
+Other assets
+Deferred tax assets
+Other financial assets
+Investments accounted for using the equity method
+Property, plant and equipment
+Other intangible assets
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Current income tax assets
+Inventories
+Contract assets
+Other current financial assets
+Trade and other receivables
+Cash and cash equivalents
+Assets
+(in millions of €)
+|| 3. Consolidated Statements of Financial Position
+I
+Sep 30,
+2021
+10,827
+10,465
+8
+3,13
+29,672
+33,861
+3, 12
+52,298
+58,829
+223
+413
+1,751
+1,935
+11
+1,795
+1,432
+7
+8,836
+10,626
+11
+6,645
+7,559
+10
+7,985
+9,696
+9
+15,518
+16,701
+9,545
+2,839
+Deferred tax liabilities
+7
+Additions to assets leased to others in operating leases
+Contract liabilities
+Trade payables
+Trade and other receivables
+Inventories
+Contract assets
+Change in operating net working capital from
+Other non-cash (income) expenses
+(Income) loss related to investing activities
+586
+2,903
+(286)
+432
+(796)
+(942)
+1,861
+2,741
+3,075
+3,561
+(1,062)
+21
+Interest (income) expenses, net
+Income tax expenses
+Amortization, depreciation and impairments
+(Income) loss from discontinued operations, net of income taxes
+Change in other assets and liabilities
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+Income taxes paid
+(432)
+(81)
+Cash flows from operating activities - discontinued operations
+10,109
+10,322
+Cash flows from operating activities - continuing operations
+1,369
+1,481
+Interest received
+238
+348
+(2,324)
+(2,173)
+1,403
+(2,584)
+(463)
+(394)
+1,132
+2,046
+1,286
+1,352
+(1,227)
+(972)
+(444)
+(1,456)
+(934)
+Dividends received
+6,697
+4,392
+Net income
+Retained earnings
+Capital reserve
+2,550
+2,550
+3,19
+90,381
+96,697
+50,381
+54,011
+1,925
+1,654
+679
+1,867
+Issued capital
+Equity
+Total liabilities
+Total non-current liabilities
+Other liabilities
+Other financial liabilities
+1,723
+1,857
+18
+Provisions
+2,337
+2,381
+Other components of equity
+Treasury shares, at cost
+Non-controlling interests
+Total equity
+Cash flows from operating activities
+2021
+2022
+Fiscal year
+Consolidated Financial Statements
+(in millions of €)
+| 4. Consolidated Statements of Cash Flows
+4
+139,372
+151,502
+48,991
+54,805
+7
+4,831
+44,160
+48,895
+Total equity attributable to shareholders of Siemens AG
+(4,804)
+(5,948)
+(232)
+6,159
+39,607
+38,959
+7,040
+7,174
+Total liabilities and equity
+5,910
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+Note 29 Segment information
+9,545
+Lessor: Leases are classified as either finance or operating leases, determined based on whether substantially all the risks and rewards
+incidental to ownership of an underlying asset are transferred. If this is the case, the lease is classified as a finance lease; if not, it is an
+operating lease. Receivables from finance leases are recognized at an amount equal to the net investment in the lease. The assets
+underlying the operating leases are presented in Property, plant and equipment and depreciated on a straight-line basis over their useful
+lives or to their estimated residual value. Operating lease income is recognized on a straight-line basis over the lease term.
+Leases - A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in
+exchange for consideration. Further information on leases can be found in Notes 8, 13 and 16.
+Impairment of property, plant and equipment and other intangible assets - The Company reviews property, plant and equipment and
+other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
+not be recoverable. In addition, intangible assets not yet available for use are subject to an annual impairment test. Impairment testing of
+property, plant and equipment and other intangible assets involves the use of estimates in determining the assets' recoverable amount,
+which can have a material impact on the respective values and ultimately the amount of any impairment.
+generally 10 years
+generally 5 years
+generally 3 to 7 years
+5 to 10 years
+20 to 50 years
+Equipment leased to others
+Office & other equipment
+Technical machinery & equipment
+Other buildings
+Factory and office buildings
+Property, plant and equipment - Property, plant and equipment, is valued at cost less accumulated depreciation and impairment losses.
+Depreciation expense is recognized using the straight-line method. The following useful lives are assumed:
+Other intangible assets - The Company amortizes intangible assets with finite useful lives on a straight-line basis over their respective
+estimated useful lives. Estimated useful lives for patents, licenses and other similar rights generally range from three to five years, except
+for intangible assets with finite useful lives acquired in business combinations. Intangible assets acquired in business combinations
+primarily consist of customer relationships and trademarks as well as technology. Useful lives in specific acquisitions ranged from two to
+30 years for customer relationships and trademarks (in fiscal 2021 four to 30 years) and for technology from five to 22 years (in fiscal
+2021 five to 22 years).
+The determination of the recoverable amount of a (group of) cash-generating unit(s) to which goodwill is allocated involves the use of
+estimates by management. The outcome predicted by these estimates is influenced e.g. by the successful integration of acquired entities,
+volatility of capital markets, interest rate developments, foreign exchange rate fluctuations and the outlook on economic trends. In
+determining recoverable amounts, discounted cash flow calculations generally use five-year projections (in exceptional cases up to ten
+years) that are based on financial forecasts. Cash flow projections consider past experience and represent management's best estimate
+about future developments. Cash flows after the planning period are extrapolated using individual growth rates. Key assumptions on
+which management has based its determination of fair value less costs to sell and value in use include estimated growth rates and weighted
+average cost of capital. These estimates, including the methodology used, can have a material impact on the respective values and
+ultimately the amount of any goodwill impairment.
+For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the (group of) cash-generating unit(s)
+that is expected to benefit from the synergies of the business combination. If the carrying amount of the (group of) cash-generating
+unit(s), to which the goodwill is allocated, exceeds its recoverable amount, an impairment loss on goodwill allocated to that (group of)
+cash-generating unit(s) is recognized. The recoverable amount is the higher of the (group of) cash-generating unit(s)' fair value less costs
+to sell and its value in use. If either of these values exceeds the carrying amount, it is not always necessary to determine both values. These
+values are generally determined based on discounted cash flow calculations. Impairment losses on goodwill are not reversed in future
+periods.
+Lessee: Siemens recognizes right-of-use assets and lease liabilities for leases with a term of more than twelve months if the underlying
+asset is not of low value. Payments for short-term and low-value leases are expensed over the lease term. Extension options are included
+in the lease term if their exercise is reasonably certain. Right-of-use assets are measured at cost less accumulated depreciation expense
+and impairment losses adjusted for any remeasurements. Right-of-use assets are depreciated under the straight-line method over the
+shorter of the lease term and the useful life of the underlying assets. Lease liabilities are measured at the present value of the lease
+payments due over the lease term, generally discounted using the incremental borrowing rate. Lease liabilities are subsequently measured
+at amortized cost using the effective interest method. They are remeasured in case of modifications or reassessments of the lease.
+Discontinued operations and non-current assets held for disposal - Discontinued operations are reported when a component of an
+entity is classified as held for disposal or has been disposed of, if the component represents a separate major line of business or
+geographical area of operations and is part of a single coordinated plan to disposal. A non-current asset or a disposal group is held for
+disposal if its carrying amount will be recovered principally through a sale transaction or through a distribution to owners rather than
+through continuing use. Depreciation and amortization cease for assets classified as held for disposal. In the Consolidated Statements of
+Income and of Cash Flows, discontinued operations are reported separately from continuing operations; prior periods are presented on a
+comparable basis. The disclosures in the Notes to the Consolidated Financial Statements outside of Note 3 relate to continuing operations
+or assets and liabilities not held for disposal. The determination of the fair value less costs to sell includes the use of estimates and
+assumptions that tend to be uncertain.
+Income taxes - Tax positions are calculated taking into consideration the respective local tax laws, relevant court decisions and applicable
+tax authorities' views. Tax regulations can be complex and possibly subject to different interpretations of tax payers and local tax
+authorities. Different interpretations of existing or new tax laws as a result of tax reforms or other tax legislative procedures may result in
+additional tax payments for prior years and are taken into account based on management's considerations. Under the liability method,
+deferred tax assets and liabilities are recognized for expected tax consequences of future periods attributable to differences between the
+financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are recognized if sufficient
+future taxable profit is available, including income from forecasted operating earnings, the reversal of existing taxable temporary
+9
+Consolidated Financial Statements
+Financial assets measured at fair value through other comprehensive income (FVOCI): are equity instruments for which Siemens
+irrevocably elects to present subsequent fair value changes in OCI at initial recognition of the instrument. Unrealized gains and losses, net
+of deferred income tax expenses, as well as gains and losses on the subsequent sale of the instruments are recognized in line item Other
+comprehensive income, net of income taxes.
+significantly reduces accounting mismatches that would otherwise arise if assets and liabilities as well as recognizing gains (losses) were
+measured on different bases.
+Consolidated Financial Statements
+10
+Financial assets measured at fair value through profit and loss (FVTPL): a) mandatorily measured at FVTPL: Debt financial assets are
+measured at FVTPL if the business model they are held in is not a hold-to-collect or a hold-and-sell business model, or if their contractual
+cash flows do not represent solely payments of principal and interest. Equity instruments are measured at FVTPL unless the FVOCI-option
+is elected. b) Financial assets designated as measured at FVTPL are irrevocably designated at initial recognition if the designation
+Termination benefits - Termination benefits are provided as a result of an entity's offer made in order to encourage voluntary redundancy
+before the regular retirement date or from an entity's decision to terminate the employment. Termination benefits in accordance with IAS
+19, Employee Benefits, are recognized as a liability and an expense when the entity can no longer withdraw the offer of those benefits.
+Financial instruments - A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
+equity instrument of another entity. Based on their contractual cash flow characteristics and the business model they are held in, financial
+instruments are classified as financial assets and financial liabilities measured at cost or amortized cost, measured at fair value, loan
+commitments, contract assets and receivables from finance leases. Regular way purchases or sales of financial assets are accounted for at
+the trade date. Initially, financial instruments are recognized at fair value and net of transaction costs, if not categorized at FVTPL.
+Subsequently, financial assets and liabilities are measured according to the category to which they are assigned to:
+Legal Proceedings often involve complex legal issues and are subject to substantial uncertainties. Accordingly, considerable judgment is
+part of determining whether it is probable that there is a present obligation as a result of a past event at the end of the reporting period,
+whether it is probable that such a Legal Proceeding will result in an outflow of resources and whether the amount of the obligation can
+be reliably estimated. Internal and external counsels are generally part of the determination process. Due to new developments, it may be
+necessary, to record a provision for an ongoing Legal Proceeding or to adjust the amount of a previously recognized provision. Upon
+resolution of a Legal Proceeding, Siemens may incur charges in excess of the recorded provisions for such matters. The outcome of Legal
+Proceedings may have a material effect on Siemens' financial position, its results of operations and/or its cash flows.
+Consolidated Financial Statements
+Significant estimates are involved in the determination of provisions related to onerous contracts, warranty costs, asset retirement
+obligations, legal and regulatory proceedings as well as governmental investigations (Legal Proceedings). Siemens records a provision for
+onerous contracts with customers when current estimates of total estimated costs exceed estimated revenue. Onerous contracts with
+customers are identified by monitoring the progress of the project and updating the estimates which requires significant judgment relating
+to achieving certain performance standards as well as estimates involving warranty costs and estimates regarding project delays including
+the assessment of responsibility splits between the contract partners for these delays.
+Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
+assets at period-end. If the performance of the underlying assets is lower than a guaranteed return, the DBO is measured by projecting
+forward the contributions at the guaranteed fixed return and discounting back to a present value.
+Remeasurements comprise actuarial gains and losses as well as the difference between the return on plan assets and the amounts included
+in net interest on the net defined benefit liability (asset). They are recognized in Other comprehensive income, net of income taxes.
+Actuarial valuations rely on key assumptions including discount rates, expected compensation increases, rate of pension progression and
+mortality rates. Discount rates used are determined by reference to yields on high-quality corporate bonds of appropriate duration and
+currency at the end of the reporting period. In case such yields are not available, discount rates are based on government bonds yields.
+Due to changing market, economic and social conditions, the underlying key assumptions may differ from actual developments.
+Service cost, past service cost and settlement gains (losses) for pensions and similar obligations as well as administration costs unrelated
+to the management of plan assets are allocated among functional costs. Past service cost and settlement gains (losses) are recognized
+immediately in profit or loss. For unfunded plans, the amount in line item Provisions for pensions and similar obligations equals the DBO.
+For funded plans, Siemens offsets the fair value of the plan assets from the DBO. Siemens recognizes the net amount, after adjustments
+for effects relating to any asset ceiling.
+Defined benefit plans Siemens measures the entitlements by applying the projected unit credit method. The approach reflects an
+actuarially calculated net present value of the future benefit entitlement for services already rendered. In determining the net present
+value of the future benefit entitlement for service already rendered (Defined Benefit Obligation (DBO)), the expected rates of future salary
+increases and expected rates of future pension progressions are considered. The assumptions used for the calculation of the DBO as of the
+period-end of the preceding fiscal year are used to determine the calculation of service cost and interest income and expense of the
+following year. Significant plans apply individual spot rates from full discount rate curves to determine service cost and interest expense.
+The net interest income or expense for the fiscal year will be based on the discount rate for the respective year multiplied by the net
+defined benefit liability (asset) at the preceding fiscal year's period-end date.
+-
+Inventories - Inventories are valued at the lower of acquisition or production costs and net realizable value, costs being generally
+determined based on an average or first-in, first-out method. Determining net realizable value of inventories involves accounting estimates
+for quantity, technical and price risks.
+differences and available tax planning opportunities that Siemens would execute. As of each period-end, Siemens evaluates the
+recoverability of deferred tax assets, based on taxable income of past periods and projected future taxable profits. As future developments
+are uncertain and partly beyond Siemens's control, assumptions are necessary to estimate future taxable profits as well as the period in
+which deferred tax assets will recover. Estimates are revised in the period in which there is sufficient evidence to revise the assumption.
+Contract assets, contract liabilities, receivables - When either party to a contract with customers has performed, Siemens presents a
+contract asset, a contract liability or a receivable depending on the relationship between Siemens' performance and the customer's
+payment. Contract assets and liabilities are presented as current since incurred in the normal operating cycle. Receivables are recognized
+when the right to consideration becomes unconditional. Valuation allowances for credit risks are made for contract assets and receivables
+in accordance with the accounting policy for financial assets measured at amortized cost.
+Provisions - A provision is recognized in the Statement of Financial Position when it is probable that the Company has a present legal or
+constructive obligation as a result of a past event and it is probable that an outflow of economic benefits will be required to settle the
+obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are recognized at
+present value by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of
+money. When a contract becomes onerous, the present obligation under the contract is recognized as a provision.
+Financial assets measured at amortized cost: Loans, receivables and other debt instruments held in a hold-to-collect business model
+with contractual cash flows that represent solely payments of principal and interest are measured at amortized cost using the effective
+interest method less valuation allowances for expected credit losses.
+00
+Goodwill - Goodwill is not amortized, instead, goodwill is tested for impairment annually, as well as whenever there are events or changes
+in circumstances (triggering events) which suggest that the carrying amount may not be recoverable. Goodwill is carried at cost less
+accumulated impairment losses. The goodwill impairment test is performed at the level of a cash-generating unit or a group of cash-
+generating units, generally represented by a segment. Siemens Healthineers is tested one level below the segment. This is the lowest level
+at which goodwill is monitored for internal management purposes.
+Overall, we face an increasingly complex and uncertain macroeconomic and geopolitical environment, including potential energy and gas
+shortfalls or outages, less predictable and escalating volatility in non-financial and financial markets (in share prices, rising interest and
+inflation rates, foreign currency prices, etc.), as well as a rising apprehension of a potential shift into an economic downturn. Impacts of
+the pandemic coronavirus spread on Siemens' Consolidated Financial Statements are contingent on the further evolution of virus variants
+and its dangerousness, the progress of worldwide vaccinations, the vaccines' effectiveness and the imposition of consequential lockdowns.
+Effects vary considerably by region and customer industries. Siemens is currently operating in a surrounding, which requires dealing with
+COVID-19, the war in Ukraine and sanctions imposed on Russia as well as the need to take potential countermeasures being taken by
+Russia into account. Uncertainties increase in prognosis and forecasts, in applying critical accounting estimates and in using management
+judgements. Those trends could impact fair values and carrying amounts of assets and liabilities, amount and timing of results of
+operations and cash flows of Siemens. Severity and duration of those trends are decisive on the magnitude of its impact on Siemens'
+Consolidated Financial Statements. Siemens based its estimates and assumptions on existing knowledge and best information available.
+Following the war in Ukraine, Siemens decided to exit business activities in Russia. Subsequent to this decision, Income from continuing
+operations was burdened by negative effects totaling €1.3 billion related to these activities primarily at Mobility, SFS and Corporate
+Treasury of Financing, eliminations and other items. For further information, see Notes 3, 4, 11, 13, 23 and 29.
+Certain of the following accounting policies require critical accounting estimates that involve complex and subjective judgments and the
+use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting
+estimates could change from period to period and have a material impact on the Company's results of operations, financial positions and
+cash flows. Critical accounting estimates could also involve estimates where Siemens reasonably could have used a different estimate in
+the current accounting period. Siemens cautions that future events often vary from forecasts and that estimates routinely require
+adjustment.
+NOTE 2 Material accounting policies and critical accounting estimates
+The accompanying Consolidated Financial Statements present the operations of Siemens Aktiengesellschaft with registered offices in
+Berlin (registry number HRB 12300) and Munich (registry number HRB 6684), Germany, and its subsidiaries (the Company or Siemens).
+They have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union as well
+as with the additional requirements set forth in Section 315e (1) of the German Commercial Code (HGB). The Consolidated Financial
+Statements are in accordance with IFRS as issued by the International Accounting Standards Board (IASB). The Consolidated Financial
+Statements were authorized for issue by the Managing Board on December 5, 2022. Siemens prepares and reports its Consolidated
+Financial Statements in euros (€). Due to rounding, numbers presented may not add up precisely to totals provided. Siemens is a German
+based multinational focused technology company.
+NOTE 1 Basis of presentation
+|| 6. Notes to Consolidated Financial Statements
+Consolidated Financial Statements
+60
+54,805
+5,910
+48,895
+(5,948)
+(134)
+(12)
+6,306
+Basis of consolidation - The Consolidated Financial Statements include the accounts of Siemens AG and its subsidiaries over which the
+Company has control. Siemens controls an investee if it has power over the investee. In addition, Siemens is exposed to, or has rights to,
+variable returns from the involvement with the investee and Siemens is able to use its power over the investee to affect the amount of
+Siemens' return.
+Business combinations - Cost of an acquisition is measured at the fair value of the assets given and liabilities incurred or assumed at the
+date of exchange. Identifiable assets acquired and liabilities assumed in a business combination (including contingent liabilities) are
+initially measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling
+interests are measured at the proportional fair value of assets acquired and liabilities assumed (partial goodwill method). If there is no loss
+of control, transactions with non-controlling interests are accounted for as equity transactions not affecting net income. At the date control
+is lost, any retained equity interests are remeasured to fair value. In case of a written put option on non-controlling interests the Company
+assesses whether the prerequisites for the transfer of present ownership interest are fulfilled at the balance sheet date. If the Company is
+not the beneficial owner of the shares underlying the put option, the exercise of the put option will be assumed at each balance sheet
+date and treated as equity transaction between shareholders with the recognition of a purchase liability at the respective exercise price.
+The non-controlling interests participate in profits and losses during the reporting period.
+Associates and joint ventures - Associates are companies over which Siemens has the ability to exercise significant influence over
+operating and financial policies (generally through direct or indirect ownership of 20% to 50% of the voting rights). Joint ventures are
+entities over which Siemens and one or more parties have joint control. Joint control requires unanimous consent of the parties sharing
+control in decision making on relevant activities.
+Associates and joint ventures are recorded in the Consolidated Financial Statements using the equity method and are initially recognized
+at cost. If the investment was retained in a transaction in which Siemens lost control of a subsidiary, the fair value of the investment
+represents the cost on initial recognition. Siemens' share of its associate's or joint venture's post-acquisition profits or losses is recognized
+in the Consolidated Statements of Income, and its share of post-acquisition changes in equity that have not been recognized in the
+associate's or joint venture's profit or loss is recognized directly in equity. The cumulative post-acquisition changes also include effects
+from fair value adjustments and are adjusted against the carrying amount of the investment. When Siemens' share of losses in an associate
+or joint venture equals or exceeds its interest in the investment, Siemens does not recognize further losses, unless it incurs obligations or
+makes payments on behalf of the associate or joint venture. The interest in an associate or joint venture is the carrying amount of the
+investment together with any long-term interests that, in substance, form part of Siemens' net investment in the associate or joint venture.
+Siemens reviews associates and joint ventures for impairment whenever there is objective evidence that its investment is impaired, for
+example a significant or prolonged decline in the fair value of the investment below its cost. This includes the use of judgements, in
+particular with respect to the net investment in Siemens Energy AG.
+Earnings per share - Basic earnings per share are computed by dividing income from continuing operations, income from discontinued
+operations and net income, all attributable to ordinary shareholders of Siemens AG by the weighted average number of shares outstanding
+during the year. Diluted earnings per share are calculated by assuming conversion or exercise of all potentially dilutive securities and share-
+based payment plans.
+Research and development costs - Costs of research activities are expensed as incurred. Costs of development activities are capitalized
+when the recognition criteria in IAS 38 are met. Capitalized development costs are stated at cost less accumulated amortization and
+impairment losses with an amortization period of generally three to 25 years.
+Product-related expenses - Provisions for estimated costs related to product warranties are recorded in line item Cost of sales at the time
+the related sale is recognized.
+Functional costs - In general, operating expenses by types are assigned to the functions following the functional area of the
+corresponding profit and cost centers. Amortization, depreciation and impairment of intangible assets and property, plant and equipment
+are included in functional costs depending on the use of the assets.
+Income from interest - Interest is recognized using the effective interest method.
+Revenues from software contracts: Software contracts usually comprise the sale of subscription licenses and perpetual licenses, which
+are both on-premise, as well as technical support services including updates and unspecified upgrades and the sale of software-as-a-
+service. Subscription contracts generally contain two separate performance obligations: time-based software license and technical support
+service. Revenues for perpetual and time-based licenses granting the customer a right to use Siemens' intellectual property are recognized
+at a point in time, i.e. when control of the license passes to the customer. Revenues for technical support services including updates and
+unspecified upgrades are recognized over time on a straight-line basis as the customer simultaneously receives and consumes the benefits
+provided by Siemens' services. Software-as-a-service contracts including related cloud services represent one performance obligation for
+which revenues are recognized over time on a straight-line basis. Payment terms for all transactions are usually 30 days from the date of
+invoice issued according to the contractual terms.
+Revenues from product sales: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon
+delivery of the goods. Invoices are issued at that point in time and are usually payable within 30 days.
+8
+Revenues from maintenance and service contracts: Revenues are recognized over time on a straight-line basis or, if the performance
+pattern is other than straight-line, as services are provided, i.e. under the percentage-of-completion method as described above. Payment
+terms are usually 30 days from the date of invoice issued according to the contractual terms.
+Revenues from construction-type contracts: Revenues are recognized over time under the percentage-of-completion method, based on
+the percentage of costs incurred to date compared to total estimated costs. An expected loss on the contract is recognized as an expense
+immediately. Payment terms are usually 30 days from the date of invoice issued according to the contractual terms.
+Revenue recognition - Siemens recognizes revenue when, or as control over distinct goods or services is transferred to the customer; i.e.
+when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits,
+provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking our
+customer's creditworthiness into account. Revenue is the transaction price Siemens expects to be entitled to. Variable consideration is
+included in the transaction price if it is highly probable that a significant reversal of revenue will not occur once associated uncertainties
+are resolved. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending
+on which is expected to better predict the amount of variable consideration. Consideration is adjusted for the time value of money if the
+period between the transfer of goods or services and the receipt of payment exceeds twelve months and there is a significant financing
+benefit either to the customer or Siemens. If a contract contains more than one distinct good or service, the transaction price is allocated
+to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company
+reasonably estimates those. Revenue is recognized for each performance obligation either at a point in time or over time.
+Foreign currency transaction Transactions that are denominated in a currency other than the functional currency of an entity, are
+recorded at that functional currency applying the spot exchange rate at the date when the underlying transactions are initially recognized.
+At the end of the reporting period, foreign currency-denominated monetary assets and liabilities are revalued to functional currency
+applying the spot exchange rate prevailing at that date. Gains and losses arising from these foreign currency revaluations are recognized
+in net income. Those foreign currency-denominated transactions which are classified as non-monetary are remeasured using the historical
+spot exchange rate.
+-
+Foreign currency translation - Assets and liabilities of foreign subsidiaries, where the functional currency is other than the euro, are
+translated using the spot exchange rate at the end of the reporting period, while the Consolidated Statements of Income are translated
+using average exchange rates during the period. Differences arising from such translations are recognized within equity and reclassified
+to net income when the gain or loss on disposal of the foreign subsidiary is recognized. The Consolidated Statements of Cash Flows are
+translated at average exchange rates during the period, whereas cash and cash equivalents are translated at the spot exchange rate at the
+end of the reporting period.
+Consolidated Financial Statements
+7
+The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards
+completion and may involve estimates on the scope of deliveries and services required to fulfill the contractually defined obligations. These
+significant estimates include total estimated costs, total estimated revenues, contract risks, including technical, political and regulatory
+risks, risks from supply chain constraints and other judgments. Under the percentage-of-completion method, changes in estimates may
+lead to an increase or decrease of revenue. In addition, Siemens needs to assess whether the contract is expected to continue or whether
+it is terminated. In determining whether the continuation or termination of a contract is expected to be the most likely scenario, all relevant
+facts and circumstances relating to the contract are considered on an individual basis.
+38,959
+Valuation allowances are set up for expected credit losses, representing a forward-looking estimate of future credit losses involving
+significant judgment. Expected credit loss is the gross carrying amount less collateral, multiplied by the probability of default and a factor
+reflecting the loss in the event of default. Valuation allowances are not recognized when the gross carrying amount is sufficiently
+collateralized. Probabilities of default are mainly derived from internal rating grades. A simplified approach is used to assess expected
+credit losses from trade receivables, lease receivables and contract assets by applying their lifetime expected credit losses. The valuation
+allowance for loans and other long-term debt instruments primarily held at Financial Services (SFS) is measured according to a three-stage
+impairment approach:
+Stage 3: If the financial asset is credit-impaired, valuation allowances equal lifetime expected credit losses. A financial asset is considered
+credit-impaired when there is observable information about significant financial difficulties and a high vulnerability to default, however,
+the definition of default is not yet met. Impairment triggers include liquidity problems, a request for debt restructuring or a breach of
+contract. A credit-risk driven contractual modification always results in a credit-impaired financial asset.
+13
+Note 4 Interests in other entities
+14
+Note 5 Other operating income
+14
+15
+Note 6 Other operating expenses and Other financial income (expenses), net
+Note 7 Income taxes
+16
+Note 8 Trade and other receivables
+17
+Note 9 Other current financial assets
+17
+Note 10 Contract assets and liabilities
+17
+Note 11 Inventories and Other current assets
+Note 3 Acquisitions and dispositions
+12
+Note 2 Material accounting policies and critical accounting estimates
+Note 1 Basis of presentation
+Table of contents
+Consolidated Financial Statements
+3
+1. Consolidated Statements of Income
+3
+2. Consolidated Statements of Comprehensive Income
+4
+17
+5
+7
+7
+7
+3. Consolidated Statements of Financial Position
+4. Consolidated Statements of Cash Flows
+5. Consolidated Statements of Changes in Equity
+6. Notes to Consolidated Financial Statements
+60
+Stage 1: At inception, twelve-month expected credit losses are recognized based on a twelve months probability of default.
+Stage 2: If the credit risk of a financial asset increases significantly without being credit-impaired, lifetime expected credit losses are
+recognized based on a lifetime probability of default. A significant increase in credit risk is determined for each individual financial
+instrument using internal credit ratings. A rating deterioration does not trigger a transfer into Stage 2, if the credit rating remains within
+the investment grade range. More than 30 days past due payments will not be transferred into Stage 2, if the delay is not credit-risk-
+related.
+Note 12 Goodwill
+18
+Note 24 Derivative financial instruments and hedging activities
+Note 25 Financial risk management
+Note 26 Share-based payment
+Note 27 Personnel costs
+11
+10,465
+Cash flow hedges: The effective portion of changes in the fair value of derivative instruments designated as cash flow hedges are
+recognized in line item Other comprehensive income, net of income taxes, and any ineffective portion is recognized immediately in net
+income. Amounts accumulated in equity are reclassified into net income in the same periods in which the hedged item affects net income.
+Share-based payment - Share-based payment awards at Siemens are predominately designed as equity-settled. Fair value is measured
+at grant date and is expensed over the vesting period. Fair value is determined as the market price of the underlying shares, considering
+dividends during the vesting period the grantees are not entitled to as well as market conditions and non-vesting conditions, if applicable.
+Plans granting the rights to receive subsidiary shares constitute own shares and, accordingly, are accounted as equity-settled.
+Fair value hedges: The carrying amount of the hedged item is adjusted by the gain or loss attributable to the hedged risk. Where an
+unrecognized firm commitment is designated as hedged item, the subsequent cumulative change in its fair value is recognized as a
+separate financial asset or liability with corresponding gain or loss recognized in net income. For hedged items carried at amortized cost,
+the adjustment is amortized until maturity of the hedged item. For hedged firm commitments the initial carrying amount of the assets or
+liabilities that result from meeting the firm commitments are adjusted to include the cumulative changes in the fair value that were
+previously recognized as separate financial assets or liabilities.
+Derivative financial instruments - Derivative financial instruments, such as foreign currency exchange contracts and interest rate swap
+contracts are measured at fair value unless they are designated as hedging instruments, for which hedge accounting is applied. Changes
+in the fair value of derivative financial instruments are recognized either in net income or, in the case of a cash flow hedge, in line item
+Other comprehensive income, net of income taxes (applicable deferred income tax). Certain derivative instruments embedded in host
+contracts are also accounted for separately as derivatives.
+Financial liabilities except for derivative financial instruments, Siemens measures financial liabilities at amortized cost using the
+effective interest method.
+Loan Commitments Expected credit losses for irrevocable loan commitments are determined using the three-stage impairment
+approach for financial assets measured at amortized cost and recognized as a liability.
+-
+Cash and cash equivalents - The Company considers all highly liquid investments with less than three months maturity from the date of
+acquisition to be cash equivalents. Cash and cash equivalents are measured at cost.
+A financial asset is derecognized when the rights to cash flows expire or the financial asset is transferred to another party. Significant
+modifications of contractual terms of a financial asset measured at amortized cost result in derecognition and recognition of a new
+financial asset; for insignificant modifications, the carrying amount of the financial asset is adjusted without derecognition.
+Financial assets are written off as uncollectible if recovery appears unlikely. Generally, if the limitation period expired, when a debtor's
+sworn statement of affairs is received, or when the receivable is not pursued due to its minor value. Receivables are written off when
+bankruptcy proceedings close.
+Note 23 Additional disclosures on financial instruments
+36
+29
+Note 22 Legal proceedings
+Note 13 Other intangible assets and property, plant and equipment
+19
+Note 14 Other financial assets
+20
+Note 15 Other current liabilities
+20
+Note 16 Debt
+822222222222333332222Z
+Note 17 Post-employment benefits
+Note 18 Provisions
+26
+Note 19 Equity
+26
+Note 20 Additional capital disclosures
+27
+Note 21 Commitments and contingencies
+25
+7,174
+Prior-year information - The presentation of certain prior-year information has been reclassified to conform to the current year
+presentation.
+(328)
+2,175
+6,697
+537
+6,161
+39,823
+3,433
+36,390
+(4,629)
+(115)
+(42)
+(1,292)
+33,078
+6,161
+6,840
+2,550
+Total
+equity
+1,251
+controlling
+interests
+29
+3,278
+(547)
+(547)
+372
+-
+58
+74
+74
+(63)
+137
+(3,088)
+(284)
+(2,804)
+-
+(2,804)
+3,364
+86
+(178)
+Non
+to share-
+holders of
+Siemens AG
+Total equity
+attributable
+Other changes in equity
+Other transactions with non-controlling interests
+Changes in equity resulting from major portfolio transactions
+Disposal of equity instruments
+Re-issuance of treasury shares
+Purchase of treasury shares
+Share-based payment
+Dividends
+Other comprehensive income, net of income taxes
+Net income
+Balance as of October 1, 2020
+(in millions of €)
+I 5. Consolidated Statements of Changes in Equity
+5
+2,550
+Balance as of September 30, 2021
+Balance as of October 1, 2021
+Net income
+Other comprehensive income, net of income taxes
+Treasury
+shares
+at cost
+Consolidated Financial Statements
+Derivative
+Currency
+translation
+differences
+Retained
+earnings
+reserve
+Capital
+(547)
+Issued
+capital
+Other changes in equity
+Transactions with non-controlling interests
+Disposal of equity instruments
+Re-issuance of treasury shares
+Purchase of treasury shares
+Share-based payment
+Dividends
+Balance as of September 30, 2022
+430
+Equity
+instruments
+8
+(69)
+83
+(3,569)
+(354)
+(3,215)
+(3,215)
+6,611
+781
+5,830
+45
+1
+6,346
+(562)
+4,392
+669
+14
+14
+(1,588)
+(1,588)
+3
+430
+(331)
+(331)
+(166)
+(19)
+(146)
+3,723
+(153)
+(41)
+(41)
+(41)
+490
+490
+444
+45
+6
+3,723
+(1,588)
+4,831
+9
+115
+114
+1
+(45)
+(174)
+(178)
+124
+5
+1,095
+1,229
+1,229
+-
+48,991
+8
+8
+2,325
+2,550
+(219)
+7,040
+44,160
+(13)
+(40)
+39,607
+2,550
+48,991
+(179)
+4,831
+44,160
+(4,804)
+(4,804)
+(179)
+(13)
+(40)
+39,607
+7,040
+(19)
+4,456
+463
+39,964
+4,797
+(4,480)
+(1,255)
+553
+2,282
+116
+361
+159
+(377)
+2,745
+128
+Other financial indebtedness (current and non-current)
+3
+3,224
+(453)
+320
+4,969
+(6,060)
+Changes in liabilities arising from financing activities
+09/30/2022
+6,658
+7,821
+Lease liabilities (current and non-current)
+43,978
+40,879
+In fiscal 2022 and 2021, Siemens recognized interest expenses on lease liabilities of €48 million and €43 million and expenses relating to
+variable lease payments not included in the measurement of lease liabilities of €93 million and €64 million, respectively. In fiscal 2022
+and 2021, cash flows to which Siemens is potentially exposed and which are not reflected in the measurement of lease liabilities relate
+primarily to lease contracts entered into, however which have not yet commenced as well as to extension options whose exercise is not
+yet reasonably certain totaling €3.1 billion and €2.9 billion, respectively, and, in addition, to variable lease payments mainly relating to
+incidental and operating costs for buildings leased by Siemens.
+Cash flows
+Non-cash changes
+(in millions of €)
+Non-current notes and bonds
+Current notes and bonds
+Loans from banks (current and non-current)
+10/01/2021
+(Acquisi-
+tions)/Dis-
+positions
+Foreign
+currency
+translation
+Fair value
+hedge
+adjustments
+Reclassifi-
+cations and
+other
+changes
+37,505
+5,867
+2,929
+(1)
+(72)
+In fiscal 2022, and 2021, Siemens recognized impairments of property, plant & equipment and other intangible assets in the amount of
+€119 million and €40 million, respectively. In fiscal 2022, impairments mainly relate to activities in Russia.
+The carrying amount of Advances to suppliers and construction in progress includes €1,218 million and €957 million, respectively, of
+property, plant and equipment under construction in fiscal 2022 and 2021. As of September 30, 2022, and 2021, contractual
+commitments for purchases of property, plant and equipment are €627 million and €625 million, respectively.
+1 Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+11,023 (2,071)
+(13,578)
+24,601
+(2,529)
+2,739
+568
+379
+1,053
+1,055
+(35)
+(420)
+711
+47
+16
+2,228
+736
+23,443
+Right-of-use assets are presented in Property, plant and equipment in accordance with their nature; right-of-use assets have a carrying
+amount of €2,608 million and €2,641 million as of September 30, 2022, and 2021, respectively; additions are €918 million and €901
+million and depreciation expense is €760 million and €726 million in fiscal 2022 and 2021. Right-of-use assets mainly relate to leases of
+land and buildings with a carrying amount of €2,309 million and €2,320 million as of September 30, 2022, and 2021, additions of €650
+million and €659 million and depreciation expense of €558 million and €534 million in fiscal 2022, and 2021. Equipment leased to others
+mainly relate to Technical machinery and equipment as well as to Office and other equipment owned by Siemens with a carrying amount
+of €1,323 million and €337 million, respectively, as of September 30, 2022 and €1,279 million and €404 million, respectively, as of
+September 30, 2021.
+(604)
+In fiscal 2022 and 2021, expenses recognized for short-term leases are €56 million and €50 million, respectively; expenses for low-value
+leases not accounted for under the right-of-use model are €22 million and €21 million, respectively. Sale and Leaseback transactions
+resulted in gains of €94 million and €1 million, respectively, in fiscal 2022 and 2021.
+Future minimum lease payments to be received under operating leases are:
+Within one year
+127
+622
+Total debt
+48,700
+(1,829)
+289
+4,526
+(1,274)
+224
+3,002
+50,636
+In addition, other financing activities resulted in €590 million cash flows in fiscal 2022.
+Cash flows
+Non-cash changes
+(in millions of €)
+10/01/2020
+2021
+2022
+Sep 30,
+After one year but not more than two years
+After two years but not more than three years
+After three years but not more than four years
+After four years but not more than five years
+More than five years
+(in millions of €)
+2,299
+In fiscal 2022 and 2021, income from operating leases is €687 million and €668 million, respectively, thereof from variable lease payments
+€144 million and €127 million, respectively.
+703
+2021
+16,551
+14,446
+4,277
+4,700
+2,868
+1,552
+1,470
+1,556
+737
+710
+25,903
+22,964
+Item Loans receivable primarily relate to long-term loan transactions of SFS.
+19
+19
+NOTE 15 Other current liabilities
+Consolidated Financial Statements
+Sep 30,
+2022
+(in millions of €)
+Other
+Receivables from finance leases
+392
+Property, plant and equipment
+426
+298
+322
+228
+239
+163
+178
+111
+122
+130
+156
+1,323
+1,443
+NOTE 14 Other financial assets
+Sep 30,
+(in millions of €)
+Loans receivable
+Derivative financial instruments
+Equity instruments
+Liabilities to personnel
+2022
+2021
+Sep 30,
+Non-current debt
+Sep 30,
+2022
+2021
+2022
+2021
+4,797
+5,867
+39,964
+37,505
+1,071
+1,183
+1,673
+1,100
+87
+70
+42
+46
+Sep 30,
+Sep 30,
+Current debt
+Total debt
+5,126
+5,375
+Deferred Income
+Accruals for pending invoices
+Other
+79
+96
+550
+541
+701
+1,692
+7,448
+7,628
+Other includes miscellaneous tax liabilities of €743 million and €742 million, respectively, in fiscal 2022 and 2021.
+NOTE 16 Debt
+(in millions of €)
+Notes and bonds
+Loans from banks
+Other financial indebtedness
+Lease liabilities
+1,616
+construction in progress
+Translation
+(511)
+(in millions of €)
+Deferred tax balances and expenses (benefits) developed as follows in fiscal 2022 and 2021:
+Minus amounts represent deferred tax liabilities.
+Total deferred taxes, net
+Tax loss carryforwards and tax credits
+Non-current assets and liabilities
+Current assets and liabilities
+Pensions and similar obligations
+Intangible assets
+Deferred taxes due to temporary differences
+(in millions of €)
+Deferred income tax assets and (liabilities) on a net basis are summarized as follows:
+Actual income tax expenses
+Other, net (primarily German trade tax differentials)
+Tax effect of investments accounted for using the equity method
+Foreign tax rate differential
+Change in tax rates
+Change in realizability of deferred tax assets and tax credits
+Taxes for prior years
+Balance at beginning of fiscal year of deferred tax (assets) liabilities
+Tax-free income
+Income taxes presented in the Consolidated Statements of Income
+Additions from acquisitions not impacting net income
+(496)
+54
+(591)
+12
+100
+(198)
+(398)
+215
+(386)
+(769)
+607
+1,947
+2,324
+2,218
+2021
+Fiscal year
+2022
+Minus amounts represent deferred tax assets.
+Balance at end of fiscal year of deferred tax (assets) liabilities
+Other (includes mainly currency translation differences)
+Changes in items of the Consolidated Statements of Comprehensive Income
+14
+Non-deductible expenses
+Expected income tax expenses
+Other financial income (expenses), net
+Other operating expenses in fiscal 2022, and 2021, include losses on the sale of property, plant and equipment as well as effects from
+insurance, personnel, legal and regulatory matters.
+Other operating expenses
+NOTE 6 Other operating expenses and Other financial income (expenses), net
+Other operating income in fiscal 2022, mainly includes gains from disposals of businesses of €1,884 million (thereof: mail and parcel-
+handling business of Siemens Logistics GmbH €1,084 million, Yunex Traffic €738 million) as well as gains from sales of property, plant
+and equipment of €125 million and €73 million, in fiscal 2022 and 2021, respectively, as well as insurance related income in both years.
+632
+2,162
+4,935
+(8)
+416
+2,881
+1,746
+2,054
+17,997
+21,714
+192
+251
+409
+514
+2021
+In fiscal 2022, expenses from hyperinflationary subsidiaries (Türkiye and Argentina) were €115 million, of which €96 million are presented
+in Other financial income (expenses). The hyperinflationary subsidiaries' non-monetary assets and liabilities as well as equity and
+comprehensive income were restated using a price index for changes in the general purchasing power. All of those subsidiaries' fiscal 2022
+financial statement items were translated at the September 30, 2022 closing rate; prior year amounts remained unchanged.
+Increase (decrease) in income taxes resulting from:
+±
+NOTE 7 Income taxes
+(in millions of €)
+Current and deferred income tax expenses differ from the amounts computed by applying a combined statutory German income tax rate
+of 31% as follows:
+In Germany, the calculation of current taxes is based on a combined tax rate of 31%, consisting of a corporate tax rate of 15%, a solidarity
+surcharge thereon of 5.5% and an average trade tax rate of 15%. For foreign subsidiaries, current taxes are calculated based on the local
+tax law and applicable tax rates in the individual foreign countries. Deferred tax assets and liabilities in Germany and abroad are measured
+at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
+Current income tax expenses in fiscal 2022 and 2021 include adjustments recognized for current taxes of prior years in the amount of
+€220 million and €(359) million, respectively. The deferred tax expenses (benefits) in fiscal 2022 and 2021 include tax effects of the
+origination and reversal of temporary differences of €(430) million and €94million, respectively, and contain deferred tax benefit of €(202)
+million and €(16) million, respectively, caused by the recognition of previously unrecognized tax loss carryforwards and temporary
+differences.
+1,861
+2,741
+211
+(422)
+1,650
+3,163
+2021
+2022
+Income tax expenses
+Deferred taxes
+Current taxes
+(in millions of €)
+Fiscal year
+Consolidated Financial Statements
+Income tax expenses (benefits) consist of the following:
+14
+147
+(106)
+(91)
+Sep 30,
+2022
+Trade receivables from the sale of goods and services
+Receivables from finance leases
+(in millions of €)
+NOTE 8 Trade and other receivables
+An uncertain tax regulation arising from a foreign tax reform may result in potential future tax payments amounting to a middle three-
+digit million euro range. Due to the low probability and the character of a contingent liability, no tax liability was recognized.
+1,690
+3.282
+(55)
+538
+(116)
+3
+1,861
+2,741
+2021
+2022
+Fiscal year
+Income and expenses recognized directly in equity
+Discontinued operations
+Continuing operations
+2021
+(in millions of €)
+14,666
+2,036
+After four years but not more than five years
+More than five years
+After three years but not more than four years
+1,284
+1,171
+1,911
+1,653
+2,711
+2,299
+2021
+2022
+After one year but not more than two years
+After two years but not more than three years
+Within one year
+(in millions of €)
+Sep 30,
+Future minimum lease payments to be received are as follows:
+In fiscal 2022 and 2021, the long-term portion of receivables from finance leases is reported in Other financial assets amounting to €4,277
+million and €4,700 million, respectively.
+15,518
+16,701
+2,250
+13,267
+Including items charged or credited directly to equity and the expenses (benefits) from continuing and discontinued operations, the
+income tax expenses (benefits) consist of the following:
+Siemens has not recognized deferred tax liabilities for income taxes or foreign withholding taxes on the cumulative earnings of subsidiaries
+of €29,687 million and €31,628 million, respectively in fiscal 2022 and 2021, because the earnings are intended to be permanently
+reinvested in the subsidiaries.
+In fiscal 2021, the amount of €2,280 million for tax loss carryforwards includes material loss carryforwards for local taxes only.
+Of the tax loss carryforward, an amount of €245 million and €82 million for fiscal 2022 and 2021, respectively can be carried forward for
+a limited period. A material portion thereof will expire until 2030 and 2029, respectively.
+(2,324)
+(527)
+2021
+2022
+Fiscal year
+527
+78
+898
+989
+(600)
+(355)
+437
+2,724
+(2,931)
+(2,957)
+1,943
+459
+2021
+Sep 30,
+2022
+1,861
+2,741
+(422)
+211
+515
+15
+2,474
+1,607
+2,280
+1,164
+194
+443
+2021
+2022
+Sep 30,
+2022
+Consolidated Financial Statements
+(in millions of €)
+Deferred tax assets have not been recognized with respect of the following items (gross amounts):
+15
+(527)
+(78)
+(49)
+184
+1,620
+172
+Deductible temporary differences
+Tax loss carryforwards
+Fiscal year
+15,758
+17,180
+(2,597)
+57
+609
+(471)
+(97)
+2021
+2022
+Fiscal year
+Consolidated Financial Statements
+Income (loss) from investments accounted for using the equity method, net
+Impairment and reversals of impairment
+Gains (losses) on disposals, net
+Share of profit (loss), net
+(in millions of €)
+Investments accounted for using the equity method
+NOTE 4 Interests in other entities
+12:
+12
+166
+(13)
+300
+(2,085)
+Mobility holds a 50% investment in a joint venture accounted for using the equity method, which wholly owns an operating company in
+Russia that designs and manufactures commuter trains and electric locomotives. Significant changes with an adverse effect in the
+economic and legal environment subsequent to sanctions imposed on Russia triggered an impairment of €172 million presented in Income
+(loss) from investments accounted for using the equity method, net, resulting in a recoverable and carrying amount of nil.
+27,941
+16,874
+17,279
+23,397
+28,665
+Siemens Energy AG
+registered in Munich, Germany
+Sep 30, 2021
+35.1%
+35.1%
+Sep 30, 2022
+attributable to shareholders of Siemens Energy AG
+Net Assets
+Non-current liabilities
+Current liabilities
+Non-current assets excluding goodwill
+Current assets
+Ownership interest
+(in millions of €)
+Below summarized financial information of Siemens Energy AG are disclosed at a 100 per cent basis. They are adjusted to align with
+Siemens' accounting policies and to incorporate effects from fair value adjustments at initial recognition.
+Siemens Energy AG, an associate accounted for using the equity method, is globally active in the transmission and generation of electrical
+power and is publicly listed. The stock market value of the investment in Siemens Energy AG was €2.9 billion and € 5.9 billion, respectively,
+as of September 30, 2022 and 2021. In fiscal 2022 and 2021, Siemens Energy AG added a loss to Share of profit (loss), net of €(207)
+million and €(396) million, respectively. The loss includes Siemens' share of Siemens Energy AG's net losses of €(142) million and €(159)
+million as well as effects from fair value adjustments at initial recognition of €(65) million and €(237) million, respectively. In fiscal 2022,
+our investment in Siemens Energy AG was impaired by €2.7 billion. The impairment loss is included in Income (loss) from investments
+accounted for using the equity method and in reconciling items of Segment information. As of June 30, 2022, the significant decline in
+the fair value of the investment triggered an impairment test. At this date, the recoverable amount of €3.6 billion was determined as the
+investment's fair value less costs to sell using Siemens Energy AG's market capitalization (level 1 of the fair value hierarchy). Siemens
+received dividends of 26 million from Siemens Energy AG in fiscal 2022.
+In February 2022, Siemens AG and Valeo GmbH signed an agreement to sell Siemens AG's 50% stake in the at equity accounted
+joint venture Valeo Siemens eAutomotive GmbH (disclosed in Portfolio Companies) to Valeo GmbH. The transaction closed in July 2022.
+The agreement triggered a partial reversal of a previous impairment and resulted in a gain of €292 million presented in Income (loss) from
+investments accounted for using the equity method, net. The recoverable amount was derived from the net consideration (including
+repayment of shareholder loans).
+(428)
+341
+Liabilities disposed of
+4
+52
+Financing and
+leasing business in
+Russia
+Parcel Logistics
+Yunex
+Inventories
+Cash and cash equivalents
+(in millions of €)
+Carrying amounts of the major categories of assets and liabilities for the businesses sold were as follows:
+In September 2022, Siemens sold its financing and leasing business in Russia for RUB 52 billion (€922 million) in cash. Siemens recorded
+a pre-tax gain on the disposal of €5 million. The earnings effect is disclosed at Siemens Financial Services and Financing, eliminations and
+other items. For further information on related impairments of lease receivables, see Note 23. In addition, in the Consolidated Statement
+of Cash Flow, cashflows from the disposal of businesses, net of cash disposed, includes €355 million cash outflows from hedging the
+proceeds in RUB.
+In February 2022, Siemens signed an agreement to sell the mail and parcel-handling business of Siemens Logistics GmbH (Parcel Logistics)
+to the Körber Group. The transaction closed as of July 1, 2022. The consideration received was €1,136 million, mainly in cash. Siemens
+recorded a pre-tax gain on the disposal of €1,084 million, which is presented in other operating income. The business was previously
+reported at Portfolio Companies.
+In January 2022, Siemens signed an agreement to sell its intelligent road traffic solutions business Yunex Traffic (Yunex) to Atlantia S.p.A.
+The transaction closed as of June 30, 2022. The consideration received was €930 million in cash. Siemens recorded a pre-tax gain on the
+disposal of €738 million, which is presented in other operating income. The business was previously reported at Mobility.
+Disposals
+In addition, Siemens closed several smaller acquisitions in fiscal 2022 and 2021 for a total purchase price of €123 million and €429 million,
+respectively, mainly paid in cash. In fiscal 2022, and 2021, the (preliminary) purchase price allocations resulted in Other intangible assets
+of €54 million and €147 million, respectively, and Goodwill of €81 million and €254 million, respectively, which comprises intangible
+assets that are not separable such as employee know-how and expected synergy effects. The purchase price allocation for some of the
+acquired businesses is preliminary, as a detailed analysis of the assets and liabilities has not been finalized.
+In August 2022, Siemens acquired all shares in Brightly Software Inc. (Brightly), an U.S.-based software-as-a-service (SaaS) provider of
+asset and maintenance management solutions. The acquired business will be integrated into Smart Infrastructure. The purchase price is
+U$1.166 billion (€1.144 billion) paid in cash plus a contingent consideration recognized at the acquisition date at US$135 million
+(€132 million) which is based on the achievement of revenue related performance indicators as of September 30, 2024, and
+September 2025. The outcome of the contingent consideration is estimated to range between zero and US$0.3 billion (€0.3 billion). The
+purchase price allocation is preliminary as a detailed analysis of the assets and liabilities has not been finalized; it resulted in the following
+assets and liabilities: Goodwill of €1.1 billion, customer-related intangible assets of €0.6 billion, other intangible assets of €0.1 billion,
+other assets of €0.1 billion, long-term debt of €0.4 billion (settled after the acquisition), a deferred tax liability of €0.2 billion and other
+liabilities of €0.1 billion. Goodwill comprises intangible assets that are not separable such as employee know-how and expected synergy
+effects. The acquired business contributed Revenue of €25 million and a Net loss of €8 million for the period from its acquisition date to
+September 30, 2022, including earnings effects from the purchase price allocation and integration costs. If Brightly had been included in
+the Consolidated Financial Statements as of October 1, 2021, revenue and net income, including earnings effects from purchase price
+allocation and integration costs, would have been €72.103 billion and €4.318 billion, respectively, in fiscal year 2022.
+In October 2021, Siemens acquired all shares in the Netherlands based company SQCAP B.V. (Sqills), a provider in the provision of cloud-
+based inventory management, reservation, and ticketing software to public transport operators around the world. The acquired business
+is integrated into Mobility. The purchase price is €537 million paid in cash, plus a contingent consideration recognized at the acquisition
+date at an amount of €88 million, representing the upper end of the bandwidth. The purchase price allocation was finalized as of fiscal
+year-end. Resulting Other Intangible assets include mainly customer-related intangible assets of €200 million and technology-related
+intangible assets of €138 million. Goodwill of €365 million comprises intangible assets that are not separable such as employee know-
+how and expected synergy effects. The acquired business is included since the beginning of the reporting period and contributed Revenue
+of €32 million and Net income of €(26) million for the period from its acquisition date to September 30, 2022, including earnings effects
+from the purchase price allocation and integration costs.
+The purchase price allocation of Varian Medical Systems, Inc. (Varian) was finalized in the second quarter of fiscal 2022 to reflect new
+information obtained. Adjustments were made retrospectively as of the acquisition date and increased Goodwill by €0.2 billion to
+€8.2 billion and decreased Other intangible assets by €0.1 billion to €6.2 billion. The adjustments were due to valuation effects resulting
+from the final allocation of intangible assets, including goodwill, to currency areas and new information in the context of Varian's project
+business. Due to the allocation to individual currency areas, the foreign currency translation led to a decrease in Other components of
+equity of €0.3 billion as of September 30, 2021.
+Acquisitions
+NOTE 3 Acquisitions and dispositions
+Consolidated Financial Statements
+48
+508
+124
+112
+79
+36
+Non-current liabilities
+162
+221
+305
+Current liabilities (thereof trade payables and contract liabilities: Yunex 148, Logistics 155)
+1,087
+375
+22,602
+486
+217
+110
+138
+Non-current assets (including Goodwill and Property, plant and equipment)
+219
+105
+172
+Miscellaneous current assets (including Trade and other receivables)
+143
+Assets disposed of
+758
+7,134
+10,870
+Ownership interests held by non-controlling interests
+(in millions of €)
+Siemens Healthineers AG
+registered in Munich, Germany
+Summarized financial information, in accordance with IFRS and before intercompany eliminations, is presented below.
+(150)
+282
+77
+152
+(171)
+21
+189
+31
+132
+93
+46
+20
+2021
+2022
+2021
+2022
+Accumulated non-controlling interests
+Fiscal year
+Current assets
+Current liabilities
+10,113
+12,024
+31,145
+35,677
+10,782
+13,379
+4,031
+4,887
+25%
+Sep 30, 2021
+Sep 30, 2022
+25%
+NOTE 5 Other operating income
+Total comprehensive income, net of income taxes
+Total cash flows
+Other comprehensive income, net of income taxes
+Income (loss) from continuing operations, net of income taxes
+Revenue
+Dividends paid to non-controlling interests
+Net income attributable to non-controlling interests
+Non-current liabilities
+Non-current assets
+Joint ventures
+Fiscal year
+Associates
+28,997
+Income (loss) from continuing operations, net of income taxes
+Revenue
+2021
+2022
+Fiscal year
+6,352
+3,662
+Carrying amount of Siemens Energy AG at fiscal year-end
+(2,703)
+Impairment
+3,009
+2,670
+3,343
+3,695
+Siemens interest in the net assets of Siemens Energy AG at fiscal year-end
+Consolidation adjustments including goodwill
+9,525
+10,528
+10,155
+28,482
+(833)
+(1,236)
+Other comprehensive income, net of income taxes
+Subsidiary with material non-controlling interests
+Total comprehensive income
+Other comprehensive income
+Income (loss) from continuing operations
+(in millions of €)
+As of September 30, 2022, and 2021, the carrying amount of all individually not material associates amounts to €943 million and €733
+million, respectively. As of September 30, 2022, and 2021, the carrying amount of all individually not material joint ventures amounts to
+€350 million and €454 million, respectively. The aggregate amount of the Siemens share in the following items of these associates and
+joint ventures is presented below.
+and other items. As of September 30, 2022, Siemens' share in Fluence Energy, Inc. is 23% and the carrying amount of the investment
+is €138 million.
+Consolidated Financial Statements
+13
+7,514
+(1)
+(2)
+(867)
+(211)
+369
+622
+In October 2021, Siemens recognized a pre-tax gain of €291 million related to Siemens' investment in Fluence Energy, LLC, Delaware, U.S.,
+an investment accounted for using the equity method, which is active in energy storage products and services and digital applications for
+renewables and storage. Fluence Energy, LLC issued new equity to a newly formed parent holding company, Fluence Energy, Inc., a
+Delaware corporation, which in turn issued shares of stock through an initial public offering. The transaction diluted Siemens' share. In
+September 2022, Siemens contributed Fluence Energy, Inc. shares to the Siemens Pension-Trust e.V. at fair value of €278 million (share
+price representing Level 1 of the fair value hierarchy) resulting to a gain of €212 million that is disclosed under Financing, eliminations
+(278)
+attributable to shareholders of Siemens Energy AG
+attributable to Siemens
+Total comprehensive income (loss), net of income taxes
+(793)
+Advances to suppliers and
+807
+452
+3,104
+26
+(568)
+834
+1,503
+58
+24,601
+Property, plant and equipment
+1,055
+construction in progress
+Advances to suppliers and
+(543)
+1,838
+(2,188)
+(631)
+1,321
+(4,420)
+5,742
+4,025
+(608)
+(19)
+(2,307)
+2
+1,359
+26,926
+1,347
+Gross
+carrying
+amount
+09/30/2021
+combi-
+10/01/2020
+business
+amount
+Retire-
+ments¹
+fications
+through
+differences
+carrying
+Reclassi-
+Additions Additions
+(Acquisi-
+tions)/Dis-
+positions
+Gross
+Consolidated Financial Statements
+18
+'Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+(2,292)
+(7)
+(12)
+(15,193) 11,733
+nations
+553
+213
+222
+656
+9,454
+Land and buildings
+(1,256)
+12,196
+22,082 (9,886)
+(298)
+345
+1,169
+2,017
+18,849
+Other intangible assets
+(478)
+5,815
+9,484 (3,669)
+(91)
+911
+698
+888
+4
+337
+10,610 (4,902)
+3,860
+Equipment leased to others.
+80 (692)
+627
+-
+320
+5,406
+Office and other equipment
+(309)
+1,519
+5,190 (3,671)
+(242)
+149
+201
+256
+4,826
+Technical machinery and equipment
+(802)
+5,708
+(746)
+Accumu-
+lated depre-
+ciation/am-
+ortization
+and impair-
+ment
+(3,405)
+4,826
+(732)
+142
+136
+73
+86
+5,120
+Technical machinery and equipment
+(707)
+5,425
+(4,029)
+9,454
+(629)
+195
+756
+349
+126
+8,656
+1,421
+Land and buildings
+(270)
+5,249
+1,882
+(1,979)
+3,860
+(538)
+1
+626
+14
+76
+3,682
+Equipment leased to others
+(582)
+1,242
+(4,164)
+5,406
+(595)
+81
+511
+85
+75
+Office and other equipment
+(1,004)
+10,827
+(8,022)
+4,631
+licenses and similar rights
+Acquired technology including patents,
+(208)
+1,794
+(1,910)
+3,704
+(51)
+277
+22
+3,456
+Internally generated technology
+(in millions of €)
+2021
+in fiscal
+Deprecia-
+tion/amorti-
+zation and
+impairment
+09/30/2021
+amount
+Carrying
+136
+2,612
+43
+(243)
+18,849
+(1,345)
+319
+6,484
+267
+13,124
+Other intangible assets
+(338)
+5,014
+7,966
+(2,953)
+(1,051)
+3,872
+109
+5,037
+Customer relationships and trademarks
+(458)
+4,020
+(3,160)
+7,179
+7,966
+Customer relationships and trademarks
+(579)
+4,331
+8,836
+10,626
+616
+379
+2,825
+3,419
+3,421
+3,631
+1,974
+3,197
+2021
+2022
+Sep 30,
+Finished goods and products held for resale
+Advances to suppliers
+Work in progress
+Raw materials and supplies
+(in millions of €)
+Inventories
+NOTE 11 Inventories and Other current assets
+Cost of sales includes inventories recognized as expense amounting to €45,159 million and €39,227 million, respectively, in fiscal 2022
+and 2021. Compared to prior year, write-downs increased by €94 million in fiscal 2022. In fiscal 2021, write-downs increased by €61
+million compared to Fiscal 2020.
+As of September 30, 2022, and 2021, amounts expected to be settled after twelve months are €1,321 million and €1,319 million for
+contract assets and €1,628 million and €1,824 million for contract liabilities, respectively. In fiscal 2022, and 2021, revenue includes
+€6,158 million and €4,966 million, respectively, which was included in contract liabilities at the beginning of the fiscal year.
+Other current assets
+NOTE 12 Goodwill
+31,360
+35,721
+Balance at fiscal year-end
+(123)
+(159)
+Dispositions and reclassifications to assets classified as held for disposal
+8,928
+1,505
+Acquisitions and purchase accounting adjustments
+441
+3,014
+22,115
+31,360
+2021
+Fiscal year
+2022
+Translation differences and other
+Balance at begin of fiscal year
+Cost
+(in millions of €)
+In fiscal 2022, and 2021, Other current assets include other tax receivables €810 million and €674 million, prepaid expenses €509 million
+and €387 million, respectively, and in fiscal 2022, €261 million reimbursement claims relating to activities in Russia, which are recognized
+in Cost of sales.
+7,985
+9,696
+1,370
+136
+Plus present value of unguaranteed residual value
+7,047
+6,350
+Present value of future minimum lease payments
+(867)
+(756)
+Less: Unearned finance income relating to future minimum lease payments
+7,914
+7,106
+Future minimum lease payments
+2021
+(in millions of €)
+Sep 30,
+Future minimum lease payments reconcile to the net investment in the lease as follows:
+7,914
+7,106
+748
+769
+115
+Net investment in the lease
+6,486
+7,162
+1,285
+398
+957
+1,132
+1,239
+5,085
+6,216
+2021
+2022
+Accumulated impairment losses and other changes
+Sep 30,
+NOTE 10 Contract assets and liabilities
+Derivative financial instruments
+Other
+Interest-bearing debt securities
+Loans receivable
+(in millions of €)
+NOTE 9 Other current financial assets
+16
+In fiscal 2022 and 2021, finance income on the net investment in the lease is €453 million and €412 million.
+Investments in finance leases primarily relate to industrial machinery, medical equipment, transportation systems, equipment for
+information technology and office machines.
+Consolidated Financial Statements
+456
+Balance at begin of fiscal year
+Impairment losses recognized during the period
+Carrying
+amount
+09/30/2022
+ciation/am-
+ortization
+and impair-
+nations
+Accumu-
+lated depre-
+Gross
+carrying
+amount
+09/30/2022
+combi-
+Retire-
+ments¹
+Additions Additions Reclassi-
+through
+fications
+business
+amount
+10/01/2021
+Gross Translation
+carrying differences
+NOTE 13 Other intangible assets and property, plant and equipment
+The sensitivity analysis for the groups of cash-generating units to which a significant amount of goodwill is allocated was based on a
+reduction in after-tax future cash flows by 10% or an increase in after-tax discount rates by one percentage point or a reduction in the
+terminal value growth rate by one percentage point. Siemens concluded that no impairment loss would need to be recognized on goodwill
+in any of these groups of cash-generating units.
+7.5%
+Imaging of Siemens Healthineers
+1.7%
+6,525
+After-tax
+discount rate
+7.8%
+8.5%
+1.7%
+7,417
+ment
+1.7%
+Deprecia-
+zation and
+impairment
+8,383 (4,052)
+(89)
+50
+259
+983
+7,179
+licenses and similar rights
+Acquired technology including patents,
+(199)
+2,051
+(2,164)
+4,215
+(119)
+295
+335
+3,704
+Internally generated technology
+(in millions of €)
+in fiscal
+2022
+tion/amorti-
+7,636
+Sep 30, 2021
+Terminal
+value growth
+rate
+Goodwill
+Consolidated Financial Statements
+17
+Siemens performs the mandatory annual impairment test in the three months ended September 30. Key assumptions on which Siemens
+based its determinations of the fair value less costs to sell for the (group of) cash-generating unit(s) include terminal value growth rates
+29,672
+33,861
+20,449
+29,672
+Balance at fiscal year-end
+Balance at begin of fiscal year
+Carrying amount
+1,688
+(59)
+1,859
+13
+22
+217
+1,666
+1,688
+Balance at fiscal year-end
+Dispositions and reclassifications to assets classified as held for disposal
+up to 1.9% and 1.7% in fiscal 2022 and 2021, respectively and after-tax discount rates of 6.5% to 12.0% in fiscal 2022 and 5.5% to 12.0%
+in fiscal 2021.
+To estimate the fair value less costs to sell of the cash-generating units or groups of cash-generating units, cash flows were projected for
+the next five years (in exceptional cases up to ten years) based on past experience, actual operating results and management's best
+estimate about future developments as well as market assumptions. The determined fair value of the cash-generating units or groups of
+cash-generating units is assigned to level 3 of the fair value hierarchy.
+The fair value less costs to sell is mainly driven by the terminal value, which is particularly sensitive to changes in the assumptions on the
+terminal value growth rate and discount rate. Both assumptions are determined individually for each cash-generating unit or group of
+cash-generating units. Discount rates are based on the weighted average cost of capital (WACC). Siemens Financial Services' discount rate
+represents its specific cost of equity. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In
+addition, the discount rates reflect the current market assessment of the risks specific to each cash-generating unit or group of cash-
+generating units by taking into account specific peer group information on beta factors, leverage and cost of debt as well as country
+specific premiums. The parameters for calculating the discount rates are based on external sources of information. The peer group is
+subject to an annual review and adjusted, if necessary. Terminal value growth rates take into consideration external macroeconomic
+sources of data and industry specific trends.
+The following table presents key assumptions used to determine fair value less costs to sell for impairment test purposes for the groups of
+cash-generating units to which a significant amount of goodwill is allocated:
+Digital Industries
+Varian of Siemens Healthineers
+(in millions of €)
+Revenue figures in the detailed forecast planning period of the groups of cash-generating units to which a significant amount of goodwill
+is allocated are based on average revenue growth rates (excluding portfolio effects) of between 8.3% and 10.3% (7.3% and 9.3% in fiscal
+2021).
+7.5%
+1.9%
+7,260
+discount rate
+9.0%
+8.0%
+1.9%
+Translation differences and other
+8,134
+8,226
+rate
+Goodwill
+After-tax
+Sep 30, 2022
+Terminal
+value growth
+Imaging of Siemens Healthineers
+Varian of Siemens Healthineers
+Digital Industries
+(in millions of €)
+1.9%
+Foreign
+currency
+translation
+2022
+€
+€
+1,498
+1,500
+€
+985
+850
+£
+878
+850
+£
+748
+750
+€
+748
+750
+€
+997
+1,000
+€
+997
+1,000
+€
+0.25%/2020/February 2029/EUR fixed-rate instruments
+0.5%/2020/February 2032/EUR fixed-rate instruments
+1.0%/2020/February 2025/GBP fixed-rate instruments
+0.125%/2020/June 2022/EUR fixed-rate instruments
+0.25%/2020/June 2024/EUR fixed-rate instruments
+0.375%/2020/June 2026/EUR fixed-rate instruments
+0.875%/2020/June 2023/GBP fixed-rate instruments
+0.625%/2022/February 2027/EUR fixed-rate instruments
+998
+1,000
+€
+950
+1,000
+€
+1,000
+962
+€
+1,000
+500
+€
+499
+500
+997
+1,000
+€
+738
+750
+€
+746
+750
+€
+1.00%/2022/February 2030/EUR fixed-rate instruments
+1.25%/2022/February 2035/EUR fixed-rate instruments
+2.25%/2022/March 2025/EUR fixed-rate instruments
+2.50%/2022/September 2027/EUR fixed-rate instruments
+2.75%/2022/September 2030/EUR fixed-rate instruments
+0.0%/2020/February 2026/EUR fixed-rate instruments
+454
+€
+522
+450
+₤
+497
+450
+₤
+998
+1,000
+€
+921
+1,000
+€
+998
+500
+497
+1,252
+€
+800
+€
+665
+800
+€
+673
+650
+€
+569
+650
+€
+759
+€
+724
+750
+€
+994
+1,000
+€
+995
+1,000
+€
+747
+750
+€
+676
+750
+€
+999
+846
+€
+800
+601
+1,251
+1,250
+€
+0.0%/2020/February 2023/EUR fixed-rate instruments
+1,251
+1,250
+€
+3m EURIBOR+0.7%/2019/December 2021/EUR floating-rate instrument
+991
+1,000
+€
+992
+1,000
+€
+1,250
+0.5%/2019/September 2034/EUR fixed-rate instruments
+1,000
+€
+995
+1,000
+€
+503
+500
+€
+479
+500
+€
+884
+800
+€
+994
+1,000
+3.00%/2022/September 2033/EUR fixed-rate instruments
+Total Debt Issuance Program
+1,000
+1.2%/2021/March 2026/US$ fixed-rate-instruments
+1,293
+1,500
+US$
+1,538
+1,500
+US$
+0.65%/2021/March 2024/US$ fixed-rate-instruments
+862
+1,000
+US$
+1,025
+1,000
+US$
+Compounded SOFR+0.43%/2021/March 2024/US$ floating-rate instruments
+1,078
+1,250
+US$
+1,282
+1,250
+US$
+0.4%/2021/March 2023/US$ fixed-rate-instruments
+1,283
+1,500
+US$
+1,526
+1,500
+US$
+4.2%/2017/March 2047/US fixed-rate-instruments
+US$
+1,750
+1,790
+US$
+21
+43,372
+44,761
+1 Includes adjustments for fair value hedge accounting.
+Total
+22,505
+22,755
+1,284
+1,500
+US$
+1,527
+1,500
+US$
+2.875%/2021/March 2041/US$ fixed-rate-instruments
+Total US$ Bonds
+1,077
+1,503
+US$
+1,788
+1,750
+US$
+2.15%/2021/March 2031/US$ fixed-rate-instruments
+1,074
+1,250
+US$
+1,277
+1,250
+US$
+1.7%/2021/March 2028/US$ fixed-rate-instruments
+1,505
+1,750
+1,750
+€
+1,250
+1,280
+768
+750
+US$
+1,493
+1,750
+US$
+1,776
+1,750
+US$
+1,369
+1,500
+US$
+1,458
+1,500
+US$
+1,511
+1,750
+US$
+2.9%/2015/May 2022/US$-fixed-rate-instruments
+3.25%/2015/May 2025/US$ fixed-rate-instruments
+4.4%/2015/May 2045/US$ fixed-rate-instruments
+2.0%/2016/September 2023/US$-fixed-rate-instruments
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+1,697
+1,750
+US$
+1,968
+1,750
+US$
+6.125%/2006/August 2026/US$ fixed-rate instruments
+20,867
+22,006
+997
+US$
+750
+646
+US$
+1,250
+US$
+3.4%/2017/March 2027/US$ fixed-rate-instruments
+902
+1,000
+US$
+992
+1,000
+US$
+3.125%/2017/March 2024/US$ fixed-rate-instruments
+734
+850
+US$
+US$ 3m LIBOR+0.61%/2017/March 2022/US$ floating-rate instruments
+US$
+873
+US$
+2.7%/2017/March 2022/US$ fixed-rate-instruments
+856
+1,000
+US$
+1,018
+1,000
+US$
+3.3% /2016/September 2046/US$-fixed-rate-instruments
+1,463
+1,700
+US$
+1,740
+1,700
+1,000
+€
+750
+1,000
+2,076
+(1,957)
+(9)
+6
+116
+Lease liabilities (current and non-current)
+2,829
+(745)
+92
+26
+726
+2,929
+Total debt
+44,567
+2,941
+159
+610
+(236)
+659
+Other financial indebtedness (current and non-current)
+48,700
+2,282
+22
+999
+Fair value
+hedge
+adjustments
+Reclassifi-
+cations and
+other
+changes
+09/30/2021
+Non-current notes and bonds
+Current notes and bonds
+34,728
+3,537
+8,316
+(3,511)
+461
+110
+(242)
+5
+(5,758)
+37,505
+5,726
+5,867
+Loans from banks (current and non-current)
+1,397
+839
+(42)
+In addition, other financing activities resulted in €130 million cash flows in fiscal 2021.
+67
+As of September 30, 2022, and 2021, Siemens has €7.45 billion lines of credit, which are unused. The €7.0 billion syndicated loan facility
+matures in February 2026. In September 2022, the unused €450 million revolving bilateral credit facility was extended to September
+2023. The facilities are for general corporate purposes.
+650
+725
+₤
+650
+743
+€
+1,000
+€
+£
+1,000
+US$
+100
+101
+US$
+100
+85
+Credit facilities
+€
+998
+406
+998
+£
+20
+Notes and bonds
+350
+Sep 30, 2022
+Consolidated Financial Statements
+Sep 30, 2021
+Currency
+Carrying
+Notional amount
+(interest/issued/maturity)
+2.75%/2012/September 2025/GBP fixed-rate instruments
+3.75%/2012/September 2042/GBP fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+0.375%/2018/September 2023/EUR fixed-rate instruments
+1.0%/2018/September 2027/EUR fixed-rate instruments
+1.375%/2018/September 2030/EUR fixed-rate instruments
+0.3%/2019/February 2024/EUR fixed-rate instruments
+0.9%/2019/February 2028/EUR fixed-rate instruments
+1.25%/2019/February 2031/EUR fixed-rate instruments
+1.75%/2019/February 2039/EUR fixed-rate instruments
+0.0%/2019/September 2024/EUR fixed-rate instruments
+0.125%/2019/September 2029/EUR fixed-rate instruments
+Currency
+(in millions)
+355
+£
+Carrying
+amount in
+millions of €1
+350
+Notional amount
+amount in
+millions of €1
+(in millions)
+Translation differences
+1,137
+(394)
+Usage
+(134)
+(8)
+301
+(179)
+(715)
+Reversals
+(224)
+47
+(4)
+(231)
+(521)
+51
+49
+6
+154
+5
+Accretion expense and effect of changes in discount rates
+(1)
+(62)
+234
+losses and
+1,723
+(3)
+Employer contributions expected to be paid to defined benefit plans in fiscal 2023 are €250 million. Over the next ten fiscal years, average
+annual benefit payments of €1,869 million and €1,754 million, respectively, are expected as of September 30, 2022 and 2021. The
+weighted average duration of the DBO for Siemens defined benefit plans was 10 and 12 years, respectively, as of September 30, 2022 and
+2021.
+Defined contribution plans and state plans
+Amounts recognized as expenses for defined contribution plans are €611 million and €484 million in fiscal 2022 and 2021, respectively.
+Contributions to state plans amount to €1,630 million and €1,449 million, respectively, in fiscal 2022 and 2021.
+NOTE 18 Provisions
+Order
+related
+(in millions of €)
+Balance as of October 1, 2021
+thereof: non-current
+Additions
+Warranties
+596
+risks
+Other
+Total
+1,488
+400
+577
+1,551
+4,016
+539
+138
+199
+847
+Asset
+retirement
+obligations
+(18)
+n/a
+(27)
+131
+3
+(113)
+Foreign exchange translation differences and other changes
+6
+16
+1
+n/a
+n/a
+Recoveries of amounts previously written off
+(28)
+(133)
+(15)
+Future cash flows
+n/a
+Write-offs charged against the allowance
+620
+82
+116
+13
+4
+132
+Change in valuation allowances recorded in the Consolidated Statements of
+Income in the current period
+52
+6
+93
+Reclassifications to line item Assets held for disposal and dispositions of
+entities
+Other changes including reclassifications to held for disposal and disposition of those entities
+(19)
+(5)
+6
+(13)
+(30)
+Balance as of September 30, 2022
+1,497
+481
+564
+1,471
+(6)
+4,013
+551
+Loans, receivables and other debt instruments measured at
+amortized cost
+172
+140
+567
+227
+22
+106
+(732)
+(19)
+Valuation allowance as of September 30, 2022
+thereof: non-current
+Virtually all equity securities have quoted prices in active markets. The fair value of fixed income securities is based on prices provided by
+price service agencies. The fixed income securities are traded in active markets and almost all fixed income securities are investment grade.
+Alternative investments include hedge funds, private equity and real estate investments, thereof real estate used by the Company with a
+fair value of €734 million and €530 million, respectively, as of September 30, 2022 and 2021. Multi strategy funds mainly comprise
+absolute return funds and diversified growth funds that invest in various asset classes within a single fund and aim to stabilize return and
+reduce volatility. Derivatives predominantly consist of financial instruments for hedging interest rate risk and inflation risk.
+(2,045)
+95
+1,559
+33,543
+CH
+Pri-2012 with generational projection from the US Social Security Administration's Long Range Demographic Assumptions
+SAPS S3 (Standard mortality tables for Self Administered Pension Schemes with allowance for future mortality improvements)
+BVG 2020 G with generational projection according to CMI model with a long-term trend rate of 1.25%
+The mortality tables used in Germany (Siemens Bio 2017/2022) are mainly derived from data of the German Siemens population and to a
+lesser extent from data of the Federal Statistical Office in Germany by applying formulas in accordance with recognized actuarial standards.
+The rates of compensation increase and pension progression for countries with significant effects are shown in the following table.
+Inflation effects, if applicable, are included in the assumptions below.
+Compensation increase
+U.K.
+CH
+Pension progression
+Germany
+U.K.
+Sensitivity analysis
+Sep 30,
+2022
+Contract
+2021
+3.3%
+3.0%
+1.5%
+1.4%
+2.0%
+1.5%
+3.2%
+3.1%
+A one-half-percentage-point change of the above assumptions would result in the following increase (decrease) of the DBO:
+U.K.
+U.S.
+Siemens specific tables (Siemens Bio 2017/2022)
+48
+212
+Lease
+Assets Receivables
+Loans and other debt instruments
+under the general approach
+Trade
+receivables
+and other
+debt instru-
+ments under
+the simplified
+approach
+(in millions of €)
+Stage 1
+increase
+Stage 2
+Valuation allowance as of October 1, 2020
+73
+27
+111
+537
+36
+227
+Change in valuation allowances recorded in the Consolidated Statements of
+Income in the current period
+18
+(10)
+2
+Stage 3
+321
+26,523
+Effect on DBO due to a one-half percentage-point
+decrease
+decrease
+Insurance contracts
+Other assets
+Total
+Sep 30,
+2022
+2021
+3,185
+5,773
+10,635
+13,811
+2,517
+3,782
+8,118
+10,030
+5,491
+4,627
+3,501
+4,288
+602
+1,510
+699
+547
+2,090
+2,690
+297
+Cash and cash equivalents
+Derivatives
+Multi strategy funds
+Alternative investments
+Sep 30,
+(in millions of €)
+Discount rate
+Rate of compensation increase
+Rate of pension progression
+2022
+2021
+(1,328)
+77
+973
+1,450
+(74)
+(813)
+2,259
+(89)
+increase
+(1,386)
+As in prior years, sensitivity determinations apply the same methodology as applied for the determination of the post-employment benefit
+obligation. Sensitivities reflect changes in the DBO solely for the assumption changed.
+Asset Liability Matching Strategies
+As a significant risk, the Company considers a decline in the plans' funded status due to adverse developments of plan assets and/or defined
+benefit obligations resulting from changing parameters. Accordingly, Siemens implemented a risk management concept aligned with the
+defined benefit obligations (Asset Liability Matching). Risk management is based on a worldwide defined risk threshold (Value at Risk).
+The concept, the Value at Risk and the asset development including the investment strategy are monitored and adjusted on an ongoing
+basis under consultation of senior external experts. Independent asset managers are selected based on quantitative and qualitative
+analyses, which include their performance and risk evaluation. Derivatives are used to reduce risks as part of risk management.
+24
+14
+Disaggregation of plan assets
+Consolidated Financial Statements
+(in millions of €)
+Equity securities
+Fixed income securities
+Government bonds
+Corporate bonds
+The DBO effect of a 10% reduction in mortality rates for all beneficiaries would be an increase of €800 million and €1,196 million,
+respectively, as of September 30, 2022 and 2021.
+53
+Germany
+98
+In connection with fair value hedges
+Not designated in a hedge accounting relationship (including embedded derivatives)
+Derivative financial instruments
+Debt instruments measured at FVTPL
+Equity instruments measured at FVOCI
+Equity instruments measured at FVTPL
+Financial assets measured at fair value
+(in millions of €)
+The following table allocates financial assets and financial liabilities measured at fair value to the three levels of the fair value hierarchy:
+Fixed-rate and variable-rate receivables with a remaining term of more than twelve months, including receivables from finance leases, are
+evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the
+customer, and the risk characteristics of the financed project. Based on this evaluation, allowances for these receivables are recognized.
+The fair value of notes and bonds is based on prices provided by price service agencies at the period-end date (Level 2). The fair value of
+loans from banks and other financial indebtedness as well as other non-current financial liabilities are estimated by discounting future
+cash flows using rates currently available for debt of similar terms and remaining maturities (Level 2).
+2,398
+Sep 30, 2021
+Carrying
+amount
+43,373
+Fair value
+45,594
+2,400
+amount
+44,764
+2,870
+Fair value
+40,622
+2,821
+Sep 30, 2022
+Carrying
+Loans from banks and other financial indebtedness
+Notes and bonds
+(in millions of €)
+The following table presents the fair values and carrying amounts of financial assets and financial liabilities measured at cost or amortized
+cost for which the carrying amounts do not approximate fair value:
+Cash and cash equivalents include €164 million and €190 million as of September 30, 2022 and 2021, respectively, which are not available
+for use by Siemens mainly due to minimum reserve requirements with banks. As of September 30, 2022, and 2021, the carrying amount
+of financial assets Siemens pledged as collateral is €166 million and €156 million, respectively.
+* Includes fair value hedge adjustments. Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term debt, Trade payables, Other current financial liabilities,
+Long-term debt and Other financial liabilities, except for separately disclosed derivative financial instruments of €1,900 million and €769 million as of September 30, 2022 and 2021, respectively.
+5 Reported in line items Other current financial liabilities and Other financial liabilities.
+3 Reported in Other financial assets.
+In connection with cash flow hedges
+2 Reported in line items Other current financial assets and Other financial assets.
+Level 1
+Level 3
+3
+3
+1,124
+-
+1,124
+3,825
+3,825
+323
+168
+1
+154
+692
+691
+2
+1,075
+372
+336
+367
+5,916
+1,230
+4,164
+521
+Sep 30, 2022
+Total
+Level 2
+1 Reported in the following line items of the Statements of Financial Position as of September 30, 2022 and 2021, respectively: Trade and other receivables, Other current financial assets and Other financial assets, except for
+separately disclosed €1,767 million and €1,824 million equity instruments in Other financial assets (thereof €692 million and €675 million at FVOCI), €154 million and €198 million financial assets designated as measured at
+FVTPL and €3,825 million and €1,950 million derivative financial instruments (thereof in Other financial assets €2,868 million and €1,552 million) as well as €169 million and €58 million debt instruments measured at FVTPL in
+Other financial assets. Includes €14,666 million and €13,267 million trade receivables from the sale of goods and services, thereof €766 million and €663 million with a term of more than twelve months as of September 30,
+2022 and 2021.
+64,436
+59,941
+Financial assets mandatorily measured at FVTPL²
+Derivatives designated in a hedge accounting relationship
+Cash and cash equivalents
+Loans, receivables and other debt instruments measured at amortized cost¹
+(in millions of €)
+The following table discloses the carrying amounts of each category of financial assets and financial liabilities:
+NOTE 23 Additional disclosures on financial instruments
+Consolidated Financial Statements
+28
+For Legal Proceedings information required under IAS 37, Provisions, Contingent Liabilities and Contingent Assets is not disclosed if the
+Company concludes that disclosure can be expected to seriously prejudice the outcome of the matter.
+Some of these Legal Proceedings could result in adverse decisions for Siemens, which may have material effects on its business activities
+as well as its financial position, results of operations and cash flows.
+Siemens is involved in numerous Legal Proceedings in various jurisdictions. These Legal Proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual
+cases this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. In addition,
+further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be extended. Asserted claims are generally
+subject to interest rates.
+As previously reported, in June 2015, Siemens Ltda. appealed to the Supreme Court against a decision of a previous court to suspend
+Siemens Ltda. from participating in public tenders and signing contracts with public administrations in Brazil for a five year term based on
+alleged irregularities in calendar 1999 and 2004 in public tenders with the Brazilian Postal authority. In June 2018, the court accepted
+Siemens' appeal and declared the earlier instance decision as void. In June 2021, the court referred the case back to the court of first
+instance. In February 2018, the Ministério Público in Brasilia filed a lawsuit based on the same set of facts, mainly claiming the exclusion
+of Siemens Ltda. from public tenders for a ten year term. Siemens Ltda. is defending itself against the lawsuit. Siemens Ltda. is currently
+not excluded from participating in public tenders.
+As previously reported, in July 2008, Hellenic Telecommunications Organization S.A. (OTE) filed a lawsuit against Siemens AG with the
+district court of Munich, Germany, seeking to compel Siemens AG to disclose the outcome of its internal investigations with respect to
+OTE. OTE seeks to obtain information with respect to allegations of undue influence and/or acts of bribery in connection with contracts
+concluded between Siemens AG and OTE from calendar 1992 to 2006. At the end of July 2010, OTE expanded its claim and requested
+payment of damages by Siemens AG of at least €57 million to OTE for alleged bribery payments to OTE employees. In October 2014, OTE
+increased its damage claim to the amount of at least €68 million. Siemens AG continues to defend itself against the expanded claim.
+As previously reported, in May 2014, the Public Affairs Office (Ministério Público) São Paulo initiated a lawsuit against Siemens Ltda. as
+well as other companies and several individuals claiming, inter alia, damages in an amount of BRL2.5 billion (approximately €476 million
+as of September 2022) plus adjustments for inflation and related interest in relation to train refurbishment contracts entered into between
+2008 and 2011. In January 2015, the district court of São Paulo admitted a lawsuit of the State of São Paulo and two customers against
+Siemens Ltda., Siemens AG and other companies and individuals claiming damages in an unspecified amount. In March 2015, the district
+court of São Paulo admitted a lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other companies
+claiming, inter alia, damages in an amount of BRL487 million (approximately €93 million as of September 2022) plus adjustments for
+inflation and related interest in relation to train maintenance contracts entered into in 2000 and 2002. In September 2015, the district
+court of São Paulo admitted another lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other
+companies claiming, inter alia, damages in an amount of BRL918 million (approximately €175 million as of September 2022) plus
+adjustments for inflation and related interest in relation to train maintenance contracts entered into in 2006 and 2007. Siemens is
+defending itself against these actions. It cannot be excluded that further significant damage claims will be brought by customers or the
+state against Siemens.
+Proceedings out of or in connection with alleged compliance violations
+NOTE 22 Legal proceedings
+guarantees is generally reduced using the straight-line method over the planned term of the underlying delivery or service agreement. As
+of September 30, 2022, and 2021, the Company accrued €54 million and €51 million, respectively, relating to performance guarantees.
+As of September 30, 2022, and 2021, in addition to guarantees disclosed in the table above, there are contingent liabilities of €421 million
+and €475 million which mainly result from other guarantees, legal proceedings and from joint and several liabilities of consortia, in
+particular from the construction of a power plant in Finland. Other guarantees include €99 million and €189 million for which Siemens
+holds reimbursement rights towards Siemens Energy.
+Consolidated Financial Statements
+27
+Credit guarantees cover the financial obligations of third parties generally in cases where Siemens is the vendor and (or) contractual
+partner or Siemens is liable for obligations of associated companies accounted for using the equity method. Additionally, credit guarantees
+are issued in the course of the SFS business. Credit guarantees generally provide that in the event of default or non-payment by the primary
+debtor, Siemens will be required to settle such financial obligations. The maximum amount of these guarantees is equal to the outstanding
+balance of the credit or, in case a credit line is subject to variable utilization, the nominal amount of the credit line. These guarantees have
+typically residual terms of up to four years. The Company held collateral mainly through inventories and trade receivables. As of September
+30, 2022, and 2021, Credit guarantees include €123 million and €124 million for which Siemens holds reimbursement rights towards
+Siemens Energy. Siemens accrued €2 million and €3 million relating to credit guarantees as of September 30, 2022 and 2021, respectively.
+Furthermore, Siemens issues performance guarantees, which mainly include performance bonds. In the event of non-fulfillment of
+contractual obligations by the primary obligor, Siemens will be required to pay up to an agreed-upon maximum amount. These agreements
+typically have terms of up to ten years. As of September 30, 2022, and 2021, Performance guarantees include €8,562 million and €14,508
+million for which Siemens holds reimbursement rights towards Siemens Energy; the related contract liability amount for parent company
+15,646
+9,824
+Sep 30,
+2021
+530
+15,116
+Financial assets designated as measured at FVTPL³
+Equity instruments measured at FVOCI¹
+Financial assets
+Sep 30,
+263
+1,249
+505
+651
+59,172
+62,536
+Derivatives designated in a hedge accounting relationship 5
+Financial liabilities
+Derivatives not designated in a hedge accounting relationship5
+Financial liabilities measured at amortized cost4
+56,012
+62,766
+2,699
+675
+198
+154
+2,305
+2,368
+852
+2,701
+9,545
+10,465
+42,436
+2021
+2022
+46,386
+692
+2,699
+Financial liabilities measured at fair value - Derivative financial instruments
+1,900
+Interest income (expense) includes interest from financial assets and financial liabilities not at fair value through profit or loss:
+Amounts include foreign currency gains (losses) from recognizing and measuring financial assets and liabilities. Net gains (losses) on
+financial assets and liabilities measured at FVTPL resulted from those mandatorily measured at FVTPL and comprise fair value changes of
+derivative financial instruments for which hedge accounting is not applied including interest income (expense), as well as dividends from
+and fair value changes of equity instruments measured at FVTPL.
+1,002
+2,126
+22
+(56)
+74
+(17)
+87
+(568)
+The discount rate was derived from high-quality corporate bonds with an issuing volume of more than 100 million units in the respective
+currency zones, which have been awarded an AA rating (or equivalent) by at least one of the three rating agencies Moody's Investors
+Service, S&P Global Ratings or Fitch Ratings.
+2021
+2022
+Fiscal year
+Financial assets and financial liabilities at FVTPL
+Financial liabilities measured at amortized cost
+Loans, receivables and other debt instruments measured at amortized cost
+Cash and cash equivalents
+(in millions of €)
+Net gains (losses) resulting from financial instruments are:
+As of September 30, 2022, and 2021, Level 3 financial assets include venture capital investments of €607 million and €515 million (Next47
+investments). In fiscal 2022 and 2021, new level 3 investments and purchases amounted to €221 million and €522 million, respectively.
+Sales of Level 3 financial assets amounted to €100 million and €305 million, respectively, in fiscal 2022 and 2021.
+Fair values of derivative financial instruments are determined in accordance with the specific type of instrument. Fair values of derivative
+interest rate contracts are estimated by discounting expected future cash flows using current market interest rates and yield curves over
+the remaining term of the instrument. Interest rate futures are valued based on quoted market prices, if available. Fair values of foreign
+currency derivatives are based on forward exchange rates. Options are generally valued based on quoted market prices or based on option
+pricing models. No compensating effects from underlying transactions (e.g. firm commitments and forecast transactions) are considered.
+The Company limits default risks resulting from derivative financial instruments by generally transacting with financial institutions with a
+minimum credit rating of investment grade. Based on Siemens' net risk exposure towards the counterparty, the resulting credit risk is
+considered via a credit valuation adjustment.
+Fair value of equity instruments quoted in an active market is based on price quotations at period-end date. Fair value of debt instruments,
+is either based on prices provided by price service agencies or is estimated by discounting future cash flows using current market interest
+rates.
+263
+(in millions of €)
+Total interest income on financial assets
+Total interest expenses on financial liabilities
+Fiscal year
+Stage 3
+Stage 2
+15
+86
+Stage 1
+Valuation allowance as of October 1, 2021
+(in millions of €)
+Lease
+Receivables
+Contract
+Assets
+the simplified
+approach
+ments under
+debt instru-
+263
+Trade
+receivables
+and other
+amortized cost
+Loans, receivables and other debt instruments measured at
+Consolidated Financial Statements
+Valuation allowances for expected credit losses
+30
+(672)
+(841)
+1,434
+1,626
+2021
+2022
+Loans and other debt instruments
+under the general approach
+535
+505
+769
+Sep 30, 2021
+Consolidated Financial Statements
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with cash flow hedges
+Financial liabilities measured at fair value - Derivative financial instruments
+In connection with cash flow hedges
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with fair value hedges
+Derivative financial instruments
+Debt instruments measured at FVTPL
+Financial assets measured at fair value
+Equity instruments measured at FVTPL
+Equity instruments measured at FVOCI
+(in millions of €)
+29
+29
+325
+325
+In connection with cash flow hedges
+925
+925
+651
+-
+651
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with fair value hedges
+1,900
+-
+Level 1
+Level 2
+Level 3
+Total
+769
+545
+545
+307
+307
+1,098
+1,098
+1,950
+1,950
+256
+57
+505
+1
+675
+674
+1
+1,149
+354
+77
+718
+4,031
+1,085
+2,030
+917
+198
+CHF
+1
+0.3%
+37,212
+Net debt
+(1,012)
+(1,720)
+Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt¹
+(1,132)
+(1,239)
+Less: Current interest bearing debt securities
+(9,545)
+(10,465)
+40,879
+43,978
+Less: Cash and cash equivalents
+Plus: Long-term debt
+7,821
+6,658
+Short-term debt and current maturities of long-term debt
+2021
+2022
+(in millions of €)
+Sep 30,
+Consolidated Financial Statements
+26
+GBP
+A key consideration of our capital structure management is to maintain ready access to capital markets through various debt instruments
+and to sustain our ability to repay and service our debt obligations over time. In order to achieve our target, Siemens intends to maintain
+an Industrial net debt divided by EBITDA (continuing operations) ratio of up to 1.5 for fiscal 2022 and beyond in accordance with our
+Financial Framework and a ratio of up to 1.0 as of September 2021 and prior periods. The ratio indicates the approximate number of years
+that would be needed to cover the Industrial net debt through Income from continuing operations, excluding interest, other financial
+income (expenses), taxes, depreciation, amortization and impairments. The fiscal 2021 ratio is disclosed as computed in the prior year.
+Less: Siemens Financial Services debt²
+(26,519)
+1.5
+1.0
+Industrial net debt/EBITDA
+9,091
+10,759
+3,075
+3,561
+(1,480)
+45
+7,496
+7,154
+EBITDA
+Plus/Less: Interest income, interest expenses and other financial income (expenses), net
+Plus: Amortization, depreciation and impairments
+Income from continuing operations before income taxes
+13,861
+10,896
+Industrial net debt
+530
+515
+Plus: Credit guarantees
+2,839
+2,275
+Plus: Provisions for pensions and similar obligations
+(29,107)
+NOTE 20 Additional capital disclosures
+Dividends paid per share were €4.00 and €3.50, respectively, in fiscal 2022 and 2021. The Managing Board and the Supervisory Board
+propose to distribute a dividend of €4.25 per share to holders entitled to dividends, in total representing approximately €3.4 billion in
+expected payments. Payment of the proposed dividend is contingent upon approval at the Shareholders' Meeting on February 9, 2023.
+In fiscal 2022, Siemens launched a new five-year share buyback program of up to €3 billion.
+Share based payment expenses increased Capital reserve by €376 million and €294 million (including non-controlling interests),
+respectively, in fiscal 2022 and 2021. In connection with the settlement of share based payment awards Siemens treasury shares (at cost)
+were transferred to employees amounting to €257 million and €226 million, respectively, in fiscal 2022 and 2021, which decreased Capital
+reserve and Retained earnings by €191 million and €66 million, respectively in 2022 and by €165 million and €61 million in fiscal 2021.
+As of September 30, 2022, and 2021, total authorized capital of Siemens AG is €600 million nominal issuable in installments based on
+various time-limited authorizations, by issuance of up to 200 million registered shares of no par value. Siemens AG's conditional capital is
+€420.6 million or 140.2 million shares as of September 30, 2022 and 2021; which, primarily, can be used to serve convertible bonds or
+warrants under warrant bonds that could or can be issued based on various time-limited authorizations approved by the respective
+Shareholders' Meeting.
+In Germany, pension benefits are provided through the following plans: BSAV (Beitragsorientierte Siemens Altersversorgung), frozen
+legacy plans as well as deferred compensation plans. The majority of active employees participate in the BSAV. Those benefits are based
+predominantly on notional contributions and the return on the corresponding assets of this plan, subject to a minimum return guaranteed
+by the employer. At inception of the BSAV, benefits provided under the frozen legacy plans were modified to substantially eliminate the
+effects of compensation increases. However, the frozen plans still expose Siemens to investment risk, interest rate risk, inflation risk and
+longevity risk. The pension plans are funded via contractual trust arrangements (CTA). In Germany no legal or regulatory minimum funding
+requirements apply.
+U.S.
+In the U.S., the Pension Plans are sponsored by Siemens, which for the most part have been frozen to new entrants and to future benefit
+accruals, except for interest credits on cash balance accounts. Siemens has appointed the Investment Committee as the named fiduciary
+for the management of the assets of the Plans. The Plans' assets are held in Trusts and the trustees of the Trusts are responsible for the
+administration of the assets of the Trusts, taking directions from the Investment Committee. The Plans are subject to the funding
+requirements under the Employee Retirement Income Security Act of 1974 as amended (ERISA). There is a regulatory requirement to
+maintain a minimum funding level of 80% in the defined benefit plans in order to avoid benefit restrictions. At their discretion, sponsoring
+employers may contribute in excess of this regulatory requirement. Annual contributions are calculated by independent actuaries.
+U.K.
+Pension benefits are mainly offered through the Siemens Benefit Scheme for which, until the start of retirement, an inflation increase of
+the majority of accrued benefits is mandatory. The required funding is determined by a funding valuation carried out every third year
+based on legal requirements. Due to deviating guidelines for the determination of the discount rates, the technical funding deficit is usually
+larger than the IFRS funding deficit. To reduce the deficit Siemens entered into an agreement with the trustees to provide annual payments
+of £31 (€36) million until fiscal 2033. The agreement also provides for a cumulative advance payment by Siemens AG compensating the
+remaining annual payments at the date of early termination of the agreement due to cancellation or insolvency.
+22
+Consolidated Financial Statements
+Switzerland
+Following the Swiss law of occupational benefits (BVG) each employer has to grant post-employment benefits for qualifying employees.
+Accordingly, Siemens in Switzerland sponsors several cash balance plans. These plans are administered by external foundations. The board
+of the main foundation is composed of equally many employer and employee representatives. The board of the foundation is responsible
+for investment policy and asset management, as well as for any changes in the plan rules and the determination of contributions to finance
+the benefits. The Company is required to make total contributions at least as high as the sum of the employee contributions set out in the
+plan rules. In case of an underfunded plan the Company together with the employees may be asked to pay supplementary contributions
+according to a well-defined framework of recovery measures.
+Development of the defined benefit plans¹
+Defined benefit
+obligation
+Fair value of
+plan assets
+Effects of asset
+ceiling
+Net defined benefit
+balance
+(DBO)2
+(I)
+(11)
+(III)
+(1 - 11 +111)
+Fiscal year
+Fiscal year
+Applied mortality tables are:
+Fiscal year
+Fiscal year
+The defined benefit plans open to new entrants are based predominantly on contributions made by the Company. Only to a certain extent,
+those plans are affected by longevity, inflation and compensation increases and take country specific differences into account. The
+Company's major plans are funded with assets in segregated entities. In accordance with local laws these plans are managed in the interest
+of the beneficiaries by way of contractual trust agreements with each separate legal entity. The defined benefit plans cover 443,000
+participants, including 180,000 actives, 84,000 deferreds with vested benefits and 179,000 retirees and surviving dependents.
+Germany
+Defined benefit plans
+NOTE 17 Post-employment benefits
+As of September 30, 2022, and 2021, Siemens has a US$9.0 billion (€9.2 billion and €7.8 billion as of September 30, 2022 and 2021)
+commercial paper program in place including US$ extendible notes capabilities. As of September 30, 2022, none were outstanding; as of
+September 30, 2021, US$15 million (€13 million) were outstanding. Siemens' commercial papers have a maturity of generally less than
+90 days. Interest rates ranged from 0.08% to 3.06% in fiscal 2022 and from 0.05% to 0.21% in fiscal 2021.
+In fiscal 2022 and 2021, Siemens repurchased 14,185,791 shares and 976,346 shares, respectively. In fiscal 2022 and 2021, Siemens
+transferred 4,376,201 and 4,022,053 treasury shares, respectively. As of September 30, 2022, and 2021, the Company has treasury shares
+of 57,454,171 and 47,644,581 respectively.
+Siemens' issued capital is divided into 850 million registered shares with no par value and a notional value of €3.00 per share as of
+September 30, 2022 and 2021, respectively. The shares are paid in full. At the Shareholders' Meeting, each share has one vote and
+accounts for the shareholders' proportionate share in the Company's net income. All shares confer the same rights and obligations.
+NOTE 19 Equity
+Other includes provisions for life and industrial business reinsurance contracts (liability, property, construction) in connection with the
+Siemens Energy business of €339 million and €487 million as of September 30, 2022 and 2021; thereof life €159 million and €248 million
+and industrial business €180 million and €239 million, respectively, as of September 30, 2022 and 2021. The provisions are for incurred
+and reported insurance losses as well as for incurred, hence, not yet reported insurance losses as of fiscal year-end. The provision is
+determined using actuarial standard valuation methodologies, which are parameterized based on historical loss data. Life reinsurance
+contracts have an average term of 19 years, whereas the cash outflows for the industrial business reinsurance contracts are expected
+within the next five years. Other also includes provisions for Legal Proceedings, as far as the risks that are subject to such Legal Proceedings
+are not already covered by project accounting. Provisions for Legal Proceedings amounted to €236 million and €251 million as of
+September 30, 2022 and 2021, respectively. As of September 30, 2022, and 2021, €181 million and €109 million are included for claims
+and charges resulting from the construction business. Furthermore, Other includes provision for indemnifications in connection with
+dispositions of businesses of €92 million and €96 million as of September 30, 2022 and 2021. Such indemnifications may protect the
+buyer from potential tax, legal and other risks in conjunction with the purchased business.
+Consolidated Financial Statements
+25
+Environmental clean-up costs relate to remediation and environmental protection liabilities which have been accrued based on the
+estimated costs of decommissioning the site for the production of uranium and mixed-oxide fuel elements in Hanau, Germany (Hanau
+facilities), as well as for a nuclear research and service center in Karlstein, Germany (Karlstein facilities). In May 2021, Siemens AG and the
+Federal Republic of Germany entered into a contract under public-law, based on which the obligation of final disposal of nuclear waste is
+transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the payment is subject to the
+approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made to measure the obligations
+that remain with Siemens AG, regarding conditioning and packaging of nuclear waste, as well as intermediate storage and transport to
+the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032. As of September 30, 2022, and 2021, the provisions
+total €487 million and €507 million, respectively.
+The Company is subject to asset retirement obligations related to certain items of property, plant and equipment. Such asset retirement
+obligations are primarily attributable to environmental clean-up costs and to costs primarily associated with the removal of leasehold
+improvements at the end of the lease term.
+Warranties mainly relate to products sold. Order related losses and risks are provided for anticipated losses and risks on uncompleted
+construction, sales and leasing contracts.
+The majority of the Company's provisions are generally expected to result in cash outflows during the next five years.
+1,857
+1 Debt is generally reported at a value approximately representing the amount to be repaid. Accordingly, debt in a hedging relationship is adjusted for fair values of interest hedges as well as for foreign currency hedge effects.
+Siemens deducts resulting changes in fair value, to derive an amount of debt that approximates the amount that will be repaid.
+886
+235
+Consolidated Financial Statements
+Debt Issuance Program - The Company has a program in place to issue debt instruments under which, as of September 30, 2022 and
+2021, up to €30.0 billion of instruments can be issued. As of September 30, 2022, €23.0 billion in notional amounts were issued and are
+outstanding (€20.8 billion as of September 30, 2021).
+In December 2021 the €1.25 billion floating-rate instrument and in June 2022 the 0.125% €1.5 billion fixed-rate instrument were
+redeemed at face value. In February 2022, Siemens issued fixed-rate instruments totaling €2.0 billion in three tranches: 0.625% €500
+million due February 2027; 1.000% €750 million due February 2030 and 1.250% €750 million due February 2035. In September 2022,
+Siemens issued fixed-rate instruments totaling €3.0 billion in four tranches: 2.250% €1.0 billion due March 2025; 2.500% €500 million
+due September 2027; 2.750% €500 million due September 2030 and 3.000% €1.0 billion due September 2033.
+US$ Bonds - In March 2022, the 2.7% US$1.0 billion fixed-rate instruments and the US$850 million floating-rate instruments were
+redeemed at face value. In May 2022, the 2.9% US$1.75 billion fixed-rate instruments were redeemed at face value.
+Assignable and term loans
+As of September 30, 2022, and 2021, five bilateral term loan facilities are outstanding (in aggregate €2.1 billion and €1.8 billion,
+respectively).
+In fiscal 2022, three bilateral term loan facilities were newly signed: one bilateral €500 million term loan facility maturing in fiscal 2025;
+one bilateral €250 million term loan facility maturing in fiscal 2023 with one one-year extension option and one bilateral €350 million
+term loan facility maturing in fiscal 2023 with one one-year extension option.
+The bilateral €500 million term loan facility, the bilateral US$350 million term loan facility and the bilateral US$150 million term loan
+facility, all maturing in fiscal 2022, were redeemed as due.
+The existing bilateral US$500 million term loan facility (€513 million) maturing in March 2024 has been extended for one year; there is
+no extension option remaining. The second bilateral US$500 million term loan facility (€513 million) has a maturity until June 2024.
+Commercial paper program
+185
+(in millions of €)
+2The adjustment considers that both Moody's and S&P view Siemens Financial Services as a captive finance company. These rating agencies generally recognize and accept higher levels of debt attributable to captive
+finance subsidiaries in determining credit ratings. Following this concept, Siemens excludes Siemens Financial Services debt.
+(in millions of €)
+(in millions of €)
+Sep 30,
+Financial liabilities
+Financial assets
+Siemens enters into master netting and similar agreements for derivative financial instruments. Potential offsetting effects are as follows:
+Offsetting
+Impairment losses on financial instruments are presented in line items Cost of sales, Selling and general administrative expenses and Other
+financial income (expenses), net. Net losses (gains) in fiscal 2022, and 2021, are €966 million and €50 million, respectively. In fiscal 2022,
+impairment losses net of (gains) from reversal of impairments at SFS total €259 million. In fiscal 2021, impairment losses net of (gains)
+from reversal of impairments were €(19) million, mostly attributable to the SFS business. In connection with the sale of its leasing business
+in Russia in fiscal 2022, Siemens partially credit-impaired the lease receivables, as far as they were not considered recoverable. Of the
+related impairments of €566 million in fiscal 2022, €478 million are attributable to Financing, eliminations and other items, presented in
+Other financial income (expenses), net.
+212
+53
+535
+98
+37
+27
+15
+86
+Valuation allowance as of September 30, 2021
+Reclassifications to line item Assets held for disposal and dispositions of
+entities
+5
+1
+5
+8
+(3)
+(5)
+2022
+Foreign exchange translation differences and other changes
+2021
+2021
+31
+163
+414
+1,157
+2,266
+586
+1,449
+748
+1,444
+Related amounts not offset in the Statement of Financial Position
+Net amounts
+748
+1,863
+1,905
+3,711
+Net amounts in the Statement of Financial Position
+5
+5
+Amounts offset in the Statement of Financial Position
+753
+1,864
+1,910
+3,711
+Gross amounts
+Sep 30,
+2022
+2
+7
+2
+S&P
+Global
+Sep 30, 2021
+Moody's
+Investors
+Service
+Service Ratings
+S&P
+Global
+Investors
+Sep 30, 2022
+Moody's
+NOTE 21 Commitments and contingencies
+Short-term debt
+Long-term debt
+Equity allocated to SFS differs from the carrying amount of equity as it is mainly allocated based on the risks of the underlying business.
+Siemens' current corporate credit ratings are:
+9.56
+9.43
+26,519
+29,107
+2,774
+3,087
+2021
+2022
+Sep 30,
+Sep 30,
+Debt to equity ratio
+Siemens Financial Services debt
+Allocated equity
+Ratings
+A1
+A+
+A1
+n/a
+n/a
+Recoveries of amounts previously written off
+(38)
+(89)
+(25)
+n/a
+n/a
+Write-offs charged against the allowance
+15
+(22)
+The SFS business is capital intensive and operates with a larger amount of debt to finance its operations compared to the industrial
+business.
+9,309
+2022
+Sep 30,
+Performance guarantees
+Credit guarantees
+(in millions of €)
+The following table presents the undiscounted amount of maximum potential future payments for major groups of guarantees:
+A-1+
+P-1
+A-1+
+P-1
+A+
+515
+Balance at begin of fiscal year
+37,010
+Interest expenses
+2,648
+254
+147
+3,933
+6,005
+4,105
+6,339
+13
+8
+(159)
+(325)
+3,075
+3,402
+3,731
+3,702
+604
+(52)
+(300)
+Other countries
+1,599
+1,643
+899
+Total
+2,314
+thereof provisions for pensions and similar obligations
+2,795
+CH
+8
+1
+28
+(17)
+Other reconciling items
+(941)
+Balance at fiscal year-end
+27,853
+Germany
+(1,091) (319)
+1,089
+35,542 26,523 33,543
+16,676 21,697 15,475 19,929
+1
+(620)
+(2,179)
+620
+16
+1,949
+2,015
+-
+-
+1,201
+1,768
+U.S.
+U.K.
+2,568
+thereof net defined benefit assets (presented in Other assets)
+27,853
+35,542
+454
+455
+(7,581)
+75
+23
+Actuarial assumptions
+The weighted-average discount rate used for the actuarial valuation of the DBO was as follows:
+Discount rate
+EUR
+USD
+Consolidated Financial Statements
+Sep 30,
+2022
+2021
+3.9%
+1.3%
+3.7%
+0.9%
+5.5%
+2.8%
+4.8%
+1.9%
+2.2%
+(156)
+(224)
+(49)
+(7,986)
+Current service cost
+26,523
+925
+33,543
+3
+8
+704
+726
+620
+16
+1,949
+2,015
+2,278
+388
+2,839
+825
+1 Discloses previous year figures including Flender. Accordingly, it comprises the total of continuing and discontinued operations.
+2 Total Defined benefit obligation (DBO) includes other post-employment benefits of €299 million and €345 million in fiscal 2022 and 2021 respectively, which primarily consist of transition payments to German employees after
+retirement as well as post-employment health care and life insurance benefits to employees in the U.S. and India.
+3 Includes past service benefits/costs, settlement gains/losses and administration costs related to liabilities.
+Net interest expenses relating to provisions for pensions and similar obligations amount to €51 million and €53 million, respectively, in
+fiscal 2022 and 2021. The DBO is attributable to actives 29% and 29%, to deferreds with vested benefits 13% and 15% and to retirees and
+surviving dependents 58% and 57%, respectively, in fiscal 2022 and 2021.
+The DBO remeasurements comprise actuarial (gains) and losses resulting from:
+(in millions of €)
+Changes in demographic assumptions
+Changes in financial assumptions
+Experience (gains) losses
+Total
+Fiscal year
+2022
+328
+854
+2021
+(8)
+254
+-
+(327)
+(254)
+Other³
+(15)
+(4)
+(10)
+(13)
+(6)
+9
+Components of defined benefit costs recognized in the
+Consolidated Statements of income
+832
+780
+317
+241
+1
+516
+540
+Return on plan assets excluding amounts included in net interest
+income and net interest expenses
+(7,018)
+327
+Interest income
+299
+367
+1
+2022
+2021
+2022
+35,542
+35,777
+33,543
+2021
+29,970
+2022
+2021
+2022
+2,243
+2021
+11
+5,819
+482
+485
+-
+-
+482
+485
+366
+299
+1
+16
+-
+2,015
+7,018
+Plan participants' contributions
+128
+102
+128
+102
+-
+Benefits paid
+(1,788)
+(1,759)
+(1,660)
+(1,638)
+-
+(128)
+(121)
+Settlement payments
+(155)
+Foreign currency translation effects
+874
+195
+371
+(154)
+195
+-
+(7)
+(2,041)
+(513)
+Business combinations, disposals and other
+513
+Actuarial (gains) losses
+(2,243)
+2,041
+(7,581)
+75
+-
+75
+Effects of asset ceiling
+602
+4
+602
+4
+(7,581)
+602
+Remeasurements recognized in the Consolidated Statements of
+4
+39
+2,243
+Employer contributions
+(2,165)
+75
+(7,581)
+Comprehensive Income
+(7,018)
+Cash flow hedges of floating-rate commercial papers
+Siemens applies cash flow hedge accounting to a revolving portfolio of floating-rate commercial papers of nominal US$200 million.
+Siemens pays a fixed rate of interest and receives a variable rate of interest, offsetting future changes in interest payments of the
+underlying floating-rate commercial papers. Net cash receipts and payments are recorded as interest expenses. The Company had interest
+rate swap contracts to receive variable rates of interest of an average of 3.64% and 0.13%, respectively, as of September 30, 2022 and
+2021, and paid fixed rates of interest at an average rate of 1.95% and 1.95%, respectively, as of September 30, 2022 and 2021.
+Fair value hedges of fixed-rate debt obligations
+Under interest rate swap agreements outstanding in fiscal 2022 and 2021, the Company agreed to pay a variable rate of interest multiplied
+by a notional principal amount, and to receive in return an amount equal to a specified fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements offset future changes in interest rates designated as hedged risk on the fair value
+of the underlying fixed-rate debt obligations. As of September 30, 2022, and 2021, the carrying amounts of €10,718 million and €6,305
+million, respectively, of fixed-rate debt obligations are designated in fair value hedges, including €(973) million and €304 million
+cumulative fair value hedge adjustments. Unamortized fair value hedge adjustments of €169 million and €181 million as of September
+30, 2022 and 2021, respectively, relate to no longer applied hedge accounting. The amounts are amortized over the remaining term of
+the underlying debt, maturing until 2042. Carrying amount adjustments to debt of €1,273 million and €236 million, respectively, in fiscal
+2022 and 2021 are included in Other financial income (expenses), net; the related swap agreements resulted in gains (losses) of €(1,236)
+million and €(243) million, respectively, in fiscal 2022 and 2021. Net cash receipts and payments relating to such interest rate swap
+agreements are recorded as interest expenses.
+The Company had interest rate swap contracts to pay variable rates of interest of an average of 0.86% and (0.14)% as of September 30,
+2022 and 2021, respectively and received fixed rates of interest (average rate of 1.07% and 1.50%, as of September 30, 2022 and 2021,
+respectively). The notional amount of indebtedness hedged as of September 30, 2022 and 2021 was €11,719 million and €6,007 million,
+respectively. This changed 26% and 15% of the Company's underlying notes and bonds from fixed interest rates into variable interest rates
+as of September 30, 2022 and 2021, respectively. The notional amounts of these contracts mature at varying dates based on the maturity
+of the underlying hedged items. The net fair value of interest rate swap contracts (excluding accrued interest) used to hedge indebtedness
+as of September 30, 2022 and 2021 was €(959) million and €277 million, respectively.
+Interest rate risk management relating to the Group, excluding SFS' businesses, uses derivative financial instruments under a portfolio-
+based approach to manage interest risk actively. Interest rate management of the SFS and businesses remains to be managed separately,
+considering the term structure of SFS' financial assets and liabilities on a portfolio basis. Neither approach qualifies for hedge accounting
+treatment. Net cash receipts and payments in connection with interest rate swap agreements are recorded as interest expense in Other
+financial income (expenses), net.
+NOTE 25 Financial risk management
+Increasing market fluctuations may result in significant earnings and cash flow volatility risk for Siemens. The Company's operating
+business as well as its investment and financing activities are affected particularly by changes in foreign exchange rates and interest rates.
+In order to optimize the allocation of financial resources across Siemens' segments and entities, as well as to achieve its aims, Siemens
+identifies, analyzes and manages the associated market risks. The Company seeks to manage and control these risks primarily through its
+regular operating and financing activities and uses derivative financial instruments when deemed appropriate.
+Operating units are prohibited from borrowing or investing in foreign currencies on a speculative basis. Intercompany financing or
+investments of operating units are preferably carried out in their functional currency or on a hedged basis.
+Any market sensitive instruments, including equity and interest-bearing investments that our Company's pension plans hold are not
+included in the following quantitative and qualitative disclosures.
+Actual results that are included in the Consolidated Statements of Income or Consolidated Statements of Comprehensive Income may
+differ substantially from VaR figures due to fundamental conceptual differences. While the Consolidated Statements of Income and
+Consolidated Statements of Comprehensive Income are prepared in accordance with IFRS, the VaR figures are the output of a model with
+a purely financial perspective and represent the potential financial loss, which will not be exceeded within ten days with a probability of
+99.5%. Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some
+limitations including the following. A ten day holding period assumes that it is possible to dispose of the underlying positions within this
+period. This may not be valid during continuing periods of illiquid markets. A 99.5% confidence level means that there is a 0.5% statistical
+probability that losses could exceed the calculated VaR. The use of historical data as a basis for estimating the statistic behavior of the
+relevant markets and finally determining the possible range of the future outcomes on the basis of this statistic behavior may not always
+cover all possible scenarios, especially those of an exceptional nature.
+33
+Consolidated Financial Statements
+Foreign currency exchange rate risk
+Derivative financial instruments not designated in a hedging relationship
+Transaction risk
+Each Siemens unit conducting businesses with international counterparties leading to future cash flows denominated in a currency other
+than its functional currency is exposed to risks from changes in foreign currency exchange rates. In the ordinary course of business,
+Siemens units are exposed to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the euro. Foreign
+currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies as well
+as production activities and other contributions along the value chain in the local markets.
+In order to quantify market risks Siemens has implemented a system based on Value at Risk (VaR), which is also used for internal
+management of Corporate Treasury activities. The VaR figures are calculated based on historical volatilities and correlations of various risk
+factors, a ten day holding period, and a 99.5% confidence level.
+Interest rate risk management
+(7)
+Consolidated Financial Statements
+reserve
+111
+According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
+exposure. Foreign currency transaction exposure of Siemens units from contracted business and cash balances in foreign currency is
+generally hedged approximately by 100% with Corporate Treasury. Foreign currency transaction exposure of Siemens units from planned
+business above defined thresholds has to be hedged with Corporate Treasury within a band of 75% to 100% for a hedging period of at
+least three months.
+(11)
+(307)
+165
+(198)
+(110)
+(170)
+(213)
+(39)
+Amounts reclassified to net income in connection with interest rate risk hedges and non-operative foreign currency hedges are presented
+in Other financial income (expenses), net. Reclassifications of foreign currency risk hedges with operative business purposes are presented
+as functional costs. Costs of hedging reserve is the forward element of forward contracts that are not designated as hedge accounting and
+which are amortized to interest expense on a straight-line basis as the hedged item is time-period related.
+Foreign currency exchange rate risk management
+Derivative financial instruments not designated in a hedging relationship
+The Company manages its risks associated with fluctuations in foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a Company-wide portfolio approach. Under this approach the Company-wide
+risks are aggregated centrally, and various derivative financial instruments, primarily foreign currency exchange contracts, foreign currency
+swaps and options, are utilized to minimize such risks. Such a strategy does not qualify for hedge accounting treatment. The Company
+also accounts for foreign currency derivatives, which are embedded in sale and purchase contracts.
+Cash flow hedges
+The Company's operating units apply hedge accounting to certain significant forecast transactions and firm commitments denominated
+in foreign currencies. Particularly, the Company entered into foreign currency exchange contracts to reduce the risk of variability of future
+cash flows resulting from forecast sales and purchases as well as firm commitments. The risk mainly results from contracts denominated
+in US$ both from Siemens' operating units entering into long-term contracts e.g. from the project business and from the standard product
+business. In fiscal 2022 and 2021, the risk is hedged against the euro at an average rate of 1.2293 €/US$ and 1.2808 €/US$ (forward
+purchases of US$), respectively and 1.0258 €/US$ and 1.2070 €/US$ (forward sales of US$). As of September 30, 2022, and 2021, the
+hedging transactions have an average remaining maturity until 2027 and 2026 (forward purchases of US$) as well as 2023 and 2022
+(forward sales of US$).
+32
+Included are Siemens' foreign currency forward contracts, entered into in fiscal 2021, to hedge foreign currency risks relating to US$10
+billion (€10 billion) bonds granted to Siemens Healthineers, through which a synthetic Euro financing structure is achieved. It factually,
+also turns interest into € with volume weighted average interest rates of currently about 0.3% and 0.3%, respectively, in fiscal 2022 and
+2021.
+Generally, the operating units conclude their hedging activities internally with Corporate Treasury. By applying a cost-optimizing portfolio
+approach, Corporate Treasury itself hedges foreign currency exchange rate risks with external counterparties and limits them.
+2024
+Translation risk
+2023
+2025 to
+2027
+2028 and
+thereafter
+5,753
+6,676
+16,263
+25,963
+Fiscal year
+1,155
+1,085
+18
+84
+6
+37
+738
+(28)
+618
+Consolidated Financial Statements
+Derivative financial liabilities
+Other financial liabilities
+Many Siemens units are located outside the Eurozone. Because the financial reporting currency of Siemens is the euro, the financial
+statements of these subsidiaries are translated into euro for the preparation of the Consolidated Financial Statements. To consider the
+effects of foreign currency translation in the risk management, the general assumption is that investments in foreign-based operations
+are permanent and that reinvestment is continuous. Effects from foreign currency exchange rate fluctuations on the translation of net
+asset amounts into euro are reflected in the Company's consolidated equity position.
+Interest rate risk
+Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
+interest rates. This risk arises whenever interest terms of financial assets and liabilities are different. In order to manage the Company's
+position with regard to interest rate risk, interest income and interest expenses, Corporate Treasury performs a comprehensive corporate
+interest rate risk management by using fixed or variable interest rates from bond issuances and derivative financial instruments when
+appropriate. The interest rate risk relating to the Group, excluding SFS' business, is mitigated by managing interest rate risk within an
+integrated Asset Liability Management approach. The interest rate risk relating to SFS' business is managed separately, considering the
+term structure of financial assets and liabilities. The Company's interest rate risk results primarily from funding in the U.S. dollar, British
+pound and euro.
+If there are no conflicting country-specific regulations, all Siemens operating units generally obtain any required financing through
+Corporate Treasury in the form of loans or intercompany clearing accounts. The same concept is adopted for deposits of cash generated
+by the units.
+As of September 30, 2022 and 2021, the VaR relating to the interest rate was €864 million and €529 million. The increase was driven
+mainly by a higher interest rate volatility for the U.S. dollar and the euro.
+Liquidity risk
+Liquidity risk results from the Company's inability to meet its financial liabilities. Siemens follows a deliberated financing policy that is
+aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Siemens mitigates liquidity
+risk by the implementation of effective working capital and cash management, arranged credit facilities with highly rated financial
+institutions, via a debt issuance program and via a global multi-currency commercial paper program. Liquidity risk may also be mitigated
+by the Siemens Bank GmbH, which increases the flexibility of depositing cash or refinancing.
+In addition, Siemens constantly monitors funding options available in the capital markets, as well as trends in the availability and costs of
+such funding, with a view to maintaining financial flexibility and limiting repayment risks.
+The following table reflects our contractually fixed pay-offs for settlement, repayments and interest. The disclosed expected undiscounted
+net cash outflows from derivative financial liabilities are determined based on each particular settlement date of an instrument and based
+on the earliest date on which Siemens could be required to pay. Cash outflows for financial liabilities (including interest) without fixed
+amount or timing are based on the conditions existing at September 30, 2022.
+34
+34
+Non-derivative financial liabilities
+Notes and bonds
+Loans from banks
+Other financial indebtedness
+Lease liabilities
+Trade payables
+As of September 30, 2022 and 2021, the VaR relating to foreign currency exchange rates was €126 million and €39 million. This VaR was
+calculated under consideration of items of the Consolidated Statements of Financial Position in addition to firm commitments, which are
+denominated in foreign currencies, as well as foreign currency denominated cash flows from forecast transactions for the following twelve
+months. The increase in the VaR resulted mainly from a higher net foreign currency position after hedging activities and a higher volatility,
+particularly between the U.S. dollar and the euro.
+reserve
+5,147
+hedge hedging
+5,752
+205
+13
+605
+558
+11,210
+859
+873
+Fair values of each type of derivative financial instruments reported as financial assets or financial liabilities in line items Other current
+financial assets (liabilities) or Other financial assets (liabilities) are:
+Sep 30, 2021
+(in millions of €)
+Foreign currency exchange contracts
+therein: included in cash flow hedges
+Interest rate swaps and combined interest and currency swaps
+therein: included in cash flow hedges
+Asset
+Sep 30, 2022
+14,676
+3,605
+16,751
+11,210
+567
+Consolidated Financial Statements
+NOTE 24 Derivative financial instruments and hedging activities
+To hedge foreign currency exchange and interest rate risks, derivatives are contracted to achieve a 1:1 hedge ratio so that the main
+characteristics match the underlying hedged items (e.g. nominal amount, maturity) in a critical term match, which ensures an economic
+relationship between hedging instruments and hedged items suitable for hedge accounting. The nominal amounts of hedging instruments
+by maturity are:
+(in millions of €)
+Foreign currency exchange contracts
+Interest rate swaps
+therein: included in cash flow hedges
+therein: included in fair value hedges
+Sep 30, 2022
+Up to 12
+months
+More than
+12 months
+Sep 30, 2021
+Up to 12
+months
+More than
+12 months
+5,872
+763
+Liability
+Asset
+Liability
+3,086
+45
+3,825
+1,900
+1,950
+769
+Other components of equity, net of income taxes, relating to cash flow hedges reconciles as follows:
+Interest
+rate risk
+Foreign currency risk
+(in millions of €)
+Balance as of October 1, 2021
+Hedging gains (losses) presented in OCI
+Reclassification to net income
+Balance as of September 30, 2022
+thereof: discontinued hedge accounting
+Cash flow
+hedge
+Cash flow
+Cost of
+70
+reserve
+(17)
+89
+Other (embedded derivatives, options, commodity swaps)
+722
+893
+569
+2,648
+319
+544
+231
+644
+1,088
+987
+155
+49
+31
+therein: included in fair value hedges
+3
+925
+307
+95
+989
+(in millions of €)
+10,258
+2,625
+3,101
+838
+665
+1,343
+1,037
+9,847
+1,548
+1,314
+2,626
+2,202
+985
+820
+31
+22
+209
+204
+659
+576
+97
+354
+36
+18
+39
+53
+Reconciliation to
+Consolidated Financial Statements
+191
+248
+181
+188
+29
+178
+34
+179
+68,277
+661
+3,234
+9,232
+17,997
+58,759
+697
+3,058
+Sep 30,
+2022
+10,861
+2,222
+6,501
+794
+850 2,547 2,661
+3,369 2,847 36,948 31,205
+10,277 8,786 56,857 48,374 9,689
+498
+512 33,263 30,384
+1,520 (84)
+Sep 30,
+2021
+10,123 4,090
+4,385
+Fiscal year
+Fiscal year
+Fiscal year
+2022
+2021
+2022
+2021
+(483) (353)
+2022
+3,750
+316
+288
+693
+640
+2,203
+2,098
+205
+181
+343
+334
+771
+898
+2021
+892
+Siemens (continuing operations)
+89,010 71,374
+Innovation - mainly includes results from our units Technology and Next47.
+Governance - primarily includes Siemens brand fees and governance costs, group managing costs, IT and corporate services.
+Centrally carried pension expense - includes the Company's pension related income (expense) not allocated to the segments, POC or
+Siemens Real Estate.
+Financing, eliminations and other items - comprise activities of Advanta and Global Business Services, results from corporate projects,
+equity interests and activities generally intended for closure as well as activities remaining from divestments, consolidation of transactions
+within the segments, certain reconciliation and reclassification items as well as central financing activities. It also includes interest income
+and expense, such as, for example, interest not allocated to segments or POC (referred to as financing interest), interest related to central
+financing activities or resulting consolidation and reconciliation effects on interest.
+Measurement - Segments
+Accounting policies for Segment information are generally the same as those used for the Consolidated Financial Statements. Segment
+information is disclosed for continuing operations; prior year Assets are reclassified to conform to the current year presentation. For
+internal and segment reporting purposes intercompany lease transactions, however, are classified as operating leases by the lessor and
+are accounted for off-balance sheet by the lessee (except for intercompany leases with Siemens Healthineers as lessees). Intersegment
+transactions are based on market prices.
+Revenue
+Revenue includes revenue from contracts with customers and revenue from leasing activities. In fiscal 2022 and 2021, lease revenue is
+€1,104 million and €1,050 million, respectively. In fiscal 2022 and 2021, Digital industries recognized €4,691 million and €4,290 million
+revenue, respectively, from its software business, Smart Infrastructure recognized €3,799 million and €3,387 million in its service business.
+Revenues of Mobility are mainly derived from construction-type business.
+Profit
+Siemens' Managing Board is responsible for assessing the performance of the segments (chief operating decision maker). The Company's
+profitability measure of the segments except for SFS is earnings before interest, certain pension costs, income taxes and amortization
+expenses of intangible assets acquired in business combinations as determined by the chief operating decision maker (Profit). The major
+categories of items excluded from Profit are described below.
+Interest income (expenses) are excluded from Profit. Decision-making regarding financing is typically made at the corporate level.
+Decisions on essential pension items are made centrally. Accordingly, Profit primarily includes amounts related to service cost of pension
+plans only, while all other regularly recurring pension related costs are included in reconciliations in line item Centrally carried pension
+expense.
+40
+Consolidated Financial Statements
+Siemens Real Estate (SRE) - manages the Group's real estate business portfolio, operates the properties, and is responsible for building
+projects and the purchase and sale of real estate; excluded is the carved-out real estate of Siemens Healthineers.
+Amortization expenses of intangible assets acquired in business combinations are not part of Profit. Furthermore, income taxes are
+excluded from Profit since income tax is subject to legal structures, which typically do not correspond to the structure of the segments.
+The effect of certain litigation and compliance issues is excluded from Profit, if such items are not indicative of performance. This may also
+be the case for items that refer to more than one reportable segment, SRE and (or) POC or have a corporate or central character. Costs for
+support functions are primarily allocated to the segments.
+In contrast to performance measurement principles applied to other segments, interest income and expenses are included, since interest
+is an important source of revenue and expense of SFS.
+Asset measurement principles
+Management determined Assets (Net capital employed) as a measure to assess capital intensity of the segments except for SFS. Its
+definition corresponds to the Profit measure except for amortization expenses of intangible assets acquired in business combinations
+which are not part of Profit, however, the related intangible assets are included in the segments' Assets. Segment Assets is based on Total
+assets of the Consolidated Statements of Financial Position, primarily excluding intragroup financing receivables, tax related assets and
+assets of discontinued operations, since the corresponding positions are excluded from Profit. The remaining assets are reduced by non-
+interest-bearing liabilities other than tax related liabilities, e.g. trade payables, to derive Assets. In contrast, Assets of SFS is Total assets. In
+individual cases assets of Mobility include project-specific intercompany financing of long-term projects. Assets of Siemens Healthineers
+include real estate, while real estate of all other segments is carried at SRE.
+Orders
+Orders are determined principally as estimated revenue of accepted purchase orders for which enforceable rights and obligations exist as
+well as subsequent order value changes and adjustments, excluding letters of intent. To determine orders, Siemens considers termination
+rights and customer's creditworthiness.
+As of September 30, 2022, and 2021, order backlog totaled €102 billion and €85 billion (continuing operations); thereof Digital Industries
+€14 billion and €7 billion, Smart Infrastructure €15 billion and €11 billion, Mobility €36 billion and €36 billion and Siemens Healthineers
+€34 billion and €27 billion. In fiscal 2023, Siemens expects to convert approximately €45 billion of the September 30, 2022 order backlog
+into revenue; thereof at Digital Industries approximately €11 billion, Smart Infrastructure approximately €10 billion, Mobility
+approximately €10 billion and Siemens Healthineers approximately €12 billion.
+Free cash flow definition
+Free cash flow of the segments constitutes cash flows from operating activities less additions to intangible assets and property, plant and
+equipment. Except for SFS, it excludes financing interest, except for cases where interest on qualifying assets is capitalized or classified as
+contract costs; it also excludes income tax as well as certain other payments and proceeds. Free cash flow of SFS includes related financing
+interest payments and proceeds; income tax payments and proceeds of SFS are excluded. In individual cases, free cash flow of Mobility
+includes project-specific intercompany financing of long-term projects.
+Amortization, depreciation and impairments
+Amortization, depreciation and impairments includes depreciation and impairments of property, plant and equipment as well as
+amortization and impairments of intangible assets each net of reversals of impairment.
+Measurement - POC and Siemens Real Estate
+POC follows the measurement principles of the segments except for SFS. Siemens Real Estate applies the measurement principles of SFS.
+Additional segment information
+Mobility was burdened by a negative effect on profit of €0.6 billion for winding down business activities in Russia; it includes a net impact
+from and in connection with contracts with customers in Russia of €(0.4) billion as well as the impairment of an investment accounted for
+using the equity method of €0.2 billion. Siemens Financial Services incurred pre-tax losses of €0.2 billion and Financing, eliminations and
+other items pre-tax losess of €0.5 billion at Corporate Treasury, in connection with the sale of Siemens' financing and leasing business in
+Russia at the end of fiscal 2022.
+Profit of the segment SFS
+663
+2,879
+includes our investment in Siemens Energy accounted for using the equity method, and previously, a
+smaller investment in connection with Siemens Energy sold in fiscal 2022.
+Siemens Energy Investment
+71,977
+769
+62,265
+(1,087)
+(1,018) (195)
+71,977
+(249) (5,141)
+62,265 7,154
+(1,717) 60,724 60,038
+7,496 151,502 139,372 8,238
+(2,533) (2,642)
+469
+376
+687
+616
+8,379
+2,084
+-
+1,730
+3,075
+39
+Consolidated Financial Statements
+Description of reportable segments
+Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries,
+complemented by product lifecycle and data-driven services,
+Smart Infrastructure offers products, systems, solutions, services and software to support a sustainable transition from fossil to renewable
+energy sources, as well as a transition to smarter, more sustainable buildings and communities,
+Mobility combines all Siemens businesses in the area of passenger and freight transportation, including rail vehicles, rail automation
+systems, rail electrification systems, road traffic technology, digital and cloud-based solutions and related services,
+Siemens Healthineers provides healthcare solutions and services. It develops, manufactures, and sells a diverse range of innovative
+diagnostic and therapeutic products and services to healthcare providers.
+Siemens Financial Services provides financing solutions to Siemens' customers and other companies via debt and equity investments,
+offering leasing, lending and working capital financing solutions, equipment and project financing and financial advisory services.
+Portfolio Companies (POC)
+Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
+solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
+and fiber.
+Reconciliation to Consolidated Financial Statements
+To better address our investors' needs, individual line items of our Profit and Asset reconciliations are displayed in a new structure since
+fiscal 2022. Essentially, the previous line item Corporate items is split into Governance, Innovation and into financing and other items. The
+latter were combined with our previous Eliminations, Corporate Treasury and other reconciling items and renamed to Financing,
+eliminations and other items. Content and measurement principles of reconciling items mainly remained unchanged. Prior period amounts
+conform to the current period disclosure.
+3,561
+805
+880
+57,954
+43
+26
+26
+26
+26
+308
+293
+308
+295
+Fiscal year
+(shares in thousands; earnings per share in €)
+2022
+2021
+47
+Income from continuing operations
+5,636
+Less: Portion attributable to non-controlling interest
+669
+537
+Income from continuing operations attributable to shareholders of Siemens AG
+3,744
+5,099
+Less: Dilutive effect from share based payment resulting from Siemens Healthineers
+(7)
+Income from continuing operations attributable to shareholders of Siemens AG to determine dilutive earnings per share
+3,737
+(5)
+5,094
+Weighted average shares outstanding - basic
+4,413
+801,338
+42
+54
+983
+24,789
+27,211
+25,008
+In fiscal 2022 and 2021, severance charges for continuing operations amount to €272 million and €410 million.
+Employees were engaged in (averages; based on headcount):
+(in thousands)
+Manufacturing and services
+Sales and marketing
+Research and development
+Administration and general services
+NOTE 28 Earnings per share
+Continuing
+Continuing and
+47
+operations
+Fiscal year
+Fiscal year
+2022
+2021
+2022
+2021
+179
+171
+179
+172
+56
+54
+56
+discontinued operations
+Reconciliation to Consolidated Financial Statements
+Effect of dilutive share-based payment
+Basic earnings per share (from continuing operations)
+2021
+25,283
+Smart Infrastructure
+Mobility
+Siemens Healthineers
+Industrial Business
+Siemens Financial Services
+84,837
+662
+Portfolio Companies
+3,995
+16,156
+419
+358
+2022
+19,517 16,514
+14,671
+366
+344
+17,353
+15,015
+3,360
+1,729
+9,205
+10
+27
+9,692
+85
+76
+21,715
+3,892
+Weighted average shares outstanding - diluted
+2021
+2021
+8,342
+809,680
+4.67
+801,829
+9,661
+811,490
+6.36
+Diluted earnings per share (from continuing operations)
+4.62
+6.28
+38
+NOTE 29 Segment information
+Orders
+External revenue
+Intersegment
+Revenue
+Total
+revenue
+Profit
+2022
+Assets
+Consolidated Financial Statements
+Additions to
+intangible
+assets and
+property, plant
+& equipment
+Amortization,
+depreciation &
+impairments
+(in millions of €)
+Digital Industries
+Fiscal year
+2022
+2021
+Fiscal year
+2022
+Fiscal year
+Fiscal year
+Fiscal year
+2021
+2022
+Free cash flow
+Profit
+18,427 19,098
+20,798 16,071 16,987
+13,200 12,696 9,683
+25,556 20,320 21,630 17,921
+67,514 67,397
+697
+632
+3,516 3,056
+Siemens Energy Investment
+1,951,223
+7,939,840
+8,670,111
+2021
+2022
+Fiscal year
+Consolidated Financial Statements
+In fiscal 2022, Siemens issued a new tranche under each of the plans of the Share Matching Program.
+Share Matching Program and its underlying plans
+Non-vested, end of period
+Settled
+Forfeited
+Adjustments due to vesting conditions other than market conditions
+Vested and fulfilled
+Granted
+Non-vested, beginning of period
+Changes in stock awards:
+36
+The fair value of stock awards granted in fiscal 2022 and 2021 (TSR-related) was calculated applying a valuation model. In fiscal 2022 and
+2021, inputs to that model include an expected weighted volatility of Siemens shares of 24.41% and 24.34%, respectively, and a share
+price per Siemens share of €153.58 and €112.36. Expected volatility was determined by reference to historic volatilities. The model applies
+a risk-free interest rate of up to (0.23)% in fiscal 2022 and up to (0.49)% in fiscal 2021 and an expected dividend yield of 2.61% and 3.11%
+in fiscal 2022 and 2021, respectively. Assumptions relating to correlations between the Siemens share price and the development of the
+MSCI Index were derived from historic observations of share price and index changes. The fair value of the ESG component of €140.52
+and €97.63 per share in fiscal 2022 and 2021, respectively, was determined as the market price of Siemens shares less the present value
+of expected dividends during the vesting period.
+In fiscal 2022 and 2021, 1,459,182 and 1,975,492 equity-settled stock awards were granted relating to the TSR-Target with a fair value
+of €106 million and €104 million, respectively. In fiscal 2022 and 2021, 365,610 and 493,472 equity-settled stock awards were granted
+relating to the ESG-Target with a fair value of €51 million and €48 million, respectively.
+Commitments to members of the senior management and other eligible employees
+The Managing Board's stock awards are based on criteria described above. Fair values are €10 million and €12 million, respectively, in
+fiscal 2022 and 2021, calculated by applying a valuation model. In fiscal 2022 and 2021, inputs to that model include an expected
+weighted volatility of Siemens shares of 24.41% and 24.30%, respectively, and a market price of €153.34 and €112.70 per Siemens share.
+Expected volatility was determined by reference to historic volatilities. The model applies a risk-free interest rate of up to (0.15)% and
+(0.49)% in fiscal 2022 and 2021, respectively, and an expected dividend yield of 2.61% in fiscal 2022 and 3.10% in fiscal 2021.
+Assumptions relating to correlations between the Siemens share price and the development of the MSCI index were derived from historic
+observations of share price and index changes.
+Stock awards are tied to performance criteria. For stock awards granted in fiscal 2022 and 2021, 80% of the target amount is linked to the
+relative total shareholder return of Siemens compared to the total shareholder return of the MSCI World Industrials sector index (TSR-
+Target); the remaining 20% are linked to a Siemens internal sustainability target considering environmental, social and governance targets
+(ESG-Target). The annual target amount for stock awards up to and including tranche 2019 is linked to the share price performance of
+Siemens relative to the share price performance of five important competitors. The target attainment for each individual performance
+criteria ranges between 0% and 200%. For awards granted since fiscal 2019 settlement is in shares only corresponding to the actual target
+attainment. Awards granted prior to fiscal 2019, target outperformances in excess of 100% are settled in cash.
+The Company grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
+Stock awards entitle the beneficiary to Siemens shares without payment of consideration at the end of the vesting period. The vesting
+period for awards granted to members of the senior management in fiscal 2022 is three years and four years for awards granted prior to
+fiscal 2022. Awards granted to members of the Managing Board are subject to a four year vesting period.
+Stock Awards
+Share-based payment awards may be settled in newly issued shares of capital stock of Siemens AG, in treasury shares or in cash. Share-
+based payment awards may forfeit if the employment of the beneficiary terminates prior to the expiration of the vesting period. In fiscal
+2022 and 2021, expense from equity-settled awards on a continuing basis are €377 million and €294 million; cash-settled awards on a
+continuing basis resulted in gains (expenses) of €12 million and €(8) million in fiscal 2022 and 2021. Included is expense of €160 million
+and €137 million in fiscal 2022 and 2021, respectively, resulting from various individually immaterial plans, of which €110 million and
+€74 million, respectively, stem from Siemens Healthineers plans. Siemens Healthineers plans are largely similar to Siemens' plans, except
+for granting Siemens Healthineers AG shares.
+NOTE 26 Share-based payment
+2,683,909
+(1,099,508)
+(1,292,912)
+(125,993)
+(624,480)
+(573.440)
+654,483
+557,839
+2021
+1,509,046
+1,389,016
+2022
+Fiscal year
+Outstanding, end of period
+Settled
+Forfeited
+Vested and fulfilled
+Granted
+Siemens' investment portfolio consists of direct and indirect investments in publicly traded companies that are classified as long term
+investments. These investments are monitored based on their current market value, affected primarily by fluctuations on the volatile
+technology-related markets worldwide. As of September 30, 2022 and 2021, the market value of Siemens' portfolio, which mainly consists
+of one investment in a publicly traded company, was €339 million and €678 million, respectively. As of September 30, 2022 and 2021,
+the VaR relating to the equity price was €74 million and €105 million.
+Outstanding, beginning of period
+Under the Base Share Program employees of Siemens AG and participating domestic Siemens companies may invest a fixed amount of
+their compensation in Siemens shares, sponsored by Siemens. The shares are bought at market price at a predetermined date in the second
+quarter and grant the right to receive matching shares under the same conditions applying to the Share Matching Plan described above.
+The fair value of the Base Share Program amounted to €24 million and €25 million in fiscal 2022 and 2021, respectively.
+Base Share Program
+Under the Monthly Investment Plan employees other than senior managers may invest a specified part of their compensation in Siemens
+shares on a monthly basis over a period of twelve months. Shares are purchased at market price at a predetermined date once a month.
+If the Managing Board decides that shares acquired under the Monthly Investment Plan are transferred to the Share Matching Plan, plan
+participants will receive the right to matching shares under the same conditions applying to the Share Matching Plan described above with
+a vesting period of about two years. The Managing Board decided that shares acquired under the tranches issued in fiscal 2021 and 2020
+are transferred to the Share Matching Plan as of February 2022 and February 2021, respectively.
+Monthly Investment Plan
+Under the Share Matching Plan, senior managers may invest a specified part of their variable compensation in Siemens shares (investment
+shares). The shares are purchased at market price at a predetermined date in the second quarter. Plan participants receive the right to one
+Siemens share without payment of consideration (matching share) for every three investment shares continuously held over a period of
+about three years (vesting period) provided the plan participant has been continuously employed by Siemens until the end of the vesting
+period.
+Share Matching Plan
+8,670,111
+8,956,287
+(42,116)
+(77,370)
+(444,962)
+(362,176)
+(173,648)
+Resulting Matching Shares:
+Equity Price Risk
+Amounts above do not represent economic credit risk, since they consider neither collateral held nor valuation allowances already
+recognized.
+Trade receivables of operating units are generally rated internally; as of September 30, 2022 and 2021, approximately 45% and 47%,
+respectively, have an investment grade rating and 55% and 53%, respectively, have a non-investment grade rating. Contract assets
+generally show similar risk characteristics as trade receivables in operating units.
+To analyze and monitor credit risks, the Company applies various systems and processes. A main element is a central IT application that
+processes data from operating units together with rating and default information and calculates an estimate, which may be used as a basis
+for individual bad debt provisions. Additionally, qualitative information is considered to particularly incorporate the latest developments.
+The carrying amount is the maximum exposure to a financial asset's credit risk, without taking account of any collateral. Collateral reduces
+the valuation allowance to the extent it mitigates credit risk. Collateral needs to be specific, identifiable and legally enforceable to be taken
+into account. Those collaterals are mostly held in the portfolio of SFS.
+An exposure is considered defaulted if the debtor is unwilling or unable to pay its credit obligations. A range of internally defined events
+trigger a default rating, including the opening of bankruptcy proceedings, receivables being more than 90 days past due, or a default
+rating by an external rating agency.
+Ratings and individually defined credit limits are based on generally accepted rating methodologies, with information obtained from
+customers, external rating agencies, data service providers and Siemens' credit default experiences. Internal ratings consider appropriate
+forward-looking information relevant to the specific financial instrument like expected changes in the debtor's financial position,
+ownership, management or operational risks, as well as broader forward-looking information, such as expected macroeconomic, industry-
+related and competitive developments. The ratings also consider a country-specific risk component derived from external country credit
+ratings. Ratings and credit limits for financial institutions as well as Siemens' public and private customers, which are determined by
+internal risk assessment specialists, are continuously updated and considered for investments in cash and cash equivalents and in
+determining the conditions under which direct or indirect financing will be offered to customers.
+Siemens maintains a Credit Risk Intelligence Unit to which numerous operating units from the Siemens Group regularly transfer business
+partner data as a basis for a centralized internal rating and credit limit recommendation process. Due to the identification, quantification
+and active management of credit risks, this increases credit risk transparency.
+The effective monitoring and controlling of credit risk through credit evaluations and ratings is a core competency of our risk management
+system. In this context, Siemens has implemented a binding credit policy.
+Siemens provides its customers with various forms of direct and indirect financing particularly in connection with large projects. Hence,
+credit risks are determined by the solvency of the debtors, the recoverability of the collaterals, the success of projects we invested in and
+the global economic development.
+Credit risk is defined as an unexpected loss in financial instruments if the contractual partner is failing to discharge its obligations in full
+and on time or if the value of collateral declines.
+Credit risk
+2 A considerable portion result from asset-based lending transactions meaning that the respective loans can only be drawn after sufficient collateral has been provided by the borrower.
+1 Based on the maximum amounts Siemens could be required to settle in the event of default by the primary debtor.
+Irrevocable loan commitments²
+Credit guarantees¹
+12
+As of September 30, 2022 and 2021, collateral of €1,444 million and €748 million, respectively, relate to financial assets measured at fair
+value. Those collaterals are provided in connection with netting agreements for derivatives providing protection from the risk of a
+counterparty's insolvency. As of September 30, 2022 and 2021, collateral held for credit-impaired receivables from finance leases
+amounted to €53 million and €90 million, respectively. As of September 30, 2022 and 2021, collateral held for financial assets measured
+at amortized cost amounted to €3,817 million and €3,328 million, respectively, including €108 million and €46 million, respectively, for
+credit-impaired loans in SFS' asset finance business. Those collaterals mainly comprised property, plant and equipment. Credit risks arising
+from irrevocable loan commitments are equal to the expected future pay-offs resulting from these commitments.
+143
+3,599
+515
+346
+548
+508
+653
+14
+331
+162
+1,112
+16
+42
+(in millions of €)
+294
+(64,030)
+SFS' external financing portfolio disaggregates into credit risk rating grades as of September 30, 2022 as follows (pre valuation
+allowances):
+Financial guarantees and
+Consolidated Financial Statements
+35
+3,678
+53
+56
+3,182
+640
+702
+16,382
+Non-Investment Grade Ratings
+2,257
+n/a
+n/a
+Loans and other debt
+instruments under the general
+approach
+729
+4
+6,134
+Investment Grade Ratings
+Stage 3
+Stage 2
+Stage 1
+Stage 3
+Stage 2
+Stage 1
+(in millions of €)
+ceivables
+loan commitments
+Lease Re-
+n/a
+(80,385)
+Commitments to members of the Managing Board
+(69,648)
+1,099
+1,013
+27,201
+41
+(1,717)
+(5,141)
+452
+(474)
+(738)
+(990)
+(170)
+(113)
+(751)
+1,010
+(582)
+(190)
+94
+118
+(396)
+2021
+(53,561)
+Reconciliation to Consolidated Financial Statements
+Financing, eliminations and other items
+Amortization of intangible assets acquired in business combinations
+Centrally carried pension expense
+Governance
+Innovation
+Siemens Real Estate
+(207)
+1,099
+Fiscal year
+2022
+(2,911)
+3,442
+For their 25th and 40th service anniversary eligible employees receive jubilee shares. There were 3.11 million and 3.15 million entitlements
+to jubilee shares outstanding as of September 30, 2022 and 2021, respectively.
+1,255,825
+NOTE 27 Personnel costs
+Consolidated Financial Statements
+Continuing
+operations
+Continuing and
+discontinued operations
+Fiscal year
+Fiscal year
+Jubilee Share Program
+(in millions of €)
+Statutory social welfare contributions and expenses for optional support
+Expenses relating to post-employment benefits
+2022
+2021
+2022
+2021
+22,659
+20,697
+22,669
+Wages and salaries
+The weighted average fair value of matching shares granted in fiscal 2022 and 2021 of €121.35 and €96.92 per share, respectively, was
+determined as the market price of Siemens shares less the present value of expected dividends; non-vesting conditions were taken into
+account.
+37
+20,882
+3,442
+3,082
+1,389,016
+3,113
+Telecomunicación, Electrónica y Conmutación S.A., Madrid / Spain
+KACO NEW ENERGY AFRICA (PTY) LTD, Midrand / South Africa
+Siemens Electronic Design Automation AB, Solna / Sweden
+Siemens Financial Services AB, Solna / Sweden
+Siemens Healthcare AB, Solna / Sweden
+Siemens Industry Software AB, Solna / Sweden
+Siemens Mobility AB, Solna / Sweden
+Siemens Healthineers International AG, Steinhausen / Switzerland
+Siemens Industry Software GmbH, Zurich / Switzerland
+Siemens Mobility AG, Wallisellen / Switzerland
+Siemens Schweiz AG, Zurich / Switzerland
+Linacre Investments (Pty) Ltd., Kenilworth / South Africa
+Siemens Employee Share Ownership Trust, Johannesburg / South Africa
+Siemens Healthcare Employee Share Ownership Trust, Midrand / South Africa
+Siemens Healthcare Proprietary Limited, Halfway House / South Africa
+SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD, Centurion / South Africa
+Siemens Large Drives (Pty) Ltd., Midrand / South Africa
+Siemens S.A., Madrid / Spain
+Varian Medical Systems Iberica SL, Madrid / Spain
+Siemens Renting S.A., Madrid / Spain
+Siemens Rail Automation S.A.U., Tres Cantos / Spain
+SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
+Siemens Logistics S.L. Unipersonal, Madrid / Spain
+Siemens Large Drives Spain, S.L., Madrid / Spain
+Siemens AB, Solna / Sweden
+Siemens Industry Software S.L., Tres Cantos / Spain
+Innovation Strategies, S.L., Palma / Spain
+Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
+S Mobility Employee Stock Ownership Trust, Johannesburg / South Africa
+Siemens Proprietary Limited, Midrand / South Africa
+Siemens Mobility (Pty) Ltd, Randburg / South Africa
+Siemens Large Drives Employee Ownership Trust, Johannesburg / South Africa
+SIEMENS HEALTHCARE, S.L.U., Madrid / Spain
+Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil / Switzerland
+Mentor Graphics Tunisia SARL, Tunis / Tunisia
+Siemens Mobility S.A.R.L., Tunis / Tunisia
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+_3
+70
+75
+Siemens S.A., Tunis / Tunisia
+KACO New Enerji Limited Sirketi, Pendik / Türkiye
+Siemens AG - Siemens Sanayi ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Türkiye
+Siemens Finansal Kiralama A.S., Istanbul / Türkiye
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Türkiye
+Siemens Large Drives Motor ve Sürücü Teknolojileri A.S., Istanbul / Türkiye
+Siemens Mobility Ulasim Sistemleri Anonim Sirketi, Istanbul / Türkiye
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Türkiye
+Sqills Turkey Bilgi Teknolojileri Ticaret Limited Sirketi, Istanbul / Türkiye
+V.O.S.S. Varinak Onkoloji Sistemleri Satis Ve Servis Anonim Sirketi, Istanbul / Türkiye
+100% foreign owned subsidiary "Siemens Ukraine", Kiev / Ukraine
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY, Kiev / Ukraine
+Acuson Middle East FZ LLC, Dubai / United Arab Emirates
+PSE Software and Consulting L.L.C., Abu Dhabi / United Arab Emirates
+Samateq FZ LLC, UAE, Abu Dhabi United Arab Emirates
+Consolidated Financial Statements
+100
+100
+100
+100
+100
+_3
+_3
+_3
+90
+100
+100
+_3
+Siemens Tanzania Ltd. i.L., Dar es Salaam / Tanzania
+Crabtree South Africa Pty. Limited, Midrand / South Africa
+SIPRIN s.r.o., Bratislava / Slovakia
+Siemens Mobility d.o.o., Ljubljana / Slovenia
+100
+Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
+100
+Siemens Financial Solutions LLC., Moscow / Russian Federation
+100
+000 Siemens Industry Software, Moscow / Russian Federation
+100
+000 Siemens, Moscow / Russian Federation
+Siemens Mobility LLC, Moscow / Russian Federation
+100
+000 Legion II, Moscow / Russian Federation
+LIMITED LIABILITY COMPANY SIEMENS ELEKTROPRIVOD, St. Petersburg / Russian Federation
+1007
+100
+100
+Acuson RUS Limited Liability Company, Moscow / Russian Federation
+Varinak Europe SRL (Romania), Pantelimon / Romania
+SIMEA SIBIU S.R.L., Sibiu / Romania
+100
+100
+100
+Varian Medical Systems (RUS) Limited Liability Company, Moscow / Russian Federation
+100
+100
+100
+Siemens Large Drives d.o.o. Beograd, Belgrade / Serbia
+Siemens Healthcare d.o.o. Beograd, Belgrade / Serbia
+Siemens d.o.o. Beograd, Belgrade / Serbia
+75
+51
+Varian Medical Systems Arabia Commercial Limited, Riyadh / Saudi Arabia
+Siemens Mobility Saudi Ltd, Khobar / Saudi Arabia
+51
+51
+51
+Siemens Ltd., Riyadh / Saudi Arabia
+Siemens Large Drives Ltd., Khobar / Saudi Arabia
+Siemens Healthcare Limited, Riyadh / Saudi Arabia
+51
+Arabia Electric Ltd. (Equipment), Jeddah / Saudi Arabia
+100
+100
+100
+100
+100
+OEZ Slovakia, spol. s r.o., Bratislava / Slovakia
+Rolling Stock Services Bratislava s.r.o., Bratislava / Slovakia
+100
+1007
+100
+SAT Systémy automatizacnej techniky spol. s.r.o., Bratislava / Slovakia
+Siemens Healthcare s.r.o., Bratislava / Slovakia
+Siemens Mobility, s.r.o., Bratislava / Slovakia
+Siemens s.r.o., Bratislava Slovakia
+60
+60
+100
+100
+100
+100
+100
+49
+49
+Siemens Healthcare d.o.o., Ljubljana / Slovenia
+Supplyframe d.o.o, Beograd-Vracar, Belgrade / Serbia
+Acuson Slovakia s. r. o., Bratislava / Slovakia
+Siemens Trgovsko in storitveno podjetje, d.o.o., Ljubljana / Slovenia
+Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
+100
+55
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+75
+100
+100
+51
+100
+100
+100
+100
+100
+Varian Medical Systems UK Limited, Crawley, West Sussex / United Kingdom
+10012
+Sep 30,
+2021
+2022
+2021
+33.481
+31.138
+34.470
+32.066
+100
+23,033
+20.680
+16.312
+20.757
+16.426
+27,653
+22,177
+17.816
+14.815
+21,708
+Fiscal year
+2022
+51
+100
+Americas (129 companies)
+Siemens Healthcare S.A., Buenos Aires / Argentina
+Siemens IT Services S.A., Buenos Aires Argentina
+Siemens Mobility S.A., Munro / Argentina
+Siemens S.A., Buenos Aires / Argentina
+Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
+Siemens Industry Software Ltda., São Caetano do Sul / Brazil
+Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
+Siemens Large Drives Máquinas e Soluções Ltda, Jundiaí / Brazil
+Siemens Mobility Soluções de Mobilidade Ltda., São Paulo / Brazil
+Siemens Participações Ltda., São Paulo / Brazil
+Varian Medical Systems Brasil Ltda., Jundiaí / Brazil
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+16.749
+13.773
+Siemens
+Asia, Australia
+2021
+2022
+Sep 30,
+Sep 30,
+NOTE 30 Information about geographies
+Reconciliation to Consolidated Financial Statements
+Financing, eliminations and other items
+Liability-based adjustments
+Tax-related assets
+Intragroup financing receivables
+Asset-based adjustments:
+Assets Innovation, Governance and Pensions
+Assets Siemens Real Estate
+Siemens Energy Investment
+(in millions of €)
+Assets
+In fiscal 2022 and 2021, Profit of SFS includes interest income of €1,399 million and €1,154 million, respectively and interest expenses of
+€428 million and €313 million, respectively.
+In fiscal 2022, the following items are also included in Financing, eliminations and other items: a loss of €308 million due to measuring
+our investment in Thoughtworks Holding, Inc. (Thoughtworks) at fair value through profit and loss at fiscal year-end (in fiscal 2021 €289
+million gains from Thoughtworks from its initial public offering and from its fair value measurement at fiscal year-end) and a loss from
+applying hyperinflation accounting to the respective subsidiaries of €101 million.
+Consolidated Financial Statements
+3,669
+100
+6,458
+4,535
+Americas
+Europe, C.I.S., Africa, Middle East
+(in millions of €)
+Fiscal year
+Non-current assets
+Revenue by location
+of companies
+of customers
+Revenue by location
+60,038
+(45,560)
+(53,342)
+60,724
+33,218
+37,518
+4,523
+3,769
+55,190
+62,765
+1,674
+1,129
+5,215
+100
+100
+100
+Brightly Software Limited, Chatham, Kent / United Kingdom
+ByteToken, Ltd, Edinburgh / United Kingdom
+Data Sheet Archive Limited, Farnborough, Hampshire / United Kingdom
+Electrium Sales Limited, Farnborough, Hampshire / United Kingdom
+Flomerics Group Limited, Farnborough, Hampshire / United Kingdom
+Next47 Fund 2018, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2019, L.P., Palo Alto, CA / United Kingdom
+492
+100
+100
+492
+492
+Assetic UK Limited, Chatham, Kent / United Kingdom
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+492
+Acuson United Kingdom Ltd., Camberley, Surrey / United Kingdom
+SIEMENS MOBILITY LLC, Dubai / United Arab Emirates
+Siemens Middle East Limited, Masdar City / United Arab Emirates
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+492
+100
+50
+Consolidated Financial Statements
+SD (Middle East) LLC, Dubai / United Arab Emirates
+Siemens Capital Middle East Ltd, Abu Dhabi / United Arab Emirates
+Siemens Healthcare FZ LLC, Dubai / United Arab Emirates
+Siemens Healthcare L.L.C., Dubai / United Arab Emirates
+Siemens Industrial LLC, Masdar City / United Arab Emirates
+100
+Next47 Fund 2020, L.P., Palo Alto, CA / United Kingdom
+100
+Next47 Fund 2021, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2022, L.P., Palo Alto, CA / United Kingdom
+Next47 Fund 2023, L.P., Palo Alto, CA / United Kingdom
+Siemens Industry Software Computational Dynamics Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens Industry Software Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens Large Drives Limited, Farnborough, Hampshire / United Kingdom
+1007
+Siemens Mobility Limited, London / United Kingdom
+100
+Siemens Pension Funding (General) Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens Pension Funding Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens plc, Farnborough, Hampshire / United Kingdom
+100
+Siemens Process Systems Engineering Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens Rail Automation Limited, London / United Kingdom
+100
+UltraSoc Technologies Limited, Farnborough, Hampshire / United Kingdom
+100
+Varian Medical Systems UK Holdings Limited, Crawley, West Sussex / United Kingdom
+Siemens Holdings plc, Farnborough, Hampshire / United Kingdom
+Siemens Healthcare Limited, Camberley, Surrey / United Kingdom
+Project Ventures Rail Investments | Limited, Farnborough, Hampshire / United Kingdom
+Samacsys Limited, Farnborough, Hampshire / United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
+Senseye Limited, Farnborough, Hampshire / United Kingdom
+100
+100
+100
+100
+100
+573
+100
+Siemens Electronic Design Automation Ltd, Farnborough, Hampshire / United Kingdom
+Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+100
+100
+Siemens Healthcare Diagnostics Ltd, Camberley, Surrey / United Kingdom
+100
+Siemens Healthcare Diagnostics Manufacturing Ltd, Camberley, Surrey / United Kingdom
+100
+Siemens Healthcare Diagnostics Products Ltd, Camberley, Surrey / United Kingdom
+100
+100
+Siemens S.R.L., Bucharest / Romania
+Consolidated Financial Statements
+Siemens Industry Software S.R.L., Brasov / Romania
+Siemens Large Drives GmbH, Munich
+Siemens Industry Software GmbH, Cologne
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+Siemens Immobilien Management GmbH, Grünwald
+Siemens Healthineers Innovation Verwaltungs-GmbH, Röttenbach
+Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
+Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
+Siemens Healthineers Holding III GmbH, Munich
+Siemens Liquidity One, Munich
+Siemens Healthineers Holding I GmbH, Munich
+Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
+Siemens Healthineers AG, Munich
+Siemens Healthcare GmbH, Munich
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+Siemens Global Innovation Partners Management GmbH, Munich
+Siemens Fonds Invest GmbH, Munich
+Siemens Financial Services GmbH, Munich
+Siemens Healthineers Beteiligungen Verwaltungs-GmbH, Röttenbach
+Siemens Finance & Leasing GmbH, Munich
+Siemens Logistics GmbH, Munich
+Siemens Middle East Services GmbH & Co. KG, Munich
+100
+100
+1007
+10010
+10010
+100
+100
+Siemens Medical Solutions Health Services GmbH, Grünwald
+100
+1007
+100
+1009
+Siemens Mobility Real Estate Management GmbH, Grünwald
+Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
+Siemens Mobility GmbH, Munich
+Siemens Middle East Services LP GmbH, Munich
+100
+75
+Siemens Electronic Design Automation GmbH, Munich
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objektmanagement GmbH, Grünwald
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+Siemens Digital Business Builder GmbH, Munich
+1009
+1007
+10010
+1007
+1007
+1007
+1007
+10010
+1007
+10010
+100
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG, Grünwald
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
+Siemens Beteiligungen USA GmbH, Berlin
+Siemens Beteiligungen Management GmbH, Kemnath
+Siemens Beteiligungen Inland GmbH, Munich
+1007
+Siemens Digital Logistics GmbH, Frankenthal
+10010
+100
+10010
+Consolidated Financial Statements
+44
+1009
+1009
+1009
+1009
+1009
+100⁹
+1009, 12
+1007
+10010
+10010
+100
+100
+100
+100
+10010
+Siemens Beteiligungen Europa GmbH, Munich
+100
+100
+100
+100
+10010
+1007
+100⁹
+10010
+1009
+100
+10010
+100
+100
+100⁹
+10010
+10010
+Siemensstadt Grundstücks-GmbH & Co. KG, Grünwald
+Siemensstadt CX Verwaltungs GmbH, Grünwald
+1007
+Siemensstadt CX GmbH & Co. KG, Grünwald
+100
+1007
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH, Munich
+VMS Deutschland Holdings GmbH, Darmstadt
+Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
+Varian Medical Systems München GmbH, Munich
+Varian Medical Systems Haan GmbH, Haan
+Varian Medical Systems Deutschland GmbH & Co. KG, Darmstadt
+SYKATEC Systeme, Komponenten, Anwendungstechnologie GmbH, Erlangen
+100
+SIMAR Ost Grundstücks-GmbH, Grünwald
+Siemensstadt VG Verwaltungs GmbH, Grünwald
+Siemensstadt SWHH Verwaltungs GmbH, Grünwald
+Siemensstadt VG GmbH & Co. KG, Grünwald
+Siemensstadt Management GmbH, Grünwald
+Siemensstadt SPE GmbH & Co. KG, Grünwald
+Siemensstadt SPE Verwaltungs GmbH, Grünwald
+Siemensstadt SWHH GmbH & Co. KG, Grünwald
+45
+1009
+1007
+1007
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+1007
+Siemensstadt C1 Verwaltungs GmbH, Grünwald
+Siemens-Fonds S-8, Munich
+1007
+1009
+10010
+100
+1009,13
+100
+10010
+100
+100
+10010
+1009
+1007
+1009
+1007
+100
+100
+100
+Siemensstadt C1 GmbH & Co. KG, Grünwald
+1009
+Siemens OfficeCenter Frankfurt GmbH & Co. KG, Grünwald
+Siemens-Fonds S-7, Munich
+Siemens-Fonds Pension Captive, Munich
+Siemens-Fonds C-1, Munich
+Siemens Treasury GmbH, Munich
+Siemens Trademark Management GmbH, Kemnath
+Siemens Trademark GmbH & Co. KG, Kemnath
+Siemens Traction Gears GmbH, Penig
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Real Estate Management GmbH, Kemnath
+Siemens Real Estate GmbH & Co. KG, Kemnath
+Siemens Real Estate Consulting Management GmbH, Grünwald
+Siemens Real Estate Consulting GmbH & Co. KG, Munich
+100
+Siemens Private Finance Versicherungsvermittlungsgesellschaft mbH, Munich
+Siemens Project Ventures GmbH, Erlangen
+Siemens OfficeCenter Verwaltungs GmbH, Grünwald
+Siemens Technology Accelerator GmbH, Munich
+Siemens Bank GmbH, Munich
+Siemens Advanta Solutions GmbH, Munich
+Senseye GmbH, Essen
+2021
+Sep 30,
+Sep 30,
+Sep 30,
+2022
+2021
+10
+584
+594
+580
+563
+2022
+1,329
+1,455
+17
+126
+107
+Fiscal year
+2022
+2021
+2022
+Liabilities
+1,384
+1,491
+Receivables
+Sep 30,
+2021
+113
+In fiscal 2022, Siemens sold real estate to its pension entities at a total fair value of EUR 174 million. As of September 30, 2022 and 2021,
+lease liabilities resulting from sale and leaseback transactions with pension entities amounted to €280 million and €222 million,
+respectively.
+Pension entities
+As of September 30, 2022 and 2021, there were loan commitments to joint ventures amounting to €4 million and €222 million,
+respectively.
+As of September 30, 2022 and 2021, the Company had commitments to make capital contributions to joint ventures and associates of
+€106 million and €72 million, therein €95 million and €65 million related to joint ventures, respectively.
+Consolidated Financial Statements
+42
+As of September 30, 2022 and 2021, loans given to joint ventures and associates amounted to €166 million and €1,138 million, therein
+€149 million and €1,122 million related to joint ventures, respectively. The related book values amounted to €143 million and €28 million,
+therein €139 million and €25 million related to joint ventures, respectively. Valuation adjustments recognized in fiscal 2022 and 2021
+reduced book values of loans related to joint ventures by €2 million and €242 million, respectively. Prior year amounts included Siemens'
+stake in the equity investment in Valeo Siemens eAutomotive GmbH that was sold in fiscal 2022.
+80
+1,086
+1,165
+As of September 30, 2022 and 2021, guarantees to joint ventures and associates amounted to €8,165 million and €14,533 million,
+respectively, thereof €8,147 million and €14,159 million, respectively, to associates. These guarantees included mainly obligations from
+performance and credit guarantees in connection with the Siemens Energy business. For these guarantees, Siemens has reimbursement
+rights towards Siemens Energy.
+870
+681
+861
+602
+1,129
+1,242
+8
+78
+As of September 30, 2022 and 2021, receivables to associates included reimbursement rights against Siemens Energy which were
+recognized correspondingly with obligations from customer contracts in connection with Siemens Energy activities legally remaining at
+Siemens. Liabilities to associates as of September 30, 2022 and 2021 were mainly due to trade receivables that also result from these
+activities and that have economically to be allocated to Siemens Energy.
+For information regarding the funding of our post-employment benefit plans see Notes 4 and 17.
+Purchases of goods and
+services and other expenses
+Sales of goods and services
+9,071
+6,999
+13.226
+13.537
+11.249
+11.961
+thereof Germany
+thereof countries outside of Germany
+51,523
+62.265
+71.977
+62.265
+71.977
+7,637
+7,105
+2022
+57,791
+and other income
+Fiscal year
+60.016
+58.440
+Associates
+(in millions of €)
+Joint ventures
+Siemens has relationships with many joint ventures and associates in the ordinary course of business whereby Siemens buys and sells a
+wide variety of products and services generally on arm's length terms. The transactions between continuing operations and joint ventures
+and associates were as follows:
+Joint ventures and associates
+NOTE 31 Related party transactions
+Non-current assets consist of property, plant and equipment, goodwill and other intangible assets.
+21,186
+51.016
+26,543
+17.727
+13.521
+17.241
+therein U.S
+42,451
+50,792
+49.039
+13.901
+Related individuals
+In fiscal 2022 and 2021, members of the Managing Board received cash compensation of €16.0 million and €21.4 million (including
+members who left during fiscal 2021). The fair value of share-based compensation amounted to €10.3 million and €11.6 million for
+134,006 and 202,139 stock awards, respectively, granted in fiscal 2022 and 2021. In fiscal 2022 and 2021, the Company granted
+contributions under the BSAV to members of the Managing Board totaling €2.2 million and €3.0 million, respectively.
+Therefore, in fiscal 2022 and 2021, compensation and benefits, attributable to members of the Managing Board amounted to €28.5
+million and €36.0 million in total, respectively.
+10010
+10010
+100
+100
+10010
+85
+10010
+1007
+100
+10010
+1007
+in %
+Equity interest
+KompTime GmbH, Munich
+IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
+KACO new energy GmbH, Neckarsulm
+ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
+1009
+Geisenhausener Entwicklungs Management GmbH, Grünwald
+Geisenhausener Entwicklungs-GmbH & Co. KG, Grünwald
+HaCon Ingenieurgesellschaft mbH, Hanover
+1009
+85
+RISICOM Rückversicherung AG, Grünwald
+REMECH Systemtechnik GmbH, Unterwellenborn
+R & S Restaurant Services GmbH, Munich
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Tübingen KG, Grünwald
+Next47 Services GmbH, Munich
+Next47 GmbH, Munich
+Moorenbrunn Entwicklungs-GmbH & Co. KG, Grünwald
+10010
+Moorenbrunn Entwicklungs Management GmbH, Grünwald
+Kyros C AG, Munich
+Kyros B AG, Munich
+Kyros 68 GmbH, Munich
+Kyros 66 GmbH, Munich
+Kyros 58 GmbH, Munich
+Kyros 54 GmbH, Munich
+100
+Lincas Electro Vertriebsgesellschaft mbH, Grünwald
+evosoft GmbH, Nuremberg
+Dade Behring Grundstücks GmbH, Kemnath
+eos.uptrade GmbH, Hamburg
+Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
+37.6
+38.2
+2021
+2022
+Fiscal year
+Tax services
+Other attestation services
+5.0
+Audit services
+Fees related to professional services rendered by the Company's principal accountant, EY, for fiscal 2022 and 2021 are:
+NOTE 32 Principal accountant fees and services
+Some of our board members hold, or in the last year have held, positions of significant responsibility with other entities. We have
+relationships with almost all of these entities in the ordinary course of our business whereby we buy and sell a wide variety of products
+and services on arm's length terms.
+In fiscal 2022 and 2021, no other major transactions took place between the Company and the members of the Managing Board and the
+Supervisory Board.
+Compensation attributable to members of the Supervisory Board comprised in fiscal 2022 and 2021 base compensation and additional
+compensation for committee work and amounted to €5.1 million and €5.2 million (including meeting fees), respectively.
+Former members of the Managing Board and their surviving dependents received emoluments within the meaning of
+Section 314 para. 1 No. 6 b of the German Commercial Code totaling €23.6 million and €30.1 million in fiscal 2022 and 2021, respectively.
+The defined benefit obligation (DBO) of all pension commitments to former members of the Managing Board and their surviving
+dependents as of September 30, 2022 and 2021 amounted to €175.3 million and €192.0 million, respectively.
+In fiscal 2022 and 2021, expense related to share-based compensation amounted to €4.7 million and €7.6 million, respectively, including
+expenses related to the additional cash payment compensation due to the spin-off of Siemens Energy.
+(in millions of €)
+3.9
+43.3
+41.6
+Berliner Vermögensverwaltung GmbH, Berlin
+BEFUND24 GmbH, Erlangen
+Alpha Verteilertechnik GmbH, Cham
+AIT Verwaltungs-GmbH, Stuttgart
+AIT Applied Information Technologies GmbH & Co. KG, Stuttgart
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+Acuson GmbH, Erlangen
+Germany (121 companies)
+Subsidiaries
+September 30, 2022
+NOTE 34 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the
+German Commercial Code
+Consolidated Financial Statements
+43
+The Managing and Supervisory Boards of Siemens Aktiengesellschaft and of Siemens Healthineers AG, a publicly listed subsidiary of
+Siemens, provided the declarations required under Section 161 of the German Stock Corporation Act (AktG) on October 1, 2022 and
+September 30, 2022. The declarations are available on the company's websites at siemens.com/gcg-code and at corporate.siemens-
+healthineers.com/investor-relations/corporate-governance.
+NOTE 33 Corporate governance
+Audit Services relate primarily to services provided by EY for auditing Siemens' Consolidated Financial Statements, for auditing financial
+statements of Siemens AG and its subsidiaries, for reviews of interim financial statements being integrated into the audit, for project-
+accompanying IT audits, for audit services in connection with the implementation of new accounting standards as well as for audits of the
+internal control system at service companies. Other Attestation Services include primarily audits of financial statements as well as other
+attestation services in connection with M&A activities, audits of employee benefit plans, attestation services relating to sustainability
+reporting, compensation reporting and disclosures in accordance with EU taxonomy, comfort letters and other attestation services required
+under regulatory requirements, contractually agreed or requested on a voluntary basis.
+In fiscal 2022 and 2021, 40% and 43%, respectively, of the total fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
+Germany.
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+Zeleni Holding GmbH, Kemnath
+Zeleni Real Estate GmbH & Co. KG, Kemnath
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (302 companies)
+ESTEL Rail Automation SPA, Algiers / Algeria
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
+Atruvi Invest Management S.à.r.l, Munsbach / Luxembourg
+Crabtree (Pty) Ltd, Maseru / Lesotho
+Siemens Large Drives WLL, Kuwait City, Ahmadi / Kuwait
+Siemens Industrial Business Co. For Electrical, Electronic and Mechanical Contracting WLL, Kuwait City / Kuwait
+VMS Kenya, Ltd, Nairobi Kenya
+Siemens TOO, Almaty / Kazakhstan
+TFM International S.A. i.L., Luxembourg / Luxembourg
+Siemens Healthcare Limited Liability Partnership, Almaty / Kazakhstan
+VAL 208 Torino GEIE, Milan / Italy
+Siemens S.p.A., Milan / Italy
+Siemens Mobility S.r.I., Milan / Italy
+Siemens Logistics S.r.I., Milan / Italy
+Siemens Large Drives S.r.I., Milan / Italy
+Siemens Industry Software S.r.l., Milan / Italy
+Siemens Healthcare S.r.I., Milan / Italy
+Varian Medical Systems Italia S.p.A., Segrate / Italy
+Acuson Italy S.r.I., Milan / Italy
+FTD Europe Ltd, Sliema / Malta
+Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
+SQCAP B.V., Enschede / Netherlands
+Siemens Nederland N.V., The Hague / Netherlands
+Siemens Mobility Holding B.V., The Hague / Netherlands
+Siemens Mobility B.V., Zoetermeer / Netherlands
+Siemens International Holding III B.V., The Hague / Netherlands
+Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
+Siemens Healthineers Holding III B.V., The Hague / Netherlands
+Siemens Healthineers Holding IV B.V., The Hague / Netherlands
+Siemens Healthineers Holding V B.V., The Hague / Netherlands
+Siemens Healthineers Nederland B.V., The Hague / Netherlands
+Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
+Siemens International Holding B.V., The Hague / Netherlands
+Siemens Electronic Design Automation B.V., Eindhoven / Netherlands
+Siemens Finance B.V., The Hague / Netherlands
+CTSI (Mauritius) Ltd., Ebene / Mauritius
+Pollux III B.V., The Hague / Netherlands
+Flowmaster Group N.V., Eindhoven / Netherlands
+Dresser-Rand International B.V., The Hague / Netherlands
+Chronos B.V., Enschede / Netherlands
+Castor III B.V., The Hague / Netherlands
+Siemens S.A., Casablanca / Morocco
+Siemens Industry Software SARL, Sala Al Jadida / Morocco
+Siemens Healthcare SARL, Casablanca / Morocco
+Mendix Technology B.V., Rotterdam / Netherlands
+Sqills Products B.V., Enschede / Netherlands
+UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
+Siemens Ltd., Rosh Ha'ayin / Israel
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens Mobility Ltd., Rosh Ha'ayin / Israel
+100
+100
+Siemens Industry Software Ltd., Airport City / Israel
+Siemens Industry Operations Ltd., Rosh Ha'ayin / Israel
+Mentor Graphics Development Services (Israel) Ltd., Rehovot / Israel
+Siemens Concentrated Solar Power Ltd., Rosh Ha'ayin / Israel
+Siemens Electronic Design Automation Ltd, Herzilya Pituah / Israel
+Siemens HealthCare Ltd., Rosh Ha'ayin / Israel
+47
+100
+100
+100
+100
+100
+100
+Mentor Graphics Development Services Limited, Shannon, County Clare / Ireland
+Siemens Electronic Design Automation Limited, Shannon, County Clare / Ireland
+Siemens Healthcare Diagnostics Manufacturing Limited, Swords, County Dublin / Ireland
+Siemens Healthcare Medical Solutions Limited, Swords, County Dublin / Ireland
+Siemens Industry Software Limited, Shannon, County Clare / Ireland
+Siemens Limited, Dublin Ireland
+Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
+10013
+100
+100
+100
+1007
+TASS International B.V., Helmond / Netherlands
+Varian Medical Systems Nederland B.V., Houten / Netherlands
+100
+48
+10
+100
+100
+100
+100
+100
+Consolidated Financial Statements
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Varian Medical Systems Nederland Finance B.V., Houten / Netherlands
+Siemens Healthcare AS, Oslo / Norway
+Siemens Healthcare S.R.L., Bucharest / Romania
+Siemens W.L.L., Doha Qatar
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
+Siemens Logistics, Unipessoal Lda, Lisbon / Portugal
+SIEMENS MOBILITY, UNIPESSOAL LDA, Amadora / Portugal
+Siemens S.A., Amadora / Portugal
+Varian Medical Systems Poland Sp. z o.o., Warsaw / Poland
+Siemens Sp. z o.o., Warsaw / Poland
+Siemens Mobility Sp. z o.o., Warsaw / Poland
+Siemens Industry Software Sp. z o.o., Warsaw / Poland
+Siemens AS, Oslo / Norway
+Siemens Healthcare Sp. z o.o., Warsaw / Poland
+Siemens Digital Logistics Sp. z o.o., Wroclaw / Poland
+Siemens Pakistan Engineering Co. Ltd., Karachi / Pakistan
+SIEMENS INDUSTRY SOFTWARE (PRIVATE) LIMITED, Lahore / Pakistan
+Siemens Healthcare (Private) Limited, Lahore / Pakistan
+Siemens Industrial LLC, Muscat / Oman
+Siemens Mobility AS, Oslo / Norway
+SIEMENS LARGE DRIVES AS, Oslo / Norway
+Siemens Finance Sp. z o.o., Warsaw / Poland
+100
+100
+100
+10013
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+492,7
+492
+100
+Siemens Mobility S.R.L., Bucharest / Romania
+100
+100
+100
+51
+100
+100
+100
+10010
+100
+100
+10013
+100
+10013
+10010
+10010
+100
+1007
+100
+100
+1007
+100
+1007
+100
+51
+100
+100
+52
+100
+100
+100
+100
+100
+100
+100
+100
+100
+69
+100
+100
+100
+100
+100
+Siemens Personaldienstleistungen GmbH, Vienna / Austria
+Siemens Mobility Austria GmbH, Vienna / Austria
+Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
+Siemens Large Drives GmbH, Vienna / Austria
+Siemens Konzernbeteiligungen GmbH, Vienna / Austria
+Siemens Industry Software GmbH, Linz / Austria
+Siemens Healthcare Diagnostics GmbH, Vienna / Austria
+Steiermärkische Medizinarchiv GesmbH, Graz / Austria
+Siemens Aktiengesellschaft Österreich, Vienna / Austria
+ITH icoserve technology for healthcare GmbH, Innsbruck / Austria
+ETM professional control GmbH, Eisenstadt / Austria
+Acuson Österreich GmbH, Vienna / Austria
+Siemens Industry Software Closed Joint-Stock Company, Yerevan / Armenia
+Siemens Spa, Algiers / Algeria
+Siemens Healthineers Oncology Services Algeria E.U.R.L., Algiers / Algeria
+Siemens Healthineers Algeria E.U.R.L., Algiers / Algeria
+Siemens Advanta Solutions GmbH, Vienna / Austria
+1007
+Varian Medical Systems Gesellschaft mbH, Brunn am Gebirge / Austria
+Siemens W.L.L., Manama / Bahrain
+1007
+Consolidated Financial Statements
+Siemens Healthcare d.o.o., Zagreb / Croatia
+Siemens d.d., Zagreb / Croatia
+Varinak Bulgaria EOOD, Sofia / Bulgaria
+Siemens Mobility EOOD, Sofia / Bulgaria
+Siemens Healthcare EOOD, Sofia / Bulgaria
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH, Vienna / Austria
+Siemens EOOD, Sofia / Bulgaria
+Siemens d.o.o. Sarajevo - U Likvidaciji, Sarajevo / Bosnia and Herzegovina
+Varian Medical Systems Belgium NV, Groot-Bijgaarden / Belgium
+Siemens S.A./N.V., Beersel / Belgium
+Siemens Mobility S.A. / N.V, Beersel / Belgium
+Siemens Large Drives N.V., Beersel / Belgium
+Siemens Industry Software NV, Leuven / Belgium
+Siemens Healthcare NV, Groot-Bijgaarden / Belgium
+Siemens Medicina d.o.o., Sarajevo / Bosnia and Herzegovina
+100
+100
+100
+100
+100
+Consolidated Financial Statements
+Varian Medical Systems Hungary Kft., Budapest / Hungary
+Siemens Zrt., Budapest Hungary
+Siemens Mobility Kft., Budapest / Hungary
+Siemens Industry Software Kft., Budapest / Hungary
+100
+Siemens Healthcare Kft., Budapest / Hungary
+SIEMENS MOBILITY RAIL AND ROAD TRANSPORTATION SOLUTIONS SINGLE-MEMBER SOCIETE ANONYME, Athens Greece
+SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME, Chalandri / Greece
+Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
+Wattsense SAS, Dardilly / France
+Varian Medical Systems France SARL, Le Plessis-Robinson / France
+Supplyframe Europe SAS, Grenoble / France
+Sqills IT Services SAS, Paris / France
+evosoft Hungary Szamitastechnikai Kft., Budapest / Hungary
+Siemens SAS, Saint-Denis / France
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+Siemens Mobility SAS, Châtillon / France
+Siemens Logistics SAS, Saint-Denis / France
+Siemens France Holding SAS, Saint-Denis / France
+Siemens Healthcare SAS, Saint-Denis / France
+Siemens Industry Software SAS, Châtillon / France
+Siemens Lease Services SAS, Saint-Denis / France
+Siemens A/S, Ballerup / Denmark
+Acuson Denmark S/A, Ballerup / Denmark
+Siemens, s.r.o., Prague / Czech Republic
+Siemens Electric Machines s.r.o., Drasov / Czech Republic
+Siemens Healthcare, s.r.o., Prague / Czech Republic
+Siemens Industry Software, s.r.o., Prague / Czech Republic
+Siemens Mobility, s.r.o., Prague / Czech Republic
+OEZ s.r.o., Letohrad / Czech Republic
+46
+40
+Siemens Healthcare A/S, Ballerup / Denmark
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens Industry Software A/S, Ballerup / Denmark
+Siemens Mobility A/S, Ballerup / Denmark
+Varian Medical Systems Scandinavia AS, Herlev / Denmark
+Siemens Financial Services SAS, Saint-Denis / France
+Siemens Electronic Design Automation SARL, Meudon La Forêt / France
+Senseye SAS, Paris / France
+PETNET Solutions SAS, Lisses / France
+Padam Mobility SAS, Paris / France
+Acuson France SAS, Saint-Denis / France
+VIBECO - Virtual Buildings Ecosystem Oy, Espoo / Finland
+Varian Medical Systems Finland OY, Helsinki / Finland
+Siemens Osakeyhtiö, Espoo / Finland
+Siemens Mobility Oy, Espoo / Finland
+Siemens Industry Software Oy, Espoo / Finland
+Siemens Healthcare Oy, Espoo / Finland
+Siemens Mobility Egypt LLC, Cairo / Egypt
+Siemens Industry Software (A Limited Liability Company - Private Free Zone), New Cairo / Egypt
+Siemens Industrial LLC, New Cairo / Egypt
+Siemens Healthcare S.A.E., Cairo / Egypt
+Siemens Healthcare Logistics LLC, Cairo / Egypt
+1007
+2021
+Siemens Large Drives, s.r.o., Bratislava / Slovakia
+3
+10.5 Significant agreements which take effect, alter or terminate upon a change of control of
+the Company following a takeover bid
+10.6 Compensation agreements with members of the Managing Board or employees in the
+event of a takeover bid
+37
+10.7 Other takeover-relevant information
+38
+11. EU Taxonomy disclosure
+removal of members of the Managing Board and governing amendment to the Articles of Association
+10.4 Powers of the Managing Board to issue and repurchase shares
+Combined Management Report
+Siemens is a technology group that is active in nearly all countries of the world, focusing on the areas of automation and digitalization in
+the process and manufacturing industries, intelligent infrastructure for buildings and distributed energy systems, smart mobility solutions
+for rail transport, and medical technology and digital healthcare services.
+Siemens comprises Siemens Aktiengesellschaft (Siemens AG), a stock corporation under the Federal laws of Germany, as the parent
+company, and its subsidiaries. Our Company is incorporated in Germany, with our corporate headquarters situated in Munich. As of
+September 30, 2023, Siemens had around 320,000 employees.
+As of September 30, 2023, Siemens has the following reportable segments: Digital Industries, Smart Infrastructure, Mobility and
+Siemens Healthineers, which together form our “Industrial Business" and Siemens Financial Services (SFS), which supports the activities
+of our industrial businesses and also conducts its own business with external customers. Furthermore, we report results for Portfolio
+Companies, which comprises businesses that are managed separately to improve their performance.
+Our reportable segments and Portfolio Companies may do business with each other, leading to corresponding orders and revenue. Such
+orders and revenue are eliminated on Group level.
+Non-financial matters of the Group and Siemens AG
+Siemens has policies for environmental, employee and social matters, for the respect of human rights, and anti-corruption and bribery
+matters, among others. Our business model is described in chapters 1 and 3 of this Combined Management Report. Reportable information
+that is necessary for an understanding of the development, performance, position and the impact of our activities on these matters is
+included in this Combined Management Report, in particular in chapters 3 through 7. Forward-looking information, including risk
+disclosures, is presented in chapter 8. Chapter 9 includes additional information that is required to be reported in the Combined
+Management Report related to the parent company Siemens AG. EU Taxonomy disclosures are outlined in chapter 11.
+1. Organization of the Siemens Group and basis of presentation
+10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
+37
+37
+33
+33
+9. Siemens AG
+9.1 Results of operations
+34
+9.2 Net assets and financial position
+34
+9.3 Corporate Governance statement
+35
+10. Takeover-relevant information (pursuant to Sections 289a and 315a of the German Commercial Code) and
+explanatory report
+10.1 Composition of common stock
+35
+10.2 Restrictions on voting rights or transfer of shares
+35
+35
+As supplementary information, amounts reported in the Consolidated Financial Statements and the Annual Financial Statements of
+Siemens AG related to such non-financial matters, and additional explanations thereto, are included in Notes to Consolidated Financial
+Statements for fiscal 2023, Notes 17, 18, 22, 26 and 27, and in the Notes to the Annual Financial Statements for fiscal 2023, Notes 16,
+17, 20, 21 and 25. In order to inform the users of the financial reports in a focused manner, these disclosures are not subject to a specific
+non-financial framework - in contrast to the disclosures in our separate "Sustainability report 2023" document, which are based on the
+standards developed by the Global Reporting Initiative (GRI). Said document also includes detailed information on DEGREE, Siemens'
+sustainability framework. With DEGREE, Siemens intends to manage and track its progress on selected ambitions in the environmental,
+social and governance areas.
+33
+3
+2. Financial performance system
+2.3 Capital structure
+Sustainable revenue and profit development is supported by a healthy capital structure. Accordingly, a key consideration within the
+Siemens Financial Framework is to maintain ready access to the capital markets through various debt products and preserve our ability to
+repay and service our debt obligations over time. Our primary measure for managing and controlling our capital structure is the ratio of
+Industrial net debt to EBITDA (continuing operations). This financial measure indicates the approximate amount of time in years that would
+be needed to cover Industrial net debt through income from continuing operations, without taking into account interest, taxes,
+depreciation and amortization. We aim to achieve a ratio of up to 1.5.
+2.4 Liquidity and dividend
+We intend to continue providing an attractive return to our shareholders. In the Siemens Financial Framework, we strive for a dividend per
+share that exceeds the amount for the preceding year, or at least matches it.
+As in the past, we intend to fund the dividend payout from Free cash flow. Our primary measure to assess our ability to generate cash,
+and ultimately to pay dividends, is the cash conversion rate for the Siemens Group, defined as the ratio of Free cash flow (continuing and
+discontinued operations) to net income. Over a cycle of three to five years, we aim to achieve a cash conversion rate of 1 minus the annual
+comparable revenue growth rate.
+At the Annual Shareholders' Meeting, the Managing Board, in agreement with the Supervisory Board, will submit the following proposal
+to allocate the unappropriated net income of Siemens AG for fiscal 2023: to distribute a dividend of €4.70 on each share of no par value
+entitled to the dividend for fiscal 2023 existing at the date of the Annual Shareholders' Meeting; the remaining amount is to be carried
+We seek to work profitably and as efficiently as possible with the capital provided by our shareholders and lenders. For purposes of
+managing and controlling our capital efficiency, we use return on capital employed, or ROCE, as our primary measure in our Siemens
+Financial Framework. Our goal is to achieve a ROCE within a range of 15% to 20% over a cycle of three to five years.
+4
+forward. Payment of the proposed dividend is contingent upon approval by Siemens shareholders at the Annual Shareholders' Meeting on
+February 8, 2024. The prior-year dividend was €4.25 per share.
+2.5 Calculations of EPS pre PPA and ROCE
+Calculation of EPS pre PPA
+Fiscal year
+(in millions of €, shares in thousands, earnings per share in €)
+2023
+Combined Management Report
+Primary measure for managing and controlling profit and profitability at Group level: Net income is the primary driver of basic earnings
+per share from net income (EPS) as well as of EPS before purchase price allocation accounting (EPS pre PPA) which is used for our capital
+market communication. EPS pre PPA is defined as basic earnings per share from net income adjusted for amortization of intangible assets
+acquired in business combinations and related income taxes. As with EPS, EPS pre PPA includes the amounts attributable to shareholders
+of Siemens AG. We aim to achieve high-single-digit annual growth in EPS pre PPA over a cycle of three to five years.
+For Siemens Healthineers, we present the margin range we expect as that company's majority shareholder.
+In line with common practice in the financial services business, our financial indicator for measuring capital efficiency at SFS is return on
+equity after tax, or ROE after tax. ROE is defined as SFS' profit after tax, divided by its average allocated equity.
+15-20%
+2.1 Revenue growth
+In the Siemens Financial Framework we aim to achieve a revenue growth range of 5% to 7% per year on a comparable basis over a cycle
+of three to five years. Our primary measure for managing and controlling our revenue growth is comparable growth, because it shows the
+development in our business net of currency translation effects, which arise from the external environment outside of our control, and
+portfolio effects, which involve business activities which are either new to or no longer a part of the respective business.
+Currency translation effects are the difference between revenue for the current period calculated using the exchange rates of the current
+period and revenue for the current period calculated using the exchange rates of the comparison period. For calculating the percentage
+change year-over-year, this absolute difference is divided by revenue for the comparison period. A portfolio effect arises in the case of an
+acquisition or a disposition and is calculated as the change year-over-year in revenue related to the transaction. For calculating the
+percentage change, this absolute change is divided by revenue for the comparison period. Any portfolio effect is excluded for the twelve
+months following the relevant transaction after which both current and past reporting periods fully reflect the portfolio change. For orders,
+we apply the same calculations for currency translation and portfolio effects as described above.
+2.2 Profitability and capital efficiency
+Within the Siemens Financial Framework, we aim to achieve over a cycle of three to five years margins that are comparable to those of
+our relevant competitors. Therefore, we have defined profit margin ranges for our industrial businesses which also consider the profit
+margins of their respective relevant competitors. Profit margin is defined as profit of the respective business divided by its revenue.
+For our industrial businesses, profit represents EBITA adjusted for amortization of intangible assets not acquired in business combinations.
+We have set the following margin ranges:
+Digital Industries
+Smart Infrastructure
+Mobility
+Siemens Healthineers
+Margin range
+17-23%
+11-16%
+10-13%
+17-21%
+Siemens Financial Services (ROE after tax)
+Combined Management Report
+8.5 Significant characteristics of the internal control and risk management system
+8.4 Opportunities
+8.2 Risk management
+SIEMENS
+Table of contents
+4
+4
+4
+4
+for fiscal 2023
+Combined Management Report
+2. Financial performance system
+2.1 Revenue growth
+2.2 Profitability and capital efficiency
+2.3 Capital structure
+2.4 Liquidity and dividend
+2.5 Calculations of EPS pre PPA and ROCE
+1. Organization of the Siemens Group and basis of presentation
+Report
+Combined Management
+Notes and forward-looking statements
+Siemens Report
+for fiscal 2023
+SIEMENS
+Table of reports
+Combined Management Report
+Consolidated Financial Statements
+Responsibility Statement (Siemens Group)
+Independent Auditor's Reports (Siemens Group)
+Annual Financial Statements
+Responsibility Statement (Siemens AG)
+Independent Auditor's Report (Siemens AG)
+Five-Year Summary
+Compensation Report (including Auditor's Report)
+Report of the Supervisory Board
+Corporate Governance Statement
+3. Segment information
+3.1 Overall economic conditions
+3.2 Digital Industries
+3.3 Smart Infrastructure
+17
+6. Financial position
+17
+6.1 Capital structure
+18
+6.2 Cash flows
+20
+23
+25
+29
+222228
+8.3 Risks
+30
+7. Overall assessment of the economic position
+8. Report on expected developments and associated material opportunities and risks
+8.1 Report on expected developments
+5. Net assets position
+2022
+16
+4.2 Income
+3.4 Mobility
+3.5 Siemens Healthineers
+3.6 Siemens Financial Services
+3.7 Portfolio Companies
+3.8 Reconciliation to Consolidated Financial Statements
+4. Results of operations
+4.1 Orders and revenue by region
+45
+666890123
+11
+14
+14
+15
+15
+4455
+4.3 Research and development
+Net income attributable to shareholders of Siemens AG
+35
+3,723
+19,517
+12%
+15%
+5,067
+4,691
+8%
+21,919
+10%
+3,892
+27%
+22.6%
+19.9%
+Following extraordinary demand in fiscal 2022, which included proactive customer purchasing, orders at Digital Industries came in lower
+in its automation businesses. The short-cycle factory automation and the motion control businesses were affected most strongly due
+particularly to destocking at customers. These declines were partly offset by significant growth in the software business, due to large
+contract wins in both the PLM and the EDA businesses. Revenue rose on increases in all businesses due in part to conversion from the
+order backlog which had expanded significantly in the previous fiscal year. The strongest revenue growth contributions came from the
+factory automation and the process automation businesses. Overall, growth in the automation businesses was supported by improved
+availability of components year-over-year. Revenue growth in the software business was led by the EDA business while year-over-year
+growth in PLM was held back by the transition to SaaS. On a geographic basis, orders remained stable in the Americas region, but came in
+lower in the region Europe, C.I.S., Africa, Middle East and in the region Asia, Australia due mainly to weaker demand in China. Revenue
+grew in all regions with the strongest contribution coming from the region Europe, C.I.S., Africa, Middle East. Profit and profitability at
+Digital Industries rose on strong improvements in all automation businesses, supported by higher capacity utilization and a more favorable
+business mix including improved availability of components for high-margin products. Profit in the software business declined due to
+increased expenses related to cloud-based activities including severance charges, which for Digital Industries overall rose to €109 million,
+up from €64 million in the prior year.
+At the beginning of fiscal 2024, business activities in the areas of low-voltage and geared motors and motor spindles, previously part of
+Digital Industries' motion control business, were transferred to Portfolio Companies. If the transfer to Portfolio Companies had already
+existed at the beginning of fiscal 2023, Digital Industries would have posted orders of €19.387 billion, revenue of €20.636 billion, profit
+of €4.833 billion and a profit margin of 23.4%. At the beginning of fiscal 2024, Digital Industries' order backlog amounted to €11 billion,
+of which €8 billion are expected to be converted into revenue in fiscal 2024.
+4,947
+(17)%
+(18)%
+25,283
+Combined Management Report
+offerings, which their customers either need or want in order to take full advantage of the investment goods. Finally, there is a trend from
+globalization to regionalization, to support local economic development, to increase supply chain resilience or to better adapt solutions to
+local needs. This is increasingly accompanied by more differentiated regulatory requirements.
+-
+Research & Development (R&D) activities at Digital Industries are aimed at innovative ways to merge the real and digital worlds with a
+continuous flow of data, so that customers can improve their products, production and resource efficiency. Digital Industries' innovations
+incorporate artificial intelligence (AI), edge computing, SaaS and software-defined control, among other advanced technologies. As part
+of Siemens' open digital marketplace Siemens Xcelerator - a business platform that includes a curated portfolio of internet-of-things-
+enabled hardware, software and digital services from across Siemens and certified third parties and facilitates interactions and transactions
+between customers, partners and developers Digital Industries in fiscal 2023 introduced Industrial Operations X, an open and
+interoperable portfolio for automating and operating industrial production. Industrial Operations X focuses on integrating IT capabilities
+such as Al, low-code programming, edge computing, and cloud computing with automation technology and digital services. Through
+various collaborations, Digital Industries is developing industrial-grade Al solutions. With Intrinsic, an Alphabet company, Digital Industries
+collaborates to accelerate the integration of Al-based robotics and automation technology. Digital Industries and Microsoft are harnessing
+generative Al to help industrial companies drive innovation and efficiency across the entire product lifecycle. Also in fiscal 2023, Digital
+Industries introduced several innovations based on cloud and edge technologies such as Simcenter Cloud HPC, which provides instant-on,
+rapidly scalable cloud-based high performance computing for complex simulation studies, hosted on Amazon Web Services; and Industrial
+Edge Management System for Kubernetes clusters, which addresses IT users in production and aims to save IT resources, energy, and
+costs. Major investments of Digital Industries in fiscal 2023 relate to its own factory automation, motion control and process automation
+businesses, to further automate and digitalize facilities particularly in Germany, China and Singapore.
+(in millions of €)
+Orders
+Revenue
+therein: software business
+Profit
+Profit margin
+Fiscal year
+2023
+2022
+% Change
+Actual
+Comp.
+20,620
+In fiscal 2023, markets served by Digital Industries overall grew significantly. However, after a strong start, growth momentum
+increasingly slowed over the course of the fiscal year. This was particularly evident in China. On a geographic basis, all regions contributed
+to growth, led by the regions Americas and Europe, C.I.S., Africa, Middle East. While global supply chain constraints eased, high price
+inflation led central banks to increase interest rates, which together with high energy costs impacted manufacturing industries. This
+impacted predominantly consumer- and building-related industries whereas production of investments goods still benefited from
+converting high order backlogs into current revenue. The entire manufacturing industry experienced a destocking of inventories as a
+countereffect of proactive ordering in the previous fiscal year. This was most evident in distributor channels and resulted in a significant
+decline in orders for automation equipment. Discrete industries, which are closer to consumer spending than process industries, were
+impacted earlier and more strongly than process industries, which are more project-based. The global automotive industry recovered
+throughout the year following a weak prior year, and benefited from improved supply chain conditions. Production of electric vehicles
+continued to increase. On a geographic basis, China, Japan, the U.S. and countries of the European Union saw a strong catchup of
+production mainly in the first half of the fiscal year. The machine-building industry grew strongly in the first half of fiscal 2023 but growth
+in major countries such as China, Germany, Japan and countries of the European Union came to a halt or market volume even declined in
+the second half of the fiscal year due to less favorable investment conditions caused by rising interest rates and a more cautious investment
+sentiment in consumer industries. Within the pharmaceutical and the chemicals industries, the pharmaceutical industry grew throughout
+the fiscal year, but with slower momentum towards the end of the fiscal year. In contrast, production in the chemicals industries declined
+in fiscal 2023. This was particularly evident within the countries of the European Union due mainly to high energy costs. The food and
+beverage industry grew strongly at the beginning of the fiscal year, driven by strong price increases. In the second half of the fiscal year,
+growth slowed considerably, reflecting weaker consumer spending. The market for electronics and semiconductors declined markedly at
+the beginning of fiscal 2023 but began to stabilize during the second half of the fiscal year. The decline, which was particularly evident in
+countries such as Taiwan and Korea with a focus on semiconductor production, was due among other factors to shrinking consumer
+6
+7
+demand following unusually high demand during the COVID-19 pandemic. For fiscal 2024, markets served by Digital Industries are
+expected to grow markedly slower than in fiscal 2023. While industrial software markets are expected to grow clearly, short-cycle markets
+served by Digital Industries are expected to contract slightly. Among other factors, rebalancing of supply chains, trade conflicts, effects
+from geopolitical tensions, cautious consumer spending and downsizing of inventories, mainly in distribution channels, are expected to
+weigh on market growth.
+19,946
+17,353
+15%
+7,949
+4,243
+3,856
+7%
+10%
+3,074
+2,222
+38%
+15.4%
+12.8%
+8
+11%
+Comp.
+Actual
+7%
+20,798
+3.3 Smart Infrastructure
+Smart Infrastructure offers products, systems, solutions, services and software to support the global transition from fossil to renewable
+energy sources, and the associated transition to smarter, more sustainable buildings and communities. Smart Infrastructure's versatile
+portfolio consists of buildings, electrification, and electrical products. Its buildings portfolio addresses the needs of operators, owners,
+occupants and users of buildings. It spans integrated building management systems and software; heating, ventilation and air conditioning
+controls; fire safety and security products and systems; and solutions and services such as energy performance services. With its
+electrification portfolio, Smart Infrastructure makes grids more resilient, flexible and efficient. Its offerings cover grid simulation, operation
+and control software; substation automation and protection; medium-voltage primary and secondary switchgear including fluorinated
+gas-free (F-gas-free) medium-voltage switchgear; and low-voltage switchboards and eMobility charging infrastructure. The electrical
+products portfolio addresses industrial and building applications. Its offerings include low-voltage switching, measuring and control
+equipment; low-voltage distribution systems and switchgear; and circuit breakers, contactors and switching for medium voltage.
+Smart Infrastructure's customer and end user base is diverse. It encompasses infrastructure developers, construction companies and
+contractors; owners, operators and tenants of both public and commercial buildings including hospitals, campuses, airports and data
+centers; companies in process industries such as oil and gas, pharmaceuticals and chemicals; companies in discrete manufacturing
+industries such as automotive and machine building; and utilities and power grid network operators (transmission and distribution). Smart
+Infrastructure serves its customers through a broad range of channels, including direct sales organizations, distributors and partners such
+as panel builders, original equipment manufacturers and value-added resellers and installers. To address more complex customer
+requirements, Smart Infrastructure uses its dedicated sales forces within its country organization. Furthermore, Smart Infrastructure
+provides e-commerce platforms or marketplaces where customers can directly place orders on-line, either via a web shop or via electronic
+interfaces, and sells its broad range of digital offerings and connected devices via Siemens Xcelerator. These digital sales channels and e-
+commerce platforms are becoming increasingly important and Smart Infrastructure therefore is continuously strengthening its digital
+omni-channel marketing and e-commerce platforms.
+Smart Infrastructure's principal competitors consist mainly of large multinational companies and smaller manufacturers in emerging
+countries. Its solutions and services business also competes with local players such as system integrators and facility management firms.
+Smart Infrastructure's businesses are impacted by changes in the overall economic environment to varying degrees, depending on the
+customer segment and offering. Demand for Smart Infrastructure's electrical and building products offerings is driven strongly by
+macroeconomic cycles, while demand for its systems and solutions offerings changes more slowly, with a time lag of several quarters. In
+contrast, demand for service offerings shows only limited influence from macroeconomic cycles. Overall, Smart Infrastructure has
+developed a balanced and resilient business mix with its diversified regional and vertical markets; its range of products, systems, solutions
+and services; and its participation in both long- and short-cycle markets. To further strengthen the resilience of its portfolio, Smart
+Infrastructure aims to increase the share of overall revenue that comes from services.
+Smart Infrastructure benefits from a number of major trends. These include urbanization, demographic change, decarbonization, and
+digitalization. Urbanization and demographic change drive a need for smarter and more human-centric buildings. Climate change drives
+the need for decarbonization and digitalization. This results in an increasing demand for flexible and resilient energy infrastructures
+including rapid growth in electric mobility and more sustainable buildings. Digitalization is an enabler for such changes in both buildings
+and grids, making it possible to develop smarter buildings and manage electricity distribution with a higher share of renewables. The
+markets served are experiencing shifts that present opportunities where building technologies and electrification meet.
+Smart Infrastructure's R&D activities focus on sustainable and decarbonizing offerings for buildings, utilities and industrial customers.
+Smart Infrastructure develops digital offerings for stable operation of electrical grids with a high share of renewable energy. In this regard,
+data from field devices is the basis for intelligent grid control and protection, providing grid flexibility and continuously matching energy
+supply and demand while protecting grid assets. Furthermore, it develops technologies for environmentally friendly and increasingly
+renewable-based energy systems, ranging from climate-friendly F-gas-free switchgear for medium voltage to charging solutions for e-
+mobility and grid integration of green hydrogen production. R&D efforts also strengthen Smart Infrastructure's capabilities to improve the
+sustainability, performance and attractiveness of buildings. Smart Infrastructure is expanding its digital offerings such as cloud solutions
+using field data from controllers and loT devices and the business platform Building X on the principles of openness and modularity of
+Siemens Xcelerator. These and other offerings are enhanced using Al and large language models. For electrical distribution systems and
+industrial plants, Smart Infrastructure continuously drives digitalization of its switching and control products with connectivity to the cloud,
+remote diagnostics and edge computing capability. Smart Infrastructure puts an increasing focus of R&D on the sustainability of its
+products along the lifecycle, incorporating environmentally friendly designs, materials and processes. To a large extent, its capital
+expenditures relate to the products businesses. Main investment areas are replacement of fixed assets and further digitalization of
+factories and technical equipment, with a strong focus on innovation.
+(in millions of €)
+Orders
+Revenue
+therein: service business
+Profit
+Profit margin
+Fiscal year
+2023
+% Change
+2022
+22,333
+Combined Management Report
+Digital Industries sees three trends influencing its business and providing long-term growth opportunities. Producers of investment goods
+in today's increasingly digital environment must modernize their production capacity, particularly to increase production flexibility and
+reduce time to market. This environment also spurs producers to complement their core products with vertical solutions and service
+15%
+Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries;
+these offerings include automation systems and software for factories, numerical control systems, servo motors, drives and inverters and
+integrated automation systems for machine tools and production machines. Digital Industries also provides process control systems,
+machine-to-machine communication products, sensors (for measuring pressure, temperature, level, flow rate, distance or shape) and
+radio frequency identification systems. Furthermore, Digital Industries offers production and product lifecycle management (PLM)
+software, and software for simulation and testing of mechatronic systems. These leading software offerings are supplemented by an
+electronic design automation (EDA) software portfolio; the Mendix cloud-native low-code application development platform, which allows
+customers to significantly reduce app development times through visual representation of underlying code; and digital marketplaces for
+the global electronics value chain, such as Supplyframe and Pixeom. Digital Industries also provides customers with lifecycle and data-
+driven services.
+Plus: Net interest expenses related to provisions for pensions and similar obligations
+Less: Interest adjustments (discontinued operations)
+Less: Taxes on interest adjustments (tax rate (flat) 30%)
+Plus: Defined Varian-related acquisition effects (after tax)²
+(I) Income before interest after tax
+(II) Average capital employed
+Plus: SFS Other interest expenses/income
+(1) / (II) ROCE
+2022
+8,529
+4,392
+(1,075)
+(939)
+957
+2023
+Less: Other interest expenses/income, net¹
+Net income
+(in millions of €)
+Taken together, Digital Industries' offerings enable customers to optimize entire value chains from product design and development
+through production and post-sale services. With its advanced software solutions in particular, Digital Industries supports customers in their
+evolution towards the "Digital Enterprise," resulting in increased flexibility and efficiency of production processes and reduced time to
+market for new products. The most important customer markets include the automotive industry, the machine-building industry, the
+pharmaceutical and chemicals industry, the food and beverage industry and the electronics and semiconductor industry. Digital Industries
+serves its customers through a common regional sales organization spanning all its businesses, using various sales channels depending
+on the type of customer and industry and also enhancing customer choice across all channels. Changes in customer demand, especially
+for standard products, are driven strongly by macroeconomic cycles, and can lead to significant short-term fluctuation in Digital Industries'
+profitability. Volume from large contracts in the software business, particularly for EDA, may also result in strong fluctuations in quarterly
+volume and profitability. In fiscal 2023, Digital Industries continued to transition parts of its software business, particularly PLM, from
+largely upfront revenue recognition towards Software as a Service (SaaS), which yields more predictable recurring revenue and offers
+growth opportunities by opening access to new customers, especially small and medium-sized companies seeking to reduce costs
+associated with owning complex IT infrastructure. The transition held back revenue growth rates and profit margin development in the
+software business in fiscal 2023 and Digital Industries expects continued impacts until completion of the transition. Competition with
+Digital Industries' business activities comes primarily from multinational corporations that offer a relatively broad portfolio and from
+smaller companies active only in certain geographic or product markets.
+Plus: Amortization of intangible assets acquired in business combinations - attributable to shareholders of Siemens AG
+Less: Taxes on adjustment
+773
+882
+(193)
+(220)
+(I) Adjusted Net income attributable to shareholders of Siemens AG
+4,384
+(II) Weighted average shares outstanding
+792
+10.77
+801
+5.47
+(I) (II) EPS pre PPA
+Calculation of ROCE
+Fiscal year
+971
+97
+8,529
+5
+Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt
+Plus: Provisions for pensions and similar obligations
+Less: SFS debt
+Plus: Adjustments from assets classified as held for disposal and liabilities associated with assets classified as held for disposal
+Less: Adjustment for deferred taxes on net accumulated actuarial gains/losses on provisions for pensions and similar obligations
+Capital employed (continuing and discontinued operations)
+5
+Combined Management Report
+3. Segment information
+3.1 Overall economic conditions
+Overall, calendar 2023 was characterized by many headwinds for the global economy. Global economic development continued to slowly
+recover from the negative shocks of the previous years: the coronavirus pandemic (COVID-19) with its disruptions on global demand and
+supply chains; war in Ukraine and the following commodity price explosions, especially for European energy; spiraling inflation and severe
+financial tightening which caused some turbulence in the banking sector and financial markets. After calendar 2022, in which global gross
+domestic product (GDP) increased by 3.1%, calendar 2023 is expected to show global GDP increasing by 2.6%, which shows a remarkable
+resilience of the global economy, given the number of big negative shocks of the previous year.
+In the post-pandemic world, consumption patterns of households continued to normalize. In particular, the shift to goods from services
+triggered by COVID-19 ended and then reversed, with a strong rebound of the service sector including tourism, and a normalization of
+goods demand. In addition, in light of much higher interest rates many firms started to reduce their inventory levels, which they had
+previously elevated as a precautionary measure to ensure production and delivery during periods of supply chain bottlenecks. Accordingly,
+both global goods demand and trade were significantly weaker in calendar 2023.
+The U.S. economy was a positive surprise. Although monetary policy was substantially tightened and the main policy interest rate was
+increased to 5.5%, consumption and investment were strong and GDP is expected to expand by 2.5% in calendar 2023. In particular the
+labor market was robust and unemployment remained at historic lows. Despite the strong economy, inflation and core inflation rates
+declined substantially. By end of calendar 2023, consumer price inflation is expected to be approximately 3%, after it reached nearly 6.5%
+at the end of calendar 2022. Receding global commodity and energy prices and the dissolvement of supply chain bottlenecks both helped
+ease inflation while tighter monetary policy had the desired effect of anchoring inflation expectations. This helped the U.S. avoid a price-
+wage-price spiral which could have led to structurally higher inflation rates.
+While the U.S. showed stronger economic growth than expected, the European Union (E.U.) experienced the difficulties that were widely
+expected. The drastic increase of energy prices in calendar 2022, a result of the war in Ukraine, had a severe negative impact, especially
+on energy-intensive industries. Strong increases in inflation rates led the European Central bank to increase the main policy interest rate
+to 4.5% which weighed on fixed investment, especially in the real estate sector. Moreover, the global manufacturing and trade slowdown
+mentioned above weighed on the E.U., due in particular to the high concentration of manufacturing and export industries in Germany,
+the region's largest economy. GDP growth in calendar 2023 is expected to be 0.4% in the E.U. and -0.4% in Germany. Only the service
+sector, in particular tourism, supported the overall E.U. economy.
+The partly estimated figures presented here for GDP are based on an S&P Global report dated October 15, 2023.
+51
+3.2 Digital Industries
+Less: Current interest-bearing debt securities
+Less: Cash and cash equivalents
+These trends were primary contributors for the significant slowdown of the Chinese economy during calendar 2023, after it started very
+dynamically in the first quarter of calendar 2023 following lifting of severe COVID-19 lockdowns. Another main contributor for the
+slowdown was the intensification of the country's real estate crisis. Hence, China's GDP is expected to grow by only 5% in calendar 2023,
+which is regarded as low because under multiple lockdowns in calendar 2022, China delivered GDP growth of only 3% and some catching-
+up in 2023 was expected.
+Less: Goodwill and other intangible assets resulting from purchase price allocation related to the Varian acquisition
+Plus: Long-term debt
+Plus: Short-term debt and current maturities of long-term debt
+251
+365
+4,819
+47,002
+47,996
+18.6%
+8,765
+(27)
+1 Item Other interest expenses/income, net primarily consists of interest relating to corporate debt, and related hedging activities, as well as interest income on corporate assets.
+2 Effects resulting from purchase price allocation for Varian Medical Systems, Inc. (Varian) which are comprised of amortization of tangible and intangible assets, inventory step-ups, deferred revenue adjustments and
+related income taxes.
+For purposes of calculating ROCE in interim periods, Income before interest after tax is annualized. Average capital employed is determined
+using the average of the respective balances as of the quarterly reporting dates for the periods under review.
+Calculation of capital employed
+Total equity
+10.0%
+6
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Sqills IT Services SAS, Paris / France
+100
+Siemens Osakeyhtiö, Espoo / Finland
+Siemens Mobility Oy, Espoo / Finland
+100
+Varian Medical Systems Finland OY, Helsinki / Finland
+VIBECO - Virtual Buildings Ecosystem Oy, Espoo / Finland
+Acuson France SAS, Courbevoie / France
+BLOCK IMAGING SAS, Paris / France
+Innomotics SAS, Saint-Priest / France
+Padam Mobility SAS, Paris / France
+PETNET Solutions SAS, Lisses / France
+Siemens Electronic Design Automation SARL, Meudon La Forêt / France
+Siemens Financial Services SAS, Courbevoie / France
+Siemens France Holding SAS, Courbevoie / France
+Siemens Healthcare SAS, Courbevoie / France
+Siemens Industry Software SAS, Châtillon / France
+Siemens Lease Services SAS, Courbevoie / France
+Siemens Logistics SAS, Saint-Denis / France
+100
+Siemens Mobility SAS, Châtillon / France
+Supplyframe Europe SAS, Grenoble / France
+Varian Medical Systems France SARL, Le Plessis-Robinson / France
+Wattsense SAS, Dardilly / France
+Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
+SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME, Marousi / Greece
+SIEMENS MOBILITY RAIL AND ROAD TRANSPORTATION SOLUTIONS SINGLE-MEMBER SOCIETE ANONYME, Athens / Greece
+evosoft Hungary Szamitastechnikai Kft., Budapest / Hungary
+Siemens Healthcare Kft., Budapest / Hungary
+Siemens Industry Software Kft., Budapest / Hungary
+Siemens Mobility Kft., Budapest / Hungary
+Siemens Zrt., Budapest Hungary
+Varian Medical Systems Hungary Kft., Budapest / Hungary
+Consolidated Financial Statements
+Siemens SAS, Courbevoie / France
+100
+Acuson Italy S.r.l., Milan/Italy
+100
+Innomotics S.r.I., Milan Italy
+Siemens Healthcare S.r.I., Milan / Italy
+Siemens Industry Software S.r.l., Milan / Italy
+Siemens Logistics S.r.I., Milan / Italy
+Siemens Mobility S.r.I., Milan / Italy
+Siemens S.p.A., Milan / Italy
+Varian Medical Systems Italia S.p.A., Segrate / Italy
+Innomotics Limited Liability Partnership, Almaty / Kazakhstan
+Siemens Healthcare Limited Liability Partnership, Almaty / Kazakhstan
+Siemens TOO, Almaty / Kazakhstan
+VMS Kenya, Ltd, Nairobi / Kenya
+Siemens Industrial Business Co. For Electrical, Electronic and Mechanical Contracting WLL, Kuwait City / Kuwait
+Siemens Large Drives Company for Repairing & Maintenance of Light & Heavy Equipment, W.L.L, Ahmadi / Kuwait
+Crabtree (Pty) Ltd, Maseru / Lesotho
+Atruvi Invest Management S.à.r.l, Munsbach / Luxembourg
+UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.l., Esch-sur-Alzette / Luxembourg
+FTD Europe Ltd, Sliema / Malta
+CTSI (Mauritius) Ltd., Ebene / Mauritius
+Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
+Siemens Healthcare SARL, Casablanca / Morocco
+Siemens Industry Software SARL, Sala Al Jadida / Morocco
+Siemens S.A., Casablanca / Morocco
+Castor III B.V., The Hague / Netherlands
+Chronos B.V., Enschede / Netherlands
+Mendix Technology B.V., Rotterdam / Netherlands
+Pollux III B.V., The Hague / Netherlands
+Siemens Finance B.V., The Hague / Netherlands
+Siemens Electronic Design Automation B.V., Eindhoven / Netherlands
+Siemens Industry Software Oy, Espoo / Finland
+TFM International S.A. i.L., Luxembourg Luxembourg
+Siemens Mobility Operations Ltd., Rosh Ha'ayin / Israel
+Siemens Mobility Ltd., Rosh Ha'ayin / Israel
+Siemens Ltd., Rosh Ha'ayin / Israel
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+10013
+Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
+Mentor Graphics Development Services Limited, Shannon, County Clare / Ireland
+Siemens Electronic Design Automation Limited, Shannon, County Clare / Ireland
+Siemens Healthcare Diagnostics Manufacturing Limited, Swords, County Dublin / Ireland
+Siemens Healthcare Medical Solutions Limited, Swords, County Dublin / Ireland
+Siemens Industry Software Limited, Shannon, County Clare / Ireland
+Siemens Limited, Dublin Ireland
+100
+1007
+100
+100
+100
+100
+46
+Mckit Systems Ltd., Giv'at Shmuel / Israel
+Siemens Concentrated Solar Power Ltd., Rosh Ha'ayin / Israel
+Siemens Electronic Design Automation Ltd, Herzilya Pituah / Israel
+Siemens HealthCare Ltd., Rosh Ha'ayin / Israel
+Siemens Industry Operations Ltd., Rosh Ha'ayin / Israel
+Siemens Industry Software Ltd., Airport City / Israel
+100
+Siemens Healthcare Oy, Espoo / Finland
+100
+Siemens Industry Software (A Limited Liability Company - Private Free Zone), New Cairo / Egypt
+Siemens Industry Software GmbH, Linz / Austria
+Siemens Konzernbeteiligungen GmbH, Vienna / Austria
+Consolidated Financial Statements
+1007
+1009
+1007
+1009
+1007
+1009
+1007
+100
+10010
+10010
+Siemens Healthcare Diagnostics GmbH, Vienna / Austria
+10013
+100
+10013
+100
+10010
+100
+100
+100
+51
+100
+100
+100
+100
+1007
+100
+Siemens Aktiengesellschaft Österreich, Vienna / Austria
+Siemens Advanta Solutions GmbH, Vienna / Austria
+ITH icoserve technology for healthcare GmbH, Innsbruck / Austria
+SIEMENS HEALTHCARE LIMITED LIABILITY COMPANY, Kiev / Ukraine
+Acuson Middle East FZ LLC, Dubai United Arab Emirates
+Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
+Siemens Healthineers Holding III B.V., The Hague / Netherlands
+Siemens Healthineers Holding IV B.V., The Hague / Netherlands
+Siemens Healthineers Holding V B.V., The Hague / Netherlands
+Siemens Healthineers Nederland B.V., The Hague / Netherlands
+Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
+100% foreign owned subsidiary "Siemens Ukraine", Kiev / Ukraine
+V.O.S.S. Varinak Onkoloji Sistemleri Satis Ve Servis Anonim Sirketi, Istanbul / Türkiye
+Sqills Turkey Bilgi Teknolojileri Ticaret Limited Sirketi, Istanbul / Türkiye
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Türkiye
+Siemensstadt Management GmbH, Grünwald
+Siemensstadt SPE GmbH & Co. KG, Grünwald
+Siemensstadt SPE Verwaltungs GmbH, Grünwald
+Siemensstadt SWHH GmbH & Co. KG, Grünwald
+Siemensstadt SWHH Verwaltungs GmbH, Grünwald
+Siemensstadt VG GmbH & Co. KG, Grünwald
+Siemensstadt VG Verwaltungs GmbH, Grünwald
+SILLIT Grundstücks-Verwaltungsgesellschaft mbH, Munich
+SIMAR Ost Grundstücks-GmbH, Grünwald
+SYKATEC Systeme, Komponenten, Anwendungstechnologie GmbH, Erlangen
+Varian Medical Systems Deutschland GmbH & Co. KG, Darmstadt
+Varian Medical Systems Haan GmbH, Haan
+Varian Medical Systems München GmbH, Munich
+Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
+VMS Deutschland Holdings GmbH, Darmstadt
+VVK Versicherungsvermittlungs- und Verkehrskontor GmbH, Munich
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+Zeleni Holding GmbH, Kemnath
+Zeleni Real Estate GmbH & Co. KG, Kemnath
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (297 companies)
+ESTEL Rail Automation SPA, Algiers / Algeria
+Siemens Healthineers Algeria E.U.R.L., Hydra / Algeria
+Siemens Healthineers Oncology Services Algeria E.U.R.L., Hydra / Algeria
+Siemens Spa, Algiers / Algeria
+Siemens Industry Software Closed Joint-Stock Company, Yerevan / Armenia
+Acuson Österreich GmbH, Vienna / Austria
+ETM professional control GmbH, Eisenstadt / Austria
+Innomotics GmbH, Vienna / Austria
+100
+Siemens Mobility Egypt LLC, Cairo / Egypt
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+45
+Siemens Healthcare, s.r.o., Prague / Czech Republic
+Siemens Industry Software, s.r.o., Prague / Czech Republic
+Siemens Large Drives, s.r.o., Drasov / Czech Republic
+Siemens Mobility, s.r.o., Prague / Czech Republic
+Siemens, s.r.o., Prague / Czech Republic
+Innomotics A/S, Ballerup / Denmark
+Siemens A/S, Ballerup / Denmark
+Siemens Healthcare A/S, Ballerup / Denmark
+Siemens Industry Software A/S, Ballerup / Denmark
+Siemens Mobility A/S, Ballerup / Denmark
+Siemens Healthcare Logistics LLC, Cairo / Egypt
+Siemens Healthcare S.A.E., Cairo / Egypt
+Siemens Industrial LLC, New Cairo / Egypt
+OEZ s.r.o., Letohrad / Czech Republic
+51
+100
+100
+100
+100
+100
+Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
+100
+Siemens Mobility Austria GmbH, Vienna / Austria
+Siemens Personaldienstleistungen GmbH, Vienna / Austria
+Steiermärkische Medizinarchiv GesmbH, Graz / Austria
+Varian Medical Systems Gesellschaft mbH, Brunn am Gebirge / Austria
+VVK Versicherungs-Vermittlungs- und Verkehrs-Kontor GmbH, Vienna / Austria
+Siemens W.L.L., Manama Bahrain
+Innomotics N.V., Beersel / Belgium
+Siemens Healthcare NV, Groot-Bijgaarden / Belgium
+Siemens Industry Software NV, Leuven / Belgium
+Siemens Mobility S.A. / N.V, Beersel / Belgium
+Siemens S.A./N.V., Beersel / Belgium
+Varian Medical Systems Belgium NV, Groot-Bijgaarden / Belgium
+Siemens d.o.o. Sarajevo - U Likvidaciji, Sarajevo / Bosnia and Herzegovina
+Siemens Medicina d.o.o., Sarajevo / Bosnia and Herzegovina
+Siemens EOOD, Sofia / Bulgaria
+Siemens Healthcare EOOD, Sofia / Bulgaria
+Siemens Mobility EOOD, Sofia / Bulgaria
+Varinak Bulgaria EOOD, Sofia / Bulgaria
+Siemens d.d., Zagreb / Croatia
+Siemens Healthcare d.o.o., Zagreb / Croatia
+100
+100
+100
+52
+69
+Siemens International Holding B.V., The Hague / Netherlands
+100
+Siemens Mobility Holding B.V., The Hague / Netherlands
+100
+1007
+100
+100
+60
+60
+100
+100
+100
+100
+100
+100
+100
+100
+48
+Crabtree South Africa Pty. Limited, Midrand / South Africa
+Innomotics (Pty) Ltd., Midrand / South Africa
+KACO NEW ENERGY AFRICA (PTY) LTD, Midrand / South Africa
+Siemens Employee Share Ownership Trust, Johannesburg / South Africa
+Siemens Healthcare Employee Share Ownership Trust, Midrand / South Africa
+Siemens Healthcare Proprietary Limited, Halfway House / South Africa
+SIEMENS INDUSTRY SOFTWARE SA (PTY) LTD, Pretoria / South Africa
+Siemens Large Drives Employee Ownership Trust, Johannesburg / South Africa
+Siemens Mobility (Pty) Ltd, Randburg / South Africa
+100
+100
+100
+_3
+_3
+Consolidated Financial Statements
+90
+100
+100
+100
+100
+100
+100
+100
+100
+55
+55
+100
+100
+100
+100
+100
+100
+100
+100
+PSE Software and Consulting L.L.C., Abu Dhabi / United Arab Emirates
+Samateq FZ LLC, UAE, Abu Dhabi / United Arab Emirates
+100
+100
+100
+100
+51
+51
+51
+51
+51
+100
+75
+100
+100
+_3
+Siemens Proprietary Limited, Midrand / South Africa
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens S.A., Tunis / Tunisia
+Innomotics Motorlar Ve Yüksek Güclü Sürücüler Anonim Sirketi, Istanbul / Türkiye
+Siemens AG - Siemens Sanayi ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Türkiye
+Siemens Finansal Kiralama A.S., Istanbul / Türkiye
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Türkiye
+100
+100
+100
+100
+S'Mobility Employee Stock Ownership Trust, Johannesburg / South Africa
+Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
+Innomotics, S.L., Madrid / Spain
+Innovation Strategies, S.L., Palma / Spain
+Siemens Campus Madrid, S.L., Madrid / Spain
+Siemens Financial Services S.A.U, Madrid / Spain
+SIEMENS HEALTHCARE, S.L.U., Madrid / Spain
+Siemens Industry Software S.L., Tres Cantos / Spain
+Siemens Logistics S.L. Unipersonal, Madrid / Spain
+SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
+Siemens Rail Automation S.A.U., Tres Cantos / Spain
+Siemens S.A., Madrid / Spain
+Telecomunicación, Electrónica y Conmutación S.A., Madrid / Spain
+Varian Medical Systems Iberica SL, Madrid / Spain
+Innomotics AB, Solna / Sweden
+Siemens AB, Solna / Sweden
+Siemens Electronic Design Automation AB, Solna / Sweden
+Siemens Financial Services AB, Solna / Sweden
+Siemens Healthcare AB, Solna / Sweden
+Siemens Industry Software AB, Solna / Sweden
+Siemens Mobility AB, Solna / Sweden
+Siemens Healthineers International AG, Steinhausen / Switzerland
+Siemens Industry Software GmbH, Zurich / Switzerland
+Siemens Mobility AG, Wallisellen / Switzerland
+Siemens Schweiz AG, Zurich / Switzerland
+Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil / Switzerland
+Siemens Tanzania Ltd. i.L., Dar es Salaam / Tanzania
+Mentor Graphics Tunisia SARL, Tunis / Tunisia
+Siemens Mobility S.A.R.L., Tunis / Tunisia
+75
+85
+_3
+100
+100
+100
+Siemens Mobility B.V., Zoetermeer / Netherlands
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+492
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+492
+100
+Siemens Nederland N.V., The Hague / Netherlands
+Sqills Products B.V., Enschede / Netherlands
+TASS International B.V., Helmond / Netherlands
+Varian Medical Systems Nederland B.V., Houten / Netherlands
+Innomotics AS, Oslo / Norway
+Siemens AS, Oslo / Norway
+Siemens Healthcare AS, Oslo / Norway
+Consolidated Financial Statements
+100
+100
+100
+100
+1007
+100
+100
+100
+1007
+100
+1007
+100
+Siemens Mobility Ulasim Sistemleri Anonim Sirketi, Istanbul / Türkiye
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens Ltd., Riyadh / Saudi Arabia
+Siemens Mobility Saudi Ltd, Khobar / Saudi Arabia
+Siemens Regional Headquarters Ltd., Jeddah / Saudi Arabia
+Varian Medical Systems Arabia Commercial Limited, Riyadh / Saudi Arabia
+Innomotics d.o.o. Beograd, Belgrade / Serbia
+Siemens d.o.o. Beograd, Belgrade / Serbia
+Siemens Healthcare d.o.o. Beograd, Belgrade / Serbia
+Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
+Supplyframe doo Beograd-Stari grad, Belgrade / Serbia
+Acuson Slovakia s. r. o., Bratislava / Slovakia
+Innomotics, s.r.o., Bratislava / Slovakia
+OEZ Slovakia, spol. s r.o., Bratislava / Slovakia
+Rolling Stock Services Bratislava s.r.o., Bratislava / Slovakia
+SAT Systémy automatizacnej techniky spol. s.r.o., Bratislava / Slovakia
+Siemens Large Drives Ltd., Khobar / Saudi Arabia
+Siemens Healthcare s.r.o., Bratislava / Slovakia
+Siemens s.r.o., Bratislava / Slovakia
+SIPRIN s.r.o., Bratislava Slovakia
+Siemens Healthcare d.o.o., Ljubljana / Slovenia
+Siemens Mobility d.o.o., Ljubljana / Slovenia
+Siemens Trgovsko in storitveno podjetje, d.o.o., Ljubljana / Slovenia
+Consolidated Financial Statements
+100
+51
+100
+100
+75
+1007
+100
+Siemens Mobility, s.r.o., Bratislava / Slovakia
+Siemens Healthcare Limited, Riyadh / Saudi Arabia
+Arabia Electric Ltd. (Equipment), Jeddah / Saudi Arabia
+Varian Medical Systems (RUS) Limited Liability Company, Moscow / Russian Federation
+47
+Siemens Mobility AS, Oslo / Norway
+Siemens Industrial LLC, Muscat / Oman
+Siemens Healthcare (Private) Limited, Lahore / Pakistan
+SIEMENS INDUSTRY SOFTWARE (PRIVATE) LIMITED, Lahore / Pakistan
+Siemens Pakistan Engineering Co. Ltd., Karachi / Pakistan
+Innomotics Sp. z o.o., Katowice / Poland
+Siemens Digital Logistics Sp. z o.o., Wroclaw / Poland
+Siemens Finance Sp. z o.o., Warsaw / Poland
+Siemens Healthcare Sp. z o.o., Warsaw / Poland
+Siemens Industry Software Sp. z o.o., Warsaw / Poland
+Siemens Mobility Sp. z o.o., Warsaw / Poland
+Siemens Sp. z o.o., Warsaw / Poland
+Varian Medical Systems Poland Sp. z o.o., Warsaw / Poland
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
+Siemens Logistics, Unipessoal Lda, Lisbon / Portugal
+SIEMENS MOBILITY, UNIPESSOAL LDA, Amadora / Portugal
+Siemens S.A., Amadora / Portugal
+Siemens Large Drives W.L.L., Doha / Qatar
+Siemens W.L.L., Doha Qatar
+INNOMOTICS S.R.L., Sibiu / Romania
+Siemens Healthcare S.R.L., Bucharest / Romania
+Siemens Industry Software S.R.L., Brasov / Romania
+Siemens Mobility S.R.L., Bucharest / Romania
+Siemens S.R.L., Bucharest Romania
+SIMEA SIBIU S.R.L., Sibiu / Romania
+Varinak Europe SRL (Romania), Pantelimon / Romania
+000 Siemens, Moscow / Russian Federation
+Siemens Healthcare Limited Liability Company, Moscow / Russian Federation
+Siemens Mobility LLC, Moscow / Russian Federation
+Smart Industry Software, 000, Moscow / Russian Federation
+Upsilon 1 LLC, St. Petersburg / Russian Federation
+100
+SD (Middle East) LLC, Dubai / United Arab Emirates
+100
+10012
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
+Siemens Digital Technology (Shenzhen) Co., Ltd., Shenzhen / China
+Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
+Siemens Commercial Factoring Ltd., Shanghai / China
+Siemens Building Technologies (Tianjin) Ltd., Tianjin / China
+100
+1007
+100
+100
+100
+100
+1007
+100
+100
+Siemens Electrical Drives (Shanghai) Ltd., Shanghai / China
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+100
+100
+Siemens Electrical Drives Ltd., Tianjin / China
+75
+60
+Siemens Intelligent Signalling Technologies Co. Ltd., Foshan, Foshan / China
+100
+Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
+100
+Siemens Industry Software (Beijing) Co., Ltd., Beijing / China
+100
+Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
+100
+Siemens Healthineers Ltd., Shanghai / China
+100
+100
+Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
+70
+Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
+Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
+100
+100
+Siemens Financial Services Ltd., Beijing / China
+Siemens Finance and Leasing Ltd., Beijing / China
+100
+100
+Siemens Electronic Design Automation (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone / China
+Siemens Factory Automation Engineering Ltd., Beijing / China
+85
+100
+100
+100
+100
+100
+Consolidated Financial Statements
+Scion Medical Technologies (Shanghai) Ltd., Shanghai / China
+Innomotics Mechanical Drives (Tianjin) Co., Ltd., Tianjin / China
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+63
+501
+100
+51
+Vendigital, Inc., Wilmington, DE / United States
+Varian Medical Systems, Inc., Wilmington, DE / United States
+Varian Medical Systems Pacific, Inc., Wilmington, DE / United States
+Varian Medical Systems Africa Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems India Private Limited, Wilmington, DE / United States
+Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
+Varian Medical Systems Latin America, Ltd., Wilmington, DE / United States
+100
+100
+100
+100
+Innomotics Large Drives (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone / China
+Hangzhou Alicon Pharm Sci & Tec Co., Ltd., Hangzhou / China
+Green Matrix (Suzhou) Network Technology Co., Ltd., Suzhou / China
+Beijing Siemens Cerberus Electronics Ltd., Beijing / China
+Acuson (Shanghai) Co., Ltd., Shanghai / China
+Siemens Industrial Limited, Dhaka / Bangladesh
+Siemens Healthcare Ltd., Dhaka / Bangladesh
+Varian Medical Systems Australasia Pty Ltd., Belrose / Australia
+SIEMENS RAIL AUTOMATION PTY. LTD., Bayswater / Australia
+Siemens Mobility Pty Ltd, Melbourne / Australia
+Siemens Ltd., Bayswater / Australia
+Siemens Healthcare Pty. Ltd., Hawthorn East / Australia
+Siemens Industry Software Pty Ltd, Bayswater / Australia
+Project Ventures Rail Investments (SMWSA) Pty Ltd, Bayswater / Australia
+Innomotics Pty Ltd, Bayswater / Australia
+Exemplar Health (NBH) Holdings 2 Pty Limited, Bayswater / Australia
+Exemplar Health (NBH) Trust 2, Bayswater / Australia
+Exemplar Health (NBH) 2 Pty Limited, Bayswater / Australia
+Brightly Software Holdings Pty. Ltd., Sydney / Australia
+Brightly Software Australia Pty Ltd, Sydney / Australia
+Australia Hospital Holding Pty Limited, Bayswater / Australia
+Asia, Australia (157 companies)
+Siemens Rail Automation, C.A., Caracas / Venezuela
+Siemens S.A., Montevideo / Uruguay
+52
+100
+100
+100
+100
+100
+100
+Siemens International Trading Ltd., Shanghai, Shanghai / China
+Varian BioSynergy, Inc., Wilmington, DE / United States
+100
+85
+SIEMENS HEALTHINEERS INDIA MANUFACTURING PRIVATE LIMITED, Mumbai / India
+Siemens Industry Software (India) Private Limited, New Delhi / India
+Siemens Healthineers India LLP, Bangalore / India
+Siemens Healthcare Private Limited, Mumbai / India
+Siemens Financial Services Private Limited, Mumbai / India
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+99
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+SIEMENS LARGE DRIVES INDIA PRIVATE LIMITED, Mumbai / India
+Siemens Logistics India Private Limited, Navi Mumbai / India
+54
+100
+Siemens Electronic Design Automation Japan K.K., Tokyo / Japan
+Nihon Block Imaging KK, Tokyo / Japan
+100
+100
+1007
+96
+100
+100
+100
+100
+100
+Siemens Limited, Mumbai / India
+100
+100
+51
+100
+Innomotics G.K., Tokyo / Japan
+Acuson Japan K.K., Tokyo / Japan
+Acrorad Co., Ltd., Okinawa / Japan
+PT Siemens Mobility Indonesia, Jakarta / Indonesia
+PT Siemens Healthineers Indonesia, Jakarta / Indonesia
+PT Innomotics Motors and Solutions, Jakarta / Indonesia
+P.T. Siemens Indonesia, Jakarta / Indonesia
+Varian Medical Systems International (India) Private Limited, Pune / India
+Siemens Technology and Services Private Limited, Navi Mumbai / India
+Siemens Rail Automation Pvt. Ltd., Navi Mumbai / India
+100
+100
+100
+100
+Scion Medical Limited, Hong Kong / Hong Kong
+Varian Medical Systems Trading (Beijing) Co., Ltd., Beijing / China
+Varian Medical Systems China Co., Ltd., Beijing / China
+Suzhou Ling Dong Zhen GE Network Technology Co., Ltd., Suzhou / China
+Siemens X-Ray Vacuum Technology Ltd., Wuxi, Wuxi / China
+Siemens Wiring Accessories Shandong Ltd., Zibo / China
+Siemens Technology Development Co., Ltd. of Beijing, Beijing / China
+Siemens Switchgear Ltd., Shanghai, Shanghai / China
+Siemens Standard Motors Ltd., Yizheng / China
+Siemens Signalling Co., Ltd., Xi'an / China
+Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
+Siemens Shanghai Medical Equipment Ltd., Shanghai / China
+Siemens Sensors & Communication Ltd., Dalian / China
+Siemens Healthcare Limited, Hong Kong / Hong Kong
+Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
+Siemens Numerical Control Ltd., Nanjing, Nanjing / China
+Siemens Power Automation Ltd., Nanjing / China
+53
+100
+100
+51
+85
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
+Siemens Mobility Electrification Equipment (Shanghai) Co., Ltd., Shanghai / China
+Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
+Siemens Mobility Rail Equipment (Tianjin) Ltd., Tianjin / China
+100
+51
+Siemens Manufacturing and Engineering Centre Ltd., Shanghai / China
+Siemens Mechatronics Technology JiangSu Ltd., Yizheng / China
+100
+Siemens Ltd., China, Beijing / China
+100
+Siemens Logistics Automation Systems (Beijing) Co., Ltd, Beijing / China
+Consolidated Financial Statements
+Siemens Industry Software Limited, Hong Kong / Hong Kong
+Siemens Limited, Hong Kong / Hong Kong
+Siemens Logistics Limited, Hong Kong / Hong Kong
+_3
+100
+100
+90
+55
+100
+70
+100
+100
+100
+100
+80
+100
+Siemens Factoring Private Limited, Navi Mumbai / India
+SIEMENS EDA (SALES & SERVICES) PRIVATE LIMITED, New Delhi / India
+SIEMENS EDA (INDIA) PRIVATE LIMITED, New Delhi / India
+PETNET Radiopharmaceutical Solutions Pvt. Ltd., Mumbai / India
+Enlighted Energy Systems Pvt Ltd, Chennai / India
+Cancer Treatment Services Hyderabad Private Limited, Hyderabad / India
+C&S Electric Limited, New Delhi / India
+Bytemark Technology Solutions India Pvt Ltd, Bangalore / India
+Bytemark India LLP, Bangalore / India
+Brightly Software India Private Limited, Bangalore / India
+Artmed Healthcare Private Limited, Hyderabad / India
+American Institute of Pathology and Laboratory Sciences Private Limited, Hyderabad / India
+AIS Design Automation Private Limited, Bangalore / India
+Vertice Investment Limited, Hong Kong / Hong Kong
+Supply Frame (Hong Kong) Limited, Hong Kong / Hong Kong
+Siemens Mobility Limited, Hong Kong / Hong Kong
+Siemens Large Drives Equipment (Tianjin) Ltd., Tianjin / China
+Siemens Capital Middle East Ltd, Abu Dhabi / United Arab Emirates
+Supplyframe, Inc., Glendale, CA / United States
+Siemens USA Holdings, Inc., Wilmington, DE / United States
+100
+EPOCAL INC., Toronto / Canada
+Bytemark Canada Inc., Oakville / Canada
+Brightly Software Canada, Inc., Oakville / Canada
+Dade Behring Hong Kong Holdings Corporation, Tortola / British Virgin Islands
+Varian Medical Systems Brasil Ltda., Jundiaí / Brazil
+Siemens Participações Ltda., São Paulo/ Brazil
+Siemens Mobility Soluções de Mobilidade Ltda., São Paulo / Brazil
+Siemens Large Drives Máquinas e Soluções Ltda, Jundiaí / Brazil
+100
+100
+100
+100
+100
+100
+100
+Siemens Healthcare Diagnósticos Ltda., São Paulo / Brazil
+Siemens Industry Software Ltda., São Caetano do Sul / Brazil
+Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
+Acuson Brasil Ltda., Joinville / Brazil
+Siemens S.A., Buenos Aires Argentina
+Siemens Mobility S.A., Olivos / Argentina
+Siemens IT Services S.A., Buenos Aires / Argentina
+Siemens Healthcare S.A., Buenos Aires / Argentina
+Americas (130 companies)
+Vendigital Limited, London / United Kingdom
+Vendigital Holdings Ltd, Swindon, Wiltshire / United Kingdom
+Varian Medical Systems UK Limited, Crawley, West Sussex / United Kingdom
+Varian Medical Systems UK Holdings Limited, Crawley, West Sussex / United Kingdom
+Siemens Rail Automation Limited, London / United Kingdom
+100
+Siemens Process Systems Engineering Limited, Farnborough, Hampshire / United Kingdom
+100
+1007
+Siemens Mobility, S.R.L., Santo Domingo / Dominican Republic
+Siemens Healthcare Diagnostics S.A., San José / Costa Rica
+Siemens S.A.S., Tenjo / Colombia
+Siemens Healthcare S.A.S., Tenjo / Colombia
+J. Restrepo Equiphos S.A.S, Bogotá / Colombia
+Siemens S.A., Santiago de Chile / Chile
+Innomotics S.A.S., Tenjo / Colombia
+Siemens Large Drives S.A., Santiago de Chile / Chile
+Siemens Mobility SpA, Santiago de Chile / Chile
+Siemens Healthcare Equipos Médicos Sociedad por Acciones, Santiago de Chile / Chile
+Varian Medical Systems Canada, Inc., Ottawa / Canada
+SIEMENS MOBILITY LIMITED, Oakville / Canada
+Siemens Industry Software ULC, Vancouver / Canada
+Siemens Healthcare Limited, Oakville / Canada
+Siemens Financial Ltd., Oakville / Canada
+100
+Siemens Electronic Design Automation ULC, Vancouver / Canada
+Innomotics Inc., Oakville / Canada
+50
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens Canada Limited, Oakville / Canada
+Siemens plc, Farnborough, Hampshire / United Kingdom
+100
+Siemens Pension Funding Limited, Farnborough, Hampshire / United Kingdom
+492
+100
+492
+492
+492
+100
+Innomotics Motors and Large Drives Limited, Farnborough, Hampshire / United Kingdom
+Project Ventures Rail Investments | Limited, Farnborough, Hampshire / United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
+Senseye Limited, Farnborough, Hampshire / United Kingdom
+Henley Topco Limited, Swindon, Wiltshire / United Kingdom
+Henley Bidco Limited, Swindon, Wiltshire / United Kingdom
+Data Sheet Archive Limited, Farnborough, Hampshire / United Kingdom
+Electrium Sales Limited, Farnborough, Hampshire / United Kingdom
+Flomerics Group Limited, Farnborough, Hampshire / United Kingdom
+Acuson United Kingdom Ltd., Camberley, Surrey / United Kingdom
+Assetic UK Limited, Farnborough, Hampshire / United Kingdom
+Brightly Software Limited, Farnborough, Hampshire / United Kingdom
+ByteToken, Ltd, Edinburgh / United Kingdom
+Siemens Healthcare FZ LLC, Dubai / United Arab Emirates
+Siemens Healthcare L.L.C., Dubai / United Arab Emirates
+Siemens Industrial LLC, Masdar City / United Arab Emirates
+Siemens Large Drives LLC, Abu Dhabi / United Arab Emirates
+Siemens Middle East Limited, Masdar City / United Arab Emirates
+SIEMENS MOBILITY LLC, Dubai / United Arab Emirates
+Consolidated Financial Statements
+1007
+49
+492
+100
+492
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens Pension Funding (General) Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens Mobility Limited, London / United Kingdom
+100
+Siemens Industry Software Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens Industry Software Computational Dynamics Limited, Farnborough, Hampshire / United Kingdom
+100
+Siemens Holdings plc, Farnborough, Hampshire / United Kingdom
+100
+Siemens Healthcare Limited, Camberley, Surrey / United Kingdom
+100
+Siemens Healthcare Diagnostics Products Ltd, Camberley, Surrey / United Kingdom
+100
+Siemens Healthcare Diagnostics Manufacturing Ltd, Camberley, Surrey / United Kingdom
+100
+100
+100
+Siemens Electronic Design Automation Ltd, Farnborough, Hampshire / United Kingdom
+Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+Siemens Healthcare Diagnostics Ltd, Camberley, Surrey / United Kingdom
+100
+573
+100
+100
+100
+100
+100
+100
+100
+Siemens S.A., Quito Ecuador
+SMI Holding LLC, Wilmington, DE / United States
+Siemens-Healthcare Cia. Ltda., Quito / Ecuador
+Siemens S.A., Antiguo Cuscatlán / El Salvador
+Next47 Mid-Tier GP 2021, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2022, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2023, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2024, L.P., Wilmington, DE / United States
+Next47 TTGP, L.L.C., Wilmington, DE / United States
+P.E.T.NET Houston, LLC, Austin, TX / United States
+Next47 Mid-Tier GP 2018, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2019, L.P., Wilmington, DE / United States
+Next47 Mid-Tier GP 2020, L.P., Wilmington, DE / United States
+J2 Innovations, Inc., Los Angeles, CA / United States
+Keystone Physics Limited, Millersville, PA / United States
+Mannesmann Corporation, New York, NY / United States
+Mansfield Insurance Company, Jeffersonville, VT / United States
+Medical Physics Holdings, LLC, Dover, DE / United States
+Next47 Fund 2018, L.P., Palo Alto, CA / United States
+Next47 Fund 2019, L.P., Palo Alto, CA / United States
+Next47 Fund 2020, L.P., Palo Alto, CA / United States
+Next47 Fund 2021, L.P., Palo Alto, CA / United States
+Next47 Fund 2022, L.P., Palo Alto, CA / United States
+Next47 Fund 2023, L.P., Palo Alto, CA / United States
+Next47 Fund 2024, L.P., Palo Alto, CA / United States
+Next47 Inc., Wilmington, DE / United States
+Innomotics LLC, Wilmington, DE / United States
+Consolidated Financial Statements
+51
+78
+1007
+100
+Healthcare Technology Management, LLC, Wilmington, DE / United States
+Gas Chromatography Systems MAXUM LLC, Wilmington, DE / United States
+100
+75
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Executive Consulting Group, LLC, Wilmington, DE / United States
+eMeter Corporation, Wilmington, DE / United States
+ECG TopCo Holdings, LLC, Wilmington, DE / United States
+ECG Acquisition, Inc., Wilmington, DE / United States
+D3 Oncology Inc., Wilmington, DE / United States
+Block Imaging Technical Excellence, LLC, Holt, MI / United States
+Brightly Software, Inc., Wilmington, DE / United States
+Building Robotics Inc., Wilmington, DE / United States
+Corindus, Inc., Wilmington, DE / United States
+100
+Block Imaging Parts & Service, LLC, Holt, MI / United States
+100
+100
+Siemens Public, Inc., Iselin, NJ / United States
+Siemens Mobility, Inc, Wilmington, DE / United States
+Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
+Siemens Logistics LLC, Wilmington, DE / United States
+Siemens Government Technologies, Inc., Wilmington, DE / United States
+Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
+Siemens Healthcare Laboratory, LLC, Wilmington, DE / United States
+Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
+Siemens Industry Software Inc., Wilmington, DE / United States
+Siemens Industry, Inc., Wilmington, DE / United States
+Siemens Advanta Solutions Corp., Wilmington, DE / United States
+Siemens Capital Company LLC, Wilmington, DE / United States
+Siemens Corporation, Wilmington, DE / United States
+Siemens Financial Services, Inc., Wilmington, DE / United States
+Siemens Financial, Inc., Wilmington, DE / United States
+Radiation Management Associates, LLC, Greenbelt, MD / United States
+Rail-Term LLC, Plymouth, MI / United States
+PETNET Solutions Cleveland, LLC, Wilmington, DE / United States
+PETNET Solutions, Inc., Knoxville, TN / United States
+PolyDyne Software Inc., Dallas, TX / United States
+PETNET Indiana, LLC, Indianapolis, IN / United States
+Page Mill Corporation, Boston, MA / United States
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Siemens Healthcare, Sociedad Anonima, Antiguo Cuscatlán / El Salvador
+Associates in Medical Physics, LLC, Greenbelt, MD / United States
+Block Imaging International, LLC, Wilmington, DE / United States
+Acuson Holding LLC, Wilmington, DE / United States
+100
+100
+100
+100
+100
+100
+100
+10013
+100
+100
+10013
+100
+100
+100
+Consolidated Financial Statements
+Innomotics S.A., Panama City / Panama
+Siemens, S.A. de C.V., Mexico City / Mexico
+SIEMENS SERVICIOS COMERCIALES SA DE CV, SOFOM, ENR, Mexico City / Mexico
+Siemens Mobility S. de R.L. de C.V., Mexico City / Mexico
+Siemens Logistics S. de R.L. de C.V., Mexico City / Mexico
+Siemens Inmobiliaria S.A. de C.V., Mexico City / Mexico
+Siemens Industry Software, S.A. de C.V., Mexico City / Mexico
+Siemens Healthcare Diagnostics, S. de R.L. de C.V., Mexico City/Mexico
+Innomotics Motors, S. de R.L. de C.V., Mexico City / Mexico
+Indústria de Trabajos Eléctricos S.A. de C.V., Ciudad Juárez / Mexico
+Grupo Siemens S.A. de C.V., Mexico City / Mexico
+Acuson México, S. de R.L. de C.V., Mexico City / Mexico
+Siemens S.A., Guatemala / Guatemala
+Innomotics S.A.C., Surquillo / Peru
+Acuson, LLC, Wilmington, DE / United States
+100
+100
+Varian Medical Systems Puerto Rico, LLC, Guaynabo / Puerto Rico
+Siemens S.A.C., Surquillo / Peru
+Siemens Mobility S.A.C., Lima / Peru
+Siemens Healthcare S.A.C., Surquillo / Peru
+1007
+1007
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+1007
+Siemens Industry Software Yazilim Hizmetleri Anonim Sirketi, Istanbul / Türkiye
+4
+Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and deferred taxes.
+Siemens Healthcare Diagnostics K.K., Tokyo / Japan
+33
+25
+25
+508
+984
+56
+Consolidated Financial Statements
+GNA 1 Geração de Energia S.A., São João da Barra / Brazil
+Micropower Comerc Energia S.A., São Paulo / Brazil
+MPC Serviços Energéticos 1A S.A, Navegantes / Brazil
+MPC Serviços Energéticos 1B S.A., Cabo de Santo Agostinho / Brazil
+Tractian Limited, Grand Cayman / Cayman Islands
+Akuo Energy Dominicana, S.R.L, Santo Domingo / Dominican Republic
+DELARO, S.A.P.I. DE C.V., Mexico City / Mexico
+Tenedora de Activos Medicos S.A.P.I. de C.V, Mexico City Mexico
+CEF-L Holding, LLC, Wilmington, DE / United States
+DeepHow Corp., Princeton, NJ / United States
+Fluence Energy, Inc., Wilmington, DE / United States
+Hickory Run Holdings, LLC, Wilmington, DE / United States
+MSS Energy Holdings, LLC, New York, NY / United States
+PhSiTh LLC, New Castle, DE / United States
+Rether networks, Inc., Berkeley, CA / United States
+Software.co Technologies, Inc., Wilmington, DE / United States
+Wi-Tronix Group Inc., Dover, DE / United States
+Asia, Australia (24 companies)
+Exemplar Health (NBH) Partnership, Melbourne / Australia
+Parklife Metro Holdings Pty Ltd, Melbourne / Australia
+106
+49
+5013
+50
+ZeeEnergie C.V., Amsterdam / Netherlands
+ZeeEnergie Management B.V., Eemshaven / Netherlands
+50
+50
+206,13
+Rousch (Pakistan) Power Ltd., Islamabad / Pakistan
+Impilo Consortium (Pty.) Ltd., La Lucia / South Africa
+Nertus Mantenimiento Ferroviario y Servicios S.A., Madrid / Spain
+WS Tech Energy Global S.L., Viladecans / Spain
+Certas AG, Zurich / Switzerland
+Parklife Metro Holdings Unit Trust, Melbourne / Australia
+Interessengemeinschaft TUS, Volketswil / Switzerland
+Awel Y Môr Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
+Cross London Trains Holdco 2 Limited, London / United Kingdom
+Five Estuaries Offshore Wind Farm Limited, Swindon, Wiltshire / United Kingdom
+Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
+Plessey Holdings Ltd., Farnborough, Hampshire / United Kingdom
+Americas (18 companies)
+Brasol Participaçoes e Empreendimentos S.A., Brazil, São Paulo / Brazil
+208
+26
+31
+514
+49
+CAPTON ENERGY DMCC, Dubai / United Arab Emirates
+Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
+PHM Technology Pty Ltd, Melbourne / Australia
+Guangzhou Suikai Smart Energy Co., Ltd., Guangzhou / China
+49
+50
+Smart Metering Solutions (Changsha) Co. Ltd., Changsha / China
+TianJin ZongXi Traction Motor Ltd., Tianjin / China
+Tieke Intelligent Signalling Railway Equipment Co., Ltd., Tianjin / China
+Xi'An X-Ray Target Ltd., Xi'an / China
+Zhi Dao Railway Equipment Ltd., Taiyuan / China
+Bangalore International Airport Ltd., Bangalore / India
+Greenko Sironj Wind Power Private Limited, New Delhi / India
+Happzee Technologies Private Limited, Hyderabad / India
+Pune IT City Metro Rail Limited, Pune / India
+SUNSOLE RENEWABLES PRIVATE LIMITED, Mumbai / India
+P.T. Jawa Power, Jakarta / Indonesia
+BE C&I Solutions Holding Pte. Ltd., Singapore / Singapore
+Power Automation Pte. Ltd., Singapore / Singapore
+SINGAPORE AQUACULTURE TECHNOLOGIES (SAT) PTE LTD, Singapore / Singapore
+49
+438
+50
+50
+176
+46
+50
+35
+25
+498
+Siemens Traction Equipment Ltd., Zhuzhou, Zhuzhou / China
+22
+20
+48
+48
+22
+33
+29
+49
+27
+Chengdu Wayin Zhiyun Medical Technology Co., Ltd., Chengdu / China
+DBEST (Beijing) Facility Technology Management Co., Ltd., Beijing / China
+238
+206
+20
+33
+308
+23
+30
+50
+20
+20
+378
+22
+Locomotive Workshop Rotterdam B.V., Zoetermeer / Netherlands
+50
+508,13
+418
+258
+50
+50
+55
+DKS Dienstleistungsgesellschaft f. Kommunikationsanlagen des Stadt- und Regionalverkehrs mbH, Cologne
+GuD Herne GmbH, Essen
+IFTEC GmbH & Co. KG, Leipzig
+inpro Innovationsgesellschaft für fortgeschrittene Produktionssysteme in der Fahrzeugindustrie mbH, Berlin
+LIB Verwaltungs-GmbH, Leipzig
+Ludwig Bölkow Campus GmbH, Taufkirchen
+MetisMotion GmbH, Munich
+MeVis BreastCare GmbH & Co. KG, Bremen
+MeVis BreastCare Verwaltungsgesellschaft mbH, Bremen
+Nordlicht Holding GmbH & Co. KG, Frankfurt
+Nordlicht Holding Verwaltung GmbH, Frankfurt
+Siemens Energy AG, Munich
+Siemens EuroCash, Munich
+Sternico GmbH, Wendeburg
+WUN H2 GmbH, Wunsiedel
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (37 companies)
+VARIAN MEDICAL SYSTEMS ALGERIA SPA, Hydra / Algeria
+Armpower CJSC, Yerevan / Armenia
+Aspern Smart City Research GmbH, Vienna / Austria
+Caterva GmbH, Pullach i. Isartal
+BentoNet GmbH, Baden-Baden
+ATS Projekt Grevenbroich GmbH, Schüttorf
+Alchemist Accelerator Europe Fund I GmbH & Co. KG, Grünwald
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Aspern Smart City Research GmbH & Co KG, Vienna / Austria
+100
+100
+100
+100
+100
+100
+100
+Siemens Ltd., Ho Chi Minh City / Viet Nam
+Varian Medical Systems Vietnam Co Ltd, Ho Chi Minh City / Viet Nam
+Associated companies and joint ventures
+Germany (19 companies)
+100
+Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
+Siemens Mobility Aarsleff Konsortium I/S, Ballerup / Denmark
+TRIXELL SAS, Moirans / France
+674, 8, 12, 13
+508,13
+25
+48
+574,8
+23
+428,13
+498
+498
+Temir Zhol Electrification LLP, Nur-Sultan-City / Kazakhstan
+44
+Prime Green Energy Infrastructure Fund II, S.A. SICAV-RAIF, Luxembourg / Luxembourg
+EGM Holding Limited, Birkirkara / Malta
+Buitengaats C.V., Amsterdam / Netherlands
+Buitengaats Management B.V., Eemshaven / Netherlands
+Infraspeed EPC Consortium V.O.F., Zoetermeer / Netherlands
+Infraspeed Maintainance B.V., Dordrecht / Netherlands
+49
+248
+33
+20
+206, 13
+208
+Energie Electrique de Tahaddart S.A., Tangier / Morocco
+76
+448
+498
+EVIOP-TEMPO S.A. Electrical Equipment Manufacturers, Vassiliko / Greece
+Parallel Graphics Ltd., Dublin Ireland
+Reindeer Energy Ltd., Bnei Berak / Israel
+Transfima GEIE, Milan / Italy
+Transfima S.p.A., Milan / Italy
+KACO New Energy Co., Amman / Jordan
+Consolidated Financial Statements
+49
+50
+50
+40
+508
+258
+238
+49
+498
+33
+338
+25
+36
+498
+458
+508
+26
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
+50
+100
+100
+100
+100
+100
+Siemens Healthcare Limited, Ho Chi Minh City / Viet Nam
+INNOMOTICS LIMITED COMPANY, Ho Chi Minh City / Viet Nam
+Siemens Mobility Limited, Bangkok/Thailand
+Siemens Logistics Automation Systems Ltd., Bangkok/Thailand
+Siemens Limited, Bangkok Thailand
+Siemens Healthcare Limited, Bangkok / Thailand
+Innomotics Limited, Bangkok Thailand
+YaRa Information Inc., Taipei / Taiwan
+Varian Medical Systems Taiwan Co., Ltd., Taipei / Taiwan
+Siemens Industry Software (TW) Co., Ltd., Taipei / Taiwan
+Siemens Limited, Taipei / Taiwan
+Fang Zhi Health Management Co., Ltd., Taipei / Taiwan
+Hong Tai Health Management Co. Ltd., Taipei / Taiwan
+New Century Technology Co. Ltd., Taipei / Taiwan
+Siemens Healthcare Limited, Taipei / Taiwan
+Siemens Mobility Pte. Ltd., Singapore / Singapore
+Siemens Pte. Ltd., Singapore / Singapore
+Siemens Logistics Pte. Ltd., Singapore / Singapore
+100
+Siemens Industry Software Pte. Ltd., Singapore / Singapore
+Siemens Healthcare Pte. Ltd., Singapore / Singapore
+In the course of our audit procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax
+implications of significant business transactions or events in fiscal year 2023, which could result in uncertain tax positions or influence the
+measurement of existing uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising
+from cross border matters, such as the determination of transfer prices, the results of tax field audits, the acquisition or disposal of company
+shares and corporate (intragroup) restructuring activities. In order to assess measurement and completeness, we also obtained
+confirmations from external tax advisors. Further, we evaluated management's assessments with respect to the prospects of success of
+appeal and tax court proceedings by inquiring of the employees of the Siemens tax department and by considering current tax case law.
+In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
+strategies and projected future taxable income and compared them to internal business plans. In the course of our audit procedures
+regarding deferred tax liabilities, we examined in particular the assumptions regarding reinvestment of subsidiaries' retained profits for an
+indefinite period and assessed these taking into account dividend planning.
+Reasons why the matter was determined to be a key audit matter: Siemens operates in numerous countries with different local tax
+legislation. The accounting for uncertain tax positions as well as deferred taxes requires management to exercise considerable judgment
+and make estimates and assumptions and was therefore a key audit matter. In particular, this affects the measurement and completeness
+of uncertain tax positions, the recoverability of deferred tax assets and the measurement and completeness of deferred tax liabilities.
+Auditor's response: With the assistance of internal tax specialists who have knowledge of relevant local tax law, we examined the
+processes installed by management for the identification, recognition and measurement of tax positions.
+Uncertain tax positions and deferred taxes
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for provisions, refer to
+Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
+to proceedings out of or in connection with alleged compliance violations, refer to Note 22 Legal proceedings.
+Auditor's response: As part of our audit, we obtained an understanding of the Group's internally established methods, processes and
+control mechanisms for project management in the bid and execution phase of construction-type contracts. In this regard, we assessed
+the design and operating effectiveness of the accounting-related internal controls in the project business by obtaining an understanding
+of business transactions specific to construction-type contracts, from the initiation of the transaction through presentation in the
+consolidated financial statements. We also tested controls addressing the timely assessment of changes in cost estimates, the timely and
+complete recognition of such changes in the project calculation as well as their accounting treatment.
+As part of our substantive audit procedures, which particularly involved project reviews, we evaluated management's estimates and
+assumptions based on a risk-based selection of a sample of contracts. Our sample primarily included projects that are subject to significant
+future uncertainties and risks, such as projects with complex safety/technical and regulatory requirements or projects with a large portion
+of materials and services to be provided by suppliers or consortium partners, fixed-price or turnkey projects, cross-border projects and
+projects with changes in cost estimates, delays and/or low or negative margins.
+Our audit procedures included, among others, review of the contracts and their terms and conditions including contractually agreed partial
+deliveries and services, termination rights, penalties for delay and breach of contract, liquidated damages as well as joint and several
+liability. In order to evaluate whether revenues were recognized on an accrual basis for the selected projects, we analyzed revenues
+attributable to the fiscal year and corresponding cost of sales to be recognized in the statement of income considering the extent of
+progress towards completion and examined the accounting for the associated items in the statement of financial position.
+For this we also assessed the accounting for contractually agreed options, contract amendments or contract terminations (including
+related pending legal proceedings) also in relation to previous construction-type contracts with Russian customers. We also assessed the
+recognition requirements of reimbursement claims.
+We further performed inquiries of project management (both commercial and technical project managers) with respect to the
+development of the projects, the reasons for deviations between planned and actual costs, the current estimated costs to complete the
+projects, and management's assessments on probabilities that contract risks and claims from joint and several liability will materialize.
+To identify anomalies in the development of margins and other project KPIs, we also applied data analysis procedures. In designing our
+audit procedures, we also considered results from project audits conducted by the internal audit function. Furthermore, we obtained
+evidence from third parties for selected projects (e.g., project acceptance documentation, contractual terms and conditions, and lawyers'
+confirmations regarding alleged breaches of contract and asserted claims) and inspected the status of projects at plant sites. Due to the
+large contract volume and risk profile, our audit procedures focused on large contracts for delivery of high-speed and commuter trains.
+Our audit procedures did not lead to any reservations relating to revenue recognition on construction-type contracts.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for construction-type
+contracts, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
+statements. With respect to contract assets and liabilities as well as provisions for order related losses and risks, refer to Note 10 Contract
+assets and liabilities, Note 18 Provisions and Note 21 Commitments and contingencies in the notes to the consolidated financial
+statements.
+Valuation of the investment in Siemens Energy AG
+Reasons why the matter was determined to be a key audit matter: Since the spin-off of Siemens Energy AG in September 2020,
+Siemens AG has held a 35.1% stake in the listed Siemens Energy AG which was reduced to 25.1% due to capital measures at Siemens
+Energy AG and the contribution of shares in Siemens Energy AG to the Siemens Pension-Trust e.V. in fiscal year 2023. The investment is
+accounted for as an associate, applying the equity method in accordance with IAS 28, Investments in Associates and Joint Ventures. As of
+June 30, 2022, an impairment was recognized on the investment. During the first six months of the financial year 2023, the market
+capitalization of the investment was mostly higher than the value at the time of the impairment. As of March 31, 2023, the latter was
+significantly exceeded. As a result, an impairment reversal was made in accordance with IAS 36, Impairment of Assets, in the amount of
+the increase in the stock market price since the date of the impairment until March 31, 2023. In addition, Siemens Energy AG acquired
+additional shares in Siemens Gamesa Renewable Energy, S.A. in fiscal year 2023. This led to a reduction in equity in the consolidated
+financial statements of Siemens Energy AG. The recognition of Siemens' share in this equity transaction resulted in a reduction of the
+carrying amount of the investment in Siemens Energy AG, which was recognized directly in Siemens' equity. As of September 30, 2023,
+the pro rata market value of the investment was above the book value.
+Due to the judgments and estimates by management in the analyses and assessments with regards to possible impairments or reversals
+of impairments as well as the overall material implications for the assets, liabilities and financial position of the Group and the related
+significant risk of material misstatement, the assessment of the investment in Siemens Energy AG is one of the key audit matters.
+Auditor's response: As part of our audit procedures in relation to management's assessment regarding the valuation of the investment in
+Siemens Energy AG, we examined the methods and processes defined internally for the identification of indicators for a reversal of an
+impairment and thus the timing of a possible reversal of an impairment as well as the measurement of a reversal of an impairment of the
+investment in Siemens Energy AG.
+With regards to the assessment of whether there are indications for a reversal of an impairment, in particular regarding the interpretation
+of a possible significant increase of the fair value, we evaluated management's assessment made on a quarterly and year-end basis as well
+as management's judgements and estimates contained therein and also considered external evidence on credit ratings, stock market
+prices, analysts' assessments and observable valuation indicatorsin this regard. In addition, we evaluated the calculation of the reversal of
+the impairment as of March 31, 2023.
+Siemens Electronic Design Automation Pte. Ltd., Singapore / Singapore
+3
+In order to assess the valuation of the investment in fiscal year 2023, we also considered the effects for Siemens AG from the acquisition
+of the shares in Siemens Gamesa Renewable Energy S.A. by Siemens Energy AG, the capital increase of Siemens Energy AG and the
+contribution of shares in Siemens Energy AG to the Siemens Pension-Trust e.V. by Siemens AG.
+Furthermore, we evaluated the disclosures in the notes to the consolidated financial statements regarding the investment in Siemens
+Energy AG, and the reversal of the impairment, the effects of the other transactions described above as well as the events affecting
+Siemens Energy AG after the balance sheet date.
+Our audit procedures did not lead to any reservations regarding the valuation of the investment in Siemens Energy AG as of September
+30, 2023.
+268
+Provisions for proceedings out of or in connection with alleged compliance violations
+Reasons why the matter was determined to be a key audit matter: We consider the accounting for provisions for proceedings out of
+or in connection with alleged compliance violations, including allegations of corruption and antitrust violations to be a key audit matter.
+These matters are subject to inherent uncertainties and require estimates that could have a significant impact on the recognition and
+measurement of the respective provision and, accordingly, on assets, liabilities and financial performance. The proceedings out of or in
+connection with alleged compliance violations are subject to uncertainties because they involve complex legal issues and accordingly,
+considerable management judgment, in particular when determining whether and in what amount a provision is required to account for
+the risks.
+Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
+we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
+determine what potentially significant pending legal proceedings or claims asserted are known and to assess management's estimates of
+the expected cash outflows, our audit procedures included inquiring of management and other persons within the Group entrusted with
+these matters, obtaining written statements from in-house legal counsels with respect to the assessment of estimated cash outflows and
+their probability, obtaining confirmations from external legal advisors and evaluating internal statements concerning the accounting
+treatment in the consolidated financial statements. Furthermore, we examined legal consulting expense accounts for any indications of
+legal matters not yet considered.
+We further considered alleged or substantiated non-compliance with legal provisions, official regulations (including sanctions) and internal
+company policies by inspecting internal and external statements on specific matters, obtaining written statements from external legal
+advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and results
+of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed on this
+basis whether management's evaluation of any risks to be accounted for in the consolidated financial statements is plausible.
+Furthermore, we evaluated the disclosures on proceedings out of or in connection with alleged compliance violations in the notes to the
+consolidated financial statements.
+Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
+compliance violations.
+Independent Auditor's Reports (Group)
+Innomotics Pte. Ltd., Singapore / Singapore
+1007
+100
+Siemens, Inc., Manila / Philippines
+Siemens Healthcare Inc., Manila / Philippines
+Siemens Healthcare Limited, Auckland / New Zealand
+Siemens (N.Z.) Limited, Auckland / New Zealand
+Varian Medical Systems Malaysia Sdn Bhd, Kuala Lumpur / Malaysia
+Siemens Mobility Sdn. Bhd., Kuala Lumpur / Malaysia
+Siemens Malaysia Sdn. Bhd., Petaling Jaya / Malaysia
+Siemens Industry Software Sdn. Bhd., George Town, Penang / Malaysia
+Siemens Healthcare Sdn. Bhd., Petaling Jaya / Malaysia
+Radica Software Sdn. Bhd., George Town / Malaysia
+Varian Medical Systems Philippines, Inc., City of Pasig / Philippines
+Innomotics Sdn. Bhd., Shah Alam / Malaysia
+Siemens Mobility Ltd., Seoul / Korea
+Siemens Ltd. Seoul, Seoul / Korea
+Siemens Large Drives Limited, Seoul / Korea
+Siemens Industry Software Ltd., Seoul / Korea
+Siemens Healthineers Ltd., Seoul / Korea
+Siemens Electronic Design Automation (Korea) LLC, Seoul / Korea
+Acuson Korea Ltd., Seongnam-si / Korea
+Varian Medical Systems K.K., Tokyo / Japan
+Siemens K.K., Tokyo / Japan
+Siemens Healthcare K.K., Tokyo / Japan
+Varian Medical Systems Korea, Inc., Seoul / Korea
+The effects of current geopolitical and macroeconomic developments on the project business, such as delays in project execution, price
+increases or disruptions in supply chains and their accounting treatment were taken into account during our audit.
+Acuson Singapore Pte. Ltd., Singapore / Singapore
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+100
+Consolidated Financial Statements
+100
+100
+100
+100
+100
+100
+100
+1007
+100
+100
+100
+100
+Revenues, total estimated contract costs and profit recognition may deviate significantly from original estimates based on new knowledge
+about cost overruns and changes in project scope over the term of a construction-type contract.
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for investments in
+associates, refer to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial
+statements. Details on the reversal of the impairment of the investment in Siemens Energy AG and the other described transactions are
+presented in Note 4 Interests in other entities. Regarding the subsequent events relating to the investment in Siemens Energy AG refer to
+Note 34 Subsequent events.
+2
+10 Exemption pursuant to Section 264 (3) German Commercial Code.
+11 Values according to the latest available local GAAP financial statements; the underlying fiscal year may differ from the Siemens fiscal year.
+12 Siemens AG is a shareholder with unlimited liability of this company.
+13 A consolidated affiliated company of Siemens AG is a shareholder with unlimited liability of this company.
+Independent Auditor's Reports (Group)
+Equity
+interest
+Net income
+Equity
+in %
+in millions
+of €
+in millions
+of €
+1004,5
+3
+15
+1004,5
+-
+67
+1004,5
+1
+273
+1004,5
+⁹ Exemption pursuant to Section 264 b German Commercial Code.
+8 Not accounted for using the equity method due to immateriality.
+7 Not consolidated due to immateriality.
+6 Significant influence due to contractual arrangements or legal circumstances.
+25
+49
+24
+Asiri A O I Cancer Centre (Private) Limited, Colombo / Sri Lanka
+508
+57
+Other investments11
+Germany (4 companies)
+Erlapolis 20 GmbH, Munich
+Erlapolis 22 GmbH, Munich
+Munipolis GmbH, Munich
+(1,795)
+SPT Beteiligungen GmbH & Co. KG, Grünwald
+Medical Systems S.p.A., Genoa / Italy
+KIC InnoEnergy S.E., Eindhoven / Netherlands
+Americas (2 companies)
+Electrify America, LLC, Wilmington, DE / United States
+Thoughtworks Holding Inc., Wilmington, DE / United States
+1 Control due to a majority of voting rights.
+2 Control due to rights to appoint, reassign or remove members of the key management personnel.
+3 Control due to contractual arrangements to determine the direction of the relevant activities.
+* No control due to contractual arrangements or legal circumstances.
+5 No significant influence due to contractual arrangements or legal circumstances.
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without Germany) (2
+companies)
+5,693
+Consolidated Financial Statements
+2
+Auditor's Reports
+to the Consolidated Financial Statements and the
+Group Management Report for fiscal 2023
+SIEMENS
+Independent Auditor's Reports (Group)
+Independent auditor's report
+To Siemens Aktiengesellschaft, Berlin and Munich
+Report on the audit of the consolidated financial statements and of the group management
+report
+Opinions
+We have audited the consolidated financial statements of Siemens Aktiengesellschaft, Berlin and Munich, and its subsidiaries (the Group),
+which comprise the consolidated statements of income and comprehensive income for the fiscal year from October 1, 2022 to September
+30, 2023, the consolidated statements of financial position as of September 30, 2023, the consolidated statements of cash flows and
+changes in equity for the fiscal year from October 1, 2022 to September 30, 2023, and notes to the consolidated financial statements,
+including a summary of significant accounting policies. In addition, we have audited the group management report of Siemens
+Aktiengesellschaft, which is combined with the management report of Siemens Aktiengesellschaft, for the fiscal year from October 1,
+2022 to September 30, 2023. In accordance with the German legal requirements, we have not audited chapter 11 "EU Taxonomy
+disclosure" of the group management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2 Compliance
+Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the Corporate Governance
+Statement which is published on the website stated in the combined management report. In our opinion, on the basis of the knowledge
+obtained in the audit,
+⚫ the accompanying consolidated financial statements comply, in all material respects, with the International Financial Reporting
+Standards (IFRSS) as adopted by the European Union (EU), and the additional requirements of German commercial law pursuant to Sec.
+315e (1) HGB ["Handelsgesetzbuch": German Commercial Code] as well as with full IFRSS as issued by the International Accounting
+Standards Board (IASB), and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial
+position of the Group as of September 30, 2023 and of its financial performance for the fiscal year from October 1, 2022 to September
+30, 2023, and
+•
+the accompanying group management report as a whole provides an appropriate view of the Group's position. In all material respects,
+this group management report is consistent with the consolidated financial statements, complies with German legal requirements and
+appropriately presents the opportunities and risks of future development. Our opinion on the group management report does not cover
+chapter 11 "EU Taxonomy disclosure" of the group management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and
+"8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the group management report and the content of the Corporate
+Governance Statement.
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
+consolidated financial statements and of the group management report.
+Basis for the opinions
+455
+Key audit matters in the audit of the consolidated financial statements
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial
+statements for the fiscal year from October 1, 2022 to September 30, 2023. These matters were addressed in the context of our audit of
+the consolidated financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these
+matters.
+Below, we describe what we consider to be the key audit matters:
+Revenue recognition on construction-type contracts
+Reasons why the matter was determined to be a key audit matter: The Group conducts a significant portion of its business under
+construction-type contracts, particularly in the Mobility business. Revenue from long-term construction-type contracts is recognized in
+accordance with IFRS 15, Revenue from Contracts with Customers, generally over time under the percentage-of-completion method. We
+consider the accounting for construction-type contracts to be an area posing a significant risk of material misstatement (including the
+potential risk of management override of internal controls) and accordingly a key audit matter, because management's assessments
+significantly impact the determination of the extent of progress towards completion. These assessments include, in particular, the scope
+of deliveries and services required to fulfill contractually defined obligations, total estimated contract costs, remaining costs to completion
+and total estimated contract revenues, as well as contract risks including technical, political, regulatory, legal and supply chain risks.
+Independent
+2
+We conducted our audit of the consolidated financial statements and of the group management report in accordance with Sec. 317 HGB
+and the EU Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally
+Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in
+Germany] (IDW). We performed the audit of the consolidated financial statements in supplementary compliance with the International
+Standards on Auditing (ISAs). Our responsibilities under those requirements, principles and standards are further described in the "Auditor's
+responsibilities for the audit of the consolidated financial statements and of the group management report" section of our auditor's report.
+We are independent of the group entities in accordance with the requirements of European law and German commercial and professional
+law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. In addition, in accordance
+with Art. 10 (2) f) of the EU Audit Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the
+EU Audit Regulation. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions
+on the consolidated financial statements and on the group management report.
+Matthias Rebellius
+Judith Wiese
+132
+6
+113
+9
+(64)
+782
+8
+(99)
+730
+58
+314
+to the Consolidated Financial Statements and the
+Group Management Report for fiscal 2023
+Responsibility Statement
+Cedrik Neike
+Dr. Roland Busch
+Siemens Aktiengesellschaft
+The Managing Board
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Consolidated Financial Statements give a
+true and fair view of the assets, liabilities, financial position and profit or loss of the Group, and the Group Management Report, which has
+been combined with the Management Report for Siemens Aktiengesellschaft, includes a fair review of the development and performance
+of the business and the position of the Group, together with a description of the material opportunities and risks associated with the
+expected development of the Group.
+Responsibility Statement (Group)
+SIEMENS
+Munich, December 4, 2023
+Prof. Dr. Ralf P. Thomas
+Responsibilities of management and the Supervisory Board for the consolidated financial statements and the
+group management report
+Management is responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSS
+as adopted the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as with full IFRSS
+as issued by the IASB, and that the consolidated financial statements, in compliance with these requirements, give a true and fair view of
+the assets, liabilities, financial position and financial performance of the Group. In addition, management is responsible for such internal
+control as management has determined necessary to enable the preparation of consolidated financial statements that are free from
+material misstatement, whether due to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material
+misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the
+Group's position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the
+audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
+as to issue an auditor's report that includes our opinions on the consolidated financial statements and on the group management report.
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
+the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+In preparing the consolidated financial statements, management is responsible for assessing the Group's ability to continue as a going
+concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
+responsible for financial reporting based on the going concern basis of accounting, unless there is an intention to liquidate the Group or
+to cease operations, or there is no realistic alternative but to do so.
+Furthermore, management is responsible for the preparation of the group management report that, as a whole, provides an appropriate
+view of the Group's position and is, in all material respects, consistent with the consolidated financial statements, complies with German
+legal requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible
+for such arrangements and measures (systems) as management has considered necessary to enable the preparation of a group
+management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate
+evidence for the assertions in the group management report.
+The Supervisory Board is responsible for overseeing the Group's financial reporting process for the preparation of the consolidated financial
+statements and of the group management report.
+Auditor's responsibilities for the audit of the consolidated financial statements and of the group
+management report
+•
+Independent Auditor's Reports (Group)
+by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
+error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
+decisions of users taken on the basis of these consolidated financial statements and this group management report.
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+•
+•
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+•
+5
+otherwise appears to be materially misstated.
+•
+⚫ is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in
+the audit, or
+•
+Independent Auditor's Reports (Group)
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
+to Note 2 Material accounting policies and critical accounting estimates in the notes to the consolidated financial statements. With respect
+to disclosures for deferred tax assets and liabilities, refer to Note 7 Income taxes in the notes to the consolidated financial statements.
+Other information
+The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2022 within the meaning of ISA [DE]
+720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
+German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
+Compensation Report. In all other respects, management is responsible for the other information. The other information comprises chapter
+11 "EU Taxonomy disclosure" of the group management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2
+Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the Corporate
+Governance Statement. In addition, the other information comprises parts to be included in the Annual Report, of which we received a
+version prior to issuing this auditor's report, in particular:
+.
+•
+•
+the Responsibility Statement (to the Consolidated Financial Statements and the Group Management Report),
+the Five-Year Summary,
+⚫ the Compensation Report,
+⚫ the Report of the Supervisory Board,
+• Notes and forward-looking statements,
+but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
+report whose content is audited and not our auditor's reports as well as not our auditor's report on a limited assurance engagement on the
+EU Taxonomy disclosure.
+Our opinions on the consolidated financial statements and on the group management report do not cover the other information, and
+consequently we do not express an opinion or any other form of assurance conclusion thereon.
+In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information
+the Responsibility Statement (to the Annual Financial Statements and the Management Report),
+.
+Basis for the opinion
+obtain an understanding of internal control relevant to the audit of the consolidated financial statements and of arrangements and
+measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in
+the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems;
+Annual Financial Statements
+Financial assets
+Property, plant and equipment
+Intangible assets
+Non-current assets
+Assets
+(in millions of €)
+2. Balance Sheet
+3
+3,613
+3,760
+(185)
+(950)
+185
+250
+3,612
+4,460
+27
+Unappropriated net income
+Sep. 30,
+Allocation to other retained earnings
+Note
+2022
+1,334
+1,571
+(1,043)
+(916)
+2,377
+2,487
+11
+Advance payments received
+Inventories
+Current assets
+72,657
+72,610
+71,576
+71,303
+928
+1,022
+153
+285
+10
+2023
+Profit carried forward
+Net income
+Appropriation of net income
+387
+1,014
+identify and assess the risks of material misstatement of the consolidated financial statements and of the group management report,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
+and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than
+the risk of not detecting a material misstatement resulting from error, as fraud may involve collusion, forgery, intentional omissions,
+misrepresentations, or the override of internal control;
+Interest income
+4,204
+4,734
+3
+Income (loss) from investments, net
+(485)
+151
+Income (loss) from operations
+(464)
+(391)
+2
+Other operating expenses
+159
+338
+2
+(1,055)
+thereof negative interest from financial investment
+(1)
+(18)
+Interest expenses
+3,612
+4,460
+498
+(298)
+6
+Net income
+Income taxes
+3,115
+4,758
+Receivables and other assets
+Income from business activity
+445
+5
+Other financial income (expenses), net
+341
+3
+thereof positive interest from borrowing
+51
+(1,586)
+4
+(1,044)
+Trade receivables
+Receivables from affiliated companies
+Other receivables and other assets
+20,623
+21,422
+3,613
+3,760
+6,188
+6,555
+8,445
+8,737
+2,378
+2,370
+(172)
+(30)
+2,550
+2,400
+15
+1 Conditional Capital as of September 30, 2023 and 2022 amounted to €421 million and €421 million, respectively.
+Total shareholders' equity and liabilities
+Deferred income
+Other liabilities
+540
+540
+16
+13,604
+4
+107,005
+103,884
+235
+235
+67,914
+1,080
+1,222
+63,417
+639
+2,249
+63,946
+Liabilities to affiliated companies
+59,483
+339
+18
+17,693
+18,270
+602
+3,711
+3,987
+17
+680
+13,380
+2,374
+(1,209)
+Trade payables
+Liabilities
+32,047
+220
+223
+28,724
+1,454
+2,370
+170
+164
+Prepaid expenses
+Cash and cash equivalents
+Other Securities
+29,090
+24,619
+1,340
+1,227
+26,093
+21,630
+1,657
+1,762
+12
+Deferred tax assets
+13
+2,294
+2,065
+Other provisions
+Provisions for taxes
+Provisions for pensions and similar commitments
+Provisions
+Special reserve with an equity portion
+Unappropriated net income
+Other retained earnings
+Capital reserve
+Issued capital
+Liabilities to banks
+Treasury shares
+Shareholders' equity
+Shareholders' equity and liabilities
+107,005
+103,884
+Total assets
+16
+33
+14
+Active difference resulting from offsetting
+Subscribed capital¹
+(2,228)
+4
+(1,785)
+•
+•
+• Identification of likely risks of material misstatement in the EU Taxonomy disclosure,
+Inquiries of the employees responsible for data capture and consolidation as well as the preparation of the EU Taxonomy disclosure
+about the reporting processes, the data capture and compilation methods as well as internal controls to the extent relevant for the
+limited assurance of the EU Taxonomy disclosure,
+Inquiries of relevant employees for the assessment of the process to identify the Taxonomy-eligible and Taxonomy-aligned economic
+activities,
+•
+•
+In the course of our assurance engagement we have, among other things, performed the following assurance procedures and other
+activities:
+Our responsibility is to express a conclusion with limited assurance on the EU Taxonomy disclosure based on our assurance engagement.
+We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements (ISAE) 3000
+(Revised): "Assurance Engagements other than Audits or Reviews of Historical Financial Information" issued by the International Auditing
+and Assurance Standards Board (IAASB). This standard requires that we plan and perform the assurance engagement to obtain limited
+assurance about whether any matters have come to our attention that cause us to believe that the Company's EU Taxonomy disclosure is
+not prepared, in all material respects, in accordance with the EU Taxonomy Regulation and the Delegated Acts adopted thereunder as well
+as the interpretation by management disclosed in the EU Taxonomy disclosure. In a limited assurance engagement, the procedures
+performed are less extensive than in a reasonable assurance engagement, and accordingly, a substantially lower level of assurance is
+obtained. The selection of the assurance procedures is subject to the professional judgment of the auditor.
+Responsibilities of the auditor
+We have complied with the German professional requirements on independence as well as other professional conduct requirements.
+Our audit firm applies the national legal requirements and professional pronouncements, in particular the BS WP/vBP ["Berufssatzung für
+Wirtschaftsprüfer/vereidigte Buchprüfer": Professional Charter for German Public Accountants/German Sworn Auditors]) in the exercise of
+their Profession and the IDW Standard on Quality Management issued by the Institute of Public Auditors in Germany (IDW): Requirements
+for Quality Management in the Audit Firm (IDW QS 1), and accordingly maintains a comprehensive quality management system that
+includes documented policies and procedures with regard to compliance with professional ethical requirements, professional standards
+as well as relevant statutory and other legal requirements.
+Independence and quality assurance of the audit firm
+These responsibilities of the Company's management include the selection and application of appropriate EU Taxonomy reporting
+methods and making assumptions and estimates about individual disclosures that are reasonable in the circumstances. Furthermore,
+management is responsible for such internal control as management considers necessary to enable the preparation of the EU Taxonomy
+disclosure that is free from material misstatement, whether due to fraud (manipulation of the EU Taxonomy disclosure) or error.
+The EU Taxonomy Regulation and the Delegated Acts adopted thereunder contain wording and terms that are still subject to considerable
+interpretation uncertainties and for which clarifications have not yet been published in every case. Therefore, management has disclosed
+their interpretation of the EU Taxonomy Regulation and the Delegated Acts adopted thereunder in the EU Taxonomy disclosure. They are
+responsible for the defensibility of this interpretation. Due to the immanent risk that undefined legal terms may be interpreted differently,
+the legal conformity of the interpretation is subject to uncertainties.
+Management of the Company is responsible for the preparation of the EU Taxonomy disclosure in accordance with Art. 8 of Regulation
+(EU) 2020/852 of the European Parliament and of the Council of June 18, 2020 on the establishment of a framework to facilitate
+sustainable investment and amending Regulation (EU) 2019/2088 (hereinafter the "EU Taxonomy Regulation") and the Delegated Acts
+adopted thereunder as well as in accordance with their own interpretation of the wording and terms contained in the EU Taxonomy
+Regulation and the Delegated Acts adopted thereunder that is presented in the EU Taxonomy disclosure.
+Responsibilities of management
+We have performed a limited assurance engagement on the "EU Taxonomy disclosure" in chapter 11 of the group management report of
+Siemens Aktiengesellschaft, Berlin and Munich (hereinafter the "Company"), which is combined with the management report of Siemens
+Aktiengesellschaft, for the period from October 1, 2022 to September 30, 2023 (hereinafter the "EU Taxonomy disclosure").
+To Siemens Aktiengesellschaft, Berlin and Munich
+Independent auditor's report on a limited assurance
+engagement on the EU Taxonomy disclosure
+Independent Auditor's Reports (Group)
+• Analytical evaluation of data at the level of the Group and businesses as well as service and governance units,
+8
+•
+Reconciliation of selected disclosures with the corresponding data in the consolidated financial statements and group management
+report,
+Johne
+[German Public Auditor]
+Wirtschaftsprüfer
+Keller
+Wirtschaftsprüfungsgesellschaft
+Ernst & Young GmbH
+Munich, December 4, 2023
+We make express reference to the fact that we will not update the report to reflect events or circumstances arising after it was issued,
+unless required to do so by law. It is the sole responsibility of anyone taking note of the summarized result of our work contained in this
+report to decide whether and in what way this result is useful or suitable for their purposes and to supplement, verify or update it by means
+of their own review procedures.
+The "General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public Auditors and Public Audit
+Firms]" dated January 1, 2017 are applicable to this engagement and also govern our relations with third parties in the context of this
+engagement (www.de.ey.com/general-engagement-terms). In addition, please refer to the liability provisions contained there in no. 9
+and to the exclusion of liability towards third parties. We accept no responsibility, liability or other obligations towards third parties unless
+we have concluded a written agreement to the contrary with the respective third party or liability cannot effectively be precluded.
+General engagement terms and liability
+We draw attention to the fact that the assurance engagement was conducted for the Company's purposes and that the report is intended
+solely to inform the Company about the result of the assurance engagement. As a result, it may not be suitable for another purpose than
+the aforementioned. Accordingly, the report is not intended to be used by third parties for making (financial) decisions based on it. Our
+responsibility is to the Company alone. We do not accept any responsibility to third parties. Our assurance conclusion is not modified in
+this respect.
+Restriction of use
+Based on the assurance procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe
+that the EU Taxonomy disclosure of Siemens Aktiengesellschaft for the period from October 1, 2022 to September 30, 2023 is not
+prepared, in all material respects, in accordance with the EU Taxonomy Regulation and the Delegated Acts adopted thereunder as well as
+the interpretation by management as disclosed in the EU Taxonomy disclosure.
+Assurance conclusion
+Independent Auditor's Reports (Group)
+9
+(2,492)
+Evaluation of the presentation of the EU Taxonomy disclosure.
+•
+Inquiries and inspection of documents relating to the collection and reporting of data,
+Independent Auditor's Reports (Group)
+Dr. Gaenslen
+Wirtschaftsprüfer
+[German Public Auditor]
+[German Public Auditor]
+Management is responsible for the preparation of the ESEF documents including the electronic rendering of the consolidated financial
+statements and the group management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB and for the tagging of the
+consolidated financial statements in accordance with Sec. 328 (1) Sentence 4 No. 2 HGB.
+Responsibilities of management and the Supervisory Board for the ESEF documents
+We conducted our assurance work on the rendering, of the consolidated financial statements and the group management report contained
+in the file identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering
+of Financial Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410)
+(06.2022) and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further
+described in the "Group auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW
+Standard on Quality Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
+Independent Auditor's Reports (Group)
+6
+In our opinion, the rendering of the consolidated financial statements and the group management report contained in the file identified
+above and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
+reporting format. Beyond this assurance opinion and our audit opinions on the accompanying consolidated financial statements and the
+accompanying group management report for the fiscal year from October 1, 2022 to September 30, 2023 contained in the "Report on the
+audit of the consolidated financial statements and of the group management report" above, we do not express any assurance opinion on
+the information contained within these renderings or on the other information contained in the file identified above.
+We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
+of the consolidated financial statements and the group management report (hereinafter the "ESEF documents") contained in the file
+SIEMENS 2023.zip and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for
+the electronic reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work extends only to the
+conversion of the information contained in the consolidated financial statements and the group management report into the ESEF format
+and therefore relates neither to the information contained within these renderings nor to any other information contained in the file
+identified above.
+Opinion
+Report on the assurance on the electronic rendering of the consolidated financial statements and the group
+management report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
+Other legal and regulatory requirements
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
+audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in
+our auditor's report unless law or regulation precludes public disclosure about the matter.
+We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
+and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
+applicable, the related safeguards.
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
+significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
+perform audit procedures on the prospective information presented by management in the group management report. On the basis of
+sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
+prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
+a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law,
+and the view of the Group's position it provides.
+obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to
+express opinions on the consolidated financial statements and on the group management report. We are responsible for the direction,
+supervision and performance of the group audit. We remain solely responsible for our opinions;
+evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether
+the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial
+statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance
+with IFRSS as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB as well as
+with full IFRSS as issued by the IASB;
+conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
+obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to
+continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report
+to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are
+inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's
+report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern;
+evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
+and related disclosures;
+In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
+documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
+electronic reporting format.
+The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
+Group auditor's responsibilities for the assurance work on the ESEF documents
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
+non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
+throughout the assurance work. We also:
+identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
+and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
+a basis for our assurance opinion;
+Wirtschaftsprüfer
+Keller
+Wirtschaftsprüfungsgesellschaft
+Ernst & Young GmbH
+Munich, December 4, 2023
+The German Public Auditor responsible for the engagement is Siegfried Keller.
+German Public Auditor responsible for the engagement
+7
+Our auditor's report must always be read together with the audited consolidated financial statements and the audited group management
+report as well as the assured ESEF documents. The consolidated financial statements and the group management report converted to the
+ESEF format - including the versions to be published in the Unternehmensregister [German Company Register] – are merely electronic
+renderings of the audited consolidated financial statements and the audited group management report and do not take their place. In
+particular, the ESEF report and our assurance opinion contained therein are to be used solely together with the assured ESEF documents
+made available in electronic form.
+Wirtschaftsprüferin
+-
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
+to Art. 11 of the EU Audit Regulation (long-form audit report).
+We were elected as group auditor by the Annual Shareholders' Meeting on February 9, 2023. We were engaged by the Supervisory Board
+on February 9, 2023. We have been the group auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October
+1, 2008 to September 30, 2009.
+Further information pursuant to Art. 10 of the EU Audit Regulation
+evaluate whether the tagging of the ESEF documents with Inline XBRL technology (iXBRL) in accordance with the requirements of Arts.
+4 and 6 of Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, enables an
+appropriate and complete machine-readable XBRL copy of the XHTML rendering.
+•
+• evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited consolidated financial
+statements and to the audited group management report;
+evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
+Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
+specification for this file;
+•
+•⚫ obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
+controls;
+Other matter - use of the auditor's report
+[German Public Auditor]
+In determining the disclosures in accordance with Art. 8 of the EU Taxonomy Regulation, management is required to interpret undefined
+legal terms. Due to the immanent risk that undefined legal terms may be interpreted differently, the legal conformity of their interpretation
+and, accordingly, our assurance engagement thereon are subject to uncertainties.
+10
+Note 31 Members of the Managing Board and Supervisory Board
+18
+10
+17
+Note 29 Declaration of Compliance with the German Corporate Governance Code
+17
+Note 28 Remuneration of the members of the Managing Board and the Supervisory Board
+17
+Note 27 Proposal for the appropriation of net income
+17
+Note 26 Derivative financial instruments and valuation units
+15
+Note 25 Other financial obligations
+15
+Note 24 Financial payment obligations under lease and rental arrangements
+15
+Note 23 Guarantees and other commitments
+14
+45557EE702
+Note 32 List of subsidiaries and associated companies pursuant to Section 285 no. 11, 11a and 11b of the
+German Commercial Code
+Note 22 Shares in investment funds
+1. Income Statement
+Fiscal year
+(2,084)
+4,888
+5,989
+(12,502)
+(13,671)
+17,390
+19,660
+1
+2022
+2023
+Note
+Other operating income
+General administrative expenses
+Selling expenses
+Research and development expenses
+Gross profit
+Cost of sales
+Revenue
+(in millions of €)
+Annual Financial Statements
+14
+Note 30 Subsequent events
+13
+2. Balance Sheet
+1. Income Statement
+Annual Financial Statements
+12
+9
+56699 co co co co ooooo -
+11
+10
+10
+10
+10
+st
+4
+3
+Table of contents
+Note 21 Share-based payment
+This document is an English language translation of the authoritative German version and is not provided
+in the European Single Electronic Format (ESEF). The legally required rendering in ESEF is filed in German
+language with the operator of the German Company Register and published in the German Company
+Register.
+for fiscal 2023
+Annual Financial
+Statements*
+3. Notes to Annual Financial Statements
+Note 1 Revenue
+Note 2 Other operating income and expenses
+Note 3 Income (loss) from investments, net
+Note 4 Interest income and interest expenses
+Note 5 Other financial income (expenses), net
+SIEMENS
+Note 6 Income taxes
+Note 20 Personnel expenses
+8
+13
+13
+Note 18 Liabilities
+13
+Note 17 Other provisions
+12
+Note 16 Provisions for pensions and similar commitments
+Note 15 Shareholders' equity
+Note 19 Material expenses
+Note 13 Deferred tax assets
+Note 12 Receivables and other assets
+Note 11 Inventories
+Note 10 Non-current assets
+Note 9 Expenses relating to prior periods
+Note 8 Income relating to prior periods
+Note 7 Other taxes
+8
+Note 14 Active difference resulting from offsetting
+8
+Allowances on receivables are determined on the basis of the probability of default and country risks.
+Deferred tax assets for differences between valuations of balance sheet line items in accordance to commercial and tax law and tax loss
+carryforwards are recognized if a future tax benefit is expected. Deferred tax assets are netted with deferred tax liabilities. Recognized
+deferred tax assets and liabilities comprise temporary differences of assets, liabilities, and deferred items of entities forming part of the
+Siemens AG tax group and partnerships to the extent that the recovery or settlement of the carrying amount of assets, liabilities, or deferred
+items result in a deductible or taxable amount in the taxable profit (loss) of Siemens AG.
+Offsetting of assets and of income and expenses: Siemens AG measures assets at fair value that are designated as being held exclusively
+to settle specified pension obligations and obligations for early retirement ("Altersteilzeit") arrangements and which cannot be accessed
+by other creditors.
+Pensions and similar commitments: Siemens AG measures its pension obligations using the settlement amount calculated with the
+actuarial projected unit credit method on the basis of biometric probabilities. The discount rate used corresponds to the average market
+interest rate for instruments with an assumed remaining maturity of 15 years as published by German Federal Reserve Bank (Deutsche
+Bundesbank).
+5
+Annual Financial Statements
+Foreign currency translation: Receivables, other current assets, securities, cash and cash equivalents, provisions and liabilities (excluding
+advance payments received on orders) as well as commitments and contingencies denominated in foreign currency are generally
+measured applying the mean spot exchange rate on the balance sheet date. Balance Sheet line items denominated in foreign currency
+which are part of a valuation unit used to hedge foreign currency risk are measured using the mean spot exchange rate on the transaction
+date. Non-current assets and inventories acquired in foreign currency are generally measured applying the mean spot exchange rate on
+the transaction date.
+According to the Act on the Improvement of Company Pensions (Gesetz zur Verbesserung der betrieblichen Altersversorgung), Siemens
+AG is secondarily liable for pension benefits provided under an indirect pension funding vehicle (mittelbarer Durchführungsweg). Siemens
+AG recognizes the underfunding in the item Provisions for pensions and similar commitments as far as the respective assets of the pension
+fund or of the pension and support fund (Pensions- und Unterstützungskasse) do not cover the settlement amount of the respective
+pension obligations.
+Other provisions are recognized in an appropriate and sufficient amount to cover individual obligations for all identifiable risks relating
+to liabilities of uncertain timing and amount and for anticipated losses on onerous contracts, taking account of price and cost increases
+expected to arise in the future. Provisions for agreed personnel restructuring measures were recognized for legal and constructive
+obligations. Significant provisions with a remaining term of more than one year are discounted using a discount rate which corresponds
+to the average market interest rate appropriate for the remaining term of the obligations, as calculated and published by Deutsche
+Bundesbank.
+Guarantees and other commitments: Siemens AG issues parent company guarantees, i.e. guarantees to ensure performance obligations
+incurred from the delivery of goods or provision of services by affiliated and long-term investee companies or their parent companies. For
+measurement purposes, the contract amount of the secured delivery or service agreement is reduced using the straight-line method over
+the planned term of the delivery or service agreement, unless there are reasons for a different risk assessment and an increased liability
+amount ("risk-adequate liability amount"). Credit lines included in the guarantee obligations in the context of financing affiliated
+companies are recognized at their nominal amount.
+Derivative financial instruments are used by Siemens AG almost exclusively for hedging purposes and – if the relevant conditions are
+met- are aggregated with the underlying hedged item into valuation units. When a valuation unit is created, changes in values or cash
+flows from the hedged item and hedging contract are compared. A provision is recognized only for a negative surplus from the ineffective
+part of the market value changes. The unrealized gains and losses from the effective part offset each other completely and are not
+recognized in the Balance Sheet or the Income Statement.
+Classification of items in the annual financial statements: Siemens AG aggregates individual line items of the Income Statement and
+Balance Sheet if the individual line item is not material for providing a true and fair view of the Company's financial position and if such
+an aggregation improves the clarity of the presentation. Siemens AG discloses these items separately in the notes.
+3.3 Notes to the Income Statement
+Financial assets: Impairment losses are recognized if the decline in value is presumed to be other than temporary. This applies, if objective
+evidence, particularly events or changes in circumstances, indicate a significant or other than temporary decline in value. In case of an
+impairment in prior periods, a lower recognized value may not be maintained if the reasons for the impairment do no longer exist.
+Inventories are measured at the lower of average acquisition or production costs and daily values. Production costs comprise, in addition
+to direct costs, an appropriate portion of production and material overheads and depreciation of property, plant and equipment. General
+administration expenses, expenses for social facilities, voluntary social costs and company pension scheme costs are not capitalized. Write-
+downs are recorded to cover inventory risks for reduced usability and technological obsolescence as well as in the context of loss-free
+valuation of unbilled contracts in construction-type and service businesses.
+NOTE 1 Revenue
+Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
+assets at the balance sheet date. If the performance of the underlying assets is lower than a guaranteed return, the pension provision is
+measured by projecting forward the contributions at the guaranteed fixed return and discounting to a present value.
+Special reserve with an equity portion includes reserves pursuant to Section 6b of the German Income Tax Act
+(Einkommensteuergesetz), recognized and transferred in fiscal years prior to the transition to regulations of the German Accounting Law
+Modernisation Act (Bilanzrechtsmodernisierungsgesetz).
+Intangible assets acquired for consideration are capitalized at acquisition costs and amortized on a straight-line basis over a maximum of
+five years or, if longer, the contractually agreed useful life. Items are amortized on a pro rata temporis basis in the year of acquisition. The
+capitalization option for internally generated intangible assets is not used.
+3 to 8 years
+Revenue by lines of business
+Annual Financial Statements
+3. Notes to Annual Financial Statements
+3.1 General Disclosures
+Siemens AG has registered offices in Berlin and Munich, Germany. The Company is registered in the commercial register maintained by
+the local courts in Berlin Charlottenburg, Germany, under the entry number HRB 12300, and in Munich, Germany, under the entry number
+HRB 6684.
+The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
+Commercial Code (Handelsgesetzbuch, HGB) and the German Stock Corporation Act (Aktiengesetz, AktG). Amounts are presented in
+millions of euros (€ million). Due to rounding, numbers presented may not add up precisely to totals provided.
+3.2 Accounting and Measurement Principles
+Revenue are proceeds from selling and leasing products, providing services and granting licenses, including licensing contracts for the
+use of the Siemens trademark.
+Negative interest from financial investments is presented as a deduction in interest income, and positive interest from borrowings as a
+deduction in interest expenses.
+Acquired goodwill is generally amortized systematically over the expected useful life of five to 15 years. The expected useful life is based
+on the expected use of the acquired businesses and is determined in particular by economic factors such as future growth and profit
+expectations, synergy effects and employee base.
+Property, plant and equipment: The components of production costs are described in the context of the explanations for inventories. In
+general, property, plant and equipment is depreciated using the straight-line method. In certain cases, the declining balance method is
+applied, whereby a switch is made from the declining balance to the straight-line method as soon as the latter results in higher depreciation
+expense. Items are depreciated on a pro rata temporis basis in the year of acquisition. Low-value non-current assets that are subject to
+wear and tear, movable, and capable of being used independently, are expensed immediately or capitalized and fully depreciated in the
+year of acquisition.
+Useful lives of property, plant and equipment
+Factory and office buildings
+Other buildings
+Technical equipment and machines
+Other equipment, plant and office equipment
+Equipment leased to others
+20 to 50 years
+5 to 10 years
+mostly 10 years
+mostly 3 to 5 years
+(in millions of €)
+6,127
+Smart Infrastructure
+50
+50
+24
+24
+321
+321
+343
+Sep 30, 2023
+Deviation
+from carrying
+amount
+amount
+1,941
+Carrying
+602,270
+(29,029)
+(15,853)
+(31,134)
+(296,040)
+307,201
+667,125
+2023
+Fiscal year
+Shares in investment assets according to investment objects
+Money market funds
+Share-based funds
+Bond-based funds
+Mixed funds
+(in million of €)
+2,336
+The following shares in investment funds according to investment objects were held:
+2,679
+Generally, shares in investment funds are accounted for securities held as non-current financial assets. Exceptions were those shares which
+represented plan assets and therefore were not accessible by all other creditors. These shares are held exclusively for the purpose of
+settling liabilities arising from post-employment obligations or comparable obligations with a long-term maturity, and are to be offset
+against such liabilities.
+5
+1,222
+24,619
+5,119
+161
+thereof
+maturities
+more than
+one year
+51
+26,093
+14
+104,511
+8,036
+23,040
+70,041
+101,116
+2023
+3,395
+Sep 30,
+Guarantees and other commitments
+thereof Others
+thereof relating to performance guarantees on behalf of affiliated companies
+thereof relating to financing of affiliated companies
+Warranty obligations
+Obligations from guarantees
+(in millions of €)
+NOTE 23 Guarantees and other commitments
+343
+1,762
+21,630
+1,227
+NOTE 22 Shares in investment funds
+Outstanding, end of fiscal year
+The following table shows the changes of stock awards subject to performance conditions held by beneficiaries of Siemens AG and, for
+the first time since fiscal 2023 due to the overall increase in volume, also stock awards not subject to performance conditions:
+Annual Financial Statements
+13
+Siemens AG grants stock awards to members of the Managing Board, members of the senior management and other eligible employees.
+Stock awards to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic value
+(= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired, if
+applicable, considering the estimated target attainment at the balance sheet date.
+Stock Awards
+Siemens AG allows employees and members of the Managing Board to participate in share-based payment programs. For the purpose of
+servicing share-based payment programs, Siemens AG also delivers Siemens shares, which have been granted by affiliated companies.
+49,000
+6,300
+7,100
+8,300
+27,200
+2023
+Fiscal year
+NOTE 21 Share-based payment
+Employees
+Administration and general functions
+Research and development
+Sales
+Production
+Personnel expenses did not include the expenses resulting from the compounding of the pension and personnel-related provisions, which
+are included in other financial income (expenses), net. Expenses for pensions mainly included effects from pension increases due to the
+continued high consumer price index as part of the actuarial valuation of the settlement amount of pension obligations.
+The breakdown of employees per function is as follows:
+(6,073)
+(6,603)
+(1,213)
+(1,148)
+(674)
+(in number of shares)
+The pro rata intrinsic value of all matching shares issued to beneficiaries of Siemens AG amounted to €47 million.
+Non-vested, beginning of fiscal year
+Vested and fulfilled
+Organizational changes
+Settled
+Forfeited
+Vested and fulfilled
+Granted
+Outstanding, beginning of fiscal year
+(in number of shares)
+The following table shows the changes in the entitlements to matching shares of beneficiaries of Siemens AG:
+Matching shares granted to beneficiaries of Siemens AG are expensed as incurred over the vesting period and are measured at the intrinsic
+value (= share price of the Siemens stock) at the balance sheet date on a pro rata basis for the proportion of the vesting period expired at
+the balance sheet date.
+Plan participants receive the right to one Siemens share without payment (matching share) for every three investment shares continuously
+held over a vesting period.
+Share Matching Program
+The pro rata intrinsic value of all stock awards issued to beneficiaries of Siemens AG amounted to €343 million at the balance sheet date.
+4,740,136
+(75,860)
+(5,005)
+(924,465)
+(730,891)
+1,364,429
+5,111,928
+2023
+Fiscal year
+Non-vested, end of fiscal year
+Organizational changes
+Settled
+Forfeited
+Granted
+ph
+1,657
+Sep 30, 2022
+(166)
+166
+1,040
+(3,492)
+2,730
+3,102
+Loans
+4,673
+1,598
+(1,450)
+4,821
+4,821
+4,673
+Securities
+1,591
+268
+(133)
+1,727
+(217)
+63
+(154)
+1,572
+1,374
+78,476
+2,136
+(4,531)
+(3,778)
+6,222
+2
+3,227
+366
+(493)
+3,100
+(2,298)
+(225)
+445
+(2,078)
+1,022
+928
+Financial assets
+Shares in affiliated companies
+Shares in investments
+64,580
+269
+(783)
+64,065
+(2,153)
+(12)
+58
+222
+(1,886)
+62,180
+62,427
+7,632
+(1,412)
+76,835
+(6,900)
+(179)
+Sep 30,
+2023
+2022
+812
+762
+278
+298
+399
+350
+937
+910
+60
+57
+2,487
+2,377
+(in millions of €)
+Trade receivables
+Receivables from affiliated companies
+Other receivables and other assets
+thereof from long-term investees
+thereof other assets
+Receivables and other assets
+Sep 30, 2023
+thereof
+maturities
+more than
+one year
+15
+NOTE 12 Receivables and other assets
+Inventories
+Advance payments made
+Cost of unbilled contracts
+286
+1,261
+(5,532)
+71,303
+71,576
+Non-current assets
+82,208
+2,680
+(4,324)
+80,565
+(9,551)
+(444)
+(689)
+286
+(7,955)
+72,610
+72,657
+9
+Annual Financial Statements
+Loans included loans to affiliated companies in the amount of to €4,383 million (2022: €4,244 million), and other loans in the amount of
+€438 million (2022: €430 million).
+Total impairments of non-current assets were €179 million (2022: €4,268 million).
+NOTE 11 Inventories
+(in millions of €)
+Raw materials and supplies
+Work in progress
+Finished products and goods
+1,754
+(4,186)
+(4,767)
+2022
+The capital stock of Siemens AG is divided into 800,000,000 registered shares (2022: 850,000,000 registered shares) of no-par value with
+a notional value of €3.00 per share.
+Authorized capital
+As of September 30, 2023, Siemens AG had authorized capital totaling a nominal amount of €600 million, which can be issued in
+instalments and with different time limits by issuing up to 200 million registered no-par value shares.
+In detail, there are the following authorizations to increase the capital stock:
+.
+By resolution of the Annual Shareholders' Meeting of February 3, 2021, the Managing Board is authorized to increase the capital stock
+until February 2, 2026 by up to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash
+(Authorized Capital 2021). Subscription rights of existing shareholders are excluded. The new shares may exclusively be offered to
+employees of Siemens AG and its affiliated companies (employee shares). To the extent permitted by law, employee shares may also be
+issued in such a manner that the contribution to be paid on such shares is covered by that part of the annual net income which the
+Managing Board and the Supervisory Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock
+Corporation Act.
+Further, by resolution of the Annual Shareholders' Meeting of January 30, 2019, the Managing Board is authorized to increase, with the
+approval of the Supervisory Board, the capital stock until January 29, 2024 by up to €510 million through the issuance of up to 170
+million registered no-par value shares against cash contributions and/or contributions in kind (Authorized Capital 2019). Under certain
+conditions, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude shareholders' subscription rights
+in the event of issue against contributions in kind. In the case of issue against cash payment, the shares are generally to be offered to
+shareholders for subscription. However, the Managing Board is authorized, with the consent of the Supervisory Board, to exclude
+subscription rights, firstly for any fractional amounts, secondly, to grant dilution compensation in connection with convertible bonds or
+bonds with warrants already issued, and thirdly, under certain further conditions, if the issue price of the new shares does not fall
+significantly below the stock exchange price of the Company's already listed shares.
+Treasury shares
+The following table presents the development of treasury shares:
+Fiscal year
+(in number of shares)
+Treasury shares, beginning of fiscal year
+Retirement of treasury shares
+Share buyback
+Issuance under share-based payments and employee share programs
+Treasury shares, end of fiscal year
+2023
+57,454,171
+(50,000,000)
+6,853,091
+(4,227,344)
+10,079,918
+Siemens AG held 10,079,918 treasury shares, equaling a nominal amount of €30 million, representing 1.3% of the capital stock.
+On June 24, 2021, Siemens announced a share buyback with a volume of up to €3 billion in the period from the beginning of fiscal 2022
+to 2026. The share buyback, which began on November 15, 2021 and will run no longer than until September 15, 2026, is executed based
+on the authorizations granted by the Annual Shareholders' Meeting on February 5, 2020. In addition to the dividend policy, the share
+buyback is intended to allow shareholders to continuously participate in the success of the Company. In fiscal 2023, Siemens AG
+repurchased a total of 6,853,091 treasury shares under this buyback program. This represented a nominal amount of €21 million or 0.9%
+of capital stock. In the current reporting period, €884 million (excluding incidental transaction charges) were spent for this purpose; this
+represents a weighted average stock price of €129.04 per share. The purchases were made in the reporting period on 248 Xetra trading
+days and were carried out by a bank that had been commissioned by Siemens AG; the shares were purchased exclusively on the electronic
+trading platform of the Frankfurt Stock Exchange (Xetra). The average volume on these trading days was about 27,633 shares.
+11
+Annual Financial Statements
+21,422
+The treasury shares purchased under the share buybacks may be used for purposes of retirement, distribution to employees, members of
+the executive bodies of companies affiliated with Siemens and members of the Managing Board, as well as the servicing of convertible
+bonds with attached warrants.
+4,460
+586
+2,400
+(172)
+150
+(21)
+13
+(30)
+2,378
+(21)
+13
+2,370
+8,445
+150
+142
+8,737
+6,188
+(150)
+(864)
+431
+950
+6,555
+3,613
+20,623
+(3,362)
+3,510
+3,760
+(884)
+(3,362)
+Following the 2023 Annual Shareholders' Meeting, the Management Board resolved to redeem 50,000,000 treasury shares.
+In fiscal 2023, Siemens AG re-issued in total 4,227,344 treasury shares under the exclusion of subscription rights in connection with share-
+based payments and employee share programs in the Group, equaling a nominal amount of €13 million and 0.5% of capital stock. The
+Company received in total €236 million for 1,843,831 shares, re-issued against payment of a purchase price. Siemens AG received this
+amount for unrestricted use. All shares were sold as investment shares in connection with the share matching program to plan participants.
+In each case, the purchase price was determined on the basis of the closing rate in Xetra trading, determined on a monthly effective date.
+Therefore, in the reporting period, in total 1,297,391 shares related to the monthly investment plan at a weighted average share price of
+€138.69 per share, 227,427 shares related to the share matching plan at a weighted average share price of €145.02 per share, and
+319,013 shares related to the base share program at a weighted average share price of €72.51 per share (after consideration of a 50%
+subsidy by the Company). The other shares re-issued during the reporting period can be primarily attributed to the servicing of stock
+awards granted in fiscal 2019 totaling 1,693,126 shares, to 573,467 matching shares under the share matching program for fiscal 2020,
+and to 116,920 jubilee shares.
+Information on amounts subject to dividend payout restrictions
+up to 1
+year
+1 year up
+more than
+Sep 30,
+up to
+1 year up
+to 5 years
+5 years
+2022
+1 year
+to 5 years
+thereof
+maturities
+more than
+5 years
+339
+2
+337
+639
+639
+2,374
+2,367
+7
+2,249
+2,209
+Digital Industries
+Sep 30,
+2023
+Liabilities to affiliated companies
+Trade payables
+Liabilities to banks
+(in millions of €)
+Fiscal Year
+2023
+Amount representing the difference of the recognition of provisions and similar commitments based on average interest rates covering ten and
+seven years, respectively
+257
+Amounts from the capitalization of deferred taxes
+2,294
+Amounts from the capitalization of assets at fair value
+18
+These amounts subject to dividend payout restrictions face other retained earnings in a sufficiently high amount. The unappropriated net
+income of €3,760 million is available for distribution.
+Disclosures on shareholdings of Siemens AG
+As of September 30, 2023, the following information on shareholdings subject to reporting requirements was available to the Company
+pursuant to Section 160 para 1 No. 8 German Stock Corporation Act (Aktiengesetz):
+(150)
+BlackRock, Inc., Wilmington, USA, informed us on August 7, 2023, that as of August 2, 2023, its percentage of voting rights (held either
+directly or indirectly) in Siemens AG amounted to 6.68% of which 6.56% were voting rights from 52,480,190 shares due to their
+participation and 0.12% were attributable to instruments.
+The Werner Siemens-Stiftung, Zug, Switzerland, notified us on January 21, 2008, that its percentage of voting rights (held either directly
+or indirectly) in Siemens AG exceeded the threshold of 3% of the voting rights in our Company on January 2, 2008 and amounted to 3.03%
+(27,739,285 voting rights) as per this date.
+NOTE 16 Provisions for pensions and similar commitments
+In Germany, Siemens AG provides pension benefits through the BSAV (Beitragsorientierte Siemens Altersversorgung), frozen legacy plans
+and deferred compensation plans. The majority of Siemens' active employees participate in the BSAV. The benefits are predominantly
+based on nominal contributions by the Company and investment returns on assets designated to that plan, subject to a minimum return
+guaranteed by the Company. At inception of the BSAV, benefits provided under the frozen legacy plans were modified to substantially
+eliminate the effects of compensation increases. However, the frozen plans still expose Siemens to investment risk, interest rate risk,
+inflation risk and longevity risk. The pension benefits are funded via contractual trust arrangements (CTA). A portion of these trust assets
+also covers the pension obligations of other domestic subsidiaries. Therefore, the assets do not meet the criteria for offsetting against the
+pension obligation and are presented as financial assets of Siemens AG.
+The actuarial assumptions for valuation of the settlement amount as of September 30, 2023 were based, among others, on a discount
+rate of 1.81% and an average weighted pension increase of 2.40% p.a. The mortality tables used (Siemens Bio 2017/2023) are primarily
+based on data of the German Siemens population, using a set of formulas that corresponds to generally accepted actuarial standards.
+NOTE 17 Other provisions
+The major amounts in other provisions were contributed by provisions related to personnel costs amounting to €1,136 million, provisions
+for contingent losses from derivative financial instruments amounting to €723 million, provisions for warranties, delay compensations,
+penalties for delay and breach of contract amounting to €639 million, provisions for decontamination obligations amounting to €489
+million, and provisions related to guarantees and expected obligations from consortium agreements amounting to €267 million.
+In May 2021, Siemens AG and the Federal Republic of Germany entered into a public-law contract based on which the obligation of final
+disposal of nuclear waste is transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the
+payment is subject to the approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made
+to measure the obligations that remain with Siemens AG, with regard to conditioning and packaging of nuclear waste, as well as
+intermediate storage and transport to the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032.
+12
+NOTE 18 Liabilities
+Annual Financial Statements
+thereof
+maturities
+(in million of €)
+Goldman Sachs Group, Inc., Wilmington, USA, informed us on December 22, 2022, that as of December 16, 2022, its percentage of voting
+rights (held either directly or indirectly) in Siemens AG amounted to 4.15% of which 0.28% were voting rights from 2,377,304 shares due
+to their participation and 3.87% were attributable to instruments.
+108
+2,550
+Net income
+57,737
+63,417
+Liabilities
+137
+137
+91
+91
+therein for social security
+93
+93
+111
+111
+therein from taxes
+61
+1,013
+1,074
+19
+1,198
+1,217
+thereof miscellaneous liabilities
+6
+6
+5
+5
+thereof to long-term investees
+4,095
+61
+1,585
+60,010
+Fiscal year
+2023
+Personnel expenses
+Expenses for pensions
+Social security contributions and expenses for other employee benefits
+Wages and salaries
+(in millions of €)
+(9,117)
+(10,257)
+(3,576)
+(4,210)
+(5,541)
+(6,047)
+2022
+2023
+Fiscal year
+NOTE 20 Personnel expenses
+Material expenses
+Costs of purchased services
+Expenses for raw materials, supplies and purchased merchandise
+(in millions of €)
+NOTE 19 Material expenses
+3.5 Other disclosures
+Liabilities to affiliated companies resulted primarily from intragroup-financing activities.
+1,684
+6,220
+67,914
+1,019
+1,080
+19
+Active difference resulting from offsetting
+Acquisition cost of designated plan assets
+Sep 30,
+2023
+1,011
+(694)
+(285)
+33
+939
+10
+10
+NOTE 15 Shareholders' equity
+(in millions of €)
+Subscribed capital
+Treasury shares
+Issued capital
+Capital reserve
+Other retained earnings
+Unappropriated net income
+Shareholders' equity
+Subscribed capital
+Oct 01, 2022
+Retirement of
+treasury shares
+Share buybacks
+Issuance of treasury
+shares under share-
+based payments
+and employee
+share programs
+Annual Financial Statements
+Dividend
+for 2022
+Settlement amount for offset personnel-related provisions
+Settlement amount for offset pension provisions
+Fair value of designated plan assets
+(in millions of €)
+1,203
+1,222
+Other liabilities
+1,684
+6,119
+56,143
+63,946
+1,585
+3,732
+54,165
+59,483
+40
+Sep 30, 2023
+4,345
+193
+161
+1,330
+193
+5,295
+4,588
+29,090
+Receivables from affiliated companies resulted primarily from intragroup-financing activities and included trade receivables totaling €15
+million (2022: €12 million).
+NOTE 13 Deferred tax assets
+Deferred tax assets resulted mainly from pension provisions and pension-related assets, from deferred taxes of companies forming part of
+the Siemens AG tax group, as well as from other provisions and tax loss carryforwards. Deferred taxes from partnerships had an offsetting
+effect.
+For the measurement of deferred taxes, a tax rate of 31.33% was applied. Deviating from this, a tax rate of 15.83% was applied for
+temporary differences related to assets, liabilities and prepaid/deferred items of partnerships.
+NOTE 14 Active difference resulting from offsetting
+1,340
+144
+Market value
+2,284
+(1)
+138
+(28)
+(487)
+(181)
+Result from changes in provisions for risks relating to derivative financial instruments
+Reversal of impairments of loans and securities
+Result from foreign currency, interest rate and other derivative financial instruments
+Result from realization of monetary balance sheet items denominated in foreign currencies
+Interest component of changes in the pension and personnel-related provisions that are not offset
+against designated plan assets
+(52)
+22
+Financial income (expenses), (net) from pension and personnel-related provisions that are offset
+against designated plan assets
+479
+(89)
+19
+44
+18
+(21)
+Expenses from designated plan assets
+Income from designated plan assets
+Interest component of changes in the pension and personnel-related provisions that are offset
+against designated plan assets
+2022
+Fiscal year
+2023
+(in millions of €)
+NOTE 5 Other financial income (expenses), net
+(1)
+510
+59
+(361)
+(325)
+(527)
+2022
+2023
+Fiscal year
+Income taxes
+Deferred taxes
+Income tax expenses
+(in millions of €)
+Annual Financial Statements
+NOTE 6 Income taxes
+7
+Result from foreign currency, interest rate and other derivative financial instruments included income of €536 million from the termination
+of interest rate hedging contracts and combined interest and currency hedging contracts in connection with intragroup financing.
+(1,044)
+445
+Other financial income (expenses), net
+(3)
+Other financial expenses
+40
+23
+(904)
+Impairments on investments
+Impairments of loans and securities
+76
+71
+Both the increase in interest income from €387 million in the prior year to €1,014 million in the current fiscal year and the swing in interest
+expense from income of €51 million in the prior year to expenses of €1,586 million in the current fiscal year resulted primarily from the
+effects of higher interest rates in connection with intragroup financing. Interest income included interest income from affiliated companies
+of €890 million (2022: €347 million). Interest expenses included interest expenses from affiliated companies of €1,548 million (2022:
+€67 million interest income). Interest income from loans of non-current financial assets amounted to €113 million (2022: €80 million).
+NOTE 4 Interest income and interest expenses
+In fiscal year 2023, Siemens AG sold 3.5% of the shares in Siemens Energy AG that were held as pension assets at that time. This resulted
+in a gain of €213 million from the disposal of investments. As of the balance sheet date, Siemens AG directly held a 21.0% stake in Siemens
+Energy AG. A reversal of impairment in the amount of €166 million was made on these shares based on Xetra closing price on the balance
+sheet date. As of the reporting date, the carrying amount of the investment in Siemens Energy AG amounted to €2.1 billion.
+Income from profit transfer agreements with affiliated companies included profit transfers from Siemens Beteiligungen Inland GmbH,
+Germany, amounting to €1,323 million, and from Siemens Financial Services GmbH, Germany, amounting to €188 million.
+Impairments on investments included an impairment of €164 million on a stake in Thoughtworks Holding, Inc., U.S.
+11,220
+2,313
+19,660
+Fiscal year
+2023
+14,708
+1,606
+3,346
+19,660
+NOTE 2 Other operating income and expenses
+Other operating income included income from an intragroup service contract in the amount of €148 million. Income from the release of
+the special reserve with an equity portion was €1 million (2022: €1 million).
+Other operating expenses included a loss of €196 million on the disposal relating to the carve-out of business activities into Innomotics
+GmbH, Germany (a supplier of engines and large drives).
+6
+NOTE 3 Income (loss) from investments, net
+Annual Financial Statements
+(in millions of €)
+Income from investments
+thereof from affiliated companies
+Income from profit transfer agreements with affiliated companies
+2023
+Fiscal year
+Income (loss) from investments, net
+Losses from the disposal of investments
+Gains from the disposal of investments
+Reversals of impairments on investments
+2023
+229
+Fiscal year
+Asia, Australia
+Income from investments included in particular profit distributions from Siemens Ltd., China, amounting to €1,987 million, and from
+Siemens Healthineers AG, Germany, amounting to €634 million.
+4,204
+4,734
+(124)
+(19)
+61
+240
+61
+224
+(3,997)
+(179)
+(61)
+3,474
+1,562
+4,768
+2,905
+4,789
+2,907
+2022
+(1)
+Other revenue
+Revenue
+Revenue by region
+(in millions of €)
+Europe, C.I.S., Africa, Middle East
+Americas
+Revenue
+823
+Other financial income
+498
+(12)
+319
+(116)
+(20)
+9
+(128)
+192
+87
+(53)
+630
+(353)
+(40)
+48
+(345)
+285
+153
+Property, plant and equipment
+Land, land rights and buildings, including
+buildings on third-party land
+445
+5
+66
+1
+93
+39
+Sep 30, 2023
+Carrying amount
+Sep 30, 2022
+Acquisition or production costs
+Oct 01, 2022
+Additions Reclassifications
+Disposals
+Sep 30, 2023
+Oct 01, 2022
+Depreciation/
+amortization
+Write-ups
+Concessions and industrial property rights
+Goodwill
+303
+49
+203
+129
+505
+178
+(41)
+310
+(237)
+(20)
+(217)
+(9)
+442
+(258)
+186
+(872)
+298
+263
+Equipment leased to others
+170
+6
+(6)
+170
+(109)
+(11)
+5
+(115)
+55
+61
+Advanced payments made and construction in
+progress
+110
+107
+(59)
+(12)
+145
+(141)
+(917)
+1,170
+(196)
+(8)
+7
+(259)
+183
+187
+Technical equipment and machinery
+1,322
+78
+42
+(269)
+Sep 30, 2023
+1,173
+(1,013)
+(65)
+247
+(830)
+343
+309
+Other equipment, plant and office equipment
+1,180
+171
+16
+(298)
+Disposals
+Expenses from loss transfers from affiliated companies
+NOTE 10 Non-current assets
+Deferred taxes included income from an increase in deferred taxes related to partnerships, pension provisions, and from entities forming
+part of the Siemens AG tax group.
+NOTE 7 Other taxes
+Other taxes of €21 million (2022: €11 million) were included in functional costs.
+NOTE 8 Income relating to prior periods
+The income statement of Siemens AG included income relating to prior periods of €520 million, resulting mainly from the release of
+provisions.
+NOTE 9 Expenses relating to prior periods
+The income statement of Siemens AG included expenses relating to prior periods of €34 million.
+8
+3.4 Notes to the Balance Sheet
+(in millions of €)
+Annual Financial Statements
+Accumulated depreciation/amortization
+Intangible assets
+42
+100
+123
+1,247
+14
+Siemens Ltd., China, Beijing / China
+Siemens International Trading Ltd., Shanghai, Shanghai / China
+177
+78
+23
+Siemens Industry Software (Shanghai) Co., Ltd., Shanghai / China
+100
+170
+2,219
+100
+100
+64
+Block Imaging International, LLC, Wilmington, DE / United States
+100
+153
+21
+Siemens Mobility Technologies (Beijing) Co., Ltd, Beijing / China
+100
+87
+Siemens Mechatronics Technology JiangSu Ltd., Yizheng / China
+8
+85
+Siemens Industrial Automation Products Ltd., Chengdu, Chengdu / China
+57
+Siemens Medium Voltage Switching Technologies (Wuxi) Ltd., Wuxi / China
+100
+104
+Siemens Mobility Equipment (China) Co., Ltd, Shanghai Pilot Free Trade Zone / China
+100
+Siemens Healthineers Digital Technology (Shanghai) Co., Ltd., Shanghai / China
+219
+100
+29
+22
+Siemens Factory Automation Engineering Ltd., Beijing / China
+100
+71
+7
+Siemens Electronic Design Automation (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone /
+China
+Annual Financial Statements
+23
+85
+103
+87
+Siemens Electrical Drives Ltd., Tianjin / China
+100
+Siemens Finance and Leasing Ltd., Beijing / China
+231
+9
+100
+Siemens Healthineers Ltd., Shanghai / China
+100
+37
+92
+100
+146
+23
+100
+25
+(28)
+Siemens Healthcare Diagnostics Manufacturing Ltd., Shanghai, Shanghai / China
+Siemens Healthineers Diagnostics (Shanghai) Co., Ltd., Shanghai / China
+100
+229
+25
+Siemens Financial Services Ltd., Beijing / China
+124
+Siemens Numerical Control Ltd., Nanjing, Nanjing / China
+Siemens Sensors & Communication Ltd., Dalian / China
+81
+100
+Associates in Medical Physics, LLC, Greenbelt, MD / United States
+93
+10
+SIEMENS LARGE DRIVES INDIA PRIVATE LIMITED, Mumbai / India
+100
+27
+282
+Siemens Healthcare Private Limited, Mumbai / India
+100
+102
+17
+Siemens Financial Services Private Limited, Mumbai / India
+100
+34
+2
+Siemens S.A.C., Surquillo / Peru
+100
+100
+22
+22
+Annual Financial Statements
+Siemens S.A.S., Tenjo / Colombia
+2
+47
+100
+Grupo Siemens S.A. de C.V., Mexico City / Mexico
+71
+88
+100
+Siemens, S.A. de C.V., Mexico City / Mexico
+58
+130
+103
+1008
+18
+99
+100
+205
+116
+Siemens Shenzhen Magnetic Resonance Ltd., Shenzhen / China
+100
+196
+Siemens Standard Motors Ltd., Yizheng / China
+86
+100
+26
+9
+121
+80
+107
+Siemens Shanghai Medical Equipment Ltd., Shanghai / China
+63
+84
+100
+249
+9
+C&S Electric Limited, New Delhi / India
+100
+37
+21
+Siemens Limited, Hong Kong / Hong Kong
+505
+53
+39
+Zhenjiang Siemens Busbar Trunking Systems Co. Ltd., Yangzhong / China
+55
+48
+33
+Siemens Switchgear Ltd., Shanghai, Shanghai / China
+SIEMENS EDA (INDIA) PRIVATE LIMITED, New Delhi / India
+82
+75
+1
+78
+100
+115
+100
+(1)
+142
+100
+(2)
+145
+100
+53
+183
+100
+1,212
+Siemens USA Holdings, Inc., Wilmington, DE / United States
+100
+53
+1008
+96
+Fluence Energy, Inc., Wilmington, DE / United States
+(297)
+645
+334
+Healthcare Technology Management, LLC, Wilmington, DE / United States
+(2)
+138
+100
+78
+59
+441
+205
+Mannesmann Corporation, New York, NY / United States
+Medical Physics Holdings, LLC, Dover, DE / United States
+Next47 Fund 2018, L.P., Palo Alto, CA / United States
+Next47 Fund 2019, L.P., Palo Alto, CA / United States
+Next47 Fund 2020, L.P., Palo Alto, CA / United States
+Next47 Fund 2021, L.P., Palo Alto, CA / United States
+Next47 Fund 2022, L.P., Palo Alto, CA / United States
+PETNET Solutions, Inc., Knoxville, TN / United States
+PolyDyne Software Inc., Dallas, TX / United States
+Siemens Capital Company LLC, Wilmington, DE / United States
+Siemens Corporation, Wilmington, DE / United States
+Siemens Financial Services, Inc., Wilmington, DE / United States
+Siemens Government Technologies, Inc., Wilmington, DE / United States
+Siemens Healthcare Diagnostics Inc., Los Angeles, CA / United States
+Siemens Healthineers Holdings, LLC, Wilmington, DE / United States
+Siemens Industry Software Inc., Wilmington, DE / United States
+Siemens Industry, Inc., Wilmington, DE / United States
+2
+49
+100
+Hickory Run Holdings, LLC, Wilmington, DE / United States
+1,674
+43
+Siemens Public, Inc., Iselin, NJ / United States
+100
+7,358
+(121)
+100
+515
+22
+100
+13,895
+2,111
+100
+6,259
+1,090
+100
+1,747
+94
+100
+170
+100
+100
+5,229
+100
+980
+47
+Siemens Mobility, Inc, Wilmington, DE / United States
+100
+17,743
+793
+3
+Siemens Medical Solutions USA, Inc., Wilmington, DE / United States
+25
+18
+Siemens Logistics LLC, Wilmington, DE / United States
+100
+5,964
+1,318
+100
+100
+141
+95
+782
+7
+5
+Innomotics Pty Ltd, Bayswater / Australia
+100
+94
+-
+Brightly Software Holdings Pty. Ltd., Sydney / Australia
+100
+100
+(4)
+Brightly Software Australia Pty Ltd, Sydney / Australia
+Asia, Australia (49 companies)
+100
+7,883
+(85)
+Varian Medical Systems, Inc., Wilmington, DE / United States
+81
+100
+Siemens Ltd., Bayswater / Australia
+94
+30
+22
+Siemens Circuit Protection Systems Ltd., Shanghai, Shanghai / China
+100
+9
+1
+Innomotics Large Drives (Shanghai) Co., Ltd., Shanghai Pilot Free Trade Zone / China
+16
+100
+25
+Beijing Siemens Cerberus Electronics Ltd., Beijing / China
+100
+161
+15
+Siemens Mobility Pty Ltd, Melbourne / Australia
+100
+28
+Siemens Electrical Apparatus Ltd., Suzhou, Suzhou / China
+6,411
+85
+(34)
+(67)
+100
+(35)
+(6)
+275
+(342)
+100
+176
+(1)
+175
+100
+(43)
+60
+75
+(64)
+100
+Varian Medical Systems International Holdings, Inc., Wilmington, DE / United States
+(115)
+ECG Acquisition, Inc., Wilmington, DE / United States
+ECG TopCo Holdings, LLC, Wilmington, DE / United States
+Electrify America, LLC, Wilmington, DE / United States
+eMeter Corporation, Wilmington, DE / United States
+730
+(99)
+Thoughtworks Holding Inc., Wilmington, DE / United States
+100
+(77)
+(41)
+Supplyframe, Inc., Glendale, CA / United States
+(70)
+100
+2
+(3)
+100
+10,415
+136
+1007
+Brightly Software, Inc., Wilmington, DE / United States
+Building Robotics Inc., Wilmington, DE / United States
+CEF-L Holding, LLC, Wilmington, DE / United States
+Corindus, Inc., Wilmington, DE / United States
+9
+SMI Holding LLC, Wilmington, DE / United States
+Roland Busch
+Warranty obligations included obligations of Siemens AG towards affiliated companies totaling €1.0 billion.
+1960
+Chairman of the Supervisory Board of
+Allianz SE
+Deputy Chairman of the Central Works
+Council and of the Combine Works
+Council of Siemens AG
+Chairman of the Supervisory Board of
+RWE AG
+Chairwoman of the Central Works Council March 26,
+of Siemens AG
+(until February 9, 2023)
+(as of February 9, 2023)
+Michael Diekmann
+January 24,
+2008
+Second Deputy Chairman
+Tobias Bäumler²
+Werner Brandt
+First Deputy Chairwoman
+Birgit Steinborn²
+- Urban Partners A/S, Denmark (Deputy Chairman)
+- Northvolt AB, Sweden (Chairman)
+- C3.ai, Inc., USA³
+Positions outside Germany:
+(Dr. rer. pol.)
+2028
+January 3,
+1954
+January 31, 2027
+- Airbus Defence and Space GmbH, Taufkirchen
+German positions:
+- HPE, Houston, Texas, USA³
+Positions outside Germany:
+- Fresenius SE & Co. KGaA, Bad Homburg (Deputy
+Chairman)³
+- Fresenius Management SE, Bad Homburg
+- Allianz SE, Munich (Chairman)³
+German positions:
+2018
+January 31, 2028
+December 23, January 24, 2023
+1954
+2008
+2028
+October
+16, 2020
+October 10,
+1979
+RWE AG, Essen (Chairman)³
+2018
+German positions:
+domestic or foreign controlling bodies of business
+enterprises (as of September 30, 2023)
+expires
+2025
+Term
+Member
+since
+October 1,
+2013
+- Siemens Aktiengesellschaft Österreich,
+Austria (Chairman)
+Positions outside Germany:
+- Siemens Mobility GmbH, Munich
+(Chairman)
+- Siemens Healthineers AG, Munich¹
+(as of September 30, 2023)
+German positions:
+Group company positions
+- European School of Management and
+Technology GmbH, Berlin
+German positions:
+- Siemens Energy Management GmbH,
+Munich
+- Siemens Energy AG, Munich'
+German positions:
+- Siemens Energy Management GmbH,
+Munich
+24
+8 Values from fiscal year August 01, 2023 - September 30, 2023
+7 Values from fiscal year July 21, 2023 - September 30, 2023
+6 Values from fiscal year July 22, 2022 - September 30, 2022
+5 Values from fiscal year January 01, 2022 - December 31, 2022
+- Siemens France Holding SAS, France
+Positions outside Germany:
+- Siemens Energy AG, Munich³
+Arabia Electric Ltd. (Equipment), Saudi
+- Siemens Ltd., India¹
+Date of birth
+October 27,
+1965
+Chairman of the Supervisory Board of
+Siemens AG
+Jim Hagemann Snabe
+Chairman
+Occupation
+Name
+Memberships in supervisory boards whose
+establishment is required by law or in comparable
+Members of the Supervisory Board and positions held by Supervisory Board members
+In fiscal 2023, the Supervisory Board had the following members:
+- Siemens Proprietary Ltd., South Africa
+(Chairman)
+Positions outside Germany:
+- Siemens Healthineers AG, Munich
+(Chairman)'
+(Chairman)
+- Siemens Healthcare GmbH, Munich
+German positions:
+Siemens W.L.L., Qatar
+(Chairman)
+- Siemens Schweiz AG, Switzerland
+Siemens Ltd., Saudi Arabia (Deputy
+Chairman)
+Arabia (Deputy Chairman)
+- Siemens Energy Management GmbH, Munich
+German positions:
+- Siemens Mobility GmbH, Munich (Deputy
+Chairwoman)
+Regina E. Dugan
+(PhD)
+Member of supervisory boards
+Director of the London School of
+Economics
+Member of supervisory boards
+February 9, 2027
+2023
+February 9, 2028
+2023
+German positions:
+- Airbus GmbH, Hamburg
+-MAN Truck & Bus SE, Munich (Deputy Chairman)
+- Siemens Energy AG, Munich³
+Siemens Energy Management GmbH, Munich
+Thyssenkrupp AG, Essen (Deputy Chairman)³
+- Traton SE, Munich³
+Positions outside Germany:
+AB Volvo, Gothenburg, Sweden³
+German positions:
+- Siemens Mobility GmbH, Munich
+September 3, January 31, 2027
+1957
+April 26,
+1967
+2018
+January 30, 2028
+2019
+Chairman of the Supervisory Board of
+Bayerische Motoren Werke
+Aktiengesellschaft
+May 29, 1956 January 27, 2023
+Trade Union Secretary of the Managing
+Board of IG Metall
+Siemens Mobility GmbH,
+Chairman of the Siemens Europe
+Committee
+Annual Financial Statements
+Positions outside Germany:
+OPUS Talent Solutions, UK (Chair)
+Martina Merz
+(since February 9, 2023)
+Christian Pfeiffer
+(Dr.-Ing.)²
+(since February 9, 2023)
+Benoît Potier
+Hagen Reimer²
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+(until February 9, 2023)
+(as of February 9, 2023)
+Kasper Rørsted
+Baroness Nemat Shafik
+(DBE, DPhil)
+(until February 9, 2023)
+(as of February 9, 2023)
+Nathalie von Siemens
+(Dr. phil.)
+Member of supervisory boards
+March 1,
+1963
+June 2,
+1969
+Innovation manager at
+member of the Combine Works Council
+of Siemens AG and of the Central Works
+Council of Siemens Mobility GmbH
+Chairman of the Board of Directors of
+L'Air Liquide S.A.
+4 Values from fiscal year October 01, 2021 - September 30, 2022
+2015
+February 24,
+1962
+Keryn Lee James
+(since September 14,
+2023)
+Oliver Hartmann²
+18
+2028
+April 1,
+2007
+March 14,
+1959
+Chairwoman of the Combine Works
+Council of Siemens AG
+28
+Bettina Haller²
+Trade Union Secretary, IG Metall Regional June 21,
+Office for Bavaria
+1970
+(Dr. phil.)
+Andrea Fehrmann²
+(since February 9, 2023)
+February 9, 2027
+2023
+March 19,
+1963
+President and Chief Executive Officer of
+Wellcome Leap Inc.
+(since February 9, 2023)
+Harald Kern²
+February 3, 2025
+2021
+Jürgen Kerner²
+Chair of the Board of Directors of
+OPUS Talent Solutions
+August 13,
+1962
+2018
+January 31, 2023
+Warranty obligations relating to financing of affiliated companies included guarantees towards banks for credit lines granted to affiliated
+companies.
+2012
+1969
+January 25, 2028
+Chief Treasurer and Executive Member of January 22,
+the Managing Board of IG Metall
+2008
+January 24, 2028
+March 16,
+1960
+2027
+December 12, February 9,
+1968
+2023
+14, 2023
+2028
+September
+April 25,
+1968
+Head of the Regional Office Erlangen /
+Nuremberg, Germany, Chairman of the
+Committee of Spokespersons of the
+Siemens Group and Chairman of the
+Central Committee of Spokespersons of
+Siemens AG
+3 Values from fiscal year January 01, 2020 - December 31, 2020
+2 Siemens AG is a shareholder with unlimited liability of this company.
+1 The values correspond to the annual financial statements after a possible profit transfer, for subsidiaries according to the IFRS closing.
+2,671
+(3,968)
+3,802
+(558)
+1,245
+687
+(10,958)
+14,073
+2023
+3,115
+Net foreign currency position (after hedging)
+thereof with affiliated companies
+thereof with external contract partners
+Foreign currency exchange contracts (net notional value)
+Net foreign currency position (before hedging)
+thereof expected cash inflows from firm commitments and forecast transactions
+thereof expected cash outflows from firm commitments and forecast transactions
+Foreign currency risk from firm commitments and forecast transactions
+thereof liabilities
+(6,639)
+thereof assets
+(166)
+As of September 30, 2023, the fair value of derivative financial instruments from foreign currency hedging transactions was €(4) million,
+net. Positive fair values of €1,897 million were offset by negative fair values of €1,901 million. For derivative financial instruments with
+negative fair values, no provision for anticipated losses was recognized as part of the valuation unit.
+Remuneration of the members of the Supervisory Board
+Siemens recognized pension provisions totaling €129.3 million for the pension entitlements to former members of the Managing Board
+and their surviving dependents.
+Former members of the Managing Board and their surviving dependents received a total of €24.6 million according to Section 285 no. 9b
+of the German Commercial Code.
+Total remuneration of former members of the Managing Board
+Therefore, the compensation and benefits attributable to members of the Managing Board amounted to €31.6 million in total.
+Members of the Managing Board received cash compensation of €18.8 million. The fair value of share-based compensation amounted to
+€10.5 million for 170,111 stock awards. The Company granted contributions under the BSAV to members of the Managing Board totaling
+€2.2 million.
+Remuneration of the members of the Managing Board
+NOTE 28 Remuneration of the members of the Managing Board and the Supervisory Board
+The Supervisory Board and the Managing Board propose the unappropriated net income of Siemens AG for the fiscal year ended September
+30, 2023, amounting to €3,760 million to be appropriated as follows: Distribution of a dividend of €4.70 on each share of no par value
+entitled to the dividend, and carry-forward of the unappropriated net income for shares of no par value not entitled to the dividend.
+NOTE 27 Proposal for the appropriation of net income
+The amount of interest rate risks hedged with the valuation unit, which did not lead to a provision for anticipated losses, totaled €165
+million.
+Annual Financial Statements
+16
+To hedge interest rate risks arising from payables to affiliated companies, Siemens AG has entered into interest rate derivatives with
+external counterparties. As of September 30, 2023, the liabilities hedged in this micro-valuation unit had a nominal volume of €2,347
+million and a maximum maturity term until the year 2025. As of September 30, 2023, the positive cumulative changes in the market value
+of these payables of €86 million were offset by external interest rate derivatives with identical maturities whose negative market value
+was €78 million.
+Siemens AG has entered into interest rate derivatives with external counterparties to hedge interest rate swaps with its affiliated companies
+against interest rate risk. As of September 30, 2023, the interest rate swaps with affiliated companies with a maximum maturity term until
+the year 2028 included in this macro-valuation unit had a notional amount of €2,121 million and fair values of €122 million. At balance
+sheet date, these underlying transactions were matched by external interest rate derivatives with negative fair values of €59 million, net,
+and a maximum maturity term until the year 2030.
+The interest rate hedging contracts used by Siemens AG serve to reduce interest rate risks within the framework of an integrated asset-
+liability management approach and to optimize the interest results.
+Valuation unit used to hedge the interest rate risk
+Firm commitments and forecast transactions relate to transactions for which a legally binding contract was concluded but not yet
+performed on by either contracting party, as well as contingent payment claims for already partially completed performance obligations
+in the project and product businesses.
+Compensation attributable to members of the Supervisory Board comprises a base compensation and additional compensation for
+committee work and amounted to €5.3 million (including meeting fees).
+Foreign currency risk from balance sheet items
+Sep 30,
+369
+Combined interest and currency hedging contracts
+Notional
+amount
+8,038
+Interest rate hedging contracts
+(in millions of €)
+Sep 30, 2023
+The following table shows the notional volume and net fair values of existing derivative financial instruments that were not included in a
+valuation unit as of the balance sheet date:
+As a consequence of its global operating, investing and financing activities, Siemens AG is in particular exposed to risks resulting from
+changes in exchange rates and interest rates, managed in line with a proven risk management system in consideration of defined risk
+limits. As the parent company of the Siemens Group, Siemens AG has the central role within the group-wide management of financial
+market risks. To manage the risks resulting from changes in exchange rates and interest rates, Siemens AG uses primarily foreign currency
+forward contracts, interest rate swaps as well as combined interest and foreign currency swaps. Thereby the operating units of Siemens
+AG are not allowed to enter into derivative financial instruments for speculative purposes. The contract partners of the Company for
+derivative financial instruments are banks, brokers and affiliated companies. The credit rating for banks and brokers is constantly
+monitored.
+NOTE 26 Derivative financial instruments and valuation units
+In the course of its normal business operations, Siemens AG is involved in numerous legal and regulatory proceedings as well as
+governmental investigations (legal proceedings) in various jurisdictions. These legal proceedings could result in particular in the Company
+being subject to payment of damages and punitive damages, equitable remedies or criminal or civil sanctions, fines or disgorgements of
+profit. In individual cases, this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or
+permits. In addition, further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be expanded. Some
+of these legal proceedings could result in adverse decisions for Siemens AG that may have material effects on its financial position, the
+results of its operations and/or its cash flows in the respective reporting period. In addition, Siemens is jointly and severally liable within
+consortia. As far as not recognized in the financial statements, Siemens AG did not expect any material negative effects on its financial
+position, the results of its operations and/or its cash flows at balance sheet date.
+Siemens AG has entered into a contract to pay its affiliated company Siemens Trademark GmbH & Co. KG, Germany, a running royalty for
+the use of the Siemens trademark rights. The fee is calculated by applying business-specific royalty rates to brand-related revenue. The
+contract has an indefinite duration. For fiscal 2023, the corresponding expenses amounted to €988 million. For fiscal 2024, the royalty is
+expected to be in the same magnitude.
+Approximately €1.5 billion were outstanding as of September 30, 2023, from an outsourcing agreement with a maturity of several years.
+Obligations for equity contributions to affiliated companies amounted to €491 million.
+NOTE 25 Other financial obligations
+Payment obligations under lease and rental arrangements amounted to €1,334 million, of which €201 million resulted from transactions
+with affiliated companies. Payment obligations under lease and rental arrangements due within the next fiscal year amounted to €247
+million.
+Expenses for lease and rental arrangements in which the economic ownership of the leased/rented asset was not attributable to Siemens
+AG and the relevant items were not recognized as assets by Siemens AG amounted to €293 million. Object of these contracts were mainly
+real estate and other non-current assets.
+NOTE 24 Financial payment obligations under lease and rental arrangements
+Siemens AG only enters into guarantees and other commitments after careful consideration of the risks concerned and in general only in
+relation to its own business activities or those of affiliated companies as well as to business activities of companies, if it holds an investment
+in them or their parent companies. Based on an ongoing risk evaluation of the arrangements entered into and taking into account all
+information available up to the date on which the Annual Financial Statements were issued for approval, Siemens AG concluded that the
+relevant primary debtors are able to fulfill the underlying obligations. For this reason, Siemens AG considered it not probable that it will
+be called upon in conjunction with any of the guarantees and commitments described above.
+Existing derivative financial instruments
+(in millions of €)
+8,407
+-
+The remaining foreign currency risk after offsetting cash flows in the same currency is hedged by the Corporate Treasury with external
+contract partners. The net foreign currency position (before hedging) is combined with the offsetting foreign currency exchange contracts
+to a macro valuation unit. For this purpose, hedged items and hedging instruments are measured with the respective underlying
+discounted cash flows. For foreign currency derivative financial instruments, the determination is based on the changes in relevant forward
+exchange rates. The existing derivative currency hedging contracts are included in the valuation unit in their entirety and had maturity
+terms until the year 2041. The cash in- and outflows from the foreign currency exchange contracts, firm commitments and forecast
+transactions are disclosed on a net basis in the following table.
+According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
+exposure. Foreign currency transaction exposure of the Siemens units from contracted business and cash balances in foreign currency is
+generally hedged approximately by 100% with Corporate Treasury. Foreign currency transaction exposure of the Siemens units from
+planned business above defined thresholds has to be hedged with Corporate Treasury within a band of 75% to 100% for a hedging period
+of at least three months.
+Valuation unit used to hedge the foreign currency risk
+Provided the relevant conditions are met, derivative financial instruments are aggregated with the underlying hedged item into valuation
+units. Using the freezing method, the hedging transactions are not recognized in the balance sheet. The effectiveness of the valuation
+unit is either ensured through risk management, or is demonstrated both prospectively and retrospectively based on appropriate methods
+used to demonstrate effectiveness (e.g. dollar offset method, regression method, sensitivity analysis). Valuation gains and losses from
+derivative financial instruments and hedged items are netted for each valuation unit. A provision for anticipated losses on onerous
+contracts is recognized for the respective valuation unit in the amount of an existing loss surplus. Profit surpluses are not recognized.
+(723)
+Other liabilities
+Other
+provisions
+(722)
+(1)
+Other assets
+Sep 30, 2023
+Combined interest and currency hedging contracts
+Derivative financial instruments requiring recognition
+Interest rate hedging contracts
+(in millions of €)
+The following table shows the carrying amounts, if any, of derivative financial instruments that are not included in valuation units and the
+balance sheet items in which the carrying amounts are recognized:
+Annual Financial Statements
+15
+Fair values of these derivative financial instruments are calculated by discounting expected future cash flows over the remaining term of
+the instrument using current market interest rates and yield curves.
+The notional amounts equal the contractual amounts of the individual derivative financial instrument which – irrespective of the nature
+of the concluded position (sale or purchase) – are presented on a gross basis (gross notional amounts).
+Fair values
+(722)
+26
+(696)
+The items Obligations from guarantees and Warranty Obligations - Others included guarantees and other commitments for the benefit of
+companies of the Siemens Energy Group totaling €0.1 billion and €4.7 billion, respectively, with corresponding full reimbursement rights
+towards Siemens Energy Global GmbH & Co. KG. In addition, the items included indemnifications issued in connection with dispositions
+of businesses. Such indemnifications, if customary to the relevant transactions, may protect the buyer from potential tax, legal and other
+risks in conjunction with the purchased business.
+NOTE 29 Declaration of Compliance with the German Corporate Governance Code
+NOTE 30 Subsequent events
+221
+34
+Siemens Healthcare K.K., Tokyo / Japan
+100
+205
+20
+Siemens Healthcare Diagnostics K.K., Tokyo / Japan
+505
+960
+204
+P.T. Jawa Power, Jakarta / Indonesia
+July 14, 1971
+100
+73
+45
+Siemens Technology and Services Private Limited, Navi Mumbai / India
+51
+100
+1,763
+Siemens K.K., Tokyo / Japan
+143
+Siemens Limited, Taipei / Taiwan
+100
+53
+22
+100
+167
+30
+Siemens Ltd. Seoul, Seoul / Korea
+100
+114
+20
+Siemens Healthineers Ltd., Seoul / Korea
+100
+955
+(1)
+Varian Medical Systems K.K., Tokyo / Japan
+100
+15
+As of October 1, 2023, the mandatory statement pursuant to Section 161 of the German Stock Corporation Act (AktG) has been issued by
+the Managing Board and the Supervisory Board and is permanently accessible on siemens.com/gcg-code.
+225
+100
+(as of September 30, 2023)
+Term expires
+March 31, 2025
+First appointed
+April 1, 2011
+November 22,
+1964
+Date of birth
+External positions
+Memberships in supervisory boards whose establishment is required by law or in
+comparable domestic or foreign controlling bodies of business enterprises
+Cedrik Neike
+Executive Officer
+President and Chief
+(Dr. rer. nat.)
+Name
+Members of the Managing Board and positions held by Managing Board members
+In fiscal 2023, the Managing Board had the following members:
+NOTE 31 Members of the Managing Board and Supervisory Board
+Annual Financial Statements
+17
+In November 2023, agreements were entered into with the intent to acquire 18% of the shares in Siemens Limited, India from the Siemens
+Energy Group for a purchase price of €2.1 billion in cash. Closing of the transaction is expected in December 2023.
+March 7, 1973 April 1, 2017
+Siemens Limited, Mumbai / India
+May 31, 2025
+January 2,
+1965
+25
+- Siemens Energy AG, Munich'
+German positions:
+- Evonik Industries AG, Essen¹
+German positions:
+1 Publicly listed.
+September 30,
+2028
+October 1,
+2020
+1971
+January 30,
+Judith Wiese
+December 14,
+2026
+September 18,
+2013
+March 7, 1961
+Ralf P. Thomas
+(Prof. Dr. rer. pol.)
+September 30,
+2025
+October 1,
+2020
+Matthias Rebellius
+7
+100
+100
+2,755
+24,217
+100²
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
+14
+18
+100
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
+Siemens Electronic Design Automation GmbH, Munich
+73
+100
+Siemens Energy AG, Munich
+(6)
+13,164
+324
+Siemens Finance & Leasing GmbH, Munich
+(6)
+100
+13,776
+Siemens Beteiligungen USA GmbH, Berlin
+1004
+RISICOM Rückversicherung AG, Grünwald
+13
+327
+100
+Siemens Bank GmbH, Munich
+65
+1,242
+100
+Siemens Beteiligungen Europa GmbH, Munich
+192
+5,895
+100
+Siemens Beteiligungen Inland GmbH, Munich
+(283)
+26,716
+100
+(6)
+138
+100
+Siemens Financial Services GmbH, Munich
+100
+Siemens Healthineers Holding I GmbH, Munich
+(48)
+(4,731)
+100
+Siemens Healthineers Holding III GmbH, Munich
+6,408
+100
+Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
+556
+48
+100
+Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
+(2)
+141
+100
+Siemens Industry Software GmbH, Cologne
+24,855
+66
+72
+75
+9
+2,038
+100
+Siemens Fonds Invest GmbH, Munich
+14
+100
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+(37)
+552
+100
+Siemens Healthcare GmbH, Munich
+205
+1,125
+100
+Siemens Healthineers AG, Munich
+1,177
+24,254
+Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
+2
+Project Ventures Butendiek Holding GmbH, Munich
+789
+4 Shareholders' Committee.
+19
+Annual Financial Statements
+NOTE 32 List of subsidiaries and associated companies pursuant to Section 285 no. 11, 11a and 11b
+of the German Commercial Code
+Net income in
+millions of €¹
+Equity in
+millions of €¹
+Equity interest
+3 Publicly listed.
+in %
+Germany (49 companies)
+Berliner Vermögensverwaltung GmbH, Berlin
+Erlangen KHK 5 GmbH & Co. KG, Grünwald
+Erlapolis 20 GmbH, Munich
+Erlapolis 22 GmbH, Munich
+(63)
+18
+September 30, 2023
+² Employee representative.
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+Siemens Industry Software GmbH, Cologne
+October 1,
+2017
+February 3, 2025
+2021
+2028
+German positions:
+- Siemens Healthcare GmbH, Munich
+German positions:
+The Exploration Company GmbH, Gilching
+Matthias Zachert
+Gunnar Zukunft²
+(until February 9, 2023)
+(as of February 9, 2023)
+Special Advisor of Rolls-Royce Holdings
+plc³ (since October 17, 2023)
+Chairman of the Board of Management of November 8,
+LANXESS AG³
+January 31, 2027
+1967
+2018
+Member of the Central Works Council of
+Siemens Industry Software GmbH
+June 21,
+1965
+January 31, 2023
+German positions:
+2018
+100
+8
+39
+1004
+100
+16
+71
+100
+Munipolis GmbH, Munich
+1
+273
+1004
+Next47 GmbH, Munich
+5
+(7)
+100
+Siemens S.A., Santiago de Chile / Chile
+148
+335
+OWP Butendiek GmbH & Co. KG, Bremen
+145
+(192)
+235
+(179)
+Innomotics GmbH, Munich
+3
+15
+1004
+67
+1006
+evosoft GmbH, Nuremberg
+1
+10
+100
+GuD Herne GmbH, Essen
+19
+37
+505
+HaCon Ingenieurgesellschaft mbH, Hanover
+12
+148
+100
+KACO new energy GmbH, Neckarsulm
+292
+100
+Siemens Logistics GmbH, Nuremberg
+32
+100
+46
+113
+100
+Siemens A/S, Ballerup / Denmark
+9
+17
+43
+Siemens Aarsleff Konsortium I/S, Ballerup / Denmark
+-
+674,2
+Siemens Osakeyhtiö, Espoo / Finland
+15
+46
+100
+100
+Siemens Mobility, s.r.o., Prague / Czech Republic
+Siemens, s.r.o., Prague / Czech Republic
+100
+(2)
+8
+108
+100
+Siemens Industry Software NV, Leuven / Belgium
+(64)
+285
+100
+Siemens S.A./N.V., Beersel / Belgium
+OEZ s.r.o., Letohrad / Czech Republic
+Siemens Large Drives, s.r.o., Drasov / Czech Republic
+23
+94
+100
+30
+65
+100
+(6)
+Siemens France Holding SAS, Courbevoie / France
+71
+173
+100
+Mentor Graphics (Holdings) Unlimited Company, Shannon, County Clare / Ireland
+Siemens Industry Software Limited, Shannon, County Clare / Ireland
+1
+63
+100
+131
+1,996
+100
+252
+1,789
+100
+Siemens Concentrated Solar Power Ltd., Rosh Ha'ayin / Israel
+Siemens Industry Software Ltd., Airport City / Israel
+57
+3,810
+100
+9
+SIEMENS HEALTHCARE INDUSTRIAL AND COMMERCIAL SINGLE MEMBER SOCIETE ANONYME,
+Marousi Greece
+Siemens Healthcare NV, Groot-Bijgaarden / Belgium
+100
+7
+Siemens Healthcare SAS, Courbevoie / France
+17
+219
+100
+Siemens Industry Software SAS, Châtillon / France
+14
+58
+100
+Siemens Mobility SAS, Châtillon / France
+(32)
+89
+100
+Siemens SAS, Courbevoie / France
+84
+238
+100
+Siemens A.E., Electrotechnical Projects and Products, Athens / Greece
+86
+100
+(87)
+(68)
+144
+100
+Siemens Trademark GmbH & Co. KG, Kemnath
+941
+3,502
+100
+Siemens Treasury GmbH, Munich
+1
+8
+100
+SIM 2. Grundst��cks-GmbH & Co. KG, Grünwald
+6
+312
+104
+SIMAR Ost Grundstücks-GmbH, Grünwald
+1
+(30)
+14
+100
+Siemens Real Estate GmbH & Co. KG, Kemnath
+330
+(18)
+67
+100
+Siemens Mobility GmbH, Munich
+226
+2,723
+100
+Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
+8
+119
+100
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+1
+29
+100
+Siemens Project Ventures GmbH, Erlangen
+44
+100
+September
+23, 1969
+SPT Beteiligungen GmbH & Co. KG, Grünwald
+5,693
+Siemens Aktiengesellschaft Österreich, Vienna / Austria
+113
+1,350
+100
+Siemens Healthcare Diagnostics GmbH, Vienna / Austria
+10
+110
+100
+Siemens Konzernbeteiligungen GmbH, Vienna / Austria
+179
+1,824
+100
+Siemens Metals Technologies Vermögensverwaltungs GmbH, Vienna / Austria
+(1)
+(22)
+100
+Siemens Mobility Austria GmbH, Vienna / Austria
+100
+(1,795)
+22
+ETM professional control GmbH, Eisenstadt / Austria
+1004
+Varian Medical Systems Particle Therapy GmbH & Co. KG, Troisdorf
+(75)
+96
+100
+VMS Deutschland Holdings GmbH, Darmstadt
+4
+428
+100
+Weiss Spindeltechnologie GmbH, Maroldsweisach
+(1)
+42
+100
+20
+20
+Europe, Commonwealth of Independent States (C.I.S.), Africa, Middle East (without
+Germany) (95 companies)
+Annual Financial Statements
+15
+Chief Technology Officer and Member of
+the Executive Team of Rolls-Royce
+Holdings plc³ (until October 17, 2023),
+Nordlicht Holding GmbH & Co. KG, Frankfurt
+2028
+(1)
+Brightly Software Limited, Farnborough, Hampshire / United Kingdom
+49
+(69)
+12
+100
+137
+174
+58
+Siemens Sanayi ve Ticaret Anonim Sirketi, Istanbul / Türkiye
+100
+41
+(6)
+Siemens Healthcare Saglik Anonim Sirketi, Istanbul / Türkiye
+100²
+(1)
+Siemens Industrial LLC, Masdar City / United Arab Emirates
+100
+Electrium Sales Limited, Farnborough, Hampshire / United Kingdom
+(7)
+181
+7
+100
+333
+1969
+57
+621
+17
+100
+(6)
+9
+255
+79
+187
+Galloper Wind Farm Holding Company Limited, Swindon, Wiltshire / United Kingdom
+Project Ventures Rail Investments | Limited, Farnborough, Hampshire / United Kingdom
+SBS Pension Funding (Scotland) Limited Partnership, Edinburgh / United Kingdom
+Siemens Financial Services Ltd., Stoke Poges, Buckinghamshire / United Kingdom
+Siemens Healthcare Diagnostics Manufacturing Ltd, Camberley, Surrey / United Kingdom
+Siemens Healthcare Diagnostics Products Ltd, Camberley, Surrey / United Kingdom
+Siemens Healthcare Limited, Camberley, Surrey / United Kingdom
+100
+53
+Siemens AG - Siemens Sanayi Ve Ticaret AS Velaro Joint Venture, Kartal - Istanbul / Türkiye
+100
+31
+20
+227
+40
+100
+671
+28
+100
+69
+5
+100
+10
+3
+100
+300
+23
+100
+44
+(1)
+100
+100
+13
+100
+Varian Medical Systems Imaging Laboratory G.m.b.H., Dättwil /Switzerland
+100
+891
+14
+Siemens Schweiz AG, Zurich / Switzerland
+100
+82
+19
+100
+191
+11
+100
+600
+54
+100
+231
+18
+95
+4
+205
+100
+(7)
+Brightly Software Canada, Inc., Oakville / Canada
+100
+311
+15
+Dade Behring Hong Kong Holdings Corporation, Tortola / British Virgin Islands
+100
+37
+(17)
+Siemens Participações Ltda., São Paulo / Brazil
+100
+62
+44
+Siemens Infraestrutura e Indústria Ltda., São Paulo / Brazil
+100
+209
+30
+74
+Siemens Healthcare Diagnósticos Ltda., São Paulo/ Brazil
+100
+EPOCAL INC., Toronto / Canada
+80
+14
+Siemens Healthcare Limited, Oakville / Canada
+100
+527
+30
+Siemens Financial Ltd., Oakville / Canada
+100
+272
+53
+Siemens Canada Limited, Oakville / Canada
+100
+8
+2
+Innomotics Inc., Oakville / Canada
+100
+127
+4
+85
+225
+(71)
+932
+156
+Siemens Mobility Limited, London / United Kingdom
+100
+98
+26
+Siemens Industry Software Limited, Farnborough, Hampshire / United Kingdom
+100
+(2)
+Siemens Industry Software Computational Dynamics Limited, Farnborough, Hampshire / United
+Kingdom
+100
+1,169
+3
+Siemens Holdings plc, Farnborough, Hampshire / United Kingdom
+100
+87
+65
+100
+175
+Siemens Pension Funding Limited, Farnborough, Hampshire / United Kingdom
+474
+GNA 1 Geração de Energia S.A., São João da Barra / Brazil
+100
+25
+1
+Siemens S.A., Buenos Aires / Argentina
+Americas (57 companies)
+100
+1
+100
+102
+(32)
+Siemens Process Systems Engineering Limited, Farnborough, Hampshire / United Kingdom
+Vendigital Holdings Ltd, Swindon, Wiltshire / United Kingdom
+100
+577
+49
+Siemens plc, Farnborough, Hampshire / United Kingdom
+100
+(3)
+37
+29
+100
+(47)
+66
+EGM Holding Limited, Birkirkara / Malta
+1005
+627
+(103)
+SPT Invest Management, SARL, Luxembourg Luxembourg
+335
+1005
+6
+SPT Holding SARL, Luxembourg / Luxembourg
+100
+65
+(3)
+FAST TRACK DIAGNOSTICS LUXEMBOURG S.à r.I., Esch-sur-Alzette / Luxembourg
+100
+193
+Varian Medical Systems Mauritius Ltd., Ebene / Mauritius
+7
+78
+Siemens Financieringsmaatschappij N.V., The Hague / Netherlands
+Siemens Healthineers Holding III B.V., The Hague / Netherlands
+100
+16
+2
+Siemens Electronic Design Automation B.V., Eindhoven / Netherlands
+(19)
+(79)
+Mendix Technology B.V., Rotterdam / Netherlands
+65
+314
+113
+KIC InnoEnergy S.E., Eindhoven / Netherlands
+205
+219
+165
+Buitengaats C.V., Amsterdam / Netherlands
+100
+290
+123
+Siemens S.p.A., Milan / Italy
+100
+German positions:
+Messer SE & Co. KGaA, Bad Soden am Taunus
+Siemens Healthcare GmbH, Munich
+- Siemens Healthineers AG, Munich³
+TÜV Süd AG, Munich
+Positions outside Germany:
+- EssilorLuxottica SA, France³
+Michael Sigmund²
+(until August 31, 2023)
+(as of August 31, 2023)
+Chairman of the Committee of
+Dorothea Simon²
+Grazia Vittadini
+September
+2
+Spokespersons of Siemens AG
+Chairwoman of the Central Works Council August 3,
+of Siemens Healthcare GmbH
+March 1,
+2014
+A. P. Møller-Mærsk A/S, Denmark³
+8
+- Henkel Management AG, Düsseldorf
+Positions outside Germany:
+- Bayerische Motoren Werke Aktiengesellschaft,
+Munich (Chairman)³
+253
+17
+Siemens Healthcare S.r.l., Milan / Italy
+455
+132
+2
+Medical Systems S.p.A., Genoa / Italy
+100
+1
+-
+UGS Israeli Holdings (Israel) Ltd., Airport City / Israel
+100
+118
+January 27, 2027
+2015
+Positions outside Germany:
+- L'Air Liquide S.A., France (Chairman)³
+German positions:
+- Henkel AG & Co. KGaA, Düsseldorf³,4
+84
+Spokespersons of the Siemens Group and 13, 1957
+Chairman of the Central Committee of
+665
+Siemens W.L.L., Doha Qatar
+100
+93
+16
+Siemens S.A., Amadora / Portugal
+100
+94
+5
+SIEMENS HEALTHCARE, UNIPESSOAL, LDA, Amadora / Portugal
+Annual Financial Statements
+21
+100
+65
+20
+100
+22
+11
+12
+Siemens Sp. z o.o., Warsaw / Poland
+54
+000 Siemens, Moscow / Russian Federation
+Upsilon 1 LLC, St. Petersburg / Russian Federation
+Siemens Mobility d.o.o. Cerovac, Kragujevac / Serbia
+Siemens Proprietary Limited, Midrand / South Africa
+Fábrica Electrotécnica Josa, S.A.U., Tres Cantos / Spain
+SIEMENS HEALTHCARE, S.L.U., Madrid / Spain
+Siemens Logistics S.L. Unipersonal, Madrid / Spain
+100
+36
+(6)
+100
+15
+(4)
+100
+15
+(4)
+Siemens Mobility AG, Wallisellen / Switzerland
+Siemens Industry Software GmbH, Zurich / Switzerland
+Siemens Healthineers International AG, Steinhausen / Switzerland
+Siemens Financial Services AB, Solna / Sweden
+Siemens AB, Solna / Sweden
+Siemens S.A., Madrid / Spain
+Siemens Rail Automation S.A.U., Tres Cantos / Spain
+SIEMENS MOBILITY, S.L.U., Tres Cantos / Spain
+55
+Siemens AS, Oslo / Norway
+Annual Financial Statements
+219
+100
+11,351
+1,221
+Siemens International Holding B.V., The Hague / Netherlands
+100
+542
+40
+Siemens Industry Software Netherlands B.V., Eindhoven / Netherlands
+100
+1,395
+279
+Siemens Healthineers Nederland B.V., The Hague / Netherlands
+100
+13,895
+Siemens Healthineers Holding IV B.V., The Hague / Netherlands
+3,944
+205
+Siemens Mobility Holding B.V., The Hague / Netherlands
+112
+100
+100
+165
+ZeeEnergie C.V., Amsterdam / Netherlands
+100
+3,034
+14
+503
+100
+11
+Varian Medical Systems Nederland B.V., Houten / Netherlands
+100
+Ural Locomotives Holding Besloten Vennootschap, The Hague / Netherlands
+54
+171
+100
+Siemens Nederland N.V., The Hague / Netherlands
+(3)
+577
+Sqills Products B.V., Enschede / Netherlands
+1,453
+Other Provisions for legal disputes, regulatory proceedings and governmental investigations
+Uncertain tax positions and recoverability of deferred tax assets
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for other provisions,
+refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements. With respect to the legal proceedings,
+regulatory proceedings and governmental investigations, refer to chapter 3.5 Other Disclosures, Note 25 Other financial obligations.
+Our audit procedures did not lead to any reservations relating to the accounting for proceedings out of or in connection with alleged
+compliance violations.
+We further considered alleged or substantiated non-compliance with legal provisions, official regulations (including sanctions) and internal
+company policies by inspecting internal and external statements on specific matters, obtaining written statements from external legal
+advisors, and by inquiring of the compliance organization. In this regard, among other procedures, we evaluated the conduct and results
+of internal investigations by inspecting internal reports and the measures taken to remediate identified weaknesses, and assessed on this
+basis whether management's evaluation of any risks to be accounted for in the annual financial statements is plausible.
+Auditor's response: During our audit of the financial reporting of proceedings out of or in connection with alleged compliance violations,
+we examined the processes implemented by Siemens for identifying, assessing and accounting for legal and regulatory proceedings. To
+determine what potentially significant pending legal proceedings or claims asserted also in connection with joint and several liability are
+known and to assess management's estimates of the expected cash outflows, our audit procedures included inquiring of management
+and other persons within the Company entrusted with these matters, obtaining written statements from in-house legal counsels with
+respect to the assessment of estimated cash outflows and their probability, obtaining confirmations from external legal advisors and
+evaluating internal statements concerning the accounting treatment in the annual financial statements. Furthermore, we examined legal
+consulting expense accounts for any indications of legal matters not yet considered.
+Reasons why the matter was determined to be a key audit matter: We considered the accounting for other provisions for legal disputes,
+regulatory proceedings and governmental investigations (legal proceedings) out of or in connection with alleged compliance violations to
+be a key audit matter. These matters are subject to inherent uncertainties and require estimates that could have a significant impact on
+the recognition and measurement of the respective provision and, accordingly, on assets, liabilities and financial performance. The
+proceedings out of or in connection with alleged compliance violations are subject to uncertainties because they involve complex legal
+issues and accordingly, considerable management judgment, in particular when determining whether and in what amount a provision is
+required to account for the risks.
+In case of the investment in Siemens Energy AG, in which 21,0% are held directly, the market capitalization during fiscal 2023 was on
+average above the book value sometimes significantly. As of September 30, 2023, a reversal of impairment to the stock market price has
+been recorded, following an impairment as of September 30, 2022.
+Furthermore, we evaluated the disclosures in the notes to the annual financial statements regarding the subsequent events relating to the
+investment in Siemens Energy AG.
+With regard to the reversal of impairment of the investment in Siemens Energy AG, we have traced the development of the stock market
+price and assessed the calculation of the reversal of impairment as of September 30, 2023, considering the acquisition costs of the
+investment.
+We assessed the underlying valuation models for the determination of the net realizable value in terms of methodology and reperformed
+the calculations with the assistance of internal valuation specialists. We further obtained explanations from management regarding
+material value drivers of the planning and examined whether the budget planning reflects general and industry-specific market
+expectations. Forecast accuracy was assessed on a sample basis using budget-to-actual comparisons of historically forecast data with the
+actual results. The parameters used to estimate net realizable value such as the estimated growth rates and the weighted average cost of
+capital rates were assessed by comparing them to publicly available market data. We also performed our own sensitivity analyses to assess
+the impairment risk in the case of a reasonably possible change in one of the significant assumptions.
+as well as to the calculation of net realizable value, obtained an understanding of management's evaluation and also considered external
+evidence in this regard, amongst others, on the development of stock market prices.
+Independent Auditor's Report (Siemens AG)
+2
+Auditor's response: With regards to the net realizable values calculated by management and its assessment as to whether an impairment
+or reversal of impairment is expected to be permanent, we examined the underlying processes related to the planning of future cash flows
+Our audit procedures did not lead to any reservations relating to the valuation of non-current financial assets as of September 30, 2023.
+Reference to related disclosures: With regard to the recognition and measurement policies applied for the impairment of non-current
+financial assets, refer to chapter 3.2 Accounting and Measurement Principles in the notes to the financial statements and with respect to
+write-downs and write-ups of non-current financial assets, refer to chapter 3.3 Notes to the Income Statement, Note 3 Income (loss) from
+investments, net as well as chapter 3.4 Notes to the Balance Sheet, Note 10 Non-current assets and with respect to the subsequent events
+relating to the investment in Siemens Energy AG, refer to chapter 3.5 Other disclosures, Note 30 Subsequent events in the notes to the
+financial statements.
+Reasons why the matter was determined to be a key audit matter: The accounting for uncertain tax positions as well as deferred taxes
+requires management to exercise considerable judgment and make estimates and assumptions, and was therefore a key audit matter. In
+particular, this affects the measurement and completeness of uncertain tax positions as well as the recoverability of deferred tax assets.
+Auditor's response: With the assistance of internal tax specialists who have knowledge of tax law, we examined the processes installed
+by management for the identification, recognition and measurement of tax positions.
+•
+3
+the Report of the Supervisory Board,
+the Compensation Report,
+•
+the Five-Year Summary,
+the Responsibility Statement (to the consolidated financial statements and the group management report),
+the Responsibility Statement (to the annual financial statements and the management report),
+•
+•
+•
+The Supervisory Board is responsible for the Report of the Supervisory Board in the Annual Report 2023 within the meaning of ISA [DE]
+720 (Revised). Management and the Supervisory Board are responsible for the declaration pursuant to Sec. 161 AktG ["Aktiengesetz":
+German Stock Corporation Act] on the Corporate Governance Code, which is part of the Corporate Governance Statement, and for the
+Compensation Report. In all other respects, management is responsible for the other information. The other information comprises
+chapter 11 "EU Taxonomy disclosure" of the combined management report, the sections "8.5.1 Internal Control System (ICS) and ERM"
+and "8.5.2 Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the
+Corporate Governance Statement. In addition, the other information comprises parts to be included in the Annual Report, of which we
+received a version prior to issuing this auditor's report, in particular:
+Other information
+Reference to related disclosures: With regard to the recognition and measurement policies applied in accounting for income taxes, refer
+to chapter 3.2 Accounting and Measurement Principles and chapter 3.3 Notes to the Income Statement, Note 6 Income taxes and with
+respect to disclosures for deferred tax assets, refer to chapter 3.4 Notes to the Balance Sheet, Note 13 Deferred tax assets in the notes to
+the financial statements.
+Our audit procedures did not lead to any reservations relating to the accounting for uncertain tax positions and the assessment of the
+recoverability of deferred tax assets.
+In assessing the recoverability of deferred tax assets, we above all analyzed management's assumptions with respect to tax planning
+strategies and projected future taxable income and compared them to internal business plans.
+Independent Auditor's Report (Siemens AG)
+In the course of our audit procedures relating to uncertain tax positions, we evaluated whether management's assessment of the tax
+implications of significant business transactions or events in fiscal year 2023, which could result in uncertain tax positions or influence the
+measurement of existing uncertain tax positions, was in compliance with tax law. In particular, this includes the tax implications arising
+from cross border matters, such as the determination of transfer prices, the results of tax field audits, the acquisition or disposal of company
+shares and corporate (intragroup) restructuring activities. In order to assess measurement and completeness of uncertain tax positions,
+we also obtained confirmations from external tax advisors. Further, we evaluated management's assessments with respect to the prospects
+of success of appeal and tax court proceedings by inquiring of the employees of the Siemens tax department and by considering current
+tax case law.
+The determination of the fair values of non-current financial assets also depends to a large extent on the assessment of future cash inflows
+and the discount rate applied.
+SIEMENS
+Valuation of non-current financial assets
+2
+Judith Wiese
+Matthias Rebellius
+Prof. Dr. Ralf P. Thomas
+Cedrik Neike
+Dr. Roland Busch
+The Managing Board
+Siemens Aktiengesellschaft
+Munich, December 4, 2023
+To the best of our knowledge, and in accordance with the applicable reporting principles, the Annual Financial Statements give a true and
+fair view of the assets, liabilities, financial position and profit or loss of the Company, and the Management Report for Siemens
+Aktiengesellschaft, which has been combined with the Group Management Report, includes a fair review of the development and
+performance of the business and the position of the Company, together with a description of the material opportunities and risks
+associated with the expected development of the Company.
+Responsibility Statement (Siemens AG)
+SIEMENS
+for fiscal 2023
+to the Annual Financial Statements and the Management Report
+Responsibility Statement
+Independent
+Auditor's Report
+to the Annual Financial Statements and the Management Report for fiscal 2023
+• Notes and forward-looking statements,
+Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the annual financial
+statements for the fiscal year from October 1, 2022 to September 30, 2023. These matters were addressed in the context of our audit of
+the annual financial statements as a whole, and in forming our opinion thereon; we do not provide a separate opinion on these matters.
+Below, we describe what we consider to be the key audit matters:
+Key audit matters in the audit of the annual financial statements
+We conducted our audit of the annual financial statements and of the management report in accordance with Sec. 317 HGB and the EU
+Audit Regulation (No 537/2014, referred to subsequently as "EU Audit Regulation") and in compliance with German Generally Accepted
+Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW).
+In conducting the audit of the annual financial statements we also complied with International Standards on Auditing (ISA). Our
+responsibilities under those requirements, principles and standards are further described in the "Auditor's responsibilities for the audit of
+the annual financial statements and of the management report" section of our auditor's report. We are independent of the Company in
+accordance with the requirements of European law and German commercial and professional law, and we have fulfilled our other German
+professional responsibilities in accordance with these requirements. In addition, in accordance with Art. 10 (2) f) of the EU Audit
+Regulation, we declare that we have not provided non-audit services prohibited under Art. 5 (1) of the EU Audit Regulation. We believe
+that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the annual financial statements
+and on the management report.
+Basis for the opinions
+Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the
+annual financial statements and of the management report.
+the accompanying management report as a whole provides an appropriate view of the Company's position. In all material respects, this
+management report is consistent with the annual financial statements, complies with German legal requirements and appropriately
+presents the opportunities and risks of future development. Our opinion on the management report does not cover chapter 11 “EU
+Taxonomy disclosure" of the combined management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2
+Compliance Management System (CMS)" in chapter 8.5 of the combined management report and the content of the Corporate
+Governance Statement.
+the accompanying annual financial statements comply, in all material respects, with the requirements of German commercial law
+applicable to business corporations and give a true and fair view of the assets, liabilities and financial position of the Company as of
+September 30, 2023 and of its financial performance for the fiscal year from October 1, 2022 to September 30, 2023 in compliance
+with German legally required accounting principles, and
+Reasons why the matter was determined to be a key audit matter: The impairment test and the assessment regarding the need for a
+reversal of impairment of non-current financial assets was a key audit matter, as in particular shares in affiliated companies and
+investments entail a higher risk of material misstatement due to the materiality of these assets as well as the estimation uncertainties and
+judgments involved in assessing whether there is objective evidence to indicate a lower net realizable value and permanent impairment
+or a reversal of impairment, and the determination of the fair values.
+In our opinion, on the basis of the knowledge obtained in the audit,
+.
+We have audited the annual financial statements of Siemens Aktiengesellschaft, Berlin and Munich, (the Company) which comprise the
+income statement for the fiscal year from October 1, 2022 to September 30, 2023, the balance sheet as of September 30, 2023 and notes
+to the financial statements, including the recognition and measurement policies presented therein. In addition, we have audited the
+management report of Siemens Aktiengesellschaft, which is combined with the group management report, for the fiscal year from
+October 1, 2022 to September 30, 2023. In accordance with the German legal requirements, we have not audited chapter 11 “EU
+Taxonomy disclosure" of the combined management report, the sections "8.5.1 Internal Control System (ICS) and ERM" and "8.5.2
+Compliance Management System (CMS)" in chapter 8.5 of the combined management report as well as the content of the Corporate
+Governance Statement which is published on the website stated in the combined management report.
+Opinions
+Report on the audit of the annual financial statements and of the management report
+To Siemens Aktiengesellschaft, Berlin and Munich
+Independent auditor´s report
+Independent Auditor's Report (Siemens AG)
+•
+but not the consolidated financial statements and the annual financial statements, not the disclosures of the combined management
+report whose content is audited and not our auditor's reports as well as not our auditor's report on a limited assurance engagement on the
+EU Taxonomy disclosure.
+obtain an understanding of internal control relevant to the audit of the annual financial statements and of arrangements and measures
+(systems) relevant to the audit of the management report in order to design audit procedures that are appropriate in the circumstances,
+but not for the purpose of expressing an opinion on the effectiveness of these systems of the Company;
+In connection with our audit, our responsibility is to read the other information, and, in so doing, to consider whether the other information
+Audit-related services include primarily audits of financial statements as well as other attestation services in connection with M&A
+activities, attestation services related to the sustainability reporting, the compensation reporting and the disclosures in accordance with
+EU Taxonomy, comfort letters and other attestation services required under regulatory requirements, contractually agreed or requested
+on a voluntary basis.
+In addition to auditing the statutory financial statements of Siemens AG, we performed the statutory audit of Siemens' consolidated
+financial statements, audits of financial statements of subsidiaries of Siemens AG, reviews of interim financial statements integrated in
+the audit, project-based IT audits as well as service organization control engagements.
+In addition to the financial statement audit, we have provided to the Company or entities controlled by it the following services that are
+not disclosed in the annual financial statements or in the management report:
+We declare that the opinions expressed in this auditor's report are consistent with the additional report to the Audit Committee pursuant
+to Art. 11 of the EU Audit Regulation (long-form audit report).
+We were elected as auditor by the Annual Shareholders' Meeting on February 9, 2023. We were engaged by the Supervisory Board on
+February 9, 2023. We have been the auditor of Siemens Aktiengesellschaft without interruption since the fiscal year from October 1, 2008
+to September 30, 2009.
+Further information pursuant to Art. 10 of the EU Audit Regulation
+• evaluate whether the ESEF documents enable an XHTML rendering with content equivalent to the audited annual financial statements
+and to the audited management report.
+• evaluate the technical validity of the ESEF documents, i.e., whether the file containing the ESEF documents meets the requirements of
+Commission Delegated Regulation (EU) 2019/815, in the version in force at the date of the financial statements, on the technical
+specification for this file;
+obtain an understanding of internal control relevant to the assurance on the ESEF documents in order to design assurance procedures
+that are appropriate in the circumstances, but not for the purpose of expressing an assurance opinion on the effectiveness of these
+controls;
+identify and assess the risks of material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB, design
+and perform assurance procedures responsive to those risks, and obtain assurance evidence that is sufficient and appropriate to provide
+a basis for our assurance opinion;
+•
+.
+Our objective is to obtain reasonable assurance about whether the ESEF documents are free from material intentional or unintentional
+non-compliance with the requirements of Sec. 328 (1) HGB. We exercise professional judgment and maintain professional skepticism
+throughout the assurance work. We also:
+The Supervisory Board is responsible for overseeing the process for preparing the ESEF documents as part of the financial reporting process.
+Auditor's responsibilities for the assurance work on the ESEF documents
+In addition, management is responsible for such internal control as it has determined necessary to enable the preparation of ESEF
+documents that are free from material intentional or unintentional non-compliance with the requirements of Sec. 328 (1) HGB for the
+electronic reporting format.
+Other matter
+-
+use of the auditor's report
+Our auditor's report must always be read together with the audited annual financial statements and the audited management report as
+well as the assured ESEF documents. The annual financial statements and the management report converted to the ESEF format -
+including the versions to be published in the Unternehmensregister [German Company Register] – are merely electronic renderings of the
+audited annual financial statements and the audited management report and do not take their place. In particular, the ESEF report and
+our assurance opinion contained therein are to be used solely together with the assured ESEF documents made available in electronic
+form.
+SIEMENS
+for the five years until fiscal 2023
+Five-Year Summary
+7
+Independent Auditor's Report (Siemens AG)
+[German Public Auditor]
+Dr. Gaenslen
+Wirtschaftsprüfer
+Management is responsible for the preparation of the ESEF documents including the electronic rendering of the annual financial
+statements and the management report in accordance with Sec. 328 (1) Sentence 4 No. 1 HGB.
+[German Public Auditor]
+Keller
+Wirtschaftsprüfungsgesellschaft
+Ernst & Young GmbH
+Munich, December 4, 2023
+The German Public Auditor responsible for the engagement is Siegfried Keller.
+German Public Auditor responsible for the engagement
+6
+Wirtschaftsprüfer
+Our opinions on the annual financial statements and on the management report do not cover the other information, and consequently
+we do not express an opinion or any other form of assurance conclusion thereon.
+We conducted our assurance work on the rendering of the annual financial statements and the management report contained in the file
+identified above in accordance with Sec. 317 (3a) HGB and the IDW Assurance Standard: Assurance on the Electronic Rendering of Financial
+Statements and Management Reports Prepared for Publication Purposes in Accordance with Sec. 317 (3a) HGB (IDW ASS 410) (06.2022)
+and the International Standard on Assurance Engagements 3000 (Revised). Our responsibility in accordance therewith is further described
+in the "Auditor's responsibilities for the assurance work on the ESEF documents" section. Our audit firm applies the IDW Standard on Quality
+Management 1: Requirements for Quality Management in the Audit Firm (IDW QS 1).
+Independent Auditor's Report (Siemens AG)
+We exercise professional judgment and maintain professional skepticism throughout the audit. We also:
+Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB and
+the EU Audit Regulation as well as in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the IDW and in supplementary compliance with ISA will always detect a material misstatement. Misstatements can arise from fraud or
+error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
+decisions of users taken on the basis of these annual financial statements and this management report.
+audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well
+as to issue an auditor's report that includes our opinions on the annual financial statements and on the management report.
+Independent Auditor's Report (Siemens AG)
+4
+Auditor's responsibilities for the audit of the annual financial statements and of the management report
+Our objectives are to obtain reasonable assurance about whether the annual financial statements as a whole are free from material
+misstatement, whether due to fraud or error, and whether the management report as a whole provides an appropriate view of the
+Company's position and, in all material respects, is consistent with the annual financial statements and the knowledge obtained in the
+The Supervisory Board is responsible for overseeing the Company's financial reporting process for the preparation of the annual financial
+statements and of the management report.
+Furthermore, management is responsible for the preparation of the management report that, as a whole, provides an appropriate view of
+the Company's position and is, in all material respects, consistent with the annual financial statements, complies with German legal
+requirements and appropriately presents the opportunities and risks of future development. In addition, management is responsible for
+such arrangements and measures (systems) as management has considered necessary to enable the preparation of a management report
+that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the
+assertions in the management report.
+In preparing the annual financial statements, management is responsible for assessing the Company's ability to continue as a going
+concern. It also has the responsibility for disclosing, as applicable, matters related to going concern. In addition, management is
+responsible for financial reporting based on the going concern basis of accounting, provided no actual or legal circumstances conflict
+therewith.
+Management is responsible for the preparation of the annual financial statements that comply, in all material respects, with the
+requirements of German commercial law applicable to business corporations, and that the annual financial statements give a true and fair
+view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally required
+accounting principles. In addition, management is responsible for such internal control as it, in accordance with German legally required
+accounting principles, has determined necessary to enable the preparation of annual financial statements that are free from material
+misstatement, whether due to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
+Responsibilities of management and the Supervisory Board for the annual financial statements and the
+management report
+If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
+report that fact. We have nothing to report in this regard.
+is materially inconsistent with the annual financial statements, with the management report or our knowledge obtained in the audit, or
+otherwise appears to be materially misstated.
+•
+•
+•
+•
+identify and assess the risks of material misstatement of the annual financial statements and of the management report, whether due
+to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
+appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for
+the risk of detecting a material misstatement resulting from error, as fraud may involve collusion, forgery, intentional omissions,
+misrepresentations, or the override of internal control;
+evaluate the appropriateness of accounting policies used by management and the reasonableness of estimates made by management
+and related disclosures;
+5
+In our opinion, the rendering of the annual financial statements and the management report contained in the file identified above and
+prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic reporting
+format. Beyond this assurance opinion and our audit opinions on the accompanying annual financial statements and the accompanying
+management report for the fiscal year from October 1, 2022 to September 30, 2023 contained in the "Report on the audit of the annual
+financial statements and of the management report" above, we do not express any assurance opinion on the information contained within
+these renderings or on the other information contained in the file identified above.
+We have performed assurance work in accordance with Sec. 317 (3a) HGB to obtain reasonable assurance about whether the rendering
+of the annual financial statements and the management report (hereinafter the "ESEF documents") contained in the file SIEMENS_2023.zip
+and prepared for publication purposes complies in all material respects with the requirements of Sec. 328 (1) HGB for the electronic
+reporting format ("ESEF format"). In accordance with German legal requirements, this assurance work extends only to the conversion of
+the information contained in the annual financial statements and the management report into the ESEF format and therefore relates
+neither to the information contained within these renderings nor to any other information contained in the file identified above.
+Opinion
+Report on the assurance on the electronic rendering of the annual financial statements and the management
+report prepared for publication purposes in accordance with Sec. 317 (3a) HGB
+Other legal and regulatory requirements
+From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
+audit of the annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our
+auditor's report unless law or regulation precludes public disclosure about the matter.
+Basis for the opinion
+We also provide those charged with governance with a statement that we have complied with the relevant independence requirements,
+and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence and where
+applicable, the related safeguards.
+perform audit procedures on the prospective information presented by management in the management report. On the basis of
+sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by management as a basis for the
+prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express
+a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that
+future events will differ materially from the prospective information.
+evaluate the consistency of the management report with the annual financial statements, its conformity with German law and the view
+of the Company's position it provides;
+evaluate the overall presentation, structure and content of the annual financial statements, including the disclosures, and whether the
+annual financial statements present the underlying transactions and events in a manner that the annual financial statements give a true
+and fair view of the assets, liabilities, financial position and financial performance of the Company in compliance with German legally
+required accounting principles;
+.
+•
+•
+• conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence
+obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability
+to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's
+report to the related disclosures in the annual financial statements and in the management report or, if such disclosures are inadequate,
+to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report.
+However, future events or conditions may cause the Company to cease to be able to continue as a going concern;
+We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
+significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
+Responsibilities of management and the Supervisory Board for the ESEF documents
+Revenue and profit
+€7.59
+3,098
+2,222
+(3,458)
+(2,467)
+(17,192)
+(4,050)
+(4,166)
+(2,218)
+(2,084)
+(1,730)
+(1,498)
+(1,739)
+(8,730)
+(7,502)
+785
+3,075
+3,561
+3,608
+6,825
+39,823
+50,984
+37%
+145,067
+36%
+151,502
+35%
+139,372
+32%
+123,897
+34%
+4,267
+150,248
+12,281
+FY 2022
+10,322
+FY 2021
+FY 2020
+FY 2019
+10,109
+7,851
+FY 2023
+48,991
+(1,214)
+927
+Application in fiscal 2023
+Contractually agreed-upon fixed annual compensation based on a Managing Board
+member's duties and related responsibilities and his or her experience
+Payment in 12 monthly installments
+Implementation in compensation system
+Fringe benefits
+Base salary
+FIXED COMPENSATION
+The following tables describe the components of the compensation system for the Managing Board members, the
+components' link to the Company's strategy and their concrete application in fiscal 2023.
+Compensation Report → B. Compensation of Managing Board members
+6
+Commitments in
+the event of
+termination of
+appointments
+Severance cap
+FISCAL 2023
+in connection with
+the commence-
+ment of appoint-
+ments
+Commitments
+Share Ownership
+Guidelines
+fiscal year
+President and CEO: €1,770,000 a year
+• Other Managing Board members: €1,101,600 a year
+Sep 30,
+Sep 30,
+(4,509)
+1,663
+1,325
+10,021
+8,157
+8,237
+6,404
+(388)
+5,845
+8,238
+8,379
+6,352
+5,086
+Sep 30,
+Sep 30,
+Sep 30,
+10,062
+54,805
+53,060
+9,896
+55,254
+56,797
+29,653
+25,847
+22,737
+19,888
+21,381
+8,514
+4,413
+5,636
+4,156
+5,063
+8,529
+4,392
+6,697
+62,265
+71,977
+77,769
+FY 2019
+Cash flows from financing activities - continuing operations
+Change in cash and cash equivalents
+Free cash flow - continuing and discontinued operations
+Free cash flow - continuing operations
+Employees
+Continuing operations (in thousands)
+Stock market information
+Basic earnings per share - continuing and discontinued operations
+Basic earnings per share - continuing operations
+4,200
+Diluted earnings per share - continuing and discontinued operations
+1 For FY 2023 to be proposed to the Annual Shareholders' Meeting.
+(in millions of €, except where otherwise stated)
+Five-Year Summary
+FY 2023
+FY 2022
+FY 2021
+FY 2020
+Diluted earnings per share - continuing operations
+Dividend per share¹
+5,648
+Sep 30,
+Sep 30,
+44,567
+36,449
+39,113
+43,978
+40,879
+38,005
+30,414
+48,700
+34,843
+37,010
+28,492
+22,726
+1,426
+2,275
+2,839
+6,360
+37,212
+Equals the sum
+of maximum
+amounts that
+can possibly be
+paid out to each
+Managing Board
+member from all
+compensation
+components for
+the relevant
+50,636
+50,723
+Sep 30,
+Sep 30,
+Sep 30,
+2023
+2022
+2020
+2019
+46,596
+60,639
+52,298
+52,968
+70,370
+44,901
+42,686
+40,000
+34,117
+58,829
+Other design
+characteristics
+Maximum
+compensation
+Not applicable
+6
+B.2.3 Appropriateness of compensation
+B.3 Variable compensation in fiscal 2023
+B.2.1 Target compensation and compensation structure
+B.2.2 Maximum compensation
+B.2 Principles of the determination of compensation
+B.1 The compensation system at a glance
+B. Compensation of Managing Board members
+A. Fiscal 2023 in retrospect
+Table of contents
+Due to rounding, numbers presented throughout this Report may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This Compensation Report provides an explanation and a clear and comprehensible presentation of the compensation
+individually awarded and due to the current and former members of the Managing Board and the Supervisory Board of
+Siemens AG for fiscal 2023 (October 1, 2022, to September 30, 2023). The Report complies with the requirements of the
+German Stock Corporation Act (Aktiengesetz, AktG). Detailed information regarding the compensation systems for
+members of the Managing Board and the Supervisory Board of Siemens AG is available on the Siemens Global Website at
+WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
+Compensation Report 2023
+Siemens Aktiengesellschaft
+Berlin and Munich
+SIEMENS
+2023
+Compensation Report
+6
+10
+10
+12
+31
+30
+27
+27
+B.6.2 Former members of the Managing Board
+B.6.1 Active Managing Board members in fiscal 2023
+B.6 Compensation awarded and due
+2
+B.5 Pension benefit commitment
+25
+B.3.3 Malus and clawback regulations
+B.3.2 Long-term variable compensation (Stock Awards)
+14
+B.3.1 Short-term variable compensation (Bonus)
+13
+12
+B.4 Share Ownership Guidelines
+€3.90
+€3.50
+€4.00
+€10.04
+FY 2019
+FY 2020
+FY 2021
+FY 2022
+FY 2023
+287
+€4.65
+285
+311
+320
+2019
+2020
+2021
+2022
+2023
+303
+WWNNNNUE
+€7.68
+€6.41
+€4.25
+€4.70
+€5.74
+€4.70
+€6.28
+€4.62
+€9.90
+€5.00
+€6.32
+€4.59
+€9.91
+€5.82
+€4.77
+€6.36
+€4.67
+€10.02
+€4.93
+Additions to intangible assets and property, plant and equipment
+19
+26
+(in % of target amount) regulations
+Malus and clawback
+Maximum payout
+Design of compensation
+components
+Compensation
+components
+Cash
+Shares
+Fixed
+Variable
+Overview of the compensation system for Managing Board members
+work.
+The Managing Board compensation system is also supplemented by commitments granted in connection with the
+commencement and termination of appointments to the Managing Board as well as any change in the regular place of
+The Share Ownership Guidelines are a further key component of the compensation system. They obligate Managing Board
+members to permanently hold Siemens shares worth a defined multiple of their base salary and to purchase additional
+shares in the event that the value of their shares falls below the defined amount.
+The compensation of the Managing Board members consists of fixed and variable components. Fixed compensation, which
+is not performance-based, comprises base salary, fringe benefits and a pension benefit commitment. Short-term variable
+compensation (Bonus) and long-term variable compensation (Stock Awards) are performance-based compensation and
+thus variable.
+The compensation system for the members of the Managing Board of Siemens AG that is applicable for fiscal 2023 has been
+in place since fiscal 2020 and was approved by the Annual Shareholders' Meeting on February 5, 2020, by a majority of
+94.51% of the valid votes cast.
+Fixed
+Base salary
+Fringe benefits
+100%1
+1 Fringe benefits are reimbursed up to a maximum amount set by the Supervisory Board.
+300%
+Environment, Social
+and Governance (ESG/
+Sustainability index)
+20%
+Total shareholder
+return (TSR) com-
+pared to MSCI World
+İndustrials Index
+80%
+Long-term
+variable
+compensation
+(Stock Awards)
+B.1 The compensation system at a glance
+200%
+33.33%
+Managing
+Board
+portfolio
+Group
+33.34%
+Siemens
+Pension benefit
+commitment
+(Bonus)
+Short-term
+variable
+compensation
+compensation
+33.33%
+Individual
+targets
+B. Compensation of Managing Board members
+B. Compensation of Managing Board members
+→
+In addition, sustainability as a strategic goal and an expression of Siemens' social responsibility – is a high priority at
+Siemens. Sustainability is managed using the DEGREE framework. Introduced in fiscal 2021, this framework addresses
+sustainability from every angle and determines Siemens' ambitions in the sustainability area with systematized, measurable
+and specific long-term targets for environment, social and governance (ESG) dimensions. DEGREE is an acronym that stands
+for decarbonization, ethics, governance, resource efficiency, equity and employability. The DEGREE framework is
+continuously developed and adapted to the commitments that Siemens has made, such as the Science Based Targets
+initiative. The key performance indicators applied in long-term variable compensation are part of this DEGREE framework
+(CO2 emissions and digital learning hours per employee) and/or reflect the Company's priorities (Net Promoter Score as an
+expression of customer satisfaction).
+As a leading technology company, Siemens partners closely with other companies, industries and innovators in order to
+combine the real and the digital worlds. In this context, the Company focuses on accelerated, high-value growth. The
+Managing Board compensation determined by the Supervisory Board fosters the implementation of the Company's strategic
+targets by providing incentives for increasing profit, capital efficiency and cash generation. Incentives are also provided for
+driving the Company's digital transformation and developing its sustainability-related business.
+How is the strategy reflected in Managing Board compensation?
+What did the economic and political environment look like at the start of fiscal 2023?
+Siemens AG began fiscal 2023 spurred by a strong performance in fiscal 2022. However, the economic and political
+environment still contained a large number of uncertainties. Although new variants of the coronavirus did not produce the
+negative impacts feared and a crisis in gas and electricity supplies failed to materialize, the economic situation began to
+weaken - particularly in Germany, the Company's home market. The war in Ukraine continued as did tensions between the
+western democracies and China. On the other hand, supply chain pressures eased. Due to a sharp increase in inflation, all
+major central banks raised their interest rates to levels not seen since the beginning of the financial crisis in 2008. In Europe,
+high energy prices burdened economic development, while, in the U.S., consumption and the labor market in particular
+proved to be very resilient despite the interest rate increases. Growth in China - which had been strong following the
+relaxation of COVID-19 restrictions in Q1 of fiscal 2023 - slowed due to the normalization of inventories, which had built
+up during the pandemic, and as a result of the burdens imposed by the crisis in China's real estate market. Siemens AG's
+markets benefited from high order backlogs, positive price developments and customers' efforts to become more resilient,
+more competitive and more sustainable.
+A. Fiscal 2023 in retrospect
+Compensation Report → A. Fiscal 2023 in retrospect
+38
+How did Siemens perform in fiscal 2023?
+Independent auditor's report
+E. Other
+34
+32
+33
+D. Comparative information on profit development and annual change in compensation
+C. Compensation of Supervisory Board members
+B.7 Outlook for fiscal 2024
+37
+26
+Fiscal 2023 was another very successful year for Siemens. We achieved excellent financial results in a volatile market
+environment, which on the one hand included destocking by customers and distributors following previously proactive
+purchasing, particularly in our short-cycle businesses, and on the other hand included improved supply chain conditions,
+which accelerated revenue conversion from our high order backlog. We raised our outlook during the fiscal year after the
+first and the second quarters. We then reached or exceeded all the targets set for our primary measures for fiscal 2023.
+Net income nearly doubled year-over year to a historic high of €8.5 billion and corresponding basic earnings per share (EPS)
+more than doubled to €10.04. Earnings per share before purchase price allocation (EPS pre PPA) increased to €10.77.
+Compensation Report
+FISCAL 2023 5
+In view of the high level of approval, the Compensation Report for 2023 is basically unchanged in structure and scope. In
+addition, no changes to the compensation system were deemed necessary for fiscal 2023. Pursuant to Section 120a para.1
+sent. 1 of the German Stock Corporation Act (AktG), the compensation system for Managing Board members must be
+submitted for regular approval by the Annual Shareholders' Meeting in February 2024. In this connection, the compensation
+system has been subjected to a comprehensive review and adjusted. The compensation system as of fiscal 2024 is available
+on the Company website as part of the Notice of Annual Shareholders' Meeting.
+The Compensation Report for fiscal 2022 was prepared in accordance with Section 162 of the German Stock Corporation
+Act (AktG), and its content was also audited by the independent auditors, beyond the requirement of Section 162 para. 3
+sent. 1 and 2 of the German Stock Corporation Act (AktG). The Compensation Report on the compensation individually
+awarded and due to the members of the Managing Board and the Supervisory Board of Siemens AG in fiscal 2022 was
+approved by a majority of 92.09% of the valid votes cast at the Annual Shareholders' Meeting on February 9, 2023.
+Vote on the Compensation Report for fiscal 2022 at the 2023 Annual Shareholders' Meeting
+Following the scheduled departure of Michael Diekmann, the previous Chairman of the Compensation Committee of the
+Supervisory Board of Siemens AG, from the Supervisory Board and thus also from the Compensation Committee, the
+Compensation Committee elected Matthias Zachert to serve as its new Chairman, effective February 10, 2023. Grazia
+Vittadini has been a new member of the Compensation Committee since February 2023. As of September 30, 2023, the
+Compensation Committee comprised Matthias Zachert (Chairman), Harald Kern, Jürgen Kerner, Jim Hagemann Snabe,
+Birgit Steinborn and Grazia Vittadini.
+There were no changes in the composition of the Managing Board of Siemens AG in fiscal 2023. In fiscal 2023, the Managing
+Board comprised Dr. Roland Busch (President and CEO), Cedrik Neike, Matthias Rebellius, Prof. Dr. Ralf P. Thomas and
+Judith Wiese.
+Revenue was higher in nearly all our industrial businesses and rose to €77.8 billion, up 8% year-over-year. Smart
+Infrastructure and Digital Industries contributed double-digit growth with all businesses posting increases. Excluding
+currency translation and portfolio effects, revenue for Siemens rose 11%. Profit Industrial Business exceeded the record
+high of a year earlier and rose 11% to €11.4 billion. The profit margin of our Industrial Business rose to 15.4%, up from
+15.1% a year earlier, reaching its highest level ever.
+Composition of the Managing Board and the Compensation Committee
+income, was 1.17. We thus achieved a cash conversion rate that contributed strongly to the average required to reach our
+target of 1 minus annual comparable revenue growth rate over a cycle of three to five years.
+A. Fiscal 2023 in retrospect
+→
+Compensation Report
+FISCAL 2023 4
+Free cash flow from continuing and discontinued operations for fiscal 2023 was €10.0 billion, reaching a record high. The
+cash conversion rate for Siemens, defined as the ratio of free cash flow from continuing and discontinued operations to net
+Return on capital employed (ROCE) for fiscal 2023 rose to 18.6%, up from 10.0% in fiscal 2022. This increase was due to
+sharply higher income before interest after tax year-over-year. We thus exceeded the forecast for ROCE, which was to come
+close to or reach the lower end of our target range of 15% to 20%.
+Siemens' strong operating performance in fiscal 2023 is reflected in the Managing Board's variable compensation, which
+takes into account not only financial success but also environmental and social aspects. As a result, the compensation of
+the Managing Board members is also oriented toward the interests of the shareholders as well as the other stakeholders of
+Siemens AG.
+Cash flows from operating activities - continuing operations
+Amortization, depreciation and impairments
+Cash flows from investing activities - continuing operations
+2021
+Total assets
+Link to strategy
+Aim to ensure
+sustainable Company
+development and avoid
+inappropriate risks.
+No application in fiscal 2023
+FISCAL 2023
+8
+Compensation Report →
+B. Compensation of Managing Board members
+MAXIMUM COMPENSATION
+Maximum
+compensation
+•
+Implementation in compensation system
+Determined annually by the Supervisory Board based on total target compensation
+Equals the sum of maximum amounts that can possibly be paid out to each Managing
+Board member from all compensation components for the relevant fiscal year and is
+calculated as follows:
+Base salary
++ maximum fringe benefits
++ BSAV contribution or amount for free disposal
++ two times the Bonus target amount
++ three times the Stock Awards target amount
+Application in fiscal 2023
+Application in fiscal 2023
+•
+In cases of severe breaches of duty or compliance and/or unethical behavior or in cases
+of grossly negligent or willful breaches of duty of care or in cases in which variable
+compensation components linked to the achievement of specific targets have been
+unduly paid out on the basis of incorrect data, the Supervisory Board can withhold or
+reclaim variable compensation.
+Other Managing Board members: €1,380,000
+Application in fiscal 2023
+2023 Stock Awards tranche
+•
+Allocation date: November 18, 2022
+End of vesting period: in November 2026
+• Performance criteria:
+•
+Development of TSR relative to MSCI World Industrials index (weighting: 80%)
+ESG key performance indicators: CO2 emissions, digital learning hours per
+employee and Net Promoter Score (weighting: 20%)
+Target amounts (based on 100% target achievement)
+President and CEO: €3,340,000
+Link to strategy
+Provides incentives for
+strong annual financial
+and non-financial
+performance as the
+basis for long-term
+Company strategy and
+sustainable value
+creation.
+Link to strategy
+Fosters long-term
+commitment and
+provides incentives for
+sustainable value
+creation in accordance
+with the interests of
+shareholders and for
+the achievement of
+strategic sustainability
+targets.
+•
+Chief Financial Officer: €2,145,000
+Malus and clawback
+regulations
+• Cedrik Neike: €1,470,000
+Implementation in compensation system
+Maximum compensation for each Managing Board member for fiscal 2023
+determined in accordance with the compensation system
+Final assessment of compliance with maximum compensation when the 2023 Stock
+Awards tranche is settled in fiscal 2027
+Relevant share price: €120.12
+Fulfilled by all the Managing Board members obligated to provide verification
+Implementation in compensation system
+Compensation for the loss of benefits from a former employer
+Moving expenses due to a change of the regular place of work at the request of the
+Company
+Application in fiscal 2023
+No application in fiscal 2023
+Implementation in compensation system
+•
+Termination by mutual agreement and without serious cause
+Change of control (only for first-time appointments and/or reappointments before
+November 2019)
+Application in fiscal 2023
+No application in fiscal 2023
+Link to strategy
+Foster an alignment of
+Managing Board and
+shareholder interests
+and provide additional
+incentives to
+sustainably increase
+Company value.
+Link to strategy
+Are part of competitive
+compensation and help
+the Company obtain
+the best candidates
+worldwide for the
+Managing Board.
+FISCAL 2023 9
+Cash flows
+• Verification date: March 10, 2023
+Application in fiscal 2023
+Obligation to purchase additional shares if the value of the accumulated shareholding
+falls below the respective amounts to be verified due to fluctuations in the Siemens
+share price
+Relevant share price: average Xetra opening price of the fourth quarter of the
+previous calendar year
+Reporting in Compensation Report for fiscal 2027
+Link to strategy
+Caps Managing Board
+members'
+compensation in order
+to avoid uncontrollably
+high payments and
+thus disproportionate
+costs and risks for the
+Company.
+OTHER DESIGN CHARACTERISTICS
+Share Ownership
+Guidelines
+•
+.
+Commitments in
+Payout cap: 300% of target amount
+connection with the
+•
+Commitments in the
+event of termination
+of Managing Board
+appointments
+Obligates Managing Board members to permanently hold Siemens shares of an
+amount equal to a multiple of their base salary during their terms of office on the
+Managing Board
+.
+President and CEO: 300%
+Other Managing Board members: 200%
+Four-year build-up phase
+Verification date on second Friday in March
+commencement of
+Managing Board
+appointments
+Outperformance relative to sector index -/+ 20 percentage points
+Siemens-internal ESG/Sustainability index with three equally weighted key
+performance indicators and annual interim targets (weighting: 20%)
+Implementation in compensation system
+Development of total shareholder return (TSR) relative to an international sector
+index (weighting: 80%)
+compensation in order
+to obtain the best
+candidates worldwide
+to develop and execute
+the Company's strategy
+and manage its
+operations and in order
+to retain these
+individuals at the
+Company over the long
+term.
+Pension benefit
+commitment
+Application in fiscal 2023
+In fiscal 2023, Managing Board members were entitled to fringe benefits equal to a
+maximum of 7.5% of their base salary
+President and CEO: max. €132,750
+• Other Managing Board members: max. €82,620
+Implementation in compensation system
+• Annual contributions to the Siemens Defined Contribution Pension Plan (BSAV)
+.
+•
+•
+Newly appointed Managing Board members as of October 1, 2019: fixed cash amount
+for free disposal
+Commitment at beginning of fiscal year
+Credit to pension account (BSAV contribution) or payout (amount for free disposal) in
+January after the end of the fiscal year
+Application in fiscal 2023
+Link to strategy
+Competitive
+BSAV contribution (credit in January 2024)
+Costs of medical checkups
+Insurance allowances
+as a percentage of total assets
+12-month reference and 36-month performance period
+Provisions for pensions and similar obligations
+Equity (including non-controlling interests)
+Net debt
+Long-term debt
+Debt
+Current liabilities
+Current assets
+Assets, liabilities and equity
+Net income
+Income from continuing operations
+Gross profit
+Revenue
+Implementation in compensation system
+•
+Determination of a maximum amount relative to base salary, covering expenses
+incurred to the benefit of the Managing Board member
+• Includes in-kind compensation and fringe benefits granted by the Company, for
+example:
+• Provision of a company car
+•
+•
+•
+President and CEO: €991,200
+Bonus for fiscal 2023
+•
+Performance period: October 1, 2022, to September 30, 2023
+Payout: February 2024 (at the latest)
+Performance criteria:
+• 33.34% earnings per share before purchase price allocation (EPS pre PPA)
+• 33.33% return on capital employed adjusted (ROCE adjusted)
+• 33.33% individual targets:
+•
+Comparable revenue growth in the area of responsibility
+Two additional individual targets with focus topics from the Bonus topic
+catalogue
+Target amounts (based on 100% target achievement)
+President and CEO: €1,770,000
+Other Managing Board members: €1,101,600
+Implementation in compensation system
+Performance-oriented plan settled by share transfer after the end of an approximately
+four-year vesting period
+• Performance range: 0% to 200%, using linear interpolation
+Two performance criteria:
+•
+Application in fiscal 2023
+• Consideration of extraordinary developments in justified, infrequent special cases
+possible
+• Cash conversion rate (CCR) in the area of responsibility
+•
+Individual targets: two to four equally weighted financial targets or focus topics
+Other Managing Board members: €616,896
+FISCAL 2023
+7
+Compensation Report
+→
+VARIABLE COMPENSATION
+Short-term variable
+compensation
+(Bonus)
+B. Compensation of Managing Board members
+Amount for free disposal (payment in January 2024)
+Other Managing Board members: €550,800
+compensation
+(Stock Awards)
+Implementation in compensation system
+Performance-oriented annual Bonus, paid in cash in the subsequent fiscal year
+Performance range: 0% to 200%, using linear interpolation
+Three equally weighted target dimensions:
+•
+Siemens Group
+•
+Long-term variable
+Managing Board portfolio
+Managing Board member since Oct. 1, 2020
+Prof. Dr. Ralf P. Thomas
+Matthias Rebellius
++ Fringe benefits¹
+100% 4,162
+compensation
+Fixed
+100%
+Managing Board member since Sept. 18, 2013
+Base salary
+4,373
+་།
+2022
+2023
+2022
+ས །
+37%
+617
+1,801
+1,102
+།།
+4,903
+30%
+2,000
+2023
+1,259
+B.3.2.1. BASIC PRINCIPLES AND FUNCTIONING
+2,954
+7,618
+€1,101,600
+།།། ༅།། ཚ།་། ༅།་།༅།
+€2,203,200
+181.77%
+€2,002,378
+B.3.2 Long-term variable compensation (Stock Awards)
+€0
+Siemens grants long-term variable compensation in the form of Stock Awards. A Stock Award is the claim to one share -
+conditional on target achievement - after the expiration of a defined vesting period. The vesting period is, accordingly, the
+term of each Stock Awards tranche.
+At the beginning of a fiscal year, the Supervisory Board defines a target amount in euros based on 100% target achievement
+for each Managing Board member. This target amount is extrapolated to target achievement of 200% ("maximum allocation
+amount"). Stock Awards for this maximum allocation amount are then allocated to the Managing Board members. The
+number of Stock Awards is calculated by dividing the maximum allocation amount by the price of the Siemens share on the
+allocation date, less the estimated discounted dividends ("allocation price").
+An approximately four-year vesting period begins with the allocation of Stock Awards, after the expiration of which Siemens
+shares are transferred. The beneficiary Managing Board members are not entitled to dividends during the vesting period.
+Performance criteria
+39%
+100%
+Since fiscal 2020, the number of Siemens shares that is actually transferred depends 80% on the financial performance
+criterion "long-term value creation," measured on the basis of the key performance indicator "total shareholder return"
+(TSR), and 20% on the non-financial performance criterion "sustainability." For measuring the "sustainability" performance
+criterion, Siemens AG's performance in the environment, social and governance (ESG) area is assessed on the basis of a
+Siemens-internal ESG/Sustainability index, the composition of which is determined annually by the Supervisory Board.
+Target achievement for TSR is concretely determined by first calculating a TSR reference value for Siemens AG and a TSR
+reference value for the sector index. The TSR reference value is equal to the average of the end-of-month values over the
+first 12 months of the vesting period (reference period).
+In order to determine at the end of the vesting period how well the TSR of Siemens AG has performed relative to the TSR of
+the sector index, the TSR performance value is calculated over the subsequent 36 months (performance period). The TSR
+performance value is the average of the end-of-month values during the performance period.
+FISCAL 2023 19
+Siemens c/o
+2023 Stock Awards (vesting: 2022 - 2026)
+2022 Stock Awards (vesting: 2021 - 2025)
+Total target compensation (TTC)
+3,340
+42%
+1,470
+34%
+8,004
+100%
+Total shareholder return - TSR is indicative of the performance of one share over a specified period of time – in the case of
+Siemens, over the approximately four-year vesting period. It takes into account changes in the share price and the dividends
+paid during this period. To reflect the Company's international footprint, the TSR of Siemens AG is compared at the end of
+the vesting period with the TSR of an international sector index, the MSCI World Industrials or a comparable successor index.
+€ thousand in % of TTC € thousand in % of TTC € thousand in % of TTC € thousand in % of TTC
+1,102
+2023
+1,102
+1,102
+2023 Stock Awards (vesting: 2022 - 2026) 1,380
+2022 Stock Awards (vesting: 2021-2025)
+Total target compensation (TTC)
+4,217
+Fixed
+compensation
+Base salary
++ Fringe benefits¹
++ BSAV contribution/
+Judith Wiese
+1,735
+Managing Board member since Oct. 1, 2020.
+€ thousand in % of TTC € thousand in % of TTC
+1,102
+83
+26%
+2%
+1,102
+83
+27%
+2%
+amount for free disposal²
+551
+€2,020,665
+13%
+2022
+551
++ Long-term variable compensation
+Bonus for fiscal 2022
+1,102
+83
+22%
+617
+1,801
+1,102
+2,145
+༅། །
+*། ༅།། ་།
+83
+།*།
+83
+551
+1,735
+1,102
+5,048
+།།།
+1,259
+4,096
+༄།། ༅།། རྨ།།
+Variable
+compensation
++BSAV contribution/
+amount for free disposal²
+= Total
++ Short-term variable compensation
+Bonus for fiscal 2023
+1,102
+183.43%
+36% 2,894
+€1,101,600
+12%
+991
+83
+2%
+།
+1,102
+25%
+83
+2%
+133
+2%
+991
+133
+23%
+1,770
+22%
+1,770
+amount for free disposal²
++BSAV contribution/
++ Fringe benefits¹
+compensation
+Base salary
+Fixed
+€ thousand in % of TTC € thousand in % of TTC € thousand in % of TTC € thousand in % of TTC
+1,102
+Managing Board member since April 1, 2017
+2022
+13%
+14%
+551
++ Long-term variable compensation
+26%
+1,102
+23%
+1,770
+Bonus for fiscal 2022
+25%
+1,102
+22%
+1,770
+617
+Bonus for fiscal 2023
+༅༅།ཇ། ༅། །
+2%
++ Short-term variable compensation
+Variable
+1,801
+41%
+1,801
+38%
+2,894
+Total
+617
+compensation
+2023
+Cedrik Neike
+Dr. Roland Busch
+President and CEO since Feb. 3, 2021
+2022
+B.2.1 Target compensation and compensation structure
+B.2 Principles of the determination of compensation
+B. Compensation of Managing Board members
+→
+Compensation Report
+payout amount
+€0
+€1,770,000
+€3,540,000
+185.10%
+€0
+The Supervisory Board has determined, in accordance with the compensation system for the Managing Board members,
+the amount of each Managing Board member's total target compensation for fiscal 2023. In making this determination, the
+Supervisory Board has ensured that the proportion of long-term variable compensation always exceeds that of short-term
+variable compensation and that the proportions of total target compensation represented by each of the individual
+compensation components are within the ranges defined in the compensation system.
+€1,101,600
+173.89%
+€3,276,270
+€1,915,572
+Matthias Rebellius
+Prof. Dr. Ralf P. Thomas
+Judith Wiese
+€0
+€1,101,600
+€2,203,200
+181.14%
+€1,995,438
+€0
+€2,203,200
+Composition of total target compensation
+Base salary
+TOTAL TARGET COMPENSATION
+2023
+B. Compensation of Managing Board members
+Compensation Report →
+in office on September 30, 2023
+Managing Board members
+Target compensation fiscal 2023
+10
+FISCAL 2023
+The following table shows the individualized target compensation of each Managing Board member and the relative
+proportions of total target compensation represented by each of the individual compensation components.
+Regarding compensation, all components of the compensation of the position of President and CEO are differentiated. The
+target amount of Prof. Dr. Ralf P. Thomas's Stock Awards is differentiated due to his particular responsibilities as CFO. The
+target amount of Cedrik Neike's Stock Awards is also differentiated due to the outstanding business results of Digital
+Industries, the strategic importance of this Business for the further development of Siemens AG and Cedrik Neike's five-
+years of membership on the Managing Board.
+Due to the increase in the Stock Awards target amounts, variable compensation is structured on a more long-term basis,
+while compensation as a whole is oriented even more toward sustainable Company development.
+The regular review of Managing Board compensation at the beginning of fiscal 2023 in order to determine the
+compensation's appropriateness and conformity with customary market practices indicated that - when compared to the
+companies in the DAX 40, the German blue-chip stock index, that have been defined in the compensation system as the
+relevant market - the total target compensation of the members of the Managing Board of Siemens AG was positioned
+toward the lower end of the customary market ranges. Compared to the companies in the STOXX Europe 50, which is also
+used for a market comparison due to Siemens' international footprint, direct target compensation was actually below the
+customary market range. Against this backdrop, the Supervisory Board approved an increase in the total target
+compensation of all Managing Board members as of October 1, 2022. This increase was implemented by raising the
+individual members' Stock Awards target amounts. The Stock Awards target amount for Dr. Roland Busch was raised to
+€3,340,000 from €2,954,000, the target amount for Prof. Dr. Ralf P. Thomas was raised to €2,145,000 from €2,000,000,
+the target amount for Cedrik Neike was raised to €1,470,000 from €1,259,000, and the target amounts for the remaining
+Managing Board members were raised to €1,380,000 from €1,259,000.
+of total target compensation
+30% to 42%
+Long-term variable
+compensation
+(Stock Awards)
+of total target compensation
+20% to 28%
+VARIABLE COMPENSATION
+Short-term variable
+compensation
+(Bonus)
+of total target compensation
+Pension benefit
+commitment
+Fringe benefits
+36% to 43%
++
+FIXED COMPENSATION
+€2,203,200
+13%
+Individual targets: Comparable revenue growth - Target setting and target achievement
+1,735
+Weighting
+Key performance indicator/ focus topics
+Target achievement
+Total target achievement
+Dr. Roland
+Busch
+25%
+CCR Siemens Group
+162.50%
+25%
+Comparable revenue growth Siemens c/o
+200.00%
+165.63%
+Business development
+50%
+150.00%
+Sustainability / diversity
+Cedrik
+25%
+Matthias
+Implementation of other strategic target setting
+130.00%
+50%
+Business development
+Individual targets: Total target achievement by each Managing Board member
+132.00%
+Comparable revenue growth Digital Industries
+25%
+Neike
+100.00%
+CCR Digital Industries
+25%
+168.00%
+Target achievement for the target dimension "Individual targets" is summarized for each Managing Board member in the
+following table.
+Implementation and anchoring in key processes such as project design and data / IT infrastructure
+as well as the development of business models
+Strengthening of the sustainability organization in the business units and establishment of a
+committee for sustainability-related business decisions
+Scaling of established financing solutions in new business models of the industrial business
+Successful support for Siemens Xcelerator through specific SFS solutions and integration of a digital
+payment and financing gateway
+Strong operating performance, including revenue growth and increase in operating profitability
+year-over-year
+Financial Services (SFS)
+business of Siemens
+Development of the
+sustainability-related
+Development and implementation of methods for identifying SFS financing solutions with a positive
+value contribution in the sustainability area
+Sustainability / diversity
+Driving performance of
+Portfolio Companies
+Successful sale of Commercial Vehicles business to Meritor
+Implementation of portfolio measures
+Wiese
+Judith
+Prof. Dr.
+Ralf P.
+Thomas
+Further development of
+Siemens Financial Services
+(SFS)
+CCR Smart Infrastructure
+• Continuous further development of sustainability through innovation in financing offerings
+Further development and
+performance of Global
+Business Services (GBS)
+Implementation of Next
+Work program
+of the target regarding the share of women in top management positions
+Acceleration of two DEGREE targets with adjusted, ambitious target setting and early achievement
+.
+• Launch of a project to further develop the DEGREE framework
+Development and provision of a Next Work training program for managers and businesses
+•
+Optimization / efficiency enhancement
+Targeted scaling of Next Work to now roughly 80,000 employees
+Revenue increase above annual planning as well as achievement of planned productivity targets
+•
+• Further expansion of business activities, including a first major external contract
+business strategy and
+anchoring in Company
+steering
+Further development of the
+sustainability-related
+Sustainability / diversity
+Further development of
+DEGREE framework
+•
+115.00%
+Rebellius
+25%
+(based on 100%
+target achievement)
+target achievement)
+in office on September 30, 2023
+Cap
+Target amount
+Floor
+(based on 0%
+(based on 200%
+target achievement)
+Cedrik Neike
+Managing Board members
+Compensation range
+Total target achievement and Bonus payout amounts for fiscal 2023
+Total target achievement and the resulting Bonus payout amount for each Managing Board member are summarized in the
+following table.
+Total target achievement for the Bonus for fiscal 2023
+Compensation Report → B. Compensation of Managing Board members
+Dr. Roland Busch
+18
+Total target
+achievement
+In addition to CCR, "comparable revenue growth" was defined as the second individual target for fiscal 2023 for all members
+of the Managing Board. It indicates the development in Siemens' business net of currency translation effects arising from
+the external environment outside of Siemens' control and the portfolio effects that involve business activities that are either
+new to or no longer a part of the relevant business. For the President and CEO and the members of the Managing Board
+with primarily functional responsibility, the growth target was determined on the basis of continuing operations (c/o)
+related to the Siemens Group (Siemens c/o). For the Managing Board members with business responsibility for Digital
+Industries and Smart Infrastructure, growth targets are based on their respective businesses. The respective target values
+were derived from the external outlook for fiscal 2023.
+target
+(0.4)
++0.4
+(0.4)
++0.4
+(0.4)
+Bonus
++0.4
+Performance range
+Performance range
+Performance range
+Target achievement: 162.50%
+Target achievement: 100.00%
+Target achievement: 115.00%
++
+Individual targets: Focus topics from the areas of Company strategy / sustainability (cont.)
+FISCAL 2023
+Sustainability / diversity
+Comparable revenue growth Siemens c/o
+25%
+Ralf P. Thomas
+162.50%
+CCR Siemens Group
+25%
+200.00%
+Prof. Dr.
+150.00%
+50%
+Business development
+153.75%
+200.00%
+Comparable revenue growth Smart Infrastructure
+Implementation of other strategic target setting
+Target achievement: 132.00% to 165.63%
+160.63%
+50%
+130.00%
+50%
+Optimization efficiency enhancement
+155.63%
+200.00%
+Comparable revenue growth Siemens c/o
+Implementation of portfolio measures
+25%
+162.50%
+CCR Siemens Group
+25%
+Judith
+Sustainability/ diversity
+140.00%
+Wiese
+target
+B. Compensation of Managing Board members
+FISCAL 2023 17
+- 200%
+200.00%
+Smart Infrastructure
+100%
+Actual
+value
+2023
+15.42%
+0% 41-
+5.50%
+Floor
+9.50%
+100%
+13.50%
+Growth
+Cap
+target
+(4) ppts.
++4 ppts.
+Performance range
+Target achievement: 200.00%
+business strategy and
+anchoring in Company
+steering
+Further development of the
+sustainability-related
+Sustainability/diversity
+of the businesses, including
+resilience
+Sustainable strengthening
+Neike
+Target achievement
+Cedrik
+Business development
+Expansion of
+Dr. Roland
+Busch
+Individual targets: Focus topics from the areas of Company strategy / sustainability
+The other two individual targets include focus topics from the areas of Company strategy / sustainability and were defined
+on the basis of the Managing Board members' respective areas of responsibility.
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2023 16
+Siemens Xcelerator business
+Target achievement: 168.00%
+Target achievement: 200.00%
+Performance range
+(2) ppts.
+Growth
+9.50%
+Cap
+100%
+target
+7.50%
+5.50%
+Floor
++2 ppts.
+0% 41
+2023
+value
+Actual
+100%
+200.00%
+200%
+10.74%
+Development of
+Performance range
+200%
++5 ppts.
+(5) ppts.
+100%
+target
+11.50%
+6.50%
+Floor
+0% 4
+Target achievement
+16.50% Growth
+Cap
+2023
+value
+Actual
+Digital Industries
+100%
+168.00%
+14.90%
+sustainability-related
+business
+Business development
+•
+Siemens Xcelerator revenue growth above fiscal-year targets for Siemens Xcelerator software,
+internet of things (IoT) and digital services and for Siemens Xcelerator loT hardware
+expertise
+including sector-specific
+Regions in go-to-market,
+Strengthening of the
+Planning for seven sectors in key countries for fiscal 2024 already concluded
+Siemens Xcelerator business
+Expansion of
+Rebellius
+Business development
+Matthias
+related business
+regard to sustainability-
+•
+Establishment and expansion of partnerships as well as analysis of new business opportunities
+External communications and training of sales personnel in sector-specific aspects of sustainability
+.
+Implementation of other strategic target setting
+related business
+Successful, cross-sector scaling of energy-saving contracting in commercial buildings, hospitals,
+universities
+regard to sustainability-
+•
+specific solutions with
+Identification of business opportunities and market-specific use cases
+Strong development in the battery and semiconductor segment, among other things, through the
+strengthening of sales structures and the conclusion of framework agreements
+•
+business
+Definition and introduction of customer value in the sustainability strategy of Siemens AG
+Determination of clear sustainability-related focus businesses and investment priorities
+.
+sustainability-related
+•
+Development of
+Strengthening of sector-
+Compensation Report →
+Definition of basic structure and preparation of new key performance indicators for impact
+Implementation of sustainability and energy efficiency campaigns
+.
+.
+.
+Achievement of software-as-
+a-service targets
+expertise
+including sector-specific
+•
+Siemens Xcelerator revenue growth above fiscal-year targets
+•
+.
+•
+Regions in go-to-market,
+Strengthening of the
+Siemens Xcelerator business
+Expansion of
+•
+.
+= Total
+Market share gains in nearly all businesses with accompanying revenue growth
+Strengthening of value chain resilience
+specific solutions with
+Strengthening of sector-
+business
+sustainability-related
+Development of
+Implementation of other strategic target setting
+as well as the extension of marketplace content and functionalities
+Transition to software-as-a-service considerably above plan and above the target communicated at
+the 2021 Capital Market Day
+Driving Regional sales transformation, among other things, through the introduction of overarching
+sales processes and steering
+Further expansion of customer and partner landscape with, among others, NVIDIA, Microsoft and
+Daimler Truck
+Positive revenue development as well as the expansion of Siemens Xcelerator scope to include
+product design, engineering and verification
+Definition of basic structure and preparation of new key performance indicators for impact
+Completion of materiality assessment pursuant to the Corporate Sustainability Reporting Directive
+(CSRD) as well as sustainability scenario modeling
+Implementation and anchoring in key processes such as product design and data / IT infrastructure
+as well as the development of business models
+Strengthening of the sustainability organization in the business units and establishment of a
+committee for sustainability-related business decisions
+Improved sector-specific expertise in the battery and semiconductor segment - in particular,
+through the dedicated allocation of resources and the addressing of key customers
+target
+Accelerated expansion of Siemens Xcelerator business through modernization and modularization
+100%
+Link to strategy
+Awards
+Stock
+Key performance
+indicator/ focus topic Bonus
+FINANCIAL TARGETS
+Performance
+criterion
+Performance criteria of variable compensation and link to strategy
+The performance criteria relevant for fiscal 2023, the key performance indicators, the focus topics and the explanations of
+how these foster the Company's long-term development are shown in the following table.
+The performance criteria and the key performance indicators used to measure performance for variable compensation in
+fiscal 2023 are derived from the Company's strategic goals and operational steering and are in line with the compensation
+system applicable for fiscal 2023. As a rule, all the performance criteria measure successful value creation in all its different
+forms, as strategically envisioned. In line with Siemens' social responsibility, sustainability is also included in the
+performance criteria.
+Variable compensation is tied to performance and accounts for a significant proportion of the total compensation of
+Managing Board members. It consists of a short-term variable component (Bonus) and a long-term variable component
+(Stock Awards).
+B.3 Variable compensation in fiscal 2023
+Compensation Report → B. Compensation of Managing Board members
+FISCAL 2023 12
+The appropriateness review of Managing Board compensation for fiscal 2023 has shown that Managing Board
+compensation is appropriate.
+The Supervisory Board conducted the annual review of Managing Board compensation in order to determine the latter's
+appropriateness and conformity with market conditions. For this purpose, the Supervisory Board assessed the
+compensation's level and structure relative to the companies included in the DAX 40, the German blue-chip stock index,
+and relative to the companies included in the STOXX Europe 50 (horizontal comparison). In the course of its review, the
+Supervisory Board also assessed the development of Managing Board compensation relative to the compensation of Senior
+Management and Siemens' total workforce in Germany (vertical comparison). Senior Management comprises executive
+employees. The total workforce comprises Senior Management as well as the Siemens employees who are covered by
+collective bargaining agreements and those who are not. In addition to a status quo analysis, the vertical comparison took
+into account the development of compensation ratios over time. Since Siemens Healthineers is a separately managed,
+publicly listed company, its workforce was not included in the vertical comparison.
+B.2.3 Appropriateness of compensation
+The final assessment of compliance with the maximum compensation for fiscal 2023 will be included in the Compensation
+Report for fiscal 2027.
+(three times target amount)
+Maximum compensation
+10,020
+4,410
+4,140
+6,435
+Profit
+4,140
+8,414
+8,078
+10,439
+8,078
+The base salary and the BSAV contribution (or the amount for free disposal) are fixed amounts. In no case did the fringe
+benefits awarded to a Managing Board member exceed the maximum amount defined for fiscal 2023. The Bonus cap was
+not reached in fiscal 2023.
+Since the 2023 Stock Awards tranche is not due until November 2026, compliance with the maximum limit of the Stock
+Awards for fiscal 2023 can be finally assessed only in November 2026, when the 2023 Stock Awards tranche is settled.
+16,454
+Profitability/
+capital efficiency
+Earnings per
+share before
+EPS reflects the net income attributable to the shareholders of Siemens AG and
+incentivizes the sustainable increase in profit - particularly by focusing on profitable
+growth. This key performance indicator provides a comprehensive perspective that
+encompasses all units of the Siemens Group. The consideration of EPS pre PPA
+strengthens the focus on Siemens' operating performance.
+ROCE, which is the primary measure for managing capital efficiency at Group level,
+reflects our focus on profitable growth, the implementation of measures to sustainably
+increase competitiveness and stringent working capital management. The adjustment
+of ROCE places the focus on Siemens' operating performance.
+CCR measures the ability to convert profit into cash flow in order to finance growth and
+offer our shareholders an attractive, progressive dividend policy.
+Further accelerating high-value growth is a key element of Siemens' strategy. As a
+leading technology company, Siemens wants to expand its position on all targeted
+markets and tap additional profitable markets.
+TSR is a yardstick for measuring the achievement of Siemens' strategic goal of
+sustainably increasing Company value. It indicates total value creation for shareholders
+in the form of increases in the Siemens share price and dividends paid.
+The individual targets for executing the Company strategy enable the Company to focus
+on specific factors that are aligned with its short- and medium-term targets and
+measures in order to ensure its long-term strategic development.
+ability index
+The focus topics in fiscal 2023 comprised business development, the implementation of
+other strategic target setting, optimization / efficiency enhancement and the
+implementation of portfolio measures.
+The Siemens-internal ESG/Sustainability index for the 2023 Stock Awards tranche
+includes:
+• CO2 emissions - Climate neutrality by 2030 in order to support the 1.5-degree target
+and thus combat global warming.
+•
+Digital learning hours - Focus on learning in order to empower our people to
+remain resilient and relevant in a constantly changing environment.
+• Net Promoter Score - Strong customer relationships are the basis for sustainable
+development both for Siemens and for our customers.
+FISCAL 2023
+Sustainability/diversity - Siemens honors its social responsibility by fostering
+diversity, inclusion and equal opportunity.
++
+Siemens-internal
+ESG/Sustain-
+Various focus
+topics
+purchase price
+allocation
+(EPS pre PPA)
+Return on capital
+employed
+adjusted
+(ROCE adjusted)
+Liquidity
+Cash conversion
+rate (CCR)
+Growth
+Long-term
+Various focus
+topics
+value creation
+Total
+shareholder
+return (TSR)
+NON-FINANCIAL, QUALITATIVE TARGETS
+Execution of
+Company
+strategy
+Sustainability
+Comparable
+revenue growth
+13
+vesting: 2022- 2026
+2,203
+(€ thousand)
+in office on September 30, 2023
+Prof. Dr. Ralf P.
+Managing Board members
+Maximum compensation fiscal 2023
+The following table shows the maximum compensation of each Managing Board member as approved by the Supervisory
+Board for fiscal 2023 in accordance with Section 87a para. 1 sent. 2 No. 1 of the German Stock Corporation Act (AktG).
+The maximum compensation of each Managing Board member is determined annually by the Supervisory Board in
+accordance with Section 87a para. 1 sent. 2 No. 1 of the German Stock Corporation Act (AktG). Maximum compensation is
+equal to the total of the maximum amounts of all compensation components that can possibly be paid out to each
+Managing Board member for the relevant fiscal year. It is calculated by adding base salary, maximum fringe benefits and
+the BSAV contribution (or the amount for free disposal) as well as two times the Bonus target amount and three times the
+Stock Awards target amount. Twice the Bonus target amount and triple the Stock Awards target amount also correspond
+to the respective limits (individual caps) on the amount of variable compensation.
+B.2.2 Maximum compensation
+Compensation Report → B. Compensation of Managing Board members
+11
+FISCAL 2023
+2 Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV).
+Instead of BSAV contributions, they receive a fixed cash amount for free disposal.
+For fiscal 2023, each Managing Board member was awarded fringe benefits equal to a maximum 7.5% of his or her base salary.
+The target amount reported here is also equal to the maximum amount.
+1
+100% 4,096 100%
+4,217
+Total target compensation (TTC)
+31%
+41% 1,735
+Cap
+42%
+Variable
+compensation
++ Short-term variable compensation
+Bonus for fiscal 2023
+1,102
+Fixed
+26%
+1,102
+27%
++ Long-term variable compensation
+2023 Stock Awards (vesting: 2022 - 2026)
+2022 Stock Awards (vesting: 2021 - 2025)
+1,380
+33%
+1,259
+Bonus for fiscal 2022
+Base salary
+compensation
++
++ amount for free disposal
+991
+617
+551
+617
+551
+BSAV contribution/
+Variable
+compensation
++
+(two times target amount)
+3,540
+2,203
+2,203
+2,203
+Bonus for fiscal 2023
+Stock Awards 2023
+83
+83
+Fringe benefits (maximum amount)
+Dr. Roland
+Cedrik
+Busch
+Neike
+Matthias
+Rebellius
+83
+Thomas
+1,770
+1,102
+1,102
+1,102
+133
+83
+Judith
+Wiese
+Compensation Report → B. Compensation of Managing Board members
+1,102
+B.3.1 Short-term variable compensation (Bonus)
+Compensation Report → B. Compensation of Managing Board members
+"Individual targets" target dimension
+The "Individual targets" target dimension comprises four equally weighted individual targets, achievement of each of which
+may be between 0% and 200%.
+The cash conversion rate (CCR) was defined as the first individual target for all Managing Board members. The CCR reflects
+a company's ability to convert profit into available cash. For the President and CEO and the Managing Board members with
+primarily functional responsibility, the CCR target was defined on the basis of the Siemens Group in order to support
+Siemens' voluntary commitment to generate cash at Group level. CCR Siemens Group is defined as the ratio of free cash
+flow from continuing and discontinued operations to net income. For the Managing Board members with business
+responsibility for Digital Industries and Smart Infrastructure, the CCR targets are business-specific and defined as the ratio
+of free cash flow to profit at each business. The target amounts for CCR were based on the budget plans.
+Individual targets: Cash conversion rate (CCR) - Target setting and target achievement
+200%
+Target achievement
+Siemens Group
+Smart Infrastructure
+200%
+-200%
+162.50%
+100%
+115.00%
+Digital Industries
+100.00%
+15
+Target achievement: 189.67%
+Main Siemens-Energy-related effects
+(0.40) ppts.
+ROCE
+0%
+12.56%
+Floor
+15.56%
+FISCAL 2023
+adjusted
+18.56%
+Cap
+Actual ROCE adjusted value
+18.25%
+target
+(3) ppts. +3 ppts.
+Performance range
+100%
+2023
+18.25%
+100%
+Actual
+0.45
+0.85
+1.25
+0.49
+0.89
+1.29
+1.32
+Floor
+Cap
+Floor
+100%
+The Supervisory Board aims to ensure that the targets for variable compensation are demanding and sustainable. If they
+are not reached, variable compensation can be reduced to zero. If the targets are significantly exceeded, target achievement
+is capped at 200%.
+Floor
+Cap
+100%
+100%
+0.92
+CCR
+Actual
+value
+value
+Actual
+value
+2023
+2023
+0.52
+2023
+0.95
+0% H
+CCR
+0%
+CCR
+0% 41
+1.17
+value
+0.85
+100%
+FISCAL 2023 14
+Compensation Report → B. Compensation of Managing Board members
+As part of target achievement, the actual EPS pre PPA value of the reporting year is used in order to place the focus on
+performance in the reporting year.
+Earnings per share before purchase price allocation (EPS pre PPA): Target setting and target achievement
+33.34% Siemens Group
+EPS pre PPA, basic
+200%
+To take account of the Company's long-term performance and provide incentives for a sustainable increase in profit, the
+average EPS pre PPA of three consecutive fiscal years was used for target setting. The portfolio of Siemens AG changed
+significantly due to the spin-off of Siemens Energy at the end of fiscal 2020. Against this backdrop, target setting for fiscal
+2023 was defined on the basis of comparable EPS pre PPA values. The following EPS pre PPA values were used for this
+purpose: the EPS pre PPA value of continuing operations was used for fiscal 2020, and the EPS pre PPA values of continuing
+and discontinued operations were used for fiscal 2021 and fiscal 2022.
+Target achievement
+200.00%
+Actual
+value
+2023
+€10.77
+90
+0%
+100%
+EPS pre PPA
+For the "Siemens Group" target dimension in fiscal 2023, the Supervisory Board of Siemens AG defined the performance
+criterion "profit." In accordance with external communications and the Siemens Financial Framework for the financial
+steering of the Company, the focus is on the transparent presentation of Siemens' operating performance. For this reason,
+"profit" is measured in terms of basic earnings per share before purchase price allocation (EPS pre PPA). EPS pre PPA is
+defined as basic earnings per share from net income adjusted for amortization of intangible assets acquired in business
+combinations and related income taxes. It includes the amounts attributable to shareholders of Siemens AG.
+B.3.1.2. BONUS FOR FISCAL 2023
+B.3.1.1 BASIC PRINCIPLES AND FUNCTIONING
+→ "Siemens Group"
+Actual
+→ "Managing Board portfolio"
+→> "Individual targets."
+Performance criteria are assigned to each of the three target dimensions based on Company priorities and the
+responsibilities of each Managing Board member. One financial performance criterion is assigned to the "Siemens Group"
+dimension and another to the "Managing Board portfolio" dimension. The fulfillment of these criteria is measured on the
+basis of key performance indicators. Within the "Individual targets" dimension, the financial performance criteria "growth"
+and "liquidity" can be employed as can additional, non-financial performance criteria. In the case of non-financial
+performance criteria, the Supervisory Board considers the degree to which a Managing Board member has fulfilled so-called
+focus topics, which comprise operations-related aspects of the execution of the Company's strategy as well as sustainability-
+related aspects.
+"Siemens Group" target dimension
+At the end of the fiscal year, target achievement for the individual key performance indicators and the achievement of the
+Managing Board members' individual targets are determined and aggregated to form a weighted average. The percentage
+of weighted target achievement multiplied by the individual target amount yields the Bonus payout amount for the past
+fiscal year. The payable Bonus is capped at two times the target amount and is paid in cash, at the latest, together with the
+compensation paid at the end of February of the following fiscal year.
+Bonus
+target amount
+Weighted average target achievement (0%-200%)
+☐ × Post + 2 + 2 =
+Bonus
+The Bonus system is based on three equally weighted target dimensions, which take account of the overall responsibility of
+the Managing Board as well as each Managing Board members' specific business responsibilities and individual challenges:
+Bonus design and calculation of payout amount
+€3.89
+payout amount
+Floor
+Actual value
+For fiscal 2020:
+comparable EPS pre PPA of continuing operations
+"Managing Board portfolio" target dimension
+The Supervisory Board of Siemens AG established "profitability / capital efficiency" measured in terms of return on capital
+employed (ROCE) as the performance criterion for the "Managing Board portfolio" target dimension for fiscal 2023 for all
+Managing Board members. ROCE is defined as profit before interest and after tax divided by average capital employed. For
+the purposes of target setting and determining target achievement, ROCE – as defined in the Siemens Financial Framework,
+which excludes certain Varian-related acquisition effects is adjusted for main effects relating to the stake in
+Siemens Energy (profit "Siemens Energy Investment" in the numerator and asset "Siemens Energy Investment” in the
+denominator). The target value for ROCE adjusted is derived from budget planning.
+Return on capital employed adjusted (ROCE adjusted): Target setting and target achievement
+Target achievement
+Percentage
+points=ppts.
+200%
+189.67%
+Calculation of actual value according to target setting:
+18.65%
+€6.39
+ROCE as reported
+(excluding defined
+Varian-related acquisition effects)
+2023 €10.77
+€5.47
+33.33% Managing Board portfolio
+ROCE adjusted
+= €6.39
++ €2.50
+2022
+€8.89
+Cap
+Performance range
+Target achievement: 200.00%
+€(2.50)
+100%
+target
+Calculation of target and actual value:
+2020
+2021
+EPS pre PPA
+€5.39
+€8.32
+avg. 2020-2022 100% target
+Fiscal
+FISCAL 2023 26
+Judith Wiese and Matthias Rebellius, who were appointed to the Managing Board as of October 1, 2020, are not included
+in the BSAV. Instead of BSAV contributions, the Supervisory Board awarded these members for fiscal 2023 a fixed cash
+amount of €550,800 each for free disposal. This amount will be paid in January 2024.
+Compensation Report → B. Compensation of Managing Board members
+B.6 Compensation awarded and due
+B.6.1 Active Managing Board members in fiscal 2023
+A total of €12,325 is attributable to the funding of personal pension benefit commitments earned prior to the transfer to the BSAV.
+Deferred compensation for Prof. Dr. Ralf P. Thomas totals €59,980 (2022: €57,419).
+The following tables show the compensation awarded and due to the active members of the Managing Board in fiscal 2023
+and fiscal 2022 in accordance with Section 162 para. 1, sent. 1 of the German Stock Corporation Act (AktG). As a result,
+they include all the amounts actually paid to individual Managing Board members in the reporting period ("awarded
+compensation") and all the compensation that is legally due but not yet received ("due compensation").
+The Bonus is reported under "Short-term variable compensation" as "due compensation" since the underlying services were
+fully rendered by the end of each period (September 30). Therefore, the Bonus payout amounts for the reporting year are
+reported, although payout only occurs after the end of each reporting year, in order to make reporting transparent and
+comprehensible and in order to guarantee a connection between performance and compensation in the reporting period.
+2019
+In connection with the due date and settlement of the Stock Awards for fiscal 2019 and fiscal 2018, the tables also include
+the additional cash payments to eligible Managing Board members as a result of the Siemens Energy spin-off. The spin-off
+of Siemens Energy in fiscal 2020 led to adjustments in the stock-based compensation allocations agreed upon until the
+spin-off date. At the time when the 2019 and 2018 Stock Awards became due, the Managing Board members - like all
+other eligible employees - were, accordingly, entitled to receive an additional cash payment based on the spin-off ratio of
+2:1 and on the Siemens Energy share price of €14.68 and €24.32, respectively, on the date when their respective stock-
+based compensation allocations became due.
+Compensation awarded and due in fiscal 2023
+Long-term variable compensation:
+2019 Stock Awards tranche
+Base salary and fringe benefits
+Monthly payout
+Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept
+Short-term variable compensation: Bonus for 2023
+2
+2023
+Amount for free disposal
+Furthermore, in fiscal 2023 and fiscal 2022, the Stock Awards from the 2019 and 2018 tranches allocated in fiscal 2019
+and fiscal 2018, respectively, became due and were settled by transfer of Siemens shares. The value of Siemens shares at
+the time of transfer is reported under "Long-term variable compensation."
+1
+Total
+21,626,822
+in office on September 30, 2023
+Dr. Roland Busch
+991,200
+991,200
+792,442
+Cedrik Neike
+616,896
+616,896
+502,591
+Prof. Dr. Ralf P. Thomas
+19,413,205
+616,896
+2,224,992
+518,342
+913,079
+581,069
+578,296
+8,569,123
+4,350,198
+7,814,364
+4,026,008
+8,707,501
+7,572,833
+2,224,992
+1,813,375
+2,072,444
+616,896
+Settlement in
+Nov '22
+31
+Payout in
+Jan '24
+26%
+111
+36
+1%
+1%
+༅། ༈ ། *།
+1,881
+31%
+1,137
+24%
+1,132
+27%
+།*།༅། །༴།
+1,916
+41%
+2,479
+41%
+1,462
+༅།་།
+Managing Board members
+35%
+1,102
+plus cash payment relating to Siemens Energy spin-off
+23%
+1,770
+2024
+Payout latest
+in Feb '24
+Fixed compensation
+Variable compensation
+In addition to the amounts of compensation, Section 162 para. 1 sent. 2 No. 1 of the German Stock Corporation Act (AktG)
+requires disclosure of the relative proportion of total compensation represented by all fixed and variable compensation
+components. The relative proportions reported here refer to the compensation components "awarded" and "due" in the
+respective fiscal years in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG).
+Although the service costs for Company pension plans are not to be classified as awarded and due compensation, they are
+also reported in the following table for purposes of transparency.
+FISCAL 2023 27
+Compensation Report → B. Compensation of Managing Board members
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
+Active Managing Board members in fiscal 2023
+Managing Board members
+in office on September 30, 2023
+2023
+Dr. Roland Busch
+President and CEO since Feb. 3, 2021
+2022
+Cedrik Neike²
+Managing Board member since April 1, 2017
+2023
+2022
+€ thousand
+in % of TC € thousand in % of TC € thousand
+in % of TC € thousand
+in % of TC
+1,770
+99
+26%
+1%
+1,102
+(Amounts in €)
+Oct '26
+2023
+Performance period
+18 Nov '22
+Nov '26
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+Siemens-internal
+ESG/Sustainability index (20%)
+Nov '22 Oct '23 Nov '23
+Reference period
+Performance period
+Oct '22
+Sept '26
+Performance period
+B.3.3 Malus and clawback regulations
+Under existing malus and clawback regulations, the Supervisory Board is authorized to withhold or reclaim variable
+compensation in cases of severe breaches of duty or compliance and/or unethical behavior or in cases of grossly negligent
+or willful breaches of the duty of care or in cases in which variable compensation components linked to the achievement
+of specific targets have been unduly paid out on the basis of incorrect data.
+The Supervisory Board exercises its authority to withhold or reclaim variable compensation components at its duty-bound
+discretion.
+In fiscal 2023, the Supervisory Board did not exercise this authority.
+FISCAL 2023 25
+Compensation Report → B. Compensation of Managing Board members
+B.4 Share Ownership Guidelines
+The deadlines by which the individual Managing Board members must first verify compliance with the Share Ownership
+Guidelines (SOG) vary from member to member, depending on when they were appointed to the Managing Board. For
+Managing Board members in office on September 30, 2023, the following table shows the number of Siemens shares that
+each held in order to comply with the SOG on March 10, 2023, the verification date. It also shows the number of shares to
+be held throughout the Managing Board members' terms of office with a view to future verification dates.
+Obligations under the Share Ownership Guidelines
+Managing Board members
+in office on September 30, 2023,
+and required to verify
+Sept '25
+compliance on March 10, 2023
+Oct '21
+Performance period
+Siemens-internal
+༄༄།།།།
+ESG/Sustainability index (20%)
+Performance period
+13 Nov '20
+Sept '23
+2024
+2025
+2026
+Nov '24
+Nov '20 Oct '21 Nov '21
+Reference period
+Oct '24
+Performance period
+Oct '20
+Sept '24
+Performance period
+12 Nov '21
+Nov '25
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+Nov '21 Oct '22 Nov '22
+Reference period
+Oct '25
+Siemens-internal
+ESG/Sustainability index (20%)
+2022
+Dr. Roland Busch
+Prof. Dr. Ralf P. Thomas
+42,723
+9,110,700
+75,847
+12,806,834
+106,617
+1
+2
+The amount of the obligation is based on the average base salary during the four years prior to the respective verification dates.
+Based on the average Xetra opening price of €120.12 for the fourth quarter of 2022 (October to December).
+3
+As of March 10, 2023 (verification date).
+B.5 Pension benefit commitment
+Most of the members of the Managing Board are included in the Siemens Defined Contribution Pension Plan (BSAV). Since
+fiscal 2020, newly appointed members of the Managing Board can be awarded, instead of BSAV contributions, a fixed cash
+amount for free disposal.
+Contributions under the BSAV are credited to the individual members' pension accounts in the January following each fiscal
+year. Until pension payments begin, members' pension accounts are credited with an annual interest payment (guaranteed
+interest) on January 1 of each year. The interest rate is currently 0.25%.
+Information regarding the Siemens Defined Contribution Pension Plan (BSAV)
+Defined benefit obligation
+Contributions¹
+2023
+2022
+Service costs according to IAS 19R
+2023
+for all pension commitments
+excluding deferred compensation²
+2022
+22,633
+Cedrik Neike
+41,261
+466%
+Total
+Required
+Verified
+Percentage of
+base salary
+Value
+in €1
+Number of
+shares²
+300%
+4,704,300
+39,163
+200%
+2,203,200
+18,342
+Percentage of
+base salary1
+316%
+247%
+Amount
+in €²
+Number of
+shares³
+200%
+2,203,200
+18,342
+4,956,271
+2,718,676
+5,131,887
+35%
+in office on September 30, 2023
+།
+3,160
+5,788
+4,882
+1
+Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive a fixed cash amount for
+free disposal.
+2 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
+March 31, 2019. The amounts reported under "2019 Stock Awards (vesting: 2018-2022)" and "2018 Stock Awards (vesting: 2017-2021)" include the value of the Stock Awards
+allocated by Siemens Ltd. China. Likewise, a portion of the additional cash payment attributable to the Stock Awards allocated by Siemens Ltd. China is included under "Cash
+payment Siemens Energy spin-off." For details, see chapter "B.3.2.3 Transfer of Stock Awards in fiscal 2023 (2019 tranche)."
+3
+In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG.
+The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms
+of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the base salary and fringe benefits reported here, €710,428 and €34,312,
+respectively, were awarded and paid by Siemens Schweiz AG. Of the Bonus for fiscal 2023 reported here, €1,192,486 (corresponding to CHF 1,153,015 and converted into euros
+as of September 30, 2023) will be paid by Siemens Schweiz AG. Furthermore, employer contributions to pension plans paid by Siemens Schweiz AG are deducted from the
+amount for free disposal. Matthias Rebellius is subject to Swiss legislation on social insurance. Unlike in Germany, this subjection to social insurance also applies to compensation
+as a member of the Managing Board of Siemens AG. Since the clarification of this matter in May 2023, employer contributions of CHF5,785 (€6,048) have accrued. For the reverse
+transaction relating to the period from October 2020, when Matthias Rebellius joined the Managing Board, until May 2023, Siemens AG has incurred, in addition, one-time social
+insurance costs of CHF133,548 (€139,855). Neither the employer contributions nor the one-time social insurance costs are included in the compensation awarded and due to
+Matthias Rebellius in fiscal 2023.
+FISCAL 2023
+28
+Compensation Report → B. Compensation of Managing Board members
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
+Active Managing Board members in fiscal 2023 (cont.)
+Managing Board members
+Judith Wiese
+Managing Board member since Oct. 1, 2020
+2022
+2023
+€ thousand in % of TC € thousand in % of TC
+Fixed
+Base salary
+1,102
+30%
+3,723
+1,102
+Total compensation (incl. service costs)
+518
+2019 Stock Awards (vesting: 2018 - 2022)
+2018 Stock Awards (vesting: 2017-2021)
+Cash payment Siemens Energy spin-off
+1,976
+37%
+1,496
+35%
+112
+2%
+124
+3%
+Total compensation (TC)
+(according to Section 162 AktG)
+3,723
+100%
+3,160 100%
+5,270
+100%
+4,304
+100%
++ Service costs
+578
++ Long-term variable compensation
+34%
++
+46%
+1
++ Long-term variable compensation
+2019 Stock Awards (vesting: 2018-2022)
+2018 Stock Awards (vesting: 2017-2021)
+Cash payment Siemens Energy spin-off
+=
+Total compensation (TC)
+(according to Section 162 AktG)
++ Service costs
+Total compensation (incl. service costs)
+3,696
+3,696
+100%
+3,223
+100%
+3,223
+Matthias Rebellius and Judith Wiese are not included in the Siemens Defined Contribution Pension Plan (BSAV). Instead of BSAV contributions, they receive a fixed cash amount for
+free disposal.
+FISCAL 2023
+29
+Total shareholder return compared to
+MSCI World Industrials index (80%)
+1,487
+compensation
+Bonus for fiscal 2022
+2,002
+Fringe benefits
+41
+1%
+83
+3%
++
+Amount for free disposal¹
+551
+15%
+551
+17%
+Total
+1,693
+46%
+1,735
+54%
+Variable
++
+Short-term variable compensation
+compensation
+Bonus for fiscal 2023
+54%
+3%
+35%
+45%
+Base salary
++ Fringe benefits
++ Amount for free disposal¹
+=
++| " | +
+Total
++ Short-term variable compensation
+Bonus for fiscal 2023
+Bonus for fiscal 2022
++ Long-term variable compensation
+2019 Stock Awards (vesting: 2018-2022)
+2018 Stock Awards (vesting: 2017 - 2021)
+Cash payment Siemens Energy spin-off
+Total compensation (TC)
+(according to Section 162 AktG)
++ Service costs
+1,869
+3,276
+1,581
+=
+Total compensation (incl. service costs)
+Matthias Rebellius³
+Prof. Dr. Ralf P. Thomas
+compensation
+Managing Board member since Oct. 1, 2020.
+Variable
+Fixed
+1,496
+124
+4,215
+100%
+581
+4,796
+ཚ། ་།ཇ། ༅།
+1,581
+1,496
+25%
+1%
+124
+2%
+90
+5,979 100% 4,723
+913
+503
+6,892
+5,226
+༅།
+༅ག་།༄།
+་།ཎ། ༅༅།ཎྜ
+compensation
+1,524
+Managing Board member since Sept. 18, 2013
+2022
+58
+1%
+=
+Total
+1,727
+46%
+1,733
+55%
+1,161
+22%
+1,160
+27%
+Variable
+compensation
++ Short-term variable compensation
+Bonus for fiscal 2023
+1,995
+Bonus for fiscal 2022
+རྨ། ་ །
+2,021
+38%
+1,428
+1%
+2023
+། ། ་ །
+551
+2023
+€ thousand in % of TC € thousand in % of TC € thousand
+Fixed
+compensation
+Base salary
++ Fringe benefits
+1,102
+30%
+1,102
+35%
+1,102
+21%
+in % of TC € thousand
+1,102
+2022
+in % of TC
+26%
+75
+2%
+80
+3%
++ Amount for free disposal¹
+551
+15%
+17%
+Oct '19
+36 months
+Oct '23
+Process sequence
+OCT '22
+NOV '22
+OCT '23
+NOV '23
+2024
+2025
+SEPT '26 OCT '26
+NOV '26
+Performance
+measurement
+TSR reference period
+TSR performance period
+ESG performance measurement based on interim targets for each fiscal year
+The target amounts, the maximum allocation amounts, the maximum number of Stock Awards allocated and the fair value
+at allocation date in accordance with IFRS 2 Share-based Payment are shown in the following table. The allocation price
+applicable for the 2023 tranche was €114.22.
+FISCAL 2023
+22
+22
+Transfer
+Allocation and four-year vesting period
+Timeline for the 2023 Stock Awards tranche
+The Supervisory Board set the allocation date for the 2023 Stock Awards tranche at November 18, 2022. The timeline of
+this tranche is as follows.
+Amount of greenhouse gases emitted
+by the Company's business operations
+in tons of CO2 equivalent, excluding
+carbon offsets (for example, certificates).
+The total number of digital learning hours
+completed in virtual trainer-led training ses-
+sions, self-paced learning, learning on
+the job, community-based virtual learning
+and hybrid training sessions, divided by the
+total number of employees.
+Customer intention to recommend us,
+measured on a scale of 1 (extremely unlikely)
+to 10 (extremely likely) and based on
+comprehensive annual customer satisfaction
+surveys.3
+Derived from
+Sustainability
+strategy
+(DEGREE
+framework)
+Sustainability
+strategy
+(DEGREE
+framework)
+and Company
+priorities
+(Growth mindset)
+Company
+Information on the allocation of the 2023 Stock Awards tranche
+(Customer
+impact)
+Net zero emissions in business operations by 2030 with 55%
+emission reduction by 2025 and 90% by 2030. This ambition,
+which was raised in fiscal 2022, also contributes to
+compliance with the SBTI pathway¹ and the fulfilment of the
+obligations arising from membership in the RE100, EV100
+and EP100 initiatives.²
+Siemens' success is inseparably linked with highly qualified
+employees. The right employees with the right expertise are
+decisive for our further growth. That is why we place a strong
+emphasis on learning in order to sustainably anchor it in
+our day-to-day working environment while continuously
+increasing learning hours.
+Customer satisfaction is Siemens' top priority. For us, this
+means identifying customer requirements as early as
+possible, strengthening partnerships and maintaining and
+building trust. As a result, we systematically measure
+customer satisfaction and take steps to improve it.
+1
+2
+Science Based Target Initiative (SBTI): Reduction targets for 2030 based on the scientific requirements for limiting global warming to 1.5 degrees Celsius.
+Use of renewable energy (RE): 100% green electricity by 2030; use of electric vehicles (EV): 100% electric vehicles;
+improving energy productivity (EP): 100% CO2-neutral buildings.
+3 The NPS is calculated by subtracting the percentage of detractors from the percentage of promoters. Customers that rate Siemens high on the scale are promoters.
+Customers that find it unlikely to recommend Siemens to others are named detractors. Example: promoters (55%) minus detractors (10%) = NPS (45%).
+Ambition
+Definition
+Managing Board members
+Dr. Roland Busch
+€3,626,839
+€1,470,000
+€2,940,000
+20,592
+5,148
+€1,596,240
+€1,380,000
+€2,760,000
+19,331
+4,833
+€1,498,519
+€2,145,000
+€4,290,000
+30,047
+7,512
+€2,329,196
+€1,380,000
+11,697
+46,787
+€6,680,000
+€3,340,000
+Cedrik Neike
+Matthias Rebellius²
+Prof. Dr. Ralf P. Thomas
+Judith Wiese
+1
+2
+Compensation Report
+→
+in office on September 30, 2023
+B. Compensation of Managing Board members
+Target amount
+(based on 100%
+target achievement)
+Maximum
+allocation amount
+Maximum number of
+Stock Awards
+Fair value at allocation
+date¹
+Siemens-internal
+Total shareholder return ESG/ Sustainability index
+(weighting: 80%)
+(weighting: 20%)
+Based on 200% target achievement
+Score (NPS)
+Net Promoter
+Digital learning
+hours per
+employee
+Relative
+TSR
+Siemens compared to MSCI World Industrials index
+• If the change in the TSR of Siemens AG is at least
+20 percentage points above that of the sector index,
+target achievement is 200%.
+• If the change in the TSR of Siemens AG is equal to
+that of the sector index, target achievement is 100%.
+•If the change in the TSR of Siemens AG is at least
+20 percentage points below that of the sector index,
+target achievement is 0%.
+If the change in the TSR of Siemens AG is between
+20 percentage points above and 20 percentage points
+below that of the sector index, target achievement is
+calculated using linear interpolation.
+FYn+4
+OCT
+Environment, social and governance - The Siemens-internal ESG/Sustainability index is based on three equally weighted,
+structured and verifiable ESG key performance indicators. At the beginning of each tranche, the Supervisory Board defines
+the target values for each of the ESG key performance indicators. Target measurement is based on defined interim targets
+for each fiscal year. Target achievement for the Siemens-internal ESG/Sustainability index is finally determined at the end
+of the approximately four-year vesting period on the basis of the weighted average of the target achievement values
+calculated for each of the key performance indicators.
+Determination of total target achievement
+At the end of the approximately four-year vesting period, the Supervisory Board determines the degree of target
+achievement. The target achievement range for TSR and for the Siemens-internal ESG/Sustainability index is between 0%
+and 200%. If target achievement is less than 200%, a number of Siemens Stock Awards equivalent to the shortfall are
+forfeited without refund or replacement and a correspondingly smaller number of shares is transferred.
+The value of the Siemens shares transferred after the expiration of the vesting period is also capped at 300% of the target
+amount. If this cap is exceeded, a corresponding number of Stock Awards is forfeited without refund or replacement.
+FISCAL 2023 20
+Compensation Report → B. Compensation of Managing Board members
+The remaining number of Stock Awards is settled by the transfer of Siemens shares to the relevant Managing Board member.
+Basic principles and functioning of Stock Awards
+Allocation
+Target amount
++20 ppts.
+(20) ppts.
+0%
+100%
+Performance period
+Compensation Report → B. Compensation of Managing Board members
+At the end of the vesting period, the change in Siemens' TSR as well as that of the sector index is determined by comparing
+the TSR reference values with the TSR performance values.
+Calculation of TSR reference values and TSR performance values for Stock Awards
+FYn+1
+FYn
+NOV
+OCT
+(based on 100% target
+achievement)
+NOV
+TSR reference values for
+→ MSCI World Industrials index
+→ Siemens AG
+TSR performance values for
+→ MSCI World Industrials index
+→ Siemens AG
+The following applies for the determination of target achievement.
+Calculation of TSR target achievement
+Target achievement
+200%
+12 months
+x 2 (Extrapolation to
+maximum possible target
+achievement of 200%)
+Four-year vesting period
+ESG/Sustainability index
+(weighting: 20%)
+4-year
+performance
+period
+> 300% of target amount
+Number of Stock Awards
+based on target
+achievement is reduced
+by amount by which
+cap is exceeded
+300% of target amount
+Number of Stock Awards
+based on target
+achievement
+= final number of
+Stock Awards
+Actual target achievement
+= Final number of Stock Awards
+Siemens-internal
+Settlement by transfer of Siemens
+shares to Managing Board member
+The Supervisory Board approved the following performance criteria for the 2023 Stock Awards tranche:
+→ "Long-term value creation," measured in terms of the development of the TSR of Siemens AG relative to the
+international sector index MSCI World Industrials and
+→ "Sustainability," measured in terms of the Siemens-internal ESG/Sustainability index, which is based on the following
+three equally weighted key performance indicators. Target setting for the three key performance indicators is oriented
+on the Company's strategic sustainability planning, which is described in detail in Siemens' sustainability reporting.
+FISCAL 2023 21
+ESG key performance indicators for 2023 Stock Awards tranche
+Compensation Report → B. Compensation of Managing Board members
+Key performance
+indicator
+CO2 emissions
+B.3.2.2 ALLOCATION OF STOCK AWARDS IN FISCAL 2023
+€2,760,000
+(based on 200% target
+achievement)
+= Maximum number
+Performance range 0%-200%
+Total shareholder return (TSR)
+compared to sector index
+(weighting: 80%)
+1-year
+3-year
+reference
+period
+performance
+period
+Settlement after expiration of vesting period
+of Stock Awards
+Number of Stock Awards based
+× Siemens share price
+(Xetra closing price on
+transfer date)
+= Value of Stock Awards in €
+(Cap: 300% of target amount)
+= Maximum allocation
+amount
+(based on 200% target
+achievement)
++ Allocation price
+(Xetra closing price on the
+allocation date, less the
+estimated discounted dividends)
+on target achievement
+19,331
+priorities
+€1,498,519
+of fiscal 2023
+Allocated
+Vested and settled
+Other changes²
+of fiscal 2023
+154,052
+58,484
+(12,202)
+(14,613)
+185,721
+98,036
+25,740
+(12,202)
+(14,613)
+96,961
+44,936
+24,164
+Balance at the end
+Balance at beginning
+During fiscal year
+Judith Wiese5
+12,202 > €1,580,891 +
+12,202 >
+15,251 >
+€89,532
+€1,580,891 +
+€89,532
+€1,975,920 +
+€111,904
+The Stock Awards settled by share transfer were valued at €129.56, the German low price of the Siemens share on November 18, 2022.
+In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
+March 31, 2019. Of the allocated number of Stock Awards reported here, 2,940 are attributable to the commitment by Siemens Ltd. China. Of the calculated number of Stock
+Awards reported here, 1,338 were awarded and paid by Siemens Ltd. China.
+In the course of transferring the 2019 Stock Awards tranche, compliance with the maximum amounts of total compensation
+for fiscal 2019 was also reviewed. The applicable maximum amount was not exceeded in the case of any Managing Board
+member.
+69,100
+B.3.2.4 CHANGES IN STOCK AWARDS IN FISCAL 2023
+Changes in Stock Awards in fiscal 2023
+(Amount in number of units)1
+Managing Board members
+in office on September 30, 2023
+Dr. Roland Busch
+Cedrik Neike3³
+Matthias Rebellius4
+Prof. Dr. Ralf P. Thomas
+The following overview shows the changes in the balance of the Stock Awards held by Managing Board members in fiscal
+2023.
+91%
+91%
+91% =
+127,859
+(15,251)
+2022
+tranche
+Performance
+criteria
+2023
+tranche
+Performance
+criteria
+Total shareholder return
+compared to MSCI World
+Industrials index (80%)
+Siemens-internal
+ESG/Sustainability index (20%)
+Allocation
+Vesting
+period
+End of vesting period
+and transfer
+2020
+2021
+2022
+2023
+8 Nov '19
+Nov '23
+Nov '19 Oct '20 Nov '20
+Reference period
+4,833
+Performance
+criteria
+2021
+tranche
+Performance
+criteria
+2020
+tranche
+(18,267)
+131,900
+59,881
+24,164
+84,045
+2 The target achievement of the Stock Awards from the 2019 tranche, which were due and settled in fiscal 2023, was 91%. Since the Stock Awards were initially allocated on the
+basis of 200% target achievement, a number equivalent to this shortfall was forfeited without refund or replacement, in accordance with plan requirements.
+3 In addition to his position as a member of the Managing Board, Cedrik Neike served as Executive Chairman of the Board of Directors of Siemens Ltd. China from May 1, 2017, to
+March 31, 2019. The reported figures include the Stock Awards allocated to Cedrik Neike by Siemens Ltd. China due to this position.
+4
+37,559
+In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG.
+of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. The Stock Awards reported here also include the Stock Awards allocated by
+Siemens Schweiz AG since the appointment of Matthias Rebellius to the Managing Board of Siemens AG.
+5 The reported figures also include the Stock Awards allocated to Judith Wiese in November 2020 as compensation for the loss of benefits granted by her former employer in
+addition to the regular allocation of Stock Awards from the 2021 tranche.
+FISCAL 2023
+24
+Compensation Report → B. Compensation of Managing Board members
+As of the end of fiscal 2023, the following Stock Awards tranches were within the vesting period and are therefore included
+in the balance at the end of the fiscal year.
+Outstanding Stock Awards tranches on September 30, 2023
+Fiscal
+The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms
+26,815 x
+26,815 x
+33,518 x
+1 Starting with the 2019 tranche, the settlement of Stock Awards will be entirely by share transfer. For this reason, the number of Stock Awards, as set out in the table, is based on a
+target achievement of 200%. At the end of the vesting period, a final number of Siemens shares to be transferred will be determined on the basis of actual target achievement and
+taking into account the Stock Awards cap.
+€2,850,000 /
+¥4,401.17 ¥3,422.67
+€121.12
+Competitors (average)
+Siemens AG
+€89.91 €115.81
+Target achievement: 91%
+Reference price versus
+performance price
+37.32%
+60.01%
+67.35%
+30.55%
+28.81%
+Target achievement
+200%
+100%
+91%
+(1.75)ppts.
+0%
+€72.37
+Schneider
+(22.23)%
+Heavy Industries
+In addition to his position as a member of the Managing Board of Siemens AG, Matthias Rebellius is CEO of Smart Infrastructure and CEO of Siemens Schweiz AG.
+The corresponding legal relationship is defined in a separate contract between Matthias Rebellius and Siemens Schweiz AG. The entire compensation he receives under the terms
+of his contract with Siemens Schweiz AG is deducted from his Managing Board compensation. Of the target amount reported here (based on 100% target achievement),
+€600,000 is attributable to Siemens Schweiz AG.
+The fair value on the allocation date is calculated for the TSR component on the basis of a valuation model and amounts to €49.42. The fair value for the ESG component of
+€112.39 is equal to the Xetra closing price of the Siemens share on the allocation date, less the discounted expected dividends. For the 2023 tranche, the allocation date in
+accordance with IFRS 2 was November 23, 2022 (the date of communication to the Managing Board members).
+€85.03 =
+Concrete target setting and the degree of target achievement for the Siemens-internal ESG/Sustainability index of the 2023
+Stock Awards tranche will be published together with the degree of target achievement for the TSR in the Compensation
+Report for fiscal 2027, after the expiration of the vesting period.
+B.3.2.3 TRANSFER OF STOCK AWARDS IN FISCAL 2023 (2019 TRANCHE)
+The 2019 Stock Awards tranche became due and was settled in fiscal 2023. The 2019 Stock Awards tranche depended on
+the performance of the Siemens share compared to the share performance of five relevant competitors during the
+approximately four-year vesting period from November 9, 2018, to November 17, 2022.
+Overview of target achievement for the 2019 Stock Awards tranche
+Performance of the Siemens share compared to the share performance of five relevant competitors
+(20.00)%
+Floor
+ABB
+Performance
+price
+price
+CHF 18.74 CHF25.73
+Eaton
+General Electric
+$79.66 $127.46
+$74.91 $82.64
+10.32%
+Reference
+0.00%
+Mitsubishi
+100%
+target
+Maximum
+number of
+Stock Awards
+(based on
+200% target
+achievement)
+Compensation Report
+→
+B. Compensation of Managing Board members
+Target
+achievement
+of share
+price
+performance
+Number of
+Stock Awards
+Value at
+transfer day
+2
+target
+achievement
+Nov. 18, 20221
+spin-off
+€2,280,000 /
+20.00%
+€85.03 =
+€85.03 =
+€2,280,000 /
+Cash payment
+Siemens Energy
+1
+based on
+Cedrik Neike2
++20 ppts.
++
+Prof. Dr. Ralf P. Thomas
+Performance range
+A= (1.75) percentage points
+Cap
+(20) ppts.
+-
+FISCAL 2023 23
+Information on the transfer of the 2019 Stock Awards tranche
+The following table provides a summary of the key parameters of the 2019 Stock Awards tranche. In connection with the
+due date and settlement of the Stock Awards for fiscal 2019, the table also includes an additional cash payment to the
+Managing Board members as a result of the Siemens Energy spin-off. The spin-off of Siemens Energy in fiscal 2020 led to
+adjustments in the stock-based compensation commitments agreed upon until the spin-off date. At the time when the
+2019 Stock Awards became due, the Managing Board members like all other eligible employees - were, accordingly,
+entitled to receive an additional cash payment based on the spin-off ratio of 2:1 and on the Siemens Energy share price of
+€14.68 on the date when their stock-based compensation commitments became due.
+Maximum
+allocation
+amount
+(based on
+Allocation
+price
+Nov. 9, 2018
+Managing Board members in
+office on September 30, 2023
+200% target
+achievement)
+Dr. Roland Busch
+with a commitment of the Stock Awards
+from the 2019 tranche
+4,441 (34)%
+2,017 (13)%
+2,331
+Cedrik Neike (since April 2017)
+(since April 2011, President and CEO since Feb. 2021)
+6,730
+5%
+Dr. Roland Busch
+III. MANAGING BOARD MEMBERS' COMPENSATION (in € thousand)
+107
+6,008
+6,740
+3,524
+Matthias Rebellius (since Oct. 2020)
+3,435
+Prof. Dr. Ralf P. Thomas (since Sept. 2013)
+4,087
+(39)% 4,235
+4,215
+4,304
+3%
+3,160
+5,979
+102
+Earnings per share before purchase price allocation (in €)
+Net income according to HGB (in € million)
+99
+n.a.
+Judith Wiese (since Oct. 2020)
+11
+n.a.
+54%
+4.65 (40)% 10.04
+116%
+8.32
+5.47 (34)% 10.77
+97%
+11,219
+5,270
+(53)%
+5,147
+(2)%
+3,612
+(30)% 4,460
+23%
+II. AVERAGE EMPLOYEE COMPENSATION (in € thousand)
+Workforce in Germany
+95
+96
+1%
+3%
+4,185
+Change
+in %
+།༅།༅།ཚ།༅།
+Compensation Report → D. Comparative information on profit development and annual change in compensation
+Comparative information on profit development and change in compensation
+of employees, Managing Board and Supervisory Board members (cont.)
+Fiscal
+Change
+2019
+2020
+in %
+2021
+Change
+in %
+35
+2022
+Change
+in %
+Bettina Haller1 (since April 2007)
+Oliver Hartmann (since Sept. 2023)
+Keryn Lee James (since Feb. 2023)
+Harald Kern (since Jan. 2008)
+IV. SUPERVISORY BOARD MEMBERS' COMPENSATION (in € thousand)
+Jim Hagemann Snabe
+(since Oct. 2013, Chairman since Jan. 2018)
+613
+632
+8%
+2023
+FISCAL 2023
+3 Basic earnings per share from continuing and discontinued operations as reported.
+2 The primary measure for managing and controlling revenue growth is comparable growth, because it shows the development in Siemens' business net of currency translation
+effects arising from the external environment outside of Siemens' control and the portfolio effects that involve business activities that are either new to or no longer a part of the
+relevant business.
+༅།༈།
+ཚ།*།རྒྱ།
+ཚ། ༴ ། ་ ། ༄ ། ་ །
+6,815
+14%
+4,723
+3,723
+2% 5,270
+3,696
+Former Managing Board members
+Lisa Davis (until Feb. 2020)
+Klaus Helmrich (until March 2021)
+Joe Kaeser (President and CEO until Feb. 2021)
+Janina Kugel (until Jan. 2020)
+Michael Sen (until March 2020)
+7,969 6,562 (18)% 1,434 (78)% 1,721
+6,679 4,186 (37)% 2,756 (34)% 1,620
+12,978 8,051 (38)% 4,616 (43)% 3,238
+4,192 2,631 (37)% 1,274 (52)% 1,620
+2,448 1,991 (19)% 5,914 197% 1,620
+20% 1,671
+(3)%
+(41)% 1,670
+(30)% 3,338
+27% 1,670
+(73)% 2,088
+3%
+3%
+3%
+29%
+1 Revenue as reported. In fiscal 2020, the segments "Gas and Power" and "Siemens Gamesa Renewable Energy" were classified as discontinued operations and are therefore not
+included in the amount reported for fiscal 2020.
+3,223
+16% 77,769
+Baroness Nemat Shafik (DBE, DPhil)
+n.a.
+(until Feb. 2023)
+2022
+140,000
+92%
+12,000
+8%
+152,000
+Michael Sigmund
+2023 128,333
+90%
+64,333
+14,000
+142,333
+(until Aug. 2023)
+2022 140,000
+92%
+12,000
+8%
+152,000
+Gunnar Zukunft¹
+(until Feb. 2023)
+Total
+10%
+9%
+6,000
+91%
+8%
+238,000
+Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer
+2023
+58,333
+72%
+16,667
+21%
+6,000
+7%
+81,000
+(until Feb. 2023)
+2022
+140,000
+72%
+40,000
+21%
+14,000
+7%
+194,000
+3%
+2023
+58,333
+2023
+2022 140,000
+2023 3,126,667
+2022 3,080,000
+9% 71,977
+8.2
+58,333
+6,000
+D. Comparative information on profit development and annual change in compensation
+Comparative information on profit development and change in compensation
+of employees, Managing Board and Supervisory Board members
+Fiscal
+I. PROFIT DEVELOPMENT
+2019
+2020
+Change
+in %
+2021
+Change
+in %
+2022
+Compensation Report →
+Change
+in %
+Change
+in %
+Revenue (in € million)
+86,849 57,139
+(34)% 62,265
+Comparable revenue growth² (in %)
+3
+Earnings per share³ (in €)
+6.41
+(2)
+11.5
+5.00 (22)% 7.68
+n.a.
+2023
+34
+FISCAL 2023
+Average employee compensation comprises the personnel costs for wages and salaries, fringe benefits, employer
+contributions to social insurance and any short-term variable compensation components attributable to the fiscal year. For
+compensation in connection with share plans, the amounts received in the fiscal year are taken into account. Therefore,
+employee compensation is also equivalent, in principle, to awarded and due compensation within the meaning of
+Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG) and is thus in line with Managing Board and
+Supervisory Board compensation.
+9%
+64,333
+92%
+12,000
+8%
+152,000
+60% 1,678,333
+60% 1,650,000
+32%
+32%
+446,000
+8%
+5,251,000
+384,000
+8%
+5,114,000
+1
+These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to transfer their compensation to the
+Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
+FISCAL 2023 33
+Compensation Report → D. Comparative information on profit development and annual change in compensation
+D. Comparative information on profit development
+and annual change in compensation
+The following table shows, in accordance with Section 162 para. 1 sent. 2 No. 2 of the German Stock Corporation Act (AktG),
+Siemens' profit development, the annual change in the Managing Board and Supervisory Board members' compensation
+and the annual change in average employee compensation on a full-time equivalent basis over the last five fiscal years.
+Profit development is presented on the basis of the Siemens Group's key performance indicators revenue, comparable
+revenue growth and basic earnings per share from continuing and discontinued operations. Through fiscal 2021, the latter
+was also one of the financial targets for the short-term variable compensation (Bonus) of the Managing Board and thus had
+a significant influence on the amount of the compensation of the Managing Board members. Since fiscal 2022, the
+comparative information has also included basic earnings per share before purchase price allocation. This key performance
+indicator supersedes basic earnings per share from continuing and discontinued operations in the Bonus in accordance with
+the Siemens Financial Framework, which has been in effect since fiscal 2022. In accordance with Section 275 para. 3 No. 16
+of the German Commercial Code (Handelsgesetzbuch, HGB), the development of the net income of Siemens AG is also
+shown.
+The compensation awarded and due to the Managing Board and Supervisory Board members in each fiscal year is presented
+in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG). Pension payments to former
+members of the Managing Board are not listed here since they do not depend on Siemens' profit development.
+The presentation of average employee compensation is based on the size of the workforce, including trainees, employed
+by Siemens in Germany. In fiscal 2023, this workforce comprised on average 70,984 employees (full-time equivalent). By
+way of comparison, the Siemens Group had about 254,000 employees and trainees worldwide as of September 30, 2023.
+The figures exclude the workforce of Siemens Healthineers, which is not included in the presentation since it is a separately
+managed, publicly listed company.
+91%
+608
+134
+(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
+Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (until Feb. 2023)
+182
+194
+7%
+190 (2)%
+194
+2%
+81
+(58)%
+Baroness Nemat Shafik (DBE, DPhil) (until Feb. 2023)
+(58)%
+140
+13%
+140
+Michael Sigmund (until Aug. 2023)
+149
+158
+6%
+154
+(11)%
+(3)% 152 (1)%
+152
+8%
+158
+100
+(3)%
+238
+50%
+198
+1%
+160
+(1)%
+152
+154
+1%
+290
+264
+(9)%
+292
+2%
+326
+12%
+Supervisory Board members
+who left during the fiscal year
+Michael Diekmann (until Feb. 2023)
+215
+223
+3%
+246
+11%
+64
+46%
+(58)%
+(6)%
+We have audited the attached Compensation Report of Siemens Aktiengesellschaft, Berlin and Munich, prepared to comply
+with Sec. 162 AktG ["Aktiengesetz": German Stock Corporation Act] for the fiscal year from October 1, 2022 to September
+30, 2023 and the related disclosures. We have not audited the content of disclosures regarding appropriateness and
+marketability of the compensation in chapter B.2.3 APPROPRIATENESS OF THE COMPENSATION that is beyond the scope of
+Sec. 162 AktG.
+Responsibilities of management and the Supervisory Board
+Management and the Supervisory Board of Siemens Aktiengesellschaft are responsible for the preparation of the
+Compensation Report and the related disclosures in compliance with the requirements of Sec. 162 AktG. In addition,
+management and the Supervisory Board are responsible for such internal control as they determine is necessary to enable
+the preparation of a Compensation Report and the related disclosures that are free from material misstatement, whether
+due to fraud (i.e., fraudulent financial reporting and misappropriation of assets) or error.
+Auditor's responsibility
+Our responsibility is to express an opinion on this Compensation Report and the related disclosures based on our audit. We
+conducted our audit in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated
+by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Those standards require that we comply
+with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Compensation
+Report and the related disclosures are free from material misstatement, whether due to fraud or error.
+An audit involves performing procedures to obtain audit evidence about the amounts in the Compensation Report and the
+related disclosures. The procedures selected depend on the auditor's judgment, including the assessment of the risks of
+material misstatement of the Compensation Report and the related disclosures, whether due to fraud or error. In making
+those risk assessments, the auditor considers internal control relevant to the preparation of the Compensation Report and
+the related disclosures in order to plan and perform audit procedures that are appropriate in the circumstances, but not for
+the
+purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating
+the accounting policies used and the reasonableness of accounting estimates made by management and the Supervisory
+Board, as well as evaluating the overall presentation of the Compensation Report and the related disclosures.
+We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+Opinion
+In our opinion, on the basis of the knowledge obtained in the audit, the Compensation Report for the fiscal year from
+October 1, 2022 to September 30, 2023 and the related disclosures comply, in all material respects, with the financial
+reporting provisions of Sec. 162 AktG. Our opinion on the Compensation Report does not cover the content of the
+abovementioned disclosures of the Compensation Report that go beyond the scope of Sec. 162 AktG.
+Other matter - formal audit of the Compensation Report
+To Siemens Aktiengesellschaft, Berlin and Munich
+The audit of the content of the Compensation Report described in this auditor's report comprises the formal audit of the
+Compensation Report required by Sec. 162 (3) AktG and the issue of a report on this audit. As we are issuing an unqualified
+opinion on the audit of the content of the Compensation Report, this also includes the opinion that the disclosures pursuant
+to Sec. 162 (1) and (2) AktG are made in the Compensation Report in all material respects.
+Compensation Report → Independent auditor's report
+Limitation of liability
+The "General Engagement Terms for Wirtschaftsprüfer and Wirtschaftsprüfungsgesellschaften [German Public Auditors and
+Public Audit Firms]" as issued by the IDW on January 1, 2017, are applicable to this engagement and also govern our
+responsibility and liability to third parties in the context of this engagement (WWW.DE.EY.COM/GENERAL-ENGAGEMENT-
+TERMS).
+Munich, December 6, 2023
+Ernst & Young GmbH
+Wirtschaftsprüfungsgesellschaft
+Keller
+Wirtschaftsprüfer
+[German Public Auditor]
+Dr. Gaenslen
+Wirtschaftsprüfer
+[German Public Auditor]
+FISCAL 2023 38
+Independent auditor's report
+Compensation Report → Independent auditor's report
+FISCAL 2023 37
+Gunnar Zukunft¹ (until Feb. 2023)
+149
+158
+6%
+154
+(3)%
+152
+(1)%
+64
+(58)%
+1 These employee representatives on the Supervisory Board and the representatives of the trade unions on the Supervisory Board have agreed to transfer their compensation to the
+Hans Böckler Foundation, in accordance with the guidelines of the Confederation of German Trade Unions.
+FISCAL 2023
+36
+Compensation Report →
+E. Other
+E. Other
+The Company provides a group insurance policy for Supervisory and Managing Board members and certain other employees
+of the Siemens Group. The policy is taken out for one year at a time or renewed annually. It covers the personal liability of
+the insured individuals in cases of financial loss associated with their activities on behalf of the Company. The insurance
+policy for fiscal 2023 includes a deductible for the members of the Managing Board that complies with the requirements of
+the German Stock Corporation Act (AktG).
+For the Managing Board
+For the Supervisory Board
+Dr. Roland Busch
+President and Chief Executive Officer
+of Siemens AG
+Prof. Dr. Ralf P. Thomas
+Chief Financial Officer
+of Siemens AG
+Jim Hagemann Snabe
+Chairman of the Supervisory Board
+of Siemens AG
+142
+222
+(1)%
+(1)%
+240
+391
+།* །༅།
+3%
+264
+3%
+384
+7%
+(4)%
+Dr.-Ing. Christian Pfeiffer¹ (since Feb. 2023)
+Martina Merz (since Feb. 2023)
+Benoît Potier (since Jan. 2018)
+141
+157
+11%
+155
+110
+158
+44%
+154 (3)%
+Kasper Rørsted (since Feb. 2021)
+Dr. Nathalie von Siemens (since Jan. 2015)
+Hagen Reimer¹ (since Jan. 2019)
+Jürgen Kerner¹ (since Jan. 2012)
+30%
+(5)%
+471
+482
+2%
+467
+Dr. Werner Brandt
+(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
+324
+336
+4%
+438
+Tobias Bäumler1 (since Oct. 2020)
+287
+Dr. Regina E. Dugan (since Feb. 2023)
+Dr. Andrea Fehrmann1 (since Jan. 2018)
+149
+158
+6%
+154
+(3)%
+244
+256
+5%
+243
+194
+Dorothea Simon1 (since Oct. 2017)
+149
+Grazia Vittadini (since Feb. 2021)
+1%
+18,000
+(1)%
+156
+3%
+3%
+256
+2%
+14
+103
+(9)% 244
+2%
+(2)% 326
+(13)%
+167
+103
+162
+152
+196
+162
+༅།ཎྜ།།༅།
+5%
+160
+296
+Birgit Steinborn¹
+2%
+464
+Matthias Zachert (since Jan. 2018)
+244
+་ ། ། ༅ ། ་ ། ྃ །
+131
+4%
+173
+6%
+154 (3)%
+188
+5%
+286
+12%
+༅། ། ། །༅།༅།
+༅༅།༅།། ༅༅།། །།
+རྩ། རྩ། རྞ།།
+་། ། ༄།༅། ་། ་།༅།༅། ་།༅། ༅། ་། ༄།
+(1)%
+602
+0%
+(4)%
+450
+1%
+5%
+0%
+34%
+9%
+59%
+In addition, the members of the Supervisory Board receive a fee of €2,000 for each of the meetings of the Supervisory Board
+and its committees that they attend. Attendance at a meeting also includes participation via telephone, video conference
+or other similar customary means of communication. For attendance at several meetings on the same day, only a single fee
+is paid.
+The members of the Supervisory Board are reimbursed for out-of-pocket expenses incurred in connection with their duties
+and for any value-added tax to be paid on their compensation. For the performance of his duties, the Chairman of the
+Supervisory Board is also entitled to an office with secretarial support and the use of a car service. No loans or advances
+from the Company are provided to members of the Supervisory Board.
+FISCAL 2023 32
+Compensation Report → C. Compensation of Supervisory Board members
+The following table shows the compensation awarded and due to the members of the Supervisory Board in fiscal 2023 and
+fiscal 2022 in accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG).
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG) -
+Supervisory Board members
+Supervisory Board members
+Basic
+in office on September 30, 2023
+compensation
+In the event of changes in the composition of the Supervisory Board and/or its committees within a fiscal year,
+compensation is paid on a pro-rated basis, rounding up to the next full month.
+Committee
+compensation
+in €
+Jim Hagemann Snabe
+2023
+280,000
+(since Oct. 2013, Chairman since Jan. 2018)
+2022
+Birgit Steinborn¹
+2023
+280,000
+210,000
+in % of TC
+47%
+47%
+Meeting Total com-
+attendance fee pensation (TC)
+Member
+€40,000
+Chair
+€80,000
+Member
+€40,000
+•
+Digital learning hours per employee
+FISCAL 2023 31
+Compensation Report → C. Compensation of Supervisory Board members
+C. Compensation of Supervisory Board members
+The currently applicable rules for Supervisory Board compensation are set out in Section 17 of the Articles of Association of
+Siemens AG. They have been in effect since October 1, 2021, and stem from a decision of the Annual Shareholders' Meeting
+on February 3, 2021, in accordance with Section 113 para. 3 of the German Stock Corporation Act (AktG). The compensation
+system for Supervisory Board members submitted to the Annual Shareholders' Meeting and the proposed new version of
+Section 17 of the Articles of Association were approved by a majority of 97.49% of the valid votes cast. The compensation
+system approved by the Annual Shareholders' Meeting as well as the Articles of Association are publicly available on the
+Siemens Global Website at WWW.SIEMENS.COM/CORPORATE-GOVERNANCE.
+Supervisory Board compensation consists entirely of fixed compensation; it reflects the responsibilities and scope of the
+work of the Supervisory Board members. Under the applicable rules, the members of the Supervisory Board receive base
+compensation for each full fiscal year, and the members of the Audit Committee, the Chairman's Committee, the
+Compensation Committee and the Innovation and Finance Committee receive additional compensation for their committee
+work. The Chairman and Deputy Chairs of the Supervisory Board as well as the chairs of the Audit Committee, the Chairman's
+Committee, the Compensation Committee and the Innovation and Finance Committee receive additional compensation.
+Compensation of members of the Supervisory Board and its committees
+Chairman
+€280,000
+Basic compensation of Supervisory Board
+Deputy Chair
+€210,000
+Additional compensation for committee work
+Audit Committee
+Chairman's Committee
+Chair
+€180,000
+Member
+€90,000
+Chair
+€80,000
+Member
+€40,000
+Member
+€140,000
+Compensation
+Committee
+Innovation and
+Finance Committee
+Chair
+€80,000
+in €
+index
+in % of TC
+in % of TC
+7%
+464,000
+(since Jan. 2018, Second Deputy Chairman since Feb. 2021)
+2022 210,000
+Tobias Bäumler1
+(since Oct. 2020)
+Dr. Regina E. Dugan
+(since Feb. 2023)
+2023
+2022
+2023
+2022
+140,000
+140,000
+93,333
+34,000
+45%
+47%
+48%
+32,000
+7%
+462,000
+130,000
+44%
+26,000
+9%
+296,000
+48% 130,000
+220,000
+47%
+45% 220,000
+2023 210,000
+290,000
+48%
+32,000
+5%
+in €
+602,000
+290,000
+48%
+32,000
+5%
+602,000
+47% 210,000
+47%
+30,000
+7%
+450,000
+(since Jan. 2008, First Deputy Chairwoman since Jan. 2015)
+2022 210,000
+47% 210,000
+47%
+26,000
+6%
+446,000
+Dr. Werner Brandt
+in €
+45%
+• CO2 emissions
+ESG/
+Managing Board member
+until Feb. 29, 2020
+1
+1,670
+28
+583
+3,338
+2,088
+58
+1,107
+Janina Kugel
+Managing Board member
+until Jan. 31, 2020
+Prof. Dr.
+Siegfried Russwurm
+Managing Board member
+until March 31, 2017
+Lisa Davis²
+1,670
+The table includes only compensation that was awarded to former members after they left the Managing Board.
+2 Lisa Davis's fringe benefits include contractually agreed-upon payments for tax adjustments.
+Prof. Dr.
+Hermann Requardt
+Managing Board member
+until Jan. 31, 2015
+29
+47
+1,670
+FISCAL 2023 30
+Compensation Report → B. Compensation of Managing Board members
+1
+Michael Sen
+Managing Board member
+until March 31, 2020
+Joe Kaeser
+President and CEO
+until Feb. 3, 2021
+until March 31, 2021
+Compensation Report → B. Compensation of Managing Board members
+B.6.2 Former members of the Managing Board
+The following table shows the compensation awarded and due to former members of the Managing Board in fiscal 2023 in
+accordance with Section 162 para. 1 sent. 1 of the German Stock Corporation Act (AktG). In accordance with Section 162
+para. 5 of the German Stock Corporation Act (AktG), the personal information of former Managing Board members is no
+longer included if they left the Managing Board before September 30, 2013. The amounts reported under Stock Awards
+also include the additional cash payment due to the Siemens Energy spin-off.
+Compensation awarded and due in accordance with Section 162 para. 1 sent. 1 German Stock Corporation Act (AktG)
+Former members of the Managing Board¹
+-
+(in Tsd. €)
+Fixed and
+Fringe benefits
+variable
+2019 Stock Awards
+compensation
+Pensions
+(vesting: 2018-2022)
+Annuity
+Capital payment
+(partial or full)
+Fixed and
+variable
+compensation
+Fringe benefits
+2019 Stock Awards
+Pensions
+(vesting: 2018-2022)
+Annuity
+Capital payment
+(partial or full)
+Klaus Helmrich
+Managing Board member
+B.7 Outlook for fiscal 2024
+Sustainability
+The following overview shows the performance criteria for variable compensation for fiscal 2024, as approved by the
+Supervisory Board of Siemens AG. These criteria are based on the regularly audited and adjusted compensation system,
+which will be submitted to the Annual Shareholders' Meeting for approval in February 2024.
+BONUS
+Comparable revenue growth, measured on the basis of:
+Siemens (c/o) for Managing Board members with primarily functional
+responsibility
+the relevant business for Managing Board members with business responsibility
+Business development
+Expansion of Siemens Xcelerator business
+Strengthening the Regions
+•
+Next Work
+Sustainability
+•
+the relevant business for Managing Board members with business responsibility
+Further development of the DEGREE framework
+Further anchoring of sustainability in business processes and product development
+Performance criterion
+Long-term value creation
+Sustainability
+Key performance
+indicator
+Total shareholder
+return (TSR)
+Details
+Development of the TSR of Siemens AG relative to the international sector index
+MSCI World Industrials
+The Siemens ESG/Sustainability index for the 2024 Stock Awards tranche is based
+on the following two equally weighted key performance indicators:
+Siemens
+•
+Siemens Group for Managing Board members with primarily functional
+responsibility
+.
+•
+Performance criterion
+Financial
+targets
+Key performance
+indicator
+Profit
+Profitability/
+capital efficiency
+ROCE
+adjusted
+Individual
+targets
+Liquidity
+CCR
+STOCK AWARDS
+Growth
+Execution of the
+Company's strategy
+•
+EPS pre PPA,
+basic
+Comparable
+revenue growth
+•
+Details
+Analogously to fiscal 2023, basic earnings per share before purchase price
+allocation (EPS pre PPA) is used to place the focus on Siemens' operating
+performance and present it transparently.
+With adjusted return on capital employed (ROCE adjusted), we aim to focus on
+Siemens' operating performance, analogously to fiscal 2023. Therefore, ROCE - as
+defined in the Siemens Financial Framework, which excludes certain Varian-related
+acquisition effects - is adjusted for the main effects relating to the stake in
+Siemens Energy.
+Cash conversion rate (CCR), measured on the basis of:
+Outlook for fiscal 2024 - Variable compensation
+80,000
+22,000
+292,000
+16,000
+8%
+196,000
+Dr. Nathalie von Siemens
+2023
+140,000
+88%
+20,000
+13%
+160,000
+20%
+(since Jan. 2015)
+140,000
+86%
+22,000
+14%
+162,000
+Dorothea Simon¹
+2023 140,000
+91%
+14,000
+9%
+2022
+40,000
+71%
+140,000
+2022 140,000
+86%
+22,000
+14% 162,000
+2023 140,000
+63%
+60,000
+27%
+22,000
+10%
+222,000
+Kasper Rørsted
+2022 140,000
+2023 140,000
+92%
+12,000
+8%
+152,000
+71% 40,000
+20%
+18,000
+198,000
+(since Feb. 2021)
+2022
+154,000
+(since Jan. 2018)
+Hagen Reimer¹
+(since Jan. 2019)
+(since Oct. 2017)
+92%
+Basic
+who left during the fiscal year
+compensation
+Committee
+compensation
+Meeting
+attendance fee
+Total com-
+pensation (TC)
+in €
+in % of TC
+Michael Diekmann
+2023
+Supervisory Board members
+58,333
+in €
+33,333
+in % of TC
+33%
+in €
+8,000
+in % of TC
+8%
+in €
+99,667
+(until Feb. 2023)
+2022
+140,000
+59%
+292,000
+8%
+22,000
+12,000
+8%
+152,000
+Grazia Vittadini
+(since Feb. 2021)
+Matthias Zachert
+(since Jan. 2018)
+2023 140,000
+2022 140,000
+2023 140,000
+2022 140,000
+53% 104,167
+39%
+20,000
+8%
+264,167
+48% 130,000
+43% 160,000
+48% 130,000
+45%
+20,000
+7%
+290,000
+49%
+26,000
+8%
+326,000
+45%
+2022 140,000
+8%
+13% 160,000
+88%
+256,000
+(since April 2007)
+2022
+140,000
+56%
+90,000
+36%
+20,000
+8%
+250,000
+10%
+Oliver Hartmann
+11,667
+2,000
+15%
+13,667
+(since Sept. 2023)
+2022
+Keryn Lee James
+2023
+93,333
+90%
+2023
+26,000
+35%
+90,000
+70%
+26,667
+20%
+14,000
+10%
+134,000
+Dr. Andrea Fehrmann¹
+2023
+140,000
+90%
+16,000
+10%
+156,000
+(since Jan. 2018)
+Bettina Haller¹
+2022
+140,000
+92%
+12,000
+8%
+152,000
+2023 140,000
+55%
+10,000
+20,000
+10%
+(since Feb. 2023)
+7%
+376,000
+93,333
+56%
+60,000
+36%
+14,000
+8%
+167,333
+(since Feb. 2023)
+26,000
+2022
+2023
+93,333
+90%
+10,000
+10%
+103,333
+(since Feb. 2023)
+2022
+Benoît Potier
+2023 140,000
+Dr.-Ing. Christian Pfeiffer¹
+56%
+210,000
+325,500
+2022
+Harald Kern¹
+2023 140,000
+57%
+80,000
+33%
+24,000
+10%
+244,000
+(since Jan. 2008)
+Jürgen Kerner¹
+(since Jan. 2012)
+Martina Merz
+2022 140,000
+2023 140,000
+2022
+2023
+58%
+80,000
+33%
+20,000
+8%
+240,000
+140,000
+43% 157,500
+37%
+48%
+28,000
+9%
+103,333
+85%
+FISCAL 2023 39
+300
+(1,208)
+Combined Management Report
+Fiscal year
+% Change
+2023
+2022
+Actual
+Profit margin
+Comp.
+13,200
+56%
+65%
+10,549
+9,692
+9%
+20,629
+Profit
+therein: service business
+Revenue
+(8,731)
+Industrial Business recorded cash inflows from operating activities that exceeded its profit, with the highest contribution from Digital
+Industries. Cash outflows from changes in operating net working capital were due mainly to Siemens Healthineers which recorded a
+significant build-up of trade and other receivables as well as inventories due in part to the expected growth of business activities in coming
+quarters.
+Cash outflows for purchase of investments and financial assets for investment purposes included additions of assets eligible as central
+bank collateral and payments for debt or equity investments.
+Cash outflows from change in receivables from financing activities of SFS related primarily to SFS's debt business.
+Cash inflows from other disposals of assets included mainly proceeds from disposals of assets eligible as central bank collateral, from the
+sale of the Commercial Vehicles business by Portfolio Companies, and from the sale or disposal of debt or equity investments.
+Cash outflows from the re-issuance of treasury shares and other transactions with owners were driven by the purchase of Siemens
+Healthineers AG treasury shares.
+18
+Combined Management Report
+Smart Infrastructure showed very strong performance in fiscal 2023. Orders increased clearly compared to the high prior-year level, which
+included proactive purchasing by customers. Growth was mainly driven by the electrification business and included a number of larger
+contract wins from data center, semiconductor, power distribution and battery manufacturing customers. Revenue rose in all businesses,
+with the strongest growth contributions coming from the electrification and the electrical products businesses. On a geographic basis,
+orders and revenue rose in all three reporting regions. The strongest growth contribution came from the Americas region, driven by the
+U.S., while growth in the Asia, Australia region was held back by declines in China, which were due mainly to negative currency translation
+effects. Profit also rose in all businesses. Growth in profit and profitability was driven by the electrical products and the electrification
+businesses due to higher revenue, by increased capacity utilization and by cost reductions achieved through the execution of Smart
+Infrastructure's competitiveness program. Severance charges were €50 million, up from €28 million a year earlier. At the end of fiscal
+2023, Smart Infrastructure's order backlog was €16 billion, of which €10 billion are expected to be converted into revenue in fiscal 2024.
+Overall, markets served by Smart Infrastructure grew clearly in fiscal 2023. Market dynamics were influenced by a further recovery from
+COVID-19-related effects; easing of supply chain and logistics constraints, which resulted in shorter lead times for order fulfillment; strong
+price inflation; and effects from the war in Ukraine. Furthermore, rising interest rates burdened building construction markets. On a
+geographic basis, all reporting regions contributed to growth. Price inflation affected all regions and was particularly high in the U.S. While
+on the one hand rising interest rates impacted growth in the U.S., economic activity was boosted by stimulus programs on the other hand.
+In China, the recovery from lockdown measures was significantly weaker than expected, which also impacted growth dynamics in other
+countries, while Europe was most strongly affected by the war in Ukraine and high energy prices. Grid markets grew clearly, driven by
+demand for integration of energy from renewable resources. Industrial markets also grew clearly on strong demand in the battery,
+semiconductor, and automotive industries. The buildings market overall also grew but activity in the commercial building market rose only
+moderately. In fiscal 2024, markets served by Smart Infrastructure are expected to grow clearly but at a slower pace than in fiscal 2023
+due to a substantially lower effect from price inflation and a cooling of the general economic environment. While growth is expected to
+be weak in residential and commercial building markets and in some industrial markets, continued robust demand is expected for data
+centers and power distribution. Overall, market development in fiscal 2024 is expected to continue to be influenced by rebalancing of
+supply chains, trade conflicts and effects from geopolitical tensions.
+3.4 Mobility
+Mobility combines all Siemens businesses in the area of rail passenger and rail freight transportation. Within its rolling stock business, its
+offerings encompass vehicles and selected components for urban and regional transport such as metro systems, trams and light rail, and
+commuter trains as well as trains and passenger coaches for intercity and long-distance services, such as high-speed rail. Rolling stock
+offerings furthermore include locomotives and solutions for automated transportation such as automated people movers. Offerings in its
+rail infrastructure business include products and solutions for rail automation, such as automatic train control systems, interlocking,
+operations control and telematic systems, digital station solutions and railway communication systems, signaling on-board and signaling
+crossing products and yard and depot solutions; and for electrification such as AC and DC traction power supply, contact lines and network
+control. With its service business, Mobility provides maintenance and digital services, among others, for rolling stock and rail infrastructure
+throughout the entire lifecycle. In its turnkey business, it bundles consulting, planning, financing, construction, service and operation of
+complete mobility systems. Mobility's software business comprises train planning systems, trip planning, mobile ticketing, Mobility as a
+Service (MaaS) platforms, on-demand transportation and fleet management, data analytics, and inventory and reservation management.
+Mobility sells its products, systems and solutions through its worldwide network of sales and execution units. The principal customers of
+Mobility are public and state-owned companies in the transportation and logistics sectors, so its markets are driven primarily by public
+spending. Customers usually have multi-year planning and implementation horizons, and their contract tenders therefore tend to be
+independent of short-term economic trends. Large contracts in the rolling stock and the rail infrastructure business are often awarded
+together with service contracts, which start to generate revenue only after the respective products and solutions have been put in
+operation, which can be a number of years after the contract award. Mobility's principal competitors are multinational companies.
+Consolidation among Mobility's competitors is continuing and may lead to increased competitive pressure within the rail transport industry
+and also to fewer sourcing options for rail customers.
+The main trends driving Mobility's markets are urbanization, decarbonization and digitalization. Increasing populations in urban centers
+need daily mobility that is simpler, faster, and more flexible, reliable and affordable. At the same time, cities and national economies face
+the challenge of cutting CO₂ and noise emissions and reducing space requirements and costs of transportation. The pressure on mobility
+providers to meet all these needs is expected to rise continuously. Furthermore, improving availability, connectivity, and sustainability of
+rail infrastructures increasingly requires digital solutions, which generates growth opportunities for providers of such solutions. IoT systems
+and new software-based solutions such as MaaS are expected to become major growth enablers for the rail industry. Overall trends towards
+urbanization, decarbonization and digitalization persist and many countries have been allocating significant funds to rail and public
+transport operators to address these trends.
+9
+(in millions of €)
+Orders
+15%
+Cash flows from financing activities - continuing and discontinued operations
+1,710
+7%
+Fiscal year
+2023
+2022
+% Change
+Actual
+Comp.
+24,499
+Profit margin
+21,681
+(4)%
+(2)%
+0%
+1%
+2,527
+11.7%
+3,369
+25,556
+21,715
+Profit
+Revenue
+Orders
+9%
+882
+794
+11%
+8.4%
+8.2%
+Order intake at Mobility exceeded the record level a year earlier on sharply higher volume from large orders. Contract wins in fiscal 2023
+were highlighted by an order worth €2.9 billion for locomotives and associated maintenance in India, a €2.5 billion order for the first line
+of a turnkey rail system in Egypt and a €2.1 billion order for suburban trains in Germany. Order intake a year earlier included among others
+an order worth €1.5 billion for high-speed trains in Germany. Revenue rose on growth in nearly all businesses with the strongest
+contribution coming from the rolling stock business, and was supported by improved availability of components. On a geographic basis,
+revenue grew in all three reporting regions. Nominal volume development was held back by the fiscal 2022 divestment of Yunex Traffic,
+resulting in a portfolio effect which took four percentage points from order growth and five percentage points from revenue growth in
+the current period. As with revenue, profit and profitability rose in nearly all businesses. Profit in fiscal 2023 included a positive €0.2 billion
+in trailing effects related to the winding down of business activities in Russia a year earlier, which burdened prior-year profit by €0.6 billion
+in impairments and other charges. In addition, profit in fiscal 2022 included impacts from supplier delays and COVID-19 effects. These
+burdens were largely offset by a gain of €0.7 billion from the sale of Yunex Traffic. Severance charges were €25 million, compared to €27
+million a year earlier. Mobility's order backlog rose to €45 billion at the end of the fiscal year, of which €11 billion are expected to be
+converted into revenue in fiscal 2024.
+Markets served by Mobility grew significantly in fiscal 2023, supported by long-term trends such as urbanization, decarbonization and
+increasing demand for digital solutions. Market dynamics in fiscal 2023 also benefited from receding material shortages and easing of
+supply chain constraints. On a geographic basis, all regions contributed to market growth, highlighted by large and very large orders in
+Germany, the U.S., Egypt and India, among others. The market for rolling stock included large orders for high-speed trains, commuter
+trains and locomotives in Europe, India and Egypt. Growth in North America included major investments in new and existing fleets,
+especially for urban transport. Growth in the rail infrastructure market was driven mainly by digitalization, deployment of ETCS technology
+and track electrification, for example with projects in Europe and Asia. For fiscal 2024, markets served by Mobility are expected to grow
+clearly, benefiting from the above-mentioned trends and with all reporting regions contributing to growth. Market expansion is expected
+to be supported by a large number of public investment programs. Mobility anticipates that rail operators in Europe, particularly in
+Germany and in the U.K., will continue making significant investments in rolling stock and advanced rail infrastructure solutions and that
+customers in the Middle East and Africa will tender large turnkey projects, especially in North Africa and the Middle East such as in in Egypt,
+Saudi Arabia and the United Arab Emirates. Markets in the U.S. are expected to remain strong, especially due to ongoing investments in
+rolling stock, particularly for mainline and light rail transport; within the infrastructure market demand is expected to continue for mass
+transit including communications-based train control technology and from a developing market for rail freight solutions. In Asia, markets
+in India are expected to grow strongly with investments in mainline transport (high-speed trains, freight infrastructure, rolling stock fleet
+renewals and expansions of large commuter rail and locomotive tenders), urban metros and rail electrification driving growth.
+3.5 Siemens Healthineers
+Siemens as majority shareholder holds just over 75% of the shares of the publicly listed Siemens Healthineers AG, Germany. Siemens
+Healthineers is a global provider of healthcare products, solutions and services. It develops, manufactures, and sells a diverse range of
+diagnostic and therapeutic products and services to healthcare providers. In addition, Siemens Healthineers also provides clinical
+consulting services, as well as an extensive range of training and service offerings. This comprehensive portfolio supports customers along
+the entire care continuum, from prevention and early detection through to diagnosis, treatment, and follow-up care. The customer
+spectrum ranges from public and private healthcare providers, including hospitals and hospital systems, public and private clinics and
+laboratories, universities, physicians/joint medical practices, public health agencies, public and private health insurers, through to
+pharmaceutical companies and clinical research institutes. The imaging business provides imaging products, services, and solutions as
+well as digital offerings. Its most important products are devices for magnetic resonance imaging, computed tomography, X-ray, molecular
+imaging, and ultrasound. The diagnostics business comprises in-vitro diagnostic products and services that are offered to healthcare
+providers in the fields of laboratory and point-of-care diagnostics. The Varian business provides multi-modality cancer care technologies
+along with solutions and services to oncology departments in hospitals and clinics. The portfolio of the advanced therapies business
+consists of highly integrated products, services, and solutions across multiple clinical fields that are designed to support image-guided
+minimally invasive treatments, in areas such as cardiology, interventional radiology, and surgery. Competition in the imaging, Varian and
+advanced therapies businesses consists mainly of a small number of large multinational companies, while the diagnostics market is
+fragmented with a variety of global players that compete with each other across market segments and also with several regional players
+and specialized companies in niche technologies. Markets of Siemens Healthineers are characterized by long-term stability, though, over
+the long term, these markets may also experience shorter-term fluctuations arising from macroeconomic and health political
+developments, such as changes in health policy, regulation or reimbursement systems. Because a substantial portion of Siemens
+Healthineers' revenue stems from recurring business, growth opportunities can be pursued from a stable foundation of profit.
+The addressable markets of Siemens Healthineers are shaped by four major trends. The first is demographic developments, in particular
+the growing and aging global population. This trend poses major challenges for global healthcare systems and, at the same time, offers
+an opportunity for healthcare providers as the demand for cost-efficient healthcare solutions increases. The second trend is economic
+development in emerging countries, which opens up improved access to healthcare for many people. Significant investment in the
+expansion of private and public healthcare systems will persist, driving overall demand for healthcare products and services and hence
+market growth. The third trend is the increase in non-communicable diseases as a consequence of an aging population and environmental
+and lifestyle-related changes. This trend results in far more patients with multiple morbidities, increasing the need for new ways to detect
+and treat diseases in a timely manner. The fourth global trend, the transformation of healthcare providers such as hospitals and
+10
+Combined Management Report
+laboratories, results from a combination of societal and market forces that are driving healthcare providers to operate and organize their
+businesses differently. This development is driven partly by staff shortages, society's increasing resistance to healthcare costs, the growing
+professionalization of health insurance and governmental healthcare systems, burdens from chronic diseases and the rapid scientific
+progress. The growing cost pressure will continue to drive new remuneration models for healthcare services such as value-based
+reimbursement instead of treatment-based reimbursement. As a result of these factors, there's a trend of consolidation of healthcare
+providers into networks. The aim of the resulting larger clinic and laboratory chains, often operating internationally and acting increasingly
+like large corporations are systematic improvements in quality, while at the same time reducing costs. This development leads to an
+increased demand for standardized and scalable systems and solutions as well as new business models.
+R&D activities at Siemens Healthineers are aimed at offering innovative and sustainable solutions for diagnostics and therapy to its
+customers. Artificial intelligence, sensors, and robotics are focal points of the R&D activities at Siemens Healthineers. A growing share of
+the R&D activities is devoted to improving the sustainability of the products. Furthermore, the systems of Siemens Healthineers regularly
+receive extensive software releases to improve user friendliness and add innovative applications. Investments at Siemens Healthineers
+were mainly for spending for factories to expand manufacturing and technical capabilities, in particular in the U.S. and China, for measures
+related to improving operational efficiency and for additions to intangible assets, including capitalized development expenses for products
+within the Atellica product line.
+(in millions of €)
+1,592
+(25)%
+Cash flows from financing activities – discontinued operations
+Dividends attributable to non-controlling interests
+Combined Management Report
+14
+In the Asia, Australia region, revenue was up by on double-digit increase at Mobility, followed by revenue growth at Digital Industries and
+Smart Infrastructure. As with orders, revenue development both in the region and in China was held back by strong negative currency
+In the Americas region, revenue was up in all four industrial businesses led by Smart Infrastructure with double-digit growth. Within the
+region in the U.S., Mobility and Siemens Healthineers reported slight revenue decreases.
+Revenue in Europe, C.I.S., Africa, Middle East increased with double-digit growth contributions from Digital Industries and Smart
+Infrastructure. Mobility reported clear revenue growth, which was held back by portfolio effects stemming from the sale of Yunex traffic
+in fiscal 2022. Revenues at Siemens Healthineers decreased slightly. Within the region in Germany, the same pattern applied for Digital
+Industries and Smart Infrastructure, while revenues at Mobility came in flat. A decline in Germany at Siemens Healthineers was primarily
+due to lower demand for rapid coronavirus antigen tests in the diagnostics business.
+Worldwide, revenue related to external customers rose significantly at Smart Infrastructure and Digital Industries, while Mobility posted
+clearly higher revenue growth year-over-year. Revenue at Siemens Healthineers came in level with fiscal 2022 and was again the highest
+among industrial businesses.
+translation effects, which turned revenue development negative in China for Smart Infrastructure and Digital Industries. Mobility also
+recorded a revenue decline in China.
+11%
+71,977
+77,769
+4%
+(2)%
+9,557
+9,367
+8%
+4.2 Income
+(in millions of €, earnings per share in €)
+Digital Industries
+ROCE
+Basic EPS
+EPS pre PPA
+Net income
+Income (loss) from discontinued operations, net of income taxes
+Income from continuing operations
+Income tax expenses
+Income from continuing operations before income taxes
+Reconciliation to Consolidated Financial Statements
+Portfolio Companies
+Siemens Financial Services
+Profit margin Industrial Business
+Industrial Business
+Siemens Healthineers
+Mobility
+Smart Infrastructure
+10%
+Cash flows from financing activities - continuing operations
+4%
+18,489
+% Change
+Fiscal year
+2023
+Siemens (continuing operations)
+therein: China
+Asia, Australia
+therein: U.S.
+2022
+Americas
+Europe, C.I.S., Africa, Middle East
+(389)
+(8,730)
+(1)
+Interest paid
+Dividends paid to shareholders of Siemens AG
+therein: Germany
+Actual
+Comp.
+36,664
+7%
+8%
+17,241
+18,561
+9%
+9%
+20,680
+22,615
+9%
+6%
+11,961
+12,718
+12%
+10%
+33,481
+17,816
+15.5%
+In fiscal 2023, Siemens Healthineers recorded a decrease of orders, while revenue was on the prior-year level. While the imaging and
+Varian businesses in particular delivered growth in both orders and revenue, this was offset by a substantial decline in the diagnostics
+business. On a geographic basis, revenue was on the prior-year level in all regions; in the Asia, Australia region reported revenue was held
+back by negative currency translation effects. Profit declined primarily due to substantially lower revenue from rapid coronavirus antigen
+tests in the diagnostics business, which also recorded charges of €0.2 billion related to its transformation program. In addition, profitability
+was burdened by impairments and other charges totaling €0.3 billion due to a management decision to refocus certain activities in the
+advanced therapies business. The imaging and Varian businesses increased their profit contributions on higher revenue. Severance charges
+were €167 million in fiscal 2023, compared to €71 million a year earlier. The order backlog for Siemens Healthineers was €34 billion at
+the end of the fiscal year, of which €11 billion are expected to be converted into revenue in fiscal 2024.
+In general, the addressable global markets of Siemens Healthineers excluding rapid coronavirus antigen tests grew moderately in fiscal
+2023. From a regional perspective, the Asia, Australia region saw market growth in most businesses; in China, government subsidy
+programs, among others, including the program of lending incentives associated with the economic stimulus package, had a positive
+effect on investment by healthcare providers. In the region Europe, C.I.S., Africa, Middle East, government subsidy programs, among
+others, were able to support growth in most businesses. In the U.S., market growth was recorded in all businesses. Globally, higher volume
+in the market for the imaging business was generated thanks to the high level of order backlogs resulting from demand catch-up effects,
+on the one hand, and investments in diagnostic imaging equipment in reaction to announced price hikes, on the other hand. The imaging
+market is expected to grow moderately overall in fiscal 2024, driven mainly by pent-up demand for the major imaging modalities. Within
+the diagnostics business, demand for rapid coronavirus antigen tests declined sharply after the COVID-19 pandemic ceased to be a global
+health emergency and the incidence of COVID-19 infections subsided. The market for the diagnostics business is expected to achieve slight
+growth in fiscal 2024, excluding COVID-19 testing. In the market for Varian, overall market growth, especially in the U.S. and Western
+Europe, was boosted mainly by increasing demand for product innovations and services as well as by an intact replacement market. For
+this reason, the market for Varian is expected to grow clearly in fiscal 2024. For advanced therapies business, government subsidy
+programs, including lending incentives enacted as part of the economic stimulus package in China along with EU investment programs,
+positively influenced market development. The expectation for the advanced therapies business is that the market will continue to grow
+moderately in fiscal 2024.
+4. Results of operations
+4.1 Orders and revenue by region
+Currency translation effects took two percentage points each from order and revenue growth year-over-year, respectively. Portfolio
+measures, including the sale of Yunex Traffic in the third quarter of fiscal 2022 and the mail and parcel-handling business of Siemens
+Logistics in the fourth quarter of fiscal 2022, took one percentage point each from order and revenue growth year-over-year. The ratio of
+orders to revenue (book-to-bill) for Siemens in fiscal 2023 was 1.19. The order backlog as of September 30, 2023 was €111 billion.
+Orders (location of customer)
+(in millions of €)
+Europe, C.I.S., Africa, Middle East
+Combined Management Report
+therein: Germany
+therein: U.S.
+Asia, Australia
+therein: China
+Siemens (continuing operations)
+Fiscal year
+2023
+2022
+Americas
+13
+Financing, eliminations and other items included a revaluation loss of €0.2 billion on the stake in Thoughtworks Holding Inc. (fiscal
+2022: a loss of €0.3 billion). For comparison, fiscal 2022 included also impacts totaling €0.5 billion at Corporate Treasury, resulting from
+the sale of Siemens' financing and leasing business in Russia, as well as a loss of €0.1 billion resulting from applying hyperinflation
+accounting. These effects were partly offset in fiscal 2022 by a gain of €0.5 billion in connection with an investment accounted for using
+the equity method mainly due to fair value measurement.
+The result for Siemens Energy Investment was driven by a gain of €1.6 billion from a partial reversal of an impairment on Siemens' stake
+in Siemens Energy AG (fiscal 2022 included an impairment of €2.7 billion), a gain of €0.3 billion resulting from the transfer of a stake in
+Siemens Energy AG to Siemens Pension-Trust e.V., and a gain of €0.2 billion which was recorded in connection with a capital increase by
+Siemens Energy AG in which Siemens did not participate. These gains were partly offset by Siemens' share of Siemens Energy's after-tax
+loss and expenses from amortization of assets resulting from purchase price allocation totaling €1.5 billion (fiscal 2022: totaling €0.2
+billion).
+(2,911)
+67
+118
+(195)
+(190)
+(451)
+(582)
+(104)
+(113)
+(865)
+(990)
+(256)
+(474)
+(1,135)
+(5,141)
+% Change
+Actual
+668
+Comp.
+42,373
+10,831
+(19)%
+(15)%
+92,305
+89,010
+4%
+8,798
+7%
+In the Europe, C.I.S., Africa, Middle East region, order intake increased by double digits at Mobility, including a €2.5 billion order for the
+first line of a turnkey rail system in Egypt and a €2.1 billion order for suburban trains in Germany. Smart Infrastructure recorded clear order
+growth, whereas Digital Industries showed a double-digit decline year-over-year from a high base of comparison, due to its automation
+businesses. Orders at Siemens Healthineers declined year-over-year primarily due to lower demand for rapid coronavirus antigen tests in
+the diagnostics business. Within the region, Germany showed a pattern similar to the region overall.
+Order intake rose in both the Americas region and in the U.S. on double-digit increases at Mobility and Smart Infrastructure, whereas
+Siemens Healthineers recorded a moderate order decline.
+In the Asia, Australia region, order intake was up on a sharp increase at Mobility, including a €2.9 billion order for locomotives and
+associated maintenance in India, combined with slight order growth at Smart Infrastructure. Orders declined at Digital Industries and
+Siemens Healthineers. Within the region in China, order declines were reported in most of the industrial businesses, except at Mobility
+with significant growth. Overall, order intake both in the region and in China was strongly burdened by negative currency translation
+effects.
+Revenue (location of customer)
+(in millions of €)
+(3,362)
+On a worldwide basis, growth in orders related to external customers came on a sharp increase at Mobility and clear order growth at
+Smart Infrastructure; both businesses reported higher order intake across all regions year-over-year. Digital Industries and, to a lesser
+extent, Siemens Healthineers recorded order declines from high bases of comparison. Siemens Healthineers again had the highest order
+contribution.
+15%
+10%
+20,990
+1%
+4%
+15,164
+15,046
+1%
+3%
+26,540
+25,646
+3%
+3%
+22,093
+21,563
+2%
+2%
+23,085
+42,679
+2022
+2023
+Fiscal year
+Sep 30,
+2023
+2022
+33,263
+32,915
+Siemens Financial Services in fiscal 2023 recorded higher earnings before taxes in the debt business despite a volatile credit environment.
+In the prior period, earnings before taxes were burdened by €0.2 billion in connection with the sale of the financing and leasing business
+in Russia at the end of the fiscal year. The equity business recorded strong results. While both periods under review included gains from
+the sales of equity investments, fiscal 2022 additionally included higher gains from fair value measurements of investments and gains
+from energy-related investments in connection with rising prices in global energy markets.
+Sep 30,
+Net cash from operations (defined as the sum of cash flows from operating and investing activities) amounted to €(733) million compared
+to €(616) million in fiscal 2022. In fiscal 2023 and fiscal 2022, net cash from operations comprised Free cash flow of €852 million and
+€985 million, respectively, while remaining cash flows from investing activities, including from changes in receivables from financing
+activities, comprised €(1,585) million and €(1,601) million, respectively.
+SFS's business scope and capital allocation is focused on areas of intense domain know-how closely aligned with Siemens' customers and
+markets, particularly for Digital Industries, Smart Infrastructure and Mobility. Accordingly, SFS is influenced by the business development
+of the markets served by the industrial businesses, among other factors, including macroeconomic effects such as inflation or recession
+which could impact the credit risk of customers. In addition to its high level of diversification across industries, SFS has a strong regional
+footprint in investment-grade countries, with the highest share in the U.S. SFS intends to maintain a highly diversified portfolio across
+regions, while participating in the strong economic development of selected Asian markets.
+3.7 Portfolio Companies
+Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
+solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
+and fiber. Unrealized potential within these businesses requires adjustment in their approach using defined measures including internal
+re-organization, digitalization, cost improvements, and optimizing procurement, production and service activities. After achieving certain
+threshold performance targets, businesses may be combined with another business in the same industry, sold, placed into an external
+private equity partnership, or exited via a public listing.
+At the end of fiscal 2023, Portfolio Companies consisted mainly of three separately managed units: Large Drives Applications offers electric
+motors, converters and mining solutions. Siemens Logistics offers sorting technology and solutions focused on handling baggage and
+cargo in airports. Siemens Energy Assets comprises certain regional business activities of the former Gas and Power segment; as part of
+the Siemens Energy carve-out these activities remained so far with Siemens due to country-specific regulatory restrictions or economic
+considerations.
+Demand within the industries served by Portfolio Companies mainly shows a delayed response to changes in the overall economic
+environment. Financial results are strongly dependent, however, on customer investment cycles in their key industries. In commodity-
+based industries such as oil and gas or mining, these cycles are driven mainly by commodity price fluctuations rather than changes in
+produced volumes. The heterogonous industrial customer base of the separately managed units requires a dedicated sales approach based
+on in-depth understanding of specific industries and customer requests, resulting in the use of various sales and marketing channels for
+Portfolio Companies.
+(in millions of €)
+Despite the increase in receivables from financing activities, total assets decreased since the end of fiscal 2022 due primarily to negative
+currency translation effects.
+(in millions of €)
+Total assets
+15.6%
+16.3%
+3.6 Siemens Financial Services
+Siemens Financial Services provides financing solutions for Siemens' customers as well as other companies in the form of debt and equity
+investments. Based on its comprehensive financing know-how and specialist technology expertise in the areas of Siemens businesses, SFS
+supports its customers' investments with leasing, lending, working capital and structured financing solutions and offers a broad range of
+equipment and project financing. In addition, SFS supports Siemens' industrial businesses with financial advisory services and via a joint
+go-to-market that includes SFS's risk management expertise, such as to assess the risk profiles of projects or business models. Furthermore,
+SFS collaborates with Siemens' industrial businesses to co-develop new digital business models, and also supports its customers through
+targeted financings in sustainable technologies and projects.
+11
+(in millions of €)
+Earnings before taxes (EBT)
+therein: equity business
+ROE (after taxes)
+Combined Management Report
+Fiscal year
+2023
+2022
+563
+498
+201
+269
+Orders
+Revenue
+Profit
+Fiscal year
+2023
+12
+Combined Management Report
+Although the broad range of businesses is operating in diverse markets, overall the main markets served by Portfolio Companies are
+generally impacted by uncertainties regarding geopolitical and economic developments which tend to trigger customer caution regarding
+purchasing decisions. After the post-pandemic recovery, a normalizing growth momentum is expected in most end-customer vertical
+markets in fiscal 2024.
+At the beginning of fiscal 2024, Large Drives Applications and certain business activities which were transferred from Digital Industries are
+combined in the areas of low- to high-voltage motors, geared motors, medium-voltage converters and motor spindles under a new
+separately managed unit, Innomotics. If the transfer from Digital Industries had already existed at the beginning of fiscal 2023, Portfolio
+Companies would have posted orders of €5,317 million, revenue of €4,699 million, profit of €457 million and a profit margin of 9.7%.
+Portfolio Companies' order backlog amounted to €5 billion at the beginning of fiscal 2024, of which €3 billion are expected to be converted
+into revenue in fiscal 2024.
+3.8 Reconciliation to Consolidated Financial Statements
+Profit
+(in millions of €)
+Siemens Energy Investment
+Siemens Real Estate
+Innovation
+Governance
+Centrally carried pension expense
+Amortization of intangible assets acquired in business combinations
+Financing, eliminations and other items
+Reconciliation to Consolidated Financial Statements
+In fiscal 2023, orders and revenue increased in all businesses. While order growth was driven by higher volume from larger orders, most
+evidently at the Airport Logistics business of Siemens Logistics, revenue increased mainly at Large Drives Applications in part due to strong
+conversion of the order backlog. Primarily due to the sale of the mail and parcel-handling business of Siemens Logistics in the fourth
+quarter of fiscal 2022, portfolio effects took eleven and 13 percentage points from orders and revenue, respectively. The strong profit was
+driven by Siemens Energy Assets and Large Drives Applications. Additionally, Portfolio Companies recorded a gain of €0.1 billion from the
+sale of the Commercial Vehicles business. For comparison, profit in fiscal 2022 included a gain of €1.1 billion from the sale of the mail and
+parcel-handling business of Siemens Logistics and a revaluation gain of €0.3 billion in connection with the sale of the equity investment
+in Valeo Siemens eAutomotive GmbH. Portfolio Companies recorded lower severance charges of €12 million, down from €20 million in
+fiscal 2022.
+Fiscal year
+Profit margin
+10.3%
+% Change
+2022
+Actual
+Comp.
+4,016
+3,995
+1%
+15%
+3,313
+3,234
+2%
+19%
+343
+1,520
+(77)%
+47.0%
+2023
+Mobility's R&D strategy is focused on reducing life-cycle costs of rail infrastructure and rolling stock, securing system availability,
+increasing network capacity of rail infrastructure, optimizing the processes of rail operators and improving passenger experience. With
+Siemens Xcelerator, Mobility intends to make software more modular and increasingly move it to the cloud. At the same time, Mobility
+intends to enhance connectivity of hardware and software and provide open application programming interfaces. Thereby Mobility
+accelerates the pace and impact of digital innovation, which in turn benefits owners, operators, and customers of rail transport. Mobility's
+major R&D areas include the development of efficient vehicle platforms with optimized lifecycle cost; eco-friendly, alternative power
+supplies for trains; the Railigent X open application suite for maintenance of rail assets; smart connected products; the Distributed Smart
+Safe System (DS3), which allows for hardware-independent and cloud-enabled signaling; automatic train operation for European Train
+Control System (ETCS); safe artificial intelligence for driverless trains; air-free brake systems, 5G for wireless-based activities; the Mobility
+Software Suite X for operators and passengers; and cyber security. Mobility's investments focus mainly on maintaining or enhancing its
+production facilities, on meeting project demands, and on enhancing its depot services.
+% Change
+43,978
+39,113
+Long-term debt
+5%
+42,686
+44,901
+Total current liabilities
+(11)%
+(19)%
+50
+Liabilities associated with assets classified as held for disposal
+10%
+7,448
+8,182
+Other current liabilities
+8%
+61
+Provisions for pensions and similar obligations
+1,426
+2,275
+(22)%
+1,867
+1,453
+(3)%
+1,857
+1,794
+Debt ratio
+Total liabilities
+Total non-current liabilities
+Other liabilities
+Other financial liabilities
+Provisions
+(30)%
+2,381
+1,655
+Deferred tax liabilities
+(37)%
+2,381
+2,566
+Current income tax liabilities
+8%
+2023
+(in millions of €)
+Sep 30,
+Combined Management Report
+6.1 Capital structure
+6. Financial position
+16
+Our investment in Siemens Energy AG was the main factor for the decrease of investments accounted for using the equity method. For
+further information see Note 4 in Notes to Consolidated Financial Statements for fiscal 2023.
+The decrease of other intangible assets resulted mainly from negative currency translation effects and from impairments recorded at
+Siemens Healthineers.
+The increase in other current financial assets was driven mainly by higher loans receivable at SFS, which were mainly due to new business
+and reclassification of loans receivable from other financial assets due to a reassessment of the expected repayment dates. The latter was
+a major factor also for the decrease of other financial assets, along with decreased positive fair values of derivative financial instruments.
+Inventories increased in all industrial businesses, with the build-up most evident at Mobility and Siemens Healthineers.
+Our total assets at the end of fiscal 2023 were influenced by negative currency translation effects of €7.6 billion (particularly affecting
+goodwill and other financial assets), primarily involving the U.S. dollar.
+(4)%
+151,502
+145,067
+(9)%
+92,673
+84,428
+2022
+1,666
+% Change
+7,483
+2,156
+2,320
+Current provisions
+4%
+12,049
+12,571
+Contract liabilities
+(1)%
+1,616
+1,601
+Other current financial liabilities
+(2)%
+10,317
+10,130
+Trade payables
+12%
+6,658
+Short-term debt and current maturities of long-term debt
+(3)%
+1,654
+47,106
+Purchase of investments and financial assets for investment purposes
+(407)
+Acquisitions of businesses, net of cash acquired
+(2,218)
+Additions to intangible assets and property, plant and equipment
+(41)
+12,239
+12,281
+(723)
+5,918
+8,529
+2023
+Fiscal year
+Cash flows from investing activities
+Cash flows from operating activities - continuing and discontinued operations
+Cash flows from operating activities – discontinued operations
+Cash flows from operating activities - continuing operations
+(2,165)
+Change in receivables from financing activities of SFS
+(1,461)
+Other disposals of assets
+(5,252)
+2,470
+(404)
+(884)
+Change in short-term debt and other financing activities
+Repayment of long-term debt (including current maturities of long-term debt)
+Issuance of long-term debt
+Re-issuance of treasury shares and other transactions with owners
+Purchase of treasury shares
+Cash flows from financing activities
+(3,176)
+Cash flows from investing activities - continuing and discontinued operations
+281
+Cash flows from investing activities – discontinued operations
+(3,458)
+Cash flows from investing activities - continuing operations
+1,351
+Other reconciling items to cash flows from operating activities - continuing operations
+Change in operating net working capital
+Net income
+Cash flows from operating activities
+(11)%
+5,910
+5,270
+145,067
+36%
+(2)%
+48,895
+47,791
+37%
+Total liabilities and equity
+Non-controlling interests
+Total equity attributable to shareholders of Siemens AG
+Equity ratio
+64%
+63%
+(5)%
+96,697
+92,007
+(13)%
+54,011
+151,502
+1%
+(4)%
+2022
+(in millions of €)
+6.2 Cash flows
+The share buyback program announced on June 24, 2021 with a volume of up to €3 billion ending September 15, 2026, at the latest,
+began on November 15, 2021. This buyback is executed based on the authorization provided by the Annual Shareholders' Meeting on
+February 5, 2020. In fiscal 2023, Siemens repurchased 6,853,091 shares under this share buyback program. On November 16, 2023 we
+announced a share buyback of up to €6 billion for up to five years.
+Share buyback
+For further information about our commitments and contingencies see Notes 21 and 25 in Notes to Consolidated Financial Statements for
+fiscal 2023.
+Irrevocable loan commitments amounted to €3.9 billion. A considerable portion of these commitments resulted from asset-based lending
+transactions, meaning that the respective loans can be drawn only after the borrower has provided sufficient collateral.
+In addition to these commitments, there are contingent liabilities of €0.4 billion which result mainly from other guarantees and legal
+proceedings. Other guarantees include €0.1 billion, for which Siemens has reimbursement rights towards Siemens Energy.
+As of September 30, 2023, the undiscounted amount of maximum potential future payments related primarily to credit and performance
+guarantees amounted to €6.2 billion. This included primarily Siemens' obligations from performance and credit guarantees in connection
+with the Siemens Energy business, for which Siemens has reimbursement rights towards Siemens Energy.
+Off-balance-sheet commitments
+Combined Management Report
+17
+For further information about our debt see Note 16 in Notes to Consolidated Financial Statements for fiscal 2023. For further information
+about the functions and objectives of our financial risk management see Note 25 in Notes to Consolidated Financial Statements for fiscal
+2023.
+We have credit facilities totaling €7.5 billion which were unused as of September 30, 2023.
+As of September 30, 2023, we recorded, in total, €40.9 billion in notes and bonds, €2.2 billion in loans from banks, €0.5 billion in other
+financial indebtedness and €2.9 billion in lease liabilities. Notes and bonds were issued mainly in the U.S. dollar and the euro, and to a
+lesser extent in the British pound.
+Debt and credit facilities
+Our capital structure ratio as of September 30, 2023 decreased to 0.6 from 1.0 a year earlier. The change was due to a decrease in Industrial
+net debt and a higher EBITDA.
+Capital structure ratio
+The increase in short-term debt and current maturities of long-term debt was due mainly to reclassifications of long-term instruments
+totaling €5.3 billion. This was partly offset by the repayment of euro, U.S. dollar and British pound instruments totaling €4.6 billion.
+Long-term debt decreased due primarily to the above-mentioned reclassifications and currency translation effects of €1.9 billion on bonds
+issued in the U.S. dollar and British pound. Set against this were mainly increases of €2.5 billion from the issuance of euro bonds.
+The contribution of a stake in Siemens Energy AG to Siemens Pension-Trust e.V. led to a decrease of provisions for pensions and similar
+obligations. Additional major effects resulted from returns on plan assets and actuarial gains and losses. For further information see Note
+17 in Notes to Consolidated Financial Statement for fiscal 2023.
+1,565
+The main factors for the decrease in total equity attributable to shareholders of Siemens AG were a negative other comprehensive
+income, net of income taxes, of €4.0 billion resulting mainly from currency translation; dividend payments of €3.4 billion (for fiscal 2022);
+and changes in equity totaling €1.6 billion resulting from an equity transaction at Siemens Energy AG. These factors were largely offset by
+€7.9 billion in net income attributable to shareholders of Siemens AG. In fiscal 2023, Siemens cancelled 50 million treasury shares, thereby
+reducing issued capital by €150 million and retained earnings by €5.1 billion.
+(9)%
+We advance technologies also through our open innovation concept. We work closely with scholars from leading universities, research
+institutions and academic start-ups, not only under bilateral cooperation agreements but also in publicly funded collective projects. Our
+focus here is on our strategic research partners and in particular the Siemens Research and Innovation Ecosystems, which we maintain at
+16 locations worldwide.
+Siemens' core technologies have been determined to be critical for our Company's long-term success and that of our customers. They are
+bundled in eleven technology areas: additive manufacturing and materials (from fiscal 2024 on: advanced manufacturing and circularity),
+cybersecurity and trust, data analytics and artificial intelligence, power electronics, simulation and digital twin, sustainable energy and
+infrastructure, future of automation, integrated circuits and electronics, connectivity and edge, software systems and processes, and user
+experience.
+Our research and development activities are ultimately geared to developing innovative, sustainable solutions for our customers - and our
+businesses - while also strengthening our own competitiveness. Joint implementation by the operating units and Technology, our central
+R&D department, ensures that research activities and business strategies are closely aligned with one another, and that all units benefit
+equally and quickly from technological developments.
+In fiscal 2023, we reported research and development expenses of €6.2 billion, compared to €5.6 billion in fiscal 2022. The resulting R&D
+intensity, defined as the ratio of R&D expenses to revenue, was 8.0% (fiscal 2022: 7.8%). Additions to capitalized development expenses
+amounted to €0.3 billion as in the prior year. As of September 30, 2023, Siemens worldwide held approximately 45,000 granted patents
+in its continuing operations. On average, we had 50,029 R&D employees in fiscal 2023.
+4.3 Research and development
+At 18.6%, ROCE was back in the target range established in our Siemens Financial Framework. The increase year-over-year was due
+primarily to sharply higher income before interest after tax.
+The increase in Basic EPS and in EPS pre PPA reflects the increase of Net income attributable to Shareholders of Siemens AG, which was
+€7,949 million in fiscal 2023 compared to €3,723 million in fiscal 2022, combined with a lower number of weighted average shares
+outstanding. Our investment in Siemens Energy AG contributed €0.84 to the increase of EPS pre PPA.
+Siemens' global venture capital unit, Next47, provides capital to help start-ups expand and scale. It serves as the creator of next-generation
+businesses for Siemens by building, buying and partnering with innovative companies at any stage. Next47 is focused on anticipating how
+emerging technologies will influence our end markets. This foreknowledge enables our Company and our customers to grow and thrive
+in the age of digitalization.
+The tax rate in fiscal 2023 was 24% (fiscal 2022: 38%), benefiting from tax-free gains in relation to the partial reversal of an impairment
+on Siemens' stake in Siemens Energy AG and the contribution of a stake in Siemens Energy AG to Siemens Pension-Trust e.V. Moreover,
+the gain recorded in connection with the capital increase by Siemens Energy AG was also tax-free. These positive influences on the tax
+rate were partly offset by our participation in the after-tax loss at Siemens Energy, which was not tax-deductible. As a result, the increase
+in Income from continuing operations was 93%.
+10.0%
+18.6%
+97%
+5.47
+10.77
+116%
+4.65
+As a result of the developments described in chapter 3, Income from continuing operations before income taxes increased by 57%.
+Severance charges for continuing operations were €430 million, of which €351 million were in Industrial Business. In fiscal 2022,
+severance charges for continuing operations were €272 million, of which €190 million were in Industrial Business.
+15
+5. Net assets position
+(in millions of €)
+Total assets
+Total non-current assets
+Other assets
+Deferred tax assets
+Other financial assets
+Investments accounted for using the equity method
+Property, plant and equipment
+Other intangible assets
+Goodwill
+Total current assets
+Assets classified as held for disposal
+Other current assets
+Current income tax assets
+Inventories
+Contract assets
+Other current financial assets
+Cash and cash equivalents
+Trade and other receivables
+10.04
+Combined Management Report
+94%
+n/a
+15.4%
+11%
+10,277
+11,430
+(25)%
+3,369
+2,527
+15.1%
+11%
+882
+38%
+2,222
+3,074
+27%
+3,892
+1,523
+794
+563
+498
+13%
+(21)
+15
+93%
+4,413
+8,514
+2%
+(2,741)
+(2,687)
+57%
+7,154
+11,201
+78%
+(5,141)
+(1,135)
+(77)%
+1,520
+343
+4,392
+Sep 30,
+8,529
+1,432
+9%
+10,626
+11,548
+0%
+7,559
+7,581
+1,363
+9%
+10,605
+2%
+4%
+16,701
+17,405
+3,014
+9,696
+% Change
+(4)%
+2,459
+1,955
+(13)%
+12,196
+10,641
+(5)%
+33,861
+32,224
+(5)%
+3%
+60,639
+(76)%
+413
+99
+1%
+1,935
+58,829
+10,465
+10,084
+2022
+11,938
+2,231
+(12)%
+25,903
+11,733
+(39)%
+4,947
+4,955
+2023
+22,855
+4/4
+(since February 9, 2023)
+Christian Pfeiffer (Dr. Ing.)
+100
+3/3
+75
+3/4
+(since February 9, 2023)
+Martina Merz
+50
+1/2
+100
+1/3
+4/4
+100
+100
+717
+Jürgen Kerner
+100
+2/2
+100
+4/4
+100
+33
+8/8
+100
+Harald Kern
+2/2
+100
+Michael Diekmann
+(until February 9, 2023)
+3/3
+100
+1/1
+100
+Regina E. Dugan (PhD)
+(since February 9, 2023)
+4/4
+100
+2/2
+100
+Andrea Fehrmann (Dr. phil.)
+717
+100
+100
+4/4
+(since February 9, 2023)
+Keryn Lee James
+100
+6/6
+717
+88
+1/1
+(since September 14, 2023)
+Oliver Hartmann
+100
+717
+Bettina Haller
+100
+100
+100
+717
+3/3
+(until February 9, 2023)
+Gunnar Zukunft
+Matthias Zachert
+100
+6/6
+100
+4/4
+100
+717
+100
+2/2
+100
+67
+100
+3/3
+71
+5/7
+100
+717
+100
+6/6
+Grazia Vittadini
+Dorothea Simon
+(until August 31, 2023)
+Michael Sigmund
+2/3
+98
+100
+96
+100
+3/3
+100
+Hagen Reimer
+717
+100
+3/3
+100
+Norbert Reithofer (Dr. Ing. Dr. Ing. E.h.)
+(until February 9, 2023)
+3/3
+100
+Kasper Rørsted
+717
+100
+2/2
+100
+Baroness Nemat Shafik (DBE, DPhil)
+(until February 9, 2023)
+3/3
+313
+Nathalie von Siemens (Dr. phil.)
+717
+100
+100
+94
+94
+Benoît Potier
+6/6
+Supervisory
+3/3
+Report of the Supervisory Board
+SIEMENS
+December 2023
+Report of the
+Supervisory Board
+Report of the Supervisory Board
+the shareholder representatives on the Supervisory Board
+within the meaning of the German Corporate Governance
+Code and with the Supervisory Board's qualification
+matrix. Finally, we discussed the results of the Supervisory
+Board's self-assessment in August and the recommen-
+dations and measures to be derived from it.
+Corporate Governance Code
+At our meeting on September 23, 2022, we approved a
+Declaration of Conformity in accordance with Section 161
+of the German Stock Corporation Act (Aktiengesetz,
+AktG). Information on corporate governance is provided
+in the Corporate Governance Statement, which is pub-
+licly available on the Siemens Global Website at www.
+SIEMENS.COM/CORPORATE-GOVERNANCE. The Company's Dec-
+laration of Conformity has been made permanently avail-
+able to shareholders on the Siemens Global Website at
+WWW.SIEMENS.COM/DECLARATION OF CONFORMITY. The cur-
+rent Declaration of Conformity is also available in the
+Corporate Governance Statement.
+Work in the Supervisory Board
+committees
+In fiscal 2023, the Supervisory Board had six standing
+committees. These committees prepare decisions and
+topics to be dealt with at the Supervisory Board's plenary
+meetings. Some of the Supervisory Board's decision-mak-
+ing powers have been delegated to these committees
+within the permissible legal framework. The committee
+chairpersons report to the Supervisory Board on their
+committees' work at the subsequent Board meeting. A
+list of the members and a detailed explanation of the
+tasks of the individual Supervisory Board committees are
+set out in the Corporate Governance Statement.
+The Chairman's Committee met eight times. Three
+meetings were held in person, two in a virtual format via
+video conference and three in a so-called hybrid format.
+The Chairman's Committee also made one decision using
+other customary means of communication. In my capac-
+ity as Chairman of the Chairman's Committee, I discussed
+topics of major importance with other Committee mem-
+bers also between meetings. The Committee concerned
+itself, in particular, with personnel-related matters, long-
+term succession planning for the composition of the
+Managing Board, corporate governance issues and the
+acceptance by Managing Board members of positions at
+other companies and institutions.
+The Nominating Committee met three times. Two meet-
+ings were held in a virtual format via video conference
+and one in a so-called hybrid format. The Nominating
+Committee gave in-depth consideration to succession
+planning for the composition of the Supervisory Board.
+One focus of the Nominating Committee's activities in
+fiscal 2023 was the preparation of the Supervisory
+Board's nominations of shareholder representatives on
+the Supervisory Board for election by the 2023 Annual
+Shareholders' Meeting. The Nominating Committee was
+supported in this connection by an external consulting
+firm. In selecting the potential candidates and in prepar-
+ing a recommendation for the Supervisory Board's deci-
+sion, the Nominating Committee gave particular consid-
+eration to the objectives that the Supervisory Board had
+previously approved for its composition - including the
+profile of required skills and expertise and the diversity
+concept for the Supervisory Board - and to the Supervi-
+sory Board's qualification matrix. With a view to the reg-
+ular elections of three shareholder representatives on the
+Supervisory Board scheduled for 2025, the Nominating
+Committee also defined the topics for its work over the
+next few years and concerned itself with the regulatory
+framework, with the objectives that the Supervisory
+Board had approved for its composition, including the
+profile of required skills and expertise and the diversity
+concept for the Supervisory Board, and with the qualifi-
+cation matrix.
+The Mediation Committee had no need to meet.
+The Compensation Committee met four times. All four
+meetings were held in person. The Compensation Com-
+mittee also made one decision using other customary
+means of communication. The Committee prepared, in
+particular, Supervisory Board decisions regarding the
+definition of performance criteria and the targets for vari-
+able compensation, regarding the determination and
+regarding the review of the appropriateness of Managing
+Board compensation and regarding the Compensation
+Report. In addition, the Compensation Committee pre-
+pared the Supervisory Board's decision regarding the en-
+gagement of an auditor for the Compensation Report for
+fiscal 2023. One focus of the Compensation Committee's
+work was the preparation of the Supervisory Board's de-
+cision regarding the adjustment of the compensation
+system for the members of the Managing Board as of
+fiscal 2024. Independent external consultants were also
+involved in the preparation of this decision.
+FISCAL 2023
+5
+Report of the Supervisory Board
+The Innovation and Finance Committee met two times.
+Both meetings were held in person. A decision was also
+made using other customary means of communication.
+The focus of the Committee's work was on innovation-
+and technology-related topics. The Committee discussed
+the Company's progress, strategic priorities, technolo-
+gies and growth opportunities relating to the industrial
+metaverse. In the strategic context, it concerned itself with
+progress regarding Siemens Xcelerator, the Company's
+open digital business platform. Detailed growth plans for
+the portfolio and new Siemens Xcelerator portfolio
+elements were presented. Expanding the ecosystem and
+increasing the relevance of the marketplace were also
+focus topics. Under the heading "UX Transformation," the
+Managing Board reported on progress in user-centered
+product design. The Committee's meetings and/or
+decisions also focused on the discussion of the pension
+system and the preparation and approval of investment
+and divestment projects and/or financial measures. For
+example, the Innovation and Finance Committee en-
+dorsed the Managing Board's decision regarding the
+Siemens Industrial Campus Erlangen Project.
+The Audit Committee held six regular meetings. All the
+meetings were held in person. In the presence of the in-
+dependent auditors, the President and Chief Executive
+Officer, the Chief Financial Officer, the General Counsel,
+the head of accounting, the head of corporate audit and
+the head of the sustainability function, the Audit Com-
+mittee dealt with the financial statements and the Com-
+bined Management Report for Siemens AG and the
+Siemens Group, including the non-financial information
+integrated into the Combined Management Report. In
+this connection, the Audit Committee also concerned it-
+self with the Sustainability Report, with the statements
+regarding the EU taxonomy in the Combined Manage-
+ment Report for Siemens AG and the Siemens Group and
+with the related reports of the independent auditors. The
+Committee discussed the Half-year Financial Report and
+the quarterly statements with the Managing Board and
+the independent auditors. In the presence of the inde-
+pendent auditors, it also discussed the report on the au-
+ditors' review of the Company's Half-year Consolidated
+Financial Statements and of its Interim Group Manage-
+ment Report. As part of the preparation and implemen-
+tation of the audit, the Audit Committee regularly ex-
+changed views with the independent auditors without
+the Managing Board in attendance. In addition, it met
+regularly without the Managing Board and/or the inde-
+pendent auditors in attendance. Outside its meetings,
+the Chairman of the Audit Committee regularly ex-
+changed views with the independent auditors regarding
+the progress of the audit and reported to the Audit Com-
+mittee thereon. The Audit Committee recommended that
+the Supervisory Board propose to the Annual Sharehold-
+ers' Meeting that Ernst & Young GmbH Wirtschaftsprü-
+fungsgesellschaft, Stuttgart, be elected independent
+auditors for fiscal 2023. It awarded the audit contract for
+fiscal 2023 to the independent auditors, who had been
+elected by the Annual Shareholders' Meeting, defined
+the audit's focus areas and determined the auditors' fee.
+The Audit Committee approved the audit plan and defined
+the Audit Committee's focus areas. It monitored the selec-
+tion, independence, qualification, rotation and efficiency
+of the independent auditors as well as the services they
+provided and concerned itself with the review of the qual-
+ity of the audit of the financial statements. In fiscal 2023,
+against the backdrop of the Wirecard situation, the Audit
+Committee regularly discussed the role of Ernst & Young
+GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, as the
+independent auditors of Wirecard AG. The Audit Commit-
+tee questioned the independent auditors regarding this
+matter and assessed the impact on Siemens AG. The Audit
+Committee also dealt with the Company's accounting and
+accounting process, the appropriateness and effective-
+ness of its internal control system and its risk manage-
+ment system (including sustainability-related aspects),
+and the effectiveness, resources and findings of its inter-
+nal audit as well as with reports concerning potential and
+pending legal disputes. In addition, the Audit Committee
+concerned itself with the Company's compliance with
+legal requirements, official regulations and the Company's
+internal guidelines (compliance) and dealt, in particular,
+with the quarterly reports, the Chief Compliance Officer's
+annual report and the compliance management system.
+For this topic, the Managing Board member responsible
+for People & Organization also attended the Audit Com-
+mittee meetings at the invitation of the Audit Committee
+Chairman. In this connection, the Audit Committee
+concerned itself with the implementation of the new
+German Supply Chain Act (Lieferkettensorgfaltspflichten-
+gesetz, LKSG). It also focused on the current and future
+regulatory requirements regarding sustainability report-
+ing and its implementation, including, in particular, the
+requirements of the EU taxonomy and the Corporate
+Sustainability Reporting Directive (CSRD). Finally, the
+FISCAL 2023
+6
+Report of the Supervisory Board
+Audit Committee concerned itself in fiscal 2023 - due to
+the regular, legally required external rotation of the
+independent auditors at the end of fiscal 2023 - with the
+selection and transition procedure for the audit of the
+financial statements for fiscal 2024.
+The Supervisory Board members take part, on their own
+responsibility, in the educational and training measures
+necessary for the performance of their duties - measures
+relating, for example, to changes in the legal framework
+and to new, groundbreaking technologies. The Company
+supports them in this regard. Internal informational
+events are regularly offered to support targeted training
+measures. In March and July of fiscal 2023, three internal
+training events concerning strategically relevant tech-
+nology and sustainability-related topics were held for
+all Supervisory Board members. The Supervisory Board
+informed itself, in particular, about industrial and
+generative artificial intelligence and discussed the tech-
+nological background, application and impact on
+Siemens' markets as well as the technology-related and
+regulatory challenges.
+New Supervisory Board members can meet with Manag-
+ing Board members and other managers with specialist
+responsibility to exchange views on current topics and
+topics of fundamental importance and thus gain an
+overview of Company-relevant matters (onboarding). In
+fiscal 2023, a separate informational event for the new
+members of the Supervisory Board was held on March 13,
+2023, to familiarize those members, in particular, with
+the Company's business model and strategy and with the
+structures of the Siemens Group. As part of this onboard-
+ing program, Supervisory Board members also have the
+opportunity to visit the various locations of different
+Siemens business areas and gain an insight into the port-
+folio as well as production and manufacturing methods.
+Longer-serving Supervisory Board members may also
+attend onboarding events and regularly do so.
+Disclosure of participation by individual
+Supervisory Board members in meetings
+The average rate of participation by members in the
+meetings of the Supervisory Board and its committees
+was 97%. In fiscal 2023, meetings were held not only in
+person but, in some cases, also in a virtual format via
+video conference or in a so-called hybrid format. No
+meetings were held via telephone conference. The par-
+ticipation rate of individual members in the meetings of
+the Supervisory Board and its committees is set out in the
+following chart:
+Berlin and Munich, December 6, 2023
+FISCAL 2023 7
+Report of the Supervisory Board
+In fiscal 2023, Siemens AG once again demonstrated its
+operational excellence as a leading technology company
+by delivering an impressively high level of profitable
+growth. The Company's long-range strategy of combining
+the real and the digital worlds and its rigorous orien-
+tation toward long-term growth fields paid off: Siemens
+benefited from strong, stable developments in the global
+markets - above all, from worldwide efforts to make
+value chains across the board more efficient, resilient
+and sustainable. The Company also made major invest-
+ments to drive its innovative power and enhance its
+manufacturing capacities – while further strengthening
+its regional diversification.
+100
+FISCAL 2023 4
+The Supervisory Board meeting on September 22, 2023,
+was held in Berlin, where we gained an insight into the
+future-oriented project Siemensstadt Square and, on a tour
+of the Röhrenwerk tube plant, familiarized ourselves with
+the advanced production and manufacturing methods at
+the long-standing location. At the meeting, the Managing
+Board reported on the state of the Company. The person-
+nel strategy of Siemens AG was again a focus of the meet-
+ing. Following up on its reporting on December 7, 2022,
+the Managing Board informed us about the strategic
+approach to systematic workforce training, which aimed
+to drive the organization's transformation and empower
+its employees to continuously learn and grow. We dis-
+cussed the Managing Board's considerations regarding the
+2024 budget. A further focus of the meeting was Manag-
+ing Board compensation, whose appropriateness had
+been confirmed by an internal review. After preparation by
+and on a recommendation of the Compensation Commit-
+tee, we approved an adjustment of the compensation
+system for the Managing Board as of fiscal 2024. As part of
+the annual review of Managing Board compensation and
+after preparation by and on a recommendation of the
+Compensation Committee, we determined each Manag-
+ing Board member's individual total target compensation
+and maximum compensation and defined the perfor-
+mance criteria for variable compensation for fiscal 2024. In
+addition, we dealt with matters relating to corporate gov-
+ernance – in particular, the Declaration of Conformity with
+the German Corporate Governance Code. We approved
+amendments to the Bylaws for the Managing Board and
+changes to the diversity concept for the Managing Board.
+We also concerned ourselves with the independence of
+Company's sustainability strategy. We concerned our-
+selves with the Company's strategic orientation and with
+progress in its sustainability-related transformation. We
+discussed the Company's business opportunities con-
+nected with sustainability-related factors and concerned
+ourselves with business potential particularly in the ar-
+eas of decarbonization, energy efficiency and resource
+efficiency. Regulatory requirements - in particular, the
+EU taxonomy and the Corporate Sustainability Reporting
+Directive (CSRD) - and their impact on Siemens were
+also topics of our discussions. In addition, we discussed
+the Siemens Energy investment and the format of the
+2024 Annual Shareholders' Meeting. Finally, we dealt
+with Managing Board compensation and approved a pro-
+posal regarding the engagement of the auditors of the
+Compensation Report for fiscal 2023.
+At our meeting on August 9, 2023, the Managing Board
+reported on the Company's current business and finan-
+cial position and on personnel-related matters as of the
+third quarter. One focus of the meeting was the
+At our meeting on May 16, 2023, the Managing Board
+reported on the Company's current business and finan-
+cial position, including personnel-related matters and
+sustainability, as of the second quarter. As part of a stra-
+tegic focus, we concerned ourselves at this meeting - on
+the basis of the strategy discussions held in the previous
+weeks in smaller groups with the Managing Board - ex-
+tensively and in detail with the growth targets and the
+further implementation of Siemens' strategy as a focused
+technology company. For Siemens Xcelerator, our open
+digital business platform, growth targets for the portfolio
+at the Siemens and business level were presented in de-
+tail and the status of the two pillars "ecosystem" and
+"marketplace" were discussed. We were also informed
+about the current business position of Siemens Healthi-
+neers and about progress in the integration of Varian. We
+approved amendments to the Bylaws for the Managing
+Board, for the Supervisory Board and for the Chairman's
+Committee, the Audit Committee, the Innovation and
+Finance Committee, and the Compensation Committee
+of the Supervisory Board.
+At the beginning of May 2023, the members of the
+Managing and Supervisory Boards met several times in
+smaller groups (so-called multilateral strategy sessions)
+to consider and discuss in detail topics of strategic
+importance to the Company.
+Due to the regular election of ten employee representa-
+tives and seven shareholder representatives on the
+Supervisory Board, a constituent meeting of the Super-
+visory Board was held immediately after the Annual
+Shareholders' Meeting on February 9, 2023. At this meet-
+ing, the Supervisory Board confirmed Birgit Steinborn
+as the Supervisory Board's First Deputy Chairwoman and
+Dr. Werner Brandt as the Supervisory Board's Second
+Deputy Chairman, effective the beginning of their re-
+spective new electoral periods. The Supervisory Board
+also elected the members of its committees.
+and sustainability, as of the first quarter. We were in-
+formed about the current business position of Siemens
+Healthineers and that of its Diagnostics Business Area, in
+particular.
+Report of the Supervisory Board
+3
+FISCAL 2023
+At our meeting on February 8, 2023, the Managing
+Board reported on the Company's current business and
+financial position, including personnel-related matters
+On January 31, 2023, we approved – in a decision using other
+customary means of communication - a decision regarding
+the exercise of shareholding rights in associated companies
+of Siemens AG pursuant to Section 32 of the German Code-
+termination Act (Mitbestimmungsgesetz, MitbestG).
+On December 7, 2022, we discussed the 2022 Annual
+Financial Report - comprising the financial statements
+and the Combined Management Report for Siemens AG
+and the Siemens Group as of September 30, 2022 - as
+well as the Report of the Supervisory Board to the Annual
+Shareholders' Meeting, the Sustainability Report, the
+Compensation Report for fiscal 2022, the Report on Gen-
+der Equality and Equal Pay in accordance with the German
+Transparency in Wage Structures Act (Entgelttransparenz-
+gesetz, EntgTranspG) and the agenda for the ordinary
+Annual Shareholders' Meeting on February 9, 2023. On
+the basis of recommendations by the Nominating Com-
+mittee, we concerned ourselves with proposals regarding
+the election of seven shareholder representatives on the
+Supervisory Board at the 2023 Annual Shareholders'
+Meeting. We also concerned ourselves with the annual
+reporting by the Chief Compliance Officer and the Global
+Chief Cypersecurity Officer. One focus of the meeting was
+the Company's personnel strategy. The Managing Board
+reported on measures regarding employee training and
+development under the heading #NextWork, with the aim
+of systematically addressing the megatrends digitaliza-
+tion, automation and demographic change.
+firmed the appropriateness of this compensation. We
+had already defined the performance criteria for the Man-
+aging Board's variable compensation for fiscal 2023 at our
+meeting on September 23, 2022. On this basis and on a
+recommendation by the Compensation Committee, we
+made a decision regarding target setting for Managing
+Board compensation for fiscal 2023 at our meeting on
+November 16, 2022. At this meeting, we also approved
+the Corporate Governance Statement for fiscal 2022 and
+endorsed a decision by the Managing Board regarding
+financing measures. In addition, we concerned ourselves
+with personnel-related matters regarding the Managing
+Board and, on a recommendation by the Chairman's Com-
+mittee, approved the extension of Judith Wiese's appoint-
+ment as a full member of the Managing Board from
+October 1, 2023, until the end of September 30, 2028.
+At our meeting on November 16, 2022, the Managing
+Board reported to us on the Company's current business
+position, including personnel-related matters and
+sustainability, as of the fourth quarter. We discussed the
+key financial figures for fiscal 2022 and approved the
+budget for fiscal 2023. We also discussed the Managing
+Board's considerations regarding business activities at
+Large Drive Applications. On a recommendation by the
+Compensation Committee, we also determined the
+Managing Board members' compensation for fiscal 2022
+on the basis of calculated target achievement. A review
+conducted by an independent compensation expert con-
+We held a total of six regular plenary meetings in fiscal
+2023. We also held an extraordinary constituent meeting
+of the Supervisory Board immediately after the Annual
+Shareholders' Meeting on February 9, 2023. Six meetings
+were held in person and one in a so-called hybrid format -
+that is, as an in-person meeting with the possibility of
+virtual participation. No meetings were held via telephone
+conference or in an exclusively virtual format. We also
+made one decision using other customary forms of com-
+munication. Topics of discussion at our regular plenary
+meetings were strategic progress, revenue, profit and em-
+ployment development at Siemens AG and the Siemens
+Group, the Company's financial position and the results of
+its operations, personnel-related matters, the status of the
+implementation of Siemens Xcelerator, and sustainability.
+In addition, we concerned ourselves, as occasion required,
+with acquisition and divestment projects and with risks to
+the Company. The Supervisory Board and/or the Innovation
+and Finance Committee were regularly informed – within
+the stipulated legal framework – by the relevant Managing
+Board member about measures and decisions of funda-
+mental importance at the Equity Investments, companies
+in which Siemens holds a majority stake. In addition, we
+regularly met in sessions without the Managing Board in
+attendance. In these closed sessions, we dealt with agenda
+items that concerned either the Managing Board itself or
+internal Supervisory Board matters.
+Topics at the plenary meetings of the
+Supervisory Board
+on decarbonization and energy efficiency, resource effi-
+ciency and circularity as well as people centricity and social
+impact. The Supervisory Board discussed the risks and op-
+portunities for the Company connected with social and en-
+vironmental factors as well as the environmental and social
+impact of the Company's activities. The Supervisory Board
+also concerned itself with the 2022 Sustainability Report.
+Report of the Supervisory Board
+FISCAL 2023 2
+A special focus of our activities in fiscal 2023 was the fur-
+ther implementation of the Company's growth strategy.
+At our meetings and in additional informational sessions,
+we concerned ourselves intensively with the goals and
+priorities of Siemens' businesses and with the Managing
+Board's technology and personnel strategy. In this connec-
+tion, we focused our attention on the accelerated trans-
+formation toward digitalization and sustainability and on
+business and technological innovation and the related
+opportunities for growth. Together with the Managing
+Board, we discussed markets, trends and growth fields. A
+further focus of our activities in fiscal 2023 - in addition to
+Siemens Xcelerator, our platform for driving the digital
+transformation - was Siemens AG's sustainability strategy.
+We focused on sustainability-related topics in the environ-
+ment, social and governance (ESG) area. At the center was
+not only DEGREE, our Companywide sustainability frame-
+work - with the aspects of decarbonization, ethics, gover-
+nance, resource efficiency, equity and employability – but
+also the positive impact the Company creates for customers
+with its portfolio. The Supervisory Board discussed the risks
+and opportunities for the Company connected with social
+and environmental factors as well as the environmental
+and social impact of the Company's activities. The discus-
+sion made clear that sustainability is a strategic business
+opportunity for Siemens due to our strong portfolio focused
+-
+kept up to date on projected business policies, Company
+planning - including financial, investment and personnel
+planning - and the Company's profitability and business
+operations as well as on the state of Siemens AG and the
+Siemens Group. We were directly involved at an early
+stage in all decisions of fundamental importance to the
+Company and discussed these decisions with the Man-
+aging Board intensively and in detail. To the extent that
+Supervisory Board approval of the decisions and mea-
+sures of Company management was required by law, the
+Siemens Articles of Association or our Bylaws, the mem-
+bers of the Supervisory Board - prepared in some cases
+by the Supervisory Board's committees issued such
+approval after intensive review and discussion.
+In fiscal 2023, the Supervisory Board performed in full
+the duties assigned to it by law, the Siemens Articles
+of Association and the Bylaws for the Supervisory Board.
+On the basis of detailed written and oral reports provided
+by the Managing Board, we monitored the Managing
+Board and advised it on the management of the Company.
+In my capacity as Chairman of the Supervisory Board,
+I regularly exchanged information with the President and
+Chief Executive Officer and other Managing Board mem-
+bers. As a result, the Supervisory Board was always
+Against this backdrop, the Supervisory Board focused
+intensively in fiscal 2023 on the execution of Siemens'
+growth strategy. Siemens Xcelerator, our open digital
+business platform, gained more and more momentum
+and is the key element of Siemens' strategy to combine
+the real and the digital worlds. The business opportunities
+created by digitalization and sustainability as well as the
+DEGREE sustainability framework were likewise priorities.
+In addition, the elections at the 2023 Annual Shareholders'
+Meeting enabled the Supervisory Board to successfully
+further develop its own profile of skills and expertise,
+particularly in the areas of technology and sustainability.
+Today, our Supervisory Board is more global and more
+diverse than ever before - and, as a result, excellently
+positioned to optimally support the Company also in the
+next phases of its development.
+Dear Shareholders,
+Report of the Supervisory Board
+Board (plenary
+meetings)
+2/2
+100
+3/3
+100
+Birgit Steinborn
+First Deputy Chairwoman
+717
+100
+8/8
+100
+4/4
+100
+6/6
+100
+2/2
+100
+Werner Brandt (Dr. rer. pol.)
+Second Deputy Chairman
+717
+100
+8/8
+100
+Tobias Bäumler
+717
+100
+6/6
+100
+100
+6/6
+75
+3/4
+Chairman's
+Compensation
+Committee
+Committee
+Audit
+Committee
+Innovation
+and Finance
+Committee
+Nominating
+Committee
+(Number of meetings/
+participation in %)
+No.
+in %
+No.
+100
+in %
+in %
+No.
+in %
+No.
+in %
+No.
+in %
+Jim Hagemann Snabe
+Chairman
+717
+100
+8/8
+100
+No.
+FISCAL 2023 8
+The Sustainability Report for fiscal 2023 and the informa-
+tion regarding the EU taxonomy in the Combined Man-
+agement Report for Siemens AG and the Siemens Group
+for fiscal 2023 and the independent auditors' related re-
+ports were dealt with at the Audit Committee meeting on
+December 5, 2023, and at the Supervisory Board meeting
+on December 6, 2023.
+Detailed discussion of the audit of the
+financial statements
+10
+FISCAL 2023
+Jim Hagemann Snabe
+Chairman
+On behalf of the Supervisory Board, I would like to thank
+the members of the Managing Board and all the employ-
+ees and employee representatives of Siemens AG and of
+all Group companies for their outstanding commitment
+and constructive cooperation in fiscal 2023.
+We thanked the Supervisory Board members who de-
+parted in fiscal 2023 for their many years of trust-based
+cooperation and for their professional commitment and
+contribution to the Company's success. Our special
+thanks go to Michael Diekmann, who - as Chairman of
+the Compensation Committee - decisively shaped the
+Supervisory Board's activities over many years.
+Upon his retirement from the Company on August 31,
+2023, Michael Sigmund left the Supervisory Board, on
+which he had represented the Senior Management of
+Siemens AG. In a decision of September 14, 2023, the
+Charlottenburg District Court appointed Oliver Hartmann
+to succeed Michael Sigmund as an employee represen-
+tative on the Supervisory Board for the remainder of
+Michael Sigmund's term of office.
+Pursuant to the provisions of the German Codetermination
+Act, Dr. Christian Pfeiffer was elected on November 22,
+2022, to serve as a new employee representative on
+the Supervisory Board for a five-year term of office, effec-
+tive at the end of the Annual Shareholders' Meeting on
+February 9, 2023. Tobias Bäumler, Dr. Andrea Fehrmann,
+Bettina Haller, Harald Kern, Jürgen Kerner, Hagen Reimer,
+Michael Sigmund, Dorothea Simon and Birgit Steinborn,
+who were already employee representatives on the
+Supervisory Board, were reelected to the Supervisory
+Board for five-year terms of office - that is, for the elec-
+toral period 2023 to 2028 - effective at the end of the
+Annual Shareholders' Meeting on February 9, 2023.
+On February 9, 2023, the Annual Shareholders' Meeting
+elected Dr. Regina E. Dugan, Keryn Lee James and
+Martina Merz to serve as new shareholder representa-
+tives on the Supervisory Board for four-year terms of
+office that is, for the electoral period 2023 to 2027.
+Dr. Werner Brandt, Benoît Potier, Dr. Nathalie von Siemens
+and Matthias Zachert, who were already shareholder rep-
+resentatives on the Supervisory Board and whose regular
+terms of office expired at the end of the Annual Share-
+holders' Meeting on February 9, 2023, were reelected to
+serve as shareholder representatives on the Supervisory
+Board for four-year terms of office - for the electoral pe-
+riod 2023 to 2027. Kasper Rørsted, Jim Hagemann Snabe
+and Grazia Vittadini had already been elected by a
+decision of the Annual Shareholders' Meeting on
+February 3, 2021, to serve as shareholder represen-
+tatives on the Supervisory Board for four-year terms of
+office - for the electoral period 2021 to 2025.
+For the Supervisory Board
+The shareholder representatives Michael Diekmann,
+Dr.-Ing. Dr.-Ing. E.h. Norbert Reithofer and Baroness
+Nemat Shafik and the employee representative
+Gunnar Zukunft left the Supervisory Board upon the
+expiry of their regular terms of office at the end of the
+Annual Shareholders' Meeting on February 9, 2023.
+-
+The independent auditors, Ernst & Young GmbH Wirt-
+schaftsprüfungsgesellschaft, Stuttgart, audited the
+Annual Financial Statements of Siemens AG, the Consol-
+idated Financial Statements of the Siemens Group and
+the Combined Management Report for Siemens AG and
+the Siemens Group for fiscal 2023 and issued an unqual-
+ified opinion for each. Ernst & Young GmbH Wirtschafts-
+prüfungsgesellschaft, Stuttgart, has served as the inde-
+pendent auditors of Siemens AG and the Siemens Group
+since fiscal 2009. Siegfried Keller has signed as auditor
+since fiscal 2023 and as auditor responsible for the audit
+also since fiscal 2023. Dr. Philipp Gaenslen has signed as
+auditor since fiscal 2021. The Annual Financial State-
+ments of Siemens AG and the Combined Management
+Report for Siemens AG and the Siemens Group were pre-
+pared in accordance with the requirements of German
+law. The Consolidated Financial Statements of the
+Siemens Group were prepared in accordance with the
+International Financial Reporting Standards (IFRS) as
+adopted for use in the European Union (EU) and with
+the additional requirements of German law set out in
+Section 315 e (1) of the German Commercial Code
+(Handelsgesetzbuch, HGB). The Consolidated Financial
+Statements of the Siemens Group also comply with all
+IFRS requirements as issued by the International Account-
+ing Standards Board (IASB). The independent auditors
+conducted their audit in accordance with Section 317 of
+the German Commercial Code and the EU Audit Regula-
+tion and German generally accepted standards for the
+audit of financial statements as promulgated by the Insti-
+tut der Wirtschaftsprüfer (IDW) as well as in supplemen-
+tary compliance with the International Standards on
+Auditing (ISA). The abovementioned documents as well
+as the Managing Board's proposal for the appropriation
+of net income were submitted to the Supervisory Board
+by the Managing Board in advance. The Audit Committee
+discussed the dividend proposal in detail at its meeting
+on November 14, 2023. It discussed the Annual Financial
+Statements of Siemens AG, the Consolidated Financial
+Statements of the Siemens Group and the Combined
+Management Report in detail at its meeting on Decem-
+ber 5, 2023. In this context, the Audit Committee con-
+cerned itself, in particular, with the key audit matters
+described in the independent auditors' respective opin-
+ions, including the audit procedures implemented. The
+Audit Committee's review also covered the non-financial
+information for Siemens AG and the Siemens Group that
+is included in the Combined Management Report. The
+audit reports prepared by the independent auditors were
+distributed to all members of the Supervisory Board and
+comprehensively reviewed at the Supervisory Board
+meeting on December 6, 2023, in the presence of the in-
+dependent auditors, who reported on the scope, focal
+points and main findings of their audit, addressing, in
+particular, key audit matters, the Audit Committee's focus
+areas and the audit procedures implemented. No major
+weaknesses in the Company's internal control or risk
+management systems were reported. At this meeting,
+the Managing Board explained the financial statements
+of Siemens AG and the Siemens Group as well as the
+Company's risk management system.
+The Supervisory Board concurs with the results of the au-
+dit. Following the definitive findings of the Audit Com-
+mittee's examination and our own examination, we have
+no objections. The Managing Board prepared the Annual
+Financial Statements of Siemens AG and the Consoli-
+dated Financial Statements of the Siemens Group. We
+approved the Annual Financial Statements of Siemens AG
+and the Consolidated Financial Statements of the
+Siemens Group. In view of our approval, these financial
+statements are accepted as submitted. We endorsed the
+Managing Board's proposal that the net income available
+for distribution be used to pay out a dividend of €4.70
+per share entitled to a dividend and that the amount of
+net income attributable to shares of stock not entitled to
+receive a dividend for fiscal 2023 be carried forward.
+Report of the Supervisory Board
+FISCAL 2023
+9
+Report of the Supervisory Board
+Changes in the composition of the
+Supervisory and Managing Boards
+There were no changes in the composition of the Manag-
+ing Board in fiscal 2023.
+As of September 30, 2023, the Mediation Commit-
+tee comprised Jim Hagemann Snabe (Chairman),
+Dr. Werner Brandt, Jürgen Kerner and Birgit Steinborn.
+As of September 30, 2023, the Nominating Commit-
+tee comprised Jim Hagemann Snabe (Chairman),
+Dr. Werner Brandt, Benoît Potier and Dr. Nathalie von
+Siemens.
+The Nominating Committee is responsible for making
+recommendations to the Supervisory Board on suitable
+candidates for the election by the Annual Shareholders'
+Meeting of shareholder representatives on the Supervisory
+Board. In preparing these recommendations, the objec-
+tives defined by the Supervisory Board for its composition
+and the approved diversity concept - in particular, inde-
+pendence and diversity - are to be appropriately consid-
+ered, as are the proposed candidates' required knowledge,
+abilities and professional experience. Fulfillment of the
+required profile of skills and expertise is also to be aimed
+at. Attention shall be paid to an appropriate participation
+of women and men in accordance with the legal require-
+ments relating to the gender quota as well as to ensuring
+that the members of the Supervisory Board are, as a group,
+familiar with the sector in which the Company operates.
+Corporate Governance Statement
+7
+Due to his many years of work at a major auditing firm -
+the former Price Waterhouse GmbH - and his many years
+of service as the chief financial officer of publicly listed
+international companies - Fresenius Medical Care AG
+and, subsequently, SAP AG Dr. Werner Brandt has
+specialist knowledge and experience in the auditing of
+financial statements. Due to his above-mentioned activ-
+ities and his many years of experience as the chairman
+of the supervisory board and audit committee of various
+publicly listed international companies, he also has
+specialist knowledge and experience in the application
+of accounting principles and internal control and risk
+management systems and thus has expertise in the
+area of accounting. In addition, Dr. Werner Brandt is
+independent. As former chief financial officer of various
+companies and as the current chairman of the super-
+visory board of RWE AG and Chairman of the Audit
+Committee of Siemens AG, Dr. Werner Brandt also has
+extensive knowledge regarding sustainability reporting.
+Dr. Werner Brandt follows current developments in
+sustainability reporting and its audit and assurance and
+is an active participant in discussions of this topic in
+expert committees. He actively applies this expertise for
+the benefit of the Supervisory Board and the Audit
+Committee of Siemens AG.
+-
+In the course of his professional career, Matthias Zachert
+has served as the chief financial officer of a variety of
+publicly listed companies and thus has specialist knowl-
+edge and experience in the application of accounting
+principles and internal control and risk management
+systems, including sustainability reporting. His activities
+as the chief financial officer of a publicly listed interna-
+tional company include engagement with non-financial
+aspects and the reporting thereon. As the current chief
+executive officer and former chief financial officer of
+Lanxess AG, Matthias Zachert has extensive knowledge
+of the requirements for sustainability reporting and of
+current developments in this area. Matthias Zachert
+follows and monitors current developments in sustain-
+ability reporting and actively applies this expertise for
+the benefit of the Supervisory Board and the Audit
+Committee of Siemens AG.
+Committee, at least one additional member with exper-
+tise in the area of auditing. Pursuant to the Code, the
+chair of the Audit Committee shall be an expert in at
+least one of these two areas and independent. The
+Chairman of the Audit Committee, Dr. Werner Brandt,
+fulfills these requirements.
+As of September 30, 2023, the Audit Committee com-
+prised Dr. Werner Brandt (Chairman), Tobias Bäumler,
+Bettina Haller, Martina Merz, Hagen Reimer, Jim
+Hagemann Snabe, Birgit Steinborn and Matthias Zachert.
+The members of the Audit Committee are, as a group,
+familiar with the sector in which the Company operates.
+Pursuant to the German Stock Corporation Act, the
+Supervisory Board must have at least one member with
+expertise in the area of accounting and at least one
+additional member with expertise in the auditing of
+financial statements. According to the Code, expertise in
+the area of accounting consists of specialist knowledge
+and experience in the application of accounting prin-
+ciples and internal control and risk management
+systems, while expertise in the area of auditing consists
+of specialist knowledge and experience in the auditing
+of financial statements. Accounting and auditing also
+include sustainability reporting and its audit and assur-
+ance. In the person of Matthias Zachert, the Supervisory
+Board and the Audit Committee have at least one mem-
+ber with expertise in the area of accounting and in the
+person of Dr. Werner Brandt, the Chairman of the Audit
+reporting and sustainability reporting. The Audit Com-
+mittee also monitors the internal audit system and the
+internal process for related party transactions. The Audit
+Committee receives regular reports from the internal au-
+dit department. It prepares the Supervisory Board's rec-
+ommendation to the Annual Shareholders' Meeting con-
+cerning the election of the independent auditors and
+submits the corresponding proposal to the Supervisory
+Board. Prior to submitting this proposal, the Audit Com-
+mittee obtains a statement from the prospective indepen-
+dent auditors affirming that their independence is not in
+question. Based on the decision of the Annual Share-
+holders' Meeting, it awards the audit contract to the inde-
+pendent auditors and monitors the independent audit of
+the financial statements as well as the auditors' selection,
+independence, qualification, rotation and efficiency and
+the services rendered by the auditors. The Audit Commit-
+tee assesses the quality of the audit of the financial state-
+ments on a regular basis. Outside its meetings, the Super-
+visory Board is also in regular communication with the
+independent auditors via the Chairman of the Audit Com-
+mittee. The Audit Committee regularly consults with the
+independent auditors also without the Managing Board
+in attendance. Outside its meetings, the Chairman of the
+Audit Committee is in regular communication with the
+independent auditors regarding the progress of the audit
+and reports thereon to the Audit Committee.
+The Mediation Committee submits proposals to the
+Supervisory Board in the event that the Supervisory
+Board cannot reach the two-thirds majority required for
+the appointment or dismissal of a Managing Board
+member on the first ballot.
+Details regarding the work of the Supervisory Board are
+provided in the Report of the Supervisory Board, which is
+made publicly available for each previous fiscal year on
+the Siemens Global Website.
+6
+The Audit Committee oversees, in particular, the
+accounting and the accounting process and conducts a
+preliminary review of the Annual Financial Statements
+of Siemens AG, the Consolidated Financial Statements of
+the Siemens Group and the Combined Management Re-
+port of Siemens AG and the Siemens Group, including
+non-financial matters. On the basis of the independent
+auditors' report on their audit of the annual financial
+statements, the Audit Committee makes, after its prelim-
+inary review, recommendations regarding Supervisory
+Board approval of the Annual Financial Statements of
+Siemens AG and the Consolidated Financial Statements
+of the Siemens Group. The Audit Committee discusses
+the quarterly statements and Half-year Financial Report
+with the Managing Board and the independent auditors
+and deals with the auditors' reports on the review of the
+Half-year Consolidated Financial Statements and Interim
+Group Management Report. The Audit Committee con-
+cerns itself with sustainability reporting, which includes
+the Sustainability Report in addition to reporting on
+non-financial matters in the Combined Management
+Report. It also monitors the Company's adherence to
+statutory provisions, official regulations and internal
+Company policies (compliance). The Chief Compliance
+Officer reports regularly to the Audit Committee. The
+Audit Committee concerns itself with the Company's risk
+monitoring system. It oversees the appropriateness and
+effectiveness of the risk management system and of the
+internal control system with particular regard to financial
+As of September 30, 2023, the Compensation Com-
+mittee comprised Matthias Zachert (Chairman),
+Harald Kern, Jürgen Kerner, Jim Hagemann Snabe,
+Birgit Steinborn and Grazia Vittadini.
+The Compensation Committee prepares, in particular,
+the proposals for decisions by the Supervisory Board's
+plenary meetings regarding the system of Managing
+Board compensation, including the implementation of
+this system in Managing Board contracts, the definition
+of the targets for variable Managing Board compensa-
+tion, the determination and review of the appropriate-
+ness of the total compensation of the individual Manag-
+ing Board members and the annual Compensation
+Report. Insofar as the non-financial aspects of Managing
+Board compensation are concerned, the Compensation
+Committee also considers sustainability in the environ-
+ment, social and governance (ESG) area.
+As of September 30, 2023, the Chairman's Commit-
+tee comprised Jim Hagemann Snabe (Chairman),
+Dr. Werner Brandt, Jürgen Kerner and Birgit Steinborn.
+The Chairman's Committee makes proposals, in particu-
+lar, regarding the appointment and dismissal of Manag-
+ing Board members and is responsible for concluding,
+amending, extending and terminating employment con-
+tracts with members of the Managing Board. When mak-
+ing recommendations for first-time appointments, it
+takes into account that the terms of these appointments
+shall not, as a rule, exceed three years. In preparing rec-
+ommendations regarding the appointment of Managing
+Board members, the Chairman's Committee takes into
+account the candidates' professional qualifications,
+international experience and leadership qualities, the
+age limit specified for Managing Board members
+and long-term succession planning as well as diversity.
+It also takes into account the diversity concept for the
+Managing Board that has been approved by the Super-
+visory Board. The Chairman's Committee concerns itself
+with questions regarding the Company's corporate
+governance and prepares the proposals to be approved
+by the Supervisory Board regarding the Declaration of
+Conformity with the Code - including the explanation of
+deviations from the Code - and regarding the Corporate
+Governance Statement and the Report of the Super-
+visory Board to the Annual Shareholders' Meeting. It is
+responsible for approving the Company's related party
+transactions. Furthermore, the Chairman's Committee
+submits recommendations to the Supervisory Board re-
+garding the composition of the Supervisory Board com-
+mittees and decides whether to approve contracts and
+business transactions with Managing Board members
+and parties related to them.
+In fiscal 2023, the Supervisory Board had six standing
+committees, whose duties, responsibilities and pro-
+cedures fulfill the requirements of the German Stock
+Corporation Act and the Code. The chairmen of these
+committees provide the Supervisory Board with regular
+reports on their committees' activities.
+SUPERVISORY BOARD COMMITTEES
+Based on the Company's overall strategy, the Innovation
+and Finance Committee discusses, in particular, the
+Company's innovation focuses and prepares the Supervi-
+sory Board's discussions and decisions regarding ques-
+tions relating to the Company's financial situation and
+structure - including annual planning (budget) – as well
+as the Company's fixed asset investments and its finan-
+cial measures. In addition, the Innovation and Finance
+Committee has been authorized by the Supervisory Board
+to decide on the approval of transactions and measures
+that require Supervisory Board approval and have a value
+of between €300 million and €600 million.
+Corporate Governance Statement
+5
+Separate preparatory meetings of the shareholder repre-
+sentatives and of the employee representatives are held
+regularly in order to prepare the Supervisory Board meet-
+ings. The Supervisory Board also meets regularly without
+the Managing Board in attendance. Every Supervisory
+Board member must disclose conflicts of interest to the
+Supervisory Board. Information regarding conflicts of
+interest that may have arisen and their handling is
+provided in the Report of the Supervisory Board. Special
+informational (onboarding) events are held in order to
+familiarize new Supervisory Board members with the
+Company's business model and the structures of the
+Siemens Group. The Supervisory Board members take
+part, on their own responsibility, in the educational and
+training measures necessary for the performance of their
+duties - measures relating, for example, to changes in
+the legal framework and new, groundbreaking tech-
+nologies. The Company supports them in this regard.
+Internal informational events are offered when necessary
+to support targeted training measures.
+-
+Corporate Governance Statement
+As of September 30, 2023, the Innovation and Finance
+Committee comprised Jim Hagemann Snabe (Chairman),
+Tobias Bäumler, Dr. Regina E. Dugan, Harald Kern,
+Jürgen Kerner, Kasper Rørsted, Birgit Steinborn and
+Grazia Vittadini.
+Pursuant to the German Stock Corporation Act, the Man-
+aging Board of Siemens AG must include at least one
+woman and at least one man (minimum participation
+requirement). In fiscal 2023, Siemens AG complied with
+this requirement. Beyond the minimum participation re-
+quirement, the consideration of women is an essential
+aspect of the Supervisory Board's long-term succession
+planning for the Managing Board.
+Further details regarding the operation and composition
+of the Supervisory Board and its committees are pro-
+vided in the Bylaws for the Supervisory Board and the
+bylaws for its committees, which are publicly available
+on the Siemens Global Website at ☐ www.SIEMENS.COM/
+Long-term succession planning
+for the Managing Board
+Siemens AG complies with the minimum participation
+requirement set out in Section 76 para. 3a of the German
+Stock Corporation Act. The Managing Board has one
+female member, Judith Wiese. Beyond the minimum
+participation requirement, the consideration of women
+is a key component of the Supervisory Board's long-term
+succession planning for the Managing Board. Different
+age groups are represented on the Managing Board. No
+Managing Board member has reached the stipulated
+regular age limit.
+industry, infrastructure, energy, mobility and healthcare
+sectors - as well as many years of experience in tech-
+nology (including information technology, digitalization
+and cybersecurity), sustainability, transformation, pro-
+curement, manufacturing, research and development,
+sales, finance, risk management, law (including compli-
+ance) and human resources.
+In its current composition, the Managing Board fulfills all
+the requirements of the diversity concept. The Managing
+Board members have a broad range of knowledge, expe-
+rience and educational and professional backgrounds as
+well as international experience. The Managing Board
+has all the knowledge and experience that is considered
+essential in view of Siemens' activities. As a group, the
+Managing Board has experience in the business areas
+that are important for Siemens - in particular, in the
+Implementation of the diversity concept
+for the Managing Board in fiscal 2023
+The diversity concept for the Managing Board is imple-
+mented as part of the process for making appointments
+to the Managing Board. When selecting candidates
+and/or making proposals for the appointment of Manag-
+ing Board members, the Supervisory Board and/or the
+Chairman's Committee of the Supervisory Board take into
+account the requirements defined in the diversity con-
+cept for the Managing Board.
+When making an appointment to a specific Managing
+Board position, the decisive factor is always the Com-
+pany's best interest, taking into consideration all cir-
+cumstances in the individual case."
+→ Diversity also means gender diversity. According to
+the legal requirement applicable to Siemens AG
+(Section 76 para. 3a of the German Stock Corpora-
+tion Act), the Managing Board must include at least
+one woman and at least one man (minimum partic-
+ipation requirement). Beyond the minimum partici-
+pation requirement, the consideration of women is
+an essential aspect of the Supervisory Board's long-
+term succession planning for the Managing Board.
+→It is considered helpful if different age groups are
+represented on the Managing Board. In accordance
+with the recommendation of the Code, the Super-
+visory Board has defined an age limit for the mem-
+bers of the Managing Board. In keeping with this
+limit, the members of the Managing Board are, as
+a rule, to be not older than 67 years of age.
+→ As a group, the Managing Board shall have many
+years of experience in technology (including infor-
+mation technology, digitalization and cybersecu-
+rity), sustainability, transformation, procurement,
+manufacturing, research and development, sales,
+finance, risk management, law (including compli-
+ance) and human resources.
+Corporate Governance Statement
+9
+→ As a group, the Managing Board shall have experi-
+ence in the business areas that are important for
+Siemens - in particular, in the industry, infrastruc-
+ture, energy, mobility and healthcare sectors.
+�� Taking the Company's international orientation
+into account, the composition of the Managing
+Board shall reflect internationality with respect to
+different cultural backgrounds and international
+experience (such as extensive professional experi-
+ence in foreign countries and responsibility for
+business activities in foreign countries in areas that
+are relevant for Siemens).
+→In addition to the expertise and management and
+leadership experience required for their specific
+tasks, the Managing Board members shall have the
+broadest possible range of knowledge and experi-
+ence and the widest possible educational and pro-
+fessional backgrounds.
+The Supervisory Board has not established a dedicated
+sustainability committee. Sustainability is one of the
+focus topics of the Supervisory Board's work. Sustain-
+ability is of such central importance for Siemens that it
+is discussed regularly and in detail at the Supervisory
+Board's plenary meetings. As a cross-cutting issue,
+sustainability touches on the areas of responsibility of
+several committees. To the extent that sustainability
+affects reporting, the Audit Committee considers
+sustainability-related questions in detail and reports on
+these matters at the Supervisory Board's plenary meet-
+ings. To prepare for discussions and decisions at these
+meetings, the sustainability-related aspects of Managing
+Board compensation are dealt with in the Compensation
+Committee.
+When selecting members of the Managing Board, the
+Supervisory Board pays close attention to candidates'
+personal suitability, integrity, convincing leadership
+qualities, international experience, expertise in their
+prospective areas of responsibility, achievements to
+date and knowledge of the Company as well as their
+ability to adjust business models and processes in a
+changing world. Diversity with respect to such charac-
+teristics as age and gender as well as professional and
+educational background is an important selection cri-
+terion for appointments to Managing Board positions.
+When selecting members of the Managing Board, the
+Supervisory Board also gives special consideration to
+the following factors:
+For the composition of the Managing Board, the follow-
+ing diversity concept applies:
+6. Diversity concept for the
+Managing Board and long-term
+succession planning
+Statutory provisions on the equal participation of men and
+women in management positions that may be applicable to
+Group companies other than Siemens AG remain unaffected.
+The composition of the Supervisory Board fulfilled the
+legal requirements regarding the minimum gender quota
+in the reporting period.
+When filling managerial positions at the Company, the
+Managing Board takes diversity into account and, in partic-
+ular, aims for an appropriate consideration of women and
+internationality. In May 2022, in compliance with the
+German legal requirements set out in Section 76 para. 4 of
+the German Stock Corporation Act, the Managing Board set
+the targets for the percentage of women in management
+positions at Siemens AG that will apply until September 30,
+2025, as follows: 30% for the first management level below
+the Managing Board and 25% for the second management
+level below the Managing Board. On the basis of projected
+employee figures, women will, accordingly, hold a total
+of four of the 13 positions at Siemens AG at the first
+management level below the Managing Board and a
+total of 32 of the 126 positions at Siemens AG at the
+second management level below the Managing Board.
+For the Siemens Group worldwide, the targets set out in
+the Companywide DEGREE sustainability framework
+continue to apply without change.
+wide sustainability strategy and on the status of this
+strategy's implementation. The Supervisory Board deals
+with both the risks and the opportunities for Siemens
+relating to social and environmental factors and the
+environmental and social impact of the Company's activ-
+ities. The Supervisory Board and the Audit Committee
+also concern themselves with sustainability reporting,
+which includes the Sustainability Report in addition to re-
+porting on non-financial matters in the Combined Man-
+agement Report, and are kept up to date on new
+developments and the status of their implementation at
+Siemens. In addition, the Supervisory Board appoints and
+dismisses the members of the Managing Board and
+determines each member's portfolios. The Supervisory
+Board approves - on the basis of a proposal by the
+Compensation Committee – the compensation system for
+Managing Board members and defines their concrete com-
+pensation in accordance with this system. It sets the indi-
+vidual targets for the variable compensation and the total
+compensation of each individual Managing Board mem-
+ber, reviews the appropriateness of total compensation
+and regularly reviews the Managing Board compensation
+system. Important Managing Board decisions
+such as
+those regarding major acquisitions, divestments, fixed as-
+set investments or financial measures - require Supervi-
+sory Board approval unless the Bylaws for the Supervisory
+Board specify that such authority be delegated to the Inno-
+vation and Finance Committee of the Supervisory Board.
+5. Targets, within the meaning
+of Section 76 para. 4 of the
+German Stock Corporation Act,
+for the quota of women at the
+two management levels below
+the Managing Board; Information
+on Managing Board compliance
+with the participation require-
+ment and Supervisory Board
+compliance with minimum
+gender quota requirements
+Corporate Governance Statement
+8
+The Supervisory Board and its committees regularly con-
+duct reviews - either internally or with the involvement
+of external consultants in order to determine how
+efficiently they perform their duties. In fiscal 2023, the
+Supervisory Board conducted an internal self-assess-
+ment. At its meeting on September 22, 2023, the Super-
+visory Board concerned itself intensively with the results
+of the assessment and the measures to be derived from
+it. The results of the assessment confirm that coopera-
+tion within the Supervisory Board and with the Manag-
+ing Board is professional, constructive and characterized
+by a high degree of trust and openness. The results also
+confirm that meetings are organized and conducted
+efficiently and that the participants receive sufficient
+information. The composition and structure of the
+Supervisory Board, including the structure and mecha-
+nisms of its committees, were assessed as effective and
+efficient. The review did not reveal a need for any funda-
+mental changes. Individual suggestions for improvement
+are also discussed and implemented during the year.
+-
+SUPERVISORY BOARD SELF-ASSESSMENT
+CORPORATE-GOVERNANCE.
+"The goal of this diversity concept is to achieve a com-
+position that is as diverse as possible and comprises
+individuals who complement one another in a Manag-
+ing Board that provides strong leadership and brings
+different perspectives to the management of the
+Company as well as to ensure that, as a group, the
+members of the Managing Board have all the know-
+how and skills that are considered essential in view of
+Siemens' activities.
+The Supervisory Board oversees and advises the Manag-
+ing Board in its management of the Company's business.
+At regular intervals, the Supervisory Board discusses
+business development, planning, strategy (including
+sustainability strategy) and strategy implementation.
+It reviews the Annual Financial Statements of
+Siemens AG, the Consolidated Financial Statements of
+the Siemens Group, the Combined Management Report
+of Siemens AG and the Siemens Group (including non-
+financial matters), and the proposal for the appropriation
+of net income. It approves the Annual Financial State-
+ments of Siemens AG as well as the Consolidated Finan-
+cial Statements of the Siemens Group, based on the
+results of the preliminary review conducted by the Audit
+Committee and taking into account the reports of the
+independent auditors. The Supervisory Board approves
+the Managing Board's proposal for the appropriation of
+net income and the Report of the Supervisory Board to
+the Annual Shareholders' Meeting. The Supervisory
+Board is jointly responsible with the Managing Board for
+the preparation of the Compensation Report. In addition,
+the Company's adherence to statutory provisions, official
+regulations and internal Company policies (compliance)
+are monitored by the Supervisory Board and/or the Audit
+Committee. The Supervisory Board's oversight and
+advisory activities also encompass, in particular, sustain-
+ability-related topics in the environment, social and
+governance (ESG) area. The Managing Board reports
+regularly to the Supervisory Board on Siemens' Company-
+As a rule, the portfolio assigned to an individual member
+is that member's own responsibility. Activities and
+Supervisory Board
+According to the suggestion in A.8 of the Code, in the
+case of a takeover event, the Managing Board should
+convene an Extraordinary General Meeting at which
+shareholders will discuss the takeover offer and may
+Siemens AG voluntarily complies with the Code's sugges-
+tions, with only the following exception:
+Suggestions of the Code
+3. Information on corporate
+governance practices
+CORPORATE-GOVERNANCE.
+The Compensation Report and the Independent Auditor's
+Report in accordance with Section 162 of the German
+Stock Corporation Act, the compensation system for the
+Managing Board members pursuant to Section 87a
+para. 1 and para. 2 sent. 1 of the German Stock Corpora-
+tion Act and the decision of the Annual Shareholders'
+Meeting pursuant to Section 113 para. 3 of the German
+Stock Corporation Act regarding the compensation of
+the Supervisory Board members are published on
+the Siemens Global Website at ☐ wWW.SIEMENS.COM/
+2. Compensation Report/
+Compensation system
+Siemens AG complies, and will continue to comply,
+with all the recommendations of the Government
+Commission on the German Corporate Governance
+Code in the version of April 28, 2022 ("Code"), pub-
+lished by the Federal Ministry of Justice in the official
+section of the Federal Gazette (Bundesanzeiger).
+"Declaration of Conformity by the Managing Board and
+the Supervisory Board of Siemens Aktiengesellschaft
+with the German Corporate Governance Code pursu-
+ant to Section 161 of the German Stock Corporation
+Act
+The Managing Board and the Supervisory Board of
+Siemens AG approved the following Declaration of
+Conformity pursuant to Section 161 of the German Stock
+Corporation Act (Aktiengesetz, AktG) as of October 1,
+2023:
+1. Declaration of Conformity
+with the German Corporate
+Governance Code
+COM/DECLARATIONOFCONFORMITY.
+The current Declaration of Conformity and the Declara-
+tions of Conformity of the previous five years are avail-
+able on the Siemens Global Website at www.SIEMENS.
+The Managing Board The Supervisory Board"
+Siemens Aktiengesellschaft
+Berlin and Munich, October 1, 2023
+As of February 10, 2023, the date of its last Declaration
+of Conformity, Siemens AG complied with all the
+recommendations of the Code.
+CORPORATE-GOVERNANCE.
+In this Statement, the Managing Board and the Super-
+visory Board report as of November 9, 2023, on corporate
+governance at the Company in fiscal 2023 (October 1,
+2022, to September 30, 2023) pursuant to Sections 289f
+and 315d of the German Commercial Code (Handels-
+gesetzbuch, HGB) and as prescribed in Principle 23 of the
+German Corporate Governance Code ("Code"). Further
+information regarding corporate governance - for exam-
+ple, the Bylaws for the Managing Board, the Bylaws for
+the Supervisory Board, the bylaws for the Supervisory
+Board committees and the Corporate Governance State-
+ments of the previous fiscal years is also available
+on the Siemens Global Website at www.SIEMENS.COM/
+Corporate Governance Statement
+pursuant to Sections 289f and 315d
+of the German Commercial Code
+Corporate Governance Statement
+SIEMENS
+October 2023
+pursuant to Sections 289f and 315d
+of the German Commercial Code
+Statement
+Corporate Governance
+2
+The Supervisory Board of Siemens AG has 20 members.
+As stipulated by the German Codetermination Act, half of
+its members represent Company shareholders, and half
+represent Company employees. The shareholder repre-
+sentatives on the Supervisory Board are elected at the
+Annual Shareholders' Meeting by a simple majority vote.
+Elections to the Supervisory Board are conducted, as a
+rule, on an individual basis. The employee representa-
+tives on the Supervisory Board are elected in accordance
+with the provisions of the German Codetermination Act.
+Further information regarding the Supervisory Board
+members and their memberships, which are to be
+disclosed pursuant to Section 285 No. 10 of the German
+Commercial Code, are set out in Section 11 of this
+Corporate Governance Statement. The curricula vitae of
+the Supervisory Board members are publicly available
+on the Siemens Global Website at ☐ www.SIEMENS.COM/
+SUPERVISORY-BOARD and updated annually.
+Corporate Governance Statement
+decide on corporate actions. The convening of a share-
+holders' meeting - even taking into account the short-
+ened time limits stipulated in the German Securities
+Acquisition and Takeover Act (Wertpapiererwerbs- und
+Übernahmegesetz, WpÜG) – is an organizational chal-
+lenge for large publicly listed companies. It appears doubt-
+ful whether the associated effort is justified also in cases
+where no relevant decisions by the shareholders' meeting
+are intended. Therefore, extraordinary shareholders'
+meetings shall be convened only in appropriate cases.
+Corporate Governance Statement
+4
+BYLAWS-MANAGINGBOARD.
+Further details regarding the operation and composition
+of the Managing Board are provided in the Bylaws for
+the Managing Board, which are publicly available on
+the Siemens Global Website at ☐ WWW.SIEMENS.COM/
+The members of the Managing Board are subject to a
+comprehensive prohibition on competitive activity for the
+period of their employment at Siemens AG. They are com-
+mitted to serving the interest of the Company. When mak-
+ing their decisions, they may not be guided by personal
+interests, nor may they exploit for their own advantage
+business opportunities offered to the Company. Manag-
+ing Board members may engage in secondary activities -
+in particular, hold supervisory board positions outside the
+Siemens Group - only with the approval of the Chairman's
+Committee of the Supervisory Board. The Supervisory
+Board is responsible for decisions regarding any adjust-
+ments to Managing Board compensation that are neces-
+sary in order to take account of compensation for second-
+ary activities. Every Managing Board member is under an
+obligation to disclose conflicts of interest without delay to
+the Chairman of the Supervisory Board and to inform the
+other members of the Managing Board thereof.
+The Managing Board and the Supervisory Board cooper-
+ate closely for the benefit of the Company. The Managing
+Board informs the Supervisory Board regularly, compre-
+hensively and without delay on all issues of importance
+to the entire Company with regard to strategy (including
+the Company's sustainability strategy), planning, business
+development, financial position, results of operations,
+compliance and entrepreneurial risks. At regular inter-
+vals, the Managing Board also discusses the status of
+strategy implementation with the Supervisory Board.
+transactions in a particular Managing Board portfolio
+that are considered to be extraordinarily important
+for the Company or associated with an extraordinary
+economic risk require the prior consent of the full
+Managing Board. The same applies to activities and
+transactions for which the President and CEO or another
+member of the Managing Board demands a prior decision
+by the Managing Board. The President and CEO is respon-
+sible for the coordination of all Managing Board port-
+folios. The Managing Board had no standing committee
+in fiscal 2023. Further details are available in the Bylaws
+for the Managing Board on the Siemens Global Website
+at www.SIEMENS.COM/BYLAWS-MANAGINGBOARD.
+Jointly with the Managing Board and with the support of
+the Chairman's Committee, the Supervisory Board con-
+ducts long-term succession planning for the Managing
+Board. Long-term succession planning is systematic and
+based on the strategic target setting of the Company.
+Taking into account the concrete qualification require-
+ments and the diversity concept that the Supervisory
+Board has approved for the Managing Board's compo-
+sition, the Chairman's Committee prepares ideal profiles.
+When a concrete decision regarding succession is to be
+made, the Chairman's Committee compiles a shortlist of
+the available candidates on the basis of these profiles.
+Structured interviews are then conducted with these
+candidates. After the interviews, a recommendation is
+submitted to the Supervisory Board for approval. When
+developing the profile of requirements and selecting
+candidates, the Supervisory Board and/or the Chairman's
+Committee are supported, if necessary, by external
+consultants.
+The Supervisory Board has issued Bylaws for the
+Managing Board that contain the assignment of different
+portfolios and the rules for cooperation both within the
+Managing Board and between the Managing Board and
+the Supervisory Board as well as rules for the so-called
+Equity Investments. In accordance with these Bylaws, the
+Managing Board is divided into the portfolio of the
+President and CEO and a variety of Managing Board port-
+folios. The Managing Board members responsible for the
+individual Managing Board portfolios are defined in a
+business assignment plan that is determined by the
+Supervisory Board. As the Managing Board member
+with responsibility for the People & Organization port-
+folio, the Labor Director (Arbeitsdirektor) is appointed in
+accordance with the requirements of Section 33 of the
+German Codetermination Act (Mitbestimmungsgesetz,
+MitbestG). When making recommendations for the first-
+time appointments of Managing Board members, it is to
+be taken into account that the terms of these appoint-
+ments shall not, as a rule, exceed three years.
+SUSTAINABILITYINFORMATION.
+The Managing Board prepares the Company's Quarterly
+Statements and Half-year Financial Report, the Annual
+Financial Statements of Siemens AG, the Consolidated
+Financial Statements of the Siemens Group and the
+Combined Management Report of Siemens AG and the
+Siemens Group. Together with the Supervisory Board, the
+Managing Board prepares the Compensation Report. The
+Managing Board has established an appropriate and
+effective internal control system and risk management
+system that also covers sustainability-related aspects.
+In addition, it ensures that the Company adheres to
+statutory requirements, official regulations and internal
+Company policies and works to achieve compliance with
+these provisions and policies within the Siemens Group.
+The Managing Board has established a comprehensive
+compliance management system oriented toward
+the Company's risk situation. Protection is offered to
+employees and third parties who provide information
+on unlawful behavior within the Company. Details on
+the compliance management system are available on
+the Siemens Global Website at ☐ wWW.SIEMENS.COM/
+SUSTAINABILITYINFORMATION.
+on the Siemens Global Website at WWW.SIEMENS.COM/
+Corporate Governance Statement
+As Siemens' top management body, the Managing Board
+is committed to serving the interests of the Company and
+achieving sustainable growth in company value. The
+members of the Managing Board are jointly responsible
+for the entire management of the Company and decide on
+basic issues of business policy and Company strategy,
+including Siemens' sustainability strategy as well as on
+the Company's annual and multi-year plans, unless
+specific circumstances are taken into account for compa-
+nies that are separately managed and publicly listed
+themselves (Siemens Healthineers). The Companywide
+DEGREE program,
+which was approved by the Managing
+Board in fiscal 2021, intensified the focus of all Siemens
+businesses on ambitious sustainability targets - targets
+for environmental and social sustainability and good
+governance - even further. The Managing Board ensures
+that the risks and opportunities for the Company
+connected with social and environmental factors and
+the environmental and social impact of the Company's
+activities are systematically identified and assessed. The
+Company strategy gives due consideration to long-term
+targets as well as to environmental and social objectives.
+Company planning encompasses both the appropriate
+financial targets and the appropriate sustainability-related
+objectives. More details on sustainability are available
+In fiscal 2023, the Managing Board of Siemens AG
+comprised Dr. Roland Busch (President and CEO),
+Cedrik Neike, Matthias Rebellius, Prof. Dr. Ralf P. Thomas
+and Judith Wiese. Further information regarding the
+Managing Board members and their memberships, which
+are to be disclosed pursuant to Section 285 No. 10 of the
+German Commercial Code, are set out in Section 10 of this
+Corporate Governance Statement. Information about the
+Managing Board members' areas of responsibility and
+their curricula vitae are available on the Siemens Global
+Website at WWW.SIEMENS.COM/MANAGEMENT.
+Managing Board
+CORPORATE-GOVERNANCE.
+powers of the Managing Board and the Supervisory
+Board as well as the regulations regarding their operation
+and composition are defined primarily by the German
+Stock Corporation Act, the Articles of Association of
+Siemens AG and the bylaws for the Company's governing
+bodies. The Articles of Association of Siemens AG, the
+Bylaws for the Managing Board, the Bylaws for the
+Supervisory Board and the bylaws for the Supervisory
+Board's most important committees are available on
+the Siemens Global Website at ☐ WWW.SIEMENS.COM/
+Siemens AG is subject to German corporate law. There-
+fore, it has a two-tier board structure, consisting of a
+Managing Board and a Supervisory Board. The duties and
+4. Description of the operation
+of the Managing Board and the
+Supervisory Board and of the
+composition and operation of
+their committees
+SIEMENS.COM/COMPLIANCE.
+The Business Conduct Guidelines provide the ethical and
+legal framework within which we want to conduct our
+activities and remain on course for success. They contain
+the basic principles and rules for our conduct within our
+Company and in relation to our external partners and the
+general public. They set out how we meet our ethical and
+legal responsibility as a Company and give expression to
+our Company values: "Responsible" - "Excellent" - "Inno-
+vative." Our Business Conduct Guidelines are publicly
+available on the Siemens Global Website at www.
+In its more than 175 years of existence, our Company has
+built an excellent reputation around the world. Technical
+performance, innovation, quality, reliability and inter-
+national engagement have made Siemens a leading
+company in its areas of activity. It is top performance with
+the highest ethics that has made Siemens strong. This is
+what the Company will continue to stand for in the future.
+The Company's values and Business
+Conduct Guidelines
+COMPLIANCE.
+Further corporate governance practices applied beyond
+the applicable legal requirements are described in our
+Business Conduct Guidelines, which are publicly available
+on the Siemens Global Website at WWW.SIEMENS.COM/
+-
+10
+3
+10. Members of the Managing Board and
+positions held by Managing Board members
+→ Siemens France Holding SAS, France
+→ Siemens Aktiengesellschaft Österreich,
+Austria (Chairman)
+Positions outside Germany:
+→ Siemens Healthineers AG, Munich'
+→ Siemens Mobility GmbH, Munich
+(Chairman)
+German positions:
+(as of September 30, 2023)
+Group company positions
+→ Siemens Energy Management GmbH,
+Munich
+→ Siemens Energy AG, Munich'
+German positions:
+→ Siemens Energy Management GmbH,
+Munich
+→ Siemens Energy AG, Munich'
+German positions:
+→ Evonik Industries AG, Essen¹
+German positions:
+(as of September 30, 2023)
+or in comparable domestic or foreign controlling bodies of business enterprises
+External positions
+January 2,
+1965
+October 1,
+2020
+September 30,
+2025
+Ralf P. Thomas
+(Prof. Dr. rer. pol.)
+March 7,
+1961
+September 18,
+2013
+Positions outside Germany:
+December 14,
+2026
+January 30,
+1971
+October 1,
+2020
+1 Publicly listed.
+Corporate Governance Statement
+Memberships in supervisory boards whose establishment is required by law
+Judith Wiese
+→ Arabia Electric Ltd. (Equipment),
+Saudi Arabia (Deputy Chairman)
+→ Siemens Ltd., India¹
+→ Siemens Ltd., Saudi Arabia
+First Deputy Chairwoman
+Werner Brandt
+(Dr. rer. pol.)
+Second Deputy Chairman
+Tobias Bäumler²
+Michael Diekmann
+(until February 9, 2023)
+(as of February 9, 2023)
+Birgit Steinborn²
+Date of birth
+Term
+expires¹
+October 27,
+1965
+October 1,
+2013
+2025
+Chairwoman of the Central Works
+Council of Siemens AG
+March 26,
+1960
+Member since
+Matthias Rebellius
+Jim Hagemann Snabe Chairman of the Supervisory Board
+of Siemens AG
+Chairman
+Name
+(Deputy Chairman)
+→ Siemens Schweiz AG, Switzerland
+(Chairman)
+→Siemens W.L.L., Qatar
+German positions:
+→Siemens Healthcare GmbH,
+Occupation
+Munich (Chairman)
+Positions outside Germany:
+→Siemens Proprietary Ltd.,
+South Africa (Chairman)
+September 30, German positions:
+2028
+→ European School of Management
+and Technology GmbH, Berlin
+16
+11. Members of the Supervisory Board and
+positions held by Supervisory Board members
+In fiscal 2023, the Supervisory Board had the following members:
+→ Siemens Healthineers AG,
+Munich (Chairman)'
+May 31,
+2025
+2017
+April 1,
+Gender
+Nationality
+International experience
+Professional
+Leadership experience
+qualification
+German
+Technology
+Transformation
+Procurement/manu-
+facturing/sales/R&D
+Finance
+Financial expert²
+Risk management
+Legal/compliance
+Sustainability
+Human resources
+German
+German
+Female
+Male
+Male
+Male
+Male
+Male
+German
+Female
+German
+German
+German
+German
+German
+German
+Female
+January 24,
+2008
+Familiarity with
+1 According to the German Corporate Governance Code (GCGC).
+15
+2023
+In fiscal 2023, the Managing Board had the following members:
+Name
+Roland Busch
+(Dr. rer. nat.)
+CORPORATE-GOVERNANCE.
+President and
+Cedrik Neike
+Date of birth
+November 22,
+1964
+April 1,
+2011
+First appointed Term expires
+March 31,
+2025
+March 7,
+1973
+Chief Executive Officer
+business area/sector
+The Articles of Association of Siemens AG, the Bylaws
+for the Supervisory Board, the bylaws for the most
+important Supervisory Board committees, the Bylaws
+for the Managing Board, our Declarations of Conformity
+with the Code and a variety of other corporate-
+governance-related documents are posted on the
+Siemens Global Website at www.SIEMENS.COM/
+Meeting (virtual shareholders' meeting). This authoriza-
+tion applies to holding virtual shareholders' meetings in a
+period of two years after the registration of this amend-
+ment in the Company's commercial registers. This regis-
+tration took place in May 2023.
+2 According to Section 100 para. 5 of the German Stock Corporation Act and recommendation D.3 of the GCGC.
+● Criterion met, based on a self-assessment by the Supervisory Board. A dot means at least "good knowledge" and thus the ability to understand the relevant issues well and make
+informed decisions on the basis of existing qualifications, the knowledge and experience acquired in the course of work as a member of the Supervisory Board (for example, many
+years of service on the Audit Committee) or the training measures regularly attended by all members of the Supervisory Board.
+14
+Corporate Governance Statement
+8. Share transactions by
+members of the Managing and
+Supervisory Boards
+As part of our investor relations activities, we inform our
+investors comprehensively about developments within
+the Company. For communication purposes, Siemens
+makes extensive use of the Internet. We publish quarterly
+statements, Half-year and Annual Financial Reports,
+earnings releases, ad hoc announcements, analyst
+presentations, letters to shareholders and press releases
+as well as the financial calendar for the current year,
+which contains the publication dates of significant
+financial communications and the date of the Annual
+Shareholders' Meeting, at ☐ wWW.SIEMENS.COM/INVESTORS.
+The Chairman of the Supervisory Board regularly dis-
+cusses Supervisory-Board-specific topics with investors.
+Pursuant to Article 19 of EU Regulation No. 596/2014 of
+the European Parliament and Council of April 16, 2014,
+on market abuse (Market Abuse Regulation), members of
+the Managing Board and the Supervisory Board are
+legally required to disclose all transactions conducted on
+their own account relating to the shares or debt instru-
+ments of Siemens AG or to the derivatives or financial
+instruments linked thereto if the total value of such trans-
+actions entered into by a board member or any closely
+associated person in any calendar year reaches or ex-
+ceeds €20,000. All transactions reported to Siemens AG
+in fiscal 2023 have been duly published and are available
+on the Siemens Global Website at ☐ WWW.SIEMENS.COM/
+of the Managing and Supervisory Boards and may contest
+decisions of the Annual Shareholders' Meeting. Sharehold-
+ers owning Siemens stock with an aggregate notional
+value of €100,000 or more may also demand the judicial
+appointment of special auditors to examine specific is-
+sues. The reports, documents and information required by
+law for the Annual Shareholders' Meeting, including the
+Annual Financial Report, can be downloaded from the
+Siemens Global Website. The same applies to the agenda
+for the Annual Shareholders' Meeting and to any counter-
+proposals or shareholders' nominations that may require
+disclosure. For the election of shareholder representatives
+on the Supervisory Board, a detailed curriculum vitae of
+every candidate is published.
+Pursuant to a decision by the Annual Shareholders' Meet-
+ing on February 9, 2023, the Articles of Association have
+been amended and the Managing Board has been autho-
+rized to allow for the Annual Shareholders' Meeting to be
+held without shareholders or their representatives being
+9. Annual Shareholders' Meeting physically present at the place of the Annual Shareholders'
+and investor relations
+=
+Shareholders exercise their rights at the Annual Share-
+holders' Meeting. An ordinary Annual Shareholders' Meet-
+ing normally takes place within the first five months of
+each fiscal year. The Annual Shareholders' Meeting de-
+cides, among other things, on the appropriation of net
+income, the ratification of the acts of the members of the
+Managing and Supervisory Boards, and the appointment
+of the independent auditors. Amendments to the Articles
+of Association and measures that change the Company's
+capital stock are approved at the Annual Shareholders'
+Meeting and implemented by the Managing Board. The
+Managing Board facilitates shareholder participation in
+this meeting through electronic communications – in par-
+ticular, via the Internet and enables shareholders who
+are unable to attend the meeting to vote by proxy. Proxies
+can also be reached during the Annual Shareholders'
+Meeting. Furthermore, shareholders may exercise their
+right to vote in writing or by means of electronic commu-
+nications (absentee voting). The Managing Board may
+enable shareholders to participate in the Annual Share-
+holders' Meeting without the need to be present at the
+venue and without a proxy and to exercise some or all of
+their rights fully or partially by means of electronic com-
+munications. The Company enables shareholders to follow
+the entire Annual Shareholders' Meeting via the Internet.
+Shareholders may submit motions regarding the proposals
+-
+DIRECTORS-DEALINGS.
+Female
+2028
+January 3,
+1954
+→Siemens Energy Management GmbH,
+→ Siemens Energy AG, Munich³
+(Deputy Chairman)
+→ MAN Truck & Bus SE, Munich
+→ Airbus GmbH, Hamburg
+German positions:
+→ OPUS Talent Solutions, UK
+(Chair)
+Positions outside Germany:
+→ Siemens Mobility GmbH, Munich
+(Deputy Chairwoman)
+German positions:
+→ Siemens Energy AG, Munich³
+→Siemens Energy Management GmbH,
+Munich
+→ Airbus Defence and Space GmbH,
+Taufkirchen
+German positions:
+→ HPE, Houston, Texas, USA³
+Positions outside Germany:
+Bad Homburg (Deputy Chairman)³
+→ Fresenius SE & Co. KGaA,
+3 Publicly listed.
+4 Shareholders' Committee.
+Corporate Governance Statement
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2023)
+Positions outside Germany:
+C3.ai, Inc., USA³
+Munich
+→ Northvolt AB, Sweden (Chairman)
+German positions:
+→ RWE AG, Essen (Chairman)³
+German positions:
+→ Allianz SE, Munich (Chairman)³
+→ Fresenius Management SE,
+Bad Homburg
+→ Urban Partners A/S, Denmark
+(Deputy Chairman)
+→ Thyssenkrupp AG, Essen
+(Deputy Chairman)³
+→ Traton SE, Munich³
+Trade Union Secretary of the
+Managing Board of IG Metall
+January 30,
+2019
+2028
+January 27,
+2015
+2023
+Chairman of the Supervisory Board
+of Bayerische Motoren Werke
+Aktiengesellschaft
+Term
+expires¹
+Member of supervisory boards
+School of Economics
+April 26,
+1967
+May 29,
+1956
+February 24,
+1962
+February 3,
+2021
+2025
+Director of the London
+2
+Member since
+Occupation
+Positions outside Germany:
+→ AB Volvo, Gothenburg, Sweden³
+German positions:
+→ Siemens Mobility GmbH, Munich
+(Chairman)
+Positions outside Germany:
+→ L'Air Liquide S.A., France (Chairman)³
+Date of birth
+17
+Hagen Reimer²
+Norbert Reithofer
+(Dr.-Ing. Dr.-Ing. E.h.)
+(until February 9, 2023)
+(as of February 9, 2023)
+Kasper Rørsted
+Baroness
+Nemat Shafik
+(DBE, DPhil)
+Name
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+Employee representative.
+2018
+2027
+(since February 9, 2023)
+Andrea Fehrmann²
+(Dr. phil.)
+Trade Union Secretary,
+IG Metall Regional Office for Bavaria
+June 21,
+1970
+January 31,
+2018
+2027
+2028
+Chairwoman of the Combine
+Works Council of Siemens AG
+Oliver Hartmann²
+(since September 14,
+2023)
+Head of the Regional Office Erlangen/Nurem-
+berg, Germany, Chairman of the Committee
+of Spokespersons of the Siemens Group
+and Chairman of the Central Committee
+of Spokespersons of Siemens AG
+Chair of the Board of Directors
+Keryn Lee James
+(since February 9, 2023)
+Harald Kern²
+Bettina Haller²
+Jürgen Kerner²
+February 9,
+2023
+of Wellcome Leap Inc.
+January 31,
+2018
+2027
+Deputy Chairman of the
+Central Works Council and of the
+Combine Works Council of Siemens AG
+Chairman of the Supervisory Board
+of Allianz SE
+October 10,
+1979
+March 19,
+1963
+October 16,
+2020
+December 23,
+1954
+January 24,
+2008
+2023
+Regina E. Dugan
+President and Chief Executive Officer
+(PhD)
+2028
+Chairman of the Supervisory Board
+of RWE AG
+of OPUS Talent Solutions
+Siemens Europe Committee
+March 16,
+1960
+January 24,
+2008
+2028
+January 22,
+1969
+January 25,
+2012
+2028
+2027
+March 1,
+1963
+2027
+June 2,
+1969
+February 9,
+2023
+2028
+September 3,
+1957
+January 31,
+February 9,
+2023
+Chairman of the
+February 9,
+2023
+2028
+Chief Treasurer and Executive Member
+of the Managing Board of IG Metall
+Martina Merz
+(since February 9, 2023)
+Member of supervisory boards
+Christian Pfeiffer²
+(Dr.-Ing.)
+(since February 9, 2023)
+December 12,
+1968
+Innovation manager at Siemens Mobility
+GmbH, member of the Combine Works
+Council of Siemens AG and of the Central
+Works Council of Siemens Mobility GmbH
+Chairman of the Board of Directors
+of L'Air Liquide S.A.
+March 14,
+1959
+April 1,
+2007
+2028
+April 25,
+1968
+September 14,
+2023
+Benoît Potier
+August 13,
+1962
+Male
+1969
+January 3,
+1954
+March 19,
+1963
+December 12,
+1968
+March 1,
+1963
+September 3, February 24,
+1957
+1962
+July 14,
+1971
+1965
+October 27, September 23, November 8,
+1969
+1967
+Gender
+Male
+Female
+Female
+Female
+Male
+Male
+Female
+Male
+Female
+Male
+Nationality
+German US-American Australian
+German
+French
+Danish
+German
+Date of birth
+Danish
+Diversity
+Independence¹
+The implementation status of the profile of required skills
+and expertise is disclosed below in the form of a qualifi-
+cation matrix.
+12
+Qualification matrix
+Shareholder representatives
+Length of membership Member since
+Corporate Governance Statement
+Werner
+Brandt
+(Dr. rer. pol.)
+Regina E.
+Dugan
+(PhD)
+1960
+Martina
+Merz
+Benoît
+Potier
+Kasper
+Rørsted
+Nathalie
+von
+Siemens
+(Dr. phil.)
+Jim
+Hagemann
+Snabe
+Grazia
+Vittadini
+Matthias
+Zachert
+January 31,
+2018
+February 9,
+2023
+February 9,
+2023
+February 9,
+2023
+January 31,
+2018
+February 3,
+2021
+January 27,
+2015
+October 1,
+2013
+February 3,
+2021
+January 31,
+2018
+Personal qualification
+No overboarding'
+In the estimation of the shareholder representatives, the
+Supervisory Board now includes ten independent share-
+holder representatives namely, Dr. Werner Brandt,
+Dr. Regina E. Dugan, Keryn Lee James, Martina Merz,
+Benoît Potier, Kasper Rørsted, Dr. Nathalie von Siemens,
+Jim Hagemann Snabe, Grazia Vittadini and
+Matthias Zachert and thus an appropriate number of
+members who are independent within the meaning of
+the Code. The regulations establishing limits on age and
+restricting membership in the Supervisory Board to three
+full terms of office are complied with.
+Italian/
+German
+International
+experience
+Jürgen
+Kerner
+Christian
+Pfeiffer
+(Dr.-Ing.)
+Hagen
+Reimer
+Dorothea
+Simon
+Birgit
+Steinborn
+Length of membership Member since
+October 16,
+2020
+January 31,
+2018
+April 1,
+2007
+September
+14, 2023
+January 24,
+2008
+January 25,
+2012
+February 9,
+2023
+January 30,
+2019
+October 1,
+2017
+January 24,
+2008
+Diversity
+Date of birth
+October 10,
+1979
+June 21,
+1970
+March 14,
+1959
+April 25,
+1968
+March 16,
+1960
+January 22,
+1969
+June 2,
+1969
+April 26,
+August 3,
+Harald
+Kern
+German
+Oliver
+Hartmann
+(Dr. phil.)
+Europe
+Americas
+China
+Asia/Pacific
+Professional
+qualification
+Leadership experience
+Technology
+Sustainability
+Transformation
+Procurement/manu-
+facturing/sales/R&D
+Finance
+Financial expert²
+Risk management
+Legal/compliance
+Human resources
+Familiarity with
+business area/sector
+1 According to the German Corporate Governance Code (GCGC).
+2 According to Section 100 para. 5 of the German Stock Corporation Act and recommendation D.3 of the GCGC.
+● Criterion met, based on a self-assessment by the Supervisory Board. A dot means at least "good knowledge" and thus the ability to understand the relevant issues well and make
+informed decisions on the basis of existing qualifications, the knowledge and experience acquired in the course of work as a member of the Supervisory Board (for example, many
+years of service on the Audit Committee) or the training measures regularly attended by all members of the Supervisory Board.
+13
+Employee representatives
+Corporate Governance Statement
+Andrea
+Tobias
+Fehrmann
+Bettina
+Bäumler
+Haller
+The Supervisory Board is of the opinion that, with its
+current composition, it meets the objectives for its compo-
+sition and fulfills the profile of required skills and expertise
+as well as the diversity concept. The Supervisory Board
+members have the specialist and personal qualifications
+considered necessary. As a group, they are familiar with the
+sector in which the Company operates and have the knowl-
+edge, skills and experience essential for Siemens in the
+areas of technology (including information technology,
+digitalization and cybersecurity), transformation, procure-
+ment, manufacturing, research and development, sales,
+finance, risk management, law (including compliance) and
+human resources. Due to the presence in the Supervisory
+Board of expertise in the sustainability-related matters
+important for Siemens, the Supervisory Board is in a
+position to monitor the way in which environmental and
+social sustainability is taken into consideration in the
+Company's strategic orientation and in Company planning.
+Knowledge and experience in the business areas important
+for Siemens - in particular, in the industry, infrastructure,
+energy, mobility and healthcare sectors - are also present
+in the Supervisory Board. A considerable number of Super-
+visory Board members are engaged in international activi-
+ties and/or have many years of international experience.
+Appropriate consideration has been given to diversity in
+the Supervisory Board. The Supervisory Board currently has
+nine female members, of whom five are shareholder repre-
+sentatives and four are employee representatives. As a
+result, 45% of the Supervisory Board members are women.
+Dr. Nathalie von Siemens is a member of the Nominating
+Committee.
+Keryn Lee
+James
+of required skills and expertise and the diversity con-
+cept into consideration.
+September 23,
+1969
+February 3,
+2021
+2025
+November 8,
+1967
+January 31,
+2018
+2027
+Gunnar Zukunft²
+(until February 9, 2023)
+(as of February 9, 2023)
+Member of the Central
+Works Council of Siemens Industry
+Software GmbH
+June 21,
+1965
+January 31,
+2023
+2018
+1 As a rule, the term of office ends at the conclusion of the (relevant) ordinary Annual Shareholders' Meeting.
+2 Employee representative.
+3 Publicly listed.
+4 Shareholders' Committee.
+Corporate Governance Statement
+Memberships in supervisory boards
+whose establishment is required by law
+or in comparable domestic or foreign
+controlling bodies of business enterprises
+(as of September 30, 2023)
+-
+→ Bayerische Motoren Werke Aktien-
+gesellschaft, Munich (Chairman)³
+→ Henkel AG & Co. KGaA, Düsseldorf 3,4
+→ Henkel Management AG, Düsseldorf
+Positions outside Germany:
+→ A.P. Møller-Mærsk A/S, Denmark³
+German positions:
+→ Messer SE & Co. KGaA,
+Bad Soden am Taunus
+→Siemens Healthcare GmbH, Munich
+→ Siemens Healthineers AG, Munich³
+→ TÜV Süd AG, Munich
+Positions outside Germany:
+→ EssilorLuxottica SA, France³
+2028
+German positions:
+October 1,
+2017
+2028
+1967
+March 26,
+2018
+(until February 9, 2023)
+(as of February 9, 2023)
+Nathalie
+Member of supervisory boards
+von Siemens
+July 14,
+1971
+January 27,
+2015
+2027
+(Dr. phil.)
+Michael Sigmund²
+(until August 31, 2023)
+(as of August 31, 2023)
+Dorothea Simon²
+Grazia Vittadini
+Matthias Zachert
+Chairman of the Committee
+of Spokespersons of the Siemens Group
+and Chairman of the Central Committee
+of Spokespersons of Siemens AG
+Chairwoman of the Central Works
+Council of Siemens Healthcare GmbH
+Chief Technology Officer
+and member of the Executive Team
+of Rolls-Royce Holdings plc³
+(until October 17, 2023),
+Special Advisor of Rolls-Royce Holdings plc³
+(since October 17, 2023)
+Chairman of the Board of
+Management of LANXESS AG³
+September 13,
+1957
+March 1,
+2014
+August 3,
+1969
+→ Siemens Healthcare GmbH, Munich
+German positions:
+→ The Exploration Company GmbH,
+Gilching
+In September 2022, the Supervisory Board approved the
+objectives for its composition including the profile of
+required skills and expertise and the diversity concept:
+German positions:
+Profile of required skills and expertise
+The candidates proposed for election to the Super-
+visory Board shall have the knowledge, skills and
+experience necessary to carry out the functions of a
+Supervisory Board member in a multinational com-
+pany oriented toward the capital markets and to safe-
+guard the reputation of Siemens in public. In particu-
+lar, care shall be taken with regard to the personality,
+integrity, commitment and professionalism of the
+individuals proposed for election.
+The goal is to ensure that, in the Supervisory Board, as
+a group, all the knowhow and experience is available
+that is considered essential in view of Siemens' acti-
+vities. This includes, for instance, knowledge and
+experience in the areas of technology (including infor-
+mation technology, digitalization and cybersecurity),
+sustainability, transformation, procurement, manu-
+facturing, research and development, sales, finance,
+risk management, law (including compliance) and
+human resources. In addition, the members of the
+Supervisory Board shall collectively have knowledge
+and experience in the business areas that are impor-
+tant for Siemens, in particular, in the areas of industry,
+infrastructure, energy, mobility and healthcare. As a
+group, the members of the Supervisory Board are to
+be familiar with the sector in which the Company
+operates. In accordance with the German Stock Cor-
+poration Act, at least one member of the Supervisory
+Board must have knowledge and expertise in the area
+of accounting, and at least one additional member of
+the Supervisory Board must have knowledge and
+expertise in the auditing of financial statements. The
+expertise in the field of accounting shall consist of
+special knowledge and experience in the application
+of accounting principles and internal control and risk
+management systems and the expertise in the field of
+auditing shall consist of special knowledge and
+experience in the auditing of financial statements.
+Accounting and auditing also include sustainability
+reporting and its audit and assurance. The chairman
+of the audit committee shall have appropriate exper-
+tise in at least one of the two areas and shall be inde-
+pendent. In particular, the Supervisory Board shall
+also include members who have leadership experi-
+ence as senior executives or members of a supervisory
+board (or comparable body) at a major company with
+international operations.
+When a new member is to be appointed, a review
+shall be performed to determine which of the areas
+of expertise deemed desirable for the Supervisory
+Board are to be strengthened.
+Internationality
+Taking the Company's international orientation into
+account, care shall be taken to ensure that the Super-
+visory Board has an adequate number of members
+with extensive international experience. The goal is to
+make sure that the present considerable share of
+Supervisory Board members with extensive inter-
+national experience is maintained.
+Diversity
+With regard to the composition of the Supervisory
+Board, attention shall be paid to achieving sufficient
+diversity. Not only is appropriate consideration to be
+given to women. Diversity of cultural heritage and a
+wide range of educational and professional back-
+grounds, experiences and ways of thinking are also to
+be promoted. When considering possible candidates
+for new elections or for filling Supervisory Board
+positions that have become vacant, the Supervisory
+Board shall give appropriate consideration to diversity
+at an early stage in the selection process.
+In accordance with the German Stock Corporation
+Act, the Supervisory Board is composed of at least
+30% women and at least 30% men. The Nominating
+11
+Corporate Governance Statement
+Committee shall continue to include at least one
+female member.
+Independence
+The Supervisory Board shall include what the share-
+holder representatives on the Supervisory Board con-
+sider to be an appropriate number of independent
+shareholder representatives. More than half of the
+shareholder representatives shall be independent of
+the Company and its Managing Board. Substantial -
+and not merely temporary - conflicts of interest are to
+be avoided.
+No more than two former members of the Managing
+Board of Siemens AG shall belong to the Supervisory
+Board.
+The Supervisory Board members shall have sufficient
+time to exercise their mandates with the necessary
+regularity and diligence.
+Limits on age and on length of
+membership
+In compliance with the age limit stipulated by the Super-
+visory Board in its Bylaws, only individuals who are no
+older than 70 years of age shall, as a rule, be nominated
+for election to the Supervisory Board. Nominations shall
+take into account the regular limit established by the
+Supervisory Board, which restricts membership on the
+Supervisory Board to a maximum of three full terms of
+office. It is considered helpful if different age groups are
+represented on the Supervisory Board."
+Implementation of the objectives
+regarding the Supervisory Board's
+composition as well as the profile of
+required skills and expertise and the
+diversity concept for the Supervisory
+Board in fiscal 2023; Independent
+members of the Supervisory Board
+Within the framework of the selection process and
+the nomination of candidates for the Supervisory Board,
+the Supervisory Board as well as the Nominating Com-
+mittee of the Supervisory Board take into account the
+objectives regarding the Supervisory Board's composition
+and the requirements defined in its diversity concept.
+In preparing the nominations of the seven shareholder
+representatives elected by the 2023 Annual Shareholders'
+Meeting, the Supervisory Board and the Nominating
+Committee took these objectives - including the profile
+7. Objectives regarding the
+Supervisory Board's composition
+as well as the profile of required
+skills and expertise and the
+diversity concept for the Super-
+visory Board
+Corporate Governance Statement
+"The composition of the Supervisory Board of
+Siemens AG shall be such that the Supervisory Board's
+ability to effectively monitor and advise the Managing
+Board is ensured. In this connection, mutually comple-
+mentary collaboration among members with a wide
+range of personal and professional backgrounds
+and diversity with regard to internationality, age and
+gender are considered helpful.
+-
+German positions:
+→ Siemens Industry Software GmbH,
+Cologne
+18
+Notes and forward-
+looking statements
+SIEMENS
+Notes and forward-looking statements
+This document contains statements related to our future business and financial performance and future events or developments involving
+Siemens that may constitute forward-looking statements. These statements may be identified by words such as "expect," "look forward
+to," "anticipate," "intend," "plan," "believe," "seek," "estimate," "will," "project" or words of similar meaning. We may also make forward-
+looking statements in other reports, in prospectuses, in presentations, in material delivered to shareholders and in press releases. In
+addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current
+expectations and certain assumptions of Siemens' management, of which many are beyond Siemens' control. These are subject to a
+number of risks, uncertainties and factors, including, but not limited to, those described in disclosures, in particular in the chapter Report
+on expected developments and associated material opportunities and risks in the Combined Management Report of the Siemens Report
+(siemens.com/siemensreport). Should one or more of these risks or uncertainties materialize, should decisions, assessments or
+requirements of regulatory authorities deviate from our expectations, should events of force majeure, such as pandemics, unrest or acts
+of war, occur or should underlying expectations including future events occur at a later date or not at all or assumptions prove incorrect,
+actual results, performance or achievements of Siemens may (negatively or positively) vary materially from those described explicitly or
+implicitly in the relevant forward-looking statement. Siemens neither intends, nor assumes any obligation, to update or revise these
+forward-looking statements in light of developments which differ from those anticipated.
+This document includes – in the applicable financial reporting framework not clearly defined – supplemental financial measures that are
+or may be alternative performance measures (non-GAAP-measures). These supplemental financial measures should not be viewed in
+isolation or as alternatives to measures of Siemens' net assets and financial positions or results of operations as presented in accordance
+with the applicable financial reporting framework in its Consolidated Financial Statements. Other companies that report or describe
+similarly titled alternative performance measures may calculate them differently.
+Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and
+percentages may not precisely reflect the absolute figures.
+This document is an English language translation of the German document. In case of discrepancies, the German language document is
+the sole authoritative and universally valid version.
+For technical reasons, there may be differences between the accounting records appearing in this document and those published pursuant
+to legal requirements.
+2
+January 31,
+C
+© 2023 by Siemens AG, Berlin and Munich
+Internet
+Phone
+Fax
+E-mail
+Siemens AG
+Werner-von-Siemens-Str. 1
+80333 Munich
+Germany
+www.siemens.com
++49 (0)89 7805-33443 (Media Relations)
++49 (0)89 7805-32474 (Investor Relations)
++49 (0)89 7805-32475 (Investor Relations)
+press@siemens.com
+Address
+investorrelations@siemens.com
+27
+Combined Management Report
+in central bank policies could therefore negatively impact our financial results. Market prices show higher volatility than in the past due to
+increased macroeconomic uncertainties resulting from inflation, geopolitical tensions and other factors noted above.
+Liquidity and financing risks: Our treasury and financing activities could face adverse deposit and/or financing conditions from negative
+developments related to financial markets, such as limited availability of funds and hedging instruments; an updated evaluation of our
+solvency, particularly from rating agencies; negative interest rates; and impacts arising from more restrictive regulation of the financial
+sector, central bank policy, or the usage of financial instruments. Widening credit spreads due to uncertainty and risk aversion in the
+financial markets might lead to adverse changes in the market values of our financial assets, in particular our derivative financial
+instruments.
+Credit risks: We provide our customers with various forms of direct and indirect financing of orders and projects, including guarantees.
+Siemens Financial Services in particular bears credit risks due to such financing activities if, for example, customers do not meet obligations
+arising from these financing arrangements, meet them only partially, or meet them late. The credit environment has become more
+dynamic due to a more uncertain macroeconomic outlook (e.g. inflation) and geopolitical tensions.
+For further information on post-employment benefits, derivative financial instruments, hedging activities, financial risk management and
+related measures, see Notes 17, 24 and 25 in Notes to Consolidated Financial Statements for fiscal 2023.
+Market price risks: We are exposed to fluctuations in exchange rates, especially between the U.S. dollar and the euro, because a high
+percentage of our business volume is conducted as exports from Europe to regions using the U.S. dollar. In addition, we are exposed to
+effects involving the currencies of emerging markets, in particular the Chinese yuan. Appreciable changes in euro exchange rates could
+materially change our competitive position. We are also exposed to fluctuations in interest rates. Even hedging activities to mitigate such
+risks may result in a reverse effect. Fluctuations in exchange or interest rates, negative developments in the financial markets and changes
+8.3.1 Strategic risks
+-
+Current and future investigations regarding allegations of corruption, of antitrust violations and of other violations of law:
+Proceedings against us or our business partners regarding allegations of corruption, of antitrust violations and of other violations of law
+may lead to fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgements, disqualifications from directly
+and indirectly engaging in certain types of business, the loss of business licenses or permits, other restrictions and legal consequences as
+well as negative public media coverage. Accordingly, we may, among other things, be required to comply with potential obligations and
+liabilities arising in connection with such investigations and proceedings, including potential tax penalties. Moreover, any findings related
+to public corruption that are not covered by the 2008 and 2009 corruption charge settlements, which we concluded with U.S. and German
+authorities, may endanger our business with government agencies and intergovernmental and supranational organizations. Monitors
+could again be appointed to review future business practices and we may otherwise be required to further modify our business practices
+and our compliance program.
+In its global business, Siemens does part of its business with state-owned enterprises and governments. We also participate in projects
+funded by government agencies and intergovernmental and supranational organizations, such as multilateral development banks.
+Ongoing or potential future investigations into allegations of corruption, antitrust violations or other violations of law could as well impair
+relationships with such parties or could result in our exclusion from public contracts. Such investigations may also adversely affect existing
+private business relationships and our ability to pursue potentially important strategic projects and transactions, such as strategic alliances,
+joint ventures or other business alliances, or could result in the cancellation of certain of our existing contracts. Moreover, third parties,
+including our competitors, could initiate significant litigation.
+In addition, future developments in ongoing and potential future investigations, such as responding to the requests of governmental
+authorities and cooperating with them, could divert management's attention and resources from other issues facing our business.
+Furthermore, we might be exposed to compliance risks in connection with recently acquired operations that are in the ongoing process of
+integration.
+Along with other measures, Siemens has established a global compliance organization that conducts compliance risk mitigation processes
+such as Compliance Risk Assessments, among others, or initiates audit activities performed by the internal assurance department.
+Sanctions and export control: As a globally operating organization, we conduct business with customers in countries which are subject
+to export control regulations, embargoes, economic sanctions, debarment policies or other forms of trade restrictions (hereafter referred
+to as "sanctions") imposed by the U.S., the EU, China or other countries or organizations. New or expanded sanctions in countries in which
+we do business may result in a curtailment of our existing business in such countries or indirectly in other countries. We are also aware of
+policies of national authorities and institutional investors, such as pension funds or insurance companies, requiring divestment of interests
+in and prohibiting investment in and transactions with entities doing business with countries identified by the U.S. Department of State as
+28
+Changes of regulations, laws and policies: Regulatory requirements are being introduced or modified at an unprecedented rate, often
+with little or no advance implementation lead time. This creates a risk that new requirements become effective more quickly than they
+can be implemented in the associated systems and processes, potentially resulting in business disruptions and the need for manual
+mitigation interventions. As a diversified company with global businesses we are exposed to various product- and country-related
+regulations, laws and policies influencing our business activities and processes. According to observations and analysis, there is an
+increasing risk that existing technical regulations in target markets will suddenly change, or new ones will be set in force, which result in
+market access criteria that our products do not meet. The affected products would lose marketability in this market. Reducing the risk of a
+sales-stop depends on the required correction for the non-conformity. In case the product can technically stay as is, while it has to undergo
+new and additional conformity assessment and certification, there will be considerable effort and cost to carry out the needed testing and
+certification procedures. In a worse case, the affected product will need re-engineering or re-design to meet the requirements of the
+changed or new technical regulation even before it can become re-assessed and certified for market approval. The latter case will cause
+significant extra effort and cost to make the needed product changes and to maintain the country-specific product variant as an additional
+derivative item in the portfolio. In the worst case, if the two aforementioned ways of maintaining the product's marketability prove to be
+not feasible, we must stop selling the affected product in the market. The uncertain geopolitical situation has triggered unpredictable -
+and often conflicting – extraterritorial regulations, restrictions and sanctions, thus creating a potential risk that it will be difficult to
+simultaneously comply with all relevant regulatory requirements of certain transactions. Complex cross-jurisdictional regulations can vary
+between countries, even within the same region, each with slightly different rules and requirements, creating a risk that a global standard
+cannot be effectively implemented and maintained, potentially leading to a need for more custom or regional standards. We monitor the
+political and regulatory landscape in all our key markets to anticipate potential problem areas, with the aim of quickly adjusting our
+business activities and processes to changed conditions. However, any changes in regulations, laws and policies could adversely affect our
+business activities and processes as well as our financial condition and results of operations.
+8.3.4 Compliance risks
+Risks from pension obligations: The provisions for pensions and similar obligations may be affected by changes in actuarial assumptions,
+including the discount rate, as well as by movements in financial markets or a change in the mix of assets in our investment portfolio.
+Additionally, they are subject to legal risks with regard to plan design, among other factors. A significant increase in underfunding may
+have a negative effect on our capital structure and rating, and thus may tighten refinancing options and increase costs. In order to comply
+with local pension regulations in selected foreign countries, we may face an economic risk of increasing cash outflows due to changes in
+funding level according to local regulations of our pension plans in these countries or to changes in the regulations themselves.
+Audits by tax authorities and changes in tax regulations: We operate in nearly all countries of the world and therefore are subject to
+many different tax regulations. Changes in tax laws in any of these jurisdictions could result in higher tax expenses and increased tax
+payments. Furthermore, legislative changes could impact our tax receivables and liabilities as well as deferred tax assets and deferred tax
+liabilities. In addition, the uncertain legal environment in some regions could limit our ability to enforce our rights. As a globally operating
+organization, we conduct business in countries subject to complex tax rules, which may be interpreted in different ways. Future
+interpretations or developments of tax regimes may affect our business situation, financial condition and results of operations. We are
+regularly audited by tax authorities in various jurisdictions and we continuously identify and assess relevant risks.
+Project-related risks: A number of our segments conduct activities under long-term contracts that are awarded on a competitive bidding
+basis. Such contracts typically arise at Mobility and in various activities of Smart Infrastructure or Portfolio Companies. Some of these
+contracts are inherently risky because we may assume substantially all of the risks associated with completing a project and meeting post-
+completion warranty obligations. For example, we may face the risk that we must satisfy technical requirements of a project even though
+we have not gained experience with those requirements before winning the project. The profit margins realized on fixed-priced contracts
+may vary from original estimates as a result of changes in costs and productivity over a contract's term. We sometimes bear the risk of
+unanticipated project modifications, shortage of key personnel, quality problems, financial difficulties of our customers and/or significant
+partners, cost overruns or contractual penalties caused by unexpected technological problems, unexpected developments at the project
+sites, unforeseen changes or difficulties in the regulatory or political environment, performance problems with our suppliers,
+subcontractors and consortium partners or other logistical difficulties. Some of our multi-year contracts also contain demanding
+installation and maintenance requirements in addition to other performance criteria relating to timing, unit cost and compliance with
+government regulations, which, if not satisfied, could subject us to substantial contractual penalties, damages, non-payment and contract
+termination. There can be no assurance that contracts and projects, in particular those with long-term duration and fixed-price calculation,
+can be completed profitably. To tackle those risks, we established a global project management organization to systematically improve
+the technical and commercial capabilities of our project management personnel. For complex projects we conduct dedicated risk
+assessments in very early stages of the sales phase before we decide to hand over a binding offer to our customers.
+Economic, political and geopolitical conditions: We see high uncertainties regarding the global economic and geopolitical outlook,
+which deteriorated significantly in the past year due to multiple headwinds, all of which may continue to intensify. First, the Israel-Gaza
+conflict continues to escalate and might cause a larger regional conflict involving further parties. Ongoing risks emanate from the war in
+Ukraine. Both the Israel-Gaza conflict and the war in Ukraine may have negative impacts on sales development, production processes and
+purchasing and logistics processes, for example through interruptions in supply chains and energy supplies or bottlenecks affecting
+components, raw materials and intermediate products. Each of the conflicts could also intensify further to the point of expanding to
+include other warring parties, including NATO countries, and the use of unconventional weapons. An expansion of the conflicts would
+have a significant impact on the Siemens market environment. Even the current states of conflicts could have a further negative impact
+on development of potential crude oil and natural gas supplies. This would fuel inflation, with further risk of a sustained wage-price-spiral.
+In any case one of the core risks for the Siemens outlook is that central banks may fail to get inflation below their targets and then react
+more restrictively or even overreact. More restrictive financial conditions would likely push advanced economies into recession and pose
+a significant risk to vulnerable emerging economies. Highly indebted (emerging and industrialized) countries could suffer from increasing
+financing costs, further U.S. dollar appreciation, and loss of investor confidence. Other risks could arise for the stability of public finances
+and the banking sector. Further risks are coming from other geopolitical tensions (particularly associated with the Baltics, Eastern Europe,
+the Western Balkans, China, Taiwan, and Iran). We continue to face economic risks from a further significant slow-down of the Chinese
+economy. Key risks are coming from potential financial imbalances, particularly due to the struggling real-estate sector, but also from the
+growing debt-level of local governments, with growing negative implications for Siemens business in China and the country's trading
+partners. Obstruction and redefinitions of international cooperation agreements could severely impact our business. First and foremost a
+more extensive U.S.-China decoupling would have adverse effects on confidence and investment activity and would severely hit Siemens'
+business. Increasing trade barriers, protectionism, sanctions and in particular technical regulations would negatively impact production
+costs and productivity along our global value chains, as well as significantly impede or even hinder access to sales markets. A significant
+risk to our sales potential and cost structures is coming from the possibility of renewed supply chain bottlenecks, due to growing lack of
+availability of intermediate goods, in particular electronic components. Furthermore, grid-lock in U.S. politics could weigh on U.S. growth
+with the risk of a global spillover. We are dependent on the economic development of certain industries; a continuation or even an
+intensification of the cyclical and structural headwinds in core customer industries, e.g. automotive or construction, would have adverse
+impact on our business prospects. A resurgence of COVID-19 or even the outbreak of a new pandemic, a terrorist attack, a significant
+cybercrime incident, or a series of such attacks or incidents in major economies, could depress economic activity globally and undermine
+consumer and business confidence. Additionally, the highly interconnected global economy remains vulnerable to natural disasters or
+hybrid warfare.
+If we are not successful in adapting our production and cost structure to subsequent changes in conditions in the markets in which we
+operate, there can be no assurance that we will not experience adverse effects. For example, our customers may modify, delay or cancel
+plans to purchase our products, solutions and services, or fail to follow through on purchases or contracts already executed. In addition, it
+may become more difficult for our customers to obtain financing. Contracted payment terms, especially regarding the level of advance
+payments by our customers relating to long-term projects, may become less favorable, which could negatively impact our financial
+condition. Siemens' global setup with operations in almost all relevant economies, our wide range of offerings with varied exposures to
+business cycles, and our balanced mix of business models (e.g. equipment, components, systems, software, services and solutions) help
+us to absorb impacts from adverse developments in any single market.
+Cyber/Information security: Digital technologies are deeply integrated into our business portfolio. Further integration of information
+technology into products and services in conjunction with changing business strategies (such as outsourcing, globally distributed
+development, a lesser degree of sole production) are leading to an increasingly distributed supply chain, making efficient controls difficult.
+The fact of a large number of suppliers requires a significant effort for the initial and regular verification of the effective implementation
+of cybersecurity requirements by suppliers. Siemens business entities might lose market access if their products, solutions and services do
+not comply with increased regulations and legal requirements for cybersecurity in their respective countries. We observe a global increase
+of cybersecurity threats and higher levels of professionalism in computer crime, which pose a risk to the security of Siemens products,
+solutions and services; to Siemens IT systems and networks; and to the confidentiality, availability and integrity of data. Like other large
+multinational companies, we face active cyber threats from sophisticated adversaries that are supported by organized crime and nation-
+states engaged in economic espionage or even sabotage. According to external sources of relevant data, this trend has been accelerated
+by geopolitical developments and tensions worldwide. Especially the numbers of phishing attacks and malicious websites have increased
+significantly. There is a risk that confidential information or data-privacy-relevant information may be stolen or that the integrity of our
+portfolio may be compromised, such as by attacks on our networks, social engineering, data manipulations in critical applications, or a
+loss of critical resources, resulting in financial damages and violation of data privacy laws. Moreover, the information technology market
+is concentrated among a small number of information technology and software vendors, which could lead to dependence on a single
+provider. There can be no assurance that the measures aimed at protecting our intellectual property and portfolio will address these threats
+under all circumstances. Cybersecurity covers the IT of our entire enterprise including office IT, systems and applications, special-purpose
+networks, and our operating environments such as manufacturing and R&D. We strive to mitigate these risks by employing a number of
+cyber defense measures, including employee training, considering new models of flexible working environments, and comprehensive
+monitoring of our networks and systems with an artificial intelligence solution to identify attacks faster, and thereby prevent damage to
+society, critical infrastructures, our customers, our partners and Siemens overall. We initiated the industrial "Charter of Trust," signed by a
+growing group of global companies, which sets out principles for building trust in digital technologies and creating a more secure digital
+world. Nonetheless, our systems, products, solutions and services, as well as those of our service providers, remain potentially vulnerable
+to attacks. Such attacks could potentially lead to the publication, manipulation or leakage of information such as through industrial
+espionage. They could also result in deliberate improper use of our systems, vulnerable products, production downtimes and supply
+shortages, with potential adverse effects on our reputation, our competitiveness and results of operations. For increased protection of
+Siemens and reduction of a potential financial impact caused by cyber incidents, the currently insurable cybersecurity risks have been to a
+partial extent transferred to a consortium of insurance companies.
+Portfolio measures, at-equity investments, other investments and strategic alliances: Our strategy includes divesting our activities in
+some business areas and strengthening others through portfolio measures, including mergers and acquisitions. With respect to
+divestments, we may not be able to divest some of our activities as planned, and the divestitures we do carry out could have a negative
+impact on our business situation, financial condition, results of operations and reputation. Mergers and acquisitions are inherently risky
+because of difficulties that may arise when integrating people, operations, technologies and products. There can be no assurance that any
+of the businesses we acquire can be integrated successfully and in a timely manner as originally planned, or that they will perform as
+anticipated once integrated. In addition, we may incur significant acquisition, administrative, tax and other expenditures in connection
+with these transactions, including costs related to integration of acquired businesses. Furthermore, portfolio measures may result in
+additional financing needs and adversely affect our capital structure. Acquisitions can lead to substantial additions to intangible assets,
+including goodwill, in our statements of financial position. If we were to encounter continuing adverse business developments or if we
+were otherwise to perform worse than expected at acquisition activities, then these intangible assets, including goodwill, might have to
+be impaired, which could adversely affect our business situation, financial condition and results of operations. Our investment portfolio
+includes investments held for purposes other than trading and other investments. Any factors negatively influencing the financial
+condition and results of operations of our at-equity investments, such as Siemens Energy, and other investments could have an adverse
+effect on our equity pick-up related to these investments or may result in a related write-off. In addition, our business situation, financial
+condition and results of operations could also be adversely affected in connection with loans, guarantees or non-compliance with financial
+covenants related to these investments. Furthermore, such investments are inherently risky as we may not be able to sufficiently influence
+corporate governance processes or business decisions taken by our at-equity investments, by other investments and by strategic alliances,
+which may have a negative effect on our business and especially on our reputation. In addition, joint ventures bear the risk of difficulties
+that may arise when integrating people, operations, technologies and products. Strategic alliances may also pose risks for us because we
+compete in some business areas with companies with which we have strategic alliances. Besides other measures, we handle these risks
+with standardized processes as well as dedicated roles and responsibilities in the areas of mergers, acquisitions, divestments and carve-
+outs. This includes the systematic treatment of all contractual obligations and post-closing claims.
+25
+Combined Management Report
+8.3.3 Financial risks
+Increasing sustainability focus: Governments around the world continue to increase their focus on sustainability topics, resulting in the
+risk of increased costs to comply with new laws and related reporting requirements. In addition, increasing stakeholder and investor focus
+on sustainability topics brings reputational risk should our sustainability commitments, targets and activities be perceived as a deceptive
+use of green marketing or otherwise not credible. Climate change litigation has become a worldwide phenomenon with a corresponding
+risk to Siemens as a large corporation. We address these risks in a variety of ways including through our sustainability framework DEGREE,
+in which we have set ambitious sustainability targets. DEGREE includes measures to reduce our carbon footprint along with other initiatives
+addressing ESG topics more generally. We have implemented an ESG due diligence process that supports Siemens businesses with due
+diligence in the customer-oriented environment with a view to possible environmental and social risks as well as related human rights and
+reputational risks. Finally, we believe our overall portfolio is very well positioned to meet the current and future sustainability needs of our
+customers and the societies in which we operate.
+Competitive environment: The worldwide markets for our products, solutions and services are highly competitive in terms of pricing,
+product and service quality, product development and introduction time, customer service, financing terms and shifts in market demands.
+We face strong, established competitors as well as rising competitors from emerging markets and new industries, which may have a better
+cost structure or offer a better customer solution. Some industries in which we operate are undergoing consolidation, which may result in
+stronger competition, a change in our relative market position, an increase in inventory of finished or work-in-progress goods, or
+unexpected price erosion. Furthermore, there is a risk that critical suppliers could be taken over by competitors and a risk that competitors
+are increasingly offering services to our installed base. We address these risks with various measures, for example benchmarking, strategic
+initiatives, sales push initiatives, executing productivity measures and target cost projects, rightsizing of our footprint, outsourcings,
+mergers and joint ventures and optimizing our product and service portfolio. We continuously monitor and analyze competitive, market
+and industry information in order to be able to anticipate unfavorable changes in the competitive environment rather than merely reacting
+to such changes.
+8.3.2 Operational risks
+Combined Management Report
+Supply chain management: The financial performance of our operating units depends on reliable and effective supply chain management
+for components, sub-assemblies, energy, critical parts (e.g. semiconductors) and materials. Capacity constraints and supply shortages
+resulting from ineffective supply chain management may lead to production bottlenecks, delivery delays, quality issues and additional
+costs. We also rely on third parties to supply us with parts, components and services. Using third parties to manufacture, assemble and
+test our products may reduce our control over manufacturing yields, quality assurance, product delivery schedules and costs. Although we
+work closely with our suppliers to avoid supply-related problems, there can be no assurance that we will not encounter supply problems
+in the future, especially if we use single-source suppliers for critical components. Shortages and delays could materially harm our
+businesses. Unanticipated increases in the price of components or raw materials due to market shortages or other reasons could also
+adversely affect performance. Furthermore, we may be exposed to the risk of delays and interruptions in the supply chain as a consequence
+of catastrophic events (including pandemics), geopolitical uncertainties, energy shortages, sabotage, cyber incidents, suppliers' financial
+difficulties or suppliers not meeting our standards, particularly if we are unable to identify alternative sources of supply or means of
+transportation in a timely manner or at all. Besides other measures, we mitigate price fluctuation in global raw material markets with
+various hedging instruments.
+Internal programs and initiatives: We are in a continuous process of operational optimization and constantly engage in cost-reduction
+initiatives, including ongoing capacity adjustment measures and structural initiatives. Consolidation of business activities and
+manufacturing facilities, outsourcings, joint ventures and the streamlining of product portfolios are all part of these cost-reduction efforts.
+These measures may not be implemented as planned, may turn out to be less effective than anticipated, may become effective later than
+estimated or may not become effective at all. Any future contribution of these measures to our profitability will be influenced by the actual
+savings achieved and by our ability to sustain them. In case of restructuring and outsourcing activities, there could be delays in product
+deliveries or we might even experience delivery failures. Furthermore, delays in critical R&D projects could lead to negative impacts in
+running projects. We constantly control and monitor the progress of these projects and initiatives using standardized controlling and
+milestone tracking approaches.
+Shortage of skilled personnel: Competition for diverse and highly qualified personnel, such as specialists and experts in technical fields,
+remains intense in the industries and regions in which our businesses operate. We have ongoing demand for highly skilled people and a
+need to enhance diversity, inclusion and sense of belonging in our workforce. Our future success depends in part on our continued ability
+to attract engineers, tech talent and other qualified personnel. We address these topics for example by strengthening the capabilities and
+skills of our talent acquisition teams and a strategy of proactive search for people with the required capabilities in our respective industries
+and markets. In fiscal 2023 we rolled out our new Employer Branding in all our recruiting marketing activities and started a media campaign
+with focus on tech talent in our key markets. Technology and digitalization help us to be more effective in attracting and selecting diverse
+talent. In addition, we have a focus on diversity and structured succession planning. As with our existing people, we must also provide
+new talent with opportunities to grow and bond, especially soon after they join us. This appears especially relevant at a time of new,
+increasingly virtual working environments.
+Disruptive technologies: The markets in which our businesses operate experience rapid and significant changes due to the introduction
+of innovative and disruptive technologies. In the field of digitalization (e.g. Digital Twin, artificial intelligence, cloud computing), there are
+risks associated with new competitors, substitutions for existing products/solutions/services, new business models (e.g. in terms of pricing,
+financing, extended scopes for project business or subscription models in the software business), and finally the risk that our competitors
+may have more advanced time-to-market strategies and introduce their disruptive products and solutions faster than Siemens. Siemens
+generally differentiates its software offerings from those of other software companies through deep domain know-how. There are risks
+associated with technologies such as artificial intelligence, including generative artificial intelligence, that domain expertise will not be a
+significant distinguishing feature in the future, and that additional competitors may therefore emerge more easily or rapidly. Our operating
+results depend to a significant extent on our technological leadership, our ability to anticipate and adapt to changes in our markets, and
+our ability to optimize our cost base accordingly. Introducing new products and technologies requires a significant commitment to research
+and development, which in return requires expenditure of considerable financial resources that may not always result in success. Our
+results of operations may suffer if we invest in technologies that do not operate or may not be integrated as expected, or that are not
+accepted in the marketplace as anticipated, or if our products, solutions or systems are not introduced to the market in a timely manner,
+particularly compared to our competitors, or even become obsolete. We constantly apply for new patents and actively manage our
+intellectual property portfolio to secure our technological position. However, our patents and other intellectual property may not prevent
+competitors from independently developing or selling products and services that are similar to ours.
+26
+(41)
+Below we describe the risks that could have a material adverse effect on our business situation, financial condition (including effects on
+assets, liabilities and cash flows), results of operations and reputation. The order in which the risks are presented in each of the four
+categories reflects the currently estimated relative exposure for Siemens associated with these risks and thus provides an indication of the
+risks' current importance to us. Additional risks not known to us or that we currently consider immaterial may also negatively impact our
+business objectives and operations. Unless otherwise stated, the risks described below relate to all our organizational units.
+The cash conversion rate was influenced by a non-cash profit of €0.7 billion in fiscal 2023 (in fiscal 2022 by a non-cash loss of €2.9 billion)
+related to Siemens Energy Investment.
+Investing activities
+Additions to intangible assets and property, plant and equipment from continuing operations totaled €2.2 billion in fiscal 2023. Within
+the industrial businesses, ongoing investments related mainly to technological innovations; maintaining, extending and digitalizing our
+capacities for designing, manufacturing and marketing new solutions; improving productivity; and replacements of fixed assets. These
+investments amounted to €1.7 billion in fiscal 2023. The remaining portion related mainly to Siemens Real Estate, including significant
+amounts for projects such as new office buildings in Germany and Spain. Siemens Real Estate is responsible for uniform and comprehensive
+management of Company real estate worldwide (except for Siemens Healthineers) and supports the industrial businesses and corporate
+activities with customer-specific real estate solutions.
+With regard to capital expenditures, we expect a significant increase in fiscal 2024. In the context of the €2 billion investment strategy
+presented in fiscal 2023 to strengthen growth, innovation and resilience, significant amounts will be invested in the coming years for the
+construction and expansion of high-tech production facilities in the U.S., China and Singapore. As part of this investment strategy, Siemens
+also announced the establishment of its new Technology Campus in Erlangen, Germany, to expand development and manufacturing
+capacities. In addition, up to €0.6 billion are to be invested in Siemensstadt Square. This project, initiated in fiscal 2019, aims to transform
+Siemens' existing industrial area in Berlin into a modern urban district supporting a diverse range of purposes, including strengthening key
+technologies. Further investments are planned in relation to new office buildings, including Siemens Campus Erlangen. Furthermore, we
+continue to invest in attractive innovation fields through Next47, our global venture capital unit.
+19
+Combined Management Report
+7. Overall assessment of the economic position
+Overall, global economic development in fiscal 2023 was mixed and characterized by a number of headwinds. In this environment,
+Siemens delivered a very strong performance in all its businesses due to its strategic positioning relative to long-term trends such as
+automation, electrification and digitalization. With our offerings, we help increase resource efficiency and the decarbonization of industry,
+transport and building infrastructures and make manufacturing more resilient and flexible. We expect these trends to continue to drive
+our growth in the coming years.
+During fiscal 2023, we made further progress in focusing our business portfolio by selling our Commercial Vehicles business. Furthermore,
+we began forming a new motors and large drives company under the name Innomotics by combining our existing business activities in
+the areas of low- to high-voltage motors, geared motors, medium-voltage converters and motor spindles. Also, we further reduced our
+stake in Siemens Energy AG to 25.1% and transferred shares to Siemens Pension-Trust e.V. To boost future growth and drive innovation,
+we announced a €2 billion investment strategy mainly for new manufacturing capacity as well as innovation labs and education centers.
+We also expanded our open digital business platform, Siemens Xcelerator, by introducing Industrial Operations X, which includes a broad
+range of interoperable offerings for more adaptive production, and by adding new cloud-based applications for Building X, our suite for
+smart and sustainable buildings.
+Fiscal 2023 was another very successful year for Siemens. We achieved excellent financial results in a volatile market environment, which
+on the one hand included destocking by customers and distributors following previously proactive purchasing, particularly in our short-
+cycle businesses, and on the other hand included improved supply chain conditions, which accelerated revenue conversion from our high
+order backlog. We raised our outlook during the fiscal year after the first and the second quarters. We then reached or exceeded all the
+targets set for our primary measures for fiscal 2023. We achieved revenue growth of 11% net of currency translation and portfolio effects
+and delivered EPS pre PPA of €10.77. Excluding Siemens Energy Investment, EPS pre PPA was €9.93. ROCE increased to 18.6%, our capital
+structure ratio came in at 0.6, and the cash conversion rate was 1.17.
+Orders rose 7% year-over-year to €92.3 billion, for a book-to-bill ratio of 1.19, thus fulfilling our expectation of a ratio above 1. Order
+growth was driven by sharply higher volume from large orders at Mobility, including an order worth €2.9 billion for locomotives and
+associated maintenance in India and a €2.5 billion order for the first line of a turnkey rail system in Egypt, and by clear growth in Smart
+Infrastructure led by the electrification business. Orders in Digital Industries came in lower as the destocking trend mentioned above had
+a significant effect on its automation businesses.
+1.86
+Revenue was higher in nearly all our industrial businesses and rose to €77.8 billion, up 8% year-over-year. Smart Infrastructure and Digital
+Industries contributed double-digit growth with all businesses posting increases. Revenue growth at Smart Infrastructure was led by the
+electrification and the electrical products businesses, while at Digital Industries the factory automation and the process automation
+businesses contributed the strongest growth. Revenue growth at Mobility was led by a significant increase in the rolling stock business.
+Revenue at Siemens Healthineers remained on the prior-year level as growth particularly in the imaging and Varian businesses was offset
+by a decline in the diagnostics business. Excluding currency translation and portfolio effects, revenue for Siemens rose 11%. We thus
+exceeded the forecast provided in our Combined Management Report for fiscal 2022, which was to achieve comparable revenue growth
+in the range of 6% to 9%, and reached the upper end of our subsequently raised outlook, which was to achieve 9% to 11% in comparable
+revenue growth.
+The profit margin of our Industrial Business rose to 15.4%, up from 15.1% a year earlier, reaching its highest level ever. Digital Industries
+and Smart Infrastructure achieved the strongest increases and also contributed the highest margins: 22.6% and 15.4%, respectively. The
+profit margin for Mobility rose slightly to 8.4%, while the profit margin at Siemens Healthineers declined to 11.7%.
+Earnings before taxes at SFS increased significantly due mainly to higher earnings before taxes in the debt business, which in the prior
+fiscal year included a €0.2 billion impact in connection with the sale of the financing and leasing business in Russia. Return on equity after
+tax for SFS increased to 16.3%. Profit at Portfolio Companies included a €0.1 billion gain from the sale of the Commercial Vehicles business
+but came in sharply lower compared to the prior fiscal year which had included a €1.1 billion gain from the sale of the mail and parcel-
+handling business of Siemens Logistics and a €0.3 billion revaluation gain in connection with the sale of our stake in Valeo Siemens
+eAutomotive GmbH. Results within Reconciliation to Consolidated Financial Statements benefited from positive effects related to Siemens
+Energy Investment, including €1.6 billion from a partial reversal of the prior-year €2.7 billion impairment on Siemens' stake in Siemens
+Energy AG. These positive effects were partly offset by Siemens' share of Siemens Energy's after-tax loss.
+Net income nearly doubled year-over-year to a historic high of €8.5 billion and corresponding basic EPS more than doubled to €10.04. EPS
+pre PPA increased to €10.77. Excluding a positive €0.84 per share related to Siemens Energy Investment, EPS pre PPA was €9.93. We thus
+exceeded the forecast provided in our Combined Management Report for fiscal 2022, which was to achieve EPS pre PPA in a range of
+€8.70 to €9.20, and exceeded our forecast made after the third quarter of fiscal 2023, which was for EPS pre PPA excluding Siemens
+Energy Investment in the range of €9.60 to €9.90.
+ROCE for fiscal 2023 rose to 18.6%, up from 10.0% in fiscal 2022. This increase was due to sharply higher income before interest after tax
+year-over-year. We thus exceeded the forecast for ROCE provided in our Combined Management Report 2022, which was to come close
+to or reach the lower end of our target range of 15% to 20%.
+We evaluate our capital structure using the ratio of Industrial net debt to EBITDA. Due to a combination of a decrease in Industrial net debt
+and higher EBITDA year-over-year, this ratio declined to 0.6. We thus achieved the forecast provided in our Combined Management Report
+2022, which was to achieve a ratio of up to 1.5.
+20
+Combined Management Report
+Free cash flow from continuing and discontinued operations for fiscal 2023 was €10.0 billion, reaching a record high. The cash conversion
+rate for Siemens, defined as the ratio of Free cash flow from continuing and discontinued operations to Net income, was 1.17. We thus
+achieved a cash conversion rate that contributed strongly to the average required to reach our target of 1 minus annual comparable
+revenue growth rate over a cycle of three to five years.
+We intend to continue providing an attractive shareholder return. The Siemens Managing Board, in agreement with the Supervisory Board,
+proposes a dividend of €4.70 per share, up from €4.25 per share a year earlier.
+21
+Combined Management Report
+Profit Industrial Business exceeded the record high of a year earlier and rose 11% to €11.4 billion. All industrial businesses except Siemens
+Healthineers increased their profit year-over-year. The strongest increase came from Smart Infrastructure on improvements in all its
+businesses, led by the electrical products and the electrification businesses. Growth at Digital Industries was driven by the automation
+businesses, only partly offset by a decline in profit in the software business due mainly to higher expenses related to cloud-based activities.
+Profit at Mobility increased in nearly all businesses and included positive trailing effects related to the winding down of business activities
+in Russia a year earlier. Profit at Siemens Healthineers came in lower on declines in the diagnostics business, due primarily to sharply lower
+revenue from rapid coronavirus antigen tests as well as charges related to its transformation program and charges related to refocusing
+certain activities in the advanced therapies business.
+4,392
+8,157
+(81)
+10,062
+(I) Free cash flow
+(2,083)
+10,241
+(81)
+10,322
+(2,084)
+(2,218)
+(2,218)
+Additions to intangible assets and property, plant and equipment
+12,239
+(41)
+12,281
+Cash flows from operating activities
+(in millions of €)
+and
+Continuing Discontinued Continuing
+operations operations
+discontinued
+operations
+discontinued
+operations
+Fiscal year 2022
+Fiscal year 2023
+Continuing
+and
+Continuing Discontinued
+operations operations
+Cash conversion rate
+With our ability to generate positive operating cash flows from continuing and discontinued operations of €12.2 billion in fiscal 2023, our
+total liquidity (defined as cash and cash equivalents plus current interest-bearing debt securities) of €11.1 billion, our unused lines of
+credit, and our credit ratings at year-end, we believe that we have sufficient flexibility to fund our capital requirements. Also in our opinion,
+our operating net working capital is sufficient for our present requirements.
+(1)/(II) Cash conversion rate
+10,021
+8,529
+1.17
+8,238
+8. Report on expected developments and associated material
+opportunities and risks
+(II) Net income
+8.1 Report on expected developments
+The global economy showed remarkable resilience in calendar 2023, given the number of headwinds and negative economic shocks from
+the previous year. Nevertheless, these shocks still have adverse implications for economic growth in calendar 2024, especially the
+dampening effects of tighter financial conditions. Accordingly, in calendar 2024 the global economy is expected to further slow down to
+2.3% GDP growth, after 2.6% in calendar 2023. Given the high number of active and potential geopolitical conflicts, the outlook is subject
+to a high level of uncertainty.
+For fiscal 2024, we expect ROCE to be in our target range of 15% to 20%.
+Capital structure
+We aim in general for a capital structure of up to 1.5; we expect to achieve this in fiscal 2024.
+Cash conversion rate
+For fiscal 2024, we expect a cash conversion rate that contributes to reaching our target of 1 minus the annual comparable revenue growth
+rate of Siemens over a cycle of three to five years.
+8.1.3 Overall assessment
+Our outlook for the Siemens Group for fiscal 2024 is based on the assumption that geopolitical tensions do not further increase. Under
+this condition, we expect our Industrial Business to continue its profitable growth.
+For the Siemens Group we expect comparable revenue growth in the range of 4% to 8% and a book-to-bill ratio above 1.
+We expect profitable growth of our Industrial Business to drive an increase in EPS pre PPA excluding Siemens Energy Investment to a range
+of €10.40 to €11.00 in fiscal 2024, up from EPS pre PPA excluding Siemens Energy Investment of €9.93 in fiscal 2023.
+This outlook excludes burdens from legal and regulatory matters.
+Overall, the actual development for Siemens and its segments may vary, positively or negatively, from our outlook due to the risks and
+opportunities described below or if our expectations and assumptions do not materialize.
+8.2 Risk management
+Capital efficiency
+8.2.1 Basic principles of risk management
+23
+Combined Management Report
+8.2.2 Enterprise risk management process
+We have implemented and coordinated a set of risk management and control systems which support us in the early recognition of
+developments that could jeopardize the continuity of our business. The most important of these systems include our enterprise-wide
+processes for strategic planning and management reporting. Strategic planning is intended to support us in considering potential risks and
+opportunities well in advance of major business decisions, while management reporting is intended to enable us to monitor such risks
+more closely as our business progresses. Our risk management and its contributing elements are regularly subject of audit activities by our
+internal audit function. Accordingly, if deficits are detected, it is possible to adopt appropriate measures for their elimination. This
+coordination of processes and procedures is intended to help ensure that the Managing Board and the Supervisory Board are fully informed
+about significant risks in a timely manner.
+Risk management at Siemens builds on a comprehensive, interactive and management-oriented Enterprise Risk Management (ERM)
+approach that is integrated into the organization and that addresses both risks and opportunities. Our ERM approach is based on the
+globally accepted COSO Standard (Committee of Sponsoring Organizations of the Treadway Commission) Enterprise Risk Management –
+Integrating with Strategy and Performance (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018)
+and is adapted to Siemens requirements. The frameworks connect the ERM process with our financial reporting process, our internal
+control and our compliance management system. They consider a company's strategy, the efficiency and effectiveness of its business
+operations, the reliability of its financial reporting and compliance with relevant laws and regulations to be equally important.
+Our ERM process aims for early identification and evaluation of, and response regarding, risks and opportunities that could materially
+affect the achievement of our strategic, operational, financial and compliance objectives. The time horizon is typically three years, and we
+take a net risk approach, addressing risks and opportunities remaining after the execution of existing and effective measures and controls.
+If risks have already been considered in plans, budgets, forecasts or the consolidated financial statements (e.g. as a provision or risk
+contingency), they are supposed to be incorporated with their financial impact in the entity's business objectives. As a consequence, only
+additional risks arising from the same cause (e.g. deviations from business objectives, different impact perspectives) should be considered.
+In order to provide a comprehensive view of our business activities, risks and opportunities are identified in a structured way combining
+elements of both top-down and bottom-up approaches. Reporting generally follows a quarterly cycle; we complement this periodic
+reporting with an ad-hoc reporting process that aims to escalate critical issues in a timely manner. Relevant risks and opportunities are
+evaluated in terms of impact and likelihood, considering different impact perspectives, including business objectives, reputation and
+regulatory requirements. The bottom-up identification and prioritization process is supplemented by workshops with the respective
+managements of our organizational units. The top-down element ensures that potential new risks and opportunities are discussed at
+different management levels and are included in the subsequent reporting process, if found to be relevant. Reported risks and
+opportunities are analyzed regarding potential cumulative effects and are aggregated within and for each of the organizational units
+mentioned above.
+Responsibilities are assigned for all relevant risks and opportunities, with the hierarchical level of responsibility depending on the
+significance of the respective risk or opportunity. In a first step, assuming responsibility for a specific risk or opportunity involves choosing
+one of our general response strategies. Our general response strategies with respect to risks are avoidance, transfer, reduction or
+acceptance of the relevant risk. Our general response strategy with respect to opportunities is to "pursue" the relevant opportunity. In a
+second step, responsibility for a risk or opportunity also involves the development, initiation and monitoring of appropriate response
+measures corresponding to the chosen response strategy. These response measures have to be specifically tailored to allow for effective
+risk management. Accordingly, we have developed a variety of response measures with different characteristics. For example, we mitigate
+the risk of fluctuations in currency and interest rates by engaging in hedging activities. Regarding our projects, systematic and
+comprehensive project management with standardized project milestones, including provisional acceptances during project execution
+and complemented by clearly defined approval processes, assists us in identifying and responding to project risks at an early stage, even
+before the bidding phase. Furthermore, we maintain appropriate insurance levels for potential cases of damage and liability risks in order
+to reduce our exposure to such risks and to avoid or minimize potential losses. Among others, we address the risk of fluctuation in
+economic activity and customer demand by closely monitoring macroeconomic conditions and developments in relevant industries, and
+by adjusting capacity and implementing cost-reduction measures in a timely and consistent manner if they are deemed necessary. Due to
+regular screening of climate risks and environmental, social and governance (ESG) developments we can initiate related mitigation actions
+in a timely manner – also as part of our DEGREE implementation. Worldwide there are risks from the transmission of infectious agents
+from animals to humans, from humans to humans and in other ways. Epidemic, pandemic or other infectious developments such as
+bioterrorism to cause high disease rates in countries, regions or continents. We constantly check information from the World Health
+Organization (WHO), the Centers for Disease Control and Prevention in the U.S. and Europe, the Robert Koch Institute in Germany and
+other institutions in order to be able to identify early epidemic or pandemic risks and determine and initiate related mitigation actions as
+early as possible.
+8.2.3 Risk management organization and responsibilities
+To oversee the ERM process and to further drive the integration and harmonization of existing control activities to align with legal and
+operational requirements, the Managing Board established a Risk Management and Internal Control Organization, led by the Head of
+Assurance. In order to allow for a meaningful discussion at the Siemens Group level, this organization aggregates individual risks and
+opportunities of similar cause-and-effect nature into broader risk and opportunity themes. This aggregation naturally results in a mixture
+of risks, including those with a primarily qualitative assessment and those with a primarily quantitative assessment; the same applies to
+opportunities. Accordingly, we do not adopt a purely quantitative assessment of risk and opportunity themes. Thematic risk and
+opportunity assessments as well as our risk-bearing capacity then form the basis for the evaluation of the company-wide risk and
+opportunity situation during the quarterly Managing Board meetings. The Head of Assurance assists the Managing Board with the
+operation and oversight of the risk and internal control system and reporting to the Audit Committee of the Supervisory Board.
+24
+Combined Management Report
+8.3 Risks
+Our risk management policy stems from a philosophy of pursuing sustainable growth and creating economic value while managing
+appropriate risks and opportunities and avoiding inappropriate risks. As risk management is an integral part of how we plan and execute
+our business strategies, our risk management policy is set by the Managing Board. Our organizational and accountability structure requires
+each of the respective managements of our organizational units to implement risk management programs that are tailored to their specific
+industries and responsibilities, while being consistent with the overall policy.
+Given the above-mentioned assumptions, we expect profitable growth of our Industrial Business to drive an increase in EPS pre PPA
+excluding Siemens Energy Investment to a range of €10.40 to €11.00 in fiscal 2024, along with a corresponding increase in net income.
+For comparison, fiscal 2023 EPS pre PPA was €9.93 excluding €0.84 in EPS pre PPA from Siemens Energy Investment.
+Our forecast for net income takes into account a number of additional factors. We assume solid project execution continues in fiscal 2024.
+We plan to keep the ratio of R&D expenses to revenue, which was 8% in fiscal 2023 at approximately the level in fiscal 2024. We expect
+the ratio of selling and general administrative expenses to revenue, which was 18% in fiscal 2023 to remain approximately on this level in
+fiscal 2024. Severance charges, which were €0.4 billion in fiscal 2023, are expected at a lower level in fiscal 2024.
+We anticipate our tax rate for fiscal 2024 to be in the range of 24% to 29%. This assumption does not take into consideration possible
+impacts from potential major tax reforms.
+In the E.U., GDP is expected to increase by 0.8% in calendar 2024, after an anticipated growth of 0.4% in calendar 2023. The effects of the
+energy crisis still show negative impacts, especially in energy-intensive industries. Tighter monetary policy - the European Central Bank
+lifted the main policy interest rate to 4.5% in just over one year also held back growth, particularly in the construction industry. The
+German economy is most impacted due to its proportionally large manufacturing sector and is expected to grow by only 0.5% in calendar
+2024.
+-
+-
+The U.S. economy is expected to decelerate to a soft landing. After unexpectedly strong GDP growth (expected to be +2.5%) in calendar
+2023, caused mainly by a very strong services sector while industry was weak, growth in calendar 2024 is expected to slow down to 1.6%.
+Tighter financial conditions
+the Federal Reserve increased the main policy interest rate to 5.5% and longer-term interest rates also
+increased substantially – will unfold their full effect next year. Hence, a short and shallow recession during calendar 2024, while not our
+baseline assumption, is also possible and expected by some economists. Consumer spending is expected to continue as a primary growth
+driver, while government investment programs (CHIPS Act, Inflation Reduction Act) play a supporting role for the economy as they spur
+business investment.
+-
+GDP in China is expected to grow at only 4.6% in calendar 2024, after an anticipated growth of 5.0% in calendar 2023. The correction in
+the real estate sector will continue to weigh on GDP growth. During calendar 2024 global goods demand, world trade and industrial
+production are expected to modestly increase again. The main assumption behind this expectation is further normalization for two critical
+factors: consumer spending and the inventory policies of companies. Both weighed on industrial output in calendar 2023 but are expected
+to modestly support growth of the Chinese economy in calendar 2024. In addition, Chinese private consumption is expected to drive
+domestic demand and some tailwinds will come from announced stimulus measures.
+Globally, the decline of inflation rates is expected to continue, although at a slower pace. Past interest rate hikes are having the desired
+effect, and headline inflation is expected to steadily approach the central bank targets. Hence, monetary policy is expected to become less
+restrictive in calendar 2024.
+Global fixed investments should benefit from government programs and from factory investments to improve supply chain resilience and
+other diversification measures. Global gross fixed investments are expected to grow by 3.2% in calendar 2024, unchanged from 3.2% in
+the year before.
+Given the forecasted further slowdown of the global economy, growth of markets served by Siemens is also expected to slow in fiscal
+2024 in light of significant headwinds, few tailwinds, and reduced stabilizing effects from high industry's order backlogs and price
+adjustments in a number of our businesses.
+The forecasts for calendars 2024 and 2023 presented here for GDP and fixed investments are based on a report from S&P Global dated
+October 15, 2023.
+8.1.2 Siemens Group
+We are basing our outlook for fiscal 2024 on the above-mentioned expectations and assumptions regarding the overall economic situation
+and also on the specific market conditions we expect for our respective industrial businesses, as described in chapter 3 Segment
+information. Furthermore, we assume that geopolitical tensions do not further increase. We expect improvements in productivity and
+adjusting prices for our own products, solutions and services to more than offset effects from wage increases and higher prices for raw
+materials and components.
+We are exposed to currency translation effects, mainly involving the U.S. dollar, the British pound and currencies of emerging markets,
+particularly the Chinese yuan. Siemens is still a net exporter from the Eurozone to the rest of the world, so a weak euro is principally
+favorable for our business and a strong euro is principally unfavorable. While we expect volatility in global currency markets to continue
+in fiscal 2024, we have improved our natural hedge on a global basis through geographic distribution of our production facilities in the
+past. In addition to the natural hedging strategy, we also hedge currency risk in our export business using derivative financial instruments.
+We expect these steps to help us limit effects on income related to currency in fiscal 2024. In this outlook, we assume that currency
+translation effects in fiscal 2024 slightly reduce nominal volume growth rates for Siemens and profitability of our businesses.
+This outlook excludes burdens from legal and regulatory matters.
+Segments
+Digital Industries expects for fiscal 2024 comparable revenue development of 0% to 3%. This is based on the assumption that following
+destocking by customers, global demand in the automation businesses, especially in China, will pick up again in the second half of the
+fiscal year. The profit margin is expected to be 20% to 23%.
+Smart Infrastructure expects for fiscal 2024 comparable revenue growth of 7% to 10%. The profit margin is expected to be 15% to 17%.
+Mobility expects for fiscal 2024 comparable revenue growth of 8% to 11%. The profit margin is expected to be 8% to 10%.
+22
+Combined Management Report
+Siemens Healthineers expects to achieve comparable revenue growth of 4.5% to 6.5% in fiscal 2024, and to contribute solidly to the profit
+and profit margin of our Industrial Business.
+SFS anticipates further gradually improved earnings before taxes in fiscal 2024 compared to fiscal 2023. Return on equity (ROE) (after tax)
+is expected to be in the target range of 15% to 20%.
+Revenue growth
+For comparable revenue, we expect the Siemens Group to achieve comparable revenue growth in the range of 4% to 8%. Furthermore,
+we anticipate that orders in fiscal 2024 will exceed revenue for a book-to-bill ratio above 1.
+As of September 30, 2023, our order backlog totaled €111 billion, and we expect conversion from the backlog to strongly support revenue
+growth in fiscal 2024 with approximately €43 billion of past orders converted to current revenue. For expected conversion of order backlog
+to revenue for our respective segments, see chapter 3 Segment information.
+Profitability
+Outside our reportable segments, we expect Portfolio Companies to achieve an operational margin of more than 5%.
+Results of Siemens Energy Investment depend on the performance of Siemens Energy and are excluded from our forecast for EPS pre PPA.
+We anticipate that Siemens Real Estate will continue with real estate disposals depending on market conditions. Results for Innovation are
+expected on the prior-year level, which was a negative €0.2 billion. The negative results related to Governance declined to €0.5 billion in
+fiscal 2023; we expect a further improvement in fiscal 2024. Centrally carried pension expense are expected to be on the prior-year level,
+which was a negative €0.1 billion. Amortization of intangible assets acquired in business combinations is expected in a range of €0.7
+billion to €0.8 billion in fiscal 2024 based on our current business portfolio. Financing, eliminations and other items, which were a negative
+€0.3 billion in fiscal 2023, are expected to be on the prior-year level depending on market developments.
+8.1.1 Worldwide economy
+Cash outflows for dividends attributable to non-controlling interests mainly included dividends paid to the shareholders of Siemens
+Healthineers AG.
+Combined Management Report
+The entire CMS is continuously adapted to business-specific risks and various local legal requirements. The findings from compliance risk
+management as well as compliance controls and audits are used to derive measures for its further development.
+10.1 Composition of common stock
+Following the cancellation of 50 million registered shares of no par value of the Company (Siemens shares) in February 2023, the
+Company's capital stock amounts to €2.400 billion (as of September 30, 2023), divided into 800 million Siemens shares. The shares are
+fully paid in. All shares confer the same rights and obligations. The shareholders' rights and obligations are governed in detail by the
+provisions of the German Stock Corporation Act, in particular by Sections 12, 53a et seq., 118 et seq. and 186 of the German Stock
+Corporation Act.
+10.2 Restrictions on voting rights or transfer of shares
+At the Shareholders' Meeting, each share of stock has one vote and accounts for the shareholder's proportionate share in the Company's
+net income. An exception to this rule applies with regard to treasury shares held by the Company, which do not entitle the Company to
+any rights. Under Section 136 of the German Stock Corporation Act the voting right of the affected shares is excluded by law.
+Siemens shares issued to employees worldwide under the Siemens share programs implemented since the beginning of fiscal 2009, in
+particular the Share Matching Plan, are freely transferable unless applicable local laws indicate otherwise. Under the rules of the Share
+Matching Plan, however, in order to receive one matching share free of charge for each three shares purchased, participants are required
+to hold the shares purchased by them for a vesting period of several years, during which the participants must be continuously employed
+by Siemens AG or any of its affiliated companies. The right to receive matching shares is forfeited if the purchased shares are sold,
+transferred, hedged on, pledged or hypothecated in any way during the relevant vesting period.
+The von Siemens-Vermögensverwaltung GmbH (VSV) has, on a sustained basis, powers of attorney allowing it to exercise the voting rights
+for 10,059,581 Siemens shares (as of September 30, 2023) on behalf of members of the Siemens family. These shares are part of the total
+number of shares held by the family's members. The powers of attorney are based on an agreement between the VSV and, among others,
+members of the Siemens family. The shares are voted together by vSV, taking into account the suggestions of a family partnership
+established by the family's members or of one of this partnership's governing bodies.
+10.3 Legislation and provisions of the Articles of Association applicable to the appointment and
+removal of members of the Managing Board and governing amendment to the Articles of
+Association
+The appointment and removal of members of the Managing Board are subject to the provisions of Sections 84 and 85 of the German Stock
+Corporation Act and Section 31 of the German Codetermination Act (Mitbestimmungsgesetz). According to Section 8 para. 1 of the Articles
+of Association, the Managing Board is comprised of several members, the number of which is determined by the Supervisory Board.
+According to Section 179 of the German Stock Corporation Act, any amendment to the Articles of Association requires a resolution of the
+Shareholders' Meeting. The authority to adopt purely formal amendments to the Articles of Association was transferred to the Supervisory
+Board under Section 13 para. 2 of the Articles of Association. In addition, by resolutions adopted during past Shareholders' Meetings, the
+Supervisory Board has been authorized to amend Section 4 of the Articles of Association in accordance with the utilization of the
+Authorized and Conditional Capitals, and after expiration of the then-applicable authorization and utilization period.
+Resolutions of the Shareholders' Meeting require a simple majority vote, unless a greater majority is required by law (Section 23 para. 2 of
+the Articles of Association). Pursuant to Section 179 para. 2 of the German Stock Corporation Act, amendments to the Articles of
+Association require a majority of at least three-quarters of the capital stock represented at the time of the casting of the votes, unless
+another capital majority is prescribed by the Articles of Association.
+10.4 Powers of the Managing Board to issue and repurchase shares
+The Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until February 2, 2026 by up
+to €90 million through the issuance of up to 30 million Siemens shares against contributions in cash (Authorized Capital 2021).
+Subscription rights of existing shareholders are excluded. The new shares shall be offered exclusively to employees of the Company and
+any of its affiliated companies. To the extent permitted by law, such employee shares may also be issued in such a manner that the
+contribution to be paid on such shares is covered by that part of the annual net income which the Managing Board and the Supervisory
+Board may allocate to other retained earnings under Section 58 para. 2 of the German Stock Corporation Act.
+Furthermore, the Managing Board is authorized to increase, with the approval of the Supervisory Board, the capital stock until January 29,
+2024 by up to €510 million through the issuance of up to 170 million Siemens shares against contributions in cash and/or in kind
+(Authorized Capital 2019).
+As of September 30, 2023, the total unissued authorized capital of Siemens AG therefore consisted of €600 million nominal that may be
+used, in installments with varying terms, by issuing up to 200 million Siemens shares.
+By resolutions of the Shareholders' Meetings on January 30, 2019 and February 5, 2020, the Managing Board is authorized to issue bonds
+with conversion, exchange or option rights or conversion obligations, or a combination of these instruments, entitling the holders/creditors
+to subscribe to up to 80 million and up to 60 million Siemens shares, respectively. Based on these two authorizations, the Company or its
+affiliated companies may issue such convertible bonds and/or warrant bonds until January 29, 2024 and February 4, 2025, respectively,
+each in an aggregate principal amount of up to €15 billion. In order to grant shares of stock to holders/creditors of such convertible bonds
+35
+Combined Management Report
+and/or warrant bonds, the capital stock was conditionally increased by resolutions of the Shareholders' Meetings in 2019 and 2020, by up
+to 80 million and up to 60 million Siemens shares, respectively (Conditional Capitals 2019 and 2020), i.e. in total by up to €420 million
+nominal through the issuance of up to 140 million Siemens shares.
+The new shares under Authorized Capital 2019 and the aforementioned bonds are to be issued against contributions in cash or in kind.
+They are, as a matter of principle, to be offered to shareholders for subscription. The Managing Board is authorized to exclude, with the
+approval of the Supervisory Board, subscription rights of shareholders in the event of capital increases against contributions in kind. In the
+event of capital increases against contributions in cash, the Managing Board is authorized to exclude shareholders' subscription rights with
+the approval of the Supervisory Board in the following cases:
+⚫ used to service or secure obligations or rights to acquire Siemens shares arising particularly from or in connection with convertible bonds
+or warrant bonds of the Company or its affiliated companies. Moreover, the Managing Board is authorized to exclude subscription rights
+in order to provide subscription rights as dilution compensation for holders/creditors of conversion or option rights/obligations on
+Siemens shares, and to use Siemens shares to service such subscription rights.
+• sold by the Managing Board, with the approval of the Supervisory Board, against payment in cash if the price at which such Siemens
+shares are sold is not significantly lower than the market price of Siemens stock (exclusion of subscription rights, limited to 10% of the
+capital stock, by mutatis mutandis application of Section 186 para. 3 sentence 4 German Stock Corporation Act); or
+⚫ offered and transferred, with the approval of the Supervisory Board, to third parties against non-cash contributions;
+• used in connection with share-based compensation programs and/or employee share programs of the Company or any of its affiliated
+companies and issued to individuals currently or formerly employed by the Company or any of its affiliated companies as well as to
+board members of any of the Company's affiliated companies;
+retired;
+In addition to selling over the stock exchange or through a public sales offer to all shareholders, the Managing Board is authorized by
+resolution of the Shareholders' Meeting on February 5, 2020 to also use Siemens shares repurchased on the basis of this or any previously
+given authorization for every permissible purpose. In particular such shares may be:
+10. Takeover-relevant information (pursuant to Sections 289a
+and 315a of the German Commercial Code) and explanatory
+report
+•
+The new shares issued or to be issued against contributions in cash or in kind, and with shareholders' subscription rights excluded, may in
+certain cases be subject to further restrictions. The details of those restrictions are described in the respective authorizations. In addition,
+the Managing Board has declared, by way of a voluntary commitment, not to increase the capital stock from the Authorized Capital 2019
+and the Conditional Capitals 2019 and 2020 by a total of more than 10% of the capital stock existing at the time of the Shareholders'
+Meeting on February 5, 2020, to the extent that capital increases with shareholders' subscription rights excluded are made from the
+Authorized Capital 2019 against contributions in cash or in kind or to service convertible bonds and/or warrant bonds issued under the
+authorizations approved on January 30, 2019 or February 5, 2020 with shareholders' subscription rights excluded. This voluntary
+commitment ends no later than February 4, 2025.
+The exclusion is used to provide subscription rights as dilution compensation for holders/creditors of conversion or option rights/
+obligations on Siemens shares.
+The exclusion is necessary with regard to fractional amounts resulting from the subscription ratio.
+•
+•
+• The issue price of the new shares/bonds is not significantly lower than the stock market price of Siemens shares already listed or the
+theoretical market price of the bonds computed in accordance with generally accepted actuarial methods (exclusion of subscription
+rights, limited to 10% of the capital stock, in accordance with or by mutatis mutandis application of Section 186 para. 3 sentence 4
+German Stock Corporation Act).
+The Company may not repurchase Siemens shares unless so authorized by a resolution duly adopted by the shareholders at a general
+meeting or in other very limited circumstances set forth in the German Stock Corporation Act. On February 5, 2020, the Shareholders'
+Meeting authorized the Company to acquire until February 4, 2025 up to 10% of its capital stock existing at the date of adopting the
+resolution or if the value is lower - as of the date on which the authorization is exercised. The aggregate of shares of stock of Siemens
+AG repurchased under this authorization and any other Siemens shares previously acquired and still held in treasury by the Company or
+attributable to the Company pursuant to Sections 71d and 71e of the German Stock Corporation Act may at no time exceed 10% of the
+then existing capital stock. Any repurchase of Siemens shares shall be accomplished at the discretion of the Managing Board either (1) by
+acquisition over the stock exchange, (2) through a public share repurchase offer or (3) through a public offer to swap Siemens shares for
+shares in a listed company within the meaning of Section 3 para. 2 German Stock Corporation Act. The Managing Board is additionally
+authorized to complete the repurchase of Siemens shares in accordance with the authorization described above by using certain derivatives
+(put and call options, forward purchases and any combination of these derivatives). In exercising this authorization, all stock repurchases
+based on the derivatives are limited to a maximum volume of 5% of Siemens' capital stock existing at the date of adopting the resolution
+at the Shareholders' Meeting. A derivative's term of maturity may not, in any case, exceed 18 months and must be chosen in such a way
+that the repurchase of Siemens shares upon exercise of the derivative will take place no later than February 4, 2025.
+Combined Management Report
+34
+The Corporate Governance statement pursuant to Sections 289f and 315d of the German Commercial Code is publicly available on the
+company's website at siemens.com/corporate-governance.
+4,666
+18,270
+2%
+13,380
+13,604
+0%
+540
+4,313
+540
+20,623
+21,422
+(3)%
+107,005
+103,884
+107%
+4%
+Furthermore, the Supervisory Board is authorized to use shares acquired on the basis of this or any previously given authorization to meet
+obligations or rights to acquire Siemens shares that were or will be agreed with members of the Managing Board within the framework of
+rules governing Managing Board compensation.
+8%
+3%
+9.3 Corporate Governance statement
+The increase in equity was due to net income for the year of €4.5 billion and the transfer of €0.6 billion in treasury shares to employees
+in connection with our share-based payment programs. These factors were partly offset by dividends paid in fiscal 2023 (for fiscal 2022)
+of €3.4 billion and share buybacks during the year amounting to €0.9 billion. The equity ratio as of September 30, 2023 increased to 21%,
+from 19% a fiscal year earlier. For the disclosures in accordance with Section 160 para. 1 no. 2 of the German Stock Corporation Act about
+treasury shares, refer to Note 15 of our Notes to Annual Financial Statements for fiscal 2023.
+The change in cash and cash equivalents, other securities relates to the liquidity management conducted by Corporate Treasury, which
+was focused not solely on the business activities of Siemens AG. The liquidity management is based on the financing policy of the Siemens
+Group, which is aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Intra-
+group financing activities drove both a decrease of €4.5 billion in receivables from affiliated companies, which resulted in lower
+inventories, receivables and other assets, and a decrease of €4.5 billion in liabilities to affiliated companies, which was the main reason
+for the decrease of trade payables, liabilities to affiliated companies and other liabilities.
+(3)%
+107,005
+103,884
+17,693
+0%
+67,914
+235
+(6)%
+67,275
+(47)%
+639
+339
+63,079
+63,417
+235
+(7)%
+16
+On June 24, 2021, the Company announced that it would launch a new five-year share buyback program, beginning in fiscal 2022. This
+buyback, which began on November 15, 2021 and extends at the latest until September 15, 2026, is limited to a maximum value of €3
+billion (excluding incidental transaction charges) on purchases of no more than 50 million Siemens shares. Using the authorization given
+by the Annual Shareholders' Meeting on February 5, 2020, Siemens repurchased 21.0 million shares by September 30, 2023 under this
+share buyback. This buyback has the exclusive purposes of retirement, of issuing shares to employees, board members of affiliated
+companies and members of the Managing Board of Siemens AG, and of servicing/securing the obligations or rights to acquire Siemens
+shares arising particularly from or in connection with convertible bonds and warrant bonds.
+36
+For additional information with respect to specific proceedings, see Note 22 in Notes to Consolidated Financial Statements for fiscal 2023.
+8.3.5 Assessment of the overall risk situation
+The most significant challenges have been mentioned first in each of the four risk categories: strategic, operational, financial and
+compliance.
+While our assessments of individual risks have changed during fiscal 2023 due to developments in the external environment, changes in
+our business portfolio, effects of our own mitigation measures and the revision of our risk assessment, the overall risk situation for Siemens
+did not change significantly as compared to the prior year. We currently see the strategic risk economic, political and geopolitical conditions
+as the most significant challenge for us followed by the operational risk cyber/information security.
+At present, no risks have been identified that either individually or in combination could endanger our ability to continue as a going
+concern.
+8.4 Opportunities
+Within our ERM we regularly identify, evaluate and respond to opportunities that present themselves in our various fields of activity. Below
+we describe our most significant opportunities. Unless otherwise stated, the opportunities described relate to all organizational units. The
+order in which the opportunities are presented reflects the currently estimated relative exposure for Siemens associated with these
+opportunities and thus provides an indication of the opportunities' current importance to us. The described opportunities are not
+necessarily the only ones we encounter. In addition, our assessment of opportunities is subject to change because the Company, our
+markets and technologies are constantly advancing. It is also possible that opportunities we see today will never materialize.
+Favorable political and regulatory environment including sustainability: A favorable political and regulatory environment including
+the transition towards a low-carbon economy could restore a more positive industrial investment sentiment that supports the growth of
+our markets. In addition, government initiatives and subsidies (including tax reforms, green and digital recovery plans, R&D among others)
+lead to more government spending (e.g. infrastructure, healthcare, mobility or digitalization investments) and may ultimately result in an
+opportunity for us to participate in ways that increase our revenue and profit. Investments to strengthen countries' resilience, energy and
+food security, as well as to diversify value chains close to major markets (reshoring, nearshoring) can present opportunities to businesses.
+By enabling our customers to reduce their greenhouse gas (GHG) emissions using our portfolio and by reducing CO2 emission in our own
+operations, Siemens strives to support the transition towards a low-carbon economy. Siemens also welcomes and supports recent
+29
+Combined Management Report
+legislative and governmental measures to accelerate the mitigation of climate change, especially in Europe such as through the Green
+Deal or sustainable finance initiatives.
+Value creation through innovation: We drive innovation by investing significantly in R&D in order to develop sustainable solutions for
+our customers while also strengthening our own competitiveness. Being an innovative company and constantly inventing new
+technologies that we expect will meet future demands arising from the megatrends of demographic change, urbanization, digitalization,
+environmental change, resource scarcity and glocalization is one of our core purposes. We are granted thousands of new patents every
+year and continuously develop new concepts and convincing new digital and data-driven business models. This helps us create the next
+generation of ground-breaking innovations in such fields as digital twin, artificial intelligence, automation and edge computing. Across
+our operating units, we are profiting from our strength in connecting the real and digital worlds. Our Xcelerator platform is an open, digital
+business platform featuring a curated portfolio of loT-enabled hardware and software, an ecosystem and a marketplace to enhance the
+digital transformation of our customers. We see growth opportunities in opening up access to new markets and customers through new
+marketing and sales strategies, which we implement in our operating units. Our position along the value chains of automation and
+digitalization allows us to further increase market penetration. Along these value chains, we have identified several clear growth fields in
+which we see our greatest long-term potential. Hence, we are combining and developing our resources and capabilities for these growth
+fields.
+Leveraging Market Potential: Through sales and services initiatives we continuously strive to grow and extend our businesses in
+established markets, open up new markets for existing portfolio elements and strengthen our installed base in order to gain a higher
+market share and increased profits. Furthermore, we aim to increase our sales via improved account management and new distribution
+channels.
+Optimization of organization and processes: On the one hand, we leverage ideas to drive further improvements in our processes and
+cost structure, such as common computing architecture for image processing. Furthermore, we leverage ideas to drive further
+improvements in our processes and cost structure optimizing factory capacities for shorter lead times. On the other hand, we see an
+opportunity of further penetrating markets by quality initiative program and avoiding or reducing non conformance cost.
+Mergers, acquisitions, equity investments, partnerships, divestments and streamlining our portfolio: We constantly monitor our
+current and potential markets to identify opportunities for strategic mergers, acquisitions, equity investments and partnerships, which
+may complement our organic growth. Such activities may help us to strengthen our position in our existing markets, provide access to
+new or underserved markets, or complement our technological portfolio in strategic areas. Opportunities might also arise when portfolio
+optimization measures generate gains, which enable us to further pursue our other strategies for growth and profitability.
+Assessment of the overall opportunities situation: The most significant opportunity for Siemens is favorable political and regulatory
+environment (including sustainability) as described above.
+While our assessments of individual opportunities have changed during fiscal 2023 due to developments in the external environment,
+changes in our business portfolio, our endeavors to profit from them and revision of our strategic plans, the overall opportunity situation
+for Siemens did not change significantly as compared to the prior year.
+8.5 Significant characteristics of the internal control and risk management system
+8.5.1 Internal Control System (ICS) and ERM
+The Compliance Control Program aims to ensure compliance with and implementation of the CMS and processes used worldwide. It is part
+of the ICS and is continuously further developed and adapted to the current Siemens guidelines. In addition, current compliance issues are
+discussed at the management level on a regular basis.
+8.5.2 Compliance Management System (CMS)
+Siemens Healthineers is largely subject to the Group-wide principles for our ICS and ERM and is responsible for adhering to those principles.
+The integration of Varian into our ICS, which began in fiscal 2021 after the acquisition by Siemens Healthineers, continued in fiscal 2023
+and was completed to a very large extent with regard to all Varian entities. The integration measures are planned to be completely finalized
+in fiscal 2024.
+The Audit Committee is systematically integrated into our ICS and ERM. In particular, it oversees the accounting and the accounting process
+as well as the adequacy and effectiveness of the ICS, ERM and the internal audit system.
+Nevertheless, there are inherent limitations on the effectiveness of any risk management and control system. For example, no system -
+even if deemed to be adequate and effective – can guarantee that all risks that will actually occur will be identified in advance or that any
+process violations will be ruled out under all circumstances.
+At the end of each fiscal year, our Managing Board performs an evaluation of the adequacy and effectiveness of the ICS and ERM. This
+evaluation is based primarily on the Siemens "In Control"-Statement and quarterly Managing Board meetings. The purpose of the "In
+Control"-Statement is to provide an overview of the key elements of the ICS and ERM of Siemens AG and its affiliated companies at the
+end of the fiscal year, to summarize the activities undertaken to review its adequacy and effectiveness and highlight any critical control
+weaknesses identified as part of these activities. The information contained in this statement is provided to the Audit Committee of the
+Supervisory Board of Siemens AG to report on the effectiveness of the ICS and ERM. The Siemens "In Control"-Statement is supported by
+certifications at various corporate levels and by all affiliated companies. In the quarterly Managing Board meetings, the company-wide risk
+and opportunity situation is evaluated, the results of the internal control process are explained and once a year an overall conclusion is
+made about the adequacy and effectiveness of our ICS or ERM. Based on this, the Managing Board has no indication that our ICS or ERM
+in their respective wholes have not been adequate or effective as of September 30, 2023.
+In addition, while we have procedures in place to ensure compliance with applicable governmental regulations in the conduct of our
+business operations, it cannot be excluded that violations of applicable governmental regulations may be caused either by us or by third
+parties that we contract with, including suppliers or service providers whose activities may be attributed to us. Any such violations
+particularly expose us to the risk of liability, penalties, fines, reputational damage or loss of licenses or permits that are important to our
+business operations. In particular, we could also face liability for damage or remediation for environmental contamination at the facilities
+we design or operate. With regard to certain environmental risks, we maintain liability insurance at levels that our management believes
+are appropriate and consistent with industry practice. We may incur environmental losses beyond the limits, or outside the coverage, of
+such insurance, and such losses may have an adverse effect on our business situation, financial condition and results of operations.
+Current or future litigation and legal and regulatory proceedings: Siemens is and potentially will be involved in numerous legal disputes
+and proceedings in various jurisdictions. These legal disputes and proceedings could result, in particular, in Siemens being subject to
+payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual cases this may
+also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. Asserted claims are generally
+subject to interest rates. Some of these legal disputes and proceedings could result in adverse decisions for Siemens; or decisions,
+assessments or requirements of regulatory authorities could deviate from our expectations, which may have material effects on our
+business activities as well as our financial position, results of operations and cash flows. Siemens maintains liability insurance for certain
+legal risks at levels our management believes are appropriate and consistent with industry practice. However, the insurance policy does
+not protect Siemens against, in particular, reputational damage. Moreover, Siemens may incur losses relating to legal disputes and
+proceedings beyond the limits, or outside the coverage, of such insurance or exceeding any provisions made for losses related to legal
+disputes and proceedings. Finally, there can be no assurance that Siemens will be able to maintain adequate insurance coverage on
+commercially reasonable terms in the future.
+and subsequently by our Managing Board and Audit Committee. The audit procedures for these topics will be - where reasonable -
+executed by joint teams including members of our and Siemens Healthineers' internal audit functions, thus respecting the interests of
+both Siemens AG and Siemens Healthineers.
+30
+Our ICS and ERM and their contributing elements are regularly subject of audit activities by our internal audit function. These are carried
+out either as part of the risk-based annual audit plan or as part of audits scheduled during the year upon request. Siemens Healthineers
+has its own internal audit function and annual audit plan. Topics from the annual audit plan of Siemens Healthineers that are also relevant
+for our Managing Board and Audit Committee must be mandated first by Siemens Healthineers' Managing Board and Audit Committee
+We have an overarching, integrated ICS and ERM methodology (RIC methodology) with a standardized procedure under which necessary
+controls are defined, documented in accordance with uniform standards, and tested regularly for their adequacy and effectiveness. For
+more information on ERM, see chapter 8.2 Risk management.
+Overall responsibility for our ICS and ERM lies with the Managing Board. The Siemens Risk and Internal Control (RIC) organization bundles
+and integrates the internal control and ERM processes and supports the Managing Board in designing and maintaining adequate and
+effective processes for implementing, monitoring and reporting on internal control and ERM activities. It consists of the central RIC
+departments of Siemens AG and the RIC departments at our organizational units. The central RIC departments are responsible for
+monitoring and coordinating the entire processes in order to ensure an adequate and effective ICS and ERM within the Group.
+Our ICS and ERM are based on the globally accepted COSO framework (Committee of Sponsoring Organizations of the Treadway
+Commission). Our ERM approach is based on the COSO Standard "Enterprise Risk Management - Integrating with Strategy and
+Performance" (2017) and the ISO (International Organization for Standardization) Standard 31000 (2018) and is adapted to Siemens
+requirements. Our ICS is based on the internationally recognized "Internal Control - Integrated Framework" (2013) also developed by
+COSO. The framework defines the elements of a control system and sets the standard for assessing the adequacy and effectiveness of the
+ICS. The frameworks connect the ERM process with our financial reporting process and our ICS, both systems are complementary.
+All Siemens entities are part of our ICS and ERM. The scope of activities to be performed by each entity is different, depending, among
+others, on the entity's impact on the Consolidated Financial Statements of Siemens and the specific risks associated with the entity. The
+management of each entity is obliged to implement an adequate and effective ICS and ERM within their area of responsibility, based on
+the group-wide mandatory methodology.
+Our ICS and ERM are based on the principles, guidelines and measures introduced by the Managing Board, which are aimed at the
+organizational implementation of the Managing Board's decisions. Our ICS and ERM include the management of risks and opportunities
+relating to the achievement of business goals, the correctness and reliability of internal and external accounting, and compliance with the
+laws and regulations relevant to Siemens. Sustainability aspects are covered as well and are continuously developed based on the
+regulatory requirements.
+Combined Management Report
+Environmental, health & safety and other governmental regulations: Some of the industries in which we operate are highly regulated.
+Current and future environmental, health, safety and other governmental regulations or changes thereto may require us to change the
+way we run our operations and could result in significant increases in our operating or production costs. Furthermore, we see the risk of
+potential environmental, health or safety incidents as well as potential non-compliance with environmental, health or safety regulations
+affecting Siemens and our contractors or sub-suppliers, resulting for example in serious injuries, business interruptions, penalties, loss of
+reputation and internal or external investigations.
+Protectionism (including tariffs/trade war): Protectionist trade policies, de-coupling and changes in the political and regulatory
+environment in the markets in which we operate, such as import and export controls, tariffs and other trade barriers including debarment
+from certain markets, inbound and outbound investment screenings, and price or exchange controls, could affect our business in national
+markets and could impact our business situation, financial position and results of operations; we may also be exposed to penalties, other
+sanctions and reputational damage. In addition, the uncertainty of the legal environment in some regions could limit our ability to enforce
+our rights and subject us to increasing costs related to adjusting our compliance programs.
+state sponsors of terrorism. As a result, it is possible that such policies may result in our inability to gain or retain certain investors or
+customers. In addition, the termination of our activities in sanctioned countries may expose us to customer claims and other actions. Our
+reputation could also suffer due to our activities with counterparties in or affiliated with these countries or due to unauthorized diversion
+of our products to restricted parties or destinations. Siemens addresses these risks by maintaining a comprehensive and robust control
+program.
+37
+We are not aware of, nor have we during the last fiscal year been notified of, any shareholder directly or indirectly holding 10% or more
+of the voting rights. There are no Siemens shares with special rights conferring powers of control. Shares of stock issued by Siemens AG
+to employees under its share programs and/or as share-based compensation are transferred to the employees. The beneficiary employees
+who hold shares of employee stock may exercise their control rights in the same way as any other shareholder in accordance with
+applicable laws and the Articles of Association.
+10.7 Other takeover-relevant information
+On September 18, 2019, the Supervisory Board of Siemens AG resolved that the contracts with members of the Managing Board should
+not contain such right of termination in the future. This has already been taken into account in the case of contract extensions and in the
+case of new contracts with the newly appointed members of the Managing Board as of October 1, 2020.
+The contracts with the members of the Managing Board previously contained the right of the member to terminate his or her contract
+with the Company for good cause in the event of a change of control that results in a substantial change in the position of a Managing
+Board member (for example, due to a change in corporate strategy or a change in the Managing Board member's duties and
+responsibilities). A change of control exists if one or several shareholders acting jointly or in concert acquire a majority of the voting rights
+in Siemens AG and exercise a controlling influence, or if Siemens AG becomes a dependent enterprise as a result of entering into an
+intercompany agreement within the meaning of Section 291 of the German Stock Corporation Act, or if Siemens AG is to be merged into
+an existing corporation or other entity. If this right of termination is exercised, the Managing Board member is entitled to a severance
+payment in the amount of no more than two years' compensation. The calculation of the annual compensation includes not only the base
+compensation and the target amount for the bonus, but also the target amount for the stock awards, in each case based on the most
+recent completed fiscal year prior to termination of the contract. The stock-based compensation components for which a firm commitment
+already exists will remain unaffected. Additionally, the severance payments cover non-monetary benefits by including an amount of 5%
+of the total severance amount. Severance payments will be reduced by 10% as a lump-sum allowance for discounted values and for income
+earned elsewhere. However, this reduction will apply only to the portion of the severance payment that was calculated without taking
+account of the first six months of the remaining term of the Managing Board member's contract. There is no entitlement to a severance
+payment if the Managing Board member receives benefits from third parties in connection with a change of control. A right to terminate
+the contract does not exist if the change of control occurs within a period of twelve months prior to a Managing Board member's
+retirement.
+10.6 Compensation agreements with members of the Managing Board or employees in the
+event of a takeover bid
+Combined Management Report
+Framework agreements concluded by Siemens AG under International Swaps and Derivatives Association Inc. documentation (ISDA
+Agreements) grant each counterparty a right of termination, including in certain cases of (i) a transformation (for example mergers and
+changes of form), (ii) an asset transfer or (iii) acquisition of ownership interests that enables the acquirer to exercise control over Siemens
+AG or its controlling bodies. Partially this right of termination exists only, if (1) the resulting entity fails to simultaneously assume Siemens
+AG's obligations under the ISDA Agreements or (2) the resulting entity's creditworthiness is materially weaker than Siemens AG's
+immediately prior to such event. Generally, ISDA Agreements are designed such that upon termination all outstanding payment claims
+documented under them are to be netted.
+In December 2021, a consolidated subsidiary as borrower and Siemens AG as guarantor entered into a bilateral loan agreement in the
+amount of €500 million, which has been fully drawn. In addition, in March 2020 and in June 2019 respectively, a consolidated subsidiary
+as borrower and Siemens AG as guarantor entered into a bilateral loan agreement, each of which has been drawn in the full amount of
+US$500 million.
+In January 2023, Siemens AG entered into a bilateral loan agreement in the amount of US$250 million and in December 2022, Siemens
+AG entered into a bilateral loan agreement in the amount of PLN500 million; both loan agreements have been fully drawn.
+As of September 30, 2023, Siemens AG maintained lines of credit in the amount of €7.45 billion.
+10.5 Significant agreements which take effect, alter or terminate upon a change of control of
+the Company following a takeover bid
+For details on the authorizations referred to above, especially the terms to exclude subscription rights, please refer to the relevant
+resolution and to Section 4 of the Articles of Association.
+Combined Management Report
+The lines of credit, and the relevant loan agreements mentioned above provide their respective lenders with a right of termination in the
+event that (1) Siemens AG becomes a subsidiary of another company or (2) a person or a group of persons acting in concert acquires
+effective control over Siemens AG by being able to exercise decisive influence over its activities (Art. 3(2) of Council Regulation (EC)
+139/2004).
+As of September 30, 2023, the Company held 10,079,918 shares of stock in treasury.
+11. EU Taxonomy disclosure
+Revenue KPI
+Combined Management Report
+38
+Corresponding to revenue, the difference between Taxonomy-eligible OpEx and Taxonomy-aligned OpEx relates mainly to the
+documentation of DNSH criteria for pollution prevention (Appendix C).
+This aligned OpEx includes €3 million related to a CapEx plan, associated with building projects to be finalized by fiscal 2028, summing up
+to a planned total volume of €1.4 billion (capitalizable and non-capitalizable costs). The buildings are designed to minimize energy use
+and carbon emissions (CCM 7.7).
+The majority of eligible and/or aligned expenditures relate to processes and assets associated with the economic activities described for
+the revenue KPI: (i) Manufacture of low carbon technologies for transport (CCM 3.3) and (ii) rail transportation infrastructure (CCM 6.14).
+These two activities account for half of eligible OpEx and the majority of aligned OpEx.
+The OpEx KPI shows the ratio of OpEx from Taxonomy-eligible and/or aligned economic activities to total OpEx. The total OpEx comprises
+direct non-capitalized costs related to research and development, building renovation measures, short-term leases, maintenance and
+repairs, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant, and equipment per Annex I of
+the Commission Delegated Regulation (EU) 2021/2178. Accordingly, 12.4% (€0.9 billion) of Siemens' OpEx were eligible and 8.2% (€0.6
+billion) were aligned.
+The key performance indicators (KPI) in this section were determined based on Commission Delegated Regulation (EU) 2021/2178 in
+conjunction with the International Financial Reporting Standards applicable for the Consolidated Financial Statements. For calculating the
+eligibility and alignment KPIs, Siemens' business activities and associated revenue, capital expenditures (CapEx), and operating
+expenditures (OpEx) were predominantly directly mapped to an applicable economic activity listed in the Commission Delegated Acts in
+connection with EU regulation 2020/852. For the calculation of CapEx and OpEx, allocations were also made based on the revenue of the
+Taxonomy-eligible and aligned activities. To avoid double counting, a mapping was always made to one economic activity only. Following
+the eligibility assessment, the alignment with Substantial Contribution criteria for all eligible business activities was assessed and
+documented based on appropriate reporting hierarchy levels, such as business-segment, product-family or project level. Once a business
+activity demonstrated Substantial Contribution, the Do No Significant Harm (DNSH) criteria were assessed together with technical experts
+on the product, site, project and/or supplier level. For fiscal 2023, EU Taxonomy reporting is limited to the first two environmental
+objectives (climate change mitigation and climate change adaption). Based on its implemented group-wide structures on risk analysis,
+corporate guidelines and due diligence processes and mechanisms, Siemens fulfills the Minimum Safeguards requirements, which
+comprise the areas of human rights, anti-corruption and bribery, taxation, and fair competition.
+Operating expenditures KPI
+This aligned CapEx includes €116 million related to a CapEx plan, associated with building projects to be finalized by fiscal 2028, summing
+up to a planned total volume of €1.4 billion (capitalizable and non-capitalizable costs). The buildings are designed to minimize energy use
+and carbon emissions (CCM 7.7).
+The CapEx KPI shows the ratio of CapEx from Taxonomy-eligible and/or aligned economic activities to the total CapEx, reflecting additions
+(including additions from business combinations) to other intangible assets and property, plant and equipment in accordance with Note
+13 to the Consolidated Financial Statements. In the reporting year, 34.5% (€1.3 billion) of Siemens' CapEx were eligible, and 12.2% (€0.5
+billion) were aligned. The aligned CapEx is composed as follows: a majority of €0.4 billion is related to additions to property, plant and
+equipment, the remainder pertains to internally generated intangible assets and capitalized right-of-use assets.
+Capital expenditures KPI
+The difference between Taxonomy-eligible revenue and Taxonomy-aligned revenue is mainly due to DNSH criteria related to pollution
+prevention as part of Appendix C, which go beyond existing national regulation. This is mainly because additionally required
+documentation is not completely available yet.
+Taxonomy-eligible and aligned economic activities were primarily driven by the (i) Manufacture of low-carbon technologies for transport
+(Climate Change Mitigation, CCM 3.3), (ii) rail transportation infrastructure (CCM 6.14), (iii) Infrastructure enabling low-carbon road
+transport and public transport (CCM 6.15), all associated with Mobility businesses, as well as (iv) energy-efficient building technologies
+(CCM 3.5) and (v) services for energy-efficient building technologies (CCM 7.5), both related to Smart Infrastructure businesses.
+The revenue KPI shows the ratio of revenue from Taxonomy-eligible and/or aligned economic activities to the total revenue in the
+Consolidated Statements of Income for the reporting year. Based on an assessment of the Siemens business portfolio, Taxonomy-eligible
+revenue accounted for 20.3% and Taxonomy-aligned revenue for 16.5% of total revenue. This translates into €15.7 billion in Taxonomy-
+eligible revenue and €12.8 billion in aligned revenue.
+Acquisition and ownership of buildings (CCM 7.7) related to Siemens' real estate portfolio represents the largest portion in overall CapEx
+eligibility. The difference between Taxonomy-eligible CapEx and Taxonomy-aligned CapEx is impacted by (i) only partial availability of
+information on energy performance certificates for our global portfolio and (ii) energy certificates below the required threshold defined
+in the Substantial Contribution criteria for the energy efficiency of buildings.
+11%
+Our ICS and ERM also comprise a CMS aligned to the Company's risk situation which is based on the three pillars - prevent, detect and
+react. It includes the legal risk areas of corruption, antitrust law, data protection, money laundering, export controls as well as human
+rights and is based on an extensive internal set of rules: The Siemens Business Conduct Guidelines (BCG) define the basic principles and
+standards of behavior that must be observed by all employees in the company units and in relation to customers, external partners and
+the public. In addition, there are extensive internal compliance regulations, including associated controls, which oblige all Siemens
+employees to ensure the implementation of the CMS. They contain topic-specific implementation regulations for the individual risk areas
+with regard to compliance processes and tools as well as additional guidelines and information. The compliance operating model contains
+binding specifications for the employees of the compliance organization and describes responsibilities and how the CMS works.
+Compliance risk management and compliance reviews as part of the CMS aim to identify compliance risks at an early stage and thus enable
+to take appropriate and effective measures to avoid or minimize risks. The risk assessment is also integrated into individual business
+processes and tools. The results of CMS that are relevant to the Group are taken into account as part of the Company-wide ERM.
+2,294
+33
+17,390
+(12,502)
+13%
+(9)%
+4,888
+23%
+28%
+(2,084)
+(1,785)
+(17)%
+(3,701)
+(3,283)
+(13)%
+(53)
+(306)
+83%
+4,734
+4,204
+498
+(298)
+53%
+3,115
+4,758
+Profit carried forward
+2022
+Net income
+Income from business activity
+79%
+(605)
+(128)
+Interest and other financial income (expenses), net
+13%
+Income taxes
+2023
+19,660
+(13,671)
+5,989
+30%
+Income (loss) from investments, net
+Other operating income (expenses), net
+Our internal audit function systematically reviews our financial reporting integrity, our accounting-related ICS and ERM. Siemens
+Healthineers has its own internal audit department and annual audit plan (see also 8.5.1). The Audit Committee is integrated into our
+accounting-related ICS. In particular, it oversees the accounting and accounting process and the adequacy and effectiveness of the
+associated ICS, the ERM and the internal audit system. Moreover, we have rules for accounting-related complaints.
+The integration of Varian into our accounting-related ICS, which began in fiscal 2021 after the acquisition by Siemens Healthineers,
+continued in fiscal 2023 and was completed to a very large extent with regard to all Varian entities. The integration measures are planned
+to be completely finalized in fiscal 2024.
+Siemens Healthineers is subject to our Group-wide principles for the accounting-related internal control and risk management system and
+is responsible for adhering to those principles.
+On a quarterly basis, we execute an internal certification process. Management at different levels of our organization, supported by
+confirmations by managements of entities under their responsibility, confirms the accuracy of the financial data that has been reported to
+Siemens' corporate headquarters and reports on the effectiveness of the related control systems.
+Qualification of employees involved in the accounting process is ensured through appropriate selection processes and training. As a
+fundamental principle, based on materiality considerations, the "four eyes" principle applies, and specific procedures must be adhered to
+for data authorization. Additional control mechanisms include target-performance comparisons and analyses of the composition of and
+changes in individual line items, both in the closing data submitted by reporting units and in the Consolidated Financial Statements. In
+line with our information security requirements, accounting-related IT systems contain defined access rules protecting them from
+unauthorized access. The manual and system-based control mechanisms referred to above generally also apply when reconciling the
+International Financial Reporting Standards (IFRS) closing data to the Annual Financial Statements of Siemens AG.
+Combined Management Report
+32
+31
+Our Consolidated Financial Statements according to IFRS are prepared on the basis of a centrally issued conceptual framework which
+primarily consists of uniform Financial Reporting Guidelines and a chart of accounts. For Siemens AG and other companies within the
+Siemens Group required to prepare financial statements in accordance with German Commercial Code, this conceptual framework is
+complemented by mandatory regulations specific to the German Commercial Code. The need for adjustments in the conceptual framework
+due to regulatory changes is analyzed on an ongoing basis. Accounting departments are informed quarterly about current topics and
+deadlines from an accounting and closing process perspective.
+At the end of each fiscal year, our management performs an evaluation of the effectiveness of the accounting-related ICS. We have a
+standardized procedure under which necessary controls are defined, documented in accordance with uniform standards, and tested
+regularly for their effectiveness. Nevertheless, there are inherent limitations on the effectiveness of any control system, and no system,
+including one determined to be effective, may prevent or detect all misstatements.
+Our ICS and ERM are based on the globally recognized COSO framework, for further information see 8.5.1.
+The overarching objective of our accounting-related ICS and ERM - as part of the overarching ICS and ERM – is to ensure that financial
+reporting is conducted in a proper manner, such that the Consolidated Financial Statements and the Combined Management Report of
+the Siemens Group and the Annual Financial Statements of Siemens AG as the parent company are prepared in accordance with all relevant
+regulations.
+8.5.3 Significant characteristics of the accounting-related ICS and ERM
+2,065
+The base data used in preparing our financial statements consists of the closing data reported by the operations of Siemens AG and its
+subsidiaries. The preparation of the closing data of most of our entities is supported by an internal shared services organization.
+Furthermore, other accounting activities, such as governance and monitoring activities, are usually bundled on a regional level. In
+particular cases, such as valuations relating to post-employment benefits, we use external experts. The reported closing data is used to
+prepare the financial statements in the consolidation system. The steps necessary to prepare the financial statements are subject to both
+manual and automated controls.
+n/a
+32
+9. Siemens AG
+Selling and general administrative expenses
+Research and development expenses
+as percentage of revenue
+Gross profit
+Cost of sales
+Revenue
+Combined Management Report
+% Change
+Statement of Income of Siemens AG in accordance with German Commercial Code (condensed)
+9.1 Results of operations
+As of September 30, 2023, the number of employees was around 47.300.
+The Supervisory Board and the Managing Board propose to distribute a dividend of €4.70 per share of no par value entitled to the dividend,
+from the unappropriated net income of Siemens AG for the fiscal year ended September 30, 2023 amounting to €3.8 billion. The proposed
+dividend represents a total payout of €3.7 billion based on the estimated number of shares entitled to dividend at the date of the Annual
+Shareholders' Meeting. We intend to continue providing an attractive return to our shareholders. This includes striving for a dividend per
+share that exceeds the amount for the preceding year, or at least matches it. For fiscal 2024, we expect that net income of Siemens AG
+will be sufficient to fund the distribution of a commensurate dividend.
+In fiscal 2023, results for Siemens AG arise mainly from the business activities of Digital Industries and Smart Infrastructure and are
+influenced significantly by the results of subsidiaries and investments Siemens AG owns either directly or indirectly. The business
+development of Siemens AG is fundamentally subject to the same risks and opportunities as the Siemens Group. Therefore, the foregoing
+explanations for the Siemens Group apply also for Siemens AG.
+The Annual Financial Statements of Siemens AG have been prepared in accordance with the regulations set forth in the German
+Commercial Code (Handelsgesetzbuch) and the German Stock Corporation Act (Aktiengesetz).
+Fiscal year
+4,460
+(in millions of €)
+23%
+21%
+1,081
+1,307
+2022
+% Change
+Sep. 30,
+2023
+71,303
+Combined Management Report
+Deferred income
+Trade payables, liabilities to affiliated companies and other liabilities
+Liabilities to banks
+Liabilities
+Provisions for taxes and other provisions
+Provisions for pensions and similar commitments
+Total liabilities and equity
+Provisions
+71,576
+72,657
+220
+1%
+3,612
+223
+(10)%
+32,047
+0%
+28,724
+1,623
+2,534
+(14)%
+30,424
+26,190
+0%
+56%
+Special reserve with an equity portion
+72,610
+Liabilities and equity
+The increase in selling and general administrative expenses was due mainly to higher selling expenses led by Digital Industries.
+Other operating income (expenses), net, included mainly a loss of €0.2 billion from a disposal in connection with the carve-out of
+business activities into the Innomotics GmbH, partly offset by €0.1 billion income from an intragroup service contract. Fiscal 2022 included
+mainly expenses of €0.2 billion from the intragroup service contract and expenses of €0.1 billion for the recognition of a provision related
+to guarantees and expected obligations from consortium contracts.
+The R&D intensity (R&D costs as a percentage of revenue) was 10.6%, slightly above the level in fiscal 2022. The R&D activities of Siemens
+AG are fundamentally the same as for its corresponding business activities within the Siemens Group. R&D expenses in both periods related
+mainly to Digital Industries. On an average basis, Siemens AG employed 7,100 people in R&D in fiscal 2023.
+The increases in revenue, cost of sales and research and development expenses were most evident at Digital Industries.
+On a geographical basis, 75% of revenue was generated in the Europe, C.I.S., Africa, Middle East region, 17% in the Asia, Australia region
+and 8% in the Americas region. Exports from Germany accounted for 57% of overall revenue. In fiscal 2023, orders for Siemens AG
+amounted to €16.1 billion.
+4%
+3,613
+Income (loss) from investments, net included mainly income from investments of €2.9 billion (fiscal 2022: €4.8 billion) and income
+from profit transfer agreements with affiliated companies of €1.6 billion (fiscal 2022: €3.5 billion). Additionally, in fiscal 2023 Siemens
+AG recorded a gain of €0.2 billion from the sale of a part of its stake in Siemens Energy AG and a gain of €0.2 billion from the reversal of
+an impairment on the remaining stake in Siemens Energy AG. The remaining stake held directly by Siemens AG amounted to 21.0% as of
+September 30, 2023. These gains were partly offset by a loss of €0.2 billion from an impairment on a stake in Thoughtworks Holding Inc.
+For comparison, in fiscal 2022 Siemens AG recorded losses of €4.0 billion from impairment of investments, which included an impairment
+of €2.9 billion on Siemens AG's stake in Siemens Energy AG, Germany.
+>-200%
+(950)
+Unappropriated net income
+Allocation to other retained earnings
+250
+Equity
+35%
+(185)
+Interest and other financial income (expenses), net included a negative interest result of €0.6 billion compared to a positive interest
+result of €0.4 billion a year earlier, which was driven by the effect of higher interest rates on intragroup-financing activities. Fiscal 2022
+included impacts of €0.6 billion in connection with allowances on receivables from affiliated companies related to business activities in
+Russia, expenses from the recognition of provisions for risks relating to derivative financial instruments of €0.4 billion and a higher negative
+interest component of €0.3 billion from changes in pension and personnel-related provisions.
+3,760
+9.2 Net assets and financial position
+Total assets
+Active difference resulting from offsetting
+33
+Deferred tax assets
+Prepaid expenses
+Cash and cash equivalents, other securities
+Inventories, receivables and other assets
+Current assets
+185
+Financial assets
+Intangible and tangible assets
+Non-current assets
+Assets
+(in millions of €)
+Statement of Financial Position of Siemens AG in accordance with German Commercial Code (condensed)
+7.6
+E
+Installation, maintenance and repair of instruments and devices
+for measuring, regulation and controlling energy performance
+of buildings
+7.5
+14
+24
+0.6%
+100%
+0%
+Y
+Y
+0.0%
+Y
+Y
+Y
+0.6%
+E
+Installation, maintenance and repair of renewable energy
+technologies
+Y
+Y
+Y
+0%
+7
+Y
+Y
+Y
+Y
+Y
+0.1%
+E
+Installation, maintenance and repair of charging stations for
+electric vehicles in buildings (and parking spaces attached to
+buildings)
+7.4
+2
+0.0%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+0.2%
+Y
+0%
+10
+0.3%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+0.3%
+E
+Professional services related to energy performance of
+9.3
+0
+0.0%
+100%
+0%
+Y
+100%
+8.2
+100%
+Data-driven solutions for GHG emissions reductions
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+0.2%
+E
+Acquisition and ownership of buildings
+7.7
+206
+5.4%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+5.4%
+0.1%
+3.0%
+7.3
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+3.0%
+E
+Transmission and distribution of electricity
+4.9
+1
+0.0%
+100%
+0%
+Y
+Y
+Y
+Y
+100%
+Y
+Y
+3.3
+aligned
+proportion
+Category
+(E = enabling;
+of CapEx
+T =
+transitional)
+Manufacture of renewable energy technologies
+3.1
+2
+0.1%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.1%
+E
+Manufacture of low carbon technologies for transport
+115
+Y
+0.0%
+E
+Y
+Y
+1.7%
+E
+Infrastructure enabling low-carbon road transport and public
+transport
+6.15
+18
+0.5%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.5%
+E
+Installation, maintenance and repair of energy efficiency
+equipment
+Y
+Y
+Y
+Y
+Transport by motorbikes, passenger cars and light commercial
+vehicles
+6.5
+12
+0.3%
+100%
+0%
+Y
+Y
+Y
+2
+Y
+Y
+0.3%
+T
+Infrastructure for rail transport
+6.14
+65
+1.7%
+100%
+0%
+Y
+Y
+3.6
+Y
+sustainable activities (not Taxonomy-aligned activities) (A.2.)
+Total (A.1+A.2)
+1,312
+34.5%
+12.2%
+B. Taxonomy-non-eligible activities
+CapEx of Taxonomy-non-eligible activities (B)
+Total (A+B)
+1 Value below €0.5 million, therefore rounded to zero.
+22.3%
+2,496
+3,808
+100.0%
+Confidential
+42
+Draft
+EU Taxonomy - OpEx
+Economic activities
+A. Taxonomy-eligible activities
+65.5%
+848
+CapEx of Taxonomy-eligible but not environmentally
+0.0%
+Installation, maintenance and repair of charging stations for
+electric vehicles in buildings (and parking spaces attached to
+buildings)
+7.4
+1
+0.0%
+Installation, maintenance and repair of instruments and devices
+for measuring, regulation and controlling energy performance
+of buildings
+7.5
+3
+0.1%
+Installation, maintenance and repair of renewable energy
+technologies
+7.6
+2
+0.1%
+Acquisition and ownership of buildings
+7.7
+652
+17.1%
+Data-driven solutions for GHG emissions reductions¹
+8.2
+0
+A.1. Environmentally sustainable activities
+(Taxonomy-aligned)
+Codes
+OpEx
+guards
+Biodiversity
+and
+ecosystems
+Minimum Taxonomy-
+safe-
+guards
+aligned
+proportion
+Category
+(E = enabling;
+of OpEx
+T =
+transitional)
+Manufacture of renewable energy technologies
+3.1
+8
+0.1%
+100%
+0%
+Y
+Y
+Y
+Y
+Pollution
+0.1%
+E/T
+Y/N
+Absolute
+OpEx
+Proportion of
+OpEx
+Substantial contribution criteria
+DNSH criteria
+Circular
+economy
+Combined Management Report
+(in millions of €)
+%
+%
+%
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+%
+4
+7.3
+Installation, maintenance and repair of energy efficiency
+equipment
+Climate
+change
+adaptation
+(in millions of €)
+%
+DNSH criteria
+Climate
+change
+mitigation
+Climate
+change
+adaptation
+Water and
+marine
+resources
+Circular
+Pollution
+Biodiversity
+and
+ecosystems
+Combined Management Report
+change
+mitigation
+Minimum Taxonomy-
+Climate
+CapEx
+Y
+0.0%
+E
+buildings¹
+CapEx of environmentally sustainable activities
+(Taxonomy-aligned) (A.1)
+464
+12.2%
+12.2%
+'Value below €0.5 million, therefore rounded to zero.
+Confidential
+41
+Draft
+EU Taxonomy - CapEx
+Economic activities
+A.2. Taxonomy-Eligible but not environmentally sustainable
+activities (not Taxonomy-aligned activities)
+Codes
+CapEx
+Substantial contribution criteria
+Absolute
+Proportion of
+CapEx
+Y
+safe-
+aligned
+proportion
+of CapEx
+4.9
+4
+0.1%
+Transport by motorbikes, passenger cars and light commercial
+vehicles
+6.5
+67
+1.8%
+Infrastructure for rail transport¹
+6.14
+0
+0.0%
+Infrastructure enabling low-carbon road transport and public
+transport¹
+6.15
+0
+0.0%
+Renovation of existing buildings
+7.2
+51
+1.4%
+Transmission and distribution of electricity
+guards
+0.1%
+Manufacture of other low carbon technologies
+Category
+(E = enabling;
+T =
+transitional)
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+%
+E/T
+Manufacture of low carbon technologies for transport
+3.3
+27
+0.7%
+Manufacture of energy efficiency equipment for buildings
+3.5
+30
+0.8%
+6
+safe-
+E
+ecosystems
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+3.9%
+3.9%
+Infrastructure enabling low-carbon road transport and public
+6.15
+1,159
+1.5%
+100%
+0%
+Y
+Y
+E
+3,013
+6.14
+Infrastructure for rail transport
+Y
+Y
+Y
+0.2%
+E
+Transmission and distribution of electricity
+4.9
+100
+0.1%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.1%
+E
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+0.6%
+E
+equipment
+Installation, maintenance and repair of instruments and devices
+for measuring, regulation and controlling energy performance
+of buildings
+7.5
+2,574
+3.3%
+100%
+90
+0%
+Y
+Y
+Y
+0%
+Y
+100%
+433
+1.5%
+E
+transport
+Infrastructure enabling low carbon water transport
+6.16
+16
+0.0%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.0%
+E
+Installation, maintenance and repair of energy efficiency
+7.3
+0.6%
+Y
+Y
+0%
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+%
+E/T
+Pollution
+Biodiversity
+and
+ecosystems
+Minimum Taxonomy-
+safe-
+guards
+aligned
+proportion
+of revenue
+Category
+(E = enabling;
+T =
+transitional)
+Manufacture of renewable energy technologies
+Y/N
+3.1
+Y/N
+%
+Draft
+EU Taxonomy - Revenue
+Economic activities
+A. Taxonomy-eligible activities
+A.1. Environmentally sustainable activities
+(Taxonomy-aligned)
+Codes
+Revenue
+Absolute
+Revenue
+Revenue
+Proportion of
+Substantial contribution criteria
+DNSH criteria
+Circular
+economy
+Combined Management Report
+(in millions of €)
+%
+%
+Y
+58
+100%
+Manufacture of energy efficiency equipment for buildings
+3.5
+39
+0.0%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.0%
+E
+Manufacture of other low carbon technologies
+3.6
+122
+0.2%
+100%
+E
+0.1%
+6.4%
+Y
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.1%
+E
+Manufacture of low carbon technologies for transport
+3.3
+4,947
+6.4%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+3.3%
+0.0%
+Installation, maintenance and repair of energy efficiency
+equipment
+7.3
+92
+0.1%
+Installation, maintenance and repair of charging stations for
+electric vehicles in buildings (and parking spaces attached to
+buildings)
+7.4
+25
+0.0%
+Acquisition and ownership of buildings
+Data-driven solutions for GHG emissions reductions
+Revenue of Taxonomy-eligible but not environmentally
+sustainable activities (not Taxonomy-aligned activities) (A.2.)
+Total (A.1+A.2)
+B. Taxonomy-non-eligible activities
+Revenue of Taxonomy-non-eligible activities (B)
+Total (A+B)
+7.7
+105
+10
+0.1%
+6.15
+0.0%
+Manufacture of low carbon technologies for transport
+3.3
+1,317
+1.7%
+Manufacture of energy efficiency equipment for buildings
+3.5
+976
+1.3%
+Manufacture of other low carbon technologies
+3.6
+130
+0.2%
+Transmission and distribution of electricity
+4.9
+241
+0.3%
+Infrastructure for rail transport
+6.14
+15
+Infrastructure enabling low-carbon road transport and public
+transport
+E/T
+8.2
+0.0%
+CapEx
+CapEx
+Pollution
+Combined Management Report
+(in millions of €)
+%
+%
+%
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+%
+E/T
+Biodiversity
+and
+Proportion of
+14
+Absolute
+Substantial contribution criteria
+2,927
+3.8%
+15,748
+20.3%
+16.5%
+62,020
+79.7%
+77,769
+100.0%
+Confidential
+40
+Draft
+EU Taxonomy - CapEx
+Economic activities
+A. Taxonomy-eligible activities
+A.1. Environmentally sustainable activities
+(Taxonomy-aligned)
+Codes
+CapEx
+DNSH criteria
+Minimum Taxonomy-
+%
+Y/N
+Y
+Y
+Y
+Y
+0.0%
+Data-driven solutions for GHG emissions reductions
+8.2
+234
+0.3%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.3%
+Y
+Y
+Professional services related to energy performance of buildings 9.3
+Y
+100%
+E
+Installation, maintenance and repair of renewable energy
+technologies
+7.6
+119
+0.2%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.2%
+E
+Acquisition and ownership of buildings
+7.7
+4
+0.0%
+0%
+Y/N
+4
+100%
+DNSH criteria
+Minimum Taxonomy-
+Absolute
+Proportion of
+safe-
+guards
+Revenue
+Revenue
+aligned
+proportion
+of revenue
+Category
+(E = enabling;
+T =
+transitional)
+(in millions of €)
+%
+%
+%
+Y/N
+Y/N
+Y/N
+Y/N
+Y/N
+Substantial contribution criteria
+0.0%
+Revenue
+Codes
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.0%
+E
+Revenue of environmentally sustainable activities
+(Taxonomy-aligned) (A.1)
+12,822
+16.5%
+16.5%
+Confidential
+39
+Draft
+EU Taxonomy - Revenue
+Economic activities
+A.2. Taxonomy-Eligible but not environmentally sustainable
+activities (not Taxonomy-aligned activities)
+Combined Management Report
+Y
+economy
+E
+10.02
+4.67
+0.02
+10.04
+(0.03)
+4.65
+28
+9.90
+4.62
+0.02
+(0.03)
+9.91
+4.59
+2. Consolidated Statements of Comprehensive Income
+Fiscal year
+2023
+2022
+(in millions of €)
+28
+Net income
+669
+3,723
+4,392
+(2,085)
+2,406
+1,632
+(1,373)
+(689)
+(387)
+(987)
+11,201
+7,154
+7
+(2,687)
+(2,741)
+8,514
+4,413
+15
+(21)
+8,529
+579
+7,949
+906
+Remeasurements of defined benefit plans
+8,529
+(74)
+Derivative financial instruments
+(15)
+45
+therein: Income tax effects
+Income (loss) from investments accounted for using the equity method, net
+(161)
+398
+Items that may be reclassified subsequently to profit or loss
+(4,431)
+7,127
+Other comprehensive income, net of income taxes
+(4,566)
+6,611
+3,962
+11,003
+Total comprehensive income
+(8)
+therein: Income tax effects
+6,803
+Currency translation differences
+4,392
+17
+(104)
+(589)
+(84)
+(560)
+(41)
+1
+Remeasurements of equity instruments
+(1)
+therein: Income tax effects
+Income (loss) from investments accounted for using the equity method, net
+10
+72
+Items that will not be reclassified to profit or loss
+(135)
+(516)
+(4,262)
+4
+(285)
+(454)
+38
+Note 29 Segment information
+41
+Note 30 Information about geographies
+41
+Note 31 Related party transactions
+42
+Note 32 Principal accountant fees and services
+42
+Note 33 Corporate governance
+42
+Note 34 Subsequent events
+43
+Note 35 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the German
+Commercial Code
+1. Consolidated Statements of Income
+(in millions of €, per share amounts in €)
+Note 28 Earnings per share
+Revenue
+37
+37
+Note 18 Provisions
+26
+Note 19 Equity
+26
+Note 20 Additional capital disclosures
+27
+Note 21 Commitments and contingencies
+27
+Note 22 Legal proceedings
+28
+Note 23 Additional disclosures on financial instruments
+31
+Note 24 Derivative financial instruments and hedging activities
+32
+Note 25 Financial risk management
+35
+Note 26 Share-based payment
+Note 27 Personnel costs
+Cost of sales
+Gross profit
+Research and development expenses
+Net income
+Consolidated Financial Statements
+Fiscal year
+Note
+2,30
+2023
+2022
+77,769 71,977
+(48,116) (46,130)
+29,653
+25,847
+(6,183)
+(5,591)
+(13,941)
+(12,857)
+5
+574
+2,171
+6
+Income (loss) from discontinued operations
+Income from continuing operations
+Diluted earnings per share
+Net income
+Selling and general administrative expenses
+Other operating income
+Other operating expenses
+Income (loss) from investments accounted for using the equity method, net
+Interest income
+Interest expenses
+Other financial income (expenses), net
+Income from continuing operations before income taxes
+Attributable to:
+Income tax expenses
+Income (loss) from discontinued operations, net of income taxes
+Net income
+Attributable to:
+Non-controlling interests
+Shareholders of Siemens AG
+Basic earnings per share
+Income from continuing operations
+Income (loss) from discontinued operations
+Income from continuing operations
+Non-controlling interests
+Shareholders of Siemens AG
+(10)
+44,901
+42,686
+Long-term debt
+16
+39,113
+43,978
+Provisions for pensions and similar obligations
+17
+1,426
+2,275
+Deferred tax liabilities
+7
+1,655
+2,381
+Provisions
+18
+1,794
+Total current liabilities
+1,857
+61
+Liabilities associated with assets classified as held for disposal
+1,601
+1,616
+Contract liabilities
+10
+12,571
+12,049
+Current provisions
+18
+2,320
+2,156
+Current income tax liabilities
+2,566
+2,381
+Other current liabilities
+15
+8,182
+7,448
+50
+Other financial liabilities
+Other liabilities
+Total non-current liabilities
+7,174
+36,874
+38,959
+2,282
+6,159
+(1,177)
+(5,948)
+Total equity attributable to shareholders of Siemens AG
+47,791
+48,895
+5,270
+5,910
+53,060
+54,805
+145,067
+151,502
+4
+7,411
+Total liabilities and equity
+Total equity
+Non-controlling interests
+Total liabilities
+Equity
+Issued capital
+1,453
+1,867
+1,666
+1,654
+47,106
+Other current financial liabilities
+54,011
+96,697
+4,19
+2,400
+0.1%
+Capital reserve
+Retained earnings
+Other components of equity
+Treasury shares, at cost
+92,007
+25
+10,317
+Trade payables
+Deferred tax assets
+Other assets
+Total non-current assets
+Total assets
+Consolidated Financial Statements
+Note
+Sep 30,
+2023
+Sep 30,
+2022
+10,084
+10,465
+8
+17,405
+16,701
+9
+10,605
+9,696
+10
+Other financial assets
+7,581
+Investments accounted for using the equity method
+Other intangible assets
+1,450
+3,972
+9,553
+3
+3. Consolidated Statements of Financial Position
+(in millions of €)
+Assets
+Cash and cash equivalents
+Trade and other receivables
+Other current financial assets
+Contract assets
+Inventories
+Current income tax assets
+Other current assets
+Assets classified as held for disposal
+Total current assets
+Goodwill
+Property, plant and equipment
+7,559
+11
+11,548
+14, 23
+22,855
+25,903
+7
+2,231
+2,459
+1,523
+1,565
+84,428
+92,673
+145,067
+151,502
+Liabilities and equity
+Short-term debt and current maturities of long-term debt
+16
+7,483
+6,658
+4,955
+3,014
+4
+11,733
+10,626
+1,363
+1,432
+11
+1,955
+1,935
+99
+413
+10,130
+60,639
+3,12
+32,224
+33,861
+3,13
+10,641
+12,196
+13
+11,938
+58,829
+Note 17 Post-employment benefits
+2,550
+Note 16 Debt
+Y
+Y
+Y
+Y
+0.4%
+E
+Installation, maintenance and repair of renewable energy
+technologies
+7.6
+1
+0.0%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+100%
+7.4
+0
+0.0%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.0%
+E
+Installation, maintenance and repair of instruments and devices
+for measuring, regulation and controlling energy performance
+of buildings
+7.5
+29
+0.4%
+0%
+0.0%
+E
+Acquisition and ownership of buildings
+Y
+Y
+0.7%
+E
+Professional services related to energy performance of
+buildings¹
+9.3
+0
+0.0%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0.0%
+Y
+Y
+Y
+Y
+7.7
+7
+0.1%
+100%
+0%
+Y
+Y
+Y
+Installation, maintenance and repair of charging stations for
+electric vehicles in buildings (and parking spaces attached to
+buildings)
+Y
+Y
+0.1%
+Data-driven solutions for GHG emissions reductions
+8.2
+54
+0.7%
+100%
+0%
+Y
+E
+E
+Y
+Y
+Y
+Y
+Y
+Y
+0.0%
+E
+Infrastructure for rail transport
+6.14
+196
+2.7%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+0%
+0.0%
+22
+Manufacture of low carbon technologies for transport
+3.3
+226
+3.1%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+E
+Transmission and distribution of electricity
+4.9
+1
+100%
+Y
+2.7%
+E
+Y
+Y
+Y
+Y
+0.0%
+E
+Installation, maintenance and repair of energy efficiency
+equipment
+7.3
+5
+0.1%
+100%
+0%
+Y
+Y
+Y
+Y
+Y
+Y
+Y
+0%
+100%
+Infrastructure enabling low-carbon road transport and public
+transport
+6.15
+69
+0.9%
+100%
+0%
+Y
+Y
+0.1%
+Y
+Y
+Y
+0.9%
+E
+Infrastructure enabling low carbon water transport
+6.16
+3
+0.0%
+Y
+OpEx of environmentally sustainable activities
+(Taxonomy-aligned) (A.1)
+3.1%
+8.2%
+activities (not Taxonomy-aligned activities) (A.2.)
+8.2%
+Total (A.1+ A.2)
+905
+12.4%
+B. Taxonomy-non-eligible activities
+OpEx of Taxonomy-non-eligible activities (B)
+Total (A+B)
+1 Value below €0.5 million, therefore rounded to zero.
+6,369
+87.6%
+7,274
+100.0%
+Confidential
+44
+Consolidated Financial
+Statements*
+4.2%
+for fiscal 2023
+307
+0.1%
+7.4
+0.0%
+Installation, maintenance and repair of instruments and devices
+for measuring, regulation and controlling energy performance
+of buildings
+7.5
+3
+0.0%
+Installation, maintenance and repair of renewable energy
+technologies
+7.6
+1
+0.0%
+Acquisition and ownership of buildings
+7.7
+21
+0.3%
+Data-driven solutions for GHG emissions reductions
+8.2
+9
+OpEx of Taxonomy-eligible but not environmentally sustainable
+This document is an English language translation of the authoritative German version and is not provided
+in the European Single Electronic Format (ESEF). The legally required rendering in ESEF is filed in German
+language with the operator of the German Company Register and published in the German Company
+Register.
+SIEMENS
+Table of contents
+Note 7 Income taxes
+Note 8 Trade and other receivables
+16
+Note 9 Other current financial assets
+16
+Note 10 Contract assets and liabilities
+16
+17
+18
+19
+67899
+Note 11 Inventories and Other current assets
+Note 12 Goodwill
+Note 13 Other intangible assets and property, plant and equipment
+Note 14 Other financial assets
+Note 15 Other current liabilities
+597
+19
+14
+Note 6 Other operating expenses
+Note 5 Other operating income
+Note 4 Interests in other entities
+Consolidated Financial Statements
+3
+1. Consolidated Statements of Income
+3
+2. Consolidated Statements of Comprehensive Income
+4
+3. Consolidated Statements of Financial Position
+5
+Installation, maintenance and repair of charging stations for
+electric vehicles in buildings (and parking spaces attached to
+buildings)
+4. Consolidated Statements of Cash Flows
+7772233456
+12
+12
+13
+5. Consolidated Statements of Changes in Equity
+6. Notes to Consolidated Financial Statements
+Note 1 Basis of presentation
+Note 2 Material accounting policies and critical accounting estimates
+Note 3 Acquisitions and dispositions
+6
+0.2%
+19
+7.3
+Climate
+change
+adaptation
+Water and
+marine
+resources
+Circular
+economy
+Pollution
+Biodiversity
+and
+ecosystems
+Combined Management Report
+Minimum Taxonomy-
+safe-
+guards
+aligned
+proportion
+Category
+(E = enabling;
+of OpEx
+mitigation
+T =
+transitional)
+change
+Climate
+1 Value below €0.5 million, therefore rounded to zero.
+16
+8.2%
+Confidential
+43
+Draft
+Economic activities
+A.2. Taxonomy-Eligible but not environmentally sustainable
+activities (not Taxonomy-aligned activities)
+Codes
+OpEx
+Absolute
+OpEx
+Proportion of
+OpEx
+(in millions of €)
+%
+Substantial contribution criteria
+800
+DNSH criteria
+Y/N
+EU Taxonomy - OpEx
+Y/N
+0.0%
+Infrastructure for rail transport¹
+6.14
+0
+0.0%
+Infrastructure enabling low-carbon road transport and public
+transport¹
+6.15
+0
+0.0%
+Construction of new buildings¹
+Installation, maintenance and repair of energy efficiency
+equipment
+7.1
+0
+0.0%
+7.2
+15
+Y/N
+2
+4.9
+Renovation of existing buildings
+0.3%
+Y/N
+Transmission and distribution of electricity
+Y/N
+Y/N
+Y/N
+%
+E/T
+Manufacture of low carbon technologies for transport
+3.3
+0.2%
+0.4%
+26
+3.6
+Manufacture of other low carbon technologies
+2.6%
+24
+Manufacture of energy efficiency equipment for buildings
+3.5
+189
+35.1%
+Siemens Energy AG, an associate accounted for using the equity method, is globally active in the transmission and generation of electrical
+power and is publicly listed. The fair value of our investment in Siemens Energy AG is €2.5 billion and €2.9 billion, respectively, as of
+September 30, 2023 and 2022, determined based on Siemens Energy's market capitalization (level 1 of the fair value hierarchy). In fiscal
+2023 and 2022, Siemens Energy AG added a loss to Share of profit (loss), net of €(1,478) million and €(207) million, respectively. The loss
+includes Siemens' share of Siemens Energy AG's net losses of €(1,405) million and €(142) million as well as effects from fair value
+adjustments at initial recognition of €(73) million and €(65) million, respectively. In fiscal 2023, Siemens Energy AG acquired and
+redeemed shares of Siemens Gamesa Renewable Energy, S.A. from the minority shareholders. The acquisition and redemption of shares
+of Siemens Gamesa Renewable Energy, S.A. reduced equity within Siemens Energy AG's consolidated financial statements. Recognizing
+Siemens' share in this equity transaction decreased the carrying amount of our investment in Siemens Energy AG by €1,553 million, which
+is recognized in Equity directly. In March 2023, Siemens Energy AG completed a capital increase, in which Siemens did not participate.
+The transaction decreased Siemens' stake in Siemens Energy AG from 35.1% to 31.9%, which resulted in a gain of €235 million, disclosed
+in Income (loss) from investments accounted for using the equity method and in Reconciling items of Segment information. As of March
+31, 2023, the recoverable amount of our investment in Siemens Energy AG of €5.2 billion, determined based on its market capitalization
+(level 1 of the fair value hierarchy), increased significantly compared to the level when the impairment was recorded in fiscal 2022. This
+triggered a partial reversal of the previous impairment of €1,594 million, which is included in Income (loss) from investments accounted
+for using the equity method and in Reconciling items of Segment information. In June 2023, Siemens contributed a 6.8% stake in Siemens
+Energy AG (54 million shares) to the Siemens Pension-Trust e.V. at fair value (share price of €15.67; Level 1 of the fair value hierarchy).
+Siemens' stake in Siemens Energy AG declined from 31.9% to 25.1%. The contribution resulted in a gain of €318 million disclosed at
+Income (loss) from investments accounted for using the equity method and at Reconciling items of Segment information.
+Below summarized consolidated financial information of Siemens Energy AG are disclosed at a 100 per cent basis. They are adjusted to
+align with Siemens' accounting policies and to incorporate effects from fair value adjustments at initial recognition.
+(in millions of €)
+Ownership interest
+Current assets
+Non-current assets excluding goodwill
+Current liabilities
+28,665
+Net Assets
+(2,085)
+Siemens Energy AG
+registered in Munich, Germany
+Sep 30, 2023
+Sep 30, 2022
+25.1%
+26,567
+Non-current liabilities
+attributable to shareholders of Siemens Energy AG
+618
+1,586
+906
+609
+Acquisitions
+In fiscal 2023, Siemens completed several individually minor acquisitions for a total purchase price of €373 million, mainly paid in cash. In
+fiscal 2022 acquisitions totaled €2.0 billion. In fiscal 2023 and 2022, the (preliminary) purchase price allocations resulted in Other
+intangible assets of €180 million and €1.1 billion, respectively, and in Goodwill of €203 million and €1.5 billion, respectively. Goodwill
+comprises intangible assets that are not separable such as employee know-how and expected synergy effects. The purchase price
+allocation for some of the acquired businesses is preliminary, as a detailed analysis of the assets and liabilities has not been finalized.
+16,321
+Disposals
+In November 2022, Siemens sold its Commercial Vehicles business for a consideration of €184 million in cash and recognized a pre-tax gain
+on the disposal of €148 million, which is presented in Other operating income. The business was previously reported at Portfolio
+Companies.
+NOTE 4 Interests in other entities
+Investments accounted for using the equity method
+(in millions of €)
+Share of profit (loss), net
+Gains (losses) on disposals, net
+Income (loss) from investments accounted for using the equity method, net
+Sep 30,
+2023
+2022
+(1,298)
+(97)
+(2,597)
+Impairments and reversals of impairment
+3,662
+31,599
+Total comprehensive income (loss), net of income taxes
+attributable to shareholders of Siemens Energy AG
+attributable to Siemens
+Fiscal year
+2023
+2022
+31,119
+(4,813)
+28,997
+(833)
+(244)
+622
+(5,057)
+(211)
+NOTE 3 Acquisitions and dispositions
+(5,075)
+(2)
+Income (loss) from continuing operations, net of income taxes
+Other comprehensive income, net of income taxes
+Revenue
+Consolidated Financial Statements
+12
+27,941
+8,487
+7,134
+2,802
+10,870
+2,207
+10,528
+17,279
+Siemens interest in the net assets of Siemens Energy AG at fiscal year-end
+Consolidation adjustments including goodwill
+3,695
+2,098
+2,670
+Accumulated (impairment) and reversal of impairment (balance at fiscal year-end)
+Carrying amount of Siemens Energy AG at fiscal year-end
+(873)
+(2,703)
+1,779
+554
+Consolidated Financial Statements
+Impairment of property, plant and equipment and other intangible assets - The Company reviews property, plant and equipment and
+other intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may
+not be recoverable. In addition, intangible assets not yet available for use are subject to an annual impairment test. Impairment testing of
+property, plant and equipment and other intangible assets involves the use of estimates in determining the assets' recoverable amount,
+which can have a material impact on the respective values and ultimately the amount of any impairment.
+Prior-year information - · The presentation of certain prior-year information has been reclassified to conform to the current year
+presentation.
+Earnings per share - Basic earnings per share are computed by dividing income from continuing operations, income from discontinued
+operations and net income, all attributable to ordinary shareholders of Siemens AG by the weighted average number of shares outstanding
+during the year. Diluted earnings per share are calculated by assuming conversion or exercise of all potentially dilutive securities and share-
+based payment plans.
+Goodwill - Goodwill is not amortized, instead, goodwill is tested for impairment annually, as well as whenever there are events or changes
+in circumstances (triggering events) which suggest that the carrying amount may not be recoverable. Goodwill is carried at cost less
+accumulated impairment losses. The goodwill impairment test is performed at the level of a cash-generating unit or a group of cash-
+generating units, generally represented by a segment. Siemens Healthineers is tested one level below the segment. This is the lowest level
+at which goodwill is monitored for internal management purposes.
+For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the (group of) cash-generating unit(s)
+that is expected to benefit from the synergies of the business combination. If the carrying amount of the (group of) cash-generating
+unit(s), to which the goodwill is allocated, exceeds its recoverable amount, an impairment loss on goodwill allocated to that (group of)
+cash-generating unit(s) is recognized. The recoverable amount is the higher of the (group of) cash-generating unit(s)' fair value less costs
+to sell and its value in use. If either of these values exceeds the carrying amount, it is not always necessary to determine both values. These
+8
+Consolidated Financial Statements
+values are generally determined based on discounted cash flow calculations. Impairment losses on goodwill are not reversed in future
+periods.
+The determination of the recoverable amount of a (group of) cash-generating unit(s) to which goodwill is allocated involves the use of
+estimates by management. The outcome predicted by these estimates is influenced e.g. by the successful integration of acquired entities,
+volatility of capital markets, interest rate developments, foreign exchange rate fluctuations and the outlook on economic trends. In
+determining recoverable amounts, discounted cash flow calculations generally use five-year projections (in exceptional cases up to ten
+years) that are based on financial forecasts. Cash flow projections consider past experience and represent management's best estimate
+about future developments. Cash flows after the planning period are extrapolated using individual growth rates. Key assumptions on
+which management has based its determination of fair value less costs to sell and value in use include estimated growth rates and weighted
+average cost of capital. These estimates, including the methodology used, can have a material impact on the respective values and
+ultimately the amount of any goodwill impairment.
+Other intangible assets - The Company amortizes intangible assets with finite useful lives on a straight-line basis over their respective
+estimated useful lives. Estimated useful lives for patents, licenses and other similar rights generally range from three to five years, except
+for intangible assets with finite useful lives acquired in business combinations. Intangible assets acquired in business combinations
+primarily consist of customer relationships and trademarks as well as technology. Useful lives in specific acquisitions ranged from two to
+30 years for customer relationships and trademarks and for technology from five to 22 years.
+Property, plant and equipment - Property, plant and equipment, is valued at cost less accumulated depreciation and impairment losses.
+Depreciation expense is recognized using the straight-line method. The following useful lives are assumed:
+Factory and office buildings
+Other buildings
+Technical machinery & equipment
+Office & other equipment
+Equipment leased to others
+20 to 50 years
+Research and development costs - Costs of research activities are expensed as incurred. Costs of development activities are capitalized
+when the recognition criteria in IAS 38 are met. Capitalized development costs are stated at cost less accumulated amortization and
+impairment losses with an amortization period of generally three to 25 years.
+Product-related expenses - Provisions for estimated costs related to product warranties are recorded in line item Cost of sales at the time
+the related sale is recognized.
+Functional costs - In general, operating expenses by types are assigned to the functions following the functional area of the
+corresponding profit and cost centers. Amortization, depreciation and impairment of intangible assets and property, plant and equipment
+are included in functional costs depending on the use of the assets.
+Income from interest - Interest is recognized using the effective interest method.
+Siemens operates in an increasingly complex and uncertain macroeconomic and geopolitical environment, particularly due to the war in
+Ukraine and the conflict in Israel-Gaza/Middle East. Notably, we face continuing inflation, increased interest rates, volatile foreign
+currencies and share prices along with a rising apprehension of a slow-down of economic growth in significant markets compared to prior
+years. Uncertainties increase in prognosis and forecasts, in applying critical accounting estimates and in using management judgements.
+Those trends could impact fair values and carrying amounts of assets and liabilities, amount and timing of results of operations and cash
+flows of Siemens. Severity and duration of those trends are decisive on the magnitude of its impact on Siemens' Consolidated Financial
+Statements. Siemens based its estimates and assumptions on existing knowledge and best information available.
+(1,605)
+Basis of consolidation - The Consolidated Financial Statements include the accounts of Siemens AG and its subsidiaries over which the
+Company has control. Siemens controls an investee if it has power over the investee. In addition, Siemens is exposed to, or has rights to,
+variable returns from the involvement with the investee and Siemens is able to use its power over the investee to affect the amount of
+Siemens' return.
+Business combinations - Cost of an acquisition is measured at the fair value of the assets given and liabilities incurred or assumed at the
+date of exchange. Identifiable assets acquired and liabilities assumed in a business combination (including contingent liabilities) are
+initially measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. Non-controlling
+interests are measured at the proportional fair value of assets acquired and liabilities assumed (partial goodwill method). If there is no loss
+of control, transactions with non-controlling interests are accounted for as equity transactions not affecting net income. At the date control
+is lost, any retained equity interests are remeasured to fair value. In case of a written put option on non-controlling interests the Company
+assesses whether the prerequisites for the transfer of present ownership interest are fulfilled at the balance sheet date. If the Company is
+not the beneficial owner of the shares underlying the put option, the exercise of the put option will be assumed at each balance sheet
+date and treated as equity transaction between shareholders with the recognition of a purchase liability at the respective exercise price.
+The non-controlling interests participate in profits and losses during the reporting period.
+Associates and joint ventures - Associates are companies over which Siemens has the ability to exercise significant influence over
+operating and financial policies (generally through direct or indirect ownership of 20% to 50% of the voting rights). Joint ventures are
+entities over which Siemens and one or more parties have joint control. Joint control requires unanimous consent of the parties sharing
+control in decision making on relevant activities.
+Associates and joint ventures are recorded in the Consolidated Financial Statements using the equity method and are initially recognized
+at cost. If the investment was retained in a transaction in which Siemens lost control of a subsidiary, the fair value of the investment
+represents the cost on initial recognition. Siemens' share of its associate's or joint venture's post-acquisition profits or losses is recognized
+in the Consolidated Statements of Income, and its share of post-acquisition changes in equity that have not been recognized in the
+associate's or joint venture's profit or loss is recognized directly in equity. The cumulative post-acquisition changes also include effects
+from fair value adjustments and are adjusted against the carrying amount of the investment. When Siemens' share of losses in an associate
+or joint venture equals or exceeds its interest in the investment, Siemens does not recognize further losses, unless it incurs obligations or
+makes payments on behalf of the associate or joint venture. The interest in an associate or joint venture is the carrying amount of the
+investment together with any long-term interests that, in substance, form part of Siemens' net investment in the associate or joint venture.
+Siemens reviews associates and joint ventures for impairment whenever there is objective evidence that its investment is impaired, for
+example a significant or prolonged decline in the fair value of the investment below its cost. In addition, Siemens similarly assesses
+whether there are indications that an impairment loss recorded in prior periods may no longer exist or may have decreased. If this is the
+case, any reversal of an impairment loss is recognized to the extent that the recoverable amount subsequently increases, not exceeding
+the carrying amount, had no impairment loss been recognized in previous periods. Impairments and reversal of impairments include the
+use of judgements.
+Foreign currency translation - Assets and liabilities of foreign subsidiaries, where the functional currency is other than the euro, are
+translated using the spot exchange rate at the end of the reporting period, while the Consolidated Statements of Income are translated
+using average exchange rates during the period. Differences arising from such translations are recognized within equity and reclassified
+to net income when the gain or loss on disposal of the foreign subsidiary is recognized. The Consolidated Statements of Cash Flows are
+translated at average exchange rates during the period, whereas cash and cash equivalents are translated at the spot exchange rate at the
+end of the reporting period.
+5 to 10 years
+7
+Foreign currency transaction - Transactions that are denominated in a currency other than the functional currency of an entity, are
+recorded at that functional currency applying the spot exchange rate at the date when the underlying transactions are initially recognized.
+At the end of the reporting period, foreign currency-denominated monetary assets and liabilities are revalued to functional currency
+applying the spot exchange rate prevailing at that date. Gains and losses arising from these foreign currency revaluations are recognized
+in net income. Those foreign currency-denominated transactions which are classified as non-monetary are remeasured using the historical
+spot exchange rate.
+Revenue recognition - Siemens recognizes revenue when, or as control over distinct goods or services is transferred to the customer; i.e.
+when the customer is able to direct the use of the transferred goods or services and obtains substantially all of the remaining benefits,
+provided a contract with enforceable rights and obligations exists and amongst others collectability of consideration is probable taking our
+customer's creditworthiness into account. Revenue is the transaction price Siemens expects to be entitled to. Variable consideration is
+included in the transaction price if it is highly probable that a significant reversal of revenue will not occur once associated uncertainties
+are resolved. The amount of variable consideration is calculated by either using the expected value or the most likely amount depending
+on which is expected to better predict the amount of variable consideration. Consideration is adjusted for the time value of money if the
+period between the transfer of goods or services and the receipt of payment exceeds twelve months and there is a significant financing
+benefit either to the customer or Siemens. If a contract contains more than one distinct good or service, the transaction price is allocated
+to each performance obligation based on relative stand-alone selling prices. If stand-alone selling prices are not observable, the Company
+reasonably estimates those. Revenue is recognized for each performance obligation either at a point in time or over time.
+Revenues from construction-type contracts: Revenues are recognized over time under the percentage-of-completion method, based on
+the percentage of costs incurred to date compared to total estimated costs. An expected loss on the contract is recognized as an expense
+immediately. Payment terms are usually 30 days from the date of invoice issued according to the contractual terms.
+The percentage-of-completion method places considerable importance on accurate estimates of the extent of progress towards
+completion and may involve estimates on the scope of deliveries and services required to fulfill the contractually defined obligations. These
+significant estimates include total estimated costs, total estimated revenues, contract risks, including technical, political and regulatory
+risks, risks from supply chain constraints and other judgments. Under the percentage-of-completion method, changes in estimates may
+lead to an increase or decrease of revenue. In addition, Siemens needs to assess whether the contract is expected to continue or whether
+it is terminated. In determining whether the continuation or termination of a contract is expected to be the most likely scenario, all relevant
+facts and circumstances relating to the contract are considered on an individual basis.
+Revenues from maintenance and service contracts: Revenues are recognized over time on a straight-line basis or, if the performance
+pattern is other than straight-line, as services are provided, i.e. under the percentage-of-completion method as described above. Payment
+terms are usually 30 days from the date of invoice issued according to the contractual terms.
+Revenues from product sales: Revenues are recognized at a point in time when control of the goods passes to the buyer, usually upon
+delivery of the goods. Invoices are issued at that point in time and are usually payable within 30 days.
+Revenues from software contracts: Software contracts usually comprise the sale of subscription licenses and perpetual licenses, which
+are both on-premise, as well as technical support services including updates and unspecified upgrades and the sale of software-as-a-
+service. Subscription contracts generally contain two separate performance obligations: time-based software license and technical support
+service. Revenues for perpetual and time-based licenses granting the customer a right to use Siemens' intellectual property are recognized
+at a point in time, i.e. when control of the license passes to the customer. Revenues for technical support services including updates and
+unspecified upgrades are recognized over time on a straight-line basis as the customer simultaneously receives and consumes the benefits
+provided by Siemens' services. Software-as-a-service contracts including related cloud services represent one performance obligation for
+which revenues are recognized over time on a straight-line basis. Payment terms for all transactions are usually 30 days from the date of
+invoice issued according to the contractual terms.
+Consolidated Financial Statements
+generally 10 years
+generally 5 years
+generally 3 to 7 years
+Leases - A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in
+exchange for consideration. Further information on leases can be found in Notes 8, 13 and 16.
+Valuation allowances are set up for expected credit losses, representing a forward-looking estimate of future credit losses involving
+significant judgment. Expected credit loss is the gross carrying amount less collateral, multiplied by the probability of default and a factor
+reflecting the loss in the event of default. Valuation allowances are not recognized as far as the gross carrying amount is sufficiently
+collateralized. Probabilities of default are mainly derived from internal rating grades. A simplified approach is used to assess expected
+credit losses from trade receivables, lease receivables and contract assets by applying their lifetime expected credit losses. The valuation
+allowance for loans and other long-term debt instruments primarily held at Financial Services (SFS) is measured according to a three-stage
+impairment approach:
+Stage 1: At inception, twelve-month expected credit losses are recognized based on a twelve months probability of default.
+Stage 2: If the credit risk of a financial asset increases significantly without being credit-impaired, lifetime expected credit losses are
+recognized based on a lifetime probability of default. A significant increase in credit risk is determined for each individual financial
+instrument using internal credit ratings. A rating deterioration does not trigger a transfer into Stage 2, if the credit rating remains within
+the investment grade range. More than 30 days past due payments will not be transferred into Stage 2, if the delay is not credit-risk-
+related.
+Stage 3: If the financial asset is credit-impaired, valuation allowances equal lifetime expected credit losses. A financial asset is considered
+credit-impaired when there is observable information about significant financial difficulties and a high vulnerability to default, however,
+the definition of default is not yet met. Impairment triggers include liquidity problems, a request for debt restructuring or a breach of
+contract. A credit-risk driven contractual modification always results in a credit-impaired financial asset.
+Financial assets are written off as uncollectible if recovery appears unlikely. Generally, if the limitation period expired, when a debtor's
+sworn statement of affairs is received, or when the receivable is not pursued due to its minor value. Receivables are written off when
+bankruptcy proceedings close.
+A financial asset is derecognized when the rights to cash flows expire or the financial asset is transferred to another party. Significant
+modifications of contractual terms of a financial asset measured at amortized cost result in derecognition and recognition of a new
+financial asset; for insignificant modifications, the carrying amount of the financial asset is adjusted without derecognition.
+Cash and cash equivalents - The Company considers all highly liquid investments with less than three months maturity from the date of
+acquisition to be cash equivalents. Cash and cash equivalents are measured at cost.
+Loan Commitments
+Financial assets measured at amortized cost: Loans, receivables and other debt instruments held in a hold-to-collect business model
+with contractual cash flows that represent solely payments of principal and interest are measured at amortized cost using the effective
+interest method less valuation allowances for expected credit losses.
+Expected credit losses for irrevocable loan commitments are determined using the three-stage impairment
+approach for financial assets measured at amortized cost and recognized as a liability.
+-
+except for derivative financial instruments, Siemens measures financial liabilities at amortized cost using the
+effective interest method.
+Derivative financial instruments - Derivative financial instruments, such as foreign currency exchange contracts and interest rate swap
+contracts are measured at fair value unless they are designated as hedging instruments, for which hedge accounting is applied. Changes
+in the fair value of derivative financial instruments are recognized either in net income or, in the case of a cash flow hedge, in line item
+Other comprehensive income, net of income taxes (applicable deferred income tax). Certain derivative instruments embedded in host
+contracts are also accounted for separately as derivatives.
+Fair value hedges: The carrying amount of the hedged item is adjusted by the gain or loss attributable to the hedged risk. Where an
+unrecognized firm commitment is designated as hedged item, the subsequent cumulative change in its fair value is recognized as a
+separate financial asset or liability with corresponding gain or loss recognized in net income. For hedged items carried at amortized cost,
+the adjustment is amortized until maturity of the hedged item. For hedged firm commitments the initial carrying amount of the assets or
+liabilities that result from meeting the firm commitments are adjusted to include the cumulative changes in the fair value that were
+previously recognized as separate financial assets or liabilities.
+Cash flow hedges: The effective portion of changes in the fair value of derivative instruments designated as cash flow hedges are
+recognized in line item Other comprehensive income, net of income taxes, and any ineffective portion is recognized immediately in net
+income. Amounts accumulated in equity are reclassified into net income in the same periods in which the hedged item affects net income.
+Share-based payment - Share-based payment awards at Siemens are predominately designed as equity-settled. Fair value is measured
+at grant date and is expensed over the vesting period. Fair value is determined as the price of the underlying shares, considering dividends
+during the vesting period the grantees are not entitled to as well as market conditions and non-vesting conditions, if applicable. Plans
+granting the rights to receive subsidiary shares constitute own shares and, accordingly, are accounted as equity-settled.
+Insurance contracts - In June 2020, the IASB issued IFRS 17 Insurance contracts (IFRS 17), effective for reporting periods beginning on
+or after January 1, 2023. Siemens will adopt the standard commencing with fiscal 2024. IFRS 17 introduces and applies uniform accounting
+policies for insurance contracts and supersedes IFRS 4 Insurance contracts. The adoption of IFRS 17 is not expected to have a significant
+impact on Siemens' Consolidated Financial Statements.
+Financial liabilities
+11
+Financial assets measured at fair value through other comprehensive income (FVOCI): are equity instruments for which Siemens
+irrevocably elects to present subsequent fair value changes in OCI at initial recognition of the instrument. Unrealized gains and losses, net
+of deferred income tax expenses, as well as gains and losses on the subsequent sale of the instruments are recognized in line item Other
+comprehensive income, net of income taxes.
+10
+Lessor: Leases are classified as either finance or operating leases, determined based on whether substantially all the risks and rewards
+incidental to ownership of an underlying asset are transferred. If this is the case, the lease is classified as a finance lease; if not, it is an
+operating lease. Receivables from finance leases are recognized at an amount equal to the net investment in the lease. The assets
+underlying the operating leases are presented in Property, plant and equipment and depreciated on a straight-line basis over their useful
+lives or to their estimated residual value. Operating lease income is recognized on a straight-line basis over the lease term.
+Lessee: Siemens recognizes right-of-use assets and lease liabilities for leases with a term of more than twelve months if the underlying
+asset is not of low value. Payments for short-term and low-value leases are expensed over the lease term. Extension options are included
+in the lease term if their exercise is reasonably certain. Right-of-use assets are measured at cost less accumulated depreciation expense
+and impairment losses adjusted for any remeasurements. Right-of-use assets are depreciated under the straight-line method over the
+shorter of the lease term and the useful life of the underlying assets. Lease liabilities are measured at the present value of the lease
+payments due over the lease term, generally discounted using the incremental borrowing rate. Lease liabilities are subsequently measured
+at amortized cost using the effective interest method. They are remeasured in case of modifications or reassessments of the lease.
+Discontinued operations and non-current assets held for disposal - Discontinued operations are reported when a component of an
+entity is classified as held for disposal or has been disposed of, if the component represents a separate major line of business or
+geographical area of operations and is part of a single coordinated plan to disposal. A non-current asset or a disposal group is held for
+disposal, if its carrying amount will be recovered principally through a sale transaction or through a distribution to owners rather than
+through continuing use. Depreciation and amortization cease for assets classified as held for disposal. In the Consolidated Statements of
+Income and of Cash Flows, discontinued operations are reported separately from continuing operations; prior periods are presented on a
+comparable basis. The disclosures in the Notes to the Consolidated Financial Statements outside of Note 3 relate to continuing operations
+or assets and liabilities not held for disposal. The non-current asset held for disposal or the disposal group is measured at the lower of its
+carrying amount and fair value less costs to sell. The determination of the fair value less costs to sell includes the use of estimates and
+assumptions that tend to be uncertain.
+Income taxes - Tax positions are calculated taking into consideration the respective local tax laws, relevant court decisions and applicable
+tax authorities' views. Tax regulations can be complex and possibly subject to different interpretations of tax payers and local tax
+authorities. Different interpretations of existing or new tax laws as a result of tax reforms or other tax legislative procedures may result in
+additional tax payments for prior years and are taken into account based on management's considerations. Under the liability method,
+deferred tax assets and liabilities are recognized for expected tax consequences of future periods attributable to differences between the
+financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are recognized if sufficient
+future taxable profit is available, including income from forecasted operating earnings, the reversal of existing taxable temporary
+differences and available tax planning opportunities that Siemens would execute. As of each period-end, Siemens evaluates the
+recoverability of deferred tax assets, based on taxable income of past periods and projected future taxable profits. As future developments
+are uncertain and partly beyond Siemens's control, assumptions are necessary to estimate future taxable profits as well as the period in
+which deferred tax assets will recover. Estimates are revised in the period in which there is sufficient evidence to revise the assumption.
+9
+Consolidated Financial Statements
+Expected tax effects, arising from prospectively applying the global minimum taxation rules (Pillar Two), are not considered in calculating
+deferred tax assets and liabilities. Currently, it is expected to apply Pillar Two to the entire Siemens Group commencing with fiscal 2025.
+Contract assets, contract liabilities, receivables – When either party to a contract with customers has performed, Siemens presents a
+contract asset, a contract liability or a receivable depending on the relationship between Siemens' performance and the customer's
+payment. Contract assets and liabilities are presented as current since incurred in the normal operating cycle. Receivables are recognized
+when the right to consideration becomes unconditional. Valuation allowances for credit risks are made for contract assets and receivables
+in accordance with the accounting policy for financial assets measured at amortized cost.
+Inventories - Inventories are valued at the lower of acquisition or production costs and net realizable value, costs being generally
+determined based on an average or first-in, first-out method. Determining net realizable value of inventories involves accounting estimates
+for quantity, technical and price risks.
+Consolidated Financial Statements
+Defined benefit plans - Siemens measures the entitlements by applying the projected unit credit method. The approach reflects an
+actuarially calculated net present value of the future benefit entitlement for services already rendered. In determining the net present
+value of the future benefit entitlement for service already rendered (Defined Benefit Obligation (DBO)), the expected rates of salary and
+pension increases are considered. The assumptions used for the calculation of the DBO as of the period-end of the preceding fiscal year
+are used to determine the calculation of service cost and interest income and expense of the following year. Significant plans apply
+individual spot rates from full discount rate curves to determine service cost and interest expense. The net interest income or expense for
+the fiscal year will be based on the discount rate for the respective year multiplied by the net defined benefit liability (asset) at the
+preceding fiscal year's period-end date.
+Remeasurements comprise actuarial gains and losses as well as the difference between the return on plan assets and the amounts included
+in net interest on the net defined benefit liability (asset). They are recognized in Other comprehensive income, net of income taxes.
+Actuarial valuations rely on key assumptions including discount rates, expected compensation increases, rate of pension progression and
+mortality rates. Discount rates used are determined by reference to yields on high-quality corporate bonds of appropriate duration and
+currency at the end of the reporting period. In case such yields are not available, discount rates are based on government bonds yields.
+Due to changing market, economic and social conditions, the underlying key assumptions may differ from actual developments.
+Entitlements resulting from plans based on asset returns from underlying assets are generally measured at the fair value of the underlying
+assets at period-end. If the performance of the underlying assets is lower than a guaranteed return, the DBO is measured by projecting
+forward the contributions at the guaranteed fixed return and discounting back to a present value.
+Provisions - A provision is recognized in the Statement of Financial Position when (1) it is probable that the Company has a present legal
+or constructive obligation as a result of a past event and (2) it is probable that an outflow of economic benefits will be required to settle
+the obligation and (3) a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are recognized
+at present value by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value
+of money. When a contract becomes onerous, the present obligation under the contract is recognized as a provision.
+Significant estimates are involved in the determination of provisions related to onerous contracts, warranty costs, asset retirement
+obligations, legal and regulatory proceedings as well as governmental investigations (Legal Proceedings). Siemens records a provision for
+onerous contracts with customers when current estimates of total estimated costs exceed estimated revenue. Onerous contracts with
+customers are identified by monitoring the progress of the project and updating the estimates which requires significant judgment relating
+to achieving certain performance standards as well as estimates involving warranty costs and estimates regarding project delays including
+the assessment of responsibility splits between the contract partners for these delays.
+Legal Proceedings often involve complex legal issues and are subject to substantial uncertainties. Accordingly, considerable judgment is
+part of determining whether it is probable that there is a present obligation as a result of a past event at the end of the reporting period,
+whether it is probable that such a Legal Proceeding will result in an outflow of resources and whether the amount of the obligation can
+be reliably estimated. Internal and external counsels are generally part of the determination process. Due to new developments, it may be
+necessary, to record a provision for an ongoing Legal Proceeding or to adjust the amount of a previously recognized provision. Upon
+resolution of a Legal Proceeding, Siemens may incur charges in excess of the recorded provisions for such matters. The outcome of Legal
+Proceedings may have a material effect on Siemens' financial position, its results of operations and/or its cash flows.
+Termination benefits - Termination benefits are provided as a result of an entity's offer made in order to encourage voluntary redundancy
+before the regular retirement date or from an entity's decision to terminate the employment. Termination benefits in accordance with IAS
+19, Employee Benefits, are recognized as a liability and an expense when the entity can no longer withdraw the offer of those benefits.
+Financial instruments - A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or
+equity instrument of another entity. Based on their contractual cash flow characteristics and the business model they are held in, financial
+instruments are classified as financial assets and financial liabilities measured at cost or amortized cost, measured at fair value, loan
+commitments, contract assets and receivables from finance leases. Regular way purchases or sales of financial assets are accounted for at
+the trade date. Initially, financial instruments are recognized at fair value and net of transaction costs, if not categorized at FVTPL.
+Subsequently, financial assets and liabilities are measured according to the category to which they are assigned to:
+Financial assets measured at fair value through profit and loss (FVTPL): a) mandatorily measured at FVTPL: Debt financial assets are
+measured at FVTPL if the business model they are held in is not a hold-to-collect or a hold-and-sell business model, or if their contractual
+cash flows do not represent solely payments of principal and interest. Equity instruments are measured at FVTPL unless the FVOCI-option
+is elected. b) Financial assets designated as measured at FVTPL are irrevocably designated at initial recognition if the designation
+significantly reduces accounting mismatches that would otherwise arise if assets and liabilities as well as recognizing gains (losses) were
+measured on different bases.
+Service cost, past service cost and settlement gains (losses) for pensions and similar obligations as well as administration costs unrelated
+to the management of plan assets are allocated among functional costs. Past service cost and settlement gains (losses) are recognized
+immediately in profit or loss. For unfunded plans, the amount in line item Provisions for pensions and similar obligations equals the DBO.
+For funded plans, Siemens offsets the fair value of the plan assets from the DBO. Siemens recognizes the net amount, after adjustments
+for effects relating to any asset ceiling.
+(1)
+Current taxes
+(in millions of €)
+Taxes for prior years
+Change in realizability of deferred tax assets and tax credits
+Change in tax rates
+Foreign tax rate differential
+Tax effect of investments accounted for using the equity method
+Other, net (primarily German trade tax differentials)
+Actual income tax expenses
+Deferred income tax assets and (liabilities) on a net basis are summarized as follows:
+(in millions of €)
+Deferred taxes due to temporary differences
+14
+78
+576
+989
+753
+Tax-free income
+Non-deductible expenses
+Increase (decrease) in income taxes resulting from:
+Expected income tax expenses
+(in millions of €)
+Deferred taxes
+Income tax expenses
+Fiscal year
+2023
+2022
+3,250
+(355)
+3,163
+(422)
+2,687
+2,741
+Current income tax expenses in fiscal 2023 and 2022 include adjustments recognized for current taxes of prior years in the amount of €73
+million and €220 million, respectively. In fiscal 2023 and 2022, deferred taxes include tax effects from the origination and reversal of
+temporary differences of €(670) million and €(430) million, respectively. Deferred taxes include tax expenses of €125 million from the
+write-down of previously recognized deferred tax assets on tax loss carryforwards and temporary differences (in fiscal 2022, €(202) million
+tax from the recognition of previously unrecognized deferred taxes on tax loss carryforwards and temporary differences).
+In Germany, the calculation of current taxes is based on a combined tax rate of 31%, consisting of a corporate tax rate of 15%, a solidarity
+surcharge thereon of 5.5% and an average trade tax rate of 15%. For foreign subsidiaries, current taxes are calculated based on the local
+tax law and applicable tax rates in the individual foreign countries. Deferred tax assets and liabilities in Germany and abroad are measured
+at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled.
+Global minimum taxation rules (Pillar Two) were enacted in some jurisdictions, in which Siemens currently operates. We expect to apply
+Pillar Two worldwide commencing with fiscal 2025 and anticipate an increase in current taxes in a low double-digit million euro range.
+Current and deferred income tax expenses differ from the amounts computed by applying a combined statutory German income tax rate
+of 31% as follows:
+(in millions of €)
+(563)
+Consolidated Financial Statements
+(318)
+640
+(769)
+(1,142)
+1,947
+831
+2,218
+3,472
+2022
+2023
+Fiscal year
+Minus amounts represent deferred tax liabilities.
+Total deferred taxes, net
+Tax loss carryforwards and tax credits
+Non-current assets and liabilities
+Current assets and liabilities
+Certain of the following accounting policies require critical accounting estimates that involve complex and subjective judgments and the
+use of assumptions, some of which may be for matters that are inherently uncertain and susceptible to change. Such critical accounting
+estimates could change from period to period and have a material impact on the Company's results of operations, financial positions and
+cash flows. Critical accounting estimates could also involve estimates where Siemens reasonably could have used a different estimate in
+the current accounting period. Siemens cautions that future events often vary from forecasts and that estimates routinely require
+adjustment.
+(8)
+215
+36
+(198)
+1,943
+(2,957)
+(2,208)
+1,709
+2022
+2023
+Sep 30,
+2,741
+459
+2,687
+(154)
+14
+410
+(591)
+(752)
+12
+(6)
+(106)
+Income tax expenses (benefits) consist of the following:
+NOTE 7 Income taxes
+13
+73
+152
+72
+292
+Subsidiary with material non-controlling interests
+Summarized consolidated financial information, in accordance with IFRS and before intercompany eliminations, is presented below.
+(in millions of €)
+Ownership interests held by non-controlling interests
+Accumulated non-controlling interests
+Current assets
+Non-current assets
+Current liabilities
+Non-current liabilities
+Net income attributable to non-controlling interests
+Dividends paid to non-controlling interests
+193
+(14)
+132
+(21)
+Income (loss) from continuing operations
+Other comprehensive income
+Total comprehensive income
+Associates
+Joint ventures
+Sep 30,
+2023
+Revenue
+Sep 30,
+2022
+Sep 30,
+2023
+2022
+95
+20
+86
+99
+Sep 30,
+Income (loss) from continuing operations, net of income taxes
+Other comprehensive income, net of income taxes
+Total comprehensive income, net of income taxes
+Total cash flows
+514
+273
+251
+21,680
+21,714
+1,525
+2,054
+372
+1,989
+(464)
+4,935
+361
+(8)
+Other operating income in fiscal 2023 and 2022, mainly includes gains from disposals of businesses of €232 million and €1,884 million,
+respectively, (thereof in fiscal 2022: mail and parcel-handling business of Siemens Logistics GmbH €1,084 million and Yunex Traffic €738
+million) gains from sales of property, plant and equipment of €174 million and €125 million, respectively, as well as insurance related
+income in both years.
+NOTE 6 Other operating expenses
+Other operating expenses in fiscal 2023, and 2022, include losses on the sale of property, plant and equipment as well as effects from
+insurance, personnel, legal and regulatory matters.
+2,881
+As of September 30, 2023, and 2022, the carrying amount of all individually not material associates amounts to €901 million and €943
+million, respectively. As of September 30, 2023, and 2022, the carrying amount of all individually not material joint ventures amounts to
+€334 million and €350 million, respectively. The aggregate amount of the Siemens' share in the following line items of these associates
+and joint ventures is presented below:
+2022
+Fiscal year
+NOTE 5 Other operating income
+Siemens Healthineers AG
+registered in Munich, Germany
+Sep 30, 2023
+Sep 30, 2022
+24%
+25%
+4,341
+2023
+4,887
+13,379
+32,548
+35,677
+13,440
+12,024
+15,110
+17,180
+14,136
+NOTE 2 Material accounting policies and critical accounting estimates
+Cash flows from operating activities - continuing and discontinued operations
+NOTE 1 Basis of presentation
+(5,252)
+Repayment of long-term debt (including current maturities of long-term debt)
+4,969
+2,470
+Issuance of long-term debt
+(305)
+(404)
+Re-issuance of treasury shares and other transactions with owners
+(1,565)
+(884)
+Purchase of treasury shares
+Cash flows from financing activities
+(2,490)
+(3,176)
+Cash flows from investing activities - continuing and discontinued operations
+(6,663)
+Change in short-term debt and other financing activities
+300
+455
+(1)
+(7,502)
+(1)
+(8,731)
+Cash flows from financing activities - continuing and discontinued operations
+(7,502)
+(8,730)
+(354)
+(389)
+(23)
+(3,215)
+Cash flows from financing activities - discontinued operations
+Cash flows from financing activities - continuing operations
+Dividends attributable to non-controlling interests
+Dividends paid to shareholders of Siemens AG
+(824)
+(1,208)
+Interest paid
+(3,362)
+Effect of changes in exchange rates on cash and cash equivalents
+281
+(2,467)
+(2,084)
+(2,218)
+Additions to intangible assets and property, plant and equipment
+Cash flows from investing activities
+10,241
+12,239
+(81)
+(41)
+Cash flows from operating activities - discontinued operations
+10,322
+12,281
+Cash flows from operating activities - continuing operations
+1,481
+2,205
+Interest received
+Acquisitions of businesses, net of cash acquired
+(407)
+(2,207)
+Purchase of investments and financial assets for investment purposes
+(3,458)
+Cash flows from investing activities – continuing operations
+1,973
+746
+Disposal of investments and financial assets for investment purposes
+2,078
+368
+Cash flows from investing activities - discontinued operations
+Disposal of businesses, net of cash disposed
+237
+Disposal of intangibles and property, plant and equipment
+(1,100)
+(1,461)
+Change in receivables from financing activities
+(1,404)
+(723)
+276
+348
+(721)
+679
+Other changes in equity
+Balance as of September 30, 2022
+2,550
+7,040
+39,607
+3,723
+(40)
+(13)
+(179)
+(4,804)
+44,160
+3,723
+4,831
+669
+48,991
+4,392
+(562)
+Transactions with non-controlling interests
+Disposal of equity instruments
+Re-issuance of treasury shares
+Purchase of treasury shares
+Currency
+translation
+differences
+Equity
+instruments
+Derivative
+financial
+instruments
+Treasury
+shares
+at cost
+Total equity
+attributable
+to share-
+holders of
+Siemens AG
+6,346
+Consolidated Financial Statements
+controlling
+interests
+Total
+equity
+(in millions of €)
+Balance as of October 1, 2021
+Other comprehensive income, net of income taxes
+Dividends
+Share-based payment
+Non
+490
+1
+5,830
+5. Consolidated Statements of Changes in Equity
+5
+7
+10,465
+10,084
+Cash and cash equivalents at end of period (Consolidated Statements of Financial Position)
+Less: Cash and cash equivalents of assets classified as held for disposal and discontinued operations
+at end of period
+10,472
+10,084
+Cash and cash equivalents at end of period
+9,545
+10,472
+Cash and cash equivalents at beginning of period
+927
+(388)
+Change in cash and cash equivalents
+Issued
+capital
+Capital
+reserve
+Retained
+earnings
+781
+6,611
+(3,215)
+-
+(3,215)
+(354)
+(3,569)
+45
+83
+14
+14
+45
+(1,588)
+444
+(1,588)
+(1,588)
+490
+(69)
+258
+(2,173)
+(2,902)
+(3,362)
+-
+(3,362)
+(400)
+(3,762)
+Share-based payment
+176
+(46)
+130
+130
+Purchase of treasury shares
+(884)
+(884)
+(884)
+Re-issuance of treasury shares
+Dividends
+(4,566)
+(589)
+(3,977)
+(12)
+(134)
+(5,948)
+48,895
+5,910
+54,805
+Net income
+Cancellation of treasury shares
+7,949
+579
+8,529
+Other comprehensive income, net of income taxes
+(100)
+(3,881)
+(41)
+45
+7,949
+6,306
+Disposal of equity instruments
+Other transactions with non-controlling interests
+7,411
+36,874
+2,425
+(53)
+(89)
+(1,177)
+47,791
+5,270
+53,060
+445
+5,211
+502
+502
+6
+Consolidated Financial Statements
+6. Notes to Consolidated Financial Statements
+2,400
+41
+37
+3
+Other changes in equity
+Balance as of September 30, 2023
+57
+(150)
+(5,061)
+14
+14
+Changes in equity resulting from major portfolio transactions
+14
+(1,553)
+(1,553)
+3
+71
+3
+75
+(267)
+(193)
+(1,553)
+38,959
+7,174
+2,550
+Dividends received
+Income taxes paid
+Change in other assets and liabilities
+Additions to assets leased to others in operating leases
+Contract liabilities
+Trade payables
+Trade and other receivables
+Inventories
+Contract assets
+Change in operating net working capital from
+Other non-cash (income) expenses
+(Income) loss related to investing activities
+Interest (income) expenses, net
+2,741
+2,687
+(1,033)
+(942)
+(979)
+432
+(2,584)
+3,184
+(394)
+(444)
+2,046
+1,069
+1,352
+3,561
+190
+(1,655)
+(1,456)
+(1,345)
+(432)
+(425)
+2,903
+(652)
+(972)
+3,608
+21
+(15)
+(166)
+(331)
+(331)
+3
+(328)
+2,550
+7,174
+(19)
+38,959
+(12)
+(134)
+(5,948)
+48,895
+5,910
+54,805
+Balance as of October 1, 2022
+6,306
+The accompanying Consolidated Financial Statements present the operations of Siemens Aktiengesellschaft with registered offices in
+Berlin (registry number HRB 12300) and Munich (registry number HRB 6684), Germany, and its subsidiaries (the Company or Siemens).
+They have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union as well
+as with the additional requirements set forth in Section 315e (1) of the German Commercial Code (HGB). The Consolidated Financial
+Statements are in accordance with IFRS as issued by the International Accounting Standards Board (IASB). The Consolidated Financial
+Statements were authorized for issue by the Managing Board on December 4, 2023. Siemens prepares and reports its Consolidated
+Financial Statements in euros (€). Due to rounding, numbers presented may not add up precisely to totals provided. Siemens is a German
+based multinational focused technology company.
+(146)
+6
+Income tax expenses
+Amortization, depreciation and impairments
+Adjustments to reconcile net income to cash flows from operating activities - continuing operations
+(Income) loss from discontinued operations, net of income taxes
+4,392
+8,529
+Net income
+Cash flows from operating activities
+(153)
+2022
+Fiscal year
+Consolidated Financial Statements
+(in millions of €)
+4. Consolidated Statements of Cash Flows
+(41)
+(41)
+(41)
+2023
+Net income
+Pensions and similar obligations
+Intangible assets
+tions)/Dis-
+7,483
+6,658
+39,113
+43,978
+In fiscal 2023 and 2022, Siemens recognized interest expenses on lease liabilities of €71 million and €48 million and expenses relating to
+variable lease payments not included in the measurement of lease liabilities of €100 million and €93 million, respectively. In fiscal 2023
+and 2022, cash flows to which Siemens is potentially exposed and which are not reflected in the measurement of lease liabilities, relate
+primarily to lease contracts entered into, however which have not yet commenced as well as to extension options whose exercise is not
+yet reasonably certain totaling €2.9 billion and €3.1 billion, respectively, and, in addition, to variable lease payments mainly relating to
+incidental and operating costs for buildings leased by Siemens.
+19
+Changes in liabilities arising from financing activities
+Cash flows
+Consolidated Financial Statements
+Non-cash changes
+(Acquisi-
+379
+287
+3,419
+3,715
+3,631
+2,299
+2,230
+703
+693
+Sep 30,
+2023
+Sep 30,
+2022
+Sep 30,
+Sep 30,
+5,545
+4,797
+4,029
+35,383
+733
+1,071
+511
+87
+1,461
+38
+1,673
+42
+2022
+39,964
+3,197
+3,516
+2022
+Sep 30,
+NOTE 10 Contract assets and liabilities
+Other
+Derivative financial instruments
+Interest-bearing debt securities
+Loans receivable
+(in millions of €)
+2023
+NOTE 9 Other current financial assets
+Investments in finance leases primarily relate to industrial machinery, medical equipment, transportation systems, equipment for
+information technology and office machines.
+6,486
+6,696
+136
+144
+6,350
+6,552
+In fiscal 2023 and 2022, finance income on the net investment in the lease is €372 million and €453 million.
+2022
+7,588
+6,216
+2023
+Sep 30,
+Finished goods and products held for resale
+Advances to suppliers
+Work in progress
+Raw materials and supplies
+(in millions of €)
+Inventories
+NOTE 11 Inventories and Other current assets
+As of September 30, 2023, and 2022, amounts expected to be settled after twelve months are €1,487 million and €1,321 million for
+contract assets and €1,812 million and €1,628 million for contract liabilities, respectively. In fiscal 2023, and 2022, revenue includes
+€7,799 million and €6,158 million, respectively, which was included in contract liabilities at the beginning of the fiscal year.
+9,696
+10,605
+1,285
+1,397
+957
+573
+1,239
+1,047
+Non-current debt
+Current debt
+Total debt
+Lease liabilities
+228
+161
+163
+101
+111
+139
+130
+215
+1,272
+In fiscal 2023 and 2022, income from operating leases is €610 million and €687 million, respectively, thereof from variable lease payments
+€137 million and €144 million, respectively.
+NOTE 14 Other financial assets
+(in millions of €)
+Loans receivable
+Receivables from finance leases
+Derivative financial instruments
+Equity instruments
+1,323
+298
+284
+392
+1,347
+(7)
+1 Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+The carrying amount of Advances to suppliers and construction in progress includes €1,125 million and €1,218 million, respectively, of
+property, plant and equipment under construction in fiscal 2023 and 2022. As of September 30, 2023, and 2022, contractual
+commitments for purchases of property, plant and equipment are €694 million and €627 million, respectively.
+In fiscal 2023, Siemens Healthineers incurred impairment losses in the endovascular robotics solution business of €262 million, mainly on
+other intangible assets, due to a decision to refocus certain activities within this business. The impairment loss is primarily reported at Cost
+of sales. The recoverable amount of the cash generating unit of €(69) million is fair value less costs to sell, determined by applying a
+discounted cash flow model (Level 3 of the fair value hierarchy) using a 10% after tax discount rate and a term corresponding to the
+expected useful life of the respective asset.
+Right-of-use assets are presented in Property, plant and equipment in accordance with their nature; right-of-use assets have a carrying
+amount of €2,546 million and €2,608 million as of September 30, 2023, and 2022, respectively; additions are €924 million and €918
+million and depreciation expense is €770 million and €760 million in fiscal 2023 and 2022. Right-of-use assets mainly relate to leases of
+land and buildings with a carrying amount of €2,176 million and €2,309 million as of September 30, 2023, and 2022, additions of €604
+million and €650 million and depreciation expense of €554 million and €558 million in fiscal 2023, and 2022. Equipment leased to others
+mainly relate to Technical machinery and equipment as well as to Office and other equipment owned by Siemens with a carrying amount
+of €1,248 million and €298 million, respectively, as of September 30, 2023 and €1,323 million and €337 million, respectively, as of
+September 30, 2022.
+In fiscal 2023 and 2022, expenses recognized for short-term leases are €64 million and €56 million, respectively; expenses for low-value
+leases not accounted for under the right-of-use model are €27 million and €22 million, respectively. Sale and Leaseback transactions
+resulted in gains of €2 million and €94 million, respectively, in fiscal 2023 and 2022.
+18
+Future minimum lease payments to be received under operating leases are:
+(in millions of €)
+Within one year
+After one year but not more than two years
+After two years but not more than three years
+After three years but not more than four years
+After four years but not more than five years
+More than five years
+Consolidated Financial Statements
+Sep 30,
+2023
+2022
+372
+Other
+(756)
+Sep 30,
+2023
+14,917
+Accruals for pending invoices
+Other
+105
+79
+569
+550
+1,985
+Deferred Income
+1,692
+7,448
+In fiscal 2023 and 2022, Other includes miscellaneous tax liabilities of €899 million and €743 million, respectively, as well as various
+accruals of €368 million and €419 million, respectively.
+NOTE 16 Debt
+(in millions of €)
+Notes and bonds
+Loans from banks
+Other financial indebtedness
+8,182
+5,126
+5,522
+2022
+16,551
+4,606
+4,277
+1,213
+2,868
+1,360
+1,470
+760
+737
+22,855
+25,903
+Item Loans receivable primarily relate to long-term loan transactions of SFS.
+NOTE 15 Other current liabilities
+Sep 30,
+(in millions of €)
+Liabilities to personnel
+2023
+2022
+(922)
+7,106
+7,475
+Deferred tax balances developed as follows:
+24
+As a significant risk, the Company considers a decline in the plans' funded status due to adverse developments of plan assets and/or defined
+benefit obligations resulting from changing parameters. Accordingly, Siemens implemented a risk management concept aligned with the
+defined benefit obligations (Asset Liability Matching). Risk management is based on a worldwide defined risk threshold (Value at Risk).
+The concept, the Value at Risk and the asset development including the investment strategy are monitored and adjusted on an ongoing
+basis under consultation of senior external experts. Independent asset managers are selected based on quantitative and qualitative
+analyses, which include their performance and risk evaluation. Derivatives are used to reduce risks as part of risk management.
+Asset Liability Matching Strategies
+As in prior years, sensitivity determinations apply the same methodology as those applied in determining post-employment benefit
+obligations. Sensitivities reflect changes in the DBO solely for the assumption changed.
+The DBO effect of a 10% reduction in mortality rates for all beneficiaries would be an increase of €714 million and €800 million,
+respectively, as of September 30, 2023 and 2022.
+(813)
+(in millions of €)
+1,450
+2022
+1,208
+(642)
+(1,123)
+788
+2023
+Rate of pension increase
+Discount rate
+(in millions of €)
+(1,328)
+973
+Sep 30,
+Balance at beginning of fiscal year of deferred tax (assets) liabilities
+Changes in items of the Consolidated Statements of Comprehensive Income
+(422)
+(563)
+(527)
+(78)
+2022
+2023
+Fiscal year
+Income taxes presented in the Consolidated Statements of Income
+Consolidated Financial Statements
+Deductible temporary differences
+(in millions of €)
+Deferred tax assets have not been recognized with respect of the following items (gross amounts):
+Minus amounts represent deferred tax assets.
+Balance at end of fiscal year of deferred tax (assets) liabilities
+Other (includes mainly currency translation differences)
+Additions from acquisitions not impacting net income
+Tax loss carryforwards
+decrease
+increase
+Effect on DBO due to a one-half percentage-point
+decrease
+2.2%
+2.1%
+4.8%
+5.5%
+5.5%
+5.9%
+3.7%
+GBP
+4.5%
+4.6%
+2022
+2023
+Sep 30,
+Consolidated Financial Statements
+USD
+EUR
+3.9%
+CHF
+Discount rates are derived from high-quality corporate bonds in the respective currency zones. As of September 30, 2023, discount rates
+are provided by external actuaries, which increased our weighted average discount rate by 0.21 percentage points.
+Applied mortality tables are:
+Germany
+increase
+A one-half-percentage-point change of the above assumptions would result in the following increase (decrease) of the DBO:
+2.0%
+3.2%
+3.0%
+2.3%
+2022
+Sep 30,
+2023
+Sensitivity analysis
+U.K.
+Germany
+Pension increase
+The mortality tables used in Germany (Siemens Bio 2017/2023) are mainly derived from data of the German Siemens population and to a
+lesser extent from data of the Federal Statistical Office in Germany by applying formulas in accordance with recognized actuarial standards.
+The weighted-average assumptions for pension increase for countries with significant effects are shown in the following table. Inflation
+effects, if applicable, are included in the assumptions below.
+Pri-2012 with generational projection from the US Social Security Administration's Long Range Demographic Assumptions
+SAPS S3 (Standard mortality tables for Self Administered Pension Schemes with allowance for future mortality improvements)
+BVG 2020 G with generational projection according to CMI model with a long-term trend rate of 1.25%
+CH
+U.K.
+U.S.
+Siemens specific tables (Siemens Bio 2017/2023)
+99
+515
+18
+172
+1,243
+1,653
+1,721
+2,299
+2,384
+2022
+2023
+1,171
+Sep 30,
+After one year but not more than two years
+After two years but not more than three years
+Within one year
+(in millions of €)
+Future minimum lease payments to be received are as follows:
+In fiscal 2023 and 2022, the long-term portion of receivables from finance leases is reported in Other financial assets amounting to €4,606
+million and €4,277 million, respectively.
+16,701
+17,405
+After three years but not more than four years
+After four years but not more than five years
+More than five years
+829
+758
+489
+2022
+2023
+Sep 30,
+Consolidated Financial Statements
+Net investment in the lease
+Plus present value of unguaranteed residual value
+Present value of future minimum lease payments
+Less: Unearned finance income relating to future minimum lease payments
+Future minimum lease payments
+(in millions of €)
+Future minimum lease payments reconcile to the net investment in the lease as follows:
+15
+7,106
+7,475
+769
+808
+456
+2,036
+(12)
+(15,193) 11,733 (2,292)
+1,952
+15,454
+Including items charged or credited directly to equity and the expenses (benefits) from continuing and discontinued operations, the
+income tax expenses (benefits) consist of the following:
+Siemens has not recognized deferred tax liabilities for income taxes or foreign withholding taxes on the cumulative earnings of subsidiaries
+of €29,720 million and €29,687 million, respectively in fiscal 2023 and 2022, because the earnings are intended to be permanently
+reinvested in the subsidiaries.
+Of the tax loss carryforward, an amount of €189 million and €245 million for fiscal 2023 and 2022, respectively can be carried forward for
+a limited period. A material portion thereof will expire until 2031 and 2030, respectively.
+1,607
+1,864
+1,164
+1,314
+Fiscal year
+443
+2022
+2023
+Sep 30,
+(78)
+(576)
+184
+(52)
+550
+2023
+2022
+(in millions of €)
+2022
+Sep 30,
+2023
+Trade receivables from the sale of goods and services
+Receivables from finance leases
+(in millions of €)
+NOTE 8 Trade and other receivables
+An uncertain tax regulation arising from a foreign tax reform may result in potential future tax payments amounting to a middle three-
+digit million euro range. Due to the low probability and the character of a contingent liability, no tax liability was recognized.
+3,282
+2,692
+538
+(4)
+Income and expenses recognized directly in equity
+3
+9
+2,741
+2,687
+Discontinued operations
+Continuing operations
+14,666
+1,359
+26,926
+(19)
+(2,307)
+3,104
+1,359
+construction in progress
+Advances to suppliers and
+(543)
+1,769
+(2,088)
+3,857
+(41)
+(675)
+643
+(149)
+4,025
+Equipment leased to others
+(674)
+1,418
+(4,482)
+12
+5,900
+742
+(8)
+Gross Translation
+'Includes assets reclassified to Assets classified as held for disposal and dispositions of those entities.
+(2,279)
+11,938
+(15,342)
+27,280
+(1,901)
+(755)
+3,252
+(1,015)
+26,926
+Property, plant and equipment
+(2)
+1,288
+(8)
+1,296
+17
+(485)
+103
+748
+(425)
+10,610
+Land and buildings
+(1,321)
+10,641
+(451)
+5,229
+1
+8,200 (2,971)
+20,247 (9,605)
+349
+203
+(1,077)
+22,082
+Other intangible assets
+(1,007)
+160
+(1,310)
+831
+424
+(548)
+15
+(223)
+5,742
+Office and other equipment
+(307)
+1,642
+(3,691)
+5,333
+(185)
+215
+289
+(177)
+5,190
+Technical machinery and equipment
+(753)
+5,821
+10,894 (5,073)
+Additions
+Additions
+carrying
+differences
+50
+(89)
+8,383
+(4,052)
+4,331
+(579)
+Customer relationships and trademarks
+259
+7,966
+911
+(91)
+Other intangible assets
+18,849
+2,017
+1,169
+345
+698
+983
+7,179
+licenses and similar rights
+Carrying
+amount
+09/30/2022
+Deprecia-
+tion/amorti-
+zation and
+impairment
+in fiscal
+2022
+(in millions of €)
+Internally generated technology
+3,704
+335
+295
+(119)
+4,215
+(2,164)
+2,051
+(199)
+Acquired technology including patents,
+(298)
+(438)
+22,082
+5,815
+1,519
+(309)
+Foreign
+ment
+ortization
+and impair-
+ciation/am-
+Accumu-
+lated depre-
+(3,671)
+nations
+combi-
+10/01/2021
+business
+amount
+Retire-
+ments¹
+Reclassi-
+fications
+through
+Gross
+carrying
+amount
+09/30/2022
+5,190
+(242)
+149
+(478)
+12,196
+(1,256)
+Land and buildings
+9,454
+656
+22
+888
+337
+(746)
+10,610 (4,902)
+5,708
+(802)
+Technical machinery and equipment
+4,826
+256
+201
+9,484 (3,669)
+(9,886)
+9,484
+Customer relationships and trademarks
+(702)
+3,014
+(1,899)
+31,360
+35,721
+2022
+2023
+Fiscal year
+198
+Consolidated Financial Statements
+Impairment losses recognized during the period
+Translation differences and other
+Balance at begin of fiscal year
+Accumulated impairment losses and other changes
+Dispositions and reclassifications to assets classified as held for disposal
+Balance at fiscal year-end
+Acquisitions and purchase accounting adjustments
+Translation differences and other
+Dispositions and reclassifications to assets classified as held for disposal
+1,505
+(110)
+(159)
+33,861
+Balance at fiscal year-end
+Balance at begin of fiscal year
+Carrying amount
+Balance at fiscal year-end
+1,859
+1,686
+(59)
+(63)
+13
+8
+217
+(118)
+1,688
+1,859
+35,721
+33,910
+Balance at begin of fiscal year
+29,672
+Cost
+NOTE 12 Goodwill
+553
+2
+(608)
+4,025 (2,188)
+1,838
+(543)
+Advances to suppliers and
+4
+construction in progress
+58
+834
+(568)
+Property, plant and equipment
+24,601
+1,503
+26
+1,055
+213
+3,860
+Equipment leased to others
+16
+In fiscal 2023, and 2022, Other current assets include other tax receivables of €784 million and €810 million, prepaid expenses of €543
+million and €509 million, respectively, and €283 million and €261 million, respectively, in reimbursement claims relating to activities in
+Russia.
+Other current assets
+Cost of sales includes inventories recognized as expense amounting to €47,350 million and €45,159 million, respectively, in fiscal 2023
+and 2022. Compared to prior year, write-downs increased by €131 million in fiscal 2023. In fiscal 2022, write-downs increased by €94
+million compared to fiscal 2021.
+10,626
+11,548
+Office and other equipment
+5,406
+320
+-
+627
+80
+(692)
+5,742
+(4,420)
+1,321
+(631)
+(in millions of €)
+Discount rate
+32,224
+Siemens performs the mandatory annual impairment test in the three months ended September 30. Key assumptions on which Siemens
+based its determinations of the fair value less costs to sell for the (group of) cash-generating unit(s) being part of the segments include
+terminal value growth rates up to 1.9% in fiscal 2023 and 2022, and after-tax discount rates of 7.5% to 9.5% in fiscal 2023 and 6.5% to
+9.0% in fiscal 2022.
+Carrying
+amount
+09/30/2023
+ment
+ortization
+and impair-
+Accumu-
+lated depre-
+ciation/am-
+Consolidated Financial Statements
+nations
+carrying
+amount
+09/30/2023
+Deprecia-
+tion/amorti-
+zation and
+impairment
+combi-
+Gross
+Retire-
+ments'
+Additions Additions Reclassi-
+fications
+through
+differences
+Gross Translation
+carrying
+amount
+10/01/2022
+(in millions of €)
+business
+in fiscal
+2023
+Internally generated technology
+3,417
+7,882 (4,465)
+(102)
+48
+43
+(490)
+8,383
+licenses and similar rights
+Acquired technology including patents,
+(168)
+1,995
+(2,170)
+4,165
+(202)
+301
+(150)
+4,215
+NOTE 13 Other intangible assets and property, plant and equipment
+33,861
+17
+7.5%
+7,828
+8,5%
+1,9%
+7,874
+After-tax
+discount rate
+value growth
+rate
+Goodwill
+1,9%
+Imaging of Siemens Healthineers
+Varian of Siemens Healthineers
+(in millions of €)
+Terminal
+Sep 30, 2023
+The following table presents key assumptions used to determine fair value less costs to sell for impairment test purposes for the groups of
+cash-generating units to which a significant amount of goodwill is allocated:
+The fair value less costs to sell is mainly driven by the terminal value, which is particularly sensitive to changes in the assumptions on the
+terminal value growth rate and discount rate. Both assumptions are determined individually for each cash-generating unit or group of
+cash-generating units. Discount rates are based on the weighted average cost of capital (WACC). Siemens Financial Services' discount rate
+represents its specific cost of equity. The discount rates are calculated based on a risk-free rate of interest and a market risk premium. In
+addition, the discount rates reflect the current market assessment of the risks specific to each cash-generating unit or group of cash-
+generating units by taking into account specific peer group information on beta factors, leverage and cost of debt as well as country
+specific premiums. The parameters for calculating the discount rates are based on external sources of information. The peer group is
+subject to an annual review and adjusted, if necessary. Terminal value growth rates take into consideration external macroeconomic
+sources of data and industry specific trends.
+To estimate the fair value less costs to sell of the cash-generating units or groups of cash-generating units, cash flows were projected for
+the next five years (in exceptional cases up to ten years) based on past experience, actual operating results and management's best
+estimate about future developments as well as market assumptions. The determined fair value of the cash-generating units or groups of
+cash-generating units is assigned to level 3 of the fair value hierarchy.
+Digital Industries
+9,5%
+6,782
+1,9%
+Imaging of Siemens Healthineers
+1.9%
+7,260
+After-tax
+discount rate
+9.0%
+8.0%
+1.9%
+8,134
+1.9%
+rate
+Goodwill
+8,226
+value growth
+Terminal
+Sep 30, 2022
+Varian of Siemens Healthineers
+Digital Industries
+(in millions of €)
+Revenue figures in the detailed forecast planning period of the groups of cash-generating units to which a significant amount of goodwill
+is allocated are based on average revenue growth rates (excluding portfolio effects) of between 7.3% and 8.4% (8.3% and 10.3% in fiscal
+2022).
+8,0%
+The sensitivity analysis for the groups of cash-generating units to which a significant amount of goodwill is allocated was based on a
+reduction in after-tax future cash flows by 10% or an increase in after-tax discount rates by one percentage point or a reduction in the
+terminal value growth rate by one percentage point. Siemens concluded that no impairment loss would need to be recognized on goodwill
+in any of these groups of cash-generating units.
+The weighted-average discount rate used for the actuarial valuation of the DBO was as follows:
+2023
+23
+€
+997
+1,000
+€
+998
+1,000
+€
+750
+950
+€
+953
+1,000
+€
+1,251
+1,250
+€
+1,000
+-
+748
+750
+€
+924
+1,000
+€
+962
+1,000
+€
+€
+976
+€
+878
+850
+£
+932
+850
+748
+1,000
+992
+1,000
+€
+€
+665
+800
+€
+664
+800
+€
+800
+569
+€
+572
+650
+€
+724
+750
+€
+650
+576
+€
+800
+993
+1,000
+€
+0.5%/2019/September 2034/EUR fixed-rate instruments
+0.0%/2020/February 2023/EUR fixed-rate instruments
+0.0%/2020/February 2026/EUR fixed-rate instruments
+0.25%/2020/February 2029/EUR fixed-rate instruments
+0.5%/2020/February 2032/EUR fixed-rate instruments
+1.0%/2020/February 2025/GBP fixed-rate instruments
+0.25%/2020/June 2024/EUR fixed-rate instruments
+0.375%/2020/June 2026/EUR fixed-rate instruments
+0.875%/2020/June 2023/GBP fixed-rate instruments
+0.625%/2022/February 2027/EUR fixed-rate instruments
+1.0%/2022/February 2030/EUR fixed-rate instruments
+1.25%/2022/February 2035/EUR fixed-rate instruments
+2.25%/2022/March 2025/EUR fixed-rate instruments
+2.5%/2022/September 2027/EUR fixed-rate instruments
+2.75%/2022/September 2030/EUR fixed-rate instruments
+995
+1,000
+€
+995
+1,000
+€
+479
+500
+€
+484
+500
+€
+601
+1,000
+921
+-
+£
+6.125%/2006/August 2026/US$ fixed-rate instruments
+3.25%/2015/May 2025/US$ fixed-rate-instruments
+4.4%/2015/May 2045/US$ fixed-rate-instruments
+2.0%/2016/September 2023/US$-fixed-rate-instruments
+2.35%/2016/October 2026/US$-fixed-rate-instruments
+3.3%/2016/September 2046/US$-fixed-rate-instruments
+3.125%/2017/March 2024/US$ fixed-rate-instruments
+22,006
+21,842
+735
+750
+€
+492
+US$
+500
+1,244
+1,250
+€
+997
+1,000
+€
+997
+€
+1,750
+1,758
+US$
+768
+750
+US$
+1,776
+1,750
+US$
+1,635
+1,750
+US$
+1,458
+1,500
+US$
+1,350
+1,500
+US$
+1,968
+1,750
+1,000
+737
+€
+497
+750
+€
+746
+750
+€
+746
+750
+739
+€
+500
+€
+455
+500
+€
+497
+450
+454
+€
+750
+738
+500
+€
+497
+500
+€
+499
+500
+€
+499
+500
+Actuarial assumptions
+997
+1,000
+€
+998
+1,000
+€
+3.0%/2022/September 2033/EUR fixed-rate instruments
+3.375%/2023/August 2031/EUR fixed-rate instruments
+3.5%/2023/February 2036/EUR fixed-rate instruments
+3.625%/2023/February 2043/EUR fixed-rate instruments
+Total Debt Issuance Program
+750
+€
+995
+(Acquisi-
+tions)/Dis-
+positions
+10/01/2021
+(in millions of €)
+Non-cash changes
+Cash flows
+In addition, other financing activities resulted in €251 million cash flows in fiscal 2023.
+46,596
+Foreign
+currency
+translation
+725
+(2,162)
+35
+(2,733)
+50,636
+Total debt
+2,924
+793
+94
+Fair value
+hedge
+adjustments
+Reclassifi-
+cations and
+other
+159
+361
+320
+2,282
+Loans from banks (current and non-current)
+4,797
+4,456
+(19)
+553
+39,964
+(4,480)
+(1,255)
+3,224
+37,505 4,969
+5,867 (6,060)
+Current notes and bonds
+Non-current notes and bonds
+changes 09/30/2022
+(97)
+(377)
+(3)
+3,002
+(5,291)
+153
+(1,911)
+2,470
+39,964
+09/30/2023
+changes
+35,383
+Reclassifi-
+cations and
+other
+translation
+positions
+10/01/2022
+Current notes and bonds
+Non-current notes and bonds
+(in millions of €)
+currency
+Fair value
+hedge
+adjustments
+4,797
+(4,574)
+114
+Lease liabilities (current and non-current)
+549
+(3)
+(123)
+546
+128
+Other financial indebtedness (current and non-current)
+2,194
+(41)
+(144)
+39
+(404)
+2,745
+Loans from banks (current and non-current)
+5,545
+5,267
+(59)
+(771)
+US$
+2,745
+116
+1,000
+€
+1,001
+1,000
+€
+725
+650
+998
+£
+650
+£
+355
+350
+£
+377
+350
+741
+US$
+100
+93
+1,000
+€
+996
+1,000
+€
+676
+750
+€
+677
+750
+€
+999
+1,000
+€
+101
+100
+US$
+£
+Other financial indebtedness (current and non-current)
+millions of €1
+millions of €1
+4,526
+289
+(1,829)
+48,700
+Total debt
+3,002
+622
+(1,274)
+127
+(604)
+2,929
+Lease liabilities (current and non-current)
+128
+3
+463
+(453)
+(72)
+224
+50,636
+In addition, other financing activities resulted in €590 million cash flows in fiscal 2022.
+(in millions)
+2.75%/2012/September 2025/GBP fixed-rate instruments
+3.75%/2012/September 2042/GBP fixed-rate instruments
+2.875%/2013/March 2028/EUR fixed-rate instruments
+3.5%/2013/March 2028/US$ fixed-rate instruments
+0.375%/2018/September 2023/EUR fixed-rate instruments
+1.0%/2018/September 2027/EUR fixed-rate instruments
+1.375%/2018/September 2030/EUR fixed-rate instruments
+0.3%/2019/February 2024/EUR fixed-rate instruments
+0.9%/2019/February 2028/EUR fixed-rate instruments
+1.25%/2019/February 2031/EUR fixed-rate instruments
+1.75%/2019/February 2039/EUR fixed-rate instruments
+0.0%/2019/September 2024/EUR fixed-rate instruments
+0.125%/2019/September 2029/EUR fixed-rate instruments
+(interest/issued/maturity)
+Carrying
+amount in
+Notional amount
+Currency
+Carrying
+amount in
+Notional amount
+Currency
+Sep 30, 2022
+Consolidated Financial Statements
+Sep 30, 2023
+Notes and bonds
+20
+20
+As of September 30, 2023, and 2022, Siemens has €7.45 billion lines of credit, which are unused. The €7.0 billion syndicated loan facility
+matures in February 2026. In September 2023, the unused €450 million revolving bilateral credit facility was extended to September
+2024. The facilities are for general corporate purposes.
+Credit facilities
+(in millions)
+1,700
+€
+US$
+(6)
+8
+(10)
+(10)
+(15)
+(2)
+Other²
+(327)
+(990)
+327
+990
+Interest income
+367
+1,070
+1
+14
+366
+1,056
+482
+386
+-
+-
+482
+386
+2,015
+1,949
+16
+Components of defined benefit costs recognized in the
+Consolidated Statements of income
+1,440
+832
+(696)
+Comprehensive Income
+Remeasurements recognized in the Consolidated Statements of
+602
+(50)
+602
+(50)
+Effects of asset ceiling
+(7,581)
+(696)
+-
+(7,581)
+(696)
+2022
+Actuarial (gains) losses
+788
+-
+-
+(7,018)
+(788)
+income and net interest expenses
+Return on plan assets excluding amounts included in net interest
+516
+474
+1
+14
+317
+980
+7,018
+2023
+2022
+2023
+620
+In Germany, pension benefits are provided through the following plans: BSAV (Beitragsorientierte Siemens Altersversorgung), frozen
+legacy plans as well as deferred compensation plans. The majority of active employees participate in the BSAV. Those benefits are based
+predominantly on notional contributions and the return on the corresponding assets of this plan, subject to a minimum return guaranteed
+by the employer. At inception of the BSAV, benefits provided under the frozen legacy plans were modified to substantially eliminate the
+effects of compensation increases. However, the frozen plans still expose Siemens to investment risk, interest rate risk, inflation risk and
+longevity risk. The pension plans are funded via contractual trust arrangements (CTA). In Germany no legal or regulatory minimum funding
+requirements apply.
+The defined benefit plans open to new entrants are based predominantly on contributions made by the Company. Only to a certain extent,
+those plans are affected by longevity, inflation and compensation increases and take country specific differences into account. The
+Company's major plans are funded with assets in segregated entities. In accordance with local laws these plans are managed in the interest
+of the beneficiaries by way of contractual trust agreements with each separate legal entity. The defined benefit plans cover 442,000
+participants, including 183,000 actives, 82,000 deferreds with vested benefits and 177,000 retirees and surviving dependents.
+Germany
+Defined benefit plans
+NOTE 17 Post-employment benefits
+As of September 30, 2023, and 2022, Siemens has a US$9.0 billion (€8.5 billion and €9.2 billion, respectively, as of September 30, 2023
+and 2022) commercial paper program in place including US$ extendible notes capabilities. As of September 30, 2023, US$49 million (€46
+million) were outstanding; as of September 30, 2022, none were outstanding. Siemens' commercial papers have a maturity of generally
+less than 90 days. Interest rates ranged from 3.06% to 5.29% in fiscal 2023 and from 0.08% to 3.06% in fiscal 2022.
+Commercial paper program
+Of the two persisting bilateral term loan facilities of US$500 million (€472 million) each, one matures in fiscal 2024, and the second in
+fiscal 2025. The existing bilateral €500 million term loan facility matures in fiscal 2025.
+The previous bilateral €250 million term loan facility and the bilateral €350 million term loan facility, both maturing in fiscal 2023, were
+redeemed as due.
+In fiscal 2023, two bilateral term loan facilities were newly signed: one bilateral PLN 500 million (€108 million) term loan facility maturing
+in fiscal 2026 with one one-year extension option and one bilateral US$250 million (€236 million) term loan facility maturing in fiscal
+2025 with one one-year extension option, which was extended in October 2023 to mature in fiscal 2026 with no remaining extension
+option.
+As of September 30, 2023, and 2022, five bilateral term loan facilities are outstanding (in aggregate €1.8 billion and €2.1 billion,
+respectively).
+Assignable and term loans
+Stand Alone Bonds - In March 2023, the 0.4% US$1.25 billion fixed-rate instruments and in September 2023, the 2.0% US$750 million
+fixed-rate instruments were redeemed at face value.
+In February 2023, the 0.0% €1.25 billion fixed-rate instruments, in June 2023, the 0.875% £450 million fixed-rate instruments and in
+September 2023, the 0.375% €1.0 billion fixed-rate instruments were redeemed at face value. In February 2023, Siemens issued fixed-
+rate instruments totaling €2.5 billion in three tranches: 3.375% €1.25 billion due August 2031; 3.5% €500 million due February 2036 and
+3.625% €750 million due February 2043.
+U.S.
+Debt Issuance Program - The Company has a program in place to issue debt instruments under which, as of September 30, 2023 and
+2022, up to €30.0 billion of instruments can be issued. As of September 30, 2023, €22.7 billion in notional amounts were issued and are
+outstanding (€23.0 billion as of September 30, 2022).
+21
+44,761
+40,929
+1 Includes adjustments for fair value hedge accounting.
+Total
+22,755
+19,087
+60
+60
+€
+2023/February 2024/EUR fixed-rate instruments
+Total Stand Alone Bonds
+1,527
+1,500
+Consolidated Financial Statements
+(7,581)
+In the U.S., the Pension Plans are sponsored by Siemens, which for the most part have been frozen to new entrants and to future benefit
+accruals, except for interest credits on cash balance accounts. Siemens has appointed the Investment Committee as the named fiduciary
+for the management of the assets of the Plans. The Plans' assets are held in Trusts and the trustees of the Trusts are responsible for the
+administration of the assets of the Trusts, taking directions from the Investment Committee. The Plans are subject to the funding
+requirements under the Employee Retirement Income Security Act of 1974 as amended (ERISA). There is a regulatory requirement to
+maintain a minimum funding level of 80% in the defined benefit plans in order to avoid benefit restrictions. At their discretion, sponsoring
+employers may contribute in excess of this regulatory requirement. Annual contributions are calculated by independent actuaries.
+Pension benefits are mainly offered through the Siemens Benefit Scheme for which, until the start of retirement, an inflation increase of
+the majority of accrued benefits is mandatory. The required funding is determined by a funding valuation carried out every third year
+based on legal requirements. Due to deviating guidelines for the determination of the discount rates, the technical funding deficit is usually
+larger than the IFRS funding deficit. To reduce the deficit Siemens entered into an agreement with the trustees to provide annual payments
+of £31 (€35) million until fiscal 2033. The agreement also provides for a cumulative advance payment by Siemens AG compensating the
+remaining annual payments at the date of early termination of the agreement due to cancellation or insolvency.
+2022
+33,543
+26,523
+35,542
+27,853
+2023
+2022
+2023
+Interest expenses
+Current service cost
+Balance at begin of fiscal year
+(in millions of €)
+Fiscal year
+Fiscal year
+U.K.
+Fiscal year
+(1 - 11 +111)
+(III)
+(11)
+(DBO)¹
+(I)
+Net defined benefit
+balance
+Effects of asset
+ceiling
+Fair value of
+plan assets
+Defined benefit
+obligation
+Development of the defined benefit plans
+Following the Swiss law of occupational benefits (BVG) each employer has to grant post-employment benefits for qualifying employees.
+Accordingly, Siemens in Switzerland sponsors several cash balance plans. These plans are administered by external foundations. The board
+of the main foundation is composed of equally many employer and employee representatives. The board of the foundation is responsible
+for investment policy and asset management, as well as for any changes in the plan rules and the determination of contributions to finance
+the benefits. The Company is required to make total contributions at least as high as the sum of the employee contributions set out in the
+plan rules. In case of an underfunded plan the Company together with the employees may be asked to pay supplementary contributions
+according to a well-defined framework of recovery measures.
+Switzerland
+Consolidated Financial Statements
+22
+Fiscal year
+(788)
+(7,018)
+(50)
+(52)
+(47)
+604
+561
+3,731
+3,783
+3,075
+3,175
+(159)
+76
+13
+12
+4,105
+1,518
+26,610 27,853
+3,591
+3,654
+254
+183
+-
+2,314
+2,057
+2,568
+1,201
+262
+-
+1,949
+1,132
+620
+3,933
+578
+1,599
+899
+DBO remeasurements in fiscal 2023 include losses of €813 million arising from inflation-related adjustments of pension benefits in
+Germany.
+Total
+(7,581)
+(49)
+(7,986)
+454
+2022
+2023
+(82)
+(1,246)
+631
+(696)
+Experience (gains) losses
+Changes in financial assumptions
+Changes in demographic assumptions
+(in millions of €)
+Fiscal year
+The DBO remeasurements comprise actuarial (gains) and losses resulting from:
+Net interest expenses relating to provisions for pensions and similar obligations amount to €97 million and €51 million, respectively, in
+fiscal 2023 and 2022. The DBO is attributable to actives 29% and 29%, to deferreds with vested benefits 12% and 13% and to retirees and
+surviving dependents 60% and 58%, respectively, in fiscal 2023 and 2022.
+864
+1 Total Defined benefit obligation (DBO) includes other post-employment benefits of €284 million and €299 million in fiscal 2023 and 2022 respectively, which primarily consist of transition payments to German employees after
+retirement as well as post-employment health care and life insurance benefits to employees in the U.S.
+2 Includes past service benefits/costs, settlement gains/losses and administration costs related to liabilities.
+293
+2,278
+1,426
+1,949
+1,132
+620
+578
+26,523
+26,055
+704
+658
+3
+4
+328
+US$
+26,055 26,523
+16,676 15,760 15,475
+thereof net defined benefit assets (presented in Other assets)
+(5)
+Business combinations, disposals and other
+(5)
+-
+(11)
+(15)
+Settlement payments
+(128)
+(124)
+-
+(1,660)
+1,602
+(1,788)
+Foreign currency translation effects
+(1,811)
+128
+126
+128
+126
+Plan participants' contributions
+(513)
+(1,104)
+513
+1,104
+Employer contributions
+39
+42
+602
+Benefits paid
+16,023
+2,240
+(281)
+12
+(204)
+thereof provisions for pensions and similar obligations
+Total
+Other countries
+CH
+U.K.
+U.S.
+Germany
+27,853
+26,610
+Balance at fiscal year-end
+(620)
+(1,333)
+1
+(155)
+874
+(6)
+(660)
+(941)
+(1,987)
+Other reconciling items
+28
+(83)
+8
+(6)
+854
+(8)
+(17)
+(7)
+(154)
+(319)
+1,405
+(1,687)
+US$
+US$
+1,250
+1,280
+4.2%/2017/March 2047/US fixed-rate-instruments
+US$
+1,500
+1,178
+1,404
+1,500
+1,526
+0.4%/2021/March 2023/US$ fixed-rate-instruments
+US$
+1,250
+1,282
+US$
+Compounded SOFR+0.43%/2021/March 2024/US$ floating-rate instruments
+1,250
+3.4%/2017/March 2027/US$ fixed-rate-instruments
+1,700
+1,740
+US$
+1,000
+937
+US$
+US$
+1,000
+US$
+1,000
+929
+1,500
+1,000
+992
+1,018
+US$
+US$
+944
+US$
+2.15%/2021/March 2031/US$ fixed-rate-instruments
+1,277
+1,250
+US$
+1,176
+1,250
+US$
+1.7%/2021/March 2028/US$ fixed-rate-instruments
+1,790
+1,750
+1,750
+1,649
+US$
+1.2%/2021/March 2026/US$ fixed-rate-instruments
+1,538
+1,500
+US$
+1,416
+1,500
+US$
+0.65%/2021/March 2024/US$ fixed-rate-instruments
+1,025
+2.875%/2021/March 2041/US$ fixed-rate-instruments
+1,750
+1,645
+US$
+1,750
+US$
+1,000
+1,000
+US$
+1,788
+Trade
+receivables
+86
+15
+98
+535
+53
+212
+Change in valuation allowances recorded in the Consolidated Statements of
+Income in the current period
+132
+4
+Valuation allowance as of October 1, 2021
+13
+82
+620
+Write-offs charged against the allowance
+n/a
+n/a
+(15)
+(133)
+(28)
+Recoveries of amounts previously written off
+n/a
+116
+Stage 3
+Stage 2
+Stage 1
+Loans and other debt instruments
+under the general approach
+Lease
+Receivables
+Assets
+debt instru-
+amortized cost
+the simplified
+approach
+Contract
+n/a
+Loans, receivables and other debt instruments measured at
+137
+134
+498
+274
+18
+100
+Valuation allowance as of September 30, 2023
+(2)
+Reclassifications to line item Assets held for disposal and dispositions of
+entities
+(8)
+ments under
+(in millions of €)
+and other
+1
+567
+6
+Related amounts not offset in the Statement of Financial Position
+Net amounts
+Financial assets
+Financial liabilities
+Sep 30,
+Sep 30,
+2023
+2022
+2023
+2022
+1,705
+Net amounts in the Statement of Financial Position
+3,711
+1,864
+1,705
+3,711
+1,558
+1,863
+863
+1,444
+865
+1,449
+842
+1,559
+16
+Amounts offset in the Statement of Financial Position
+(in millions of €)
+Foreign exchange translation differences and other changes
+(113)
+3
+131
+52
+6
+93
+Reclassifications to line item Assets held for disposal and dispositions of
+entities
+Valuation allowance as of September 30, 2022
+106
+Gross amounts
+22
+(732)
+227
+(4)
+140
+172
+Impairment losses on financial instruments are presented in line items Cost of sales, Selling and general administrative expenses and Other
+financial income (expenses), net. Net losses (gains) in fiscal 2023 are €247 million and in fiscal 2022 €966 million (thereof €566 million
+due to credit impaired lease receivables in connection with the sale of our leasing business in Russia). In fiscal 2023 and 2022, impairment
+losses net of (gains) from reversal of impairments at SFS total €181 million and €259 million, respectively. Impairment losses and (gains)
+from reversal of impairments at SFS are presented in Other financial income (expenses), net.
+30
+Consolidated Financial Statements
+Offsetting
+Siemens enters into master netting and similar agreements for derivative financial instruments. Potential offsetting effects are as follows:
+(19)
+(48)
+(6)
+2,266
+3,825
+3,825
+1,124
+1,124
+3
+3
+2,699
+2,699
+Financial liabilities measured at fair value - Derivative financial instruments
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with fair value hedges
+In connection with cash flow hedges
+1,900
+1,900
+651
+651
+925
+925
+325
+325
+Fair value of equity instruments quoted in an active market is based on price quotations at period-end date. Fair value of debt instruments,
+is either based on prices provided by price service agencies or is estimated by discounting future cash flows using current market interest
+rates.
+Fair values of derivative financial instruments are determined in accordance with the specific type of instrument. Fair values of derivative
+interest rate contracts are estimated by discounting expected future cash flows using current market interest rates and yield curves over
+the remaining term of the instrument. Interest rate futures are valued based on quoted market prices, if available. Fair values of foreign
+currency derivatives are based on forward exchange rates. Options are generally valued based on quoted market prices or based on option
+pricing models. No compensating effects from underlying transactions (e.g. firm commitments and forecast transactions) are considered.
+The Company limits default risks resulting from derivative financial instruments by generally transacting with financial institutions with a
+minimum credit rating of investment grade. Based on Siemens' net risk exposure towards the counterparty, the resulting credit risk is
+considered via a credit valuation adjustment.
+As of September 30, 2023, and 2022, Level 3 financial assets include venture capital investments of €578 million and €607 million (Next47
+investments). In fiscal 2023 and 2022, new level 3 investments and purchases amounted to €156 million and €221 million, respectively.
+Sales of Level 3 financial assets amounted to €40 million and €100 million, respectively, in fiscal 2023 and 2022.
+Net gains (losses) resulting from financial instruments are:
+(in millions of €)
+Cash and cash equivalents
+Loans, receivables and other debt instruments measured at amortized cost
+Financial liabilities measured at amortized cost
+Financial assets and financial liabilities at FVTPL
+323
+168
+1
+154
+296
+954
+954
+In connection with cash flow hedges
+328
+328
+(in millions of €)
+Financial assets measured at fair value
+Equity instruments measured at FVTPL
+Equity instruments measured at FVOCI
+Debt instruments measured at FVTPL
+Derivative financial instruments
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with fair value hedges
+In connection with cash flow hedges
+Fiscal year
+Sep 30, 2022
+Level 2
+Level 3
+Total
+521
+4,164
+1,230
+5,916
+367
+336
+372
+1,075
+2
+691
+692
+Level 1
+2023
+2022
+(38)
+Stage 1
+Stage 2
+Stage 3
+106
+22
+227
+567
+140
+172
+Change in valuation allowances recorded in the Consolidated Statements of
+Income in the current period
+106
+3
+74
+41
+Valuation allowance as of October 1, 2022
+(1)
+Write-offs charged against the allowance
+n/a
+n/a
+(135)
+(69)
+(36)
+Recoveries of amounts previously written off
+n/a
+n/a
+4
+9
+4
+Foreign exchange translation differences and other changes
+(112)
+5
+104
+(in millions of €)
+ments under
+87
+(306)
+(568)
+(25)
+(56)
+(1,283)
+2,126
+29
+Consolidated Financial Statements
+Amounts include foreign currency gains (losses) from recognizing and measuring financial assets and liabilities. Net gains (losses) on
+financial assets and liabilities measured at FVTPL resulted from those mandatorily measured at FVTPL and comprise fair value changes of
+derivative financial instruments for which hedge accounting is not applied including interest income (expense), as well as dividends from
+and fair value changes of equity instruments measured at FVTPL.
+Interest income (expense) includes interest from financial assets and financial liabilities not at fair value through profit or loss:
+(in millions of €)
+Total interest income on financial assets
+Total interest expenses on financial liabilities
+the simplified
+approach
+Valuation allowances for expected credit losses
+2023
+2022
+2,380
+1,626
+(1,476)
+(841)
+Loans, receivables and other debt instruments measured at
+amortized cost
+Contract
+Assets
+Lease
+Receivables
+Loans and other debt instruments
+under the general approach
+Trade
+receivables
+and other
+debt instru-
+Fiscal year
+694
+8,325
+NOTE 24 Derivative financial instruments and hedging activities
+To hedge foreign currency exchange and interest rate risks, derivatives are contracted to achieve a 1:1 hedge ratio so that the main
+characteristics match the underlying hedged items (e.g. nominal amount, maturity) in a critical term match, which ensures an economic
+relationship between hedging instruments and hedged items suitable for hedge accounting. The nominal amounts of hedging instruments
+by maturity are:
++5%
+CNY
+GBP
+USD
+CNY
+GBP
+USD
+Change in €
+versus
+Sep 30, 2022
+Sep 30, 2023
+Equity
+Net income
+27
+(in Mio. €)
+According to the Company policy, Siemens units are responsible for recording, assessing and monitoring their foreign currency transaction
+exposure. Foreign currency transaction exposure of Siemens units from contracted business and cash balances in foreign currency is
+generally hedged approximately by 100% with Corporate Treasury. Foreign currency transaction exposure of Siemens units from planned
+business above defined thresholds has to be hedged with Corporate Treasury within a band of 75% to 100% for a hedging period of at
+least three months.
+Operating units are prohibited from borrowing or investing in foreign currencies on a speculative basis. Intercompany financing or
+investments of operating units are preferably carried out in their functional currency or on a hedged basis.
+Each Siemens unit conducting businesses with international counterparties leading to future cash flows denominated in a currency other
+than its functional currency is exposed to risks from changes in foreign currency exchange rates. In the ordinary course of business,
+Siemens units are exposed to foreign currency exchange rate fluctuations, particularly between the U.S. dollar and the euro. Foreign
+currency exchange rate exposure is partly balanced by purchasing of goods, commodities and services in the respective currencies as well
+as production activities and other contributions along the value chain in the local markets.
+Transaction risk
+Foreign currency exchange rate risk
+Any market sensitive instruments, including equity and interest-bearing investments that our Company's pension plans hold are not
+included in the following quantitative and qualitative disclosures.
+probability that losses could exceed the calculated VaR. The use of historical data as a basis for estimating the statistic behavior of the
+relevant markets and finally determining the possible range of the future outcomes on the basis of this statistic behavior may not always
+cover all possible scenarios, especially those of an exceptional nature.
+Consolidated Financial Statements
+32
+Actual results that are included in the Consolidated Statements of Income or Consolidated Statements of Comprehensive Income may
+differ substantially from VaR figures due to fundamental conceptual differences. While the Consolidated Statements of Income and
+Consolidated Statements of Comprehensive Income are prepared in accordance with IFRS, the VaR figures are the output of a model with
+a purely financial perspective and represent the potential financial loss, which will not be exceeded within ten days with a probability of
+99.5%. Although VaR is an important tool for measuring market risk, the assumptions on which the model is based give rise to some
+limitations including the following. A ten day holding period assumes that it is possible to dispose of the underlying positions within this
+period. This may not be valid during continuing periods of illiquid markets. A 99.5% confidence level means that there is a 0.5% statistical
+Foreign currency exchange rate risk is quantified based on a sensitivity analysis. In order to quantify remaining market risks Siemens has
+implemented a system based on Value at Risk (VaR), which is also used for internal management of Corporate Treasury activities. The VaR
+figures are calculated based on historical volatilities and correlations of various risk factors, a ten day holding period, and a 99.5%
+confidence level.
+Increasing market fluctuations may result in significant earnings and cash flow volatility risk for Siemens. The Company's operating
+business as well as its investment and financing activities are affected particularly by changes in foreign exchange rates and interest rates.
+In order to optimize the allocation of financial resources across Siemens' segments and entities, as well as to achieve its aims, Siemens
+identifies, analyzes and manages the associated market risks. The Company seeks to manage and control these risks primarily through its
+regular operating and financing activities and uses derivative financial instruments when deemed appropriate.
+Generally, the operating units conclude their hedging activities internally with Corporate Treasury. By applying a cost-optimizing portfolio
+approach, Corporate Treasury itself hedges foreign currency exchange rate risks with external counterparties and limits them.
+The following table demonstrates the sensitivity of net income and equity to a reasonably possible change in the euro versus the most
+important currency exchange rates compared to the respective year-end exchange rates. The analysis does not include effects of foreign
+currency translation. The effect on net income is due to changes in the fair values of monetary assets and liabilities including non-
+designated foreign currency derivatives and embedded derivatives. The effect on equity is due to changes in the fair values of forward
+exchange contracts designated as cash flow hedges. In fiscal 2023, the sensitivity of net income with regard to the U.S. dollar decreased
+compared to the prior year mainly due to a decrease of monetary assets and liabilities and a higher hedge ratio. The sensitivity of equity
+with regard to the U.S. dollar decreased due to a decline in the nominal amount of U.S. dollar forward exchange contracts designated as
+cash flow hedges.
+NOTE 25 Financial risk management
+15
+122
+Interest rate risk
+Many Siemens units are located outside the Eurozone. Because the financial reporting currency of Siemens is the euro, the financial
+statements of these subsidiaries are translated into euro for the preparation of the Consolidated Financial Statements. To consider the
+effects of foreign currency translation in the risk management, the general assumption is that investments in foreign-based operations
+are permanent and that reinvestment is continuous. Effects from foreign currency exchange rate fluctuations on the translation of net
+asset amounts into euro are reflected in the Company's consolidated equity position.
+Translation risk
+(12)
+(72)
+(71)
+(19)
+(62)
+3
+(5)%
+12
+72
+(3)
+71
+62
+(3)
++5%
+3
+(22)
+(122)
+3
+(15)
+(27)
+(5)%
+(3)
+22
+19
+Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market
+interest rates. This risk arises whenever interest terms of financial assets and liabilities are different. In order to manage the Company's
+position with regard to interest rate risk, interest income and interest expenses, Corporate Treasury performs a comprehensive corporate
+interest rate risk management by using fixed or variable interest rates from bond issuances and derivative financial instruments when
+appropriate. The interest rate risk is mitigated by managing interest rate risk within an integrated Asset Liability Management approach
+and results primarily from funding in the U.S. dollar, British pound and euro. This includes SFS business, for which the interest rate risk
+was formerly managed separately.
+The Company had interest rate swap contracts to pay variable rates of interest of an average of 3.00% and (0.86% as of September 30,
+2023 and 2022, respectively and received fixed rates of interest (average rate of 1.81% and 1.07%, as of September 30, 2023 and 2022,
+respectively). The notional amount of indebtedness hedged as of September 30, 2023 and 2022 was €13,687 million and €11,719 million,
+respectively. This changed 33% and 26% of the Company's underlying notes and bonds from fixed interest rates into variable interest rates
+as of September 30, 2023 and 2022, respectively. The notional amounts of these contracts mature at varying dates based on the maturity
+of the underlying hedged items. The net fair value of interest rate swap contracts (excluding accrued interest) used to hedge indebtedness
+as of September 30, 2023 and 2022 was €(844) million and €(959) million, respectively.
+Fair value hedges of fixed-rate debt obligations
+hedging
+Cost of
+Cash flow
+hedge
+reserve
+reserve
+hedge
+Cash flow
+Foreign currency risk
+Interest
+rate risk
+Balance as of September 30, 2023
+Reclassification to net income
+Hedging gains (losses) presented in OCI
+Balance as of October 1, 2022
+reserve
+(in millions of €)
+89
+1,900
+3,825
+1,578
+1,786
+95
+20
+76
+Other (embedded derivatives, options, commodity swaps)
+925
+3
+954
+34
+Other components of equity, net of income taxes, relating to cash flow hedges reconciles as follows:
+Under interest rate swap agreements outstanding in fiscal 2023 and 2022, the Company agreed to pay a variable rate of interest multiplied
+by a notional principal amount, and to receive in return an amount equal to a specified fixed rate of interest multiplied by the same notional
+principal amount. These interest rate swap agreements offset future changes in interest rates designated as hedged risk on the fair value
+of the underlying fixed-rate debt obligations. As of September 30, 2023, and 2022, the carrying amounts of €13,164 million and €10,718
+million, respectively, of fixed-rate debt obligations are designated in fair value hedges, including €(876) million and €(973) million
+cumulative fair value hedge adjustments. Unamortized fair value hedge adjustments of €112 million and €169 million as of September
+30, 2023 and 2022, respectively, relate to no longer applied hedge accounting. The amounts are amortized over the remaining term of
+the underlying debt, maturing until 2042. Carrying amount adjustments to debt of €(95) million and €1,273 million, respectively, in fiscal
+2023 and 2022 are included in Other financial income (expenses), net; the related swap agreements resulted in gains (losses) of €74
+million and €(1,236) million, respectively, in fiscal 2023 and 2022. Net cash receipts and payments relating to such interest rate swap
+agreements are recorded as interest expenses.
+53
+(213)
+In September 2023, Siemens ended cash flow hedge accounting. Previously, Siemens applied cash flow hedge accounting to a revolving
+portfolio of floating-rate commercial papers of nominal US$200 million.
+Cash flow hedges of floating-rate commercial papers
+Interest rate risk management uses derivative financial instruments under a portfolio-based approach to manage interest risk actively. The
+approach does not qualify for hedge accounting. Gains and losses in connection with interest rate swap agreements are recorded in Other
+financial income (expenses), net. The interest rate risk management includes SFS business, for which the interest rate risk was formerly
+managed separately.
+Derivative financial instruments not designated in a hedging relationship
+Interest rate risk management
+Included are Siemens' foreign currency forward contracts, entered into in fiscal 2021, to hedge foreign currency risks relating to US$10
+billion (€10 billion) bonds granted to Siemens Healthineers, through which a synthetic Euro financing structure is achieved. It factually,
+also turns interest into € with volume weighted average interest rates of currently about 0.7% and 0.3%, respectively, in fiscal 2023 and
+2022.
+The Company's operating units apply hedge accounting to certain significant forecast transactions and firm commitments denominated
+in foreign currencies. Particularly, the Company entered into foreign currency exchange contracts to reduce the risk of variability of future
+cash flows resulting from forecast sales and purchases as well as firm commitments. The risk mainly results from contracts denominated
+in US$ both from Siemens' operating units entering into long-term contracts e.g. from the project business and from the standard product
+business. In fiscal 2023 and 2022, the risk is hedged against the euro at an average rate of 1.2780 €/US$ and 1.2293 €/US$ (forward
+purchases of US$), respectively, and 1.1027 €/US$ and 1.0258 €/US$ (forward sales of US$), respectively. As of September 30, 2023, and
+2022, the hedging transactions have an average remaining maturity until 2028 and 2027 (forward purchases of US$) as well as 2024 and
+2023 (forward sales of US$), respectively.
+Cash flow hedges
+swaps and options, are utilized to minimize such risks. Such a strategy does not qualify for hedge accounting treatment. The Company
+also accounts for foreign currency derivatives, which are embedded in sale and purchase contracts.
+Consolidated Financial Statements
+31
+The Company manages its risks associated with fluctuations in foreign currency denominated receivables, payables, debt, firm
+commitments and forecast transactions primarily through a Company-wide portfolio approach. Under this approach the Company-wide
+risks are aggregated centrally, and various derivative financial instruments, primarily foreign currency exchange contracts, foreign currency
+(170)
+Derivative financial instruments not designated in a hedging relationship
+Amounts reclassified to net income in connection with interest rate risk hedges and non-operative foreign currency hedges are presented
+in Other financial income (expenses), net. Reclassifications of foreign currency risk hedges with operative business purposes are presented
+as functional costs. Costs of hedging reserve is the forward element of forward contracts that are not designated as hedge accounting and
+which are amortized to interest expense on a straight-line basis as the hedged item is time-period related.
+thereof: discontinued hedge accounting
+(26)
+(107)
+(153)
+24
+(135)
+(59)
+(28)
+241
+75
+(1)
+Foreign currency exchange rate risk management
+414
+If there are no conflicting country-specific regulations, all Siemens operating units generally obtain any required financing through
+Corporate Treasury in the form of loans or intercompany clearing accounts. The same concept is adopted for deposits of cash generated
+by the units.
+33
+Credit risk is defined as an unexpected loss in financial instruments if the contractual partner is failing to discharge its obligations in full
+and on time or if the value of collateral declines.
+Credit risk
+2 A considerable portion result from asset-based lending transactions meaning that the respective loans can only be drawn after sufficient collateral has been provided by the borrower.
+1 Based on the maximum amounts Siemens could be required to settle in the event of default by the primary debtor.
+6
+156
+325
+3,370
+411
+262
+355
+307
+Siemens provides its customers with various forms of direct and indirect financing particularly in connection with large projects. Hence,
+credit risks are determined by the solvency of the debtors, the recoverability of the collaterals, the success of projects we invested in and
+the global economic development.
+760
+170
+186
+1,134
+3
+21
+10,107
+918
+982
+609
+753
+36
+2
+8
+205
+The effective monitoring and controlling of credit risk through credit evaluations and ratings is a core competency of our risk management
+system. In this context, Siemens has implemented a binding credit policy.
+Ratings and individually defined credit limits are based on generally accepted rating methodologies, with information obtained from
+customers, external rating agencies, data service providers and Siemens' credit default experiences. Internal ratings consider appropriate
+forward-looking information relevant to the specific financial instrument like expected changes in the debtor's financial position,
+ownership, management or operational risks, as well as broader forward-looking information, such as expected macroeconomic, industry-
+related and competitive developments. The ratings also consider a country-specific risk component derived from external country credit
+ratings. Ratings and credit limits for financial institutions as well as Siemens' public and private customers, which are determined by
+internal risk assessment specialists, are continuously updated and considered for investments in cash and cash equivalents and in
+determining the conditions under which direct or indirect financing will be offered to customers.
+(in millions of €)
+Foreign currency exchange contracts
+Interest rate swaps
+therein: included in cash flow hedges
+therein: included in fair value hedges
+Sep 30, 2023
+Up to 12
+More than
+Sep 30, 2022
+Up to 12
+More than
+months
+12 months
+Siemens maintains a Credit Risk Intelligence Unit to which numerous operating units from the Siemens Group regularly transfer business
+partner data as a basis for a centralized internal rating and credit limit recommendation process. Due to the identification, quantification
+and active management of credit risks, this increases credit risk transparency.
+months
+11,538
+5,872
+16,751
+3,090
+10,597
+763
+11,210
+296
+34
+As of September 30, 2023 and 2022, collateral of €863 million and €1,444 million, respectively, relate to financial assets measured at fair
+value. Those collaterals are provided in connection with netting agreements for derivatives providing protection from the risk of a
+counterparty's insolvency. As of September 30, 2023 and 2022, collateral held for credit-impaired receivables from finance leases
+amounted to €66 million and €53 million, respectively. As of September 30, 2023 and 2022, collateral held for financial assets measured
+at amortized cost amounted to €3,918 million and €3,817 million, respectively, including €135 million and €108 million, respectively, for
+To analyze and monitor credit risks, the Company applies various systems and processes. A main element is a central IT application that
+processes data from operating units together with rating and default information and calculates an estimate, which may be used as a basis
+for individual bad debt provisions. Additionally, qualitative information is considered to particularly incorporate the latest developments.
+The carrying amount is the maximum exposure to a financial asset's credit risk, without taking account of any collateral. Collateral reduces
+the valuation allowance to the extent it mitigates credit risk. Collateral needs to be specific, identifiable and legally enforceable to be taken
+into account. Those collaterals are mostly held in the portfolio of SFS.
+An exposure is considered defaulted if the debtor is unwilling or unable to pay its credit obligations. A range of internally defined events
+trigger a default rating, including the opening of bankruptcy proceedings, receivables being more than 90 days past due, or a default
+rating by an external rating agency.
+12 months
+As of September 30, 2023 and 2022, the VaR relating to the interest rate was €683 million and €864 million. The decrease was driven
+mainly by a decrease in interest rate sensitivity for the U.S. dollar and a lower interest rate volatility for the euro.
+3,090
+558
+14,599
+159
+1,308
+820
+4,642
+6,598
+Irrevocable loan commitments²
+Credit guarantees¹
+Derivative financial liabilities
+Other financial liabilities
+Trade payables
+Lease liabilities
+Other financial indebtedness
+24,763
+Loans from banks
+Non-derivative financial liabilities
+(in millions of €)
+2029 and
+thereafter
+2026 to
+2028
+2025
+2024
+Fiscal year
+The following table reflects our contractually fixed pay-offs for settlement, repayments and interest. The disclosed expected undiscounted
+net cash outflows from derivative financial liabilities are determined based on each particular settlement date of an instrument and based
+on the earliest date on which Siemens could be required to pay. Cash outflows for financial liabilities (including interest) without fixed
+amount or timing are based on the conditions existing at September 30, 2023.
+In addition, Siemens constantly monitors funding options available in the capital markets, as well as trends in the availability and costs of
+such funding, with a view to maintaining financial flexibility and limiting repayment risks.
+Liquidity risk results from the Company's inability to meet its financial liabilities. Siemens follows a deliberated financing policy that is
+aimed towards a balanced financing portfolio, a diversified maturity profile and a comfortable liquidity cushion. Siemens mitigates liquidity
+risk by the implementation of effective working capital and cash management, arranged credit facilities with highly rated financial
+institutions, via a debt issuance program and via a global multi-currency commercial paper program. Liquidity risk may also be mitigated
+by the Siemens Bank GmbH, which increases the flexibility of depositing cash or refinancing.
+Liquidity risk
+Consolidated Financial Statements
+Notes and bonds
+10,597
+21
+49
+11,210
+Fair values of each type of derivative financial instruments reported as financial assets or financial liabilities in line items Other current
+financial assets (liabilities) or Other financial assets (liabilities) are:
+Sep 30, 2023
+Sep 30, 2022
+(in millions of €)
+Foreign currency exchange contracts
+therein: included in cash flow hedges
+Interest rate swaps and combined interest and currency swaps
+therein: included in cash flow hedges
+519
+Asset
+Liability
+therein: included in fair value hedges
+Asset
+1,637
+603
+3,086
+722
+1,431
+328
+2,648
+319
+73
+955
+644
+1,088
+Liability
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with fair value hedges
+guarantees:
+1,578
+Financial assets mandatorily measured at FVTPL²
+Financial assets designated as measured at FVTPL³
+Equity instruments measured at FVOCI¹
+Financial assets
+Sep 30,
+2023
+2022
+47,021
+46,386
+10,084
+10,465
+1,466
+2,701
+1,578
+2,368
+136
+154
+665
+692
+60,950
+62,766
+Financial liabilities measured at amortized cost4
+Derivatives not designated in a hedge accounting relationship5
+Derivatives designated in a hedge accounting relationship 5
+Financial liabilities
+58,202
+Derivatives designated in a hedge accounting relationship
+Cash and cash equivalents
+Loans, receivables and other debt instruments measured at amortized cost¹
+(in millions of €)
+(in millions of €)
+Credit guarantees
+2023
+Sep 30,
+2022
+411
+515
+Performance guarantees
+5,746
+9,309
+6,156
+9,824
+Credit guarantees cover the financial obligations of third parties generally in cases where Siemens is the vendor and (or) contractual
+partner or Siemens is liable for obligations of associated companies accounted for using the equity method. Additionally, credit guarantees
+are issued in the course of the SFS business. Credit guarantees generally provide that in the event of default or non-payment by the primary
+debtor, Siemens will be required to settle such financial obligations. The maximum amount of these guarantees is equal to the outstanding
+balance of the credit or, in case a credit line is subject to variable utilization, the nominal amount of the credit line. These guarantees have
+typically residual terms of up to three years (in fiscal 2022 four years). The Company held collateral mainly through inventories and trade
+receivables. As of September 30, 2023, and 2022, Credit guarantees include €95 million and €123 million for which Siemens holds
+reimbursement rights towards Siemens Energy. Siemens accrued €18 million and €2 million relating to credit guarantees as of September
+30, 2023 and 2022, respectively.
+62,536
+Furthermore, Siemens issues performance guarantees, which mainly include performance bonds. In the event of non-fulfillment of
+contractual obligations by the primary obligor, Siemens will be required to pay up to an agreed-upon maximum amount. These agreements
+typically have terms of up to ten years. As of September 30, 2023, and 2022, Performance guarantees include €5,341 million and €8,562
+million for which Siemens holds reimbursement rights towards Siemens Energy; the related contract liability amount for parent company
+guarantees is generally reduced using the straight-line method over the planned term of the underlying delivery or service agreement. As
+of September 30, 2023, and 2022, the Company accrued €58 million and €54 million, respectively, relating to performance guarantees.
+As of September 30, 2023, and 2022, in addition to guarantees disclosed in the table above, there are contingent liabilities of €402 million
+and €421 million which mainly result from other guarantees and legal proceedings. Other guarantees include €71 million and €99 million
+for which Siemens holds reimbursement rights towards Siemens Energy.
+Siemens is involved in numerous Legal Proceedings in various jurisdictions. These Legal Proceedings could result, in particular, in Siemens
+being subject to payment of damages and punitive damages, equitable remedies or sanctions, fines or disgorgement of profit. In individual
+cases this may also lead to formal or informal exclusion from tenders or the revocation or loss of business licenses or permits. In addition,
+further Legal Proceedings may be commenced or the scope of pending Legal Proceedings may be extended. Asserted claims are generally
+subject to interest rates.
+Some of these Legal Proceedings could result in adverse decisions for Siemens, which may have material effects on its business activities
+as well as its financial position, results of operations and cash flows.
+For Legal Proceedings information required under IAS 37, Provisions, Contingent Liabilities and Contingent Assets is not disclosed if the
+Company concludes that disclosure can be expected to seriously prejudice the outcome of the matter.
+Proceedings out of or in connection with alleged compliance violations
+As previously reported, in July 2008, Hellenic Telecommunications Organization S.A. (OTE) filed a lawsuit against Siemens AG with the
+district court of Munich, Germany, seeking to compel Siemens AG to disclose the outcome of its internal investigations with respect to
+OTE. OTE seeks to obtain information with respect to allegations of undue influence and/or acts of bribery in connection with contracts
+concluded between Siemens AG and OTE from calendar 1992 to 2006. At the end of July 2010, OTE expanded its claim and requested
+27
+Consolidated Financial Statements
+payment of damages by Siemens AG of at least €57 million to OTE for alleged bribery payments to OTE employees. In October 2014, OTE
+increased its damage claim to the amount of at least €68 million. Siemens AG continues to defend itself against the expanded claim.
+As previously reported, in May 2014, the Public Affairs Office (Ministério Público) São Paulo initiated a lawsuit against Siemens Ltda. as
+well as other companies and several individuals claiming, inter alia, damages in an amount of BRL2.5 billion (approximately €471 million
+as of September 2023) plus adjustments for inflation and related interest in relation to train refurbishment contracts entered into between
+2008 and 2011. In January 2015, the district court of São Paulo admitted a lawsuit of the State of São Paulo and two customers against
+Siemens Ltda., Siemens AG and other companies and individuals claiming damages in an unspecified amount. In March 2015, the district
+court of São Paulo admitted a lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other companies
+claiming, inter alia, damages in an amount of BRL487 million (approximately €92 million as of September 2023) plus adjustments for
+inflation and related interest in relation to train maintenance contracts entered into in 2000 and 2002. In September 2015, the district
+court of São Paulo admitted another lawsuit of the Public Affairs Office (Ministério Público) São Paulo against Siemens Ltda. and other
+companies claiming, inter alia, damages in an amount of BRL918 million (approximately €173 million as of September 2023) plus
+adjustments for inflation and related interest in relation to train maintenance contracts entered into in 2006 and 2007. Siemens is
+defending itself against these actions. It cannot be excluded that further significant damage claims will be brought by customers or the
+state against Siemens.
+As previously reported, in June 2015, Siemens Ltda. appealed to the Supreme Court against a decision of a previous court to suspend
+Siemens Ltda. from participating in public tenders and signing contracts with public administrations in Brazil for a five year term based on
+alleged irregularities in calendar 1999 and 2004 in public tenders with the Brazilian Postal authority. In June 2018, the court accepted
+Siemens' appeal and declared the earlier instance decision as void. In June 2021, the court referred the case back to the court of first
+instance. In February 2018, the Ministério Público in Brasilia filed a lawsuit based on the same set of facts, mainly claiming the exclusion
+of Siemens Ltda. from public tenders for a ten year term. Siemens Ltda. is defending itself against the lawsuit. Siemens Ltda. is currently
+not excluded from participating in public tenders.
+NOTE 23 Additional disclosures on financial instruments
+The following table discloses the carrying amounts of each category of financial assets and financial liabilities:
+NOTE 22 Legal proceedings
+296
+651
+1,282
+499
+602
+818
+699
+2,039
+2,090
+299
+321
+26,523
+26,055
+Virtually all equity securities have quoted prices in active markets. The fair value of fixed income securities is based on prices provided by
+price service agencies. The fixed income securities are traded in active markets and almost all fixed income securities are investment grade.
+Alternative investments include hedge funds, private equity and real estate investments, thereof real estate used by the Company with a
+fair value of €608 million and €734 million, respectively, as of September 30, 2023 and 2022. Multi strategy funds mainly comprise
+absolute return funds and diversified growth funds that invest in various asset classes within a single fund and aim to stabilize return and
+reduce volatility. Derivatives predominantly consist of financial instruments for hedging interest rate risk and inflation risk.
+Future cash flows
+3,501
+Employer contributions expected to be paid to defined benefit plans in fiscal 2024 are €230 million. Over the next ten fiscal years, average
+annual benefit payments of €1,945 million and €1,869 million, respectively, are expected as of September 30, 2023 and 2022. The
+weighted average duration of the DBO for Siemens defined benefit plans was 9 and 10 years, respectively, as of September 30, 2023 and
+2022.
+Amounts recognized as expenses for defined contribution plans are €611 million and €611 million in fiscal 2023 and 2022, respectively.
+Contributions to state plans amount to €1,723 million and €1,630 million, respectively, in fiscal 2023 and 2022.
+NOTE 18 Provisions
+Order
+related
+losses and
+(in millions of €)
+Balance as of October 1, 2022
+thereof: non-current
+Additions
+Warranties
+risks
+Asset
+retirement
+obligations
+Other
+Defined contribution plans and state plans
+Sep 30,
+3,329
+5,207
+1,249
+59,779
+64,436
+1 Reported in the following line items of the Statements of Financial Position as of September 30, 2023 and 2022, respectively: Trade and other receivables, Other current financial assets and Other financial assets, except for
+separately disclosed €1,691 million and €1,767 million equity instruments in Other financial assets (thereof €665 million and €692 million at FVOCI), €136 million and €154 million financial assets designated as measured at
+FVTPL and €1,786 million and €3,825 million derivative financial instruments (thereof in Other financial assets €1,213 million and €2,868 million) as well as €232 million and €169 million debt instruments measured at FVTPL
+in Other financial assets. Includes €15,454 million and €14,666 million trade receivables from the sale of goods and services, thereof €640 million and €766 million with a term of more than twelve months as of September 30,
+2023 and 2022.
+Disaggregation of plan assets
+Consolidated Financial Statements
+Sep 30,
+(in millions of €)
+Equity securities
+Fixed income securities
+Government bonds
+Corporate bonds
+Alternative investments
+5,491
+Multi strategy funds
+Cash and cash equivalents
+Insurance contracts
+Other assets
+Total
+2023
+2022
+3,360
+3,185
+10,504
+10,635
+2,639
+2,517
+7,865
+8,118
+Derivatives
+1,578
+The following table presents the undiscounted amount of maximum potential future payments for major groups of
+A-1+
+NOTE 20 Additional capital disclosures
+A key consideration of our capital structure management is to maintain ready access to capital markets through various debt instruments
+and to sustain our ability to repay and service our debt obligations over time. In order to achieve our target, Siemens intends to maintain
+an Industrial net debt divided by EBITDA (continuing operations) ratio of up to 1.5 in accordance with our Financial Framework. The ratio
+indicates the approximate number of years that would be needed to cover the Industrial net debt through Income from continuing
+operations, excluding interest, other financial income (expenses), taxes, depreciation, amortization and impairments.
+(in millions of €)
+Short-term debt and current maturities of long-term debt
+Plus: Long-term debt
+Less: Cash and cash equivalents
+Less: Current interest-bearing debt securities
+Less: Fair value of foreign currency and interest hedges relating to short- and long-term debt¹
+Net debt
+Less: Siemens Financial Services debt²
+Plus: Provisions for pensions and similar obligations
+Plus: Credit guarantees
+Industrial net debt
+Income from continuing operations before income taxes
+Plus/Less: Interest income, interest expenses and other financial income (expenses), net
+Plus: Amortization, depreciation and impairments
+EBITDA
+Sep 30,
+2023
+2022
+7,483
+6,658
+39,113
+43,978
+(10,084)
+(10,465)
+(1,047)
+Dividends paid per share were €4.25 and €4.00, respectively, in fiscal 2023 and 2022. The Managing Board and the Supervisory Board
+propose to distribute a dividend of €4.70 per share to holders entitled to dividends, in total representing approximately €3.7 billion in
+expected payments. Payment of the proposed dividend is contingent upon approval at the Shareholders' Meeting on February 8, 2024.
+Share based payment expenses increased Capital reserve by €444 million and €376 million (including non-controlling interests),
+respectively, in fiscal 2023 and 2022. In connection with the settlement of share based payment awards, Siemens treasury shares (at cost)
+were transferred to employees amounting to €265 million and €257 million, respectively, in fiscal 2023 and 2022, which decreased Capital
+reserve and Retained earnings by €221 million and €44 million, respectively in 2023 and by €191 million and €66 million in fiscal 2022.
+As of September 30, 2023, and 2022, total authorized capital of Siemens AG is €600 million nominal issuable in installments based on
+various time-limited authorizations, by issuance of up to 200 million registered shares of no par value. Siemens AG's conditional capital is
+€420.6 million or 140.2 million shares as of September 30, 2023 and 2022; which, primarily, can be used to serve convertible bonds or
+warrants under warrant bonds that could or can be issued based on various time-limited authorizations approved by the respective
+Shareholders' Meeting.
+As of September 30, 2023, and 2022, Siemens' issued capital is divided into 800 million and 850 million registered shares, respectively,
+with no par value and a notional value of €3.00 per share. The shares are paid in full. At the Shareholders' Meeting, each share has one
+vote and accounts for the shareholders' proportionate share in the Company's net income. All shares confer the same rights and
+obligations. In fiscal 2023, Siemens cancelled 50 million treasury shares, thereby reducing issued capital by €150 million to €2.4 billion.
+In fiscal 2023 and 2022, Siemens repurchased 6,853,091 shares and 14,185,791 shares, respectively. In fiscal 2023 and 2022, Siemens
+transferred 4,227,344 and 4,376,201 treasury shares, respectively. As of September 30, 2023, and 2022, the Company has treasury shares
+of 10,079,918 and 57,454,171 respectively.
+NOTE 19 Equity
+5
+Other changes including reclassifications to held for disposal and disposition of those entities
+(57)
+(1)
+7
+92
+42
+Balance as of September 30, 2023
+1,566
+470
+556
+1,521
+(1,239)
+4,113
+585
+207
+179
+823
+1,794
+The majority of the Company's provisions are generally expected to result in cash outflows during the next five years.
+Warranties mainly relate to products sold. Order related losses and risks are provided for anticipated losses and risks on uncompleted
+construction, sales and leasing contracts.
+The Company is subject to asset retirement obligations related to certain items of property, plant and equipment. Such asset retirement
+obligations are primarily attributable to environmental clean-up costs and to costs primarily associated with the removal of leasehold
+improvements at the end of the lease term.
+Environmental clean-up costs relate to remediation and environmental protection liabilities which have been accrued based on the
+estimated costs of decommissioning the site for the production of uranium and mixed-oxide fuel elements in Hanau, Germany (Hanau
+facilities), as well as for a nuclear research and service center in Karlstein, Germany (Karlstein facilities). In May 2021, Siemens AG and the
+Federal Republic of Germany entered into a contract under public-law, based on which the obligation of final disposal of nuclear waste is
+transferred to the Federal Republic of Germany for a payment of €360 million. The contract and therefore the payment is subject to the
+approval of the EU commission under state-aid rules. Estimation uncertainties still relate to assumptions made to measure the obligations
+that remain with Siemens AG, regarding conditioning and packaging of nuclear waste, as well as intermediate storage and transport to
+the final storage facility "Schacht Konrad" or a logistics depot until year-end 2032. As of September 30, 2023, and 2022, the provisions
+total €480 million and €487 million, respectively.
+25
+Consolidated Financial Statements
+Other includes provisions for life and industrial business reinsurance contracts (liability, property, construction) in connection with the
+Siemens Energy business of €267 million and €339 million as of September 30, 2023 and 2022; thereof life €145 million and €159 million
+and industrial business €122 million and €180 million, respectively, as of September 30, 2023 and 2022. The provisions are for incurred
+and reported insurance losses as well as for incurred, hence, not yet reported insurance losses as of fiscal year-end. The provision is
+determined using actuarial standard valuation methodologies, which are parameterized based on historical loss data. Life reinsurance
+contracts have an average term of 19 years, whereas the cash outflows for the industrial business reinsurance contracts are expected
+within the next five years. Other also includes provisions for Legal Proceedings, as far as the risks that are subject to such Legal Proceedings
+are not already covered by project accounting. Provisions for Legal Proceedings amounted to €227 million and €236 million as of
+September 30, 2023 and 2022, respectively. As of September 30, 2023, and 2022, €260 million and €181 million are included for claims
+and charges resulting from the construction business. Furthermore, Other includes provision for indemnifications in connection with
+dispositions of businesses of €82 million and €92 million as of September 30, 2023 and 2022. Such indemnifications may protect the
+buyer from potential tax, legal and other risks in conjunction with the purchased business.
+thereof: non-current
+(621)
+(1,720)
+34,843
+3,087
+28,756
+29,107
+9.18
+9.43
+Equity allocated to SFS differs from the carrying amount of equity as it is mainly allocated based on the risks of the underlying business.
+Siemens' current corporate credit ratings are:
+Long-term debt
+Short-term debt
+Sep 30, 2023
+Moody's
+S&P
+Investors
+3,133
+Global
+Ratings
+Sep 30, 2022
+Moody's
+Investors
+Service
+S&P
+Global
+Ratings
+Aa3
+A+
+A1
+A+
+P-1
+A-1+
+P-1
+Service
+NOTE 21 Commitments and contingencies
+2022
+Sep 30,
+2023
+37,212
+(28,756)
+(29,107)
+1,426
+2,275
+411
+7,924
+515
+10,896
+11,201
+7,154
+(646)
+45
+3,608
+Sep 30,
+3,561
+10,759
+0.6
+1.0
+Industrial net debt/EBITDA
+1 Debt is generally reported at a value approximately representing the amount to be repaid. Accordingly, debt in a hedging relationship is adjusted for fair values of interest hedges as well as for foreign currency hedge effects.
+Siemens deducts resulting changes in fair value, to derive an amount of debt that approximates the amount that will be repaid.
+2 The adjustment considers that both Moody's and S&P view Siemens Financial Services as a captive finance company. These rating agencies generally recognize and accept higher levels of debt attributable to captive
+finance subsidiaries in determining credit ratings. Following this concept, Siemens excludes Siemens Financial Services debt.
+26
+26
+Consolidated Financial Statements
+The SFS business is capital intensive and operates with a larger amount of debt to finance its operations compared to the industrial
+business.
+(in millions of €)
+Allocated equity
+Siemens Financial Services debt
+Debt to equity ratio
+14,163
+1,497
+Total
+564
+Debt instruments measured at FVTPL
+Derivative financial instruments
+Not designated in a hedge accounting relationship (including embedded derivatives)
+In connection with cash flow hedges
+Sep 30, 2023
+Level 1
+Level 2
+Level 3
+Total
+Equity instruments measured at FVOCI
+349
+1,302
+3,844
+213
+334
+479
+1,026
+2
+663
+665
+2,193
+Equity instruments measured at FVTPL
+Financial assets measured at fair value
+(in millions of €)
+481
+2 Reported in line items Other current financial assets and Other financial assets.
+3 Reported in Other financial assets.
+* Includes fair value hedge adjustments. Reported in the following line items of the Statements of Financial Position: Short-term debt and current maturities of long-term debt, Trade payables, Other current financial liabilities, Long-
+term debt and Other financial liabilities, except for separately disclosed derivative financial instruments of €1,578 million and €1,900 million as of September 30, 2023 and 2022, respectively.
+5 Reported in line items Other current financial liabilities and Other financial liabilities.
+Cash and cash equivalents include €89 million and €164 million as of September 30, 2023 and 2022, respectively, which are not available
+for use by Siemens mainly due to minimum reserve requirements with banks. As of September 30, 2023, and 2022, the carrying amount
+of financial assets Siemens pledged as collateral is €164 million and €166 million, respectively.
+The following table presents the fair values and carrying amounts of financial assets and financial liabilities measured at cost or amortized
+cost for which the carrying amounts do not approximate fair value:
+(in millions of €)
+Notes and bonds
+Loans from banks and other financial indebtedness
+Sep 30, 2023
+Sep 30, 2022
+Fair value
+37,059
+2,681
+Carrying
+amount
+40,929
+2,744
+Fair value
+40,622
+2,821
+Carrying
+amount
+44,764
+2,870
+Fixed-rate and variable-rate receivables with a remaining term of more than twelve months, including receivables from finance leases, are
+evaluated by the Company based on parameters such as interest rates, specific country risk factors, individual creditworthiness of the
+customer, and the risk characteristics of the financed project. Based on this evaluation, allowances for these receivables are recognized.
+28
+Consolidated Financial Statements
+The fair value of notes and bonds is based on prices provided by price service agencies at the period-end date (Level 2). The fair value of
+loans from banks and other financial indebtedness as well as other non-current financial liabilities are estimated by discounting future
+cash flows using rates currently available for debt of similar terms and remaining maturities (Level 2).
+The following table allocates financial assets and financial liabilities measured at fair value to the three levels of the fair value hierarchy:
+136
+71
+In connection with fair value hedges
+367
+(212)
+Translation differences
+Reversals
+(753)
+(198)
+(11)
+(156)
+(388)
+Usage
+1,428
+371
+5
+284
+769
+1,857
+886
+185
+161
+551
+4,013
+1,471
+(101)
+(2)
+235
+(504)
+1,786
+(189)
+1,786
+320
+34
+34
+1,432
+1,432
+Financial liabilities measured at fair value - Derivative financial instruments
+320
+4
+(37)
+(3)
+3
+Accretion expense and effect of changes in discount rates
+(118)
+(30)
+(46)
+(5)
+Consolidated Financial Statements
+100
+Siemens Beteiligungsverwaltung GmbH & Co. OHG, Kemnath
+10010
+Siemens Beteiligungen USA GmbH, Berlin
+Siemens Beteiligungen Management GmbH, Kemnath
+100
+10010
+Siemens Campus Erlangen Grundstücks-GmbH & Co. KG, Grünwald
+10010
+1009,12
+Siemens Campus Erlangen Objekt 3 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 4 GmbH & Co. KG, Grünwald
+1009
+Siemens Campus Erlangen Objekt 5 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 6 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objekt 7 GmbH & Co. KG, Grünwald
+Siemens Campus Erlangen Objektmanagement GmbH, Grünwald
+Siemens Campus Erlangen Verwaltungs-GmbH, Grünwald
+Siemens Digital Business Builder GmbH, Munich
+Siemens Beteiligungen Inland GmbH, Munich
+1009
+1009
+43
+1007
+Siemens Beteiligungen Europa GmbH, Munich
+1007
+100
+Siemens Digital Logistics GmbH, Frankenthal
+Next47 Services GmbH, Munich
+OPTIO Grundstücks-Vermietungsgesellschaft mbH & Co. Objekt Tübingen KG, Grünwald
+REMECH Systemtechnik GmbH, Unterwellenborn
+RISICOM Rückversicherung AG, Grünwald
+Siemens Advanta Solutions GmbH, Munich
+10010
+1007
+1007
+Siemens Bank GmbH, Munich
+1007
+1007
+1007
+10010
+1007
+1009
+10010
+10010
+1009
+10010
+1007
+Siemens Electronic Design Automation GmbH, Munich
+Siemens Liquidity One, Munich
+Siemens Financial Services GmbH, Munich
+Siemens-Fonds S-7, Munich
+Siemens-Fonds Pension Captive, Munich
+Siemens-Fonds C-1, Munich
+Siemens Treasury GmbH, Munich
+Siemens Trademark Management GmbH, Kemnath
+Siemens Trademark GmbH & Co. KG, Kemnath
+Siemens Traction Gears GmbH, Penig
+Siemens Technopark Nürnberg GmbH & Co. KG, Grünwald
+Siemens Technology Accelerator GmbH, Munich
+Siemens Real Estate Management GmbH, Kemnath
+Siemens-Fonds S-8, Munich
+Siemens Real Estate GmbH & Co. KG, Kemnath
+Siemens Real Estate Consulting GmbH & Co. KG, Munich
+100
+Siemens Private Finance Versicherungsvermittlungsgesellschaft mbH, Munich
+Siemens Project Ventures GmbH, Erlangen
+Siemens OfficeCenter Verwaltungs GmbH, Grünwald
+Siemens OfficeCenter Frankfurt GmbH & Co. KG, Grünwald
+Siemens Nixdorf Informationssysteme GmbH, Grünwald
+1009
+100
+1007
+1009
+Siemens Real Estate Consulting Management GmbH, Grünwald
+10010
+Siemensstadt C1 GmbH & Co. KG, Grünwald
+Siemensstadt CX GmbH & Co. KG, Grünwald
+44
+1009
+1007
+1007
+1007
+100⁹
+100
+100
+100
+100
+Siemensstadt C1 Verwaltungs GmbH, Grünwald
+10010
+100⁹
+10010
+1009
+10010
+1007
+100
+100
+100⁹
+10010
+Siemensstadt CX Verwaltungs GmbH, Grünwald
+Siemensstadt Grundstücks-GmbH & Co. KG, Grünwald
+1007
+Siemens Finance & Leasing GmbH, Munich
+100
+10010
+Siemens Mobility Real Estate Management GmbH, Grünwald
+Siemens Mobility Real Estate GmbH & Co. KG, Grünwald
+Siemens Mobility GmbH, Munich
+Siemens Middle East Services LP GmbH, Munich
+Siemens Middle East Services GmbH & Co. KG, Munich
+Next47 GmbH, Munich
+Siemens Logistics GmbH, Nuremberg
+Siemens Industry Software GmbH, Cologne
+Siemens Industriepark Karlsruhe GmbH & Co. KG, Grünwald
+Siemens Immobilien Management GmbH, Grünwald
+1009
+Siemens Immobilien Besitz GmbH & Co. KG, Grünwald
+Siemens Healthineers Innovation GmbH & Co. KG, Röttenbach
+Siemens Healthineers Holding III GmbH, Munich
+Siemens Healthineers Holding I GmbH, Munich
+Siemens Healthineers Beteiligungen Verwaltungs-GmbH, Röttenbach
+Siemens Healthineers Beteiligungen GmbH & Co. KG, Röttenbach
+Siemens Healthineers AG, Munich
+Siemens Healthcare GmbH, Munich
+Siemens Healthcare Diagnostics Products GmbH, Marburg
+Siemens Global Innovation Partners Management GmbH, Munich
+Siemens Fonds Invest GmbH, Munich
+Siemens Healthineers Innovation Verwaltungs-GmbH, Röttenbach
+1009,13
+1009
+100
+100
+10010
+100⁹
+1007
+1009
+1007
+100
+100
+100
+1007
+100⁹
+100
+100
+100
+1007
+10010
+10010
+100
+100
+100
+100
+1007
+75
+Moorenbrunn Entwicklungs-GmbH & Co. KG, Grünwald
+Stage 3
+n/a
+Lincas Electro Vertriebsgesellschaft mbH, Grünwald
+Free cash flow
+Consolidated Financial Statements
+Additions to
+intangible
+assets and
+property, plant
+& equipment
+Amortization,
+depreciation &
+impairments
+(in millions of €)
+Digital Industries
+Fiscal year
+2023
+2022
+Fiscal year
+2023
+Fiscal year
+2022
+2023
+2022
+Fiscal year
+2023
+Fiscal year
+Assets
+20,620
+Profit
+Intersegment
+Revenue
+3,737
+Weighted average shares outstanding - basic
+791,538
+Effect of dilutive share-based payment
+Weighted average shares outstanding - diluted
+Basic earnings per share (from continuing operations)
+Diluted earnings per share (from continuing operations)
+9,803
+801,342
+10.02
+9.90
+801,338
+8,342
+809,680
+4.67
+4.62
+37
+NOTE 29 Segment information
+Orders
+External revenue
+Total
+revenue
+25,283 21,478
+19,098
+442
+84,837
+73,152
+662
+442
+3,995 3,112
+67,397
+943
+880
+74,095
+68,277
+632
+25
+29
+3,056
+|
+201
+178
+468
+3,313
+88,082
+468
+4,016
+Portfolio Companies
+Siemens Financial Services
+21,681
+Smart Infrastructure
+Mobility
+Siemens Healthineers
+Industrial Business
+22,333 20,798 19,564
+20,629 13,200 10,537
+16,987
+381
+7,930
+419
+366
+9,683
+12
+10
+10,549
+24,499 25,556 21,574 21,630
+108
+85
+19,946
+Income from continuing operations attributable to shareholders of Siemens AG to determine dilutive earnings per share
+(7)
+(4)
+29,488
+27,201
+29,494
+27,211
+In fiscal 2023 and 2022, severance charges for continuing operations amount to €430 million and €272 million, thereof at Siemens
+Healthineers €167 million and €71 million, respectively, and at Digital Industries €109 million and €64 million, respectively.
+Employees were engaged in (averages; based on headcount):
+(in thousands)
+Manufacturing and services
+Sales and marketing
+Research and development
+Administration and general services
+NOTE 28 Earnings per share
+Continuing
+operations
+Continuing and
+discontinued operations
+Fiscal year
+1,099
+1,031
+1,099
+1,031
+Statutory social welfare contributions and expenses for optional support
+Expenses relating to post-employment benefits
+Continuing
+operations
+Continuing and
+discontinued operations
+Fiscal year
+2023
+Fiscal year
+2022
+2023
+Fiscal year
+2022
+22,659
+24,689
+22,669
+3,774
+3,442
+3,774
+3,442
+24,683
+661
+3,234
+2023
+2023
+308
+Fiscal year
+(shares in thousands; earnings per share in €)
+2023
+2022
+Income from continuing operations
+8,514
+4,413
+Less: Portion attributable to non-controlling interest
+579
+669
+Income from continuing operations attributable to shareholders of Siemens AG
+7,935
+3,744
+Less: Dilutive effect from share based payment resulting from Siemens Healthineers
+316
+308
+316
+26
+2022
+183
+179
+183
+179
+57
+56
+2022
+57
+50
+47
+50
+47
+26
+26
+27
+56
+Wages and salaries
+2022
+2023
+21,919 19,517 4,947 3,892
+17,353 3,074 2,222
+9,692
+882
+794
+21,715 2,527 3,369
+10,277
+498
+1,520
+11,430
+563
+343
+Orders
+Orders are determined principally as estimated revenue of accepted purchase orders for which enforceable rights and obligations exist as
+well as subsequent order value changes and adjustments, excluding letters of intent. To determine orders, Siemens considers termination
+rights and customer's creditworthiness.
+As of September 30, 2023, and 2022, order backlog totaled €111 billion and €102 billion (continuing operations); thereof Digital Industries
+€11 billion and €14 billion, Smart Infrastructure €16 billion and €15 billion, Mobility €45 billion and €36 billion and Siemens Healthineers
+€34 billion and €34 billion. In fiscal 2024, Siemens expects to convert approximately €43 billion of the September 30, 2023 order backlog
+into revenue; thereof at Digital Industries approximately €8 billion, Smart Infrastructure approximately €10 billion, Mobility approximately
+€11 billion and Siemens Healthineers approximately €11 billion.
+Free cash flow definition
+Free cash flow of the segments constitutes cash flows from operating activities less additions to intangible assets and property, plant and
+equipment. Except for SFS, it excludes financing interest, except for cases where interest on qualifying assets is capitalized or classified as
+contract costs; it also excludes income tax as well as certain other payments and proceeds. Free cash flow of SFS includes related financing
+interest payments and proceeds; income tax payments and proceeds of SFS are excluded. In individual cases, free cash flow of Mobility
+includes project-specific intercompany financing of long-term projects.
+Amortization, depreciation and impairments
+Amortization, depreciation and impairments includes depreciation and impairments of property, plant and equipment as well as
+amortization and impairments of intangible assets each net of reversals of impairment.
+Measurement - POC and Siemens Real Estate
+POC follows the measurement principles of the segments except for SFS. Siemens Real Estate applies the measurement principles of SFS.
+Additional segment information
+The orderly wind down of business activities in Russia resulted in losses in Profit of Mobility of €0.6 billion in fiscal 2022. In fiscal 2023,
+subsequent to the wind down, Profit of Mobility carried related gains of €153 million, which mainly stem from the reversal of provisions
+and obligations as well as from the reversal of write downs and the sale of inventories.
+Reconciliation to Consolidated Financial Statements
+Profit
+Fiscal year
+(in millions of €)
+Siemens Energy Investment
+Management determined Assets (Net capital employed) as a measure to assess capital intensity of the segments except for SFS. Its
+definition corresponds to the Profit measure except for amortization expenses of intangible assets acquired in business combinations
+which are not part of Profit, however, the related intangible assets are included in the segments' Assets. Segment Assets is based on Total
+assets of the Consolidated Statements of Financial Position, primarily excluding intragroup financing receivables, tax related assets and
+assets of discontinued operations, since the corresponding positions are excluded from Profit. The remaining assets are reduced by non-
+interest-bearing liabilities other than tax related liabilities, e.g. trade payables, to derive Assets. In contrast, Assets of SFS is Total assets. In
+individual cases assets of Mobility include project-specific intercompany financing of long-term projects. Assets of Siemens Healthineers
+include real estate, while real estate of all other segments is carried at SRE.
+Siemens Real Estate
+Asset measurement principles
+Profit of the segment SFS
+Innovation - mainly includes results from our units Technology and Next47.
+Governance - primarily includes Siemens brand fees and governance costs, group managing costs, IT and corporate services.
+Centrally carried pension expense - includes the Company's pension related income (expense) not allocated to the segments, POC or
+Siemens Real Estate.
+Financing, eliminations and other items - comprise activities of Advanta and Global Business Services, results from corporate projects,
+equity interests and activities generally intended for closure as well as activities remaining from divestments, consolidation of transactions
+within the segments, certain reconciliation and reclassification items as well as central financing activities. It also includes interest income
+and expense, such as, for example, interest not allocated to segments or POC (referred to as financing interest), interest related to central
+financing activities or resulting consolidation and reconciliation effects on interest.
+Measurement - Segments
+Accounting policies for Segment information are generally the same as those used for the Consolidated Financial Statements. Segment
+information is disclosed for continuing operations. For internal and segment reporting purposes, intercompany lease transactions,
+however, are classified as operating leases by the lessor and are accounted for off-balance sheet by the lessee (except for intercompany
+leases with Siemens Healthineers as lessees). Intersegment transactions are based on market prices.
+Revenue
+Revenue includes revenue from contracts with customers and revenue from leasing activities. In fiscal 2023 and 2022, lease revenue is
+€1,004 million and €1,104 million, respectively. In fiscal 2023 and 2022, Digital industries recognized €5,067 million and €4,691 million
+revenue, respectively, from its software business, Smart Infrastructure recognized €4,243 million and €3,856 million in its service business.
+Revenues of Mobility are mainly derived from construction-type business.
+Profit
+Siemens' Managing Board is responsible for assessing the performance of the segments (chief operating decision maker). The Company's
+profitability measure of the segments except for SFS is earnings before interest, certain pension costs, income taxes and amortization
+expenses of intangible assets acquired in business combinations as determined by the chief operating decision maker (Profit). The major
+categories of items excluded from Profit are described below.
+Interest income (expenses) are excluded from Profit. Decision-making regarding financing is typically made at the corporate level.
+Decisions on essential pension items are made centrally. Accordingly, Profit primarily includes amounts related to service cost of pension
+plans only, while all other regularly recurring pension related costs are included in reconciliations in line item Centrally carried pension
+expense.
+Amortization expenses of intangible assets acquired in business combinations are not part of Profit. Furthermore, income taxes are
+excluded from Profit since income tax is subject to legal structures, which typically do not correspond to the structure of the segments.
+The effect of certain litigation and compliance issues is excluded from Profit, if such items are not indicative of performance. This may also
+be the case for items that refer to more than one reportable segment, SRE and (or) POC or have a corporate or central character. Costs for
+support functions are primarily allocated to the segments.
+39
+Consolidated Financial Statements
+In contrast to performance measurement principles applied to other segments, interest income and expenses are included, since interest
+is an important source of revenue and expense of SFS.
+Innovation
+Governance
+Centrally carried pension expense
+(5,141)
+In fiscal 2023 and 2022, Financing, eliminations and other items includes a loss of €167 million and €308 million, respectively, mainly due
+to measuring our investment in Thoughtworks Holding, Inc. at fair value through profit and loss at fiscal year-end.
+In fiscal 2023, and 2022, Profit of SFS includes interest income of €1,942 million and €1,399 million, respectively and interest expenses
+of €985 million and €428 million, respectively.
+40
+Assets
+(in millions of €)
+Siemens Energy Investment
+Assets Siemens Real Estate
+Assets Innovation, Governance and Pensions
+Asset-based adjustments:
+Intragroup financing receivables
+Tax-related assets
+Liability-based adjustments
+Financing, eliminations and other items
+Reconciliation to Consolidated Financial Statements
+(1,135)
+Reconciliation to Consolidated Financial Statements
+(474)
+(256)
+2023
+2022
+668
+(2,911)
+67
+118
+(195)
+Siemens Real Estate (SRE) - Siemens Real Estate is responsible for uniform and comprehensive management of Company real estate
+worldwide (except for Siemens Healthineers) and supports the industrial businesses and corporate activities with customer-specific real
+estate solutions.
+(190)
+(582)
+(104)
+(113)
+Amortization of intangible assets acquired in business combinations
+(865)
+(990)
+Financing, eliminations and other items
+(451)
+Siemens Energy Investment - includes our investment in Siemens Energy accounted for using the equity method, and previously, a
+smaller investment in connection with Siemens Energy sold in fiscal 2022.
+Reconciliation to Consolidated Financial Statements
+Portfolio Companies comprise businesses which deliver a broad range of customized and application-specific products, software,
+solutions, systems and services for different industries including oil and gas, chemical, mining, cement, logistics, energy, marine, water
+and fiber.
+771
+190
+188
+238
+248
+2,625
+817
+838
+1,555 1,343
+9,689
+1,730
+1,548
+2,798
+2,626
+33,263
+1,046
+343
+393
+205
+Sep 30, Sep 30,
+2023 2022
+10,946 10,861
+6,386
+2,244 2,547
+34,415 36,948 2,221
+53,991 56,857 10,376
+32,915
+482
+Fiscal year
+Fiscal year
+Fiscal year
+2023
+4,201 4,090
+2022
+2023
+852
+2022
+2022
+440
+316
+612
+693
+6,501 2,908 2,203
+284
+2023
+2022
+985
+31
+584
+687
+2,218
+2,084
+3,608
+3,561
+38
+Consolidated Financial Statements
+Description of reportable segments
+Digital Industries offers a comprehensive product portfolio and system solutions for automation used in discrete and process industries,
+complemented by product lifecycle and data-driven services,
+Smart Infrastructure offers products, systems, solutions, services and software to support a sustainable transition from fossil to renewable
+energy sources, as well as a transition to smarter, more sustainable buildings and communities,
+Mobility combines all Siemens businesses in the area of rail passenger and rail freight transportation, including rail vehicles, rail
+automation systems, rail electrification systems, digital and cloud-based solutions and related services,
+Siemens Healthineers provides healthcare solutions and services. It develops, manufactures, and sells a diverse range of innovative
+diagnostic and therapeutic products and services to healthcare providers.
+Siemens Financial Services provides financing solutions to Siemens' customers and other companies via debt and equity investments,
+offering leasing, lending, working capital and structured financing solutions, equipment and project financing and financial advisory
+services.
+Portfolio Companies (POC)
+469
+418
+(5,141) 57,680 60,724 (1,363) (2,533)
+7,154 145,067 151,502 10,062 8,238
+(195) (1,135)
+71,977 11,201
+175
+659
+197
+97
+38
+36
+25
+32
+209
+39
+Reconciliation to
+Consolidated Financial Statements
+Siemens (continuing operations)
+(261) (483) 1,062
+92,305 89,010 77,769
+892
+71,977
+(1,170) (1,087) (108)
+77,769
+51
+(in millions of €)
+NOTE 27 Personnel costs
+For their 25th and 40th service anniversary eligible employees receive jubilee shares. There were 3.14 million and 3.11 million entitlements
+to jubilee shares outstanding as of September 30, 2023 and 2022, respectively.
+Sep 30,
+2022
+80
+2023
+42
+1,436
+1,478
+563
+580
+517
+487
+1,384
+1,491
+2022
+17
+30
+107
+2023
+2022
+2023
+116
+1,527
+1,643
+Sep 30,
+Fiscal Year
+Liabilities
+Sep 30,
+2023
+Receivables
+1,204
+Sep 30,
+2022
+78
+Related individuals
+For information regarding the funding of our post-employment benefit plans see Notes 4 and 17.
+As of September 30, 2023 and 2022, lease liabilities resulting from sale and leaseback transactions with pension entities amounted to
+€264 million and €280 million, respectively.
+Pension entities
+Consolidated Financial Statements
+41
+As of September 30, 2023 and 2022, there were loan commitments to joint ventures amounting to €2 million and €4 million, respectively.
+As of September 30, 2023 and 2022, the Company had commitments to make capital contributions to joint ventures and associates of
+€108 million and €106 million, therein €86 million and €95 million related to joint ventures, respectively.
+As of September 30, 2023 and 2022, loans given to joint ventures and associates amounted to €160 million and €166 million, therein
+€126 million and €149 million related to joint ventures, respectively. The related book values amounted to €133 million and €143 million,
+therein €112 million and €139 million related to joint ventures, respectively. Valuation adjustments recognized in fiscal 2023 and 2022
+reduced book values of loans related to joint ventures by €5 million and €2 million, respectively.
+As of September 30, 2023 and 2022, guarantees to joint ventures and associates amounted to €5,098 million and €8,165 million,
+respectively, thereof €5,081 million and €8,147 million, respectively, to associates. These guarantees included mainly obligations from
+performance and credit guarantees in connection with the Siemens Energy business. For these guarantees, Siemens has reimbursement
+rights towards Siemens Energy.
+As of September 30, 2023 and 2022, receivables to associates included reimbursement rights against Siemens Energy which were
+recognized correspondingly with obligations from customer contracts in connection with Siemens Energy activities legally remaining at
+Siemens. Liabilities to associates as of September 30, 2023 and 2022 were mainly due to trade receivables that also result from these
+activities and that have economically to be allocated to Siemens Energy.
+686
+832
+1,284
+608
+55
+777
+Purchases of goods and
+services and other expenses
+and other income
+Fiscal Year
+Sales of goods and services
+6,999
+7,535
+13,537
+14,778
+11,961
+12,718
+thereof Germany
+57,791
+54,804
+71,977
+77,769
+71,977
+77,769
+Siemens
+7,105
+thereof countries outside of Germany
+65,051
+60,016
+62,991
+Associates
+(in millions of €)
+Joint ventures
+Siemens has relationships with many joint ventures and associates in the ordinary course of business whereby Siemens buys and sells a
+wide variety of products and services generally on arm's length terms. The transactions between continuing operations and joint ventures
+and associates were as follows:
+Joint ventures and associates
+NOTE 31 Related party transactions
+Non-current assets consist of property, plant and equipment, goodwill and other intangible assets.
+26,543
+In fiscal 2023 and 2022, members of the Managing Board received cash compensation of €18.8 million and €16.0 million. The fair value
+of share-based compensation amounted to €10.5 million and €10.3 million for 170,111 and 134,006 stock awards, respectively, granted
+in fiscal 2023 and 2022. In fiscal 2023 and 2022, the Company granted contributions under the BSAV to members of the Managing Board
+totaling €2.2 million and €2.2 million, respectively.
+23,644
+19,072
+17,241
+18,561
+therein U.S
+50,792
+47,269
+58,440
+17,727
+Therefore, in fiscal 2023 and 2022, compensation and benefits, attributable to members of the Managing Board amounted to €31.6
+million and €28.5 million in total, respectively.
+In fiscal 2023 and 2022, expense related to share-based compensation amounted to €8.3 million and €4.7 million, respectively, including
+expenses related to the additional cash payment compensation due to the spin-off of Siemens Energy.
+Former members of the Managing Board and their surviving dependents received emoluments within the meaning of
+Section 314 para. 1 No. 6 b of the German Commercial Code totaling €24.6 million and €23.6 million in fiscal 2023 and 2022, respectively.
+The defined benefit obligation (DBO) of all pension commitments to former members of the Managing Board and their surviving
+dependents as of September 30, 2023 and 2022 amounted to €140.3 million and €175.3 million, respectively.
+10010
+85
+10010
+100
+1009
+10010
+1007
+KompTime GmbH, Munich
+IPGD Grundstücksverwaltungs-Gesellschaft mbH, Grünwald
+KACO new energy GmbH, Neckarsulm
+Innomotics Real Estate GmbH & Co. KG, Nuremberg
+Innomotics GmbH, Munich
+ILLIT Grundstücksverwaltungs-Management GmbH, Grünwald
+Innomotics Beteiligungs-GmbH, Munich
+Geisenhausener Entwicklungs Management GmbH, Grünwald
+Geisenhausener Entwicklungs-GmbH & Co. KG, Grünwald
+HaCon Ingenieurgesellschaft mbH, Hanover
+evosoft GmbH, Nuremberg
+Dade Behring Grundstücks GmbH, Kemnath
+eos.uptrade GmbH, Hamburg
+100
+100
+10010
+10010
+Kyros C AG, Munich
+Kyros B AG, Munich
+Kyros 71 GmbH, Munich
+Kyros 70 GmbH, Munich
+Kyros 68 GmbH, Munich
+Kyros 58 GmbH, Munich
+Kyros 54 GmbH, Munich
+Capta Grundstücks-Verwaltungsgesellschaft mbH, Grünwald
+100
+1009
+100
+1007
+85
+10010
+1009
+1007
+100
+6,468
+Berliner Vermögensverwaltung GmbH, Berlin
+Alpha Verteilertechnik GmbH, Cham
+5.0
+3.3
+38.2
+41.2
+2022
+2023
+Fiscal year
+Other attestation services
+Tax services
+Audit services
+(in millions of €)
+Fees related to professional services rendered by the Company's principal accountant, EY, for fiscal 2023 and 2022 are:
+NOTE 32 Principal accountant fees and services
+Some of our board members hold, or in the last year have held, positions of significant responsibility with other entities. We have
+relationships with almost all of these entities in the ordinary course of our business whereby we buy and sell a wide variety of products
+and services on arm's length terms.
+In fiscal 2023 and 2022, no other major transactions took place between the Company and the members of the Managing Board and the
+Supervisory Board.
+Compensation attributable to members of the Supervisory Board comprised in fiscal 2023 and 2022 base compensation and additional
+compensation for committee work and amounted to €5.3 million and €5.1 million (including meeting fees), respectively.
+44.5
+43.3
+In fiscal 2023 and 2022, 39% and 40%, respectively, of the total fees related to Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft,
+Germany.
+Audit Services relate primarily to services provided by EY for auditing Siemens' Consolidated Financial Statements, for auditing financial
+statements of Siemens AG and its subsidiaries, for reviews of interim financial statements being integrated into the audit, for project-
+accompanying IT audits, as well as for audits of the internal control system at service companies. Other Attestation Services include
+primarily audits of financial statements as well as other attestation services in connection with M&A activities, audits of employee benefit
+plans, attestation services relating to sustainability reporting, compensation reporting and disclosures in accordance with EU taxonomy,
+comfort letters and other attestation services required under regulatory requirements, contractually agreed or requested on a voluntary
+basis.
+AIT Verwaltungs-GmbH, Stuttgart
+AIT Applied Information Technologies GmbH & Co. KG, Stuttgart
+Airport Munich Logistics and Services GmbH, Hallbergmoos
+Acuson GmbH, Erlangen
+Germany (121 companies)
+Subsidiaries
+September 30, 2023
+BEFUND24 GmbH, Erlangen
+in %
+NOTE 35 List of subsidiaries and associated companies pursuant to Section 313 para. 2 of the
+German Commercial Code
+Consolidated Financial Statements
+42
+In November 2023, agreements were entered into with the intent to acquire 18% of the shares in Siemens Limited, India from the Siemens
+Energy Group for a purchase price of €2.1 billion in cash. Closing of the transaction is expected in December 2023. Upon closing, the
+acquisition will be accounted for as equity transaction not impacting net income and Siemens' share in Siemens Limited, India will increase
+to 69%. Additionally, the Siemens Energy Group will receive a put option for up to an additional 5% of the shares in Siemens Limited, India.
+If specific guarantee events occur, Siemens Energy can exercise the option for a fixed price totaling €750 million for the entire 5% stake
+to be paid by Siemens. The transaction will be recognized in equity not impacting net income and a purchase liability measured at the
+respective present value of the option price will be recorded.
+NOTE 34 Subsequent events
+The Managing and Supervisory Boards of Siemens Aktiengesellschaft and of Siemens Healthineers AG, a publicly listed subsidiary of
+Siemens, provided the declaration required under Section 161 of the German Stock Corporation Act (AktG) on October 1, 2023 and
+September 30, 2023, respectively. The declarations are available on the company's websites at siemens.com/gcg-code and at
+corporate.siemens-healthineers.com/investor-relations/corporate-governance.
+NOTE 33 Corporate governance
+Equity interest
+16,749
+17,214
+17,816
+Vested and fulfilled
+Adjustments due to vesting conditions other than market conditions
+Forfeited
+Settled
+Non-vested at period-end
+Share Matching Program and its underlying plans
+Subject to
+performance conditions
+Fiscal year
+Not subject to
+performance conditions
+Fiscal year
+2023
+2022
+8,956,287
+8,670,111
+2023
+1,131,311
+2022
+Granted
+Non-vested, beginning of period
+Changes in stock awards:
+The weighted average fair value of stock awards granted in fiscal 2023 and 2022 of €125.42 and €125.29 per share, respectively, was
+determined as Siemens' share price, less the present value of expected dividends during the respective vesting period.
+NOTE 26 Share-based payment
+Share-based payment awards may be settled in newly issued shares of capital stock of Siemens AG, in treasury shares or in cash. Share-
+based payment awards may forfeit if the employment of the beneficiary terminates prior to the expiration of the vesting period. In fiscal
+2023 and 2022, expense from equity-settled awards on a continuing basis are €444 million and €377 million; cash-settled awards on a
+continuing basis resulted in expenses of €18 million and gains of €12 million in fiscal 2023 and 2022. Included is expense of €113 million
+and €110 million in fiscal 2023 and 2022, respectively, relating to Siemens Healthineers plans. Siemens Healthineers plans are largely
+similar to Siemens' plans, except for granting Siemens Healthineers AG shares.
+Stock awards
+Stock awards granted by Siemens are distinguished between a) subject to performance conditions and b) no performance conditions.
+Stock awards entitle the beneficiaries to Siemens shares without payment of consideration at the end of the respective vesting period.
+Stock awards subject to performance conditions
+The Company grants stock awards subject to performance conditions to members of the Managing Board, members of the senior
+management and other eligible employees. The vesting period for awards granted to members of the senior management and other
+eligible employees is three years respectively four years for awards granted prior to fiscal 2022. Awards granted to members of the
+Managing Board are subject to a four year vesting period.
+For stock awards subject to performance conditions, 80% of the target amount is linked to the relative total shareholder return of Siemens
+compared to the total shareholder return of the MSCI World Industrials sector index (TSR-Target); the remaining 20% are linked to a
+Siemens internal sustainability target considering environmental, social and governance targets (ESG-Target). The annual target amount
+for stock awards up to and including tranche 2019 is linked to the share price performance of Siemens relative to the share price
+performance of five important competitors. The target attainment for each individual performance criteria ranges between 0% and 200%.
+Settlement of the awards is in shares corresponding to the actual target attainment.
+Commitments to members of the Managing Board
+624,775
+Fair values of TSR-related stock awards granted are €7 million and €6 million, respectively, in fiscal 2023 and 2022, calculated by applying
+a valuation model. In fiscal 2023 and 2022, inputs to that model include an expected weighted volatility of Siemens shares of 26.71% and
+24.41%, respectively, and a Siemens share price of €130.68 and €153.34. Expected volatility was determined by reference to historic
+volatilities. The model applies a risk-free interest rate of up to 2.76% and (0.15)% in fiscal 2023 and 2022, respectively, and an expected
+dividend yield of 3.25% in fiscal 2023 and 2.61% in fiscal 2022. Assumptions relating to correlations between the Siemens share price and
+the development of the MSCI index were derived from historic observations of share price and index changes. The fair value of the ESG
+component of €112.39 and €135.25 per share in fiscal 2023 and 2022, respectively, was determined as Siemens' share price, less the
+present value of expected dividends during the vesting period.
+In fiscal 2023 and 2022, 1,784,892 and 1,459,182 equity-settled stock awards were granted relating to the TSR-Target with a fair value
+of €114 million and €106 million, respectively. In fiscal 2023 and 2022, 446,237 and 365,610 equity-settled stock awards were granted
+relating to the ESG-Target with a fair value of €54 million and €51 million, respectively.
+The fair value of stock awards granted in fiscal 2023 and 2022 (TSR-related) was calculated by applying a valuation model. In fiscal 2023
+and 2022, inputs to that model include an expected weighted volatility of Siemens shares of 26.70% and 24.41%, respectively, and a
+35
+Consolidated Financial Statements
+Siemens' share price of €133.66 and €153.58. Expected volatility was determined by reference to historic volatilities. The model applies a
+risk-free interest rate of up to 2.68% and (0.23)% in fiscal 2023 and 2022, respectively, and an expected dividend yield of 3.18% in fiscal
+2023 and 2.61% in fiscal 2022. Assumptions relating to correlations between the Siemens share price and the development of the MSCI
+Index were derived from historic observations of share price and index changes. The fair value of the ESG component of €120.28 and
+€140.52 per share in fiscal 2023 and 2022, respectively, was determined as Siemens' share price, less the present value of expected
+dividends during the vesting period.
+Stock awards not subject to performance conditions
+Each quarter, the Company grants stock awards not subject to performance conditions to selected employees. The awards are subject to
+a ratable vesting period of one to four years, i.e. 25% of the number of awards granted are transferred each year.
+Commitments to members of the senior management and other eligible employees
+Siemens' investment portfolio consists of direct and indirect investments in publicly traded companies that are classified as long term
+investments. These investments are monitored based on their current market value, affected primarily by fluctuations on the volatile
+technology-related markets worldwide. As of September 30, 2023 and 2022, the market value of Siemens' portfolio was €182 million and
+€339 million, respectively. As of September 30, 2023 and 2022, the VaR relating to the equity price was €26 million and €74 million.
+2,401,240 1,951,223
+778,012
+Forfeited
+Settled
+1,255,825
+655,177
+(573,468)
+2022
+1,389,016
+557,839
+(573,440)
+(68,404)
+(64,030)
+(23,663)
+(53,561)
+Outstanding, end of period
+1,245,467
+1,255,825
+The weighted average fair value of matching shares granted in fiscal 2023 and 2022 of €107.60 and €121.35 per share, respectively, was
+determined as Siemens' share price, less the present value of expected dividends; non-vesting conditions were taken into account.
+36
+Consolidated Financial Statements
+Jubilee Share Program
+Vested and fulfilled
+Granted
+Outstanding, beginning of period
+2023
+(1,192,351)
+(1,099,508)
+(91,905) (125,993)
+(1,667,914) (362,176)
+(16,447) (77,370)
+8,388,910 8,956,287
+(365,913)
+(198,524)
+n/a
+n/a
+(66,128) (71,512)
+(3,484) (1,440)
+1,593,270 1,131,311
+897,484
+In fiscal 2023, Siemens issued a new tranche under each of the plans of the Share Matching Program.
+Under the Share Matching Plan, senior managers may invest a specified part of their variable compensation in Siemens shares (investment
+shares). The shares are purchased at market price at a predetermined date in the second quarter. Plan participants receive the right to one
+Siemens share without payment of consideration (matching share) for every three investment shares continuously held over a period of
+about three years (vesting period) provided the plan participant has been continuously employed by Siemens until the end of the vesting
+period.
+Monthly Investment Plan
+Under the Monthly Investment Plan employees other than senior managers may invest a specified part of their compensation in Siemens
+shares on a monthly basis over a period of twelve months. Shares are purchased at market price at a predetermined date once a month.
+If the Managing Board decides that shares acquired under the Monthly Investment Plan are transferred to the Share Matching Plan, plan
+participants will receive the right to matching shares under the same conditions applying to the Share Matching Plan described above with
+a vesting period of about two years. The Managing Board decided that shares acquired under the tranches issued in fiscal 2022 and 2021
+are transferred to the Share Matching Plan as of February 2023 and February 2022, respectively.
+Base Share Program
+Under the Base Share Program employees of Siemens AG and participating domestic Siemens companies may invest a fixed amount of
+their compensation in Siemens shares, sponsored by Siemens. The shares are bought at market price at a predetermined date in the second
+quarter and grant the right to receive matching shares under the same conditions applying to the Share Matching Plan described above.
+Siemens' contributions to the Base Share Program recognized as expense were €23 and €24 in fiscal 2023 and 2022, respectively
+Resulting Matching Shares:
+Fiscal year
+Share Matching Plan
+Moorenbrunn Entwicklungs Management GmbH, Grünwald
+Equity Price Risk
+Trade receivables of operating units are generally rated internally; as of September 30, 2023 and 2022, approximately 45% and 45%,
+respectively, have an investment grade rating and 55% and 55%, respectively, have a non-investment grade rating. Contract assets
+generally show similar risk characteristics as trade receivables in operating units.
+2022
+2023
+(in millions of €)
+Sep 30,
+Fiscal year
+Fiscal year
+Non-current assets
+Revenue by location
+of companies
+of customers
+Revenue by location.
+60,724
+(53,342)
+(49,602)
+57,680
+37,518
+38,509
+2023
+2022
+2023
+2022
+18,489
+Asia, Australia
+27,653
+24,844
+20,757
+22,669
+20,680
+3,769
+22,615
+23,033
+23,492
+34,470
+37,886
+33,481
+36,664
+Europe, C.I.S., Africa, Middle East
+Americas
+Amounts above do not represent economic credit risk, since they consider neither collateral held nor valuation allowances already
+recognized.
+3,499
+57,137
+Lease Re-
+ceivables
+approach
+Stage 1
+6,074
+16,017
+Stage 2
+4
+548
+Stage 1
+840
+Stage 2
+n/a
+Stage 3
+n/a
+2,512
+918
+2,857
+67
+118
+3,593
+Financial guarantees and
+loan commitments
+Loans and other debt
+instruments under the general
+Non-Investment Grade Ratings
+Investment Grade Ratings
+1,129
+1,211
+5,215
+5,126
+3,669
+1,801
+2022
+62,765
+2023
+Sep 30,
+Consolidated Financial Statements
+NOTE 30 Information about geographies
+Consolidated Financial Statements
+credit-impaired loans in SFS' asset finance business. Those collaterals mainly comprised property, plant and equipment. Credit risks arising
+from irrevocable loan commitments are equal to the expected future pay-offs resulting from these commitments.
+SFS' external financing portfolio disaggregates into credit risk rating grades as of September 30, 2023 as follows (pre valuation
+allowances):
+(in millions of €)
+Sep 30,
+10010